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[MICHAEL FOODS LETTERHEAD]
CONTACT: MARK D. WITMER
ASSISTANT TREASURER
(952) 542-4906
FOR IMMEDIATE RELEASE
MICHAEL FOODS REPORTS THIRD QUARTER FINANCIAL RESULTS
MINNEAPOLIS, November 8 -- Michael Foods, Inc. today reported financial
results for the periods ended September 30, 2001. Earnings before interest,
taxes, depreciation and amortization (EBITDA, as defined in our senior credit
facility) for the three months ended September 30, 2001 were $37.4 million
compared to $35.4 million in 2000's third quarter, an increase of 6%. Net
sales for the three months ended September 30, 2001 were $299.2 million
compared to $276.6 million, an increase of 8%. Pro forma EBITDA for the nine
months ended September 30, 2001 was $106.2 million compared to $102.3 million
in 2000's first nine months, an increase of 4%. Pro forma EBITDA for the last
twelve months ended September 30, 2001 was $139.9 million. Pro forma net
sales for the nine months ended September 30, 2001 were $870.0 million
compared to $795.1 million, an increase of 9%. The preceding pro forma
information is derived by combining selected Company financial information
with that of the Predecessor for periods prior to the April 1, 2001
going-private transaction.
Commenting on the quarterly results, Chairman and Chief Executive Officer
Gregg A. Ostrander said, "For our third quarter EBITDA to match that of the
second quarter was a solid achievement given the notable margin pressure seen
in our Refrigerated Distribution business last quarter. Unusually high cheese
and butter costs depressed that division's EBITDA. However, near the
quarter's end these markets began to decline, which should allow for more
normal margins this quarter for Crystal Farms. Our other three divisions each
showed solid EBITDA growth in the third quarter. We were especially pleased
with the Dairy Products Division's performance. Strong sales growth and
improved operations more than offset pressures from high ingredient costs,
driving EBITDA 49% higher than that seen in the 2000 period."
Addressing Michael Foods' largest division, Egg Products, Ostrander added,
"Third quarter Egg Products EBITDA was up 12% year-over-year and rose
slightly from the prior quarter. Strong gains in some of our key value-added
products, most notably our egg substitutes line, were moderated by poor
market conditions for certain of our industrial egg products."
Ostrander concluded, "We remain very focused on generating free cash flow to
reduce the debt we added to effect our going-private transaction of last
spring. Our debt levels are lower than our original plan, as cash flow has
stayed healthy. Beyond scheduled debt payments, we made a voluntary
prepayment of $20 million of our senior term debt in late October."
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Unaudited segment data follows (in thousands):
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<Caption>
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Egg Refrigerated Dairy Potato
Products Distribution Products Products Corporate Total
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THREE MONTHS ENDED SEPT. 30, 2001:
External net sales $163,334 $63,692 $54,889 $17,310 N/A $299,225
EBITDA* 30,027 850 3,724 3,525 (733) 37,393
THREE MONTHS ENDED SEPT. 30, 2000:
External net sales $162,461 $57,636 $41,305 $15,166 N/A $276,568
EBITDA* 26,921 4,138 2,499 2,883 (1,079) 35,362
NINE MONTHS ENDED SEPT. 30, 2001 (a):
External net sales $489,445 $189,308 $142,038 $49,170 N/A $869,961
EBITDA* 83,719 7,682 8,793 9,612 (3,637) 106,169
NINE MONTHS ENDED SEPT. 30, 2000:
External net sales $472,849 $169,073 $109,237 $43,951 N/A $795,110
EBITDA* 79,263 12,947 5,771 8,572 (4,284) 102,269
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* as defined in our senior credit facility
(a) The nine month period ended September 30, 2001 is presented on a pro
forma basis. The pro forma amounts include external net sales and EBITDA of
the Predecessor for the three month period ended March 31, 2001 (pre-merger)
combined with the same data for the Company for the period subsequent to the
merger date, effective April 1, 2001.
CERTAIN ITEMS IN THIS RELEASE ARE FORWARD-LOOKING STATEMENTS, WHICH ARE MADE
IN RELIANCE UPON THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
NUMEROUS RISKS AND UNCERTAINTIES, INCLUDING CHANGES IN DOMESTIC AND
INTERNATIONAL ECONOMIC CONDITIONS. SPECIFIC RISKS AND UNCERTAINTIES INCLUDE
VARIANCES IN THE SUPPLY OF, AND DEMAND FOR, BUTTERFAT-RELATED PRODUCTS IN THE
U. S., INCLUDING NORMAL PRICING VOLATILITY FOR CHEESE, BUTTER AND OTHER DAIRY
ITEMS. AS A RESULT, THE COMPANY'S ACTUAL FINANCIAL RESULTS COULD DIFFER
MATERIALLY FROM THE RESULTS ESTIMATED BY, FORECASTED BY, OR IMPLIED BY THE
COMPANY IN SUCH FORWARD-LOOKING STATEMENTS.
Michael Foods, Inc. is a diversified food processor and distributor with
particular interests in egg products, refrigerated grocery products,
specialty dairy products and refrigerated potato products. Principal
subsidiaries include Papetti's Hygrade Egg Products, Inc., M. G. Waldbaum
Company, Crystal Farms Refrigerated Distribution Company, Kohler Mix
Specialties, Inc. and Northern Star Co.
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Consolidated statements of earnings follow:
MICHAEL FOODS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(000'S, UNAUDITED)
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<Caption>
COMPANY PREDECESSOR
2001 2000
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Net sales $299,225 $276,568
Cost of sales 248,436 228,820
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Gross profit 50,789 47,748
Selling, general & administrative expenses 30,066 25,506
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Operating profit 20,723 22,242
Interest expense, net 13,416 3,524
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Earnings before income taxes 7,307 18,718
Income tax expense 4,010 6,900
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NET EARNINGS $3,297 $11,818
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Depreciation & amortization $16,038 $12,700
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EBITDA, as defined in our senior credit facility $37,393 $35,362
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11-08-01