Thursday, 8 August 2002

Dean Foods Company Reports Record Second Quarter Results and Raises Earnings Estimates for 2002

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Thursday, 8 August 2002

Pro Forma Diluted Earnings Per Share Grew 15% to $0.76

CEO and CFO File Sworn Statements With SEC Regarding Integrity of Financial
Statements

DALLAS, Aug. 8 /PRNewswire-FirstCall/ — Dean Foods Company (NYSE: DF)
today announced record results for the quarter ended June 30, 2002. Second
quarter net sales totaled $2.4 billion, growing 55% over the second quarter of
2001. Diluted earnings per share totaled $0.72, an increase of 31% compared
with $0.55 in the second quarter of 2001. Net income for the second quarter
was $73.2 million, an increase of 112% versus $34.6 million in the second
quarter of 2001.

On a pro forma basis, diluted earnings per share for the second quarter
totaled $0.76, an increase of 15% over pro forma earnings of $0.66 per share
in last year’s second quarter. Pro forma net income for the second quarter
grew 84% to $77.4 million, compared with pro forma net income of $42.1 million
in the second quarter of 2001.

Second quarter 2002 pro forma results exclude restructuring charges of
$6.7 million related to plant closings in Puerto Rico and Vermont and a Dairy
Group distribution facility in Virginia. Second quarter 2001 pro forma
results have been adjusted to reflect the elimination of goodwill and other
intangible amortization. A reconciliation table between earnings per share
and pro forma earnings per share is attached.

“We are proud of our performance this quarter and are on track to deliver
outstanding results in 2002,” said Gregg Engles, Chairman and Chief Executive
Officer of Dean Foods. “We achieved approximately $29 million in merger
synergies during the second quarter and anticipate that we will deliver total
synergies in excess of $100 million this year, significantly more than our
original estimate. As a result, we are raising our estimate for 2002 pro
forma diluted earnings per share to a range of $2.75 to $2.78 per share. We
expect third quarter pro forma diluted earnings per share to be in the range
of $0.67 to $0.69 per share.”

The company reported second quarter operating income of $178.4 million
versus $102.9 million in the second quarter of 2001, an increase of 73%.
Pro forma operating income totaled $185.0 million, an increase of 60% over
pro forma operating income of $115.6 million in the second quarter of 2001.
Pro forma second quarter 2002 operating income margins were 7.87%, an increase
of 26 basis points versus the pro forma results from the second quarter of
last year. Operating income margin gains were due primarily to realized
merger synergies and the decline in raw milk costs compared with the prior
year.

Free cash flow for the quarter, defined as pro forma EBITDA less interest,
taxes and capital expenditures was $59.1 million. In the second quarter of
2001, free cash flow totaled $45.3 million.

The company’s long-term debt, including $139 million in current
liabilities, at the end of the quarter was approximately $3.0 billion, and the
Debt-to-EBITDA ratio was approximately 3.4 times. At June 30, 2002,
approximately $693 million of the company’s $2.7 billion bank facility
remained undrawn and available for future investments.

RECENT DEVELOPMENTS

  • Today the company’s CEO and CFO filed the sworn statements required by
    the Securities and Exchange Commission of the country’s 947 largest
    public companies. The statements were signed in the form mandated by
    the SEC without exception.

“We have always taken our financial reporting responsibility extremely
seriously, and we stand by the integrity of our financial statements,”
said Engles.

  • In July, the company announced a new licensing arrangement with Land
    O’Lakes. The new arrangement grants Dean Foods a perpetual license to
    use the Land O’Lakes(R) brand name nationally on a broad range of fluid
    milk and cultured dairy products, including all basic fluid dairy
    products, as well as a variety of other value-added products.
    In mid-August 2002, Morningstar Foods will launch Land O’Lakes Dairy
    Ease lactose-free milk, the first new product resulting from the
    expanded relationship.

“By strengthening our alliance with Land O’Lakes, we are another step
closer to our stated goal of building a more branded food and beverage
company,” said Engles. “Because we now have greater rights to use the
Land O’Lakes brand, as well as increased marketing and distribution
responsibilities for the products, we will be better positioned to
invest in the continued growth of the Land O’Lakes brand. Our efforts,
together with Land O’Lakes’ continued promotion of the brand on its
core products should significantly strengthen the entire Land O’Lakes
brand franchise.”

  • In May, the company acquired the assets of Marie’s Quality Foods,
    Marie’s Dressings, Inc. and Marie’s Associates, makers of Marie’s(R)
    brand dips and dressings in the western United States. Prior to the
    acquisition, Dean Foods licensed the Marie’s brand to Marie’s Quality
    Foods and Marie’s Dressings, Inc. for use in connection with the
    manufacturing and sale of dips and dressings in the western United
    States. With this acquisition, Dean Foods is now the sole owner,
    manufacturer and marketer of Marie’s brand products nationwide.

“By completing this transaction, we consolidated the Marie’s brand
nationally, allowing us greater ability to invest efficiently in
product innovation and branding,” Engles said. “It is another
important step toward focusing our efforts on brands that we own or
control.”

  • In May, Dean Foods completed the acquisition of the remaining
    64% equity interest in White Wave, Inc. it did not already own.
    White Wave, based in Boulder, Co., is the maker of Silk(R), the leading
    refrigerated soymilk in the country. For financial reporting purposes,
    White Wave’s results will be aggregated with the company’s Morningstar
    segment.

“We believe that soymilk is one of the most promising branded growth
opportunities in the food and beverage industry today,” said Engles.
“With its proven record of success in the soymilk category, we believe
White Wave is well positioned to take advantage of the explosive growth
potential that this category holds. Dean Foods is committed to
investing, innovating and branding in the functional beverage arena,
and this transaction is another step toward delivering on that
commitment.”

  • Dean Foods completed its two-for-one common stock split and began
    trading on a split-adjusted basis on April 24, 2002. All share and per
    share amounts in this press release have been adjusted to reflect the
    stock split.

SEGMENT RESULTS

Dairy Group sales for the second quarter totaled $1.8 billion, an increase
of 45% over $1.2 billion in the second 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 second quarter improved 66%
to $142.4 million, and pro forma operating margins increased 102 basis points
to 7.92% of sales, due to synergies from the merger transaction and lower raw
milk costs. The average Class I mover, as determined on a monthly basis by
the USDA, declined 21% in the second quarter to $11.25 per hundred weight in
comparison to the comparable period in 2001.

Morningstar/White Wave sales in the second quarter totaled $263.8 million,
an increase of 47%. The increase was due primarily to the addition of legacy
Dean’s National Refrigerated Products segment and White Wave.

Pro forma operating income in the second quarter for Morningstar/White
Wave was $30.8 million, up 16% compared to last year, and operating margins
were down 315 basis points to 11.69%, due to the previously announced
phase-out of the Lactaid and Nestle brands and incremental marketing spending
toward the company’s branded and value-added growth platforms, including White
Wave.

Specialty Foods sales totaled $177.4 million and operating income was
$25.4 million, or 14.3% of sales. “We are very proud of the accomplishments
of our Specialty Foods segment in the second quarter,” said Engles. “The
Specialty Foods team has moved aggressively to reduce costs, innovate in
packaging and drive profitability, resulting in substantial margin improvement
over last year.”

RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2002

The company recorded net sales growth of 55% to $4.6 billion for the
six months ended June 30, 2002, compared with $3.0 billion during the first
half of 2001. Net income for the first six months totaled $81.3 million,
compared with $56.7 million in the first six months of 2001. Pro forma net
income for the six months totaled $133.5 million, an increase of 82% over
$73.5 million in the first half of 2001.

Diluted earnings per share for the six months ended June 30, 2002 declined
to $0.85, compared with $0.94 in the first half of 2001. Pro forma diluted
earnings per share for the six months totaled $1.33, an increase of 14%
compared with $1.17 in the first half of 2001.

Pro forma results for the six months ended June 30, 2002 exclude
restructuring charges of $7.9 million related to plant closings and 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.” Pro forma results
for the first six months of 2001 have been adjusted to exclude plant closing
charges and to reflect the elimination of goodwill and other intangible
amortization. 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. A reconciliation table between earnings per share and pro
forma earnings per share is attached.

The company reported operating income for the six months of $326.7 million
versus $186.8 million in the first six months of 2001, an increase of 75%.
Pro forma operating income totaled $334.6 million, an increase of 57% over pro
forma $212.9 million in the first half of 2001. Pro forma operating income
margins for the first half of 2002 were 7.22%, an increase of 8 basis points
versus the pro forma results from the first six months of last year.

Free cash flow for the first six months of 2002 was $131.5 million,
compared with $92.7 million in the first half of 2001.

CONFERENCE CALL WEBCAST

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

ABOUT DEAN FOODS

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 earnings per share, merger
synergies, cash flow and capital expenditures, as well as the company’s
expectations concerning its branding initiatives. 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, earnings per share and cash flow
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 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.

                              (Tables to follow)


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

                                      REPORTED             PRO FORMA (A)
                                 Three months ended      Three months ended
                                       June 30,                June 30,
                                   2002        2001        2002        2001

    Net sales                  $2,350,956  $1,517,541  $2,350,956  $1,517,541
    Cost of sales               1,738,644   1,163,947   1,738,644   1,163,947

      Gross profit                612,312     353,594     612,312     353,594

    Operating costs and
     expenses                     427,265     250,691     427,265     238,027
    Plant closing costs             6,665

      Operating income            178,382     102,903     185,047     115,567

    Interest expense
     & financing charges
     on preferred securities       60,709      34,330      60,709      34,330
   (Earnings) from
    unconsolidated affiliates      (1,404)     (1,186)     (1,404)     (2,066)
    Other (income) expense            739        (189)        739        (189)

      Income before income taxes
       and minority interest      118,338      69,948     125,003      83,492

    Income taxes                   45,104      25,982      47,570      29,602
    Minority interest                   7       9,363           7      11,759

        Net income                $73,227     $34,603     $77,426     $42,131

    Basic earnings per share        $0.81       $0.63       $0.86       $0.76

        Basic average common
         shares (000's)            90,050      55,121      90,050      55,121

    Diluted earnings per share      $0.72       $0.55       $0.76       $0.66

        Diluted average common
         shares (000's)           108,989      72,228     108,989      72,228

(A) Pro forma results for second quarter 2002 are adjusted to exclude

        plant closing costs.  Pro forma results for second quarter 2001 are
        adjusted to eliminate goodwill and other intangible amortization.


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

                                      REPORTED             PRO FORMA (B)
                                  Six months ended        Six months ended
                                       June 30,                June 30,
                                   2002        2001        2002        2001

    Net sales                  $4,632,941  $2,982,613  $4,632,941  $2,982,613
    Cost of sales               3,464,340   2,281,774   3,464,340   2,281,774

      Gross profit              1,168,601     700,839   1,168,601     700,839

    Operating costs and
     expenses                     834,032     513,215     834,032     487,960
    Plant closing costs             7,898         843

      Operating income            326,671     186,781     334,569     212,879

    Interest expense
     & financing charges on
     preferred securities         120,982      70,028     120,982      70,028
    (Earnings) from
     unconsolidated affiliates     (1,807)     (2,859)     (1,807)     (4,593)
    Other expense                     453         502         453         502

      Income before income
       taxes and minority
       interest                   207,043     119,110     214,941     146,942

    Income taxes                   78,442      44,649      81,383      52,199
    Minority interest                  16      16,341          16      21,293

        Net income before
         cumulative effect of
         accounting change        128,585      58,120     133,542      73,450

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

        Net income                $81,269     $56,674    $133,542     $73,450

    Basic earnings per share:
        Income before cumulative
         effect of accounting
         change                     $1.44       $1.06
        Cumulative effect of
         accounting change          (0.53)      (0.03)
        Net income                  $0.91       $1.03       $1.49       $1.34

        Basic average common
         shares (000's)            89,466      54,917      89,466      54,917

    Diluted earnings per share:
        Income before cumulative
         effect of accounting
         change                     $1.29       $0.96
        Cumulative effect of
         accounting change          (0.44)      (0.02)
        Net income                  $0.85       $0.94       $1.33       $1.17

        Diluted average common
         shares (000's)           108,484      71,897     108,484      71,897

(B) Pro forma results for the first six months of 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 six months of 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.


                              DEAN FOODS COMPANY

                           Condensed Balance Sheet
                            (Dollars in Thousands)

                                                 June 30,        December 31,
    ASSETS                                         2002              2001

    Cash and cash equivalents                      $67,350           $78,260
    Other current assets                         1,313,941         1,403,924
      Total current assets                       1,381,291         1,482,184

    Property, plant & equipment                  1,620,119         1,668,592

    Intangibles & other assets                   3,841,513         3,581,121

        Total Assets                            $6,842,923        $6,731,897

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Total current liabilities                   $1,159,318        $1,174,963

    Long-term debt                               2,886,912         2,971,525

    Other long-term liabilities                    561,791           524,924

    Mandatorily redeemable TIPES                   584,886           584,605

    Stockholders' equity:
      Common stock                                     903               879
      Additional paid-in capital                 1,051,666           961,705
      Retained earnings                            624,409           543,139
      Other comprehensive income                   (26,962)          (29,843)
          Total stockholders' equity             1,650,016         1,475,880

        Total Liabilities and
         Stockholders' Equity                   $6,842,923        $6,731,897


                  Earnings Per Share Summary and Reconciliation

                                          Three Months Ended  Six Months Ended
                                               June 30,          June 30,
                                             2002     2001     2002     2001
    Diluted earnings per share              $0.72    $0.55    $0.85    $0.94

    Elimination of amortization:
      Goodwill amortization                           0.10              0.19
      Trademark amortization                          0.01              0.02

    Nonrecurring losses:
      Plant closing costs (A)                0.04              0.04

    Cumulative effect of accounting
     change (B)                                                0.44     0.02

    Pro forma diluted earnings per share    $0.76    $0.66    $1.33    $1.17

(A) Plant closing costs in the second quarter of 2002 related to the

        closings of plants in Puerto Rico and Vermont, as well as a Dairy
        Group distribution facility; in addition, a Dairy Group plant in
        Michigan was closed in the six month period.

(B) Cumulative effect of accounting change in 2002 was related to the

        write-down of certain trademarks due to the implementation of FAS 142,
        "Goodwill and Other Intangible Assets".  In 2001 the cumulative effect
        of accounting change was the result of the adoption of FAS 133,
        "Accounting for Derivative Instruments and Hedging Activities".


                              DEAN FOODS COMPANY

                             Segment Information
                            (Dollars in thousands)

                                      Reported               Pro Forma
                                 Three Months Ended       Three Months Ended
                                       June 30,                June 30,
                                   2002        2001        2002        2001
    Revenue
      Dairy Group              $1,798,714  $1,240,098  $1,798,714  $1,240,098
      Morningstar Foods/White
       Wave                       263,796     178,938     263,796     178,938
      Specialty Foods             177,364                 177,364
      Corporate / Other           111,082      98,505     111,082      98,505
      Consolidated             $2,350,956  $1,517,541  $2,350,956  $1,517,541

    Operating Income
      Dairy Group                $137,113     $75,681    $142,382     $85,545
      Morningstar Foods/White
       Wave                        30,835      24,748      30,835      26,550
      Specialty Foods              25,367                  25,367
      Corporate / Other           (14,933)      2,474     (13,537)      3,472
      Consolidated               $178,382    $102,903    $185,047    $115,567

                                      Reported               Pro Forma
                                  Six Months Ended        Six Months Ended
                                       June 30,                June 30,
                                   2002        2001        2002        2001
    Revenue
      Dairy Group              $3,576,218  $2,440,772  $3,576,218  $2,440,772
      Morningstar Foods/White
       Wave                       502,376     345,627     502,376     345,627
      Specialty Foods             338,578                 338,578
      Corporate / Other           215,769     196,214     215,769     196,214
      Consolidated             $4,632,941  $2,982,613  $4,632,941  $2,982,613

    Operating Income
      Dairy Group                $263,347    $142,312    $269,849    $162,819
      Morningstar Foods/White
       Wave                        53,940      46,265      53,940      49,831
      Specialty Foods              46,154                  46,154
      Corporate / Other           (36,770)     (1,796)    (35,373)        229
      Consolidated               $326,671    $186,781    $334,570    $212,879


                        Summary Financial Information
                            (Dollars in thousands)

                                             Reported           Pro Forma
                                        Three Months Ended  Three Months Ended
                                              June 30,           June 30,
                                           2002     2001      2002     2001

    Depreciation                         $39,157  $24,008    $39,157  $24,008
    Amortization of intangibles            1,135   13,456      1,135      792
    Amortization shown in interest
     expense                               3,237      666      3,237      666
    Capital expenditures                  60,498   35,585     60,498   35,585

                                          Six Months Ended   Six Months Ended
                                              June 30,           June 30,
                                           2002     2001      2002     2001

    Depreciation                         $82,115  $47,830    $82,115  $47,830
    Amortization of intangibles            3,347   26,797      3,347    1,542
    Amortization shown in interest
     expense                               5,799    1,332      5,799    1,332
    Capital expenditures                  91,528   55,317     91,528   55,317

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

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

SOURCE Dean Foods Company

-0- 08/08/2002

/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/

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