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Dean Foods Reports Fourth Quarter And Full Year 2013 Results

- Q4 GAAP Loss from Continuing Operations Attributable to Dean Foods of $0.40 per Share
- Q4 Adjusted Diluted Earnings from Continuing Operations of $0.18 per Share
- 2013 Full-Year GAAP Diluted Earnings per Share of $8.58
- 2013 Full Year Adjusted Diluted Earnings per Share of $0.86; up 12% versus 2012

DALLAS, Feb. 11, 2014 /PRNewswire/ -- Dean Foods Company (NYSE: DF) today announced that the Company earned $8.58 per diluted share for the full year 2013, as compared to $1.70 per diluted share for the full year 2012.  Full year 2013 reported results include the gain on disposition of WhiteWave common stock of $416 million, the gain on sale of Morningstar of $492 million (net of tax) and other one-time or non-recurring items, as more fully described in the attached tables. On an adjusted basis, the Company earned $0.86 per diluted share for the full year 2013, compared to $0.77 for the full year 2012.

For the fourth quarter of 2013, the Company reported a loss from continuing operations attributable to Dean Foods of $0.40 per share, compared to fourth quarter 2012 income from continuing operations of $0.08 per share. The loss for the fourth quarter of 2013 includes a $63 million (net of tax) loss on the early retirement of debt, $10 million (net of tax) of restructuring charges, and other one-time or non-recurring items, as more fully described in the attached tables.   On an adjusted basis, fourth quarter 2013 diluted earnings from continuing operations were $0.18 per share, compared to fourth quarter 2012 adjusted earnings of $0.23 per share.  

Fourth quarter 2013 operating income totaled $35 million, compared to fourth quarter 2012 operating income of $38 million. Fourth quarter 2013 adjusted operating income totaled $48 million, compared to $62 million in the year-ago period on an adjusted basis.

Full year 2013 operating income totaled $131 million, compared to full year 2012 operating income of $261 million.  Full year 2013 adjusted operating income totaled $228 million, compared to $256 million in the year ago period on an adjusted basis.

Net loss from continuing operations attributable to Dean Foods totaled $37 million for the fourth quarter of 2013, compared with $8 million in income the previous year. On an adjusted basis, fourth quarter net income from continuing operations attributable to Dean Foods totaled $17 million, compared with $21 million in the previous year. 

Net income attributable to Dean Foods totaled $813 million for the full year 2013, compared with $159 million in the previous year.  On an adjusted basis, net income for the full year 2013 totaled $82 million, compared to $72 million in 2012.  

"We continue to feel confident in our long-term trajectory," said Gregg Tanner, Chief Executive Officer of Dean Foods. "In 2013, Dean Foods successfully transformed itself, generating more than $2 billion in shareholder value, substantially deleveraging the company, and focusing the company on its core dairy business.  At the same time, we faced significant challenges in the inflationary commodity environment and through competitive pressures on our business.  This very challenging environment will persist for Dean Foods, particularly during the first half of 2014, but we are confident that we have the right strategies in place to drive meaningful productivity savings and top line volume growth through the balance of the year."

Dean Foods' share of U.S. fluid milk sales volume increased to 35.7 percent during the fourth quarter of 2013 from 34.9 percent in the third quarter of 2013. Industry fluid milk volumes declined approximately 2.2 percent year-over-year in the fourth quarter on an unadjusted basis, based on USDA data and company estimates. Due to the previously disclosed loss of business at a large retailer, Dean Foods' unadjusted fluid milk volumes declined 9 percent on a year-over-year basis. Excluding the previously announced loss of business at a major customer and another customer's decision to vertically integrate its dairy operations last year, Dean Foods' milk volumes declined 0.6 percent in the fourth quarter of 2013, significantly better than the overall category and an improvement from last quarter's comparable 1.7 percent decline. Total volumes across all products declined 8 percent from the year ago period to 699 million gallons in the fourth quarter of 2013.

The Company continued to make solid progress against its cost savings targets including the planned closure of eight to twelve (10-15 percent) of its manufacturing facilities by mid-2014. The Company has closed 8 plants and announced a 9th since its accelerated cost reduction initiatives began in the fourth quarter of 2012. 

The fourth quarter 2013 average Class I Mover, a measure of raw milk costs, was $19.92 per hundred-weight, a 2 percent decline from the fourth quarter of 2012, and 5 percent above the third quarter 2013 level.

CASH FLOW
Consolidated net cash used in continuing operations for the twelve months ended December 31, 2013 totaled $331 million. Free cash flow from continuing operations, which is defined as net cash provided by or used in continuing operations less capital expenditures, was an outflow of $506 million for the twelve months ended December 31, 2013. Negative cash flow was driven primarily by non-recurring items, most of which were associated with strategic separation activities, including the payment of approximately $420 million of taxes related to the Morningstar divestiture, $31 million related to the impact of moving WhiteWave and Morningstar accounts receivable from intercompany to third party transactions, and $32 million of transaction costs, as well as a $19 million litigation settlement payment in the second quarter. On an adjusted basis, which excludes these, and certain other items, Dean Foods generated $60 million in free cash flow for the twelve months ended December 31, 2013.  A reconciliation between net cash used in continuing operations and adjusted free cash flow provided by continuing operations is provided in the tables below.

NET DEBT
Total debt at December 31, 2013, net of $17 million cash on hand, was approximately $881 million. On an all cash netted basis, the Company's leverage ratio was 2.21 times funded net debt to EBITDA at the end of 2013.

Forward Outlook
"Turning to our forward outlook, there are several broad themes that are expected to drive business results and our earnings progression this year," continued Tanner.

"First, the consensus view of the dairy commodity outlook for 2014 appears to be more challenging than previously expected as current dairy commodity prices have moved near or beyond all-time highs despite strong global production growth.  On our last earnings conference call, we expressed a view that raw milk prices would begin to fall in the early part of 2014, before moderating and rising slightly over the back half.  However, since then, raw milk prices have risen sharply driven by global demand for imported dairy products.   We now expect Class I dairy commodity prices to climb throughout the majority of the first half, before flattening and declining moderately in the second half of 2014.

"Second, the RFP driven volume losses and the associated margin pressures we experienced occurred primarily late in the second quarter and early third quarter of 2013 resulting in very tough first half 2014 overlaps.

"Third, because overall 2013 performance was meaningfully below our plan, we significantly underpaid our 2013 bonus targets.  Our 2014 guidance assumes we will pay short term incentive at targeted levels. This higher level of incentive compensation is expected to be a drag on our financial performance in 2014.

"Finally, the fluid milk category finished the year with industry volumes down 2.2 percent in the fourth quarter and we continue to keep a watchful eye on the impacts associated with higher dairy commodity prices and the recent reduction in Supplemental Nutrition Assistance Program, or SNAP benefits.  We are hopeful that our new volume wins, and increasing share gains, will partially offset the asset deleverage soft category volumes create; however soft volumes, coupled with inflation,  can negate some of the impact of our cost reduction efforts, and makes it harder to take those savings to the bottom line.

"On the plus side, we continue to have a robust cost reduction effort in place.  We are working to offset both commodity and non-commodity related inflation through a combination of cost reductions and price realization.  That said, we are clearly beginning the year behind commodity inflation in the first quarter given the rapid rise in Class I prices to all-time highs.  In order to mitigate soft volumes, we have won new business that should continue to come on line late in the first quarter and we are continuing to execute against our plant closure initiatives in order to increase efficiencies within our existing network. 

"Taking all of these factors into account, we expect full year adjusted diluted earnings of $0.73 to $0.86 per share.

"We expect the first half of 2014 to be particularly difficult as we battle the RFP driven volume losses and the associated margin pressures we experienced primarily late in the second quarter and early third quarter of 2013.  We will not fully lap these impacts until the second half of the year, which will make for a very tough first half comparison, particularly in Q1.  We expect our first quarter will be our most difficult quarter of this year as we chase the current all-time high Class I commodity environment, overlap the full brunt of the RFP driven volume losses and margin pressures, and continue to work through the transitory costs associated with our accelerated plant closure agenda.  All in, we expect first quarter adjusted diluted earnings per share to be approximately break-even with three cents of potential risk or benefit implied. We expect our performance to improve throughout the year as we adjust to offset inflation, volume from new business flows into the system and our cost reduction initiatives continue to gain momentum."  

CONFERENCE CALL/WEBCAST
A webcast to discuss the Company's financial results and outlook will be held at 9:00 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 and is the nation's largest processor and direct-to-store distributor of fluid milk. Headquartered in Dallas, Texas, the Dean Foods portfolio includes TruMoo®, the leading national flavored milk brand, along with well-known regional dairy brands such as Alta Dena®, Berkeley Farms®, Country Fresh®, Dean's®, Garelick Farms®, LAND O LAKES® milk and cultured products*, Lehigh Valley Dairy Farms®, Mayfield®, McArthur®, Meadow Gold®, Oak Farms®, PET®**, T.G. Lee®, Tuscan® and more. In all, Dean Foods has more than 50 local and regional dairy brands and private labels. Dean Foods also makes and distributes ice cream, cultured products, juices, teas, and bottled water. Nearly 18,000 employees across the country work every day to make Dean Foods the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion. For more information about Dean Foods and its brands, visit www.deanfoods.com.

*The LAND O LAKES brand is owned by Land O'Lakes, Inc. and is used by license.
**PET is a trademark of The J.M. Smucker Company and is used by license.

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, diluted earnings per share, adjusted diluted earnings per share, debt covenant compliance, cost reduction strategies, divestitures,  planned share repurchases, and expected financial performance. These statements involve risks and uncertainties that may cause results to differ materially from the statements set forth in this press release. The cost and supply of commodities and other raw materials are determined by market forces over which we have limited or no control. 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. The declaration and payment of cash dividends under our dividend policy remains at the sole discretion of the Board of Directors or a committee thereof and will depend upon our financial results, cash requirements, future prospects, applicable law and other factors that may be deemed relevant by the Board or such committee. 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 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.

NON-GAAP FINANCIAL MEASURES
In addition to the results prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), we have presented certain adjusted financial results and certain other non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow and Adjusted Free Cash Flow, each as defined below.  These non-GAAP financial measures are from continuing operations and are adjusted to eliminate the net expense, net gain and cash flow impacts related to the items identified in the "Reconciliation of GAAP to Non-GAAP Information" tables below. This information is provided to assist investors in making meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. Additionally, certain pro forma adjustments were made to our GAAP results for the three and twelve months ended December 31, 2012 to facilitate a meaningful comparison of operating results between 2012 and 2013. Because we cannot predict the timing and amount of charges associated with certain non-recurring items; asset impairment charges; gains or losses related to discontinued operations and divestitures; deal, integration and separation costs; facility closing, reorganization and realignment costs; litigation settlements; and certain other charges, as well as the timing and amount of any cash outflows or inflows associated with such items, our  management does not consider these items when evaluating our performance, when making decisions regarding the allocation of resources, in determining incentive compensation for management, or in determining earnings estimates.

We have defined Adjusted EBITDA as net income attributable to Dean Foods, which is the most comparable GAAP financial measure, adjusted for the items above as well as interest, taxes, depreciation and amortization. We believe Adjusted EBITDA is a useful measure for analyzing the performance of our business and is an indicator of our ability to incur and service indebtedness and generate free cash flow. We also believe that EBITDA measures are commonly reported and widely used by investors and other interested parties as measures of a company's operating performance and debt servicing ability because such measures assist in comparing performance on a consistent basis without regard to capital structure, depreciation or amortization (which can vary significantly) and non-operating factors (such as historical cost). EBITDA is also a widely-accepted financial indicator of a company's ability to incur and service indebtedness. The reconciliation of net income to Adjusted EBITDA for the three and twelve months ended December 31, 2013 and 2012 is included in the tables below.

Additionally, we believe free cash flow provided by (used in) continuing operations ("Free Cash Flow") and adjusted free cash flow provided by (used in) continuing operations ("Adjusted Free Cash Flow") are meaningful non-GAAP measures that offer supplemental information and insight regarding the liquidity of our operations and our ability to generate sufficient cash flow above what is required in our business to sustain our operations.

We define Free Cash Flow as net cash provided by (used in) continuing operations less cash payments for capital expenditures.

We define Adjusted Free Cash Flow as Free Cash Flow adjusted for the impact on operating cash flows related to certain significant or non-recurring items, including income taxes paid on the divestiture of Morningstar; litigation payments; payments associated with our restructuring, reorganization and realignment activities; transaction costs and other separation costs resulting from the Morningstar divestiture and WhiteWave spin-off in 2013; income tax payments related to certain deferred intercompany transactions between us and WhiteWave which were recognized by us upon  completion of the WhiteWave spin-off; and other increases in or reductions to income tax payments associated with the adjustments described above.  Additionally, the computation of Adjusted Free Cash Flow for the twelve months ended December 31, 2013 has been further adjusted to exclude the net impact on working capital of accounts receivable and accounts payable associated with our transitional services agreements with WhiteWave and Morningstar, as well as the movement of WhiteWave and Morningstar trade accounts receivable and trade accounts payable from intercompany transactions (which were previously eliminated in consolidation) to third-party transactions in 2013.  A reconciliation of net cash used in continuing operations, which is the most comparable U.S. GAAP financial measure, to Adjusted Free Cash Flow, is included in the tables below.

This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP. Additionally, these non-GAAP measures may be different than similar measures used by other companies. We believe that the presentation of these non- GAAP financial measures, when considered together with our GAAP financial measures and the reconciliations to the corresponding GAAP financial measures, provides investors with a more complete understanding of the factors and trends affecting our business than could be obtained absent these disclosures.  A full reconciliation of our results and financial measures reported in accordance with GAAP for the three and twelve months ended December 31, 2013 and 2012 to the non-GAAP financial measures described above is set forth herein.  

CONTACT: Corporate Communications, Jamaison Schuler, +1-214-721-7766; or Investor Relations, Tim Smith, +1-214-303-3713

 


 DEAN FOODS COMPANY 


 Condensed Consolidated Statements of Operations 


 (Unaudited) 


 (In thousands, except per share data) 



























 Three months ended 


 Three months ended 





December 31,


December 31,





2013


2012


2013


2012





GAAP


 Adjusted* 


 Pro forma adjusted* 













 Net sales 

$ 2,295,450


$ 2,455,130


$     2,295,450


$     2,467,582

 (j) 

 Cost of sales 

1,849,680


1,939,327


1,848,569

 (a) (b) 

1,953,277

 (j) 












 Gross profit 

445,770


515,803


446,881


514,305












 Operating costs and expenses: 










 Selling and distribution  

332,614


351,690


332,439

 (b) 

351,693

 (j) 


 General and administrative  

66,827


107,763


65,655

 (b) (c) (f) 

99,931

 (c) (j) 


 Amortization of intangibles 

884


940


884


940



 Facility closing and reorganization costs 

9,191


18,055


-

 (b) 

-

 (b) 


 Impairment of long-lived assets 

1,500


-


-

 (a) 

-



 Other operating income 

-


(1,120)


-


-

 (a) 



 Total operating costs and expenses 

411,016


477,328


398,978


452,564













 Operating income 

34,754


38,475


47,903


61,741













 Interest expense 

20,549


33,851


20,195

 (h) 

27,640

 (g) (h) 

 Loss on early retirement of debt 

63,387


-


-

 (d) 

-


 Other expense, net 

89


29


89


29













 Income (loss) from continuing operations before 











 income taxes 

(49,271)


4,595


27,619


34,072













 Income tax expense (benefit) 

(11,909)


(3,167)


10,495

 (i) 

12,947

 (i) (j) 












 Income (loss) from continuing operations 

(37,362)


7,762


17,124


21,125


 Gain (loss) on sale of discontinued operations, net of tax 

(227)


405


-

 (f) 

-

 (g) 

 Income (loss) from discontinued operations, net of tax 

(88)


22,385


-

 (f) 

-

 (f) (g) 













 Net income (loss) 

(37,677)


30,552


17,124


21,125




 Net income attributable to non-controlling interest in discontinued operations 

-


(2,419)


-


-

 (h) 


 Net income (loss) attributable to Dean Foods Company     

$    (37,677)


$      28,133


$          17,124


$          21,125













 Average common shares: 










 Basic 

94,535


92,670


94,535


92,670



 Diluted 

94,535


93,492


95,468

 (k) 

93,492












Basic earnings (loss) per common share:










Income (loss) from continuing operations attributable to











 Dean Foods Company 

$        (0.40)


$          0.08


$              0.18


$              0.23



Gain from discontinued operations attributable to











 Dean Foods Company 

-


0.22


-


-



Net income (loss) attributable to Dean Foods Company

$        (0.40)


$          0.30


$              0.18


$              0.23













Diluted earnings (loss) per common share:










Income (loss) from continuing operations attributable to











 Dean Foods Company 

$        (0.40)


$          0.08


$              0.18


$              0.23



Gain from discontinued operations attributable to











 Dean Foods Company 

-


0.22


-


-



Net income (loss) attributable to Dean Foods Company

$        (0.40)


$          0.30


$              0.18


$              0.23



 * See notes to Earnings Release Tables 

**Basic and diluted earnings (loss) per common share and average basic and diluted shares outstanding for the three months ended December 31, 2012 have been adjusted retroactively to reflect a 1-for-2 reverse stock split effected August 26, 2013.




 DEAN FOODS COMPANY 


 Condensed Consolidated Statements of Operations 


 (Unaudited) 


 (In thousands, except per share data) 



























 Twelve months ended 


 Twelve months ended 





December 31,


December 31,





2013


2012


2013


2012





GAAP


 Adjusted* 


 Pro forma adjusted* 













 Net sales 

$     9,016,321


$     9,274,662


$     9,016,321


$     9,317,288

 (j) 

 Cost of sales 

7,161,734


7,179,403


7,155,223

 (a) (b) 

7,228,256

 (a) (j) 













 Gross profit 

1,854,587


2,095,259


1,861,098


2,089,032













 Operating costs and expenses: 










 Selling and distribution  

1,337,745


1,419,531


1,335,161

 (b) 

1,419,562

 (j) 


 General and administrative  

310,453


412,957


293,822

 (b) (c) (f) 

409,625

 (c) (j) 


 Amortization of intangibles 

3,669


3,758


3,669


3,758



 Facility closing and reorganization costs 

27,008


55,787


-

 (b) 

-

 (b) 


 Litigation settlements 

(1,019)


-


-

 (h) 

-



 Impairment of long-lived assets 

43,441


-


-

 (a) 

-



 Other operating (income) loss 

2,494


(57,459)


-

 (a) 

-

 (a) 



 Total operating costs and expenses 

1,723,791


1,834,574


1,632,652


1,832,945














 Operating income 

130,796


260,685


228,446


256,087













 Interest expense 

200,558


150,589


96,686

 (e) (f) (g) (h) 

142,160

 (g) (h) 

 Gain on disposition of WhiteWave common stock 

(415,783)


-


-

 (e) 

-


 Loss on early retirement of debt 

63,387


-


-

 (d) 

-


 Other income, net 

(400)


(1,664)


(400)


(1,664)














 Income from continuing operations before 











 income taxes 

283,034


111,760


132,160


115,591













 Income tax expense (benefit) 

(42,325)


87,945


50,219

 (i) 

43,923

 (i) (j) 












 Income from continuing operations 

325,359


23,815


81,941


71,668


 Gain (loss) on sale of discontinued operations, net of tax 

491,195


(2,053)


-

 (f) (g) (h) 

-

 (e) (g) 

 Income from discontinued operations, net of tax 

2,803


139,279


-

 (f) (g) 

-

 (f) (g) 













 Net income 

819,357


161,041


81,941


71,668




 Net income attributable to non-controlling interest in discontinued operations 

(6,179)


(2,419)


-

 (h) 

-

 (h) 


 Net income attributable to Dean Foods Company     

$        813,178


$        158,622


$          81,941


$          71,668













 Average common shares: 










 Basic 

93,786


92,375


93,786


92,375



 Diluted 

94,796


93,066


94,796


93,066













Basic earnings per common share:










Income from continuing operations attributable to











 Dean Foods Company 

$              3.47


$              0.26


$              0.87


$              0.78



Gain from discontinued operations attributable to











 Dean Foods Company 

5.20


1.46


-


-



Net income attributable to Dean Foods Company

$              8.67


$              1.72


$              0.87


$              0.78













Diluted earnings per common share:










Income from continuing operations attributable to











 Dean Foods Company 

$              3.43


$              0.26


$              0.86


$              0.77



Gain from discontinued operations attributable to











 Dean Foods Company 

5.15


1.44


-


-



Net income attributable to Dean Foods Company

$              8.58


$              1.70


$              0.86


$              0.77














 * See notes to Earnings Release Tables 

**Basic and diluted earnings per common share and average basic and diluted shares outstanding for the year ended December 31, 2012 have been adjusted retroactively to reflect a 1-for-2 reverse stock split effected August 26, 2013.


 

 DEAN FOODS COMPANY 

 Computation of Adjusted EBITDA 

 (Unaudited) 

 (In thousands) 
























 Three months ended 


 Twelve months ended 




December 31,


December 31,




2013


2012


2013


2012












 Net income attributable to Dean Foods Company 

$          17,124


$          21,125


$          81,941


$          71,668


 Interest expense 

20,195


27,640


96,686


142,160


 Income tax expense 

10,495


12,947


50,219


43,923


 Depreciation and amortization 

39,813


42,925


160,511


172,287



 Adjusted EBITDA 

$          87,627


$        104,637


$        389,357


$        430,038

 

DEAN FOODS COMPANY

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)






December 31,


December 31,

ASSETS


2013


2012





Cash and cash equivalents

$ 16,762


$ 24,657





Assets of discontinued operations*

-


2,793,608





Other current assets

1,133,936


1,162,469






Total current assets

1,150,698


3,980,734





Property, plant and equipment, net

1,216,047


1,248,637





Intangibles and other assets, net

435,300


468,212





Total Assets

$ 2,802,045


$ 5,697,583









LIABILITIES AND STOCKHOLDERS' EQUITY





Liabilities of discontinued operations*

$ -


$ 1,466,221





Other current liabilities, excluding debt

780,389


933,631






Total current liabilities, excluding debt

780,389


2,399,852





Total long-term debt, including current portion

897,262


2,322,243





Other long-term liabilities

410,079


515,860





Total Dean Foods Company stockholders' equity

714,315


357,187





Non-controlling interest

-


102,441






Total stockholders' equity

714,315


459,628







Total Liabilities and Stockholders' Equity

$ 2,802,045


$ 5,697,583





*Reflects the discontinued operations of WhiteWave and Morningstar

 

 DEAN FOODS COMPANY 

 Condensed Consolidated Statements of Cash Flows (GAAP Basis) 

 (Unaudited) 

 (In thousands) 













 Year ended December 31, 

 Operating Activities 

2013


2012


 Net cash provided by (used in) continuing operations 

$(330,727)


$   204,879


 Net cash provided by discontinued operations 

14,086


277,539


 Net cash provided by (used in) operating activities 

(316,641)


482,418






 Investing Activities 




 Payments for property, plant and equipment 

(175,163)


(123,892)

 Proceeds from insurance and other recoveries 

-


3,075

 Proceeds from divestitures 



58,034

 Proceeds from sale of fixed assets 

9,940


12,962

 Other 

-


(253)


 Net cash used in investing activities - continuing operations 

(165,223)


(50,074)


 Net cash provided by (used in) investing activities - discontinued operations 

1,403,494


(124,104)


 Net cash provided by (used in) investing activities 

1,238,271


(174,178)






 Financing Activities 




 Net repayment of debt 

(839,937)


(1,407,470)

 Premiums paid on early retirement of debt 

(57,243)


-

 Payments of financing costs 

(6,197)


-

 Issuance of common stock, net of share repurchases 

23,481


6,434

 Other 

1,954


571


 Net cash used in financing activities - continuing operations 

(877,942)


(1,400,465)


 Net cash provided by (used in) financing activities - discontinued operations 

(51,584)


1,098,002


 Net cash used in financing activities 

(929,526)


(302,463)







 Effect of exchange rate changes on cash and cash equivalents 

1


733






 Increase (decrease) in cash and cash equivalents 

(7,895)


6,510

 Cash and cash equivalents, beginning of period 

24,657


18,147






 Cash and cash equivalents, end of period 

$    16,762


$     24,657

 

 DEAN FOODS COMPANY 

 Reconciliation of Net Cash Provided by (Used in) Continuing Operations
to Adjusted Free Cash Flow Provided by Continuing Operations 

 (Unaudited) 

 (In thousands) 




























Year ended December 31,






2013


2012


 Computation of Free Cash Flow provided by (used in) continuing operations 













 Net cash provided by (used in) continuing operations - GAAP Basis 

$(330,727)


$ 204,879


 Payments for property, plant and equipment 

(175,163)


(123,892)





  Free cash flow provided by (used in) continuing operations 

$(505,890)


$   80,987










 Computation of Adjusted Free Cash Flow provided by continuing operations 













 Net cash provided by (used in) continuing operations - GAAP Basis 

$(330,727)


$ 204,879



 Estimated impact on net cash provided by (used in) continuing operations related to: 







 Facility closing, reorganization and realignment costs 

35,726


24,150




 Deal, integration and separation costs 

32,246


16,444




 Morningstar divestiture 

57,948


-




 WhiteWave spin-off 

10,756


-




 Litigation payments 

19,101


61,325




 Increase in (reduction to) income tax payments associated with above activities 

410,163


(32,692)


 Adjusted net cash provided by continuing operations 

235,213


274,106


 Less: Payments for plant, property & equipment 

(175,163)


(123,892)





 Adjusted free cash flow provided by continuing operations 

$    60,050


$ 150,214

 

DEAN FOODS COMPANY

 Reconciliation of GAAP to Pro Forma Adjusted Earnings

 (Unaudited)

 (In thousands, except per share data)















































 Three months ended

December 31, 2013






























Asset write-downs


Facility closing,


Deal, integration


Loss on early

















and (gain) loss on


reorganization &


and separation


retirement of


Morningstar


WhiteWave


Other


Income









sale of assets


realignment costs


costs


debt


sale


spin-off


adjustments


tax







GAAP


(a)


(b)


(c)


(d)


(f)


(g)


(h)


(i)


Adjusted*
























 Operating income (loss):





















 Dean Foods

$     45,445


$                        1,064


$                          783


$                   1,156


$                    -


$             (545)


$                 -


$                  -


$                -


$     47,903


 Facility closing and reorganization costs

(9,191)


-


9,191


-


-


-


-


-


-


-


 Impairment of long-lived assets

(1,500)


1,500


-


-


-


-


-


-


-


-



 Total operating income

34,754


2,564


9,974


1,156


-


(545)


-


-


-


47,903

























 Interest expense

20,549


-


-


-


-


-


-


(354)


-


20,195


 Loss on early retirement of debt

63,387


-


-


-


 

(63,387)


-


-


-


-


-


 Other expense, net

89


-


-


-


-


-


-


-


-


89


 Income tax expense (benefit)

(11,909)


-


-


-


-


-


-


-


22,404


10,495



 Income (loss) from continuing operations

(37,362)


2,564


9,974


1,156


63,387


(545)


-


354


(22,404)


17,124

























 Loss from discontinued operations, net of tax

(315)


-


-


-


-


315


-


-


-


-



 Net income (loss) attributable to Dean Foods Company

$    (37,677)


$                        2,564


$                       9,974


$                   1,156


$          63,387


$             (230)


$                 -


$             354


$     (22,404)


$     17,124















































 Diluted earnings (loss) per share (k)

$        (0.40)


$                          0.03


$                         0.11


$                     0.01


$              0.67


$                   -


$                 -


$                  -


$         (0.24)


$         0.18

 

 Three months ended





December 31, 2012






































Asset write-downs


Facility closing,


Deal, integration


Loss on early





















and (gain) loss on


reorganization and


and separation


retirement of


Morningstar


WhiteWave


Other


Income




Pro forma









sale of assets


realignment costs


costs


debt


sale


spin-off


adjustments


tax




adjustments


Pro forma





GAAP


(a)


(b)


(c)


(d)


(f)


(g)


(h)


(i)


Adjusted*


(j)


 adjusted*




























 Operating income (loss):

























 Dean Foods

$     55,410


$                               -


$                               -


$                   6,904


$                    -


$                   -


$                 -


$                  -


$                -


$     62,314


$            (573)


$       61,741


 Facility closing and reorganization costs

(18,055)


-


18,055


-


-


-


-


-


-


-


-


-


 Other operating income

1,120


(1,120)


-


-


-


-


-


-


-


-


-


-



 Total operating income

38,475


(1,120)


18,055


6,904


-


-


-


-


-


62,314


(573)


61,741


























 Interest expense

33,851


-


-


-


-


-


(5,693)


(518)


-


27,640


-


27,640


 Other expense, net

29


-


-


-


-


-


-


-


-


29


-


29


 Income tax expense (benefit)

(3,167)


-


-


-


-


-


-


-


16,332


13,165


(218)


12,947



 Income from continuing operations

7,762


(1,120)


18,055


6,904


-


-


5,693


518


(16,332)


21,480


(355)


21,125


























 Income from discontinued operations, net of tax

22,790


-


-


-


-


(3,932)


(18,858)


-


-


-


-


-


 Net income attributable to non-controlling interest in discontinued operations

(2,419)


-


-


-


-


-


-


2,419


-


-


-


-



 Net income attributable to Dean Foods Company

$     28,133


$                      (1,120)


$                     18,055


$                   6,904


$                    -


$          (3,932)


$      (13,165)


$          2,937


$     (16,332)


$     21,480


$            (355)


$       21,125

























 Diluted earnings per share

$         0.30


$                        (0.01)


$                         0.19


$                     0.07


$                    -


$            (0.04)


$          (0.14)


$            0.03


$         (0.17)


$         0.23


$                  -


$           0.23



 * See notes to Earnings Release Tables


DEAN FOODS COMPANY





Reconciliation of GAAP to Pro Forma Adjusted Earnings





(Unaudited)





(In thousands, except per share data)















 Twelve months ended





December 31, 2013








































Asset write-downs


Facility closing,


Deal, integration


Loss on early


Disposition of





















and (gain) loss on


reorganization &


and separation


retirement of


WWAV common


Morningstar


WhiteWave


Other


Income













sale of assets


realignment costs


costs


debt


stock


sale


spin-off


adjustments


tax











GAAP


(a)


(b)


(c)


(d)


(e)


(f)


(g)


(h)


(i)


Adjusted*


































 Operating income (loss):




























 Dean Foods

$     202,720


$                        4,926


$                     10,787


$                 10,558


$                    -


$                           -


$             (545)


$                 -


$                  -


$                -


$      228,446






 Facility closing and reorganization costs

(27,008)


-


27,008


-


-


-


-


-


-


-


-






 Litigation settlements

1,019


-


-


-


-


-


-


-


(1,019)


-


-






 Impairment of long-lived assets

(43,441)


43,441


-


-


-


-


-


-


-


-


-






 Other operating loss

(2,494)


2,494


-


-


-


-


-


-


-


-


-







 Total operating income

130,796


50,861


37,795


10,558


-


-


(545)


-


(1,019)


-


228,446

































 Interest expense

200,558


-


-


-


-


(649)


(29,430)


(66,684)


(7,109)


-


96,686






Gain on disposition of WhiteWave common stock

(415,783)


-


-


-


-


415,783


-


-


-


-


-






 Loss on early retirement of debt

63,387


-


-


-


(63,387)


-


-


-


-


-


-






 Other income, net

(400)


-


-


-


-


-


-


-


-


-


(400)






 Income tax expense (benefit)

(42,325)


-


-


-


-


-


-


-


-


92,544


50,219







 Income from continuing operations

325,359


50,861


37,795


10,558


63,387


(415,134)


28,885


66,684


6,090


(92,544)


81,941
































 Income from discontinued operations, net of tax

493,998


-


-


-


-


-


(491,887)


(2,815)


704


-


-






 Net income attributable to non-controlling interest in discontinued operations

(6,179)


-


-


-


-


-


-


-


6,179


-


-







 Net income attributable to Dean Foods Company

$     813,178


$                      50,861


$                     37,795


$                 10,558


$          63,387


$              (415,134)


$      (463,002)


$       63,869


$        12,973


$     (92,544)


$        81,941

























































 Diluted earnings per share

$           8.58


$                          0.54


$                         0.40


$                     0.11


$              0.67


$                    (4.38)


$            (4.89)


$           0.67


$            0.14


$         (0.98)


$            0.86

























































 Twelve months ended





December 31, 2012








































Asset write-downs


Facility closing,


Deal, integration


Loss on early


Disposition of





















and (gain) loss on


reorganization and


and separation


retirement of


WWAV common


Morningstar


WhiteWave


Other


Income




Pro forma









sale of assets


realignment costs


costs


debt


stock


sale


spin-off


adjustments


tax




adjustments


Pro forma





GAAP


(a)


(b)


(c)


(d)


(e)


(f)


(g)


(h)


(i)


Adjusted*


(j)


 adjusted*






























 Operating income (loss):



























 Dean Foods

$     259,013


$                        5,983


$                               -


$                   6,904


$                    -


$                           -


$                   -


$                 -


$                  -


$                -


$      271,900


$       (15,813)


$     256,087


 Facility closing and reorganization costs

(55,787)


-


55,787


-


-


-


-


-


-


-


-


-


-


 Other operating income

57,459


(57,459)


-


-


-


-


-


-


-


-


-


-


-



 Total operating income

260,685


(51,476)


55,787


6,904


-


-


-


-


-


-


271,900


(15,813)


256,087




























 Interest expense

150,589


-


-


-


-


-


-


(5,693)


(2,736)


-


142,160


-


142,160


 Other income, net

(1,664)


-


-


-


-


-


-


-


-


-


(1,664)


-


(1,664)


 Income tax expense

87,945


-


-


-


-


-


-


-


-


(38,013)


49,932


(6,009)


43,923



 Income from continuing operations

23,815


(51,476)


55,787


6,904


-


-


-


5,693


2,736


38,013


81,472


(9,804)


71,668




























 Income from discontinued operations, net of tax

137,226


-