Michael Foods, Inc. Second Quarter 2001 Financial Results Press Release

Summary

Michael Foods, Inc. has released its financial results for the second quarter and first half of 2001, reporting increases in both EBITDA and net sales compared to the previous year. The report details performance across its business divisions, including egg products, refrigerated distribution, dairy, and potato products. The company also highlights efforts to reduce debt following a recent going-private transaction. This document is an informational press release and does not create legal obligations between parties.

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EX-2.1 2 a2055175zex-2_1.txt EXHIBIT 2.1 [LETTERHEAD - MICHAEL FOODS, INC. NEWS] MICHAEL FOODS REPORTS SECOND QUARTER FINANCIAL RESULTS MINNEAPOLIS, July 25 -- Michael Foods, Inc. today reported financial results for the second quarter and first half ended June 30, 2001. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended June 30, 2001 were $37.0 million compared to $35.8 million in 2000's second quarter, an increase of 4%. Net sales for the three months ended June 30, 2001 were $295.1 million compared to $266.6 million, an increase of 11%. EBITDA for the six months ended June 30, 2001 was $68.8 million compared to $66.9 million in 2000's first half, an increase of 3%. Net sales for the six months ended June 30, 2001 were $570.7 million compared to $518.5 million, an increase of 10%. Commenting on the results, Chairman and Chief Executive Officer Gregg A. Ostrander said, "We were pleased to generate an increase in EBITDA for both the second quarter and the first half of the year given the challenges of low egg markets and high butter fat-related markets. Strong unit sales growth, particularly from our non-egg products operations, allowed us to overcome some gross margin pressures caused by these commodity factors. Our performance during this relatively difficult market period underscores the strength and stability of our businesses." Addressing divisional results, Ostrander added, "Egg Products experienced another quarter of lackluster earnings results on the industrial products side due to continued low prices in these markets, which was offset by strong profit growth in certain value-added egg products. Refrigerated Distribution results showed strong sales growth, as a result of both good distributed products real sales gains and inflationary impacts. EBITDA, however, fell as a result of the dramatic contrast in the raw material environment from a year ago, when low cheese and butter prices benefited margins. Potato Products results continued to show the steady growth in sales and EBITDA that this division has experienced in recent quarters, driven by the continued growth of our Simply Potatoes(R) business and the addition of new foodservice accounts. Lastly, Dairy Products remained in a strong recovery mode versus the disappointing results of the past two years. Gallons sold in the quarter rose by nearly 20%. This robust volume growth, combined with a margin recovery in the core dairy mix business and improved plant operations, drove second quarter EBITDA sharply higher versus 2000 levels." Ostrander concluded, "Beyond growing our businesses, we are very focused on generating cash flow to reduce the debt we added to affect our going-private transaction of early April of this year. Our debt levels are lower than our original plan, as cash flow has been strong. We have reduced our outstanding debt by approximately $15 million since the closing of our transaction in early April 2001." Unaudited segment data follows (in thousands):
Company -------------------------------------------------------------------------------- Egg Refrigerated Dairy Potato Products Distribution Products Products Corporate Total -------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30, 2001: External net sales $162,582 $64,431 $51,821 $16,275 N/A $295,109 Intersegment sales 2,862 1 - 845 N/A 3,708 Depreciation and amortization 12,380 642 1,010 1,561 10 15,603 EBITDA* 29,269 2,877 3,058 3,120 (1,291) 37,033
Predecessor -------------------------------------------------------------------------------- Egg Refrigerated Dairy Potato Products Distribution Products Products Corporate Total -------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30, 2000: External net sales $156,835 $55,189 $39,903 $14,689 N/A $266,616 Intersegment sales 2,942 40 - 613 N/A 3,595 Depreciation and amortization 8,808 333 1,165 1,348 31 11,685 EBITDA* 27,891 4,161 2,293 3,033 (1,623) 35,755 THREE MONTHS ENDED MARCH 31, 2001: External net sales $163,529 $61,185 $35,328 $15,585 N/A $275,627 Intersegment sales 4,246 - - 1,003 N/A 5,249 Depreciation and amortization 9,610 316 1,271 1,278 34 12,509 EBITDA* 24,424 3,955 2,011 2,966 (1,612) 31,744 THREE MONTHS ENDED MARCH 31, 2000: External net sales $153,553 $56,248 $28,029 $14,096 N/A $251,926 Intersegment sales 2,885 18 485 555 N/A 3,943 Depreciation and amortization 9,056 344 1,165 1,355 31 11,951 EBITDA* 24,451 4,649 979 2,656 (1,583) 31,152
* as defined in our senior credit facility 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. Consolidated statements of earnings follow (in thousands): MICHAEL FOODS, INC. CONSOLIDATED STATEMENTS OF EARNINGS
Predecessor Company ------------------------------------------- ------------- Three Months Ended Three Months -------------------------------------------- Ended June 30, March 31, March 31, June 30, 2001 2000 2001 2000 -------------- -------------- --------------- -------------- Net sales $295,109 $266,616 $275,627 $251,926 Cost of sales 244,855 216,981 227,707 205,071 -------- -------- -------- -------- Gross profit 50,254 49,635 47,920 46,855 Selling, general & administrative 30,294 25,706 27,376 27,956 Transaction expenses -- -- 11,050 -- -------- -------- -------- -------- Operating profit 19,960 23,929 9,494 18,899 Interest expense, net 16,241 3,304 3,293 2,950 -------- -------- --------- -------- Earnings before income taxes and extraordinary item 3,719 20,625 6,201 15,949 Income tax expense 2,050 8,350 2,430 6,460 -------- -------- -------- -------- Earnings before extraordinary item 1,669 12,275 3,771 9,489 Extraordinary item--early extinguishment of debt, net of taxes -- -- (9,424) -- -------- -------- -------- -------- NET EARNINGS $ 1,669 $ 12,275 $ (5,653) $ 9,489 ======== ======== ======== ========
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