DALLAS, Aug. 3 /PRNewswire-FirstCall/ — Dean Foods Company (NYSE: DF)
today announced that the company earned $0.52 per diluted share from
continuing operations for the quarter ended June 30, 2005, as compared to
$0.39 per diluted share from continuing operations in the second quarter of
2004. Net income from continuing operations for the second quarter of 2005
totaled $81.2 million, compared with $63.3 million in the prior year second
quarter.
On an adjusted basis (as defined below), diluted earnings from continuing
operations increased 36% to $0.53 per share, compared to $0.39 in last year’s
second quarter. Adjusted net income from continuing operations for the second
quarter was $82.7 million compared to $63.3 million in the second quarter of
2004.
“Our second quarter results demonstrate further progress toward meeting
our operational and strategic goals,” said Gregg Engles, chairman and chief
executive officer. “Our Dairy Group turned in another strong quarter, and
WhiteWave Foods posted significantly increased profitability. Additionally,
we successfully completed the spin-off of TreeHouse Foods, signed a definitive
agreement to divest our Marie’s dressings and Dean’s dips businesses, and
lowered our future interest expense through an amendment of our bank credit
facility.”
Net sales for the second quarter totaled $2.6 billion, on par with the
second quarter of 2004, primarily due to higher fluid dairy volumes and
increased sales at WhiteWave Foods, which were offset by the pass-through of
lower raw milk and butterfat costs in the Dairy Group.
Consolidated operating income from continuing operations in the second
quarter totaled $173.5 million versus $147.2 million in the second quarter of
2004. Adjusted second quarter operating income totaled $175.9 million, a
19.5% increase compared to $147.2 million in the second quarter of 2004. The
company’s adjusted second quarter 2005 operating margin was 6.71%, up
110 basis points versus the second quarter of the prior year. The increase in
the consolidated operating margin was primarily due to the positive impact of
lower raw milk and butterfat costs and increased profitability at WhiteWave
Foods. Included in operating income for the second quarter of 2005 is a
$3.9 million charge ($0.02 net of tax), which represents one half of the total
expense related to the accelerated vesting of stock units issued to key
employees in January 2003. The balance of this expense, or approximately
$0.02 per share net of tax, will be recognized in the third quarter of 2005.
The acceleration of these stock units occurred because the price of the
company’s common stock achieved a price appreciation target that represents an
increase of more than 50% from the stock price on the date of the grant.
Offsetting second quarter expenses is a gain of $4.5 million recorded in the
second quarter due to the favorable settlement of class action litigation
related to high-fructose corn syrup purchases made by the company in prior
years.
The company repaid $117.4 million of debt during the second quarter,
bringing total debt repayments for the year to $269.1 million. Long-term debt
as of June 30, 2005 was approximately $3.0 billion, including $56 million due
within one year that is reported as part of current liabilities. At the end
of the quarter, approximately $1 billion of the company’s senior credit
facility was available for future borrowings.
SEGMENT RESULTS
Dairy Group net sales for the second quarter were $2.2 billion, 2% lower
than the second quarter of 2004. The sales decrease was primarily due to the
pass-through of lower raw milk and butterfat costs, partially offset by a 4.1%
increase in fluid milk volumes. The Class I mover, which is an indicator of
the company’s raw milk costs, averaged $14.18 per hundredweight in the second
quarter of 2005, 22% lower than the same period in 2004.
Dairy Group operating income in the second quarter was $175.1 million, an
increase of 11% over last year. Operating margins increased 90 basis points
to 7.8% of sales due primarily to the positive impact of lower raw milk and
butterfat costs, and the receipt of the $4.5 million settlement from class
action litigation related to prior period high-fructose corn syrup purchases.
WhiteWave Foods reported second quarter net sales of $284.1 million, a 12%
increase compared to the second quarter of 2004. The increase was driven by
sales growth in the company’s core brands.
Operating income for WhiteWave Foods in the second quarter was
$28.7 million, an increase of 160% over the $11.0 million reported in the
second quarter of 2004. Operating margin for the second quarter of 2005 was
10.1%, an increase of 574 basis points compared to the prior year second
quarter. The improvement in operating margin was the result of sales growth,
increased manufacturing and distribution efficiency and lower year over year
marketing spending during the quarter.
RECENT DEVELOPMENTS
- On June 27, the company completed the previously announced spin-off of
its Specialty Foods division, now known as TreeHouse Foods. The newly
created firm is headquartered in the Chicago, IL area and trades on
the NYSE under the ticker symbol “THS”. - As part of management’s strategy to further focus the company on its
core dairy and branded businesses, Dean Foods recently entered into an
agreement to sell its Marie’s dressings and Dean’s dips businesses to
Ventura Foods. Pending customary governmental antitrust review, the
company expects the transaction to close in the third quarter. The
sale is expected to be approximately $0.02 dilutive to the balance of
the year. - During the quarter the company successfully amended its bank credit
facility to reduce borrowing costs. - Subsequent to the end of the second quarter, the Company has made open
market purchases of its common stock totaling 1.9 million shares
for a total cost of $68.8 million. The Company has $49.2 million
remaining under its current repurchase authorization.
OUTLOOK FOR THE REMAINDER OF 2005
“Our business outlook for the remainder of the year has improved. Based
on second quarter results that exceeded our expectations and continuing strong
business trends, we believe that operating performance for the year will be
better than our previous expectations,” said Engles. “We expect this
improvement in our business outlook to increase earnings per share by
approximately three cents. This increase is offset by approximately four
cents due to the dilution from the divestiture of Marie’s dressings and Dean’s
dips businesses and the acceleration of employee stock unit vesting. Our
expectations are now for earnings to range between $1.97 and $2.02 per share
in 2005. For the third quarter, we anticipate adjusted earnings from
continuing operations of between $0.49 and $0.51 per share.”
The company’s earnings guidance excludes the impact of facility closing
and reorganization costs and any non-recurring or one-time gains or losses.
RESULTS FOR SIX MONTHS ENDED JUNE 30, 2005
The company’s net sales from continuing operations increased 6% to
$5.2 billion for the six months ended June 30, 2005, compared with
$4.9 billion during the first six months of 2004. The increase was due to
sales growth at WhiteWave Foods and volume growth in the Dairy Group, which
was partially offset by the pass-through of lower raw dairy commodity costs.
Net income from continuing operations for the first half of the year totaled
$137.0 million, compared with $119.4 million in the first six months of 2004.
Diluted earnings per share from continuing operations for the six months ended
June 30, 2005 totaled $0.88, compared with $0.73 in the first six months of
2004.
On an adjusted basis (as defined below), net income from continuing
operations for the six months totaled $144.3 million, an increase of 16% over
$124.1 million in the same period of 2004. Adjusted diluted earnings per
share from continuing operations for the first six months of 2005 totaled
$0.92 compared with $0.76 in the first six months of 2004.
The company reported operating income for the six month period ended
June 30, 2005 of $306.9 million versus $278.9 million in the same period of
2004. Adjusted operating income for the first six months of 2005 totaled
$318.8 million, an increase of 11% versus $286.5 million in the same period of
last year. Adjusted operating income margins for the six months were 6.13%,
an increase of 29 basis points versus the prior year’s first six months.
ADJUSTMENTS TO HISTORICAL FINANCIAL STATEMENT
The company has adjusted its historical financial results for the year
2002 through the first quarter of 2005 to reflect the businesses contributed
to TreeHouse Foods as discontinued operations. These adjusted financial
results are included in a schedule titled, ‘Revised Historical Results to
Reflect TreeHouse Foods Spin-off,’ which is available at the investor
relations section of the company’s website at https://www.deanfoods.com .
COMPARISON OF ADJUSTED INFORMATION TO GAAP INFORMATION
The adjusted financial results contained in this press release are
non-GAAP financial measures that eliminate the net expense or net gain related
to the items identified below. These numbers are 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 and six month periods ended June 30, 2005
calculated according to GAAP and on an adjusted basis is attached.
For the quarter ended June 30, 2005, the adjusted results reported above
differ from the company’s results under GAAP by excluding a $2.4 million
charge ($1.5 million net of tax) primarily related to previously announced
reorganizations and facility closings, including consolidation of WhiteWave
Foods Company.
For the six months ended June 30, 2005, the adjusted results reported
above differ from the company’s results under GAAP by excluding
a) an $8.8 million charge ($5.4 million net of tax) related to
consolidation activities at WhiteWave Foods and previously announced
reorganizations and facility closings in the Dairy Group,
b) and a $3.1 million charge ($1.9 million net of tax) related to
severance payments made to the former president of WhiteWave Foods.
For the six months ended June 30, 2004, the adjusted results reported
above differ from the company’s results under GAAP by excluding a net
$7.6 million charge ($4.6 million net of income tax) related to Dairy Group
plant closings in Madison WI, South Gate CA, San Leandro CA, and Wilkesboro
NC, which was partly offset by a gain on the sale of a Dairy Group plant
closed in Hawaii in 2003.
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 https://www.deanfoods.com .
ABOUT DEAN FOODS
Dean Foods is one of the leading food and beverage companies in the United
States. Its Dairy Group is the largest processor and distributor of fresh
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 is the nation’s leading organic foods
company. WhiteWave Foods markets and sells a variety of well-known dairy and
dairy-related products, such as Silk(R) soymilk, Horizon Organic(R) dairy
products and juices, International Delight(R) coffee creamers and LAND
O’LAKES(R) creamers and cultured products. Dean Foods Company also owns the
fourth largest dairy processor in Spain and the leading brand of organic dairy
products 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
June 30, June 30,
2005 2004 2005 2004
Net sales $2,623,251 $2,623,914 $2,623,251 $2,623,914
Cost of sales 1,961,319 2,027,254 1,961,319 2,027,254
Gross profit 661,932 596,660 661,932 596,660
Operating costs and expenses 486,040 449,444 486,040 449,444
Facility closings and
reorganization costs, net 2,438 11
Operating income 173,454 147,205 175,892 147,216
Interest expense 42,141 44,063 42,141 44,063
Other income (228) (185) (228) (185)
Income from continuing
operations before
income taxes 131,541 103,327 133,979 103,338
Income taxes 50,321 39,991 51,257 39,995
Income from continuing
operations 81,220 63,336 82,722 63,343
Income from discontinued
operations, net of tax 5,428 13,737
Net income $86,648 $77,073 $82,722 $63,343
Basic earnings per share:
Income from continuing
operations $0.54 $0.40 $0.55 $0.40
Income from discontinued
operations 0.03 0.09 0.00 0.00
Net income $0.57 $0.49 $0.55 $0.40
Basic average common
shares (000's) 150,834 157,331 150,834 157,331
Diluted earnings per
share:
Income from continuing
operations $0.52 $0.39 $0.53 $0.39
Income from discontinued
operations 0.03 0.08 0.00 0.00
Net income $0.55 $0.47 $0.53 $0.39
Diluted average common
shares (000's) 157,220 163,634 157,220 163,634
[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
(Dollars in thousands, except per share data)
GAAP ADJUSTED [B]
Six Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Net sales $5,201,564 $4,902,496 $5,201,564 $4,902,496
Cost of sales 3,919,240 3,732,543 3,919,240 3,732,543
Gross profit 1,282,324 1,169,953 1,282,324 1,169,953
Operating costs and
expenses 966,622 883,444 963,549 883,444
Facility closings and
reorganization costs, net 8,828 7,584
Operating income 306,874 278,925 318,775 286,509
Interest expense 84,560 86,559 84,560 86,559
Other income (338) (1,659) (338) (1,659)
Income from continuing
operations before
income taxes 222,652 194,025 234,553 201,609
Income taxes 85,605 74,593 90,234 77,535
Income from continuing
operations 137,047 119,432 144,319 124,074
Income from discontinued
operations, net of tax 15,798 26,881
Net income $152,845 $146,313 $144,319 $124,074
Basic earnings per share:
Income from continuing
operations $0.91 $0.76 $0.96 $0.79
Income from discontinued
operations 0.11 0.17 0.00 0.00
Net income $1.02 $0.93 $0.96 $0.79
Basic average common
shares (000's) 150,331 156,718 150,331 156,718
Diluted earnings per share:
Income from continuing
operations $0.88 $0.73 $0.92 $0.76
Income from discontinued
operations 0.10 0.17 0.00 0.00
Net income $0.98 $0.90 $0.92 $0.76
Diluted average common
shares (000's) 156,442 163,149 156,442 163,149
[B] 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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
GAAP diluted earnings per
share from continuing
operations $0.52 $0.39 $0.88 $0.73
Adjustments:
Facility closings and
reorganization costs, net 0.01 0.03 0.03
Other nonrecurring
operating costs 0.01
Adjusted diluted earnings
per share $0.53 $0.39 $0.92 $0.76
Segment Information
(Dollars in thousands)
GAAP ADJUSTED [C]
Three Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Net sales
Dairy Group $2,234,653 $2,280,575 $2,234,653 $2,280,574
WhiteWave Foods Company 284,076 253,495 284,076 253,495
Corporate / Other 104,522 89,844 104,522 89,845
Total $2,623,251 $2,623,914 $2,623,251 $2,623,914
Segment operating income
(loss)
Dairy Group $175,068 $157,938 $175,069 $157,938
WhiteWave Foods Company 28,667 11,030 28,667 11,030
Corporate / Other (27,843) (21,752) (27,844) (21,752)
Subtotal 175,892 147,216 175,892 147,216
Facility closings and
reorganization costs, net (2,438) (11)
Total operating income $173,454 $147,205 $175,892 $147,216
GAAP ADJUSTED [C]
Six Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Net sales
Dairy Group $4,431,101 $4,244,118 $4,431,101 $4,244,118
WhiteWave Foods Company 562,827 485,889 562,827 485,889
Corporate / Other 207,636 172,489 207,636 172,489
Total $5,201,564 $4,902,496 $5,201,564 $4,902,496
Segment operating income
(loss)
Dairy Group $324,848 $297,833 $324,848 $297,833
WhiteWave Foods Company 38,108 23,585 41,181 23,585
Corporate / Other (47,254) (34,909) (47,254) (34,909)
Subtotal 315,702 286,509 318,775 286,509
Facility closings and
reorganization costs, net (8,828) (7,584)
Total operating income $306,874 $278,925 $318,775 $286,509
[C] 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
Condensed Balance Sheet
(Dollars in Thousands)
June 30, December 31,
ASSETS 2005 2004
Cash and cash equivalents $32,305 $27,407
Other current assets 1,351,957 1,409,675
Total current assets 1,384,262 1,437,082
Property, plant & equipment 1,850,192 1,821,719
Intangibles & other assets 3,850,750 3,869,009
Assets of discontinued operations --- 628,558
Total Assets $7,085,204 $7,756,368
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $953,907 $1,050,175
Long-term debt 2,930,887 3,110,716
Other long-term liabilities 833,718 820,297
Liabilities of discontinued operations --- 111,581
Stockholders' equity:
Common stock 1,515 1,492
Additional paid-in capital 1,368,236 1,308,172
Retained earnings 1,021,125 1,359,632
Other comprehensive income (24,184) (5,697)
Total stockholders' equity 2,366,692 2,663,599
Total Liabilities and
Stockholders' Equity $7,085,204 $7,756,368
DEAN FOODS COMPANY
Condensed Statement of Cash Flows
(Dollars in Thousands)
Six Months Ended June 30,
Operating Activities 2005 2004
Net income $152,845 $146,313
Income from discontinued operations (15,798) (26,881)
Depreciation and amortization 109,445 103,766
Deferred income taxes 22,969 32,429
Loss (gain) on disposition of assets 585 (1,532)
Tax savings on equity compensation 12,697 15,298
Write-down of impaired assets 697 2,175
Changes in current assets and liabilities 54,127 (212,718)
Other (2,449) 917
Net cash provided by continuing
operations 335,118 59,767
Net cash provided by discontinued
operations 31,912 65,490
Net cash provided by operating
activities 367,030 125,257
Investing Activities
Additions to property, plant and equipment (144,268) (155,774)
Cash outflows for acquisitions (1,702) (350,176)
Proceeds from sale of fixed assets 5,281 7,420
Net cash used in continuing operations (140,689) (498,530)
Net cash used in discontinued operations (7,631) (9,287)
Net cash used in investing activities (148,320) (507,817)
Financing Activities
Proceeds from the issuance of debt 16,722 478,688
Repayment of debt (285,796) (155,775)
Issuance of common stock, net of expenses 47,390 52,474
Redemption of common stock --- (5,163)
Other (3,281) (1,140)
Net cash provided (used) in continuing
operations (224,965) 369,084
Net cash provided (used) in
discontinued operations 11,153 (3,594)
Net cash provided (used) in financing
activities (213,812) 365,490
Increase (decrease) in cash and cash
equivalents 4,898 (17,070)
Beginning cash balance 27,407 46,037
Ending cash balance $32,305 $28,967
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
Web site: https://www.deanfoods.com
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