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Dean Foods Company : Dean Foods Reports Third Quarter 2011 Results

11/09/2011 | 08:05am US/Eastern
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DALLAS, Nov. 9, 2011 /PRNewswire/ -- Dean Foods Company (NYSE: DF) announced today that the Company reported a loss of $8.39 per diluted share, as compared to third quarter 2010 earnings of $0.13 per diluted share. The loss per share in the quarter includes a $1.9 billion, or $1.6 billion net of tax, non-cash goodwill impairment charge, which is described below.

On an adjusted basis, third quarter 2011 diluted earnings per share were $0.18, a 39% increase from $0.13 per adjusted diluted share in the prior year's third quarter. A full reconciliation between GAAP earnings per share and adjusted earnings per share is provided in the tables below.

For the third quarter of 2011, the net loss attributable to Dean Foods totaled $1.5 billion, compared to net income of $24 million in the prior year's third quarter. Adjusted net income for the third quarter was $33 million, compared to adjusted net income of $23 million in the third quarter of 2010.

"The third quarter marks a return to growth for Dean," said Gregg Engles, Chairman and CEO. "Consolidated adjusted operating income increased 5% and adjusted diluted earnings per share increased 39% in the quarter. While Fresh Dairy Direct continued to face challenges in the quarter, WhiteWave-Alpro posted exceptional results and corporate costs declined due to our focus on reducing SG&A costs, resulting in the return to growth in the quarter."

CONSOLIDATED NET SALES

Net sales for the third quarter totaled $3.4 billion, compared to $3.1 billion of net sales in the third quarter of 2010. Net sales for the third quarter increased due to the pass-through of higher dairy and overall commodity costs at Fresh Dairy Direct-Morningstar and continued solid sales growth at WhiteWave-Alpro, partially offset by lower volumes at Fresh Dairy Direct-Morningstar.

CONSOLIDATED OPERATING INCOME / LOSS

Consolidated operating loss in the third quarter totaled $1.9 billion, compared to consolidated operating income of $93 million in the third quarter of 2010. Third quarter consolidated adjusted operating income totaled $108 million, a 5% increase from $103 million in the third quarter of 2010. The increase in third quarter consolidated adjusted operating income was due to $13.5 million of operating income growth at WhiteWave-Alpro and a $12.5 million decline in corporate expense driven by the Company's ongoing cost savings initiatives, offset by a $21.2 million decline in operating income at Fresh Dairy Direct-Morningstar.




          Summary of Dean Foods Third Quarter 2011 Operating Results
          ----------------------------------------------------------

                                                   Q3 2011
                                                  $millions        Y/Y
                                                   (except
                                                     EPS)        Change
                                                  --------       ------

    Consolidated Adjusted Operating Income             $108          +5%

    Interest Expense                                    $62          -4%

    Consolidated Adjusted Net Income                    $33         +43%

    Adjusted Diluted Earnings per Share               $0.18         +39%

FRESH DAIRY DIRECT-MORNINGSTAR

Fresh Dairy Direct-Morningstar fluid milk volumes were essentially flat in the third quarter, compared to the overall industry that experienced a volume decline of approximately 0.9% on a year-over-year basis, based on USDA data and Company estimates. The Company's outperformance of the industry was driven primarily by the addition of new customers. Sales volume in other product categories served by Fresh Dairy Direct-Morningstar remained below year ago levels. Total volumes from the Fresh Dairy Direct-Morningstar segment declined 1% from the third quarter of 2010 excluding the impact of divested businesses, or 3.6% in total.

Despite lower volumes, Fresh Dairy Direct-Morningstar net sales increased 12% to $2.9 billion from $2.6 billion in net sales for the third quarter of 2010. The increase in net sales for the segment is driven by the pass-through of higher dairy commodity costs. The third quarter average Class I mover, a measure of the Company's cost of milk, was $21.41 per hundred-weight, 8% above the previous quarter and 37% above the third quarter of 2010.



           Third Quarter 2011 Fresh Dairy Direct-Morningstar  Summary
           ----------------------------------------------------------


                                                                     Y/Y
                                                     Q3 2011       Change
                                                     -------       ------

    Fluid Milk Volume                                      --        -0.3%

    Operating Income ($ millions)                         $95         -18%

    Class I Mover (/hwt)                               $21.41         +37%

    Class II Butterfat (/lb)                            $2.26          +7%

Fresh Dairy Direct-Morningstar operating income in the third quarter was $95 million, a decrease of 18% from the $116 million reported in the third quarter of 2010. The year-over-year decline in operating income is primarily the result of continued soft volumes in non-milk categories and pricing pressures across the portfolio, which offset the Company's cost reduction initiatives.

WHITEWAVE - ALPRO

For the third quarter of 2011, the WhiteWave-Alpro segment reported net sales of $531 million, 11% above third quarter 2010 net sales of $478 million due to continued strong growth across the product portfolio. Among the key brands at WhiteWave-Alpro, net sales of Horizon Organic® branded milk increased low-double digits in the third quarter. Branded creamer sales, which includes both International Delight® and LAND O LAKES® creamers, increased mid-teens on continued strength behind International Delight and other innovation. Silk® sales increased mid-single digits on continued strength of Silk PureAlmond® and Silk PureCoconut®. Alpro sales increased low-single digits in the quarter on a constant currency basis, and high-single digits after currency translation.

On a reported basis, segment operating income in the third quarter for WhiteWave-Alpro was $52 million, 39% above the $37 million reported in third quarter of 2010. On an adjusted basis, which excludes the impact of the 50% interest in the Hero/WhiteWave joint venture that WhiteWave does not own, the segment reported operating income of $53 million, an increase of 34% from $39 million in the third quarter of 2010.


        Third Quarter 2011 WhiteWave-Alpro  Summary
        -------------------------------------------

                                Q3 2011        Y/Y
                               $millions     Change
                               ---------     ------
    Net Sales                       $531         +11%


    Adjusted Operating Income        $53         +34%

CORPORATE EXPENSE

Third quarter 2011 corporate expense totaled $40.3 million, a decrease of 24% from $52.8 million in the third quarter of 2010. The reduction in corporate expense was driven by management's concerted efforts to reduce costs, particularly in selling, general and administrative (SG&A) functions.

COST REDUCTION

Reducing SG&A expense, excluding incentive compensation and advertising expense, is an area of focus for the Company in 2011. In the third quarter these costs were approximately $22 million below third quarter 2010 levels. The Company also continues to make strong progress toward its initiative to reduce supply chain costs by $125 million in 2011, which will complete its initial $300 million cost reduction program that began in 2009. Management continues to see meaningful opportunities to reduce costs in the coming years.

CASH FLOW

Net cash provided by continuing operations for the nine months ended September 30, 2011 totaled $246 million, compared to $379 million through the third quarter of 2010. Free cash flow provided by continuing operations, which is defined as net cash provided by continuing operations less capital expenditures, totaled $30 million for the first nine months of 2011, compared to $199 million over the same period in 2010. A reconciliation between net cash provided by continuing operations and free cash flow provided by continuing operations is provided in the tables below.

Year-to-date capital expenditures totaled $215 million, compared to $181 million through the first nine months of 2010. Total debt outstanding, net of cash on hand, has decreased by $240 million from year ago levels. Total debt at September 30, 2011, net of $108 million cash on hand, was $3.7 billion. The Company's funded debt to EBITDA ratio, as defined by its credit agreements, was 4.91x as of the end of the third quarter versus a maximum leverage ratio covenant of 5.75x. The current maximum leverage ratio remains in effect until March 31, 2012, when it steps down to 5.50x. The Company continues to focus on reducing its overall leverage and expects to exit 2011 with a leverage ratio below 4.75x.

GOODWILL IMPAIRMENT

Industry conditions over the past few years affecting both consumption and pricing in Fresh Dairy Direct product categories culminated in a change in the Company's outlook for that business. As a result, the Company performed an interim step one analysis of the goodwill associated with the Fresh Dairy Direct reporting unit in the third quarter. This testing determined that the implied fair value of Fresh Dairy Direct's goodwill was below its carrying value, resulting in a $1.6 billion, net of tax, non-cash goodwill impairment charge in the quarter. The recorded charge represents the lower end of an estimated range, as a significant amount of work remains to be done to arrive at the final charge. The Company expects to complete the necessary work and adjust the charge in the fourth quarter. The final charge could differ materially from the estimate recorded in the third quarter.

"Like many companies that were built through a series of acquisitions, the Fresh Dairy Direct business accumulated a large amount of goodwill on its balance sheet. As we've discussed over the past few years, changed economic conditions have resulted in increased challenges for the fresh milk processing industry. Industry-wide volume declines and price erosion have lowered the profit outlook for our fresh dairy business. As a result of these challenges, and our view that they are unlikely to improve materially, we performed an interim goodwill analysis of the Fresh Dairy Direct business. This analysis determined the fair value of the Fresh Dairy Direct reporting unit was below its carrying value," continued Mr. Engles.

"There are three things to keep in mind related to the impairment charge: first, the charge is an accounting adjustment reflecting significantly changed industry conditions that have affected both consumption and pricing across Fresh Dairy Direct's key categories, and that we believe will continue to impact Fresh Dairy Direct going forward. Second, this charge is related only to the Fresh Dairy Direct business. The WhiteWave, Alpro, and Morningstar businesses have not been affected by these conditions to the same degree as Fresh Dairy Direct, and we believe their fair values remain in excess of their carrying values. Third, this is a non-cash charge and has no impact on our operations, cash flows, or financial covenant compliance."

FORWARD OUTLOOK

"Looking ahead, recent trends continue across the business. Fresh Dairy Direct-Morningstar continues to face a difficult volume and pricing environment," said Engles. "We expect this to continue into the fourth quarter. However, results should benefit from our continued focus on cost reduction across the business, moderating dairy and other commodity costs, and typical fourth quarter seasonality that has a beneficial mix component.

"At WhiteWave-Alpro, strong top-line trends continue as we enter the seasonally strongest quarter of the year. We therefore expect WhiteWave-Alpro to have a solid end to the year, with full year segment operating income to grow in the high-teens.

"Corporate costs will continue to be a tailwind for the business as our sharp focus on SG&A reduction will drive significant year over year savings in the fourth quarter. All in, we expect fourth quarter adjusted diluted earnings per share to step up from third quarter levels to between $0.20 and $0.25 per share resulting in full year 2011 adjusted diluted earnings per share of between $0.69 and $0.74 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 website at www.deanfoods.com. A slide presentation will accompany the webcast.

ABOUT DEAN FOODS

Dean Foods is one of the leading food and beverage companies in the United States and a European leader in branded soy foods and beverages. The Company's Fresh Dairy Direct-Morningstar segment is the largest U.S. processor and distributor of milk, creamers, and cultured dairy products. These offerings are marketed under more than 50 local and regional dairy brands, as well as through private labels. The WhiteWave-Alpro segment produces and sells an array of branded dairy, soy and plant-based beverages and foods. WhiteWave brands, including Silk® soy, almond and coconut milk, Horizon Organic® milk and dairy products, International Delight® coffee creamers, and LAND O LAKES® creamers, are category leaders and consumer favorites. Alpro is the pan-European leader in branded soy food products.

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 our litigation matters, and the amount of our goodwill impairment charge. 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.

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


                                         (Tables to follow)


                                         DEAN FOODS COMPANY
                           Condensed Consolidated Statements of Operations
                                             (Unaudited)
                                  (In thousands, except share data)


                                                   GAAP                          ADJUSTED
                                                   ----                         --------
                                               Three months
                                                   ended                   Three months ended
                                              September 30,                   September 30,
                                                 2011        2010            2011                2010
                                                 ----        ----            ----                ----

     Net sales                             $3,410,797  $3,054,130      $3,410,797          $3,054,130
     Cost of sales                          2,669,532   2,304,501       2,669,532           2,304,501
                                            ---------   ---------       ---------           ---------

       Gross profit                           741,265     749,629         741,265             749,629

     Operating costs and expenses:
       Selling and
        distribution                          498,682     491,154         498,682             491,154
                                                                                    (a)
       General and                                                                   (b)
        administrative                        148,191     154,895         133,438    (g)      154,895
       Amortization of
        intangibles                             2,584       2,810           2,584               2,810
       Facility closing and
        reorganization
        costs                                  10,283       8,253               -   (c)             -  (c)
       Goodwill impairment                  1,926,000           -               -   (e)             -
       Other operating
        expense                                27,827           -               -   (a)             -
       Loss attributable to
        non-controlling
        interest in Hero JV                         -           -          (1,323)  (f)        (2,310) (f)
                                                  ---         ---          ------              ------
         Total operating
          costs and expenses                2,613,567     657,112         633,381             646,549
                                            ---------     -------         -------             -------

       Operating income
        (loss)                             (1,872,302)     92,517         107,884             103,080

     Interest expense                          62,873      64,304          62,023   (d)        64,304
     Other (income)
      expense, net                               (414)        383            (414)                383
                                                 ----         ---            ----                 ---

       Income (loss) from continuing
        operations before
         income taxes                      (1,934,761)     27,830          46,275              38,393

     Income tax expense
      (benefit)                              (379,111)     10,653          13,023   (i)        15,140  (i)
                                             --------      ------          ------              ------

     Income (loss) from
      continuing
      operations                           (1,555,650)     17,177          33,252              23,253
     Loss from
      discontinued
      operations, net of
      tax                                           -      (1,577)              -                   -  (j)
     Gain on sale of
      discontinued
      operations, net of
      tax                                       3,616       6,357               -   (j)             -  (j)
                                                -----       -----             ---                 ---

       Net income (loss)                   (1,552,034)     21,957          33,252              23,253
         Net loss
          attributable to
          non-controlling
          interest                             11,537       2,339               -   (f)             -  (f)
                                               ------       -----             ---                 ---
       Net income (loss)
        attributable to
        Dean Foods Company                $(1,540,497)    $24,296         $33,252             $23,253
                                          ===========     =======         =======             =======

     Average common shares:
       Basic                                  183,650     182,119         183,650             182,119
       Diluted                                183,650     182,323         184,173   (k)       182,323

    Basic earnings (loss) per
     common share:
      Income (loss) from continuing
       operations attributable to
         Dean Foods Company                    $(8.41)      $0.11           $0.18               $0.13
      Income from discontinued
       operations attributable to
         Dean Foods Company                      0.02        0.02               -                   -
                                                 ----        ----
    Net income (loss)
     attributable to
     Dean Foods Company                        $(8.39)      $0.13           $0.18               $0.13
                                               ======       =====           =====               =====

    Diluted earnings (loss) per
     common share:
      Income (loss) from continuing
       operations attributable to
         Dean Foods Company                    $(8.41)      $0.11           $0.18               $0.13
      Income from discontinued
       operations attributable to
         Dean Foods Company                      0.02        0.02               -                   -
                                                 ----        ----
    Net income (loss)
     attributable to
     Dean Foods Company                        $(8.39)      $0.13           $0.18               $0.13
                                               ======       =====           =====               =====


     * See notes to Earnings Release Tables


                                                DEAN FOODS COMPANY
                                  Condensed Consolidated Statements of Operations
                                                    (Unaudited)
                                         (In thousands, except share data)


                                                                 GAAP                        ADJUSTED
                                                                 ----                       --------
                                                              Nine months
                                                                 ended                  Nine months ended
                                                            September 30,                 September 30,
                                                               2011          2010        2011               2010
                                                               ----          ----        ----               ----

     Net sales                                           $9,759,459    $8,969,926  $9,759,459         $8,969,926
     Cost of sales                                        7,508,351     6,721,080   7,508,351          6,721,080
                                                          ---------     ---------   ---------          ---------


                  Gross profit                            2,251,108     2,248,846   2,251,108          2,248,846

     Operating costs and expenses:
                  Selling and distribution                1,476,578     1,421,586   1,476,578          1,421,586
                                                                                                (a)
                  General and administrative                466,498       465,283     443,234    (b)     465,283
                  Amortization of intangibles                 7,959         8,480       7,959              8,480
                  Facility closing and
                   reorganization costs                      42,152        16,313           -   (c)            -  (c)
                  Litigation settlements                    131,300             -           -   (d)            -
                  Goodwill impairment                     1,926,000             -           -   (e)            -
                  Other operating income                    (16,561)            -           -   (a)            -
                  Loss attributable to non-
                   controlling interest in Hero JV                -                    (5,623)  (f)       (6,421) (f)
                                                                ---           ---                            ---
                  Total operating costs and
                   expenses                               4,033,926     1,911,662   1,922,148          1,888,928
                                                          ---------     ---------   ---------          ---------

                  Operating income (loss)                (1,782,818)      337,184     328,960            359,918

     Interest expense                                       191,636       177,742     190,786   (d)      171,041  (h)
     Other income, net                                       (1,169)         (102)     (1,169)              (102)
                                                             ------          ----      ------               ----

                  Income (loss) from continuing
                   operations before
                  income taxes                           (1,973,285)      159,544     139,343            188,979

     Income tax expense (benefit)                          (387,997)       59,095      48,999   (i)       69,262  (i)
                                                           --------        ------      ------             ------

     Income (loss) from continuing
      operations                                         (1,585,288)      100,449      90,344            119,717
     Loss from discontinued operations, net
      of tax                                                      -        (2,919)          -                  -  (j)
     Gain on sale of discontinued
      operations, net of tax                                  3,616         8,194           -   (j)            -  (j)
                                                              -----         -----         ---                ---

                  Net income (loss)                      (1,581,672)      105,724      90,344            119,717
                  Net loss attributable to
                   non-controlling interest                  15,925         6,511           -   (f)            -  (f)
                                                             ------         -----         ---                ---
                  Net income (loss) attributable to
                   Dean Foods Company                   $(1,565,747)     $112,235     $90,344           $119,717
                                                      =============   ===========

     Average common shares:
                  Basic                                     183,279       181,666     183,279            181,666
                  Diluted                                   183,279       182,839     184,158   (k)      182,839

    Basic earnings (loss) per common
     share:
                  Income (loss) from continuing
                  operations attributable to
                  Dean Foods Company                         $(8.56)        $0.59       $0.49              $0.66
                  Income from discontinued
                  operations attributable to
                  Dean Foods Company                           0.02          0.03           -                  -
                                                               ----          ----
    Net income (loss) attributable to Dean
     Foods Company                                           $(8.54)        $0.62       $0.49              $0.66
                                                             ======         =====       =====              =====

    Diluted earnings (loss) per common
     share:
                  Income (loss) from continuing
                  operations attributable to
                  Dean Foods Company                         $(8.56)        $0.58       $0.49              $0.65
                  Income from discontinued
                  operations attributable to
                  Dean Foods Company                           0.02          0.03           -                  -
                                                               ----          ----
    Net income (loss) attributable to Dean
     Foods Company                                           $(8.54)        $0.61       $0.49              $0.65
                                                             ======         =====       =====              =====


     * See notes to Earnings Release Tables


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

                                             September 30,   December 31,
     ASSETS                                           2011           2010
     ------                                           ----           ----

     Cash and cash equivalents                    $107,731        $92,007
     Other current assets                        1,692,574      1,724,209
                                               ---------      ---------
            Total current assets               1,800,305      1,816,216

     Property, plant and equipment, net        2,068,935      2,113,391

     Intangibles and other assets              2,041,961      4,027,060
                                               ---------      ---------

     Total Assets                             $5,911,201     $7,956,667
                                              ==========     ==========


     LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)
     -----------------------------

     Total current liabilities,
      excluding debt                          $1,322,395     $1,266,715

     Total long-term debt, including
      current portion                          3,850,802      4,067,525

     Other long-term liabilities                 796,144      1,108,359

     Total Dean Foods Company
      stockholders' equity (deficit)             (63,062)     1,499,525
     Non-controlling interest                      4,922         14,543
                                                   -----         ------
            Total stockholders' equity
             (deficit)                           (58,140)     1,514,068
                                                --------        -------

     Total Liabilities and
      Stockholders' Equity (Deficit)          $5,911,201     $7,956,667
                                              ==========     ==========


                                DEAN FOODS COMPANY
                       Condensed Consolidated Statements of Cash Flows
                                    (Unaudited)
                                   (In thousands)


                                                            Nine months ended
                                                                               September 30,
     Operating Activities                                     2011        2010
     --------------------                                     ----        ----
              Net cash provided by continuing
               operations                                $245,649    $379,293

              Net cash provided by discontinued
               operations                                     774       8,890
                                                              ---         ---
              Net cash provided by operating
               activities                                 246,423     388,183

     Investing Activities
     --------------------
     Payments for property,
      plant and equipment                                (215,412)   (180,557)
     Proceeds from divestitures                           185,270           -
     Proceeds from sale of fixed
      assets                                                5,277       3,807
                                                            -----       -----
              Net cash used in investing activities -
               continuing operations                      (24,865)   (176,750)
              Net cash provided by investing
               activities -discontinued operations          3,616      24,795
                                                            -----       -----
              Net cash used in investing activities       (21,249)   (151,955)

     Financing Activities
     --------------------
     Net repayment of debt                               (218,068)   (156,921)
     Payment of deferred
      financing costs                                        (600)    (34,233)
     Issuance of common stock,
      net                                                   3,764       3,298
     Capital contribution from
      non-controlling interest                              6,304       6,916
     Other                                                      -         275
                                                                          ---
              Net cash used in financing activities      (208,600)   (180,665)

              Effect of exchange rate changes on cash
               and cash equivalents                          (850)      1,347
                                                            -----        ----

     Increase in cash and cash
      equivalents                                          15,724      56,910
     Cash and cash equivalents,
      beginning of period                                  92,007      45,190
                                                           ------      ------

     Cash and cash equivalents,
      end of period                                      $107,731    $102,100
                                                         ========    ========

      Computation of Free Cash
       Flow provided by
       continuing operations

      Net cash provided by
       continuing operations                             $245,649    $379,293
      Net additions to property,
       plant and equipment                               (215,412)   (180,557)
                                                         --------    --------

               Free cash flow provided by continuing
                operations                                $30,237    $198,736


                                                                       DEAN FOODS COMPANY
                                               Segment Information and Reconciliation of GAAP to Adjusted Earnings
                                                                           (Unaudited)
                                                                          (In thousands)


                                                                                            Three months ended
                                                                                            September 30, 2011
                                                                                            ------------------
                                                           Asset write-       Post         Facility                                     Non-
                                                                                down           retirement      closing &     Litigation     Goodwill    controlling      Other
                                                           & (gain)       benefits                                                  interest
                                                                              loss on      adjustment    reorganization   settlements   impairment        in       adjustments
                                                           sales of                                                                 Hero JV
                                                                GAAP        assets (a)         (b)         costs (c)          (d)           (e)           (f)       (g) (j)    Adjusted
                                                  ----  -----------         ---         ---------          ---           ---       --------      -------      --------

     Segment
      operating
      income (loss):

       Fresh Dairy
        Direct -
        Morningstar                            $95,281             $-            $-               $-            $-           $-            $-            $-    $95,281
       Whitewave -
        Alpro                                   51,531              -             -                -             -            -         1,323             -     52,854
       Corporate                               (55,004)           (25)       15,172                -             -            -             -          (394)   (40,251)
       Facility closing
        and
        reorganization
        costs                                  (10,283)             -             -           10,283             -            -             -             -          -
       Goodwill
        impairment                          (1,926,000)             -             -                -             -    1,926,000             -             -          -
       Other operating
        expense                                (27,827)        27,827             -                -             -            -             -             -          -
                                               -------         ------           ---              ---           ---          ---           ---           ---        ---
                    Total operating
                     income (loss)         $(1,872,302)       $27,802       $15,172          $10,283            $-   $1,926,000        $1,323         $(394)  $107,884
                                         =============    ===========       =======          =======       =======          ===    ==========        ======      =====


     Net income
      (loss)
      attributable to
      Dean Foods
      Company  (i)                         $(1,540,497)       $10,711        $9,769           $6,591          $548   $1,550,000            $-       $(3,870)   $33,252
                                           ===========        =======        ======           ======          ====   ==========           ===       =======    =======


     Diluted earnings
      (loss) per
      share (k)                                 $(8.39)         $0.06         $0.05            $0.04            $-        $8.44            $-        $(0.02)     $0.18
                                                ======          =====         =====            =====           ===        =====           ===        ======      =====



                                                                                          Three months ended
                                                                                          September 30, 2010
                                                                                          ------------------
                                                         Asset write-       Post         Facility                                     Non-
                                                                             down           retirement      closing &     Litigation     Goodwill    controlling      Other
                                                           & (gain)       benefits                                                  interest
                                                                              loss on      adjustment    reorganization   settlements   impairment        in       adjustments
                                                           sales of                                                                 Hero JV
                                                                GAAP        assets (a)         (b)         costs (c)          (d)           (e)           (f)          (j)     Adjusted
                                                  ----  -----------         ---         ---------          ---           ---       --------         ---       --------

     Segment
      operating
      income (loss):

       Fresh Dairy
        Direct -
        Morningstar                           $116,465             $-            $-               $-            $-           $-            $-            $-   $116,465
       Whitewave -
        Alpro                                   37,073              -             -                -             -            -         2,310             -     39,383
       Corporate                               (52,768)             -             -                -             -            -             -             -    (52,768)
       Facility closing
        and
        reorganization
        costs                                   (8,253)                                        8,253                                                                 -
                                                ------            ---           ---            -----           ---          ---           ---           ---        ---
                    Total operating
                     income                    $92,517             $-            $-           $8,253            $-           $-        $2,310            $-   $103,080
                                        ==============        =======           ===              ===        ======          ===           ===        ======        ===


     Net income
      attributable to
      Dean Foods
      Company  (i)                             $24,296             $-            $-           $3,738            $-           $-            $-       $(4,781)   $23,253
                                               =======            ===           ===           ======           ===          ===           ===       =======    =======


     Diluted earnings
      per share                                  $0.13             $-            $-            $0.02            $-           $-            $-        $(0.02)     $0.13
                                                 =====            ===           ===            =====           ===          ===           ===        ======      =====



     * See notes to Earnings Release Tables


                                                                    DEAN FOODS COMPANY
                                            Segment Information and Reconciliation of GAAP to Adjusted Earnings
                                                                        (Unaudited)
                                                                       (In thousands)


                                                                                     Nine months ended
                                                                                    September 30, 2011
                                                                                    ------------------
                                                 Asset write-       Post         Facility                                   Non-
                                                  down           retirement      closing &     Litigation     Goodwill  controlling    Other
                                                   & (gain)       benefits                                                interest
                                                   loss on      adjustment    reorganization   settlements   impairment      in     adjustments
                                                   sales of                                                               Hero JV
                                      GAAP       assets (a)         (b)         costs (c)          (d)           (e)         (f)        (j)      Adjusted
                                      ----      -----------         ---         ---------          ---           ---     --------       ---      --------

     Segment
      operating
      income
      (loss):

       Fresh Dairy
        Direct -
        Morningstar                   $322,468             $-            $-               $-            $-           $-          $-          $-   $322,468
       Whitewave -
        Alpro                          141,723              -             -                -             -            -       5,623           -    147,346
       Corporate                      (164,118)         8,092        15,172                -             -            -           -           -   (140,854)
       Facility
        closing and
        reorganization
        costs                          (42,152)             -             -           42,152             -            -           -           -          -
       Litigation
        settlements                   (131,300)             -             -                -       131,300            -           -           -          -
       Goodwill
        impairment                  (1,926,000)             -             -                -             -    1,926,000           -           -          -
       Other
        operating
        income                          16,561        (16,561)            -                -             -            -           -           -          -
                                        ------        -------           ---              ---           ---          ---         ---         ---        ---
         Total
          operating
          income
          (loss)                   $(1,782,818)       $(8,469)      $15,172          $42,152      $131,300   $1,926,000      $5,623          $-   $328,960
                                   ===========        =======       =======          =======      ========   ==========      ======         ===   ========



     Net income
      (loss)
      attributable
      to Dean
      Foods
      Company  (i)                 $(1,565,747)      $(12,161)       $9,769          $27,014       $85,085   $1,550,000          $-     $(3,616)   $90,344
                                   ===========       ========        ======          =======       =======   ==========         ===     =======    =======


     Diluted
      earnings
      (loss) per
      share (k)                         $(8.54)        $(0.07)        $0.05            $0.15         $0.46        $8.46          $-      $(0.02)     $0.49
                                        ======         ======         =====            =====         =====        =====         ===      ======      =====



                                                                                     Nine months ended
                                                                                    September 30, 2010
                                                                                    ------------------
                                                 Asset write-       Post         Facility                                   Non-
                                                  down           retirement      closing &     Litigation     Goodwill  controlling    Other
                                                   & (gain)       benefits                                                interest
                                                   loss on      adjustment    reorganization   settlements   impairment      in     adjustments
                                                   sales of                                                               Hero JV
                                      GAAP       assets (a)         (b)         costs (c)          (d)           (e)         (f)     (h) (j)     Adjusted
                                      ----      -----------         ---         ---------          ---           ---     --------    -------     --------

     Segment
      operating
      income
      (loss):

       Fresh Dairy
        Direct -
        Morningstar                   $390,035             $-            $-               $-            $-           $-          $-          $-   $390,035
       Whitewave -
        Alpro                          118,455              -             -                -             -            -       6,421           -    124,876
       Corporate                      (154,993)             -             -                -             -            -           -           -   (154,993)
       Facility
        closing and
        reorganization
        costs                          (16,313)                                       16,313                                                             -
                                       -------            ---           ---           ------           ---          ---         ---         ---        ---
         Total
          operating
          income                      $337,184             $-            $-          $16,313            $-           $-      $6,421          $-   $359,918
                                      ========            ===           ===          =======           ===          ===      ======         ===   ========



     Net income
      attributable
      to Dean
      Foods
      Company  (i)                    $112,235             $-            $-           $8,640            $-           $-          $-     $(1,158)  $119,717
                                      ========            ===           ===           ======           ===          ===         ===     =======   ========


     Diluted
      earnings per
      share                              $0.61             $-            $-            $0.05            $-           $-          $-      $(0.01)     $0.65
                                         =====            ===           ===            =====           ===          ===         ===      ======      =====



     * See notes to Earnings Release Tables


    For the three and nine months ended September 30,
     2011 and 2010, the adjusted results and certain
     other non-GAAP financial measures differ from the
     Company's results under GAAP by excluding the
     following:
                      The adjustment reflects the elimination of
    (a)               the following:
                                                                  A net gain resulting from the
                                                                  sale of our Mountain High and
                                                                  private label yogurt
                                                                  operations, which closed on
                                                                  February 1, 2011 and April 1,
                     a.                                           2011, respectively;
                                                                  A net loss resulting from the
                                                                  sale of our fluid milk
                                                                  operations at our
                                                                  manufacturing facility in
                                                                  Waukesha, Wisconsin, which
                                                                  was completed on September 8,
                     b.                                           2011;
                                                                  Charges associated with the
                                                                  pending sale and cease of use
                                                                  of certain corporate assets;
                     c.                                           and
                                                                  The write down of the Hero/
                                                                  WhiteWave joint venture's
                                                                  long-lived assets to fair
                                                                  value, less cost to sell, as
                                                                  a result of the joint venture
                                                                  partners' approval to wind
                                                                  down the operations of the
                     d.                                           joint venture.

                      The adjustment reflects the exclusion of a
                      non-cash charge of $15.2 million for
                      previously unrecorded other postretirement
    (b)               benefits related to periods prior to 2011.

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

                      The adjustment eliminates a charge, and
                      related interest accretion, in connection
                      with our previously disclosed dairy farmer
                      class action lawsuit filed in the United
                      States District Court for the Eastern
    (d)               District of Tennessee.

                      The adjustment reflects the elimination of
                      the goodwill impairment charge related to
                      our Fresh Dairy Direct reporting unit.  The
                      goodwill impairment charge is an estimate
                      subject to adjustment upon finalization of
                      our analysis during the fourth quarter of
    (e)               2011.

                      The results of operations for the Hero/
                      WhiteWave joint venture have been
                      consolidated for financial reporting
                      purposes. The adjustment reflects the
                      operating loss attributable to the 50%
                      interest in the Hero/WhiteWave joint
    (f)               venture that we do not own.

                      The adjustment reflects the elimination of
                      transaction-related fees on acquisitions
                      and divestitures that have closed or are
    (g)               expected to close.

                      The adjustment reflects the elimination of
                      financing costs expensed in association
                      with the amendment of our senior secured
    (h)               credit facility in June 2010.

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

                      The adjustment reflects the elimination of
    (j)               discontinued operations, net of tax.

                      The adjustment reflects an add-back of the
                      dilutive shares for the three and nine
                      month periods ended September 30, 2011,
                      which were anti-dilutive for GAAP
    (k)               purposes.

SOURCE Dean Foods Company

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