Dreyer's Announces Fourth Quarter and Full Year 2004 Results; Continued Strong Growth From Company Brands.OAKLAND, Calif. -- Dreyer's Grand Ice Cream Holdings, Inc. (the company, Dreyer's, Dreyer's Holdings, and DGICH) (NNM NNM Network Node Manager NNM NASDAQ National Market (financial) NNM National Nutrition Month (March; American Dietetic Association) NNM Naryan-Mar (Russia) NNM Net New Money :DRYR) today announced results for the fourth quarter and fiscal year ended December 25, 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of company brands, including owned, licensed and joint venture brands of packaged ice cream and frozen snacks, increased significantly in the quarter and full year ended December 25, 2004. This strong growth was driven by the continued success of Dreyer's and Edy's Slow Churned(TM) Light ice cream, growth of Dreyer's and Edy's(R) classic premium ice cream, and the ongoing resurgence re·sur·gence n. 1. A continuing after interruption; a renewal. 2. A restoration to use, acceptance, activity, or vigor; a revival. of the Haagen-Dazs(R) ice cream brand. ACNielsen data on the US grocery channel shows that Dreyer's company brands of packaged ice cream grew nine percent in the quarter ended December 25, 2004 and reached a dollar market share of 24 percent for the quarter, the highest quarterly share ever held by the company. Operating Results Net sales of the company's branded products increased $429,236,000, or 49 percent, for the year to $1,312,180,000 driven primarily by the addition of the Dreyer's Grand Ice Cream, Inc. (DGIC DGIC Dirección General de Investigaciones Criminalisticas (Spanish: Criminal Investigation Division; Honduran police) ) company brand portfolio acquired in the Dreyer's Nestle Transaction, strong sales growth of both Dreyer's and Edy's Grand and Dreyer's and Edy's Slow Churned Light ice creams and the sales of Skinny (Skinny Station Protocol) Cisco's proprietary implementation of the H.323 IP telephony model. Skinny phones can also be configured for the SIP protocol. See IP telephony. Cow(R) ice cream products which were reclassified as company brands following the Company's acquisition of Silhouette silhouette (sĭl'  ĕt`), outline image, especially a profile drawing solidly filled in or a cutout pasted against a lighter background. Brands, Inc. on July 26, 2004.Net sales of partner brands, products distributed for other manufacturers, decreased $29,193,000, or 11 percent, for the year to $235,512,000 driven primarily by a reduction in sales following the termination of certain distribution agreements resulting from the Dreyer's Nestle Transaction, partially offset by the addition of other partner brand sales that resulted from the Dreyer's Nestle Transaction. The decrease also includes a reduction in partner brand sales following the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of Skinny Cow ice cream product sales as company brands after July 26, 2004. Company brands represented 83 percent and partner brands represented 15 percent of total net revenues for the year, compared to 74 percent and 22 percent, respectively, for 2003. Other revenues decreased $2,176,000, or five percent, to $40,736,000 for 2004. This result primarily reflects a decrease of $13,458,000 for reimbursements received from Eskimo Pie Eskimo Pie is a brand name for a chocolate-covered vanilla ice cream bar wrapped in foil, the first such dessert sold in the United States. Danish immigrant Christian Kent Nelson, a schoolteacher and candy store owner, claimed to have received the inspiration for the Eskimo Frozen Distribution, Inc. (Eskimo Pie), a subsidiary of Integrated Brands, Inc. (Integrated Brands) for the payroll expenses incurred by the company for distribution services in the territories divested to Eskimo Pie, offset by an increase of $10,755,000 for revenues received for the transitional manufacturing and distribution of divested brands following the July 5, 2003 Divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). Transaction between the company and Integrated Brands, a subsidiary of CoolBrands International, Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : COB A). The cost of providing these services is in Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold . Other revenues represented two percent of total net revenues for the year, compared to four percent for 2003. Total net revenues increased $397,867,000, or 33 percent, to $1,588,428,000 for 2004. Cost of goods sold increased $430,667,000 or 43 percent, to $1,435,862,000 for 2004. The increase in Cost of goods sold was driven by the addition of the DGIC product lines acquired in the Dreyer's Nestle Transaction, incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. distribution expenses from the DGIC distribution system, an approximate $57,300,000 increase in the cost of cream and an $11,380,000 increase in drayage Drayage A trucking company freight charge for the pick up or delivery of an ocean container. expense paid to Integrated Brands for the delivery of certain products. The company's gross profit decreased by $32,800,000 to $152,566,000 for 2004, and represented a 10 percent gross margin compared with a 16 percent gross margin for 2003. The decrease in gross profit was driven by an approximate $57,300,000 increase in the cost of cream and reduced gross profit from the decrease in partner brand sales, which was partially offset by a product mix shift from lower margin partner brands towards higher margin company brands. Selling, general and administrative expenses increased by $49,060,000 to $247,405,000 for 2004 and represented 16 percent of total net revenues, compared with $198,345,000, or 17 percent of total net revenues, for 2003. The dollar increase in expenses in 2004 over those in 2003 was primarily driven by the addition of selling, general and administrative expenses from DGIC operations as a result of the Dreyer's Nestle Transaction, an increase in marketing expenses, an expense of $14,538,000 related to minimum volume commitments under co-pack arrangements, and an increase in stock option compensation expense of $1,360,000. Interest expense increased by $5,188,000, or 126 percent, to $9,291,000 for 2004, primarily due to the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of a long term senior note issue (the Notes) and expenses incurred for unamortized debt issuance costs of the Notes and a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility which was also terminated in 2004. The increase was also driven by higher average borrowings, which were partially offset by lower average interest rates. Royalty expense to affiliates increased by $4,524,000, or 20 percent, to $27,288,000 for 2004 due to increased net sales of products marketed under brands which are licensed to the company. Other (income) expense, net decreased $1,866,000, or 71 percent to income of $(752,000) for 2004. Other (income) expense, net in 2004 was driven by joint venture and equity affiliate earnings of $(2,793,000) offset by other expenses. Other (income) expense, net in 2003 was largely driven by a litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement yielding income of $(2,602,000). Severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and retention expense decreased $48,752,000, or 95 percent to $2,334,000 for 2004 as the majority of the Dreyer's Nestle Transaction severance expense occurred in 2003. The company reported a net loss available to Class A callable Callable Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. puttable and Class B common stockholders for the year ended December 25, 2004 of $(342,366,000), or $(3.62) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of common stock, compared to a net loss available to Class A callable puttable and Class B common stockholders of $(191,780,000) or $(2.44) per diluted share of common stock for the year ended December 27, 2003. Comparability of Results The company's financial statements reflect the June 26, 2003 combination of Dreyer's Grand Ice Cream, Inc. (DGIC) and Nestle Ice Cream Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (NICC See NIC. ), Nestle's U.S. frozen dessert business (the Dreyer's Nestle Transaction) through which Dreyer's Grand Ice Cream Holdings, Inc. became the parent of DGIC and NICC. The transaction was accounted for as a reverse acquisition under the purchase method of accounting, which deemed NICC to be the acquirer and DGIC to be the acquiree. As a result, the Consolidated Statement of Operations See Income statement. for the year ended December 25, 2004 and December 27, 2003 are not directly comparable. Results for the fiscal year ended December 25, 2004 reflect the results of operations of the combined entity, Dreyer's Holdings, for the entire period. Results for the year ended December 27, 2003 reflect the operations of stand-alone NICC for the period from January 1, 2003 through the June 26, 2003 combination, and the operations of the combined entity, Dreyer's Holdings, for the period from June 27, 2003 through December 27, 2003. However, the Consolidated Statement of Operations for the fourth quarter ended December 25, 2004 can be directly compared to the prior year period. Investors are urged to read the annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission (SEC) for more details on the ongoing effects of the Dreyer's Nestle Transaction on the financial statements. Dreyer's Grand Ice Cream Holdings, Inc., and its subsidiaries manufacture and distribute a full spectrum of ice cream and frozen dessert products. Brands of frozen dessert products currently manufactured or distributed by Dreyer's in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. include Grand, Slow Churned(TM) Light, Haagen-Dazs(R), Nestle(R) Drumstick drumstick /drum·stick/ (-stik) a nuclear lobule attached by a slender strand to the nucleus of some polymorphonuclear leukocytes of normal females but not of normal males. (R), Nestle Crunch (1) To process data. See number crunching. (2) To compress data. See data compression. 1. (jargon) crunch - To process, usually in a time-consuming or complicated way. (R), Butterfinger(R), Toll House(R), Carnation carnation: see pink. carnation Herbaceous plant (Dianthus caryophyllus) of the pink family, native to the Mediterranean, widely cultivated for its fringe-petaled, often spicy-smelling flowers. (R), Push-Up(R), Dole dole, distribution to the poor, usually of food or money. In medieval times doles were usually from bequests of money or land, and the income was given to charity or distributed to the local poor at funerals. (R), Homemade home·made adj. 1. Made or prepared in the home: homemade pie. 2. Made by oneself. 3. Crudely or simply made. Adj. 1. , Fruit Bars, Starbucks(R), Skinny Cow(R), Skinny Carb Bar(TM) and Healthy Choice(R). The company's premium products are marketed under the Dreyer's brand name throughout the western states and Texas, and under the Edy's name throughout the remainder of the United States. Internationally, the Dreyer's brand extends to select markets in the Far East and the Edy's brand extends to the Caribbean and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . For more information on the company, please visit www.dreyersinc.com. Edy's, the Dreyer's and Edy's logo design, Slow Churned, and Homemade, are all trademarks or trade names of Dreyer's Grand Ice Cream, Inc. The Nestle and Haagen-Dazs trademarks in the U.S. are licensed to Dreyer's by Nestle. All other trademarks and trade names are owned by their respective companies and licensed to Dreyer's. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements contained in this press release, the forthcoming conference call, simultaneous webcast and audio replay are forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements regarding expectations, beliefs, intentions, or strategies regarding the future. Such forward-looking statements involve known and unknown risks and uncertainties at the time such statements are made which may cause the company's actual actions or results to differ materially from those contained in the forward-looking statements. Specific factors that might cause such a difference include, but are not limited to, the following: the level of consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. for frozen dessert products; costs or difficulties related to the company's combination of DGIC and NICC, including the integration of the operations of those companies and compliance with the Federal Trade Commission's order and costs or difficulties associated with the integration of the operations of other companies that have been acquired, costs or difficulties related to the expansion and closing of the company's manufacturing and distribution facilities, and the company's ability to achieve efficiencies in its manufacturing and distribution operations without negatively affecting sales; the cost of energy and gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by used in manufacturing and distribution; the cost of dairy raw materials and other commodities, such as vanilla vanilla, a plant of the genus Vanilla of the family Orchidaceae (orchid family). Vines of hot, damp climates, most are indigenous to Central and South America, especially Mexico, but are now cultivated in other tropical regions. , used in the company's products; the company's ability to develop, market and sell new frozen dessert products; the success of the company's marketing and promotion programs and competitors' responses; market conditions affecting the prices of the company's products; responsiveness of both the trade and consumers to the company's new products and marketing and promotional programs; and the costs associated with any litigation proceedings.
Consolidated Statement of Operations
(In thousands, except per share amounts)
Quarter Ended Year Ended
------------------- -----------------------
Dec. 25, Dec. 27, Dec. 25, Dec. 27,
2004 2003 2004 2003
--------- --------- ----------- -----------
Revenues:
Net sales $338,882 $365,191 $1,547,692 $1,147,649
Other revenues 8,145 18,884 40,736 42,912
--------- --------- ----------- -----------
347,027 384,075 1,588,428 1,190,561
--------- --------- ----------- -----------
Operating costs and
expenses:
Cost of goods sold 320,355 334,350 1,435,862 1,005,195
Selling, general and
administrative expense 63,303 57,060 247,405 198,345
Interest, net of amounts
capitalized 3,884 1,465 9,291 4,103
Royalty expense to
affiliates 5,659 4,079 27,288 22,764
Other (income) expense,
net (974) (3,072) (752) (2,618)
Severance and retention
expense (259) 5,181 2,334 51,086
In-process research &
development 11,495
Loss on divestiture 3,010 (216) 14,941
--------- --------- ----------- -----------
391,968 402,073 1,721,212 1,305,311
--------- --------- ----------- -----------
Loss before income tax
benefit (44,941) (17,998) (132,784) (114,750)
Income tax benefit 16,635 7,087 50,893 39,015
--------- --------- ----------- -----------
Net loss (28,306) (10,911) (81,891) (75,735)
Accretion of Class A
callable puttable common
stock (68,508) (59,475) (260,475) (116,045)
--------- --------- ----------- -----------
Net loss available to
Class A callable puttable
and Class B common
stockholders $(96,814) $(70,386) $(342,366) $(191,780)
========= ========= =========== ===========
Weighted average common
shares outstanding -
diluted 94,913 93,673 94,563 78,681
========= ========= =========== ===========
Net loss per share of
Class A callable puttable
and Class B common stock $ (1.02) $ (.75) $ (3.62) $ (2.44)
========= ========= =========== ===========
Dividends declared per
share of Class A callable
puttable and Class B
common stock $ .06 $ .06 $ .24 $ .18
========= ========= =========== ===========
Condensed Consolidated Balance Sheet
(In thousands)
Dec. 25, 2004 Dec. 27, 2003
------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 870 $ 1,623
Receivables 98,645 121,961
Inventories 178,107 148,426
Prepaid expenses and other 26,450 37,723
Income taxes refundable 11,797 18,283
Taxes receivable due from affiliates - 12,236
Deferred income taxes 5,643 17,265
------------- -------------
Total current assets 321,512 357,517
Property, plant and equipment, net 519,562 392,613
Other assets 14,578 20,735
Goodwill and other intangibles, net 2,391,042 2,320,558
------------- -------------
Total assets $3,246,694 $3,091,423
============= =============
Liabilities, Class A Callable Puttable
Common Stock and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 240,319 $ 189,719
Current portion of long-term debt - 2,143
------------- -------------
Total current liabilities 240,319 191,862
Long-term debt, less current portion 354,600 149,286
Long-term stock option liability 73,209 135,121
Other long-term liabilities 41,655 18,207
Deferred income taxes 38,400 81,065
------------- -------------
Total liabilities 748,183 575,541
Class A callable puttable common stock 2,251,040 1,903,314
Stockholders' equity 247,471 612,568
------------- -------------
Total liabilities, Class A callable
puttable common stock, and stockholders'
equity $3,246,694 $3,091,423
============= =============
Conference Call Dreyer's Grand Ice Cream Holdings, Inc. (NNM:DRYR) will hold a conference call for analysts and investors on Tuesday, March 8, 2005, at 10:30 a.m. ET (7:30 a.m. PT) to discuss its results. The call will be webcast in its entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. from the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of www.dreyersinc.com. A replay of the call will be available from the audio archives at the same website location and is incorporated by reference into this news release. |
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