-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KKDqXxTR40zWcTLcwya2LdCnDqjVydO9QtKkfrfNq/ABqJ40zyFKpfFxhWHpNcsS TM2iBcyBaE4Tk8yCaWgYVQ== 0000950134-99-008399.txt : 19990924 0000950134-99-008399.hdr.sgml : 19990924 ACCESSION NUMBER: 0000950134-99-008399 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990921 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990923 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUIZA FOODS CORP CENTRAL INDEX KEY: 0000931336 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 752559681 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12755 FILM NUMBER: 99715418 BUSINESS ADDRESS: STREET 1: 2515 MCKINNEY AVENUE LB 30 STREET 2: SUITE 1200 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2145289922 MAIL ADDRESS: STREET 1: 3811 TURTLE CREEK BLVD STREET 2: SUITE 1300 CITY: DALLAS STATE: TX ZIP: 75219 8-K 1 FORM 8-K 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): September 23, 1999 (September 21, 1999) =============================================================================== SUIZA FOODS CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 1-12755 75-2559681 (State or Other Jurisdiction (Commission File Number) (IRS Employer Identification No.) of Incorporation)
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) 2 Item 5. Other Events. On September 21, 1999, Suiza Foods Corporation (the "Company") issued a press release, a copy of which is filed herewith as Exhibit 99.1, announcing (i) the Company's proposed acquisition (the "Proposed Transaction") of Southern Foods Group, L.P. pursuant to a joint venture with Dairy Farmers of America, and related events, and (ii) the resignation of Irwin Gordon, President and Chief Operating Officer. Also filed herewith as Exhibit 99.2 are the presentation materials used by the Company during investor meetings held on September 21, 1999 for the purpose of explaining the Proposed Transaction. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits
Exhibit Number Description ------- ----------- 99.1 Press Release dated September 21, 1999 99.2 Investor Presentation Materials
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: September 22, 1999 SUIZA FOODS CORPORATION By: /s/ LISA N. TYSON ---------------------------- Lisa N. Tyson Vice President and Assistant General Counsel - 2 - 3 INDEX TO EXHIBITS
Exhibit Number Description ------- ----------- 99.1 Press Release dated September 21, 1999 99.2 Investor Presentation Materials
- 3 - EX-99.1 2 PRESS RELEASE DATED SEPTEMBER 21, 1999 1 EXHIBIT 99.1 SUIZA FOODS MEDIA CONTACTS: Lisabeth Weiner INVESTORS CONTACT: Cory M. Olson 212.906.1572 VP and Treasurer Twania Brewster 214.303.3645 214.303.3436 FOR IMMEDIATE RELEASE - ------------------------------------------------------------------------------- SUIZA FOODS TO ACQUIRE SOUTHERN FOODS GROUP TO FORM $6 BILLION DAIRY INDUSTRY LEADER SUIZA'S DAIRY INDUSTRY LEADERSHIP TO SPAN 46 STATES DALLAS, September 21, 1999 - Suiza Foods Corporation (NYSE:SZA) today announced the acquisition of Southern Foods Group, L.P. - whose well-known regional dairy brands include Meadow Gold(R), Borden(R) and Elsie(R) - forming a $6 billion dairy company with an unparalleled national processing, marketing and distribution presence. "The combination of Suiza Foods, the number one fluid milk processor, with Southern Foods, the number three processor, firmly establishes our leadership position," said Suiza Chairman and Chief Executive Officer Gregg Engles. "Our combined fluid milk processing and distribution will now reach into 46 states. Together with our long shelf life dairy operations at Morningstar we can provide our customers virtually any product in the dairy case nationwide." Suiza also said that with the closing of the transaction, Pete Schenkel, a 41-year-veteran of the dairy industry and president and CEO of Southern Foods, will become president of Suiza's domestic fluid milk operations. He will also become vice chairman of Suiza's Board of Directors. The transaction, which is expected to close at the end of this year, forms a new joint venture that will encompass all the domestic fluid milk processing activities of Suiza Foods and Southern Foods. Suiza will have 66.2 percent ownership of the joint venture, while the remaining 33.8 percent minority interest will be held by Dairy Farmers of America, Inc. (DFA). The joint venture will initially be known as the Suiza Fluid Dairy Group. Suiza's acquisition of Southern Foods is expected to be neutral to slightly accretive to earnings in the first year of operation. Annualized cost savings of about $10 million are expected during the first year primarily from purchasing and general and administrative expenses. (more) 2 -2- Suiza's Morningstar subsidiary, which manufactures and sells value added products such as coffee creamers, whipped toppings, and cultured dairy products, and its international businesses, which includes its Puerto Rico dairy and its European packaging operations, will continue to operate as wholly-owned subsidiaries of the company. Suiza also continues to hold a minority interest in Consolidated Container Company. The Boards of both companies have unanimously approved the transaction. The transaction is subject to customary closing conditions and obtaining approval of the U.S. Department of Justice. In addition, Suiza expects to obtain up to $2 billion of new financing to refinance existing debt of the companies, for future acquisitions and for general corporate purposes. "While we plan to continue our disciplined acquisition strategy, with this acquisition in place our focus in the U.S. will shift to further integrating our businesses so we can become the supplier of choice to all our customers - national, regional and local - and pursue economies of scale in procurement and product innovation," Engles added. Both Suiza and Southern Foods boast strong regional brands. Suiza's brands include Natural by Garelick Farms(R), Country Fresh(R), Lehigh Valley Farms(R), Tuscan(R), Louis Trauth Dairy(TM), Dairymens(R), Model Dairy(TM), Velda Farms(R), Pet(R), Flav-O-Rich(R), Broughton(R), West Lynn Creamery(R), Robinson(R), Suiza Dairy(R) and Adohr Farms(R). Southern Foods' brands include Meadow Gold(R), rights to Borden(R) and Elsie(R) in several states, Oak Farms(R), Schepps(R), Viva(R), Foremost(R), Mountain High(R), Barbe's(R) and Brown's Velvet Dairy(R). The companies also have complementary geographic locations, with Suiza concentrated in the Northeast, Southeast, Midwest and Mid-Atlantic, and Southern Foods in the West, South, Mountain States and Hawaii. "Our emphasis on customer service and providing a quality product through strong regional relationships and dairy case branding is a perfect match with the Suiza strategy," Schenkel said. "This transaction will accelerate our ability to serve our customers with the quality and value they expect and deserve across their operations. "Our two organizations have very similar cultures and operating philosophies. I look forward to joining the Suiza senior management team which has a reputation for achieving strong operating results," Schenkel added. With the addition of Pete Schenkel to the management team, Suiza's senior managers have combined industry experience of more than 200 years. (more) 3 -3- "Size, geographical reach, experience and, most important, understanding the customer are critical to our success. With this acquisition, we have firmly established our leadership in these areas," Engles said. Suiza also announced that its president and chief operating officer, G. Irwin Gordon, has decided to leave the company to pursue other interests. "Irwin's organizational development skills and leadership have contributed significantly to Suiza's growth over the last two years and we are grateful for his contributions. He will be greatly missed," Engles said. Michael Hogan, Suiza's chief marketing officer, who previously reported to the president, will now report directly to the chairman. "This reporting change emphasizes my personal commitment and support for our brands and the importance that we place on marketing and innovation in our business," Engles said. Suiza Foods Corporation (www.suizafoods.com) is the nation's leading dairy processor and distributor, producing a full line of company-branded and customer-branded products such as fluid milk, ice cream and novelties, coffee creamers, half-and-half, whipping cream, sour cream, cottage cheese and yogurt. Suiza's dairy group also manufactures and distributes fruit juices and other flavored drinks, bottled water and coffee. Suiza's national brands are International Delight(R), Second Nature(R), Naturally Yours(R) and Mocha Mix(R), and its partner brand Lactaid(R). ### 4 The following statements made in this press release are "forward looking" and are made pursuant to the safe harbor provision of the Securities Litigation Reform Act of 1995: statements relating to (1) projected combined annual sales, (2) when the proposed transaction is expected to close, (3) the expected impact of the proposed transaction on earnings per share, (4) expectations about Suiza's ability to successfully integrate the acquired business, (5) expected cost savings as a result of the proposed transaction, (6) the combined entity's ability to become the supplier of choice to customers as a result of the proposed transaction, (7) the expected number of customers after the transaction, (8) the company's ability to profit from its branding initiatives, and (9) the company's ability to meet its financial goals. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in this press release. For example, sales projections are based on a number of assumptions. Actual sales could be materially less than projected sales if those assumptions are erroneous. Sales can vary based on a variety of economic, governmental and competitive factors, all of which are identified in Suiza's filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10Q for the second quarter of this year. Projections concerning the expected impact of the proposed transaction on earnings per share are also based on a number of assumptions, including sales and operating cost projections. The company has limited resources, and it may not be able to realize cost savings to the degree and within the timeframe that it is projecting if it cannot efficiently and effectively integrate the acquired business. The company's ability to retain existing customers, to become the supplier of choice for large national customers and otherwise to meet targeted financial results depends on a variety of economic, competitive and governmental factors, many of which are beyond the company's control and which are described in Suiza's securities filings, as well as the company's ability to effectively manage the combined business. The company's ability to profit from its branding initiatives will depend on customer acceptance of the company's products. Finally, the transaction may take longer, and cost more, to complete than the company is expecting as a result of delays or other problems in obtaining required governmental consents and acceptable financing. All forward looking statements in this press release speak only as of the date of this release. Suiza 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. EX-99.2 3 INVESTOR PRESENTATION MATERIALS 1 EXHIBIT 99.2 [SUIZA FOODS LOGO] SUIZA FOODS TO ACQUIRE SOUTHERN FOODS GROUP TO FORM $6 BILLION DAIRY INDUSTRY LEADER September 21, 1999 [SUIZA FOODS LOGO] 2 SPEAKERS Gregg Engles Chairman and CEO - Suiza Foods Pete Schenkel President and CEO - Southern Foods Barry Fromberg EVP and CFO - Suiza Foods [SUIZA FOODS LOGO] 3 SAFE HARBOR STATEMENT Some of the statements that we will make in today's presentation will be "forward looking" and we make them pursuant to the safe harbor provision of the Securities Litigation Reform Act of 1995. These "forward looking" statements include statements relating to (1) projected combined annual sales, (2) when the proposed transaction is expected to close, (3) the expected impact of the proposed transaction on earnings per share, (4) expectations about our ability to successfully integrate the acquired business, (5) expected cost savings as a result of the proposed transaction, (6) the combined entity's ability to become the supplier of choice to customers as a result of the proposed transaction, (7) the expected number of customers after the transaction, (8) our ability to profit from our branding initiatives, and (9) our ability to meet our financial goals. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in this press release. For example, sales projections are based on a number of assumptions. Actual sales could be materially less than projected sales if those assumptions are erroneous. Sales can vary based on a variety of economic, governmental and competitive factors, all of which are identified in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10Q for the second quarter of this year. Projections concerning the expected impact of the proposed transaction on earnings per share are also based on a number of assumptions, including sales and operating cost projections. We have limited resources, and we may not be able to realize cost savings to the degree and within the timeframe that we are projecting if we cannot efficiently and effectively integrate the acquired business. Our ability to retain existing customers, to become the supplier of choice for large national customers and otherwise to meet targeted financial results depends on a variety of economic, competitive and governmental factors, many of which are beyond our control and which are described in our securities filings, as well as our ability to effectively manage the combined business. Our ability to profit from our branding initiatives will depend on customer acceptance of our products. Finally, the transaction may take longer, and cost more, to complete than we are expecting as a result of delays or other problems in obtaining required governmental consents and acceptable financing. All forward looking statements in this press release speak only as of the date of this release. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based. [SUIZA FOODS LOGO] 4 AGENDA o Transaction overview o Strategic rationale o Competitive advantages o Financials o Future outlook [SUIZA FOODS LOGO] 5 TRANSACTION OVERVIEW Transaction Form Acquisition - -------------------------------------------------------------------------------- Transaction Structure Newly formed JV combining Southern Foods with Suiza's U.S. fluid milk assets - -------------------------------------------------------------------------------- Ownership of JV 66.2% Suiza Foods 33.8% Dairy Farmers of America - -------------------------------------------------------------------------------- Senior Management Pete Schenkel, Vice Chairman of Addition Suiza and President of joint venture - -------------------------------------------------------------------------------- Expected Closing Date December 1999 - -------------------------------------------------------------------------------- EPS Impact Neutral to slightly accretive [SUIZA FOODS LOGO] 6 CORPORATE STRUCTURE [CHART] [SUIZA FOODS LOGO] 7 STRATEGIC RATIONALE o Customer service and quality o National platform aligned with customers o Leverage economies of scale and scope - Product innovation, packaging & brands o Complementary strengths - Geographic reach - Strong regional leadership and brands o Improves Suiza's position for integration and further consolidation [SUIZA FOODS LOGO] 8 SUIZA HAS CHANGED THE LANDSCAPE PLANT LOCATIONS 1995 1999 [MAP] [MAP] o $293 million* in sales o $4.1 billion in annualized sales o 5 plants o 56 plants o 385 DSD routes o 3,200 DSD routes o 13,000 stores served o 83,000 stores served *Dairy only sales without pooling transactions. [SUIZA FOODS LOGO] 9 UNPARALLELED GEOGRAPHIC REACH [MAP] o 81 plants o 4,800 DSD routes o 140,000 stores served o 17,500 employees [LEGEND] [SUIZA FOODS LOGO] 10 "The top 10 supermarket chains controlled 52.1% of U.S. grocery sales last year, up from 28.4% in 1987." - The Wall Street Journal, 9/16/99 [SUIZA FOODS LOGO] 11 U.S. GROCERY CONSOLIDATION
Date Major Transaction - ---- ----------------- May 97 Fred Meyer/Smith's Food & Drug Center Nov 97 Fred Meyer/Ralph's/Quality Food Centers Aug 98 Albertson's/American Stores Oct 98 Safeway/Dominick's Oct 98 Kroger/Fred Meyer Aug 99 Food Lion/Hannaford
[GRAPH] Source: Supermarket News [SUIZA FOODS LOGO] 12 CAPITALIZING ON THE CHANGE TODAY FUTURE Fragmented Processor Base with -- Consolidated Processor Base Limited Geographic Scope with National/Broad Regional Scope Fragmented Small Regional -- Super Regional Brands with Brands and Private Labels Differentiated Products Purchasing Power Parity Among -- Consolidated Buyers with Clout Processors Commodity Margins -- Higher Branded Margins [SUIZA FOODS LOGO] 13 LEVERAGE SCALE AND SCOPE SCOPE* o 81 plants o 140,000 stores served o 4,800 direct store delivery (DSD) routes - -------------------------------------------------------------------------------- OPPORTUNITIES o Premier refrigerated distributor o Able to rationalize plants and routes o Productivity increases: specialization and product line consolidation o Ability to align with major customer objectives - Single-source provider - Customers are receptive to dairy growth initiatives [SUIZA FOODS LOGO] 14 COMPETITIVE STRENGTHS o Dedication to quality and customer service o Operational expertise o Product and packaging innovation o Strong regional and national brands o Marketing skills o "Cultural" fit o Integration experience [SUIZA FOODS LOGO] 15 SOUTHERN FOODS HISTORY o Schepps Dairy (Dallas) original building block o 1987 - SFG formed, purchased Schepps & Foremost (Shreveport) plants o 1990 - Oak Farms acquisition o 1994 - Partner with Dairy Farmers of America o 1990 - 1997 - Several smaller acquisitions o 1997 - Meadow Gold acquisition [SUIZA FOODS LOGO] 16 STRONG RELATIONSHIPS o Focus on the customer and consumer - Quality - Service o Suppliers - Dairy Farmers of America o Management team - Decentralized to facilitate decision making - Dedicated regional leadership [SUIZA FOODS LOGO] 17 STRONG COMBINED CUSTOMER FRANCHISE [VARIOUS FRANCHISE LOGOS] [SUIZA FOODS LOGO] 18 FLUID MILK MARKET SHARE
Major Markets Combined Suiza/SF Rank - ------------- ---------------------- New York #1 Boston/Providence #1 Philadelphia #1 North Carolina #1 Detroit #1 Dallas #1 San Antonio #1 Houston #1 Denver #1 Salt Lake City #1
[SUIZA FOODS LOGO] 19 BRAND MANAGEMENT OPPORTUNITIES [VARIOUS BRAND LOGOS] [SUIZA FOODS LOGO] 20 COMBINED PRODUCT MIX Revenue By Product Category [SUIZA FOODS LOGO] 21 BUILD THE BRANDS OBJECTIVE Improve margins and grow category - -------------------------------------------------------------------------------- PLAN Identify strongest brands Innovate - Packaging - Products - Labeling Leverage distribution network - -------------------------------------------------------------------------------- APPROACH Empirical research Disciplined methodology [SUIZA FOODS LOGO] 22 CONSUMERS PAY PREMIUMS FOR VALUE-ADDED BENEFITS
Price Premium [GRAPH] per Gallon per Gallon ---------- ---------- Lactaid $5.76 $3.07 Horizon $4.74 $2.05 Organic Valley $4.74 $2.05 2% Milk $2.69
Source: IRI/Nielsen data [SUIZA FOODS LOGO] 23 DISCIPLINED PRODUCT DEVELOPMENT AND ROLLOUT [GRAPH] [SUIZA FOODS LOGO] 24 EXHIBIT 99.2 FINANCIAL HIGHLIGHTS [SUIZA FOODS LOGO] 25 [SUIZA HAS DEMONSTRATED EXCEPTIONAL EPS GROWTH GRAPH] Adjusted for non-recurring charges [SUIZA FOODS LOGO] 26 [SALES PERFORMANCE GRAPH] All figures in millions [SUIZA FOODS LOGO] 27 [OPERATING INCOME PERFORMANCE GRAPH] All figures in millions, except percentages [SUIZA FOODS LOGO] 28 [COMBINED PRO FORMA GRAPH] Sales $ 6,000 - ------------------------------------------------- EBITDA 475 EBITDA Margin 7.9% - ------------------------------------------------- Operating Income 340 Operating Margin 5.7%
All figures in millions except percentages Estimated LTM annualized as of 6/99 including Valley of Virginia [SUIZA FOODS LOGO] 29 FINANCING o Refinance existing debt of both Suiza and Southern Foods with 2 new credit facilities o JV will have credit facility between $1.5-$2.0 billion - $0.8 - $1.1 billion outstanding at closing o Separate Suiza facility of approximately $300 million [SUIZA FOODS LOGO] 30 FINANCIAL GOALS o Grow EPS - Sales growth - Margin improvement o Drive free cash flow - Manage working capital - Disciplined investment spending [SUIZA FOODS LOGO] 31 [DEPTH OF MANAGEMENT TALENT GRAPH]
- ------------------------------------------------------------------------------------------------------------------------- IN THE FIELD - ------------------------------------------------------------------------------------------------------------------------- Rick Fehr Alan Bernon Delton Parks Bing Graffunder Rick Sturgeon Rick Beaman COO Midsouth COO Northeast COO Midwest COO Morningstar VP West EVP Southern Foods 25 Years Dairy 23 Years Dairy 37 Years Dairy 29 Years Dairy 35 Years Dairy 26 Years Dairy - ------------------------------------------------------------------------------------------------------------------------- HEADQUARTERS - ------------------------------------------------------------------------------------------------------------------------- Gregg Engles Pete Schenkel Bill Brick Barry Fromberg Mike Hogan Tracy Noll Chairman, CEO Vice Chairman and COO Dairy CFO SVP Marketing EVP President of SFOG Corp. Development 6 Years Dairy 41 Years Dairy 11 Years Dairy 18 Years Telecom 13 Years PepsiCo 17 Years Dairy 18 Years Food Industry 1 Year Texas 13 Years Southland Instruments
OVER 200 YEARS OF DAIRY EXPERIENCE [SUIZA FOODS LOGO] 32 SUMMARY o Focus on shareholder value o Strong customer franchise o Dedication to quality and service o Unparalleled national reach o Leverage scale and scope o Leadership and operational expertise o Brand management opportunities o Strong track records [SUIZA FOODS LOGO] 33 [SUIZA FOODS LOGO] -----END PRIVACY-ENHANCED MESSAGE-----