Tuesday, 7 September 2004

Dean Foods Comments on Market Environment and Revises Financial Outlook

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Tuesday, 7 September 2004

DALLAS, Sep 7, 2004 /PRNewswire-FirstCall via COMTEX/ — Dean Foods Company (NYSE: DF)
announced today that unprecedented volatility in raw milk prices, a difficult
retail grocery environment, and record-high fuel, resin and other commodity
costs have caused it to reduce its earnings expectations for 2004. The
company said that these and other factors are contributing to weaker than
expected performance across all of its businesses.

For the full year 2004, the company now expects to achieve adjusted
earnings per share (EPS) in the range of $2.00 to $2.05. The company expects
to achieve adjusted EPS of $0.44 to $0.46 and $0.63 to $0.66 in the third and
fourth quarters of 2004, respectively.

Gregg Engles, Chairman and Chief Executive Officer, said, “We said on our
August 4th conference call that our guidance for the balance of 2004 assumed a
certain limited benefit to our Dairy Group as a result of decreasing raw milk
prices. As July results came in, and we moved through August, it has become
apparent that the competitive pressures we referenced on the call are more
intense than we expected. While our volumes are strong in our Dairy Group and
Branded Products Group segments, we have not realized the margin benefit we
expected from the July and August declines in dairy commodity costs.
Furthermore, we’ve continued to be impacted by rising fuel and resin prices,
volatility in the butter market, and aggressive competition among our retail

Engles added, “As we also indicated on our second quarter conference call,
our Specialty Foods Group segment has experienced commodity cost and
competitive pricing pressures. These trends have not abated and, in fact, we
have seen sharply weaker demand from our co-pack customers in the nutritional
drinks business, particularly in low carb beverages. Our retail pickle
business also has been significantly weaker than expected due to soft demand
in a cool, wet summer. We are systematically analyzing all aspects of our
Specialty Foods business with a view to reducing costs and returning this
operation to its historical levels of profitability.”

Engles continued, “Our Branded Products Group segment — which includes
Silk and Horizon Organic, the largest and most dynamic natural and organic
brands in the U.S. — continues to be a bright spot and we expect it to remain
so for the foreseeable future. We have, however, somewhat reduced our
expectations for our branded business for the balance of the year. We now
expect White Wave sales will grow 36% year over year as opposed to 40%, and
have lowered our profit expectations accordingly. With the recently announced
consolidation of our branded businesses, we are creating a unified consumer
products company with approximately $1.1 billion in sales and operating profit
in the range of 8% to 10% in 2004, and we continue to be very encouraged about
the opportunities for this business.”

Engles continued, “Turning to our Spanish dairy operations, unlike in the
U.S., raw milk costs have continued to rise in the third quarter in Spain, and
due to competitive pressure, we have not been able to pass through the
increases as rapidly as we had hoped. Volume growth continues to be very
strong, but lower branded sales resulting from an industry-wide trend of
consumers shifting to lower-margin private label products and competitive
pressures will adversely affect our margins for the remainder of the year.”

Engles concluded, “While we’re clearly disappointed with today’s
announcement, we remain confident about our future prospects. While this year
will reset our base, we continue to believe that, absent the extraordinary
circumstances we have faced this year, our business is well positioned to grow
EPS an average of 8% to 10% per year over time. In a difficult market, we’ve
continued to gain market share in our dairy business and remain committed to
meeting the needs of our customers — a strategy that we believe will drive
profitability and shareholder value in the longer-term. We expect to provide
earnings guidance for 2005 as usual on our third quarter conference call in

Conference Call Webcast

A webcast to discuss the company’s announcement will be held at 8:30 a.m.
ET tomorrow, September 8 and may be heard live by visiting the “Webcasts”
section of the company’s corporate website at http://www.deanfoods.com .

Comparison Of Adjusted Estimates To GAAP Estimates

The earnings estimates contained in this press release are non-GAAP
financial measures that do not incorporate any net expense the company may
incur related to plant closings, restructurings and non-operating one-time
charges. Because the company cannot predict the timing and amount of charges
associated with plant closings, restructurings and non-operating one-time
items, management does not consider them in its earnings estimates or budgets,
or when evaluating the company’s performance, making decisions regarding the
allocation of resources, or determining incentive compensation for management.
Plant closing, restructuring and non-operating one-time charges are not
recorded in any of the company’s operating segments. This non-GAAP financial
information is provided as additional information for investors in order to
make meaningful comparisons of the company’s operating performance between
periods and to view the company’s business from the same perspective as the
company’s management. This information is not in accordance with or an
alternative to GAAP and may be different than similar measures used by other

About Dean Foods

Dean Foods Company is one of the leading food and beverage companies in
the United States. Its Dairy Group division is the largest processor and
distributor of milk and other dairy products in the country, with an extensive
refrigerated direct-store-delivery network. Through its White Wave and
Horizon Organic subsidiaries, Dean Foods Company is also the nation’s leading
manufacturer of soymilk, organic milk and other branded organic foods. The
company’s Specialty Foods Group is a leading manufacturer of pickles and other
specialty food products. Dean Foods Company and its subsidiaries operate
approximately 120 plants in 36 U.S. states, Spain and the United Kingdom, and
employ approximately 29,000 people.

Some of the statements in this press release, including the company’s
projected earnings per share, its projected sales and profitability for its
Branded Products Group and its projected long-term growth rate, are “forward-
looking” and are made pursuant to the safe harbor provision of the Securities
Litigation Reform Act of 1995. 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 sales, operating income,
and earnings per share depends on a variety of economic, competitive and
governmental factors, including raw material costs and other input, 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 company’s
ability to profit from its branding initiatives depends on a number of factors
including primarily consumer acceptance of the company’s products. 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.

     Investor Contact
     Cory Olson
     Senior Vice President, Treasurer
     (214) 303-3645

     Media Contact
     Debbie Miller
     Citigate Sard Verbinnen
     (212) 687-8080

SOURCE Dean Foods Company

investors, Cory Olson, Senior Vice President, Treasurer,
+1-214-303-3645, or media, Debbie Miller of Citigate Sard Verbinnen,
+1-212-687-8080, for Dean Foods Company


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