-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DeP1XlMzv4u5uXIr8ggwiHaEdGCqU282qjASR5NpdxPnD8ql0XEr8PP4y62IkcU8 hg8c8izyC7lNBe/ioRrB2w== 0000950149-95-000281.txt : 19950517 0000950149-95-000281.hdr.sgml : 19950517 ACCESSION NUMBER: 0000950149-95-000281 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950516 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DREYERS GRAND ICE CREAM INC CENTRAL INDEX KEY: 0000352305 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 942967523 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14190 FILM NUMBER: 95540249 BUSINESS ADDRESS: STREET 1: 5929 COLLEGE AVE CITY: OAKLAND STATE: CA ZIP: 94618 BUSINESS PHONE: 5106528187 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED APRIL 1, 1995 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ---- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 1, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ---- SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-14190 DREYER'S GRAND ICE CREAM, INC. (Exact name of registrant as specified in its charter) Delaware No. 94-2967523 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5929 College Avenue, Oakland, California 94618 (Address of principal executive offices) (Zip Code) (510) 652-8187 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Shares Outstanding May 12, 1995 ------------------ Common stock, $1.00 par value 13,435,117 2 DREYER'S GRAND ICE CREAM, INC. PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED BALANCE SHEET
April 1, December 31, ($ in thousands, except per share amounts) 1995 1994 ---------- ------------ (unaudited) Assets Current Assets: Cash and cash equivalents $ 2,101 $ 6,334 Trade accounts receivable, net of allowance for doubtful accounts of $611 in 1995 and $635 in 1994 63,212 47,519 Other accounts receivable 9,810 6,243 Inventories 32,551 29,081 Prepaid expenses and other 7,777 9,657 -------- -------- Total current assets 115,451 98,834 Property, plant and equipment, net 165,858 160,322 Goodwill and distribution rights, net of accumulated amortization of $11,192 in 1995 and $10,443 in 1994 88,852 87,825 Other assets 15,025 15,045 -------- -------- Total assets $385,186 $362,026 ======== ========
See accompanying Notes to Consolidated Financial Statements 2 3 DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED BALANCE SHEET
April 1, December 31, ($ in thousands, except per share amounts) 1995 1994 ----------- ------------ (unaudited) Liabilities and Stockholders' Equity Current Liabilities: Accounts payable and accrued liabilities $ 52,882 $ 30,130 Accrued payroll and employee benefits 9,565 15,801 Current portion of long-term debt 4,500 4,500 -------- -------- Total current liabilities 66,947 50,431 Long-term debt, less current portion 58,000 46,100 Convertible subordinated debentures 100,752 100,752 Deferred income taxes 29,029 28,822 -------- -------- Total liabilities 254,728 226,105 -------- -------- Commitments and contingencies Stockholders' Equity: Preferred stock, $1 par value - 10,000,000 shares authorized; no shares issued or outstanding in 1995 and 1994 Common stock, $1 par value - 30,000,000 shares authorized; 13,919,000 shares and 14,064,000 shares issued and outstanding in 1995 and 1994, respectively 13,919 14,064 Capital in excess of par 70,435 75,257 Retained earnings 46,104 46,600 -------- -------- Total stockholders' equity 130,458 135,921 -------- -------- Total liabilities and stockholders' equity $385,186 $362,026 ======== ========
See accompanying Notes to Consolidated Financial Statements 3 4 DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED STATEMENT OF INCOME (unaudited)
Thirteen Weeks Ended --------------------------------------- ($ in thousands, except per share amounts) April 1, 1995 March 26, 1994 ------------- -------------- Revenues: Net sales $141,255 $112,001 Other income 239 273 -------- -------- 141,494 112,274 -------- -------- Costs and expenses: Cost of goods sold 112,230 88,752 Selling, general and administrative 26,491 18,728 Interest, net of interest capitalized 2,242 2,209 -------- -------- 140,963 109,689 -------- -------- Income before income taxes 531 2,585 Income taxes 209 1,003 -------- -------- Net income $ 322 $ 1,582 ======== ======== Net income per share $ .02 $ .11 ======== ======== Dividends per share $ .06 $ .06 ======== ========
See accompanying Notes to Consolidated Financial Statements 4 5 DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
Common Stock -------------------- Capital In Retained (In thousands) Shares Amount Excess of Par Earnings Total -------- ------- ------------- -------- ------- Balance at December 25, 1993 14,671 $14,671 $59,145 $49,218 $123,034 Net income 1,582 1,582 Cash dividends declared (884) (884) Repurchases and retirements of common stock (25) (25) (628) (653) Employee stock plans 91 91 1,183 1,274 ------ ------- ------- ------- -------- Balance at March 26, 1994 14,737 $14,737 $59,700 $49,916 $124,353 ====== ======= ======= ======= ======== Balance at December 31, 1994 14,064 $14,064 $75,257 $46,600 $135,921 Net income 322 322 Cash dividends declared (818) (818) Repurchases and retirements of common stock (250) (250) (6,403) (6,653) Employee stock plans 105 105 1,581 1,686 ------ ------- ------- ------- -------- Balance at April 1, 1995 13,919 $13,919 $70,435 $46,104 $130,458 ====== ======= ======= ======= ========
See accompanying Notes to Consolidated Financial Statements 5 6 DREYER'S GRAND ICE CREAM, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
Thirteen Weeks Ended ------------------------------------ ($ in thousands) April 1, 1995 March 26, 1994 ------------- -------------- Cash flows from operating activities: Net income $ 322 $ 1,582 Adjustments to reconcile net income to cash provided from operations: Depreciation and amortization 4,900 4,090 Deferred income taxes 207 195 Changes in assets and liabilities, net of amounts acquired: Trade accounts receivable (15,693) (6,311) Other accounts receivable (3,567) (35) Inventories (3,470) (3,362) Prepaid expenses and other 1,880 2,113 Accounts payable and accrued liabilities 22,796 5,576 Accrued payroll and employee benefits (6,236) (1,421) -------- ------- 1,139 2,427 -------- ------- Cash flows from investing activities: Acquisition of property, plant and equipment (9,430) (11,470) Retirement of property, plant and equipment 93 52 Increase in goodwill and distribution rights (1,776) (14,790) Increase in other assets, net (330) (699) -------- ------- (11,443) (26,907) -------- ------- Cash flows from financing activities: Increase in short-term bank borrowings 23,400 Proceeds from long-term debt 15,500 Reductions in long-term debt (3,600) (610) Issuance of common stock under employee stock plans 1,686 1,274 Repurchases of common stock (6,653) (653) Cash dividends paid (862) (881) -------- ------- 6,071 22,530 -------- ------- Decrease in cash and cash equivalents (4,233) (1,950) Cash and cash equivalents, beginning of period 6,334 2,532 -------- ------- Cash and cash equivalents, end of period $ 2,101 $ 582 ======== ======= Supplemental Cash Flow Information - cash paid during the year for: Interest (net of amounts capitalized) $ 2,843 $ 2,789 Income taxes (net of refunds) 106 166
See accompanying Notes to Consolidated Financial Statements 6 7 DREYER'S GRAND ICE CREAM, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - General: Dreyer's Grand Ice Cream, Inc. and its subsidiaries (the "Company") is a single segment industry company engaged in the business of manufacturing and distributing premium ice cream and other frozen dairy products. The consolidated financial statements for the thirteen week periods ended April 1, 1995, and March 26, 1994, have not been audited by independent public accountants, but include all adjustments, such as normal recurring accruals, which management considers necessary for a fair presentation of the consolidated operating results for the periods. The statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosure normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of results to be expected for an entire year. The aforementioned statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 1994, appearing in the Company's 1994 Annual Report to Stockholders. NOTE 2 - Financial Statement Presentation: Certain reclassifications have been made to the prior period financial statements in order to conform to the current presentation. NOTE 3 - Inventories: Inventories are stated at the lower of cost (determined by the first-in, first-out method) or market. Inventories at April 1, 1995 and December 31, 1994 consisted of the following (in thousands):
April 1, December 31, 1995 1994 -------- ------------ Raw materials $ 4,464 $ 3,153 Finished goods 28,087 25,928 -------- -------- $ 32,551 $ 29,081 ======== ========
7 8 NOTE 4 - Net Income Per Share: Net income per common share is computed using the weighted average number of shares of common stock outstanding during the period which were 13,971,000 shares for the quarter ended April 1, 1995 and 14,698,000 shares for the quarter ended March 26, 1994. The potentially dilutive effect of the Company's convertible subordinated debentures and other common stock equivalents was anti-dilutive for the thirteen week periods ended April 1, 1995 and March 26, 1994. Accordingly, fully diluted net income per share is not presented. NOTE 5 - Common Stock: During the quarter, the Company repurchased and retired 232,000 shares of its common stock at prices ranging from $25.38 to $27.00 per share under a plan to repurchase up to 5,000,000 shares through open market purchases and negotiated transactions. In addition, the Company repurchased and retired 18,000 shares of its common stock at prices ranging from $24.75 to $28.00 per share from employees who previously acquired shares under employee stock plans. NOTE 6 - Subsequent Event: Subsequent to quarter end, the Company repurchased and retired 481,000 shares of its common stock at prices ranging from $28.63 to $34.25 per share under the plan to repurchase up to 5,000,000 shares. (See Note 5.) 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth for the periods indicated the percent which the items in the Consolidated Statement of Income bear to net sales and the percentage change of such items compared to the indicated prior period:
Percentage of Net Sales ----------------------------- Period-to-Period Thirteen Weeks Ended Increase (Decrease) ----------------------------- ------------------- April 1, March 26, Thirteen Weeks 1995 1995 1994 Compared to 1994 -------- --------- ------------------- Revenues: Net sales 100.0% 100.0% 26.1% Other income 0.2 0.2 12.5 ----- ----- Total revenue 100.2 100.2 26.0 ----- ----- Costs and expenses: Cost of goods sold 79.4 79.2 26.5 Selling, general and administrative 18.8 16.7 41.5 Interest, net of interest capitalized 1.6 2.0 1.5 ----- ----- Total costs and expenses 99.8 97.9 28.5 ----- ----- Income before income taxes 0.4 2.3 (79.5) Income taxes 0.2 0.9 (79.2) ----- ----- Net income 0.2 1.4 (79.7) ===== =====
9 10 RESULTS OF OPERATIONS Thirteen Weeks ended April 1, 1995 Compared with Thirteen Weeks Ended March 26, 1994 The Company embarked on a five year plan during the second quarter of 1994 to accelerate the sales of its Company brands by greatly increasing its consumer marketing efforts and expanding its distribution system into additional markets (the Strategic Plan). Under the Strategic Plan, the Company increased the amount of its spending for advertising and consumer promotion from $11,486,000 in 1993 to $40,287,000 in 1994, and plans to spend approximately $50,000,000 annually on these marketing activities from 1995 through 1998. In 1994, the Company began selling its products for the first time in the Texas and New England markets as well as in several cities in the southern United States, and has continued to expand into additional geographic markets in 1995. The Company anticipates that the Strategic Plan will continue to materially reduce earnings during 1995 and some portion of 1996 below levels that would have been attained under the former business plan. The potential benefits of the new strategy are increased market share and future earnings above those levels that would be attained in the absence of the strategy. The Company believes that these benefits are not likely to impact its results until 1996 at the earliest, and no assurance can be given that the anticipated benefits of the strategy will be achieved. The success of the strategy will depend upon, among other things, consumer responsiveness to the increased marketing expenditures, competitors' activities and general economic conditions. Consolidated net sales for the first quarter of 1995 increased 26% to $141,255,000 compared with $112,001,000 for the same period last year. Sales of the Company's brands increased 24%. The increase related primarily to higher unit sales of the Company's established brands in all markets due in part to substantially higher advertising and consumer promotion spending under the Company's Strategic Plan. The products that led this increase were Dreyer's and Edy's Fat Free Ice Cream, Dreyer's and Edy's Frozen Yogurt and Dreyer's and Edy's Grand Ice Cream. Sales of products purchased from other manufacturers (partner brands) increased 28%, led by frozen novelty and ice cream products from Nestle Ice Cream Company and Healthy Choice(R) lowfat ice cream from ConAgra, Inc. Sales of partner brands represented 35% of consolidated net sales as compared with 34% in the first quarter of 1994. The effect of price increases for the Company's brands and partner brands was not significant. Cost of goods sold increased $23,478,000, or 27%, over the first quarter of 1995, while the overall gross margin decreased slightly from 20.8% in the first quarter of 1994 to 20.6% in the first quarter of 1995. Selling, general and administrative expenses in the first quarter of 1995 were $7,763,000, or 42%, higher than in the same period of 1994. This increase related primarily to an increase in overall marketing expenses of $6,399,000. Income taxes decreased $794,000, reflecting a lower pre-tax income, while the effective tax rate increased from 38.8% for the first quarter of 1994 to 39.4% for the first quarter of 1995. 10 11 LIQUIDITY AND CAPITAL RESOURCES Working capital at April 1, 1995 increased $101,000 from year end 1994 due primarily to the seasonal increase in trade accounts receivable and a decrease in accrued payroll and employee benefits, offset almost entirely by an increase in accounts payable and accrued liabilities. Cash was provided primarily from the $15,500,000 proceeds from long-term debt. This source was used to fund the $9,430,000 increase in property, plant and equipment and the $6,653,000 repurchases of common stock. Subsequent to quarter end, the Company repurchased and retired 481,000 shares of its common stock at prices ranging from $28.63 to $34.25 per share under a plan to repurchase up to 5,000,000 shares through open market purchases and negotiated transactions. At April 1, 1995, the Company had $2,101,000 in cash and cash equivalents, and an unused credit line of $89,300,000. The Company believes that its credit line, along with its liquid resources, internally generated cash and financing capacity, are adequate to meet anticipated operating and capital requirements. 11 12 PART II: OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. No reports on Form 8-K were filed by the Company during the quarter ended April 1, 1995. b. Exhibits Exhibit No. Description - ----------- ----------- 11 Computation of Net Income Per Common Share. 27 Financial Data Schedule. 12 13 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. DREYER'S GRAND ICE CREAM, INC. Dated: May 16, 1995 By: /s/ Paul R. Woodland ------------------------------------------ Paul R. Woodland Vice President - Finance and Administration and Chief Financial Officer 14 EXHIBIT INDEX Exhibit No. Description - ----------- ------------ 11 Computation of Net Income Per Common Share. 27 Financial Data Schedule. EX-11 2 COMPUTATION OF NET INCOME PER COMMON SHARE 1 EXHIBIT 11 DREYER'S GRAND ICE CREAM, INC. COMPUTATION OF NET INCOME PER COMMON SHARE (unaudited)
Thirteen Weeks Ended ---------------------------------------------------- (in thousands, except per share amounts) April 1, 1995 March 26, 1994 ------------- -------------- PRIMARY Net income $ 322 $ 1,582 Weighted average number of shares of common stock outstanding 13,971 14,698 --------- --------- Net income per share, as reported $ .02 $ .11 ========= ========== Weighted average number of shares of common stock outstanding 13,971 14,698 Common stock equivalent--assumed exercise of common stock options 95 73 --------- ---------- Weighted average number of shares of common stock outstanding, including common stock equivalents 14,066 14,771 ========= ========== Net income per share $ .02(1) $ .11(1) ========= ========== FULLY DILUTED Net income $ 322 $ 1,582 Add interest expense on convertible subordinated debentures issued June 1993, due June 2006 and amortization of related issuance costs, net of tax 1,017 1,020 --------- --------- Adjusted net income $ 1,339 $ 2,602 ========= ========= Weighted average number of shares of common stock outstanding 13,971 14,698 Common stock equivalent--assumed exercise of common stock options 95 73 Assumed conversion of debentures 2,900 2,900 --------- --------- Adjusted shares 16,966 17,671 ========= ========== Net income per share $ .08(2) $ .15(2) ========= ==========
(1) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although it is not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%. (2) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although it is contrary to APB Opinion No. 15 because it produces an anti-dilutive effect. EX-27 3 FINANCIAL DATA SCHEDULE
5 EXHIBIT 27 FINANCIAL DATA SCHEDULE THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-30-1995 APR-1-1995 2,101 0 63,823 (611) 32,551 115,451 232,185 (66,327) 385,186 66,947 158,752 13,919 0 0 116,539 385,186 141,255 141,494 112,230 112,230 26,267 224 2,242 531 209 322 0 0 0 322 .02 .02
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