| Broughton Foods Company | |||
| Ticker: | MILK | 210 North Seventh Street | |
| Exchange: | NASDAQ-National Market | Marietta, OH 45750 | |
| Industry: | Manufacturing (SIC Code 2026) | (614) 373-4121 | |
| # of Employees: | 429 | ||
| Type of Shares: | Common Shares | Filing Date: | 10/8/97 | |
| U.S. Shares: | 1,300,000 | Offer Date: | 12/8/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $13.00 - $15.00 | |
| Primary Shares: | 1,300,000 | Offer Price: | $15.00 | |
| Secondary Shares: | 0 | Gross Spread: | $1.05 | |
| Offering Amount: | $18,200,000 | Selling: | $0.63 | |
| Expenses: | - | Reallowance: | $0.10 | |
| Shares Out After: | 5,490,517 |
| Manager | Tier | Phone |
| Advest, Inc. | Lead Manager | (860) 509-2177 |
| Ferris, Baker, Watts Inc. | Co-manager | (202) 429-3608 |
| Issuer's Law Firm: | Arnold & Porter |
| Bank's Law Firm: | Morgan, Lewis & Bockius |
| Auditor: | Coopers & Lybrand |
| Registrar/Transfer Agent: | Wachovia Bank of North Carolina |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 6/30/97 | 6/30/96 | 6/30/97 | ||
| Revenue: | $83.92 | $41.03 | $38.63 | Assets: | $18.96 |
| Net Income: | $2.33 | $0.93 | $0.15 | Curr Assets: | $12.77 |
| EPS: | $0.56 | $0.23 | $0.04 | Liabilities: | $7.69 |
| Prior EPS: | -$0.07 | $1.27 | $1.27 | Curr Liabilities: | $5.93 |
| Cash Flow/Oper: | $0.13 | -$0.33 | -$1.13 | Equity: | $11.27 |
| Cash Flow/Fin: | -$0.99 | -$0.75 | -$0.17 | Cash: | $2.50 |
| Cash Flow/Inv: | $3.01 | -$0.75 | Working Cap: | $6.84 | |
| Business Description |
| The company is a leading manufacturing and distributor of fresh milk and dairy products in Ohio, West Virginia, Kentucky and parts of the eastern U.S. The company operates two divisions, the Diary division and the Foods division. The Dairy Division, with its raw milk processing plant based in Marietta, Ohio, manufactures and distributes a full line of fresh milk and related products and also distributes brand name dairy and non-dairy foods. The Dairy Division processes whole milk, low-fat milk, skim milk, buttermilk and cottage cheese and manufactures chocolate milk, eggnog, iced tea, orange juice, ice cream mix, fruit drink, yogurt mix and ice cream under its own Broughton or Dairylane label and under various private labels. The Foods Division, with an ultra high temperature ("UHT") plant based in Charleston, West Virginia, processes a variety of extended life products, including half-and-half, sour cream, dips, dressings, aerosol toppings, whipped cream, coffee cream, table cream, non-dairy creamers and whipped toppings. The Foods Division also distributes various lines of branded refrigerated food products manufactured by third parties. Strategically located between the cities of Pittsburgh, Pennsylvania; Cleveland, Columbus and Cincinnati, Ohio; and Lexington, Kentucky, each of the Company's divisions is a strong regional competitor with an established reputation for customer service and product quality. The Dairy Division markets and distributes its products through an extensive network to a variety of customers, including supermarkets, convenience stores, minimarkets, local grocery stores, restaurants and institutional customers. The Foods Division serves independent dairies, food service distributors, brokers, grocery warehouses and commissaries. |
| Competition |
| The Company's dairy operations are subject to significant competition from regional dairy operations and large national food service distributors that operate in the Company's markets. Competition in the dairy processing, fruit drink and food distribution businesses is based primarily on service, price, brand recognition, quality and breadth of product line. Many of the Company's competitors are larger, better capitalized and have available to them greater financial, operational and marketing resources than the Company. The dairy industry has excess capacity and has been in the process of consolidation for many years. Consolidation has resulted from the development of more efficient manufacturing techniques, the establishment of captive dairy manufacturing operations by large grocery retailers and relatively little growth in the demand for fresh milk products. The larger companies formed by such consolidations and the increased use of captive dairy manufacturing operations by the Company's customers could have an adverse effect on the Company's business, financial condition and results of operations and on the market price of the Common Stock. The dairy foods business is also highly competitive. The Company faces a number of competitors in the dairy foods business, including smaller independent dairy foods manufacturers and grocery and other retailers that manufacture and package dairy foods at store locations. Competition exists primarily on a regional basis, with service, price and quality as the principal competitive factors. A significant increase in on-site manufacturing by operators of large and small retail chains served by the Company could have an adverse effect on the Company's business, financial condition and results of operations and on the market price of the Common Stock. |
| Business Plan |
| The Company's strategic objective is to continue to expand and strengthen its market share in the regions in which it currently operates and to become a leading national provider of dairy and related products. The key elements of the Company's strategy include: (I) Expanding its operations through consolidating acquisitions within the markets it currently serves and through strategic acquisitions of regional dairy and related businesses in new geographic markets; (ii) Extending its product lines and securing distribution rights for additional branded product lines; (iii) Expanding the company's revenue base by generating increasing demand for new product lines from existing customers and increasing its customer base in markets in which it operates; and (iv) Achieving cost efficiencies by combining innovative and traditional production and distribution methods, hiring and training skilled employees, rationalizing raw materials usage and implementing improved process controls and other productivity improvements. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to fund the cash portion of the consideration for the Southern Belle Acquisition, to finance facilities expansion and other capital expenditures, to repay certain indebtedness, and for general corporate purposes including working capital and future acquisitions. |
| Name of Shareholder | % Owned Before | % Owned After |
| Marshall T. Reynolds | 31.65% | 23.77% |
| Thomas W. Wright | 7.47% | 5.61% |
| Neil W. Scaggs | 5.82% | 4.37% |
| Charles R. Hooten, Jr. | 5.82% | 4.37% |
| Philip E. Cline | 5.68% | 4.26% |
| Officer Name | Title | Age |
| Marshall T. Reynolds | Chairman of the Board of Directors | 60 |
| George W. Broughton | Executive Vice President, Sales and Marketing, Director | 40 |
| Philip E. Cline | President and Chief Executive Officer, Director | 64 |
| Todd R. Fry | Treasurer and Chief Financial Officer | 32 |
| Ronald V. Arthur II | Vice President, General Manager, Foods Division, Director | 38 |