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Michael Foods looking to preserve liquidity, but eyes acquisitions
By Jennifer Lanning Drey
Portland, Ore., Aug. 14 - Michael Foods Inc. is focused on maintaining adequate liquidity to ride out the current economic downturn but would consider making an acquisition if presented with the right opportunity, Gregg A. Ostrander, chief executive officer of Michael Foods, said Friday during its second-quarter earnings conference call.
The company had $95 million of cash and cash equivalents at July 4.
"We're going to stay focused on being very liquid, but on acquisitions, the good news is we're in a good position from an earnings standpoint that if the right ones come along, we can take a serious look at them," Ostrander said.
Michael Foods reported second-quarter net earnings of $10.6 million, compared to net earnings of $11.2 million in the second quarter of 2008. Second-quarter net sales were $369.1 million, down from $442.3 million in the 2008 period.
As a result of healthy cash flow and its current liquidity position, the company opted to make a $33.8 million voluntary prepayment on its term loans on July 31. The payment represented scheduled amortization over the next 18 months of the term loan A and term loan B, Mark Witmer, Michael Foods' treasurer, said during the call.
At $47.9 million, Michael Foods' EBITDA showed a 5% increase over the prior-year period.
Michael Foods is a Minnetonka, Minn., diversified foods processor and distributor.
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