Dean Foods Reports Strong Fourth Quarter And Full Year 2012 Results

--Q4 Diluted Earnings per Share of $0.20, Full Year 2012 Diluted Earnings per Share of $0.90

--Pro Forma Adjusted Diluted EPS increases 48 Percent in Q4 to $0.40, Full Year 2012 up 81 Percent to $1.39

--Affirms Plan to Spin-off Shares of The WhiteWave Foods Company in May 2013

--Announces Intention to Retain up to 19.9 Percent of the Outstanding WhiteWave Shares

Feb 13, 2013, 07:00 ET from Dean Foods Company

DALLAS, Feb. 13, 2013 /PRNewswire/ -- Dean Foods Company (NYSE: DF) today announced strong fourth quarter and full year 2012 results. The Company reported fourth quarter 2012 diluted earnings per share of $0.20, compared to a fourth quarter 2011 loss per share of $0.05. These financial results reflect both the initial public offering of The WhiteWave Foods Company in October 2012, which minority interest is now reflected as a non-controlling interest, and the sale in January 2013 of the Company's Morningstar business, which is now reflected in discontinued operations.  On a pro forma adjusted basis, including the Morningstar business in continuing operations and eliminating the non-controlling interest of The WhiteWave Foods Company that the Company does not own, as well as certain separation costs and certain other adjustments, fourth quarter 2012 adjusted diluted earnings per share were $0.40, a 48 percent increase from the $0.27 adjusted diluted earnings per share in the prior year's fourth quarter, and well above the Company's November 2012 guidance for the fourth quarter.

Fourth quarter consolidated operating income totaled $83 million, compared to a consolidated operating loss of $50 million in the fourth quarter of 2011. Pro forma adjusted fourth quarter consolidated operating income in 2012 totaled $157 million, a 16 percent increase from the $135 million reported in the fourth quarter of 2011.

"The fourth quarter marked the successful conclusion of a very strong year," said Gregg Tanner, Chief Executive Officer of Dean Foods. "At Fresh Dairy Direct, our employees are to be commended for the results they delivered through continued focus on the fundamentals of the business, including volume performance, cost control and effective pricing. In particular, the strong pricing discipline demonstrated by our FDD field organization in the face of a highly inflationary commodity environment resulted in significant outperformance compared to our expectations."

Net income attributable to Dean Foods totaled $37 million for the fourth quarter of 2012, compared to a net loss of $10 million in the prior year fourth quarter. Pro forma adjusted net income for the fourth quarter was $74 million, a 47 percent increase from $51 million in the fourth quarter of 2011.

Net sales for the fourth quarter of 2012 totaled $3.0 billion, compared to $2.9 billion of net sales in the fourth quarter of 2011, reflecting strong sales growth at WhiteWave and the pass-through of higher commodity costs at Fresh Dairy Direct.

FRESH DAIRY DIRECT

Fourth quarter Fresh Dairy Direct operating income was $106 million, as compared to $107 million in the fourth quarter of 2011. Fourth quarter Fresh Dairy Direct pro forma adjusted operating income was $102 million, a 2 percent increase from $99 million in the fourth quarter of 2011.

"Despite the challenging rise in costs in the back half of the year and fourth quarter in particular, fourth quarter gross profit per gallon was above third quarter and year ago levels," said Mr. Tanner. "These results demonstrate the benefits of our focused agenda, and begin to break the old paradigm that we are reliant on favorable commodity prices to perform."

While still down on a year-over-year basis, industry volume performance improved in the fourth quarter from earlier in 2012. On an adjusted basis, as defined by the USDA, which adjusts for the quality and number of days in the period, Fresh Dairy Direct fluid milk volumes declined 0.8 percent on a year-over-year basis. This compares to the balance of the industry that experienced a volume decline of approximately 0.9 percent on a year-over-year basis, based on USDA data and Company estimates.

The pass-through of higher year-over-year commodity costs resulted in Fresh Dairy Direct net sales of $2.42 billion, a 1.5 percent increase from $2.39 billion in net sales for the fourth quarter of 2011. The fourth quarter 2012 average Class I Mover, a measure of raw milk costs, was $20.32 per hundred-weight, an increase of 8 percent from the fourth quarter of 2011, and 23 percent above the third quarter 2012 level.

CORPORATE EXPENSE

Fourth quarter 2012 corporate expense totaled $56 million, compared to $48 million in the fourth quarter of 2011. On a pro forma adjusted basis, fourth quarter 2012 corporate costs were $40 million compared to $46 million in the year ago period.

CASH FLOW

Net cash provided by continuing operations, which excludes Morningstar, for the year ended December 31, 2012, totaled $384 million, compared to $412 million for the year ended December 31, 2011. Free cash flow provided by continuing operations, which is defined as net cash provided by continuing operations less capital expenditures, totaled $156 million for full year 2012, compared to $106 million in 2011. A reconciliation between net cash provided by continuing operations and free cash flow provided by continuing operations is provided in the tables below.

Capital expenditures in 2012, including Morningstar, totaled $254 million, compared to $326 million in 2011. Total debt outstanding, net of cash on hand, decreased by $634 million from year-ago levels. Consolidated total debt at December 31, 2012, net of $79 million cash on hand, was $3.0 billion. For purposes of credit facility compliance, at the Dean Foods level, which includes Morningstar but excludes WhiteWave, total debt at December 31, 2012, net of $25 million cash on hand, was $2.3 billion. The Company's funded debt to EBITDA ratio, as defined by its credit agreements, was 3.54 times as of the end of 2012 versus a maximum leverage ratio covenant of 5.50 times.

FORWARD OUTLOOK ON REBASED RESULTS

With strong 2012 results, a strengthened balance sheet and a narrowed strategic focus, Dean Foods enters 2013 with considerable momentum across many fronts, but also some challenges.  Management expects consolidated operating income growth in the low-to-mid single digits,  as compared to a rebased 2012 operating income of $257 million that reflects the anticipated future structure of the Company assuming a full separation of WhiteWave had occurred on January 1, 2012 and reflects the sale of Morningstar (see Rebase paragraph below). 

The Company's focus on volume, cost and pricing effectiveness has yielded significantly improved results and renewed momentum in the business. However, the fluid milk industry remains competitive. A recent RFP for private label milk with a significant Dean Foods customer resulted in a loss of a portion of that customer's business which will begin to be reflected in the second quarter of 2013. Dean Foods' management expects 2013 total fluid milk volume to decline in the low-single digits.

"Building on our successful cost reduction actions in 2012, we expect to dramatically accelerate our efforts to offset the financial impact of the recently lost volumes," continued Mr. Tanner. "Our primary focus for the balance of 2013 is on the elimination of costs, particularly fixed costs. With our significantly improved balance sheet, we anticipate expediting our ongoing cost reduction efforts, including the closing of 10-15% of our plants to remove fixed costs and eliminating a significant number of distribution routes, as well as associated SG&A.  As these initiatives gain traction, we expect the impact of the lost volumes on our operating income to be relatively modest."

Operating income at FDD is forecasted to decline in the mid-single digits from the rebased results. This decline is expected to be more than offset by substantially reduced corporate costs, resulting in a low-to-mid single digit increase in consolidated operating income compared to 2012's rebased results. The Company also noted that, with the completed sale of Morningstar and pending separation of WhiteWave from Dean Foods, the Company expects to consolidate the reporting of FDD and corporate in 2013.

Forward Outlook Excluding WhiteWave's Operating Results

Excluding WhiteWave's operating results, Dean Foods expects to deliver adjusted diluted earnings per share of between $0.45 and $0.55 for the full year 2013. For the first quarter, Dean Foods expects to earn between $0.10 and $0.15 per share, excluding WhiteWave's operating results.

Forward Outlook Including WhiteWave's Operating Results

(Assuming WhiteWave Achievement of Midpoint of Guidance)

Including its current WhiteWave ownership interest, and assuming that The WhiteWave Foods Company achieves $0.70 and $0.15 of adjusted diluted earnings per share for the full year 2013 and first quarter, respectively, each the midpoint of the adjusted diluted earnings per share guidance ranges that it announced today, Dean Foods' expects approximately $1.00 to $1.10 adjusted diluted earnings per share for the full year 2013 and  $0.22 to $0.27 adjusted diluted earnings per share per share for the first quarter of 2013.

REBASED 2012

In conjunction with today's earnings announcement, the Company provided a rebased view of 2012 results to provide investors a base for modeling the Company's business on a go-forward basis. The rebased results give effect to new cross-entity pricing arrangements among Dean Foods, WhiteWave and Morningstar. Additionally, the rebased view excludes Morningstar, which has been reclassified as discontinued operations as a result of the recent sale of the business. The rebased results also exclude WhiteWave, which is expected to be reclassified to discontinued operations concurrent with the planned spin-off of the majority of the equity interest in WhiteWave that Dean currently holds. The spin-off is expected to take place in May 2013. Allowing for these adjustments, 2012 Fresh Dairy Direct operating income is $440 million, corporate expense is $184 million, and adjusted consolidated operating income is $257 million. A more complete reconciliation of the rebased full year and quarterly results is provided in the schedules below.

THE WHITEWAVE FOODS COMPANY INITIAL PUBLIC OFFERING AND PLANNED SPIN-OFF BY DEAN FOODS

On October 31, 2012, The WhiteWave Foods Company, formerly a wholly-owned subsidiary of Dean Foods that owns the business comprising Dean Foods' WhiteWave segment, completed its initial public offering of 23 million shares of its Class A common stock at a price to the public of $17.00 per share (the "WhiteWave IPO"). WhiteWave's Class A common stock began trading on the New York Stock Exchange on October 26, 2012, under the symbol "WWAV". In addition, in connection with the WhiteWave IPO, WhiteWave entered into a $1.35 billion senior secured credit facility under which it borrowed approximately $885 million upon completion of the WhiteWave IPO. Substantially all of the net proceeds of the initial borrowing under the WhiteWave senior secured credit facility plus $282 million of the net proceeds of the WhiteWave IPO were used to repay approximately $1.16 billion of indebtedness outstanding under the Dean Foods senior secured credit facility. WhiteWave used the remaining net proceeds from the WhiteWave IPO of approximately $86 million to repay debt under its senior secured credit facility.

Following the WhiteWave IPO, Dean Foods continues to own approximately 86.7 percent of the economic interest in, and approximately 98.5 percent of the voting power of, WhiteWave's common stock. 

Today, Dean Foods affirmed its intention to effect a tax-free spin-off of shares of The WhiteWave Foods Company in May, following the April 23, 2013 expiration of its IPO lock-up period. The Company has received a private letter ruling from the Internal Revenue Service providing that, subject to certain conditions, the anticipated spin-off will be tax-free for U.S. federal income tax purposes. Dean Foods also announced plans to retain up to 19.9% of the outstanding WhiteWave shares, or up to 34.4 million shares, with the intention to monetize or distribute the position in a tax free manner at a later date. 

The spin-off or other disposition is subject to various conditions including Board approval, the receipt of any necessary regulatory or other approvals, the maintenance of the private letter ruling from the Internal Revenue Service, and the existence of satisfactory market conditions. There can be no assurance as to when or whether the proposed spin-off or any other disposition will occur.

Following any spin-off or other disposition, Dean Foods anticipates that there will be ongoing commercial relationships between Dean Foods and WhiteWave. In addition, Dean Foods and WhiteWave will provide certain transitional services to each other.

MORNINGSTAR SALE

On December 3, 2012, Dean Foods announced an agreement to sell its Morningstar division to Saputo for $1.45 billion in gross proceeds. The transaction closed on January 3, 2013. Dean Foods management expects the transaction to result in at least $887 million of net proceeds, after taxes and expenses, including transaction costs, as well as $60 million paid to WhiteWave in exchange for certain assets. All proceeds have been used to repay Dean Foods' outstanding term debt. Tax payments related to the transaction will begin in the second quarter of 2013, with additional payments in the third and fourth quarters of 2013.

CONFERENCE CALL/WEBCAST

A webcast to discuss the Company's financial results and outlook will be held at 10:30 a.m. ET today and may be heard live by visiting the "Webcast" section of the Company's website at http://www.deanfoods.com/. A slide presentation will accompany the webcast.

ABOUT DEAN FOODS

Dean Foods is a leading food and beverage company in the United States. The Company's Fresh Dairy Direct segment is the nation's largest processor and direct-to-store distributor of fluid milk marketed under more than 50 local and regional dairy brands and private labels. Fresh Dairy Direct also distributes ice cream, cultured products, juices, teas, bottled water and other products. Dean Foods also holds a majority interest in The WhiteWave Foods Company, which produces and sells an array of nationally and internationally branded plant-based foods and beverages, coffee creamers and beverages, and premium dairy products. WhiteWave brands - including Silk®, Horizon Organic®, International Delight®, and LAND O LAKES® - are category leaders and consumer favorites. Alpro is the pan-European leader in branded soy food and beverage products with the Alpro® soya and Provamel® brands. For more information about Dean Foods, visit www.deanfoods.com.

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 Private Securities Litigation Reform Act of 1995. These "forward-looking" statements include statements relating to, among other things, projected sales, operating income, net income, adjusted diluted earnings per share, debt covenant compliance, cost reduction strategies, divestitures, and expected financial performance, the status of the Company's litigation matters, and any potential spin-off or other disposition of the Company's remaining ownership interest in The WhiteWave Foods Company. 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 cost reductions, sales, operating income, net income and earnings per share depends on a variety of economic, competitive and governmental factors, including raw material availability and costs, the demand for the Company's products, and the Company's ability to access capital under its credit facilities or otherwise, many of which are beyond the Company's control and which are described in the Company's filings with the Securities and Exchange Commission. Any spin-off or other disposition of the Company's remaining ownership interest in The WhiteWave Foods Company would be subject to various conditions, including the receipt of any necessary regulatory or other approvals, the existence of satisfactory market conditions and Board approval, and, in the case of a tax-free spin-off or other tax-free disposition, the Company's maintenance of the private letter ruling from the Internal Revenue Service. For other risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see the "Risk Factors" section of the Company's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC. 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: Corporate Communications, Jamaison Schuler, +1-214-721-7766; or Investor Relations, Barry Sievert, +1-214-303-3438

 

 DEAN FOODS COMPANY 

 Condensed Consolidated Statements of Operations 

 (Unaudited) 

 (In thousands, except share data) 

 GAAP 

 Proforma Adjusted* 

 Three months ended 

 Three months ended 

December 31,

December 31,          

2012

2011

2012

2011

 Net sales 

$      3,041,354

$      2,928,967

$      3,417,798

 (h) (i) 

$      3,296,034

 (h) (i) 

 Cost of sales 

2,312,995

2,224,212

2,620,363

 (h) (i) 

2,529,556

 (h) (i) 

 Gross profit 

728,359

704,755

797,435

766,478

 Operating costs and expenses: 

 Selling and distribution  

476,266

463,602

501,612

 (h) (i) 

487,170

 (h) (i) 

 General and administrative  

150,210

136,423

136,641

 (b) (h) (i) 

142,370

 (h) (i) 

 Amortization of intangibles 

1,587

1,849

2,318

 (h) 

2,580

 (h) 

 Facility closing and reorganization costs 

18,055

3,536

-

 (d) 

-

 (d) 

 Goodwill impairment 

-

149,836

-

-

 (f) 

 Other operating (income) loss 

(1,120)

8

-

 (a) 

-

 (a) 

 Loss attributable to non-controlling interest in Hero JV 

-

-

-

(594)

 (g) 

 Total operating costs and expenses 

644,998

755,254

640,570

631,526

 Operating income (loss) 

83,361

(50,499)

156,865

134,952

 Interest expense 

38,791

45,958

53,869

 (e) (h) (i) 

60,465

 (e) (h) 

 Other (income) loss, net 

206

(746)

(944)

 (i) 

(746)

 Income (loss) from continuing operations before 

 income taxes 

44,364

(95,711)

103,940

75,233

 Income tax expense (benefit) 

9,273

(74,733)

29,573

 (j) 

24,600

 (j) 

 Income (loss) from continuing operations 

35,091

(20,978)

74,367

50,633

 Gain on sale of discontinued operations, net of tax 

405

-

-

 (a) 

-

 Income from discontinued operations, net of tax 

3,932

10,479

-

 (b) (h) 

-

 (h) (a) 

 Net income (loss) 

39,428

(10,499)

74,367

50,633

 Net (income) loss attributable to non-controlling interest 

(2,419)

625

-

 (i) 

-

 (g) 

 Net income (loss) attributable to Dean Foods Company     

$           37,009

$            (9,874)

$           74,367

$           50,633

 Average common shares: 

 Basic 

185,341

183,711

185,341

183,711

 Diluted 

186,984

183,711

186,984

184,468

 (k) 

Basic earnings (loss) per common share:

Income (loss) from continuing operations attributable to Dean Foods Company 

$               0.18

$              (0.11)

$               0.40

$               0.28

Income from discontinued operations attributable to Dean Foods Company 

0.02

0.06

-

-

Net income (loss) attributable to Dean Foods Company

$               0.20

$              (0.05)

$               0.40

$               0.28

Diluted earnings (loss) per common share:

Income (loss) from continuing operations attributable to Dean Foods Company 

$               0.18

$              (0.11)

$               0.40

$               0.27

Income from discontinued operations attributable to Dean Foods Company 

0.02

0.06

-

-

Net income (loss) attributable to Dean Foods Company

$               0.20

$              (0.05)

$               0.40

$               0.27

 * See notes to Earnings Release Tables 

 

 

DEAN FOODS COMPANY

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share data)

GAAP

Proforma Adjusted*

Twelve months ended

Twelve months ended

December 31,

December 31,

2012

2011

2012

2011

Net sales

$ 11,462,277

$ 11,641,191

$ 12,900,648

(h) (i)

$ 13,055,493

(h) (i)

Cost of sales

8,562,279

8,861,574

9,722,500

(a) (h) (i)

10,037,907

(h) (i)

Gross profit

2,899,998

2,779,617

3,178,148

3,017,586

Operating costs and expenses:

Selling and distribution

1,912,588

1,878,372

2,006,178

(h) (i)

1,963,748

(h) (i)

General and administrative

555,012

585,288

552,205

(b) (h) (i)

585,604

(a) (c) (h) (i)

Amortization of intangibles

6,283

7,616

9,206

(h)

10,539

(h)

Facility closing and reorganization costs

55,787

45,688

-

(d)

-

(d)

Litigation settlements

-

131,300

-

-

(e)

Goodwill impairment

-

2,075,836

-

-

(f)

Other operating (income) loss

(57,459)

6,561

-

(a)

-

(a)

Loss attributable to non-controlling interest in Hero JV

-

-

-

(6,217)

(g)

Total operating costs and expenses

2,472,211

4,730,661

2,567,588

2,553,674

Operating income (loss)

427,787

(1,951,044)

610,560

463,912

Interest expense

164,572

190,912

218,479

(e) (h) (i)

251,251

(e) (h)

Other income, net

(707)

(1,915)

(1,857)

(i)

(1,915)

Income (loss) from continuing operations before

income taxes

263,922

(2,140,041)

393,938

214,576

Income tax expense (benefit)

137,633

(489,588)

135,461

(j)

73,599

(j)

Income (loss) from continuing operations

126,289

(1,650,453)

258,477

140,977

Gain (loss) on sale of discontinued operations, net of tax

(2,053)

3,616

-

(a)

-

(a)

Income from discontinued operations, net of tax

45,681

54,666

-

(b) (d) (h)

-

(a) (h)

Net income (loss)

169,917

(1,592,171)

258,477

140,977

Net (income) loss attributable to non-controlling interest

(2,419)

16,550

-

(i)

-

(g)

Net income (loss) attributable to Dean Foods Company

$ 167,498

$ (1,575,621)

$ 258,477

$ 140,977

Average common shares:

Basic

184,751

183,388

184,751

183,388

Diluted

186,132

183,388

186,132

184,280

(k)

Basic earnings (loss) per common share:

Income (loss) from continuing operations attributable to Dean Foods Company

$ 0.67

$ (8.91)

$ 1.40

$ 0.77

Income from discontinued operations attributable to Dean Foods Company

0.24

0.32

-

-

Net income (loss) attributable to Dean Foods Company

$ 0.91

$ (8.59)

$ 1.40

$ 0.77

-

-

-

-

Diluted earnings (loss) per common share:

Income (loss) from continuing operations attributable to Dean Foods Company

$ 0.67

$ (8.91)

$ 1.39

$ 0.77

Income (loss) from continuing operations attributable to Dean Foods Company

0.23

0.32

-

-

Net income (loss) attributable to Dean Foods Company

$ 0.90

$ (8.59)

$ 1.39

$ 0.77

* See notes to Earnings Release Tables

DEAN FOODS COMPANY

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

December 31,

December 31,

ASSETS

2012

2011

Cash and cash equivalents

$ 78,975

$ 115,650

Assets of discontinued operations*

672,989

668,673

Other current assets

1,450,814

1,454,385

Total current assets

2,202,778

2,238,708

Property, plant and equipment, net

1,873,279

1,936,235

Intangibles and other assets, net

1,612,108

1,580,224

Total Assets

$ 5,688,165

$ 5,755,167

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Liabilities of discontinued operations*

$ 101,332

$ 133,202

Other current liabilities, excluding debt

1,214,127

1,188,555

Total current liabilities, excluding debt

1,315,459

1,321,757

Total long-term debt, including current portion

3,102,793

3,743,927

Other long-term liabilities

802,984

788,134

Total Dean Foods Company stockholders' equity (deficit)

364,488

(103,398)

Non-controlling interest

102,441

4,747

Total stockholders' equity (deficit)

466,929

(98,651)

Total Liabilities and Stockholders' Equity (Deficit)

$ 5,688,165

$ 5,755,167

*Related to Morningstar discontinued operations

DEAN FOODS COMPANY

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Twelve months ended December 31,

Operating Activities

2012

2011

    Net cash provided by continuing  operations

$ 384,321

$ 411,657

    Net cash provided by discontinued operations

56,221

53,687

    Net cash provided by operating activities

440,542

465,344

Investing Activities

Payments for property, plant and equipment

(228,083)

(305,167)

Cash proceeds from insurance and other recoveries

7,481

786

Proceeds from divestitures

58,034

91,958

Proceeds from sale of fixed assets

14,465

7,361

Other, net

(1,244)

-

    Net cash used in investing activities - continuing operations

(149,347)

(205,062)

    Net cash provided by (used in) investing activities - discontinued operations

(24,831)

76,802

    Net cash used in investing activities

(174,178)

(128,260)

Financing Activities

Net repayment of debt

(642,835)

(324,777)

Payment of deferred financing costs

(12,278)

(600)

Proceed from sale of subsidiary shares in initial public offering, net of offering expenses

367,540

-

Issuance of common stock, net of share repurchases

6,434

3,623

Capital contribution from non-controlling interest

-

6,754

Other

571

33

    Net cash used in financing activities - continuing operations

(280,568)

(314,967)

    Net cash provided (used) by financing activities - discontinued operations

(21,895)

21,369

    Net cash used in financing activities

(302,463)

(293,598)

    Effect of exchange rate changes on cash and cash equivalents

(576)

(4,588)

Increase (decrease) in cash and cash equivalents

(36,675)

38,898

Cash and cash equivalents, beginning of period

115,650

76,752

Cash and cash equivalents, end of period

$ 78,975

$ 115,650

Computation of Free Cash Flow provided by continuing operations

Net cash provided by continuing operations

$ 384,321

$ 411,657

Net additions to property, plant and equipment

(228,083)

(305,167)

    Free cash flow provided by continuing operations

$ 156,238

$ 106,490

DEAN FOODS COMPANY

Segment Information and Reconciliation of GAAP to Proforma Adjusted Earnings

(Unaudited)

(In thousands, except per share data)

Three months ended

December 31, 2012

Adjustments to GAAP

Proforma Adjustments

Asset write-down and (gain) loss on sale of assets

Deal, integration and separation costs

Facility closing & reorganization costs

Litigation settlements

Goodwill impairment

Non-controlling interest in Hero JV

Morningstar sale

WhiteWave separation activities

Proforma

GAAP

(a)

(b)

(d)

(e)

(f)

(g)

(h)

(i)

adjusted

Segment operating income (loss):

Fresh Dairy Direct

$ 105,757

$ -

$ -

$ -

$ -

$ -

$ -

$ -

$ (4,080)

$ 101,677

Morningstar

-

-

-

-

-

-

-

30,238

-

30,238

WhiteWave

50,042

-

1,085

-

-

-

-

5,037

8,599

64,763

Corporate

(55,503)

-

12,654

-

-

-

-

6,608

(3,572)

(39,813)

Facility closing and reorganization costs

(18,055)

-

-

18,055

-

-

-

-

-

-

Other income

1,120

(1,120)

-

-

-

-

-

-

-

-

Total operating income

$ 83,361

$ (1,120)

$ 13,739

$ 18,055

$ -

$ -

$ -

$ 41,883

$ 947

$ 156,865

-

-

Net income from continuing operations (j)

$ 35,091

$ (674)

$ 8,505

$ 11,359

$ 334

$ -

$ -

$ 19,001

$ 751

$ 74,367

Income from discontinued operations, net of tax

4,337

(405)

15,069

-

-

-

-

(19,001)

-

-

Net income attributable to non-controlling interest

(2,419)

-

-

-

-

-

-

-

2,419

-

Net income attributable to Dean Foods Company (j)

$ 37,009

$ (1,079)

$ 23,574

$ 11,359

$ 334

$ -

$ -

$ -

$ 3,170

$ 74,367

-

-

Diluted earnings per share

$ 0.20

$ (0.01)

$ 0.13

$ 0.06

$ -

$ -

$ -

$ -

$ 0.02

$ 0.40

-

-

Three months ended

December 31, 2011

Adjustments to GAAP

Proforma Adjustments

Asset write-down and (gain) loss on sale of assets

Deal, integration and separation costs

Facility closing & reorganization costs

Litigation settlements

Goodwill impairment

Non-controlling interest in Hero JV

Morningstar sale

WhiteWave separation activities

Proforma

GAAP

(a)

(b)

(d)

(e)

(f)

(g)

(h)

(i)

adjusted

Segment operating income (loss):

Fresh Dairy Direct

$ 106,629

$ -

$ -

$ -

$ -

$ -

$ -

$ -

$ (7,245)

$ 99,384

Morningstar

-

-

-

-

-

-

-

23,040

-

23,040

WhiteWave

44,361

-

-

-

-

-

594

6,344

7,245

58,544

Corporate

(48,109)

-

-

-

-

-

-

2,093

-

(46,016)

Facility closing and reorganization costs

(3,536)

-

-

3,536

-

-

-

-

-

-

Goodwill impairment

(149,836)

-

-

-

-

149,836

-

-

-

-

Other income (loss)

(8)

8

-

-

-

-

-

-

-

-

Total operating income (loss)

$ (50,499)

$ 8

$ -

$ 3,536

$ -

$ 149,836

$ 594

$ 31,477

$ -

$ 134,952

-

-

Net income (loss) from continuing operations (j)

$ (20,978)

$ 7

$ -

$ 2,245

$ 547

$ 57,891

$ 625

$ 10,296

$ -

$ 50,633

Income from discontinued operations, net of tax

10,479

(183)

-

-

-

-

-

(10,296)

-

-

Net loss attributable to non-controlling interest

625

-

-

-

-

-

(625)

-

-

-

Net income (loss) attributable to Dean Foods Company (j)

$ (9,874)

$ (176)

$ -

$ 2,245

$ 547

$ 57,891

$ -

$ -

$ -

$ 50,633

-

-

Diluted earnings (loss) per share (k)

$ (0.05)

$ -

$ -

$ 0.01

$ -

$ 0.31

$ -

$ -

$ -

$ 0.27

-

-

* See notes to Earnings Release Tables

DEAN FOODS COMPANY

Segment Information and Reconciliation of GAAP to Proforma Adjusted Earnings

(Unaudited)

(In thousands, except per share data)

Twelve months ended

December 31, 2012

Adjustments to GAAP

Proforma Adjustments

Asset write-down and (gain) loss on sale of assets

Deal, integration and separation costs

Postretirement benefits adjustment

Facility closing & reorganization costs

Litigation settlements

Goodwill impairment

Non-controlling interest in Hero JV

Morningstar sale

WhiteWave separation activities

Proforma

GAAP

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

adjusted

Segment operating income (loss):

Fresh Dairy Direct

$ 446,451

$ 5,983

$ -

$ -

$ -

$ -

$ -

$ -

$ -

$ (24,660)

$ 427,774

Morningstar

-

-

-

-

-

-

-

-

121,752

-

121,752

WhiteWave

192,557

-

1,085

-

-

-

-

-

24,153

29,179

246,974

Corporate

(212,893)

-

24,654

-

-

-

-

-

5,871

(3,572)

(185,940)

Facility closing and reorganization costs

(55,787)

-

-

-

55,787

-

-

-

-

-

-

Litigation settlements

-

-

-

-

-

-

-

-

-

-

-

Goodwill impairment

-

-

-

-

-

-

-

-

-

-

-

Other income

57,459

(57,459)

-

-

-

-

-

-

-

-

-

Total operating income

$ 427,787

$ (51,476)

$ 25,739

$ -

$ 55,787

$ -

$ -

$ -

$ 151,776

$ 947

$ 610,560

-

-

Net income from continuing operations (j)

$ 126,289

$ 14,436

$ 16,231

$ -

$ 35,918

$ 1,764

$ -

$ -

$ 63,087

$ 751

$ 258,476

Income from discontinued operations, net of tax

43,628

2,053

15,069

-

2,337

-

-

-

(63,087)

-

-

Net income attributable to non-controlling interest

(2,419)

-

-

-

-

-

-

-

-

2,419

-

Net income attributable to Dean Foods Company (j)

$ 167,498

$ 16,489

$ 31,300

$ -

$ 38,255

$ 1,764

$ -

$ -

$ -

$ 3,170

$ 258,476

-

-

Diluted earnings per share

$ 0.90

$ 0.09

$ 0.17

$ -

$ 0.20

$ 0.01

$ -

$ -

$ -

$ 0.02

$ 1.39

-

-

Twelve months ended

December 31, 2011

                                            Adjustments to GAAP

Proforma Adjustments

Asset write-down and (gain) loss on sale of assets

Deal, integration and separation costs

Postretirement benefits adjustment

Facility closing & reorganization costs

Litigation settlements

Goodwill impairment

Non-controlling interest in Hero JV

Morningstar sale

WhiteWave separation activities

Proforma

GAAP

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

adjusted

Segment operating income (loss):

Fresh Dairy Direct

$ 378,493

$ -

$ -

$ -

$ -

$ -

$ -

$ -

$ -

$ (29,005)

$ 349,488

Morningstar

-

-

-

-

-

-

-

-

95,404

-

95,404

WhiteWave

148,595

-

-

-

-

-

-

6,217

22,073

29,005

205,890

Corporate

(218,747)

8,092

-

15,172

-

-

-

-

8,613

-

(186,870)

Facility closing and reorganization costs

(45,688)

-

-

-

45,688

-

-

-

-

-

-

Litigation settlements

(131,300)

-

-

-

-

131,300

-

-

-

-

-

Goodwill impairment

(2,075,836)

-

-

-

-

-

2,075,836

-

-

-

-

Other income (loss)

(6,561)

6,561

-

-

-

-

-

-

-

-

-

Total operating income (loss)

$ (1,951,044)

$ 14,653

$ -

$ 15,172

$ 45,688

$ 131,300

$ 2,075,836

$ 6,217

$ 126,090

$ -

$ 463,912

-

-

Net income (loss) from continuing operations (j)

$ (1,650,453)

$ 3,046

$ -

$ 9,769

$ 29,259

$ 85,632

$ 1,607,891

$ 16,550

$ 39,283

$ -

$ 140,977

Income from discontinued operations, net of tax

58,282

(18,999)

-

-

-

-

-

-

(39,283)

-

-

Net loss attributable to non-controlling interest

16,550

-

-

-

-

-

-

(16,550)

-

-

-

Net income (loss) attributable to Dean Foods Company (j)

$ (1,575,621)

$ (15,953)

$ -

$ 9,769

$ 29,259

$ 85,632

$ 1,607,891

$ -

$ -

$ -

$ 140,977

-

-

Diluted earnings (loss) per share (k)

$ (8.59)

$ (0.09)

$ -

$ 0.05

$ 0.16

$ 0.47

$ 8.77

$ -

$ -

$ -

$ 0.77

-

-

* See notes to Earnings Release Tables

 DEAN FOODS COMPANY 

 2012 Proforma to 2012 Rebased 

 (Unaudited) 

 (In thousands) 

 Note:  The purpose of this chart is to recast 2012 results to reflect the ongoing operating structure of Dean Foods post Morningstar divestiture and WhiteWave spin-off 

 Three months ended 

March 31, 2012

Proforma to Rebased 

 2012 Proforma Adjusted 

 New Commercial Agreements 

 Morningstar Discontinued Operations 

 WhiteWave Spin-off 

2012 Rebased

(1)

(2)

 Segment operating income (loss): 

 Fresh Dairy Direct 

$         101,196

$             2,719

$                    -

$                    -

$         103,915

 Corporate 

(38,428)

-

(1,301)

1,911

(37,818)

 Total operating income - ongoing 

62,768

2,719

(1,301)

1,911

66,097

 WhiteWave 

60,310

(5,234)

-

(55,076)

-

 Morningstar 

28,750

2,515

(31,265)

-

 Total operating income 

$         151,828

$                    -

$         (32,566)

$         (53,165)

$           66,097

 Three months ended 

June 30, 2012

Proforma to Rebased 

 2012 Proforma Adjusted 

 New Commercial Agreements 

 Morningstar Discontinued Operations 

 WhiteWave Spin-off 

2012 Rebased

(1)

(2)

 Segment operating income (loss): 

 Fresh Dairy Direct 

$         125,205

$             2,732

$                    -

$                    -

$         127,937

 Corporate 

(58,530)

-

(1,180)

2,458

(57,252)

 Total operating income - ongoing 

66,675

2,732

(1,180)

2,458

70,685

 WhiteWave 

57,695

(5,988)

-

(51,707)

-

 Morningstar 

32,171

3,256

(35,427)

-

 Total operating income 

$         156,541

$                    -

$         (36,607)

$         (49,249)

$           70,685

 Three months ended 

September 30, 2012

Proforma to Rebased 

 2012 Proforma Adjusted 

 New Commercial Agreements 

 Morningstar Discontinued Operations 

 WhiteWave Spin-off 

2012 Rebased

(1)

(2)

 Segment operating income (loss): 

 Fresh Dairy Direct 

$           99,696

$             4,386

$                    -

$                    -

$         104,082

 Corporate 

(49,169)

-

(1,282)

3,199

(47,252)

 Total operating income - ongoing 

50,527

4,386

(1,282)

3,199

56,830

 WhiteWave 

64,206

(6,507)

-

(57,699)

-

 Morningstar 

30,593

2,121

(32,714)

-

 Total operating income 

$         145,326

$                    -

$         (33,996)

$         (54,500)

$           56,830

 Three months ended 

December 31, 2012

Proforma to Rebased 

 2012 Proforma Adjusted 

 New Commercial Agreements 

 Morningstar Discontinued Operations 

 WhiteWave Spin-off 

2012 Rebased

(1)

(2)

 Segment operating income (loss): 

 Fresh Dairy Direct 

$         101,677

$             2,580

$                    -

$                    -

$         104,257

 Corporate 

(39,813)

-

(2,108)

647

(41,274)

 Total operating income - ongoing 

61,864

2,580

(2,108)

647

62,983

 WhiteWave 

64,763

(6,254)

-

(58,509)

-

 Morningstar 

30,238

3,674

(33,912)

-

 Total operating income 

$         156,865

$                    -

$         (36,020)

$         (57,862)

$           62,983

 (1)  Morningstar Discontinued Operations upon sale 

 (2)  WhiteWave to be Discontinued Operations upon spin-off 

 Twelve months ended