<PAGE> 1
DREYER'S GRAND ICE CREAM, INC.
FORM 10-K/A
Amendment No. 1
For the fiscal year ended December 30, 1995
This amendment is being filed to amend Part IV, Item 14 to include, as a
financial statement schedule, the consolidated financial statements of M-K-D
Distributors, Inc. and Subsidiary, a significant subsidiary of Dreyer's Grand
Ice Cream, Inc. ("Dreyer's") for the fiscal year ended December 30, 1995 and to
add to Exhibit 23 the Consent of Independent Accountants relating to such
financial statements. Dreyer's filed on March 29, 1996 a Form 12b-25 in
connection with this amendment.
<PAGE> 2
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- --------------------------------------------------------------------------------
FORM 10-K/A
AMENDMENT NO. 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-14190
DREYER'S GRAND ICE CREAM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
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DELAWARE NO. 94-2967523
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
5929 COLLEGE AVENUE, OAKLAND, CALIFORNIA 94618
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (510) 652-8187
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- --------------------------------------------------------------------------------------------
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NOT APPLICABLE NOT APPLICABLE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $1.00 PAR VALUE
PREFERRED STOCK PURCHASE RIGHTS
- --------------------------------------------------------------------------------
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<PAGE> 3
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES:
The following documents are filed as part of this report:
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PAGE(S)
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1. Financial Statements:
Report of Independent Accountants........................................ 14
Consolidated Statement of Income for the three years ended December 30,
1995................................................................... 14
Consolidated Balance Sheet at December 30, 1995 and December 31, 1994.... 15
Consolidated Statement of Changes in Stockholders' Equity for the three
years ended December 30, 1995.......................................... 16
Consolidated Statement of Cash Flows for the three years ended December
30, 1995............................................................... 17
Notes to Consolidated Financial Statements............................... 18-26
2. Financial Statement Schedules:
Report of Independent Accountants on Financial Statement Schedule........ 31
For the three years ended December 30, 1995
II. Valuation and Qualifying Accounts.................................. 32
M-K-D Distributors, Inc. and Subsidiary Consolidated Financial Statments:
Report of Independent Accountants........................................ 33 (8)*
Consolidated Balance Sheet at December 30, 1995 and December 31, 1994
(unaudited)............................................................ 34 (9)*
Consolidated Statement of Income and Retained Earnings for the fiscal
years ended December 30, 1995, December 31, 1994 (unaudited) and
December 25, 1993 (unaudited)............................................ 35 (10)*
Consolidated Statement of Cash Flows for the fiscal years ended December
30, 1995, December 31, 1994 (unaudited) and December 25, 1993
(unaudited)............................................................ 36 (11)*
Notes to Consolidated Financial Statements............................... 37-43 (12-18)*
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
Financial statements of any other 50% or less owned company have been omitted
because the Registrant's proportionate share of the income from continuing
operations before income taxes, and total assets is less than 20% of the
respective consolidated amounts, and the investment in and advances to any such
company is less than 20% of consolidated total assets.
3. List of Management Compensation Agreements
(i) Dreyer's Grand Ice Cream, Inc. Incentive Stock Option Plan (1982)
referenced in Exhibit 10.3 herein.
(ii) Indemnification Agreements by and between Dreyer's Grand Ice Cream, Inc.
and each of its directors, executive officers and certain other officers
referenced in Exhibit 10.11 herein.
(iii) Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1992) referenced in
Exhibit 10.19 herein.
(iv) Dreyer's Grand Ice Cream, Inc. Incentive Bonus Plan referenced in Exhibit
10.22 herein.
(v) Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993) referenced in
Exhibit 10.23 herein.
(vi) Dreyer's Grand Ice Cream, Inc. Income Swap Plan referenced in Exhibit
10.24 herein.
* Denotes page references to this Form 10-K/A Amendment No. 1.
</TABLE>
1
<PAGE> 4
(b) REPORTS ON FORM 8-K
Not applicable.
(c) EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
2.1 Asset Purchase Agreement dated as of November 20, 1992 by and between Edy's Grand
Ice Cream and Calip Dairies, Inc. (Exhibit 2.1(11)).
2.2 Securities Purchase Agreement dated June 24, 1993 by and among Dreyer's Grand Ice
Cream, Inc., Trustees of General Electric Pension Trust, GE Investment Private
Placement Partners, I and General Electric Capital Corporation (Exhibit 2.1(13)).
2.3 Amendment to Securities Purchase Agreement dated May 6, 1994 by and among Dreyer's
Grand Ice Cream, Inc., Trustees of General Electric Pension Trust, GE Investment
Private Placement Partners, I and General Electric Capital Corporation, amending
Exhibit 2.2 (Exhibit 2.1(16)).
2.4 Stock and Warrant Purchase Agreement dated as of May 6, 1994 by and between
Dreyer's Grand Ice Cream, Inc. and Nestle Holdings, Inc. (Exhibit 2.1(17)).
2.5 First Amendment to Stock and Warrant Purchase Agreement dated as of June 14, 1994
by and between Dreyer's Grand Ice Cream, Inc. and Nestle Holdings, Inc., amending
Exhibit 2.4 (Exhibit 2.1(18)).
2.6 Second Amendment to Securities Purchase Agreement dated July 28, 1995 and
effective as of June 1, 1995 by and among Dreyer's Grand Ice Cream, Inc., Trustees
of General Electric Pension Trust, GE Investment Private Placement Partners, I and
General Electric Capital Corporation, amending Exhibit 2.3 (Exhibit 10.2(20)).
2.7 Third Amendment to Securities Purchase Agreement dated October 30, 1995 and
effective as of September 30, 1995 by and among Dreyer's Grand Ice Cream, Inc.,
Trustees of General Electric Pension Trust, GE Investment Private Placement
Partners, I and General Electric Capital Corporation, amending Exhibit 2.3
(Exhibit 10.1(21)).
2.8 Amended and Restated Fourth Amendment to Securities Purchase Agreement dated March
12, 1996 and effective as of October 1, 1995 by and among Dreyer's Grand Ice
Cream, Inc., Trustees of General Electric Pension Trust, GE Investment Private
Placement Partners, I and General Electric Capital Corporation, amending Exhibit
2.3 (Exhibit 2.8(22)).
3.1 Certificate of Incorporation of Dreyer's Grand Ice Cream, Inc., as amended,
including the Certificate of Designation of Series A Convertible Preferred Stock,
as amended, setting forth the Powers, Preferences, Rights, Qualifications,
Limitations and Restrictions of such series of Preferred Stock and the Certificate
of Designation of Series B Convertible Preferred Stock, as amended, setting forth
the Powers, Preferences, Rights, Qualifications, Limitations and Restrictions of
such series of Preferred Stock (Exhibit 3.1(18)).
3.2 Certificate of Designation, Preferences and Rights of Series A Participating
Preference Stock (Exhibit 3.2(19)).
3.3 By-laws of Dreyer's Grand Ice Cream, Inc., as last amended May 2, 1994 (Exhibit
3.2(18)).
4.1 Amended and Restated Rights Agreement dated March 4, 1991 between Dreyer's Grand
Ice Cream, Inc. and Bank of America, NT & SA (Exhibit 10.1(6)).
4.2 Registration Rights Agreement dated as of June 30, 1993 among Dreyer's Grand Ice
Cream, Inc., General Electric Capital Corporation, Trustees of General Electric
Pension Trust, and GE Investment Private Placement Partners, I (Exhibit 4.1(14)).
4.3 Amendment to Registration Rights Agreement dated May 6, 1994 by and among Dreyer's
Grand Ice Cream, Inc., Trustees of General Electric Pension Trust, GE Investment
Private Placement Partners, I and General Electric Capital Corporation, amending
Exhibit 4.2 (Exhibit 4.1(16)).
</TABLE>
2
<PAGE> 5
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------------
<C> <S>
4.4 First Amendment to Amended and Restated Rights Agreement dated as of June 14, 1994
between Dreyer's Grand Ice Cream, Inc. and First Interstate Bank of California (as
successor Rights Agent to Bank of America NT & SA), amending Exhibit 4.1 (Exhibit
4.1(18)).
4.5 Registration Rights Agreement dated as of June 14, 1994 between Dreyer's Grand Ice
Cream, Inc. and Nestle Holdings, Inc. (Exhibit 4.2(18)).
4.6 Warrant Agreement dated as of June 14, 1994 between Dreyer's Grand Ice Cream, Inc.
and Nestle Holdings, Inc. (Exhibit 4.3(18)).
10.1 Agreement dated September 18, 1978 between Dreyer's Grand Ice Cream, Inc. and
Kraft, Inc. (Exhibit 10.8(1)).
10.2 Agreement and Lease dated as of January 1, 1982 and Amendment to Agreement and
Lease dated as of January 27, 1982 between Jack and Tillie Marantz and Dreyer's
Grand Ice Cream, Inc., as amended (Exhibit 10.2(19)).
10.3 Dreyer's Grand Ice Cream, Inc. Incentive Stock Option Plan (1982), as amended.
(Exhibit 10.6(15)).
10.4 Loan Agreement between Edy's and City of Fort Wayne, Indiana dated September 1,
1985 and related Letter of Credit, Letter of Credit Agreement, Mortgage, Security
Agreement, Pledge and Security Agreement and General Continuing Guaranty of
Dreyer's Grand Ice Cream, Inc. (Exhibit 10.33(2)).
10.5 Distribution Agreement between Dreyer's Grand Ice Cream, Inc. and Ben & Jerry's
Homemade, Inc. dated January 6, 1987 (Exhibit 10.1(3)).
10.6 Amendment and Waiver dated July 17, 1987 between Dreyer's Grand Ice Cream, Inc.
and Security Pacific National Bank, amending the General Continuing Guaranty
referenced in Exhibit 10.4 (Exhibit 10.44(7)).
10.7 Amendment and Waiver dated December 24, 1987 between Dreyer's Grand Ice Cream,
Inc. and Security Pacific National Bank, amending the General Continuing Guaranty
referenced in Exhibit 10.4 (Exhibit 10.45(7)).
10.8 Master Lease dated September 28, 1988 between Dreyer's Grand Ice Cream, Inc. and
Security Pacific Equipment Leasing, Inc., as amended (Exhibit 10.53(7)).
10.9 Agreement for Amendments to Distribution Agreement dated as of January 20, 1989
among Dreyer's Grand Ice Cream, Inc., Edy's Grand Ice Cream, Edy's of New York,
Inc., and Ben & Jerry's Homemade, Inc., amending Exhibit 10.5 (Exhibit 10.46 (4)).
10.10 Amendment to the Distribution Agreement dated as of April 11, 1989 by and among
Dreyer's Grand Ice Cream, Inc., Edy's Grand Ice Cream, Edy's of New York, Inc.,
and Ben & Jerry's Homemade, Inc., amending Exhibit 10.5 (Exhibit 10.46(5)).
10.11 Form of Indemnification Agreement between Dreyer's Grand Ice Cream, Inc. and each
officer and director of Dreyer's Grand Ice Cream, Inc. (Exhibit 10.47(4)).
10.12 Assignment of Lease dated as of March 31, 1989 among Dreyer's Grand Ice Cream,
Inc., Smithway Associates, Inc. and Wilsey Foods, Inc. (Exhibit 10.52(5)).
10.13 Amendment of Lease dated as of March 31, 1989 between Dreyer's Grand Ice Cream,
Inc. and Smithway Associates, Inc., as amended by letter dated April 17, 1989
between Dreyer's Grand Ice Cream, Inc. and Wilsey Foods, Inc., amending Exhibit
10.12 (Exhibit 10.53(5)).
10.14 Manufacturing and Warehouse Agreement dated as of April 5, 1989 by and between
Edy's Grand Ice Cream and Ben & Jerry's Homemade, Inc. and Agreement for First
Amendment to Manufacturing and Warehouse Agreement dated as of January 3, 1990
(Exhibit 10.45(5)).
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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10.15 Third Amendment to General Continuing Guaranty and Waiver dated January 29, 1991
between Dreyer's Grand Ice Cream, Inc. and Security Pacific National Bank,
amending the General Continuing Guaranty referenced in Exhibit 10.4 (Exhibit
10.46(7)).
10.16 $25,000,000 9.3% Senior Notes: Form of Note Agreement dated as of March 15, 1991,
and executed on April 12, 1991 between Dreyer's Grand Ice Cream, Inc. and each of
Massachusetts Mutual Life Insurance Company, Massachusetts Mutual Life Pension
Insurance Company, Connecticut Mutual Life Insurance Company, The Equitable Life
Assurance Society of the United States, and Transamerica Occidental Life Insurance
Company (Exhibit 19.1(8)).
10.17 Second Amendment to Distribution Agreement dated as of August 31, 1992 between
Dreyer's Grand Ice Cream, Inc. and Ben & Jerry's Homemade, Inc., amending Exhibit
10.5 (Exhibit 19.6(10)).
10.18 Letter Agreement dated February 4, 1992 between Dreyer's Grand Ice Cream, Inc. and
Ben & Jerry's Homemade, Inc., amending Exhibit 10.14 (Exhibit 10.61(9)).
10.19 Dreyer's Grand Ice Cream, Inc., Stock Option Plan (1992) (Exhibit 10.35(15)).
10.20 Agreement of Amendment and Waiver, dated as of September 30, 1992, between
Dreyer's Grand Ice Cream, Inc. and each of Massachusetts Mutual Life Insurance
Company, MML Pension Insurance Company, the Connecticut Mutual Life Insurance
Company, the Equitable Life Assurance Society of the United States, and
Transamerica Occidental Life Insurance Company (together, the "Lenders") regarding
the Note Agreements dated as of March 15, 1991 between Dreyer's Grand Ice Cream,
Inc. and each of the Lenders, which Note Agreements are referenced in Exhibit
10.16 (Exhibit 19.5(10)).
10.21 Second Amendment to Note Agreements dated as of September 30, 1992, between
Dreyer's Grand Ice Cream, Inc. and each of Massachusetts Mutual Life Insurance
Company, MML Pension Insurance Company, the Connecticut Mutual Life Insurance
Company, the Equitable Life Assurance Society of the United States, and
Transamerica Occidental Life Insurance Company (together, the "Lenders") regarding
the Note Agreements dated as of March 15, 1991 between Dreyer's Grand Ice Cream,
Inc. and each of the Lenders, which Note Agreements are referenced in Exhibit
10.16 (Exhibit 10.58(12)).
10.22 Description of Dreyer's Grand Ice Cream, Inc. Incentive Bonus Plan (Exhibit
10.57(12)).
10.23 Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993) (Exhibit 10.9(15)).
10.24 Dreyer's Grand Ice Cream, Inc. Income Swap Plan (Exhibit 10.38 (15)).
10.25 Distribution and Customer Base Agreement by and between Dreyer's Grand Ice Cream,
Inc. and Sunbelt Distributors, Inc. dated January 4, 1994 (Exhibit 10.37(15)).
10.26 Amendment to Distribution Agreement dated April 18, 1994, and Letter Agreement
modifying such Amendment to Distribution Agreement dated April 18, 1994 between
Dreyer's Grand Ice Cream, Inc. and Ben & Jerry's Homemade, Inc., amending Exhibit
10.5 (Exhibit 10.3(16)).
10.27 Amendment to Distribution Agreement dated December 12, 1994 between Dreyer's Grand
Ice Cream, Inc. and Ben & Jerry's Homemade, Inc., amending Exhibit 10.5 (Exhibit
10.27(19)).
10.28 Third Amendment to Note Agreement dated as of June 5, 1995 between Dreyer's Grand
Ice Cream, Inc. and each of Massachusetts Mutual Life Insurance Company, MML
Pension Insurance Company, the Connecticut Mutual Life Insurance Company, the
Equitable Life Assurance Society of the United States, and Transamerica Occidental
Life Insurance Company (together, the "Lenders"), regarding the Note Agreements
dated as of March 15, 1991 between Dreyer's Grand Ice Cream, Inc. and each of the
Lenders, which Note Agreements are referenced in Exhibit 10.16 (Exhibit 10.3(20)).
10.29 Letter Agreement dated August 4, 1995 between Dreyer's Grand Ice Cream, Inc. and
Smithway Associates, Inc., amending Exhibits 10.2 and 10.12 (Exhibit 10.29(22)).
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
10.30 Credit Agreement dated as of December 22, 1995 among Dreyer's Grand Ice Cream,
Inc., Bank of America NT & SA (as a Bank and as Agent), ABN-AMRO Bank N.V. (as a
Bank and as Co-Agent), Credit Suisse and The Bank of California (Exhibit 10.30(22)).
11 Computation of Net Income Per Share (Exhibit 11(22)).
21 Subsidiaries of Registrant (Exhibit 21(22)).
23 Consents of Independent Accountants.
27 Financial Data Schedule (Exhibit 27(22)).
</TABLE>
- ---------------
(1) Incorporated by reference to designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Registration Statement on Form S-1 and Amendment No. 1
thereto, filed under Commission File No. 2-71841 on April 16, 1981 and June
11, 1981, respectively.
(2) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K and Amendment No. 1 thereto for
the fiscal year ended December 28, 1985 filed under Commission File No.
0-10259 on March 28, 1986 and April 14, 1986, respectively.
(3) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-10259 on January 23, 1987.
(4) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
31, 1988 filed under Commission File No. 0-10259 on March 31, 1989.
(5) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
30, 1989 filed under Commission File No. 0-10259 on March 30, 1990.
(6) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-10259 on March 20, 1991.
(7) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
29, 1990 filed under Commission File No. 0-10259 on March 29, 1991.
(8) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
on June 29, 1991 filed under Commission File No. 0-10259 on August 13,
1991.
(9) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
28, 1991 filed under Commission File No. 0-10259 on March 27, 1992.
(10) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
on September 26, 1992 filed under Commission File No. 0-10259 on November
10, 1992.
(11) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-10259 on December 4, 1992.
(12) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
26, 1992 filed under Commission File No. 0-10259 on March 26, 1993.
(13) Incorporated by reference to designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-10259 on June 25, 1993.
(14) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
on June 26, 1993 filed under Commission File No. 0-10259 on August 10,
1993.
5
<PAGE> 8
(15) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
25, 1993 filed under Commission File No. 0-14190 on March 25, 1994.
(16) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
March 26, 1994 filed under Commission File No. 0-14190 on May 10, 1994.
(17) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-14190 on May 9, 1994.
(18) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
June 25, 1994 filed under Commission File No. 0-14190 on August 9, 1994.
(19) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
31, 1994 filed under Commission File No. 0-14190 on March 30, 1995.
(20) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
July 1, 1995 filed under Commission File No. 0-14190 on August 15, 1995.
(21) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1995 filed under Commission File No. 0-14190 on November 14,
1995.
(22) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended
December 30, 1995 filed under Commission File No. 0-14190 on March 29,
1996.
6
<PAGE> 9
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 12, 1996 DREYER'S GRAND ICE CREAM, INC.
By: /s/ PAUL R. WOODLAND
-----------------------
(Paul R. Woodland)
Vice President -- Finance and
Administration, Chief
Financial Officer and Assistant
Secretary
7
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of M-K-D Distributors, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of M-K-D
Distributors, Inc. and its subsidiary at December 30, 1995, and the results of
their operations and their cash flows for the fiscal year in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our
audit 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
audit provides a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
San Francisco, California
April 9, 1996
8
<PAGE> 11
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
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<CAPTION>
UNAUDITED
DECEMBER 30, DECEMBER 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 46,871 $ 234,414
Trade accounts receivable, net of allowance for doubtful
accounts of $71,303 in 1995 and $65,655 in 1994 4,784,633 4,628,048
Inventories 2,361,881 3,325,921
Prepaid expenses and other 562,266 244,119
----------- -----------
Total current assets 7,755,651 8,432,502
Property, plant and equipment, net 9,256,360 7,312,750
Notes receivable and other 432,458 404,730
----------- -----------
Total assets $17,444,469 $16,149,982
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 2,804,416 $ 3,984,188
Accrued payroll and employee benefits 709,343 612,333
Current portion of long-term debt 446,334 1,195,750
Income taxes payable 145,141
----------- -----------
Total current liabilities 3,960,093 5,937,412
Long-term debt, less current portion 1,563,263 108,000
Deferred income taxes 521,027 391,697
----------- -----------
Total liabilities 6,044,383 6,437,109
----------- -----------
Commitments
Stockholders' Equity:
Common stock, $1 par value - 10,000 shares authorized,
issued and outstanding in 1994 and 1995 10,000 10,000
Capital in excess of par 40,265 40,265
Retained earnings 11,349,821 9,662,608
----------- -----------
Total stockholders' equity 11,400,086 9,712,873
----------- -----------
Total liabilities and stockholders' equity $17,444,469 $16,149,982
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
9
<PAGE> 12
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------
UNAUDITED UNAUDITED
DECEMBER 30, DECEMBER 31, DECEMBER 25,
1995 1994 1993
<S> <C> <C> <C>
REVENUES:
Net sales $74,218,680 $62,816,959 $43,385,264
Other income 334,884 64,709 36,091
----------- ----------- -----------
74,553,564 62,881,668 43,421,355
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of goods sold 58,902,661 48,324,932 32,134,445
Selling, general and administrative 12,806,842 11,118,291 8,796,008
Interest 119,758 86,514 107,831
----------- ----------- -----------
71,829,261 59,529,737 41,038,284
----------- ----------- -----------
Income before income taxes 2,724,303 3,351,931 2,383,071
Income taxes 1,037,090 1,205,721 866,507
----------- ----------- -----------
Net income 1,687,213 2,146,210 1,516,564
Retained earnings, beginning
of year 9,662,608 7,516,398 5,999,834
----------- ----------- -----------
Retained earnings, end of year $11,349,821 $ 9,662,608 $ 7,516,398
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
10
<PAGE> 13
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
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<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------
UNAUDITED UNAUDITED
DECEMBER 30, DECEMBER 31, DECEMBER 25,
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,687,213 $ 2,146,210 $ 1,516,564
Adjustments to reconcile net income to
cash provided from operations:
Depreciation 1,191,747 904,440 758,832
Deferred taxes 129,330 40,013 45,677
Gain on sale of assets (10,854) (747)
Changes in assets and liabilities, net
of amounts acquired:
Trade accounts receivable (156,585) (812,342) (1,047,030)
Inventories 964,040 (1,102,532) (531,391)
Prepaid expenses and other (318,147) 410,618 (135,059)
Notes receivable and other (27,728) (213,228) 42,004
Accounts payable and accrued liabilities (1,179,772) 1,529,746 658,811
Accrued payroll and employee benefits 97,010 158,305 48,881
Income taxes payable (145,141)
----------- ----------- -----------
2,241,967 3,050,376 1,356,542
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (3,135,357) (3,214,223) (1,683,829)
Proceeds from sale of equipment 100,000 9,015
----------- ----------- -----------
(3,135,357) (3,114,223) (1,674,814)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 2,075,547 135,000
Reductions in long-term debt (1,369,700) (255,000) (255,000)
----------- ----------- -----------
705,847 (120,000) (255,000)
----------- ----------- -----------
Decrease in cash (187,543) (183,847) (573,272)
Cash, beginning of year 234,414 418,261 991,533
----------- ----------- -----------
Cash, end of year $ 46,871 $ 234,414 $ 418,261
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 101,749 $ 107,831 $ 105,029
Income taxes (net of refunds) 1,038,500 899,000 710,960
</TABLE>
See accompanying notes to consolidated financial statements.
11
<PAGE> 14
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
- --------------------------------------------------------------------------------
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements of M-K-D Distributors,
Inc. and subsidiary (the Company) include the accounts of M-K-D
Distributors, Inc. (MKD) and its wholly-owned subsidiary, Snelgrove Ice
Cream, Inc. (Snelgrove). All significant intercompany balances and
transactions have been eliminated. The Company reports on a fifty-two or
fifty-three week fiscal year, ending on the last Saturday in December.
OPERATIONS
MKD, a Texas corporation, was incorporated on December 14, 1979, and is
engaged in the wholesale distribution of Dreyer's Grand Ice Cream, Ben and
Jerry's, Nestle and other premium ice cream products, primarily in
Washington, Oregon and Alaska. Dreyer's Grand Ice Cream, Inc. (Dreyer's),
a Delaware corporation, holds 49.7% of MKD's outstanding common stock (see
Note 11, Subsequent Event). In 1991, MKD acquired the assets of Snelgrove
Ice Cream, Inc. (formerly known as Snelgrove Distinctive Ice Cream, Inc.),
a manufacturer and distributor of premium ice cream products, and
commenced manufacturing and distribution operations late in 1991 for Utah
and other high altitude markets in the western United States. Sales are
primarily to retail grocers.
REVENUE RECOGNITION
Sales revenues are recognized when deliveries of products are made to
customers.
INVENTORIES
Inventories of purchased and manufactured products are stated at the lower
of cost (first-in, first-out method) or market. Costs of purchased
products manufactured by others and of raw materials include costs of
acquisition and transportation in. Manufactured product inventories are
costed based on standards which approximate actual costs of materials,
labor and production overhead.
PROPERTY, PLANT AND EQUIPMENT
Depreciation and amortization are provided on property, plant and
equipment on the straight-line basis over their estimated useful lives as
follows:
Building and improvements 5 to 35 years
Equipment 3 to 15 years
Delivery trucks and other vehicles 5 to 8 years
Furniture and fixtures 3 to 8 years
Leasehold improvements are amortized over the life remaining in the
applicable lease (4 to 10 years).
The cost of maintenance and repairs, which neither materially add to the
value of property nor appreciably prolong its life, are expensed as
incurred.
12
<PAGE> 15
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
- --------------------------------------------------------------------------------
ESTIMATES AND ASSUMPTIONS
Management makes estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could differ from those
estimates.
FEDERAL AND STATE INCOME TAXES
Effective for the fiscal year ended December 25, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS 109), on a prospective basis. SFAS 109 required the
Company to change its method of accounting for income taxes from the
deferred method to the liability method. Under the liability method,
deferred tax liabilities and assets are recognized for the tax
consequences of temporary differences between the financial reporting and
tax basis of assets and liabilities. The adoption of SFAS 109 did not
have a material effect on the Company's Consolidated Financial Statements.
FINANCIAL STATEMENT PRESENTATION
Certain reclassifications have been made to prior years' financial
statements to conform to the 1995 presentation.
2. INVENTORIES
Components of inventories at December 30, 1995 and December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
UNAUDITED
1995 1994
<S> <C> <C>
Purchased products $1,639,437 $2,138,051
Raw materials 365,745 610,871
Finished goods 356,699 576,999
---------- ----------
$2,361,881 $3,325,921
========== ==========
</TABLE>
13
<PAGE> 16
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
- --------------------------------------------------------------------------------
3. PROPERTY, PLANT AND EQUIPMENT
The cost and accumulated depreciation of property, plant and equipment at
December 30, 1995 and December 31, 1994, were as follows:
<TABLE>
<CAPTION>
UNAUDITED
1995 1994
<S> <C> <C>
Building and improvements $ 2,722,371 $ 976,206
Machinery and equipment 9,869,316 8,715,736
Office furniture and fixtures 1,498,363 1,260,658
----------- -----------
14,090,050 10,952,600
Accumulated depreciation (5,539,341) (4,344,256)
----------- -----------
8,550,709 6,608,344
Land 705,651 704,406
----------- -----------
$ 9,256,360 $ 7,312,750
=========== ===========
</TABLE>
Depreciation expense for property, plant and equipment was $1,191,747,
$904,440 and $758,832, in 1995, 1994 (unaudited) and 1993 (unaudited),
respectively.
4. LONG-TERM NOTES RECEIVABLE
At December 30, 1995, long-term notes receivable of $144,779 (December 31,
1994 - $129,935-unaudited) are due from a customer with payments due every
year beginning in 1996 in the amount of $20,000 plus accrued interest at
the prime rate plus 2%. The notes are secured by delivery and freezer
equipment and are due in December 2000.
14
<PAGE> 17
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
- --------------------------------------------------------------------------------
5. LONG-TERM DEBT
Long-term debt at December 30, 1995 and December 31, 1994, consisted of the
following:
<TABLE>
<CAPTION>
UNAUDITED
1995 1994
<S> <C> <C>
Note payable to bank, payable in monthly
installments of $16,687 from August 1995 to
June 2000, plus interest at 7.81% per annum,
secured by equipment $ 916,665
Note payable to bank, payable in monthly
installments of $17,335 from August 1995 to
July 2000, plus interest at 7.8% per annum,
secured by equipment 954,475
Capital lease obligation payable in monthly
minimum payments of $1,026 from August 1995
to July 1998, including interest at 4.9%, secured
by computer equipment 30,457
Note payable, payable in annual installments of
$27,000 from June 1995 to June 1999, plus
interest at 8.00% per annum, secured by
property and building 108,000 $ 135,000
Note payable to bank, payable in monthly installments
of $21,250, plus interest at 6.81% per annum,
due July 1995 1,168,750
---------- ----------
2,009,597 1,303,750
Less current portion of long-term debt 446,334 1,195,750
---------- ----------
$1,563,263 $ 108,000
========== ==========
</TABLE>
15
<PAGE> 18
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
- --------------------------------------------------------------------------------
Principal payments due on long-term debt for each of the years subsequent
to December 30, 1995 are as follows:
<TABLE>
<S> <C>
1996 $ 446,334
1997 446,889
1998 443,026
1999 435,264
2000 238,084
----------
$2,009,597
==========
</TABLE>
At December 30, 1995, the Company had an unused secured revolving line of
credit of $2,000,000 available for working capital needs. The interest
rate on borrowings is equal to the bank's floating commercial loan
reference rate or LIBOR plus 1.5%.
6. PROFIT SHARING PLAN
The Company has a 401(k) profit sharing plan and trust covering all
employees over 21 years of age with more than one year of service.
Participating employees may make elective salary deferrals into the plan
up to the maximum qualifying amount permitted by federal income tax law.
In addition, employer matching contributions and/or profit sharing
contributions are made to the plan at the discretion of the Company's
Board of Directors. Matching and profit sharing contributions made by the
Company to the plan for fiscal 1995 were $225,440 (fiscal 1994 unaudited -
$189,480 - and fiscal 1993 unaudited - $120,830).
7. INCOME TAXES
The provision for income taxes for the fiscal years ended December 30,
1995, December 31, 1994 and December 25, 1993, consisted of the following:
<TABLE>
<CAPTION>
UNAUDITED
----------------------
1995 1994 1993
<S> <C> <C> <C>
Current
Federal $ 825,960 $1,060,481 $750,773
State 81,800 105,227 70,057
---------- ---------- --------
907,760 1,165,708 820,830
Deferred 129,330 40,013 45,677
---------- ---------- --------
$1,037,090 $1,205,721 $866,507
========== ========== ========
</TABLE>
16
<PAGE> 19
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
- --------------------------------------------------------------------------------
The deferred tax liability arises principally because of an accumulated
depreciation temporary difference. The effective tax rate differs from
the federal statutory income tax rate due primarily to state taxes, net of
federal benefit.
8. RELATED PARTIES
The Company purchases premium ice cream and related products from Dreyer's
under a long-term distribution agreement. In addition, the Company sells
ice cream products to Dreyer's, which are manufactured at the Snelgrove
plant in Utah. Purchases from Dreyer's were $25,174,000, $22,583,000
(unaudited) and $18,360,000 (unaudited) in fiscal 1995, 1994 and 1993,
respectively. Sales of Snelgrove manufactured products to Dreyer's were
$6,021,636, $4,305,669 (unaudited) and $105,367 (unaudited) in fiscal
1995, 1994 and 1993, respectively. In addition, under the distribution
agreement, the Company is reimbursed by Dreyer's for 65% of costs relating
to jointly-directed consumer promotion programs. The Company charged
Dreyer's $1,874,845, $1,098,598 (unaudited) and $600,297 (unaudited) in
fiscal 1995, 1994 and 1993, respectively, for Dreyer's share of such
costs. Amounts due from and due to Dreyer's at December 30, 1995 and
December 31, 1994, were as follows:
<TABLE>
<CAPTION>
UNAUDITED
1995 1994
<S> <C> <C>
Accounts receivable from Dreyer's $ 505,331 $ 772,890
========== ==========
Accounts payable to Dreyer's $1,579,544 $1,470,897
========== ==========
</TABLE>
9. MAJOR CUSTOMERS
The Company had four retail customers that accounted for approximately 48%
of net sales for the fiscal year ended December 30, 1995 (fiscal 1994 and
1993 unaudited - 45%).
17
<PAGE> 20
M-K-D DISTRIBUTORS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND DECEMBER 25, 1993
- --------------------------------------------------------------------------------
10. COMMITMENTS
LEASES
The Company leases its office and warehouse facilities and certain
vehicles and equipment under various leases accounted for as operating
leases. Future minimum lease payments under these leases at December 30,
1995 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER,
<S> <C>
1996 $ 322,421
1997 329,963
1998 314,243
1999 172,512
2000 172,587
Thereafter 694,822
----------
$2,006,548
==========
</TABLE>
Rent expense for the fiscal year ended December 30, 1995 was $478,788
(fiscal 1994 unaudited - $491,516 - and fiscal 1993 unaudited - $416,623).
11. SUBSEQUENT EVENT
On March 27, 1996, the stockholders, other than Dreyer's, entered into an
agreement to exchange their shares of the Company's common stock for
300,000 shares of Dreyer's common stock, distributed to such stockholders
on a basis proportionate to their ownership of the Company's common
stock. One of the stockholders received an additional 20,000 shares of
Dreyer's common stock as a finder's fee related to the transaction.
18
<PAGE> 21
EXHIBIT INDEX
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------
<S> <C>
23 Consent of Independent Accountants.
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-7350, 33-8418, 33-35561, 33-36092, 33-40275,
33-56417, 33-56411 and 33-56413) of Dreyer's Grand Ice Cream, Inc. of our
report dated April 9, 1996 relating to the consolidated financial statements
of M-K-D Distributors, Inc. appearing on page 8 of this Form 10-K/A, Amendment
No. 1.
PRICE WATERHOUSE LLP
San Francisco, California
April 12, 1996
