Thursday, 3 August 2000

Suiza Foods Corporation Reports Record Second Quarter Diluted Earnings Per Share of $1.06

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Thursday, 3 August 2000

DALLAS–(BUSINESS WIRE)–Aug. 3, 2000–Suiza Foods Corporation (NYSE:SZA), the nation’s leading dairy processor and distributor, today announced sales for the quarter ended June 30, 2000 of $1.4 billion, up 28.2% from $1.1 billion in the same period in 1999. Diluted earnings per share before restructuring costs were $1.06, representing growth of 12.8% over the prior year. Excluding the effects of the sale of the company’s U.S. packaging business sold in July 1999, sales grew 44.3%, and diluted earnings per share before restructuring increased 22.0% over the second quarter of 1999.

Operating income for the quarter increased 25.8% to $103.3 million. Excluding the effects of the sale of the company’s U.S. packaging business, second quarter operating income rose 60.9%. Before restructuring costs and excluding packaging, consolidated operating margins expanded by 36 basis points compared with the second quarter last year. Included in operating income for the quarter was a gain of $3.6 million associated with the curtailment of certain benefit plans.

“We are pleased to report that for the eighteenth consecutive quarter, Suiza Foods posted record sales and earnings per share,” said Gregg Engles, Chairman and Chief Executive Officer of Suiza Foods. “We also reported healthy operating income growth this quarter, driven by acquisitions, improved operating margin performance and growth in our portfolio of branded products. In the first half of the year, we have generated free cash flow from operations of over $75 million, which was used to fund acquisitions and our ongoing share repurchase program.”

Second quarter diluted cash earnings per share before restructuring totaled $1.22, an increase of 13.0% over last year. Cash earnings per share is defined as earnings per share before goodwill amortization, net of the related income tax effects. Excluding the U.S. packaging business and before restructuring costs, diluted cash earnings per share increased 23.8%.

In the second quarter of 2000, the company recorded a charge of $1.2 million related to plant and administrative restructuring items, equivalent to two cents per share.

SIX MONTH RESULTS

Sales for the first six months of 2000 totaled $2.8 billion, an increase of 24.5% over last year. Operating income before restructuring costs grew 23.0% to $182.6 million. Diluted earnings per share before restructuring costs totaled $1.77, an increase of 14.2% over last year. Diluted cash earnings per share totaled $2.09, an increase of 14.2%.

Excluding the effects of the sale of the company’s U.S. packaging business, sales rose 39.5%, operating income before restructuring costs increased 60.4% and operating income margin expanded 84 basis points over last year. Diluted earnings per share increased 26.0% and diluted cash earnings per share grew 27.6%.

RECENT DEVELOPMENTS

Most recently, Suiza:

  • Fulfilled its $300 million share repurchase authorization and
    announced board approval to increase the share repurchase
    authorization by $100 million. Through August 3, 2000, the
    company had repurchased 2.3 million common shares this year at
    a total investment of $99.3 million. The company has $56.6
    million remaining under its current authorization.

  • Announced its investment in Dairy.com, the first
    business-to-business online vertical exchange focused
    specifically on serving the dairy industry. Dairy.com is an
    independent, neutral company that will bring farmers, farm
    cooperatives, processors and manufacturers together in an
    electronic marketplace for the exchange of goods and services,
    supply chain efficiency tools and dairy farm optimization
    tools. Dairy.com will also provide industry specific
    information to improve decision-making.

  • Closed and fully funded an asset securitization financing
    totaling $150 million. The proceeds from the new financing
    were used to pay down higher cost debt.

Suiza Foods Corporation, based in Dallas, 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 Dairy(TM), 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), Garelick Farms(TM), 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 time 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.



                        SUIZA FOODS CORPORATION
                        Condensed Balance Sheet
                            (in thousands)

                                         June 30,       December 31,
ASSETS                                     2000             1999
------                                --------------  ---------------
Cash and cash equivalents            $       69,304  $        25,155
Other current assets                        698,334          614,252
                                      --------------  ---------------
  Total current assets                      767,638          639,407

Property, plant & equipment                 985,313          758,485

Intangibles & other assets                1,923,283        1,261,030
                                      --------------  ---------------

    Total Assets                     $    3,676,234  $     2,658,922
                                      ==============  ===============


LIABILITIES AND STOCKHOLDERS' EQUITY

Total current liabilities            $      623,303  $       479,117

Long term debt                            1,279,860          689,397

Other long-term liabilities                  88,019           81,181

Mandatorily redeemable TIPES                583,796          683,505

Minority interest in subsidiaries           497,824          141,750

Stockholders' equity:
  Common stock                                  284              293
  Additional paid-in capital                230,556          275,527
  Retained earnings                         373,685          314,590
  Other comprehensive income                 (1,093)          (6,438)
                                      --------------  ---------------
     Total stockholders' equity             603,432          583,972
                                      --------------  ---------------

    Total Liabilities and
     Stockholders' Equity            $    3,676,234  $     2,658,922
                                      ==============  ===============

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

                                            Three months ended
                                                 June 30,
                                      -------------------------------
                                           2000             1999
                                      --------------  ---------------

Net sales                            $    1,434,354  $     1,118,844
Cost of sales                             1,074,136          855,895
                                      --------------  ---------------

  Gross profit                              360,218          262,949

Operating costs and expenses                255,712          176,119
Plant and administrative
 restructuring costs                          1,190            4,671
                                      --------------  ---------------

  Operating income                          103,316           82,159

Interest expense & financing charges
 on preferred securities                     35,309           24,881
Equity in earnings of unconsolidated
 affiliates                                  (3,535)
Other (income) expense                         (528)             406
                                      --------------  ---------------

  Income before income taxes and
   minority interest                         72,070           56,872

Income taxes                                 27,700           22,092
Minority interest                            10,837            2,633
                                      --------------  ---------------

    Net income before extraordinary
     items                                   33,533           32,147

Extraordinary gain
                                      --------------  ---------------

    Net income                       $       33,533  $        32,147
                                      ==============  ===============

    Net income before nonrecurring
     items                           $       34,352  $        35,014
                                      ==============  ===============

Diluted EPS before nonrecurring
 items                               $         1.06  $          0.94
                                      ==============  ===============

Diluted cash EPS before nonrecurring
 items                               $         1.22  $          1.08
                                      ==============  ===============

Basic earnings per share:
   Income before extraordinary items $         1.16  $          0.95
   Extraordinary gain                            --               --
                                      --------------  ---------------
   Net income                        $         1.16  $          0.95
                                      ==============  ===============

   Basic average common shares
    (000's)                                  28,897           33,730

Diluted earnings per share:
   Income before extraordinary items $         1.04  $          0.87
   Extraordinary gain                            --               --
                                      --------------  ---------------
   Net income                        $         1.04  $          0.87
                                      ==============  ===============

   Diluted average common shares
    (000's)                                  37,322           43,806

Summary Financial Information:
  Depreciation                       $       24,052  $        22,226
  Amortization                       $       13,609  $        10,296


                                            Six months ended
                                                 June 30,
                                      -------------------------------
                                           2000            1999
                                      --------------  ---------------

Net sales                            $    2,828,495  $     2,272,030
Cost of sales                             2,128,118        1,776,522
                                      --------------  ---------------

  Gross profit                              700,377          495,508

Operating costs and expenses                517,785          347,002
Plant and administrative
 restructuring costs                          2,964            4,671
                                      --------------  ---------------

  Operating income                          179,628          143,835


Interest expense & financing charges
 on preferred securities                     70,940           50,471
Equity in earnings of unconsolidated
 affiliates                                  (5,404)
Other (income) expense                       (1,075)            (101)
                                      --------------  ---------------

  Income before income taxes and
   minority interest                        115,167           93,465

Income taxes                                 43,879           36,103
Minority interest                            17,161            4,342
                                      --------------  ---------------

    Net income before extraordinary
     items                                   54,127           53,020

Extraordinary gain                            4,968
                                      --------------  ---------------

    Net income                       $       59,095  $        53,020
                                      ==============  ===============

    Net income before nonrecurring
     items                           $       55,626  $        55,887
                                      ==============  ===============

Diluted EPS before nonrecurring
 items                               $         1.77  $          1.55
                                      ==============  ===============

Diluted cash EPS before nonrecurring
 items                               $         2.09  $          1.83
                                      ==============  ===============

Basic earnings per share:
   Income before extraordinary items $         1.87  $          1.57
   Extraordinary gain                          0.17               --
                                      --------------  ---------------
   Net income                        $         2.04  $          1.57
                                      ==============  ===============

   Basic average common shares
    (000's)                                  28,984           33,686

Diluted earnings per share:
   Income before extraordinary items $         1.73  $          1.48
   Extraordinary gain                          0.13               --
                                      --------------  ---------------
   Net income                        $         1.86  $          1.48
                                      ==============  ===============

   Diluted average common shares
    (000's)                                  37,470           43,846

Summary Financial Information:
  Depreciation                       $       48,097  $        42,750
  Amortization                       $       26,885  $        20,452


CONTACT:
Suiza Foods Corporation, Dallas

Cory M. Olson, 214/303-3645

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