<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
MARCH 20, 1998 (MARCH 18, 1998)
SUIZA FOODS CORPORATION
-----------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-12755 75-2559681
-------- ------- ----------
(STATE OR OTHER (COMMISSION FILE (IRS EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION NO.)
INCORPORATION)
3811 TURTLE CREEK BLVD., SUITE 1300
DALLAS, TEXAS 75219
-------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(214) 528-0939
1
<PAGE> 2
ITEM 5. OTHER EVENTS.
The purpose of this Current Report on Form 8-K is to file certain pro
forma financial data included in the Final Offering Memorandum relating to a
private placement (the "Offering") by Suiza Capital Trust II, a Delaware
business trust formed by Suiza Foods Corporation, a Delaware corporation (the
"Registrant"), pursuant to Rule 144A of the Securities Act of 1933, as amended
(the "Act"), of 5.5% Trust Convertible Preferred Securities. The following pro
forma financial data is filed herewith. On March 20, 1998, the Registrant
issued a press release relating to the pricing of the private placement, a copy
of which is filed as Exhibit 99.1.
<TABLE>
<S> <C>
SUIZA FOODS CORPORATION
Unaudited Pro Forma Consolidated Statement
of Earnings (year ended December 31, 1996)................ F-2
Notes to Unaudited Pro Forma Consolidated
Statement of Earnings (year ended December 31, 1996)...... F-3
Unaudited Pro Forma Consolidated Statement
of Earnings (nine months ended September 30, 1997)........ F-5
Notes to Unaudited Pro Forma Consolidated Statement
of Earnings (nine months ended September 30, 1997)........ F-6
Unaudited Pro Forma Balance Sheet (as of
September 30, 1997)....................................... F-8
Notes to Unaudited Pro Forma Balance Sheet
(as of September 30, 1997)................................ F-9
</TABLE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
Exhibit
Number
99.1 Press Release issued by the Registrant at 9:59 a.m. EDT on March
20, 1998.
2
<PAGE> 3
PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data is based on adjustments to
the historical supplemental consolidated balance sheet and related supplemental
consolidated statements of income of Suiza to give effect to (i) Suiza's
completed 1996 acquisitions of Garrido y Compania, Inc. ("Garrido"), Swiss
Dairy, a Corporation ("Swiss Dairy"), Presto Food Products, Inc. ("Presto") and
Model Dairy, Inc. ("Model Dairy"), which were acquired on July 1, 1996,
September 9, 1996, December 3, 1996 and December 16, 1996, respectively, and
Suiza's completed 1997 acquisitions of Dairy Fresh L.P. ("Dairy Fresh") and The
Garelick Companies (the "Garelick Companies"), which were acquired on July 1,
1997 and July 31, 1997, respectively, (the 1996 and 1997 acquisitions
collectively, the "Acquired Businesses"), (ii) the proposed Merger (the
"Continental Can Merger") with Continental Can Company, Inc. ("Continental Can")
and (iii) the offering (the "Offering") of 5.5% trust convertible preferred
securities (the "Preferred Securities") by Suiza Capital Trust II, a Delaware
business trust formed by Suiza, and the application of the net proceeds
therefrom to repay certain outstanding indebtedness. All of the above
acquisitions have been accounted for using the purchase method of accounting.
The unaudited pro forma consolidated statements of earnings for the year
ended December 31, 1996 and the nine month period ended September 30, 1997 give
effect to the completed acquisitions of the Acquired Businesses, the proposed
Continental Can Merger and the Offering and the application of the net proceeds
therefrom as if each had been consummated on January 1, 1996. There is no
unaudited pro forma consolidated statement of earnings effect during the nine
month period ended September 30, 1997 of the acquisitions by Suiza of Garrido,
Swiss Dairy, Presto and Model Dairy, which acquisitions were completed prior to
January 1, 1997 and, as a result, their results of operations are already
included in the historical supplemental consolidated results of operations of
Suiza for the nine months ended September 30, 1997. The unaudited pro forma
consolidated balance sheet as of September 30, 1997 gives effect to the proposed
Continental Can Merger, and the Offering and the application of the net proceeds
therefrom as if each had been consummated on September 30, 1997. There is no pro
forma consolidated balance sheet effect of the acquisitions of the Acquired
Businesses, which were acquired prior to September 30, 1997, and, as a result,
their balance sheets are already included in the historical supplemental
consolidated balance sheet of Suiza as of that date.
The unaudited pro forma financial data should be read in conjunction with
the separate audited and unaudited supplemental consolidated financial
statements of Suiza and the separate audited and unaudited financial statements
of Continental Can and of the Acquired Businesses, including the notes thereto,
previously filed with the Securities and Exchange Commission. The supplemental
consolidated financial statements of Suiza give retroactive effect to its
mergers with Country Fresh, Inc. ("Country Fresh") and The Morningstar Group
Inc. ("Morningstar") on November 25, 1997 and November 26, 1997, respectively,
which have been accounted for as poolings of interests. Generally accepted
accounting principles proscribes giving effect to a consummated business
combination accounted for by the pooling of interests method in financial
statements that do not include the date of consummation. These financial
statements do not extend through the date of consummation; however, they will
become the historical consolidated financial statements of Suiza after
consolidated financial statements are issued covering the date of consummation
of the Country Fresh and Morningstar mergers. The unaudited pro forma
consolidated income statement data are not necessarily indicative of the
operating results that would have occurred had the acquisitions of the Acquired
Businesses, the proposed Continental Can Merger and the Offering and the
application of the net proceeds therefrom occurred on January 1, 1996, nor are
they necessarily indicative of the future operating results of Suiza.
On February 20, 1998, Suiza completed the acquisition of Land-O-Sun
Dairies, L.L.C. ("Land-O-Sun") for a purchase price of approximately $248
million consisting of approximately $128 million in cash, $100 million of 5%
trust convertible preferred securities and $20 million of preferred interests of
Land-O-Sun. In addition, Suiza refinanced Land-O-Sun's existing outstanding
indebtedness, which totaled approximately $52 million as of the closing date.
Suiza financed the cash portion of the purchase price and refinanced the
existing long-term indebtedness of Land-O-Sun with borrowings of approximately
$180 million under Suiza's Senior Credit Facility. In addition, Suiza has
acquired or agreed to acquire, subject in each case to specified conditions, a
number of smaller dairy, plastic packaging and packaged ice businesses which it
has or will fund through additional Senior Credit Facility borrowings. The pro
forma effect of Land-O-Sun and these other acquisitions has not been reflected
in the "Pro Forma Financial Data" herein.
F-1
<PAGE> 4
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE DATA AND RATIOS)
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
SUPPLEMENTAL ACQUIRED CONTINENTAL
SUIZA FOODS BUSINESSES(A) CAN ADJUSTMENTS PRO FORMA
------------ ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES........................... $ 1,260,349 $754,277 $585,034 $ -- $ 2,599,660
COST OF SALES....................... 989,053 586,167 498,008 (3,121)(b)(c)(d) 2,070,107
----------- -------- -------- -----------
Gross profit...................... 271,296 168,110 87,026 529,553
OPERATING EXPENSES:
Selling, distribution and
administrative.................. 190,981 109,540 59,528 (13,778)(b)(c)(d) 346,271
Amortization of intangibles....... 8,192 2,217 -- 12,041 (e) 22,450
Merger, restructuring and other
costs........................... 571 -- 7,624 8,195
----------- -------- -------- -----------
Total operating expenses... 199,744 111,757 67,152 376,916
----------- -------- -------- -----------
OPERATING INCOME.................... 71,552 56,353 19,874 152,637
OTHER:
Interest expense, net............. 22,715 5,600 19,593 (1,377)(f)(g) 46,531
Dividends on company-obligated
mandatorily redeemable
convertible preferred securities
of financing trust.............. -- -- -- 27,992 (g) 27,992
Other (income) expense............ (4,734) (495) 282 (4,947)
----------- -------- -------- -----------
Total other................ 17,981 5,105 19,875 69,576
----------- -------- -------- -----------
INCOME BEFORE
INCOME TAXES...................... 53,571 51,248 (1) 83,061
INCOME TAXES........................ 4,393 1,280 1,245 9,318 (h) 16,236
----------- -------- -------- -----------
INCOME BEFORE MINORITY INTEREST..... 49,178 49,968 (1,246) 66,825
MINORITY INTEREST................... -- -- (1,822) 994 (i) (828)
----------- -------- -------- -----------
INCOME FROM CONTINUING OPERATIONS... $ 49,178 $ 49,968 $ 576 $ 67,653
=========== ======== ======== ===========
EARNINGS FROM CONTINUING OPERATIONS
APPLICABLE TO COMMON SHARES....... $ 48,876 $ 67,351
=========== ===========
EARNINGS PER COMMON SHARE FROM
CONTINUING OPERATIONS:
Basic............................. $ 2.09 $ 2.62
=========== ===========
Diluted........................... $ 2.00 $ 2.51
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING:
Basic............................. 23,424,322 25,734,665
=========== ===========
Diluted........................... 24,491,899 26,834,820
=========== ===========
OTHER DATA:
Depreciation and
amortization(j)................. $ 31,635 $ 91,243
Ratio of earnings to combined
fixed charges and preferred
stock dividends(k).............. 2.90x 1.97x
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Statement of
Earnings.
F-2
<PAGE> 5
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1996
(a) Includes the pre-acquisition results of operations of Suiza's 1996
acquisitions of Garrido through June 30, 1996, Swiss Dairy through August
31, 1996 and Model Dairy and Presto through November 30, 1996 and the
pre-acquisition results of operations of Suiza's 1997 acquisitions of Dairy
Fresh for the year ended December 31, 1996, and the Garelick Companies for
its most recent fiscal year ended September 30, 1996.
(b) Elimination of the excess of historical depreciation expense of the
Acquired Businesses over the depreciation of the fair value of property and
equipment, which resulted in a decrease of $2,107 and $829 in amounts
charged to cost of sales and selling, distribution and administrative
expense, respectively. Suiza has not completed an assessment of the fair
value of property and equipment of Continental Can for purchase price
allocation purposes. Accordingly, the excess purchase price has been
allocated to goodwill. To the extent that such assessments indicate that
the fair value of property and equipment exceeds its net book values, this
excess would be allocated to property and equipment and would reduce
goodwill. Assuming a weighted average useful life of property and equipment
of 15 years, every $5,000 of excess purchase price allocated to property
and equipment of Continental Can (rather than to goodwill) would increase
depreciation and amortization expense for 1996 by $208.
(c) Elimination of salaries and benefits paid to former shareholders and
employees of the Acquired Businesses whose employment was either terminated
or salaries were reduced as part of the purchase agreement, along with the
elimination of certain related party expenses of the Acquired Businesses,
pursuant to an agreement with such related parties at acquisition date,
resulting in a reduction of historical costs of sales and selling,
distribution and administrative costs of $517 and $12,784, respectively.
(d) Pro forma reduction of Continental Can's benefits expense from the
adjustments to the fair value of benefit liabilities at acquisition date,
resulting in an estimated reduction of historical costs of sales and
selling, distribution and administrative costs of $497 and $165,
respectively.
(e) Amortization of goodwill and other intangibles, over the following
amortization periods, in excess of historical amounts, as follows:
<TABLE>
<CAPTION>
ACQUIRED CONTINENTAL
LIFE BUSINESSES CAN TOTAL
------ ---------- ----------- -------
<S> <C> <C> <C> <C>
Organization costs.............................. 5 $ 22 $ -- $ 22
Tradenames...................................... 25-40 2,343 -- 2,343
Customer list................................... 10 367 -- 367
Goodwill........................................ 40 6,810 2,499 9,309
------ ------ -------
$9,542 $2,499 $12,041
====== ====== =======
</TABLE>
(f) Pro forma interest expense on the average outstanding balance of new
variable rate borrowings used to fund the purchases of the Acquired
Businesses at an assumed interest rate of 7.25%, including the amortization
of deferred financing costs, net of the reduction of historical interest
expense related to the historical debt repaid, along with the reduction of
interest expense for Continental Can's fixed rate debt to a current market
yield of 7.75%, as follows:
<TABLE>
<S> <C>
Acquired Businesses.................................... $35,664
Continental Can........................................ (1,860)
-------
Total............................................. $33,804
=======
</TABLE>
F-3
<PAGE> 6
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
-- (CONTINUED)
(IN THOUSANDS)
The effect of a 0.125% change in the interest rate on the new variable rate
borrowings to fund the purchases of the Acquired Businesses, would have
resulted in a change in the pro forma interest expense adjustment of $615.
(g) Pro forma adjustment to reduce interest expense by $35,181 from the use of
the proceeds of the Offering to repay amounts outstanding under the Senior
Credit Facility and the related increase in financing charges of $27,992 to
reflect the dividends on the $500,000 liquidation amount of the Preferred
Securities at an assumed dividend rate of 5.5% per annum, along with the
accretion of the Preferred Securities (which will be recorded net of fees
and expenses) to their liquidation amount over the term of the securities.
(h) Estimated pro forma adjustment to reflect pro forma income taxes for the
Acquired Businesses at the estimated effective tax rate for such Acquired
Businesses, which ranged from 35% to 42%, to adjust income taxes of
Continental Can for the pro forma adjustments, excluding non-deductible
goodwill, at the estimated effective tax rate, for Continental Can of 40%
and to adjust income taxes for the pro forma effect of the Offering at the
estimated effective tax rate of 38%.
<TABLE>
<S> <C>
Acquired Businesses.................................... $7,094
Continental Can........................................ (508)
Offering............................................... 2,732
------
Total............................................. $9,318
======
</TABLE>
(i) Estimated pro forma adjustment of $994 to adjust the minority interest
benefit to reflect the purchase of substantially all of the outstanding
minority owned shares of Continental Can's subsidiaries for cash
immediately prior to the Continental Can Merger.
(j) Includes depreciation and amortization of property, equipment and
intangible assets and amortization of deferred financing costs treated as a
component of interest expense.
(k) For purposes of calculating the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" represent income before income
taxes plus fixed charges. "Fixed charges" consist of interest on all
indebtedness, amortization of deferred financing costs, the portion of
rental expense that management believes is representative of the interest
component of rent expense. Preferred stock dividends consist of dividends,
adjusted to a pre-tax basis, on Suiza's Series A Preferred Stock.
F-4
<PAGE> 7
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS, EXCEPT SHARE DATA AND RATIOS)
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL ACQUIRED CONTINENTAL
SUIZA FOODS BUSINESSES(A) CAN ADJUSTMENTS PRO FORMA
------------ ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET SALES........................ $ 1,299,094 $284,285 $414,365 $ $ 1,997,744
COST OF SALES.................... 986,672 222,046 347,130 (2,637)(b)(d) 1,553,211
----------- -------- -------- -----------
Gross profit................... 312,422 62,239 67,235 444,533
OPERATING EXPENSES:
Selling, distribution and
administrative............... 204,116 32,613 40,248 (2,078)(b)(c)(d) 274,899
Amortization of intangibles.... 11,075 1,257 -- 4,882 (e) 17,214
----------- -------- -------- -----------
Total operating
expenses.............. 215,191 33,870 40,248 292,113
----------- -------- -------- -----------
INCOME FROM OPERATIONS........... 97,231 28,369 26,987 152,420
OTHER:
Interest expense, net.......... 28,366 3,753 12,195 (15,821)(f)(g) 28,493
Dividends on Company-obligated
mandatorily redeemable
convertible preferred
securities of financing
trust........................ -- -- -- 20,994 (g) 20,994
Other (income) expense......... (19,625) (18) (103) (19,746)
----------- -------- -------- -----------
Total other............. 8,741 3,735 12,092 29,741
----------- -------- -------- -----------
INCOME BEFORE INCOME TAXES....... 88,490 24,634 14,895 122,679
INCOME TAXES..................... 30,463 787 4,612 8,668 (h) 44,530
----------- -------- -------- -----------
INCOME BEFORE MINORITY
INTEREST....................... 58,027 23,847 10,283 78,149
MINORITY INTEREST................ -- -- 2,930 (2,790)(i) 140
----------- -------- -------- -----------
INCOME FROM CONTINUING
OPERATIONS..................... $ 58,027 $ 23,847 $ 7,353 $ 78,009
=========== ======== ======== ===========
INCOME FROM CONTINUING OPERATIONS
APPLICABLE TO COMMON SHARES.... $ 57,803 $ 77,785
=========== ===========
INCOME PER COMMON SHARE FROM
CONTINUING OPERATIONS:
Basic.......................... $ 1.98 $ 2.47
=========== ===========
Diluted........................ $ 1.86 $ 2.33
=========== ===========
AVERAGE COMMON SHARES
OUTSTANDING:
Basic.......................... 29,225,850 31,475,068
=========== ===========
Diluted........................ 31,071,025 33,374,080
=========== ===========
OTHER DATA:
Depreciation and
amortization(j).............. $ 34,900 $ 61,552
Ratio of earnings to combined
fixed charges and preferred
stock dividends(k)........... 3.62x 3.05x
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Statement of
Earnings.
F-5
<PAGE> 8
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, 1997
(a) Includes the pre-acquisition results of operations Suiza's 1997 acquisitions
of Dairy Fresh for the six months ended June 30, 1997 and the Garelick
Companies for the seven months ended July 31, 1997.
(b) Elimination of the excess of historical depreciation expense of the Acquired
Businesses over the depreciation of the fair value of property and
equipment, which resulted in a decrease of $2,264 and $619 in amounts
charged to cost of sales and selling, distribution and administrative
expense, respectively. Suiza has not completed an assessment of the fair
value of property and equipment of Continental Can for purchase price
allocation purposes. Accordingly, the excess purchase price has been
allocated to goodwill. To the extent that such assessments indicate that the
fair value of property and equipment exceeds its net book values, this
excess would be allocated to property and equipment and would reduce
goodwill. Assuming a weighted average useful life of property and equipment
of 15 years, every $5,000 of excess purchase price allocated to property and
equipment of Continental Can (rather than to goodwill) would increase
depreciation and amortization expense for the first nine months of 1997 by
$156.
(c) Elimination of salaries and benefits paid primarily to former shareholders
and employees of the Acquired Businesses whose employment was either
terminated or salaries were reduced as part of the purchase agreement, along
with the elimination of certain related party expenses of the Acquired
Businesses, pursuant to an agreement with such related parties at
acquisition date, resulting in a reduction of historical selling,
distribution and administrative costs of $1,335.
(d) Pro forma reduction of Continental Can's benefits expense from the
adjustments to the fair value of benefit liabilities at acquisition date,
resulting in an estimated reduction of historical costs of sales and
selling, distribution and administrative costs of $373 and $124,
respectively
(e) Amortization of goodwill and other intangibles, over the following
amortization periods, in excess of historical amounts, as follows:
<TABLE>
<CAPTION>
ACQUIRED CONTINENTAL
LIFE BUSINESSES CAN TOTAL
----- ---------- ----------- ------
<S> <C> <C> <C> <C>
Organization costs.......................... 5 $ 5 $ -- $ 5
Tradenames.................................. 25-40 233 -- 233
Goodwill.................................... 40 2,770 1,874 4,644
------ ------ ------
$3,008 $1,874 $4,882
====== ====== ======
</TABLE>
(f) Pro forma interest expense on the average outstanding balance of new
variable rate borrowings used to fund the purchases of the Acquired
Businesses at an assumed interest rate of 7.25%, including the amortization
of deferred financing costs, net of the reduction of historical interest
expense related to the historical debt repaid, along with the reduction of
interest expense for Continental Can's fixed rate debt to a current market
yield of 7.75%, as follows:
<TABLE>
<S> <C>
Acquired Businesses......................................... $11,569
Continental Can............................................. (1,005)
-------
Total............................................. $10,564
=======
</TABLE>
The effect of a 0.125% change in the interest rate on the new variable rate
borrowings to fund the purchases of the Acquired Businesses, would have
resulted in a change in the pro forma interest expense adjustment of $202.
(g) Pro forma adjustment to reduce interest expense by $26,385 from the use of
the proceeds of the Offering to repay amounts outstanding under the Senior
Credit Facility and the related increase in financing charges of $20,994 to
reflect the dividends on the $500,000 liquidation amount of the Preferred
Securities at an assumed dividend rate of 5.5% per annum, along with the
accretion of the Preferred Securities (which will be recorded net of fees
and expenses) to their liquidation amount over the term of the securities.
F-6
<PAGE> 9
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
-- (CONTINUED)
(IN THOUSANDS)
(h) Estimated pro forma adjustment to reflect pro forma income taxes for the
Acquired Businesses at the estimated effective tax rate of 40% for such
Acquired Businesses, to adjust income taxes of Continental Can for the pro
forma adjustments, excluding non-deductible goodwill, at the estimated
effective tax rate for Continental Can of 40% and to adjust income taxes for
the pro forma effect of the Offering at the estimated effective tax rate of
38%.
<TABLE>
<S> <C>
Acquired Businesses......................................... $4,526
Continental Can............................................. 2,093
Offering.................................................... 2,049
------
Total............................................. $8,668
======
</TABLE>
(i) Estimated pro forma adjustment of $2,790 to adjust the minority interest
charge to reflect the purchase of substantially all of the outstanding
minority owned shares of Continental Can's subsidiaries for cash immediately
prior to the Continental Can Merger.
(j) Includes depreciation and amortization of property, equipment and
intangible assets and amortization of deferred financing costs treated as a
component of interest expense.
(k) For purposes of calculating the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" represent income before income
taxes plus fixed charges. "Fixed charges" consist of interest on all
indebtedness, amortization of deferred financing costs, the portion of
rental expense that management believes is representative of the interest
component of rent expense. Preferred stock dividends consist of dividends,
adjusted to a pre-tax basis, on Suiza's Series A Preferred Stock.
F-7
<PAGE> 10
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
AS OF SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SUPPLEMENTAL CONTINENTAL
SUIZA FOODS CAN ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............... $ 22,902 $ 36,466 $(41,192)(a) $ 18,176
Accounts receivable..................... 163,986 87,400 -- 251,386
Inventories............................. 76,358 86,476 4,200 (b) 167,034
Prepaid expenses and other.............. 12,547 6,154 18,701
Deferred income taxes................... 12,962 -- 12,962
---------- -------- ----------
Total current assets............ 288,755 216,496 468,259
PROPERTY AND EQUIPMENT.................... 406,567 140,958 547,525
DEFERRED INCOME TAXES..................... 10,862 -- 18,000 (b) 28,862
INTANGIBLE AND OTHER ASSETS............... 670,853 54,769 99,972 (b) 825,594
---------- -------- ----------
TOTAL ASSETS.................... $1,377,037 $412,223 $1,870,240
========== ======== ==========
CURRENT LIABILITIES:
Accounts payable and accrued expenses... $ 202,096 $104,775 $ -- $ 306,871
Income taxes payable.................... 8,856 2,113 10,969
Current portion of long-term debt....... 33,989 28,063 62,052
---------- -------- ----------
Total current liabilities............... 244,941 134,951 379,892
LONG-TERM DEBT............................ 732,503 159,465 (467,250)(b)(c) 424,718
OTHER LIABILITIES......................... 6,508 28,595 8,500 (b) 43,603
DEFERRED INCOME TAXES..................... 13,414 4,260 17,674
MINORITY INTEREST......................... 15,896 (15,125)(b) 771
COMPANY - OBLIGATED MANDATORILY REDEEMABLE
CONVERTIBLE PREFERRED SECURITIES OF
FINANCING TRUST......................... -- -- 485,250 (c) 485,250
STOCKHOLDERS' EQUITY:
Preferred stock......................... 3,741 -- 3,741
Common stock............................ 303 -- 20 (a) 323
Additional paid-in capital.............. 276,068 -- 138,641 (a) 414,709
Retained................................ 99,559 -- 99,559
Equity of acquired businesses........... -- 69,056 (69,056)(b) --
---------- -------- ----------
Total stockholders' equity...... 379,671 69,056 518,332
---------- -------- ----------
TOTAL........................... $1,377,037 $412,223 $1,870,240
========== ======== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet.
F-8
<PAGE> 11
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
AS OF SEPTEMBER 30, 1997
(a) In connection with the Continental Can Merger, Suiza will exchange 0.629
shares of Common Stock for all the issued and outstanding shares of Company
Common Stock and will exchange 0.629 Suiza replacement stock options for all
the outstanding Options of Continental Can. In addition, pursuant to the
purchase agreement, Continental Can has agreed to purchase substantially all
of the outstanding minority owned shares of its subsidiaries for cash
immediately prior to the Continental Can Merger. In addition to the shares
issued to effect the Continental Can Merger, the purchase price for the
minority interests and transaction expenses will be funded through available
cash. The following is a summary of the total purchase price, including the
purchase of the minority interests:
<TABLE>
<S> <C>
Cash and cash equivalents................................... $ 41,192
Issuance of common stock.................................... 138,661
--------
Total purchase prices............................. $179,853
========
</TABLE>
(b) The acquisition of Continental Can resulted in an excess of the purchase
prices over the historical net assets acquired, which were allocated to the
net assets acquired, as follows:
<TABLE>
<S> <C>
Total purchase prices....................................... $179,853
Historical carrying value of net assets:
Total net assets.......................................... 69,056
Carrying value of minority interest acquired.............. 15,125
--------
Excess of net purchase prices over historical carrying
values.................................................... $ 95,672
========
Allocation of excess purchase price:
Excess fair value of inventories.......................... $ 4,200
Deferred income tax assets................................ 18,000
Fair value of assumed debt................................ (18,000)
Fair value of benefit liabilities......................... (8,500)
Intangible assets......................................... 99,972
--------
$ 95,672
========
</TABLE>
(c) Issuance of $500,000 liquidation amount of the Preferred Securities in the
Offering for net proceeds of $485,250, which are to be used to repay amounts
outstanding under the Senior Credit Facility.
In connection with the November 1997 mergers of Country Fresh and
Morningstar and other transactions, Suiza expensed as merger and other costs in
the fourth quarter of 1997 approximately $34.7 million, net of tax benefit,
which represent primarily transaction related expenses incurred on the
consummation dates of the mergers. These transaction related costs, net of tax
benefits, include approximately $17.1 million of investment banking fees, legal
fees, accounting fees, and filing and printing fees, along with approximately
$17.6 million of employee costs related to the payments of contractual retention
bonuses and excise taxes to certain Country Fresh and Morningstar employees
pursuant to existing contractual agreements and the payments of severance costs
and excise taxes for certain Morningstar employees whose employment was
terminated on the consummation date pursuant to existing contractual agreements.
In addition, in November 1997, Suiza entered into a new $1.25 billion credit
facility, and repaid all outstanding amounts under its existing credit facility,
which resulted in the recognition of an extraordinary loss on early
extinguishment of debt of $8.0 million, net of tax.
F-9
<PAGE> 12
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.
Dated: March 20, 1998 SUIZA FOODS CORPORATION
By: /s/ Joseph B. Armes
----------------------------
Executive Vice President,
General Counsel and
Assistant Secretary
<PAGE> 13
INDEX TO EXHIBITS
Exhibit
Number
99.1 Press Release issued by the Registrant at 9:59 a.m. EDT on March
20, 1998
<PAGE> 1
EXHIBIT 99.1
FOR: SUIZA FOODS CORPORATION
CONTACT: J. Michael Lewis
Vice President and Treasurer
(214) 528-9922
FOR IMMEDIATE RELEASE
Morgan-Walke Associates:
June Filingeri, John Blackwell
Media contact: Miriam Adler,
Leslie Feldman
(212) 850-5600
SUIZA FOODS ANNOUNCES PLACEMENT OF $500 MILLION
TRUST CONVERTIBLE PREFERRED SECURITIES
DALLAS, Texas, March 20, 1998 -- Suiza Foods Corporation (NYSE-SZA) announced
today that it has priced its previously announced Rule 144A offering of Trust
Convertible Preferred Securities. Suiza Foods has agreed to sell $500 million
of 5-1/2% Trust Convertible Preferred Securities ("Preferred Securities") to be
issued by a special purpose trust (plus up to an additional $100 million of the
Preferred Securities to cover over-allotments, if any). The Preferred
Securities will have an annual dividend equal to 5-1/2% of each Preferred
Security's liquidation preference of $50. The Preferred Securities will be
convertible, at the option of the holder, into shares of Suiza's common stock
at an initial conversion price of $78.25 per Suiza common share, representing a
conversion premium of 24.1%. The Preferred Securities will be non-callable for
three years.
Proceeds from the Rule 144A offering will be used to repay outstanding
indebtedness under Suiza's revolving credit facility.
The 5-1/2% Trust Convertible Preferred Securities will not be and have
not been registered under the Securities Act of 1933 and may not be offered or
sold in the United States absent registration or an applicable exemption from
the registration requirements under such act.
Suiza Foods is a Dallas-based company with leading positions in the
dairy, plastic packaging and packaged ice industries. Its principal holdings
are in fluid dairy processing, refrigerated, shelf-stable and frozen food
products, plastic packaging for consumer and industrial products and packaged
ice.
Statements in this press release other than statements of historical fact may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements, as
well as Suiza's future financial condition and results, are subject to inherent
risks and uncertainties, and actual results may differ materially from the
results discussed in these forward-looking statements. Additional information
concerning these and other risk factors are contained in Suiza's latest Annual
Report on Form 10-K and in each of Suiza's other recent filings with the
Securities and Exchange Commission (SEC), copies of which are available from
the SEC and can be obtained from Suiza upon request.
