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Dean Foods Company : Dean Foods Reports Strong First Quarter Results

05/09/2012 | 08:05am US/Eastern

DALLAS, May 9, 2012 /PRNewswire/ -- Dean Foods Company (NYSE: DF) today announced strong first quarter results driven by solid growth across all operating segments, and supported by tight expense control. The Company reported first quarter 2012 earnings of $0.20 per diluted share, compared to first quarter 2011 earnings of $0.14 per diluted share. On an adjusted basis, first quarter 2012 diluted earnings per share were $0.31, a 121% increase from the $0.14 per diluted share earned in the prior year's first quarter.

First quarter consolidated operating income totaled $123 million, compared to consolidated operating income of $106 million in the first quarter of 2011. Adjusted first quarter consolidated operating income totaled $152 million, a 42% increase compared to $107 million reported in the first quarter of 2011.

"Today we announced strong first quarter results, driven by stronger than forecasted growth across each of our three operating segments, and supported by tight expense control across the business," said Gregg Engles, Chairman and CEO. "As a result, consolidated adjusted operating income increased 42% above year ago levels.

"Our financial performance was further bolstered by declining interest expense, resulting in first quarter adjusted diluted earnings per share of $0.31, more than double the previous year and the sixth straight quarter we have delivered adjusted EPS at or above our guidance."

Net income attributable to Dean Foods totaled $38 million, compared to net income of $25 million in the prior year's first quarter. Adjusted net income for the first quarter was $57 million, a 129% increase from $25 million in the first quarter of 2011.

Net sales for the first quarter totaled $3.2 billion, compared to $3.0 billion of net sales in the first quarter of 2011.

                                      Summary of Dean Foods First Quarter 2012 Operating Results
                                      ----------------------------------------------------------

                                                                   Q1 2012
                                                                       $ millions                  Y/Y
                                                                (except EPS)                     Change
                                                                 -----------                     ------

     Consolidated Adjusted
     Operating Income      $152              +42%

     Adjusted Interest
     Expense                      $60                 -8%

     Consolidated
     Adjusted Net Income          $57               +129%

     Adjusted Diluted
     Earnings per Share         $0.31               +121%

WHITEWAVE - ALPRO
For the first quarter of 2012, the WhiteWave-Alpro segment reported net sales of $571 million, 13% higher than first quarter 2011 net sales of $507 million, and the highest net sales in the history of the segment. Strong category growth, and continued investment in brand building, innovation, and marketing drove the first quarter performance.

                             First Quarter 2012 WhiteWave-Alpro Summary
                             ------------------------------------------

                                                  Q1 2012                 Y/Y
                                                      $ millions        Change
                                                      ----------        ------
     Net Sales        $571           +13%

     Operating Income    $60           +31%

Among the product categories at WhiteWave-Alpro, sales in the Coffee Creamers and Beverages platform increased more than 20% in the first quarter, driven by strong International Delight creamers sales and augmented by the rollout of new iced coffee products. The Coffee Creamers and Beverages platform includes coffee creamers under the International Delight®, Land O'Lakes®, Silk® and Horizon Organic® brands, as well as International Delight Iced Coffee. Sales of Plant-based Beverages, which includes Silk® soy, almond and coconut milk products, also increased more than 20% in the first quarter on accelerating growth of Silk PureAlmond®. Sales of Value-Added Dairy, which includes Horizon Organic® branded milk and other products, increased mid-single digits as mild winter weather resulted in higher organic raw milk supply than initially forecasted and price increases to offset higher milk costs were put into the marketplace. Alpro net sales increased mid-single digits in the first quarter on a Euro basis and were approximately flat after currency translation.

A culture of efficiency and expense control at WhiteWave-Alpro leveraged 13% top-line growth to 31% operating income growth in the first quarter. For the quarter, WhiteWave-Alpro operating income was $60 million, versus $46 million in the first quarter of 2011.

FRESH DAIRY DIRECT

                                                           First Quarter 2012 Fresh Dairy Direct Summary
                                                           ---------------------------------------------


                                                                                                           Y/Y
                                                                                 Q1 2012                 Change
                                                                                 -------                 ------

     Fluid Milk Volume                                         --                             +0.4%
      Fluid Milk Volume,
      adjusted*                                                --                             +1.8%

      Operating Income ($
      millions)                             $101                    +18%

      *adjusted to exclude the estimated impact of the September
      2011 Waukesha, WI plant divestiture

A more favorable commodity environment and a continued focus on the fundamentals of cost reduction, price realization, and sales volume growth led to a strong quarterly performance at Fresh Dairy Direct. For the first quarter, Fresh Dairy Direct fluid milk volumes increased 0.4% on a year-over-year basis. This compares to the balance of the industry that experienced a volume decline of approximately 2.9% on a year-over-year basis, based on USDA data and company estimates. Excluding the estimated impact of the September 2011 divestiture of the Waukesha facility, Fresh Dairy Direct fluid milk volumes increased 1.8% in the first quarter of 2012.

The pass-through of higher average commodity costs and volume growth resulted in Fresh Dairy Direct net sales of $2.3 billion, a 4% increase from $2.2 billion in net sales for the first quarter of 2011. The first quarter 2012 average Class I Mover, a measure of raw milk costs, was $17.38 per hundred-weight, an increase of 6% over the first quarter of 2011, but a decrease of 8% from the fourth quarter of 2011.

First quarter Fresh Dairy Direct operating income was $101 million, an 18% increase from the $86 million in the first quarter of 2011.

MORNINGSTAR

                                                    First Quarter 2012 Morningstar Summary
                                                    --------------------------------------

                                                                                             Y/Y
                                                                      Q1 2012              Change
                                                                      -------              ------

     Volume                                    --        flat

     Volume, adjusted*                           --           +16%

      Operating Income ($
      millions)                              $29           +13%

      *adjusted to exclude the estimated impact of
      April 2011 yogurt divestiture

First quarter Morningstar volumes were essentially flat, reflecting strong core volume sales across both retail and foodservice channels, offset by the impact of the April 2011 divestiture of its yogurt business. Excluding the impact of the divestiture, first quarter 2012 Morningstar volume increased 16% from the first quarter of 2011, reflecting the Company's continued success in partnering with winning customers to drive growth. Volumes were also supported by warmer weather, which helped drive ice cream mix sales.

Core volume growth and a more favorable commodity environment drove Morningstar net sales of $325 million, a 5% increase over the prior year first quarter, despite the April 2011 divestiture of its yogurt business. Morningstar operating income increased 13% in the first quarter to $29 million, from $25 million in the first quarter of 2011.

CORPORATE EXPENSE
Managements' efforts to reduce SG&A expense resulted in a significant decline in Corporate expense in the quarter. First quarter 2012 Corporate expense totaled $38 million, compared to $60 million in the year ago period. First quarter 2012 adjusted Corporate expense totaled $38 million, a 27% decline from the $53 million reported in the first quarter of 2011.

CASH FLOW
Net cash provided by continuing operations for the quarter ended March 31, 2012 totaled $3 million, compared to $37 million in the first quarter of 2011. Free cash flow used in operations, which is defined as net cash provided by continuing operations less capital expenditures, was $41 million, compared to $3 million in the first quarter of 2011. Management expects positive free cash flow throughout the balance of the year. A reconciliation between net cash provided by continuing operations and free cash flow used in continuing operations is included below.

Capital expenditures for the first quarter of 2012 totaled $45 million, compared to $40 million in the year ago period. During the quarter, total debt outstanding, net of cash on hand, increased by $36 million to $3.7 billion. The increase in net debt in the quarter is largely due to litigation settlement payments and a small increase in working capital. The Company's funded debt to EBITDA ratio, as defined by its credit agreements, declined to 4.41x as of the end of the first quarter versus a maximum leverage covenant ratio of 5.5x. Management continues to focus on reducing its overall leverage and now expects Dean Foods leverage ratio to be at or below 4.0x by year end.

FORWARD OUTLOOK
"Given our significant momentum in the first quarter, the cautious optimism that we expressed last quarter has turned less cautious," continued Engles. "All three operating segments performed well in the first quarter, and we expect strong full year growth across the business.

"At WhiteWave-Alpro, first quarter top-line growth accelerated behind strength in our core products as well as strong early consumer interest in our new product introductions. Looking ahead, we expect continued solid top and bottom-line growth. Our Dallas plant start-up costs and marketing spend in support of new product launches will increase in the second quarter from the first quarter. Given the first quarter's strong performance, however, we now expect full-year WhiteWave-Alpro operating income growth to be in the high-teens.

"Fresh Dairy Direct continued to outperform the industry from a volume perspective. This, combined with price realization and cost reductions, resulted in strong first quarter profit growth for FDD. Looking ahead, we will continue to focus on the fundamentals of the business: volume, price realization, and cost reduction. With our outlook for a relatively more stable commodity environment through 2012, we expect continued strong growth for the second quarter and the full year. For the full year, we expect low-teens operating income growth for Fresh Dairy Direct.

"Morningstar's balanced business across foodservice and retail also produced solid first quarter results as we continue to partner with winning customers. Given Morningstar's strong start, we expect full year operating income growth in the mid-teens.

"In light of our more favorable operating outlook, our expectations for continued SG&A savings, and lower interest expense over the balance of the year, we expect second quarter adjusted earnings per share of $0.28- $0.33. We are also increasing our full year guidance to a range of $1.10-$1.20 in adjusted earnings per share."

CONFERENCE CALL WEBCAST
A webcast to discuss the Company's financial results and outlook will be held at 9:30 a.m. ET today and may be heard live by visiting the "Webcast" section of the Company's site at 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 and a European leader in branded plant-based foods and beverages. The Company's Fresh Dairy Direct segment is one of the nation's largest processors and direct-to-store distributors 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. The WhiteWave-Alpro segment produces and sells an array of nationally and internationally branded dairy, plant-based food and beverages, and coffee creamers. 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. Morningstar Foods is a leading warehouse delivery dairy business that produces and sells traditional and specialty dairy items, including cultured dairy products, ice cream mixes, coffee creamers, aerosol whipped toppings, traditional and value-added milks, and blended iced beverages to retailers and foodservice providers nationwide. For more information, visit www.deanfoods.com.

CONTACT: Corporate Communications, Liliana Esposito, +1-214-721-7766; or Investor Relations, Barry Sievert, +1-214-303-3438

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, capital expenditures, new product launches and expected financial performance. 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. 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
                                                                                  Condensed Consolidated Statements of Operations
                                                                                                    (Unaudited)
                                                                                       (In thousands, except per share data)
                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                     
                                                                     GAAP                                                  ADJUSTED*
                                                                    ----                                                   --------
                                                              Three months ended                                      Three months ended
                                                                  March 31,                                               March 31,
                                                                                2012                           2011                                                2012                                          2011
                                                                                ----                           ----                                                ----                                          ----
                                                                                                                                                                                                                                     
     Net sales                                                            $3,214,094                     $3,049,854                                          $3,214,094                                    $3,049,854
     Cost of sales                                                         2,426,241                      2,299,572                                           2,426,241                                     2,299,572
                                                                           ---------                      ---------                                           ---------                                     ---------
                                                                                                                                                                                                                                     
                         Gross profit                                        787,853                        750,282                                             787,853                                       750,282
                                                                                                                                                                                                                                     
     Operating costs and expenses:
                         Selling and
                          distribution                                       504,235                        485,802                                             504,235                                       485,802
                         General and
                          administrative                                     129,505                        164,662                                             129,505                                       156,811           (a)
                         Amortization of
                          intangibles                                          2,285                          2,738                                               2,285                                         2,738
                         Facility
                          closing and
                          reorganization
                          costs                                               28,822                         10,643                                                   -   (b)                                       -           (b)
                         Other operating
                          income                                                   -                        (19,490)                                                  -                                             -           (a)
                         Loss
                          attributable
                          to non-
                          controlling
                          interest in
                          Hero JV                                                  -                              -                                                   -                                        (1,837)          (c)
                        --------------                                           ---
                         Total operating costs and
                          expenses                                           664,847                        644,355                                             636,025                                       643,514
                                                                             -------                        -------                                             -------                                       -------
                                                                                                                                                                                                                                     
                         Operating
                          income                                             123,006                        105,927                                             151,828                                       106,768
                                                                                                                                                                                                                                     
     Interest expense                                                         60,747                         65,270                                              59,897   (d)                                  65,270
     Other (income) expense, net                                                 554                            (48)                                                554                                           (45)
                                                                                 ---                            ---                                                 ---                                           ---
                                                                                                                                                                                                                                     
                         Income from
                          continuing
                          operations
                          before
                         income taxes                                         61,705                         40,705                                              91,377                                        41,543
                                                                                                                                                                                                                                     
     Income tax expense                                                       23,822                         17,323                                              34,528   (e)                                  16,734           (e)
                                                                              ------                         ------                                              ------                                        ------
                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                     
                         Net income                                           37,883                         23,382                                              56,849                                        24,809
                         Net loss attributable to non-
                          controlling interest                                     -                          1,881                                                   -                                             -           (c)
                                                                                 ---                          -----                                                 ---                                           ---
                         Net income
                          attributable
                          to Dean Foods
                          Company                                            $37,883                        $25,263                                             $56,849                                       $24,809
                        ==============                                       =======
                                                                                                                                                                                                                                     
     Average common shares:
                         Basic                                               184,105                        182,817                                             184,105                                       182,817
                         Diluted                                             184,948                        183,293                                             184,948                                       183,293
                                                                                                                                                                                                                                     
    Basic earnings per common share:
    Net income attributable to Dean Foods Company                              $0.21                          $0.14                                               $0.31                                         $0.14
                                                                               =====                          =====                                               =====                                         =====
                                                                                                                                                                                                                                     
    Diluted earnings per common share:
    Net income attributable to Dean Foods Company                              $0.20                          $0.14                                               $0.31                                         $0.14
                                                                               =====                          =====                                               =====                                         =====
                                                                                                                                                                                                                                     
     * See notes to Earnings Release Tables

                         DEAN FOODS COMPANY
                Condensed Consolidated Balance Sheets
                             (Unaudited)
                           (In thousands)

                                                     March 31,    December 31,
     ASSETS                                                2012           2011
     ------                                                ----           ----

     Cash and cash equivalents                         $130,309       $114,851

     Other current assets                           1,592,580      1,601,471
                                                    ---------      ---------

              Total current assets                  1,722,889      1,716,322

     Property, plant and equipment, net             2,083,432      2,114,380

     Intangibles and other assets, net              1,952,311      1,923,661
                                                    ---------      ---------

     Total Assets                                  $5,758,632     $5,754,363
                                                   ==========     ==========


     LIABILITIES AND STOCKHOLDERS' DEFICIT
     -------------------------------------

     Total current liabilities, excluding debt     $1,173,221     $1,293,003

     Total long-term debt, including current
      portion                                       3,817,740      3,765,928

     Other long-term liabilities                      820,403        794,083

     Total deficit                                    (52,732)      (103,398)

     Non-controlling interest                               -          4,747
                                                          ---          -----

              Total Dean Foods Company
               stockholders' deficit                  (52,732)       (98,651)
                                                     --------        -------

     Total Liabilities and Stockholders' Deficit   $5,758,632     $5,754,363
                                                   ==========     ==========

                                          DEAN FOODS COMPANY

                            Condensed Consolidated Statements of Cash Flows
                                              (Unaudited)
                                            (In thousands)


                                                   Three months ended
                                                       March 31,
     Operating Activities                                          2012          2011
     --------------------                                          ----          ----
              Net cash provided by operating
               activities                                       $3,222       $37,183

     Investing Activities
     --------------------
     Payments for property,
      plant and equipment                                      (44,517)      (40,411)
     Proceeds from insurance
      claims                                                     2,996             -
     Proceeds from divestitures                                      -        91,780
     Other, net                                                   (790)            -
     Proceeds from sale of
      fixed assets                                               1,554         1,807
                                                                 -----         -----
              Net cash provided by (used in)
               investing activities                            (40,757)       53,176

     Financing Activities
     --------------------
     Net proceeds from
      (repayment of) debt                                       51,604       (79,037)
     Issuance of common stock,
      net                                                       (2,255)         (580)
     Capital contribution from
      non-controlling interest                                       -         2,913
     Tax savings on share-
      based compensation                                           286             -
                                                                   ---           ---
              Net cash provided by (used in)
               financing activities                             49,635       (76,704)

              Effect of exchange rate
               changes on cash and cash
               equivalents                                       3,358         2,947
                                                                 -----         -----

     Increase in cash and cash
      equivalents                                               15,458        16,602
     Cash and cash equivalents,
      beginning of period                                      114,851        92,007
                                                               -------        ------

     Cash and cash equivalents,
      end of period                                           $130,309      $108,609
                                                              ========      ========

      Computation of Free Cash Flow used in continuing
       operations

      Net cash provided by
       continuing operations                                    $3,222       $37,183
      Net additions to property,
       plant and equipment                                     (44,517)      (40,411)
                                                               -------       -------

               Free cash flow used in
                continuing operations                         $(41,295)      $(3,228)

                              DEAN FOODS COMPANY
     Segment Information and Reconciliation of GAAP to Adjusted Earnings
                                  (Unaudited)
                    (In thousands, except per share data)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                       Three months ended
                                                                                                                                                                        March 31, 2012
                                                                                                                                                                        --------------
                                                                                                                                                           Asset write-down                        Facility closing                              Non-controlling                                  Other
                                                                                                                                                          & (gain) loss on                         & reorganization                                interest in                                 adjustments
                                                                                                                                                           sales of assets                              costs                                        Hero JV
                                                                                                                   GAAP                                          (a)                                     (b)                                           (c)                                         (d)                                       Adjusted*
                                                                                                                   ----                                          ---                                     ---                                           ---                                         ---                                       --------
                                                                                                                                                                                                                                                                                                                                                                    
     Segment operating income (loss):
                                                                                                                                                                                                                                                                                                                                                                    
                                                                           Fresh Dairy
                                                                            Direct                                         $101,196                            $             -                             $               -                               $         -                                   $         -                                      $101,196
                                                                           Morningstar                                       28,750                                          -                                             -                                         -                                             -                                        28,750
                                                                           Whitewave -
                                                                            Alpro                                            60,310                                          -                                             -                                         -                                             -                                        60,310
                                                                           Corporate                                        (38,428)                                         -                                             -                                         -                                             -                                       (38,428)
                                                                           Facility
                                                                            closing and
                                                                            reorganization
                                                                            costs                                           (28,822)                                         -                                        28,822                                         -                                             -                                             -
                                                                                                                                                                                                                                                                                                                                
                                                                           Total
                                                                            operating
                                                                            income           $123,006                                $             -                            $28,822                                       $         -                               $         -                                   $151,828
                                                                                             ========                                ===============                            =======                                       ===========                               ===========                                   ========
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
     Net income attributable to Dean Foods Company  (e)                                                                     $37,883                            $             -                                       $18,418                               $         -                                          $548                                       $56,849
                                                                                                                            =======                            ===============                                       =======                               ===========                                          ====                                       =======
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
     Diluted earnings per share                                                                                               $0.20                            $             -                                         $0.11                               $         -                                   $         -                                         $0.31
                                                                                                                              =====                            ===============                                         =====                               ===========                                   ===========                                         =====
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                       Three months ended
                                                                                                                                                                        March 31, 2011
                                                                                                                                                                        --------------
                                                                                                                                                           Asset write-down                        Facility closing                              Non-controlling                                  Other
                                                                                                                                                          & (gain) loss on                         & reorganization                                interest in                                 adjustments
                                                                                                                                                           sales of assets                              costs                                        Hero JV
                                                                                                                   GAAP                                          (a)                                     (b)                                           (c)                                                                                   Adjusted*
                                                                                                                   ----                                          ---                                     ---                                           ---                                                                                   --------
                                                                                                                                                                                                                                                                                                                                                                    
     Segment operating income (loss):
                                                                                                                                                                                                                                                                                                                                                                    
                                                                           Fresh Dairy
                                                                            Direct                                          $86,038                            $             -                             $               -                               $         -                                   $         -                                       $86,038
                                                                           Morningstar                                       25,444                                          -                                             -                                         -                                             -                                        25,444
                                                                           Whitewave -
                                                                            Alpro                                            46,091                                          -                                             -                                     1,837                                             -                                        47,928
                                                                           Corporate                                        (60,493)                                     7,851                                             -                                         -                                             -                                       (52,642)
                                                                           Facility
                                                                            closing and
                                                                            reorganization
                                                                            costs                                           (10,643)                                         -                                        10,643                                         -                                             -                                             -
                                                                           Other income                                      19,490                                    (19,490)                                            -                                         -                                             -                                             -
                                                                                                                                                                                                                                                                                                                                
                                                                           Total
                                                                            operating
                                                                            income           $105,927                                       $(11,639)                           $10,643                                            $1,837                               $         -                                   $106,768
                                                                                             ========                                       ========                            =======                                            ======                               ===========                                   ========
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
     Net income attributable to Dean Foods Company  (e)                                                                     $25,263                                    $(7,003)                                       $6,549                               $         -                                   $         -                                       $24,809
                                                                                                                            =======                                    =======                                        ======                               ===========                                   ===========                                       =======
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
     Diluted earnings per share                                                                                               $0.14                                     $(0.04)                                        $0.04                               $         -                                   $         -                                         $0.14
                                                                                                                              =====                                     ======                                         =====                               ===========                                   ===========                                         =====
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
     * See notes to Earnings Release Tables

For the three months ended March 31, 2012 and 2011, the adjusted results and certain other non-GAAP financial measures differ from the Company's results under GAAP by excluding the following:

(a) The adjustment reflects the elimination of the following:

a. A net gain resulting from the sale of our Mountain High yogurt operations, which closed on February 1, 2011, offset by charges recorded in conjunction with the divestiture of our manufacturing facility in Waukesha, Wisconsin; and

b. Charges associated with the cease of use of certain corporate assets.

(b) The adjustment reflects the elimination of charges related to announced facility closings and reorganization costs.

(c) In 2011, the results of operations for the Hero/WhiteWave joint venture were consolidated for financial reporting purposes. The adjustment reflects the operating loss attributable to the 50% interest in the Hero/WhiteWave joint venture that we do not own. As of March 31, 2012, we have completed the shutdown of the operations and only an immaterial amount of assets remain as part of the investment. We may incur additional charges related to the final settlement with Hero Group.

(d) The adjustment reflects the elimination of interest accretion in connection with our previously disclosed dairy farmer class action lawsuit filed in the United States District Court for the Eastern District of Tennessee.

(e) The adjustment reflects the income tax impact for income from continuing operations before income taxes on adjustments (a) through (d).

SOURCE Dean Foods Company

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