FORM 10-Q
UNITED STATES
| (Mark One) | ||||
| [X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|||
For the quarterly period ended September 28, 2002
| 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.
| 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 | ||||
| November 11, 2002 | ||||
Common stock, $1 par value |
34,911,000 | |||
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
DREYER’S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
| Sept. 28, 2002 | Dec. 29, 2001 | |||||||||
| ($ in thousands, except per share amounts) | (Unaudited) | |||||||||
Assets |
||||||||||
Current Assets: |
||||||||||
Cash and cash equivalents |
$ | 1,859 | $ | 1,650 | ||||||
Trade accounts receivable, net of allowance for doubtful accounts of
$1,584 in 2002 and $1,024 in 2001 |
116,640 | 89,721 | ||||||||
Other accounts receivable |
14,384 | 16,116 | ||||||||
Inventories |
85,533 | 81,298 | ||||||||
Deferred income taxes |
1,698 | 3,547 | ||||||||
Prepaid expenses and other |
17,253 | 8,849 | ||||||||
Total current assets |
237,367 | 201,181 | ||||||||
Property, plant and equipment, net |
210,665 | 198,565 | ||||||||
Goodwill |
84,701 | 39,114 | ||||||||
Other intangibles, net |
1,849 | 55,354 | ||||||||
Other assets |
3,364 | 4,475 | ||||||||
Total assets |
$ | 537,946 | $ | 498,689 | ||||||
Liabilities and Stockholders’ Equity |
||||||||||
Current Liabilities: |
||||||||||
Accounts payable and accrued liabilities |
$ | 109,673 | $ | 91,794 | ||||||
Accrued payroll and employee benefits |
32,194 | 25,369 | ||||||||
Current portion of long-term debt |
2,143 | |||||||||
Total current liabilities |
144,010 | 117,163 | ||||||||
Long-term debt, less current portion |
146,429 | 148,671 | ||||||||
Deferred income taxes |
14,468 | 24,490 | ||||||||
Total liabilities |
304,907 | 290,324 | ||||||||
Commitments and contingencies |
||||||||||
Stockholders’ Equity: |
||||||||||
Preferred stock, $1 par value - 10,000,000 shares authorized;
no shares issued or outstanding in 2002 and 2001 |
||||||||||
Common stock, $1 par value - 60,000,000 shares authorized;
34,883,000 shares and 34,461,000 shares issued and outstanding in 2002 and 2001, respectively |
34,883 | 34,461 | ||||||||
Capital in excess of par |
166,962 | 160,103 | ||||||||
Notes receivable from stockholders |
(2,228 | ) | (2,546 | ) | ||||||
Retained earnings |
33,422 | 16,347 | ||||||||
Total stockholders’ equity |
233,039 | 208,365 | ||||||||
Total liabilities and stockholders’ equity |
$ | 537,946 | $ | 498,689 | ||||||
See accompanying Notes to Consolidated Financial Statements.
2
DREYER’S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF INCOME
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||||
| ($ in thousands, except per share amounts) | Sept. 28, 2002 | Sept. 29, 2001 | Sept. 28, 2002 | Sept. 29, 2001 | ||||||||||||||
Net sales |
$ | 383,598 | $ | 361,636 | $ | 1,050,823 | $ | 936,473 | ||||||||||
Costs and expenses: |
||||||||||||||||||
Cost of goods sold |
327,624 | 321,020 | 912,650 | 831,136 | ||||||||||||||
Selling, general and administrative |
35,632 | 28,884 | 90,560 | 84,204 | ||||||||||||||
Interest, net of amounts capitalized |
1,947 | 2,814 | 5,835 | 9,092 | ||||||||||||||
Other income, net |
(575 | ) | (1,029 | ) | (386 | ) | (2,198 | ) | ||||||||||
Merger transaction expenses |
2,823 | 5,711 | ||||||||||||||||
| 367,451 | 351,689 | 1,014,370 | 922,234 | |||||||||||||||
Income before income tax provision |
16,147 | 9,947 | 36,453 | 14,239 | ||||||||||||||
Income tax provision |
5,813 | 3,899 | 13,123 | 5,582 | ||||||||||||||
Net income | 10,334 | 6,048 | 23,330 | 8,657 | ||||||||||||||
Accretion of preferred stock to redemption
value |
212 | |||||||||||||||||
Preferred stock dividends |
348 | |||||||||||||||||
Net income available to common stockholders |
$ | 10,334 | $ | 6,048 | $ | 23,330 | $ | 8,097 | ||||||||||
Net income per common share: |
||||||||||||||||||
Basic |
$ | .30 | $ | .18 | $ | .67 | $ | .26 | ||||||||||
Diluted |
$ | .27 | $ | .17 | $ | .62 | $ | .24 | ||||||||||
Dividends per common share |
$ | .06 | $ | .06 | $ | .18 | $ | .18 | ||||||||||
See accompanying Notes to Consolidated Financial Statements.
3
DREYER’S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
| Notes | |||||||||||||||||||||||||
| Common Stock | Receivable | ||||||||||||||||||||||||
| Capital in | From | Retained | |||||||||||||||||||||||
| (In thousands) | Shares | Amount | Excess of Par | Stockholders | Earnings | Total | |||||||||||||||||||
Balances at December 30, 2000 |
28,268 | $ | 28,268 | $ | 58,396 | $ | (2,284 | ) | $ | 15,992 | $ | 100,372 | |||||||||||||
Net income |
8,657 | 8,657 | |||||||||||||||||||||||
Accretion of preferred stock to
redemption value |
(212 | ) | (212 | ) | |||||||||||||||||||||
Preferred stock dividends declared |
(348 | ) | (348 | ) | |||||||||||||||||||||
Common stock dividends declared |
(5,845 | ) | (5,845 | ) | |||||||||||||||||||||
Conversion of mandatorily
redeemable convertible preferred
stock to common stock |
5,800 | 5,800 | 94,952 | 100,752 | |||||||||||||||||||||
Issuance of common stock under
employee stock plans, net |
480 | 480 | 7,739 | (819 | ) | 7,400 | |||||||||||||||||||
Repurchases and retirements of
common stock |
(82 | ) | (82 | ) | (2,249 | ) | (2,331 | ) | |||||||||||||||||
Balances at September 29, 2001 |
34,466 | $ | 34,466 | $ | 158,838 | $ | (3,103 | ) | $ | 18,244 | $ | 208,445 | |||||||||||||
Balances at December 29, 2001 |
34,461 | $ | 34,461 | $ | 160,103 | $ | (2,546 | ) | $ | 16,347 | $ | 208,365 | |||||||||||||
Net income |
23,330 | 23,330 | |||||||||||||||||||||||
Common stock dividends declared |
(6,255 | ) | (6,255 | ) | |||||||||||||||||||||
Issuance of common stock under
employee stock plans, net |
477 | 477 | 8,952 | (78 | ) | 9,351 | |||||||||||||||||||
Repurchases and retirements of
common stock |
(55 | ) | (55 | ) | (2,093 | ) | 396 | (1,752 | ) | ||||||||||||||||
Balances at September 28, 2002 |
34,883 | $ | 34,883 | $ | 166,962 | $ | (2,228 | ) | $ | 33,422 | $ | 233,039 | |||||||||||||
See accompanying Notes to Consolidated Financial Statements.
4
DREYER’S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
| Thirty-nine Weeks Ended | |||||||||||
| ($ in thousands) | Sept. 28, 2002 | Sept. 29, 2001 | |||||||||
Cash flows from operating activities: |
|||||||||||
Net income |
$ | 23,330 | $ | 8,657 | |||||||
Adjustments to reconcile net income to cash flows from operations: |
|||||||||||
Depreciation and amortization |
26,067 | 26,940 | |||||||||
Deferred income taxes |
1,993 | 1,029 | |||||||||
Impairment of investment in Momentx Corporation |
1,093 | ||||||||||
Changes in assets and liabilities, net of amounts acquired: |
|||||||||||
Trade accounts receivable |
(26,919 | ) | (52,241 | ) | |||||||
Other accounts receivable |
1,732 | (1,957 | ) | ||||||||
Inventories |
(4,235 | ) | (12,688 | ) | |||||||
Prepaid expenses and other |
(8,404 | ) | 219 | ||||||||
Accounts payable and accrued liabilities |
17,854 | 42,353 | |||||||||
Accrued payroll and employee benefits |
6,825 | (424 | ) | ||||||||
| 39,336 | 11,888 | ||||||||||
Cash flows from investing activities: |
|||||||||||
Acquisition of property, plant and equipment |
(37,927 | ) | (29,218 | ) | |||||||
Retirement of property, plant and equipment |
536 | 1,662 | |||||||||
Purchase of independent distributors and other intangibles |
(2,757 | ) | (5,646 | ) | |||||||
Increase in other assets |
(249 | ) | 513 | ||||||||
| (40,397 | ) | (32,689 | ) | ||||||||
Cash flows from financing activities: |
|||||||||||
Net (repayments of) proceeds from long-term debt |
(99 | ) | 42,700 | ||||||||
Repayments of long-term debt |
(22,186 | ) | |||||||||
Issuance of common stock under employee stock plans, net |
9,351 | 7,400 | |||||||||
Repurchases and retirements of common stock |
(1,752 | ) | (2,331 | ) | |||||||
Cash dividends paid |
(6,230 | ) | (4,974 | ) | |||||||
| 1,270 | 20,609 | ||||||||||
Increase (decrease) in cash and cash equivalents |
209 | (192 | ) | ||||||||
Cash and cash equivalents, beginning of period |
1,650 | 2,721 | |||||||||
Cash and cash equivalents, end of period |
$ | 1,859 | $ | 2,529 | |||||||
Supplemental cash flow information: |
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Cash paid during the period for: |
|||||||||||
Interest (net of amounts capitalized) |
$ | 5,511 | $ | 8,848 | |||||||
Income taxes (net of refunds) |
$ | 6,653 | $ | 261 | |||||||
Supplemental schedule of noncash investing and financing activities: |
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Conversion of redeemable convertible preferred stock to common stock |
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