Michael Foods, Inc. 2001 Financial Results Press Release

Summary

Michael Foods, Inc. has released its financial results for the fourth quarter and full year ending December 31, 2001. The report details increases in net sales and EBITDA across most divisions, with record sales levels for the year. The company highlights growth in its Egg Products, Potato Products, and Dairy Products divisions, while noting challenges in Refrigerated Distribution. The release also includes unaudited segment data and consolidated earnings statements. This document is an informational press release and does not create legal obligations between parties.

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EX-2.1 3 a2071569zex-2_1.txt EXHIBIT 2.1 [MICHAEL FOODS LETTERHEAD] CONTACT: MARK D. WITMER ASSISTANT TREASURER ###-###-#### FOR IMMEDIATE RELEASE MICHAEL FOODS REPORTS 2001 FINANCIAL RESULTS MINNEAPOLIS, February 21 -- Michael Foods, Inc. today reported financial results for the quarterly and annual periods ended December 31, 2001. Earnings before interest, taxes, depreciation and amortization (EBITDA, as defined in our senior credit facility) for the three months ended December 31, 2001 were $39.6 million compared to $33.7 million in 2000's fourth quarter, an increase of 17%. Net sales for the three months ended December 31, 2001 were $291.3 million compared to $285.5 million, an increase of 2%. Pro forma EBITDA for the year ended December 31, 2001 was $145.8 million compared to $136.0 million in 2000, an increase of 7%. Pro forma net sales for 2001 were $1,161.3 million compared to $1,080.6 million, an increase of 7%. Net sales for 2001's fourth quarter and full-year were at record levels. 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 results, Chairman, President and Chief Executive Officer Gregg A. Ostrander said, "We achieved solid cash earnings growth across three of our divisions last year, driven by cost improvements and a better sales mix for Egg Products, strong sales growth from the retail side of the Potato Products Division, and volume and sales mix improvements in the Dairy Products segment. Dairy Products EBITDA results were particularly notable, more than doubling from depressed prior year levels. Our fourth division, Refrigerated Distribution, struggled under a high cheese and butter cost environment for much of the year, but ended 2001 on a very positive note." Further addressing Michael Foods' largest division, Egg Products, Ostrander added, "Fourth quarter Egg Products EBITDA was up 8% year-over-year, with a 6% increase recorded for the year. The 2001 EBITDA margin for the division rose to 17.0% from 16.2%. Contributing to this margin increase were double digit sales and earnings gains from egg substitutes, a recovery in dried products profitability and cost savings initiatives." Ostrander concluded, "We ended the year with net debt, inclusive of accrued interest, of approximately $536 million, which was comfortably below the levels we projected last spring when we closed our going-private transaction. In particular, net working capital was reduced a meaningful amount in 2001." Unaudited segment data follows (in thousands):
-------------------------------------------------------------------------- Egg Refrigerated Dairy Potato Products Distribution Products Products Corporate Total -------------------------------------------------------------------------- THREE MONTHS ENDED DEC. 31, 2001: External net sales $156,408 $73,372 $43,844 $17,684 N/A $291,308 EBITDA* 28,116 3,234 4,274 4,780 (845) 39,559 THREE MONTHS ENDED DEC. 31, 2000: External net sales $164,506 $72,041 $32,164 $16,780 N/A $285,491 EBITDA* 25,926 4,370 284 4,450 (1,296) 33,734 TWELVE MONTHS ENDED DEC. 31, 2001 (a): External net sales $645,853 $262,680 $185,882 $66,854 N/A $1,161,269 EBITDA* 111,865 10,915 13,065 14,393 (4,485) 145,753 TWELVE MONTHS ENDED DEC. 31, 2000: External net sales $637,355 $241,114 $141,401 $60,731 N/A $1,080,601 EBITDA* 105,190 17,317 6,056 13,022 (5,583) 136,002
* as defined in our senior credit facility (a) The twelve month period ended December 31, 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 MAY BE 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 HOW THE CASH MANAGEMENT ACTIVITIES OF THE COMPANY, ITS CUSTOMERS AND ITS SUPPLIERS, ALONG WITH COMPANY GROWTH PLANS, AFFECT WORKING CAPITAL COMPONENTS, AS WELL AS WHETHER DEBT PREPAYMENT OPPORTUNITIES ARE MORE ATTRACTIVE THAN INTERNAL INVESTMENT OPPORTUNITIES. ALSO, THE COMPANY FACES NORMAL, AND AT TIMES NOTABLE, VARIANCES IN THE SUPPLY OF, AND DEMAND FOR, EGGS, GRAIN FEED INPUTS, AND BUTTERFAT-RELATED PRODUCTS, WHICH CAN RESULT IN PRICING AND PROFIT MARGIN VOLATILITY FOR CERTAIN EGG PRODUCTS, AND 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 M. G. Waldbaum Company, Papetti's Hygrade Egg Products, Inc., Crystal Farms Refrigerated Distribution Company, Kohler Mix Specialties, Inc. and Northern Star Co. Consolidated statements of earnings follow: MICHAEL FOODS, INC. CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED DECEMBER 31, (000'S, UNAUDITED)
COMPANY PREDECESSOR 2001 2000 ------------------ ---------------- Net sales $291,308 $285,491 Cost of sales 240,717 238,266 ---------- --------- Gross profit 50,591 47,225 Selling, general & administrative expenses 27,124 25,489 ---------- --------- Operating profit 23,467 21,736 Interest expense, net 12,678 3,428 ---------- --------- Earnings before income taxes 10,789 18,308 Income tax expense 5,940 7,180 ---------- --------- NET EARNINGS $ 4,849 $ 11,128 ========== ========= Depreciation & amortization $ 15,332 $ 11,653 ========== ========= EBITDA, as defined in our senior credit facility $ 39,559 $ 33,734 ========== =========
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