Dreyer's announces record annual sales and earnings
Dreyer's earned $.72 per diluted common share in 2000 after the effect of a reserve taken during the fourth quarter for uncollectible receivables from the bankruptcy of The Grand Union Company, a major grocery retailer in the Northeast. Before the impact of this reserve, Dreyer's earned $.75 per share, a significant improvement over earnings of $.33 per diluted common share recorded in 1999. The Company's earnings for 2000 were reduced by ($0.08) as a result of dilution related to acquisitions completed during the year.
Net income for 2000 was $25,378,000, or $.72 per diluted common share. This represents a one hundred thirty-one percent, or $14,386,000, improvement over net income of $10,992,000, or $0.33 per diluted common share, in 1999.
Operating results
Consolidated sales for the fifty-three weeks of 2000 increased nine percent to $1,194,356,000, compared with sales of $1,099,817,000 for the fifty-two weeks of 1999. Sales of the Company's branded products increased 15 percent to $840,356,000 and represented 70 percent of total sales. Virtually every Company brand recorded strong growth in 2000. Premium brand growth was led by the successful introduction of the new co-branded Mars line from the Company's joint venture with M&M/Mars, continued growth of the core Dreyer's & Edy's premium product line and the renewed growth of the Dreyer's & Edy's ``better-for-you'' portfolio. Sales of Dreyer's superpremium brand portfolio, which includes Dreyer's and Edy's Dreamery(TM), Godiva® and Starbucks®, grew substantially in 2000 as well, and achieved a 25 percent market share of the superpremium segment. Dreyer's and Edy's Whole Fruit bar is now the leading brand in its segment and made a significant contribution to the Company's growth in 2000.
Sales of partner brands, products distributed for other manufacturers, decreased by four percent in 2000 to $354,000,000 and represented 30 percent of total sales. The decrease in sales was entirely attributable to lower sales of Ben & Jerry's Homemade, Inc. superpremium products. As previously disclosed, the Company began distributing Ben & Jerry's products in a reduced geographic area in September, 1999. In 2000, Dreyer's signed a new agreement with Ben & Jerry's to resume national distribution of its superpremium product line to the grocery channel in the Spring of 2001 and to work together with Ben & Jerry's to expand Dreyer's distribution of Ben & Jerry's products in non-grocery channels.
Gross profit increased by 16 percent, or $43,034,000, to $304,944,000 for the year, representing a 26 percent gross margin, a significant improvement over the 24 percent margin achieved in 1999. The increase in gross profit was primarily the result of continued strong sales of both super-premium and premium product lines, sales of the new co-branded M&M/Mars line, and higher wholesale prices. The effect of these positive factors more than offset the loss of distribution gross profit from lower Ben & Jerry's sales. The impact of the change in dairy raw material costs for the year was a $9,289,000 pre-tax benefit versus the same period last year.
Selling, general and administrative expenses increased by nine percent for the year to $255,739,000, but remained level as a percentage of total sales at 21 percent. Marketing and promotion expenses for the rollout of new products accounted for a substantial portion of the increase in SG&A spending for the year. Costs associated with the Company's earlier bid to acquire Ben & Jerry's and the subsequent negotiation of the national distribution agreement also contributed to the increase.
Pre-tax income for 2000 was $40,611,000, a one hundred seventeen percent, or $21,892,000, improvement over 1999 pre-tax income of $18,719,000.
Consolidated sales for the fourteen-week period ended December 30, 2000 were $285,100,000, an increase of 18 percent over sales of $242,160,000 for the thirteen-week period ended December 25, 1999. Company brand sales increased 11 percent to $198,353,000 and represented 70 percent of total sales for the quarter. Partner brand sales increased by 36 percent to $86,747,000, or 30 percent of sales.
The Company recorded a pre-tax loss of ($1,671,000) for the fourth quarter. This pre-tax loss includes the reserve for uncollectible receivables from the bankruptcy of The Grand Union Company, a major grocery retailer in the Northeast, which equaled ($1,602,000), or ($.03) per share. The quarterly pre-tax loss represented a $1,993,000 improvement over the pre-tax loss of ($3,664,000) in the fourth quarter of 1999. The fourth quarter of 1999 included a $1,315,000 reversal of restructuring charges related to the Company's 1998 restructuring program. The Company's net loss for the fourth quarter of 2000 was ($794,000), or ($.04) per diluted common share, compared with a net loss of ($2,044,000), or ($0.08) per diluted common share, recorded in the same period in 1999. The impact of the change in dairy raw material costs for the quarter was a $72,000 pre-tax cost versus the same period last year.
Chairman's comments
T. Gary Rogers, Chairman of Dreyer's Grand Ice Cream, Inc., had the following comments on the Company's results for 2000: ``We made significant advances in 2000 against our strategy to expand our portfolio and grow the sales of both our premium and super-premium brands. The 2000 launch of the new co-branded M&M/Mars line has dramatically increased our presence in the premium sector of the category, complementing the growth of our Dreyer's and Edy's Grand Ice Cream premium products and our expanding super-premium portfolio. Our unique direct-store-delivery system continues to be the foundation of this growth and an important strategic advantage for Dreyer's. The distributor acquisitions and national distribution contracts we secured in 2000 have only strengthened this foundation and will contribute significantly to our results in 2001 and beyond.''
Dreyer's Grand Ice Cream, Inc. manufactures and distributes a full spectrum of premium and super-premium ice creams. The Company's product lines are marketed under the Dreyer's brand name throughout the thirteen western states, Texas and certain markets in the Far East, and under the Edy's name throughout the remainder of the United States. Taken together, Dreyer's and Edy's is the best-selling brand of packaged ice cream and other premium frozen dairy dessert products in the country. Brands currently manufactured and distributed by Dreyer's include Homemade, Whole Fruit Sorbet, Starbucks®, Godiva®, Dreamery(TM), M&M/Mars and Healthy Choice®. For more information on the Company and its products, please visit the Dreyer's website at www.icecream.com.
Source: Dreyer's Grand Ice Cream, Inc.