EXHIBIT 99.1
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Investor Presentation
May 29, 2003
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Forward-Looking Statements
A number of the statements in this presentation are forward-looking statements.
Except for the historical information contained in this presentation, the
statements in this presentation are forward-looking statements that are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Act of 1995. Statements regarding future market prices and margins, future
operating results, sugarbeet acreage, operating efficiencies, future government
action, cost savings, our liquidity and ability to finance our operations, and
other statements that are not historical facts contained in this presentation,
are forward-looking statements. Forward-looking statements involve risks,
uncertainties and assumptions, including market factors, energy costs, the
effect of weather and economic conditions, farm and trade policy, our ability to
realize planned cost savings, the available supply of sugar, available quantity
and quality of sugarbeets, actual or threatened acts of terrorism or armed
hostilities, legislative, administrative and judicial actions and other factors.
Forward-looking statements are based on management's current expectations and
beliefs and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. Many of these factors are beyond our ability to
control or predict. Management cautions against placing undue reliance on
forward-looking statements or projecting any future results based on such
statements or present or future earnings levels. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those indicated. All
forward-looking statements in this presentation are qualified in their entirety
by the cautionary statements contained in this section and elsewhere in this
presentation and in our Form 10-K for the year ended September 30, 2002, our
most recent Form 10-Q reports and our other filings with the SEC. We are under
no obligation to (and expressly disclaim any such obligation to) update or alter
the forward-looking statements whether as a result of new information, future
events or otherwise. This presentation does not constitute an offer of any
securities for sale.
Note on EBITDA:
Earnings before interest, taxes, depreciation & amortization (EBITDA) is not a
measure of financial performance under generally accepted accounting principles
and should not be considered in isolation from or as a substitute for net income
or cash flow measures prepared in accordance with generally accepted accounting
principles or as a measure of liquidity. Additionally, EBITDA may not be
comparable to other similarly titled measures of other companies. We have
included EBITDA as a supplemental disclosure because our management believes
that it provides useful information regarding our ability to service debt and to
fund capital expenditures and provides investors a helpful measure for comparing
our operating performance with the performance of other companies that have
different financing and capital structures or tax rates. In addition, our bank
credit agreement contains covenants depending on EBITDA, adjusted to exclude the
effect of certain charges and credits.
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Discussion Agenda
I. Sugar Industry Overview
II. Company Overview
III. Financial Overview
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Major Business Themes
Well Positioned in the Industry
Customers
Geography
Critical Mass
Brands
Strong Balance Sheet
Competitive Differentiation
Management
IT Infrastructure
Total Selling Solution; Cross Functional Coordination
Commodities Management
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Sugar Industry Overview
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Sugar Industry Overview
Sugar Value Chain
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Sugar Industry Overview
Industry Consolidation
1988 Sugar Market Profile*
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2002-2003 Sugar Market Profile*
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* Sugar market profile reflects estimated cwt. marketed by company
based on management's estimates.
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Sugar Industry Overview
Cane Sugar-Processing Summary
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Sugar cane is harvested and processed into raw sugar at sugar mills near the
cane fields
Raw sugar is typically 96.0-99.5% sucrose and can be readily transported in bulk
Raw sugar is not normally fit for human consumption as-is
Refineries further process the raw sugar into a range of finished products
Refining involves melting, clarifying, filtering, boiling and drying the raw
sugar to remove impurities
Sugar cane refineries operate year round and can be located near the mills or
near the centers of consumption
Drivers of cane sugar manufacturing economics include daily production rate
(melt), sucrose refining losses and operating efficiency
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Sugar Industry Overview
Beet Processing Summary
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Growers harvest beets and deliver to the factory or receiving station
Beets are perishable-in cold climates they can be piled but in warm climates
they are processed immediately
Beet factories are located in the beet growing area
Beets are sliced and processed directly into refined sugar
Drivers of efficient beet operations include:
Beet acreage
Beet tonnage
Beet quality
Sugar recovery from beets
Operating efficiency
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Sugar Industry Overview
Industry Dynamics
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* Source data based on USDA World Agricultural Supply & Demand
Estimates (WASDE) report 398.
** Use data based on the March 2003 USDA Farm Service Agency
Sweetener Market Data Report.
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Sugar Industry Overview
U.S. Sugar Deliveries for Human Consumption
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Historical data from USDA Sugar & Sweeteners Yearbook Table #20. 2003/4
estimates are from WASDE report 398
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Sugar Industry Overview
Historical Pricing Trends
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Source: NYBOT (raw prices) and Milling & Baking News (refined Midwest)
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Sugar Industry Overview
U.S. Sugar Policy Background
Governments of every major sugar producing nation intervene to protect their
domestic industry
U.S. policy in place since 1934
New Farm Bill in 2002 will run through 2008
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Sugar Industry Overview
U.S. Sugar Policy Background
Marketing Allotments
New policy tool to control domestic supply
Remains in place while imports are below 1.53 million short tons
Discourages expansion of domestic cane and beet supplies
Affects primary processor (i.e. cane mills and beet factories)
Based on 3 year lookback to the 1998/99 through 2000/01 crop years
55% beet / 45% cane
Minimum Support Price
Processors can surrender crop to USDA if prices are below $18.00 per cwt for
cane raw sugar FOB mill (about $20.50 delivered to refineries); $22.90 per cwt
FOB plant for beet refined
Import Tariff Rate Quotas
Fixed annually by the USDA for approximately 40 countries subject to a 1.25
million short ton minimum
PIK Payments
USDA may use payments in kind to "buy out" acreage from producers
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Sugar Industry Overview
U.S. Sugar Policy Background
NAFTA - Mexican Access to the U.S.
Under negotiation
Mexican access reduced during negotiations
Imports of around 250,000 short tons per year have been discussed
Imports can be raw or refined sugar
USDA could "buy out" Mexican access
Open market in 2008
Declining tier two duty
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Sugar Industry Overview
Market Outlook Supply / Demand - 1,000 Short Tons Raw Value
USDA Historical Sugar Supply and Demand
Estimate Projection Projection
2001-02 2002-03 2003-04
1996-97 1997-98 1998-99 1999-00 2000-01 (1) (1) (1)
Beginning Stocks 1,492 1,488 1,679 1,639 2,219 2,180 1,281 1,601
Beet Production 4,013 4,389 4,423 4,976 4,640 3,914 4,450 4,450
Cane Production 3,191 3,631 3,952 4,065 4,072 3,992 3,950 4,145
Total Production 7,204 8,020 8,375 9,041 8,712 7,906 8,400 8,595
Imported Stocks 2,774 2,163 1,824 1,591 1,503 1,150 1,265 1,221
Other 45 45 377 400 385
Total Supply 11,470 11,671 11,878 12,316 12,479 11,613 11,346 11,802
Exports 124 135 137 155 150
Domestic Consumption 9,983 9,992 10,238 9,973 10,218 10,195 9,590 10,050
Total Use 9,983 9,992 10,238 10,097 10,353 10,332 9,745 10,200
Ending Stocks 1,487 1,679 1,640 2,219 2,126 1,281 1,601 1,602
Stocks-to-Use 14.9 % 16.8 % 16.0 % 22.0 % 20.5 % 12.4 % 16.4 % 15.7 %
Source: USDA reports - fiscal years beginning Oct. 1
(1) USDA WASDE report 398
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Company Overview
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Company Overview
Company History
1843 Imperial Sugar Company's predecessor is founded in Sugar Land, Texas
1924 Imperial Sugar Company is incorporated
1988 Acquires Holly Sugar Corporation
1996 Acquires Spreckels Sugar Company
1997 Acquires Savannah Foods & Industries, Inc.
1998 Acquires Wholesome Sweeteners L.L.C.
Acquires Diamond Crystal Specialty Foods, Inc.
2001 January-files for protection under Chapter 11 of the Bankruptcy code
April-sells nutritional business of DCB to Hormel Foods
August-emerges from Chapter 11
December-sells King Packaging to Tyco
2002 February-sells Michigan Sugar Company to grower cooperative
June-sells Worland, Wyoming beet factory to grower cooperative
October-sells Rocky Mountain factories to American Crystal Sugar Company
December-sells Diamond Crystal Brands to Hormel
-obtains new $175 million credit facility
2003 April-listed on the NASDAQ National Market
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Company Overview
Business Overview
Imperial is a leading manufacturer and marketer of sugar products in the United
States
Refined Sugar
Granulated
Liquid
Brown
Powdered
Specialty Sugar
Savannah Gold™
Edible molasses
Syrups
Sucanat
Sugar produced from organically grown sugar cane
Specialty sugars used in confections, fondants, & icings
Byproducts
Beet Pulp
Molasses
Beet Seed
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Company Overview
Business Overview
Key Company Strengths
Strong brand names in regional markets
Strong account relationships
Able to serve industrial customers from coast-to-coast
Well-run, strategically located operating facilities
Operations sourced in both beet and cane
Strong, long-standing relationships with growers
Experienced senior management team
Middle management with significant operating experience
Strong balance sheet
Advanced IT infrastructure relative to competition
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Company Overview
Business Overview
Disadvantages
Non-integrated producer
Public company
No secrets
Different time frame
Lingering bankruptcy skepticism among some stakeholders
Internal procedures still being refined
Restricted capital spending in recent years
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Company Overview
Experienced Management Team
Start Date
Bob Peiser President & Chief Executive Officer 04/02
Bill Schwer SVP-General Counsel 08/88
Duffy Smith SVP-Operations 09/99
Patrick Henneberry SVP-Commodities Management 07/02
Darrell Swank SVP-Chief Financial Officer 09/02
Lee Van Syckle SVP-Sales & Marketing 11/02
? SVP-Human Resources June
Brian Harrison VP-Operations 04/80
Hal Mechler VP-Finance & Accounting 06/88
George Muller VP-Chief Information Officer 03/97
Baxter Gladden VP-Customer Service & Logistics 06/00
Arthur Saxby VP-Marketing 08/02
Chris Armero VP-Strategic Planning 09/02
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Company Overview
Business Strategy
Strengthen position as leading manufacturer and marketer of refined sugar
products in the United States, through focus on:
Strong brands
Value-added products
Innovative packaging concepts
Value chain optimization
Cost efficiency
Primary components of this strategy are:
Strengthening the management team (substantially completed)
Improving the balance sheet (substantially completed)
Improving the business through executing on "4-pronged" operating approach:
Customer partnering
Grower and key supplier relationships
Internal (operations and administrative)
Financial stability
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Company Overview
Dominant Brand Names in Grocery & Industrial Products
Imperial Sugar is the leading brand in the Southwest United States
Dixie Crystals is the leading brand in the Southeast United States
Only domestic sugar provider with two leading brand names
Also markets Pioneer, Holly, and Spreckels brands
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Company Overview
Long-Standing Customers
The Company benefits from long-standing relationships with its major customers
in industrial, grocery, and foodservice sales
Imperial's top customers are leaders in their respective industries
Imperial or its predecessors have conducted business with most of its top
customers for over 15 years
5-year supply contract with Hormel (Diamond Crystal Brands)
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Company Overview
Strategically Located Operating Facilities
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Financial Overview
Production Capacity
Fiscal 2002 Daily Melt
Production Capacity Annual Capacity
(Million cwt.) (cwt.) (Million cwt.)
Cane Sugar Facilities
Port Wentworth, Georgia 16.5 63,000 17.7
Gramercy, Louisiana 10.1 45,000 12.7
Sugar Land, Texas 7.4 - -
Total 34.0 108,000 30.4
Fiscal 2002 Daily Slice
Production Capacity Annual Capacity
(Million cwt.) (tons) (Million cwt.)
Beet Sugar Facilities
Brawley, California 2.6 9,000 2.8
Mendota, California 1.6 4,000 2.3
Total 4.2 13,000 5.1
Total 35.5
Source: Company analysis
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Company Overview
Raw Sugar Supply Contracts (Cane)
Louisiana
80-90% contracted on an agreement with Louisiana producers that matures in
September 2005
Flexible pricing, quantity and delivery
Close working relationship
Balance of needs purchased on spot contracts
2 refineries (Imperial & Domino) and 2 major grower groups (LSCPI & Patout)
Georgia
80-100% contracted on annual contracts
Market pricing
Balance of needs can be bought on the spot market
Numerous potential suppliers
Amerop
Cargill
C. Czarnikow
ED&F Man
Louis Dreyfus
Marubeni
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Company Overview
Beet Purchase Contracts
All beet purchase contracts are based on a percentage of net selling price less
marketing & packaging fees:
60% of net selling price represents cost of beets
Contract terms
Sugar / purity specifications
Renegotiated annually
Initial payments (80%) made to growers weekly for prior week's deliveries
Growers pay carrying charge on large crops
In-bound freight participation by growers
Mendota
Approximately 125 growers / 25,000 acres
Brawley
Approximately 70 growers / 25,000 acres
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Company Overview
Customer Overview
Imperial markets a wide range of products to three primary customer groups,
industrial, consumer, and foodservice:
Gross Sales*
FY 2002
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Source: Company analysis
* Excludes foodservice business sold to Hormel
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Company Overview
Industrial Sales
The Company participates in the industrial business in all regions of the United
States marketing bulk sugar, bag granulated and value added products like
powdered and brown sugars.
Top 10 customers represent approximately 40% of industrial business revenue.
FY 2002
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Industrial Sales by Region
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Industrial Sales by Product Line
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Source: Company analysis
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Company Overview
Industrial Sales - Marketing Strategy
Apply the basics of consumer marketing to industrial customers
Collaborative forecasting
Customer profitability
Consultative selling
Provide value added products and services that can help lower the customer's
total cost of operation
Compound crystallized sugar
Customer logistics
Collaborative business planning
Vendor managed inventory
Extranet - secure 24-hour internet based customer self-service center
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Company Overview
Consumer Sales
The Company's consumer business is primarily focused in the Southeast and
Southwest regions of the United States selling both branded and private label
products
The Company's strategic focus is expanding the value added brands of Imperial
and Dixie Crystals
Top 10 customers represent approximately 60% of consumer business revenue
FY 2002
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Consumer Sales by Region
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Consumer Sales by Product Line
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Source: Company analysis
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Company Overview
Retail Market Share in Core Markets
Imperial Brand
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Dixie Brand
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Core Markets: Core Markets:
Dallas/Ft. Worth Atlanta Raleigh/Greensboro
Houston Jacksonville Charlotte
San Antonio Miami/Ft. Lauderdale South Carolina
Corpus Christi Orlando Knoxville
Tampa/St. Petersburg
Source: IRI data from 52 week period ended 3/24/03
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Company Overview
Consumer Sales - Packaging (Before & After)
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Company Overview
Consumer Sales - Packaging (Before & After)
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Company Overview
Foodservice Sales
The Company's foodservice business consists of bagged sugar formerly sold by
Diamond Crystal Brands. Products include granulated, powdered and brown sugars.
Top 10 customers represent approximately 65% of foodservice revenue.
FY 2002
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Foodservice Sales by Product Type
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Foodservice Sales by Bag Size
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Source: Company analysis
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Company Overview
Business Differentiators
Industrial Marketplace
Customer logistics program to improve supply chain efficiencies (VMI / CRP)
Customer partnering to develop enhanced products
Renewed emphasis on industrial specialties
Collaborative forecasting
Use of technology to create efficiencies (company and customer)
Consumer Marketplace
Customer logistics program to improve supply chain efficiencies
Collaborative forecasting
Account profitability analysis (customers' profitability)
Create consumer pull and store efficiencies through innovative packaging
Use of technology to create efficiencies (company and customer)
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Company Overview
Business Technology Initiatives
Extranet
A competitive differentiator
Allows customers access to key information 24/7
Have been taking orders for just over 1 year
Have processed 5,500 orders valued at $71 million to date
National Recognition from Wharton Business School award in May 2003 - bringing
about change and transformation with the use of technology
Imperial's Extranet was the "keynote" address at Novell's Annual User Conference
in April 2003
ERP
Currently upgrading and implementing PeopleSoft's suite of financial and supply
chain software
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Financial Overview
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Financial Overview
Historical Perspective
The Company increased its leverage to acquire Savannah Foods (1997) and Diamond
Crystal Specialty Foods (1998) when sugar margins were strong.
Following the acquisitions, sugar margins declined due to an oversupply of
refined sugar in the market. Depressed margins, huge debt burden, and management
challenges resulted in the Chapter 11 filing in early 2001.
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Source: Company SEC filings(debt), NYBOT (raw prices) and Milling & Baking News
(refined prices)
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Financial Overview
Historical Operating Performance
Net Sales ($ Millions)
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EBITDA
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Interest Expense ($ Millions)
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Source: Company SEC filings & Company analysis
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Financial Overview
Calculation of EBITDA FY 1998 - 2002
1998 1999 2000 2001 2002
$Millions ------ ------ ------- ------- ------
Operating Income $ 38.9 $ 47.9 $ (27.8 ) $ (36.6 ) $ 14.8
Depreciation & Amort. 45.8 51.3 52.0 47.3 18.7
EBITDA $ 84.7 $ 99.2 $ 24.2 $ 10.7 $ 33.5
Source: Company analysis
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Financial Overview
DCB Divestiture Overview
DCB was sold in December to Hormel for a gross sales price of $121 million
As part of the DCB divestiture, Imperial sold the following product lines:
Packet, canister, and shaker products
Blended products
Retail channel products (non-sugar)
Imperial retained the bag sugar business to the foodservice channel
Imperial is DCB's largest supplier of sugar under a 5-year supply agreement
between Imperial and Hormel
New $175 million credit facility simultaneously executed:
$140 million revolver
$35 million term loan
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Financial Overview
Balance Sheet
Sep. 2001 Sep. 2002 Mar. 2003
$Millions ------------- ------------- -------------
Cash & short-term investments $ 10.1 $ 8.8 $ 52.5
Other current assets 240.5 214.9 173.1
Total current assets 250.6 223.7 225.6
Investment in securitization affiliate 19.9 13.9 0.0
Other investments 4.3 14.3 11.7
PP&E, net 275.5 206.7 142.4
Other assets 5.5 4.8 15.3
Total assets $ 555.8 $ 463.4 $ 395.0
Short-term borrowings / current maturities $ 4.3 $ 10.3 $ 35.1
Other current liabilities 158.7 129.6 109.0
Total current liabilities 162.9 139.9 144.1
Long-term debt, net of current maturities 226.8 148.9 12.1
Deferred employee benefits & other 86.4 76.3 113.2
Total liabilities 476.1 365.1 269.4
Shareholders' equity 79.7 98.3 125.6
Total liabilities & shareholders' equity $ 555.8 $ 463.4 $ 395.0
Memo: Total debt including off-balance sheet
A/R securitization debt $ 309.2 $ 220.6 $ 47.2
Source: Company SEC filings
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Financial Overview
Debt Outstanding
Sep. 2001 Sep. 2002 Mar. 2003
$Millions ----------- ----------- -----------
Short-Term Borrowings $ 0.5 $ 3.4 $ 0.8
Current Maturities of Long Term Debt 3.7 6.8 34.3
Long Term Debt, Net of Current Maturities 226.8 148.9 12.1
A/R Securitization Debt 78.1 61.5 -
Total Debt $ 309.2 $ 220.6 $ 47.2
Cumulative Debt Reduction Since 9/01 $ 88.6 $ 261.9
Source: Company SEC filings
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Financial Overview
Fiscal Year 2002 Results Adjusted For Sale of DCB
Pro-Forma FY
Historical FY 2002 DCB Adjustments 2002
$Millions ------------------ ------------------- --------------
Net Sales $ 1,297.8 $ (162.0 ) $ 1,135.8
Gross Margin 101.3 (31.7 ) 69.6
Operating Income 14.8 (13.9 ) 0.9
Depreciation & Amortization 18.7 (3.7 ) 15.0
EBITDA $ 33.5 $ (17.6 ) $ 15.9
Source: Company SEC filings and Company analysis
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Financial Overview
YTD 2003 Results
$Millions, except EPS Q1 Q2 1st Half
2003 2003 2003
Net Sales $ 277.2 $ 239.7 $ 516.9
Cost of Sales 256.9 226.5 483.4
Gross Margin 20.3 13.2 33.5
SG&A 14.5 12.8 27.3
Discount on Receivables Sold 1.9 - 1.9
Depreciation & Amortization 3.4 5.3 8.7
Asset Impairment & Other 2.8 (0.1 ) 2.7
Operating Income (2.3 ) (4.8 ) (7.1 )
Income (Loss) from Continuing Ops. $ (5.6 ) $ (6.0 ) $ (11.6 )
Net Income $ 63.4 $ (0.3 ) $ 63.1
EPS (from Continuing Operations) $ (0.56 ) $ (0.60 ) $ (1.16 )
EPS $ 6.34 $ (0.03 ) $ 6.31
Source: Company SEC filings
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Financial Overview
EBITDA Analysis
The following table presents a reconciliation of EBITDA to operating income,
which we believe is the most directly comparable financial measure calculated in
accordance with generally accepted accounting principles:
1st 1st
Q1 Q1 Q2 Q2 Half Half
2002 2003 2002 2003 2002 2003
$Millions ------ ------ ------ ------ ------ ------
Operating income $ (3.6 ) $ (2.3 ) $ 0.9 $ (4.8 ) $ (2.7 ) $ (7.1 )
Depreciation & amortization 3.8 3.4 3.8 5.3 7.6 8.7
EBITDA $ 0.2 $ 1.1 $ 4.7 $ 0.5 $ 4.9 $ 1.6
1st 1st
Q1 Q1 Q2 Q2 Half Half
2002 2003 2002 2003 2002 2003
Charges (Credits) Included in EBITDA:
Discount on receivables sold $ 1.0 $ 1.9 $ 0.6 $ - $ 1.6 $ 1.9
Asset impairment-Sugar Land - 2.2 - 0.5 - 2.7
Severance costs-Sugar Land - 0.6 - 0.3 - 0.9
Severance costs-headquarters - - - 0.8 - 0.8
Lease reserve settlement - - - (0.8 ) - (0.8 )
Professional fees & expenses for restructuring 0.4 1.9 1.4 0.6 1.8 2.5
Trailing bankruptcy costs 0.3 0.2 1.1 0.1 1.4 0.3
Michigan lease (2.2 ) - (3.9 ) - (6.1 ) -
Worland lease (0.2 ) - (0.1 ) - (0.3 ) -
Total $ (0.7 ) $ 6.8 $ (0.9 ) $ 1.5 $ (1.6 ) $ 8.3
Source: Company analysis
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Financial Overview
Capital Expenditures
CAPEX
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Source: Company SEC filings
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Financial Overview
Shares Outstanding
Company had 10.0 million shares of common stock outstanding at 3/31/03.
Maximum potential stock options under currently approved programs total
approximately 1.7 million shares. As of 3/31/03, approximately 1.5 million
options had been issued.
Warrants to purchase 1.1 million shares of common stock with a strike price of
$31.89 are outstanding. These warrants expire on 8/29/08.
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Company Summary
Continue to upgrade management
Create greater emphasis on branded retail products
Improve packaging designs
Increase penetration of brand vs. private label
Increase penetration of brand in non-core regions
Possible territorial expansion
Within industrial
Seek value added solutions
Greater emphasis on industrial specialties
Develop closer relationship with growers in order to reduce earnings volatility
Improve earnings and cash flow
Implement PeopleSoft ERP
Internally move more to one company culture; improve cross functional
coordination
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