1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 1997
A. Full title of the Plan:
DEAN FOODS COMPANY INVESTMENT AND PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
DEAN FOODS COMPANY
3600 N. RIVER ROAD
FRANKLIN PARK, ILLINOIS 60131
TELEPHONE: 847/678-1680
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
By: /s/ Gerald W. Berger
-----------------------------------------
Gerald W. Berger
Member of Plan Administrative
Committee for Dean Foods Company
Investment and Profit Sharing Plan
Date: June 26, 1998
3
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
----------------------------------
FINANCIAL STATEMENTS
--------------------
DECEMBER 31, 1997 AND 1996
--------------------------
4
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
----------------------------------
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page
----
Report of independent accountants 1
Financial statements:
Statement of net assets available for
plan benefits at December 31, 1997 and 1996 2
Statement of changes in net assets available
for plan benefits for the year ended
December 31, 1997 3
Notes to financial statements 4-12
Assets held for investment as of
December 31, 1997 Schedule I
Transactions or series of transactions in excess of five percent
of the current value of plan assets for the year ended
December 31, 1997 Schedule II
Note: All other supplementary schedules have been omitted because
they are not applicable.
5
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
May 8, 1998
To the Participants and
Administrator of the
Dean Foods Company
Investment and Profit Sharing Plan
In our opinion, the accompanying statement of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the financial status of the
Dean Foods Company Investment and Profit Sharing Plan at December 31, 1997 and
1996, and the changes in its financial status for the year ended December 31,
1997, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the plan administrator; 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
generally accepted auditing standards which require that we plan and perform
the audits 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 the plan administrator, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Our audits were performed for the purposes of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II is presented for purposes of additional analysis and is not
a required part of the basic financial statements but is additional information
required by the Department of Labor's rules and regulations for reporting and
disclosure under the Employee Retirement Income Security Act of 1974. The fund
information in the footnotes to the financial statements is presented for
purposes of additional analysis rather than to present the net assets available
for plan benefits and changes in net assets available for benefits of each
fund. Schedules I and II and the fund information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
6
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
----------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT DECEMBER 31, 1997 AND 1996
-----------------------------
1997 1996
---- ----
Investments, at market value (Note 3):
Holding account $ 13,923 $ 2,186,848
Balanced fund 37,089,229 29,516,748
Equity Income fund 76,538,427 57,273,781
Dean Foods stock fund 36,639,387 19,609,744
Government fixed fund 53,657,680 54,758,632
Reiter Dairy Plan fund 217,022 279,184
International fund 8,186,463 6,309,615
Equity growth fund 22,604,396 16,379,296
Furman 1,454,844 -
Florida Plan fund 291,740 735,296
------------ ------------
Total investments $236,693,111 $187,049,144
------------ ------------
Employer and employee contributions receivable 1,152,948 1,069,181
Employer profit sharing contribution receivable 3,590,242 2,967,659
Loans to participants 8,751,038 5,058,869
Interest and dividends receivable 317,044 2,523
------------ ------------
Net assets available for Plan benefits $250,504,383 $196,147,376
============ ============
The accompanying notes are an integral part of this statement.
- 2 -
7
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS FOR THE YEAR
ENDED DECEMBER 31, 1997
-----------------------
Source of assets:
Investment income:
Net unrealized depreciation in market value of investments $ (2,079,602)
Realized net gains on sales of investments 45,777,901
Interest 3,579,473
Dividends 666,356
Other Income 55,110
------------
47,999,238
------------
Contributions:
Employer contributions 2,587,849
Employee contributions 14,145,971
Profit sharing contributions 6,506,954
------------
23,240,774
------------
Participant rollovers from other plans 2,565,431
------------
Total sources of assets 73,805,443
------------
Application of assets:
Benefit payments to Plan participants 19,292,178
Fees and expenses 156,258
------------
Total applications of assets 19,448,436
Increase in net assets during the year 54,357,007
Net assets available for Plan benefits, beginning of year 196,147,376
------------
Net assets available for Plan benefits, end of the year $250,504,383
============
The accompanying notes are an integral part of this statement.
DEAN FOODS COMPANY
- 3 -
8
INVESTMENT AND PROFIT SHARING PLAN
----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - GENERAL DESCRIPTION OF THE PLAN:
- -----------------------------------------
The Dean Foods Company Investment and Profit Sharing Plan (the Plan) is a
defined-contribution profit sharing plan that provides retirement benefits to
employees of Dean Foods Company (the Company) who have met certain
length-of-service requirements.
A committee appointed by the Board of Directors of the Company is responsible
for the administration of the Plan. Assets of the Plan are held in trust funds
maintained at The Northern Trust Company (the Trustee).
Participants' contributions are permitted in an amount not to exceed thirteen
percent of their annual compensation. The Company is required to match
participant contributions in an amount equal to twenty-five percent of the
first six percent of elective contributions. In addition, the Company may
elect to make an annual supplemental contribution to the Plan out of its
current or accumulated net profits.
Effective January 1, 1998, the Company increased the employer match under the
Company's savings and investment plan from 25% to 50% of the first 6% of pay
contributed by employees. The Company also increased the employee maximum
savings limit from 13% to 16% of annual compensation. Additionally, in July
1997, the Company approved a resolution to eliminate the annual profit sharing
contributions paid under the 401(k) plan after the fiscal 1998 contributions.
Participants are eligible to contribute to the Plan at the date of hire.
Participants vest immediately in their elective contributions, including any
investment income earned pertaining to such contributions. Participants become
forty percent vested in Company contributions and related earnings after two
years of credited service, with vesting percentages increasing in
twenty-percent increments each subsequent year until participants are fully
vested after five years of credited service. Participants become fully vested
in all accounts upon retirement or after attaining age sixty-five, or upon
termination by reason of death or disability.
Separate accounts are maintained for each participant for Company contributions
and employee elective contributions. Participants direct the investment of all
contributions to established funds in one percent increments. Plan income is
allocated to each participant's account, based on the relative value of
individual participant accounts to the total of all participants' accounts.
Forfeitures from terminated participants are used to reduce subsequent employer
contributions.
The Company believes that the Plan will continue indefinitely, but reserves the
right to terminate the Plan at any time. In the event of termination of the
Plan, all assets of the Plan would become fully vested with the participants
and would be distributed in accordance with the provisions of the Plan.
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9
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------
Basis of accounting
- -------------------
The financial statements have been prepared on the accrual basis of accounting.
Contributions
- -------------
Employer matching and profit sharing contributions are recorded in the year
accrued by the Company. Employee contributions are recorded in the year
withheld by the Company from employee payrolls or in the year of occurrence for
a qualified rollover contribution as defined in Section 408(d)(3) of the
Internal Revenue Code. Provisions of the Plan specify that no Company
contributions and a maximum of forty percent of any participant's contributions
may be invested in the Dean Foods stock fund.
Investments
- -----------
Purchases and sales of securities, including gains and losses on such sales,
are recorded as of the trade date for the first six months of the year and as
of the settlement date thereafter due to a change in the manner in which
information is presented per the trustee statements. Pending trade
sales/purchases for the latter six months of the year are netted against ending
investment market values. Realized gains or losses resulting from the sale of
securities are based on the difference between the selling price and the cost
of the securities, cost being determined on a specific identification basis.
In accordance with the policy of stating investments at market value, the net
increase or decrease in the unrealized value of investments for the year is
reflected in the statement of changes in net assets available for plan
benefits.
Market values of investments are based on published market quotations where
available. Investments in collective funds are stated at the year-end unit
values as determined by the Trustee, multiplied by the number of units owned.
Investment income is recorded as earned.
Expenses of the Plan
- --------------------
Trustee fees and other administrative expenses of the Plan are paid by the
Plan. Legal and audit fees associated with the Plan are paid by the Company.
Benefits payable
- ----------------
In accordance with authoritative guidance for accounting and disclosure by
employee benefit plans, participant distributions payable are not presented as
a liability in the statement of net assets or included in benefit payments
in the statement of changes in net assets, resulting in a difference between
the Plan's Form 5500 and the accompanying financial statements. Benefit
payment obligations existing at December 31, 1997 and 1996 were $681,650 and
$197,516, respectively.
- 5 -
10
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31,
--------------------------
1997 1996
------------ ------------
Net assets available for benefits per the
financial statements $250,504,383 $196,147,376
Amounts payable to withdrawing participants (681,650) (197,516)
------------ ------------
Net assets available for benefits per the Form 5500 $249,822,733 $195,949,860
============ ============
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year ended
December 31,
1997
------------
Benefits paid to participants per the financial
statements $ 19,292,178
Add: Amounts payable to withdrawing
participants at December 31, 1997 681,650
Less: Amounts payable to withdrawing
participants at December 31, 1996 (197,516)
------------
Benefits paid to participants per the Form 5500 $ 19,776,312
============
- 6 -
11
NOTE 3 - INVESTMENTS:
- ---------------------
Effective October 1, 1995, the Plan began offering an international equity fund
and an equity growth fund and July 1, 1997, the Plan began offering a small
caps fund. These funds are comprised of stocks, bonds and cash. The balanced
fund, international equity fund, one-half of the equity growth fund and
government fixed fund are managed by Diversified Investment Advisors, formerly
Mutual of New York. One-half of the equity fund is managed by ARK Investments,
a division of Diversified Investment Advisors and the other half is managed by
Oppenheimer. The other half of the equity growth fund and the small caps fund
is managed by Mackay Shields and Furman Selz, respectively. These funds hold
various securities and financial instruments under investment guidelines
specified by the respective investment advisors.
The Reiter Dairy Plan fund and the Florida Plan funds are frozen. The assets
in the Reiter Dairy Plan fund and the Florida Plan fund are being liquidated as
they mature. The GIC fund merged into the government fixed fund in 1996.
The Dean Foods stock fund, which is managed by the Trustee, consists of Dean
Foods Company Common Stock ($1 par value).
- 7 -
12
The Plan's assets are invested as follows:
December 31, 1997
--------------------------------------------
Shares/
par value Cost Market value
--------- ---- ------------
Holding account:
Cash $ 13,923 $ 13,923
Balance fund:
Corporate bonds 24,696,584 37,089,229
Equity Income fund:
Common stock 69,555,106 73,414,400
Short-term investments 3,124,026 3,124,026
Government fixed fund:
U.S. government issues 53,657,868 53,657,680
Reiter Dairy Plan fund:
Short-term investments 43,520 43,520
Growth/Income fund 221,200 173,502
Dean Foods stock fund:
Common stock 610,219 17,749,494 36,639,387
Equity growth fund:
Common stock 20,556,382 22,604,395
International fund:
Common stock 6,859,957 8,186,463
Florida Plan fund:
Short-term investments 291,740 291,740
Small Caps fund:
Common Stock 1,414,930 1,454,846
------------ ------------
$198,184,730 $236,693,111
============ ============
- 8 -
13
December 31, 1996
--------------------------------------------
Shares/
par value Cost Market value
--------- ---- ------------
Holding account:
Cash $ 2,186,848 $ 2,186,848
Balance fund:
Corporate bonds 21,840,133 29,516,748
Equity Income fund:
Common stock 32,068,876 57,273,781
Government fixed fund:
U.S. government issues 54,758,821 54,758,632
Reiter Dairy Plan fund:
Short-term investments 76,622 76,622
Growth/income funds 256,300 202,562
Dean Foods stock fund:
Common stock 608,198 16,236,376 19,609,744
Equity growth fund:
Common stock 13,029,655 16,379,296
International fund:
Common stock 5,242,720 6,309,615
Florida Plan fund:
Common stock 550,168 520,652
Short-term investments 214,644 214,644
------------ ------------
$146,461,163 $187,049,144
============ ============
- 9 -
14
The changes in unrealized appreciation/(depreciation) of investments during the
year ended December 31, 1997 were as follows:
January 1, December 31,
1997 Appreciation 1997
balance (Depreciation) balance
------- -------------- -------
Balanced fund $ 7,676,615 $ 4,716,030 $ 12,392,645
Equity income fund 25,204,905 (21,345,611) 3,859,294
Reiter Dairy Plan fund (53,738) 6,040 (47,698)
Government fixed fund (189) - (189)
Small Caps Fund - 39,914 39,914
Dean Foods stock fund 3,373,368 15,516,525 18,889,893
Equity growth fund 3,349,641 (1,301,628) 2,048,013
International fund 1,066,895 259,612 1,326,507
Florida Plan fund (29,516) 29,516 -
------------ ------------ -------------
Total $ 40,587,981 $ (2,079,602) $ 38,508,379
============ ============ =============
The aggregate proceeds, costs, and realized gains/(losses) resulting from the
sale of investments for the year ended December 31, 1997 were as follows:
Aggregate Aggregate Realized
proceeds cost gain/(loss)
-------- ---- -----------
Balanced fund $ 3,444,556 $ 2,376,393 $ 1,068,163
Equity income fund 82,031,867 44,180,546 37,851,321
Small caps fund 71,415 69,570 1,845
Government fixed fund 13,353,727 13,353,727 -
Dean Foods stock fund 3,369,224 2,232,432 1,136,792
Equity growth fund 22,148,713 16,618,883 5,529,830
International fund 1,058,406 846,033 212,373
Reiter Dairy 395 35,100 (34,705)
Florida Plan fund 562,450 550,168 12,282
------------ ------------ -------------
Total $126,040,753 $ 80,262,852 $ 45,777,901
============ ============ =============
- 10 -
15
NOTE 4 - SUMMARY OF FINANCIAL STATEMENT BALANCES BY FUND:
- ---------------------------------------------------------
Following is a summary of certain financial statement balances by fund at
December 31, 1997 and 1996:
Interest and
Dividend Benefit
1997 Receivables Contribution Income Payments
---- ----------- ------------ ------------ --------
Balanced fund $ 2,568,194 $ 4,174,945 $ 2,012 $ 5,401,810
Equity income fund 3,846,306 6,419,102 335,555 6,752,262
Small caps fund 123,468 124,397 928 1,929,218
Government fixed fund 3,039,737 5,422,740 3,408,018 2,893,827
Reiter Dairy Plan fund 240 - 3,468 38,584
Dean Foods stock fund 1,484,312 2,544,489 476,981 1,543,374
Equity growth fund 1,927,503 3,219,945 3,592 77,169
International fund 820,101 1,335,156 625 578,765
Florida Plan fund 1,411 - 14,650 77,169
----------- ----------- ----------- -----------
Total $13,811,272 $23,240,774 $ 4,245,829 $19,292,178
=========== =========== =========== ===========
Interest and
Dividend Benefit
1996 Receivables Contribution Income Payments
---- ----------- ------------ ------------ --------
Balanced fund $ 1,744,907 $ 3,826,201 $ 1,795 $ 1,274,738
Equity income fund 2,569,852 5,614,991 2,778 2,549,476
GIC fund - - 14,559 -
Government fixed fund 2,129,943 5,493,932 3,465,843 5,678,379
Reiter Dairy Plan fund 354 - 2,816 115,886
Dean Foods stock fund 1,051,871 2,346,409 444,350 927,082
Equity growth fund 1,132,865 2,449,990 895 579,426
International fund 467,318 983,128 488 347,656
Florida Plan fund 1,122 - 12,642 115,885
----------- ----------- ----------- -----------
Total $ 9,098,232 $20,714,651 $ 3,946,166 $11,588,528
=========== =========== =========== ===========
- 11 -
16
NOTE 5 - INCOME TAX STATUS:
- ---------------------------
The Plan administrator has received a favorable determination letter for the
Plan from the Internal Revenue Service dated February 22, 1996. There have
been no material changes to the plan during 1997. As such, the current
determination letter is effective, and no provision for income taxes has been
made in the accompanying financial statements.
NOTE 6 - SIGNIFICANT INVESTMENTS:
- ---------------------------------
Investments with fair values in excess of 5% of net assets available for
benefits at December 31, 1997 and 1996 were:
1997 1996
---- ----
*Dean Foods Company Common Stock $ 36,644,771 $ 19,614,386
Dean Foods Equity
Growth Fund Mutual Fund 22,604,074 16,379,297
Dean Foods Equity
Value Fund Mutual Fund 73,414,400 57,273,781
Diversified Investment
Advisors Balanced
Fund Mutual Fund 37,089,009 29,516,748
Money Government U.S. Government and
Fixed Fund Agency Issues 53,651,826 54,758,631
- 12 -
17
SCHEDULE I
----------
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
----------------------------------
ASSETS HELD FOR INVESTMENT
AS OF DECEMBER 31, 1997 (LINE 27a OF FORM 5500)
-----------------------------------------------
Description
Identity of Issue Of Investment Cost Fair Value
- ----------------- ------------- ---- ----------
*Dean Foods Company Common Stock $ 17,754,878 $ 36,644,771
Diversified Investment
Advisors International
Equity Fund Mutual Fund 6,860,009 8,186,489
Dean Foods Equity
Growth Fund Mutual Fund 20,556,056 22,604,074
Dean Foods Equity
Income Fund Mutual Fund 69,555,106 73,414,400
Diversified Investment
Advisors Balanced
Fund Mutual Fund 24,696,362 37,089,009
Money Government U.S. Government and
Fixed Fund Agency Issues 53,651,826 53,651,826
Frank Russell Real Estate
Equity Fund Mutual Fund 291,740 291,740
Dean Foods Master Trust
Furman Selz Mutual Fund 1,413,951 1,453,865
*Participant Loans Loans at 6-9% - 8,751,038
*Northern Trust Collective
Short-Term Investment
Fund Cash Equivalents 3,183,434 3,183,434
Sundry Assets Miscellaneous 221,389 173,503
------------ ------------
$198,184,751 $245,444,149
============ ============
*Party in interest
- 13 -
18
SCHEDULE II
-----------
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
----------------------------------
TRANSACTIONS OR SERIES OF TRANSACTIONS
INVOLVING AN AMOUNT IN EXCESS OF
FIVE PERCENT OF THE CURRENT VALUE OF ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 (LINE 27d OF FORM 5500)
------------------------------------------------------------
Description of
asset (include interest Expense
Identity of party rate and maturity in Selling incurred with Cost of
involved case of loan) Purchase Price Price Lease Rental transaction asset
-------- ------------- -------------- ----- ----------- ----------- ----
Dean Foods Master
Trust Mackay Shields 19,402,311 - - - -
Diversified Investment
Advisors Equity Value Fund 35,977,129 - - - -
Diversified Investment
Advisors Equity Growth Fund - 19,402,312 - - 14,285,845
Diversified Investment
Advisors Equity Income Fund - 35,637,923 - - 19,915,739
Diversified Investment
Advisors Equity Income Fund - 35,977,129 - - 17,915,740
The Northern Trust Collective Investment
Company Fund 35,637,990 - - - -
The Northern Trust Collective Investment -
Company Fund 30,260,482 - - 30,260,482
Dean Foods Master
Trust Mackay Shields 21,666,050 - - - -
Dean Foods Master
Trust Mackay Shields - 1,172,876 - - 1,112,538
Diversified Investment
Advisor Equity Value Fund 37,913,871 - - - -
Diversified Investment
Advisor Equity Value Fund - 1,784,313 - - 1,713,406
Diversified Investment
Advisor Equity Growth Fund 2,479,238 - - - -
Diversified Investment
Advisor Equity Growth Fund - 20,975,837 - - 15,506,345
Diversified Investment
Advisor Equity Incom 5,297,993 - - - -
Diversified Investment
Advisor Equity Incom - 74,512,906 - - 37,357,619
The Northern Trust Collective Investment
Company Fund 59,144,424 - - - -
The Northern Trust Collective Investment
Company Fund - 58,141,666 - - 58,141,666
Diversified Investment Government Fixed
Fund Fund 12,315,519 - - - -
Diversified Investment Government Fixed
Fund Fund - 13,353,727 - - 13,353,727
Current value
of asset on
Identity of party transaction Net gain
involved date or (loss)
-------- ------------- ---------
Dean Foods Master
Trust 19,402,311 -
Diversified Investment
Advisors 35,977,129 -
Diversified Investment
Advisors 19,402,312 5,116,467
Diversified Investment
Advisors 35,637,923 15,722,184
Diversified Investment
Advisors 35,977,129 18,061,389
The Northern Trust
Company 35,637,990 -
The Northern Trust
Company 30,260,482 -
Dean Foods Master
Trust 21,666,050 -
Dean Foods Master
Trust 1,172,876 60,338
Diversified Investment
Advisor 37,913,871 -
Diversified Investment
Advisor 1,784,313 70,906
Diversified Investment
Advisor 2,479,238 -
Diversified Investment
Advisor 20,975,837 5,469,492
Diversified Investment
Advisor 5,297,993 -
Diversified Investment
Advisor 74,512,906 37,155,287
The Northern Trust
Company 59,144,424 -
The Northern Trust
Company 58,141,666 -
Diversified Investment
Fund 12,315,519 -
Diversified Investment
Fund 13,353,727 -
19
EXHIBIT 1
---------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 2-94753) of Dean Foods Company of our report dated
May 8, 1998 appearing on page 4 of the Annual Report of Deans Foods Company
Investment and Profit Sharing Plan on Form 11-K for the year ended December 31,
1997.
Price Waterhouse LLP
Chicago, Illinois
June 26, 1998