Wednesday, 7 February 2007

Dean Foods Company Reports Fourth Quarter and Full Year Results

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Wednesday, 7 February 2007

Company Reports Fourth Quarter GAAP Earnings From Continuing Operations of $0.56 per Share, Adjusted Earnings of $0.61 per Share Company Sets 2007 Expectations for Adjusted EPS of $2.33 to $2.38DALLAS, Feb 07, 2007 /PRNewswire-FirstCall via COMTEX News Network/ — Dean Foods Company (NYSE: DF)
today announced that the Company earned $0.56 per diluted share from
continuing operations for the quarter ended December 31, 2006, compared with
$0.48 per diluted share from continuing operations in the fourth quarter of
2005. Net income from continuing operations for the fourth quarter totaled
$76.3 million, compared with $69.8 million in the prior year’s fourth quarter.

On an adjusted basis (as defined below), diluted earnings per share were
$0.61, an increase of 17% from $0.52 in the prior year’s fourth quarter.
Adjusted net income for the fourth quarter was $83.9 million compared with
adjusted net income of $75.1 million in the fourth quarter of 2005, an
increase of 12%.

“Our fourth quarter was a fitting finish to a very successful year at
Dean,” said Gregg Engles, Chairman and Chief Executive Officer. “Our Dairy
Group grew full year fluid milk volumes by 2% in 2006 and increased operating
income by 6%. WhiteWave Foods continued to drive strong top line growth
behind our key brands and drove operational efficiencies that resulted in 21%
operating income growth for the year. We have significant momentum as we
enter 2007 and look forward to another successful year.”

Net sales for the fourth quarter totaled $2.6 billion, roughly in-line
with net sales for the fourth quarter of 2005, due to strong volume growth at
the Dairy Group and sales growth at WhiteWave Foods that was offset by the
pass through of lower overall dairy commodity costs.

Consolidated operating income in the fourth quarter totaled $172.6 million
versus $158.9 million in the fourth quarter of 2005. Operating margin for the
fourth quarter was 6.65%, as compared to 6.07% in the fourth quarter of the
prior year. Adjusted fourth quarter operating income totaled $184.9 million,
an increase of 10.3% from $167.6 million in the fourth quarter of 2005. The
adjusted fourth quarter operating margin was 7.13%, up 72 basis points versus
the fourth quarter of the prior year.

Long-term debt at December 31, 2006 was approximately $3.36 billion,
including $484 million due within one year. At the end of the year,
approximately $1 billion of the Company’s senior credit facility was available
for future borrowings.

SEGMENT RESULTS

Dairy Group net sales for the fourth quarter were $2.2 billion, a 1.7%
decrease from $2.3 billion in the fourth quarter of 2005. The sales decrease
was due primarily to the pass-through of lower overall dairy commodity costs
to our customers, offset by a 1% increase in fluid milk volumes. The fourth
quarter average Class I mover, which is an indicator of the Company’s raw milk
costs, averaged $12.42 per hundred-weight, a 12% decrease from the same period
in 2005. Class II butterfat prices averaged $1.39 per pound in the fourth
quarter, 16% lower than the fourth quarter of 2005.

Dairy Group segment operating income in the fourth quarter was
$172.1 million, an increase of 4.2% year-over-year. Dairy Group operating
margin increased 43 basis points to 7.67% of sales. Segment operating income
growth was driven by increased fluid milk volumes, a relatively favorable
dairy commodity environment and improved operational efficiencies.

WhiteWave Foods reported fourth quarter net sales of $350 million, a 5.0%
increase compared to fourth quarter 2005 net sales of $333 million.

Segment operating income in the fourth quarter for WhiteWave Foods was
$46.8 million, an increase of 24.6% from the $37.6 million reported in the
fourth quarter of 2005. Segment operating margins improved 211 basis points
for the quarter to 13.38% due to higher sales volumes and more efficient
operations.

CORPORATE

Corporate and other expenses totaled $34.1 million, a 3% decrease from the
fourth quarter of 2005.

RECENT EVENTS

  • Pursuant to the Company’s share repurchase authorization, the Company
    repurchased ten million shares of common stock during 2006 at a total
    cost of approximately $400 million. The Company currently has
    approximately $220 million remaining under its repurchase
    authorization.
  • The Company added significantly to its management team in the fourth
    quarter. Harrald Kroeker joined the Company as Senior Vice President
    and Chief Operating Officer, Dairy Group. Kroeker joined the Company
    from Pepsi Bottling Group where he served in multiple executive
    capacities, including most recently, as Vice President and General
    Manager, Great West Business Unit.
  • Brad Holcomb also recently joined the Company and will serve as Senior
    Vice President and Chief Procurement Officer, Dairy Group. Holcomb
    joined the Company from the turnaround management team at Royal Group
    Technologies Limited, where he was Senior Vice President of Global
    Materials and Supply.

OUTLOOK FOR 2007

“With solid growth in operating income expected from both our business
segments this year, we are expecting earnings in 2007 of $2.33 to $2.38 per
share in 2007,” said Engles. “This represents growth of 10% to 12% over 2006
adjusted earnings.”

The Company expects to report adjusted earnings per share between $0.44
and $0.46 in the first quarter of 2007, or 10% to 15% over the $0.40 reported
in the first quarter of 2006. The Company’s earnings guidance excludes the
impact of any facility closing and reorganization costs and non-recurring or
one-time gains or losses that may occur in 2007.

RESULTS FOR THE YEAR ENDED DECEMBER 31, 2006

For the year ended December 31, 2006, the Company’s net sales decreased
0.7% to $10.1 billion. Strong sales growth at WhiteWave Foods and volume
growth in the Dairy Group were offset by the pass-through of lower dairy
commodity costs to customers.

Operating income for the year ended December 31, 2006 totaled
$650.7 million versus $580.1 million in 2005. Adjusted operating income for
2006 totaled $675.8 million, an increase of 9.2% over adjusted operating
income of $618.7 million in the prior year. Adjusted operating margins for
the year were 6.69%, versus 6.08% in 2005.

Net income from continuing operations for 2006 totaled $280.3 million,
compared with $256.7 million reported in 2005. Diluted earnings per share
from continuing operations for the year ended December 31, 2006 totaled $2.01,
compared with $1.67 in 2005.

Adjusted net income for the year totaled $295.7 million, an increase of 5%
over $280.6 million in 2005. Adjusted diluted earnings per share for 2006
were $2.12, an increase of 16% over the $1.83 reported in the prior year.

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
presented 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 and twelve month
periods ended December 31, 2006 calculated according to GAAP and on an
adjusted basis is attached.

For the quarter ended December 31, 2006, the adjusted results reported
above differ from the Company’s results under GAAP by excluding a
$12.3 million charge ($7.6 million net of income tax) related to the closing
of our Akron, OH manufacturing facility and other previously announced
facility closings and reorganization charges.

For the quarter ended December 31, 2005, the adjusted results reported
above differ from the Company’s results under GAAP by excluding $8.7 million
of charges ($5.4 million net of income tax) related to previously announced
facility closings and reorganization charges, including the WhiteWave Foods
reorganization.

For the twelve months ended December 31, 2006, the adjusted results
reported above differ from the Company’s results under GAAP by excluding
$25.1 million of charges ($15.4 million net of income tax) related to the
closing of our Akron OH manufacturing facility, the closing of our Union, NJ
facility, the closing of our Madison, WI distribution center and other
previously announced facility closings and reorganizations.

For the twelve months ended December 31, 2005, the adjusted results
reported above differ from the Company’s results under GAAP by excluding the
following facility closing, and reorganization charges:


     a)  $25.2 million ($15.6 million net of income tax) charge primarily
         related to plant closures in Union, NJ and Albuquerque, NM and
         related restructuring activities, and
     b)  $13.4 million charge ($8.3 million net of income tax) related to
         restructuring and non-recurring activities at WhiteWave Foods.

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 third largest organic yogurt brand in the
United Kingdom.

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
                                    December 31,            December 31,
                                  2006        2005        2006        2005

    Net sales                  $2,593,838  $2,615,612  $2,593,838  $2,615,612
    Cost of sales               1,883,158   1,941,948   1,883,158   1,941,948

      Gross profit                710,680     673,664     710,680     673,664

    Operating costs and
     expenses                     525,824     506,063     525,824     506,063
    Facility closings,
     reorganization costs and
     other                         12,293       8,705         ---         ---

      Operating income            172,563     158,896     184,856     167,601

    Interest expense               50,212      44,550      50,212      44,550
    Other (income) expense            481        (228)        481        (228)

      Income from continuing
       operations before
       income taxes               121,870     114,574     134,163     123,279
    Income taxes                   45,594      44,823      50,276      48,136

    Income from continuing
     operations                    76,276      69,751      83,887      75,143
    Loss from discontinued
     operations, net of tax        (3,314)     (2,025)        ---         ---

      Net income before
       cumulative effect of
       accounting change           72,962      67,726      83,887      75,143

    Cumulative effect of
     accounting change                ---      (1,552)        ---         ---

      Net income                  $72,962     $66,174     $83,887     $75,143


    Basic earnings per share:
      Income from continuing
       operations                   $0.58       $0.51       $0.64       $0.54
      Loss from discontinued
       operations                   (0.03)      (0.02)        ---         ---
      Cumulative effect of
       accounting change              ---       (0.01)        ---         ---
        Net income                  $0.55       $0.48       $0.64       $0.54

        Basic average common
         shares (000's)           131,847     138,053     131,847     138,053

    Diluted earnings per share:
      Income from continuing
       operations                   $0.56       $0.48       $0.61       $0.52
      Loss from discontinued
       operations                   (0.03)      (0.02)        ---         ---
      Cumulative effect of
       accounting change              ---       (0.01)        ---         ---
        Net income                  $0.53       $0.45       $0.61       $0.52

        Diluted average common
         shares (000's)           137,379     145,459     137,379     145,459

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



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

                                      GAAP                  ADJUSTED [B]
                              Twelve Months Ended       Twelve Months Ended
                                  December 31,              December 31,
                               2006         2005         2006         2005

    Net sales              $10,098,555  $10,174,718  $10,098,555  $10,174,718
    Cost of sales            7,358,676    7,591,547    7,358,676    7,591,547

      Gross profit           2,739,879    2,583,171    2,739,879    2,583,171

    Operating costs and
     expenses                2,064,068    1,964,476    2,064,068    1,964,476
    Facility closings,
     reorganization costs
     and other                  25,116       38,599          ---          ---

      Operating income         650,695      580,096      675,811      618,695

    Interest expense           194,547      160,230      194,547      160,230
    Other (income) expense         435         (682)         435         (682)

      Income from continuing
       operations before
       income taxes            455,713      420,548      480,829      459,147
    Income taxes               175,450      163,898      185,120      178,534

    Income from continuing
     operations                280,263      256,650      295,709      280,613
    Income (loss) from
     discontinued operations,
     net of tax                (54,849)      53,555          ---          ---

      Net income before
       cumulative effect of
       accounting change       225,414      310,205      295,709      280,613

    Cumulative effect of
     accounting change             ---       (1,552)         ---          ---

      Net income              $225,414     $308,653     $295,709     $280,613


    Basic earnings per share:
      Income from continuing
       operations                $2.09        $1.75        $2.21        $1.91
      Income (loss) from
       discontinued operations   (0.41)        0.36          ---          ---
      Cumulative effect of
       accounting change           ---        (0.01)         ---          ---
        Net income               $1.68        $2.10        $2.21        $1.91

        Basic average common
         shares (000's)        133,939      146,673      133,939      146,673

    Diluted earnings per share:
      Income from continuing
       operations                $2.01        $1.67        $2.12        $1.83
      Income (loss) from
       discontinued operations   (0.40)        0.35          ---          ---
      Cumulative effect of
       accounting change           ---        (0.01)         ---          ---
        Net income               $1.61        $2.01        $2.12        $1.83

        Diluted average common
         shares (000's)        139,762      153,439      139,762      153,439

     [B] Adjusted results differ from results reported under GAAP by excluding
         income and expense related to discontinued operations, facility
         closings, reorganizations and the cumulative effect of accounting
         change.  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  Twelve Months Ended
                                          December 31,         December 31,
                                         2006     2005        2006     2005
    GAAP diluted earnings per share
     from  continuing operations        $0.56    $0.48       $2.01    $1.67

    Adjustments:
      Facility closings,
       reorganization costs and
       other                             0.05     0.04        0.11     0.16

    Adjusted diluted earnings
     per share                          $0.61    $0.52       $2.12    $1.83



                             Segment Information
                            (Dollars in thousands)

                               Three Months Ended       Twelve Months Ended
                                  December 31,              December 31,
                                2006        2005         2006         2005
    Net sales
      Dairy Group            $2,244,049  $2,282,455   $8,820,950   $8,973,442
      WhiteWave Foods
       Company                  349,789     333,157    1,277,605    1,201,276
        Total                $2,593,838  $2,615,612  $10,098,555  $10,174,718

    Segment operating income
     (loss)
      Dairy Group              $172,133    $165,153     $678,011     $642,043
      WhiteWave Foods
       Company                   46,791      37,556      139,352      114,950
      Corporate / Other         (34,068)    (35,108)    (141,552)    (138,298)
        Subtotal                184,856     167,601      675,811      618,695
    Facility closings,
     reorganization costs
     and other                  (12,293)     (8,705)     (25,116)     (38,599)
        Total operating
         income                $172,563    $158,896     $650,695     $580,096



                              DEAN FOODS COMPANY

                           Condensed Balance Sheets
                            (Dollars in thousands)

                                               December 31,      December 31,
    ASSETS                                         2006              2005

    Cash and cash equivalents                      $31,140           $24,456
    Other current assets                         1,348,150         1,376,737
      Total current assets                       1,379,290         1,401,193

    Property, plant & equipment                  1,786,907         1,776,801

    Intangibles & other assets                   3,583,996         3,571,163
    Assets of discontinued operations               19,980           301,727

      Total Assets                              $6,770,173        $7,050,884


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Total current liabilities, excluding
     debt                                         $852,898          $960,608

    Total long-term debt, including
     current portion                             3,355,851         3,386,848

    Other long-term liabilities                    743,234           675,186
    Liabilities of discontinued
     operations                                      8,791           126,029

    Stockholders' equity:
      Common stock                                   1,284             1,342
      Additional paid-in capital                   624,475           922,791
      Retained earnings                          1,229,427         1,004,013
      Other comprehensive income (loss)            (45,787)          (25,933)
        Total stockholders' equity               1,809,399         1,902,213

        Total Liabilities and
         Stockholders' Equity                   $6,770,173        $7,050,884



                              DEAN FOODS COMPANY

                      Condensed Statements of Cash Flows
                            (Dollars in thousands)

                                             Twelve Months Ended December 31,
    Operating Activities                            2006              2005
      Net income                                  $225,414          $308,653
      Loss (income) from discontinued
       operations                                   54,849           (53,556)
      Depreciation and amortization                227,682           214,630
      Deferred income taxes                         66,994            34,141
      Share-based compensation                      36,871            40,067
      Changes in current assets and
       liabilities                                 (76,303)          (13,672)
      Other                                         24,831            11,675
        Net cash provided by continuing
         operations                                560,338           541,938
        Net cash (used in) provided
         by discontinued operations                 (3,302)           13,838
        Net cash provided by operating
         activities                                557,036           555,776

    Investing Activities
      Additions to property, plant and
       equipment                                  (237,242)         (287,129)
      Cash outflows for acquisitions               (16,918)           (1,378)
      Proceeds from divestitures                    95,982           189,862
      Proceeds from sale of fixed assets             6,190             8,357
        Net cash used in continuing
         operations                               (151,988)          (90,288)
        Net cash used in discontinued
         operations                                (15,151)          (27,432)
        Net cash used in investing
         activities                               (167,139)         (117,720)

    Financing Activities
      Proceeds from the issuance of debt           496,633           272,183
      Repayment of debt                           (550,086)         (114,837)
      Issuance of common stock, net                 32,311            57,718
      Redemption of common stock                  (400,062)         (699,878)
      Tax savings on share-based
       compensation                                 31,211            20,614
      Other                                         (6,974)           (4,279)
        Net cash used in continuing
         operations                               (396,967)         (468,479)
        Net cash provided by discontinued
         operations                                 13,754            29,522
        Net cash used in financing
         activities                               (383,213)         (438,957)

    Increase (decrease) in cash and cash
     equivalents                                     6,684              (901)
    Beginning cash balance                          24,456            25,357

    Ending cash balance                            $31,140           $24,456

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

SOURCE Dean Foods Company

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