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8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 17, 2000
MICHAEL FOODS, INC.
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(Exact name of registrant as specified in its charter)
MINNESOTA
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(State or other jurisdiction of incorporation)
0-15638 41-0498850
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(Commission File Number) (IRS Employer Identification No.)
Suite 324, Park National Bank Bldg.
5353 Wayzata Boulevard
Minneapolis, Minnesota 55416
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (612) 546-1500
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On February 17, 2000 Michael Foods, Inc. ("the Company") announced that
its Board of Directors authorized the purchase of up to an additional 2 million
shares of the Company's common stock on the open market.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
The following exhibit is filed herewith:
EXHIBIT NUMBER DESCRIPTION
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99 News release of Michael Foods, Inc.,
issued February 17, 2000, regarding
1999 financial results and the
share repurchase authorization.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MICHAEL FOODS, INC.
Dated: March 1, 2000 By: /s/ John D. Reedy
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John D. Reedy, Vice President-Finance,
Chief Financial Officer and Treasurer
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
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99 News release of Michael Foods, Inc.,
issued February 17, 2000, regarding
1999 financial results and the
share repurchase authorization.
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[NEWS LOGO]
[MICHAEL FOODS, INC. LETTERHEAD]
Contact: Mark D. Witmer
Assistant Treasurer
(612) 546-1500
For Immediate Release
MICHAEL FOODS REPORTS RECORD RESULTS FOR 1999; BOARD AUTHORIZES ADDITIONAL
TWO MILLION SHARE REPURCHASE
MINNEAPOLIS, February 17 -- Michael Foods, Inc. (Nasdaq/NMS:MIKL) today
announced record financial results for the fourth quarter and year ended
December 31, 1999.
Diluted net earnings per share for the three months ended December 31, 1999
were $0.64 compared to $0.47 per share in 1998's fourth quarter, an
increase of 36%. Net earnings for the fourth quarter of 1999 increased 30%
to $13.2 million compared to $10.2 million in 1998's fourth quarter. Net
sales for the three months ended December 31, 1999 were $272.0 million
compared to $277.4 million in the previous year period, a decrease of 2%.
Diluted net earnings per share for the year ended December 31, 1999 were
$2.12 compared to $1.83 in 1998, an increase of 16%. Net earnings for 1999
increased 9% to $44.1 million compared to $40.3 million in 1998. Net sales
for the year ended December 31, 1999 were $1.05 billion compared to $1.02
billion in the previous year, an increase of 3%. The 1999 results
established new annual records for net sales, net earnings and earnings per
share.
In a separate development, the Michael Foods, Inc. Board of Directors
authorized the purchase of an additional two million shares of the
Company's common stock. Purchases may be made through the open market or
through private transactions. Approximately 100,000 shares remain available
for purchase under an existing two million share repurchase authorization
from July 1998. The Company has approximately 20.3 million common shares
outstanding. The Board believes the stock represents an excellent value,
with repurchases being a prudent use of the Company's rising free cash
flow. Management stressed that it expects to repurchase shares and still
have adequate capital available to fund capital projects, as well as
acquisition and/or joint venture opportunities.
Chief Executive Officer Gregg A. Ostrander commented, "1999 was an
excellent year for Michael Foods. We overcame challenging egg industry
conditions to again register record sales and earnings. Additionally,
dividends per share rose 17%, following a 15% rise in 1998. Also, return on
average shareholders' equity approached record levels at 17.3% last year.
Cash flow was also healthy in 1999, with earnings before interest, taxes,
depreciation and amortization (EBITDA) of $129 million. We used this strong
cash flow to fund record capital spending of $74 million, make $9 million
in international egg products joint venture investments and repurchase
920,100 shares of our stock for $19 million. Given our good earnings
momentum and declining capital spending needs going forward, we expect to
generate increasing amounts of free cash flow. With our
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commitment to create shareholder value, we will use this strong cash flow,
in part, to retire more shares."
Turning to 1999 divisional results, Ostrander added, "The Egg Products
Division had a strong 1999 despite a seven year low in egg pricing.
Overcoming this notable deflation, the Division recorded a sales increase
for the year due to unit sales gains for value-added products. The unit
sales growth, coupled with operating efficiencies and lower feed costs,
paced a 6% operating profit increase for the year. Refrigerated
Distribution results were outstanding. While sales growth was constrained
by a sharp decline year-over-year in butter and shell egg prices, strong
unit sales growth helped generate a 46% increase in operating profit for
the Division."
Ostrander continued, "The 1999 performance of the Potato Products Division
was also excellent. Sales of mashed items rose over 20%, with foodservice
gains well above that level. Also, our various retail refrigerated potato
products, sold under the Simply Potatoes(TM) and Diner's Choice(TM) brands,
turned in strong sales and earnings performances last year. In total,
Potato Products operating profit rose over 70% last year. Lastly, it was a
disappointing year for Dairy Products. Sales rose as a result of a mid-year
acquisition, but operating profit fell by over 40%. Margins were hampered
by the effects of a product recall early in the year, the loss of a large
industrial customer later in the year, and generally inefficient plant
operations. However, recent management changes within the Division lead us
to be optimistic that the strong track record of the Division will be
reestablished."
Unaudited segment data follows (in thousands):
<TABLE>
<CAPTION>
External Net Sales Operating Profit
Three Months Ended December 31, Three Months Ended December 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Egg Products $160,238 $163,662 $20,994 $17,720
Refrigerated Dist. 63,953 65,332 3,610 1,876
Dairy Products 32,614 34,556 478 1,376
Potato Products 15,147 13,870 2,186 1,968
Corporate N/A N/A (2,126) (3,255)
</TABLE>
<TABLE>
<CAPTION>
External Net Sales Operating Profit
Twelve Months Ended December 31, Twelve Months Ended December 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Egg Products $620,719 $607,688 $73,531 $69,295
Refrigerated Dist. 230,335 221,586 10,656 7,288
Dairy Products 144,865 138,865 3,750 6,748
Potato Products 57,353 52,345 6,751 3,890
Corporate N/A N/A (8,358) (7,668)
</TABLE>
Michael Foods, Inc. is a diversified food processor and distributor with
particular interests in egg products, refrigerated grocery products,
specialty dairy products and refrigerated potato products. Principal
subsidiaries include Papetti's Hygrade Egg Products, Inc., M. G. Waldbaum
Company, Crystal Farms Refrigerated Distribution Company, Kohler Mix
Specialties, Inc. and Northern Star Co.
Certain items in this release are forward-looking statements, which are
made in reliance upon the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject
to numerous risks and uncertainties, including changes in domestic and
international economic conditions. Additional risks and uncertainties
include variances in the demand for the Company's products due to
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customer developments and industry developments, as well as variances in
the costs to produce such products, including normal volatility in feed
costs and open market egg costs. Also, capital spending plans are subject
to change, due to food products markets and financial markets variability,
and components of cash flow can also change materially within relatively
short timeframes. As a result, the Company's actual financial results could
differ materially from the results estimated by, forecasted by, or implied
by the Company in such forward-looking statements.
Consolidated statements of earnings follow.
MICHAEL FOODS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(000'S, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net sales $ 271,952 $ 277,420 $1,053,272 $1,020,484
Cost of sales 217,955 232,362 860,256 847,383
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Gross profit 53,997 45,058 193,016 173,101
Selling, general & administrative 28,855 25,373 106,686 93,548
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Operating profit 25,142 19,685 86,330 79,553
Interest expense, net 2,802 2,155 11,664 10,136
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Earnings before income taxes 22,340 17,530 74,666 69,417
Income tax expense 9,160 7,360 30,610 29,160
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NET EARNINGS $ 13,180 $ 10,170 $ 44,056 $ 40,257
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Earnings per share
Basic $ 0.65 $ 0.48 $ 2.15 $ 1.86
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Diluted $ 0.64 $ 0.47 $ 2.12 $ 1.83
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Weighted average common shares
Outstanding
Basic 20,278 21,156 20,500 21,642
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Diluted 20,544 21,454 20,750 21,980
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</TABLE>
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