Wednesday, 8 May 2002

Dean Foods Company Announces First Quarter Results

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Wednesday, 8 May 2002

DALLAS, May 8, 2002 —

Pro Forma EPS Grew 12% to $0.57; Consolidated Sales Increased 56% to a Record $2.3 Billion Company Announces Planned Acquisition of White Wave, Inc.

Dean Foods Company
(NYSE: DF) today announced results for the quarter ended March 31, 2002. Pro
forma earnings per share for the first quarter totaled $0.57, an increase of 12%
over pro forma earnings of $0.51 per share in last year’s first quarter. Pro
forma net income for the first quarter grew 79% to $56.1 million, compared with
pro forma net income of $31.3 million in the first quarter of 2001.

“We are very pleased with our results this quarter,” said Gregg Engles, Chairman
and Chief Executive Officer of Dean Foods. “We have accomplished a great deal in
the five months following the closing of our merger. We realized approximately
$20 million in synergies in the first quarter, and we are increasingly confident
that we will exceed our $60 million goal in 2002. As we have promised, we will
devote excess synergies toward building our branded, value-added growth
platforms so that we can consistently deliver 8-10% earnings per share growth
into the foreseeable future.

“We are also delighted to announce the White Wave transaction today. As we step
up our efforts toward building our branded platforms and leveraging our
direct-store-delivery network, we are confident we will create an even more
vibrant, more successful food and beverage company capable of delivering
consistent shareholder value in the years to come,” concluded Engles.

First quarter net sales totaled $2.3 billion, an increase of 56% over the first
quarter of 2001. The sales increase was due primarily to the addition of legacy
Dean Foods in the company’s results.

Pro forma operating income totaled $149.5 million, an increase of 54% over pro
forma $97.3 million in the first quarter of 2001. Pro forma first quarter 2002
operating income margin was 6.6%, a decrease of 9 basis points versus the pro
forma results from the first quarter of last year.

First quarter 2002 pro forma results are adjusted to exclude restructuring
charges of $1.2 million related to the previously announced closing of the
company’s Country Fresh facility in Port Huron, Mich. and to exclude a one-time
charge of $47.3 million, net of income tax, related to the write-down of certain
trademarks due to the implementation of Financial Accounting Standard (FAS) 142,
“Goodwill and Other Intangible Assets.” First quarter 2001 pro forma results are
adjusted to reflect the elimination of goodwill and other intangible
amortization as if FAS 142 had been effective as of January 1, 2001. In
addition, pro forma 2001 results exclude the cumulative effect of the accounting
change for the adoption of FAS 133 in the first quarter of 2001 and plant
closing costs of $0.8 million. A reconciliation table between reported earnings
per share and pro forma earnings per share is attached.

SEGMENT RESULTS

Dairy Group sales for the first quarter totaled $1.8 billion, an increase of 48%
over $1.2 billion in the first quarter of 2001. The sales growth was due
primarily to the addition of the legacy Dean dairies.

Dairy Group pro forma operating income in the first quarter increased 65% to
$127.4 million, and pro forma operating margins increased 73 basis points to
7.2% of sales, due to lower raw milk costs. Raw milk costs declined
approximately 8% compared with the prior year first quarter.

Morningstar sales in the first quarter totaled $238.6 million, an increase of
43%, due to the addition of legacy Dean’s National Refrigerated Products
segment.

Morningstar pro forma operating income in the first quarter was $23.1 million,
virtually flat to last year, and operating margins declined 428 basis points to
9.7%, as a result of increased investment in branded and value-added growth
platforms, the inclusion of legacy Dean’s lower margin National Refrigerated
Products segment and the previously announced phase-out of the Lactaid and
Nestle brands.

Specialty Foods sales totaled $161.2 million and operating income was $20.8
million, or 12.9% of sales.

REPORTED RESULTS

Reported operating income for the first quarter was $148.3 million or 6.5% of
sales, compared with $83.9 million, or 5.7% of sales, in the 2001 first quarter.
First quarter reported net income was $8.0 million, compared with $22.1 million
in the 2001 first quarter. Reported diluted earnings per share totaled $0.12,
compared with $0.38 in the first quarter of 2001.

    RECENT DEVELOPMENTS
— Today in a separate press release, Dean Foods announced that it has
signed a definitive agreement to acquire the remaining equity
interests in White Wave, Inc., maker of Silk(R), the leading
refrigerated soymilk in the country. White Wave had net sales of
approximately $125 million during the twelve months ended March 31,
2002.

— The company successfully amended its senior credit facility to
decrease the interest rate on its $1 billion Tranche B term loan by
50 basis points, effective May 1, 2002.

— The company completed its two-for-one common stock split and began
trading on a split-adjusted basis on April 24, 2002. Earnings per
share and share count in this press release have been adjusted to
reflect the stock split.

— On April 12, the company announced the retirement of Howard M. Dean,
Director and Chairman of the Board of Directors. Mr. Dean worked
for Dean Foods Company for 37 years and served as President from
1970 to 1988 and Chairman and Chief Executive Officer from 1988
through 2001. Upon Mr. Dean’s retirement, Gregg Engles re-assumed
the role of Chairman of the Board.

— Morningstar Foods launched Folgers(R) Jakada(TM), the first
ready-to-drink chilled coffee beverage made from Mountain Grown(R)
Folgers coffee and low-fat milk. The product is sold in
single-serve plastic bottles and is available in three flavors:
French Roast, Vanilla and Mocha. Under its licensing agreement with
Procter & Gamble, Morningstar Foods produces, promotes and
distributes Folgers Jakada and P&G shares in revenue generated from
all Folgers Jakada sales while retaining rights to the Folgers
trademark.

— Since closing the merger on December 21, 2001, the company has made
significant progress toward integrating the Suiza Foods and Dean
Foods businesses. Progress includes the following:
— Formed a new Midwest Dairy Group region and successfully
integrated the legacy Dean plants into the existing Suiza
operating structure.
— Integrated the former National Refrigerated Products
business into Morningstar Foods.
— Completed the reorganization of the Franklin Park, Ill.
offices and downsized duplicate corporate overhead and
successfully completed the integration of various
corporate functions.
— Closed or announced the closure of 3 Dairy Group plants
and 2 Specialty Foods plants and completed the sale of the
DFC transportation business and the boiled peanut
business.
— Made substantial progress toward the rationalization of
various manufacturing functions and the realization of
critical purchasing synergies.


CONFERENCE CALL WEBCAST

A conference call to discuss the company’s financial results and outlook will be
held at 10:00 a.m. eastern today. The call may be heard live by visiting the
“Webcasts” section of the company web site at www.deanfoods.com .

Dean Foods Company is one of the nation’s leading food and beverage companies.
The company produces a full line of company-branded and private label dairy
products such as milk and milk-based beverages, ice cream, coffee creamers, half
and half, whipping cream, whipped toppings, sour cream, cottage cheese, yogurt,
dips, dressings and soy milk. The company is also a leading supplier of pickles
and other specialty food products, juice, juice drinks and water. The company
operates over 120 plants in 38 U.S. states and 3 countries, and employs more
than 30,000 people.

Some of the statements in this press release are “forward-looking” and are made
pursuant to the safe harbor provision of the Securities Litigation Reform Act of
1995. These “forward-looking” statements include statements relating to among,
other things, the company’s projected growth rate and the projected synergies
from the company’s recent merger with Dean Foods. 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 during the remainder of 2002, including
targeted sales, operating margins and earnings per share, depends on a variety
of economic, competitive and governmental factors, 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 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.

                              (Tables to follow)

DEAN FOODS COMPANY
(Dollars in thousands, except per share data)

REPORTED PRO FORMA (A)
Three months ended Three months ended
March 31, March 31,
2002 2001 2002 2001

Net sales $2,281,985 $1,465,072 $2,281,985 $1,465,072
Cost of sales 1,725,697 1,117,837 1,725,697 1,117,837

Gross profit 556,288 347,235 556,288 347,235

Operating costs and
expenses 404,553 249,173 404,553 249,173
Amortization of
intangibles 2,212 13,341 2,212 749
Plant closing costs 1,234 843

Operating income 148,289 83,878 149,523 97,313

Interest expense &
financing charges on
preferred securities 60,272 35,697 60,272 35,697
Earnings from
unconsolidated affiliates (403) (1,673) (403) (2,527)
Other (income) expense (286) 691 (286) 691

Income before income
taxes and minority
interest 88,706 49,163 89,940 63,452

Income taxes 33,338 18,667 33,813 22,597
Minority interest 9 6,979 9 9,535

Net income before
cumulative effect of
accounting change 55,359 23,517 56,118 31,320

Cumulative effect of
accounting change (47,316) (1,446)

Net income $8,043 $22,071 $56,118 $31,320

Basic earnings per share:
Income before
cumulative effect of
accounting change $0.62 $0.43
Cumulative effect of
accounting change (0.53) (0.03)
Net income $0.09 $0.40 $0.63 $0.57

Basic average common
shares (000’s) 88,876 54,710 88,876 54,710

Diluted earnings per share:
Income before
cumulative effect of
accounting change $0.56 $0.40
Cumulative effect of
accounting change (0.44) (0.02)
Net income $0.12 $0.38 $0.57 $0.51

Diluted average common
shares (000’s) 107,903 71,570 107,903 71,570

(A) Pro forma results for first quarter 2002 are adjusted to exclude
plant closing costs and the cumulative effect of accounting change
related to the write-down of certain trademarks due to the
implementation of FAS 142, “Goodwill and Other Intangible Assets”.
Pro forma results for first quarter 2001 are adjusted to exclude
plant closing costs, to exclude the cumulative effect of accounting
change due to the implementation of FAS 133, “Accounting for
Derivative Instruments and Hedging Activities”, and to eliminate
goodwill and other intangible amortization as if FAS 142 had been
effective as of January 1, 2001.

DEAN FOODS COMPANY

Earnings Per Share Summary and Reconciliation

Three Months Ended
March 31,
2002 2001
Diluted earnings per share $0.12 $0.38

Elimination of amortization as if FAS
142 had been adopted January 1, 2001:
Goodwill amortization 0.09
Trademark amortization 0.01

Nonrecurring losses:
Plant closing costs 0.01 0.01

Cumulative effect of accounting change 0.44 0.02

Pro forma diluted earnings per share $0.57 $0.51

Segment Information
(Dollars in thousands)

Reported Pro Forma (B)
Three Months Ended Three Months Ended
March 31, March 31,
2002 2001 2002 2001
Revenue
Dairy Group $1,777,503 $1,200,675 $1,777,503 $1,200,675
Morningstar Foods 238,580 166,688 238,580 166,688
Specialty Foods 161,215 161,215
Corporate / Other 104,687 97,709 104,687 97,709
Consolidated $2,281,985 $1,465,072 $2,281,985 $1,465,072

Operating Income
Dairy Group $126,209 $66,631 $127,443 $77,275
Morningstar Foods 23,105 21,517 23,105 23,281
Specialty Foods 20,787 20,787
Corporate / Other (21,812) (4,270) (21,812) (3,243)
Consolidated $148,289 $83,878 $149,523 $97,313

Summary Financial Information
(Dollars in thousands)

Reported Pro Forma (B)
Three Months Three Months
Ended March 31, Ended March 31,
2002 2001 2002 2001
Depreciation $42,958 $23,822 $42,958 $23,822
Amortization of intangibles $2,212 $13,341 $2,212 $749
Amortization shown in interest
expense $2,024 $666 $2,024 $666

(B) Pro forma results for first quarter 2002 are adjusted to exclude
plant closing costs of $1.2 million. Pro forma results for first
quarter of 2001 are adjusted to exclude plant closing costs of
$0.8 million and to eliminate goodwill and other intangible
amortization of $12.6 million as if FAS 142 had been effective as of
January 1, 2001.

DEAN FOODS COMPANY
Condensed Balance Sheet
(Dollars in thousands)

March 31, December 31,
ASSETS 2002 2001

Cash and cash equivalents $22,736 $78,260
Other current assets 1,397,151 1,403,924
Total current assets 1,419,887 1,482,184

Property, plant & equipment 1,648,512 1,668,592

Intangibles & other assets 3,528,416 3,581,121

Total Assets $6,596,815 $6,731,897

LIABILITIES AND STOCKHOLDERS’ EQUITY

Total current liabilities $1,118,002 $1,174,963

Long-term debt 2,808,417 2,971,525

Other long-term liabilities 523,927 524,924

Mandatorily redeemable TIPES 584,750 584,605

Stockholders’ equity:
Common stock 449 439
Additional paid-in capital 1,040,158 962,145
Retained earnings 551,182 543,139
Other comprehensive income (30,070) (29,843)
Total stockholders’ equity 1,561,719 1,475,880

Total Liabilities and
Stockholders’ Equity $6,596,815 $6,731,897

Contact: Cory Olson
Senior Vice President and Treasurer
(214) 303-3645

P.I. Aquino
Assistant Treasurer
(214) 303-3437


SOURCE Dean Foods Company

CONTACT: Cory Olson, Senior Vice President and Treasurer,
+1-214-303-3645, or P.I. Aquino, Assistant Treasurer, +1-214-303-3437, both of
Dean Foods Company

URL: https://www.deanfoods.com

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