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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
- ---- ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended May 28, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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COMMISSION FILE NO.: 1-08262
DEAN FOODS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-0984820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3600 N. RIVER ROAD, FRANKLIN PARK, ILLINOIS 60131
(Address of principal executive offices) (Zip Code)
(847) 678-1680
Registrant's telephone number, including area code
Securities registered pursuant to Sections 12(b) and 12(g) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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COMMON STOCK, PAR VALUE $1 PER SHARE NEW YORK STOCK EXCHANGE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
Indicate by check mark if disclosure of delinquent files pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The number of shares of Common Stock, Par Value $1 Per Share, of the
Registrant outstanding as of August 1, 2000 was 35,536,520. The aggregate market
value of such outstanding shares on August 1, 2000 was $1.26 billion, based upon
the closing price for the Common Stock on the New York Stock Exchange on such
date.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference in the
respective Parts hereof indicated:
1. Registrant's Proxy Statement for its Annual Meeting of Stockholders to
be held on September 26, 2000 (referred to herein as the "Company's 2000
Proxy Statement"): Part III
2. Registrant's Current Report on Form 8-K dated July 20, 2000 (referred to
herein as "The Company's Form 8-K dated July 20, 2000"): Part I and
Part II
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PART I
ITEM 1. BUSINESS.
GENERAL
Dean Foods Company and its subsidiaries ("the Company") is engaged in
the processing, distribution and sales of dairy, pickle and specialty food
products. The predecessor to Dean Foods Company was incorporated in Illinois in
1925.
The Company's principal products are Dairy (fluid milk and cultured
products, ice cream and extended shelf life products), Pickles (pickles,
relishes and specialty items) and Specialty (powdered products, refrigerated
salad dressings, dips, sauces and puddings). A significant portion of the
Company's products is sold under private labels. The Company also operates a
trucking business hauling less-than-truckload freight, concentrating primarily
on refrigerated and frozen cartage, the results of which are reported in the
Specialty segment.
STRATEGIC DIRECTION
The Company's primary objective is the maximization of shareholder value
through long-term stock appreciation and dividend growth. The Company continues
to refine and execute its previously announced long-term strategic plan, the
underlying goal of which is to improve profitability and enhance shareholder
value. The Company's strategy remains focused on profitable top-line growth,
primarily through new product introductions and acquisitions, and continuous
margin improvement through cost reduction initiatives.
On July 27, 1998, as part of the Company's on-going strategic review,
the Company announced the divestiture of the its Vegetables segment to Agrilink
Foods, Inc. ("Agrilink"). On September 23, 1998, the transaction closed for cash
consideration of $378.2 million, a $30.0 million Agrilink subordinated note and
Agrilink's aseptic foods business, which was valued at $80.2 million. Vegetables
segment results of operations are presented as discontinued operations in the
financial statements and other financial information presented in The Company's
Form 8-K dated July 20, 2000 and incorporated herein by reference.
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BUSINESS ACQUISITIONS
Acquisitions continue to be an important part of the Company's strategy.
The Company's acquisition strategy focuses on food companies having a
well-established reputation for quality products and services that meet selected
financial criteria, including return on invested capital and market value added.
The Company continues to take advantage of industry consolidation trends,
specifically within the dairy segment, and to focus on companies that can
provide significant operating efficiencies. The Company has completed 26
acquisitions in the last five fiscal years. These companies, businesses and
assets were acquired for cash, installment notes or a combination thereof,
except for the fiscal 1999 and 1998 acquisitions of U.C. Milk Company, Berkeley
Farms, Purity Dairies and Coburg Dairy, which were stock purchases. The listing
below summarizes the acquisitions completed by fiscal year:
FISCAL YEAR 2000
Dairy Express, a dairy processor Philadelphia, Pennsylvania
Steinfeld's Pickle Products, a pickle processor Portland, Oregon
FISCAL YEAR 1999
Alta Dena Certified Dairy, a dairy processor City of Industry, California
Berkeley Farms, a dairy processor Hayward, California
U.C. Milk Company, a dairy processor Madisonville, Kentucky
Barber Dairy, a dairy processor Birmingham, Alabama
Hillside Dairy, a dairy processor Cleveland Heights, Ohio
R.G. Clark, a dairy distributor Paducah, Kentucky
Modern Dairy, a dairy distributor Ashland, Kentucky
Ice Cream Products, an ice cream distributor Columbia, South Carolina
Custom Food Processors International, a dry New Hampton, Iowa
ingredients processor
FISCAL YEAR 1998
Purity Dairies, a dairy processor Nashville, Tennessee
Coburg Dairy, a dairy processor Charleston, South Carolina
Dairy business of American Stores Company (Lucky Buena Park, Escondido, San Leandro and
Stores) Sacramento, California
Wengert's Dairy, a dairy processor Lebanon, Pennsylvania
Sani-Dairy Division of Penn Traffic Company, a Johnstown, Pennsylvania
dairy processor
Maplehurst Dairy, a dairy processor Indianapolis, Indiana
H. Meyer Dairy Company, a dairy processor Cincinnati, Ohio
Milk Products LLC, a dairy processor Albuquerque, New Mexico and El Paso, Texas
Schwartz Pickle Company, a refrigerated pickles Chicago, Illinois
processor
Marie's Salad Dressing, a processor of salad Thornton, Illinois
dressings and vegetable dips
FISCAL YEAR 1997
Tri-State Dairy, Inc., a dairy processor Miami, Florida
Meadows Distribution Co., Inc., an ice cream and Batavia, Illinois
frozen foods distributor
FISCAL YEAR 1996
Norcal Crossetti Foods, Inc., a frozen vegetable Watsonville, California
and fruit processor
Paramount Foods, Inc., a pickle processor Louisville, Kentucky
Rod's Food Products, a specialty foods processor City of Industry, California
of aerosol toppings and extended shelf life
products
Subsequent to the end of fiscal 2000, the Company completed the
acquisitions of the Land O'Lakes Upper Midwest fluid dairy operations and the
Nally's pickle business, a pickle processor located in Tacoma, Washington, each
for cash consideration.
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BUSINESS SEGMENTS
Information regarding the Company's Dairy, Pickles and Specialty
business segments for the last three fiscal years is included, in Note 15 to the
consolidated financial statements in The Company's Form 8-K dated July 20, 2000.
That information, excluding the first sentence of the footnote, is hereby
incorporated by reference.
Dairy Segment
Fluid Milk and Cultured Dairy Products
The Company processes raw milk and other raw materials into fluid milk
and cultured products. The Company believes that it is one of the two largest
fluid milk processors in the United States. Although industry data is not
available, the Company estimates that it has a 14% market share in domestic
fluid milk. Included in the fluid products category is homogenized, low-fat and
skim milk plus buttermilk, chocolate milk and juice products. Cultured dairy
products include cottage cheese, yogurt and sour cream. The Company also
produces and distributes organic dairy products, which include a wide variety of
homogenized and pasteurized milk and cultured products.
Fluid milk and fresh cultured products are sold to grocery store chains,
mass merchandisers, convenience stores, smaller retail grocery outlets,
warehouse club stores, grocery warehouses, institutional and governmental
customers in the Midwest and Midsouth, in parts of the Southeastern,
Southwestern and Rocky Mountain states, parts of Pennsylvania and New York,
California and Mexico.
In addition to the strong Dean's brand in the Midwest and Midsouth,
fluid milk and cultured dairy products are sold in various areas under
well-established labels such as Alta Dena, Barber's, Berkeley Farms, Land O'
Lakes, Coburg, Cream o'Weber, Creamland, Gandy's, Mayfield, McArthur, Meadow
Brook, Price's, Purity, Reiter, T.G. Lee, Verifine and Wengert's. A substantial
portion of the Company's fluid milk and cultured products volume is sold under
private labels.
The fluid milk and cultured products business is extremely competitive
and productivity is very important. The Company continues to reinvest a
substantial portion of its total capital budget in its dairy plants and
distribution systems to maintain and improve efficiencies. Fiscal 2000, 1999 and
1998 major capital expenditures included the new and continued installation of
small plastic bottle (Milk Chugs) filling lines at plants located in Alabama,
California, Florida, Illinois, Pennsylvania and Utah. Fiscal 2000 and 1999
expenditures include spending associated with new wrap-around labeling equipment
at the Florida dairy plants and spending associated with the Company's
enterprise wide information systems initiative. Fiscal 2000 expenditures also
included spending related to distribution equipment in the Florida, Alabama and
Ohio dairies. Fiscal 1999 expenditures included cooler expansion at its
Sharpsville, Pennsylvania facility, as well as costs associated with production
consolidation at its Southwest facilities. Fiscal 1998 expenditures included
costs associated with the completion of a fluid milk plant in Braselton,
Georgia. Major capital expenditures in fiscal 1997 included the initial
construction of the new Braselton, Georgia, fluid milk processing plant,
expansion of the filler room at the Sharpsville, Pennsylvania facility and new
labeling equipment at the Athens, Tennessee plant. Capital expenditures during
fiscal 1996 included installation of a small plastic bottle filling line at its
Athens, Tennessee dairy plant, the expansion of the Erie, Pennsylvania milk
cooler and additional processing capacity at the Company's Rochester, Indiana
and Huntley, Illinois milk plants.
Sales of fluid milk and cultured products to unaffiliated customers for
the fiscal years 2000, 1999, and 1998 were $2.6 billion, $2.4 billion and $1.6
billion, respectively.
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Ice Cream and Frozen Novelties
The Company produces packaged and bulk ice cream products which are sold
through grocery store chains, mass merchandisers, convenience stores, smaller
retail grocery outlets, restaurants and other foodservice outlets. The product
line includes ice cream (regular, low-fat and non-fat), fruit sherbets, frozen
yogurts, and novelties made with ice cream, sherbet and ices. These products are
sold under a variety of regional brands and numerous private labels in the
Midwest, Mid-South, Southeast, Southwest, California, parts of the Rocky
Mountain states, Pennsylvania, New York, California and Mexico. The brands
include Dean's, Dean's Country Charm, Alta Dena, Bud's of San Francisco,
Barber's, Berkeley Farms, Creamland, Cream o'Weber, Gandy's, Price's, Purity,
Fitzgerald, Fieldcrest, Mayfield, McArthur/T.G. Lee, Reiter and Verifine. Sales
of ice cream and frozen dessert products are substantially greater during the
summer months than during the rest of the year. Additionally, the Company
produces and supplies Baskin-Robbins ice cream products in the Midwest and
Southwest.
Fiscal 2000 capital expenditures included the purchase and expansion of
ice cream storage facilities in the Alabama dairies, as well as the purchase and
installation of two-piece carton equipment in the Georgia dairy. Fiscal 1999 and
1998 capital expenditures included the purchase and installation of frozen
novelties vending machines in the Midsouth. Capital expenditures during fiscal
1999 also included freezer expansion at the Birmingham, Alabama facility and the
purchase of freezer equipment for the Company's Athens, Tennessee facility.
Fiscal 1998 capital expenditures included the expansion of an ice cream storage
facility. Capital expenditures during fiscal 1997 and fiscal 1996 included
additional processing equipment at the Company's Belvidere, Illinois and Athens,
Tennessee ice cream plants.
Sales to unaffiliated customers for the fiscal years 2000, 1999 and 1998
were $483 million, $467 million and $332 million, respectively.
Extended Shelf Life
The Company processes extended shelf life fluid, aerosol and other dairy
products. Extended shelf life products include flavored milks, non-dairy coffee
creamers, whipping creams, half-and-half dairy creamers, aerosol whipped creams
and non-dairy toppings, coffee creamers and lactose-reduced milks.
Extended shelf life products are distributed nationally under Dean
brands including Dairy Pure, Dean Ultra and Easy 2%, as well as well-known
licensed national brands and private labels. The extended shelf life products
business is extremely competitive and productivity is very important. The
Company continues to reinvest in its extended shelf life plants and distribution
systems to maintain and improve efficiencies. Fiscal 2000 and 1999 capital
expenditures included investments in small bottle lines and infrastructure
improvements to the Murray, Kentucky facility. Fiscal 1999 capital expenditures
included cooler capacity. Capital expenditures in fiscal 1998 included
investment in a new high-temperature processor and cooler expansion at its
Murray, Kentucky plant. In fiscal 1997, the Company divested its Ready Foods
plant in Philadelphia, Pennsylvania and consolidated production into the Murray,
Kentucky facility, where the Company invested in a new aerosol filling line.
During fiscal 1996, capital expenditures included the installation of new
racking and inventory systems and cooler expansion at its Murray, Kentucky
plant.
Sales of extended shelf life products to unaffiliated customers for
fiscal 2000, 1999 and 1998 were $184 million, $167 million and $147 million,
respectively.
Pickles Segment
Pickles, Relishes and Specialty Items
The Company is one of the largest pickle processors and marketers in the
United States. Pickles, relishes, pickled peppers and other assorted specialty
items are sold nationally under brand names, including Arnold's, Atkins, Aunt
Jane's, Cates, Dailey, Heifetz, Paramount, Peter Piper, Rainbo, Roddenbery,
Schwartz
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and Steinfeld's. Branded and private label products are marketed and
distributed to grocery store chains, wholesalers and the foodservice industry
and in bulk to other food processors.
Capital expenditures in fiscal 2000 included the purchase of a produce
cooler for the Green Bay facility and investments in a warehouse management
system. During fiscal 1999, the Company closed its Croswell, Michigan plant and
consolidated production into existing facilities and continued to modernize its
remaining manufacturing facilities. Fiscal 1999 capital expenditures included
costs to further automate pickle production at the Faison, North Carolina
facility. Capital expenditures in fiscal 1998 included non-fermenting processing
equipment, a new water treatment system and banana pepper handling equipment.
During fiscal 1997 the Company closed its Eaton Rapids, Michigan plant and
consolidated production. During fiscal 1996, capital improvements were made to
upgrade and modernize the Company's manufacturing facilities and reduce
transportation costs.
The processing of pickle products is seasonal, dependent to a large
extent upon the growing season of cucumbers in the summer months. Inventories
are therefore higher in the fall and winter months than in the spring and early
summer.
The Company markets a number of specialty sauces, including shrimp,
seafood, tartar, horseradish, chili and sweet and sour sauces, in the Eastern,
Midwestern and Southern United States to retail grocers. Products are sold under
the Bennett's and Hoffman House brand names.
Sales to unaffiliated customers for the fiscal years 2000, 1999 and 1998
were $379 million, $364 million and $349 million, respectively.
Specialty Segment
Powdered Products
Non-dairy coffee creamers are the Company's principal powdered products.
However, as a result of the fiscal 1999 acquisition of a New Hampton, Iowa
manufacturing facility, the Company's capabilities have been extended into
shortening powders and other high fat formulas used in baking, beverage mixes,
gravies and sauces. Our core business includes premium and low-fat powdered
products sold primarily under private labels to vending operators, office
beverage service companies and institutional foodservice distributors with
national distribution to restaurants, schools, health care institutions, hotels,
vending and fast-food operators. Non-dairy creamers are also sold for private
label distribution to all classes of the retail trade and sold in bulk to a
number of other food companies for use as an ingredient in their food products.
Powdered products are also sold to international customers in Australia, Canada,
the Far East, Mexico, South America, Europe, Africa and the Middle East. The
Company believes that it is the largest manufacturer of powdered non-dairy
coffee creamers in the United States. The Company's non-dairy coffee creamers
are an economical and convenient substitute for milk and cream. These products
require no refrigeration and have long shelf lives.
While continuing to grow its non-dairy creamer business, the Company
entered into the nutritionally-based products market in fiscal 1999. The
nutritional beverage operations were acquired in conjunction with the Vegetables
segment disposition, which was sold to Agrilink Foods, Inc. on September 23,
1998. The Company will leverage its private label expertise and launch beverages
in the meal supplement, weight loss and sports categories.
The Company, through an affiliate, provides stabilizers and other dry
ingredients to customers in the United Kingdom, Continental Europe and other
foreign markets.
Capital expenditures in fiscal 2000 included the purchase and
installation of equipment to increase creamer capacity and the purchase and
installation of emission and waste treatment equipment at the Wayland, Michigan
facility. There were no major capital expenditures during fiscal 1999. Fiscal
1998 and fiscal 1997 capital expenditures included the construction of a new
dryer in Wayland, Michigan, which began operation
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during the third quarter of fiscal 1998. Capital expenditures during fiscal 1996
included the construction of a new production facility in the United Kingdom.
Sales to unaffiliated customers for the fiscal years 2000, 1999 and 1998
were $206 million, $176 million and $161 million, respectively.
Salad Dressings, Dips, Sauces and Puddings
The Company manufactures snack dips, low-fat sour cream and sour cream
replacements at its Rockford, Illinois facility. These products are sold
nationally, but primarily east of the Rockies, under the Dean's, King and
private label brands in supermarkets and other retail outlets through direct
warehouse delivery. Dean's brand dips are available in regular, low-fat and
non-fat varieties. At the beginning of fiscal 1998, the Company completed the
acquisition of the Marie's business. The Marie's product line includes
refrigerated salad dressings, vegetable dips, salsas and fruit glazes, which are
marketed in the produce section of supermarkets. Dean's dips and Marie's
refrigerated salad dressings are the leading brand names in their respective
categories. Marie's dips are the second leading produce dip. The Company
acquired Rod's Food Products in fiscal 1996, which increased West Coast presence
of Dean's product lines. Rod's supplies a large and growing Western United
States customer base with retail snack dips and other oil-based products, as
well as flavored salad dressings for the foodservice trade. Retail products are
sold under the Rod's, Imo and Chivo brand names and a number of private labels.
The Company produces aseptic products including ready-to-serve natural
cheese sauces, puddings and other specialty sauces. These products are
sterilized under a process which allows storage for prolonged periods without
refrigeration. Aseptic products are sold nationally, primarily under private
labels, to distributors that supply restaurants, schools, hotels and other
segments of the foodservice industry.
There were no major capital expenditures in fiscal 2000. Capital
expenditures during fiscal 1999 included a small-pouch filler line at the
Company's Dixon, Illinois plant. Fiscal 1998 capital expenditures included
receiving room upgrades at the Company's City of Industry, California facility.
There were no major capital expenditures during fiscal years 1997 and 1996.
Sales to unaffiliated customers for the fiscal years 2000, 1999 and 1998
were $200 million, $199 million and $147 million, respectively.
DFC Transportation
DFC Transportation Company, a transportation and logistics subsidiary of
the Company, operates nationally with a fleet of approximately 129 tractors and
200 trailers, providing less-than-truckload refrigerated and frozen cartage
service. Its customers include food and industrial companies. A significant
portion of its revenues is derived from the brokerage of various types of
freight.
Revenues from unaffiliated customers for fiscal years 2000, 1999, and
1998 were approximately $26 million, $32 million and $27 million, respectively.
Revenues relating to hauling products for other divisions and subsidiaries of
the Company have been eliminated in consolidation.
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RAW MATERIALS AND SUPPLIES
The Company's business depends on obtaining adequate supplies of raw and
processed agricultural products. Historically, the Company has been able to
obtain adequate supplies of agricultural products.
Raw milk and other agricultural products are generally purchased
directly from farmers and farm cooperatives. The Company generally does not have
long-term purchase contracts for agricultural products. The price of raw milk is
extensively regulated. On average, raw milk costs were lower in fiscal 2000 than
in fiscal 1999. With the exception of three months during the second fiscal
quarter of 2000, raw costs have been in a relatively stable range. In fiscal
1999, raw costs increased early in the second quarter, increased again in the
third quarter and then fell sharply in the fourth quarter. Early fiscal 1999 raw
milk costs were higher in comparison to the same period of the prior year and
continued to increase to record high levels by the end of the third quarter and
beginning of the fourth quarter. Costs fell sharply during the last two months
of the fourth quarter of fiscal 1999 to a level below fiscal 1998 year-end
costs. Early indications are that raw milk costs should remain in a relatively
stable range; significant run-ups are not currently anticipated. Additionally,
advanced forward milk pricing was adopted by the national federal order system
in January of 2000, substantially reducing the quarterly earnings volatility
associated with the previous federal order milk pricing system.
The Company produces most of its plastic gallon and half-gallon
containers for its fluid milk business. Glass containers for pickles and related
products are purchased from one primary supplier.
Certain commodities, such as corn syrups, vegetable oils, sugar and
casein, and various packaging supplies are purchased from numerous sources on a
normal purchase order basis, with cucumbers purchased under seasonal grower
contracts. The Company is confident that any lost supplier requirements could be
replaced in the ordinary course of business.
In its Pickles operations, the Company supplies seed and advises growers
regarding planting techniques. In addition, the Company monitors and arranges
for the control of insects, directs the harvest, and, for some crops, provides
automated harvesting service.
Unfavorable weather conditions in the Southeast and Midwest led to lower
quality and inconsistent cucumber crops during fiscal 2000. The reduced volume
from local crops in conjunction with higher volumes and higher costs from Mexico
resulted in higher fiscal 2000 cucumber costs as compared with fiscal 1999.
Fiscal 1999 cucumber costs approximated fiscal 1998 and fiscal 1997 costs.
Fiscal 2001 cucumber costs are expected to be slightly lower than fiscal 2000
costs.
DISTRIBUTION
Dairy products are delivered directly to grocery chain stores or
warehouses from the Company's processing plants. Products are delivered by the
Company, in trucks that it owns or leases, and by independent distributors. In
certain states, products are also delivered to the Company's distribution
branches from which distribution is then made to customers. The Company has
continued its efforts to streamline its distribution system for dairy products.
Major economies have been effected in recent years through consolidation of
distribution branches and routes, with emphasis on direct truck delivery to
retail stores and warehouses of grocery chains. The Company's Pickles and
Specialty products are delivered to warehouses and food distributors by the
Company's fleet of trucks and outside freight carriers.
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COMPETITION
The Company's business is highly price competitive with relatively low
operating margins, consistent with other food companies. Quality and customer
service are important factors in securing and maintaining business. An important
aspect of the Company's service to customers is computer ordering, shipping and
billing services. Referred to in the food industry as "Efficient Consumer
Response", the Company has over the last several years made a substantial
commitment to this effort. The Company's Dairy business operates in a number of
different geographical markets. In these markets the company competes against
national, regional and local companies. In certain markets, some supermarket
chain stores have their own dairy products processing plants. There are usually
a number of competitors in each major market and product class. Some of the
competitors have greater sales and assets than the Company's operations in that
market. The Company's Pickles and Specialty products are marketed nationally
and, in some cases, internationally. The degree of penetration and competitive
conditions in each market varies, but the Company does not believe it has any
material competitive advantage in any of its major markets or product classes.
EMPLOYEES
The Company employs approximately 13,300 employees (13,000 full-time).
Approximately 5,600 employees are represented by the International Brotherhood
of Teamsters and other unions under 64 collective bargaining agreements.
Twenty-eight of these agreements expire during fiscal 2001. Generally, the
Company considers its employee relations to be very good.
The Company has approximately 800 seasonal positions at its pickle
processing plants, principally during the summer months. At times, the Company
has experienced difficulties in meeting seasonal employee needs. A number of
strategies have been employed to retain seasonal employees including incentive
programs and employee sharing programs.
ENVIRONMENT
The Company's compliance with federal, state and local regulations
relating to the discharge of material into the environment or otherwise relating
to the protection of the environment has not had a material effect on the
Company's capital expenditures, earnings or competitive position. The Company
continues to give considerable attention to the impact or potential impact of
its operations on the environment.
ITEM 2. PROPERTIES.
The Company owns sixty-two of its processing plants (three of which are
subject to mortgage) and leases the other five under leases expiring from fiscal
2001 through fiscal 2007. The Company has owned and leased distribution branches
and storage warehouses located throughout the country. The Company considers its
properties suitable and adequate for the conduct of its business. Production
facilities are principally operated at or near capacity levels, but generally on
the basis of fewer than three shifts per day.
Further information relating to the Company's leases is contained in
Note 10 to the consolidated financial statements appearing in The Company's Form
8-K dated July 20, 2000. Such information is hereby incorporated by reference.
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The locations of the Company's processing facilities, by product
category within business segment, are included below:
DAIRY
Fluid Milk and Cultured Dairy Products
Birmingham, Alabama Woodbury, Minnesota
Buena Park, California Albuquerque, New Mexico
City of Industry, California Bismarck, North Dakota
Escondido, California Cincinnati, Ohio
Hayward, California Springfield, Ohio
San Leandro, California Cleaveland Heights, Ohio
Miami, Florida Belleville, Pennsylvania
Orange City, Florida Erie, Pennsylvania
Orlando, Florida Lebanon, Pennsylvania
Braselton, Georgia Sharpsville, Pennsylvania
Chemung, Illinois North Charleston, South Carolina
Huntley, Illinois Sioux Falls, South Dakota
Rockford, Illinois Athens, Tennessee
Rochester, Indiana Nashville, Tennessee
Louisville, Kentucky El Paso, Texas
Madisonville, Kentucky Lubbock, Texas
Evart, Michigan Salt Lake City, Utah
Thief River Falls, Minnesota Sheyboygan, Wisconsin
Ice Cream and Frozen Novelties
Birmingham, Alabama Belvidere, Illinois
Buena Park, California Albuquerque, New Mexico
City of Industry, California Athens, Tennessee
Emeryville, Louisiana Nashville, Tennessee
Extended Shelf Life
Jacksonville, Florida Murray, Kentucky
Richland Center, Wisconsin
PICKLES
Pickles, Relishes and Specialty Items
Atkins, Arkansas Faison, North Carolina
LaJunta, Colorado Portland, Oregon
Cairo, Georgia Scappoose, Oregon
Chicago, Illinois Green Bay, Wisconsin
Plymouth, Indiana
SPECIALTY
Powdered Products
Pecatonica, Illinois Wayland, Michigan
Rockford, Illinois Abingdon, Oxon, United Kingdom
New Hampton, Iowa
Salad Dressings, Dips, Sauces and Puddings
City of Industry, California Thornton, Illinois
Dixon, Illinois Benton Harbor, Michigan
Rockford, Illinois
Distribution branches for the Dairy segment are located in Alabama,
California, Florida, Georgia, Illinois, Indiana, Kentucky, Nevada, New Mexico,
New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas,
and West Virginia.
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Distribution warehouses for the Pickles and Specialty segments are
maintained adjacent to many processing plants. The Company maintains powdered
product warehouses that it utilizes which are located throughout the United
States.
ITEM 3. LEGAL PROCEEDINGS.
Information on legal proceedings is contained in Note 14 to the
consolidated financial statements included in The Company's Form 8-K dated July
20, 2000. Such information is hereby incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended May 28, 2000.
EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the Company's executive officers is set forth in
Item 10 of Part III of this Report.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is traded on the New York Stock Exchange
under the ticker symbol DF. The range of common stock sales prices for each of
the quarters during the past two fiscal years (as reported by the New York Stock
Exchange) and the frequency and amount of common stock dividends declared the
past two fiscal years are set forth under the caption "Quarterly Financial Data"
in The Company's Form 8-K dated July 20, 2000, in the rows captioned "Stock
Price Range" and "Dividend Rate". Such rows and the column and row captions
related thereto are hereby incorporated by reference.
The approximate number of holders of record of the Company's common
stock on August 1, 2000 was 8,272.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for each of the Company's last five fiscal years
is set forth in The Company's Form 8-K dated July 20, 2000, under the caption
"Summary of Operations". Such selected financial data is hereby incorporated by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
A discussion of the Company's financial condition, cash flows and
results of operations, including information with respect to liquidity and
capital resources, is included in The Company's Form 8-K dated July 20, 2000,
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operation", which is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information set forth in The Company's Form 8-K dated July 20, 2000,
under the caption "Quantitative and Qualitative Disclosures about Market Risk"
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's consolidated balance sheet as of May 28, 2000 and May 30,
1999 and related consolidated statements of income, cash flows and shareholders'
equity for each of the three fiscal years in the period ended May 28, 2000, and
the notes thereto, together with the report thereon of independent accountants,
are set forth in The Company's Form 8-K dated July 20, 2000. Such financial
statements, notes thereto and the report thereon of independent accountants are
hereby incorporated by reference.
Financial data for each quarter within the two most recent fiscal years
is set forth under the caption "Quarterly Financial Data" in The Company's Form
8-K dated July 20, 2000, in the rows captioned "Net Sales", "Gross Profit",
"Income from Continuing Operations", "Net Income" and "Per Common Share Data:
Basic Income (Loss) Per Share and Diluted Income (Loss) Per Share". Such rows
and row captions are hereby incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
11
13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the Company's directors (including nominees for
election at the Company's Annual Meeting of Stockholders to be held September
26, 2000) is set forth in the Company's 2000 Proxy Statement under the captions
"ELECTION OF DIRECTORS" and "CERTAIN INFORMATION REGARDING THE BOARD OF
DIRECTORS". Such information is hereby incorporated by reference.
Information supplied by the Company's executive officers who are not
also directors of the Company concerning their ages, business experience, and
periods of service as executive officers is as follows:
Served in
Position with such position
the Company Age since
----------- --- -----
Eric A. Blanchard...........................Vice President and President, 44 1999
Dairy Division
Jenny L. Carpenter..........................Vice President 54 1995
Gary A. Corbett.............................Vice President, Governmental 52 1993
and Dairy Industry Relations
Daniel M. Dressel...........................Vice President, 57 1999
Human Resources
Neil J. Finerty.............................Vice President, 55 1997
Industrial Relations
Gary D. Flickinger..........................Vice President, 59 1993
Manufacturing and Engineering
Daniel E. Green.............................Vice President, Special Projects 55 1999
James R. Greisinger.........................Group Vice President and 60 1992
President, Dean Pickle and
Specialty Products Company
Alan W. Hooper..............................Vice President, 51 1997
Special Operation Projects
Dale E. Kleber..............................Vice President, Secretary and 44 1999
General Counsel
Barbara A. Klein............................Vice President, Finance and 46 2000
Chief Financial Officer
William M. Luegers, Jr. ....................Vice President and Treasurer 46 1999
Daniel R Morrison...........................Vice President, Corporate Controller 43 2000
George A. Muck..............................Vice President, 62 1970
Research and Development
12
14
Luis P. Nieto...............................Vice President, 45 1999
Business Strategy
Douglas A. Parr.............................Vice President, 58 1993
Dairy Sales and Marketing
Dennis J. Purcell...........................Group Vice President and 57 1993
President, Specialty Business Unit
Gary P. Rietz...............................Vice President and 44 1997
Chief Information Officer
Each of the executive officers, including executive officers who are
also directors, was elected to serve as an executive officer until the next
annual meeting of directors, scheduled for September 26, 2000.
All of the Company's executive officers listed in Part III, Item 10
have been employees of the Company for more than five years, with the exception
of Mr. Dressel, Ms. Klein, Mr. Luegers, Mr. Nieto and Mr. Rietz. Prior to
assuming their current positions,
- - Mr. Blanchard was a Company Vice President and Secretary and General Counsel;
- - Ms. Carpenter was the Company's Director of Marketing and Sales-Specialty
Foods Division;
- - Mr. Corbett was in the Company's sales administration management;
- - Mr. Finerty was the Director of Industrial Relations;
- - Mr. Flickinger was the Director of Production - Dairy and a divisional
general manager;
- - Mr. Green was Group Vice President and President-Ryan Foods Company;
- - Mr. Greisinger was a Company Vice President and President of Dean Pickle
and Specialty Products Company;
- - Mr. Hooper was the Company's Director of Strategic Projects;
- - Mr. Kleber was Vice President, Associate General Counsel;
- - Mr. Morrison was Vice President of Finance for the Dairy Division;
- - Mr. Parr was a Company regional sales manager;
- - Mr. Purcell was Senior Vice President of Sales and Marketing of Dean Pickle
and Specialty Products Company;
Mr. Dressel has been employed by the Company since 1999. Mr. Dressel, prior to
his employment with the Company, was Vice President - Human Resources at Kraft
Foods, Inc., a diversified food company.
Ms. Klein was employed by the Company in 2000. Ms. Klein, prior to her
employment with the Company, was Vice President and Corporate Comptroller of
Ameritech Corporation, a telecommunications company.
Mr. Luegers has been employed by the Company since 1996. Prior to assuming his
present duties, he was Corporate Controller. Mr. Luegers, prior to his
employment with the Company, was Director of Accounting of Brunswick
Corporation, a diversified marine and recreational products company.
Mr. Nieto has been employed by the Company since 1999. Prior to assuming his
present duties, he was Vice President - Marketing of the Specialty business
unit. Mr. Nieto, prior to his employment with the Company, was Director - Ethnic
Marketing of Kraft Foods, Inc., a diversified food company.
Mr. Rietz has been employed by the Company since 1997. Mr. Rietz, prior to his
employment with the Company, was Business Systems Manager - North American
Beverage Division of Quaker Oats Company, a diversified food and beverage
company.
13
15
ITEM 11. EXECUTIVE COMPENSATION.
Information regarding the cash compensation of the Company's executive
officers, compensation pursuant to plans and compensation of the Company's
directors (including nominees for election at the Company's Annual Meeting of
stockholders to be held September 26, 2000) is set forth in the Company's 2000
Proxy Statement under the caption "CERTAIN INFORMATION REGARDING THE BOARD OF
DIRECTORS" and under the caption "EXECUTIVE COMPENSATION." Such information is
hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding security ownership of certain beneficial owners
and management is set forth in the Company's 2000 Proxy Statement under the
caption "PRINCIPAL HOLDERS OF VOTING SECURITIES". Such information is hereby
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
14
16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this Report. The
page number, if any, listed opposite a document indicates the
page number in the sequential numbering system in the manually
signed original of this Report where such document can be found.
Page No.
--------
(1) Financial Statements
The consolidated balance sheets at May 28, 2000
and May 30, 1999, and the related consolidated
statements of income, of cash flows and of
shareholders' equity for each of the three fiscal
years in the period ended May 28, 2000, and
the notes thereto, together with the report
thereon of PricewaterhouseCoopers LLP dated
June 27, 2000, except as to Note 16 which is as
of July 10, 2000, as incorporated by reference
in Part II, Item 8 of this Report.
(2) Financial Statement Schedules
Report of independent accountants on financial
statement schedule 17
Schedule VIII - Valuation and qualifying accounts 18
All other schedules have been omitted because they
are not applicable, or not required, or because
the required information is shown in the
consolidated financial statements or notes thereto.
Separate financial statements of the
Registrant have been omitted since the
Registrant is primarily an operating
company and all subsidiaries included in
the consolidated financial statements, in
the aggregate, do not have minority equity
interest and/or indebtedness to any person
other than the Registrant or its
consolidated subsidiaries in amounts which
together exceed 5% of total consolidated
assets at May 28, 2000, except for
indebtedness incurred in the ordinary
course of business which is not overdue and
which matures within one year from the date
of its creation.
(3) Exhibits
See Exhibit Index 19-20
(b) Reports on Form 8-K.
The Company filed a Current Report dated June 5, 2000, with
regards to the Company's press release dated May 24, 2000, "Dean
Foods Selects New Chief Financial Officer".
The Company filed a Current Report dated June 27, 2000, with
regards to the Company's press release dated June 27, 2000, "Dean
Foods Reports Record Fourth Quarter and Fiscal Year Earnings".
The Company filed a Current Report dated July 20, 2000, with
regards to the Company's Fiscal Year ended May 28, 2000, which
included the Financials Statements, Management's Discussion and
Analysis of Financial Condition and Results of Operations,
Selected Financial Data and Quantitative and Qualitative
Disclosures about Market Risk.
The Company filed a Current report dated August 2, 2000, with
regard to the Company's press release dated August 1, 2000, "Dean
Foods Elects New Corporate Controller".
15
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DEAN FOODS COMPANY
By /s/ BARBARA A. KLEIN
-------------------------------
Barbara A. Klein
Vice President, Finance and
Chief Financial Officer
Date: August 8, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ HOWARD M. DEAN Chairman of the Board and August 8, 2000
- -------------------------- Chief Executive Officer
Howard M. Dean
/s/ RICHARD E. BAILEY President, Chief Operating August 8, 2000
- -------------------------- Officer and Director
Richard E. Bailey
/s/ EDWARD A. BRENNAN Director August 8, 2000
- --------------------------
Edward A. Brennan
/s/ LEWIS M. COLLENS Director August 8, 2000
- --------------------------
Lewis M. Collens
/s/ PAULA H. CROWN Director August 8, 2000
- --------------------------
Paula H. Crown
/s/ JOHN P. FRAZEE, JR. Director August 8, 2000
- --------------------------
John P. Frazee, Jr.
/s/ BERT A. GETZ Director August 8, 2000
- --------------------------
Bert A. Getz
/s/ JANET HILL Director August 8, 2000
- --------------------------
Janet Hill
/s/ JOHN S. LLEWELLYN, JR. Director August 8, 2000
- --------------------------
John S. Llewellyn, Jr.
/s/ RICHARD P. MAYER Director August 8, 2000
- --------------------------
Richard P. Mayer
/s/ THOMAS A. RAVENCROFT Senior Vice President August 8, 2000
- -------------------------- and Director
Thomas A. Ravencroft
/s/ J. CHRISTOPHER REYES Director August 8, 2000
- --------------------------
J. Christopher Reyes
16
18
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Dean Foods Company:
Our audits of the consolidated financial statements referred to in our report
dated June 27, 2000, except as to Note 16 which is as of July 10, 2000,
appearing in the Current Report on Form 8-K dated July 20, 2000 of Dean Foods
Company (which report and consolidated financial statements are incorporated
by reference in this Annual Report on Form 10-K) also included an audit of the
financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our
opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Chicago, Illinois
June 27, 2000
17
19
DEAN FOODS COMPANY AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Amount
Balance at charged Accounts Additions Balance at
beginning of to costs and written due to end of
Classification period expenses off acquisitions period
- -------------- ------ -------- ----------- ------------ ------
Fiscal Year Ended May 28, 2000
Allowance for doubtful
accounts and notes
receivable $ 7,570 $ 3,516 $ 4,775 $ - $ 6,311
======== ========= ========= ======== =========
Fiscal Year Ended May 30, 1999
Allowance for doubtful
accounts and notes
receivable $ 4,212 $ 1,410 $ 1,302 $ 3,250 $ 7,570
======== ========= ========= ======== =========
Fiscal Year Ended May 31, 1998
Allowance for doubtful
accounts and notes
receivable $ 3,085 $ 2,790 $ 2,822 $ 1,159 $ 4,212
======== ========= ========= ======== =========
18
20
EXHIBIT INDEX
The following documents are the exhibits to this Report. For convenient
reference, each exhibit is listed according to the number assigned to it in the
Exhibit Table of Item 601 of Regulation S-K. The page number, if any, listed
opposite an exhibit indicates the page number in the sequential numbering system
in the manually signed original of this Report where such exhibit can be found.
Page No.
--------
(3) Articles of Incorporation and By-Laws
a. Dean Foods Company Restated Certificate of
Incorporation dated February 8, 1988 as amended
October 5, 1998 (filed as Exhibit 3(a)) to
Registrant's Form 10-Q Quarterly Report for
quarterly period ended August 30, 1998 and
incorporated herein by reference)
b. By-Laws of Registrant, as amended May 22, 1998
(filed as Exhibit 4(a) to the Registrant's
Form 10-K Annual Report for the Fiscal Year Ended
May 28, 1998 and incorporated herein by reference)
(4) Instruments defining the rights of security holders,
including indentures
c. Rights Agreement dated May 22, 1998 (filed as
Exhibit 4(a) to the Registrant's Form 10-K Annual
Report for the Fiscal Year Ended May 31, 1998
and incorporated herein by reference)
(10) Material contracts
a. Amended and Restated Dean Foods Company Management
Deferred Compensation Plan, dated as of June 1, 1994
(filed as Exhibit 10(a) to Registrant's Form 10-K
Annual Report for Fiscal Year Ended May 29, 1994
and incorporated herein by reference)
b. Dean Foods Company Retirement Plan for Certain
Directors (filed as Exhibit 10(a) to Registrant's
Form 10-K Annual Report for Fiscal Year Ended
December 28, 1985 and incorporated herein by
reference)
c. Form of Agreement dated March 17, 1986, between
Registrant and each of its current executive
officers (filed as Exhibit 10(b) to Registrant's
Form 10-K Annual Report for Fiscal Year Ended
December 28, 1985 and incorporated herein by
reference)
d. Form of Indemnification Agreement between Registrant
and each of its directors and officers serving at
any time after October 5, 1987 (filed as Exhibit 10(m)
to Registrant's Form 10-K Annual Report for Fiscal
Year Ended May 29, 1988, and incorporated herein
by reference)
e. Amended and Restated Dean Foods Company Directors
Deferred Compensation Plan, dated March 25, 1988
(filed as Exhibit 10(j) to Registrant's Form 10-K
Annual Report for Fiscal Year Ended May 28, 1989
and incorporated herein by reference)
f. Dean Foods Company Supplemental Benefit Plan
for eligible officers, as amended and restated on
May 24, 1991 (filed as Exhibit 10(k) to Registrant's
Form 10-K Annual Report for Fiscal Year Ended
May 26, 1991 and incorporated herein by reference)
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21
Page No.
--------
g. Dean Foods Company Supplemental Incentive
Compensation Plan for certain officers, as
amended March 31, 1989 (filed as Exhibit
10(l) to Registrant's Form 10-K Annual Report
for Fiscal Year Ended May 28, 1989 and
incorporated herein by reference)
h. Dean Foods Company Director Stock Option Plan,
dated September 30, 1992 (filed as Exhibit 10(i)
to Registrant's Form 10-K Annual Report for
Fiscal Year Ended May 30, 1993 and incorporated
herein by reference)
i. $500 million Credit Agreement dated as of March 31,
1998 (filed as Exhibit 10(i) to Registrant's
Form 10-K Annual Report for Fiscal Year Ended
May 31, 1998 and incorporated herein by
reference)
(11) Computation of Basic and Diluted Income Per Share 21
(12.1) Computation of Ratio of Earnings to Fixed Charges 22
(12.2) Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends 23
(21) Subsidiaries of the Registrant
a. Subsidiaries of the Registrant as of May 28, 2000 24
(23) Consents of Experts and Counsel
a. Consent of Independent Accountants dated August 8, 2000 25
(27) Financial Data Schedules
a. Fiscal Year Ended May 28, 2000 26
20