Wednesday, 20 September 2000

Dean Foods Reports First Quarter Results and Business Unit Realignment to Drive National Brands

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Wednesday, 20 September 2000

FRANKLIN PARK, Ill., Sept. 20 /PRNewswire/ — Dean Foods Company
(NYSE: DF) today announced its first quarter earnings and an enhancement to
its business unit structure to further the Company’s strategy to focus on high
margin value-added branded products.

First quarter sales increased 5.3% to a record $1,054.3 million, compared
to $1,001.3 million in the first quarter of fiscal 2000. Earnings per share
increased 5.7% to a record 74 cents per diluted share, versus 70 cents per
diluted share last year. Net income was $26.4 million in the first quarter of
fiscal 2001 compared to $27.8 million in the first quarter of fiscal 2000, as
improved operating results were offset by higher interest expense to finance
acquisitions in a consolidating industry.

“Our first quarter earnings were driven by improved operating results in
our Dairy and Specialty Foods divisions,” stated Howard Dean, Chairman and
Chief Executive Officer. “Operating earnings in the newly formed National
Refrigerated Products Division, formed by combining Dean’s national branded
products from our former Dairy and Specialty segments, reflect investment of
approximately $6 million for launches of new products during the first
quarter.”

Dean Foods’ first quarter results included the following highlights:

  • Fluid milk operations benefited from steady margins and improved
    performance at the Barber and Berkeley acquisitions.
  • Ice cream earnings were impacted by lower volumes due to a cooler than
    normal summer and a lower level of promotional activity in several key
    markets.
  • Expanded fluid milk brand sales in the major California market and
    successfully introduced Mayfield brand ice cream into new Southeastern
    markets.
  • Improved results in the pickles operation due to better crop
    conditions and lower promotional activity by the branded leader.
  • Successful launch of new products in the National Refrigerated
    Products Division including Dips-For-OneTM, which achieved a fifty
    percent penetration of the grocery channel in the quarter.
  • Advertising, promotion and other introductory cost spending of
    $6 million behind National Refrigerated Products introductions of
    Dips-For-One(TM), Marie’s pourable salad dressings, Intermediate Shelf
    Life Chugs and the Land O’Lakes Grip ‘N Go single serve product.
  • Closed the acquisitions of the Nalley’s pickles business and Land
    O’Lakes Upper Midwest fluid milk operations.
  • Dean Foods also announced that the Company realigned its business unit
    structure and formed a new unit focused on refrigerated national dairy and
    related brands.

    Under this new structure, Dean Foods’ largest unit continues to be the
    Dairy Division, which will serve national and regional dairy customers through
    its system of direct route sales. This division will continue to be led by
    Eric Blanchard. The second largest unit is the Specialty Foods Division,
    which combines the Pickles business with non-dairy creamer products, aseptic
    products, ingredient products and the Company’s transportation group, all of
    which were part of the former Specialty segment. This division will be led by
    Jim Greisinger, who previously headed the Pickles division.

    The third unit is the newly formed National Refrigerated Products
    Division, and will be led by Lou Nieto, who was previously the Company’s
    senior marketing executive. National Refrigerated Products includes national
    brands such as Intermediate Shelf Life Milk Chugs, Land O’ Lakes Grip ‘N Go,
    Dean’s dips, including Dips-For-OneTM, Marie’s refrigerated salad dressings,
    White Wave soy products, including the Silk(TM) brand of soymilk, and other
    owned and licensed national brands. Responsibility for developing Extended
    Shelf Life products for national warehouse distribution will move from the
    Dairy Division to the National Refrigerated Products Division.

    “The creation of the National Refrigerated Products Division under an
    experienced marketing executive like Lou Nieto will accelerate our strategy to
    drive national brands. Our regional brands will continue to drive Dean’s
    growth in the core dairy business. Increasing our focus on national brands
    will drive incremental growth as we market existing and develop new
    value-added, national products,” said Howard Dean.

    “Our customers have told us that they want a more efficient way of dealing
    with Dean Foods,” said Richard Bailey, Dean Foods’ President. “This new
    structure will provide that capability as we create supply-chain efficiencies
    for our products.” Bailey added that as part of the realignment, Dean will
    implement a brand management system in the National Refrigerated Products
    Division to more effectively leverage its national brand opportunities. In
    addition, Bailey said the Company intends to substantially increase marketing
    expenditures to further invest in its national brands.

    “The new structure is about increasing overall market penetration,
    increasing revenue growth, enhancing shareholder value and providing our
    employees with additional opportunities to grow with the Dean Foods
    organization,” said Bailey.

    Mr. Dean concluded, “We are confident that our focused product and
    marketing plans for the year, and improved execution in the marketplace
    through our newly formed National Refrigerated Products Division, will enable
    us to deliver much improved results this year.”

    Dean Foods is one of the nation’s leading dairy processors and
    distributors producing a full line of branded and private label products,
    including fluid milk, ice cream and extended shelf life products, which are
    sold under the Dean’s and other strong regional brand names. Dean Foods is
    the industry leader in other food products including pickles, powdered
    non-dairy coffee creamers, aseptically packaged foodservice products, and
    refrigerated dips and salad dressings.

    Certain statements in this press release are forward-looking as defined by
    the Private Securities Litigation Reform Act of 1995. These statements
    involve certain risks and uncertainties that may cause actual results to
    differ materially from expectations as of the date of this press release.
    These risks include, but are not limited to, the ability to integrate
    acquisitions, adverse weather conditions resulting in poor harvest conditions,
    raw milk and resin costs, interest rate fluctuations, competitive pricing
    pressures, the effectiveness of marketing and cost-management programs and
    shifts in the market demand.

    The Company’s quarterly earnings conference call will be held today at
    8:00 a.m. Central Time. The call may be heard live at the Company’s web site,
    http://www.deanfoods.com, using RealPlayer7 Basic software. The basic version of
    RealPlayer7 may be downloaded at no charge from
    http://www.real.com/products/player/index.html prior to the call. Please allow
    approximately 15 minutes to download the software. Replays will be available
    at the same internet address for a limited time period.

    
                                  DEAN FOODS COMPANY
                      CONDENSED CONSOLIDATED STATEMENT OF INCOME
                                FOR THE QUARTERS ENDED
                         AUGUST 27, 2000 AND AUGUST 29, 1999
                                     (Unaudited)
                     (In Millions, Except for Per Share Amounts)
    
                                                        First Quarter Ended
                                                  Aug. 27,  Aug. 29,   Change
                                                    2000      1999        %
    
        Net sales                               $1,054.3   $1,001.3      5.3%
        Costs of products sold                     801.0      762.0     (5.1)%
        Delivery, selling and
          administrative expenses                  194.5      182.5     (6.6)%
        Operating earnings                          58.8       56.8      3.5%
        Interest expense, net of interest income    16.1       11.2    (43.8)%
        Income before income taxes                  42.7       45.6     (6.4)%
        Provision for income taxes                  16.3       17.8      8.4%
        Net income                                 $26.4      $27.8     (5.0)%
    
    
        Income per share:
            Basic                                   $.74       $.71      4.2%
            Diluted                                 $.74       $.70      5.7%
    
        Weighted average common shares:
            Basic                                   35.5       39.3     (9.7)%
            Diluted                                 35.8       39.9    (10.3)%
    
    
                                    DEAN FOODS COMPANY
                           CONDENSED CONSOLIDATED BALANCE SHEET
                                       (Unaudited)
                                      (In Millions)
    
                                                        August 27,     August 29,
                                                           2000            1999
                               ASSETS
        Current Assets:
          Cash and temporary cash investments              $29.7          $20.8
          Accounts and notes receivable, net of
           allowance for doubtful accounts                 326.3          295.4
          Inventories                                      229.2          210.0
          Other current assets                              86.9           90.9
    
            Total current assets                           672.1          617.1
    
        Property, Plant and Equipment, net                 889.9          773.8
    
        Other Assets                                       713.4          588.5
    
            Total Assets                                $2,275.4       $1,979.4
    
    
                LIABILITIES AND SHAREHOLDERS' EQUITY
        Current Liabilities:
          Current installments of long-term obligations     $3.4           $2.5
          Accounts payable and accrued expenses            429.1          397.7
          Dividends payable                                  8.1            8.7
          Federal and state income taxes                    56.8           47.5
    
            Total current liabilities                      497.4          456.4
    
        Long-Term Obligations                              964.5          657.8
    
        Deferred Liabilities                               136.2          128.2
    
        Shareholders' Equity                               677.3          737.0
    
            Total Liabilities and
             Shareholders' Equity                       $2,275.4       $1,979.4
    
    
                                    DEAN FOODS COMPANY
                               BUSINESS SEGMENT INFORMATION
                                  FOR THE QUARTERS ENDED
                           AUGUST 27, 2000 AND AUGUST 29, 1999
                                       (Unaudited)
                                      (In Millions)
    
        NEW SEGMENTS                              National
                                     Specialty  Refrigerated
                             Dairy     Foods      Products    Corp.  Consolidated
        Fiscal 2001
        Net sales           $788.8     $181.2      $84.3      $ -     $1,054.3
        Operating earnings   $41.7      $23.0       $4.3      $(10.2)    $58.8
    
    
        Fiscal 2000
        Net sales           $763.8     $170.6      $66.9      $ -     $1,001.3
        Operating earnings   $39.9      $20.2       $8.3      $(11.6)    $56.8
    
    
        PRIOR SEGMENTS
                             Dairy   Specialty    Pickles     Corp.  Consolidated
        Fiscal 2001
        Net sales           $846.6     $105.2     $102.5      $ -     $1,054.3
        Operating earnings   $43.2       13.1      $13.0      $(10.5)    $58.8
    
    
        Fiscal 2000
        Net sales           $806.2      $99.9      $95.2      $ -     $1,001.3
        Operating earnings   $42.9      $15.5      $10.2      $(11.8)    $56.8
    
    
    
                                  DEAN FOODS COMPANY
                     NEW BUSINESS SEGMENT HISTORICAL INFORMATION
                                     (Unaudited)
                           (In Millions, Except for ROS %)
    
                        Full Year               Fiscal Year 2000
                      Fiscal 1999 *    Q1       Q2       Q3      Q4**   Full Year
    
        Net Sales
          Dairy         $2,817.7    $763.8   $808.6  $739.7    $758.5  $3,070.6
          Specialty Foods  669.8     170.6    184.5   166.4     189.6     711.1
          National
           Refrigerated
            Products       267.6      66.9     73.9    70.7      72.4     283.9
          Consolidated  $3,755.1  $1,001.3 $1,067.0  $976.8  $1,020.5  $4,065.6
    
        Operating Earnings
          Dairy            $99.8     $39.9    $31.1   $32.3     $44.6    $147.9
          Specialty Foods   86.2      20.2     25.0    18.6      17.7      81.5
          National
           Refrigerated
            Products        20.5       8.3     10.0     9.7       9.5      37.5
          Corporate        (35.1)    (11.6)    (9.7)   (6.1)    (10.8)   (38.2)
          Consolidated    $171.4     $56.8    $56.4   $54.5     $61.0    $228.7
    
        ROS %
          Dairy             3.5%      5.2%     3.8%    4.4%      5.9%      4.8%
          Specialty Foods  12.9%     11.8%    13.6%   11.2%      9.3%     11.5%
          National
           Refrigerated
            Products        7.7%     12.4%    13.5%   13.7%     13.1%     13.2%
          Consolidated      4.6%      5.7%     5.3%    5.6%      6.0%      5.6%
    
        *     Fiscal 1999 excludes $18.1 million pre-tax plant closure charge
    recorded in the divisions as follows:
                               Dairy        $ 8.9
                          Specialty Foods        $ 9.2
    
        **    Fiscal 2000 excludes $6.1 million pre-tax plant closure charge in
    the Dairy Segment.
    
    SOURCE  Dean Foods Company
    
    

    Web site: http://www.deanfoods.com

    Company News On-Call: http://www.prnewswire.com/comp/109161.htmlor fax, 800-758-5804, ext. 109161

    CONTACT: Barb Klein, Vice President, Finance & CFO, or BillLuegers, Vice President and Treasurer, 847-678-1680, both of DeanFoods Company

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