<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the six months ended June 30, 2002
FAGE DAIRY INDUSTRY S.A.
(Translation of Registrant's name into English)
35, Hermou Street, 144 52 Metamorfossi, Athens, Greece
(Address of principal executive office)
[Indicate by check mark whether the Registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.]
Form 20-F X Form 40-F
--------- ---------
[Indicate by check mark whether the Registrant by furnishing the information
contained in the Form is also there by furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes No X
-------------- ---------------
I
<Page>
This report (the "Quarterly Report") sets forth certain information
regarding the financial condition and results of operations of Fage Dairy
Industry S.A., a Greek societe anonyme (the "Company" or "Fage"), for the fiscal
quarter ended June 30, 2002. The Quarterly Report encloses a review, in English,
of the Company's unaudited financial information and analysis for the second
quarter as well as certain other information.
The following unaudited financial statements in the opinion of the
management, reflect all necessary adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the financial
position, the results of operations and cash flows for the periods presented.
For a description of accounting policies see Notes to financial statements
in Fage's 2001 annual report (FORM 20-F).
Fage, commencing January 1, 2002, is preparing its financial statements in
Euros. For comparison purposes results of previous periods included in this
Report have also been stated in Euros based on the fixed exchange rate of GRD
340.75 to EUR 1.00.
II
<Page>
FAGE DAIRY INDUSTRY S.A.
FORM 6-K
INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<Table>
<Caption>
PAGE
----
PART I FINANCIAL INFORMATION
ITEM 1 -FINANCIAL STATEMENTS
a - Consolidated Balance Sheets as of December 31, 2001
and June 30, 2002 1-2
b - Consolidated Statements of Income for the six months ended
June 30, 2001 and 2002 3
c - Consolidated statements of Income for the three months ended
June 30, 2001 and 2002 4
d - Consolidated Statement of Shareholders' Equity for the six months
ended June 30, 2002 5
e - Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2002 6
f - Notes to Consolidated Financial Statements 7-16
ITEM 2 -MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 17-19
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings 20
ITEM 2 Changes in Securities and use of proceeds 20
ITEM 3 Defaults upon Senior Securities 20
ITEM 4 Submission of Matters to a Vote of Security Holders 20
ITEM 5 Other Information 20
ITEM 6 Exhibits and Reports on Form 8-K 20
SIGNATURES 21
</Table>
III
<Page>
PART I
ITEM 1.a
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND JUNE 30, 2002
(AMOUNTS IN 000'S OF EUROS AND U.S. DOLLARS)
<Table>
<Caption>
UNAUDITED
-----------------------------------
DECEMBER 31, 2001 JUNE 30, 2002
------------------- -----------------------------------
NOTES EUR EUR U.S.$
------------ ------------------- --------------- --------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 2,831 11,204 11,043
Restricted cash 15,298 15,494 15,271
Marketable securities 4 3,251 2,929 2,886
Accounts receivable 5 71,881 80,734 79,571
Less: Allowance for doubtful accounts 5 (6,951) (7,226) (7,121)
------------------- --------------- --------------
64,930 73,508 72,450
Due from related companies 6 1,755 1,735 1,710
Inventories 7 23,861 28,887 28,471
Deferred income taxes 0 0 0
------------------- --------------- --------------
TOTAL CURRENT ASSETS 111,926 133,757 131,831
------------------- --------------- --------------
INVESTMENTS AND OTHER ASSETS
Investments in and advances to affiliates 8 3,624 3,352 3,304
Other non-current assets 9 806 1,053 1,038
------------------- --------------- --------------
4,430 4,405 4,342
------------------- --------------- --------------
PROPERTY, PLANT AND EQUIPMENT
Cost 138,547 142,922 140,864
Less: Accumulated depreciation (56,069) (59,890) (59,027)
------------------- --------------- --------------
82,478 83,032 81,836
------------------- --------------- --------------
DEFERRED CHARGES 2
Cost 3,334 3,334 3,285
Less: Accumulated amortization (2,119) (2,286) (2,253)
------------------- --------------- --------------
1,215 1,048 1,032
------------------- --------------- --------------
GOODWILL, RESULTING FROM CONSOLIDATED
SUBSIDIARIES 10 6,677 6,677 6,581
------------------- --------------- --------------
TOTAL ASSETS 206,726 228,919 225,622
=================== =============== ==============
</Table>
Exchange rate used for the convenience translation of the June 30, 2002
euro amounts: U.S.$ 0.9856 to EUR 1.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE BALANCE SHEETS.
1
<Page>
PART I
ITEM 1.a
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
AS OF DECEMBER 31, 2001 AND JUNE 30, 2002
(AMOUNTS IN 000'S OF EUROS AND U.S. DOLLARS)
<Table>
<Caption>
UNAUDITED
--------------------------------
DECEMBER 31, 2001 JUNE 30, 2002
----------------- --------------------------------
NOTES EUR EUR U.S.$
----------- ----------------- --------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings 11 30,896 34,701 34,201
Current portion of long-term debt 12 1,234 617 608
Trade accounts payable 37,020 38,382 37,829
Due to related companies 6 4,580 10,417 10,267
Income taxes payable 4,019 7,893 7,780
Deferred income taxes 1,083 4,816 4,747
Other current liabilities 14 8,328 7,963 7,848
---------------- --------------- -----------
TOTAL CURRENT LIABILITIES 87,160 104,789 103,280
---------------- --------------- -----------
LONG-TERM LIABILITIES
Long-term debt 12, 13 103,522 93,107 91,766
Staff retirement indemnities 1,199 1,315 1,296
Other long-term liabilities 2,560 2,560 2,523
Deferred income taxes 5,539 7,368 7,261
---------------- --------------- -----------
112,820 104,350 102,847
---------------- --------------- -----------
MINORITY INTERESTS 163 190 187
---------------- --------------- -----------
CONTINGENCIES 15
SHAREHOLDERS' EQUITY
Share capital, nominal value EUR 2,93
and EUR 2,94 each at the respective
dates (7,010,000 shares authorised,
issued and outstanding at December
31, 2001 and June 30, 2002) 20,572 20,609 20,312
Reversal of revaluation gains (14,751) (14,751) (14,539)
Retained earnings 763 13,732 13,534
---------------- --------------- -----------
6,584 19,590 19,308
---------------- --------------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 206,726 228,919 225,622
================ =============== ===========
</Table>
Exchange rate used for the convenience translation of the June 30, 2002
euro amounts: U.S.$ 0.9856 to EUR 1.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE BALANCE SHEETS.
2
<Page>
PART I
ITEM 1.b
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2002
(AMOUNTS IN 000'S OF EUROS AND U.S. DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
2002
2001 -----------------------------------
NOTES EUR EUR U.S.$
---------------- --------------- --------------- -----------------
Net sales 139,603 155,039 152,806
Cost of sales (92,651) (97,976) (96,565)
--------------- --------------- -----------------
Gross profit 46,952 57,063 56,241
Selling, general and
administrative expenses (33,893) (41,288) (40,693)
--------------- --------------- -----------------
Income from operations 13,059 15,775 15,548
Interest expense 2, 11, 12, 13 (5,985) (5,360) (5,283)
Foreign exchange gains
(losses), net (11,082) 12,170 11,995
Other income (expenses), net 346 571 563
--------------- --------------- -----------------
Income (loss) before income taxes
and minority interests (3,662) 23,156 22,823
Provision for income taxes 1,230 (9,797) (9,656)
--------------- --------------- -----------------
Income (loss) before minority interests (2,432) 13,359 13,167
Minority interests (105) (54) (53)
--------------- --------------- -----------------
NET INCOME (LOSS) (2,537) 13,305 13,114
=============== =============== =================
INCOME (LOSS) PER SHARE, BASIC AND DILUTED (0.36) 1.90 1.87
=============== =============== =================
WEIGHTED AVERAGE NUMBER OF SHARES, BASIC AND DILUTED 7,010,000 7,010,000 7,010,000
=============== =============== =================
</Table>
Exchange rate used for the convenience translation of the June 30, 2002
euro amounts: U.S.$ 0.9856 to EUR 1.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
<Page>
PART I
ITEM 1.c
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2002
(AMOUNTS IN 000'S OF EUROS AND U.S. DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
2002
2001 -----------------------------------
NOTES EUR EUR U.S.$
---------------- --------------- --------------- -----------------
Net sales 75,327 85,250 84,022
Cost of sales (50,562) (55,345) (54,548)
--------------- --------------- -----------------
Gross profit 24,765 29,905 29,474
Selling, general and
administrative expenses (19,251) (23,768) (23,426)
--------------- --------------- -----------------
Income from operations 5,514 6,137 6,048
Interest expense 2, 11, 12, 13 (3,077) (2,464) (2,428)
Foreign exchange gains
(losses), net (3,520) 13,362 13,170
Other income (expenses), net 250 327 322
--------------- --------------- -----------------
Income (loss) before income taxes
and minority interests (833) 17,362 17,112
Provision for income taxes 173 (7,832) (7,719)
--------------- --------------- -----------------
Income (loss) before minority interests (660) 9,530 9,393
Minority interests 12 (48) (47)
--------------- --------------- -----------------
NET INCOME (LOSS) (648) 9,482 9,346
=============== =============== =================
INCOME (LOSS) PER SHARE, BASIC AND DILUTED (0.09) 1.35 1.33
=============== =============== =================
WEIGHTED AVERAGE NUMBER OF SHARES, BASIC AND DILUTED 7,010,000 7,010,000 7,010,000
=============== =============== =================
</Table>
Exchange rate used for the convenience translation of the June 30, 2002
euro amounts: U.S.$ 0.9856 to EUR 1.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<Page>
PART I
ITEM 1.d
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(AMOUNTS IN 000'S OF EUROS AND U.S. DOLLARS)
(UNAUDITED)
<Table>
<Caption>
RETAINED EARNINGS (DEFICIT)
---------------------------
LEGAL, TAX
REVERSAL OF FREE AND
COMPREHENSIVE SHARE REVALUATION EXTRAORDINARY ACCUMULATED
INCOME CAPITAL GAINS RESERVES DEFICIT
---------------- ----------- ------------ ------------ -----------
BALANCE, DECEMBER 31, 2001 20,572 (14,751) 19,516 (18,497)
=========== ============ ============ ===========
Increase in share capital through
cash contribution 37 0 0 0
Net income for the period 13,305 0 0 0 13,305
Valuation of marketable securities (336) 0 0 0 0
----------------
Comprehensive income 12,969
================ ----------- ------------ ------------ -----------
BALANCE, JUNE 30, 2002 20,609 (14,751) 19,516 (5,192)
=========== ============ ============ ===========
<Caption>
RETAINED EARNINGS (DEFICIT)
-----------------------------------------
ACCUMULATED
OTHER
COMPREHENSIVE GRAND
INCOME TOTAL TOTAL
------------ ---------- ----------
BALANCE, DECEMBER 31, 2001 (256) 763 6,584
============ ========== ==========
Increase in share capital through
cash contribution 0 0 37
Net income for the period 0 13,305 13,305
Valuation of marketable securities (336) (336) (336)
Comprehensive income
------------ ---------- ----------
BALANCE, JUNE 30, 2002 (592) 13,732 19,590
============ ========== ==========
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
5
<Page>
PART I
ITEM 1.e
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2002
(AMOUNTS IN 000'S OF EUROS AND U.S. DOLLARS)
(UNAUDITED)
<Table>
<Caption>
2002
2001 ----------------------------
EUR EUR U.S.$
------------- ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (2,537) 13,305 13,114
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation, amortization and impairment allowance 4,241 4,086 4,027
Deferred income taxes (1,272) 5,561 5,481
Provision for personnel retirement cost 126 144 142
Provision for doubtful accounts receivable 311 275 271
Minority interests 105 54 53
Gain from sale of property, plant & equipment (237) (194) (191)
Unrealised foreign exchange (gains) losses 11,163 (12,454) (12,274)
Loss on investments 239 272 268
(Increase) Decrease in:
Accounts receivable (18,152) (8,607) (8,483)
Due from related companies (241) 20 19
Inventories (5,537) (5,026) (4,953)
Increase (Decrease) in:
Trade accounts payable 11,174 1,362 1,343
Due to related companies 3,862 5,837 5,753
Income taxes payable 111 3,873 3,818
Other current liabilities (411) (365) (359)
Payment of staff retirement indemnities (25) (28) (28)
(Increase) decrease in other non-current assets (255) (262) (258)
Increase (decrease) in other long-term liabilities (269) 0 0
------------- ------------ -----------
NET CASH FROM OPERATING ACTIVITIES 2,396 7,855 7,742
------------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditure for property, plant & equipment (5,385) (6,201) (6,112)
Proceeds from sale of fixed assets 381 1,769 1,744
Proceeds from subsidies/grants 218 0 0
Investments in and advances to affiliates (4,613) 0 0
Net change in restricted cash (155) (196) (193)
Purchase of marketable securities (1,048) (14) (14)
------------- ------------ -----------
NET CASH USED IN INVESTING ACTIVITIES (10,602) (4,642) (4,575)
------------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt 11,030 5,720 5,638
Repayment of long-term debt (676) (616) (607)
Increase of share capital 0 37 36
------------- ------------ -----------
NET CASH FROM FINANCING ACTIVITIES 10,354 5,142 5,068
------------- ------------ -----------
EFFECT OF EXCHANGE RATES CHANGES ON CASH 139 17 17
------------- ------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,287 8,372 8,252
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,447 2,831 2,791
------------- ------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 5,734 11,204 11,043
============= ============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
- interest, net of amounts capitalized 5,521 5,485 5,406
- income taxes 256 361 356
</Table>
Exchange rate used for the convenience translation of the June 30, 2002
euro amounts: U.S.$ 0.9856 to EUR 1.00
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
6
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
PART I
ITEM 1.f NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(AMOUNTS IN ALL TABLES AND NOTES ARE PRESENTED IN THOUSANDS OF EUROS UNLESS
OTHERWISE STATED)
(UNAUDITED)
BUSINESS INFORMATION:
Fage Dairy Industry S.A., a corporation organized under the laws of the
Hellenic Republic (also known as Greece), is the successor to a business founded
in Athens in 1926 by the family of Mr. Athanassios Filippou, the father of the
current shareholders, Messrs. Ioannis and Kyriakos Filippou. References to the
"Company" or "Fage" include, unless the context requires otherwise, Fage Dairy
Industry S.A. and its consolidated subsidiaries.
Fage is engaged in the dairy products business and operates primarily in
Greece. The Company's sales are primarily to retailers in Greece and the
remainder is exported to Western European countries.
No single customer accounted for more than 10% of the consolidated net
sales for the three or six months ended June 30, 2001 and 2002.
The accompanying unaudited financial statements, in the opinion of the
management, reflect all necessary adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the financial
position, the results of operations and cash flows for the periods presented.
For a full description of accounting policies see notes to financial
statements for the year ended December 31, 2001.
1. RECENTLY ISSUED ACCOUNTING STANDARDS:
During 2001, the Financial Accounting Standards Board ("FASB") has issued
four SFAS's ,which are summarized as follows:
(i) SFAS No. 141, "Business Combinations", relates to financial
accounting and reporting for business combinations and is
effective for all business combinations initiated after June 30,
2001 and business combinations completed July 1, 2001 and later.
It states that all business combinations included within the
scope of the statement should be accounted for using the
purchase method. The Company has no pending business
combinations, which would be affected by the statement, but any
future business combinations that are contemplated would need to
take account of the requirements of the statement.
(ii) SFAS No. 142, "Goodwill and Other Intangible Assets",
establishes new standards for accounting for goodwill and other
intangible assets. The statement does require that goodwill and
indefinite lived intangible assets no longer be amortized, but
reviewed annually for impairment and is effective for financial
statements issued for fiscal years beginning after December 15,
2001. The Company applied SFAS No. 142 as of January 1, 2002 and
completed the step 1 of the transitional goodwill impairment
test for all its reporting units. The test indicated that the
carrying value of goodwill relating to subsidiaries operating in
the cheese sector exceeded its fair value. The Company expects
to measure the impairment loss by completing step 2 no later
than the end of the fiscal year, December 31, 2002. No other
impairment indicators have arisen since January 1, 2002.
(iii) SFAS No. 143, "Accounting for Asset Retirement Obligations",
relates to financial accounting and reporting requirements
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. The statement is
effective for financial statements issued for fiscal years
beginning after June 15, 2002. The Company has not determined
the impact, if any, that the adoption of this statement will
have on the Company's results of operation or financial
position.
7
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
(iv) SFAS No 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", addresses financial accounting and reporting
for the impairment or disposal of long-lived assets and
supersedes SFAS No 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
The statement requires that those long-lived assets be measured
at the lower of carrying amount of fair value less cost to sell,
whether reported in continuing operations or in discontinued
operations. The statement is effective for financial statements
issued for fiscal years beginning after December 15, 2001. The
Company applied SFAS No 144 in the accompanying financial
statements. No adjustments occurred for the six months ended
June 30, 2002.
2. DEFERRED CHARGES:
The expenses incurred in connection with the issuance and distribution of
the Senior Notes issued on February 11, 1997, (see Note 13), including
underwriting commissions, were capitalized as deferred charges and are being
amortized on a straight-line basis over the term of the Notes. Amortization for
the six months ended June 30, 2001 and 2002 totaled EURO 167 for each of the
above periods and amortization for the three months ended June 30, 2001 and 2002
totaled EURO 83 and are included in interest expense in the accompanying
consolidated statements of income.
3. TRANSLATIONS OF EURO AMOUNTS INTO U.S. DOLLARS:
The consolidated financial statements are stated in Euros. The
translations of the Euro amounts into U.S. Dollars at the rate of US $ 0.9856 to
EURO 1.00 are included solely for the convenience of the reader. This
convenience exchange rate is computed based on the noon buying rate in New York
City for cable transfers in Euros, as certified for customs purposes by the
Federal Reserve Bank of New York on June 30, 2002, which was US $ 0.9856 to EURO
1.00. The convenience translations should not be construed as representations
that the Euros amounts have been, could have been, or could in the future be,
converted into U.S. Dollars at this or any other rate of exchange. Included in
foreign exchange gains (losses), net, for the six months ended June 30, 2001 and
2002 is an amount of EURO (9,434) and EURO 10,537, respectively, relating to
unrealized foreign exchange gains (losses) of the Senior Notes referred to in
Note 13. Included in foreign exchange gains (losses), net, for the three months
ended June 30, 2001 and 2002 is an amount of EURO (2,798) and EURO 11,582,
respectively, relating to unrealized foreign exchange gains (losses) of the
Senior Notes referred to in Note 13.
4. MARKETABLE SECURITIES:
Equity securities at December 31, 2001 and June 30, 2002 include: (a) EURO
1,841 and EURO 1,453, respectively, representing the market value of 139,141
preferred and 210,719 common shares as of December 31, 2001 and 139,831
preferred and 212,849 common shares as of June 30, 2002 of Vis S.A. (a related
company - Note 6) representing approximately 7.0% and 7.1% at the respective
dates, of the authorized, issued and outstanding shares as of those dates, and
b) EURO 1,410 and EURO 1,476 representing the market value of 300,000 shares, of
Hellenic Biscuit Company (a related company) representing approximately 0.9% on
both dates of Hellenic Biscuit Company's authorized, issued and outstanding
shares traded on the Athens Stock Exchange.
The above mentioned investments have been classified as available for sale
and are carried at their fair market value with the difference in the market
values reflected in shareholders' equity. At December 31, 2001 and June 30,
2002, the cost of these investments in equity securities was EURO 3,507 and EURO
3,521 respectively.
There were no sales of equity securities for the six months ended June 30,
2001 and 2002.
The change in net unrealized holding gain (loss) on available for sale
equity securities totaled EURO (1,107) and EURO (336) for the six months ended
June 30, 2001 and 2002, respectively.
8
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
5. ACCOUNTS RECEIVABLE:
Accounts receivable are analyzed as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------ ----------
(UNAUDITED)
TRADE:
- In Euro 57,058 62,418
- In foreign currencies 4,118 9,495
--------- -------
61,176 71,913
- Less: allowance for doubtful accounts (3,098) (3,237)
--------- -------
58,078 68,676
========= =======
OTHER:
- Value added tax 2,594 1,591
- Prepayments 190 222
- Custom brokers 128 54
- Advances from suppliers 227 184
- Various debtors 7,566 6,770
--------- -------
10,705 8,821
- Less: allowance for doubtful accounts and
various debtors (3,853) (3,989)
--------- -------
6,852 4,832
--------- -------
64,930 73,508
========= =======
</Table>
The provision for doubtful accounts for the six months ended June 30, 2001
and 2002 totaled EURO 311 and EURO 275, respectively.
The fair value of accounts receivable approximates the above recorded
values.
At each reporting date, all potentially uncollectable accounts are
assessed individually (through consultation with collection counsel) for
purposes of determining the appropriate allowance for doubtful accounts. In this
respect, the allowance for doubtful accounts at June 30, 2002, includes
approximately 100%, 90%, 80%, 70%, 45% and 30% of the delinquent accounts
identified above for 1993 through 1997, 1998, 1999, 2000, 2001 and 2002,
respectively.
It is the Company's policy to attach liens against the property of most of
its delinquent customers. Because of the prolonged and complex legal procedures
in Greece, it is not unusual for the collection process to take three to five
years before a case is finalized.
9
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
6. DUE FROM (TO) RELATED COMPANIES:
Fage purchases goods and services from and makes sales of goods to certain
related companies in the ordinary course of business. Such related companies
consist of affiliates or companies, which have common ownership and/or
management with Fage. The Company believes that in each case the terms of such
transactions are comparable to those that would be attainable by the Company in
the ordinary course of business from unaffiliated third parties under similar
circumstances.
Account balances with related companies are as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------ ------------
(UNAUDITED)
Due from:
- Ioannis Nikolou ULP 1,254 1,368
- Sideris & Co. 367 367
- Bizios S.A. 134 -
------------ ------------
1,755 1,735
============ ============
Due to:
- Evga S.A. 368 1,215
- Mornos S.A. 1,677 3,300
- Aspect S.A. 1,309 4,239
- Vis S.A. 580 842
- Vihep S.A. 336 433
- Palace S.A. 230 122
- Iofil S.A. 80 -
- Bizios S.A. - 266
------------ ------------
4,580 10,417
============ ============
</Table>
Transactions with related companies for the six months ended June 30, 2001
and 2002 are analyzed as follows:
<Table>
<Caption>
PURCHASES SALES
FROM RELATED PARTIES TO RELATED PARTIES
--------------------------- -------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2001 2002 2001 2002
---------- ---------- ---------- ----------
(UNAUDITED)
Inventories, materials and supplies 16,019 17,932 2,809 1,924
Advertising and media 9,534 7,472 - -
Commercial services 1,235 1,325 - -
---------- ---------- ---------- ----------
26,788 26,729 2,809 1,924
========== ========== ========== ==========
</Table>
Purchases of inventories, materials and supplies, represent approximately
18% and 20% of Fage's total purchases for the six months ended June 30, 2001 and
2002, respectively.
Advertising and media buying services represent approximately 87% and 73%
of Fage's total advertising costs for the six months ended June 30, 2001 and
2002, respectively.
10
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
7. INVENTORIES:
Inventories are analyzed as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------ -----------
(UNAUDITED)
Merchandise 1,311 1,583
Finished and semi-finished products 8,879 14,937
Raw materials and supplies 7,342 8,403
Advances and payments to suppliers for materials and
supplies 6,329 3,964
-------- --------
23,861 28,887
======== ========
</Table>
8. INVESTMENTS IN AND ADVANCES TO AFFILIATES:
The Company's investments are analyzed as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------ -----------
(UNAUDITED)
Equity participation:
- Tyras S.A. 1,109 1,109
- Bizios S.A. 1,875 1,603
- Packaging Hellas Development S.A. 88 88
------------ -----------
3,072 2,800
Goodwill, net of amortization:
- Bizios S.A. 552 552
------------ -----------
3,624 3,352
============ ===========
</Table>
The Company's investments in Tyras S.A. and Packing Items Development S.A. are
accounted for at cost while its investment in Bizios S.A. is accounted for under
the equity method.
9. OTHER NON-CURRENT ASSETS:
Other non-current assets are analyzed as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------ -----------
(UNAUDITED)
Long-term notes receivable 813 1,729
Less: current maturities, included in
trade accounts receivable (380) (1,079)
------- -------
433 650
Trademarks, net of amortization 87 77
Utility deposits 236 278
Other 50 48
------- -------
806 1,053
======= =======
</Table>
The fair value of the long-term notes receivable approximates the above
recorded values.
11
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
10. GOODWILL, RESULTING FROM CONSOLIDATED SUBSIDIARIES:
At December 31, 2001 and June 30, 2002, the cost and the accumulated
amortization of goodwill were EURO 8,582 and EURO (1,905), respectively at both
dates. The Company as of January 1, 2002 applied SFAS No 142, "Goodwill and
Other Intangible Assets" and completed the step 1 of the transitional goodwill
impairment test for all its reporting units. The test indicated that the
carrying value of goodwill relating to subsidiaries operating in the cheese
sector exceeded its fair value. The Company expects to measure the impairment
loss by completing step 2 no later than the end of the fiscal year, December 31,
2002. No other impairment indicators have arisen since January 1, 2002.
The unamortized goodwill reflected in the accompanying consolidated
balance sheets is analyzed as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------ -----------
(UNAUDITED)
Food Hellas S.A. 1,755 1,755
Pindos S.A. 374 374
Voras S.A. - -
Xylouris S.A. 754 754
Ellenica S.R.L. 180 180
Tamyna S.A. 1,394 1,394
Agroktima S.A. 134 134
Iliator S.A. 31 31
Zagas S.A. 2,055 2,055
Fage USA Corp. - -
------------ -----------
6,677 6,677
============ ===========
</Table>
FOODS HELLAS S.A.: Foods Hellas is owned 99.38% by Fage and the balance of
0.62% is owned in equal shares by the two shareholders of Fage. Foods Hellas is
a distribution company with a network that covers Northern Greece.
Fage acquired its participating interest in Foods Hellas in three
tranches. The first (46.9%) was acquired in 1990 for a consideration of EURO
1,174 from a third party who had previously acquired the shares from Fage's
present shareholders. The second tranche (37.5%) was acquired in 1992 and the
third tranche (14.98%) was acquired in 2001 from Fage's present shareholders.
Effective January 1, 1998, the distribution network of Foods Hellas has been
operated under the name of Fage.
PINDOS S.A.: Fage acquired its participating interest of 97.48% in Pindos
S.A. in six tranches (51% in 1993, 19.6% in 1994, 11.2% in 1997, 12.09% in 1998,
2.22% in 1999 and 1.37% in 2001) for a total consideration of EURO 8,359. Pindos
S.A. is a cheese producer in Ioannina.
In September 1999 Foods Hellas S.A. acquired a 3.89% interest in Pindos
S.A. for an amount of EURO 440. During 2001, Fage increased its participation in
Pindos S.A. by 1.37% through an increase in share capital of Pindos S.A. of EURO
2,641 in which Food Hellas did not participate and as a result, its interest in
Pindos S.A. was reduced to 2.52%. Accordingly, at June 30, 2002, Fage's direct
and indirect interest in Pindos S.A. amounts to 99.984%.
VORAS S.A.: Fage acquired its participating interest 75.5% in Voras S.A.
in three tranches ( 45% in September 1996, 25% in July 1997 and 5.5% in October
1998) for a total consideration of EURO 5,881. Voras S.A. is a milk producer in
Amintaio.
XYLOURIS S.A.: Fage acquired its participating interest 51% in Xylouris
S.A. in three tranches (35% in 1995, 12% in 1996 and 4% in October 1997 ) for a
total consideration of EURO 1,404. Xylouris is a cheese producer in Crete.
12
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
ELLENIKA S.R.L.: Ellenika is a 88.87% owned Italian distribution company.
Fage acquired its participating interest in Ellenika in 1993 for a consideration
of EURO 457.
TAMYNA S.A.: Fage acquired its participating interest 99.42% in Tamyna
S.A. in four tranches (42.3% in 1996, 4.7% in 1997, 25.49% in 2000 and 26.93% in
March 2001) for a total consideration of EURO 4,845. Additionally in 2000, Foods
Hellas S.A. acquired a 0.576% interest in Tamyna S.A. for an amount of EURO 37.
Therefore, Fage obtained an additional (indirect) 0.49% interest in Tamyna S.A.
and, as of June 30, 2002, holds 99.996% of the company's outstanding shares.
Tamyna is a cheese producer in Aliveri.
AGROKTIMA S.A.: Fage acquired its participating interest of 99.33% in
Agroktima S.A. in two tranches (33.24% in 1998 and 66.09% in 2000) for a total
consideration of EURO 1,573. Additionally in 2000, Foods Hellas S.A. acquired a
0.666% interest in Agroktima S.A. for an amount of EURO 12. Therefore, Fage
obtained an additional (indirect) 0.57% interest in Agroktima S.A. and, as of
June 30, 2002, holds 99.996% of the company's outstanding shares. Agroktima is
an agricultural and farm development company.
ILIATOR S.A.: The Company has a participation interest of 97% in Iliator
S.A., a construction company.
FAGE USA CORP.: During 2000, Fage S.A. established a distribution company
in U.S.A. under the name of Fage USA, Corp. Fage S.A. owns 100% of the company,
which has been capitalized for an amount of EURO 162 in equity.
ZAGAS S.A.: Zagas S.A. is a cheese producer in Agrinio. Fage acquired its
participating interest 98% on January 19, 2001, for a consideration of EURO
3,020. Additionally in 2001 Foods Hellas S.A. acquired a 2% interest in Zagas
S.A. for an amount of EURO 62. Therefore, Fage obtained an additional (indirect)
1.988% interest in Zagas S.A. and, as of June 30, 2002, holds 99.988% of the
company's outstanding shares. The results of this investment have been included
in the Company's consolidated results of operations from the date of
acquisition. The purchase of Zagas S.A. was accounted for under the purchase
method of accounting.
In 2000 and 2001, the review by the Company's management of the carrying
amounts of the goodwill that arose from investments in subsidiaries in
connection with their expected recoverable amount and the estimated undiscounted
cash flows from future operations indicated that the carrying amount of goodwill
relating to subsidiaries operating in the "Feta" cheese sector exceeded its
expected recoverable amount. Accordingly management decided to recognize an
impairment loss EURO 1,323 and EURO 3,324 in 2000 and 2001, respectively, based
upon a calculation of discounted expected cash flows, which was included in
impairment loss in the 2000 and 2001 consolidated statements of income,
respectively.
The impairment loss recognized in fiscal year 2001 related to Pindos S.A.
(EURO 266), Voras S.A. (EURO 2,420) and Tamyna S.A. (EURO 548) while that of
2000 related to Pindos S.A. (EURO 734) and Tamyna S.A. (EURO 589).
The main reason for the impairment is mainly linked with the fact that the
packaged cheese market in Greece is not developing in line with management's
expectations. One of the main contributions to this fact is the European Court
ruling against the validity of legislation protecting Feta cheese, the main
product of the majority of the Company's subsidiaries, which had an adverse
impact on the Company's estimates of future turnover of "Feta" cheese.
11. SHORT-TERM BORROWINGS:
Short-term borrowings are draw-downs under various lines of credit
maintained by the Company with several banks. The aggregate amount of
available lines of credit was EURO 49,900 at December 31, 2001 and June
30, 2002, of which approximately EURO 19,004 and EURO 15,199 were unused
as of the above dates. Draw-downs of USD 14.1 million or EURO 14.3 million
were made in fiscal year 2000 from these lines of credit, the proceeds of
which were used to repurchase Senior Notes with an aggregate face amount
of USD 27.4 million (see Note 13). Fage held as of December 31, 2001 and
June 30, 2002, in a restricted cash account, an amount of EURO 15,298 and
EURO 15,494, respectively, including interest earned through that date.
During July 2002, the above short-term borrowings amounted to EURO 14.3
million were paid and the restricted cash was released.
13
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
Short-term borrowings are denominated in Euros, Japanese Yen and U.S.
Dollars and are secured by the corporate guarantee of Fage Dairy Industry
S.A. the weighted average interest rates on short-term borrowings as of
December 31, 2001 & June
The weighted average interest rates on short-term borrowings as of
December 31, 2001 and June 30, 2002, were as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------ ------------
(UNAUDITED)
CURRENCY
Japanese Yen 2.66% 2.25%
U.S. Dollar 6.10% 3.80%
Euro 6.44% 5.65%
</Table>
Interest on short-term borrowings for the six months ended June 30, 2001
and 2002, totaled EURO 770 and EURO 680, respectively, and for the three months
ended June 30, 2001 and 2002 totaled EURO 420 and EURO 383, respectively, and
are included in interest expense in the accompanying consolidated statements of
income.
12. LONG-TERM DEBT:
Long-term debt consists of:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------- -----------
(UNAUDITED)
(a) Senior Notes, due 2007 (the "Notes ") issued on February 11,
1997. Interest on the Notes is paid semi-annually in February
and August, commencing August 1, 1997, at the rate of 9% per
annum. The Notes are redeemable, in whole or in part, at the
option of the Company at any time on or after February 1, 2002
(see Note 13) 103,522 93,107
(b) Long-term loan obtained by Voras S.A. in July 1997 (JPY 248
million) due in seven semi-annual installments, commencing July
31, 1999 (two years grace period), through July 2002 bearing
interest at a rate equal to LIBOR plus 2.10% (2.22% at June 30,
2002). 614 -
(c) Long-term loan obtained by Voras S.A. in July 1997 (EURO 1.95
million changed in JPY 250.2 million in February 1999) due in
seven semi-annual installments, commencing July 31, 1999 (two
years grace period), through July 2002 bearing interest at a
rate equal to LIBOR plus 2.10% (2.22% at June 30, 2002). 620 617
------------- -----------
104,756 93,724
Less: Current portion of Voras S.A.'s long-term debt. (1,234) (617)
------------- -----------
103,522 93,107
============= ===========
</Table>
The fair value of the Company's long-term debt approximates the
above-recorded values, generally due to their variable market rates.
Interest expense (excluding Senior Notes interest expense disclosed in
Note 13) for the six months ended June 30, 2001 and 2002, totaled EURO 40 and
EURO 11, respectively, and for the three months, ended June 30, 2001 and 2002
totaled EURO 14 and EURO 3, respectively and are included in interest expense in
the accompanying consolidated statements of income.
14
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
13. SENIOR NOTES DUE 2007:
In February 1997, the Company completed the issuance of debt securities
(Senior Notes) in the United States. The net proceeds of the offering of U.S.$
114.6 million were used to repay outstanding obligations and for general working
capital.
The Senior Notes ("Notes") issued at an aggregate face amount of U.S.$ 120
million, with maturity date on February 1, 2007, bear interest at a rate of 9%
per annum, payable semi-annually on each February 1, and August 1, and commenced
on August 1, 1997. The Senior Notes are redeemable in whole or in part, at the
option of the Company at any time on or after February 1, 2002.
During 1999 and 2000, the Company repurchased in privately negotiated
transactions Senior Notes with an aggregate face amount of U.S. $ 27.4 million.
The repurchased Senior Notes have been canceled.
Interest expense (including amortization of deferred charges) for the six
months ended June 30, 2001 and 2002, totaled EURO 5,175 and EURO 4,669,
respectively, and for the three months ended June 30, 2001 and 2002 totaled EURO
2,643 and EURO 2,078, respectively, and are included in interest expense in the
accompanying consolidated statements of income.
The indebtedness evidenced by the Notes constitutes general unsecured
senior obligation of Fage Dairy Industry S.A. and will rank PARI PASSU in right
of payment with all other senior indebtedness and will rank senior in right of
payment to all subordinated indebtedness of Fage Dairy Industry S.A.
The Senior Notes Indenture contains certain covenants that, among other
things, limit the type and amount of additional indebtedness that may be
incurred by Fage and its subsidiaries and imposes certain limitations on
investments, loans and advances, sales or transfers of assets, liens, dividends
and other payments, the ability of Fage and its subsidiaries to enter into
sale-leaseback transactions, certain transactions with affiliates and certain
mergers. The Company is in compliance with the terms of the Indenture.
14. OTHER CURRENT LIABILITIES:
The amount reflected in the accompanying consolidated balance sheets is
analyzed as follows:
<Table>
<Caption>
DECEMBER 31, JUNE 30,
2001 2002
------------- ------------
(UNAUDITED)
Taxes withheld:
Payroll 381 293
Third parties 248 398
Milk producers 49 210
Other 364 379
------------- ------------
1,042 1,280
------------- ------------
Advances from customers 313 3
------------- ------------
Accrued bank interest 4,093 3,679
Social security funds payable 1,153 645
Accrued and other liabilities 1,727 2,356
------------- ------------
6,973 6,680
------------- ------------
TOTAL 8,328 7,963
============= ============
</Table>
15
<Page>
FAGE DAIRY INDUSTRY S.A. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS - CONTINUED
15. CONTINGENCIES:
The Company is a party to various lawsuits and arbitration proceedings in
the normal course of business in Greece, with claims totaling approximately EURO
2,800. According to the Company's management and its legal advisors, all of the
lawsuits will be settled without any material adverse effect on the Company's
consolidated financial position or results of operations.
Furthermore, Fage S.A. has been appointed as an official sponsor of the
Olympic games held in Athens in the year 2004. The future commitment under the
sponsorship agreement amounts to approximately EURO 5.1 million.
16. SUBSEQUENT EVENTS
In April 2002, the Agricultural Bank of Greece announced its intent to
sell Agno Dairy Industry S.A. (the fourth largest enterprise in the Greek dairy
market). The sale is to take place in a two-part competitive process. First
interested parties, including Fage, were asked to submit a business plan. Based
on this, Fage and two other prospective purchasers (Mevgal and Eurofarma Dairy
Industries) were invited to submit financial offers. However, Fage subsequently
decided to withdraw from the bidding process and did not submit a bid.
In July 2002 Fage engaged Ernst & Young as its auditors for the year
ending December 31, 2002, replacing Arthur Andersen.
16
<Page>
PART I MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
ITEM 2 AND RESULTS OF OPERATIONS
GENERAL
In the first semester of the year 2002, the entire Greek white milk market
volume increased by 5%, due to a significant increase of 7% in the refrigerated
segment. Out of all the segments, ESL white milk remains the most dynamic with
volume that increased approximately 40% compared to last year, an increase that
can be largely attributed to the launch of new FAGE added value products under
the FARMA brand name. UHT milk volume decreased by approximately 7%. The yogurt
market increased by almost 4% compared to last year. The segments driving this
increase are strained (Greek Style) yogurt and children's yogurt. Fage is the
leading company in both segments. Desserts volume increased by 28%, mainly due
to Fage's launch of the new family brand GLYKOKOYTALIES (sweet spoonfuls).
Packaged cheese kept its increasing trend, since market volume increased by 10%
in the first semester of the year 2002.
In the first semester of the year 2002, Fage's sales volume for
refrigerated white milk increased by 4%, ESL milk increased by 43%. UHT Fage's
sales volume decreased by 6.5%. Yogurt sales volume increased by 2.5%, desserts
sales volume increased by 95%. Packaged cheese sales volume increased by 8%.
FAGE's export volume increased by 9.5%, primary due to an increase of
12.6% in yogurt's export sales and 1.2% in cheese.
In March, Fage increased prices for all segments by 3.5%.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items
in the Company's consolidated income statements expressed as percentages of net
sales:
<Table>
<Caption>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2001 2002 2001 2002
------------------- -------------------
(UNAUDITED) (UNAUDITED)
Net sales ................................... 100% 100% 100% 100%
Cost of sales ............................... 66.4 63.2 67.1 64.9
------------------- -------------------
Gross profit ................................ 33.6 36.8 32.9 35.1
Selling, general and administrative expenses. 24.3 26.6 25.6 27.9
------------------- -------------------
Income from operations ...................... 9.3 10.2 7.3 7.2
Interest expense ............................ 4.2 3.5 4.1 2.9
Foreign exchange gains (losses), net ........ (7.9) 7.8 (4.7) 15.7
Other income (expenses), net ................ 0.2 0.4 0.4 0.4
------------------- -------------------
Income (loss) before income taxes and
minority interests ........................ (2.6) 14.9 (1.1) 20.4
Provision for income taxes .................. 0.9 (6.3) 0.2 (9.2)
------------------- -------------------
Income (loss) before minority interests ..... (1.7) 8.6 (0.9) 11.2
Minority interests .......................... (0.1) - - (0.1)
------------------- -------------------
Net income (loss) ........................... (1.8) 8.6 (0.9) 11.1
=================== ===================
</Table>
In the following discussion, amounts are presented in thousands of Euros,
unless otherwise stated, with a convenience translation into U.S. dollars based
on the June 30, 2002 noon buying rate of U.S. $ 0.9856 to EURO 1.00.
17
<Page>
SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2002.
NET SALES. Net sales for the six months ended June 30, 2002 were EURO
155,039 ($ 152.8 million), an increase of EURO 15,436 ($ 15.2 million ), or 11.1
%, from EURO 139,603 ($ 137.6 million) for the comparable period of 2001. This
growth resulted from both volume and price increases in the net sales.
GROSS PROFIT. Gross profit for the six months ended June 30, 2002 was EURO
57,063 ($ 56.2 million), an increase of EURO 10,111 ($ 10.0 million), or 21.5 %,
from EURO 46,952 ($ 46.3 million) for the comparable period of 2001. Gross
profit as a percentage of net sales for the six months ended June 30, 2002
increased to 36.8% from 33.6% for the comparable period of 2001. The increase
was primarily the result of continued improvement in operating and purchasing
efficiencies.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) for the six months ended June 30, 2002 were EURO
41,288 ($ 40.7 million), an increase of EURO 7,395 ($ 7.3 million), or 21.8%,
from EURO 33,893 ($ 33.4 million) for the comparable period of 2001. SG&A as a
percentage of net sales increased to 26.6% for the first six months of 2002 from
24.3 % for the first six months of 2001. A significant component of the
increased SG&A was attributable to promotion and other expenses in connection
with Fage's sponsorship up the 2004 Olympics to be held in Athens. Members of
the Filippou family have been engaged by Fage in connection with these
promotional activities. In addition, Fage has increased the compensation of
certain members of the Filippou family employed by the Company. In each case,
the Company believes the amounts paid to members of the family are appropriate
consideration for the services provided.
INCOME FROM OPERATIONS. Income from operations for the six months ended
June 30, 2002 was EURO 15,775 ($ 15.5 million), an increase of EURO 2,716 ($ 2.7
million), or 20.8%, from EURO 13,059 ($ 12.9 million) for the comparable period
of 2001. Income from operations as a percentage of net sales for the six months
ended June 30, 2002 was 10.2% while the respective percentage for the comparable
period of 2001 was 9.3 %.
INTEREST EXPENSES. Interest expenses for the six months ended June 30,
2002 was EURO 5,360 ($ 5.3 million), a decrease of EURO 625 ($ 0.6 million), or
10.4%, from EURO 5,985 ($ 5.9 million) for the comparable period of 2001. The
decrease in interest expense was mainly due to the devaluation of the US dollar
against the Euro for the six months ended June 30, 2002.
FOREIGN EXCHANGE GAINS (LOSSES), NET. Foreign exchange gains for the six
months ended June 30, 2002 were EURO 12,170 ($ 12.0 million). These gains are
mainly the result of the June 30, 2002 remeasurement of the Senior Notes, based
on the Euro-US dollar exchange rate, which amounted to EURO 10,537 ($ 10.4
million). This non-cash gain significantly affected net income. For the
comparable period of 2001 there was a foreign exchange loss of EURO 11,082 ($
10.9 million).
OTHER INCOME (EXPENSES), NET. Other income for the six months ended June
30, 2002 were EURO 571 ($ 0.6 million) while for the comparable period of 2001
there was other income of EURO 346 ($ 0.3 million).
PROVISION FOR INCOME TAXES. The provision for income taxes for the six
months ended June 30, 2002 was EURO 9,797 ($ 9.7 million) mainly due to the
increased income before income taxes and minority interests. The respective
amount for the six months ended June 30, 2001 was EURO 1,230 ($ 1.2 million)
benefit due to the loss of that period.
NET INCOME (LOSS). There was net income of EURO 13,305 ($ 13.1 million)
for the six months ended June 30, 2002 compared to net loss of EURO 2,537 ($ 2.5
million) for the comparable period of 2001.
THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THREE MONTHS ENDED JUNE 30,
2001.
NET SALES. Net sales for the three months ended June 30, 2002 were EURO
85,250 ($ 84.0 million), an increase of EURO 9,923 ($ 9.8 million), or 13.2%,
from EURO 75,327 ($ 74.2 million) for the comparable period of 2001. This growth
resulted from both volume and price increases in the net sales.
GROSS PROFIT. Gross profit for the three months ended June 30, 2002 was
EURO 29,905 ($ 29.5 million), an increase of EURO 5,140 ($ 5.1 million), or
20.8%, from EURO 24,765 ($ 24.4 million) for the comparable period of 2001.
Gross profit as a percentage of net sales for the three months ended June 30,
2002 increased to 35.1% from 32.9% for the comparable period of 2001. The
increase was primarily the result of continued improvement in operating and
purchasing efficiencies.
18
<Page>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) for the three months ended June 30, 2002 were
EURO 23,768 ($ 23.4 million), an increase of EURO 4,517 ($4.5 million), or
23.5%, from EURO 19,251 ($ 19.0 million) for the comparable period of 2001. SG&A
as a percentage of net sales increased to 27.9% for the three months ended
June 30, 2002 from 25.6% for the comparable period of 2001.A significant
component of the increased SG&A was attributable to promotion and other expenses
in connection with Fage's sponsorship up the 2004 Olympics to be held in Athens.
Members of the Filippou family have been engaged by Fage in connection with
these promotional activities. In addition, Fage has increased the compensation
of certain members of the Filippou family employed by the Company. In each
case, the Company believes the amounts paid to members of the family are
appropriate consideration for the services provided.
INCOME FROM OPERATIONS. Income from operations for the three months ended
June 30, 2002 was EURO 6,137 ($ 6.0 million), an increase of EURO 623 ($ 0.6
million), or 11.3%, from EURO 5,514 ($ 5.4 million) for the comparable period of
2001. Income from operations as a percentage of net sales for the three months
ended June 30, 2002 decreased to 7.2% from 7.3% for the comparable of 2001. This
was primarily due to increased SG&A discussed above.
INTEREST EXPENSE. Interest expense for the three months ended June 30,
2002 was EURO 2,464 ($2.4 million), a decrease of EURO 613 ($ 0.6 million), or
19.9%, from EURO 3,077 ($ 3.0 million) for the comparable period of 2001. The
decrease in interest expense was mainly due to the devaluation of the US dollar
against the Euro for the three months ended June 30, 2002.
FOREIGN EXCHANGE GAINS (LOSSES), NET. Foreign exchange gains for the three
months ended June 30, 2002 were EURO 13,362 ($13.2 million). These gains are
mainly related to the Senior Notes period end remeasurement of the Senior Notes,
based on the Euro-US dollar exchange rate. For the comparable period of 2001
there was a foreign exchange loss of EURO 3,520 ($ 3.5 million).
OTHER INCOME (EXPENSES), NET. Other income for the three months ended June
30, 2002 was EURO 327 ($ 0.3 million) while for the comparable period of 2001
there was other income of EURO 250 ($ 0.2 million).
PROVISION FOR INCOME TAXES .The provision for income taxes for the three
months ended June 30, 2002 was EURO 7,832 ($ 7.7 million) due to the income
before income taxes and minority interests. The provision for income taxes for
the three months ended June 30, 2001 was EURO 173 ($ 0.2 million) benefit due to
the loss of that period.
NET INCOME (LOSS). There was net income of EURO 9,482 ($ 9.3 million) for
the three months ended June 30, 2002 compared to a net loss of EURO 648 ($ 0.6
million) for the comparable period of 2001.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES. Net cash from operating activities for the six
months ended June 30, 2002 was EURO 7,855 ($ 7.7 million), an increase of EURO
5,459 ($ 5.4 million) from EURO 2,396 ($ 2.4 million) net cash from operating
activities for the comparable period of 2001 mainly due to the unrealized
foreign exchange gains for the six months ended June 30, 2002.
INVESTING ACTIVITIES. Net cash used in investing activities for the six
months ended June 30, 2002 was EURO 4,642 ($ 4.6 million), a decrease of EURO
5,960 ($ 5.9 million) from EURO 10,602 ($ 10.4 million), net cash used in
investing activities for the comparable period of 2001. Capital expenditure of
EURO 6,201 ($ 6.1 million) were made in continued investments in the Company's
facilities in order to further realize operating efficiencies.
FINANCING ACTIVITIES. Net cash from financing activities for the six
months ended June 30, 2002 was EURO 5,142 ($ 5.1 million) while net cash from
financing activities was EURO 10,354 ($ 10.2 million) for the comparable period
of 2001, a decrease of EURO 5,212 ($ 5.1 million).
SOURCES OF CAPITAL. The Company funds its operating costs through cash
from operations and short-term borrowings under various lines of credit
maintained at several banks. At June 30, 2002, approximately EURO 15,199 was
available, see "Note 11 Short-Term Borrowings".
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PART II
ITEM 1 - LEGAL PROCEEDINGS
No material changes have emerged with respect to the legal proceedings in
which the Company is involved and which are incidental to the conduct of its
business. The Company does not believe that the outcome of any of these legal
proceedings will have a material adverse effect on the business, financial
condition or prospects of the Company.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
None
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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, in Athens, Greece.
FAGE DAIRY INDUSTRY S.A.
Date: August 8, 2002 By: /s/ Ioannis Filippou
------------------------------
Chairman of the Board
Date: August 8, 2002 By: /s/ Kyriakos Filippou
----------------------------------------
Chief Executive Officer and Director
Date: August 8, 2002 By: /s/ Christos Koloventzos
------------------------------
Chief Financial Officer
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