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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): September 23, 1998
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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.) (I.R.S. Employer
of incorporation) Identification No.)
3600 N. River Road, Franklin Park, Illinois 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 2. Acquisition or Disposition of Assets
On September 23, 1998, the Registrant sold the stock of Dean Foods
Vegetable Company, a wholly owned subsidiary of the Registrant, to Agrilink
Foods, Inc. ("Agrilink"), an unaffiliated purchaser, for $365.6 million in cash,
an Agrilink subordinated note in the amount of $30.0 million and Agrilink's
aseptic foods business. The sale was the result of a bid process initiated by
the Registrant with the assistance of an investment banker.
Item 7. Financial Statements and Exhibits
(a) Not applicable.
(b) Pro Forma Financial Information of Dean Foods Company
Pro Forma Consolidated Balance Sheet at May 31, 1998
Pro Forma Consolidated Statement of Income for the Fiscal Year Ended
May 31, 1998
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Summary Unaudited Consolidated Pro Forma Financial Information
The following summary unaudited Consolidated Pro Forma Financial
Information gives effect to the sale of Dean Foods Vegetable Company, a wholly
owned subsidiary of Dean Foods Company ("Dean"), which constituted the
Vegetables segment of Dean's consolidated operations, to Agrilink Foods, Inc.
("Agrilink") for $365.6 million in cash, an Agrilink subordinated note in the
amount of $30.0 million and Agrilink's aseptic food business, with an estimated
fair market value of $80.0 million. Due to the uncertainty of realizability of
the $30.0 million subordinated note, the note has been valued at zero in this
Pro Forma financial information. The valuation of the aseptic foods business is
based on a preliminary appraisal and the estimates of the fair value are subject
to change when final information concerning asset valuations is obtained
The historical financial information is consistent with Dean's Annual Report on
Form 10-K for the fiscal year ended May 31, 1998, and reflects the Vegetables
segment operations as discontinued operations. The historical financial
information for the Agrilink aseptic foods business is based on the unaudited
"carved-out" condensed financial position and results of operations of such
business as of and for the year ended June 30, 1998. The income statement data
give effect to the acquisition of the Agrilink aseptic foods business and the
utilization of the cash proceeds received in this transaction as if the sale had
occurred as of the beginning of the fiscal year ended May 31, 1998. The balance
sheet data gives effect to the sale of Dean Foods Vegetable Company and the
acquisition of Agrilink's aseptic food business as of May 31, 1998. The summary
unaudited Consolidated Pro Forma Information should be read in conjunction with
Dean Foods Company historical consolidated financial statements incorporated by
reference in its Annual Report on Form 10-K for the fiscal year ended May 31,
1998, and does not purport to be indicative of the results that would have been
achieved had the sale of Dean Foods Vegetable Company and the acquisition of the
aseptic foods business been completed on the dates indicated or that may be
achieved in the future.
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PRO FORMA FINANCIAL INFORMATION
DEAN FOODS COMPANY
Pro Forma Consolidated Balance Sheet
Fiscal Year Ended May 31, 1998
(In millions)
(UNAUDITED)
<TABLE>
<CAPTION>
Dean Sale of Acquisition
Foods Dean Foods of Agrilink
Company Vegetable Aseptic Other
Historical Company Business Adjustments Pro Forma
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
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CURRENT ASSETS
Cash and temporary cash investments $ 11.9 $ 143.6 (a) $ - $ - $ 155.5
Accounts and notes receivable, net 226.0 226.0
Inventories 135.4 10.1(f) 0.4 (g) 145.9
Deferred tax assets 12.3 3.3 (c) 15.6
Other 34.6 34.6
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Total Current Assets 420.2 143.6 10.1 3.7 577.6
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PROPERTY, PLANT AND EQUIPMENT
Properties, at cost 966.2 9.0(f) 2.2 (g) 977.4
Less - Accumulated depreciation 415.2 415.2
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Total Properties, net 551.0 9.0 2.2 562.2
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NET ASSETS OF DISCONTINUED OPERATIONS 288.0 (288.0)(b) -
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OTHER ASSETS
Goodwill, net of amortization 329.7 58.3 (h) 388.0
Other intangible assets, net of amortization 4.9 4.9
Other 13.3 13.3
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Total Other Assets 347.9 58.3 406.2
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TOTAL ASSETS $1,607.1 $(144.4) $19.1 $ 64.2 $1,546.0
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LIABILITIES & SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
Notes payable to banks $ 12.0 $ (12.0)(a) $ - $ - $ -
Current installments of long-term debt 9.0 9.0
Accounts payable and accrued expenses 311.3 19.8 (e) 331.1
Dividends payable 8.1 8.1
Federal and state income taxes payable 12.5 63.5 (d) 76.0
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Total Current Liabilities 352.9 (12.0) 83.3 424.2
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LONG-TERM OBLIGATIONS 558.2 (210.0)(a) 348.2
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DEFERRED LIABILITIES
Deferred Income Taxes 43.5 (8.0) (c) 35.5
Other 33.2 33.2
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Total Deferred Liabilities 76.7 (8.0) 68.7
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SHAREHOLDERS' EQUITY 619.3 77.6 (i) 19.1(i) (11.1)(i) 704.9
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COMMITMENTS AND CONTINGENT LIABILITIES - -
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TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,607.1 $(144.4) $19.1 $ 64.2 $1,546.0
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</TABLE>
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NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(a) Reflects gross cash proceeds of $365.6 million from the sale of Dean Foods
Vegetable Company. The cash was utilized to repay $222.0 million of debt
under the Company's revolving credit agreement and short-term lines of
credit, with the balance remaining in cash and temporary cash investments.
(b) Reflects the removal of the net investment in Dean Foods Vegetable Company
as a result of the sale.
(c) Reflects temporary differences associated with the timing of tax versus
book recognition of income tax expense.
(d) Reflects the increase in current tax liability resulting from the sale.
(e) Reflects accruals for transaction costs, including investment banking,
legal and accounting fees, employee related costs and other transaction
related liabilities.
(f) Reflects the assets of the Agrilink aseptic foods business received as a
portion of the consideration for Dean Foods Vegetable Company.
(g) Reflects the write-up to estimated fair market value of the inventory and
property, plant and equipment of the Agrilink aseptic foods business
assets.
(h) Reflects the excess of the $80.0 million estimated value of the Agrilink
aseptic foods business over the estimated fair value of the inventory and
property, plant and equipment acquired.
(i) Reflects the estimated gain related to the sale of Dean Foods Vegetable
Company to Agrilink Foods, Inc.
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PRO FORMA FINANCIAL INFORMATION
DEAN FOODS COMPANY
Pro Forma Consolidated Statement of Income
Fiscal Year Ended May 31, 1998
(In millions, except for per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Dean Acquisition
Foods of Agrilink
Company Aseptic Other
Historical Business (a) Adjustments Pro Forma
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<S> <C> <C> <C> <C>
Net Sales $2,735.8 $95.4 $ - $2,831.2
Cost of products sold 2,105.8 74.6 0.6 (b) 2,181.0
Delivery, selling and administrative expenses 467.5 11.1 1.5 (b) 480.1
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Operating earnings 162.5 9.7 (2.1) 170.1
Interest expense(c) 21.1 21.1
Interest income 2.3 2.3
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Income from continuing operations
before income taxes 143.7 9.7 (2.1) 151.3
Provision (benefit) for income taxes 55.7 3.9 (0.6) 59.0
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Income from continuing operations $ 88.0 $ 5.8 $(1.5) $ 92.3
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Income per share from continuing operations:
Basic $ 2.17 $ 2.28
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Diluted $ 2.13 $ 2.23
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Weighted average common shares:
Basic 40.5 40.5
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Diluted 41.4 41.4
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</TABLE>
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NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(a) Reflects the income statement for the Agrilink aseptic foods business
acquired as a portion of the consideration for Dean Foods Vegetable
Company.
(b) Reflects the increase in depreciation and amortization expense related to
the write-up of the assets of the Agrilink aseptic foods business, using a
weighted average seven year life for property, plant and equipment and a
forty year life for goodwill amortization.
(c) Due to borrowing levels during the fiscal year and the allocation of
interest expense to the discontinued vegetables operation, there was no
incremental impact on interest expense of continuing operations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DEAN FOODS COMPANY
Date: September 30, 1998 By: /s/ William R. McManamam
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Vice President - Finance and
Chief Financial Officer
