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Dean Foods Reports Strong Third Quarter Results



               Dean Foods Reports Strong Third Quarter Results

- Continued Strong Performance Across All Segments

- Q3 Diluted Earnings per Share of $0.20, Adjusted Diluted Earnings per Share
increase 83% to $0.33

- Dean Foods Full Year 2012 Guidance Increased to $1.27-$1.32 per share

- Company announces Chief Financial Officer and General Counsel Succession
Plans

PR Newswire

DALLAS, Nov. 8, 2012

DALLAS, Nov. 8, 2012 /PRNewswire/ -- Dean Foods Company (NYSE: DF) today
announced strong third quarter results driven by continued solid growth across
all operating segments. The Company reported third quarter 2012 diluted
earnings per share of $0.20, compared to a third quarter 2011 loss per share
of $8.39. The prior year third quarter includes a $1.9 billion goodwill
impairment charge. On an adjusted basis, third quarter 2012 diluted earnings
per share were $0.33, an 83 percent increase from the $0.18 adjusted diluted
earnings per share in the prior year's third quarter.  

Third quarter consolidated operating income for the third quarter of 2012
totaled $182 million, compared to a consolidated operating loss of $1.9
billion in the third quarter of 2011. Adjusted third quarter consolidated
operating income for the third quarter of 2012 totaled $145 million, a 35
percent increase from the $108 million reported in the third quarter of 2011.

Gregg Engles, Chairman of Dean Foods said: "Today we announced our fifth
consecutive quarter of growth, with all of our operating segments continuing
to perform well. We have successfully built on the momentum from the first
half of the year to deliver 35 percent growth in third quarter adjusted
operating income and 83 percent growth in adjusted diluted earnings per share
for the quarter. Our strong performance this year has created the flexibility
to pursue important strategic actions like the recently completed initial
public offering of The WhiteWave Foods Company. It has also driven our
expectations for further growth to close out the year."

Net income attributable to Dean Foods totaled $36 million for the third
quarter of 2012, compared to a net loss of $1.5 billion in the prior year
third quarter. Adjusted net income for the third quarter was $61 million, an
84 percent increase from $33 million in the third quarter of 2011.

Net sales for the third quarter of 2012 totaled $3.1 billion, compared to $3.4
billion of net sales in the third quarter of 2011, reflecting strong sales
growth at WhiteWave-Alpro offset by the pass-through of lower commodity costs
at Fresh Dairy Direct and Morningstar.

Summary of Dean Foods Third Quarter 2012 Operating Results
                                        Q3 2012
                                        $ millions    Y/Y
                                        (except EPS)  Change
Consolidated Adjusted Operating Income  $145          +35%
Adjusted Interest Expense               $52           -17%
Consolidated Adjusted Net Income        $61           +84%
Adjusted Diluted Earnings per Share     $0.33         +83%

 

WHITEWAVE-ALPRO
For the third quarter of 2012, the WhiteWave-Alpro segment reported net sales
of $598 million, 13 percent higher than third quarter 2011 net sales of $531
million.

Third Quarter 2012 WhiteWave-Alpro Summary
                     Q3 2012       Y/Y
                     $ millions    Change
Net Sales            $598          +13%
Operating Income     $64           +25%

 

Net sales growth was led by the Coffee Creamers and Beverages platform, which
includes coffee creamers under the International Delight®, Land O Lakes®,
Silk® and Horizon Organic® brands, as well as International Delight Iced
Coffee. Coffee Creamers and Beverages net sales increased by more than 20
percent in the third quarter of 2012 as compared to the third quarter of 2011.
Net sales in the North American Plant-based Foods and Beverages platform,
which includes Silk Soymilk, PureAlmond® and PureCoconut®, increased more than
20 percent in the third quarter, driven primarily by continued strong growth
of Silk PureAlmond.  Alpro's European Plant-based Foods and Beverages net
sales increased high-single digits on a constant currency basis and declined
low-single digits after currency conversion. Net sales in the Premium Dairy
platform, which includes Horizon Organic branded milk and other products,
increased mid-single digits in the third quarter.

For the quarter, WhiteWave-Alpro operating income was $64 million, a 25
percent increase from the $52 million in the third quarter of 2011.

The consolidated financial statements of The WhiteWave Foods Company will
differ from our historically reported WhiteWave-Alpro segment results, as our
historical results include adjustments for management and segment reporting
purposes.  In addition, The WhiteWave Food Company's consolidated financial
statements include certain other adjustments, including the allocation of
corporate and shared service costs, which are not reflected in the
WhiteWave-Alpro segment results. 

FRESH DAIRY DIRECT
Third quarter Fresh Dairy Direct operating income was $94 million, as compared
to $75 million in the third quarter of 2011. Third quarter Fresh Dairy Direct
adjusted operating income was $100 million, a 32 percent increase from $75
million in the third quarter of 2011.

Third Quarter 2012 Fresh Dairy Direct Summary
                                            Q3 2012                Y/Y
                                            $ millions             Change
Fluid Milk Volume                           N/A                    -2.2%
Fluid Milk Volume, adjusted*                N/A                    -1.4%
Adjusted Operating Income ($                $100                   +32%
millions)
*adjusted to exclude the estimated impact of the September 2011 Waukesha, WI
plant divestiture

 

"Fresh Dairy Direct continued to successfully execute our plan in the third
quarter, despite rising dairy commodity costs," said Gregg Tanner, Dean Foods
Chief Executive Officer. "We have a simplified, focused agenda that maximizes
our strengths as a business. Our performance continued to be driven by a focus
on three fundamental areas: volume performance versus the industry, price
realization to cover commodity inflation, and cost efficiency with an
unrelenting continued focus on the quality of our products, the safety of our
employees, and the service we provide our customers."

Fresh Dairy Direct volumes continued to outperform the broader industry. Fresh
Dairy Direct fluid milk volumes declined 1.4 percent on a year-over-year
basis, excluding the impact of divestitures. This compares to the balance of
the industry that experienced a volume decline of approximately 3.1 percent on
a year-over-year basis, based on USDA data and Company estimates.

The pass-through of lower overall year-over-year commodity costs resulted in
Fresh Dairy Direct net sales of $2.2 billion, a 13 percent decrease from $2.5
billion in net sales for the third quarter of 2011. The third quarter 2012
average Class I Mover, a measure of raw milk costs, was $16.55 per
hundred-weight, a decrease of 23 percent from the third quarter of 2011, but 6
percent above the second quarter 2012 level.

MORNINGSTAR

Third Quarter 2012 Morningstar Summary
                               Q3 2012     Y/Y
                               $ millions  Change
Volume                         N/A         +6%
Operating Income ($ millions)  $31         +54%

 

Third quarter 2012 Morningstar volumes increased 6 percent as compared to the
third quarter of 2011, reflecting continued strong growth across the away from
home channel.  Core volume growth, offset by the pass-through of lower dairy
commodity costs, resulted in Morningstar net sales of $338 million, a decrease
of 3 percent from the year-ago period. Morningstar operating income increased
54 percent in the third quarter of 2012 to $31 million, from $20 million in
the third quarter of 2011.

CORPORATE EXPENSE
Third quarter 2012 corporate expense totaled $57 million, compared to $55
million in the third quarter of 2011, or $49 million compared to $40 million
on an adjusted basis.

CASH FLOW
Net cash provided by continuing operations for the nine months ended September
30, 2012 totaled $354 million, compared to $246 million for the nine months
ended September 30, 2011. Free cash flow provided by continuing operations,
which is defined as net cash provided by continuing operations less capital
expenditures, totaled $191 million for the first nine months of 2012, compared
to $30 million over the same period in 2011.  A reconciliation between net
cash provided by continuing operations and free cash flow provided by
continuing operations is provided in the tables below.

Capital expenditures through the first nine months of 2012 totaled $163
million, compared to $215 million through the first nine months of 2011. Total
debt outstanding, net of cash on hand, decreased by $362 million from year-ago
levels. Total debt at September 30, 2012, net of $70 million cash on hand, was
$3.4 billion. The Company's funded debt to EBITDA ratio, as defined by its
credit agreements, was 3.71 times as of the end of the third quarter versus a
maximum leverage ratio covenant of 5.50 times.

FORWARD OUTLOOK
Dean Foods management increased full year 2012 guidance for adjusted diluted
earnings of between $1.27 and $1.32 per share, driven by continued strong
momentum across the business, offset by the expected impact of rising
commodity costs, particularly at Fresh Dairy Direct. Management currently
expects the Class I mover, a measure of raw milk costs, to increase
approximately 20 percent in the fourth quarter from third quarter levels.
Management expects fourth quarter 2012 adjusted diluted earnings per share of
between $0.27 and $0.32.

"Before any adjustments related to the IPO of the WhiteWave-Alpro business,
our full year 2012 expectations have risen across the business. At
WhiteWave-Alpro, we said we expected strong momentum to continue in the back
half of the year," continued Engles. "Third quarter results were strong, and
we expect continued momentum in the fourth quarter, with full-year segment
operating income growth of around 20 percent.

"At Fresh Dairy Direct, last quarter we said we expected mid-to-high teens
full year operating income growth. We expect the upside from the third quarter
to more than offset the impact of higher than expected commodity costs and the
effects of Hurricane Sandy in the fourth quarter. So, while we continue to
expect fourth quarter Fresh Dairy Direct operating income to be down on a
year-over-year basis, we have increased our full-year expectations for
operating income to increase in the high-teens to twenty percent. The third
quarters' outperformance has provided a bit of breathing room against this
target as we navigate a more challenging commodity environment in the fourth
quarter, giving us confidence in our ability to hit our full-year segment
operating income target.

"At Morningstar, strong growth across the business has continued, and we are
increasing our expectations for full-year operating income growth. We now
expect Morningstar full-year operating income to be above year ago levels in
the mid-twenty percents, reflecting expectations for continued momentum to
finish out the year."

There are several adjustments to Company guidance as a result of the October
31, 2012 completion of the initial public offering of 13.3 percent of the
economic interest in The WhiteWave Foods Company, formerly a wholly owned
subsidiary of Dean Foods. These adjustments and guidance are reflective of
management expectations for Dean Foods including the WhiteWave-Alpo segment,
which only includes two months of adjustments for the fourth quarter,
representing the portion of the quarter after the IPO. They are not intended
to reflect the anticipated performance of, or expectations for, The WhiteWave
Foods Company fourth quarter expectations.  The WhiteWave Foods Company will
issue its own guidance later in the fourth quarter, following the expiration
of the IPO quiet period.

These adjustments include changes to business relationships between Dean
Foods' segments to reflect market pricing, which are expected to decrease
WhiteWave-Alpro segment operating income by approximately $4-6 million in the
fourth quarter, while increasing operating income across remaining Dean Foods
by an equal amount.

Additionally, a significant amount of corporate costs previously incurred at
the Dean Foods corporate segment will be transferred to WhiteWave-Alpro. These
costs primarily reflect long-term incentive compensation costs of
WhiteWave-Alpro employees. Additionally, WhiteWave-Alpro will incur
incremental corporate costs to establish public company functions including
legal, corporate accounting, treasury, SEC reporting, and investor relations.
In total, WhiteWave-Alpro is expected to incur $8-10 million in incremental
fourth quarter corporate costs compared to pre-IPO levels. Dean Foods'
corporate costs are expected to decline by approximately $6-8 million,
resulting in an incremental $1-2 million of costs for total Dean Foods.   

WhiteWave-Alpro is expected to incur approximately $4 million of interest
expense in the fourth quarter related to borrowings under its newly
established credit facility. The debt reduction related to the $1.16 billion
payment from The WhiteWave Foods Company to Dean Foods, is expected to reduce
Dean Foods' fourth quarter interest expense by $4 million to approximately $45
million.

Overall, the various IPO-related adjustments will create some minor shifts
between segments, but do not affect adjusted diluted EPS guidance, which
remains $1.27-$1.32 both before and after the IPO-related adjustments. Going
forward, The WhiteWave Foods Company results will be consolidated in Dean
Foods results. An adjustment will be made to back out the 13.3 percent
non-controlling interest for post-IPO periods.

Beginning with the fourth quarter of 2012, The WhiteWave Foods Company will
report earnings separately from Dean Foods and expects to hold independent
conference calls with the investment community.

THE WHITEWAVE FOODS COMPANY INITIAL PUBLIC OFFERING
On October 31, 2012, The WhiteWave Foods Company, formerly a wholly-owned
subsidiary of Dean Foods, that owns the business comprising Dean Foods'
WhiteWave-Alpro segment, completed its initial public offering of 23 million
shares of its Class A common stock at a price to the public of $17.00 per
share (the "WhiteWave IPO"). WhiteWave's Class A common stock began trading on
the New York Stock Exchange on October 26, 2012 under the symbol "WWAV". The
underwriters of the WhiteWave IPO have an option to purchase an additional
3.45 million shares of Class A common stock of WhiteWave at a price to the
public of $17 per share on or before November 24, 2012. In addition, in
connection with the WhiteWave IPO, WhiteWave entered into a $1.35 billion
senior secured credit facility under which it borrowed approximately $885
million upon completion of the WhiteWave IPO.  Substantially all of the net
proceeds of the initial borrowing under the WhiteWave senior secured credit
facility plus $282 million of the net proceeds of the WhiteWave IPO were used
to repay approximately $1.16 billion of indebtedness outstanding under the
Dean Foods senior secured credit facility. WhiteWave used the remaining net
proceeds from the WhiteWave IPO of approximately $86 million, and will use any
proceeds that may be received from the future exercise of the underwriters'
overallotment option, to reduce the indebtedness outstanding under the
revolving portion of its senior secured credit facility.

Mr. Engles said: "We believe this is the right move for our shareholders,
employees and customers. WhiteWave Foods and the rest of Dean Foods have
distinct product portfolios that require different management styles,
operating philosophies and levels of investment.  This transaction is the next
logical step in our evolution and the timing is right. We are fortunate to
have a deep bench of leadership talent within both Dean Foods and WhiteWave,
which will enable a smooth transition."

Following the WhiteWave IPO, Dean Foods continues to own approximately 86.7
percent of the economic interest in, and approximately 98.5 percent of the
voting power of, WhiteWave's capital stock.  Dean Foods previously announced
its intention to effect a tax-free spin-off or other tax-free disposition of
all or a portion of its remaining ownership interest in WhiteWave to Dean
Foods stockholders as soon as practicable but no earlier than the expiration
or waiver of the 180-day lock-up period under the WhiteWave IPO underwriting
agreement, which will expire on April 23, 2013.  Any such spin-off or other
disposition would be subject to various conditions including the receipt of
any necessary regulatory or other approvals, the existence of satisfactory
market conditions and, in the case of a tax-free spin-off or other tax-free
disposition, Dean Foods' receipt of a private letter ruling from the Internal
Revenue Service and/or an opinion of counsel that the transaction would be
tax-free to Dean Foods and its stockholders. There can be no assurance as to
when or whether the proposed spin-off or any other disposition will occur.

Following any spin-off or other disposition, Dean Foods anticipates that there
will be ongoing commercial relationships between Dean Foods and WhiteWave.  In
addition, Dean Foods and WhiteWave will provide certain transitional services
to each other.

MANAGEMENT TEAM
As previously announced, pursuant to a transitional service agreement that
took effect upon completion of the  WhiteWave Foods Company IPO, Gregg Engles
was appointed Chairman and Chief Executive Officer of The WhiteWave Foods
Company. Effective upon completion of the WhiteWave IPO on October 31, 2012,
Mr. Engles resigned as Chief Executive Officer of Dean Foods, while remaining
Chairman of Dean Foods. Also effective upon completion of the WhiteWave IPO,
Gregg Tanner, President of Fresh Dairy Direct and Chief Supply Chain Officer,
assumed the role of Chief Executive Officer of Dean Foods.

Mr. Engles said: "In his five years with Dean Foods, Gregg Tanner has led the
Supply Chain and FDD organizations to great success, driving a continuous
improvement process and mindset that has driven out costs and increased
efficiency across our production and distribution network.  More recently, he
has returned the FDD business to growth despite challenging market
conditions.  Gregg is one of the most knowledgeable and capable leaders in
this industry, and the Board and I are fully confident in his abilities to
lead Dean Foods and to continue to build on the recent successes at Dean Foods
to drive long-term value."

Gregg Tanner, Chief Executive Officer of Dean Foods, commented:  "I'm honored
and humbled by the opportunity to become the Chief Executive Officer of Dean
Foods, and I am excited about our future as the country's leading and largest
dairy company. I'm excited because this is a business with many unique
advantages. We have significant scale, being five times the size of our next
largest competitor. We have a unique national footprint and one of the largest
refrigerated direct store delivery networks in the country, giving us national
reach, and local touch. I believe our network optimization and supply chain
management efforts have made us one of the most efficient, profitable
operators in the country, and we will continue to push that advantage. And bar
none, I strongly believe our organization has the best talent in the industry,
both in management and throughout the Company. I would also like to take a
minute to thank our employees for their continued focus and commitment to Dean
Foods. Our company has experienced great change over the past few months, but
our team has stayed focused on our priorities and that has translated into the
results you're seeing today.

"I feel very fortunate to be leading such a talented team, and we believe that
our future success will be driven by leveraging our advantages toward our
streamlined agenda of volume, price, and cost. At the same time, we are
uncompromising in our focus on the quality of our products, the safety of our
employees, and the service we provide to our customers.

"Our financial flexibility is vastly improved. Looking ahead, with a strong
cash-flow and return on invested capital focus, our financial strength should
continue to improve.

"I believe we have a strong foundation for Dean Foods to drive significant
shareholder value in the years to come."

Two of Dean Foods' senior executives, Shaun Mara and Steve Kemps, have
announced their plans to leave the company.  They have both committed to
remain at Dean Foods through the year-end reporting cycle.  Thereafter, Mr.
Mara and Mr. Kemps will continue in a consultancy capacity for several months
in order to assist Gregg Tanner and his team in facilitating a smooth
transition, in anticipation of a tax-free spin-off or other disposition of
Dean Foods' remaining ownership interest in The WhiteWave Foods Company and
the potential sale of the Morningstar business.

Mr. Mara will step down as Executive Vice President and Chief Financial
Officer of Dean Foods following the year-end reporting cycle to pursue other
opportunities. Upon his departure, Chris Bellairs, currently Chief Financial
Officer of Fresh Dairy Direct, will be promoted to Executive Vice President
and Chief Financial Officer of Dean Foods.  Mr. Bellairs is a seasoned
financial executive with significant experience at Proctor and Gamble, Pepsi
and Iron Mountain.  In his four and a half years at Dean Foods he has served
side-by-side with Gregg Tanner in Chief Financial Officer roles of both Supply
Chain and Fresh Dairy Direct and has been instrumental in helping to lead Dean
Foods' cost reduction efforts and the return to growth of the Fresh Dairy
Direct business.

Mr. Kemps, currently Executive Vice President and General Counsel of Dean
Foods intends to leave the Company following the year end reporting cycle to
pursue other opportunities. Upon his departure, Rachel Gonzalez, currently
Deputy General Counsel of Dean Foods, will be promoted to Executive Vice
President and General Counsel of Dean Foods. Ms. Gonzalez joined Dean Foods in
2008. Prior to joining Dean, Ms. Gonzalez served as Senior Vice President and
Group Counsel for Mergers and Acquisitions at Affiliated Computer Services,
Inc. Prior to joining ACS, Ms. Gonzalez was a partner in the law firm of
Morgan, Lewis and Bockius LLP.

Mr. Engles said: "I would like to take this opportunity to recognize Shaun
Mara and Steve Kemps for their dedication and service to Dean Foods and to
thank them for assisting in this transition.  Shaun played a vital role in the
transformation of the Finance function and Dean Foods more broadly. Steve has
overseen a critical period at Dean Foods and made tremendous contributions to
the business. We are grateful to them for their service as executives, and we
wish them well in their future endeavors.  I would also like to congratulate
Chris and Rachel on their well-deserved promotions." 

MORNINGSTAR SALE PROCESS
As previously announced on September 26, 2012, Dean Foods is exploring
strategic alternatives regarding its Morningstar business, including a
potential sale of the business. This process is ongoing, and the Company
expects to make an announcement when and if an agreement relating to such
transaction is executed.

CONFERENCE CALL/WEBCAST
A webcast to discuss the Company's financial results and outlook will be held
at 9.30 a.m. ET today and may be heard live by visiting the "Webcast" section
of the Company's website at http://www.deanfoods.com/. A slide presentation
will accompany the webcast.

ABOUT DEAN FOODS
Dean Foods is a leading food and beverage company in the United States. The
Company's Fresh Dairy Direct segment is one of the nation's largest processors
and direct-to-store distributors of fluid milk marketed under more than 50
local and regional dairy brands and private labels. Fresh Dairy Direct also
distributes ice cream, cultured products, juices, teas, bottled water and
other products. Morningstar Foods is a leading warehouse delivery dairy
business that produces and sells traditional and specialty dairy items,
including cultured dairy products, ice cream mixes, coffee creamers, aerosol
whipped toppings, traditional and value-added milks, and blended iced
beverages to retailers and foodservice providers nationwide. Dean Foods also
holds a majority interest in The WhiteWave Foods Company, which produces and
sells an array of nationally and internationally branded plant-based foods and
beverages, coffee creamers and beverages, and premium dairy products.
WhiteWave brands - including Silk®, Horizon Organic®, International Delight®,
and LAND O LAKES® - are category leaders and consumer favorites. Alpro is the
pan-European leader in branded soy food and beverage products with the Alpro®
soya and Provamel® brands. For more information about Dean Foods, visit
www.deanfoods.com.

FORWARD-LOOKING STATEMENTS
Some of the statements in this press release are "forward looking" and are
made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These "forward-looking" statements include
statements relating to, among other things, projected sales, operating income,
net income, adjusted diluted earnings per share, debt covenant compliance,
cost reduction strategies, divestitures (including the potential sale of
Morningstar) and expected financial performance, the status of the Company's
litigation matters, any potential spin-off or other disposition of the
Company's remaining ownership interest in The WhiteWave Foods Company and the
succession plans for the Company's executive officers. These statements
involve risks and uncertainties that may cause results to differ materially
from the statements set forth in this press release. The Company's ability to
meet targeted financial and operating results, including targeted cost
reductions, sales, operating income, net income and earnings per share depends
on a variety of economic, competitive and governmental factors, including raw
material availability and costs, the demand for the Company's products, and
the Company's ability to access capital under its credit facilities or
otherwise, many of which are beyond the Company's control and which are
described in the Company's filings with the Securities and Exchange
Commission. Any spin-off or other disposition of the Company's remaining
ownership interest in The WhiteWave Foods Company would be subject to various
conditions, including the receipt of any necessary regulatory or other
approvals, the existence of satisfactory market conditions and, in the case of
a tax-free spin-off or other tax-free disposition, the Company's receipt of a
private letter ruling from the Internal Revenue Service and/or an opinion of
counsel that the transaction would be tax free to the Company and its
stockholders.  Any potential sale of Morningstar would be subject to, among
other things, the negotiation and execution of a definitive purchase and sale
agreement acceptable to the Company. For other risks and uncertainties that
may cause actual results to differ from the forward-looking statements
contained in this press release, see the "Risk Factors" section of the
Company's most recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q filed with the SEC. The forward-looking statements in this press release
speak only as of the date of this release. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to such
statements to reflect any change in its expectations with regard thereto or
any changes in the events, conditions or circumstances on which any such
statement is based.

CONTACT: Corporate Communications, Liliana Esposito, +1-214-721-7766; or
Investor Relations, Barry Sievert, +1-214-303-3438

STATEMENT REGARDING THE WHITEWAVE FOODS COMPANY REGISTRATION STATEMENT
A Registration statement relating to securities of The WhiteWave Foods Company
has been filed with and declared effective by the SEC. This press release
shall not constitute an offer to sell or the solicitation of an offer to buy,
nor shall there be any sale of, these securities in any state or jurisdiction
in which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state or
jurisdiction.

 

DEAN FOODS COMPANY
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
                     GAAP                    ADJUSTED*
                     Three months ended      Three months ended
                     September 30,           September 30,
                     2012       2011         2012          2011
Net sales            $          $ 3,410,797  $             $
                     3,143,252               3,143,252     3,410,797
Cost of sales        2,361,495  2,669,532    2,355,512 (a) 2,669,532
  Gross profit       781,757    741,265      787,740       741,265
Operating costs and
expenses:
  Selling and        502,710    498,682      502,710       498,682
  distribution
  General and        145,404    148,191      137,404   (h) 133,438   (b)(c)(h)
  administrative
  Amortization of    2,299      2,584        2,299         2,584
  intangibles
  Facility closing
  and reorganization 5,996      10,283       -         (d) -         (d)
  costs
  Goodwill           -          1,926,000    -             -         (f)
  impairment
  Other operating    (56,339)   27,827       -         (b) -         (b)
  (income) loss
  Loss attributable
  to non-controlling -          -            -             (1,323)   (g)
  interest in Hero
  JV
    Total operating
    costs and        600,070    2,613,567    642,413       633,381
    expenses
  Operating income   181,687    (1,872,302)  145,327       107,884
  (loss)
Interest expense     52,259     62,873       51,741    (e) 62,023    (e)
Other (income) loss, 484        (414)        484           (414)
net
  Income (loss) from
  continuing
  operations before
    income taxes     128,944    (1,934,761)  93,102        46,275
Income tax expense   92,503     (379,111)    31,953    (i) 13,023    (i)
(benefit)
Income (loss) from
continuing           36,441     (1,555,650)  61,149        33,252
operations
Gain on sale of
discontinued         -          3,616        -             -         (j)
operations, net of
tax
  Net income (loss)  36,441     (1,552,034)  61,149        33,252
    Net loss
    attributable to  -          11,537       -             -         (b) (g)
    non-controlling
    interest
  Net income (loss)             $
  attributable to    $ 36,441   (1,540,497)  $ 61,149      $ 33,252
  Dean Foods Company
Average common
shares:
  Basic              184,990    183,650      184,990       183,650
  Diluted            186,301    183,650      186,301       184,173   (k)
Basic earnings
(loss) per common
share:
  Income (loss) from
  continuing
  operations
  attributable to
    Dean Foods       $ 0.20     $ (8.41)     $ 0.33        $ 0.18
    Company
  Gain from
  discontinued
  operations
  attributable to
    Dean Foods       -          0.02         -             -
    Company
Net income (loss)
attributable to Dean $ 0.20     $ (8.39)     $ 0.33        $ 0.18
Foods Company
Diluted earnings
(loss) per common
share:
  Income (loss) from
  continuing
  operations
  attributable to
    Dean Foods       $ 0.20     $ (8.41)     $ 0.33        $ 0.18
    Company
  Gain from
  discontinued
  operations
  attributable to
    Dean Foods       -          0.02         -             -
    Company
Net income (loss)
attributable to Dean $ 0.20     $ (8.39)     $ 0.33        $ 0.18
Foods Company
* See notes to Earnings Release
Tables

 

DEAN FOODS COMPANY
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share data)
                        GAAP                    ADJUSTED*
                        Nine months ended       Nine months ended
                        September 30,           September 30,
                        2012       2011         2012          2011
Net sales               $          $ 9,759,459  $             $
                        9,482,850               9,482,850     9,759,459
Cost of sales           7,108,120  7,508,351    7,102,137 (a) 7,508,351
  Gross profit          2,374,730  2,251,108    2,380,713     2,251,108
Operating costs and
expenses:
  Selling and           1,504,566  1,476,578    1,504,566     1,476,578
  distribution
  General and           427,564    466,498      415,564   (h) 443,234   (b)(c)
  administrative
  Amortization of       6,888      7,959        6,888         7,959
  intangibles
  Facility closing and  41,350     42,152       -         (d) -         (d)
  reorganization costs
  Litigation            -          131,300      -             -         (e)
  settlements
  Goodwill impairment   -          1,926,000    -             -         (f)
  Other operating       (56,339)   (16,561)     -         (b) -         (b)
  income
  Loss attributable to
  non-controlling       -          -            -             (5,623)   (g)
  interest in Hero JV
    Total operating     1,924,029  4,033,926    1,927,018     1,922,148
    costs and expenses
  Operating income      450,701    (1,782,818)  453,695       328,960
  (loss)
Interest expense        166,828    191,636      164,610   (e) 190,786   (e)
Other income, net       (913)      (1,169)      (913)         (1,169)
  Income (loss) from
  continuing operations
  before
    income taxes        284,786    (1,973,285)  289,998       139,343
Income tax expense      151,839    (387,997)    105,888   (i) 48,999    (i)
(benefit)
Income (loss) from      132,947    (1,585,288)  184,110       90,344
continuing operations
Gain (loss) on sale of
discontinued            (2,458)    3,616        -         (j) -         (j)
operations, net of tax
  Net income (loss)     130,489    (1,581,672)  184,110       90,344
    Net loss
    attributable to     -          15,925       -             -         (b)(g)
    non-controlling
    interest
  Net income (loss)                $
  attributable to Dean  $ 130,489  (1,565,747)  $ 184,110     $ 90,344
  Foods Company
Average common shares:
  Basic                 184,553    183,279      184,553       183,279
  Diluted               185,607    183,279      185,607       184,158   (k)
Basic earnings (loss)
per common share:
  Income (loss) from
  continuing operations
  attributable to
    Dean Foods Company  $ 0.72     $ (8.56)     $ 1.00        $ 0.49
  Gain (loss) from
  discontinued
  operations
  attributable to
    Dean Foods Company  (0.01)     0.02         -             -
Net income (loss)
attributable to Dean    $ 0.71     $ (8.54)     $ 1.00        $ 0.49
Foods Company
Diluted earnings (loss)
per common share:
  Income (loss) from
  continuing operations
  attributable to
    Dean Foods Company  $ 0.71     $ (8.56)     $ 0.99        $ 0.49
  Gain (loss) from
  discontinued
  operations
  attributable to
    Dean Foods Company  (0.01)     0.02         -             -
Net income (loss)
attributable to Dean    $ 0.70     $ (8.54)     $ 0.99        $ 0.49
Foods Company
* See notes to Earnings Release
Tables

 

DEAN FOODS COMPANY
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
                                                   September 30,  December 31,
ASSETS                                             2012           2011
Cash and cash equivalents                          $ 69,775       $ 114,851
Other current assets                               1,615,145      1,601,471
                 Total current assets              1,684,920      1,716,322
Property, plant and equipment, net                 2,037,386      2,114,380
Intangibles and other assets, net                  1,927,654      1,923,661
Total Assets                                       $ 5,649,960    $ 5,754,363
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Total current liabilities, excluding debt          $ 1,337,805    $ 1,293,003
Total long-term debt, including current portion    3,451,118      3,765,928
Other long-term liabilities                        810,464        794,083
Total Dean Foods Company stockholders' equity      50,573         (103,398)
(deficit)
Non-controlling interest                           -              4,747
                 Total stockholders' equity        50,573         (98,651)
                 (deficit)
Total Liabilities and Stockholders' Equity         $ 5,649,960    $ 5,754,363
(Deficit)

 

DEAN FOODS COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
                                               Nine months ended September 30,
Operating Activities                           2012               2011
  Net cash provided by continuing operations   $ 354,004          $ 245,649
  Net cash provided by discontinued operations -                  774
  Net cash provided by operating activities    $ 354,004          $ 246,423
Investing Activities
Payments for property, plant and equipment     (162,731)          (215,412)
Cash proceeds from insurance and other         7,481              -
recoveries
Proceeds from divestitures                     56,339             185,270
Proceeds from sale of fixed assets             11,980             5,277
Other, net                                     (993)              -
  Net cash used in investing activities -      (87,924)           (24,865)
  continuing operations
  Net cash provided by investing activities -  -                  3,616
  discontinued operations
  Net cash used in investing activities        (87,924)           (21,249)
Financing Activities
Net repayment of debt                          (316,004)          (218,068)
Payment of deferred financing costs            -                  (600)
Issuance of common stock, net of share         3,138              3,764
repurchases
Tax savings on share-based compensation        360                -
Capital contribution from non-controlling      -                  6,304
interest
  Net cash used in financing activities        (312,506)          (208,600)
  Effect of exchange rate changes on cash and  1,350              (850)
  cash equivalents
Increase (decrease) in cash and cash           (45,076)           15,724
equivalents
Cash and cash equivalents, beginning of period 114,851            92,007
Cash and cash equivalents, end of period       $ 69,775           $ 107,731
Computation of Free Cash Flow provided by
operating activities
Net cash provided by operating activities      $ 354,004          $ 245,649
Net additions to property, plant and equipment (162,731)          (215,412)
  Free cash flow provided by operating         $ 191,273          $ 30,237
  activities

 

DEAN FOODS COMPANY
Segment Information and Reconciliation of GAAP to Adjusted Earnings
(Unaudited)
(In thousands, except per share data)
                 Three months ended
                 September 30, 2012
                              Asset              Asset       Post        Facility        Litigation   Goodwill    Non-controlling  Other
                                                 write-down  retirement  closing
                              impairment         & (gain)    benefits    &               settlements  impairment  interest in      adjustments
                                                 loss on                 reorganization
                              non-restructuring  sales of    adjustment  costs                                    Hero JV
                                                 assets
                 GAAP         (a)                (b)         (c)         (d)             (e)          (f)         (g)              (h)          Adjusted^*
Segment
operating income
(loss):
 Fresh Dairy     $ 93,713     $ 5,983            $ -         $ -         $ -             $ -          $ -         $ -              $ -          $ 99,696
 Direct
 Morningstar     30,594       -                  -           -           -               -            -           -                -            30,594
 Whitewave -     64,205       -                  -           -           -               -            -           -                -            64,205
 Alpro
 Corporate       (57,168)     -                  -           -           -               -            -           -                8,000        (49,168)
 Facility
 closing and     (5,996)      -                  -           -           5,996           -            -           -                -            -
 reorganization
 costs
 Other income    56,339       -                  (56,339)    -           -               -            -           -                -            -
      Total
      operating  $ 181,687    $ 5,983            $ (56,339)  $ -         $ 5,996         $ -          $ -         $ -              $ 8,000      $ 145,327
      income
Net income
attributable to  $ 36,441     $ 3,846            $ 11,264    $ -         $ 4,113         $ 334        $ -         $ -              $ 5,151      $ 61,149
Dean Foods
Company (i)
Diluted earnings $ 0.20       $ 0.02             $ 0.06      $ -         $ 0.02          $ -          $ -         $ -              $ 0.03       $ 0.33
per share
                 Three months ended
                 September 30, 2011
                              Asset              Asset       Post        Facility        Litigation   Goodwill    Non-controlling  Other
                                                 write-down  retirement  closing
                              impairment         & (gain)    benefits    &               settlements  impairment  interest in      adjustments
                                                 loss on                 reorganization
                              non-restructuring  sales of    adjustment  costs                                    Hero JV
                                                 assets
                 GAAP         (a)                (b)         (c)         (d)             (e)          (f)         (g)              (h) (j)      Adjusted^*
Segment
operating income
(loss):
 Fresh Dairy     $ 75,425     $ -                $ -         $ -         $ -             $ -          $ -         $ -              $ -          $ 75,425
 Direct
 Morningstar     19,856       -                  -           -           -               -            -           -                -            19,856
 Whitewave -     51,531       -                  -           -           -               -            -           -                -            51,531
 Alpro
 Non-controlling
 interest in     -            -                  -           -           -               -            -           1,323            -            1,323
 Hero JV
 Corporate       (55,004)     -                  (25)        15,172      -               -            -           -                (394)        (40,251)
 Facility
 closing and     (10,283)     -                  -           -           10,283          -            -           -                -            -
 reorganization
 costs
 Goodwill        (1,926,000)  -                  -           -           -               -            1,926,000   -                -            -
 impairment
 Other loss      (27,827)     -                  27,827      -           -               -            -           -                -            -
      Total
      operating  $            $ -                $ 27,802    $ 15,172    $ 10,283        $ -          $           $ 1,323          $ (394)      $ 107,884
      income     (1,872,302)                                                                          1,926,000
      (loss)
Net income
(loss)           $                                                                                    $
attributable to  (1,540,497)  $ -                $ 10,711    $ 9,769     $ 6,591         $ 548        1,550,000   $ -              $ (3,870)    $ 33,252
Dean Foods
Company (i)
Diluted earnings
(loss) per share $ (8.39)     $ -                $ 0.06      $ 0.05      $ 0.04          $ -          $ 8.44      $ -              $ (0.02)     $ 0.18
(k)
* See notes to
Earnings Release
Tables

 

 

DEAN FOODS COMPANY
Segment Information and Reconciliation of GAAP to Adjusted Earnings
(Unaudited)
(In thousands, except per share data)
                 Nine months ended
                 September 30, 2012
                              Asset              Asset       Post        Facility        Litigation   Goodwill    Non-controlling  Other
                                                 write-down  retirement  closing
                              impairment         & (gain)    benefits    &               settlements  impairment  interest in      adjustments
                                                 loss on                 reorganization
                              non-restructuring  sales of    adjustment  costs                                    Hero JV
                                                 assets
                 GAAP         (a)                (b)         (c)         (d)             (e)          (f)         (g)              (h) (j)      Adjusted^*
Segment
operating income
(loss):
 Fresh Dairy     $ 320,114    $ 5,983            $ -         $ -         $ -             $ -          $ -         $ -              $ -          $ 326,097
 Direct
 Morningstar     91,515       -                  -           -           -               -            -           -                -            91,515
 Whitewave -     182,210      -                  -           -           -               -            -           -                -            182,210
 Alpro
 Corporate       (158,127)    -                  -           -           -               -            -           -                12,000       (146,127)
 Facility
 closing and     (41,350)     -                  -           -           41,350          -            -           -                -            -
 reorganization
 costs
 Other income    56,339       -                  (56,339)    -           -               -            -           -                -            -
      Total
      operating  $ 450,701    $ 5,983            $ (56,339)  $ -         $ 41,350        $ -          $ -         $ -              $ 12,000     $ 453,695
      income
Net income
attributable to  $ 130,489    $ 3,846            $ 11,264    $ -         $ 26,896        $ 1,431      $ -         $ -              $ 10,184     $ 184,110
Dean Foods
Company (i)
Diluted earnings $ 0.70       $ 0.02             $ 0.06      $ -         $ 0.14          $ 0.01       $ -         $ -              $ 0.06       $ 0.99
per share
                 Nine months ended
                 September 30, 2011
                              Asset              Asset       Post        Facility        Litigation   Goodwill    Non-controlling  Other
                                                 write-down  retirement  closing
                              impairment         & (gain)    benefits    &               settlements  impairment  interest in      adjustments
                                                 loss on                 reorganization
                              non-restructuring  sales of    adjustment  costs                                    Hero JV
                                                 assets
                 GAAP         (a)                (b)         (c)         (d)             (e)          (f)         (g)              (j)          Adjusted^*
Segment
operating income
(loss):
 Fresh Dairy     $ 250,104    $ -                $ -         $ -         $ -             $ -          $ -         $ -              $ -          $ 250,104
 Direct
 Morningstar     72,364       -                  -           -           -               -            -           -                -            72,364
 Whitewave -     141,723      -                  -           -           -               -            -           -                -            141,723
 Alpro
 Non-controlling
 interest in     -            -                  -           -           -               -            -           5,623            -            5,623
 Hero JV
 Corporate       (164,118)    -                  8,092       15,172      -               -            -           -                -            (140,854)
 Facility
 closing and     (42,152)     -                  -           -           42,152          -            -           -                -            -
 reorganization
 costs
 Litigation      (131,300)    -                  -           -           -               131,300      -           -                -            -
 settlement
 Goodwill        (1,926,000)  -                  -           -           -               -            1,926,000   -                -            -
 impairment
 Other income    16,561       -                  (16,561)    -           -               -            -           -                -            -
      Total
      operating  $            $ -                $ (8,469)   $ 15,172    $ 42,152        $ 131,300    $           $ 5,623          $ -          $ 328,960
      income     (1,782,818)                                                                          1,926,000
      (loss)
Net income
(loss)           $                                                                                    $
attributable to  (1,565,747)  $ -                $ (12,161)  $ 9,769     $ 27,014        $ 85,085     1,550,000   $ -              $ (3,616)    $ 90,344
Dean Foods
Company (i)
Diluted earnings
(loss) per share $ (8.54)     $ -                $ (0.07)    $ 0.05      $ 0.15          $ 0.46       $ 8.46      $ -              $ (0.02)     $ 0.49
(k)
* See notes to
Earnings Release
Tables

 

For the three and nine months ended September 30, 2012 and 2011, the adjusted
results and certain other non-GAAP financial measures differ from the
Company's results under GAAP by excluding the following:
     The adjustment reflects the elimination of an asset write-down that was
     recorded at our Evart, Michigan production facility during the third
 (a) quarter of 2012 as a result of declining cash flows due to the loss of a
     significant customer.  We intend to shut down production at this facility
     in February 2013.
 (b) The adjustment reflects the elimination of the following:
                   A pre-tax gain resulting from the sale of our approximately
     a.            25% non-controlling interest in Consolidated Container
                   Company, which closed on July 3, 2012;
                   A net gain resulting from the sales of our Mountain High
     b.            and private label yogurt operations, which closed on
                   February 1, 2011 and April 1, 2011, respectively;
                   A net loss resulting from the sale of our fluid milk
     c.            operations at our manufacturing facility in Waukesha,
                   Wisconsin, which was completed on September 8, 2011;
     d.            Charges associated with our ceasing to use of certain
                   corporate assets; and
                   The write-down of the Hero/WhiteWave joint venture's
     e.            long-lived assets to fair value, less cost to sell, as a
                   result of the joint venture partner's approval to wind down
                   the operations of the joint venture.
     The adjustment reflects the exclusion of a non-cash charge of $15.2
 (c) million for previously unrecorded other postretirement benefits related
     to periods prior to 2011.
 (d) The adjustment reflects the elimination of charges related to announced
     facility closings and reorganization costs.
     The adjustment reflects the elimination of a charge and related interest
     accretion, in connection with our previously disclosed dairy farmer class
 (e) action lawsuit filed in the United States District Court for the Eastern
     District of Tennessee.  The Court granted final approval of the
     settlement agreement on June 15, 2012.
 (f) The adjustment reflects the elimination of the non-cash goodwill
     impairment charge related to our Fresh Dairy Direct segment.
     In 2011, the results of operations for the Hero/WhiteWave joint venture
     were consolidated for financial reporting purposes. The adjustment
     reflects the operating loss attributable to the 50% interest in the
 (g) Hero/WhiteWave joint venture that we do not own.  As of September 30,
     2012, we have completed the shutdown of the operations and only an
     immaterial amount of assets remain as part of the investment.  We may
     incur additional charges related to the final settlement of the joint
     venture with Hero Group.
     The adjustment reflects the elimination of transaction-related fees and
 (h) expenses incurred in connection with  the WhiteWave Foods Company's
     initial public offering completed on October 31, 2012 and acquisitions
     and divestitures that have closed or are expected to close.
 (i) The adjustment reflects the income tax impact for income from continuing
     operations before income taxes on adjustments (a) through (h).
 (j) The adjustment reflects the elimination of discontinued operations, net
     of tax.
 (k) The adjustment reflects an add-back of the dilutive shares, which were
     anti-dilutive for GAAP purposes.

 

SOURCE Dean Foods Company

Website: http://www.deanfoods.com
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