Tuesday, 15 February 2000

Suiza Foods Corporation Reports Record Earnings Per Share of $3.37 for 1999; Company Announces Exceptional Growth in Sales and Net Income in 1999

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Tuesday, 15 February 2000

DALLAS–(BUSINESS WIRE)–Feb. 15, 2000–Suiza Foods Corporation (NYSE:SZA), the nation’s leading dairy processor and distributor, today announced sales for the year ended December 31, 1999 of $4.5 billion, up 35% from $3.3 billion in 1998. Excluding the effects of the sale of the company’s U.S. packaging business in July 1999, the company increased sales for the year by 45%.

Net income from continuing operations in 1999, excluding non-recurring items, grew 16.6% to $119.9 million from $102.8 million in the prior year, and diluted earnings per share rose 16.2% to $3.37 for the year compared with $2.90 in 1998. Net income for the year, after non-recurring items, totaled $109.7 million, or $3.13 per diluted share. Diluted cash earnings per share, excluding non-recurring items and goodwill amortization, totaled $3.92, representing growth of 16.7% over $3.36 in 1998.

“We are pleased with our solid performance for the year and in the quarter, as we continued to integrate acquisitions and improve operational performance,” said Gregg Engles, Chairman and Chief Executive Officer of Suiza Foods. “We look forward to an exciting year in 2000 now that we have gained a national presence with our acquisition of Southern Foods. That national presence, combined with our ability to deliver quality products, excellent customer service, and innovation in the dairy category will allow us to better align ourselves with our customers, who are also consolidating.”

FOURTH QUARTER RESULTS

Sales for the fourth quarter of 1999 grew 13.7% to $1.1 billion, compared with $991.6 million in the fourth quarter of 1998. Excluding the effect of the U.S. packaging business sale, the company recorded revenue growth of 27%.

Fourth quarter diluted earnings per share before non-recurring items increased 19.7% to $0.91 per share from $0.76 per share in the 1998 fourth quarter, and diluted cash earnings per share rose 19.1% to $1.06. Net income before non-recurring items increased 12.3% to $30.4 million compared with $27.1 million in the prior-year fourth quarter.

The company reported operating income excluding non-recurring items and the effect of the sale of the U.S. packaging business for the quarter of $70.7 million, or 6.3% of sales, compared with $49.5 million, or 5.6% of sales, in the 1998 fourth quarter.

Fourth quarter operating margins for dairies owned by Suiza for more than 12 months were 9.1%, a 180 basis point improvement over the prior-year period, driven primarily by lower raw milk prices, growth in margins at the Morningstar subsidiary and synergies related to plant closures and other consolidation activities.

Non-recurring items related to plant closings, severance payments and the company’s share of restructuring charges taken by Consolidated Container totaled $7.8 million during the quarter.

During the fourth quarter, Suiza repurchased approximately $128 million, or 3.5 million shares, of common stock under its open market share repurchase program. To date in 2000, the company has bought back an additional $12.8 million, or 317,500 shares.

RECENT DEVELOPMENTS

Since the end of the fourth quarter, Suiza:

  • Completed the acquisition of Southern Foods Group L.P., making Suiza the nation’s first dairy company with national reach
  • Completed the acquisition of Valley of Virginia, an agricultural marketing cooperative with dairy processing plants in Springfield, Virginia and Mt. Crawford, Virginia
  • Expanded the test market for three new branded milks,
    kidsmilk™, fitmilk™, and lifemilk™, targeted toward
    specific segments of milk-drinkers, into New England and
    Michigan

  • Introduced Sun Soy(TM), a non-dairy, lactose-free,
    cholesterol-free milk made from soy and enriched with calcium and
    vitamins A, B12, D and E, through its Morningstar subsidiary

  • Entered into a long-term supply agreement to provide all
    private-label milk and related dairy products to Stop & Shop
    stores, the largest grocery store operator in New England Suiza Foods Corporation is the nation’s leading dairy processor and distributor, producing a full line of company-branded and customer-branded products. Suiza sells its dairy products under various brands including national brands (such as International Delight®, Second Nature®, Naturally Yours®, Mocha Mix®, Sun Soy™, kidsmilk™, fitmilk™, and lifemilk™), strong regional brands (such as Adohr Farms®, Barbe’s®, Brown’s Velvet Dairy®, Broughton®, Country Fresh®, Dairymens®, Lehigh Valley Farms®, London’s®, Meadow Gold®, Model Dairy(TM), Natural by Garelick Farms®, Oak Farms®, Robinson®, Schepps®, Suiza(TM), Louis Trauth™, Tuscan®, Velda Farms® and West Lynn Creamery®) and partner or licensed brands in certain regions (including Borden®, Lactaid®, Flav-O-Rich®, Foremost®, and Pet®). Suiza also has holdings in the consumer goods packaging industry.

The company’s earnings conference call will be held at 10:00 a.m. E.S.T. today. You may listen to the call live at the company’s web site at www.suizafoods.com. You will need Real Audio software, which may be downloaded by going to the Suiza site 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.


                        SUIZA FOODS CORPORATION
             (Dollars in thousands, except per share data)

                            Three months ended      Twelve months ended
                                December 31,            December 31,
                            ------------------      -------------------
                             1999        1998        1999         1998
                             ----        -----       ----         ----
Net sales                 $1,127,910   $ 991,595  $4,481,999  $3,320,940
Cost of sales                876,144     772,238   3,487,075   2,557,908
                          ----------   ---------  ----------  ----------
  Gross profit               251,766     219,357     994,924     763,032

Operating costs and
 expenses                    181,083     152,133     705,484     520,576
Plant closing and
 other costs                   4,375           0      12,566           0
                          ----------   ---------  ----------  ----------
  Operating income            66,308      67,224     276,874     242,456

Interest expense &
 financing charges on
 preferred securities         19,267      25,803      87,817      82,295
Consolidated Container
 equity interest earnings     (1,330)                 (7,578)
Consolidated Container
 plant closing charges         3,391                   4,948
Other (income) expense        (1,699)     (1,928)     (1,416)     (4,290)
                          ----------   ---------  ----------  ----------
  Income from continuing
   operations                 46,679      43,349     193,103     164,451

Income taxes                  19,001      15,845      75,463      59,823
Minority interest              2,320         431       8,813       1,559
                          ----------   ---------  ----------  ----------
  Net income from
   continuing operations  $   25,358   $  27,073  $  108,827  $  103,069
                          ==========   =========  ==========  ==========

  Net income applicable
   to common stockholders $   26,262   $  27,073  $  109,731  $  131,369
                          ==========   =========  ==========  ==========

  Net income applicable
   to common
   stockholders before
   nonrecurring items     $   30,404   $  27,073  $  119,891  $  102,832
                          ==========   =========  ==========  ==========
Diluted EPS before
 nonrecurring items       $     0.91   $    0.76  $     3.37  $     2.90
                          ==========   =========  ==========  ==========

Basic earnings per share:
  Income from continuing
   operations             $     0.83   $    0.81  $     3.31  $     3.12
  Net income                    0.86        0.81        3.34        3.98
  Basic average common
   shares (000's)             30,433      33,549      32,861      32,953

Diluted earnings per share:
  Income from continuing
   operations             $     0.78   $    0.76  $     3.11  $     2.90
  Net income                    0.80        0.76        3.13        3.58
  Diluted average common
   shares (000's)             40,324      43,793      42,858      41,966

Summary Financial Information:
  Depreciation            $   17,223   $  17,845  $   77,205  $   59,323
  Amortization            $   10,028   $   9,676  $   39,403  $   32,456



                          SUIZA FOODS CORPORATION
                          Condensed Balance Sheet
                              (in thousands)



                                                December 31, December 31,
ASSETS                                              1999        1998
------                                          -----------   ----------

Cash and cash equivalents                        $   25,155  $   54,922
Other current assets                                614,252     758,977
                                                 ----------  ----------
 Total current assets                               639,407     813,899

Property, plant & equipment                         758,485     846,956

Intangibles & other assets                        1,261,030   1,352,928
                                                 ----------  ----------
   Total Assets                                  $2,658,922  $3,013,783
                                                 ==========  ==========


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Total current liabilities                        $  479,117  $  559,071

Long term debt                                      689,397     893,077

Other long-term liabilities                          81,181      93,151

Mandatorily redeemable TIPES                        683,505     682,938

Minority interest in subsidiaries                   141,750     129,775

Stockholders' equity:
  Common stock                                          293         336
  Additional paid-in capital                        275,527     446,230
  Retained earnings                                 314,589     204,859
  Other comprehensive income                         (6,437)      4,346
                                                 ----------  ----------
     Total stockholders' equity                     583,972     655,771

    Total Liabilities and Stockholders Equity    $2,658,922  $3,013,783
                                                 ==========  ==========

CONTACT:
Suiza Foods Corporation, Dallas
Cory Olson, 214/303-3645

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