Wednesday, 3 May 2006

Dean Foods Company Reports First Quarter Results

Back to all newsroom
Wednesday, 3 May 2006

Company Reports First Quarter GAAP Earnings From Continuing Operations of
$0.37 Per Share, Adjusted Earnings of $0.40 Per Share

Company Reaffirms Full Year Guidance of $2.10 to $2.15 Per Share

Board of Directors Approves Additional $300 Million Share Repurchase
Authorization

DALLAS, May 3 /PRNewswire-FirstCall/ — Dean Foods Company (NYSE: DF)
today announced that the Company earned $0.37 per diluted share from
continuing operations for the quarter ended March 31, 2006, compared with
$0.33 per diluted share from continuing operations in the first quarter of
2005. Net income from continuing operations for the first quarter totaled
$52.8 million, compared with $51.1 million in the prior year first quarter.

On an adjusted basis (as defined below), diluted earnings per share were
$0.40, an increase of 8% from $0.37 in last year’s first quarter. Adjusted
net income for the first quarter was $56.3 million, versus $56.9 million
reported in the first quarter of 2005.

“Both the Dairy Group and WhiteWave Foods performed well in the first
quarter,” said Gregg Engles, chairman and chief executive officer. “Our Dairy
Group again outpaced the industry, growing fluid milk volumes by 3.4%. Sales
of our key brands at WhiteWave Foods continue to grow at a robust pace, and
our supply chain initiatives are driving significant operational
improvements.”

Net sales for the first quarter totaled $2.6 billion, an increase of 1%
over the first quarter of 2005, due to strong sales growth at the Dairy Group
and WhiteWave Foods, partially offset by the pass through of lower dairy
commodity costs.

Consolidated operating income from continuing operations in the first
quarter totaled $137.0 million versus $125.9 million in the first quarter of
2005. Operating margin for the first quarter was 5.3%, as compared to 4.9% in
the first quarter of the prior year. Adjusted first quarter operating income
totaled $142.9 million, an increase of 5.5% from $135.4 million in the first
quarter of 2005. The adjusted first quarter operating margin was 5.5%, up 23
basis points versus the first quarter last year.

Long-term debt at March 31, 2006 was approximately $3.5 billion, including
$170 million due within one year that is reported as part of current
liabilities. As of March 31, 2006, approximately $552 million of the
Company’s senior credit facility was available for future borrowings.

SEGMENT RESULTS

Dairy Group net sales increased $12 million to $2.20 billion in the first
quarter of 2006. The sales increase was due to a 3.4% increase in fluid milk
volumes that was partially offset by the pass through of lower dairy commodity
costs to our customers. The first quarter Class I mover, which is an
indicator of the Company’s raw milk costs, averaged $13.08 per hundred-weight,
a 14% decrease from the same period in 2005. Class II butterfat prices
averaged $1.37 per pound in the first quarter, 22% lower than the first
quarter of 2005.

Dairy Group segment operating income in the first quarter was
$152.7 million, an increase of 3% year-over-year. Dairy Group operating
margin increased 15 basis points to 6.9% of sales. Segment operating income
growth was driven by increased fluid milk volumes and operational efficiencies
resulting from ongoing plant rationalization activities.

WhiteWave Foods reported first quarter net sales of $307 million, an 8%
increase compared to first quarter 2005 net sales of $285 million. The
increase was driven by strong sales growth in the branded portfolio,
particularly in our Silk, Horizon Organic, and International Delight brands.

Segment operating income in the first quarter for WhiteWave Foods was
$26.1 million, with operating margins of 8.5%, compared to $12.9 million, and
operating margins of 4.5% in the prior year first quarter. Segment operating
income increased due to strong sales growth and increased operational
efficiencies that were partially offset by higher organic milk, sugar and
energy costs.

Corporate and Other sales were $83 million in the first quarter of 2006,
5% lower than in the same period of the prior year. Corporate and Other
operating loss was $36.0 million, $10 million higher than the first quarter of
2005. The increase in operating loss is due to increased corporate expenses
related to higher employee benefit and retirement costs and lower operating
income contribution from Leche Celta.

    RECENT EVENTS
     *  On April 27, 2006 Jack F. Callahan Jr. was named Executive Vice
        President and Chief Financial Officer of Dean Foods, reporting
        directly to Gregg Engles, Chairman and Chief Executive Officer.  He is
        expected to begin his tenure at Dean in May.  Previously, Mr. Callahan
        served as Senior Vice President of Corporate Strategy and Development
        at PepsiCo, where he oversaw all corporate strategy and merger and
        acquisition activity.
     *  During the first quarter of 2006, the Company made open market
        purchases of its common stock totaling 400,000 shares for a total cost
        of $15 million.  Today, the Board of Directors increased the Company's
        repurchase authorization by an additional $300 million.  Including
        this new authorization, the Company has a total of $303 million
        remaining under its repurchase authorizations.
     *  Beginning in the first quarter of 2006, the Company has adopted the
        provisions of FAS 123(R) related to the expensing of stock-based
        compensation on a retroactive basis.  Historical financial results
        have been restated to include stock option expenses.  On a GAAP basis,
        restated diluted earnings per share from continuing operations for
        2005 are $1.65, an increase of 28% over $1.29 in 2004.  Restated
        adjusted diluted earnings per share for 2005 are $1.82, an increase of
        22% over $1.49 in 2004.

    OUTLOOK FOR THE REMAINDER OF 2006

“Although rising fuel prices are a concern, volume trends are strong in
the Dairy Group and dairy commodity prices are trending favorably. At
WhiteWave Foods, we expect continued strong sales trends throughout the year.
However, commodity costs in organic milk, energy, and sugar have increased,”
said Engles. “Balancing the benefits of a favorable dairy commodity
environment against increased commodity costs throughout much of our WhiteWave
Foods business, we are leaving our full year guidance unchanged with
expectations for $2.10 to $2.15 earnings per share. For the second quarter,
we are expecting earnings of approximately $0.52 to $0.54 per share.”

COMPARISON OF ADJUSTED INFORMATION TO GAAP INFORMATION

The adjusted financial results contained in this press release are from
continuing operations and are adjusted to eliminate the net expense or net
gain related to the items identified below. This information is provided in
order to allow investors to make meaningful comparisons of the Company’s
operating performance between periods and to view the Company’s business from
the same perspective as company management. Because the Company cannot
predict the timing and amount of charges associated with non-recurring items
or facility closings and reorganizations, management does not consider these
costs when evaluating the Company’s performance, when making decisions
regarding the allocation of resources, in determining incentive compensation
for management, or in determining earnings estimates. These costs are not
recorded in any of the Company’s operating segments. This non-GAAP financial
information is provided as additional information for investors and is not in
accordance with or an alternative to GAAP. These non-GAAP numbers may be
different than similar measures used by other companies. A full
reconciliation table between earnings per share for the three month periods
ended March 31, 2006 and March 31, 2005 calculated according to GAAP and on an
adjusted basis is attached.

For the quarter ended March 31, 2006, the adjusted results reported above
differ from the Company’s results under GAAP by excluding the following
facility closing, reorganization and non-recurring charges:

     a)  $2.7 million charge ($1.7 million net of income tax) related to Dairy
         Group facility closings and restructurings, including the closing of
         our Union, NJ plant,

     b)  $1.7 million charge ($1.0 million net of income tax) related to
         reorganization and consolidation activities at WhiteWave Foods, and

     c)  $1.4 million charge ($0.9 million net of income tax) related to the
         restructuring of Leche Celta's operations.

For the quarter ended March 31, 2005, the adjusted results reported above
differ from the Company’s results under GAAP by excluding the following
facility closing, reorganization, and non-recurring charges:

     a)  $3.7 million charge ($2.2 million net of income tax) primarily
         related to previously announced Dairy Group facility closings and
         restructurings, and

     b)  $5.8 million charge ($3.5 million net of income tax) related to the
         reorganization and consolidation of WhiteWave Foods, and severance
         payments made to a former employee.

    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 “Webcasts”
section of the Company site at http://www.deanfoods.com .

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 products
sold under more than 50 familiar local and regional brands and a wide array of
private labels. The Company’s WhiteWave Foods subsidiary markets and sells a
variety of well-known dairy and dairy-related products, such as Silk(R)
soymilk, Horizon Organic(R) milk and other dairy products and International
Delight(R) coffee creamers. WhiteWave Foods’ Rachel’s Organic(R) brand is the
largest organic milk brand and second largest organic yogurt brand in the
United Kingdom. Dean Foods is also one of the largest processors and
distributors of fluid milk in Spain and Portugal.

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 Securities Litigation Reform
Act of 1995. These “forward-looking” statements include statements relating
to, among other things, projected sales, operating income, net income and
earnings per share. 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, net income and earnings
per share depends on a variety of economic, competitive and governmental
factors, including raw material costs, 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 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.

                              (Tables to follow)



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

                                        GAAP                ADJUSTED [A]
                                 Three Months Ended      Three Months Ended
                                     March 31,               March 31,
                                  2006        2005        2006        2005

    Net sales                  $2,591,968  $2,561,751  $2,591,968  $2,561,751
    Cost of sales               1,936,464   1,948,455   1,936,464   1,948,455

      Gross profit                655,504     613,296     655,504     613,296

    Operating costs and
     expenses                     512,624     477,917     512,624     477,917
    Facility closings,
     reorganization costs and
     other                          5,837       9,463         ---         ---

      Operating income            137,043     125,916     142,880     135,379

    Interest expense               50,215      41,035      50,215      41,035
    Other (income) expense             73        (110)         73        (110)

      Income from continuing
       operations before
       income taxes                86,755      84,991      92,592      94,454
    Income taxes                   33,963      33,858      36,248      37,551

    Income from continuing
     operations                    52,792      51,133      56,344      56,903
    Income from discontinued
     operations, net of tax           ---      10,336         ---         ---

        Net income                $52,792     $61,469     $56,344     $56,903


    Basic earnings per share:
      Income from continuing
       operations                   $0.39       $0.34       $0.42       $0.38
      Income from discontinued
       operations                     ---        0.07         ---         ---
        Net income                  $0.39       $0.41       $0.42       $0.38

        Basic average common
         shares (000's)           135,170     149,822     135,170     149,822

    Diluted earnings per share:
      Income from continuing
       operations                   $0.37       $0.33       $0.40       $0.37
      Income from discontinued
       operations                     ---        0.06         ---         ---
        Net income                  $0.37       $0.39       $0.40       $0.37

        Diluted average common
         shares (000's)           142,410     155,663     142,410     155,663

     [A]  Adjusted results differ from results reported under GAAP by
          excluding income and expense related to discontinued operations,
          facility closings and reorganizations.  More information about these
          items is included in the earnings release under the heading
          "Comparison of Adjusted Information to GAAP Information."



                              DEAN FOODS COMPANY

                Earnings Per Share Summary and Reconciliation

                                                      Three Months Ended
                                                           March 31,
                                                     2006              2005
    GAAP diluted earnings per share from
     continuing operations                           $0.37             $0.33

    Adjustments:
      Facility closings, reorganization
       costs and other                                0.03              0.04

    Adjusted diluted earnings per share              $0.40             $0.37



                             Segment Information
                            (Dollars in thousands)

                                                Three Months Ended March 31,
                                                   2006              2005
    Net sales
      Dairy Group                               $2,202,067        $2,189,774
      WhiteWave Foods Company                      306,975           284,797
      Corporate / Other                             82,926            87,180
        Total                                   $2,591,968        $2,561,751

    Segment operating income (loss)
      Dairy Group                                 $152,748          $148,606
      WhiteWave Foods Company                       26,097            12,925
      Corporate / Other                            (35,965)          (26,152)
        Subtotal                                   142,880           135,379
    Facility closings, reorganization
     costs and other                                (5,837)           (9,463)
        Total operating income                    $137,043          $125,916



                              DEAN FOODS COMPANY

                           Condensed Balance Sheet
                            (Dollars in Thousands)

                                                March 31,        December 31,
    ASSETS                                         2006              2005

    Cash and cash equivalents                      $28,341           $25,120
    Other current assets                         1,387,831         1,451,848
      Total current assets                       1,416,172         1,476,968

    Property, plant & equipment                  1,881,118         1,874,486

    Intangibles & other assets                   3,717,868         3,699,430

        Total Assets                            $7,015,158        $7,050,884


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Total current liabilities, excluding
     debt                                         $846,334        $1,029,087

    Total long-term debt, including
     current portion                             3,474,729         3,436,835

    Other long-term liabilities                    704,504           682,749

    Stockholders' equity:
      Common stock                                   1,362             1,342
      Additional paid-in capital                   944,923           922,791
      Retained earnings                          1,056,805         1,004,013
      Other comprehensive income                   (13,499)          (25,933)
          Total stockholders' equity             1,989,591         1,902,213

        Total Liabilities and
         Stockholders' Equity                   $7,015,158        $7,050,884



                              DEAN FOODS COMPANY

                      Condensed Statement of Cash Flows
                            (Dollars in Thousands)

                                                 Three Months Ended March 31,
    Operating Activities                            2006              2005
      Net income                                   $52,792           $61,469
      Income from discontinued operations              ---           (10,336)
      Depreciation and amortization                 57,229            54,226
      Deferred income taxes                         38,244            12,281
      Share-based compensation                       9,391             8,491
      Changes in current assets and liabilities   (136,691)           41,488
      Other                                          1,921              (424)
        Net cash provided by
         continuing operations                      22,886           167,195
        Net cash provided by
         discontinued operations                       ---            31,083
        Net cash provided by
         operating activities                       22,886           198,278

    Investing Activities
      Additions to property, plant and equipment   (60,500)          (63,883)
      Cash outflows for acquisitions                (9,760)           (1,702)
      Proceeds from sale of fixed assets             1,838             3,364
        Net cash used in continuing operations     (68,422)          (62,221)
        Net cash used in
         discontinued operations                       ---            (2,725)
        Net cash used in investing
         activities                                (68,422)          (64,946)

    Financing Activities
      Proceeds from the issuance of debt            73,788            30,627
      Repayment of debt                            (37,792)         (182,273)
      Issuance of common stock, net                  5,438            14,760
      Redemption of common stock                   (15,357)              ---
      Tax savings on equity compensation            22,680             5,245
      Other                                            ---               (31)
        Net cash provided by (used in)
         continuing operations                      48,757          (131,672)
        Net cash used in
         discontinued operations                       ---               (46)
        Net cash provided by (used in)
         financing activities                       48,757          (131,718)

    Increase in cash and cash equivalents            3,221             1,614
    Beginning cash balance                          25,120            27,407

    Ending cash balance                            $28,341           $29,021

     Contact:  Barry Sievert
               Senior Director, Investor Relations
               (214) 303-3437

SOURCE Dean Foods Company

CONTACT: Barry Sievert, Senior Director, Investor Relations of Dean
Foods Company, +1-214-303-3437

All the latest from Dean Foods

familyofproducts

Latest news

In May 2020, Dairy Farmers of America (DFA) acquired a substantial portion of Dean Foods' assets. As a family farmer-owned and governed cooperative, no one has a greater interest in preserving and expanding milk markets than DFA.

6 May, 2020
Dean Foods Completes Sale of its Miami, Florida Facility to Mana Saves McArthur, LLC
DALLAS--(BUSINESS WIRE)--Dean Foods today announced that it has completed the previously announced s...
learn-more
1 May, 2020
Dean Foods Completes Sale of Assets to Dairy Farmers of America
DALLAS--( BUSINESS WIRE )--Dean Foods Company ("Dean Foods" or the "Company") today announced that i...
learn-more
30 April, 2020
Dean Foods Completes Sales of its Uncle Matt’s Business and the Majority of the Meadow Gold Hawaii...
DALLAS--(BUSINESS WIRE)--Dean Foods ("Dean Foods" or the "Company") today announced that it has comp...
learn-more
22 April, 2020
Dean Foods Announces Asset Purchase Agreement with MGD Acquisition, LLC for the Sale of the Majority...
MGD Acquisition to Operate Meadow Gold Hawaii as an Ongoing Business to Continue Serving the Hawaiia...
learn-more
13 April, 2020
Dean Foods Announces Termination of Agreement in Principle with Industrial Realty Group, LLC for the...
Reached Agreement in Principle with an Interested Party for the Sale of Dean Foods’ Hilo Facility ...
learn-more
4 April, 2020
Dean Foods Receives Court Approval for the Sale of Substantially All of Its Assets
DALLAS--(BUSINESS WIRE)--Dean Foods Company ("Dean Foods" or the "Company") today announced that the...
learn-more
1 April, 2020
Dean Foods Reaches Agreement in Principle With Industrial Realty Group, LLC for the Sale of Dean Foo...
DALLAS--(BUSINESS WIRE)--Dean Foods Company ("Dean Foods" or the "Company") today announced that it ...
learn-more
31 March, 2020
Dean Foods Announces Dairy Farmers of America as Winning Bidder for Substantially All of Its Assets
Prairie Farms Dairy, Mana Saves McArthur, LLC, Producers Dairy Foods and Harmoni, Inc. to Purchase A...
learn-more
17 February, 2020
Dean Foods Enters Into Asset Purchase Agreement with Dairy Farmers of America
Dairy Farmers of America to Serve as Proposed “Stalking Horse Bidder” in a Court-Supervised Sale...
learn-more
20 December, 2019
Dean Foods Receives Final Court Approval for $850 Million in Debtor-In-Possession Financing
DALLAS --(BUSINESS WIRE)--Dec. 20, 2019-- Dean Foods Company (NYSE: DF) (“Dean Foods” or the “...
learn-more
14 November, 2019
Dean Foods Company Receives Court Approval of “First Day” Motions to Support Normal Busi...
Obtains Interim Approval to Access DIP Financing Customers Receiving Uninterrupted Supply of Dairy P...
learn-more
12 November, 2019
Dean Foods Company Initiates Voluntary Reorganization with New Financial Support from Existing Lende...
Company Secures Commitments for $850 Million in DIP Financing to Support Operations In Advanced Disc...
learn-more
25 October, 2019
Dean Foods Company Announces Date for Third Quarter 2019 Earnings Release and Conference Call
DALLAS , Oct. 25, 2019 /PRNewswire/ --  Dean Foods Company (NYSE: DF) today announced that it will ...
learn-more
6 September, 2019
Dean Foods Concludes Strategic Alternatives Review; Focuses on Go-Forward Strategy Under New Leaders...
DALLAS , Sept. 6, 2019 /PRNewswire/ --  Dean Foods Company (NYSE: DF) (" Dean Foods " or the "Compa...
learn-more
6 August, 2019
Dean Foods Announces Second Quarter 2019 Results
DALLAS , Aug. 6, 2019 /PRNewswire/ -- Dean Foods Company (NYSE: DF) today reported second quarter 20...
learn-more
26 July, 2019
Dean Foods Appoints Eric Beringause as President and CEO
Industry Veteran Brings More Than Three Decades of Experience in Food, Beverage and Consumer Product...
learn-more
View the newsroom

We’re proud to support national organizations that are nourishing children, promoting animal welfare, and helping in times of disaster.

White papers
farm