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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 21, 2001
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Dean Foods Company
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(Exact name of registrant as specified in its charter)
Delaware 1-08262 36-0984820
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
3600 N. River Road Franklin Park, IL 60131
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 678-1680
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(Former name or former address, if changed since last report)
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Item 5 - Other Events
DEAN FOODS REPORTS THIRD QUARTER EARNINGS
Franklin Park, Illinois...March 21, 2001... Dean Foods Company (NYSE: DF) today
announced its third quarter and year-to-date fiscal 2001 results.
Third quarter sales increased 11.9% to $1,093.3 million, compared to
$976.8 million in the third quarter of fiscal 2000. Acquisitions in the Dairy
and Specialty Foods Groups, along with continued growth of nationally branded
products in the National Refrigerated Products Group, drove the sales increase.
Net income was $16.7 million, compared to $25.2 million in the third quarter of
fiscal 2000. Diluted earnings per share declined to $0.47 from $0.67 last year.
Operating earnings were $45.9 million, compared to $54.5 million in the third
quarter of fiscal 2000. Net interest expense was $5.4 million higher as a result
of higher debt levels for acquisitions and fiscal 2000 share repurchases.
Year-to-date sales were $3,251.1 million, a 6.8% increase over fiscal
2000. Net income for the first nine months was $72.9 million compared to $80.0
million last year. Diluted earnings per share were $2.04 versus $2.05 in fiscal
2000. Net income and earnings per share in fiscal 2001 include a $6.2 million
after-tax gain ($0.18 per diluted share) on the sale of a note associated with
the fiscal 1999 divestiture of the Company's vegetables segment.
The Dairy Group's third quarter sales increased 9.0% to $806.6 million
from $739.7 million last year. The increase was due primarily to acquisitions.
Operating earnings increased 1.5%, to $32.9 million from $32.4 million in the
prior year. The Dairy Group's earnings were negatively impacted by lower fluid
volumes in certain markets, increased energy and fuel costs, and higher raw milk
and butterfat costs.
The Specialty Foods Group reported sales of $185.4 million in the third
quarter compared to $166.4 million in the prior year. The sales increase was
primarily due to the acquisition of a pickles business at the beginning of the
fiscal year. Earnings, however, decreased slightly from $18.6 to $18.2 million,
as the quarter reflected lower gross margins resulting from increased
competition and higher energy costs, especially for powdered and aseptic
products.
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The Company continued to generate substantial revenue growth in its
National Refrigerated Products (NRP) Group. Sales increased 43.3% in the third
quarter and 36.1% year-to-date as a result of growth in sales of intermediate
and extended shelf life products and new products. New product introductions,
including Dips-for-One and Marie's pourable salad dressings, continued to
progress well in the third quarter.
Operating earnings in the NRP Group were $2.7 million, versus $9.6
million in the third quarter of last year, as the Company continued to support
new product introductions by investing approximately $4.0 million in the third
quarter, and a total of $16.0 million during the first nine months of the year
in marketing and promotional programs. Costs associated with the significant
ramp-up of complex, state-of-the-art technology to produce intermediate and
extended shelf life products also impacted third quarter earnings by
approximately $2.0 million. The Company is focused on improving the production
processes and continued progress is expected throughout the remainder of the
year, although inefficiencies are expected to impact the fourth quarter.
Howard Dean, Chairman and Chief Executive Officer, commented, "We are
obviously disappointed in the performance of the third quarter and in the
projections for the rest of the year. This has been a challenging year for all
of our businesses, with cost increases, challenges with the technology to
produce intermediate and extended shelf life products, and increased competition
in certain of our product lines. We are pleased, however, with the continued
strong demand for our products, especially in the National Refrigerated Products
Group. We are taking a number of steps to address the operational issues,
including further cost savings initiatives and pricing adjustments. We also
recently announced that we are working with Goldman, Sachs & Co. to explore
strategic and financial alternatives. This is an ongoing process and the
Company's management will carefully consider alternatives."
The Company expects full year diluted earnings per share in the range
of $2.50 to $2.55 per share for fiscal 2001. This estimate excludes the $6.2
million after-tax gain ($0.18 per diluted share) on the sale of the note
associated with the fiscal 1999 divestiture of the vegetables segment.
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Dean Foods is one of the nation's leading dairy processors and
distributors producing a full line of branded and private label products,
including fluid milk, ice cream and extended shelf life products, which are sold
under the Dean's and other strong regional brand names. Dean Foods is the
industry leader in other food products including pickles, powdered non-dairy
coffee creamers, aseptically packaged foodservice products, and refrigerated
dips and salad dressings. More information about Dean Foods can be found on its
web site at http://www.deanfoods.com.
The Company's quarterly earnings conference call will be held today at
8:00 a.m. Central Time. The call may be heard live at the Company's web site,
www.deanfoods.com, using Real Player8 Basic Software. The basic version of Real
Player8 may be downloaded at no charge from
www.real.com/products/player/index.html prior to the call. Please allow
approximately 15 minutes to download the software. Replays will be available at
the same internet address.
Certain statements in this press release are forward-looking as defined
by the Private Securities Litigation Reform Act of 1995. These statements
involve certain risks and uncertainties that may cause actual results to differ
materially from expectations as of the date of this press release. These risks
include, but are not limited to, the ability to integrate acquisitions, adverse
weather conditions resulting in poor harvest conditions, raw milk, resin, and
fuel costs, interest rate fluctuations, the level of promotional spending,
competitive pricing pressures, the effectiveness of marketing and
cost-management programs and shifts in the market demand.
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DEAN FOODS COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In millions, except for per share amounts)
Third Quarter Ended Nine Months Ended
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February 25, February 27, February 25, February 27,
2001 2000 2001 2000
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Net sales $ 1,093.3 $ 976.8 $ 3,251.1 $ 3,045.2
Costs of products sold 844.5 743.3 2,492.5 2,333.3
Delivery, selling and administrative expenses 202.9 179.0 597.2 544.2
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Operating earnings 45.9 54.5 161.4 167.7
Interest expense, net of interest income 18.6 13.2 53.3 36.5
Gain on sale of note -- -- 10.0 --
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Income before income taxes 27.3 41.3 118.1 131.2
Provision for income taxes 10.6 16.1 45.2 51.2
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Net income $ 16.7 $ 25.2 $ 72.9 $ 80.0
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Net income per share:
Basic $ .47 $ .67 $ 2.05 $ 2.07
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Diluted $ .47 $ .67 $ 2.04 $ 2.05
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Weighted average common shares:
Basic 35.6 37.3 35.5 38.6
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Diluted 35.7 37.7 35.7 39.1
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DEAN FOODS COMPANY
BUSINESS SEGMENT INFORMATION
(UNAUDITED)
(In Millions)
FOR THE THREE MONTHS ENDED FEBRUARY 25, 2001 AND FEBRUARY 27, 2000
National
Specialty Refrigerated
Dairy Foods Products Corporate Consolidated
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FISCAL 2001
Net sales $ 806.6 $ 185.4 $ 101.3 $ -- $ 1,093.3
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Operating earnings $ 32.9 $ 18.2 $ 2.7 $ (7.9) $ 45.9
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FISCAL 2000
Net sales $ 739.7 $ 166.4 $ 70.7 $ -- $ 976.8
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Operating earnings $ 32.4 $ 18.6 $ 9.6 $ (6.1) $ 54.5
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FOR THE NINE MONTHS ENDED FEBRUARY 25, 2001 AND FEBRUARY 27, 2000
National
Specialty Refrigerated
Dairy Foods Products Corporate Consolidated
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FISCAL 2001
Net sales $ 2,407.3 $ 555.9 $ 287.9 $ -- $ 3,251.1
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Operating earnings $ 118.4 $ 61.6 $ 7.1 $ (25.7) $ 161.4
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FISCAL 2000
Net sales $ 2,312.1 $ 521.5 $ 211.6 $ -- $ 3,045.2
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Operating earnings $ 103.4 $ 63.8 $ 27.9 $ (27.4) $ 167.7
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DEAN FOODS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions)
February 25, May 28,
2001 2000
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ASSETS
Current Assets:
Cash and temporary cash investments $ 41.0 $ 26.6
Accounts and notes receivable, net of
allowance for doubtful accounts 330.2 302.6
Inventories 223.7 178.4
Other current assets 75.2 92.8
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Total current assets 670.1 600.4
Property, Plant and Equipment, net 920.4 815.2
Other Assets 711.5 587.9
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Total Assets $ 2,302.0 $ 2,003.5
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term obligations $ 5.1 $ 3.6
Accounts payable and accrued expenses 431.4 396.4
Dividends payable 8.1 7.9
Federal and state income taxes 41.1 41.2
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Total current liabilities 485.7 449.1
Long-Term Obligations 972.7 758.7
Deferred Liabilities 134.7 138.0
Shareholders' Equity 708.9 657.7
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Total Liabilities and
Shareholders' Equity $ 2,302.0 $ 2,003.5
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dean Foods Company
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(Registrant)
Date: March 23, 2001 /s/ BARBARA A. KLEIN
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Barbara A. Klein
Vice President Finance and
Chief Financial Officer