UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
BEN & JERRY'S HOMEMADE, INC.
(Exact name of registrant as specified in its charter)
For the quarter ended: Commission File Number:
March 28, 1998 0-13544
VERMONT 03-0267543
(State of incorporation) (I.R.S. Employer Identification No.)
30 Community Drive
South Burlington, Vermont 05403-6828
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(802) 651-9600
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 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 classes of
common stock outstanding as of the latest practicable date. 6,385,813 shares of
Class A Common Stock and 859,813 shares of Class B Common Stock outstanding as
of May 1, 1998.
<PAGE>
BEN & JERRY=S HOMEMADE, INC.
Form 10-Q for quarter ended March 29, 1997
INDEX
PART I: FINANCIAL INFORMATION PAGE NO.
Condensed Consolidated Balance Sheets
March 28, 1998 and December 27, 1997 1-2
Condensed Consolidated Statements of Operations
Thirteen weeks ended March 28, 1998
and March 29, 1997 3
Condensed Consolidated Statements of Cash Flows
Thirteen weeks ended March 28, 1998
and March 29, 1997 4
Notes to Condensed Consolidated Financial Statements 5-6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
PART II: OTHER INFORMATION
Item 6-Exhibits and Reports on Form 8-K 11
SIGNATURES 12
Exhibit 1
<PAGE>
BEN & JERRY=S HOMEMADE, INC.
Form 10-Q for quarter ended March 28, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All numbers in tables in thousands except per share data)
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the thirteen weeks ended March 28, 1998 are
not necessarily indicative of the results that may be expected for the year
ending December 26, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 27, 1997.
2. INVENTORIES
March 28, December 27,
1998 1997
---- ----
Ice cream, frozen yogurt, sorbet and ingredients $14,885 $10,294
Paper goods 435 536
Food, beverage and gift items 203 292
--- ---
Total $15,523 $11,122
======= =======
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
March 28, December 27,
1998 1997
---- ----
Trade accounts payable $ 7,916 $ 3,832
Accrued expenses 11,061 10,313
Accrued payroll and related costs 2,425 2,076
Accrued promotional costs 5,405 3,581
Accrued marketing costs 2,475 2,230
Income taxes payable 451
Accrued insurance expense 1,513 1,234
----- -----
Total $31,246 $23,266
======= =======
<PAGE>
4. COMPREHENSIVE INCOME
As of December 28, 1997 the Company adopted Statement No. 130, Reporting
Comprehensive Income (FAS 130). FAS 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the adoption of
this statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities and foreign currency translation adjustments,
which prior to adoption were reported separately in shareholders' equity, to be
included in other comprehensive income.
During the first quarter of 1998 and 1997, total comprehensive income (loss)
amounted to $382,000 and ($1,059,000) respectively.
5. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
Disclosure About Segments of an Enterprise and Related Information (FAS 131).
FAS 131 establishes standards for public companies to report information about
operating segments in financial statements, and supercedes FAS 14, Financial
Reporting for Segments of a Business Enterprise, but retains the requirement to
report information about major customers. FAS 131 is effective in fiscal 1998.
The Company does not believe the adoption of this statement will have a material
impact on the Company's financial statements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The following table shows certain items as a percentage of net sales which are
included in the Company's Condensed Statement of Operations and the percentage
increase (decrease) of such items as compared to the indicated prior period.
Percentage of Net Sales Period-to-Period
Thirteen Weeks Increase (Decrease)
Ended Thirteen Weeks
March March 1998 Compared
28, 1998 29, 1997 To 1997
-------- -------- ------
Net sales 100.0% 100.0% 15.0%
Cost of sales 66.4% 72.3% 5.5%
----- ----- ------
Gross profit 33.6% 27.7% 39.6%
Selling, general and
administrative expenses 32.3% 32.0% 16.1%
----- ----- ------
Operating income (loss) 1.3% (4.3%) 134.7%
Other income (expense) 0.1% (0.4%) 134.4%
---- ----- ------
Income (loss) before income taxes 1.4% (4.7%) 134.7%
Income taxes 0.5% (1.8%) 132.9%
---- ----- ------
Net income (loss) 0.9% (2.9%) 135.8%
===== ======= ======
Thirteen Weeks Ended March 28, 1998 and March 29, 1997
Net Sales
Net sales of $41.6 million for the thirteen weeks ended March 28, 1998 were up
15.0% from the same period in 1997. Sales of the Company's domestic pint
products increased 12% with the original ice cream line providing the majority
of the increase. This 12% increase was comprised of a volume increase of 9% and
a price increase of approximately 3% effective in April 1997. Also contributing
to the increase in sales this quarter was the launch of the Company's new
single-serving products in Japan and the introduction of a new line of premium
plus ice cream, Newman's Own(TM) All Natural Ice Cream, manufactured and sold
under a license agreement with Paul Newman and Newman's Own.
<PAGE>
Packaged sales (primarily pints) represented 87% of total net sales in the first
quarter of 1998 and 88% of total net sales in the first quarter of 1997. Net
sales of 2 1/2 gallon bulk containers represented approximately 7% of total net
sales in the first quarters of 1998 and 1997. Net sales of novelty products
(including single servings) accounted for approximately 6% of total net sales in
this period in 1998 and 5% of total net sales in 1997.
Cost of Sales and Gross Profit
Cost of sales in the first quarter of 1998 increased approximately $1,447,000 or
5.5% over the same period in 1997 and overall gross profit as a percentage of
net sales increased from 27.7% in 1997 to 33.6% in 1998. The higher gross profit
as a percentage of net sales primarily resulted from increases in selling prices
effective in April 1997 and better plant utilization due to higher production
volumes. In addition, in the first quarter of 1997, the Company provided for
additional reserves for potential product obsolescence. In 1998, additional
reserves for product obsolescence were not necessary. However, the decrease in
inventory reserves, as compared to the prior year, was offset by increased dairy
commodity costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 16.1% from $11.6 million
in the first quarter of 1997 to $13.4 million in 1998. Selling, general and
administrative expenses as a percentage of net sales increased slightly from
32.0% in 1997 to 32.3% in 1998. This primarily reflects increased promotional
and sales expenses in part related to new domestic product entries, the launch
of a new line of premium plus ice cream under the name of Newman's Own(TM) All
Natural Ice Cream, combined with increased international costs.
Other Income (Expense)
Interest income increased $148,000 during the first quarter of 1998 as compared
to the same period in the prior year. The increase in interest income was due to
a higher average invested balance throughout the period. Interest expense
decreased $35,000 during the first quarter of 1998 as compared to the same
period in the prior year.
Income Taxes
The Company recorded income tax expense during the first quarter of 1998 of
$213,000 compared to an income tax benefit of $649,000 in the first quarter of
1997. Management expects 1998's effective income tax rate to decrease to
approximately 36% compared to 38% in 1997 due to higher income tax credits and
lower state taxes.
<PAGE>
Net Income (loss)
As a result of the foregoing, net income for the first quarter of 1998 was
$380,000 compared to a net loss for the first quarter of 1997 of $1,059,000. Net
income as a percentage of net sales was 0.9% in the first quarter of 1998
compared to a net loss of 2.9% of net sales in the first quarter of 1997.
Diluted net income per share was $.05 per common share for the first quarter of
1998 compared to a diluted net loss per common share of $.15 for the first
quarter of 1997.
Liquidity and Capital Resources
As of March 28, 1998 the Company had $48.1 million of cash and cash equivalents,
an increase of $758,000 since December 27, 1997. Net cash provided by operations
in the first quarter of 1998 was approximately $4.5 million. Cash of $3.6
million was used for net additions to property, plant and equipment, primarily
for equipment upgrades at the Company's manufacturing facilities.
Since December 27, 1997 trade accounts receivable and the sum of accounts
payable and accrued expenses have increased $1.5 million and $8.0 million
respectively. These increases reflect the seasonality of the Company's business
and increased sales and marketing expenses. Inventories have increased since
December 1997 from $11.1 million to $15.5 million. This increase reflects
seasonally higher raw material inventories and increased finished goods
inventories.
The Company anticipates capital expenditures in the remainder of 1998 of
approximately $5.4 million. These additional projected capital expenditures
relate to equipment upgrades and enhancements at the Company's manufacturing
facilities, research and development equipment, computer related expenditures
and acquisition and leasehold improvement costs related to Company owned scoop
shop locations in Europe.
The Company's short and long-term debt includes $30 million aggregate principal
amount of Senior Notes issued in 1993 and 1994, which are held in cash
equivalents pending their use in the business. The first principal payment of $5
million is due in September 1998.
The Company has two lines of credit for an aggregate of $20,000,000 with the
Bank of Boston and Key Bank of Vermont. These unsecured agreements provide for
borrowings from time to time and unless further extended expire September 29,
1998 and December 29, 1998, respectively. The agreements specify interest at
either banks' Base Rate or the Eurodollar rate plus a maximum of 1.25%. As of
May 1, 1998, there have been no borrowings under these line of credit
agreements. Management intends to renew its lines of credit.
Management believes that internally generated funds, cash currently on hand,
investments held in marketable securities (pending their use in the business),
and equipment lease financing will be
<PAGE>
adequate to meet anticipated operating and capital requirements.
"Forward-Looking Statements"
This section, as well as other portions of this document, includes certain
forward-looking statements about the Company's business and new products, sales,
expenditures and cost savings, effective tax rate, operating and capital
requirements and refinancings. Any such statements are subject to risks that
could cause the actual results or needs to vary materially. These risks are
discussed in "Risk Factors" in the Company's Annual Report on Form 10-K for the
year 1997.
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit (11) Statement Re: Computation of Per Share Earnings
Exhibit (27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
March 28, 1998, for which this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be duly signed on its behalf by
the undersigned thereunto duly authorized, being also its principal financial
officer.
BEN & JERRY'S HOMEMADE, INC.
BY: /s/Frances Rathke
Frances Rathke, Chief Financial Officer
and Secretary
DATE: May 12, 1998
<PAGE>
BEN & JERRY'S HOMEMADE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
<TABLE>
<CAPTION>
March 28, December 27,
1998 1997
--------------- --------------
(Unaudited) (Note)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 48,076 $ 47,318
Investments 477 481
Trade accounts receivable:
(less allowance of $1,009 in 1998
and $1,066 in 1997 for doubtful accounts) 14,179 12,710
Inventories 15,523 11,122
Deferred income taxes 7,566 6,071
Prepaid expenses and other current assets 1,372 2,378
--------------- --------------
Total current assets 87,193 80,080
Property, plant and equipment, net 64,387 62,724
Investments 1,077 1,061
Other assets 2,621 2,606
--------------- --------------
$ 155,278 $ 146,471
=============== ==============
</TABLE>
Note: The balance sheet at December 27, 1997 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. See notes to condensed
consolidated financial statements.
- 1 -
<PAGE>
BEN & JERRY'S HOMEMADE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES & STOCKHOLDERS' EQUITY
(In thousands except share data)
<TABLE>
<CAPTION>
March 28, December 27,
1998 1997
--------------- --------------
(Unaudited) (Note)
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 31,246 $ 23,266
Current portion of long-term debt and
obligations under capital leases 5,405 5,402
--------------- --------------
Total current liabilities 36,651 28,668
Long-term debt and obligations under capital leases 25,541 25,676
Deferred income taxes 5,703 5,208
Stockholders' equity:
$1.20 noncumulative Class A preferred stock - par value
$1.00 per share, redeemable at $12.00 per share;
900 shares authorized, issued and outstanding;
aggregated preference on liquidation - $9 1 1
Class A common stock - $.033 par value; authorized
20,000,000 shares; issued: 6,505,863 at March 28, 1998
and 6,494,835 at December 27, 1997 215 214
Class B common stock - $.033 par value; authorized
3,000,000 shares; issued: 863,252 at March 28, 1998
and 866,664 at December 27, 1997 28 29
Additional paid-in-capital 49,762 49,681
Retained earnings 39,466 39,086
Cumulative translation adjustment (126) (129)
Treasury stock, at cost: 124,532 Class A and 1,092 Class B
shares at March 28, 1998 and December 27, 1997 (1,963) (1,963)
--------------- --------------
Total stockholders' equity 87,383 86,919
--------------- --------------
$ 155,278 $ 146,471
=============== ==============
</TABLE>
Note: The balance sheet at December 27, 1997 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. See notes to condensed
consolidated financial statements.
- 2 -
<PAGE>
BEN & JERRY'S HOMEMADE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
For the Thirteen weeks ended
March 28, March 29,
1998 1997
------------------ ------------------
<S> <C> <C>
Net sales $ 41,556 $ 36,148
Cost of sales 27,592 26,145
------------------ ------------------
Gross profit 13,964 10,003
Selling, general and
administrative expenses 13,423 11,560
------------------ ------------------
Operating income (loss) 541 (1,557)
Interest income 553 405
Interest expense (515) (550)
Other income (expense) 14 (6)
------------------ ------------------
52 (151)
------------------ ------------------
Income (loss) before income taxes 593 (1,708)
Income taxes (benefit) 213 (649)
------------------ ------------------
Net income (loss) $ 380 $ (1,059)
================== ==================
Shares Outstanding:
Basic 7,243 7,198
Diluted 7,451 7,198
Basic and diluted income (loss) per common share $ 0.05 $ (0.15)
</TABLE>
See notes to condensed consolidated financial statements.
- 3 -
<PAGE>
BEN & JERRY'S HOMEMADE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Thirteen weeks ended
March 28, March 29,
1998 1997
------------------ ------------------
<S> <C> <C>
Net income (loss) $ 380 $ (1,059)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 1,927 1,939
Allowance for bad debts 0 53
Deferred income taxes (1,000) (1,145)
Loss on disposition of assets 80 37
Changes in operating assets and liabilities:
Accounts receivable (1,312) (6,951)
Inventories (4,401) 154
Prepaid expenses (328) (119)
Accounts payable and accrued expenses 7,529 2,716
Income taxes payable/receivable 1,628 458
------------------ ------------------
Net cash provided by (used for) operating activities 4,503 (3,917)
Additions to property, plant and equipment (3,606) (867)
Changes in other assets (79) (71)
Increase in investments (12) (18)
------------------ ------------------
Net cash used for investing activities (3,697) (956)
Repayments of long-term debt and capital leases (132) (193)
Proceeds from issuance of common stock 81 85
------------------ ------------------
Net cash used for financing activities (51) (108)
Effect of exchange rate changes on cash 3 1
------------------ ------------------
Increase (decrease) in cash and cash equivalents 758 (4,980)
Cash and cash equivalents at beginning of period 47,318 36,104
------------------ ------------------
Cash and cash equivalents at end of period $ 48,076 $ 31,124
================== ==================
</TABLE>
See notes to condensed consolidated financial statements.
- 4 -
BEN & JERRY'S HOMEMADE, INC.
COMPUTATION OF NET EARNINGS PER SHARE
(In thousands except per share amounts)
Thirteen weeks ended
3/28/98 3/29/97
------------- ------------
Basic:
Weighted average shares outstanding 7,243 7,198
============= ============
Net income (loss) $380 ($1,059)
============= ============
Basic earnings per share amount $0.05 ($0.15)
============= ============
Diluted:
Weighted average shares outstanding 7,243 7,198
Effect of dilutive securities
Employee stock options 208
------------- ------------
Diluted shares outstanding 7,451 7,198
============= ============
Net income (loss) $380 ($1,059)
============= ============
Diluted earnings per share amount $0.05 ($0.15)
============= ============
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> See accompanying notes.
$ in thousands, except per share data
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-26-1998
<PERIOD-START> Dec-28-1997
<PERIOD-END> Mar-28-1998
<CASH> 48076
<SECURITIES> 0
<RECEIVABLES> 14179
<ALLOWANCES> 0
<INVENTORY> 15523
<CURRENT-ASSETS> 87193
<PP&E> 64387
<DEPRECIATION> 0
<TOTAL-ASSETS> 155278
<CURRENT-LIABILITIES> 36651
<BONDS> 0
0
1
<COMMON> 243
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 155278
<SALES> 41556
<TOTAL-REVENUES> 0
<CGS> 27592
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 515
<INCOME-PRETAX> 593
<INCOME-TAX> 213
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 380
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
