<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1997
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file numbers 340-28130
SUIZA FOODS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-2559681
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
3811 Turtle Creek Boulevard, Suite 1300
Dallas, Texas 75219
(214) 528-0939
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be file by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
As of May 9, 1997, the number of shares outstanding of each class of
common stock was:
Common Stock, $.01 par value: 15,243,392
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
December 31, March 31,
1996 1997
------------ ---------
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,951 $ 7,528
Accounts receivable 50,608 49,724
Inventories 19,228 20,764
Prepaid expenses and other current assets 2,754 22,208
Refundable income taxes 2,312 ---
Deferred income taxes 3,672 3,734
--------- ---------
Total current assets 87,525 103,958
PROPERTY, PLANT AND EQUIPMENT 123,260 128,031
DEFERRED INCOME TAXES 8,524 7,938
INTANGIBLE AND OTHER ASSETS 164,839 167,594
--------- ---------
TOTAL $ 384,148 $ 407,521
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 46,664 $ 46,463
Income taxes payable 1,105 2,334
Current portion of long-term debt 12,876 16,855
--------- ---------
Total current liabilities 60,645 65,652
LONG-TERM DEBT 226,693 140,035
DEFERRED INCOME TAXES 3,278 4,103
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share; 20,000,000 shares
authorized, 10,741,729 and 15,153,229 shares issued and
outstanding, as adjusted 107 152
Additional paid-in capital 89,337 181,319
Retained earnings 4,088 16,260
--------- ---------
Total stockholders' equity 93,532 197,731
--------- ---------
TOTAL $ 384,148 $ 407,521
--------- ---------
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
----------------------------
1996 1997
--------- ----------
(Dollars in thousands,
except share data)
NET SALES $ 109,035 $ 165,125
COST OF SALES 82,615 126,569
--------- ----------
GROSS PROFIT 26,420 38,556
OPERATING COSTS AND EXPENSES:
Selling and distribution 15,502 20,142
General and administrative 4,921 8,814
Amortization of intangibles 937 1,472
--------- ----------
Total operating costs and expenses 21,360 30,428
--------- ----------
INCOME FROM OPERATIONS 5,060 8,128
OTHER (INCOME) EXPENSE:
Interest expense, net 4,616 3,670
Other income, net (80) (18,353)
--------- ----------
Total other (income) expense 4,536 (14,683)
--------- ----------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY LOSS 524 22,811
INCOME TAXES 141 7,369
--------- ----------
INCOME BEFORE EXTRAORDINARY LOSS 383 15,442
EXTRAORDINARY LOSS FROM EARLY EXTINGUISHMENT OF DEBT -- (3,270)
--------- ----------
NET INCOME $ 383 $ 12,172
--------- ----------
--------- ----------
NET EARNINGS (LOSS) PER SHARE:
Income before extraordinary loss $ 0.06 $ 1.05
Extraordinary loss -- (0.22)
--------- ----------
Net income $ 0.06 $ 0.83
--------- ----------
--------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING 6,953,131 14,744,140
--------- ----------
--------- ----------
See notes to condensed consolidated financial statements.
3
<PAGE>
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Three months ended March 31,
----------------------------
(Dollars in thousands)
1996 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 383 $ 12,172
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,251 3,077
Amortization of intangible assets, including deferred
financing costs 1,161 1,697
Extraordinary loss from early extinguishment of debt --- 3,270
Noncash and imputed interest 216 ---
Deferred income taxes 384 3,661
Changes in operating assets and liabilities:
Accounts and notes receivable (1,258) 1,141
Inventories (448) (1,439)
Prepaid expenses and other assets (15) (19,526)
Accounts payable and other accrued expenses (1,481) (538)
Income taxes payable (1,151) 3,233
---------- ----------
Net cash provided by operating activities 42 6,748
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (3,433) (3,948)
Proceeds from the sale of property, plant and equipment 229 34
Cash outflows for acquisitions (3,333) (5,610)
---------- ----------
Net cash used in investing activities (6,537) (9,524)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt 8,119 28,000
Repayment of debt (3,700) (110,679)
Payment of deferred financing costs and debt prepayment penalties --- (4,670)
Issuance of common stock, net of expenses --- 88,702
---------- ----------
Net cash provided by financing activities 4,419 1,353
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (2,076) (1,423)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,177 8,951
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,101 $ 7,528
---------- ----------
---------- ----------
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements as of and for the three
months ended March 31, 1997 have been prepared by Suiza Foods Corporation
(the "Company" or "Suiza Foods") without audit. In the opinion of
management, all necessary adjustments (which include only normal recurring
adjustments) to present fairly, in all material respects, the consolidated
financial position, results of operations and cash flows of the Company as
of and for the three months ended March 31, 1997 have been made. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. These financial statements should be read in
conjunction with the Company's 1996 financial statements contained in its
Annual Report on Form 10-K as filed with the Securities and Exchange
Commission on March 29, 1997.
2. INVENTORIES
At December 31, At March 31,
1996 1997
--------------- ------------
Pasteurized and raw milk and raw materials $ 7,693 $ 10,319
Parts and supplies 5,584 4,222
Finished goods 5,951 6,223
-------- ---------
$ 19,228 $ 20,764
-------- ---------
-------- ---------
3. LONG-TERM DEBT
At December 31, At March 31,
1996 1997
--------------- ------------
Senior credit facility:
Revolving loan facility $ 8,600 $ 7,100
Acquisition loan facility 69,100 3,000
Term loan facility 125,000 146,000
Subordinated notes 36,000 ---
Capital lease obligations and other debt 869 790
-------- ---------
239,569 156,890
Less: current portion (12,876) (16,855)
-------- ---------
$226,693 $ 140,035
-------- ---------
-------- ---------
5
<PAGE>
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
March 31, 1997
3. LONG-TERM DEBT (Continued)
On January 28, 1997, the Company sold 4,270,000 shares of common stock,
$.01 par value per share, in a public offering (the "Offering") at a price
to the public of $22.00 per share. The Offering provided net cash
proceeds to the Company of approximately $89.0 million. Of this amount,
$36.0 million was used to repay subordinated notes and $4.3 million was
used to pay prepayment penalties related to the early extinguishment of the
subordinated notes, which, along with the related balance of unamortized
deferred loan costs and net of related income tax benefits, was reported as
an extraordinary loss from the early extinguishment of debt. The remainder
of the net proceeds were used to repay a portion of the outstanding balance
of the acquisition loan facility of the Company's Senior Credit Facility.
On March 5, 1997, the Company amended its Senior Credit Facility. Pursuant
to this amendment, the Company's term loans were expanded from a $130.0
million facility into a $150.0 million facility. Quarterly amortization
payments beginning March 31, 1997 on this facility are $4.0 million,
increasing to: 1) $4.5 million on March 31, 1998; 2) $5.0 million on
March 31, 1999; 3) $5.5 million on March 31, 2000; 4) $6.0 million on
March 31, 2001; 5) $6.5 million on March 31, 2002, with a final installment
of $24.0 million due on March 31, 2003. The Company further amended its
Senior Credit Facility to increase the acquisition loan facility from $90.0
million to $100.0 million. The Company is required to pay interest only on
amounts drawn under the acquisition loan facility until June 30, 1999, at
which time any outstanding balance will convert into a term loan facility
with scheduled amortization.
4. TAXES
In December 1995, the Commonwealth of Puerto Rico adopted the Puerto Rico
Agricultural Tax Incentives Act of 1995, which reduced the effective income
tax rate for qualified agricultural businesses from 39% to 3.9% and
provided for a 50% tax credit for certain "eligible investments" in
qualified agricultural businesses in Puerto Rico. During 1996, the Company
made investments in its Suiza-Puerto Rico dairy, fruit, plastics and coffee
operations, all of which were certified as qualified agricultural
businesses in Puerto Rico during 1996.
During 1996, the Company recognized $15.75 million in tax credits related
to qualifying investment made in its Puerto Rico dairy subsidiary which met
the eligible investment criteria of this act. However, in 1996 the Company
did not recognize any of the potential tax credits related to its
investments in its Puerto Rico fruit, plastics and coffee operations since
certain rulings in 1996 by Puerto Rico tax authorities created uncertainty
as to whether these investments met the eligible investment criteria of the
act and whether these additional tax credits had been earned.
6
<PAGE>
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
March 31, 1997
4. TAXES (continued)
During the first quarter of 1997, the Company obtained a ruling from the
Commonwealth of Puerto Rico confirming that its investments in its
Suiza-Puerto Rico fruit and plastics subsidiaries qualified for the 50% tax
credit. Accordingly, in March 1997, the Company recognized a nonrecurring
gain of $18.1 million, net of discounts and related expenses ($11.5 million
after income taxes) for earned tax credits which at March 31, 1997, it had
agreed to sell to third parties. Such earned tax credits are reflected in
current assets at March 31, 1997. In April 1997, the Company completed the
sale of substantially all of these tax credits to the third parties.
The Company is currently investigating whether its investment in its coffee
operations will qualify for additional tax credits based on recent rulings
by Puerto Rico tax authorities and is awaiting a ruling from the Treasury
Department in Puerto Rico on the availability of such tax credits. If the
Company ultimately qualifies for such credits, the Company will account for
these tax benefits as an adjustment of the purchase price, which would
result in a reduction of goodwill.
5. ACQUISITIONS
During the quarter, the Company acquired three small ice businesses for
total consideration of approximately $8.9 million. Of this amount, $5.6
million was paid in cash from existing cash resources or borrowings from
the Company's acquisition loan facility and approximately $3.3 million was
financed through the issuance of 133,000 shares of the Company's common
stock. Estimated annual sales of these ice companies are $4.1 million.
6. STOCKHOLDERS' EQUITY
On January 28, 1997, the Company sold 4,270,000 shares of common stock,
$.01 par value per share, in a public offering at a price to the public of
$22.00 per share. On March 12, 1997, the Company issued 133,000 shares of
its common stock in partial consideration of the purchase of an ice
company. Following these transactions, the Company had 15,153,229 shares
of common stock issued and outstanding.
7. SUBSEQUENT EVENTS
In April 1997, the Company acquired five additional ice companies for
approximately $10.1 million, bringing the total number of acquired ice
companies in 1997 to eight, with estimated aggregate annual sales in excess
of $12.0 million.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Suiza Foods is a leading manufacturer and distributor of fresh milk products and
refrigerated ready-to-serve fruit drinks and coffee in Puerto Rico, fresh milk
and related dairy products in Florida, California and Nevada, and packaged ice
in Florida and the southwestern United States. The Company has grown primarily
through strategic and consolidating acquisitions. Through these acquisitions,
the Company has realized regional economies of scale and operating efficiencies
by consolidating manufacturing and distribution operations in each of its core
businesses. The Company conducts its dairy operations through several Puerto
Rico subsidiaries ("Suiza-Puerto Rico"), Velda Farms Inc. ("Velda Farms"), Swiss
Dairy Corporation ("Swiss Dairy") and Model Dairy, Inc. ("Model Dairy") and its
ice operations through Reddy Ice Corporation ("Reddy Ice"). Each of these
subsidiaries is a strong regional competitor with an established reputation for
customer service and product quality. These subsidiaries market their products
through extensive distribution networks to a diverse group of customers,
including convenience stores, grocery stores, other retail outlets, schools and
institutional food service customers.
On April 22, 1996, the Company sold 3,795,000 shares of common stock, $.01 par
value per share, in a public offering (the "IPO") at a price to the public of
$14.00 per share. Prior to the IPO, there was no public market for the
Company's stock. The IPO provided net cash proceeds to the Company of
approximately $48.6 million. On August 7, 1996, the Company sold 625,000 shares
of its common stock in a private placement to a single investor, which provided
net cash proceeds to the Company of approximately $9.7 million. On January 28,
1997 the Company sold 4,270,000 shares of its common stock in a public offering
at a price to the public of $22.00 per share, providing net cash proceeds to the
Company of approximately $89.0 million. On March 12, 1997 the Company issued
133,000 of its common stock in partial consideration for the purchase of an ice
company. As of March 31, 1997 the Company had 15,153,229 shares of common stock
issued and outstanding.
Outlook and Uncertainties
Certain information in this Quarterly Report on Form 10-Q may contain "forward-
looking statements" within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended. All statements other than statements of historical fact
are "forward-looking statements" for purposes of these provisions, including any
projections of earnings, revenues or other financial items, any statements of
the plans and objectives of management for future operations, any statements
concerning proposed new products or services, any statements regarding future
economic conditions or performance, and any statement of assumptions underlying
any of the foregoing. Although the Company believes that the expectations
reflected in its forward-looking statements are reasonable, it can give no
assurance that such expectations or any of its forward-looking statements will
prove to be correct, and actual results could differ materially from those
projected or assumed in the Company's forward-looking statements. The Company's
future financial condition and results, as well as any forward-looking
statements, are subject to inherent risks and uncertainties, including, without
limitation, potential limitations on the Company's ability to pursue its
acquisition strategy, significant competition, limitations arising from the
Company's substantial indebtedness, government regulation, seasonality and
dependence on key management. Additional information concerning these and other
risk factors is contained in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, a copy of which may be obtained from the
Company upon request.
8
<PAGE>
Results of Operations
The Company currently operates in two distinct businesses: Dairy, which
includes the operations of Suiza - Puerto Rico, Velda Farms, Swiss Dairy and
Model Dairy; and Ice, which includes Reddy Ice.
<TABLE>
Three months ended March 31,
-------------------------------------------
Percent to Percent to
1996 Net Sales 1997 Net Sales
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Net sales:
Dairy $102,214 $156,876
Ice 6,821 8,249
-------- --------
Net sales 109,035 100.0% 165,125 100.0%
Cost of sales 82,615 75.8 126,569 76.7
-------- ----- -------- -----
Gross profit 26,420 24.2 38,556 23.3
Operating expenses:
Selling and distribution 15,502 14.2 20,142 12.2
General and administrative 4,921 4.5 8,814 5.3
Amortization of intangibles 937 .9 1,472 0.9
-------- ----- -------- -----
Total operating expenses 21,360 19.6 30,428 18.4
Operating income (loss):
Dairy 6,444 5.9 10,949 6.6
Ice (476) (0.5) (958) (0.6)
Corporate office (908) (0.8) (1,863) (1.1)
-------- ----- -------- -----
Total operating income $ 5,060 4.6% $ 8,128 4.9%
-------- ----- -------- -----
-------- ----- -------- -----
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
NET SALES. The Company's net sales increased 51.4% to $165.1 million in the
first quarter of 1997 from $109.0 million in 1996. Dairy net sales increased
53.5% or $54.7 million to $156.9 million in the first quarter of 1997, primarily
due to (i) the acquisitions of Garrido y Compania into Suiza-Puerto Rico, Swiss
Dairy and Model Dairy in the last half of 1996, (ii) an increase in prices
charged for milk resulting from increased raw milk costs compared to the first
quarter of last year and (iii) increased unit volumes in operations owned for
more than one year. Ice net sales increased 20.9% or $1.4 million to $8.2
million in the first quarter of 1997 due to the acquisition of eleven ice
businesses during 1996 and three in early 1997.
COST OF SALES. The Company's cost of sales increased $44.0 million,
resulting in an increase in the cost of sales margin to 76.7% in the first
quarter of 1997 from 75.8% in 1996. The increase in Dairy cost of sales was
primarily due to the aforementioned acquisitions. Dairy cost of sales
margins increased due to the acquisitions of Swiss Dairy and Model Dairy in
the last half of 1996, which have higher inherent cost of sales margins than
the other dairy operations. Ice cost of sales increased as a result of the
increased sales volumes primarily resulting from several acquisitions. Ice
cost of sales margins decreased, reflecting additional efficiencies realized
from acquired business and increased volumes.
9
<PAGE>
OPERATING EXPENSES. The Company's operating expenses increased $9.1 million in
the first quarter of 1997, while the operating expense margin decreased to 18.4%
in the 1997 period from 19.6% in the 1996 period. Dairy operating expense
margins decreased in the first quarter comparison primarily because of the
addition of Swiss Dairy during the last half of 1996, which had lower operating
expense margins than the other operations. Ice operating expenses increased due
to a heightened emphasis on selling and marketing and due to added delivery
costs at acquired businesses.
OPERATING INCOME. The Company's operating income increased 60.6% to $8.1
million in the first quarter of 1997 from $5.1 million in the first quarter of
1996 as a result of the aforementioned acquisitions during the last half of
1996. The Company's operating income margin increased to 4.9% in the first
quarter of 1997 from 4.6% in the first quarter of 1996 primarily due to the
acquisitions and due to operating expense efficiencies.
OTHER (INCOME) EXPENSE. Interest expense declined to $3.7 million in the first
quarter of 1997 from $4.6 million in the first quarter of 1996 primarily due to
a decrease in interest rates from the repayment of certain subordinated notes in
1996 and 1997 and lower average debt levels during the 1997 period. Other
income rose to $18.4 million in the first quarter of 1997 primarily as a result
of the nonrecurring gain of $18.1 million from the recognition of tax credits as
discussed in footnote 4 to the condensed consolidated financial statements.
EXTRAORDINARY ITEMS. The Company incurred a $3.3 million extraordinary loss
(net of a $2.0 million tax benefit) on January 28, 1997 related to the losses on
the early extinguishment of subordinated debt, which included the write-off of
deferred financing costs and certain prepayment penalties.
NET INCOME. The Company reported net income of $12.2 million in the first
quarter of 1997 ($3.9 million excluding the nonrecurring gain from the
recognition of tax credits and the extraordinary loss) compared to net income of
$0.4 million in the first quarter of 1996.
Seasonality
The Company's Ice business is seasonal with peak demand for its products
occurring during the second and third calendar quarters. Over the past two
fiscal years, the Company's Ice business has recorded an average of
approximately 69% of it annual net sales during these two quarters. While this
percentage for the second and third quarters has remained relatively constant
over recent years, the timing of the hottest summer weather can impact the
distribution of sales between these two quarters.
Liquidity and Capital Resources
As of March 31, 1997, the Company had total stockholders' equity of $197.7
million and total indebtedness of $156.9 million (including long-term debt and
the current portion of long-term debt). The Company is currently in compliance
with all covenants and financial ratios contained in its debt agreements.
CASH FLOW. Historically, the working capital needs of the Company have been
met with cash flow from operations along with borrowings under revolving credit
facilities. Net cash provided by operating activities was $6.7 million for the
first quarter of 1997 as contrasted with net cash provided by operations of less
than $0.1 million for the first quarter of 1996. Investing activities in the
first quarter of 1997 included approximately $4.0 million in capital
expenditures of which $2.8 million was spent at Dairy and $1.2 million was
spent at Ice. Investing activities also included $5.6 million for acquisitions.
FUTURE CAPITAL REQUIREMENTS. During the remainder of 1997, the Company intends
to invest approximately $12.4 million in addition to the $4.0 million spent
during the first quarter in its manufacturing facilities and distribution
capabilities. Of these amounts, Dairy intends to spend approximately $11.6
million for the year to expand and maintain its manufacturing facilities and for
10
<PAGE>
fleet replacement and Ice intends to spend a total of approximately $4.8 million
in 1997, including $2.7 million for maintenance of existing facilities and $2.1
million to increase production capacity.
On January 28, 1997, the Company sold 4,270,000 shares of newly issued common
stock, $.01 par value per share, in a public offering (the "Offering") at a
price to the public of $22.00 per share. The Offering provided net cash
proceeds to the Company of approximately $89.0 million. Of this amount, $36.0
million was used to repay subordinated notes and $4.3 million was used to pay
prepayment penalties related to the early extinguishment of the subordinated
notes, which, along with the remaining balance of unamortized deferred loan
costs, was reported as an extraordinary loss from the early extinguishment of
debt. The remainder of the net proceeds were used to repay a portion of the
outstanding balance of the acquisition loan facility of the Company's Senior
Credit Facility.
On March 5, 1997 the Company amended its Senior Credit Facility. Pursuant to
this amendment the Company's term loans were expanded from a $130.0 million
facility into a $150.0 million facility, and the acquisition loan facility was
increased from a $90.0 million facility to a $100.0 million facility. Also at
March 31, 1997, $42.9 million was available under the revolving loan facility.
The Company expects that cash flow from operations will be sufficient to meet
the Company's requirements for the remainder of 1997 and for the foreseeable
future. During the remainder of 1997 and in the future, the Company intends to
pursue additional acquisitions in its existing regional markets and to seek
strategic acquisition opportunities that are compatible with it core businesses.
Management believes that, in addition to the $97.0 million of availability under
the Company's acquisition loan facility, the Company has the ability to secure
additional financing to pursue its acquisition and consolidation strategy.
There can be no assurance, however, that the Company will have sufficient
available capital resources to realize its acquisition and consolidation
strategy.
Additional Factors That May Affect Future Results
The Company's quarterly operating results may fluctuate in the future as a
result of a variety of factors, many of which are outside the Company's control.
Factors that may adversely affect the Company's future operating results
attributable to its dairy operations include changes in the cost of raw
materials, federal, Puerto Rico and state government regulation of the dairy
industry and competition. Factors that may adversely affect the Company's
quarterly operating results attributable to its ice operations include weather,
seasonality and competition. The Company's operating results in the future are
also dependent on the ability of the Company to identify suitable acquisition
candidates and successfully integrate any acquired businesses into the Company's
existing business and retain key customers of acquired businesses. There can be
no assurance that the Company will have sufficient available capital resources
to realize its acquisition strategy.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time party to legal proceedings that arise in the
ordinary course of business. Management does not believe that the resolution of
any threatened or pending legal proceedings will have a material adverse affect
on the Company's financial position, results of operations or liquidity.
ITEM 2. CHANGES IN SECURITIES
On March 12, 1997, the Company acquired PureIce of the South, Inc. ("PureIce")
for a purchase price of approximately $5.3 million, plus the assumption of
certain indebtedness. The Company paid
11
<PAGE>
approximately $3.3 million of the purchase price by issuing an aggregate of
133,000 shares of common stock to the stockholders of PureIce. The issuance
of common stock in connection with this acquisition was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended. No underwriter participated in this transaction.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters submitted to a vote of the holders of securities of
the Company during the period covered by this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Statement re computation of per share earnings
27. Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUIZA FOODS CORPORATION
/s/ Tracy L. Noll
---------------------------------------
Tracy L. Noll
Vice President, Chief Financial Officer
(Principal Accounting Officer)
Date: May 13, 1997
13
<PAGE>
SUIZA FOODS CORPORATION
EXHIBIT 11 - Statement re computation of per share earnings
<TABLE>
For the three For the three
Months ended Months ended
March 31, March 31,
1996 1997
------------- -------------
(In thousands, except share
and per-share amounts)
<S> <C> <C>
Income(loss) before extraordinary items $ 383 $ 15,442
Extraordinary loss 0 (3,270)
----------- -----------
Net income (loss) $ 383 $ 12,172
----------- -----------
----------- -----------
Calculation of primary earnings (loss) per share:
Weighted average shares outstanding 6,313,479 13,763,718
Common stock equivalents (options & warrants) 639,652 980,422
----------- -----------
Total weighted average shares outstanding 6,953,131 14,744,140
----------- -----------
----------- -----------
Income (loss) before extraordinary items $ 0.06 $ 1.05
Extraordinary loss 0.00 (0.22)
----------- -----------
Net income (loss) $ 0.06 $ 0.83
----------- -----------
----------- -----------
Calculation of fully diluted earnings (loss) per share:
Weighted average shares outstanding 6,313,479 13,763,718
Common stock equivalents (options & warrants) 674,283 1,056,942
----------- -----------
Total weighted average shares outstanding 6,987,762 14,820,660
----------- -----------
----------- -----------
Income (loss) before extraordinary items $ 0.05 $ 1.04
Extraordinary loss 0.00 (0.22)
----------- -----------
Net income (loss) $ 0.05 $ 0.82
----------- -----------
----------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains Summary Financial information extracted from Condensed
Financial Statements for the 3-month period ended March 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,528
<SECURITIES> 0
<RECEIVABLES> 49,724
<ALLOWANCES> 0
<INVENTORY> 20,764
<CURRENT-ASSETS> 103,958
<PP&E> 128,031
<DEPRECIATION> 0
<TOTAL-ASSETS> 407,521
<CURRENT-LIABILITIES> 65,652
<BONDS> 140,035
0
0
<COMMON> 152
<OTHER-SE> 197,579
<TOTAL-LIABILITY-AND-EQUITY> 407,521
<SALES> 165,125
<TOTAL-REVENUES> 165,125
<CGS> 126,569
<TOTAL-COSTS> 30,428
<OTHER-EXPENSES> (18,353)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,670
<INCOME-PRETAX> 22,811
<INCOME-TAX> 7,369
<INCOME-CONTINUING> 15,442
<DISCONTINUED> 0
<EXTRAORDINARY> 3,270
<CHANGES> 0
<NET-INCOME> 12,172
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.82
</TABLE>
