T O O U R S H A R E H O L D E R S
For much of 2001, the ice cream industry was preoccupied with a single factor ®
the extraordinarily high cost of cream. The spike in dairy costs not only depressed
profits, it also prompted retailers to accelerate increases in the retail price of ice cream.
While these price increases are likely to benefit profits in the long run, they served to
depress demand in the first half of the year by slowing the growth of the category.
Our company was not immune from this issue. Our dairy costs for the year were
$30 million higher than normal and our sales during the first half of the year were well
below our expectations due to the effect of price elasticity. Results on the bottom
line for 2001 were very disappointing. However, during the last half of the year, we
drove a tremendous rebound in our sales growth; and late in the year, we finally saw a
long-overdue crash in dairy prices. We are glad that the cost issues are moving
Forward