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FILED BY SUIZA FOODS
CORPORATION PURSUANT TO
RULE 425 OF THE SECURITIES
ACT OF 1933 AND DEEMED
FILED PURSUANT TO RULE
14a-12 OF THE SECURITIES
EXCHANGE ACT OF 1934
SUBJECT COMPANY: DEAN FOODS COMPANY
COMMISSION FILE NO. 1-08262
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Some of the statements in this document are "forward-looking" and are made
pursuant to the safe harbor provision of the Securities Litigation Reform Act of
1995. These "forward-looking" statements include statements relating to (1) the
impact the companies expect the proposed transaction to have on earnings per
share, (2) the companies' expectations about their ability to successfully
integrate the combined businesses, (3) the amount of cost savings and overall
operational efficiencies the companies expect to realize as a result of the
proposed transaction, (4) when the companies expect to close the proposed
transaction, (5) the level of divestitures necessary to obtain regulatory
approval, (6) the companies' projected combined sales, EBITDA and margins, (7)
the ability of the companies to implement and continue branding initiatives and
product innovations in a cost effective manner, (8) the ability of the companies
to obtain financing for the transaction upon the terms contemplated, and (9) the
ability to meet their stated financial goals. These statements involve risks and
uncertainties which may cause results to differ materially from those set forth
in these statements. The ability to achieve the earnings per share projected and
to realize projected cost savings and operational efficiencies is dependent upon
their ability in the time periods projected, to (i) consolidate or reduce
certain administrative or centralized functions, (ii) obtain certain goods and
services more cost effectively, (iii) shift production and distribution between
operating locations without disruption in their operations or in their relations
with their customers, and (iv) close the proposed transactions on the terms
contemplated. The ability to close the proposed transaction in the third quarter
is subject to receipt of shareholder approval and regulatory approval. The level
of divestitures necessary to obtain regulatory approval of the transaction is
subject to the extent of competition in the various markets in which the
combining companies operate, as determined by the Department of Justice, other
regulatory authorities and potentially, state and federal courts. The ability of
the companies to achieve projected combined sales, EBITDA and margins is
dependent upon the ability of the combining companies to maintain their existing
customer and other business relationships or to replace such customers or
business relationships with other comparable relationships and upon economic,
governmental and competitive conditions generally. The ability of the companies
to obtain financing and the terms of such financing is subject to the financial
condition and operating performance of each of the combining companies prior to
closing and to economic and financial market conditions generally. Other risks
affecting the business of the companies are identified in their filings with the
Securities and Exchange Commission, including the Suiza Foods Annual Report on
Form 10-K for the year ended December 31, 2000 and the Dean Foods Annual Report
on Form 10-K for the year ended May 28, 2000. All forward-looking statements in
this press release speak only as of the date hereof. Suiza and Dean Foods
expressly disclaim any obligation or undertaking to release publicly any updates
or revisions to any such statements to reflect any change in their expectations
or any changes in the events, conditions or circumstances on which any such
statement is based.
Other Legal Information
Suiza and Dean Foods expect to file with the SEC a joint proxy
statement/prospectus and other relevant documents concerning the proposed
transaction. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS
WHEN ITS BECOMES AVAILABLE AND ANY AMENDMENTS OR SUPPLEMENTS TO THE JOINT PROXY
STATEMENT/PROSPECTUS AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
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CONCERNING THE PROPOSED TRANSACTION. Investors will be able to obtain the joint
proxy statement/prospectus and other documents filed with the SEC free of charge
at the SEC's website (http: //www.sec.gov). In addition, the joint proxy
statement/prospectus and other documents filed by Suiza and Dean Foods with the
SEC may be obtained free of charge by contacting Suiza Foods Corporation, 2515
McKinney Avenue, Suite 1200, Dallas, Texas 75201, Attn: Investor Relations (tel
214-303-3400), or Dean Foods, 3600 North River Road, Franklin Park, Illinois
60131, Attn: Corporate Secretary (tel 847-678-1680).
Suiza, Dean Foods and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from the stockholders
of Suiza and Dean Foods in connection with the transaction. The directors and
executive officers of Suiza and their beneficial ownership of Suiza common stock
are set forth in the proxy statement for the 2000 annual meeting of Suiza. The
directors and executive officers of Dean Foods and their beneficial ownership of
Dean Foods common stock are set forth in the proxy statement for the 2000 annual
meeting of Dean Foods. You may obtain the proxy statements of Suiza and Dean
Foods free of charge at the SEC's website (http://www.sec.gov). Stockholders of
Suiza and Dean Foods may obtain additional information regarding the interest of
such participants by reading the joint proxy statement/prospectus when it
becomes available.
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The communication filed herewith is a transcript of
Suiza's annual meeting held on May 17, 2001.
(Michelle) Forum is present for purposes of conducting business at this
meeting and I declare that the meeting is legally convened and
ready to transact business. The poll for each matter to be
voted on at this meeting are now open. All stockholders as of
the close of business on March 19, 2001 are entitled to vote
at this meeting, either in person or by proxy, and each
shareholder is entitled to one vote for each share held in his
or her name. We have asked that each of you sign the register
to determine how many shares are present at the meeting. If
you intend to file a proxy at this meeting and you have not
already signed the register, please do so now so that our
inspector of election can determine the total number of shares
entitled to vote at the meeting. As we stated in our notice of
this meeting, we have three matters to be considered and acted
upon today: The reelection of Alan Bernon, Gregg Engles,
Joseph Hardin, and Gene Pender as members of our Board of
Directors, an increase in the number of shares of common stock
issuable under our employee stock purchase plan from 250,000
to 500,000, and the ratification of our Board of Directors'
selection of Deloitte & Touche as our independent auditors for
2001. Is there any discussion concerning any of the matters
before the meeting? If not then we will begin the voting
process. Please vote only if you have not already given a
proxy or if you intend to revoke a proxy that you have already
given. If you need a ballot, please raise your hand and we
will ask that Mark Asbury provide one to you. While the
inspector of election is counting the ballots, I'll turn the
meeting back over to Gregg and Barry who will make a brief
presentation on our operations and recent developments. But
before they begin, I would like to remind you all that the
forward-looking statements that they will make in their
presentation are subject to the provision of the Securities
Litigation Reform Act of 1995. These statements will include
disclosure of our sales and earnings targets for 2001, as well
as our expectations regarding other aspects of our business,
such as our branded product initiatives and the timing of the
completion of our proposed merger with Dean Foods. All of
these statements involve risks and uncertainties that may
cause actual results to differ materially from the statements
made in today's presentation. Information containing
those...concerning those risks is contained in our quarterly
report on Form 10-Q for the quarter ended March 31, 2001.
Also, I will remind you that completion of our transaction
with Dean Foods is subject to the receipt of regulatory
approvals and to the approval of the majority of our
stockholders and those of Dean Foods. Once we have received
our regulatory approval we will distribute a joint proxy
statement to all of our shareholders. We urge you to read that
joint proxy statement very carefully as it will contain
important information that you will need to consider before
voting. You will be able to obtain that joint proxy statement
from the SEC directly or by calling us, or if you are a
registered shareholder it should be mailed to you directly.
Thank you very much and with that I'll turn it over to Gregg
and Barry.
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(Gregg) Thank you, Michelle. Um, we'd now like to make a brief
presentation regarding the company: where we are, what our
performance has looked like recently, and describe for you
what we believe to be the benefits of the Dean Foods
transaction and what the resulting company will look like for
what will be called the new Dean Foods. Let me first walk you
through, again, an overview of how we are organized today and
structured as a company. We have five operations in our
company that are...make up our P&L on our balance sheet. The
largest of those is the Suiza Fluid Dairy Group. It consists
of 4.7 billion dollars in sales. It is primarily engaged in
the business of processing and distributing fresh dairy
products, milk and culture products. We do that through a
network of 4,300 DSD routes, so we have a very dense direct
store delivery distribution system and we're engaged in the
manufacturing of private label brands for our customers, and
our own brands for distribution or labels that we own in the
marketplace. This is a business in which we own a 66.2%
interest and which Dairy Farmers of America owns a 33.8%
interest, so if you're looking at our P&L and you see a
significant minority interest line item in the P&L, it relates
primarily to DFA's 33.8% ownership in our business. The second
business in our group is the Morningstar Foods business. This
is our branded value added business. We own 100% of this
business that has approximately 700 million dollars in sales.
It is engaged primarily in the manufacturing of long shelf
life branded value added dairy products, which are distributed
through a national refrigerated warehouse system, owned by our
customers or by warehouse companies that serve our customers,
and we service our brands in-store through a...an extensive
broker distribution network that we manage through our
Morningstar operation. We also own a significant dairy
operation in Puerto Rico, it has approximately 250 million
dollars in sales. It is engaged primarily, again, in the
distribution and manufacture of fresh dairy products, operates
approximately 260 DSD routes on the island of Puerto Rico, and
has approximately 67% share of the Puerto Rico marketplace. It
is entirely a branded business on the island of Puerto Rico.
We have recently, in February of last year, made our first
foray into the international marketplace with the acquisition
of 75% of a company called Leche Celta which is in the
manufacturing and distribution, again, of fluid milk products.
These are aseptically-manufactured products so they're shelf
stable. This business has approximately 150 million dollars in
sales and again operates through a warehouse distribution
system. And then we own a 43% minority interest in a company
called Consolidated Container, which is comprised of our
previously wholly owned, rigid container, rigid plastic
container manufacturing business, which has been merged with
another business in which we received cash and a 43%
continuing stake. We have, at Suiza today, a very broad system
of manufacturing and distribution operations, and I'm going to
talk about those quickly in the next couple of slides. We have
plant operations in each of these states colored in in either
blue or green or yellow and the little Suiza flags up there
represent manufacturing operations. We have 80 plants in the
United States and cover the bulk of the US population. In
terms of distribution systems, we cover the territories that
are shaded in light green with direct store delivery
distribution from our fluid milk manufacturing plants and
operations and we
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service those areas with the regional brand names that are
located on the map. And you can see that of what you might
have historically thought of as great and notable dairy brands
from your past or childhood, if you grew up in various parts
of the country represented by our distribution system, we own,
I would say, the lion's share of those brands today and they
continue to serve us extremely well. We are also a company
that, as you noticed if you saw the press releases yesterday,
is focusing increasingly on innovation. Now last year at this
meeting I talked about our innovation in the fluid dairy group
with our Milk Made Better products. We continue to roll those
out into new marketplaces as we speak, and we are also
investing very heavily in innovation in the Morningstar group.
I think that the Morningstar management team has done an
outstanding job of finding ways to leverage our manufacturing
and distribution system and our marketing capabilities and
finding ways to partner with people who own great brands that
have applicability in the dairy case. Hershey's, I believe, is
a terrific example of this. We launched a national Hershey's
product in September of last year. It has quickly grown to be
a very important part of our business and we believe it has
absolutely fantastic prospects to grow in what is an 800
million dollar flavored milk category with, I believe, the
best chocolate brand in America, so we're extremely excited
about Hershey and it continues to grow. Yesterday we announced
that we have entered into a licensing agreement and
partnership with Proctor and Gamble to manufacture milk and
coffee beverages under the Folgers Jakada name. Those products
will be launched in the fourth quarter of this year, and
again, we think this is a very large and growing market and
one that we're excited about with the entrance of our new
products into those marketplaces, and I'm sure you'll have the
opportunity to see those at next year's meeting. We also have
launched and are growing very rapidly, our soy milk brand of
products under the Sun Soy label. Again, this is, I believe, a
great success story for Morningstar. This is a category that
is absolutely exploding in terms of its overall growth. We're
the number two player in this category but growing very, very
quickly in terms of our distribution and sales with respect to
this product, and continually, I believe, elevating the
brandedness of our company in a sense of value added
components of our business, and I believe that what we saw
yesterday in terms of the stock market's reaction to the
Folgers announcement is the beginning of a recognition that
this company has great prospects and abilities to continue to
grow its margins and grow its company and sales through
innovation, and these are just a few of the examples of the
success that we have had so far in that arena. We have made
our top priority as a management team delivering on our
financial commitments to our shareholders and on our
commitments of service and quality to our customers, and I'd
like to review with you how we've done with respect to those
commitments over the last year. Uh, we grew our sales in the
year 2000 to 5.8 billion dollars. It was a terrific year with
over 25% sales growth, driven primarily by our acquisition of
the Southern Foods group. Margins increased 61 basis points
from 1999 to the year 2000 up to 6.6% which are historically
extremely high margins in this business and I think reflect
the quality and the drive of our management team to deliver
financial results. We grew diluted earnings per share by an
excess of 20% last year to $3.86. We are very focused
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on free cash flow generation in this company. We generated 150
million dollars of free cash flow out of our business. That's
after the payment of taxes, capital expenditures, every item
we generated an excess of 150 million dollars of free cash
flow, and we increased our returns on invested capital by 10
basis points over the year. The financial community and the
financial press is starting to recognize us for the kind of
performance that we delivered here over the last number of
years, and just to give you a couple of quick examples,
Fortune magazine in the fall puts out a tabulation of most
admired companies from their reader base and their survey
data. They break it down by industry category and in the food
production category, Suiza Foods was head and shoulders among
the Fortune survey, the most admired company in the industry,
which I think is great recognition for a company as young as
ourselves. And Forbes does a similar assessment based on its
own survey and its own database. They call it the Platinum
list and they group us in a somewhat broader category
including food distributors and food manufacturers and they
include not only food processors as Fortune does but also more
branded companies, and again, we ranked third amongst that
group behind Cisco and Performance foods, ahead of such
companies as the William Rigley Company, McCormick, Sara Lee,
and Hormel. So, we as a management team are extremely proud of
the recognition that we're beginning to get for the financial
performance that we have as our number one priority as a
management team. Let me now turn the presentation over the
Barry Fromberg who will, uh, who has the fun part of
describing what our historical financial performance has been
as a company.
(Barry) Got it. Uh, good morning everybody. As Gregg mentioned, I do
think I have the most fun part of the presentation, cause I
get to talk about the cash, and after all, that's why we're
all here. So I would like to spend a few minutes showing you
the money when it comes to Suiza Foods. And, uh, let me start
off by talking about net sales, the left-hand part of this
slide. Net sales have grown just under 50% a year over the
last 5 years, from 1.2 billion dollars in 1996 to 5.8 billion
dollars last year. Uh, now most of this growth does come from
acquisitions but we are growing the business organically at a
rate of about 3-4% a year. That's a combination of increased
volume in our businesses as well as a shift in our mix to more
value added businesses. But this is not a story of just growth
- this is a story of profitable growth and you see that on the
right-hand side of this slide. Our operating income has
actually grown faster than our sales at close to 58% a year
because we are driving margin improvement. You can see the
consolidated margins at the bottom of this page. They are
business-leading because they do reflect a change in our mix
of business over this 5-year period. We bought acquisitions
that have lower margin businesses and folded them into our
operations. We acquired and then divested our packaging
business which actually had higher margins than our dairy
operations. But overall, if you look at our core business,
year in year out, we've been very successful at driving margin
improvement in just about all of our operations. The left
button isn't working. Did I get it? Got it. Um, moving down
the income statement - earnings per share, this is one of the
key benchmarks that we measure ourselves against. You
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can see on the left-hand side of the page our traditional
historical GAAP earnings per share growing 28% a year to $3.86
last year. Cash EPS which adjusts for goodwill amortization,
which is intended to be a proxy for the new accounting
pronouncements, purchase accounting and goodwill
pronouncements that are coming out later this year, growing at
about the same rate to $4.52. Comparing the two numbers last
year, goodwill amortization accounted for 66 cents a share, or
about 17% increase of our cash EPS over traditional EPS
measures. Uh, another very important benchmark for us that
Gregg mentioned is free cash flow. This is net income plus
amortization and depreciation less capital expenditures less
income contributed for Consolidated Containers since that is a
non-cash item, so this is the true free cash flow that the
businesses throw off. Now a portion of this cash is actually
owned by DFA through their minority interests but this
represents the total cash that the businesses generate to
support our debt service to invest in the business and to fuel
the growth of the company. And you can see that we've made
extraordinary progress over the last few years growing from 20
million dollars in free cash flow in 1998 to over a 150
million dollars last year. Looking at our most recent quarter
that we announced a few weeks ago, another very strong quarter
for the company. Sales grew at 5.8%, actually a little higher
than our run rate because of our pass through of higher raw
material costs, operating income grew 8.5%, operating margins
grew 15 basis points during the quarter, and earnings per
share grew from 71 cents to 82 cents, or over 15% over prior
year, and again that cash EPS also grew by about 15% and for
the first quarter the goodwill amortization represented about
20 cents per share in the quarter. Free cash flow continues to
grow at 46 million dollars this year versus 39 million last
year, or an 18% increase over prior year. Looking at our
balance sheet for a moment, we have total debt of about 1.3
billion dollars at March 31st. Most of that was in the dairy
group. 1.18 billion dollars. We had about a billion dollars
outstanding on our revolving credit facility with the balance
being receivable debt and some subsidiary debt. The total
facility available to us at the dairy group is 1.6 billion
dollars so we had just about 500 million dollars available
under that facility to fund the growth of the company going
forward. The parent company debt is virtually all subsidiary
debt. We have a 300 million dollar revolving credit facility
available at the parent level. None of it was outstanding in
March, so in total, we had over 800 million dollars of cash
available under our revolving credit facilities to fund future
growth. With our free cash flow paying down debt, our debt to
EBITDA leverage ration continues to decline. We're now at 2.4
times debt to EBITDA which is a very comfortable level for us.
And Wall Street has, I think, appreciated the performance of
the company. This chart shows how our stock has performed
since our IPO compared to the S&P 500. If you invested in our
company at the IPO you would have earned about a 30%
compounded rate of return over the 5-year period - just
extraordinary performance for a company in our business. And,
as we saw yesterday, we hope that that growth will continue
over time. Our goals for 2001 as we stated publicly before, we
think sales will continue to grow at a rate of 3-4% a year.
EPS, we believe, will grow at double digits, 10-12%, and that
assumes no acquisitions, no additional stock buy-back, and all
we do with our free cash
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flow is pay down debt over the course of the year, which is
probably the least strategic use of that capital. But on that
basis, with our core assets today, we are comfortable that we
could continue to grow earnings here 10-12% over 2001. And
with that, I'd like to turn the presentation back to Gregg.
Thank you very much.
(Gregg) Thanks, Barry. Now let me spend a few minutes and walk you
through the Dean Foods transaction and describe for you what I
believe will be the benefits of the transaction to you as
Suiza shareholders. First of all, the details of the
transaction and how it's structured and the consideration. In
terms of consideration, the deal with Dean Foods is 21 dollars
per share in cash plus .429 shares of Suiza Foods common
stock. At the time that the deal was announced, our stock was
trading in the 48 dollar range. That implied evaluation for
Dean's share of $40.92. Obviously, that has moved up as
Suiza's stock has moved up since the announcement of the
transaction. Basic share ownership following the completion of
the transaction, and this is excluding the shares that will be
issued when our trust converted preferred securities issue
converts. What would be 65% ownership to the Suiza
shareholders and 35% ownership in the Dean shareholders. Total
value of the transaction at the date of the announcement was
2.5 billion dollars which includes one billion dollars of
assumed debt on Dean's balance sheet. In conjunction with this
transaction, we're also going to move to simplify our
corporate structure, and also address what we believe would be
some anti-trust concerns that would otherwise exist with
respect to the consummation of this transaction. By redeeming
the 33.8% interest that Dairy Farmers of America owns in our
Suiza Fluid Dairy Group in exchange for 165 million dollars in
cash and six plants in overlapping regions where Dean and
Suiza both have significant shares in the fluid milk business.
In terms of some of the non-financial issues around the
transaction, the new name of the company will be Dean Foods
Company. We at Suiza hate to give up our name. It's something
we're very proud of and the reputation that we have built in
the marketplace, but this is the right answer for the merge
business. With the exception of our operations in Puerto Rico,
we do not have a consumer franchise in the United States under
the Suiza Foods name. Dean has a very, very substantial
consumer franchise in the United States where the bulk of the
combined companies' operations will be, and we believe that
the identity between our corporate performance and the
recognition and the performance of our brands in the
marketplace is an important one and Dean Foods is the right
name for this company. The headquarters of the company will be
here in Dallas. Howard Dean will be chairman of the company
until his retirement in the middle of next year, 2002. I'll be
C.E.O. until that time and then will also assume the chairman
title at the point in time that Howard turns 65. Board
structure will look like ownership structure with Suiza having
10 of 15 directors and Dean having the remaining 5. What does
the new Dean Foods look like following the consummation of
this merger? Uh, first of all, the company will be an
unparalleled leader in the dairy industry. We'll have
approximately 10 billion dollars in sales in both dairy and
specialty foods, and the company following integration of the
two businesses will generate almost a billion dollars
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in EBITDA on an annual basis. The company will have truly
national geographic reach, and I believe that there's a map
back in here in a moment that will show you where our direct
store delivery coverage will be in the dairy industry on a
combined basis, and it reaches virtually the entire US
population. We will have an even stronger portfolio of brands,
both in the fluid dairy area and also in a value added segment
of our business, and I think those brands will give us
significantly larger and more capable platforms for the growth
of our value added and higher margin branded business, whether
it be in the dairy group or in the Morningstar area. And
finally, we will have a deep and a very experienced management
team, combining management teams from both of these very fine
companies. And, in terms of the Suiza team, will bring to the
party, I think, a track record and an experienced set with
respect to integration of acquisitions and a seamless
presentation of the new company to our customers that have
served us extremely well over the last five years. How do you
as shareholders of Suiza Foods see value creation in this
transaction? Well, first of all, as always, in making
acquisitions at Suiza Foods, we have been extremely
disciplined here with respect to valuation, and because of
that, we expect this transaction to be immediately accretive
to the company in terms of the new accounting standards of
cash earnings per share. In fact, in the first full year of
ownership of this business, we expect the acquisition and
merger of Dean Foods and Suiza to be 5-10% accretive to
earnings per share. On a GAAP earnings basis because in terms
of existing GAAP, because this will be accounted for as a
purchase and will put a significant amount of good will on our
balance sheet, we expect this transaction to be neutral to
GAAP earnings per share in the first full year. We have
expressed to the marketplace our belief that within the first
12 months of owning this business, we will capture 60 million
dollars in synergies which will consist of significant
corporate overhead savings, a more disciplined and focused
approach to advertising and promotional spending, significant
operating improvements in areas where our two businesses
overlap and we'll have the opportunity to reduce facilities
and capture enhanced operating performance in our operations,
there will be some purchasing synergies that come out of this
transaction and we are working hard to identify those and be
prepared to capture them immediately, and then there will be a
host of other smaller items that will contribute to our
recognition of the 60 million dollars in synergies in the
first full year. By the end of the third year we expect to
capture 100 or 120 million dollars in synergies during the
third full year of our ownership of the Dean operation, so we
expect this business as we fully integrate it to become
increasing accretive to earnings per share over time. In terms
of other metrics that impact shareholder value and the balance
sheet of our company going forward, let me note that over the
next 5 years we expect the company to generate in excess of
1.5 billion dollars of free cash flow before debt service. So
this will be a company that will have the ability to rapidly
de-leverage its balance sheet following the consummation of
this transaction. Because of that de-leveraging and the
increasing portfolio of synergies that we expect to capture,
we believe that this company will accelerate our earnings per
share growth rate back up into the mid teens on a sustainable
basis for the next several years. We will have a host of
opportunities as we move
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forward to utilize our assets better. I expect that we will
consolidate facilities, we will drive higher unit volumes
through our most efficient operating facilities as we move
forward, and we will recognize significant benefits in terms
of distribution systems as we combine these two companies. So
we expect that this will be a transaction that will keep on
giving for a significant period of time. We will also have a
company that has substantially greater both opportunities and
resource to invest in innovation branding and in moving our
company up the value added chain to look more like a
traditional consumer package goods company, and we're
extremely excited about that opportunity as we merge the two
companies together. And finally, we'll have a company that has
significantly greater market capitalization and I believe
liquidity in its trading environment, which I believe will
benefit all of our shareholders. In terms of Dean Foods, the
new Dean Foods composition of sales, we'll be a company with
approximately 5.5 billion dollars of traditional fresh milk
and cream sales, or approximately 58% of our combined
business. We will have a business in Morningstar, combining
Morningstar with Dean's National Refrigerated Products group,
with sales in excess of 1.1 billion dollars, or approximately
12% of our business. That will be a highly branded, highly
value added aspect of our business, and a very, very
significant contributor to earnings and growth going forward.
We will be, on a combined basis, the third largest ice cream
manufacturing and distribution company in the United States,
with sales of close to a billion dollars in the ice cream and
novelty business alone, or approximately 10% of our business.
We believe that ice cream is an area where we have great
opportunities to add value and to continue to drive margins
forward in the size and scale that we'll have in combining our
operations with Dean's, will make us, I believe, a very, very
powerful platform in the more highly branded, highly value
added ice cream business. We'll have a 600 million dollar
cultured products business as part of our combined operation,
and then we will have also significant juice, water and drink
businesses, and pickle business, which Dean Foods operates as
the leading private label manufacturer and food service
manufacturer of pickles in the country. And then a couple of
other smaller businesses that will round out the portfolio of
approximately 10 billion dollars in sales. We will have a
company that has not only a history of product innovation, but
as I mentioned earlier, I believe, greater opportunities to
innovate moving forward. On the Suiza side, we have introduced
Milk Made Better products. They're growing in the marketplaces
and expanding their distribution. Sun Soy, I mentioned
earlier, Hershey's, our International Delight brand continues
to grow at double-digit rates after ten years of such
performance. And on the Dean Foods side, Dean has been a
terrific innovator in packaging and small single-serve milk
items with their Chug products, that is approximately a 200
million dollar brand. Dean also has the right to acquire and
currently owns 38% of the Silk soy milk brand, which is the
leading brand in the category, and when combined with Sun Soy
will give us, I believe, and absolutely unassailable position
in the soy milk category. Dean's also owns the Marie's salad
dressing business and is the number one producer of branded
dip items sold throughout the United States, so we'll have a
broad portfolio of branded value added products that I believe
we can build upon as we move forward. I mentioned the ubiquity
of
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our distribution system. Uh, the combined companies will cover
the areas shaded in green with the addition of the Dean's
brands such as Land O'Lakes and Deans, and Mayfield that you
see on this chart. And this is a company that frankly has the
likes of which the dairy industry has never seen with the sort
of geographic scope that we'll bring to bear that I believe
allows us to match up with our national customers in a way
that will continue to have us be the preferred supplier of
fluid dairy products throughout the United States. Our system
will consist of 137 plants over 600 DSD distribution routes,
and over 30,000 employees in our fluid dairy operations. We do
have some regulatory hoops and approvals that we're gonna have
to jump through and acquire as we move forward to closing. The
principal requirements will be approval from the Justice
Department pursuant to our filing of a Hart-Scott-Rodino
merger prenotification filing. We will both, as Michelle
mentioned earlier, both companies have to acquire shareholder
approval from our shareholders with respect to this
transaction because of the stock nature of 50% of the
consideration. We expect those conditions to be satisfied some
time during the third and fourth quarter of this year, and
that closing will happen before year end. So, in summary, in
terms of delivering shareholder value, we at Suiza continue to
focus on driving earnings per share growth and on building our
free cash flow as our company and investing it wisely. In
combining with Dean we are creating the unparalleled dairy
leader in the industry, approximately four times as large as
our next largest competitor. We believe we have a very, very
solid growth strategy. That strategy is build around, first of
all taking great care of our customers, delivering them with
great quality products that are always available for sale to
their customers, and then adding value in those areas where we
can add value and create shareholder value at the same time in
our product portfolio mix. We're a company with great growing
and stable cash flows. We have, I believe, an outstanding
history, particularly recently of product innovation, and we
have a very robust new product pipeline. We have a management
team that is heavily invested in this stock. We are utterly
committed to delivering value to you as fellow shareholders
day in and day out, and we are here to stay the course and do
so in a manner that is both steady and progressive in terms of
driving earnings growth in our business and creating value for
you, our shareholders. With that, I would like to close the
meeting in terms of our presentation and invite...Michelle,
are you going to come back up to tally the votes or would you
like me to do so?
(Michelle) You're scheduled to do it.
(Gregg) I'm scheduled to do it. So I will do it. Mr. Asbury, as of
10:40 today, Thursday, May 17th, the polls are officially
closed for each matter to be decided at this meeting. Will you
please report the results of the ballot?
(Mr. Asbury) Yes sir, Mr. Chairman. I have counted the ballots and the
results are as follows: The nominees for re-election to the
Board of Directors, Mr. Alan J. Bernon, Mr. Gregg L. Engles,
Mr. Joseph S. Hardin, Jr., and Mr. P. Eugene Pender, each
received the affirmative vote of a plurality of the votes cast
in today's election.
13
The proposal to increase the number of shares of common stock
issuable unto the Suiza Foods 1997 Employee Stock Purchase
Plan from 250,000 shares to 500,000 shares received the
affirmative vote of the majority of the shares having voting
power present at this meeting in person or by proxy, and
finally, the proposal to ratify the selection of Deloitte &
Touche, L.L.P., as independent auditor for the fiscal year
2001 received the affirmative vote of the holders of the
majority of the shares present in person or by proxy and
entitled to vote at this meeting. Accordingly, each of the
proposals has been approved by the requisite number of votes
entitled to vote at this meeting.
(Gregg) Thank you. I now declare that all proposals have passed. At
this time I would like to introduce Keith Flanigan and Mark
Layton from Deloitte & Touche, L.L.P., who are available to
answer any questions from any stockholders or proxies. Are
there any questions for Messrs. Flanigan and Layton with
respect to accounting matters of the company? Thank you,
Keith. I'd now like to open the floor for any general
questions. Are there questions of management or any other
official or agent of the company at the meeting? If not, then
the business for which this meeting was convened is now
completed and the meeting is adjourned. Thank you for
attending and please join us for a cup of coffee in the lobby.
Thank you very much.