<PAGE> 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, 1998
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
<PAGE> 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 29, 1999
<PAGE> 3
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE> 4
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of independent accountants 1
Financial statements:
Statement of net assets available for
plan benefits at December 31, 1998 and 1997 2
Statement of changes in net assets available
for plan benefits for the year ended
December 31, 1998 3
Notes to financial statements 4-12
Assets held for investment as of
December 31, 1998 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, 1998 Schedule II
Note: All other supplementary schedules have been omitted because
they are not applicable.
</TABLE>
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
June 22, 1999
To the Participants and
Administrator of the
Dean Foods Company
Investment and Profit Sharing Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Dean Foods Company Investment and Profit Sharing Plan (the "Plan") at
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment as of December 31, 1998 and of transactions or series of
transactions in excess of five percent of the current value of plan assets for
the year ended December 31, 1998 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary 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. These supplemental schedules and fund
information are the responsibility of the Plan's management. The supplemental
schedules and 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.
<PAGE> 6
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Investments, at market value (Note 3):
Holding account $ 141,543 $ 13,923
Balanced fund 41,983,171 37,089,229
Equity Income fund 83,404,985 76,538,427
Dean Foods stock fund 26,337,759 36,639,387
Government fixed fund 58,431,421 53,657,680
Reiter Dairy Plan fund 166 217,022
International fund 8,610,492 8,186,463
Equity growth fund 40,162,001 22,604,396
Small Caps fund 1,971,742 1,454,844
Florida Plan fund - 291,740
------------- -------------
Total investments 261,043,280 236,693,111
------------- -------------
Employer and employee contributions receivable 633,467 1,152,948
Employer profit sharing contribution receivable 133,072 3,590,242
Loans to participants 11,111,176 8,751,038
Interest and dividends receivable 3,325,137 317,044
------------- -------------
Net assets available for Plan benefits $ 276,246,132 $ 250,504,383
============= =============
</TABLE>
The accompanying notes are an integral part of this statement.
-2-
<PAGE> 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, 1998
Source of assets:
Investment income:
Net unrealized appreciation in market value of investments $ 4,016,299
Realized net gains on sales of investments 7,095,761
Interest 3,565,702
Dividends 1,012,632
Other Income 366,010
------------
16,056,404
------------
Contributions:
Employer contributions 5,337,586
Employee contributions 17,906,525
Profit sharing contributions 2,955,812
------------
26,199,923
------------
Participant rollovers from other plans 5,070,273
------------
Total sources of assets 47,326,600
------------
Application of assets:
Benefit payments to Plan participants 21,242,258
Fees and expenses 342,593
------------
Total applications of assets 21,584,851
Increase in net assets during the year 25,741,749
Net assets available for Plan benefits, beginning of year 250,504,383
------------
Net assets available for Plan benefits, end of the year $276,246,132
============
The accompanying notes are an integral part of this statement.
-3-
<PAGE> 8
DEAN FOODS COMPANY
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).
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 sixteen
percent of their annual compensation. The Company is required to match
participant contributions in an amount equal to fifty 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,
except for certain union requirements.
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
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<PAGE> 9
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.
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of accounting
The financial statements of the Plan have been prepared on the accrual basis of
accounting.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual results could differ
from those estimates.
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 investment fees of the Plan are paid by the Plan. The Company
pays legal, audit,
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<PAGE> 10
and other administrative expenses fees associated with the Plan.
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, 1998 and 1997 were $191,949 and $681,650, respectively.
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net assets available for benefits per the
financial statements $276,246,132 $250,504,383
Amounts payable to withdrawing participants (191,949) (681,650)
------------ ------------
Net assets available for benefits per the Form 5500 $276,054,183 $249,822,733
============ ============
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year ended
December 31,
1998
------------
<S> <C>
Benefits paid to participants per the financial
statements $21,242,258
Add: Amounts payable to withdrawing
participants at December 31, 1998 191,949
Less: Amounts payable to withdrawing
participants at December 31, 1997 (681,650)
-----------
Benefits paid to participants per the Form 5500 $20,752,557
===========
</TABLE>
Forfeited accounts
Forfeited nonvested accounts are used to reduce future employer contributions.
In 1998, employer contributions were reduced by $413,814 from forfeited
nonvested accounts.
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
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<PAGE> 11
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. At December 31, 1998 the Florida Plan assets have been fully
liquidated.
The Dean Foods stock fund, which is managed by the Trustee, consists of Dean
Foods Company Common Stock ($1 par value).
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<PAGE> 12
The Plan's assets are invested as follows:
December 31, 1998
----------------------------------------------
Shares/
par value Cost Market value
--------- ---- ------------
Holding account:
Cash $ 141,543 $ 141,543
Balance fund:
Corporate bonds 27,350,161 41,983,171
Equity Income fund:
Common stock 71,644,900 80,264,977
Short-term investments 3,140,008 3,140,008
Government fixed fund:
U.S. government issues 58,431,421 58,431,421
Reiter Dairy Plan fund:
Short-term investments 25,165 166
Dean Foods stock fund:
Common stock 629,859 19,987,170 25,706,120
Short-term investments 631,639 631,639
Equity growth fund:
Common stock 27,484,028 39,439,690
Short-term investments 722,311 722,311
International fund:
Common stock 6,955,986 8,610,492
Florida Plan fund:
Short-term investments - -
Small Caps fund:
Common stock 1,948,515 1,915,961
Short-term investments 55,781 55,781
------------- -------------
$ 218,518,628 $ 261,043,280
============= =============
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<PAGE> 13
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
============ ============
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<PAGE> 14
The changes in unrealized appreciation/(depreciation) of investments during the
year ended December 31, 1998 were as follows:
January 1, December 31,
1998 Appreciation/ 1998
balance (Depreciation) balance
------- -------------- -------
Balanced fund $ 12,392,645 $ 2,240,365 $ 14,633,010
Equity income fund 3,859,294 4,760,782 8,620,076
Reiter Dairy Plan fund (47,698) 22,699 (24,999)
Government fixed fund (189) 189 -
Small Caps Fund 39,914 (72,468) (32,554)
Dean Foods stock fund 18,889,893 (13,170,943) 5,718,950
Equity growth fund 2,048,013 9,907,649 11,955,662
International fund 1,326,507 328,026 1,654,533
Florida Plan fund - - -
------------- ------------ -------------
Total $ 38,508,379 $ 4,016,299 $ 42,524,678
============= ============ =============
The aggregate proceeds, costs, and realized gains/(losses) resulting from the
sale of investments for the year ended December 31, 1998 were as follows:
Aggregate Aggregate Realized
proceeds cost gain/(loss)
-------- ---- -----------
Balanced fund $ 7,000,567 $ 4,697,719 $ 2,302,848
Equity income fund 30,553,251 27,776,715 2,776,536
Small caps fund 837,642 941,763 (104,121)
Government fixed fund 15,554,835 15,554,835 -
Dean Foods stock fund 3,360,917 2,052,673 1,308,244
Equity growth fund 3,594,828 3,090,706 504,122
International fund 2,598,868 2,110,410 488,458
Reiter Dairy 15,874 196,200 (180,326)
Florida Plan fund - - -
------------ ------------ ------------
Total $ 63,516,782 $ 56,421,021 $ 7,095,761
============ ============ ============
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<PAGE> 15
NOTE 4 - SUMMARY OF FINANCIAL STATEMENT BALANCES BY FUND:
Following is a summary of certain financial statement balances by fund at
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Interest and
Dividend Benefit
1998 Receivables Contribution Income Payments
---- ----------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Balanced fund $ 2,005,973 $ 4,494,560 $ 459 $ 2,540,065
Equity income fund 3,226,578 7,200,515 703,435 6,304,390
Small caps fund 237,015 518,435 1,151 98,770
Government fixed fund 5,683,134 4,928,726 3,310,361 7,453,227
Reiter Dairy Plan fund - - 3,382 119,295
Dean Foods stock fund 1,546,992 3,449,937 527,457 2,132,979
Equity growth fund 1,911,049 4,259,189 13,482 1,977,717
International fund 592,111 1,348,561 123 615,815
Florida Plan fund - - 18,484 -
----------- ----------- ---------- -----------
Total $15,202,852 $26,199,923 $4,578,334 $21,242,258
=========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Interest and
Dividend Benefit
1997 Receivables Contribution Income Payments
---- ----------- ------------ ---------- --------
<S> <C> <C> <C> <C>
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
=========== =========== ========== ===========
</TABLE>
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<PAGE> 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. Following the
amendments to the Plan relating to contribution percentages and employer match,
the Plan administrator and the Plan's tax counsel believe that the Plan is still
designed and being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, they believe that the Plan was qualified
and the related trust was tax exempt as of December 31, 1998 and 1997. As such,
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, 1998 and 1997 were:
1998 1997
---- ----
*Dean Foods Company Common Stock $25,706,120 $36,644,771
Dean Foods Equity
Growth Fund Mutual Fund 39,439,690 22,604,074
Dean Foods Equity
Income Fund Mutual Fund 80,264,977 73,414,400
Diversified Investment
Advisors Balanced
Fund Mutual Fund 41,983,171 37,089,009
Money Government U.S. Government and
Fixed Fund Agency Issues 58,431,421 53,651,826
* Party in interest
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<PAGE> 17
SCHEDULE I
DEAN FOODS COMPANY
INVESTMENT AND PROFIT SHARING PLAN
ASSETS HELD FOR INVESTMENT
AS OF DECEMBER 31, 1998 (LINE 27a OF FORM 5500)
<TABLE>
<CAPTION>
Description
Identity of Issue Of Investment Cost Fair Value
- ----------------- ------------- ---- ----------
<S> <C> <C> <C>
*Dean Foods Company Common Stock $ 19,987,170 $ 25,706,120
Diversified Investment
Advisors International
Equity Fund Mutual Fund 6,955,986 8,610,492
Dean Foods Equity
Growth Fund Mutual Fund 27,484,028 39,439,690
Dean Foods Equity
Income Fund Mutual Fund 71,644,900 80,264,977
Diversified Investment
Advisors Balanced
Fund Mutual Fund 27,350,161 41,983,171
Money Government U.S. Government and
Fixed Fund Agency Issues 58,431,421 58,431,421
Dean Foods Small
Cap Fund Mutual Fund 1,948,515 1,915,961
*Participant Loans Loans at 6-9% - 11,111,176
*Northern Trust Collective
Short-Term Investment
Fund Cash Equivalents 4,691,447 4,691,447
Sundry Assets Miscellaneous 25,000 1
------------ ------------
$218,518,628 $272,154,456
============ ============
*Party in interest
</TABLE>
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<PAGE> 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, 1998 (LINE 27d OF FORM 5500)
<TABLE>
<CAPTION>
Description of Current value
asset (include interest Expense of asset on
Identity of party rate and maturity in Selling incurred with Cost of transaction
involved case of loan) Purchase Price Price Lease Rental transaction asset date
-------- ------------- -------------- ----- ------------ ----------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Diversified Investment
Advisors Balanced Fund 8,370,119 - - - - 8,370,119
Diversified Investment
Advisors Balanced Fund - 4,470,339 - - 3,085,736 4,470,339
The Northern Trust Collective Investment
Company Fund 48,541,313 - - - - 48,541,313
The Northern Trust Collective Investment
Company Fund - 43,835,749 - - 43,835,749 43,835,749
Diversified Investment
Advisor Equity Value Fund 6,898,972 - - - - 6,898,972
Diversified Investment
Advisor Equity Value Fund - 11,732,983 - - 10,992,229 11,732,983
Diversified Investment Government Fixed
Fund Fund 14,859,279 - - - - 14,859,279
Diversified Investment Government Fixed
Fund Fund - 10,457,034 - - 10,457,034 10,457,034
The Northern Trust Collective Short Term
Company Investment Fund 18,286,432 - - - - 18,286,432
The Northern Trust Collective Short Term
Company Investment Fund - 17,880,973 - - 17,880,973 17,880,973
<CAPTION>
Description of
asset (include interest
Identity of party rate and maturity in Net gain
involved case of loan) or (loss)
-------- ------------- ---------
<S> <C> <C>
Diversified Investment
Advisors Balanced Fund -
Diversified Investment
Advisors Balanced Fund 1,384,603
The Northern Trust Collective Investment
Company Fund -
The Northern Trust Collective Investment
Company Fund -
Diversified Investment
Advisor Equity Value Fund -
Diversified Investment
Advisor Equity Value Fund 740,754
Diversified Investment Government Fixed
Fund Fund -
Diversified Investment Government Fixed
Fund Fund -
The Northern Trust Collective Short Term
Company Investment Fund -
The Northern Trust Collective Short Term
Company Investment Fund -
</TABLE>
<PAGE> 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
June 22, 1999 appearing on page 4 of the Annual Report of Dean Foods Company
Investment and Profit Sharing Plan on Form 11-K for the year ended December 31,
1998.
PricewaterhouseCoopers LLP
Chicago, Illinois
June 29, 1999
