Tuesday, 7 November 2006

Dean Foods Company Reports Third Quarter Results

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Tuesday, 7 November 2006

Company Reports GAAP Earnings From Continuing Operations of $0.54 per Share;
Adjusted Earnings of $0.56 per Share

GAAP Operating Income Increases 22%; Adjusted Operating Income Growth of 12%

DALLAS, Nov. 7 /PRNewswire-FirstCall/ — Dean Foods Company (NYSE: DF)
today announced that the Company earned $0.54 per diluted share from
continuing operations for the quarter ended September 30, 2006, as compared to
$0.40 per diluted share from continuing operations for the quarter ended
September 30, 2005. On an adjusted basis (as defined below), diluted earnings
per share were $0.56, an increase of 19% from $0.47 in last year’s third
quarter.

Consolidated operating income from continuing operations in the third
quarter totaled $169 million, an increase of 22% from $138 million in the
third quarter of 2005. Adjusted third quarter operating income totaled $174
million, an increase of 12% from $156 million in the third quarter of 2005.
The adjusted third quarter operating margin was 6.92%, up 85 basis points
versus the third quarter last year.

Net income from continuing operations for the third quarter totaled $74
million, compared with $62 million in the prior year third quarter. Adjusted
net income for the third quarter was $78 million, 6% higher than the $73
million reported in the third quarter of 2005.

Net sales for the third quarter totaled $2.5 billion, a decrease of 2%
from the third quarter of 2005, due to the pass through of lower raw dairy
input costs, partially offset by fluid milk volume growth at the Dairy Group
and continued sales growth at WhiteWave Foods.

“I am very pleased with the operating profit and earnings per share growth
in the third quarter,” said Gregg Engles, chairman and chief executive
officer. “Our portfolio of businesses continues to perform well, with
especially robust results from the Dairy Group this quarter. WhiteWave Foods
posted solid sales growth, while making considerable progress against its
supply chain and information technology initiatives. As we look forward to
2007, we are confident that we are well positioned for sustained double-digit
EPS growth.”

DAIRY GROUP

Dairy Group net sales were $2.2 billion in the third quarter of 2006, down
3% from the prior year third quarter. The sales decrease was due to the pass
through of lower dairy input costs that were partially offset by a 1.3%
increase in fluid milk volumes. The third quarter Class I mover, which is an
indicator of the Company’s raw milk costs, averaged $11.05 per hundred-weight,
a 21% decrease from the same period in 2005. Class II butterfat prices
averaged $1.32 per pound in the third quarter, 28% lower than the third
quarter of 2005.

Dairy Group segment operating income in the third quarter was $173
million, an increase of 10% year-over-year. Dairy Group operating margin
increased 94 basis points to 7.83% of sales. Segment operating income growth
was driven by increased fluid milk volumes and operational efficiencies
resulting from ongoing plant rationalization activities and continuing
productivity initiatives. In addition, there were a number of specific items
in the quarter, including a favorable resolution of a dispute with a supplier,
which on balance added approximately 3 percentage points to Dairy Group
operating income growth in the quarter, or approximately 20 basis points of
operating margin.

WHITEWAVE FOODS

WhiteWave Foods reported third quarter net sales of $314 million, a 5%
increase compared to third quarter 2005 net sales of $299 million. The sales
increase was driven by strong sales growth in the core branded portfolio,
partly offset by the SKU reduction activities undertaken late in 2005 and
slower growth in non-core products.

WhiteWave’s core products continued to post double-digit growth in the
third quarter. Net sales of Horizon Organic(R) milk increased in the high
teens in the quarter as the category continues to expand. Both Silk(R) soymilk
and Land O’ Lakes fluid and cultured products grew in the low double digits
and International Delight(R) coffee creamers grew in the low single digits in
the third quarter.

Consistent with previous expectations, segment operating income in the
third quarter for WhiteWave Foods was $36.5 million, with operating margins of
11.6%, compared to $36.2 million, and operating margins of 12.1% in the prior
year third quarter. WhiteWave operating margin decreased due to higher
organic milk, sugar and fuel costs, SAP transition costs, and higher overall
investments in information technology and support infrastructure. These
increased costs were partially offset by supply chain efficiencies related to
WhiteWave’s ongoing business consolidation and integration project.

CORPORATE

Corporate expense was $35 million in the third quarter of 2006, 5% lower
than in the same period of the prior year. The decrease in corporate expense
is primarily related to lower share-based compensation expense.

During the quarter, the Company reduced outstanding debt by $210 million,
including over $96 million in proceeds from the sale of Leche Celta. Long-term
debt at September 30, 2006 was under $3.2 billion, including $485 million due
within one year that is reported as part of current liabilities. Interest
expense during the quarter was $48 million, 27% higher than in the third
quarter a year ago, due to higher average debt balances and the current
interest rate environment.

Through October 31, 2006, the Company has repurchased 4.5 million shares
of its stock in 2006. As a result of its ongoing share repurchase program,
diluted shares outstanding were 16 million shares lower in the third quarter
of 2006 than in the same period a year earlier.

Based on management’s review of historical stock option grants, certain
administrative errors have been identified relating to certain stock option
grants in 1997 and 2000. As the aggregate differences were not deemed
material, the Company will not restate its historical results and the full
impact of the pretax cumulative non-cash charge of approximately $500,000 was
recognized in the third quarter, 2006.

OUTLOOK FOR THE REMAINDER OF 2006 AND FULL YEAR 2007

“Looking to the end of this year, we believe we will finish the year with
earnings per share growth of 15%-16% and are comfortable with estimates for
full year 2006 adjusted earnings per share between $2.10 and $2.12,” said
Engles. “Looking forward to 2007, we expect to enter the new year with
considerable momentum and are comfortable with expectations for 11%-13% growth
in adjusted earnings per share.”

RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006

The Company’s net sales from continuing operations decreased slightly to
$7.5 billion for the nine months ended September 30, 2006. The decrease was
due to the pass through of lower raw dairy commodity costs which were offset
by sales growth at WhiteWave Foods and volume growth in the Dairy Group. Net
income from continuing operations for the first nine months of the year
totaled $204 million, compared with $187 million in the first nine months of
2005. Diluted earnings per share from continuing operations for the nine
months ended September 30, 2006 totaled $1.45, compared to $1.20 for the first
nine months of 2005.

On an adjusted basis (as defined below), net income for the nine months
totaled $212 million, compared to $205 million in the same period of 2005.
Adjusted diluted earnings per share from continuing operations for the first
nine months of 2006 totaled $1.51 compared with $1.32 in the first nine months
of 2005.

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 and nine month periods ended
September 30, 2006 and September 30, 2005 calculated according to GAAP and on
an adjusted basis is attached.

For the quarter ended September 30, 2006, the adjusted results reported
above differ from the Company’s results under GAAP by excluding the following
facility closing and reorganization charges:

     a) a $5.5 million ($3.4 million net of tax) charge related to the
        Madison, WI warehouse closing , ice cream production facility
        consolidation in the East Region, and other announced facility
        closings and reorganizations.

For the quarter ended September 30, 2005, the adjusted results reported
above differ from the Company’s results under GAAP by excluding the following
facility closing and reorganization charges:

     a) an $18.0 million charge ($11.3 million net of tax) related to the
        closure of a facility in Union, NJ, consolidation activities at
        WhiteWave Foods and previously announced reorganizations and facility
        closings in the Dairy Group.

For the nine months ended September 30, 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) a $12.8 million ($7.8 million net of tax)  charge related to the
        Madison, WI warehouse closing,  ice cream production facility
        consolidation in the East Region , and  other previously announced
        facility closings and reorganizations.

For the nine months ended September 30, 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) a $26.8 million charge ($16.7 million net of tax) related to the
        closure of a facility in Union, NJ, consolidation activities at
        WhiteWave Foods and previously announced reorganizations and facility
        closings in the Dairy Group, and

     b) a $3.1 million charge ($1.9 million net of tax) related to severance
        payments made to the former president of 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
intended to qualify for 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.

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

               Marguerite Copel
               Vice President, Corporate Communications
               (214) 721-1273


                              (Tables to follow)


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


                                        GAAP                 ADJUSTED [A]
                                  Three Months Ended      Three Months Ended
                                     September 30,           September 30,
                                   2006        2005        2006        2005

    Net sales                  $2,517,792  $2,569,405  $2,517,792  $2,569,405
    Cost of sales               1,823,786   1,918,356   1,823,786   1,918,356

      Gross profit                694,006     651,049     694,006     651,049

    Operating costs and
     expenses                     519,789     495,082     519,789     495,082
    Facility closings,
     reorganization costs and
     other                          5,471      17,993         ---         ---

      Operating income            168,746     137,974     174,217     155,967

    Interest expense               48,031      37,837      48,031      37,837
    Other (income) expense            (60)       (173)        (60)       (173)

      Income from continuing
       operations before
          income taxes            120,775     100,310     126,246     118,303
    Income taxes                   46,277      38,129      48,374      44,823

    Income from continuing
     operations                    74,498      62,181      77,872      73,480
    Income (loss) from
     discontinued operations,
        net of tax                 (3,705)     37,203         ---         ---

        Net income                $70,793     $99,384     $77,872     $73,480

    Basic earnings per share:
      Income from continuing
       operations                   $0.56       $0.42       $0.58       $0.50
      Income (loss) from
       discontinued operations      (0.03)       0.25         ---         ---
        Net income                  $0.53       $0.67       $0.58       $0.50

        Basic average common
         shares (000's)           133,739     148,098     133,739     148,098

    Diluted earnings per
     share:
      Income from continuing
       operations                   $0.54       $0.40       $0.56       $0.47
      Income (loss) from
       discontinued operations      (0.03)       0.24         ---         ---
        Net income                  $0.51       $0.64       $0.56       $0.47

        Diluted average common
         shares (000's)           139,160     155,536     139,160     155,536


     [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]
                                  Nine Months Ended       Nine Months Ended
                                     September 30,           September 30,
                                   2006        2005        2006        2005

    Net sales                  $7,504,717  $7,559,106  $7,504,717  $7,559,106
    Cost of sales               5,475,518   5,649,599   5,475,518   5,649,599

      Gross profit              2,029,199   1,909,507   2,029,199   1,909,507

    Operating costs and
     expenses                   1,538,244   1,458,413   1,538,244   1,458,413
    Facility closings,
     reorganization costs and
     other                         12,823      29,894         ---         ---

      Operating income            478,132     421,200     490,955     451,094

    Interest expense              144,335     115,681     144,335     115,681
    Other (income) expense            (46)       (455)        (46)       (455)

      Income from continuing
       operations before
          income taxes            333,843     305,974     346,666     335,868
    Income taxes                  129,856     119,075     134,844     130,398

    Income from continuing
     operations                   203,987     186,899     211,822     205,470
    Income (loss) from
     discontinued operations,
        net of tax                (51,534)     55,580         ---         ---

        Net income               $152,453    $242,479    $211,822    $205,470



    Basic earnings per share:
      Income from continuing
       operations                   $1.51       $1.25       $1.57       $1.37
      Income (loss) from
       discontinued operations      (0.38)       0.37         ---         ---
        Net income                  $1.13       $1.62       $1.57       $1.37

        Basic average common
         shares (000's)           134,644     149,578     134,644     149,578

    Diluted earnings per
     share:
      Income from continuing
       operations                   $1.45       $1.20       $1.51       $1.32
      Income (loss) from
       discontinued operations      (0.36)       0.35         ---         ---
        Net income                  $1.09       $1.55       $1.51       $1.32

        Diluted average common
         shares (000's)           140,501     156,137     140,501     156,137


     [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 Nine Months Ended
                                             September 30,     September 30,
                                             2006     2005     2006     2005
    GAAP diluted earnings per share from
      continuing operations                 $0.54    $0.40    $1.45    $1.20

    Adjustments:
      Facility closings, reorganization
       costs and other                       0.02     0.07     0.06     0.12

    Adjusted diluted earnings per share     $0.56    $0.47    $1.51    $1.32



                               Segment Information
                              (Dollars in thousands)

                                   Three Months Ended      Nine Months Ended
                                      September 30,           September 30,
                                    2006        2005        2006        2005
    Net sales
      Dairy Group              $2,204,143  $2,270,310  $6,576,901  $6,690,986
      WhiteWave Foods Company     313,649     299,095     927,816     868,120
        Total                  $2,517,792  $2,569,405  $7,504,717  $7,559,106

    Segment operating income
     (loss)
      Dairy Group                $172,653    $156,498    $505,878    $476,890
      WhiteWave Foods Company      36,484      36,188      92,560      77,394
      Corporate / Other           (34,920)    (36,719)   (107,483)   (103,190)
        Subtotal                  174,217     155,967     490,955     451,094
    Facility closings,
     reorganization costs and
     other                         (5,471)    (17,993)    (12,823)    (29,894)
        Total operating income   $168,746    $137,974    $478,132    $421,200



                               DEAN FOODS COMPANY

                            Condensed Balance Sheets
                             (Dollars in thousands)

                                                September 30,     December 31,
    ASSETS                                          2006              2005

    Cash and cash equivalents                      $43,070           $24,456
    Other current assets                         1,321,906         1,376,737
      Total current assets                       1,364,976         1,401,193

    Property, plant & equipment                  1,792,145         1,776,801

    Intangibles & other assets                   3,588,500         3,571,163
    Assets of discontinued operations               17,587           301,727

        Total Assets                            $6,763,208        $7,050,884


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Total current liabilities, excluding
     debt                                         $864,808          $960,608

    Total long-term debt, including
     current portion                             3,176,373         3,386,848

    Other long-term liabilities                    719,560           675,186
    Liabilities of discontinued
     operations                                      6,490           126,029

    Stockholders' equity:
      Common stock                                   1,344             1,342
      Additional paid-in capital                   874,924           922,791
      Retained earnings                          1,156,466         1,004,013
      Other comprehensive income (loss)            (36,757)          (25,933)
         Total stockholders' equity              1,995,977         1,902,213

        Total Liabilities and
         Stockholders' Equity                   $6,763,208        $7,050,884



                               DEAN FOODS COMPANY

                       Condensed Statements of Cash Flows
                             (Dollars in thousands)


                                               Nine Months Ended September 30,
    Operating Activities                             2006              2005
      Net income                                  $152,453          $242,479
      (Income) loss from discontinued
       operations                                   51,534           (55,580)
      Depreciation and amortization                169,029           159,929
      Deferred income taxes                         61,802            43,569
      Share-based compensation                      28,554            32,280
      Changes in current assets and
       liabilities                                 (43,307)           38,005
      Other                                          6,887             7,542
              Net cash provided by
               continuing operations               426,952           468,224
              Net cash (used in) provided
               by discontinued operations             (900)            7,552
              Net cash provided by
               operating activities                426,052           475,776

    Investing Activities
      Additions to property, plant and
       equipment                                  (174,913)         (206,035)
      Cash outflows for acquisitions               (16,819)             (361)
      Proceeds from divestitures                    96,280           189,862
      Proceeds from sale of fixed assets             5,619             7,021
              Net cash used in continuing
               operations                          (89,833)           (9,513)
              Net cash used in
               discontinued operations             (14,696)          (22,636)
              Net cash used in investing
               activities                         (104,529)          (32,149)

    Financing Activities
      Proceeds from the issuance of debt           498,020             9,100
      Repayment of debt                           (729,381)         (196,301)
      Issuance of common stock, net                 28,049            46,051
      Redemption of common stock                  (135,679)         (345,087)
      Tax savings on share-based
       compensation                                 31,211            16,895
      Other                                         (6,889)           (3,281)
              Net cash used in continuing
               operations                         (314,669)         (472,623)
              Net cash provided by
               discontinued operations              11,760            33,321
              Net cash used in financing
               activities                         (302,909)         (439,302)

    Increase in cash and cash equivalents           18,614             4,325
    Beginning cash balance                          24,456            25,357

    Ending cash balance                            $43,070           $29,682

SOURCE Dean Foods Company

CONTACT: Barry Sievert, Senior Director, Investor Relations,
+1-214-303-3437, or Marguerite Copel, Vice President, Corporate
Communications, +1-214-721-1273, both of Dean Foods Company

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