-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FK54wAqJ0gYUHguClYtLicffuwEhA3Avh5NELUD6G15oaL7OCBJMSurQnefw5Me/ xX66XuME2BMCYTOIkOZ98w== 0000916641-99-000663.txt : 19990812 0000916641-99-000663.hdr.sgml : 19990812 ACCESSION NUMBER: 0000916641-99-000663 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19990811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESKIMO PIE CORP CENTRAL INDEX KEY: 0000787520 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 540571720 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: SEC FILE NUMBER: 000-19867 FILM NUMBER: 99683223 BUSINESS ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 BUSINESS PHONE: 8045608400 MAIL ADDRESS: STREET 1: 901 MOOREFIELD PARK DR CITY: RICHMOND STATE: VA ZIP: 23236 DEFA14A 1 ESKIMO PIE CORPORATION DEFA14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant |X| Filed by a Party other than the Registrant |_| Check the appropriate box: |-| Preliminary Proxy Statement |_| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | | Definitive Proxy Statement |x| Definitive Additional Materials |_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12 Eskimo Pie Corporation - ------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - ------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): |X| No fee required |_| $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. |_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- 5) Total fee paid: - -------------------------------------------------------------------------------- |_| Fee paid previously by written preliminary materials. |_| Check box if any part of the fee is offset as provided by Exchange Act Rule O-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: [Eskimo Pie Logo] Eskimo Pie Corporation June 30, 1999 Mid Year Report Focused on the Brand [Graphic of cartoon bear holding Eskimo Pie bar] To Our Shareholders, We are very pleased to report to you summarized financial results for the six months ending June 30, 1999. We experienced improvements in virtually all measures and believe these results reflect well on management's execution of the recently announced Growth and Restructuring Plan. SALES PERFORMANCE. For the six month period ending June 30, 1999, net sales increased by 6% to $38.3 million as compared with $36.1 million during the comparable period in 1998. Net Sales for the six months ended June 30, 1999 1998 - -------------------------------------------------------------------------- Eskimo Pie Brand $12,037 $12,661 Foodservice 4,936 3,945 Other National Brands 13,166 12,686 Flavors, Packaging and Other Revenues 8,136 6,853 ------- ------- $38,275 $36,145 Revenues in the National Brands Division increased slightly during 1999 due largely to increased sales of Welch's and Weight Watchers Smart Ones brand products. The Company has received favorable responses to the introduction of Welch's Double Dare ice pops which capitalize on the youthful popularity of "sour" treats. The repositioning of the Weight Watchers novelties under the Smart One's banner also continues to attract new consumers. Also included in the 1999 revenue growth was a $440,000 increase in licensing fees earned from the new licensing agreements entered into with the Company's six largest customers effective January 1, 1999. The Foodservice Division contributed to approximately half of the overall Company increase as a result of new business secured under its innovative "Right Choice" sales and marketing program. Under the Right Choice program, foodservice operators can offer consumers a choice between branded premium ice cream and frozen yogurt and, as a result, capture soft serve sales that would have been lost without the alternative choices. The foodservice industry continues to grow as more and more consumers chose to "eat out" and the Company expects to capitalize on this momentum as it continues to build upon its Foodservice division. GROSS MARGIN IMPROVEMENTS. The Company's gross margins also increased in 1999 and, as a percent of sales, continued the improvement begun in recent years. The improved gross margin reflects the increased sales, the benefits associated with the additional licensing fees and, as discussed below, the discontinuance of certain unprofitable packaging operations in the first quarter of 1999. Gross Margin for the six months ended June 30, 1999 1998 - ----------------------------------------------------------------------------- Gross Profit $17,277 $15,592 As a Percent of Sales 45.1% 43.1% EXPENSE FROM RESTRUCTURING ACTIVITIES & THE GROWTH AND RESTRUCTURING PLAN. The Company incurred $572,000 in expenses associated with three separate restructuring activities during the first half of 1999. First, the Company incurred $381,000 in costs during the previously announced examination of strategic alternatives to enhance shareholder value and the subsequent development of the Company's Growth and Restructuring Plan. Under the recently announced Growth and Restructuring Plan, the Company will focus on the rejuvenation of its core Eskimo Pie brand within the licensing and foodservice businesses. Key components of the Plan include significantly increased investments in advertising, promotion and product development for the core Eskimo Pie brand, the potential sale of certain non-core manufacturing operations, but only at prices accretive to shareholder value, and additional overhead and staff reductions. Actions taken under the Plan to date include: new product and promotional planning for the 2000 novelty season, the engagement of a new advertising agency to assist in the rejuvenation of the Eskimo Pie brand, the discontinuance of certain unprofitable packaging operations and headquarters staff reductions. The Company incurred $105,000 of severance costs during the first quarter of 1999 associated with the discontinuance of unprofitable operations in the Company's Packaging Division. As a result of this action, profitability in the Packaging Division, exclusive of the severance costs, has improved by approximately $250,000 over 1998 results. During the second quarter of 1999, the Company eliminated two vacant positions and terminated the employment of six employees located at the Company's headquarters. The severance costs associated with the terminations totaled $75,000 and, when combined with the savings from the eliminated positions, these actions are anticipated to provide annualized savings of approximately $300,000 per year. OVERALL PROFITABILITY. As a result of the increased sales, improved gross margins and reduced overall costs, net income for the six months ended June 30, 1999 increased to $1,631,000 or $0.47 per share. These 1999 results represent a 30% improvement over first half 1998 net income of $1,250,000 or $0.36 per share. Exclusive of the year to date restructuring charges, net income would have increased by approximately 59% over 1998 results. Earnings Per Share for the six months ended June 30, 1999 1998 - ----------------------------------------------------------------------- Net Income $0.47 $0.36 Without Restructuring Charges 0.57 NA LIQUIDITY AND CAPITAL RESOURCES. The Company's liquidity and capital resources have continued to strengthen as improved profitability has led to an increase in cash from operations. Working capital is being managed closely and long term debt is being reduced by over $300,000 each quarter. As a result, the Company's working capital at June 30, 1999 exceeded the outstanding debt obligations for the first time in over five years. Liquidity and Capital Resources, as of 6/30/99 12/31/98 6/30/98 - -------------------------------------------------------------------------------- Working Capital $8,789 $6,345 $7,983 Debt Obligations 8,359 9,018 9,676 EARNINGS OUTLOOK. The Company expects continued improvement during the second half of 1999 with sales and operating profit exceeding that reported in the second half of 1998. We hope you that you share our pride in the accomplishments made to date. The Growth and Restructuring Plan involves a renewed focus on the Eskimo Pie brand with the profitable National Brands novelties and Foodservice businesses. We believe that building the value of the Eskimo Pie brand, the divestiture, as appropriate, of certain non-core manufacturing assets and the continued management of fixed overhead costs will best enhance long term shareholder value. We are beginning to see improvements from our actions and thank you for your continued support of our efforts on your behalf. Sincerely, /s/ David B. Kewer /s/ Arnold H. Dreyfuss David B. Kewer Arnold H. Dreyfuss President and Chief Executive Officer Chairman of the Board FINANCIAL DATA (amounts in thousands, except Share Data)
Six months ended Condensed results of operations (unaudited) for the June 30, - -------------------------------------------------------------------------------------------------------------------- 1999 1998 ------------------------------------------- Net sales $ 38,275 $ 36,145 Cost of products sold 20,998 20,553 ------------------------------------------- Gross profit 17,277 15,592 Advertising and sales promotion expenses 9,708 8,877 Selling, general and administrative expenses 4,182 4,490 Expense from restructuring activities 572 - ------------------------------------------- Operating income 2,815 2,225 Interest income 50 102 Interest expense and other - net 276 344 ------------------------------------------- Income before income taxes 2,589 1,983 Income tax expense 958 733 ------------------------------------------- Net income $ 1,631 $ 1,250 =========================================== Per Share Data Basic: Weighted average number of common shares outstanding 3,462,810 3,458,187 Net income $ 0.47 $ 0.36 =========================================== Assuming dilution: Weighted average number of common shares outstanding 3,464,031 3,629,990 Net income $ 0.47 $ 0.36 =========================================== Cash dividends $ 0.10 $ 0.10 ===========================================
June 30, December 31, June 30, Condensed Balance Sheet Data (unaudited) as of 1999 1998 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents $ 2,179 $ 530 $ 2,285 Receivables 12,073 6,817 11,011 Inventories 5,227 4,897 5,895 Prepaid expenses 287 889 819 -------------------------------------------------------------- Total current assets 19,766 13,133 20,010 Property, plant and equipment - net 6,839 7,665 7,983 Goodwill and other intangibles 17,142 17,645 17,221 Other assets 1,048 1,645 1,399 -------------------------------------------------------------- Total assets $ 44,795 $ 40,088 $ 46,613 ============================================================== Total current liabilities $ 10,960 $ 6,788 $ 12,027 Long term debt 7,157 3,901 4,559 Convertible subordinated notes - 3,800 3,800 Postretirement benefits and other liabilities 3,108 3,373 3,216 Total shareholders' equity 23,570 22,226 23,011 -------------------------------------------------------------- Total liabilities and shareholders' equity $ 44,795 $ 40,088 $ 46,613 ==============================================================
[Graphic of cartoon bear holding Eskimo Pie bar] Eskimo Pie Corporation 901 Moorefield Park Drive Richmond, Virginia 23236 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Information in this report relating to the Company's future plans and performance are "forward looking statements" and, as such, involve certain risks and uncertainties that could cause actual results to vary materially. Potential risks and uncertainties include, but are not limited to: (1) the highly competitive nature of the frozen dessert market and the level of consumer interest in the Company's products, (2) product costing, (3) the weather, (4) the performance of management including management's ability to implement its plans as contemplated, (5) the Company's relationships with its licensees and licensors, (6) the impact of Year 2000 matters and (7) government regulation. These risks and uncertainties are further discussed in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission for the year ended December 31, 1998. Actual results may vary materially from those included herein and the Company assumes no responsibility for updating these statements. -----END PRIVACY-ENHANCED MESSAGE-----