<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-14190
DREYER'S GRAND ICE CREAM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE No. 94-2967523
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5929 College Avenue, Oakland, California 94618
(Address of principal executive offices) (Zip Code)
(510) 652-8187
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<CAPTION>
Shares Outstanding
August 8, 1997
------------------
<S> <C>
Common stock, $1.00 par value 13,448,780
</TABLE>
<PAGE> 2
DREYER'S GRAND ICE CREAM, INC.
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 28, December 28,
1997 1996
----------- -----------
($ in thousands, except per share amounts) (unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 1,500 $ 4,134
Trade accounts receivable, net of
allowance for doubtful accounts of
$725 in 1997 and $755 in 1996 115,928 73,053
Other accounts receivable 17,900 13,638
Inventories 55,592 40,760
Prepaid expenses and other 13,075 13,652
-------- --------
Total current assets 203,995 145,237
Property, plant and equipment, net 226,185 225,038
Goodwill and distribution rights, net 91,507 92,010
Other assets 16,181 16,622
-------- --------
Total assets $537,868 $478,907
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
2
<PAGE> 3
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 28, December 28,
1997 1996
----------- -----------
($ in thousands, except per share amounts) (unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 83,794 $ 48,391
Accrued payroll and employee benefits 19,395 18,198
Current portion of long-term debt 8,512 8,512
-------- --------
Total current liabilities 111,701 75,101
Long-term debt, less current portion 179,228 163,135
Deferred income taxes 39,227 37,802
-------- --------
Total liabilities 330,156 276,038
-------- --------
Commitments and contingencies
Redeemable convertible Series B preferred stock, $1 par
value - 1,008,000 shares authorized; 1,008,000
shares issued and outstanding in 1997 and 1996 99,018 98,806
-------- --------
Stockholders' Equity:
Preferred stock, $1 par value -
8,992,000 shares authorized; no shares
issued or outstanding in 1997 and 1996
Common stock, $1 par value -
30,000,000 shares authorized; 13,443,000
shares and 13,345,000 shares issued and
outstanding in 1997 and 1996, respectively 13,443 13,345
Capital in excess of par 54,463 51,956
Retained earnings 40,788 38,762
-------- --------
Total stockholders' equity 108,694 104,063
-------- --------
Total liabilities and stockholders' equity $537,868 $478,907
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
3
<PAGE> 4
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------------- ------------------------------
($ in thousands, except per share amounts) June 28, 1997 June 29, 1996 June 28, 1997 June 29, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $271,972 $211,568 $472,410 $378,538
Other income 593 675 997 1,140
-------- -------- -------- --------
272,565 212,243 473,407 379,678
Costs and expenses:
Cost of goods sold 212,716 164,732 374,968 299,393
Selling, general and administrative 46,916 37,143 83,100 65,421
Interest, net of interest capitalized 2,743 2,268 5,231 3,981
-------- -------- -------- --------
262,375 204,143 463,299 368,795
-------- -------- -------- --------
Income before income taxes 10,190 8,100 10,108 10,883
Income taxes 4,005 3,080 3,972 4,179
-------- -------- -------- --------
Net income 6,185 5,020 6,136 6,704
Accretion of preferred stock to
redemption value 106 106 212 212
Preferred stock dividends 1,143 1,143 2,287 2,287
-------- ------- -------- --------
Net income applicable to common stock $ 4,936 $ 3,771 $ 3,637 $ 4,205
======= ======= ======== ========
Net income per common share $ .35 $ .28 $ .27 $ .32
======= ======= ======== ========
Dividends per common share $ .06 $ .06 $ .12 $ .12
======= ======= ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
4
<PAGE> 5
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Common Stock
------------------- Capital in Retained
(In thousands) Shares Amount Excess of Par Earnings Total
------- ------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 30, 1995 12,929 $12,929 $39,370 $39,964 $ 92,263
Net income 6,704 6,704
Accretion of preferred stock
to redemption value (212) (212)
Preferred stock dividends declared (2,287) (2,287)
Common stock dividends declared (1,600) (1,600)
Common stock issued in acquisition
of M-K-D Distributors, Inc. 320 320 10,480 10,800
Repurchases and retirements
of common stock (4) (4) (110) (114)
Employee stock plans 93 93 1,957 2,050
------ ------- ------- ------- --------
Balance at June 29, 1996 13,338 $13,338 $51,697 $42,569 $107,604
====== ======= ======= ======= ========
Balance at December 28, 1996 13,345 $13,345 $51,956 $38,762 $104,063
Net income 6,136 6,136
Accretion of preferred stock
to redemption value (212) (212)
Preferred stock dividends declared (2,287) (2,287)
Common stock dividends declared (1,611) (1,611)
Repurchases and retirements
of common stock (6) (6) (189) (195)
Employee stock plans 104 104 2,696 2,800
------ ------- ------- ------- --------
Balance at June 28, 1997 13,443 $13,443 $54,463 $40,788 $108,694
====== ======= ======= ======= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
5
<PAGE> 6
DREYER'S GRAND ICE CREAM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
------------------------------------
($ in thousands) June 28, June 29,
1997 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,136 $ 6,704
Adjustments to reconcile net income to cash
from operations:
Depreciation and amortization 15,520 13,231
Deferred income taxes 1,425 1,905
Changes in assets and liabilities, net of amounts acquired:
Trade accounts receivable (42,875) (31,126)
Other accounts receivable (4,262) (556)
Inventories (14,832) (11,634)
Prepaid expenses and other 577 3,845
Accounts payable and accrued liabilities 35,397 17,519
Accrued payroll and employee benefits 1,197 (4,847)
-------- --------
(1,717) (4,959)
-------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment (16,052) (36,367)
Retirement of property, plant and equipment 449 1,513
Increase in goodwill and distribution rights (96) (751)
Increase in other assets (24) (4,346)
-------- --------
(15,723) (39,951)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 22,800 76,000
Reductions in long-term debt (6,707) (30,472)
Issuance of common stock under employee stock plans 2,800 2,050
Repurchases of common stock (195) (114)
Cash dividends paid (3,892) (2,719)
-------- --------
14,806 44,745
-------- --------
Decrease in cash and cash equivalents (2,634) (165)
Cash and cash equivalents, beginning of period 4,134 3,051
-------- --------
Cash and cash equivalents, end of period $ 1,500 $ 2,886
======== ========
Supplemental Cash Flow Information -
Cash paid (refunded) during the period for:
Interest (net of amounts capitalized) $ 5,147 $ 3,769
Income taxes (net of refunds) (2,900) (23)
Non-cash transaction:
Acquisition of M-K-D Distributors, Inc. 10,800
</TABLE>
See accompanying Notes to Consolidated Financial Statements
6
<PAGE> 7
DREYER'S GRAND ICE CREAM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General:
Dreyer's Grand Ice Cream, Inc. and its subsidiaries (the Company) is a
single segment industry company engaged in the business of manufacturing and
distributing premium ice cream and other frozen dessert products to grocery and
convenience stores, foodservice accounts and independent distributors in the
United States.
The consolidated financial statements for the thirteen and twenty-six week
periods ended June 28, 1997 and June 29, 1996 have not been audited by
independent public accountants, but include all adjustments, such as normal
recurring accruals, which management considers necessary for a fair presentation
of the consolidated operating results for the periods. The statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, certain information and footnote
disclosure normally included in financial statements prepared in conformity with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. The operating results for interim periods are not
necessarily indicative of results to be expected for an entire year. The
aforementioned statements should be read in conjunction with the Consolidated
Financial Statements for the year ended December 28, 1996, appearing in the
Company's 1996 Annual Report to Stockholders.
NOTE 2 - Financial Statement Presentation:
Certain reclassifications have been made to the prior period financial
statements in order to conform to the current presentation.
NOTE 3 - Inventories:
Inventories are stated at the lower of cost (determined by the first-in,
first-out method) or market. Inventories at June 28, 1997 and December 28, 1996
consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 28, December 28,
1997 1996
----------- ------------
(unaudited)
<S> <C> <C>
Raw materials $ 8,470 $ 5,361
Finished goods 47,122 35,399
------- -------
$55,592 $40,760
======= =======
</TABLE>
NOTE 4 - Net Income Per Common Share:
Net income per common share is computed using the weighted average number of
shares of common stock outstanding during the period and dilutive common stock
equivalents if the dilution exceeds 3% of net income per common share. For the
thirteen and twenty-six weeks ended June 28, 1997, the number of common shares
used in the calculation were 13,946,000 and 13,391,000, respectively. For the
7
<PAGE> 8
thirteen and twenty-six weeks ended June 29, 1996 the number of common shares
used were 13,335,000 and 13,155,000, respectively. The potentially dilutive
effect of the Company's redeemable convertible Series B preferred stock and
other common stock equivalents used in the calculation of fully diluted net
income per common share was anti-dilutive for the thirteen and twenty-six week
periods ended June 28, 1997 and June 29, 1996. Accordingly, fully diluted net
income per common share is not presented.
In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings
per Share" (SFAS 128), was issued. SFAS 128 establishes new standards for
computing and disclosing earnings per share (EPS). The Company is required to
adopt SFAS 128 during the fourth quarter of 1997 effective in the Company's 1997
Annual Report to Stockholders. When adopted, SFAS 128 will require the Company
to replace its traditional EPS disclosures with a dual presentation of basic and
diluted EPS and to restate all prior EPS data presented. If SFAS 128 had been in
effect for the thirteen and twenty-six weeks ended June 28, 1997 and June 29,
1996, basic and diluted EPS would have been as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------------------- ---------------------------------
June 28, 1997 June 29, 1996 June 28, 1997 June 29, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Basic $ .37 $ .28 $ .27 $ .32
Diluted .35 .27 .27 .31
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percent which
the items in the Consolidated Statement of Operations bear to net sales and the
percentage change of such items compared with the indicated prior period:
<TABLE>
<CAPTION>
Percentage of Net Sales Period-to-Period
----------------------- Increase (Decrease)
----------------------
Thirteen Twenty-Six
Thirteen Weeks Ended Twenty-Six Weeks Ended Weeks Weeks
-------------------- ---------------------- 1997 1997
June 28, June 29, June 28, June 29, Compared Compared
1997 1996 1997 1996 to 1996 to 1996
-------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Net sales 100.0% 100.0% 100.0% 100.0% 28.6% 24.8%
Other income 0.2 0.3 0.2 0.3 (12.1) (12.5)
----- ----- ------ -----
Total revenues 100.2 100.3 100.2 100.3 28.4 24.7
===== ===== ====== =====
Costs and expenses:
Cost of goods sold 78.2 77.8 79.4 79.1 29.1 25.2
Selling, general and administrative 17.3 17.6 17.6 17.3 26.3 27.0
Interest, net of interest capitalized 1.0 1.1 1.1 1.0 20.9 31.4
----- ----- ------ -----
Total costs and expenses 96.5 96.5 98.1 97.4 28.5 25.6
----- ----- ------ -----
Income before income taxes 3.7 3.8 2.1 2.9 25.8 (7.1)
----- ----- ------ -----
Income taxes 1.5 1.4 0.8 1.1 30.0 (5.0)
----- ----- ------ -----
Net income 2.2 2.4 1.3 1.8 23.2 (8.5)
Accretion of preferred stock
to redemption value 0.0 0.1 0.0 0.1 0.0 0.0
Preferred stock dividends 0.4 0.5 0.5 0.6 0.0 0.0
----- ----- ------ -----
Net income applicable to
common stock 1.8% 1.8% 0.8% 1.1% 30.9% (13.5)%
===== ===== ====== =====
</TABLE>
9
<PAGE> 10
RESULTS OF OPERATIONS
The Strategic Plan
The Company embarked on a five year plan (the Strategic Plan, also referred
to as the Grand Plan) during the second quarter of 1994 to accelerate the sales
of its brand throughout the country. The key elements of this plan are: 1) to
build a high margin brand with a leading market share through effective consumer
marketing activities, 2) to expand the Company's direct-store-delivery
distribution network to national scale and enhance this capability with
sophisticated information and logistics systems and 3) to introduce innovative
new products. The potential benefits of the Strategic Plan are increased market
share and future earnings above those levels that would be attained in the
absence of the Strategic Plan. As originally announced, the Company anticipated
that the cost of implementing the Strategic Plan would materially reduce
earnings during the fiscal years of 1994 and 1995. For fiscal 1996, earnings
improved to a net income of $6,997,000, or $0.15 per common share, on sales of
$791,841,000, from a net loss in 1995 of $(1,524,000), or $(0.26) per common
share, on sales of $678,797,000. This improvement is partially attributable to
benefits accruing from the investments made under the Strategic Plan during the
past two and a half years. The Company believes that the key elements of the
Strategic Plan have either been executed or are being executed and that, as a
result, the benefits anticipated under the Strategic Plan will be achieved in
future years. However, no assurance can be given that these expectations
relative to future market share and earnings benefits of the strategy will be
achieved. The realization of the benefits will depend upon, among other things,
continued consumer purchase responsiveness to the increased marketing
expenditures, competitors' marketing responses, market conditions affecting the
price of the Company's products, commodity costs and efficiencies achieved in
manufacturing and distribution operations.
To date in 1997, the Company recorded net income of $6,136,000 or $0.27 per
common share, on sales of $472,410,000, compared with net income of $6,704,000,
or $0.32 per common share, on sales of $378,538,000 for the same period of 1996.
Net profitability for the first two quarters of 1997 was lower than the prior
year primarily due to a $2,100,000 insurance settlement recorded as a reduction
of cost of goods sold in the prior year and higher advertising and trade
promotion expenses in the current year.
Thirteen Weeks ended June 28, 1997 Compared with Thirteen Weeks Ended
June 29, 1996
Consolidated net sales for the second quarter of 1997 increased 29%, or
$60,404,000, to $271,972,000 from $211,568,000 for the same period last year.
Sales of the Company's branded products were 32%, or $41,380,000, higher than
the comparable quarter in 1996 and accounted for the majority of the overall
sales increase. The increase in sales of the Company's branded products related
primarily to higher unit sales in all markets due in part to the continued
higher advertising and promotion spending under the Company's Strategic Plan.
The products that led this increase were Dreyer's and Edy's Grand Ice Cream,
Dreyer's and Edy's Grand Light(R) Ice Cream, Starbucks(TM) Ice Cream and Edy's
new Homemade Ice Cream. Sales of other companies' branded products (partner
brands) increased 23%, led by Healthy Choice(R) Low Fat Ice Cream from Con Agra,
Inc., frozen novelty and ice cream products from Nestle Ice Cream Company, and
Ben and Jerry's Homemade(R) superpremium products. Sales of partner brands
represented 38% of consolidated net sales compared with 39% in the same period
last year. Wholesale prices for the Company's branded products increased
approximately 3%. The effect of price increases for partner brands was not
significant.
Cost of goods sold increased $47,984,000, or 29%, over the second quarter of
1996, while the overall gross margin decreased to 21.8% from 22.1%. The gross
margin decreased due to lower margins on partner brands in 1997 caused by a
shift in the mix of products and a slight increase in distribution costs
relating to increased sales in the midwestern and eastern United States, where
distribution costs per unit are currently higher than the Company's average.
These decreases in gross margin were partially offset by an increase in sales of
the Company's branded products as a percent of consolidated net sales (which
carry a higher margin than partner brands) in the second quarter of 1997.
Selling, general and administrative expenses in the second quarter of 1997 were
$9,773,000, or 26%, higher than in the same period of 1996. This increase
related primarily to significantly higher promotion expenses in the second
10
<PAGE> 11
quarter of 1997 compared with the same period in 1996. Selling, general and
administrative expenses decreased slightly from 17.6% of net sales in 1996 to
17.3% of net sales in 1997.
Interest expense increased $475,000, or 21%, over the second quarter of 1996,
due primarily to additional interest expense from the issuance of senior notes
in the second quarter of 1996, partially offset by a reduction in interest
expense due to lower average borrowings on the Company's line of credit.
Income taxes increased primarily due to higher pre-tax income in 1997. The
effective tax rate increased to 39.3% for the second quarter of 1997 compared
with 38.0% for the second quarter of 1996.
Twenty-six Weeks ended June 28, 1997 Compared with Twenty-six Weeks ended
June 29, 1996
Consolidated net sales for the twenty-six weeks ended June 28, 1997
increased 25%, to $472,410,000 compared with $378,538,000 for the same period
last year. Sales of the Company's branded products were 27%, or $63,775,000,
higher than in the same period last year and accounted for the majority of the
increase in total sales. The increase in sales of the Company's branded products
related primarily to higher unit sales in all markets due in part to the
continued higher advertising and promotion spending under the Company's
Strategic Plan. The products that led this increase were Dreyer's and Edy's
Grand Ice Cream, Starbucks(TM) Ice Cream, Dreyer's and Edy's Grand Light(R) Ice
Cream and Edy's new Homemade Ice Cream. Sales of partner brands increased 21%,
led by Healthy Choice(R) Low Fat Ice Cream from Con Agra, Inc. and frozen
novelty and ice cream products from Nestle Ice Cream Company. Sales of partner
brands represented 37% of consolidated net sales as compared with 38% in the
same period last year. Wholesale prices for the Company's branded products
increased approximately 3%. The effect of price increases for partner brands was
not significant.
Cost of goods sold increased $75,575,000, or 25%, as compared with 1996, while
the overall gross margin decreased slightly from 20.9% to 20.6% in 1997. The
gross margin decreased due to lower margins on partner brands in 1997 caused by
a shift in the mix of products and the reduction of prior year cost of goods
sold due to a $2,100,000 insurance gain recorded during the first quarter of
1996. These decreases in gross margin were partially offset by an increase in
sales of the Company's branded products as a percent of consolidated net sales
(which carry a higher margin than partner brands) in the second quarter of 1997.
Selling, general and administrative expenses in the first two quarters of 1997
increased $17,679,000, or 27%, as compared with the same period in 1996. This
increase related primarily to significantly higher promotion expenses in the
first two quarters of 1997 compared with the same period in 1996. Selling,
general and administrative expenses increased slightly as a percentage of net
sales from 17.6% for the first two quarters 1997 compared with 17.3% for the
same period in 1996.
Interest expense in the first two quarters of 1997 was $1,250,000, or 31%,
higher than in the same period in the prior year due primarily to additional
interest expense from the issuance of senior notes in the second quarter of
1996, partially offset by a reduction in interest expense due to lower average
borrowings on the Company's line of credit.
Income taxes decreased $207,000 reflecting a lower pre-tax income, while the
effective tax rate increased from 38.4% for the first two quarters of 1996 to
39.3% for the first two quarters of 1997.
11
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 28, 1997 increased $22,158,000 from year-end 1996
due primarily to the seasonal increase in accounts receivable and inventories
partially offset by an increase in accounts payable and accrued liabilities.
Cash was provided primarily from borrowings on the Company's long term line of
credit and was used to fund a $16,052,000 increase in property, plant and
equipment.
At June 28, 1997, the Company had $1,500,000 in cash and cash equivalents, and
an unused credit line of $76,500,000. The Company believes that its credit line,
along with its liquid resources, internally generated cash and financing
capacity, are adequate to meet anticipated operating and capital requirements.
12
<PAGE> 13
PART II: OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Title of Class of Security Involved: Preferred Stock Purchase
Rights. On May 14, 1997 the Board of Directors of the Registrant
approved a third amendment (the Third Amendment) to the Amended and
Restated Rights Agreement (the Rights Agreement) dated as of March
4, 1991 by and between the Company and ChaseMellon Shareholder
Services, LLC (as second successor in interest to Bank of America,
NT&SA), as Rights Agent . The Third Amendment, which became
effective May 15, 1997 amends the Rights Agreement to change the
Final Expiration Date (as defined in the Rights Agreement) to May
16, 2007, and to increase the Purchase Price (as defined in the
Rights Agreement) for each one-hundredth of a Preferred Share (as
defined in the Rights Agreement) to $300, subject to adjustment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 14, 1997, the Company held its 1997 Annual Meeting of
Stockholders. A total of 12,612,236 shares (77.4%) of the
outstanding shares were represented at the meeting whether by person
or proxy, including the shares of common stock into which the
outstanding shares of Series B Convertible Preferred Stock were
convertible on the record date for the meeting. Matters submitted to
a vote of securities holders at the meeting were as follows:
a. Election of three Class III directors to hold office until the
2000 Annual Meeting of Stockholders or until their successors are
elected and qualified; and
b. Approval of the appointment of Price Waterhouse LLP as independent
public accountants for the fiscal year 1997 and thereafter until a
successor is appointed.
At the Annual Meeting, T. Gary Rogers, William F. Cronk, and M.
Steven Langman were elected as directors of Class III of the
Company's Board Directors. Jan L. Booth, John W. Larson, and Jack O.
Peiffer continue to hold office as directors of Class I of the Board
of Directors until the 1998 Annual Meeting. Timm F. Crull, Edmund R.
Manwell and Timothy P. Smucker continue to hold office as directors
of Class II of the Board of Directors until the 1999 Annual Meeting.
Price Waterhouse LLP was approved as the Company's independent
public accountants for the fiscal year 1997. The number of
affirmative votes cast was 12,604,639. The number of negative votes
cast was 2,602.
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
a. The following report on Form 8-K was filed during the quarter ended
June 28, 1997:
Form 8-K filed with the commission on May 19, 1997 to report an
amendment to the Amended and Restated Rights Agreement dated as of
March 4, 1991 between the Company and ChaseMellon Shareholder
Services, LLC (as second successor to Bank of America, NT&SA), as
Rights Agents, in the form approved by the Board of Directors on May
14, 1997.
b. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
11 Computation of Net Income Per Common Share.
27 Financial Data Schedule.
</TABLE>
14
<PAGE> 15
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.
DREYER'S GRAND ICE CREAM, INC.
Dated: August 12, 1997 By: /s/ Paul R. Woodland
---------------------------------------
Paul R. Woodland
Vice President - Finance and Administration
and Chief Financial Officer
<PAGE> 16
EXHIBIT 11
DREYER'S GRAND ICE CREAM, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
------------------------------ -----------------------------
(in thousands, except per share amount) June 28, 1997 June 29, 1996 June 28, 1997 June 29, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PRIMARY
Net income applicable to common stock $ 4,936 $ 3,771 $ 3,637 $ 4,205
Weighted average number of shares of
common stock outstanding 13,415 13,335 13,391 13,155
-------- -------- -------- --------
Net income per common share, simple $ .37 $ .28(1) $ .27(1) $ .32(1)
======== ======== ======== ========
Weighted average number of shares of common
stock outstanding 13,415
Common stock equivalent--assumed exercise of
common stock options and warrants 531
--------
Weighted average number of shares of common
stock outstanding, including common
stock equivalents 13,946
========
Net income per common share, primary $ .35(2)
========
FULLY DILUTED
Net income applicable to common stock $ 4,936 $ 3,771 $ 3,637 $ 4,205
Add preferred dividends on redeemable
convertible Series B preferred stock, due
June 2001, and accretion of preferred
stock to redemption value 1,249 1,249 2,499 2,499
-------- -------- -------- --------
Adjusted net income $ 6,185 $ 5,020 $ 6,136 $ 6,704
======== ======== ======== ========
Weighted average number of shares of
common stock outstanding 13,415 13,335 13,391 13,155
Common stock equivalent--assumed exercise
of common stock options and warrants 826 464 838 394
Assumed conversion of preferred stock 2,900 2,900 2,900 2,900
-------- -------- -------- --------
Adjusted shares 17,141 16,699 17,129 16,449
======== ======== ======== ========
Net income per common share, fully diluted $ .36 $ .30(3) $ .36(3) $ .41(3)
======== ========= ======== ========
</TABLE>
<PAGE> 17
EXHIBIT 11
DREYER'S GRAND ICE CREAM, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(unaudited)
(1) The number of shares of the Company's common stock obtainable upon exercise
of outstanding options and warrants exceeded 20% of the number of common
shares outstanding at the end of the period. However, the calculation of
net income per common share using the modified treasury stock method as
required by paragraph 38 of APB Opinion No. 15 is not submitted because it
results in dilution of less than 3%.
(2) The number of shares of the Company's common stock obtainable upon exercise
of outstanding options and warrants exceeded 20% of the number of common
shares outstanding at the end of the period. However, the calculation of
net income per common share using the modified treasury stock method as
required by paragraph 38 of APB Opinion No. 15 is not submitted because it
results in the same dilution of net income per common share as calculated
under the treasury stock method.
(3) This calculation is submitted in accordance with Regulation S-K item 601(b)
(11) although it is contrary to APB Opinion No. 15 because it produces an
anti-dilutive effect.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
(A) THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> JUN-28-1997
<EXCHANGE-RATE> 1
<CASH> 1,500
<SECURITIES> 0
<RECEIVABLES> 116,653
<ALLOWANCES> 725
<INVENTORY> 55,592
<CURRENT-ASSETS> 203,995
<PP&E> 326,530
<DEPRECIATION> (100,345)
<TOTAL-ASSETS> 537,868
<CURRENT-LIABILITIES> 111,701
<BONDS> 179,228
99,018
0
<COMMON> 13,443
<OTHER-SE> 95,251
<TOTAL-LIABILITY-AND-EQUITY> 537,868
<SALES> 472,410
<TOTAL-REVENUES> 473,407
<CGS> 374,968
<TOTAL-COSTS> 374,968
<OTHER-EXPENSES> 82,739
<LOSS-PROVISION> 361
<INTEREST-EXPENSE> 5,231
<INCOME-PRETAX> 10,108
<INCOME-TAX> 3,972
<INCOME-CONTINUING> 6,136
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,136
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
