USA: Suiza Foods Corporation announces third quarter results
Diluted cash earnings per share before non-recurring items for the third quarter totaled $1.18 compared with $1.23 in the prior year comparable period. Excluding Consolidated Container's shortfall, cash earnings per share would have been $1.30, an increase of 5.7% over the prior year third quarter. 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 turned in solid performances in spite of continued high raw material prices and softness in volumes due to September 11th," said Gregg Engles, Chairman and Chief Executive Officer of Suiza Foods Corporation. "Our operating results this quarter once again demonstrate our ability to manage through a difficult environment."
Third quarter consolidated operating income before non-recurring items grew 2.9% to $98.2 million, or 6.3% of sales, compared with $95.4 million reported in the third quarter of 2000. Consolidated operating margin before non-recurring items declined 32 basis points due to high raw material costs during the quarter. Butterfat averaged $2.32 per pound during the quarter, up 82% over the prior year, and raw milk averaged $15.43 per hundred weight, 28% higher than the third quarter of 2000.
Sales for the first nine months of 2001 totaled $4.6 billion, an increase of 6.8% over last year. Operating income before non-recurring items for the nine months grew 2.8% to $285.8 million. Before non-recurring items, diluted earnings per share totaled $2.90, an increase of 4.3% over last year, and diluted cash earnings per share totaled $3.50, an increase of 4.2%. Excluding Consolidated Container's shortfall in the third quarter, diluted earnings per share before non-recurring items would have risen 8.6% to $3.02 and diluted cash earnings per share would have been $3.62, an increase of 7.7%.
RECENT DEVELOPMENTS -- During the third quarter, Suiza's Morningstar subsidiary began bottling and distributing Hershey(R)'s flavored milks and milkshakes in plastic bottles, using new European extended-shelf-life technology that was successfully installed in the company's Mt. Crawford plant in Virginia. The flavored milks are available in fat free chocolate, 2% reduced fat chocolate and 2% reduced fat strawberry; and the new milkshakes are available in creamy chocolate and cookies-n-cream. The new flavored milks and shakes will have a longer shelf life of up to 60 days. The company anticipates installing another line in spring 2002 to meet increasing demand. -- In September, both Suiza and Dean Foods (NYSE: DF - news) independently announced that their shareholders approved the proposed merger. The companies continue to await regulatory approval from the Department of Justice.
"We believe that we are near completion of the process, and we continue to expect to close the transaction by year end," said Engles.
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®, Dairymens®, 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®, Hershey®'s and Pet®. Additionally, the company owns approximately 43% of Consolidated Container Company, one of the nation's largest manufacturers of rigid plastic containers.
The statement in this press release regarding the expected timing for completion of the proposed merger with Dean Foods is "forward-looking" and is made pursuant to the safe harbor provision of the Securities Litigation Reform Act of 1995. This statement involves risks and uncertainties that could 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. Risks regarding the company's business are set forth in its quarterly report on Form 10-Q for the quarter ended June 30, 2001. The forward-looking statement in this press release speaks only as of the date of this release. Suiza expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statement to reflect any change in its expectations with regard thereto or any changes in the events, conditions or circumstances on which such statement is based.
(Tables to follow) SUIZA FOODS CORPORATION Condensed Balance Sheet (Dollars in thousands) September 30, December 31, ASSETS 2001 2000 Cash and cash equivalents $25,761 $31,110 Other current assets 868,693 786,821 Total current assets 894,454 817,931 Property, plant & equipment 1,011,645 1,003,769 Intangibles & other assets 1,926,679 1,958,778 Total Assets $3,832,778 $3,780,478 LIABILITIES AND STOCKHOLDERS' EQUITY Total current liabilities $719,007 $699,908 Long-term debt 1,119,087 1,225,045 Other long-term liabilities 200,281 157,816 Mandatorily redeemable TIPES 584,459 584,032 Minority interest in subsidiaries 515,472 514,845 Stockholders' equity: Common stock 281 273 Additional paid-in capital 199,593 166,361 Retained earnings 519,405 433,309 Other comprehensive income (24,807) (1,111) Total stockholders' equity 694,472 598,832 Total Liabilities and Stockholders' Equity $3,832,778 $3,780,478 Segment Information (Dollars in Thousands) Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 Revenue Suiza Dairy Group $1,272,119 $1,176,168 $3,716,980 $3,463,702 Morningstar Foods 184,105 175,473 543,807 504,118 Corporate / Other 99,507 88,306 296,371 300,622 Consolidated $1,555,731 $1,439,947 $4,557,158 $4,268,442 Operating Income before Non-Recurring Items Suiza Dairy Group $76,143 $71,817 $219,298 $216,014 Morningstar Foods 21,825 25,415 68,090 69,205 Corporate / Other 199 (1,813) (1,597) (7,208) Consolidated $98,167 $95,419 $285,791 $278,011 SUIZA FOODS CORPORATION (Dollars in thousands, except per share data) Three months ended Nine months ended September 30, September 30, 2001 2000 2001 2000 Net sales $1,555,731 $1,439,947 $4,557,158 $4,268,442 Cost of sales 1,195,435 1,085,627 3,477,209 3,213,745 Gross profit 360,296 354,320 1,079,949 1,054,697 Operating costs and expenses 262,129 258,901 794,158 776,685 Plant closing costs --- 424 843 3,388 Operating income 98,167 94,995 284,948 274,624 Interest expense & financing charges on preferred securities 31,653 37,382 101,680 108,322 Equity in (earnings) loss from unconsolidated affiliates 3,700 (5,169) 841 (10,572) Equity in restructuring charges of unconsolidated affiliates 1,724 --- 1,724 --- Other (income) expense 1,097 (594) 1,600 (1,670) Income before income taxes and minority interest 59,993 63,376 179,103 178,544 Income taxes 20,803 24,021 65,452 67,901 Minority interest 9,768 8,166 26,109 25,327 Net income before extraordinary items 29,422 31,189 87,542 85,316 Extraordinary gain --- --- --- 4,968 Cumulative effect of accounting change --- --- (1,446) --- Net income $29,422 $31,189 $86,096 $90,284 Net income before non-recurring items $30,408 $31,461 $88,857 $87,087 Diluted EPS before non-recurring items $0.98 $1.02 $2.90 $2.78 Diluted cash EPS before non-recurring items $1.18 $1.23 $3.50 $3.36 Basic earnings per share: Income before extraordinary items $1.06 $1.13 $3.17 $2.99 Extraordinary gain --- --- --- 0.17 Cumulative effect of accounting change --- --- (0.05) --- Net income $1.06 $1.13 $3.12 $3.16 Basic average common shares (000's) 27,861 27,624 27,595 28,531 Diluted earnings per share: Income before extraordinary items $0.95 $1.01 $2.86 $2.73 Extraordinary gain --- --- --- 0.14 Cumulative effect of accounting change --- --- (0.04) --- Net income $0.95 $1.01 $2.82 $2.87 Diluted average common shares (000's) 36,604 36,198 36,180 37,062 Summary Financial Information: Depreciation $23,748 $23,768 $71,578 $71,865 Amortization of intangibles $13,116 $13,532 $39,914 $39,231 Amortization shown in interest expense $643 $558 $1,975 $2,823
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