Suiza Foods Corporation (NYSE: SZA), the nation’s leading dairy processor and distributor, today announced net sales totaled $1.5 billion for the quarter ended June 30, 2001, an increase of 6.5% over the second quarter of 2000. Diluted earnings per share before non-recurring items for the quarter totaled $1.11, an increase of 4.7% from $1.06 in the second quarter of 2000.
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Diluted cash earnings per share for the second quarter increased 4.8% to $1.31. The calculation of cash earnings per share excludes amortization of goodwill and certain intangibles as if the recently issued Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets” had been effective for the periods.
“Our operating units delivered another quarter of strong results despite a very challenging raw material environment,” said Gregg Engles, Chairman and Chief Executive Officer of Suiza Foods. “Butterfat averaged $2.10 per pound, up 63% over last year, and raw milk costs increased 25% to $14.21 per hundred weight. This is clearly one of the most difficult operating environments we have experienced, and in light of these conditions, our performance is a real tribute to the strength of our management team.”
During the second quarter of 2000, the company recorded a one-time pretax gain of $3.6 million related to the curtailment of certain benefit plans. This gain had a $1.4 million impact net of taxes and minority interest, equal to $0.03 per diluted share. Excluding this gain, diluted earnings per share and diluted cash earnings per share would have increased 7.8% and 7.6% respectively in the second quarter period.
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By GlobalDataSecond quarter consolidated operating income before non-recurring items totaled $102.9 million, or 6.7% of sales, compared with $104.5 million reported in the second quarter of 2000. Excluding the curtailment gain, operating income would have increased 1.9%, and operating margins would have declined 30 basis points. The margin decline is due primarily to significantly higher raw material costs in the current period.
Sales for the first six months of 2001 totaled $3.0 billion, an increase of 6.1% over last year. Operating income before non-recurring items grew 2.8% to $187.6 million. Before non-recurring items, diluted earnings per share totaled $1.92, an increase of 8.5% over last year, and diluted cash earnings per share totaled $2.33, an increase of 8.9%.
Recent Highlights
- In May, the company announced an agreement with Procter & Gamble to launch and market Folgers Jakada(TM), a chilled coffee drink made from Folgers coffee and lowfat milk. Under this new licensing agreement Morningstar Foods will produce, promote and distribute Folgers Jakada, and P&G will receive a licensing fee generated from all Folgers Jakada sales while retaining ownership of the Folgers trademark. The company expects to launch Folgers Jakada in the fourth quarter of this year.
- In July, Suiza filed a preliminary joint proxy statement/prospectus with the Securities and Exchange Commission in connection with its proposed merger with Dean Foods (NYSE: DF). The company intends to finalize and mail the proxy statement/prospectus to its shareholders in mid August. A separate press release was issued today to provide additional information regarding the company’s merger with Dean Foods.
- On July 31, the company completed the syndication of its $2.7 billion bank financing. The proceeds will be used to provide funding for the Dean Foods transaction and to provide funds for general corporate purposes.
Suiza Foods Corporation, based in Dallas, is the nation’s leading dairy processor and distributor, producing a full line of company-branded and customer-branded products. National brands include International Delight®, Second Nature®, Naturally Yours®, Mocha Mix®, Sun Soy(TM), kidsmilk(TM) and fitmilk®. Regional brands include Adohr Farms®, Barbe’s®, Broughton®, Brown’s Dairy(TM), Country Delite®, Country Fresh®, Dairy Gold®, Dairymen’s®, Flav-O-Rich®, Garelick Farms®, Hygeia®, Lehigh Valley Farms®, London’s®, Meadow Gold®, Model Dairy®, Oak Farms®, Poudre Valley®, Robinson®, Schenkel’s All Star Dairy, Schepps®, Shenandoah’s Pride®, Suiza Dairy®, Swiss Dairy(TM), Louis Trauth Dairy®, Tuscan® and Velda Farms®, as well as Celta® in Spain. Suiza also sells products under partner or licensed brands in certain regions, including Borden®, Foremost® and Pet®. Additionally, the company owns approximately 43% of Consolidated Container Company, one of the nation’s largest manufacturers of rigid plastic containers.
Forward-Looking Statement
Some of the statements in this press release are “forward-looking” and are made pursuant to the safe harbor provision of the Securities Litigation Reform Act of 1995. These “forward-looking” statements include statements relating to the company’s expectations regarding its proposed merger with Dean Foods. These statements involve risks and uncertainties, which may cause results to differ materially from the statements set forth in this press release. The company’s ability to close the proposed transaction on the terms and in the timeframe contemplated depends primarily on the company’s ability to obtain regulatory approval for the transaction on the terms and within the timeframe contemplated. Other risks relating to the proposed merger with Dean Foods are identified in the joint press release of the company and Dean Foods filed by the company with the Securities and Exchange Commission with its Form 8-K dated April 5, 2001, as amended on April 10, 2001. The forward-looking statements in this press release speak only as of the date of this release. Suiza expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based.
Other Legal Information
Suiza Foods and Dean Foods have filed with the SEC a preliminary joint proxy statement/prospectus and other relevant documents concerning the proposed merger. In addition, Suiza Foods and Dean Foods will prepare and file a definitive joint proxy statement/prospectus and other relevant documents concerning the proposed merger. Investors are urged to read the definitive joint proxy statement/prospectus, when it becomes available, and any amendments or supplements to the definitive joint proxy statement/prospectus as well as any other documents filed with the SEC, because they will contain important information concerning the proposed merger. Investors will be able to obtain the definitive joint proxy statement/prospectus and other documents filed with the SEC free of charge at the SEC’s website (http://www.sec.gov ). In addition, the definitive joint proxy statement/prospectus and other documents filed by Dean Foods and Suiza Foods with the SEC may be obtained free of charge by contacting Dean Foods, 3600 North River Road, Franklin Park, Illinois 60131, Attention: Investor Relations (Tel: 847-678-1680) or Suiza Foods, 2515 McKinney Avenue, Suite 1200, Dallas, Texas 75201, Attention: Investor Relations (Tel: 800-431-9214).
Suiza Foods, Dean Foods and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Suiza Foods and Dean Foods in favor of the transaction. The directors and executive officers of Suiza Foods and their beneficial ownership of Suiza Foods common stock are set forth in the proxy statement for the 2000 annual meeting of Suiza Foods. The directors and executive officers of Dean Foods and their beneficial ownership of Dean Foods common stock are set forth in the proxy statement for the 2000 annual meeting of Dean Foods. You may obtain the proxy statements of Suiza Foods and Dean Foods free of charge at the SEC’s website (http://www.sec.gov ). Stockholders of Suiza Foods and Dean Foods may obtain additional information regarding the interest of such participants by reading the joint proxy statement/prospectus.
(Tables to follow)
SUIZA FOODS CORPORATION
(Dollars in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
Net sales $1,527,074 $1,434,354 $3,001,427 $2,828,495
Cost of sales 1,163,947 1,074,136 2,281,774 2,128,118
Gross profit 363,127 360,218 719,653 700,377
Operating costs and
expenses 260,225 255,712 532,030 517,785
Plant closing costs — 1,190 843 2,964
Operating income 102,902 103,316 186,780 179,628
Interest expense &
financing charges on
preferred securities 34,329 35,309 70,027 70,940
Equity in earnings of
unconsolidated affiliates (1,186) (3,535) (2,859) (5,404)
Other (income) expense (189) (528) 502 (1,075)
Income before income
taxes and minority
interest 69,948 72,070 119,110 115,167
Income taxes 25,982 27,700 44,649 43,879
Minority interest 9,363 10,837 16,341 17,161
Net income before
extraordinary items 34,603 33,533 58,120 54,127
Extraordinary gain — — — 4,968
Cumulative effect of
accounting change — — (1,446) —
Net income $34,603 $33,533 $56,674 $59,095
Net income before non-
recurring items $34,603 $34,352 $58,449 $55,626
Diluted EPS before non-
recurring items $1.11 $1.06 $1.92 $1.77
Diluted cash EPS before
non-recurring items $1.31 $1.25 $2.33 $2.14
Basic earnings per share:
Income before
extraordinary items $1.26 $1.16 $2.11 $1.87
Extraordinary gain — — — 0.17
Cumulative effect of
accounting change — — (0.05) —
Net income $1.26 $1.16 $2.06 $2.04
Basic average common
shares (000’s) 27,560 28,897 27,458 28,984
Diluted earnings per
share:
Income before
extraordinary items $1.11 $1.04 $1.91 $1.73
Extraordinary gain — — — 0.13
Cumulative effect of
accounting change — — (0.04) —
Net income $1.11 $1.04 $1.87 $1.86
Diluted average common
shares (000’s) 36,114 37,322 35,948 37,470
Summary Financial
Information:
Depreciation $24,008 $24,052 $47,830 $48,097
Amortization of
intangibles $13,457 $12,994 $26,798 $25,699
Amortization shown in
interest expense $666 $1,141 $1,332 $2,265
SUIZA FOODS CORPORATION
Condensed Balance Sheet
(in thousands)
June 30, December 31,
ASSETS 2001 2000
Cash and cash equivalents $22,938 $31,110
Other current assets 795,980 786,821
Total current assets 818,918 817,931
Property, plant & equipment 1,006,372 1,003,769
Intangibles & other assets 1,935,678 1,958,778
Total Assets $3,760,968 $3,780,478
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities $689,071 $699,908
Long-term debt 1,135,563 1,225,045
Other long-term liabilities 171,553 157,816
Mandatorily redeemable TIPES 584,323 584,032
Minority interest in subsidiaries 524,271 514,845
Stockholders’ equity:
Common stock 277 273
Additional paid-in capital 182,151 166,361
Retained earnings 489,983 433,309
Other comprehensive income (16,224) (1,111)
Total stockholders’ equity 656,187 598,832
Total Liabilities and
Stockholders’ Equity $3,760,968 $3,780,478
Segment Information
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenue
Suiza Dairy Group $1,242,045 $1,165,529 $2,444,862 $2,287,534
Morningstar Foods 186,203 169,440 359,702 328,644
Corporate / Other 98,826 99,385 196,863 212,317
Consolidated $1,527,074 $1,434,354 $3,001,427 $2,828,495
Operating Income before
Non-Recurring Items
Suiza Dairy Group $75,930 $82,299 $143,655 $144,697
Morningstar Foods 24,748 23,337 46,265 43,790
Corporate / Other 2,224 (1,130) (2,297) (5,895)
Consolidated $102,902 $104,506 $187,623 $182,592
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