Dreyers Ice Cream (NASDAQ:DRYR)
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Dreyer's Grand Ice Cream Holdings, Inc. (the company,
Dreyer's, Dreyer's Holdings, and DGICH) (NNM:DRYR) today announced
results for the third quarter ended September 24, 2005.
Operating Results
Total net revenues for the third quarter of 2005 increased
$46,591,000, or 10 percent, to $520,268,000.
Net sales of company brands for the third quarter of 2005
increased $64,789,000, or 16 percent from the comparable quarter in
2004, to $475,201,000 after promotional costs. The increase was driven
primarily by net sales increases for the company's premium and
superpremium products reflecting continued strong sales of premium
Dreyer's and Edy's(R) Slow Churned(TM) Light ice cream, strong
introductory sales of superpremium Haagen-Dazs(R) Light ice cream and
continued strong growth of Dreyer's and Edy's classic premium ice
cream. The increase also reflects an increase in net sales of the
company's frozen snack products primarily due to new product launches,
including Dibs(TM) and Nestle(R) Kids products, and also due to the
addition of The Skinny Cow(R) products to the company-owned portfolio
following the acquisition of Silhouette Brands, Inc. in July 2004.
The market share of Dreyer's company brands of packaged ice cream
sold in the US grocery channel reached 23 percent for the quarter.
Net sales of partner brands, products distributed for other
manufacturers, decreased $13,185,000, or 24 percent from the
comparable quarter in 2004, to $40,634,000 for the third quarter of
2005. The decrease was primarily attributable to reduced net sales of
certain partner brands due to competition and changes in consumer
preference, and the reclassification of the net sales of The Skinny
Cow product line as company brands. The decrease was partially offset
by the classification of sales of the Dreamery(R), Whole Fruit(TM)
Sorbet and Godiva(R) brands as partner brands as a result of a
September 2004 agreement with Integrated Brands, Inc. (Integrated
Brands), a subsidiary of CoolBrands International, Inc. (CoolBrands).
Other revenues decreased $5,013,000, or 53 percent, to $4,433,000
for the third quarter of 2005. The decrease in other revenues was
driven primarily by a $5,496,000 decrease in revenues received from
Integrated Brands for transitional manufacturing and distribution.
Company brands represented 91 percent, partner brands represented
eight percent and other revenues represented one percent of total net
revenues for the third quarter of 2005, compared with 87 percent, 11
percent, and two percent, respectively, for the comparable period in
2004.
Cost of goods sold increased $29,301,000, or seven percent, to
$445,664,000 for the third quarter of 2005. The increase reflects
higher sales and the related increase in distribution expenses offset
by a $5,906,000 decrease in drayage expense paid to CoolBrands for the
delivery of certain of the company's products and a decrease of
approximately $4,900,000 in the cost of cream.
The company's gross profit increased by $17,290,000, or 30
percent, to $74,604,000 for the third quarter of 2005, representing a
14 percent gross margin compared with a 12 percent gross margin for
the same period in 2004. The increase in gross profit was driven
primarily by an increase in incremental sales, a decrease in drayage
expense paid to CoolBrands, a decrease in the cost of cream and a
product mix shift from sales of lower margin partner brands to higher
margin company brands. The increase was partially offset by increased
promotional costs, primarily associated with new product launches, and
a decease in revenues received from Integrated Brands for
manufacturing and distribution of Dreamery, Whole Fruit Sorbet and
Godiva brands.
Selling, general and administrative expense increased by
$5,093,000, or eight percent, to $67,351,000 for the third quarter of
2005, representing 13 percent of total net revenues, compared with
$62,258,000, or 13 percent of total net revenues, for the same period
in 2004. The increase was driven primarily by increases in marketing
expenses.
Interest expense increased by $3,074,000 to $4,818,000 for the
third quarter of 2005, primarily due to higher average borrowings and
further attributable to higher average interest rates. Royalty expense
paid to affiliates increased by $1,926,000 to $10,857,000 for the
third quarter of 2005 driven by increased sales of products marketed
under brand names or incorporating technology which is licensed to the
company by affiliates of Nestle S.A.
Finally, other expense for the third quarter of 2005 was
$1,411,000, including $1,365,000 in accretion for vested stock
options. Other expense of $2,196,000 for the third quarter of 2004
included $2,403,000 in losses from butter trading activities.
The company reported a net loss available to Class A callable
puttable and Class B common stockholders for the quarter ended
September 24, 2005 of $(74,933,000), or $(.78) per diluted share,
compared with $(76,824,000), or $(.81) per diluted share, for the
quarter ended September 25, 2004.
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 include
Grand, Slow Churned(TM) Light, Haagen-Dazs(R), Nestle(R) Drumstick(R),
Nestle Crunch(R), Butterfinger(R), Toll House(R), Carnation(R),
Dibs(TM), Push-Up(R), Dole(R), Homemade, Fruit Bars, Starbucks(R), The
Skinny Cow(R), and Skinny Carb Bar(TM). 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. For more information on the company,
please visit www.dreyersinc.com.
Edy's, the Dreyer's and Edy's logo design, Slow Churned, Dibs 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.
Disclosure Controls and Procedures
The company's management has carried out an evaluation of the
effectiveness of the company's disclosure controls and procedures
pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 and
concluded that those controls and procedures were not effective as of
September 24, 2005 because of a material weakness in internal control
over the valuation and determination of its deferred income tax assets
and income tax provision. The company is designing and implementing
improvements in its internal controls to address the material
weakness. These improvements include a new internal control regarding
the valuation of assets supporting the valuation of the company's
deferred tax assets and income tax provision. Notwithstanding the
existence of the material weakness, management has concluded that the
consolidated financial statements contained in its Form 10-Q for the
period ending September 24, 2005 and as included herein fairly
present, in all material respects, the company's financial position,
results of operation and cash flows for the periods presented.
Forward-Looking Statements
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 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 for frozen
dessert products; the company's ability to achieve efficiencies in its
manufacturing and distribution operations without negatively affecting
sales; costs or difficulties related to the company's combination of
Dreyer's Grand Ice Cream, Inc. and Nestle Ice Cream Company, LLC,
including the integration of the operations of those businesses and
the compliance with the Federal Trade Commission's order relating to
the divestiture of assets; costs or difficulties related to the
expansion and closing of the company's manufacturing and distribution
facilities; the cost of energy and gasoline used in manufacturing and
distribution; the cost of dairy raw materials and other commodities,
such as vanilla, used in the company's products; the company's ability
to develop, manufacture, 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.
-0-
*T
DREYER'S GRAND ICE CREAM HOLDINGS, INC.
THIRD QUARTER 2005
FINANCIAL RESULTS
Consolidated Statement of Operations
(In thousands, except per share amounts)
Quarter Ended Three Quarters Ended
Sept. 24, Sept. 25, Sept. 24, Sept. 25,
2005 2004 2005 2004
--------- ----------- ----------- -----------
Revenues:
Net sales $515,835 $464,231 $1,314,293 $1,208,810
Other revenues 4,433 9,446 18,779 32,591
-------- -------- ---------- ----------
Total net revenues 520,268 473,677 1,333,072 1,241,401
-------- -------- ---------- ----------
Costs and expenses:
Cost of goods sold 445,664 416,363 1,198,986 1,115,507
Selling, general and
administrative expense 67,351 62,258 180,632 183,882
Interest, net of
amounts capitalized 4,818 1,744 11,129 5,407
Royalty expense
to affiliates 10,857 8,931 26,512 21,629
Other expense, net 1,411 2,196 3,758 224
Severance and retention
(adjustment) expense (69) (637) (293) 2,593
-------- -------- ---------- ----------
530,032 490,855 1,420,724 1,329,242
-------- -------- ---------- ----------
Loss before income tax
benefit (9,764) (17,178) (87,652) (87,841)
Income tax benefit 10,623 6,699 31,428 34,258
-------- -------- ---------- ----------
Net income (loss) 859 (10,479) (56,224) (53,583)
Accretion of Class A
callable puttable
common stock (75,792) (66,345) (219,948) (191,967)
-------- -------- ---------- ----------
Net loss available to
Class A callable
puttable and Class B
common stockholders $(74,933) $(76,824) $ (276,172) $ (245,550)
======== ======== ========== ==========
Weighted average shares
of Class A callable
puttable and Class B
common stock - basic
and diluted 95,702 94,810 95,465 94,446
======== ======== ========== ==========
Net loss per share of
Class A callable
puttable and Class B
common stock - basic
and diluted $ (.78) $ (.81) $ (2.89) $ (2.60)
======== ======== ========== ==========
Dividends declared per
share of Class A
callable puttable and
Class B common stock $ .06 $ .06 $ .18 $ .18
======== ======== ========== ==========
Condensed Consolidated Balance Sheet
(In thousands)
Sept. 24, Dec. 25,
2005 2004
----------- -----------
Assets
Current Assets:
Cash and cash equivalents $ 424 $ 870
Receivables 165,824 98,645
Inventories 192,472 178,107
Prepaid expenses and other 14,686 26,450
Income taxes refundable 2,796 11,797
Deferred income taxes 5,643 5,643
----------- -----------
Total current assets 381,845 321,512
Property, plant and equipment, net 644,374 519,562
Other assets 16,525 14,578
Deferred income taxes 1,219
Other intangibles, net and Goodwill 2,383,071 2,391,042
----------- -----------
Total assets $3,427,034 $3,246,694
=========== ===========
Liabilities, Class A Callable Puttable Common
Stock and Stockholders' (Deficit) Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 242,996 $ 240,319
----------- -----------
Total current liabilities 242,996 240,319
Nestle S.A. credit facility 620,000 354,600
Long-term stock option liability 30,486 73,209
Other long-term obligations 45,710 41,655
Deferred income taxes 38,400
----------- -----------
Total liabilities 939,192 748,183
Commitments and contingencies
Class A callable puttable common stock 2,533,741 2,251,040
Stockholders' (deficit) equity (45,899) 247,471
----------- -----------
Total liabilities, Class A callable
puttable common stock and
stockholders' (deficit) equity $3,427,034 $3,246,694
=========== ===========
*T
Conference Call
Dreyer's Grand Ice Cream Holdings, Inc. (NNM:DRYR) will hold a
conference call for analysts and investors today Monday, November 7,
2005, at 10:30 a.m. EST (7:30 a.m. PST) to discuss the company's
financial results. The call will be webcast in its entirety from the
Investor Relations section of www.dreyersinc.com. A replay of the call
will be available for a limited time from the audio archives at the
same website location.