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Securities And Exchange Commission
Washington, DC 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
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Date of Report (Date of Earliest Event Reported):
February 12, 1999 (February 11, 1999)
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SUIZA FOODS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
Delaware 1-12755 75-2559681
(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification No.)
of Incorporation)
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2515 McKinney Avenue, Suite 1200
Dallas, Texas 75201
(Address of Principal Executive Offices) (Zip Code)
(214) 303-3400
(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events.
On February 11, 1999, Suiza Foods Corporation issued a press release
announcing fourth quarter and year-end 1998 sales and earnings, a copy of which
is filed herewith as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
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<CAPTION>
Exhibit
Number Description
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<S> <C>
99 Press Release dated February 11, 1999
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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: February 11, 1999 SUIZA FOODS CORPORATION
By: /s/ LISA N. TYSON
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Lisa N. Tyson
Vice President and
Assistant General Counsel
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INDEX TO EXHIBITS
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<CAPTION>
Exhibit
Number Description
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<S> <C>
99 Press Release dated February 11, 1999
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EXHIBIT 99
[SUIZA FOODS LOGO]
NEWS RELEASE
Contact: J. Michael Lewis
Vice President and Treasurer
(214) 303-3437
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SUIZA FOODS CORPORATION REPORTS RECORD FOURTH QUARTER AND
YEAR-END 1998 EARNINGS
DALLAS, Texas, February 11, 1999 -- Suiza Foods Corporation (NYSE:
SZA) today announced record operating results for its fourth quarter and year
ended December 31, 1998. Net sales increased 81% to $991.6 million in the
fourth quarter of 1998 versus $548.7 million in the comparable quarter of 1997.
Operating income for the fourth quarter was $67.2 million, compared to fourth
quarter 1997 operating income of $44.1 million (excluding merger and other
nonrecurring costs of $37.0 million primarily related to the Country Fresh and
Morningstar mergers). Net income applicable to common stockholders was $27.1
million or $0.76 per diluted share in the fourth quarter of 1998 compared to a
net loss of $26.1 million or $0.86 per diluted share in the fourth quarter of
1997. Excluding the effect of the charges for merger and other nonrecurring
costs, discontinued operations and the extraordinary losses reported in the
fourth quarter of 1997, earnings per share grew 22.6% to $0.76 per diluted
share in 1998 compared to $0.62 per diluted share in the fourth quarter of
1997. There were 32% more diluted common shares outstanding in the most recent
period primarily due to the issuance of Trust Convertible
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Preferred stock, shares issued as a result of the acquisition of Continental
Can in May 1998, and the exercise of stock options.
Net sales of $3.321 billion in 1998 were 85% higher than 1997 net
sales of $1.796 billion. Operating income for 1998 was $242.5 million, compared
to operating income of $131.9 million in 1997 (before merger and other
nonrecurring costs of $37 million). Net income applicable to common
stockholders was $131.4 million or $3.58 per diluted share in 1998 (or $102.8
million excluding the effects of discontinued operations and an extraordinary
gain in 1998) compared to net income of $28.5 million or $0.91 per diluted
share in 1997 (or $64.3 million excluding the effects of the charges for merger
and other nonrecurring costs, discontinued operations and an extraordinary loss
in 1997). Excluding the effects of the charges for merger and other costs,
discontinued operations, and an extraordinary gain, earnings per share grew
41.5% to $2.90 per diluted share in 1998 from $2.05 per diluted share in 1997.
In 1998 there were 34% more diluted common shares outstanding than in 1997
primarily due to the issuance of Trust Convertible Preferred stock, shares
issued as a result of the acquisition of Continental Can in May 1998, and the
exercise of stock options.
The Company noted that strong 1998 fourth quarter and full-year
results reflect continued operating improvements as well as the continuing
success of its acquisition strategy in the dairy and packaging industries.
During 1998, Suiza completed 13 dairy acquisitions and 8 packaging
acquisitions.
In the fourth quarter, gross margins were 22.1% in 1998 compared to
23.3% in 1997. Operating margins in the fourth quarter were 6.8% in 1998 versus
8.0% in the fourth quarter of 1997 before the charges for merger and other
costs. Suiza's operating margins in the fourth quarter were impacted by lower
margins from newly acquired operations, a continuing negative
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effect from Hurricane Georges on our Puerto Rico operations, a higher basic
formula price for raw milk, and a volatile butterfat market in the Company's
dairy division. The impact of these items was partially offset by sales
increases in value added specialty dairy products, improved margins in our
existing U.S. fluid dairy operations, and improved operating results in the
packaging division. For the full year, gross margins of 23.0% were comparable
to margins of 23.1% in 1997 and operating margins in both 1998 and 1997 were
7.3% before charges for merger and other nonrecurring costs.
Gregg L. Engles, Suiza Foods' Chairman and CEO commented, "I am
pleased to announce record sales, earnings and profits for the twelfth
consecutive quarter. Our fourth quarter represented outstanding results in both
our domestic dairy division and our packaging operations. Despite a difficult
raw material environment, operating income margins increased by 60 basis points
during the fourth quarter at our existing dairy operations, excluding Puerto
Rico. Operating margins increased at both Morningstar and our existing domestic
fluid dairy operations. Our newly acquired dairies, or those we have owned less
than one year, also posted strong operating performance, although their
operating margins have not yet reached those of Suiza's existing properties.
"Our packaging operations also had an outstanding quarter, with sales
increasing by 524% to $170.6 million, and operating profit growing 683% to
$19.4 million.
"The outstanding results in these businesses more than offset a very
difficult operating environment in Puerto Rico resulting from Hurricane Georges
in late September. The hurricane damaged both our supply of raw milk and the
coffee crop. The milk supply is slowly returning to normal, and we expect the
coffee supply to do so as well with the fall 1999 crop.
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"On the acquisition front, during 1998 we added approximately $2.3
billion in revenues on an annualized basis through our acquisitions in dairy
and packaging. We believe significant acquisition opportunities continue to be
available to us on an accretive basis. We intend to continue to pursue these
opportunities to expand our geographic coverage and achieve further synergies,
efficiencies and economies of scale."
Suiza Foods is a Dallas-based company with leading positions in the
dairy and consumer goods packaging industries. Its principal holdings are in
fluid dairy processing, refrigerated, shelf-stable and frozen dairy case
products, and consumer goods packaging.
Please note our earnings conference call will be held at 10:00 a.m.
EST today, Thursday, February 11, 1999. You may listen live to the call by
going to the following Internet address:
http://webevents.broadcast.com/suizafoods/q498earnings/. You will need Real
Audio software, which may be downloaded by going to http://www.real.com prior
to the call. It takes approximately 15 minutes to download the software.
Replays will be available at the same address for a limited time period.
Certain statements and information in this press release constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be indicated by
phrases such as "believes," "anticipates," "expects," "intends," "foresees,"
"projects," "forecasts" or words of similar meaning or import. Such statements
are subject to certain risks, uncertainties, or assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those set fourth in
the applicable forward-looking statement. Among the key factors that may have a
direct bearing on the Company's
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results and financial condition are (i) risks associated with Suiza Foods'
acquisition strategy, including its ability to integrate the operations of its
acquired businesses and realize operating efficiencies; (ii) risks relating to
Suiza Foods' leverage position; (iii) risks associated with intense competition
in Suiza Foods' industries; (iv) the impact of government regulations affecting
the dairy industry; and (v) fluctuations in the pricing of raw milk, butterfat,
and other components used in the Company's businesses. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those set forth in the
applicable forward-looking statement. Any forward-looking statements made or
incorporated by reference herein speak only as of the date of this press
release. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any such statements to reflect any
change in its expectations with regard thereto or any changes in the events,
conditions, or circumstances on which any such statement is based.
- Financial Tables Follow -
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SUIZA FOODS CORPORATION
INCOME STATEMENT
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
NET SALES $ 991,595 $ 548,665 $ 3,320,940 $ 1,795,868
COST OF SALES 772,238 420,943 2,557,908 1,381,084
----------- ----------- ----------- -----------
GROSS PROFIT 219,357 127,722 763,032 414,784
OPERATING COSTS AND EXPENSES 152,133 120,657 520,576 319,898
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INCOME FROM OPERATIONS 67,224 7,065 242,456 94,886
OTHER (INCOME) EXPENSE:
INTEREST EXPENSE, NET 16,131 13,313 52,082 36,664
FINANCING CHARGES ON PREFERRED SECURITIES 9,672 0 30,213 0
OTHER INCOME, NET (1,928) (4,369) (4,290) (24,483)
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 43,349 (1,879) 164,451 82,705
INCOME TAXES 15,845 14,396 59,823 43,375
MINORITY INTEREST 431 0 1,559 0
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INCOME FROM CONTINUING OPERATIONS 27,073 (16,275) 103,069 39,330
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 0 (1,705) (3,161) 717
----------- ----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEMS 27,073 (17,980) 99,908 40,047
EXTRAORDINARY GAIN (LOSS) 0 (8,013) 31,698 (11,283)
----------- ----------- ----------- -----------
NET INCOME $ 27,073 $ (25,993) $ 131,606 $ 28,764
=========== =========== =========== ===========
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 27,073 $ (26,068) $ 131,369 $ 28,464
=========== =========== =========== ===========
NET INCOME APPLICABLE TO COMMON
STOCKHOLDERS BEFORE NONRECURRING ITEMS $ 27,073 $ 20,406 $ 102,832 $ 64,286
=========== =========== =========== ===========
BASIC EARNINGS (LOSS) PER SHARE:
INCOME FROM CONTINUING OPERATIONS $ 0.81 $ (0.54) $ 3.12 $ 1.32
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS 0.00 (0.06) (0.10) 0.02
EXTRAORDINARY GAIN (LOSS) 0.00 (0.26) 0.96 (0.38)
=========== =========== =========== ===========
NET INCOME $ 0.81 $ (0.86) $ 3.98 $ 0.96
=========== =========== =========== ===========
BASIC EPS BEFORE NONRECURRING ITEMS $ 0.81 $ 0.67 $ 3.12 $ 2.18
=========== =========== =========== ===========
BASIC AVERAGE COMMON SHARES (000'S) 33,549 30,310 32,953 29,509
=========== =========== =========== ===========
DILUTED EARNINGS (LOSS) PER SHARE:
INCOME FROM CONTINUING OPERATIONS $ 0.76 $ (0.54) $ 2.90 $ 1.25
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS 0.00 (0.06) (0.08) 0.02
EXTRAORDINARY GAIN (LOSS) 0.00 (0.26) 0.76 (0.36)
=========== =========== =========== ===========
NET INCOME $ 0.76 $ (0.86) $ 3.58 $ 0.91
=========== =========== =========== ===========
DILUTED EPS BEFORE NONRECURRING ITEMS $ 0.76 $ 0.62 $ 2.90 $ 2.05
=========== =========== =========== ===========
DILUTED AVERAGE COMMON SHARES (000'S) 43,793 33,089 41,966 31,349
=========== =========== =========== ===========
SUMMARY FINANCIAL INFORMATION:
DEPRECIATION $ 32,461 $ 9,243 $ 59,323 $ 28,708
AMORTIZATION $ 9,482 $ 4,840 $ 31,611 $ 14,917
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SUIZA FOODS CORPORATION
CONDENSED BALANCE SHEET
(IN THOUSANDS)
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<CAPTION>
DECEMBER 31, DECEMBER 31,
ASSETS 1998 1997
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<S> <C> <C>
CURRENT ASSETS $ 793,846 $ 396,076
PROPERTY, PLANT & EQUIPMENT 847,561 363,649
INTANGIBLES & OTHER ASSETS 1,379,900 643,737
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TOTAL ASSETS $3,021,307 $1,403,462
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LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 552,599 $ 232,873
LONG TERM DEBT 894,119 777,813
OTHER LONG-TERM LIABILITIES 105,780 33,466
MANDATORILY REDEEMABLE TIPES 682,938 0
MINORITY INTEREST IN SUBSIDIARIES 129,775 0
STOCKHOLDERS' EQUITY:
PREFERRED STOCK 0 3,741
COMMON STOCK 351 305
ADDITIONAL PAID-IN CAPITAL 443,936 281,774
RETAINED EARNINGS 204,804 73,490
UNREALIZED GAINS 7,005 0
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TOTAL $3,021,307 $1,403,462
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SUIZA FOODS CORPORATION
SEGMENT INFORMATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
REVENUE
DAIRY $ 820,982 $ 521,321 $ 2,816,195 $ 1,743,240
PACKAGING 170,613 27,344 504,745 52,628
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CONSOLIDATED $ 991,595 548,665 $ 3,320,940 $ 1,795,868
=========== =========== =========== ===========
INCOME FROM OPERATIONS
DAIRY $ 54,764 $ 43,080 $ 204,319 $ 133,996
PACKAGING 19,370 2,473 56,186 4,862
CORPORATE (6,910) (38,488) (18,049) (43,972)
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CONSOLIDATED $ 67,224 $ 7,065 $ 242,456 $ 94,886
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