Thursday, 4 May 2000

Suiza Foods Corporation Reports Record First Quarter Diluted Earnings Per Share of 71 Cents; Sales and Earnings Gains Fueled by Acquisitions and Volume Growth

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Thursday, 4 May 2000

DALLAS–(BUSINESS WIRE)–May 4, 2000–Suiza Foods Corporation (NYSE:SZA), the nation’s leading dairy processor and distributor, today announced sales for the quarter ended March 31, 2000 of $1.4 billion, an increase of 20.9% over the same quarter last year.

Diluted earnings per share before non-recurring items totaled 71 cents compared with 60 cents last year. Excluding the effects of the sale of the company’s U.S. packaging business sold in July 1999, sales grew 35.0% and diluted earnings per share before non-recurring items increased 40.6% over the first quarter of 1999.

“We delivered excellent first quarter results, and we believe we’re off to a solid start for 2000,” said Gregg Engles, Chairman and Chief Executive Officer of Suiza Foods. “The effect of higher margin acquisitions, healthy volume growth and lower raw material costs impacted us positively this quarter as we maintained our focus on integrating acquisitions effectively and improving operational performance.”

First quarter diluted cash earnings per share before non-recurring items, which represents earnings per share before goodwill amortization, net of the related income tax effects, totaled 87 cents, an increase of 15.3% over 75 cents last year. Net income before non-recurring items for the first quarter grew 1.9% to $21.3 million from $20.9 million in the prior year. Excluding the U.S. packaging business and before non-recurring items, diluted cash earnings per share increased 33.4% and net income rose 21.9%.

Operating income before non-recurring items totaled $78.1 million, or 5.6% of sales, an improvement of 30 basis points over the first quarter of 1999. Excluding U.S. packaging, operating margins improved 130 basis points due to higher margins at dairies owned for more than 12 months, higher margin acquisitions and lower raw material costs.

During the quarter, the company recorded an extraordinary net gain of $5.0 million related to the payoff of its previous credit facility on January 4, 2000. Also in the quarter, the company recognized a non-recurring expense of $1.8 million related to plant closings.

RECENT DEVELOPMENTS

Most recently, Suiza has:

  • Completed the acquisition of Leche Celta, the fourth
    largest dairy in Spain, with sales of approximately $150
    million in 1999. Given the mature, highly-fragmented
    nature of the Spanish dairy industry, the acquisition
    provides another platform for growth, improves alignment
    with large retail customers with European operations and
    offers greater access to advances in ultra-high
    temperature (UHT) technology.

  • Sold Ferembal S.A. and Dixie Union GmbH & Co. KG, the
    company’s two European packaging subsidiaries, which
    completes the company’s dispositions of its remaining
    international packaging operations.

  • As of May 3, repurchased 816,400 common shares for a total
    cost of $32.2 million under the company’s open market
    share repurchase program. Approximately $23.7 million
    remains available under the company’s $300 million share
    repurchase authorization.

Suiza Foods Corporation, based in Dallas, Texas, is the nation’s leading dairy processor and distributor, producing a full line of company-branded and customer-branded products. National brands include International Delight(R), Second Nature(R), Naturally Yours(R), Mocha Mix(R), Sun Soy(TM), kidsmilk(TM), fitmilk(TM) and lifemilk(TM). Regional brands consist of Adohr Farms(R), Barbe’s(R), Brown’s Velvet Dairy(R), Broughton(R), Country Fresh(R), Dairymen’s(R), Flav-O-Rich(R), Lehigh Valley Farms(R), London’s(R), Meadow Gold(R), Model Dairy(TM), Natural by Garelick Farms(R), Oak Farms(R), Robinson(R), Schepps(R), Shenandoah’s Pride(R), Suiza(TM), Louis Trauth(TM), Tuscan(R), Velda Farms(R) and West Lynn Creamery(R), as well as Celta(R) in Spain. Suiza also sells products under partner or licensed brands in certain regions, including Borden(R), Lactaid(R), Foremost(R) and Pet(R). Additionally, the company owns approximately 43% of Consolidated Container Company, one of the nation’s largest manufacturers of rigid plastic containers.

The company’s earnings conference call will be held at 10:00 a.m. eastern today. The call may be heard live at the company’s web site at www.suizafoods.com. Real Audio software is required to listen to the call and is available on the web site. The software takes approximately 15 minutes to download. Replays will be available at the same address for a limited time period.

-0-

                        SUIZA FOODS CORPORATION
                        Condensed Balance Sheet
                            (in thousands)

                                    March 31,            December 31,
ASSETS                                2000                   1999
------                           --------------        ---------------

Cash and cash equivalents        $    32,507           $    25,155
Other current assets                 722,262               614,252
                                 --------------        ---------------
  Total current assets               754,769               639,407

Property, plant & equipment          969,607               758,485

Intangibles & other assets         1,903,923             1,261,030
                                 --------------        ---------------

    Total Assets                 $ 3,628,299           $ 2,658,922
                                 ==============        ===============


LIABILITIES AND STOCKHOLDERS'
 EQUITY

Total current liabilities        $   608,899           $   479,117

Long term debt                     1,255,525               689,397

Other long-term liabilities           87,684                81,181

Mandatorily redeemable TIPES         583,650               683,505

Minority interest in
 subsidiaries                        491,750               141,750

Stockholders' equity:
  Common stock                           290                   293
  Additional paid-in capital         261,166               275,527
  Retained earnings                  340,151               314,590
  Other comprehensive income           (816)               (6,438)
                                 --------------        ---------------
   Total stockholders' equity        600,791               583,972

   Total Liabilities and
    Stockholders' Equity         $ 3,628,299           $ 2,658,922
                                 ==============        ===============



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

                                            Three months ended
                                                 March 31,
                                      -------------------------------
                                          2000              1999
                                      ------------      -------------

Net sales                            $   1,394,141     $    1,153,186
Cost of sales                            1,053,983            920,627
                                      ------------      -------------

  Gross profit                             340,158            232,559

Operating costs and expenses               262,073            170,883
Plant closing costs                          1,774                 --
                                      ------------      -------------
 Operating income                           76,311             61,676


Interest expense & financing charges
 on preferred securities                    35,630             25,590
Equity in earnings of unconsolidated
 affiliates                                 (1,869)               (64)
Other income                                  (547)              (443)
                                      ------------      -------------
 Income before income taxes and
  minority interest                         43,097             36,593

Income taxes                                16,179             14,012
Minority interest                            6,324              1,708
                                      ------------      -------------
   Net income before extraordinary
    items                                   20,594             20,873

Extraordinary gain                           4,968                 --
                                      ------------      -------------
    Net income                       $      25,562     $       20,873
                                      ============      =============
    Net income before nonrecurring
     items                           $      21,274     $       20,873
                                      ============      =============
Diluted EPS before nonrecurring
 items                               $        0.71     $         0.60
                                      ============      =============
Diluted cash EPS before nonrecurring
 items                               $        0.87     $         0.75
                                      ============      =============

Basic earnings per share:
   Income before extraordinary items $        0.71     $         0.62
   Extraordinary gain                         0.17                 --
                                      ------------      -------------
   Net income                        $        0.88     $         0.62
                                      ============      =============

   Basic average common
    shares (000's)                          29,071             33,642

Diluted earnings per share:
   Income before extraordinary items $        0.69     $         0.60
   Extraordinary gain                         0.13                 --
                                      ------------      -------------
   Net income                        $        0.82     $         0.60
                                      ============      =============

   Diluted average common
    shares (000's)                          37,611             36,207

Summary Financial Information:
  Depreciation                       $      24,070     $       20,525
  Amortization                       $      13,278     $       10,158


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

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