DREYERS GRAND ICE CREAM HOLDINGS INC - 10-Q Quarterly Report

5929 College Avenue, Oakland, California 94618
(Address of principal executive offices) (Zip 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.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.


			Sept. 27, 2003			Dec. 31, 2002

($ in thousands, except per share amounts)			(Unaudited)

Assets
Current Assets:
	Cash and cash equivalents		$	4,487		$	2,435
	Trade accounts receivable, net of allowance for doubtful accounts of $6,133 in 2003 and $3,104 in 2002			144,524			51,643
	Other accounts receivable			18,536			4,754
	Inventories			137,657			52,711
	Prepaid expenses and other			43,100			2,811
	Income taxes refundable			21,313
	Taxes receivable due from affiliates			22,674			16,943
	Deferred income taxes			36,716			7,890

		Total current assets		429,007			139,187
Employee loans							3,279
Property, plant and equipment, net				395,545			211,248
Other assets				25,850			18,682
Other intangibles, net				390,649			525
Goodwill				1,954,844			381,215

		Total assets	$	3,195,895		$	754,136

Liabilities and Stockholders’ Equity
Current Liabilities:
	Accounts payable and accrued liabilities		$	152,242		$	46,581
	Accrued payroll and employee benefits			77,194			15,603
	Current portion of long-term debt			2,143			73,142

		Total current liabilities		231,579			135,326
Long-term debt, less current portion				169,286
Long-term stock option liability				179,565
Long-term employee benefit obligations				3,518			2,813
Deferred income taxes				134,960			7,332

		Total liabilities		718,908			145,471

Commitments and contingencies

Class A Callable Puttable Common Stock:
	Class A callable puttable common stock, $.01 par value - 31,830,332 shares authorized; 28,710,339 issued and outstanding in 2003, and none in 2002			287
	Class A capital in excess of par			1,783,271
	Notes receivable from Class A callable puttable common stockholders			(1,174	)

		Total Class A callable puttable common stock		1,782,384

Stockholders’ Equity:
	Class B common stock, $.01 par value - 96,394,647 shares authorized; 64,564,315 shares issued and outstanding in 2003, and none in 2002			646
	Class B capital in excess of par			967,941
	Investment from member						750,252
	Accumulated deficit			(273,984	)		(141,587	)

		Total stockholders’ equity		694,603			608,665

		Total liabilities, Class A callable puttable common stock, and stockholders’ equity	$	3,195,895		$	754,136

DREYER’S GRAND ICE CREAM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)


			Quarter Ended						Three Quarters Ended

			Sept. 27, 2003			Sept. 29, 2002			Sept. 27, 2003			Sept. 29, 2002

($ in thousands, except per share amounts)

Revenues:
	Net sales — external customers		$	492,671		$	179,560		$	782,460		$	494,816
	Net sales — affiliates			1,078			1,218			2,882			3,368

		Net sales		493,749			180,778			785,342			498,184
	Other revenues			21,144						21,144

		Total net revenues		514,893			180,778			806,486			498,184

Costs and expenses:
	Cost of goods sold — external customers			432,460			144,714			667,963			393,196
	Cost of goods sold — affiliates			1,078			1,218			2,882			3,368

		Cost of goods sold		433,538			145,932			670,845			396,564
	Selling, general and administrative			78,862			33,385			138,639			93,276
	Interest, net of amounts capitalized			1,880			518			2,638			1,511
	Royalty expense			6,656			7,265			18,788			20,190
	Other expense, net			531			510			454			1,508
	Severance and retention expense			5,081						45,905
	Impairment of goodwill						69,956						69,956
	In-process research and development									11,495
	Loss on divestiture			323						11,931
	Dreyer’s Nestlé Transaction expenses			2,404						2,543

				529,275			257,566			903,238			583,005

Loss before income tax benefit				(14,382	)		(76,788	)		(96,752	)		(84,821	)
Income tax benefit				(4,746	)		(28,919	)		(31,928	)		(31,593	)

Net loss				(9,636	)		(47,869	)		(64,824	)		(53,228	)
Accretion of Class A callable puttable common stock				55,329						56,570

Net loss available to Class A callable puttable and Class B common stockholders			$	(64,965	)	$	(47,869	)	$	(121,394	)	$	(53,228	)

Net loss per Class A callable puttable and Class B common share:
	Basic		$	(.71	)	$	(.74	)	$	(1.65	)	$	(.82	)

	Diluted		$	(.71	)	$	(.74	)	$	(1.65	)	$	(.82	)

Dividends declared per common share:
	Class A callable puttable		$	.06					$	.12

	Class B		$	.06					$	.12


		Class B Common Stock
										Investment			Accumulated
					Capital in		Accumulated			From			Net Loss to
	Shares		Par Value		Excess of Par		Deficit			Member			Member			Total

(In thousands)

*Balances at December 31, 2001*										$	735,383		$	(54,700	)	$	680,683
Capital contributions											2,166						2,166
Capital contributions — acquisition costs paid by Nestlé											5,750						5,750
Tax sharing adjustment														(15,897	)		(15,897	)
Net loss to member														(53,228	)		(53,228	)

*Balances at September 29, 2002*										$	743,299		$	(123,825	)	$	619,474



*Balances at December 31, 2002*										$	750,252		$	(141,587	)	$	608,665
Capital contributions — acquisition costs paid by Nestlé affiliate											17,145						17,145
Reclassification of investment from member to Class B capital in excess of par					$	767,397					(767,397	)
Reclassification of accumulated net loss to member to accumulated deficit							$	(141,587	)					141,587
Net loss								(64,824	)								(64,824	)
Accretion of Class A callable puttable common stock								(56,570	)								(56,570	)
Class A callable puttable and Class B common stock dividends declared								(11,003	)								(11,003	)
Conversion of DGIC common stock held by Nestlé to DGICH Class B common stock		9,563	$	96		200,544											200,640
Issuance of Class B common stock in connection with the Dreyer’s Nestlé Transaction		55,001		550													550

*Balances at September 27, 2003*		64,564	$	646	$	967,941	$	(273,984	)	$			$			$	694,603

DREYER’S GRAND ICE CREAM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)


			Three Quarters Ended

(In thousands)			Sept. 27, 2003			Sept. 29, 2002

*Cash flows from operating activities:*
	Net loss		$	(64,824	)	$	(53,228	)
	Adjustments to reconcile net loss to cash flows from operations, net of amounts acquired:
		Depreciation and amortization		33,580			18,443
		In-process research and development		11,495
		Loss on divestiture		11,931
		Noncash charges from member					400
		Loss on disposal of fixed assets					1,252


(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 27, 2003

		OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-50325


PART I: FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS.
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited).
	ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.
	ITEM 4. CONTROLS AND PROCEDURES.
PART II: OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
SIGNATURE
INDEX OF EXHIBITS
Exhibit 10.43
Exhibit 10.44
Exhibit 10.45
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents


Delaware (State or other jurisdiction of incorporation or organization)		No. 02-0623497 (I.R.S. Employer Identification No.)


	Shares Outstanding at November 11, 2003

Class A callable puttable common stock, $.01 par value		29,007,629
Class B common stock, $.01 par value		64,564,315


Yes x		No o


Yes x		No o