EXHIBIT 99(b)
THE EARTHGRAINS COMPANY
AND
METZ BAKING COMPANY
PRO FORMA COMBINED STATEMENT OF EARNINGS
FISCAL YEAR 2000
(Unaudited)
($ In Millions)
The following unaudited pro forma combined statement of
earnings combines The Earthgrains Company (Earthgrains or
The Company) for the fifty-two week period ended March 28,
2000 and Metz Baking Company (Metz) for the fifty-two week
period ended December 31, 1999. This statement has been
prepared under the assumptions set forth in the accompanying
notes. This statement should be read in conjunction with
the separate financial statements and notes thereto of
Earthgrains, included in the Company's recent filing on Form
8-K and to be included in the Annual Report to Shareholders
on Form 10-K for the year ended March 28, 2000, and Metz for
the fifty-two week period ended December 31, 1999 included
in this report. The pro forma combined statement
of earnings is not necessarily indicative of the future
results of operations of the combined companies or the
results as they might have been had the acquisition been
effective on the first day of Earthgrains' fiscal 2000.
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------
Metz Note Pro Forma
Earthgrains(f) Historical Amount Reference Combined
----------- ---------- ------ --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $2,039.3 $561.2 $(14.8) (a) $2,585.7
Cost of products
sold 1,122.5 281.9 (7.7) (a) 1,398.9
2.2 (b)
-------- ------ ------ --------
Gross profit 916.8 279.3 (9.3) 1,186.8
Marketing,
distribution
and administrative
expenses 804.4 249.7 (7.0) (a) 1,059.4
1.4 (b)
10.9 (c)
Provision for
restructuring and
consolidation 2.3 --- --- 2.3
-------- ------ ------ --------
Operating income 110.1 29.6 (14.6) 125.1
Other income and
expenses:
Interest expense (26.5) (9.8) (27.8) (d) (64.1)
Other income, net 4.3 0.2 --- 4.5
-------- ------ ------ --------
Income before
income taxes 87.9 20.0 (42.4) 65.5
Provision for
income taxes 32.8 8.6 (12.3) (e) 29.1
Minority interest
expense (0.6) --- --- (0.6)
-------- ------ ------ --------
Net income $ 54.5 $ 11.4 $(30.1) $ 35.8
======== ====== ======= ========
Earnings per share:
Basic net earnings $ 1.34 $ 0.88
========= =========
Weighted average
shares outstanding 40.6 40.6
======== ========
Diluted net earnings $ 1.30 $ 0.85
========= =========
Weighted average
shares outstanding 41.9 41.9
======== ========
</TABLE>
<PAGE>
Notes to Combined Statement of Earnings:
(a) To eliminate the 10 days' operating activity of Metz
from the date of the acquisition included in Earthgrains
fiscal 2000 results. The elimination includes $14.8 million
in net sales, $7.7 million in cost of products sold, and
$7.0 million in marketing, distribution and administrative
expenses.
(b) To reflect the anticipated incremental cost for
workers' compensation expense and fleet insurance of $3.0
million and a $0.6 million from combined
employee benefit plans; 60% of these impacts are included in
cost of products sold; 40% are included in marketing,
distribution and administrative expenses.
(c) To eliminate Metz historical goodwill amortization of
$1.1 million and to reflect incremental goodwill
amortization of $12.0 million associated with the
preliminary purchase price allocation as a result of the
acquisition. Goodwill is being amortized using the
straight-line method over 40 years.
(d) To eliminate interest expense on debt relative to 10
days' ownership of Metz included in Earthgrains' fiscal 2000
results; to eliminate the $9.8 million of Metz historical
interest expense; and to reflect interest expense on
incremental debt of $625 million. The incremental debt
is based upon assumed borrowings of $225 million in
commercial paper, at a fiscal 2000 weighted average
interest rate of 5.8473%, and $400 million in fixed-rate
debt, at a fiscal 2000 weighted average interest rate
of 6.847%. Interest expense would be approximately
$13 million higher at prevailing rates as of June 2000
and the Company's intent to issue up to $550 million
in fixed-rate debt.
(e) To reflect the tax effect of the proforma adjustments
at the combined federal and state blended rate of 39%.
(f) Earthgrains historical figures presented represent the
amounts included in the recent filing on Form 8-K for the
fiscal year 2000 and to be included in the Annual Report to
Shareholders on Form 10-K for the year ended March 28, 2000.
<PAGE>
