FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _________________
Commission File Number 0-13544
BEN & JERRY'S HOMEMADE, INC.
(Exact name of registrant as specified in its charter)
Vermont 03-0267543
(State of incorporation) (I.R.S. Employer Identification No.)
Duxtown Commercial Plaza
Junction of Rts. 2 and 100
Waterbury, Vermont 05676
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 802-244-6957
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.033 par value per share
Class B Common Stock, $.033 par value per share
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (225.405) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ x ]
The aggregate market value of the Company's Class A and Class B
Common Stock held by non-affiliates was approximately $63,952,994 and
$3,124,771 respectively, at March 24, 1995.
At March 24, 1995, 6,238,103 shares of the Company's Class A
Common Stock and 927,750 shares of the Company's Class B Common Stock
were outstanding.
Page 1 of ___ pages. Exhibit Index appears on page __.
BEN & JERRY'S HOMEMADE, INC.
1994 FORM 10-K ANNUAL REPORT
Table of Contents
Page
Item 1. Business 1
Item 2.Properties13
Item 3.Legal Proceedings14
Item 4.Submission of Matters to Vote of Security Holders14
Item 5.Market for Registrant's Common Equity and Related
Stockholder Matters15
Item 6.Selected Financial Data18
Item 7.Management's Discussion and Analysis of Financial
Condition and Results of Operations19
Item 8.Financial Statements and Supplementary Data24
Item 9.Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure24
Item 10.Directors and Executive Officers of the Company25
Item 11.Executive Compensation30
Item 12. Security Ownership of Certain Beneficial Owners and
Management33
Item 13.Certain Relationships and Related Transactions34
Item 14.Exhibits, Financial Statements, and Financial
Statement Schedules, and Reports on Form 8-K38
Item 1. Business
Introduction
Ben & Jerry's Homemade, Inc. (Ben & Jerry's or the
"Company") is a leading manufacturer of super premium ice cream
and frozen yogurt in unique and regular flavors. The Company also
manufactures ice cream and novelty products, including Peace
Pops. The Company uses natural ingredients in its products and
believes that its gourmet-quality, "down home", made in Vermont
image is a key element of its marketing strategy.
The Company's products are currently distributed throughout
the United States primarily through independent distributors.
However, the Company's marketing resources are concentrated on
certain target markets including New England, New York, the Mid-
Atlantic region, Florida, Texas, the West Coast and selected other
major markets, including the metropolitan Chicago and Denver
areas. In 1994, approximately 78% of the sales of the Company's
packaged pints were attributable to these target markets.
The Company currently markets 30 flavors in packaged pints,
for sale primarily in supermarkets, grocery stores, convenience
stores and other retail food outlets and generally markets over 44
flavors of its ice cream and frozen yogurt in bulk, primarily to
restaurants and Ben & Jerry's franchised "scoop shops."
History and Philosophy of the Company
The Company began active operations in May 1978, when Ben
Cohen, now the Company's Chairperson, and Jerry Greenfield, now
the Company's Vice Chairperson, opened a retail store in a
renovated gas station in Burlington, Vermont. The store featured
homemade ice cream made in an antique rock salt ice cream freezer.
That ice cream parlor continues to make its own ice cream in the
same freezer in a larger location in Burlington.
The Company believes that, despite its growth, it has
maintained a reputation for producing gourmet-quality, natural ice
cream and for sponsoring or creating light-hearted promotions that
foster an image as an independent socially conscious Vermont
company. Most of these promotions take the form of Company-
sponsored public events or community celebrations in the primary
markets in which the Company sells its products. The Company's
goal in supporting such events is not only to promote awareness of
its products and its objectives as a socially responsible
business, but also to contribute to the communities in which its
products are sold. See "Marketing."
The Board of Directors of the Company has formalized its
basic business philosophy by adopting a three part "mission
statement" for Ben & Jerry's. The statement includes a "product
mission," to "make, distribute and sell the finest quality all-
natural ice cream"; an "economic mission," to "operate the Company
on a sound financial basis...increasing value for our shareholders
and creating career opportunities and financial rewards for our
employees"; and a "social mission," to "operate the Company...[to]
improve the quality of life of our employees and a broad
community: local, national and international." Since 1988 the
Company's Annual Report to Stockholders has contained a "social
audit" on the Company's performance during the year.
Given the Company's financial loss for the year ended
December 31, 1994, amounts advanced to the Foundation and directly
to philanthropic causes in 1994 during the first three profitable
quarters will be offset against future allocations of pre-tax
profits. Under present Board policy, cash donations to The Ben &
Jerry's Foundation and directly to donees by the Company,
utilizing employee groups organized into Community Action Teams
and its five Vermont sites, with respect to each fiscal year are
approximately 7.5% of income before income taxes. The amount of
the Company's cash contribution is subject to review by the Board
of Directors from time to time in light of the Company's cash
needs, its operating results, existing conditions in the industry
and other factors deemed relevant by the Board. See "The Ben &
Jerry's Foundation."
Ben & Jerry's maintains a special tie to the Vermont
community in which it had its origins. The Company donates
product to public events and community celebrations in the Vermont
area. In 1994 the Company created a Community Action Team at each
of the Company's five sites in Vermont. Each Community Action
Team receives a portion of the 7.5% of profits directed for
philanthropy to makes cash contributions to various environmental
and community organizations in the Vermont area. Each county in
Vermont is covered by a Ben & Jerry's Community Action Team.
Also, the Company, acting as agent, transfers funds to charitable
organizations throughout Vermont derived from the sale of "factory
seconds" to participating Vermont retail grocers. Ben & Jerry's
has also taken actions intended to strengthen the Company's
ability to remain an independent, Vermont-based company, which Ben
& Jerry's believes is in the best interests of the Company, its
stockholders, its employees and the Vermont community.
In 1991 the Company decided to pay not less than a certain
minimum price for its dairy ingredients, other than yogurt
cultures, to bring the price up to an amount based upon the
average price for dairy products in certain prior periods. This
commitment is part of an effort to foster the supply of Vermont
dairy products and thereby also seek to maintain the long-term
viability of the Company's source of supply of its principal dairy
ingredients, against the marketplace background of a continuing
trend of decreasing family dairy farms in Vermont. In early 1994
the Company's agreement with the St. Albans Cooperative Creamery
was amended to include, as a condition for payment of the premium,
an assurance from the St. Albans Cooperative Creamery that the
milk and cream purchased by the Company will not come from cows
that have been treated with rBST, a synthetic growth hormone
recently approved by the FDA. The Company's premium policy has
some adverse impact on its gross margin.
In 1992 the Company became a signatory to the CERES
Principals adopted by the Community for Environmentally
Responsible Economies. The CERES Principles establish an
environmental ethic with criteria by which investors and others
can assess the environmental performance of companies. Ben &
Jerry's is also a founding member of Businesses for Social
Responsibility, Inc. ("BSR"), an organization in Washington, DC
which includes over 700 member companies and affiliated
businesses. BSR promotes a concept of business profitability that
includes environmental responsibility and social equity.
The Super Premium Ice Cream and Frozen Yogurt Market
The packaged ice cream industry includes economy, regular,
premium and super premium products. Super premium ice cream is
generally characterized by a greater richness and density than
other kinds of ice cream.
This higher quality ice cream generally costs more than other
kinds and is usually marketed by emphasizing quality, flavor
selection, texture and brand image. Other types of ice cream are
largely marketed on the basis of price.
Super premium ice cream and, more recently, super premium
frozen yogurt have become an important part of the frozen dessert
industry. In response to the demand for lower fat, lower
cholesterol products like frozen yogurt, the Company introduced
its own super premium low fat frozen yogurt nationally in 1992.
The Company plans to introduce three non-fat frozen yogurt flavors
nationally in 1995.
The Company believes, based on information provided by
Information Resources, Inc., a software and marketing information
services company, that total annual U.S. sales in supermarkets at
retail prices (defined as grocery stores with annual revenues of
at least $2 million) of super premium ice cream, frozen yogurt,
ice milk and sorbet were in excess of $415 million in 1994,
compared with about $402 million in 1993.
Ben & Jerry's Super Premium Ice Cream and Frozen Yogurt
Ben & Jerry's super premium ice cream is a high butterfat ice
cream, with approximately 15% fat (excluding add-ins) and less
than 20% air content. Ben & Jerry's frozen yogurt is a high
quality low fat frozen yogurt with approximately 2% fat (excluding
add-ins) and less than 20% air content. Of the Company's 8 frozen
yogurt flavors, 3 are not labeled low fat because they contain
add-ins which increase the total fat content over the 2% fat level
required by FDA labeling guidelines. The fat content of these
products is derived mostly from the butterfat in cream but also
from egg yolks (except for frozen yogurt). Pure cane and beet
sugar and corn syrup are the only sweeteners used. Ben & Jerry's
products contain no artificial ingredients or preservatives,
although some cookies and candies used in some Ben & Jerry's
flavors do contain artificial ingredients, chemicals and
preservatives. The flavorings used by the Company include premium
quality, unpreserved extracts and fruits, nuts, chocolates,
liqueurs, and some cookies and candies. The dairy products in Ben
& Jerry's products are readily available from dairy cooperatives
in Vermont. The various flavorings are readily available from
multiple suppliers throughout the country.
A number of Ben & Jerry's flavors are original creations of
the Company, including Cherry Garcia, Chunky Monkey, Rain Forest
Crunch, White Russian, Chubby Hubby, Chocolate Fudge Brownie
and Chocolate Chip Cookie Dough, which has become the Company's
most popular flavor.
Ben & Jerry's license agreements include a license from Jerry
Garcia and the Grateful Dead rock group with respect to the
Company's Cherry Garcia flavor.
The mix used by the Company in the production of Ben &
Jerry's ice cream follows the original formula developed by Ben
Cohen and Jerry Greenfield and consists of fresh cream, cane or
beet sugar, non-fat milk solids, egg yolks and natural
stabilizers. The Company's plants in Waterbury and Springfield,
Vermont include mix batching facilities that enable Ben & Jerry's
to manufacture its own ice cream mix for use at its plants. The
new St. Albans, Vermont plant is currently supplied mix from the
Springfield plant and will operate its own mix batching facility
in mid-1995. The automated mix batching equipment, together with
a quality control lab, enhances the Company's ability to maintain
consistent quality production. The Company purchases its dairy
ingredients, except yogurt cultures, from the St. Albans
Cooperative Creamery. The Company purchases cultured pasteurized
milk mix from another Vermont dairy cooperative which is used for
manufacture of its frozen yogurt products. The Company has
designed and modified special machinery to insert large chunks of
cookies and candies into its ice cream and frozen yogurt.
The Company also makes ice cream novelty products, including
stick pops, which Ben & Jerry's markets as Peace Pops.
Manufacturing
The Company currently has a maximum manufacturing capacity at its
own facilities of approximately 10.2 million gallons per year
of packaged pints excluding bulk product. When the new plant
becomes fully operational (currently expected to occur in the
latter part of 1995), the Company's facilities will have a maximum
projected capacity of approximately 22 million gallons per year of
packaged pints excluding bulk product.
The Company manufactures Ben & Jerry's super premium ice
cream and frozen yogurt pints at its Waterbury, Vermont plant.
The Company generally operates its Waterbury plant 2 shifts a day,
six days a week. The Company manufactured approximately 4.7
million gallons at this facility last year.
The Company's Springfield, Vermont plant is used for the
production of ice cream novelties, bulk ice cream and frozen
yogurt and packaged pints and quarts. The plant produced
approximately 1.2 million dozen novelties, 2.3 million gallons of
bulk ice cream and frozen yogurt, packaged pints and quarts. The
Company operates the Springfield plant five to six days per week,
either with one or two production shifts depending on the season.
Since June 1992, the Company has been operating an interim
pint manufacturing line in St. Albans, Vermont on space provided
by the St. Albans Cooperative Creamery from which the Company
purchases all of its dairy ingredients except yogurt cultures.
Production on this line was approximately 2.4 million gallons last
year. This line will gradually be phased out as production at the
new plant increases and some of the assets will be transferred to
the new plant.
In October 1992 the Company started construction of a new
manufacturing plant (the "new plant") in St. Albans, Vermont which
is anticipated to cost $40 million. In March 1995 the new plant
started manufacturing ice cream on one line using a temporary
nitrogen tunnel hardening system. The Company expects the new
plant to be fully operational with two lines in the latter part of
1995. In 1995, the Company expects the line with the temporary
nitrogen tunnel hardening system to produce 1.3 million gallons.
The new plant is designed to provide a maximum projected capacity
of approximately 12 million gallons of packaged pints per year,
excluding bulk product, with the two lines that are anticipated to
be operational in 1995 and with the addition of a third
manufacturing line at the plant the maximum capacity would be
approximately 17 million gallons of packaged pints per year
excluding bulk products.
In order to meet current and near-term expected demand for
its pints, the Company has a manufacturing and warehouse agreement
with Edy's Grand Ice Cream, a subsidiary of Dreyer's Grand Ice
Cream, Inc. Under this agreement Edy's manufactures certain pint
ice cream flavors at its plant in Fort Wayne, Indiana through
September 1995 in accordance with specifications and quality
control provided by Ben & Jerry's and using dairy products from
Vermont. The agreement provides that Edy's may terminate the
agreement only for cause which is not cured within 30 days or in
the event that Ben & Jerry's terminates its distribution agreement
(See "Markets and Customers") with Dreyer's without cause as to
all or substantially all of the territories covered by such
distribution agreement. Approximately 5 million gallons, or about
40% of the packaged pints manufactured in 1994, were manufactured
under this arrangement, up from approximately 37% in 1993. The
Company expects to have 2 million gallons manufactured by Edy's in
1995.
Markets and Customers
The Company markets packaged pints, quarts and novelty
products primarily through supermarkets, grocery stores,
convenience stores and other retail food outlets. The Company
markets ice cream and frozen yogurt in 21/2-gallon bulk containers
primarily through franchised (and Company-owned) Ben & Jerry's
"scoop shops" and through restaurants.
Ben & Jerry's products are distributed primarily through
Dreyer's and independent regional ice cream distributors. With
some exceptions, only one distributor is appointed for each
territory for supermarkets. In some areas, sub-distributors are
used. Company trucks also distribute some of the ice cream and
frozen yogurt sold in Vermont and upstate New York.
Ben & Jerry's has a distribution agreement with Dreyer's
under which Dreyer's acts as the master distributor (with
exclusivity, in general, for sales to supermarkets and similar
accounts) of Ben & Jerry's products in most of the Company's
markets outside of New England, upstate New York, Pennsylvania and
Texas. Dreyer's markets its own premium ice cream under both the
Dreyer's and Edy's brand names as well as certain frozen dessert
products of other companies. Dreyer's does not produce or market
any other super premium ice cream or frozen yogurt (other than
novelties), and in the event that Dreyer's were to distribute
another super premium ice cream or frozen yogurt in any part of
its territory, Dreyer's would lose the exclusivity granted to it
as a Ben & Jerry's distributor under the agreement. The agreement
also contains certain additional provisions specific to the
greater metropolitan New York market, including special
limitations on the ability of either party to terminate the
agreement with respect to the New York market. In early 1994 the
agreement was amended to provide for the Company to perform the
subdistribution of Ben & Jerry's products to convenience stores
and mom and pops in the New York City area. Net sales to Dreyer's
accounted for approximately 52% (including sales where the Company
acts as a subdistributor for Dreyer's) and 54% of the Company's
net sales for 1994 and 1993, respectively.
In the event that Dreyer's were to terminate the agreement
without cause, the agreement provides for a twelve month notice
period (subject to reduction by the Company) and specified minimum
purchase requirements by Dreyer's during the notice period. In
addition, the agreement provides for termination by Ben & Jerry's
without cause upon twelve months' notice and for termination by
Ben & Jerry's or Dreyer's on short notice for cause. The
agreement also contains certain provisions for termination by one
party (at its election) upon a change in control (as defined) of
the other, in which event the terminated party experiencing the
change in control has a minimum purchase or sale obligation, as
the case may be, for a specified additional period and also must
make a $20 million termination payment to the other party. In
addition, the agreement states that in the event that Dreyer's,
directly or indirectly introduces, acquires, or distributes in the
United States another super premium product (as defined) the
Company may terminate the agreement and Dreyer's must make a $20
million termination payment to the Company. The common stock of
Dreyer's is publicly traded. In April 1994 Nestl‚ USA, Inc. (a
U.S. subsidiary of a large international conglomerate) acquired a
significant minority equity position in Dreyer's. (See also
"Competition")
The relationship between the Company and Dreyer's commenced
in 1987, and the distribution agreement has been amended several
times since then. The Company and Dreyer's regularly engage in
discussions regarding ways to improve their long-term relationship
to their mutual benefit, and it is contemplated that the parties
may revise and restate the distribution agreement. Any changes
which are then or thereafter adopted may have certain beneficial
or adverse consequences, the effects of which cannot be foreseen
by the Company.
While the Company believes that its relationships with
Dreyer's and its other distributors generally have been
satisfactory and that these relationships have been instrumental
in the Company's growth, the Company has at times experienced
difficulties in maintaining these relationships. Available
distribution alternatives are limited. Accordingly, there can be
no assurance that such difficulties, which may be related to
actions by the Company's competitors or by one or more of the
distributors themselves (or their controlling persons), will not
have a material adverse effect on the Company's business. Loss of
one or more of the Company's principal distributors or termination
of one or more of the related distribution agreements could have a
material adverse effect on the Company's business.
Marketing
Ben & Jerry's marketing strategy is characterized by its
focus on innovative, non-traditional methods of promotion. The
Company emphasizes the high quality, natural ingredients in its
ice cream and frozen yogurt, and the "down home Vermont" image of
its products in its packaging, sales materials and promotional
campaigns. Significant prominence has been given to Ben Cohen and
Jerry Greenfield, the founders of the Company, as "two real guys"
still actively involved in the Company. Pictures of Ben and
Jerry appear on packaging, and they make personal appearances on
TV, radio and at select marketing events.
As the Company has become a significant force in super
premium ice cream and frozen yogurt, its marketing emphasis has
shifted from portraying itself as the small "underdog" firm to a
Company-wide focus on community involvement and its status as a
socially responsible business. In the past, the Company has
focused its marketing efforts on communicating newsworthy,
company-wide unique business approaches that tend to generate
unpaid newspaper, magazine, radio and TV news coverage.
During 1994 the Company created and produced a Ben & Jerry's
"One World, One Heart" Festival in Vermont. The Company also
sponsored the Ben & Jerry's Newport Folk Festival in Newport,
Rhode Island. These events, attended by nearly 50,000 people in
outdoor public areas generated lots of goodwill, ice cream
sampling and social activism at one time while building customer
loyalty and support for the Company's products in the future.
Ben & Jerry's continues to conduct guided tours of its
facility in Waterbury, Vermont. In 1994, approximately 275,000
people visited the plant, making it (the Company believes) the
single most popular tourist attraction in the State.
Franchise shops are an integral part of the Company's
marketing efforts and work on the local level contributes to the
Company's three part mission. A franchise is required to spend at
least 4% of its gross sales on community/self directed marketing,
sampling, advertising and participation in certain Ben & Jerry's
selected promotions.
The introduction of Ben & Jerry's Smooth (No Chunks!) line of
flavors in the Spring of 1994 included a mass media, TV, print and
outdoor national marketing campaign. Also in 1994, the Company
continued its "Call for Kids" campaign. A 1-800 telephone number
was presented on all packages and on collateral materials as well.
This campaign was designed in conjunction with the Children's
Defense Fund, a non-profit organization based in Washington, D.C.,
that speaks on behalf of children in this country to see that they
get a Head Start, a Fair Start, a Safe Start and a Healthy Start.
In June 1994 the Company, as part of its decision to hire a new
Chief Executive Officer, announced a national public "contest"
centered on an Uncle Sam-like "We Want YOU to Be Our CEO" poster.
The contest asked applicants to explain in 100 words, "Why I Would
Be a Great CEO for Ben & Jerry's" This contest resulted in a
significant amount of publicity and thousands of creative entries
that came in from all over the country and the world.
Franchise Program
As of December 31, 1994, there were 105 franchised Ben &
Jerry's "scoop shops", as compared with 100 stores open at
December 25, 1993. The franchised "scoop shops" are located in
New England, New York, the mid-Atlantic region, Georgia, Florida,
Ohio, Indiana, Illinois and California.
During 1994, the Company opened 5 additional franchised
"scoop shops" under single store and area franchise agreements
discussed below. Ben & Jerry's has changed its policy limiting
the development of individual franchise store openings and is
actively pursuing locations in selected markets around the
country.
The Company's domestic franchise agreements with respect to
individual stores are for a ten-year term with an option to the
franchisee to renew for a second ten-year term. The agreements
grant the franchisee an exclusive area for bulk ice cream and
frozen yogurt with certain exceptions and require the franchisee
to purchase from the appropriate local distributor Ben & Jerry's
ice cream, frozen yogurt and certain other products, principally
baked goods and hot fudge sauce. Franchisees pay an initial
franchise fee, currently $25,000 per store, and each franchisee is
required to make the advertising payments described above. The
franchise agreements with stores sponsored by charitable
organizations provide for waivers of certain provisions.
In addition, the Company has entered into three exclusive
area franchise agreements. Under these agreements, the franchisee
agrees to pay a specified negotiated franchise fee in installments
and to open a certain number of stores in a particular territory
according to a specified schedule. The franchisee is given
exclusive franchise rights in the territory, subject to conditions
specified in the agreements. Under its current area franchise
agreements, franchisees have agreed to open an aggregate of 55
stores, primarily in California, 27 of which had been opened as of
December 31, 1994 in accordance with amended build-out schedules.
The Company's Canadian subsidiary also has four franchised Ben &
Jerry's "scoop shops" in Canada.
International
In 1992 the Company repurchased the Canadian rights to Ben &
Jerry's products which it had previously licensed in 1987. The
Company has not yet formulated a production and marketing plan for
introducing the distribution of Ben & Jerry's packaged pints in
Canada. In 1987, the Company granted an exclusive license to
manufacture and sell Ben & Jerry's ice cream in Israel.
In 1990, the Company entered into a joint venture agreement
with certain individuals in the former Soviet Union to establish a
Ben & Jerry's "scoop shop" in the Russian state of Karelia. The
Company's goal is to provide a model of a small scale private
enterprise in the former Soviet Union and to foster international
cooperation and global understanding. The joint venture is
currently operating three scoop shops in Karelia.
The Company regularly investigates the possibilities of
entering new markets and may at some future date enter additional
foreign markets, particularly in Europe and the Pacific Rim. In
March 1994 the Company started shipping a small amount of its
products to the United Kingdom to smaller specialty stores. Ben &
Jerry's ice cream products are now carried at the United Kingdom's
largest grocery store chain, Sainsbury's and in 1995 will be sold
to the majority of larger retailers in the United Kingdom.
Competition
The super premium ice cream and frozen yogurt business is
highly competitive. The Company's principal competitor is The
Haagen-Dazs Company, Inc. Other significant competitors are
Dannon, Healthy Choice and Columbo. Haagen-Dazs, an industry
leader in the super premium ice cream market, is owned by The
Pillsbury Company, which in turn is owned by Grand Metropolitan
PLC, a British food and liquor conglomerate. Grand Metropolitan
is a large, diversified company with resources significantly
greater than the Company's, and Haagen-Dazs has significant shares
of the markets which the Company has entered in recent years.
Haagen-Dazs has also entered substantially more foreign markets
than the Company (including certain markets in Europe and the
Pacific Rim). Haagen-Dazs and certain other competitors also
market flavors using pieces of cookies and candies as ingredients.
In the ice cream novelty segment, the Company competes with
several well-known brands, including Haagen-Dazs and Dove Bars,
manufactured by a division of Mars, Inc. Both of these other
brands have achieved far larger shares of the novelty market than
the Company.
During 1994 the Company noted that the premium category
experienced unprecedented promotional activity fueled by the
national competition between Dreyer's Grand Ice Cream, Inc. and
Breyer's Ice Cream (owned by Unilever, a large international food
company). In May 1994 Dreyer's announced that as part of its
strategic five year plan to accelerate the sales of their branded
premium products Dreyer's was increasing its consumer marketing
efforts and expanding its distribution system into additional U.S.
markets. Under the plan, Dreyer's expects to increase the amount
of spending for advertising and consumer promotion of its Dreyer's
and Edy's products from a level of approximately $12 million in
1993 to $40-50 million annually in 1994 through 1998.
There are a number of other super premium brands, including
some significant regional ice cream companies and some new
entries. Increased competition and the increased consumer demand
for new lower fat, lower cholesterol products like low fat or
nonfat frozen yogurt and low fat ice cream, combined with limited
shelf space within supermarkets, may have, in general, made
market entry harder and has already forced some brands out of some
markets. The ability to introduce innovative new flavors and low
fat offerings on a periodic basis is also a significant
competitive factor. The Company expects strong competition to
continue, including price/promotional competition, competition for
adequate distribution and competition for limited shelf space
within the frozen dessert category in supermarkets and other food
retail outlets.
Seasonality
The ice cream, frozen yogurt and frozen dessert industry
generally experiences the highest volume during the spring and
summer months and the lowest volume in the winter months.
Regulation
The Company is subject to regulation by various governmental
agencies, including the United States Food and Drug Administration
and the Vermont Department of Agriculture. It must also obtain
licenses from the states where Ben & Jerry's ice cream and frozen
yogurt are sold. The criteria for labeling low-fat/low-
cholesterol and other health-oriented foods was revised, and in
some respects made more stringent, by the FDA. The Company, like
other companies in the food industry, made changes in its labeling
in response to these regulations and is in compliance. The Company
cannot predict the impact of possible further changes that it may
be required to make in response to legislation, rules or inquiries
made from time to time by any governmental agencies. FDA
regulations may, in certain instances, affect the ability of the
Company, as well as others in the frozen desserts industry, to
develop and market new products. Nevertheless, the Company does
not believe these legislative and administrative rules and
regulations will have a significant impact on its operations.
In connection with the operation of all plants, the Company
must comply with the Vermont environmental laws and regulations
relating to air quality, waste management, and other related land
use matters. The Company maintains wastewater discharge permits
for all of its manufacturing locations. The Waterbury plant and
the new St. Albans plant pretreat production effluent prior to
discharge to the municipal treatment facility. The Company
believes that it is in compliance with all of the required
operational permits relating to environmental regulations.
The Company believes that it is in compliance in all material
respects with the other regulatory requirements applicable to its
operations and that continuing expenditures for compliance with
environmental or other regulatory requirements will not materially
affect its results.
Trademarks
"Ben & Jerry's", "Cherry Garcia", "Chunky Monkey", "Chubby
Hubby" and "Peace Pops", are registered trademarks of the
Company. Some of the Company's other trademarks include "White
RussianTM" and "Vermont's FinestTM".
Employees
At December 31, 1994, Ben & Jerry's employed 537 people.
This represents a 7% increase from the 500 people employed by the
Company at December 25, 1993.
The Ben & Jerry's Foundation
In 1985, Ben Cohen, Chairperson of the Board, contributed a
portion of the equity of the Company which he then owned to The
Ben & Jerry's Foundation, Inc., a charitable organization under
Section 501(c)(3) of the Internal Revenue Code, in order to enable
the Foundation to sell such equity and invest the net proceeds
(approximately $598,000) in income-producing securities to
generate funds for future charitable grants. Until March 1994,
the Foundation was the recipient of the bulk of the Company's cash
charitable contributions and provided the principal means for
carrying out the Company's cash charitable giving policy. In
March 1994 the Board of Directors revised the process to make
philanthropic giving more meaningful for and connected to the
employees of the Company. Employees serving in Community Action
Teams now provide the principal means for carrying out the
Company's cash charitable giving policy in the State of Vermont.
The Foundation, with input from its employee led grant making
committee, provides the principal means for carrying out the
Company's cash charitable giving policy across the nation. The
Foundation continues to target its grants to local groups
concerned with the welfare of children and their families, and
other grass roots social change organizations.
In October 1985, pursuant to stockholder authorization, the
Company sold to the Foundation all of the 900 authorized shares of
Preferred Stock for $10 per share. The Preferred Stock gives the
Foundation a special class voting right to act with respect to
certain mergers and other Business Combinations (as defined in the
Company's charter). The sale of Preferred Stock was designed to
perpetuate the relationship between the Foundation and the Company
and to assist the Company in its determination to remain an
independent business headquartered in Vermont.
Item 2. Properties
Ben & Jerry's owns a 42.5-acre site in Waterbury, Vermont on
which it operates a 46,000-square-foot plant producing ice cream
and frozen yogurt in packaged pints. The Company also owns a
48,000 square-foot production facility in Springfield, Vermont.
The Springfield plant is used for the production of ice cream
novelties, bulk ice cream and frozen yogurt and at times packaged
pints and quarts.
The Company's property, plant and equipment at its production
facilities in Waterbury and Springfield are subject to various
liens securing a portion of the Company's long-term debt.
In 1991, the Company entered into a twenty-five year lease
with an option to purchase 17.1 acres of land in Rockingham,
Vermont on which the Company constructed, and operates, a 45,000-
square foot central distribution facility. In 1992, the Company
entered into a five-year lease/purchase agreement for a 42-acre
parcel of land in St. Albans, Vermont, the site of the Company's
82,000 square foot new plant.
The Company leases, 25,000 square feet of office space in
Moretown, Vermont in which the Company's executive offices and
administrative departments are located. The Company also leases
space for its retail ice cream parlors in Burlington and
Montpelier, Vermont and 12,000 square feet of storage space in
Waterbury, Vermont. The Company owns two single-family houses,
both situated on land adjacent to its manufacturing facility it
Waterbury, used for a day-care center, employee training and other
purposes.
The Company believes that all of its facilities are well
maintained and in good repair.
Item 3. Legal Proceedings
The Company is subject to certain litigation and claims in
the ordinary course of business which management believes are not
material to the Company's business.
Item 4.Submission of Matters to Vote of Security Holders
No matters were submitted to a vote of security holders of
the Company during the fourth quarter of 1994.
PART II
Item 5.Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's Class A Common Stock is traded on the NASDAQ
National Market System under the symbol BJICA. The following
table sets forth for the period January 1, 1993 through March 24,
1995 the high and low closing sales prices of the Company's Class
A Common Stock for the periods indicated, adjusted to reflect all
stock splits.
High Low
1993
First Quarter...................... $31 1/2 $22 3/4
Second Quarter..................... 32 24
Third Quarter...................... 26 18 3/4
Fourth Quarter..................... 19 1/2 15 3/4
1994
First Quarter...................... $20 $14 3/4
Second Quarter..................... 18 1/2 14
Third Quarter...................... 16 3/4 13
Fourth Quarter..................... 14 9 1/2
1995
First Quarter (through March 24)... $14 $ 9 5/8
The Class B Common Stock is generally non-transferable, and
there is no trading market for the Class B Common Stock. The
Class B Common Stock is freely convertible into Class A Common
Stock on a share-for-share basis, and transferable thereafter.
The Company has never declared a cash dividend on its Class A
Common Stock or the Class B Common Stock and the current policy of
its Board of Directors is to retain earnings for expansion and
development of the Company's business. Accordingly, the Board of
Directors does not anticipate declaring any cash dividends on the
Class A or Class B Common Stock in the foreseeable future. See
"Description of Capital Stock-Dividends."
As of March 24, 1995, there were 11,080 holders of record of
the Company's Class A Common Stock and 2,604 holders of record of
the Company's Class B Common Stock.
Anti-Takeover Effects of Class B Common Stock and Preferred Stock
The holders of Class A Common Stock are entitled to one vote
for each share held on all matters voted on by stockholders,
including the election of directors. The holders of Class B
Common Stock are entitled to ten votes for each share held in the
election of directors and on all other matters. The Class B
Common Stock is generally nontransferable, and there is no trading
market for the Class B Common Stock. The Class B Common Stock is
freely convertible into Class A Common Stock on a share-for-share
basis and transferable thereafter.
The Company has been advised that Mr. Ben Cohen (Chairperson
and a director of the Company), Mr. Jerry Greenfield (Vice
Chairperson and a director of the Company), Mr. Fred Lager (a
director and consultant to the Company) and Mr. Jeff Furman a
director and consultant to the Company) (collectively, the
"Principal Stockholders") presently intend to retain substantial
numbers of shares of Class B Common Stock. As a result of
conversions by "public" stockholders of Class B Common Stock, in
order to enable their sales of such securities, the Class B Common
Stock is now held disproportionately by Company insiders,
including the above-named four directors who are Principal
Stockholders. See "Security Ownership of Certain Beneficial
Owners and Management." As of March 24, 1995, these four
principal individual stockholders held shares representing 47.7%
of the aggregate voting power in elections of directors and
various other matters but only 20.2% of the aggregate common
equity outstanding, permitting them, as a practical matter,
generally to decide elections of directors and various other
questions submitted to a vote of the Company's stockholders even
though they might sell substantial portions of their Class A
Common Stock.
The Board of Directors, without further stockholder approval,
may authorize the issuance of additional shares of Class B Common
Stock in the future and sell shares of Class B Common Stock held
in the Company's treasury; however, issuance or sale of additional
shares of Class B Common Stock is not currently permitted under a
rule of the NASDAQ-NMS, except under limited circumstances,
including pro rata stock dividends or splits.
In 1985 the Company sold 900 shares of Preferred Stock at a
price of $10 per share to The Ben & Jerry's Foundation, Inc. (the
"Foundation"). While the Foundation is a charitable entity
legally separate from the Company, it may be deemed to be an
affiliate of the Company because two of the three current
directors of the Foundation are Messrs. Greenfield and Furman.
The Preferred Stock gives the Foundation a special class voting
right to act with respect to certain Business Combinations (as
defined in the Company's charter). The sale of the Preferred
Stock to the Foundation effectively limits the voting rights that
holders of the Class A Common Stock and Class B Common Stock, the
owners of virtually all of the equity in the Company, would
otherwise have with respect to Business Combinations (as defined).
This may have the effect of limiting such common stockholders'
participation in certain transactions such as mergers, other
Business Combinations (as defined) and tender offers, whether or
not such transactions might be favored by such common
stockholders.
The Class B Common Stock and the Preferred Stock may be
deemed to be "anti-takeover" devices in that the Board of
Directors believes the existence of these securities will make it
difficult for a third party to acquire control of the Company on
terms opposed by the holders of the Class B Common Stock,
including primarily the Principal Stockholders, and the Foundation
or for incumbent management and the Board of Directors to be
removed.
Item 6.Selected Financial Data
The following table contains selected financial information
for the Company's fiscal years 1990 through 1994.
Summary of Operations:
(In thousands except per share data)
____________________Year Ended____________________
12/31/94 12/25/93 12/26/92 12/28/91 12/29/90
Net sales............. $148,802 $140,328 $131,969 $96,997 $ 77,024
Cost of sales.......... 109,760 100,210 94,389 68,500 54,203
Gross profit.......... 39,042 40,118 37,580 28,497 22,821
Selling, general
and administrative
expenses.............36,253 28,270 26,243 21,264 17,639
Asset write-down....... 6,779
Other income
(expense)--net..... 229 197 (23) (729) (709)
Income before income
taxes ...............(3,761) 12,045 11,314 6,504 4,473
Income taxes........... (1,893) 4,845 4,639 2,765 1,864
Net income............. (1,868) 7,200 6,675 3,739 2,609
Net income per common
share{1}............$ (0.26) $ 1.01 $ 1.07 $ 0.67 $ 0.50
Weighted Average common
shares outstanding1 7,148 7,138 6,254 5,572 5,225
Balance Sheet Data:
__________________Years Ended___________________
12/31/94 12/25/93 12/26/92 12/28/91 12/29/90
Working capital $ 37,456 $ 29,292 $ 18,053 $ 11,035 $ 8,202
Total assets 120,295 106,361 88,207 43,056 34,299
Long-term debt 32,419 18,002 2,641 2,787 8,948
Stockholders' equity2 72,502 74,262 66,760 26,269 16,101
_______________________
1 The per share amounts and average shares outstanding have been
adjusted for the effects of all stock splits, including stock splits
in the form of stock dividends.
2 No cash dividends have been declared or paid by the Company on its
capital stock since the Company's organization. The Company intends
to reinvest earnings for use in its business and to finance future
growth. Accordingly, the Board of Directors does not anticipate
declaring any cash dividends in the foreseeable future.
Item 7.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 Statement of Operations and
the percentage increase (decrease) of such items as compared to the
indicated prior period.
Annual Increase (Decrease)
Percentage of Net Sales 1994 1993 1992
________Year Ended_____ Compared Compared Compared
12/31/94 12/25/93 12/26/92 to1993 to1992 to1991
--------- -------- -------- ------ ----- ------
Net sales 100.0% 100.0% 100.0% 6.0% 6.3% 36.1%
Cost of sales 73.8 71.4 71.5 9.5 6.2 37.8
Gross profit 26.2 28.6 28.5 (2.7) 6.8 31.9
Selling, general and
administrative expenses 24.4 20.2 19.9 28.2 7.7 23.4
Asset write-down ( 4.6) n/a
Other income (expenses) 0.2 0.2 0.0 15.8 0.0 (96.9)
--- ---- ---- ---- ---- ------
Income (loss) before
income taxes ( 2.6) 8.6 8.6 (131.2) 6.5 74.0
Federal and state income
taxes ( 1.3) 3.5 3.5 (139.1) 4.4 67.8
Net income (loss) ( 1.3)% 5.1% 5.1% (126.0)% 7.9 % 78.5%
======= ==== ==== ======== ===== =====
Sales
Although net sales in the fourth quarter declined 2% from the
fourth quarter of 1993 and were lower than expected, net sales in
1994 overall increased 6.0% to $149 million from $140 million in
1993. This was primarily the result of a 7% increase in net sales of
packaged pints. The increase in pint sales is primarily due to sales
of the Company's new "Smooth, No Chunks" line which was introduced
nationally during the months of March through May 1994. Sales of the
Company's reformulated and repackaged Peace Pops resulted in an
increase in Peace Pop sales. However this was offset by the absence
of sales of the Brownie Bar which the Company discontinued
manufacturing in May 1993, resulting in a approximately the same
level of net sales of novelties overall in 1994 as in 1993.
Pint sales represented 85% of total net sales in 1994 and 1993
as compared to 83% in 1992. Net sales of 2 1/2 gallon bulk
containers represented approximately 7% of total net sales in 1994
and 8% in 1993 and 1992. Net sales of novelties accounted for
approximately 5% of total net sales in 1994 and 1993 compared with 7%
in 1992. Net sales from the Company's retail stores represented 3%
of total net sales in 1994 and 2% in 1993 and 1992.
Net sales in 1993 increased 6.3% to $140 million from $132
million in 1992. This increase is attributable to a 7% increase in
unit volume of packaged pints, an average price increase of 3% on
packaged pints, and a decline in net sales of novelties accounting
for approximately 3% of total net sales. The increase in packaged
pints sales is primarily due to a 35% increase in unit sales of
frozen yogurt pints, which were introduced in January 1992. The
decrease in net sales of novelties is attributable to substantially
lower sales of the Brownie Bar, a product that the Company
discontinued manufacturing in May 1993, partially offset by higher
sales of the Company's Peace Pop line.
Cost of Sales
Cost of sales in 1994 increased approximately $9.6 million or
9.5% over the same period in 1993 and overall gross profit as a
percentage of net sales decreased from 28.6% in 1993 to 26.2% in
1994. Overall gross profit in 1994 has been negatively impacted by
inventory management problems and production inefficiencies, as well
as start up costs associated with certain flavors of the new "Smooth,
No Chunks" ice cream line in packaged pints. The significant
increase in the number and the complexity of some of the pint flavors
being produced requires a higher level of production planning,
purchasing, inventory management and operational systems than
currently exists in the Company. The Company is actively addressing
these manufacturing issues by developing changes in its systems to
return to a more cost-efficient level of production planning,
purchasing, inventory management and manufacturing.
The lower gross profit as a percentage of sales also reflects higher
manufacturing costs due to more product being produced for the
Company by Edy's Grand Ice Cream, a subsidiary of Dreyer's Grand Ice
Cream, at its plant in Fort Wayne, Indiana. In 1994 approximately
40% of the packaged pints manufactured by the Company were produced
by Edy's as compared to 37% in 1993.
Cost of sales in 1993 increased approximately $5.8 million or
6.2% over 1992 and overall gross profit as a percentage of net sales
remained the same, 28.6% in 1993 compared to 28.5% in 1992. The
gross profit reflects lower manufacturing costs due to less product
being produced for the Company by Edy's Grand Ice Cream, a subsidiary
of Dreyer's Grand Ice Cream, at its plant in Fort Wayne, Indiana. In
1993, approximately 37% of the packaged pints manufactured by the
Company were produced by Edy's as compared to 42% in 1992.
Offsetting these savings were higher manufacturing costs associated
with early runs of new flavors.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 28% to
$36.3 million in 1994 from $28.3 million in 1993 and increased as a
percentage of net sales to 24.4% in 1994 from 20.2% in 1993. This
increase primarily reflects increased marketing and selling expenses,
including higher than anticipated coupon redemption expenses,
associated with promoting the new "Smooth, No Chunks" line as well as
the Company's taking over the distribution arrangements to the
smaller classes of trade in the New York market and one-time costs
associated with changes in distribution arrangements in the United
Kingdom.
Selling, general and administrative expenses increased 8% to
$28.3 million in 1993 from $26.2 million in 1992 and was 20.2% of net
sales in 1993 compared to 19.9% in 1992. This increase reflects
increased marketing and selling expenses as well as a general
increase in the Company's administrative infrastructure.
Asset Write-Down
1994 results include a pretax charge of $6.8 million,
representing a write-down of certain assets of the Company's new St.
Albans, Vermont plant currently under construction, including a
portion of the previously incurred capitalized interest and project
management costs. The impact of this charge on both the 1994 fourth
quarter and full year 1994 results was $4.1 million or $0.57 per share.
Following substantial delays with the implementation and
completion of certain automated handling processes and refrigeration
hardening equipment of the new plant and after receipt of a report from an
outside engineering firm experienced in the refrigerated food industry, the
Company decided to replace certain of the software and equipment
installed at the new plant.
The Company began manufacturing at the new plant in March, 1995,
utilizing a temporary set-up on one production line. Normal
production on two lines is currently expected by late summer.
Other Income (Expenses)
Other income (expense)-net increased approximately $31,000 in
1994 compared to 1993 primarily due to higher interest income
partially offset by higher interest expense. Interest income
increased $277,000 reflecting interest earned on investments.
Interest expense increased $191,000 reflecting the issuance of the
$30 million Series A and B Notes bearing interest at a weighted
average rate of 5.84%. Interest expense was reduced during 1994 by
capitalization of interest as part of the cost of the new plant.
Other income (expenses)-net increased approximately $220,000 in
1993 compared to 1992 primarily due to higher interest income. Interest
income increased $363,000 reflecting interest earned on investments
made with the proceeds of the Company's public stock offering in
September 1992 and the issuance of $15,000,000 of a total aggregate
principal amount of $30,000,000 Series A and B Senior Notes in October
1993, pending their use in the Company's business. Interest expense
decreased $77,000 due to capitalization of interest in 1993 as part of the
cost of the new plant currently under construction in St. Albans, Vermont.
Other expense increased $220,000 primarily due to increased royalty
expenses and a reduction of royalty income.
Income Taxes
In 1994 the pretax $6.8 million asset write-down resulted in
the Company's experiencing a loss for the year and a corresponding
benefit for income taxes of $1.9 million as compared to a provision
for income taxes of $4.8 million in 1993. The Company's effective
tax rate increased to 50.3% in 1994 from 40.2% in 1993 reflecting
higher income tax credits and tax-exempt interest income in 1994 as
compared to 1993. Management expects 1995's effective rate to
decline to approximately 40%.
Income taxes increased $206,000 while the Company experienced a
lower effective rate of 40.2% in 1993 as compared with an effective rate
of 41% in the prior year. This rate decrease is attributable to a lower
overall state tax rate than in previous years as a result of a higher
percentage of income being taxed in states with lower rates.
Net Income
As a result of the foregoing, including the asset write-down
described above, the Company experienced a net loss of $1.9 million in
1994, a decrease of $9.1 million from a $7.2 million net income in
1993 and $6.7 million net income in 1992. Net (loss) income as a
percentage of net sales was (1.3%) in 1994 and 5.1% in 1993 and 1992.
Seasonality
The Company typically experiences more demand for its products
during the summer than during the winter.
Inflation
Inflation has not had a material effect on the Company's business to
date. Management believes that the effects of inflation and changing
prices have been successfully managed, with both margins and earnings
being protected through a combination of pricing adjustments, cost control
programs and productivity gains.
Liquidity and Capital Resources
The Company's working capital at December 31, 1994 was
approximately $37.5 million as compared to $29.3 million at December 25,
1993. This $8.2 million increase was primarily due to increases of $6.1
million in cash and cash equivalents resulting from proceeds of the March
1994 issuance of Senior Notes described below and $2.1 million income
taxes receivable due to the net loss attributable to the asset write-down
described above.
Net cash provided by operations in 1994 was approximately $4.6
million. Approximately $26 million cash was used for net additions to
property, plant and equipment, primarily for the new plant currently being
constructed in St. Albans, Vermont. Funds were provided by operations,
cash and investments existing at December 25, 1993 and by the issuance
of $15 million of Senior Notes in March 1994. At December 31, 1994 cash
and cash equivalents were $20.8 million.
Inventories have remained at the same level at December 31, 1994
as compared to December 25, 1993.
During the second quarter of 1989, the Company entered into a
manufacturing and warehouse agreement with Edy's Grand Ice Cream, a
subsidiary of Dreyer's Grand Ice Cream, Inc., to manufacture product at
Edy's plant in Fort Wayne, Indiana in accordance with
specifications and quality control provided by the Company and using
dairy products from Vermont. In September 1994 the Company amended
this agreement to extend the period through September 1995. The
agreement specifies certain minimum quantities which the Company is
obligated to purchase which represented approximately 1.9 million gallons
and $13.2 million in future commitments at December 31, 1994. The
agreement also specifies certain maximum quantities which the Company
may require Edy's to manufacture. This agreement assists the Company in
meeting its current and near-term expected demand. Because per unit
manufacturing costs are higher under this agreement than at
the Company's plants, the Company expects this agreement to continue to
have an adverse impact on its gross profit as a percentage of net sales
throughout the term of this agreement.
In October 1992, the Company began construction of a new third
plant in St. Albans, Vermont. At December 31, 1994, the Company has
spent approximately $32 million to date, net of the write-down of certain
assets, on building and equipping the new plant ($22.9 million in 1994) and
anticipates additional capital costs of approximately $8 million in 1995.
The cost of building and equipping the new plant, net of the write-down of
certain assets (described above under "Asset Write-Down") is currently
estimated to be approximately $40 million. Construction is currently
scheduled to be completed in the latter part of 1995.
In addition to the construction expenditures for the new plant,
other capital expenditures in 1994 totaled $3.3 million. These
projects included equipment upgrading the Waterbury and Springfield
plants as well as certain distribution related capital expenditures in
New York City. The Company anticipates capital expenditures in 1995 for
items other than the new plant of approximately $5 million
principally for equipment upgrades in the Waterbury and Springfield
plants.
Management believes that internally generated funds, cash
currently on hand, investments held in cash equivalents (pending their use
in the business), and equipment lease financing and/or borrowings under
unsecured bank lines of credit will be adequate to meet anticipated
operating and capital requirements.
On March 31, 1994, the Company issued $5 million of Series A
Senior Notes and $10 million of Series B Senior Notes, making a total
of $30 million aggregate principal amount of Senior Notes outstanding.
These funds are being held in cash equivalents pending their use in the
business.
On September 29, 1994, the Company entered into line of credit
agreements, for an aggregate of $20 million, with The First National
Bank of Boston and the Bank of Vermont. These are unsecured
agreements providing for borrowings from time to time, expiring at
September 29, 1995 with interest at either the banks' Base Rate or the
Eurodollar rate plus 1.25%. As of March 25, 1995, there have been no
borrowings under these lines of credit agreements.
Item 8. Financial Statements and Supplementary Data
See the index to the financial statements and financial statement
schedules in Item 14, which financial statements and financial statement
schedules are filed as part of this report at the pages indicated in such
index and are incorporated in this Item 8 by
reference.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Company
Directors and Executive Officers
The directors and executive officers of the Company are as follows:
Name Age Office
---- --- ------
Ben Cohen......................43 Chairperson and Director
Robert Holland Jr..............54 President, CEO and Director
Jerry Greenfield...............43 Vice Chairperson and Director
Elizabeth Bankowski............47 Director and Director of Social Mission
Merritt C. Chandler............78 Director
Jeffrey Furman.................51 Director
Fred Lager.....................40 Director
Frederick A. Miller............48 Director
Henry Morgan...................68 Director
Frances Rathke.................34 Chief Financial Officer, Treasurer and Secretary
All directors hold office until the 1995 annual meeting of
stockholders of the Company and until their successors are
elected and qualified. The Board of Directors has an Audit
Committee on which Messrs. Morgan (Chairperson), Chandler and
Lager serve and a Compensation Committee on which Messrs. Morgan
(Chairperson), Chandler, Furman and Miller serve. Officers
serve until their successors are elected and qualified.
Ben Cohen, a founder of the Company, was President and
Chief Executive Officer from January 1983 until February 1989,
when he became Chairperson. From January 1, 1991 until January
29, 1995 he was the Chief Executive Officer of the Company. As
Chairperson he spends the principal portion of his time on new
product development and marketing strategy, in addition to those
matters considered by the Board of Directors at its monthly
meetings.
Mr. Cohen first became involved with ice cream in 1968 as
an independent mobile ice cream retailer with Pied Piper
Distributors, Inc., Hempstead, New York, during three summers.
He was promoted within the Pied Piper organization, and his
responsibilities were broadened to include warehousing,
inventory control and driver training. He spent three years,
from 1974 to 1977, as a crafts teacher at Highland Community,
Paradox, New York, a residential school for disturbed
adolescents, before moving to Vermont to form the Company with
Jerry Greenfield. Mr. Cohen has been a director of the Company
since 1977. Mr. Cohen is a director of Community Products,
Inc., manufacturer of Rain Forest Crunch candy, a director of
Oxfam America and a trustee of Hampshire College.
Robert Holland Jr. was hired as Chief Executive Officer
of the Company effective January 30, 1995. In March 1995 he
assumed Charles Lacy's position as a Director of the Company.
He had been Chairperson and Chief Executive Officer of ROHKER-J,
a consulting firm for Fortune 500 companies since 1991. Mr.
Holland was a Director and Senior Vice President of Gilreath
Manufacturing, Inc. from 1987 to 1990 and was appointed
Chairperson and Chief Executive Officer in March 1990 after the
company voluntarily filed for protection under the Chapter 11
provision of the U.S. Bankruptcy Code. Mr. Holland remained as
Chairperson and Chief Executive Officer until 1991. From 1984
to 1987, Mr. Holland was Chairperson and Chief Executive Officer
of City Marketing which engaged in beverage distribution. From
1968 through 1991, Mr. Holland was an associate and then partner
with McKinsey & Company, Inc. where he managed projects for
global concerns involving operational, strategic and marketing
issues. He holds a Bachelor's degree in Mechanical Engineering
from Union College and a M.B.A. from Bernard Baruch College with
a focus on International Marketing. Mr. Holland is Chairperson
of the Board of Trustees at Spelman College, a trustee of
Atlanta University Center and Mutual of New York and is a member
of the Board of Directors of Middlesex Mutual Assurance and the
Harlem Junior Tennis Program.
Jerry Greenfield became a director and Vice Chairperson
of the Board in 1990 and spends the principal portion of his
time on sales, promotion and distribution. Mr. Greenfield is a
founder of the Company, and was President from 1977 until
January 1983. After graduating from Oberlin College in 1973
with a B.A. in Biology, Mr. Greenfield engaged in biochemical
research at the Public Health Research Institute in New York
City and then at the University of North Carolina, Chapel Hill.
Mr. Greenfield moved to Vermont to establish the Company with
Mr. Cohen in 1977. Effective in January 1983, Mr. Greenfield
elected to withdraw from the daily operations of the Company and
moved to Arizona. Mr. Greenfield moved back to Vermont in 1985
and through 1986 was a consultant to the Company, participating
in promotional activities, special projects and certain major
policy decisions. Effective January 1, 1987, Mr. Greenfield
became a full-time employee of the Company.
Elizabeth Bankowski became a director of the Company in
1990, having served as a consultant to the Company since earlier
that year. She joined the Company as an employee and Director
of Social Mission Development in December, 1991. Ms. Bankowski
was Chief of Staff to the Governor of Vermont from 1985 through
1989. She held the office of Secretary of Civil and Military
Affairs.
Merritt C. Chandler became a director of the Company in
1987. He has been Business Manager of the Addison, Vermont
Central Supervisory Union, a group of school districts, since
1985. Until 1982, Mr. Chandler was an executive of Xerox
Corporation. From 1982 until 1985 he was an independent
business consultant. Mr. Chandler acted as project manager in
connection with the construction of the Company's Waterbury,
Vermont plant. Mr. Chandler serves as a member of the
Compensation Committee of the Board of Directors and as a member
of the Audit Committee of the Board of Directors.
Jeffrey Furman has been a director and a consultant or
officer of the Company since 1982. Effective March 2, 1991 Mr.
Furman resigned as an officer. He currently serves as a
director of and consultant to the Company. Mr. Furman serves as
a member of the Compensation Committee of the Board of
Directors.
Fred Lager has been a director and consultant to or
officer of the Company since 1982. He joined the Company as
Treasurer and General Manager in November 1982. From February
1989 until his resignation in early 1991, he was President and
Chief Executive Officer of the Company. Mr. Lager is a director
of Working Assets Funding Service. Mr. Lager serves as a member
of the Audit Committee of the Board of Directors.
Frederick A. Miller became a director of the Company in
1992. Since 1985, he has been President of The Kaleel Jamison
Consulting Group, Inc., a strategic cultural change and
management consulting firm, which he joined in 1979. Prior to
joining the firm Mr. Miller was Assistant Director of Corporate
Training at Connecticut General Life Insurance Company (now
Cigna). Mr. Miller serves as a member of the Compensation
Committee of the Board of Directors.
Henry Morgan became a director of the Company in 1987. He
is Dean Emeritus of the Boston University School of Management,
having served as Dean from 1979 to 1986. He is a director of
Cambridge Bancorporation, MedChem Products, Inc. and Symbolics,
Inc. Mr. Morgan serves as Chairperson of the Audit Committee
and as a member of the Compensation Committee of the Board of
Directors.
Frances Rathke was named Chief Financial Officer and
Chief Accounting Officer of the Company in April, 1990 and
Secretary and Treasurer effective January 1, 1991. Ms. Rathke
joined the Company in April 1989 as its Controller. From
September 1982 to March 1989, Ms. Rathke was a manager at
Coopers & Lybrand, independent public accountants, in Boston,
Massachusetts. Ms. Rathke is a certified public accountant.
Other Key Personnel
Charles Lacy, age 38, resigned as President and Chief
Operating Officer of the Company on January 30, 1995 and as a
Director of the Company in March 1995. He held the positions
since January 1991. Mr. Lacy is currently assisting in the CEO
leadership transition. He first joined the Company in 1988 as
Director of Special Projects and became General Manager and
Chief Operating Officer in February 1989. From 1984 until
joining Ben & Jerry's, Mr. Lacy was a finance and business
development executive with United Health Services, a chain of
non-profit hospitals and clinics in upstate New York. He has a
B.A. from Amherst College and an M.B.A. from Cornell University.
Holly Alves, age 39, joined the Company as Director of
Marketing in April 1990. From 1986 to 1990, she was the
Marketing Director of ESPRIT, Inc., a world-wide manufacturer
and retailer of clothing. Prior to that, Ms. Alves worked for
Hannaford Brothers, Inc., a food distributor and supermarket
company, as the Director of Advertising.
Keith Hunt, age 44, joined the Company as Director of
Human Resources in February 1993. From 1982 to 1993 Mr. Hunt
was with Scott Paper Company. His most recent position was
Manager, Human Resources. He also held positions as Manager,
Manufacturing and as Manager of Organizational Effectiveness
providing leadership in a large system change. From 1975 to
1982, Mr. Hunt worked for Procter and Gamble Company as Senior
Consultant/Organizational Development for Research and
Development, Manufacturing and Engineering organizations.
John Stigmon, age 46, joined the Company in July 1991 as
Director of Retail Operations. From 1989 until 1991 he was
employed by Circle K, a convenience store chain, as National
Product Manager of Food Service. From 1987 until 1989 Mr.
Stigmon was self-employed, assisting entrepreneurial companies
in the development of franchise programs. From 1976 until 1987
Mr. Stigmon was employed by Swensen's Ice Cream Co. in various
management positions, including Group Vice President of
Franchise Operations from 1984 to 1987.
Rei Tanaka, age 51, joined the Company in March 1994 as
Director of Sales. From January 1993 to March 1994, Mr. Tanaka
was an independent consultant/merger and acquisition broker and
served on several voluntary boards, including the St. Lawrence
Centre for the Arts. From 1991 to December 1992, Mr. Tanaka was
a Marketing and Sales Consultant to Meteor Publishing
Corporation, a division of Hosiery Corporation of America. From
1990 until 1991 Mr. Tanaka was Senior Vice President, Marketing
and Sales/Circulation for Marvel Entertainment Group, Inc. From
1978 until 1989 Mr. Tanaka was employed by Harlequin Enterprises
Ltd., a division of Torstar Corporation in various management
positions in North American and international sales and
distribution divisions, including Executive Vice President,
North American Retail Division.
________________________________
The Company is currently interviewing applicants for
Director of Manufacturing. Mr. Lager is currently providing
consulting services as the Acting Director of Manufacturing.
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth the cash compensation paid by
the Company in Fiscal Years 1992 - 1994 as well as certain other
compensation paid, awarded or accrued for those years to the
Company's Chief Executive Officer and the Company's other
executive officers at the end of the 1994 fiscal year whose total
annual salary and bonuses exceeded $100,000:
Long-Term
Annual Compensation Compensation
-------------------- ------------
Name and Other Annual Restricted All Other
Principal Position Year Salary Bonus1 Compensation2 Stock Awards Compensation3
------------------ ---- -------- ------ ------------- ------------ -------------
Ben Cohen 1994 $132,500 -- $2,650
Chairperson and CEO 1993 $133,212 -- $2,664
1992 $123,173 $600 $2,469
Jerry Greenfield 1994 $132,745 -- $2,655
Vice Chairperson 1993 $132,517 -- $2,650
1992 $123,173 $600 $2,469
Charles Lacy(4) 1994 $150,358 $735 $3,000
President and COO 1993 $150,262 $1,970 $3,045
1992 $131,346 $2,714 $20,498 $2,635
Frances Rathke 1994 $121,398 $611 $2,440
CFO, Treasurer 1993 $110,000 $1,581 $2,232
and Secretary 1992 $97,557 $2,206 $8,078 $1,959
Elizabeth Bankowski 1994 $115,803 $328 $2,323
Director of Social 1993 $105,000 $694 $2,114
Mission Development 1992 $87,691 $1,041 --
1"Bonus" includes discretionary distributions under the Company's
profit sharing plan pursuant to which a cash bonus was awarded to
all employees (other than co-founders, Ben Cohen and Jerry Greenfield)
and also includes the $600 bonus paid to all employees in 1992.
2"Other Annual Compensation" includes tax reimbursement on restricted
stock awards made in 1991 and gross up.
3 "All Other Compensation" includes company contributions to
401(K) plans.
4Mr. Lacy resigned as President and COO in January 1995.
Option/SAR Grants in 1994
Potential
Realizable
Value at
Percentage Assumed Annual
of Total Rates of
Options/ Stock Price
SARS Exercise Appreciation
Options/ Granted to or for Option Term
SARS Employees Base Price Expiration ---------------
Granted in 1994(1) (per share) Date 5% 10%
-------- ---------- ----------- ---------- ------- -------
Ben Cohen 0 0 0 0 0 0
Jerry Greenfield 0 0 0 0 0 0
Charles Lacy 1,430 .8% $16.75 3/31/04 $15,064 $38,174
Frances Rathke 1,185 .7% $16.75 3/31/04 $12.483 $31,634
Elizabeth Bankowski 970 .5% $16.75 3/31/04 $10,218 $25,894
----
(1)Options granted on March 31, 1994 have a ten year term with 50%
vesting in two years and the remaining 50% vesting in four years.
Aggregated Option/SAR Exercises in 1994 and 1994 Year-End
Option/SAR Values
Shares Value of Unexercised
Acquired Number of Unexercised In-The-Money Options/
on Options/SARS at 12/31/94 SARS at 12/31/94
Exercise ------------------------ ----------------------
(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ------------- ----------- -------------
Ben Cohen 0 0 0 0 0 ---
Jerry Greenfield 0 0 0 0 0 ---
Charles Lacy 0 0 0 1,430 0 ---
Frances Rathke 0 0 0 1,185 0 ---
Elizabeth Bankowski 0 0 0 970 0 ---
Directors who are not employees or full-time consultants of the
Company receive $9,000 per year plus expenses. On December 17, 1992,
two non-employee directors, Mr. Chandler and Mr. Morgan, each received
awards of 1,000 shares of the Company's Class A Common Stock under
the 1992 Non-Employee Directors' Restricted Stock Plan.
The shares had a market value on the date of grant of $28.50 per share.
The Company entered into an Employment Agreement dated as of
August 18, 1994 with Mr. Lacy. Under the terms of the Agreement, Mr.
Lacy receives a base salary of $150,358 per year for the fiscal year
ending December 31, 1994 plus reasonable out-of-pocket expenses and
medical benefits. In addition, the Employment Agreement provides Mr.
Lacy is entitled, in consideration of his covenant not to compete for
the period of four years after the date of termination of employment
(whether such termination is involuntary or voluntary subject to certain
provisions) to severance compensation during the two year period after
termination at the annual rate of $150,000 plus medical insurance
coverage for a period of four years after termination and the transfer
to Mr. Lacy of a $1 million life insurance policy on Mr. Lacy's life and
to provide for continued payment by the Company of the premiums on the
policy for five years following the date of such termination of
employment. In 1995 Mr. Lacy resigned as President, COO and Director
of the Company and has agreed to continue with the Company for a
period of time during the transition to a new Chief Executive Officer.
Item 12.Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information as of March 24,
1995 with respect to the beneficial ownership of the outstanding
shares of Class A Common Stock, Class B Common Stock and Preferred
Stock by (i) all persons owning of record, or beneficially to the knowledge of
the Company, more than five percent of the outstanding shares of Class
A Common Stock, Class B Common Stock or Preferred Stock, (ii) each
director and executive officer of the Company individually, (iii) all
directors and officers of the Company as a group and (iv) The Ben &
Jerry's Foundation, Inc. The mailing address of each of the persons
shown and of the Foundation is c/o the Company, P.O. Box 240, Route
100, Waterbury, Vermont 05676.
Amount of Amount of
Beneficial Beneficial Amount of
Ownership of Ownership of Beneficial
Class A Class B Ownership of
Common Stock Common Stock Preferred Stock
------------ ------------ ---------------
Percentage Percentage Percentage
Number of Number of Number of
of Outstanding of Outstanding of Outstanding
Shares Shares(a) Shares Shares(b) Shares Shares
------- --------- ------- --------- ------ ------
Ben Cohen (c) 614,373 9.8% 487,876 52.6% -- --
Robert Holland Jr. 0 -- -- -- -- --
Fred Lager (d) 25,600 * 53,600 5.8% -- --
Jeffrey Furman (e), (f) 10,000 * 30,300 3.3% -- --
Merritt C. Chandler 1,072 * 36 * -- --
Henry Morgan 2,700 * -- -- -- --
Jerry Greenfield (e) 135,000 2.2% 90,000 9.7% -- --
Frederick A. Miller 400 * -- -- -- --
Elizabeth Bankowski 2,835 * -- -- -- --
Frances Rathke 3,315 * -- -- -- --
All officers and directors
as a group (10 persons) 795,295 12.7% 661,812 71.3% -- --
The Ben & Jerry's
Foundation, Inc. -- -- -- -- 900 100%
______________________
*Less than 1%
(a) Based on the number of shares of Class A Common Stock outstanding
as of March 24, 1995. Each share of Class A Common Stock entitles
the holder to one vote.
(b) Based on the number of shares of Class B Common Stock outstanding
as of March 24, 1995. Each share of Class B Common Stock entitles
the holder to ten votes.
(c) Under the regulations and interpretations of the Securities and
Exchange Commission, Mr. Cohen may be deemed to be a parent of
the Company.
(d) Mr. Lager owns these shares jointly with his wife.
(e) By virtue of their positions as two of the three current directors of
the Foundation, which has the power to vote or dispose of the Preferred
Stock, each of Messrs. Greenfield, a co-founder, Director and Vice
Chairperson of the Company, and Furman, a Director of and consultant to
the Company, may be deemed, under the regulations and interpretations
of the Securities and Exchange Commission, to own beneficially the
Preferred Stock.
(f) Does not include 210 shares of Class A Common Stock and 105 shares
of Class B Common Stock owned by Mr. Furman's wife, as to which he
disclaims beneficial ownership.
(g) While the Foundation is an entity legally separate from the Company,
it may be deemed to be an affiliate of the Company under the securities
laws.
Item 13. Certain Relationships and Related Transactions
Mr. Greenfield, Vice Chairperson, is also a director and
President of the Foundation. Mr. Furman is a director of the
Foundation.
During the year ended December 31, 1994, the Company
purchased Rain Forest Crunch cashew-brazilnut buttercrunch candy
to be included in Ben & Jerry's Rain Forest Crunch flavor ice
cream for an aggregate purchase price of approximately $1,500,000
from Community Products, Inc., a company of which Messrs. Cohen
and Furman are the principal stockholders and of which Mr. Cohen
is also president. Mr. Lager was a director until January 1994.
The candy was purchased from Community Products, Inc. at
competitive prices and on standard terms and conditions. Although
the Company expects to purchase additional quantities of candy
from Community Products, Inc. and had purchase commitments of
approximately $1,500,000 as of March 1995, severance of Ben &
Jerry's relationship with this supplier would not have a material
effect on the Company's business.
Subsequent to year-end 1990, Messrs. Lager and Furman retired
as employees of the Company and as President (and Chief Executive
Officer) and Secretary, respectively. Messrs. Lager and Furman
first provided services to the Company in 1982 and 1978,
respectively, and have been instrumental, along with the co-
founders of the Company, in its emergence as a leading super
premium ice cream business and a socially responsible Vermont
company. The Board has approved the following employment
termination arrangements for Messrs. Lager and Furman, each of
whom remains a director of the Company and a consultant to the
Company.
Under the terms of the Employment Agreement dated January 1,
1984 between the Company and Mr. Lager, Mr. Lager is entitled, in
consideration of his covenant not to compete for the period of two
years after termination of employment, to severance compensation
during that two year period at his annual base salary level in
effect on the date of termination of employment ($100,000 per
year). The Employment Agreement was amended (i) to extend the
termination date from December 31, 1989 to February 2, 1991, (ii)
to provide that the Company pay for family health insurance
coverage under the Company's regular employee health insurance
plan for a twelve year period after termination, (iii) to transfer
to Mr. Lager a $1 million life insurance policy presently held by
the Company on Mr. Lager's life and to provide for continued
payment by the Company of the premiums due on the life insurance
policy (currently $11,165 per year) until the date when the policy
becomes "self-funding", which is estimated to be December 31,
2002, and (iv) to extend the non-compete provisions for an
additional three years (without any additional payment) beyond the
two-year post-employment non-competition period provided for in
the original Employment Agreement.
Under the terms of a Consulting Agreement dated as of January
17, 1991 (the "Original Consulting Agreement"), Mr. Lager agrees
to furnish management consulting services to the Company upon the
Company's request (up to approximately 40 hours per month, at the
Company's request, subject to holidays and vacations) for a five-
year period, commencing February 3, 1991, with compensation being
paid at the rate of $75,000 for the first year, and with $5,000
annual increases for each of the following four years. Under the
Agreement Mr. Lager has agreed not to compete with the Company
during the term of and for a period of two years following the
expiration of the Agreement.
Mr. Lager's Consulting Agreement was amended effective July
1, 1994 to reflect additional consulting services during the
period the Company was searching for a new Chief Executive
Officer. Mr. Lager has been the Acting Director of Manufacturing
since October 1994. The Amendment covered the period July 1, 1994
through December 31, 1994 and suspended the Original Consulting
Agreement payments until the end of this specified period. Under
the terms of the Amendment, Mr. Lager agreed to furnish management
consulting services to the Company on a full-time basis with
compensation at the rate of $3,300 per week plus reasonable out-
of-pocket expenses for the period July 1, 1994 through December
31, 1994 and the termination date of Mr. Lager's Original
Consulting Agreement was extended from February 2, 1996 to July
31, 1996. Effective January 1, 1995 the arrangement for Mr.
Lager's full-time consulting services has been extended until such
time as the CEO and the Board determine that Mr. Lager's full-time
consulting services are no longer needed, at which time Mr. Lager
will provide consulting services at the request of the Company and
at the rate and terms specified in the Original Consulting
Agreement. Commencing January 1, 1995, Mr. Lager's compensation
for full-time consulting services under the arrangement presently
in effect is at the rate of $20,000 per month, in addition to
payments under Mr. Lager's Original Consulting Agreement at $7,900
per month, plus reasonable out-of-pocket expenses.
Under the terms of a Severance and Non-Competition Agreement
dated as of December 31, 1990, Mr. Furman was entitled to two-year
severance/non-competition payments similar to those paid to Mr.
Lager. Under the terms of the Agreement, Mr. Furman was entitled,
as severance and in consideration of his covenant not to compete
for a period of five years after termination of employment, to
compensation payable for the first two years after termination on
March 2, 1991 at the annual rate of $60,000. The Severance and
Non-Competition Agreement also provides for the Company to pay for
family health insurance coverage under the Company's regular
employee health insurance plan for an eight-year period after
termination. In 1994, Mr. Furman was paid $70,300 for consulting
services in connection with his work on behalf of the Company as
the Chair of the CEO Search Committee and consultant for certain
projects including the Russian joint venture, franchise
partnershops and alternative supplier arrangements.
Mr. Holland was hired January 30, 1995 as President and Chief
Executive Officer and has replaced Mr. Lacy as a Director in March
1995. Under Mr. Holland's Employment Agreement which has a term
of four years, Mr. Holland is entitled to a base salary of
$250,000 per year, subject to increase from time to time by the
Board of Directors, and an annual incentive award payable in cash
or vested shares of Class A Common Stock as determined by the
Compensation Committee of the Board of Directors in an amount up
to but not exceeding $125,000, with all or such portion thereof to
be earned on a sliding scale based upon the extent to which the
Committee determines that Mr. Holland has met in each fiscal year
the objectives previously established for that year by the
Compensation Committee. For 1995, the Incentive Award Objectives
will be financial objectives and then for years 1996 and beyond
the Objectives will be financial and non-financial in nature (i.e.
Internal Culture and External Social Responsibility, etc.). Under
the Company's 1985 Stock Option Plan, Mr. Holland received non-
incentive stock options to purchase 180,000 shares of Class A
Common Stock of the Company at an exercise price of 1013/16 per
share equal to the fair market value at the date of grant. The
options have a term of eight years and become exercisable at the
rate of 20,000 shares a year for the first four years, and
thereafter at the rate of 25,000 a year so long as Mr. Holland is
an employee of the Company under this Agreement, provided that, in
lieu of said "regular" annual vesting of options during the fifth
through eighth years, options for 25,000 shares which are at the
time the latest options to become "regularly" exercisable by the
passage of time become exercisable, by acceleration, upon the
Committee's determination by March 15th of each year, commencing
March 15, 1996, that Mr. Holland has met the Non-Financial Option
Objectives previously established for that fiscal year by the
Committee. The agreement provides for termination of employment
by the Company for cause (as defined) and also provides for
termination by the Company other than for cause or by Mr. Holland
for good reason (as defined), in each of which events Mr. Holland
is entitled to receive for the remaining period of the four year
term his base salary and an amount equal to the average Incentive
Award that was earned prior to termination under the Agreement
times the period remaining and all options which could have become
exercisable upon "regular" annual vesting prior to the end of the
four year term shall be accelerated and become vested upon such
termination. The Agreement also provides that during the term and
for two years thereafter Mr. Holland will not compete with the
Company.
Item 14.Exhibits, Financial Statements, and Financial
Statement Schedules, and Reports on Form 8-K
(a) List of financial statements and financial statement
schedules: Form 10-K
Page No.
(1) The following consolidated financial statements
are included in Item 8:
Consolidated Balance Sheets as of December
31, 1994 and December 25, 1993 F-2
Consolidated Statement of Operations for the
years ended December 31, 1994, December 25, 1993
and December 26, 1992 F-3
Consolidated Statement of Stockholders' Equity
for the years ended December 31, 1994,
December 25, 1993 and December 26, 1992 F-4
Consolidated Statement of Cash Flows for the
years ended December 31, 1994, December 25, 1993
and December 26, 1992 F-5
Notes to Consolidated Financial Statements F-6 to
F-13
(2) The following financial statement schedule
is included in Item 14(d):
SCHEDULE II - Valuation and Qualifying
Accounts F-14
All other schedules for which provision is
made in the applicable accounting regulations
of the Securities and Exchange Commission are
not required under the related instructions or
are inapplicable, and therefore have been omitted.
(3) The following designated exhibits are, as
indicated below, either filed herewith or have
heretofore been filed with the Securities and
Exchange Commission under the Securities Act of
1933 or the Securities Exchange Act of 1934 and are
referred to and incorporated herein by reference to
such filings.
Exhibit No.
----------
3.1 Articles of Association, as amended, of the
Company (filed with the Securities and
Exchange Commission as exhibit 3.1 and 3.1.1
to the Company's Registration Statement on
Form-1 (File No. 33-284) and incorporated
herein by reference).
3.1.1 Amendment to Articles of Association on June
27, 1987 (filed as Exhibit 1 to the
Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1987 and
incorporated herein by reference).
3.1.2 Amendment to Articles of Association on
September 7, 1993 (filed as Exhibit 1 to the
Company's Quarterly Report on Form 10-Q for
the period ended June 26, 1993 and
incorporated herein by reference).
3.2 By-laws as amended through August 6, 1992
(filed as Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the year
ended December 25, 1993 and incorporated
herein by reference).
3.2.1 By-laws as amended on September 16, 1994
(filed herewith).
4.1 See Exhibit 3.1.
4.2 See Exhibit 3.2
4.3 Mortgage and Security Agreement among the
State of Vermont, the Company and the Howard
Bank, N.A. (filed as exhibit 4.1 to the
Company's Registration Statement on Form S-1
(file no. 33-284) and incorporated herein by
reference).
4.4 Guaranty by the Company accepted by the
Howard Bank, N.A., Trustee, and Marine
Midland Bank, N.A., as amended (filed as
exhibits 4.2 and 4.2.1 to the Company's
Registration Statement on Form S-1 (file no.
33-284) and incorporated herein by
reference), as amended November 20, 1987
(filed as exhibit 4.4 to the Company's
Registration Statement on Form S-1 (file no.
33-17516) and incorporated by reference), as
amended January 31 and March 10, 1989 (filed
as Exhibit 4.4 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1988 and incorporated herein by
reference).
4.4.1 Amendment to item 4.4 dated July 28, 1992
(filed an Exhibit to the Company's
Registration Statement on Form S-3 (file
no. 33-51550) and incorporated herein by
reference).
4.5 Loan Agreement and Amendment between the
Village of Waterbury, Vermont and the
Company (filed as exhibit 4.4 to the
Company's Registration Statement on Form S-1
(file no. 33-284) and incorporated herein by
reference).
4.6 Second Mortgage and Security Agreement dated
December 11, 1984 between the Company and
the Village of Waterbury, Vermont (filed as
exhibit 4.5 to the Company's Registration
Statement on Form S-1 (file no. 33-284) and
incorporated herein by reference).
4.7 Grant Agreement between the Secretary of
Housing and Urban Development and the
Village of Waterbury, Vermont dated
September 15, 1984 (filed as exhibit 4.6 to
the Company's Registration Statement on Form
S-1 (file no. 33-284) and incorporated
herein by reference).
4.8 Form of Class A Common Stock Certificate
(filed as exhibit 4.8 to the Company's
Registration Statement on Form S-1 (file no.
33-17516) and incorporated herein by
reference).
4.9 Form of Class B Common Stock Certificate
(filed as exhibit 4.9 to the Company's
Registration Statement on Form S-1 (file no.
33-17516) and incorporated herein by
reference).
4.10 Omitted.
4.11 Senior Note Agreement dated as of October
13, 1993 between Ben & Jerry's Homemade,
Inc. and The Travelers Insurance Company and
Principal Mutual Life Insurance Company
(filed as Exhibit 1 to the Company's
Quarterly Report on Form 10-Q for the period
ended September 25, 1993 and incorporated
herein by reference).
The registrant agrees to furnish a copy to
the Commission upon request of any other
instrument with respect to long-term debt
(not filed as an exhibit), none of which
relates to securities exceeding 10% of the
total assets of the registrant.
10.1 Employment Agreement between Bennett R.
Cohen and the Company (filed as exhibit 10.1
to the Company's Registration Statement on
Form S-1 (file no. 33-284) and incorporated
herein by reference).
10.1.1 Amendment to Employment Agreement dated as
of March 27, 1991 (filed as exhibit 10.1 to
the Company's Registration Statement on Form
S-1 (file no. 33-284) and incorporated
herein by reference).
10.2 Employment Agreement between Fred Lager and
the Company (filed as exhibit 10.2 to the
Company's Registration Statement on Form S-1
(file no. 33-284) and incorporated herein by
reference).
10.2.1 Amendment to Employment Agreement dated as
of December 31, 1990 (filed as exhibit
10.2.1 to the Company's Annual Report on
Form 10-K for the year ended December 29,
1990 and incorporated herein by reference).
10.2.2 Consulting Agreement between Fred Lager and
the Company dated as of January 17, 1991
(filed as Exhibit 10.2.2 to the Company's
Annual Report on Form 10-K for the year
ended December 18, 1991 and incorporated
herein by reference).
10.2.3 Amendment to Consulting Agreement between
Fred Lager and the Company dated as of July
1, 1994 (filed herewith).
10.2.4 Amendment to Consulting Agreement between
Fred Lager and the Company dated as of
January 1, 1995 (filed herewith).
10.3 Employment Agreement between Charles Lacy
and the Company dated August 18, 1994 (filed
herewith).
10.4 Omitted.
10.5 Settlement Agreement dated March 20, 1985
between the Company and Haagen-Dazs, Inc.
(filed as exhibit 10.8 to the Company's
Registration Statement on Form S-1 (file no.
33-284) and incorporated herein by
reference).
10.6 Omitted.
10.7 License Agreement between the Company and
L.S. Heath & Sons, Inc. (filed as exhibit
10.12 to the Company's Annual Report on Form
10-K for the year ended December 31, 1986
and incorporated herein by reference).
10.8 Distribution Agreement between the Company
and Dreyer's Grand Ice Cream, Inc. dated
January 6, 1987 (filed as exhibit 10.13 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1986 and
incorporated herein by reference), as
amended as of January 20, 1989 (filed as
exhibit 10.14 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1988 and incorporated herein by reference).
10.8.1 Amendment to Item 10.8 dated August 31,1992
(filed as exhibit 28.1 to the Company's
Registration Statement on Form S-3 (file no.
33-51550) and incorporated here-in by
reference).
10.8.2 Amendment to Item 10.8 dated April 18, 1994
(filed as exhibit 2 to the Company's
Quarterly Report on Form 10-Q dated March
26, 1994 and incorporated here-in by
reference).
10.8.3 Subdistribution Agreement between the
Company and Dreyer's Grand Ice Cream, Inc.
dated February 7, 1994 (filed as exhibit 1
to the Company's Quarterly Report on Form
10-Q dated March 26, 1994 and incorporated
here-in by reference.)
10.9 License Agreement between the Company and
Jerry Garcia and Grateful Dead Productions,
Inc. dated July 26, 1987 (filed as exhibit
10.15 to the Company's Registration
Statement on Form S-1 (file no. 33-17516)
and incorporated herein by reference).
10.10 Omitted.
10.11 Area Franchise Agreement between the Company
and Ben & Jerry's of Indiana Inc. dated
November 18, 1987 (filed as exhibit 10.20 to
the Company's Registration Statement on Form
S-1 (file no. 33-17516) and incorporated
herein by reference).
10.12 Omitted.
10.13 Franchise Agreement between the Company and
Ben & Jerry's of California, Inc. dated
June 13, 1988 (filed as exhibit 10.21 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1988 and
incorporated herein by reference).
10.13.1 Amendment to 10.13 effective December 17,
1990 (filed as exhibit 10.13.1 to the
Company's Annual Report on Form 10-K for the
year ended December 25, 1993 and
incorporated herein by reference).
10.13.2 Amendment to 10.13 dated as of March 20,
1992 (filed as exhibit 10.13.2 to the
Company's Annual Report on Form 10-K for the
year ended December 25, 1993 and
incorporated herein by reference).
10.14 Area Franchise Amended and Restated
Agreement between the Company and Ben &
Jerry's West Coast, Inc. dated March 27,
1992 (filed as exhibit 10.13.2 on Form 10-K
for the year ended December 25, 1993 and
incorporated herein by reference).
10.15 Franchise Agreement between the Company and
BJ O/R, a California limited partnership,
dated June 9, 1993 (filed as Exhibit 2 to
the Company's Quarterly Report on Form 10-Q
for the period ended June 26, 1993 and
incorporated herein by reference).
10.16 Omitted.
10.17 Lease between the Company and Stedeley
Partnership dated November 30, 1988 (filed
as Exhibit 10.25 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1988 and incorporated herein by
reference).
10.18 Manufacturing and Warehouse Agreement
between the Company and Edy's Grand Ice
Cream, a subsidiary of Dreyer's Grand Ice
Cream, Inc. dated April 5, 1989 (filed as
Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the year ended December 30,
1989 and incorporated herein by reference).
10.18.1 Amendment to Item 10.18 dated September 18,
1992 (filed as Exhibit 10.18.1 to the
Company's Annual Report on Form 10-K for the
year ended December 25, 1993 and
incorporated herein by reference).
10.18.2 Amendment to Item 10.18 dated November 12,
1992 (filed as Exhibit 10.18.2 to the
Company's Annual Report on Form 10-K for the
year ended December 25, 1993 and
incorporated herein by reference).
10.18.3 Amendment to Item 10.18 dated September 2,
1994 (filed as Exhibit 1 to the Company's
Quarterly Report on Form 10-Q for the
quarter ended September 24, 1994 and
incorporated herein by reference).
10.19 1986 Restricted Stock Plan (filed as Exhibit
10.19 to the Company's Annual Report on Form
10-K for the year ended December 30, 1989
and incorporated herein by reference).
10.20 1986 Employee Stock Purchase Plan (filed as
Exhibit 4 to the Company's Registration
Statements on Form S-8 (file nos. 33-9420
and 33-17594) and incorporated herein by
reference).
10.21 1985 Stock Option Plan (filed as Exhibit
10.21 to the Company's Annual Report on Form
10-K for the year ended December 30, 1989
and incorporated herein by reference).
10.21.1 1994 Amendment to 1985 Stock Option Plan
(filed herewith).
10.22 Ben & Jerry's Homemade, Inc. Employees'
Retirement Plan as amended (filed as Exhibit
10.22 to the Company's Annual Report on Form
10-K for the year ended December 30, 1989
and incorporated herein by reference).
10.22.1 Amendment to Item 10.22 dated January 1,
1990 (filed as exhibit 10.22.1 to the
Company's Report on Form 10-K for the year
ended December 29, 1991 and incorporated
herein by reference).
10.22.2 Amendment to Item 10.22 dated June 28, 1990
(filed as exhibit 10.22.2 to the Company's
Report on Form 10-K for the year ended
December 25, 1993 and incorporated herein by
reference).
10.22.3 Amendment to Item 10.22 dated January 1,
1991 (filed as exhibit 10.22.3 to the
Company's Report on Form 10-K for the year
ended December 25, 1993 and incorporated
herein by reference).
10.23 1991 Restricted Stock Plan (filed as exhibit
10.23 to the Company's Report on Form 10-K
for the year ended December 25, 1993 and
incorporated herein by reference).
10.24 Severance/Non-Competition Agreement dated as
of December 31, 1990 between Jeffrey Furman
and the Company (filed as exhibit 10.24 to
the Company's Report on Form 10-K for the
year ended December 25, 1993 and
incorporated herein by reference).
10.25 Omitted.
10.26 Directors and Officers Liability Insurance
Policy, dated February 24, 1995 (filed
herewith).
10.27 1992 Non-employee Directors' Restricted
Stock Plan (filed as Exhibit 10.27 to the
Company's Annual Report on Form 10-K for the
year ended December 25, 1993 and
incorporated herein by reference).
10.28 Employment Agreement between Robert Holland
Jr. and the Company (filed herewith).
21.1 Subsidiaries of the registrant as of
December 31, 1994 (filed herewith).
23.1 Consent of Ernst & Young LLP (filed
herewith).
(b) No Current Reports on Form 8-K were filed during the fourth
quarter of 1993.
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
BEN & JERRY'S HOMEMADE, INC.
By:__________________________
Robert Holland Jr.
President
Dated: March 30, 1995
--
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Company and in the capacities and on the
date indicated.
March 30, 1995 Elizabeth Bankowski
Director, Director of Social Mission Development
March 30, 1995 Merritt C. Chandler
Director
March 30, 1995 Bennett R. Cohen
Director, Chairperson and Chief Executive Officer
March 30, 1995 Jeffrey Furman
Director
March 30, 1995 Jerry Greenfield
Director, Vice Chairperson
March 30, 1995 Robert Holland Jr.
Director, President and Chief Executive Officer
March 30, 1995 Fred E. Lager
Director
March 30, 1995 Frederick A. Miller
Director
March 30, 1995 Henry Morgan
Director
March 30, 1995 Frances Rathke
Chief Financial Officer and
Principal Accounting Officer
BEN & JERRY'S HOMEMADE INC.
ANNUAL REPORT ON FORM 10-K
CONSOLIDATED FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Auditors...............................F-1
Consolidated Balance Sheet as of December 31, 1994 and
December 25, 1993...........................................F-2
Consolidated Statement of Operations for the years ended
December 31, 1994, December 25, 1993 and
December 26, 1992..........................................F-3
Consolidated Statement of Stockholders' Equity
for the years ended December 31, 1994,
December 25, 1993 and December 26, 1992....................F-4
Consolidated Statement of Cash Flows for the years ended
December 31, 1994, December 25, 1993
and December 26, 1992......................................F-5
Notes to Consolidated Financial Statements...................F-6 to
F-13
SCHEDULE II - Valuation and Qualifying Accounts..............F-14
FOOTNOTES********************************
{1}