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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
MARCH 6, 2002 (DECEMBER 21, 2001)
[DEAN FOODS COMPANY]
DEAN FOODS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 1-12755 75-2559681
(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification
of Incorporation) No.)
2515 MCKINNEY AVENUE, LB 30, SUITE 1200
DALLAS, TEXAS 75201
(Address of principal executive offices) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(214) 303-3400
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Explanatory Note: This Current Report on Form 8-K/A amends the Registrant's
Current Report on Form 8-K dated and filed January 7, 2002 to include financial
statements of old Dean Foods Company ("Old Dean Foods") and pro forma financial
information relating to the Registrant's acquisition of Old Dean Foods and
certain related divestitures, in accordance with Items 7(a)(4) and 7(b)(2) of
Form 8-K. The Registrant previously reported the completion of its acquisition
of Old Dean Foods, now known as Dean Holding Company, and the related
divestitures in its Current Report on Form 8-K dated January 7, 2002. The
acquisition and divestitures were completed on December 21, 2001.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
In connection with the acquisition by merger of Old Dean Foods by our
wholly-owned subsidiary, Blackhawk Acquisition Corp., on December 21, 2001, the
financial statements required by Item 7(a) of the General Instructions to Form
8-K have been included in the following documents, previously filed with the
Securities and Exchange Commission pursuant to the Securities and Exchange Act
of 1934, as amended, and are hereby incorporated by reference:
1. Old Dean Foods' Annual Report on Form 10-K for the year ended May
27, 2001 (File No. 001-08262).
2. Old Dean Foods' Quarterly Report on Form 10-Q for the quarterly
period ended August 26, 2001 (File No. 001-08262).
3. Dean Holding Company's Quarterly Report on Form 10-Q for the
quarterly period ended November 25, 2001 (File No. 001-08262).
(b) PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma financial information for the year
ended December 31, 2000 and the nine months ended September 30, 2001 is
derived from the historical financial statements of Suiza Foods Corporation
(now known as Dean Foods Company) and old Dean Foods and gives effect to
the following transactions:
- The acquisition by merger of old Dean Foods by our wholly-owned
subsidiary, Blackhawk Acquisition Corp (the "merger"). The acquisition
was accounted for under the purchase method of accounting. Blackhawk
Acquisition Corp. survived the merger and immediately thereafter changed
its name to Dean Holding Company ("Dean Holding" or "legacy Dean").
Immediately after the merger, we changed our name to Dean Foods Company
("new Dean", "Suiza" or "legacy Suiza").
- The purchase of Dairy Farmers of America, Inc.'s ("DFA") 33.8% minority
interest in our subsidiary, Suiza Dairy Group, L.P.
- The divestiture of eleven plants located in areas where our operations
and those of legacy Dean overlapped. These divestitures were required in
order to obtain regulatory approval for the acquisition.
- The refinancing of certain of our indebtedness and that of Dean Holding.
The legacy Dean historical financial information included in the pro forma
financial information for the year ended December 31, 2000 is derived from
legacy Dean's results of operations for the twelve months ended November 26,
2000. The legacy Dean historical financial information included in the pro forma
financial information for the nine months ended September 30, 2001 is derived
from legacy Dean's results of operations for the nine months ended November 25,
2001. The legacy Dean historical financial information included in the pro forma
balance sheet is derived from Dean Holding's balance sheet as of November 25,
2001. Prior to the merger, legacy Dean's actual fiscal year ended on the last
Sunday of May. Subsequent to the merger, Dean Holding changed its fiscal year
end to December 31. The pro forma balance sheet data is presented as if the
merger and the related transactions had occurred on September 30, 2001. The pro
forma statements of income assume the merger and the related transactions
occurred on January 1, 2000.
1
New Dean has not completed a final allocation of the purchase price to the
fair values of assets and liabilities of Dean Holding and the related business
integration plans. New Dean expects that the ultimate purchase price allocation
may include additional adjustments to the fair values of depreciable tangible
assets, identifiable intangible assets (some of which will have indefinite
lives) and the carrying values of certain liabilities. Accordingly, to the
extent that such assessments indicate that the fair value of the assets and
liabilities differ from their preliminary purchase allocations, such difference
would adjust the amounts allocated to those assets and liabilities and would
change the amounts allocated to goodwill. The pro forma statements of income do
not include cost savings from synergies which may be achievable subsequent to
the closing of the merger or the impact of non-recurring items directly related
to the merger.
The pro forma information shown under this heading is unaudited, is
presented for informational purposes only, is not necessarily indicative of the
financial position or results of operations that would actually have occurred
had the merger or the related transactions been consummated as of the dates or
at the beginning of the periods presented, nor is it necessarily indicative of
future operating results or financial position. The unaudited pro forma
condensed consolidated financial statements should be read in conjunction with
our historical financial statements and related notes thereto and those of Dean
Holding.
2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS EXCEPT SHARE DATA)
RECLASSIFICATION PURCHASE
LEGACY LEGACY ACQUISITION OF OF DIVESTED OF MINORITY
SUIZA DEAN LEGACY DEAN OPERATIONS INTEREST PRO FORMA
---------- ---------- -------------- ---------------- ----------- ----------
(H)
Net sales....................... $5,756,303 $4,193,293(a) $ -- $(710,547) $ -- $9,239,049
Cost of sales................... 4,330,067 3,165,289(a) (5,964)(d) (537,160) 6,952,232
---------- ---------- ---------- --------- -------- ----------
Gross profit.................... 1,426,236 1,028,004 5,964 (173,387) -- 2,286,817
Operating costs and expenses:
Selling and distribution...... 812,274 643,215(a) (2,230)(d) (112,971) 1,340,288
General and administrative.... 182,570 131,204 (341)(d) (19,422) (1,000)(i) 293,011
Amortization of intangibles
and other assets............ 52,441 22,271 (13,914)(d),(e) (4,209) 56,589
Plant closing and other
costs....................... 3,388 6,078 9,466
Litigation settlement costs... 7,500 7,500
---------- ---------- ---------- --------- -------- ----------
Total operating costs
and expenses......... 1,058,173 802,768 (16,485) (136,602) (1,000) 1,706,854
---------- ---------- ---------- --------- -------- ----------
Operating income................ 368,063 225,236 22,449 (36,785) 1,000 579,963
Other (income) expense:
Interest expense, net......... 112,586 60,606 85,464(f) 13,793(j) 272,449
Finance charges on trust
issued preferred
securities.................. 33,595 33,595
Equity in earnings of
unconsolidated affiliates... (11,453) 414 (11,039)
Income on divested
operations.................. (22,325) 22,325(i)
Other income, net............. (630) (10,000)(c) (491) (11,121)
---------- ---------- ---------- --------- -------- ----------
Total other (income)
expense.............. 134,098 51,020 85,464 (22,816) 36,118 283,884
---------- ---------- ---------- --------- -------- ----------
Income from continuing
operations before income
taxes......................... 233,965 174,216 (63,015) (13,969) (35,118) 296,079
Income taxes.................... 90,303 66,689 (25,100)(g) (13,969) (5,117)(g) 112,806
Minority interest in earnings... 29,911 (29,340)(i) 571
---------- ---------- ---------- --------- -------- ----------
Income from continuing
operations.................... $ 113,751 $ 107,527 $ (37,915) $ -- $ (661) $ 182,702
========== ========== ========== ========= ======== ==========
Earnings per share from
continuing operations:
Basic........................... $ 4.03 $ 4.19
Diluted......................... $ 3.68 $ 3.91
Average common shares:
Basic........................... 28,195,043 15,459,528(k) 43,654,571(k)
Diluted......................... 36,671,264 15,459,528(k) 52,130,792(k)
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income For
the Year Ended December 31, 2000 and the Nine Months Ended September 30, 2001.
3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2001
(IN THOUSANDS EXCEPT SHARE DATA)
RECLASSIFICATION PURCHASE
LEGACY LEGACY ACQUISITION OF OF DIVESTED OF MINORITY
SUIZA DEAN LEGACY DEAN OPERATIONS INTEREST PRO FORMA
----------- ---------- -------------- ---------------- ----------- -----------
(H)
Net sales.................. $ 4,557,158 $3,448,956(a) $ -- $ (546,395) $ -- $ 7,459,719
Cost of sales.............. 3,477,209 2,680,702(a) (6,906)(d) (419,616) 5,731,389
----------- ---------- ----------- ---------------- -------- -----------
Gross profit............... 1,079,949 768,254 6,906 (126,779) -- 1,728,330
Operating costs and
expenses:
Selling and
distribution........... 622,746 483,609(a) (2,053)(d) (86,720) 1,017,582
General and
administrative......... 131,498 116,000 (373)(d) (14,929) (750)(i) 231,446
Amortization of
intangibles and other
assets................. 39,914 18,658 (12,394)(d),(e) (3,140) 43,038
Plant closing and other
costs.................. 843 843
Merger-related costs..... 35,691(b) (35,691)(b)
----------- ---------- ----------- ---------------- -------- -----------
Total operating
costs and
expenses......... 795,001 653,958 (50,511) (104,789) (750) 1,292,909
----------- ---------- ----------- ---------------- -------- -----------
Operating income........... 284,948 114,296 57,417 (21,990) 750 435,421
Other (income) expense:
Interest expense, net.... 76,494 49,920 57,059(f) 8,540(j) 192,013
Finance charges on trust
issued preferred
securities............. 25,186 25,186
Equity in earnings of
unconsolidated
affiliates............. 2,565 (2,251) 314
Income on divested
operations (14,410) 14,410(i)
Other income, net........ 1,600 1,600
----------- ---------- ----------- ---------------- -------- -----------
Total other
(income)
expense.......... 105,845 47,669 57,059 (14,410) 22,950 219,113
----------- ---------- ----------- ---------------- -------- -----------
Income from continuing
operations before income
taxes.................... 179,103 66,627 358 (7,580) (22,200) 216,308
Income taxes............... 65,452 24,762 2,896(g) (7,580) (3,116)(g) 82,414
Minority interest in
earnings................. 26,109 (25,593)(i) 516
----------- ---------- ----------- ---------------- -------- -----------
Income from continuing
operations............... $ 87,542 $ 41,865 $ (2,538) $ -- $ 6,509 $ 133,378
=========== ========== =========== ================ ======== ===========
Earnings per share from
continuing operations:
Basic...................... $ 3.17 $ 3.10
Diluted.................... $ 2.86 $ 2.89
Average common shares:
Basic...................... 27,594,599 15,459,528(k) 43,054,127(k)
Diluted.................... 36,180,167 15,459,528(k) 51,639,695(k)
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
For the Year Ended December 31, 2000 and the Nine Months Ended September 30,
2001.
4
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE NINE MONTHS ENDED SEPTEMBER 30,
2001
(IN THOUSANDS EXCEPT SHARE DATA)
(a) The Emerging Issues Task Force of the Financial Accounting Standards
Board Issue No. 00-10 "Accounting for Shipping and Handling Fees and Costs" was
adopted by legacy Dean in the fourth quarter of its fiscal year ended May 27,
2001. This resulted in a reclassification to legacy Dean's income statement for
its fiscal year ended May 27, 2001. This reclassification has been reflected in
the historical Dean Foods amounts in these pro forma financial statements. There
was no net impact on legacy Dean's operating income or net income as a result of
this reclassification.
(b) Legacy Dean recorded a pre-tax charge of $35.7 million ($22.1 million
after-tax) in the nine months ended November 25, 2001 for merger-related costs.
These charges consist of professional fees of $15.4 million, severance and
employee stay costs of $5.3 million and a $15.0 million charge relating to a
lease commitment on office space that the company will not occupy. These costs
directly related to the merger have been eliminated from the pro forma statement
of income for the nine months ended September 30, 2001.
(c) On December 1, 2000, legacy Dean sold a $30 million subordinated note
which was received as part of the proceeds from the sale of legacy Dean's
vegetable business in legacy Dean's 1999 fiscal year, for cash proceeds of $10
million. Due to the uncertainty of the collectibility of the note, the note was
originally valued at a nominal amount. As a result of the sale, legacy Dean
reversed $10 million of the original reserve against the note, resulting in a
$10 million pre-tax gain in its second quarter of fiscal 2001.
(d) Pro forma adjustment to depreciation and amortization to reflect the
depreciation and amortization of the fair values of property and equipment and
identifiable intangibles over their estimated useful lives.
(e) Pro forma adjustment to eliminate legacy Dean's historical amortization
of goodwill, net of the amounts related to legacy Dean's divested operations.
On June 29, 2001, the Financial Accounting Standards Board issued a new
business combinations financial accounting standard and a new goodwill and
intangible asset financial accounting standard. The new business combinations
financial accounting standard and the portion of the new intangible asset
financial accounting standard related to the elimination of the requirement to
amortize goodwill and intangibles with indefinite lives, are effective for
acquisitions completed after June 30, 2001 and therefore no amortization for
goodwill or intangibles with indefinite lives has been included for the purchase
of Dean Holding. The remaining provisions of the new intangible asset financial
accounting standard which will discontinue the requirement to amortize existing
goodwill and existing intangibles with indefinite lives for business
combinations completed prior to June 30, 2001 were not effective for new Dean
until January 1, 2002. Since these remaining provisions were not yet effective
in the periods presented in these pro formas, no pro forma adjustment has been
included for the elimination of historical new Dean amortization of goodwill and
intangibles with indefinite lives.
New Dean has not completed a final allocation of the purchase price to the
fair value of assets and liabilities of legacy Dean and the related business
integration plans. New Dean expects that the ultimate purchase price allocation
may include additional adjustments to the fair values of depreciable tangible
assets, identifiable intangible assets (some of which will have indefinite
lives) and the carrying value of certain liabilities. Accordingly, to the extent
that such assessments indicate that the fair value of the assets and liabilities
differ from their preliminary purchase price allocations, such difference would
adjust the amounts allocated to those assets and liabilities and would change
the amounts allocated to goodwill. Assuming a weighted average useful life of
depreciable assets of 15 years, every $10 million of excess purchase price which
is reallocated between depreciable assets and goodwill will result in a change
in depreciation expense for the year ended December 31, 2000 of approximately
$.7 million and for the nine month period ended September 30, 2001 of
approximately $0.5 million.
5
(f) Pro forma adjustment to reflect interest expense on the new credit
facility borrowings and borrowings under the receivable-backed loan, partially
offset by the elimination of interest expense related to repaid debt, as
follows:
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
2000 2001
------------ -------------
Interest on proceeds under new credit facility assuming a
weighted average interest rate of 9.14% for the year and
7.54% for the nine month period........................... $166,716 $103,218
Interest on borrowings under receivable-backed loan assuming
a weighted average interest rate of 6.91% for the year and
5.26% for the nine month period........................... 27,642 15,776
Letter of credit and commitment fees........................ 4,161 3,067
Amortization of fair value adjustment on Dean Holding's
debt...................................................... 3,499 2,530
Amortization of deferred financing costs.................... 8,434 6,326
Less historical interest expense on the following debt:
New Dean credit facility, including letter of credit and
commitment fees........................................ (98,266) (55,123)
New Dean receivable-backed loan........................... (5,482) (7,452)
Amortization of deferred financing costs.................. (2,344) (1,952)
Dean Holding's commercial paper and revolving credit
facility............................................... (18,896) (9,331)
-------- --------
Pro forma adjustment to interest expense on debt
facilities................................................ $ 85,464 $ 57,059
======== ========
A 0.125% increase in the interest rate on the new credit facility and the
receivable-backed loan would increase interest expense by $3.0 million and $2.2
million for the year ended December 31, 2000 and the nine months ended September
30, 2001, respectively.
(g) Pro forma adjustment to reflect income taxes on adjustments at an
estimated overall effective tax rate of 38.1%.
(h) Pro forma adjustment to reclassify the operations of the eleven milk
processing plants to be divested to a single line item, "Income on divested
operations."
(i) Pro forma adjustment to reflect new Dean's acquisition of DFA's
minority interest in Suiza Dairy Group and the elimination of the minority
interest charge related to DFA's minority interest. In addition, management fees
payable to DFA of $1 million and $0.75 million for the year ended December 31,
2000 and the nine months ended September 30, 2001, respectively, have been
eliminated.
(j) Pro forma adjustment to reflect interest expense on $150.9 million in
borrowings under the new credit facility to fund the purchase, assuming a
weighted average interest rate of 9.14% and 7.54% for the year ended December
31, 2000 and the nine months ended September 30, 2001, respectively. These
borrowings were used to pay the cash portion of consideration to purchase DFA's
minority interest in Suiza Dairy Group.
(k) Pro forma shares reflect historical new Dean basic and diluted shares
adjusted for the issuance of shares to legacy Dean stockholders in connection
with the merger.
These pro forma statements of income do not include adjustments to reflect
cost savings from synergies which may be achievable subsequent to the closing of
the merger or the impact of non-recurring items directly related to the merger.
In connection with the refinancing of existing credit facilities, new Dean will
record an extraordinary loss of $4.9 million, net of income taxes of $3.0
million, related to the write-off of unamortized deferred financing costs of the
old credit facility. New Dean would recognize an estimated gain of $29.5
million, net of income taxes of $18.1 million, on the sale of existing legacy
Suiza plants to DFA in connection with the purchase of DFA's minority interest
in Suiza Dairy Group. In addition, new Dean realized a tax benefit of $12.0
million from the divestiture of the four legacy Dean plants. These pro forma
statements also do not include a charge of $28.5 million recognized during the
fourth quarter of 2001 to amend existing milk supply arrangements with DFA.
6
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2001
(IN THOUSANDS)
RECLASSIFICATION PURCHASE PRO FORMA
LEGACY LEGACY ACQUISITION OF OF DIVESTED OF MINORITY BALANCE
SUIZA DEAN LEGACY DEAN OPERATIONS INTEREST SHEET
---------- ---------- -------------- ---------------- ----------- ----------
(e) (f)
Current assets:
Cash and cash equivalents...... $ 25,761 $ 37,411 $ -- $ -- $ -- $ 63,172
Receivables, net of allowance
for doubtful accounts........ 540,791 353,327 (59,825) 834,293
Inventories.................... 209,616 261,127 23,434(a) (16,829) 477,348
Refundable income taxes........ 1,268 1,268
Deferred income taxes.......... 60,844 49,340 38,964(a) (2,550) 146,598
Prepaid expenses and other
current assets............... 56,174 29,496 (32,468)(d) (1,440) 51,762
---------- ---------- ---------- --------- --------- ----------
Total current assets............. 894,454 730,701 29,930 (80,644) 1,574,441
Property, plant and equipment,
net............................ 1,011,645 907,288 (114,597)(a) (136,178) 1,668,158
Carrying value of net assets to
be divested.................... 236,136 (236,136)
Intangible and other assets...... 1,926,679 700,335 1,121,951(a),(b), (80,070) (64,079) 3,604,816
(c),(d)
---------- ---------- ---------- --------- --------- ----------
Total................... $3,832,778 $2,338,324 $1,037,284 $ (60,756) $(300,215) $6,847,415
========== ========== ========== ========= ========= ==========
Current liabilities:
Accounts payable and accrued
expenses..................... $ 543,076 $ 447,422 $ 116,226(a),(c) $ (47,141) $ -- $1,059,583
Income taxes payable........... 11,012 43,442 (3,008)(b) 15,472 6,063 72,981
Current portion of long-term
debt......................... 164,919 20,150 (66,250)(c) (523) 118,296
---------- ---------- ---------- --------- --------- ----------
Total current
liabilities........... 719,007 511,014 46,968 (32,192) 6,063 1,250,860
Long-term debt................... 1,119,087 936,015 855,430(a),(c) (10,106) 150,918(c) 3,051,344
Other long-term liabilities...... 60,695 32,310 119,984(a) (375) 40,000 252,614
Deferred income taxes............ 139,586 118,313 21,096(a) (18,083) 260,912
Mandatorily redeemable
convertible trust issued
preferred securities........... 584,459 584,459
Minority interest in
subsidiaries................... 515,472 (515,472)
Stockholders' equity............. 694,472 740,672 (6,194)(a),(b) 18,276 1,447,226
---------- ---------- ---------- --------- --------- ----------
Total................... $3,832,778 $2,338,324 $1,037,284 $ (60,756) $(300,215) $6,847,415
========== ========== ========== ========= ========= ==========
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
7
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE DATA)
(a) In connection with the merger, new Dean paid each legacy Dean
stockholder $21.00 in cash per share and issued 0.429 shares of new Dean common
stock for each of the 36.0 million shares of legacy Dean common stock
outstanding at the date of the merger. In addition new Dean issued approximately
..752 new Dean stock options for each outstanding stock option of legacy Dean.
The following summarizes the total assumed purchase price and related
preliminary allocation to the net assets acquired:
Total purchase price:
Fair value of new Dean common stock based on an average
price per share of $47.83 around the announcement
date................................................... $ 739,366
Cash consideration........................................ 756,760
Estimated transaction costs............................... 55,735
----------
Net purchase price................................ $1,551,861
==========
Purchase price allocation:
Net purchase price........................................ $1,551,861
Historical net assets acquired............................ (740,672)
----------
Excess purchase price..................................... 811,189
Less allocation of excess purchase price:
Reduction in the carrying value of legacy Dean's senior
notes to reflect higher fair value interest rates..... (41,058)
Increase in the carrying value of inventory to fair
value................................................. (23,434)
Decrease in the carrying value of property, plant and
equipment to fair value based on expected
post-acquisition use.................................. 114,597
Increase in other long-term liabilities to reflect fair
value primarily due to employee benefit plan
obligations and unfavorable contracts................. 119,984
Increase in accounts payable and accrued expenses to
reflect estimated cash liabilities to satisfy (I)
employee surrender rights under Dean's stock option
plans of approximately $81.0 million and (ii)
severance and employee change in control obligations
of $23.9 million and other required reserves.......... 119,313
Increase in the carrying value of equity-method
investments to fair value............................. (30,839)
Allocation of purchase price to identifiable
intangibles, including trademarks, tradenames and
favorable customer contracts, net of existing
historical amounts.................................... (218,253)
Current deferred tax effect of fair value
adjustments........................................... (38,964)
Non-current deferred tax effect of fair value
adjustments........................................... 21,096
----------
Excess purchase price allocated to goodwill................. $ 833,631
==========
We have not completed our final assessment of the fair value of assets and
liabilities of Dean Holding and the related business integration plans, and thus
our purchase price allocation process is incomplete. We expect that the ultimate
purchase price allocation will include additional adjustments to the fair values
of depreciable tangible assets, changes in preliminary allocations of a portion
of the purchase price to both definite and indefinite life indentifiable
intangible assets and additional adjustments to the carrying value of certain
liabilities, including the finalization of or revisions to potential liabilities
associated with business integration plans and termination and change in control
benefits. Accordingly, to the extent that such assessments indicate that the
fair value of the assets and liabilities differ from the above preliminary
allocations, such differences would be allocated to those assets and liabilities
and would change the amounts allocated to goodwill.
8
(b) In connection with the refinancing of existing credit facilities
discussed in (c) below, new Dean recorded an extraordinary loss of $4.9 million,
net of income taxes of $3.0 million, related to the write-off of unamortized
deferred financing costs of the old credit facility. As a result, intangibles
and other assets have been reduced by $7.9 million and taxes have been reduced
by $3.0 million, with the residual difference of $4.9 million reflected as a
decrease in equity.
(c) In connection with the merger, new Dean entered into a new credit
facility, expanded its receivable-backed loan facility and refinanced certain
indebtedness.
The following table summarizes the sources and uses of the borrowings under
the new credit facility and the increase in the receivable-backed loan:
ACQUISITION OF PURCHASE OF
LEGACY DEAN MINORITY INTEREST TOTAL
-------------- ----------------- ----------
Sources:
Proceeds from the new credit facility...... $1,824,138 $150,918 $1,975,056
Proceeds from the receivable-backed loan... 150,000 150,000
---------- -------- ----------
Total sources...................... $1,974,138 $150,918 $2,125,056
========== ======== ==========
Uses:
Repayment of existing new Dean credit
facility, including accrued interest of
$1.7 million............................ $ 945,620 $ -- $ 945,620
Repayment of legacy Dean revolving credit
facility, including accrued interest of
$1.4 million............................ 201,368 201,368
Payment of cash consideration to legacy
Dean stockholders....................... 756,760 756,760
Payment of cash consideration to acquire
DFA minority interest................... 145,396 145,396
Payment of estimated financing costs on new
credit facility, in excess of $16.6
million previously paid................. 30,527 30,527
Payment of estimated transaction costs, in
excess of $15.8 million previously
paid.................................... 39,863 5,522 45,385
---------- -------- ----------
Total uses......................... $1,974,138 $150,918 $2,125,056
========== ======== ==========
(d) Payments of $32.5 million for financing costs on new credit facility
and transaction costs through September 30, 2001 are reclassified from prepaid
expenses into intangibles and other assets in this pro forma balance sheet.
(e) Represents the reclassification to a single line item, "Carrying value
of net assets to be divested," of the historical carrying values of the net
assets of the seven divested legacy Suiza milk processing plants and the fair
value of the four divested legacy Dean milk processing plants as part of the
purchase price for DFA's minority interest in Suiza Dairy Group.
(f) Reflects the acquisition of DFA's minority interest in Suiza Dairy
Group for consideration of $473.4 million consisting of (i) $145.4 million in
cash, (ii) the net assets of eleven milk processing plants at fair value and
(iii) a $40 million subordinated contingent promissory note. The estimated
consideration does not include a contingent purchase price amount for potential
additional payments to DFA related to the milk supply of legacy Dean plants. As
a result of the acquisition of DFA's minority interest in Suiza Dairy Group and
the related sale of legacy Suiza plants, new Dean would recognize an estimated
gain of $29.5 million, net of income taxes of $18.1 million. In addition, new
Dean realized a tax benefit of $12.0 million from the divestiture of the four
legacy Dean plants. Also as a result of the acquisition of the DFA minority
interest, new Dean will recognize an additional reduction in equity of $11.2
million to fully recognize an accumulated other comprehensive loss on interest
rate swaps that had previously been partially allocated to DFA's minority
interest in Suiza Dairy Group.
9
(c) EXHIBITS
2.1 -- Agreement and Plan of Merger, dated as of April 4, 2001,
among Suiza Foods Corporation, Dean Foods Company and
Blackhawk Acquisition Corp. (filed as Exhibit 2.1 to Suiza's
Current Report on Form 8-K, dated as of April 5, 2001, and
incorporated herein by reference).
2.2 -- Credit Agreement, dated as of July 31, 2001, among Suiza
Foods Corporation, certain subsidiaries of Suiza Foods
Corporation named therein, as guarantors, the lenders named
therein, First Union National Bank, as administrative agent,
Bank One, N.A., as syndication agent, First Union
Securities, Inc. and Banc One Capital Markets, Inc., as co-
lead arrangers and joint book runners, and Fleet National
Bank, Harris Trust and Savings Bank and Suntrust Bank, N.A.,
as co-documentation agents (filed as Exhibit 10.3 to Suiza's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2001 (File No. 1-12755) and incorporated herein by
reference).
2.3* -- First Amendment to Credit Agreement, dated as of December
19, 2001, by and among Suiza Foods Corporation, a Delaware
corporation, First Union National Bank, as Administrative
Agent for the lenders party to the Credit Agreement, Bank
One, NA, as Syndication Agent for the Lenders, Fleet
National Bank, Harris Trust and Savings Bank and Suntrust
Bank, as Co-Documentation Agents, and the Required Lenders
named therein, amending that certain Credit Agreement, dated
as of July 31, 2001, among Suiza Foods Corporation, the
Administrative Agent, the Syndication Agent, the
Documentation Agents and the Lenders.
2.4* -- Amended and Restated Securities Purchase Agreement, dated as
of December 21, 2001, among Suiza Foods Corporation, Suiza
Dairy Group Holdings, Inc., Dairy Farmers of America, Inc.,
Dairy Rich, LLC and Mid-Am Capital, L.L.C.
23.1 -- Consent of PricewaterhouseCoopers LLP
---------------
* Previously filed with the Registrant's Current Report on Form 8-K dated and
filed January 7, 2002
10
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 thereunto duly authorized.
DEAN FOODS COMPANY
By: /s/ BARRY FROMBERG
------------------------------------
Executive Vice President and
Chief Financial Officer
Dated: March 6, 2002
11
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Agreement and Plan of Merger, dated as of April 4, 2001, among
Suiza Foods Corporation, Dean Foods Company and Blackhawk
Acquisition Corp. (filed as Exhibit 2.1 to Suiza's Current Report
on Form 8-K, dated as of April 5, 2001, and incorporated herein by
reference).
2.2 Credit Agreement, dated as of July 31, 2001, among Suiza Foods
Corporation, certain subsidiaries of Suiza Foods Corporation named
therein, as guarantors, the lenders named therein, First Union
National Bank, as administrative agent, Bank One, N.A., as
syndication agent, First Union Securities, Inc. and Banc One
Capital Markets, Inc., as co-lead arrangers and joint book
runners, and Fleet National Bank, Harris Trust and Savings Bank
and Suntrust Bank, N.A., as co-documentation agents (filed as
Exhibit 10.3 to Suiza's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001 (File No. 1-12755) and incorporated
herein by reference).
2.3* First Amendment to Credit Agreement, dated as of December 19,
2001, by and among Suiza Foods Corporation, a Delaware
corporation, First Union National Bank, as Administrative Agent
for the lenders party to the Credit Agreement, Bank One, NA, as
Syndication Agent for the Lenders, Fleet National Bank, Harris
Trust and Savings Bank and Suntrust Bank, as Co-Documentation
Agents, and the Required Lenders named therein, amending that
certain Credit Agreement, dated as of July 31, 2001, among Suiza
Foods Corporation, the Administrative Agent, the Syndication
Agent, the Documentation Agents and the Lenders.
2.4* Amended and Restated Securities Purchase Agreement, dated as of
December 21, 2001, among Suiza Foods Corporation, Suiza Dairy
Group Holdings, Inc., Dairy Farmers of America, Inc., Dairy Rich,
LLC and Mid-Am Capital, L.L.C.
23.1 Consent of PricewaterhouseCoopers LLP
----------
* Previously filed with the Registrant's Current Report on Form 8-K dated
and filed January 7, 2002