1 EXHIBIT 99.1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Dean Foods Company: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Dean Foods Company and its subsidiaries at May 28, 2000 and May 30, 1999, and the results of their operations and their cash flows for each of the three years in the period ended May 28, 2000, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /S/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Chicago, IL June 27, 2000, except as to Note 16 which is as of July 10, 2000. 1 2 CONSOLIDATED BALANCE SHEETS May 28, 2000 and May 30, 1999 (In thousands) ASSETS 2000 1999 CURRENT ASSETS Cash and temporary cash investments $ 26,649 $ 15,958 Accounts and notes receivable, less allowance for doubtful accounts of $6,311 and $7,570, respectively 302,557 303,337 Inventories 178,438 168,836 Deferred tax assets 56,720 54,354 Other 36,020 39,653 - ------------------------------------------------------------------------------------------------------- Total Current Assets 600,384 582,138 - ------------------------------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT, AT COST Land 58,420 57,860 Buildings and improvements 371,107 357,266 Machinery and equipment 790,929 672,345 Transportation equipment 90,321 72,729 Construction in progress 45,410 82,038 - ------------------------------------------------------------------------------------------------------- Total Property, Plant and Equipment, gross 1,356,187 1,242,238 Less - Accumulated depreciation 540,923 477,292 - ------------------------------------------------------------------------------------------------------- Total Property, Plant and Equipment, net 815,264 764,946 - ------------------------------------------------------------------------------------------------------- OTHER ASSETS Goodwill, net of amortization of $36,550 and $21,568, respectively 557,721 547,153 Other intangible assets, net of amortization of $5,560 and $2,983, respectively 6,085 4,333 Other 24,088 13,306 - ------------------------------------------------------------------------------------------------------- Total Other Assets 587,894 564,792 - ------------------------------------------------------------------------------------------------------- TOTAL ASSETS $2,003,542 $1,911,876 ======================================================================================================= See accompanying notes to consolidated financial statements. 2 3 (In thousands) 2000 1999 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current installments of long-term obligations $ 3,603 $ 2,651 Accounts payable and accrued expenses 396,400 398,174 Dividends payable 7,876 8,353 Federal and state income taxes 41,219 30,308 - ----------------------------------------------------------------------------------------------------- Total Current Liabilities 449,098 439,486 - ----------------------------------------------------------------------------------------------------- LONG-TERM OBLIGATIONS 758,725 631,286 - ----------------------------------------------------------------------------------------------------- DEFERRED LIABILITIES Deferred income taxes 99,410 79,345 Other 38,624 45,345 - ----------------------------------------------------------------------------------------------------- Total Deferred Liabilities 138,034 124,690 - ----------------------------------------------------------------------------------------------------- Total Liabilities 1,345,857 1,195,462 SHAREHOLDERS' EQUITY Preferred stock, $1 par value, 10,000,000 shares authorized, none issued -- -- Common stock, $1 par value, 150,000,000 shares authorized, 42,364,508 and 42,275,564 shares issued, respectively 42,365 42,276 Capital in excess of par value 65,172 62,120 Retained earnings 803,096 730,074 Cumulative translation adjustment (361) (21) Less - Treasury stock, at cost, 6,879,155 and 2,999,246 shares, respectively 252,587 118,035 - ----------------------------------------------------------------------------------------------------- Total Shareholders' Equity 657,685 716,414 - ----------------------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENT LIABILITIES -- -- - ----------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,003,542 $ 1,911,876 ===================================================================================================== See accompanying notes to consolidated financial statements. 3 4 CONSOLIDATED STATEMENTS OF INCOME 2000 1999 1998 For the Three Fiscal Years Ended May (In thousands) Net sales $ 4,065,636 $ 3,755,148 $ 2,735,834 Costs of products sold 3,104,218 2,941,170 2,105,849 Delivery, selling and administrative expenses 732,728 642,535 467,466 Plant closure charges 6,078 18,105 -- - ---------------------------------------------------------------------------------------------------------------- Operating earnings 222,612 153,338 162,519 Interest expense, net of interest income 49,338 38,041 18,789 - ---------------------------------------------------------------------------------------------------------------- Income from continuing operations before income taxes 173,274 115,297 143,730 Provision for income taxes 67,156 44,966 55,750 - ---------------------------------------------------------------------------------------------------------------- Income from continuing operations 106,118 70,331 87,980 - ---------------------------------------------------------------------------------------------------------------- Discontinued operations, net of taxes: Income (loss) from discontinued operations -- (2,929) 18,322 Gain on sale of discontinued operations -- 83,820 -- - ---------------------------------------------------------------------------------------------------------------- Total discontinued operations, net of taxes -- 80,891 18,322 - ---------------------------------------------------------------------------------------------------------------- Net income $ 106,118 $ 151,222 $ 106,302 ================================================================================================================ Basic earnings (loss) per share: Income from continuing operations $ 2.79 $ 1.77 $ 2.17 Income (loss) from discontinued operations -- (.07) .46 Gain on sale of discontinued operations -- 2.10 -- - ---------------------------------------------------------------------------------------------------------------- Net income $ 2.79 $ 3.80 $ 2.63 ================================================================================================================ Diluted earnings (loss) per share: Income from continuing operations $ 2.77 $ 1.74 $ 2.13 Income (loss) from discontinued operations -- (.07) .44 Gain on sale of discontinued operations -- 2.07 -- - ---------------------------------------------------------------------------------------------------------------- Net income $ 2.77 $ 3.74 $ 2.57 ================================================================================================================ Weighted average common shares: Basic 37,965 39,842 40,469 Diluted 38,311 40,482 41,395 ================================================================================================================ See accompanying notes to consolidated financial statements. 4 5 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Three Fiscal Years Ended May (In thousands) - ------------------------------------------------------------------------------------------------------------------------------ COMMON COMMON CAPITAL IN CUMULATIVE STOCK STOCK EXCESS OF RETAINED TRANSLATION TREASURY SHARES VALUE PAR VALUE EARNINGS ADJUSTMENT STOCK BALANCES AT MAY 25, 1997 40,284 $ 41,545 $ 18,073 $ 538,450 $ (218) $ (30,169) Net income -- -- -- 106,302 -- -- Issuance of common stock 358 358 2,397 -- -- -- Exercise of stock options 59 59 10,657 -- -- -- Purchase of treasury stock (731) -- -- -- -- (35,754) Cash dividends declared, $.80 per share -- -- -- (32,362) -- -- Cumulative translation adjustment -- -- -- -- (72) -- - ----------------------------------------------------------------------------------------------------------------------------- BALANCES AT MAY 31, 1998 39,970 41,962 31,127 612,390 (290) (65,923) Net income -- -- -- 151,222 -- -- Issuance of common stock 250 250 2,765 -- -- -- Exercise of stock options 64 64 9,101 -- -- -- Purchase of treasury stock (1,783) -- -- -- -- (70,384) Issuance of treasury stock 6 -- (155) -- -- 155 Issuance of treasury stock for acquisition 769 -- 19,282 -- -- 18,117 Cash dividends declared, $.84 per share -- -- -- (33,538) -- -- Cumulative translation adjustment -- -- -- -- 269 -- - ----------------------------------------------------------------------------------------------------------------------------- BALANCES AT MAY 30, 1999 39,276 42,276 62,120 730,074 (21) (118,035) Net income -- -- -- 106,118 -- -- Issuance of common stock 27 27 1,099 -- -- -- Exercise of stock options 62 62 2,300 -- -- -- Purchase of treasury stock (3,893) -- -- -- -- (134,899) Issuance of treasury stock 13 -- (347) -- -- 347 Cash dividends declared, $.88 per share -- -- -- (33,096) -- -- Cumulative translation adjustment -- -- -- -- (340) -- - ----------------------------------------------------------------------------------------------------------------------------- BALANCES AT MAY 28, 2000 35,485 $ 42,365 $ 65,172 $ 803,096 $ (361) $(252,587) ============================================================================================================================= See accompanying notes to consolidated financial statements. 5 6 CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Fiscal Years Ended May (In thousands) 2000 1999 1998 CONTINUING OPERATIONS Income from continuing operations $ 106,118 $ 70,331 $ 87,980 Adjustments to reconcile income from continuing operations to net cash provided from continuing operations: Depreciation and amortization 107,571 87,942 60,418 Deferred income taxes 16,463 9,834 16,131 Other long-term deferred liabilities (4,762) (4,240) (5,409) Plant closure charges 6,078 18,105 -- (Increase) decrease in working capital items, net of acquisitions: Accounts and notes receivable 6,817 (15,108) (16,581) Inventories and other current assets 1,363 (963) 19,857 Accounts payable and accrued expenses (14,580) (17,102) (10,294) Federal and state income taxes 10,912 18,096 9,342 Other (1,560) (2,977) 1,266 - --------------------------------------------------------------------------------------------------------------------- Net cash provided from continuing operations 234,420 163,918 162,710 - --------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Capital expenditures (147,541) (139,346) (104,683) Proceeds from dispositions of property, plant and equipment 6,898 4,693 1,943 Acquisitions and equity investment, net of cash acquired (38,204) (238,786) (369,560) Capitalized information system costs and other (8,081) (7,284) -- - --------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (186,928) (380,723) (472,300) - --------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of long-term obligations -- 201,627 147,575 Repayment of long-term obligations (3,217) (107,256) (35,509) Issuance of commercial paper, net 131,401 136,410 -- Issuance (repayment) of revolving credit agreement, net -- (210,000) 210,000 Issuance (repayment) of notes payable to banks, net -- (12,000) 9,000 Unexpended industrial revenue bond proceeds -- 5,965 4,656 Cash dividends paid (33,574) (33,263) (32,021) Issuance of common stock 3,488 12,180 11,020 Purchase of treasury stock (134,899) (70,384) (35,754) - --------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (36,801) (76,721) 278,967 - --------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY DISCONTINUED OPERATIONS -- 297,552 38,169 - --------------------------------------------------------------------------------------------------------------------- INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS 10,691 4,026 7,546 Cash and temporary cash investments - beginning of year 15,958 11,932 4,386 - --------------------------------------------------------------------------------------------------------------------- CASH AND TEMPORARY CASH INVESTMENTS - END OF YEAR $ 26,649 $ 15,958 $ 11,932 ===================================================================================================================== See accompanying notes to consolidated financial statements. 6 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DOLLAR AMOUNTS IN THOUSANDS UNLESS OTHERWISE NOTED. 1. NATURE OF THE BUSINESS AND SUMMARY OF ACCOUNTING POLICIES NATURE OF BUSINESS - Dean Foods Company and its subsidiaries ("the Company") are engaged in the processing, distribution and sales of dairy, pickle and other specialty food products. The Company operates in three business segments. The Company's principal products in the Dairy segment are fluid milk and cultured products, ice cream and extended shelf-life-products. Principal products in the Pickles segment are pickles, relishes and related items. Specialty segment products include powdered products, refrigerated salad dressings, sauces, puddings and dips, as well as the operations of the Company's transportation subsidiary. USE OF ESTIMATES IN THE FINANCIAL STATEMENTS - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. DEFINITION OF FISCAL YEAR - The Company's fiscal year ends on the last Sunday in May. There were 52 weeks in the fiscal years ended May 2000 and 1999 and 53 weeks in fiscal 1998. PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the Company and all of its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. CASH AND TEMPORARY CASH INVESTMENTS - The Company considers temporary cash investments with an original maturity of three months or less to be cash equivalents. INVENTORIES - Inventories are stated at the lower of cost or market. The majority of pickle inventories are valued on the last-in, first-out (LIFO) method. Dairy and certain specialty inventories are valued on the first-in, first-out (FIFO) method. PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets as follows: Asset Useful Life - --------------------------------------------------------- Buildings and improvements 5 to 40 years Machinery and equipment 2 to 25 years Transportation equipment 5 to 12 years 7 8 Major renewals and betterments are capitalized, while repairs and maintenance, which do not improve or extend useful life, are expensed. Upon sale, retirement, abandonment or other disposition of property, the cost and related accumulated depreciation are eliminated from the accounts and any gain or loss is included in income. For income tax purposes, certain assets are depreciated using accelerated methods. INTANGIBLE ASSETS - Excess of cost over market value of net identifiable assets of acquired companies and other intangible assets are amortized on a straight-line basis over periods up to forty years. LONG-LIVED ASSETS - The Company continually reviews intangible assets and property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. To determine whether impairment exists, an estimate of the undiscounted future cash flows or, in the case of goodwill, undiscounted operating earnings are compared to the carrying amount. The Company believes that there is no impairment of long-lived assets at May 28, 2000. COMPUTER SOFTWARE - The Company expenses or capitalizes computer software developed or obtained for internal use in accordance with AICPA Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use". Capitalized costs are amortized over a period of 5 years, beginning when the capitalized software is ready for its intended use. PENSIONS - All of the Company's employees are covered by Company or union-management-administered pension plans or profit sharing plans. The policy with respect to Company-administered pension plans is to fund accrued pension costs based on determinations made by independent actuaries which include provisions for service cost, interest cost, return on pension assets and amortization of prior service cost and unrecognized initial net assets. INCOME TAXES - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. ADVERTISING EXPENSE - Advertising expense is comprised of media, agency and production expenses. Advertising expenses are charged to income during the period incurred, except for expenses related to the development of a major commercial or media campaign, which are charged to income during the period in which the advertisement or campaign is first presented by the media. REVENUE RECOGNITION - Substantially all revenues are recognized when products are shipped to the customers. Revenues are recorded net of all applicable provisions for discounts, returns and allowances. EARNINGS PER COMMON SHARE - Earnings per share is computed in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." Basic earnings per common share is based upon net income divided by the weighted average number of common shares outstanding during each year. Diluted earnings per common share is calculated based upon net income divided by the weighted average number of shares outstanding plus the weighted average number of potential common shares outstanding. The potential common shares outstanding of 346,000, 640,000 and 926,000 for fiscal 2000, 1999 and 1998, respectively, consist solely of the outstanding options under the Company's stock option plans. 8 9 STOCK-BASED COMPENSATION - SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has elected to continue to measure compensation cost using the intrinsic value-based method of accounting as prescribed by Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees." Income tax benefits attributable to stock options exercised are credited to capital in excess of par value. The pro-forma disclosures required by SFAS No. 123, are disclosed in Note 7 of the Consolidated Financial Statements. COMPREHENSIVE INCOME - During fiscal 1999, SFAS No. 130, "Reporting Comprehensive Income," which requires reporting comprehensive income and its components to be disclosed in the financial statements for all periods presented, became applicable. The only item of comprehensive income applicable to the Company was a cumulative translation adjustment. SEGMENT REPORTING - SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," requires disclosures of certain information about operating segments on a basis consistent with the way in which the Company manages and operates. The disclosures required by SFAS No. 131, are included in Note 15 of the Consolidated Financial Statements. RECLASSIFICATIONS - Certain previously reported amounts have been reclassified to conform to current year-end presentations. 2. BUSINESS ACQUISITIONS During fiscal 2000 the Company completed the following two acquisitions: FISCAL 2000 ACQUISITION CLOSING DATE - ------------------------------------------------------------------------- DAIRY SEGMENT: Dairy Express July 16, 1999 PICKLES SEGMENT: Steinfeld's Products Company July 1, 1999 - ------------------------------------------------------------------------- Each of the fiscal 2000 acquisitions were asset purchases for cash consideration. The Company also assumed certain liabilities in addition to cash consideration paid. On a pro forma basis, which assumes the above acquisitions occurred at the beginning of each period presented, sales and net income are not materially impacted. On August 23, 1999, the Company made an equity investment in White Wave, Inc., a processor of soy-based products, the results of which are included in the Specialty segment. The acquisitions and equity investment were made for cash consideration totaling $38.2 million. During fiscal 1999 the Company completed the following six acquisitions: FISCAL 1999 ACQUISITION CLOSING DATE - -------------------------------------------------------------------------------- DAIRY SEGMENT: Alta Dena Certified Dairy May 5, 1999 Berkeley Farms November 4, 1998 U.C. Milk Company September 17, 1998 Barber Dairies August 11, 1998 Hillside Dairy July 1, 1998 SPECIALTY SEGMENT: Custom Food Processors, International March 8, 1999 - -------------------------------------------------------------------------------- 9 10 The Company also acquired three dairy distributors and, in conjunction with the sale of the Company's vegetable operations, an aseptic business, which is included in the Specialty segment. All of the fiscal 1999 acquisitions were asset purchases, except U.C. Milk Company and Berkeley Farms, which were stock purchases. Cash consideration for fiscal 1999 acquisitions totaled $238.8 million. In addition to the cash consideration paid for these operations, the Company assumed certain liabilities. On a pro forma basis, the net sales (unaudited) of the Company would have been $4,116.9 million in 1999 and $3,995.4 million in 1998. The pro forma sales amounts assume that all of the fiscal 1999 acquisitions occurred at the beginning of each period presented. On a pro forma basis, the results of operations (unaudited) of the companies acquired would not have had a material effect on the Company's net income or earnings per common share in 1999 or 1998. During fiscal 1998, the Company completed the following ten acquisitions: FISCAL 1998 ACQUISITION CLOSING DATE - -------------------------------------------------------------------------------- DAIRY SEGMENT: Purity Dairies May 14, 1998 Coburg Dairy March 31, 1998 Dairy Business of American Stores Company (Lucky Stores) March 2, 1998 Wengert's Dairy February 23, 1998 Sani-Dairy Division of the Penn Traffic Company January 20, 1998 Maplehurst Dairy, Inc. January 6, 1998 H. Meyer Dairy Company November 24, 1997 Milk Products LLC November 21, 1997 PICKLES SEGMENT: Schwartz Pickle May 18, 1998 SPECIALTY SEGMENT: Marie's Salad Dressing May 27, 1997 - -------------------------------------------------------------------------------- All of the fiscal 1998 acquisitions were asset purchases, with the exception of the Coburg Dairy and Purity Dairies acquisitions, which were stock purchases. Cash consideration for fiscal 1998 acquisitions totaled $369.6 million. In addition to the cash consideration paid for these operations, the Company assumed certain liabilities. On a pro forma basis, the net sales (unaudited) of the Company would have been $3,254.5 million in 1998. The pro forma sales amounts assume that all of the above acquisitions occurred at the beginning of fiscal 1998. On a pro forma basis, the results of operations (unaudited) of the companies acquired would not have had a material effect on the Company's net income or earnings per common share in 1998. 10 11 All of the acquisitions were accounted for using the purchase method of accounting as of their respective acquisition dates and accordingly, the operating results of the acquired companies, subsequent to their respective acquisition dates, are included in the Company's consolidated financial statements. Fiscal 2000 acquisitions have been recorded at their estimated fair values using preliminary valuations of the opening balance sheets. These estimates of fair value are subject to change when final information concerning asset and liability valuations are obtained. Goodwill arising from the acquisitions, totaling an estimated $22.2 million, $221.4 million and $284.4 million in 2000, 1999 and 1998, respectively, will be amortized using the straight-line method over periods up to forty years. 3. PLANT CLOSURE CHARGES During the fourth quarter of fiscal 2000, the Company announced two plant closures in the Dairy segment, which resulted in a pre-tax charge of $6.1 million ($3.8 million after-tax, or $.10 per share). Cash charges related to the plant closures, which include severance and exit costs, totaled $1.9 million. Non-cash charges of $4.2 million are associated with the write-down to net realizable value of certain assets. Cash charges are expected to be paid by the end of fiscal year 2001. The closures, which will affect approximately 118 hourly and salaried employees, are expected to be completed by the end of the second quarter of fiscal year 2001. Production will be relocated and consolidated into existing facilities. During fiscal 1999, the Company announced plant closures in the Dairy, Pickles and Specialty segments, which resulted in a pre-tax charge of $18.1 million ($11.0 million after-tax or $.27 per share). Cash charges related to the plant closures, which include primarily severance, lease termination and exit costs, totaled $8.9 million. Non-cash charges of $9.2 million associated with the write-down to net realizable value of certain assets comprise the remainder of the provision. As of May 28, 2000, substantially all the cash charges related to the plant closures have been paid. Fiscal 1999 plant closures were completed by the end of the first quarter of fiscal 2000 resulting in the elimination of approximately 400 hourly and salaried employees. Production from the Dairy and Pickles operations was relocated and consolidated into existing facilities. The Specialty segment warehouse was replaced by public warehousing. 4. DISCONTINUED OPERATIONS On September 23, 1998, the Company sold the stock of Dean Foods Vegetable Company to Agrilink Foods, Inc. ("Agrilink") for $378.2 million in cash, a $30.0 million Agrilink subordinated note and Agrilink's aseptic foods business, which was valued at $80.2 million. Cash proceeds were utilized to repay debt outstanding under the Company's Revolving Credit Agreement. Due to the uncertainty of the realizability of the $30.0 million subordinated note, the note was valued at a nominal amount. In fiscal year 1999, the Company recorded an after-tax gain on the sale of the Vegetables segment of $83.8 million ($2.07 per diluted share). Accordingly, Vegetables segment results are presented as discontinued operations. Net sales of discontinued operations were $139.8 million and $533.3 million in 1999 and 1998, respectively. The income tax provision (benefit) included in Income (Loss) from Discontinued Operations was $(1.9) million and $12.2 million for 1999 and 1998, respectively. Income from operations of the discontinued segment includes interest expense allocations (based on short-term interest expense incurred and changes in working capital levels) of $2.5 million and $9.2 million in 1999 and 1998, respectively. 11 12 5. BORROWING ARRANGEMENTS Long-term obligations, less installments due within one year, are summarized below: 2000 1999 $200 million senior note, 6.625%, maturing in 2009 $199,844 $199,826 $150 million senior note, 6.9%, maturing in 2017 147,893 147,772 $100 million senior note, 6.75%, maturing in 2005 99,495 99,394 Commercial paper, maturing in 2003 (weighted average 5.69%) 267,811 136,410 Industrial revenue bonds, maturing in varying amounts through 2021: Fixed rate, 4.75% to 6.63%, (weighted average 5.96%) 3,675 4,235 Floating rate, 3.7% to 3.8%, (weighted average 3.79%) 25,400 25,600 Capitalized lease obligations, 2.0% to 10.0%, maturing in various installments through 2011 (weighted average 8.05%) 17,782 19,622 Other obligations, 4.8% to 10.0%, maturing in varying amounts through 2004 (weighted average 7.79%) 428 1,078 - ------------------------------------------------------------------------------------------------- 762,328 633,937 Less: Installments due within one year 3,603 2,651 - ------------------------------------------------------------------------------------------------- Total long-term obligations $758,725 $631,286 - ------------------------------------------------------------------------------------------------- In March 1999, the Company entered into a $500 million Commercial Paper program backed entirely by the Company's $500 million Revolving Credit Agreement. As the Company has the ability and intent to refinance such borrowings on a long-term basis, the outstanding commercial paper balance has been classified as long-term. During fiscal 2000, the maximum commercial paper outstanding was $306.4 million; average commercial paper outstanding during the year was $223.1 million at a weighted average interest rate of 5.69%. At May 28, 2000, the Company had $267.8 million of outstanding commercial paper. During fiscal 1999, the maximum commercial paper outstanding was $377.5 million; average commercial paper outstanding during the year was $50.1 million at a weighted average interest rate of 4.88%. At May 30, 1999, the Company had $136.4 million of outstanding commercial paper. In fiscal 1998, the Company entered into an unsecured $500 million Revolving Credit Agreement maturing in 2003 and with a facility fee of 0.07%. Borrowings under the Credit Agreement bear interest, at the Company's option, at either fixed or variable rates linked to the Company's public debt credit rating. During fiscal 2000 there were no borrowings under the Credit Agreement. During fiscal 1999, the maximum borrowings under the Credit Agreement were $350.0 million; average borrowings were $131.0 million at a weighted average interest rate of 5.6%. At May 30, 1999, there were no borrowings outstanding under this facility. Prior to December 1999, the Company had various committed and uncommitted lines of credit. During fiscal 2000, there were no borrowings under the committed and uncommitted lines of credit. During fiscal 1999, maximum borrowings under the Company's committed and uncommitted lines of credit were $198.0 million and average borrowings for the year were $34.7 million at a weighted average interest rate of 5.4%. At May 30, 1999, the Company did not have any debt outstanding from uncommitted short-term lines of credit. 12 13 In May 1999, the Company issued $200 million of 6.625% Notes due 2009. The net proceeds were used to repay existing commercial paper indebtedness. The Company is subject to certain debt covenants. The most restrictive provisions of the Company's borrowing arrangements were as follows: the Company's fixed charge coverage ratio must exceed 3.0; and the Company's ratio of Consolidated Debt to Consolidated Total Capital cannot exceed 65%. Maturities of long-term obligations are as follows: 2001 $ 3,603 2002 5,169 2003 269,880 2004 2,199 2005 104,406 Thereafter 377,071 - --------------------------------------------------------------- Total $762,328 =============================================================== Certain land, buildings and machinery and equipment having a net carrying value of approximately $21 million were mortgaged or otherwise encumbered against long-term debt of $18 million at May 28, 2000. The fair value of the Company's long-term debt was determined using valuation techniques that considered cash flows discounted at current market rates and management's best estimate for instruments without quoted market prices. At May 28, 2000 and May 30, 1999 the fair value of long-term debt is estimated to be $718.7 million and $633.7 million, respectively. 6. SHAREHOLDERS' EQUITY The 1998 shareholders' rights plan, as amended, protects shareholders in the event the Company becomes the target of coercive and unfair takeover tactics. The rights were distributed to shareholders on the basis of one preferred share purchase right for each share of Dean Foods Company common stock. Each right is attached to and traded with the Company's common stock, but will detach and become exercisable ten days after a public announcement that a person or group has acquired, or has announced a tender offer for, 15% or more of the Company's common stock. The rights will initially be exercisable to purchase common stock equivalents for $200 per share. Upon a person acquiring 15% or more of the Company's common stock, the rights will entitle the holders (other than the acquiring person) to purchase shares of common stock at a 50% discount. The rights may be redeemed by the Company for $.01 per right at any time prior to a public announcement that a person or group has acquired 15% or more of the Company's common stock. The rights expire on August 10, 2008, unless previously redeemed or exercised. The Company, from time to time, may repurchase shares of its common stock in the open market, in privately-negotiated transactions or otherwise at a price or prices reasonably related to the then prevailing market price. During fiscal 2000, the Company repurchased a total of 3,893,341 shares of its common stock for $134.9 million. Total shares classified on the May 28, 2000 and May 30, 1999 balance sheets as treasury stock are 6,879,155 and 2,999,246, respectively, resulting in a decrease in shareholders' equity of $252.6 million and $118.0 million, respectively. 13 14 7. STOCK PLANS A summary of stock option activity for the Company's stock option plans follows: Number Average of Shares Option Price Under Option Per Share Options outstanding at May 25, 1997 1,892,794 $27.45 Changes during the year: Granted 828,074 34.77 Terminated (92,771) 30.23 Exercised (416,924) 27.44 - ----------------------------------------------------------------------- Options outstanding at May 31, 1998 2,211,173 30.07 Changes during the year: Granted 600,300 48.89 Terminated (21,689) 40.14 Exercised (300,075) 28.45 - ----------------------------------------------------------------------- Options outstanding at May 30, 1999 2,489,709 34.72 Changes during the year: Granted 955,200 37.31 Terminated (146,222) 42.77 Exercised (81,960) 28.73 - ----------------------------------------------------------------------- Options outstanding at May 28, 2000 3,216,727 $35.28 ======================================================================= Options exercisable and available for grants at the end of each respective year are as follows: 2000 1999 1998 Exercisable 1,693,572 1,351,210 1,020,194 Average option price per share $31.33 $30.53 $28.92 ============================================================================= Available for grants 2,837,647 1,691,193 2,330,613 ============================================================================= Weighted average Weighted remaining average contractural Exercise Range of Exercise Prices Shares life(yrs) Price - -------------------------------------------------------------------------- $22.87 to $24.67 315,035 5.50 23.21 $26.87 to $27.50 449,187 4.84 27.18 $28.13 to $29.87 363,942 5.00 28.87 $32.00 to $32.87 314,285 5.34 32.22 $36.50 to $39.00 1,230,130 8.55 37.47 $49.43 to $55.38 544,148 7.96 50.05 - -------------------------------------------------------------------------- 3,216,727 6.92 35.28 - -------------------------------------------------------------------------- Options vest in accordance with provisions as set forth in the applicable option agreements. 14 15 The Company adopted the disclosure-only provision under SFAS No. 123, "Accounting for Stock-Based Compensation," while continuing to measure compensation cost under APB Opinion No. 25, "Accounting for Stock Issued to Employees." If the accounting provisions of SFAS No. 123 had been adopted over the last three years, the Company's income from continuing operations and income per share would have been reduced to the following pro forma amounts: 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------- Income from continuing operations: As reported $ 106,118 $ 70,331 $ 87,980 Pro forma $ 100,422 $ 65,195 $ 84,180 - ----------------------------------------------------------------------------------------------------------- Basic earnings per share: As reported $ 2.79 $ 1.77 $ 2.17 Pro forma $ 2.64 $ 1.64 $ 2.08 - ----------------------------------------------------------------------------------------------------------- Diluted earnings per share: As reported $ 2.77 $ 1.74 $ 2.13 Pro forma $ 2.62 $ 1.61 $ 2.03 - ----------------------------------------------------------------------------------------------------------- The weighted average fair value of options at date of grant was $11.25, $15.20 and $15.00 during 2000, 1999, and 1998, respectively. The fair value of each option at date of grant was estimated using the Black-Scholes model with the following weighted average assumptions: 2000 1999 1998 Expected life (years) 8.0 8.0 8.0 Risk-free rate of return 6.0% 5.6% 6.9% Volatility 23.1% 22.2% 20.6% Dividend yield 2.5% 2.0% 2.0% Under the stock option plans, key employees and directors may be granted stock awards or options to purchase, at fair market value on the date of grant, a maximum of 7,315,000 shares of the Company's common stock. Of these shares, a maximum of 215,000 may be granted to non-employee directors. A total of 166,500 shares have been granted to non-employee directors. A total of 78,932 non-qualified options are outstanding, which obligate the Company to make a cash payment to the optionee, upon exercise, of an amount up to the aggregate increase in the market value of the common stock since the date of grant. Options terminate ten years after date of grant. The Company may, from time to time, offer key employees the opportunity to elect to receive, in lieu of all or a portion of the cash bonuses otherwise payable to them, stock awards of shares of the Company's common stock having a fair market value on the date of the award equal to 115% of such cash bonuses or portions thereof (Incentive Awards Program). In fiscal 2000 and 1999, key employees elected to receive 27,068 and 43,788 shares, respectively, under the Incentive Awards Program. 15 16 8. INVENTORIES At May 28, 2000 and May 30, 1999, inventories comprised the following: 2000 1999 Raw materials and supplies $ 53,726 $ 52,482 Materials in process 9,593 11,292 Finished goods 124,381 114,776 - ------------------------------------------------------------------------- 187,700 178,550 Less: Excess of current cost over stated value of last-in, first-out inventories 9,262 9,714 - ------------------------------------------------------------------------- Total inventories $178,438 $168,836 ========================================================================= The percentage of costs of products sold determined on the basis of last-in, first-out cost approximated 13.3% and 12.6% for 2000 and 1999, respectively. 9. INCOME TAXES Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Provision for income taxes was as follows: 2000 1999 1998 Current tax expense: Federal $ 44,297 $ 28,013 $ 34,196 State and foreign 6,396 7,119 5,423 - ------------------------------------------------------------------------- 50,693 35,132 39,619 - ------------------------------------------------------------------------- Deferred tax expense (benefit): Federal 14,067 10,070 12,852 State and foreign 2,396 (236) 3,279 - ------------------------------------------------------------------------- 16,463 9,834 16,131 - ------------------------------------------------------------------------- Provision for income taxes $ 67,156 $ 44,966 $ 55,750 ========================================================================= The effective tax rates differ from the prevailing statutory federal rate as follows: 2000 1999 1998 Statutory federal tax rate 35.0% 35.0% 35.0% State and foreign, net of federal benefit 3.3 4.0 4.0 Goodwill 0.9 1.5 0.3 Other, net (0.4) (1.5) (0.5) - ------------------------------------------------------------------------- Effective tax rate 38.8% 39.0% 38.8% ========================================================================= 16 17 The components of the deferred income tax assets and liabilities were as follows: 2000 1999 Deferred tax assets: Accounts receivable $ 1,928 $ 2,136 Inventory (2,238) (3,036) Self-insurance reserves 19,987 18,040 Plant shutdown, idle facilities and environmental costs 8,504 10,145 Note receivable 13,523 12,400 Employee benefits and compensation 8,002 7,749 Other 7,014 6,920 - ------------------------------------------------------------------------- Total deferred tax assets $ 56,720 $ 54,354 ========================================================================= Deferred tax liabilities: Fixed assets $ (77,310) $ (57,661) Deferred compensation 14,559 13,127 Goodwill and other intangibles (41,272) (40,106) Loss carryforwards 5,812 5,761 Other (1,199) (466) - ------------------------------------------------------------------------- Total deferred tax liabilities $ (99,410) $ (79,345) ========================================================================= 10. LEASES Net rental expense, including amounts for leases of one year or less, was $50.9 million, $42.2 million, and $32.6 million in 2000, 1999, and 1998, respectively. Sublease rental income is not significant. A majority of the Company's leases provide that the Company pay taxes, maintenance, insurance and certain other operating expenses. At May 28, 2000, annual minimum rental payments under capital and operating leases that have initial noncancelable terms in excess of one year were as follows: Capital Operating Leases Leases 2001 $ 3,133 $ 15,105 2002 2,938 13,029 2003 2,805 10,831 2004 2,804 8,223 2005 4,763 6,231 Thereafter 9,762 16,396 - -------------------------------------------------------------------- Total minimum lease payments 26,205 $ 69,815 =========== Less: Imputed interest 8,423 - -------------------------------------------------- Present value of minimum lease payments $ 17,782 ================================================== 17 18 11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Consolidated accounts payable and accrued expenses at May 28, 2000 and May 30, 1999 comprised the following items: 2000 1999 Trade payables $ 151,398 $ 156,993 Accrued expenses 109,111 124,227 Accrued insurance 58,669 53,089 Accrued payroll 53,738 48,025 Accrued taxes, other than income 5,966 6,349 Accrued pension and profit sharing 17,518 9,491 - ------------------------------------------------------------------------- Total accounts payable and accrued expenses $ 396,400 $ 398,174 ========================================================================= 12. CASH FLOW DATA Interest and taxes paid included in the Company's cash flow from operations were as follows: 2000 1999 1998 Interest paid $49,559 $39,125 $19,358 Taxes paid 39,400 83,313 33,573 ========================================================================= Liabilities assumed in conjunction with business acquisitions were: 2000 1999 1998 Fair value of assets acquired $ 42,197 $ 367,470 $ 460,650 Consideration paid (38,204) (238,786) (369,560) - ------------------------------------------------------------------------- Liabilities assumed $ 3,993 $ 128,684 $ 91,090 ========================================================================= 13. EMPLOYEE BENEFITS PLANS The Company maintains or participates in defined benefit plans or union-management-administered pension or profit sharing plans covering substantially all of its employees. Benefits are based on years of service and comprehensive or stated amounts for each year of service. Plan assets are invested in equities and fixed income securities. The Company's funding policy is to contribute annually not less than the ERISA minimum funding standards nor more than the maximum funding standards nor more than the maximum amount which can be deducted for federal income tax purposes. The Company also provides health care and life insurance benefits to certain of its retired employees and eligible dependents. Employees are eligible for such benefits subject to minimum age and service requirements. Eligible employees that retire before the normal retirement age, along with their dependents, are entitled to benefits on a shared contribution basis. Substantially all benefits terminate at age sixty-five. The Company retains the right to modify or eliminate these benefits. Effective with May 30, 1999, the Company adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." SFAS No. 132 does not change the measurement or recognition of those plans, but revises the disclosure requirements for pension and other postretirement benefit plans for all years presented. 18 19 Net periodic benefit cost included the following components: PENSION BENEFITS 2000 1999 1998 Service cost $ 14,189 $ 12,429 $ 3,919 Interest cost 9,343 7,429 4,068 Expected return on assets (9,150) (6,867) (3,403) Amortization of unrecognized net transition asset (488) (461) (281) Amortization of prior service cost 215 203 93 Amortization of unrecognized net loss 432 722 279 - ------------------------------------------------------------------------------------- Net benefit cost - company plans 14,541 13,455 4,675 Net benefit cost - multi-employer plans 10,911 9,891 6,606 - ------------------------------------------------------------------------------------- Total net benefit cost $ 25,452 $ 23,346 $ 11,281 ===================================================================================== POSTRETIREMENT BENEFITS 2000 1999 1998 Service cost $ 200 $ 98 $ 68 Interest cost 496 290 230 Amortization of prior service cost 38 - - Amortization of unrecognized net loss (gain) 337 46 (16) - ----------------------------------------------------------------------------------------------------- Total net benefit cost $ 1,071 $ 434 $ 282 ===================================================================================================== 19 20 The changes in benefit obligations and plan assets, as well as, the funded status of the Company's pension and postretirement benefit plans are as follows: PENSION BENEFITS POSTRETIREMENT BENEFITS 2000 1999 2000 1999 CHANGE IN BENEFIT OBLIGATION Benefit obligation at beginning of year $ 138,581 $ 113,309 $ 7,698 $ 4,653 Service cost 14,189 13,139 200 102 Interest cost 9,343 7,854 496 302 Plan amendments 844 - 2,021 379 Liability from merged plans - 17,027 - - Actuarial loss (gain) (6,869) 7,497 1,854 3,242 Curtailment - (10,188) - - Benefits paid (21,199) (10,057) (1,230) (980) - ------------------------------------------------------------------------------------------------------------------------------ Benefit obligation at end of year 134,889 138,581 11,039 7,698 - ------------------------------------------------------------------------------------------------------------------------------ CHANGE IN PLAN ASSETS Fair value of plan assets at beginning of year 114,187 103,134 - - Actual return on plan assets 15,929 3,231 - - Assets from merged plans - 17,082 - - Company contributions 6,290 797 1,230 980 Benefits paid (21,199) (10,057) (1,230) (980) - ------------------------------------------------------------------------------------------------------------------------------ Fair value of plan assets at end of year 115,207 114,187 - - - ------------------------------------------------------------------------------------------------------------------------------ Funded status (19,682) (24,394) (11,039) (7,698) Unrecognized net transition asset (1,785) (2,272) - - Unrecognized prior service cost 2,966 2,337 2,362 379 Unrecognized net loss (4,044) 10,035 5,657 4,140 - ------------------------------------------------------------------------------------------------------------------------------ Accrued pension cost $ (22,545) $ (14,294) $ (3,020) $ (3,179) - ------------------------------------------------------------------------------------------------------------------------------ Total amounts recognized in the consolidated balance sheet $ (22,545) $ (14,294) $ (3,020) $ (3,179) ============================================================================================================================== Included in the above pension benefits table is an unfunded supplemental retirement plan with a liability of $8.0 million and $7.0 million at May 28, 2000 and May 30, 1999, respectively. The following weighted-average assumptions were used to determine the Company's obligations under the plans: PENSION BENEFITS POSTRETIREMENT BENEFITS 2000 1999 1998 2000 1999 1998 Discount rate 7.50% 7.00% 7.25% 7.5% 7.00% 7.25% Expected return on plan assets 9.00% 9.00% 9.00% - - - Rate of compensation increase 0-5.0% 0-5.0% 0-5.0% - - - - ------------------------------------------------------------------------------------------------------------- 20 21 The assumed health care cost trend was 6.0% in 2000, decreasing gradually to 5.0% over two years and remaining level thereafter. If the health care trend was increased one percentage point, postretirement benefit costs for the year ended May 28, 2000, would have been $64 thousand higher, and the accumulated postretirement benefit obligation as of May 28, 2000, would have been $522 thousand higher. If the health care trend was decreased one percentage point, postretirement benefit costs for the year ended May 28, 2000, would have been $58 thousand lower, and the accumulated postretirement benefit obligation as of May 28, 2000, would have been $496 thousand lower. The Company retained the earned pension liability related to the Vegetables operations for liabilities through the date of disposition. Accordingly, the projected benefit obligation, change in plan assets, funded status and prepaid benefit cost tables above include continuing and discontinued operations. The Company sponsors contributory savings plans that allow employees to make regular contributions of up to 16% of their salary, subject to certain limitations prescribed by the Internal Revenue Service. The Company contributes an additional amount equal to 50% of the first 6% of salary contributed by the employee. Contributions by the Company to the savings plan were $6.5 million, $5.5 million and $3.0 million for fiscal 2000, 1999 and 1998, respectively. As of January 1, 1998, the Company discontinued the noncontributory profit sharing plans for certain employees. Contributions under these plans were made at the discretion of the Board of Directors. Several acquired companies maintained profit sharing plans. Fiscal 2000 expense for these plans was zero, whereas expense for these plans for fiscal 1999 and 1998 was $253 thousand and $6.2 million, respectively. 14. COMMITMENTS AND CONTINGENT LIABILITIES The Company is a current defendant in assorted legal matters and has been the subject of routine investigations by various state and federal agencies. The ultimate resolution of these matters is not expected to have a material adverse effect on the financial position or results of operations of the Company. 22 15. BUSINESS SEGMENT INFORMATION The nature of products classified in the business segments presented herein is described in Note 1. Outside the United States, no single country is material for separate disclosure. Intersegment sales are not material. The Company has one retail grocery customer which represents approximately 10 percent of the Company's consolidated net sales. Operating earnings of segments do not include interest income or expense and provision for income taxes. Identifiable assets are those used in the Company's operations in each segment. Corporate assets consist primarily of cash and temporary cash investments and deferred tax assets. DAIRY PICKLES SPECIALTY CORPORATE CONSOLIDATED 2000 Net sales $ 3,255,017 $ 378,562 $432,057 $ -- $ 4,065,636 Operating earnings(a) 156,384 34,237 70,998 (39,007) 222,612 Identifiable assets 1,378,424 205,795 290,024 129,299 2,003,542 Depreciation and amortization 79,853 10,538 12,083 5,097 107,571 Capital expenditures 127,220 8,034 9,666 2,621 147,541 1999 Net sales $ 2,984,626 $ 363,681 $406,841 $ -- $ 3,755,148 Operating earnings(b) 95,577 34,229 59,234 (35,702) 153,338 Identifiable assets 1,329,629 185,572 287,515 109,160 1,911,876 Depreciation and amortization 65,989 8,566 9,922 3,465 87,942 Capital expenditures 118,993 10,349 5,510 4,494 139,346 1998 Net sales $ 2,052,532 $ 348,695 $ 334,607 $ -- $ 2,735,834 Operating earnings 114,084 37,054 52,187 (40,806) 162,519 Identifiable assets 919,116 182,463 164,956 52,617 1,319,152 Depreciation and amortization 43,568 6,880 6,958 3,012 60,418 Capital expenditures 68,142 12,095 18,829 5,617 104,683 - --------------------------------------------------------------------------------------------------------------------------- (a) Fiscal 2000 segment operating earnings include plant closure charges of $6,078 in the Dairy segment. (b) Fiscal 1999 segment operating earnings include plant closure charges of $8,882, $8,530 and $693 in the Dairy, Pickles, and Specialty segments, respectively. 22 23 16. SUBSEQUENT EVENTS On June 23, 2000, the Company filed a shelf registration to issue from, time to time, up to $650.0 million in various debt and equity securities. The Company plans to use the net proceeds from any such issuances for general corporate purposes, including working capital, repayment or refinancing of indebtedness, acquisitions and capital expenditures. On June 27, 2000, the Company purchased the Nalley's pickle business located in Tacoma, Washington, from Agrilink Foods, Inc. for cash consideration. On July 10, 2000, the Company purchased the assets of the Land O'Lakes Upper Midwest fluid dairy operations for cash consideration. These operations include a full line of fluid milk, yogurt, cream, sour cream and cottage cheese. In conjunction with the Land O'Lakes purchase, Land O'Lakes and Dean Foods entered into a joint venture agreement to develop, market and license cream, half-and-half, sour cream and extended shelf life products to further expand the Lands O'Lakes brand. 24 QUARTERLY FINANCIAL DATA Unaudited (In thousands, except for share data) FIRST SECOND THIRD FOURTH FISCAL YEAR FISCAL 2000 Net sales $1,001,360 1,067,010 976,816 1,020,450 4,065,636 Gross profit $ 239,356 239,069 233,450 249,543 961,418 Net income $ 27,835 27,010 25,177 26,096 106,118 Per common share data: Basic income per share $ .71 .69 .67 .72 2.79 Diluted income per share $ .70 .68 .67 .72 2.77 Stock price range High $ 43 13/16 46 1/4 40 1/8 31 1/8 46 1/4 Low $ 37 5/16 38 1/4 28 11/16 23 15/16 23 15/16 Dividend rate $ .22 .22 .22 .22 .88 FISCAL 1999 Net sales $ 825,104 934,377 995,169 1,000,498 3,755,148 Gross profit $ 191,176 202,014 188,484 232,304 813,978 Income from continuing operations $ 22,913 23,354 3,280 20,784 70,331 Net income $ 21,172 105,986 3,280 20,784 151,222 Per common share data: Basic income (loss) per share Continuing operations $ .57 .59 .08 .53 1.77 Discontinued operations $ (.04) (.03) - - (.07) Gain on sale of discontinued operations $ - 2.10 - - 2.10 Net income $ .53 2.66 .08 .53 3.80 Diluted income (loss) per share Continuing operations $ .56 .58 .08 .52 1.74 Discontinued operations $ (.04) (.03) - - (.07) Gain on sale of discontinued operations $ - 2.05 - - 2.07 Net income $ .52 2.60 .08 .52 3.74 Stock price range High $ 57 7/16 50 46 5/16 39 3/4 57 7/16 Low $ 45 1/4 41 33 3/8 32 15/16 32 15/16 Dividend rate $ .21 .21 .21 .21 .84 - --------------------------------------------------------------------------------------------------------------------------- The Company's common stock is traded on the New York Stock Exchange under the ticker symbol: DF. 24 25 SUMMARY OF OPERATIONS (In thousands, except for items marked with an *) Fiscal Year Ended May: 2000 1999 1998 1997 1996 OPERATING DATA Net sales $ 4,065,636 3,755,148 2,735,834 2,460,563 2,240,517 Operating earnings (loss) $ 222,612 (a) 153,338 (b) 162,519 138,671 (593)(c) Interest expense $ 50,148 39,098 21,101 15,071 16,316 Income (loss) from continuing operations $ 106,118 (a) 70,331 (b) 87,980 73,988 (16,865)(c) Income (loss) from discontinued operations $ - (2,929) 18,322 12,716 (32,823) Net income (loss) $ 106,118 (a) 151,222 (b) 106,302 86,704 (49,688)(c) Depreciation on properties $ 87,532 72,774 54,060 48,566 47,968 Capital expenditures $ 147,541 139,346 104,683 55,580 71,086 Number of employees* 13,300 13,600 11,200 8,300 8,600 BALANCE SHEET DATA Working capital $ 151,286 142,652 67,324 64,988 24,649 Total assets $ 2,003,542 1,911,876 1,607,189 1,133,680 1,131,625 Net plant and equipment $ 815,264 764,946 551,064 381,800 375,072 Long-term obligations $ 758,725 631,286 558,233 208,931 217,984 Shareholders' equity $ 657,685 716,414 619,266 567,681 507,692 COMMON STOCK DATA* Basic income (loss) per share Continuing operations $ 2.79 (a) 1.77 (b) 2.17 1.84 (.42)(c) Discontinued operations $ - (.07) .46 .32 (.82) Gain on sale of discontinued operations $ - 2.10 - - - Net income (loss) $ 2.79 (a) 3.80 (b) 2.63 2.16 (1.24)(c) Diluted income (loss) per share Continuing operations $ 2.77 (a) 1.74 (b) 2.13 1.83 (.42)(c) Discontinued operations $ - (.07) .44 .32 (.82) Gain on sale of discontinued operations $ - 2.07 - - - Net income (loss) $ 2.77 (a) 3.74 (b) 2.57 2.15 (1.24)(c) Cash dividends per share $ .88 .84 .80 .76 .72 Book value per share $ 18.53 18.24 15.49 14.09 12.65 Number of shareholders 8,311 8,469 8,690 8,838 9,481 - --------------------------------------------------------------------------------------------------------------------------- (a) 2000 continuing operations results include a pre-tax charge of $6,078 ($3,768 after-tax, or $.10 per share) related to the plant closures. (b) 1999 continuing operations results include a pre-tax charge of $18,105 ($11,044 after-tax, or $.27 per share) related to the plant closures. (c) 1996 continuing operations results include a pre-tax charge of $102,439 ($64,906 after-tax, or $1.62 per share) related to the adoption of a plan to reduce costs, rationalize production capacity and provide for severance and environmental costs. The 1996 Net Loss includes a pre-tax charge of $150,000 ($97,720 after-tax, or $2.44 per share) related to the plan adoption. 25