Consolidated net sales for the quarter ended December 25, 1999 increased by 16.5% to $51,677,000 compared to $44,332,000 for the same period in 1998. Excluding non-recurring special charges, the Company had net income for the quarter of $1,030,000, or diluted net income per common share of $0.14. This compares to net income of $840,000 and diluted net income per common share of $0.11 in the fourth quarter of 1998. The quarter includes non-recurring pre-tax charges of $8,602,000 ($0.78 per common share after tax) related to the fourth quarter 1999 manufacturing restructuring program developed to reduce its manufacturing costs and increase its profitability. The Company recorded a net loss for the fourth quarter of ($4,561,000), or ($.64) diluted net loss per common share.
Consolidated net sales for the year ended December 25, 1999 increased by 13.3% to $237,043,000 compared to 1998 sales for the same period of $209,203,000. Excluding the non-recurring special charge discussed above, the Company recorded net income for the year of $8,976,000, or diluted net income per common share for 1999 of $1.21 . This compares to net income of $6,242,000 and diluted net income per common share of $0.84 for 1998. The Company recorded net income for the year of $3,385,000, or $.46 diluted net income per common share.
The Company experienced both an increase in net sales and improvement in its gross profit margin as compared to 1998's fourth quarter. The increase in net sales for the fourth quarter was driven by continued domestic growth in the Company's core pint business as well as an increase in net sales in the United Kingdom partially offset by a decrease in net sales to the Japanese market.
The Company's gross profit margin for the quarter increased to 35.3% as compared to 30.8% in the same period last year, primarily as a result of decreases in dairy prices as compared to the extraordinarily high dairy prices experienced in 1998, increased sales volumes and favorable manufacturing variances resulting from better plant utilization due to higher production volumes. Selling, general and administrative expenses increased 34.0% as compared to last year's fourth quarter and increased as a percentage of net sales to 32.7% from 28.5%. The increase in selling, general and administrative expenses primarily reflects increased advertising and promotion expenses. In addition, the Company is continuing to invest more heavily in its international operations, most notably in the United Kingdom, Japan and Israel , in order to capitalize on further opportunities to grow its ice cream sales outside the United States.
Gross profit for the year ended December 25, 1999 increased 25.7% from 1998 and the Company's gross profit margin increased to 38.7% in 1999 as compared to 34.9% in 1998. Improvements in gross margins are a result of decreased dairy commodity costs, increased sales volumes and favorable manufacturing variances resulting from better plant utilization due to higher production volumes and increases in its selling prices. Selling, general and administrative expenses increased 23.1% as compared to 1998 and increased as a percentage of net sales to 33.2% from 30.5%.
In 1999 the Company repurchased a total of 364,100 shares of Class A common stock for approximately $7.2 million. The repurchase program announced in September 1998 authorized the Company to purchase shares of its Class A common stock up to an aggregate of $5 million for use for general corporate purposes. In September 1999 the Board of Directors approved additional stock repurchases of $3 million of its Class A common shares.
Special Charges:
Following a comprehensive review of its manufacturing operations, the Company finalized a plan to shift manufacturing of its frozen novelty line of business from a company owned plant in Springfield, Vermont to third party co-packers to improve the Company's competitive position, gross margin and profitability. This action resulted in the fourth quarter 1999 write-off of assets associated with the ice cream novelty and other manufacturing assets and costs associated with severance for those employees who do not accept the Company's offer of relocation. This plan to shift novelty manufacturing will be executed over the next six to twelve months. The outsourcing of its ice cream novelty business will enable the Company to introduce a wider range of novelty products in the future and increase its flexibility.
Indications of Interest:
As previously announced on December 2, 1999 Ben & Jerry's Homemade, Inc. has received indications of interest to acquire the Company at prices significantly above the closing price on NASDAQ on the day before the December 2, 1999 press release ($21.00). These indications of interest are subject to conditions and are being considered by the Board of Directors.
The Company's policy, as regularly disclosed in its filings with the Securities and Exchange Commission, is to be an independent Vermont based company focused on its three-part corporate mission, emphasizing product quality, economic reward and a commitment to the community, contributing 7 1/2% of its profit before tax to charities, including donations to The Ben & Jerry's Foundation, Inc.
No decision has been made by the Board with respect to any of these indications of interest or as to any sale of the Company, and no implications should be drawn from this press release as to what definitive decision will be reached by the Board after it has concluded its deliberations or as to the timing of any decision.
Ben & Jerry's produces a wide variety of superpremium ice cream, ice cream novelties, low fat ice cream, low fat yogurt and sorbet, using Vermont dairy products and high quality, all natural ingredients. The Company is committed to using milk and cream that have not been treated with the synthetic hormone, rBGH. Ben & Jerry's products are distributed nationwide and in selected foreign countries in supermarkets, grocery stores, convenience stores, franchised and company-owned Ben & Jerry's Scoop Shops, restaurants and other venues.
Ben & Jerry's Homemade, Inc. Condensed Statement of Income (In thousands except per share data) Thirteen weeks ended Year ended Dec 25, Dec 26, Dec 25, Dec 26, 1999 1998 1999 1998 Net sales $ 51,677 $ 44,332 $237,043 $209,203 Gross profit 18,233 13,634 91,752 72,978 Selling, general & administrative expenses 16,916 12,627 78,623 63,895 Special charges 8,602 8,602 Operating (loss) income (7,285) 1,007 4,527 9,083 Other income 268 329 681 693 (Loss) income before income taxes (7,017) 1,336 5,208 9,776 Net (loss) income (4,561) 840 3,385 6,242 (Loss) earnings per share - diluted ($ 0.64) $ 0.11 $ .46 $ 0.84 Shares outstanding - diluted 7,170 7,408 7,405 7,463 Selected Balance Sheet Data (In thousands) Dec 25, Dec 26, 1999 1998 Cash, cash equivalents and short-term investments $ 46,482 $ 47,229 Trade accounts receivable, net 18,834 11,338 Inventories 13,937 13,090 Total assets 150,602 149,501 Current liabilities 44,587 33,928 Long-term debt and capital lease obligations 16,624 20,491 Stockholders' equity 89,392 90,908
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