DALLAS, Aug. 10, 2015 /PRNewswire/ -- Dean Foods
Company (NYSE: DF) today reported second quarter 2015 results.
Highlights
- Q2 net income per diluted share was $0.28 and adjusted net income per diluted share
was $0.33.
- Q2 adjusted results reflect the highest gross profit and per
gallon operating income since 2012.
- Financial results improved for the fourth consecutive quarter
as price realization offset volume deleverage.
- Stepped up advertising and marketing supports Q2 launch of
DairyPure®, the first and largest fresh, white milk
national brand.
- Q3 adjusted diluted earnings are expected to be $0.17 to $0.27 per share.
Chief Executive Officer Gregg
Tanner said, "I'm very pleased with the operational and
financial performance of the business this quarter and really
excited about our prospects going forward. Across our supply chain,
we continued to execute our cost productivity agenda and utilize
our scale to procure ingredients and packaging at industry leading
levels, optimize our production network and reduce our logistics
costs. From a commercial perspective, with the category showing
signs of improvement, we continued to focus on striking the right
balance between volume performance and price realization. And we
successfully launched DairyPure, the country's first and largest
fresh, white milk national brand that we believe, over the long
term, will provide incremental benefits to consumers, our category,
our customers and our company."
Second Quarter 2015 Operating Results
Chief Financial
Officer Chris Bellairs said, "With
volume performance coming in-line with our expectations and a
generally favorable commodity environment, we delivered a fourth
consecutive quarter of sequentially improving gross profit and
operating income. For the quarter, our gross profit, on an absolute
dollar basis, and our operating income, on a per gallon basis, was
the highest we have had since 2012. Coupled with the debt
refinancing completed last quarter, improved operating and cash
flow performance have clearly strengthened our balance sheet and
our leverage improved by over a full turn for a second consecutive
quarter. With solid execution by our commercial, operations and
logistics teams, we believe we're well positioned to drive
shareholder value."
Financial Summary
*
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
(In millions,
except per share amounts)
|
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
GAAP
|
|
$
496
|
$ 399
|
|
$
974
|
$ 815
|
Adjusted
|
|
$
496
|
$ 400
|
|
$
973
|
$ 816
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
GAAP
|
|
$
57
|
$
(4)
|
|
$
(3)
|
$ 2
|
Adjusted
|
|
$
67
|
$
(6)
|
|
$
119
|
$ 1
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
GAAP
|
|
$
17
|
$
15
|
|
$
34
|
$ 30
|
Adjusted
|
|
$
17
|
$
15
|
|
$
33
|
$ 29
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
|
|
|
|
|
GAAP
|
|
$
27
|
$
(1)
|
|
$
(47)
|
$ (10)
|
Adjusted
|
|
$
32
|
$
(13)
|
|
$
54
|
$ (17)
|
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share (EPS)
|
|
|
|
|
|
|
GAAP
|
|
$
0.28
|
$ (0.01)
|
|
$ (0.50)
|
$(0.10)
|
Adjusted
|
|
$
0.33
|
$ (0.14)
|
|
$
0.57
|
$(0.18)
|
|
|
|
|
|
|
|
* Adjustments to GAAP
for the impacts of specific transactions and other one-time or
non-recurring items are fully described in the attached
tables.
|
The second quarter 2015 average Class I Mover, a measure of raw
milk costs, was $15.82 per
hundred-weight, a 6% sequential decrease from the first quarter of
2015 and a decrease of 33% from the second quarter of 2014. Total
volume across all products was 653 million gallons for the second
quarter of 2015, a 3% decline compared to total volume of 674
million gallons in the second quarter of 2014. Based on the USDA's
recently published category data, fluid milk volumes improved
sequentially from a 3.1% decline in the fourth quarter to a 2.2%
decline in the first quarter. Quarter-to-date through May 2015, fluid milk volumes declined
approximately 2.5% year-over-year, on an unadjusted basis. On this
same basis, Dean Foods' share of U.S. fluid milk volumes decreased
to 35.0%, from 35.9% in the second quarter of 2014.
Tanner added, "We are the largest player in the milk industry
with sustainable competitive advantages through scale and
capabilities, and we remain focused on our initiatives to drive
shareholder value. With DairyPure, our national fresh white milk
brand, and TruMoo, our national flavored milk brand, we have
significant opportunity to expand our industry leadership
role. Our financial results reflect improving performance
trends and we have refinanced our debt and expanded our accessible
liquidity which gives us significantly more financial flexibility
as we move forward."
Cash Flow
Consolidated net cash provided by
continuing operations for the six months ended June 30, 2015, totaled $272 million. Free cash flow provided by
continuing operations, which is defined as net cash provided by
continuing operations less capital expenditures, was $224 million for six months ended June 30, 2015. Free cash flow includes the impact
of lower commodity costs, $56 million
of federal tax refunds in respect of 2014 and the third of four
annual litigation settlement payments of $19
million.
Debt
Total debt at June 30,
2015, net of $106 million cash
on hand, was approximately $734
million. The Company's maximum senior secured net leverage
ratio calculated in accordance with the senior secured revolving
credit facility, which for purposes of calculating indebtedness
deducts up to $50 million of cash on
hand and excludes borrowings under the receivables securitization
facility, was zero times as of the end of the second quarter of
2015. For the second consecutive quarter, the Company's funded net
debt to EBITDA ratio, on an all cash netted basis, improved
sequentially by over a full turn to 2.30 times at the end of the
second quarter of 2015.
Forward Outlook
"For the third quarter, with expected
volume declines in the low single digits, slightly increasing raw
milk costs and taking normal seasonality and other factors into
account, we expect adjusted diluted earnings of between
$0.17 and $0.27 per share," concluded
Tanner.
Non-GAAP Financial Measures
In addition to the
results prepared in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP"), we have presented certain adjusted
financial results and certain other non-GAAP financial measures,
including Adjusted EBITDA and Free Cash Flow, each as defined
below. These non-GAAP financial measures are from continuing
operations and are adjusted to eliminate the net expenses and net
gains related to the items identified in the "Reconciliation of
GAAP to Non-GAAP Information" tables below. This information is
provided to assist investors in making meaningful comparisons of
our operating performance between periods and to view our business
from the same perspective as our management. Because we
cannot predict the timing and amount of expenses or gains
associated with certain non-recurring items; asset impairment
charges; gains or losses related to discontinued operations and
divestitures; facility closing, reorganization and realignment
costs; costs associated with the early retirement of long-term
debt; gains (losses) on the mark-to-market of our derivative
contracts; litigation settlements; incremental non-cash trademark
amortization triggered by the launch of a national fresh white milk
brand; and certain other charges, our management does not
consider these items when evaluating our performance, when making
decisions regarding the allocation of resources, in determining
incentive compensation for management, or in determining earnings
estimates.
We have defined Adjusted EBITDA as net income (loss), which is
the most comparable GAAP financial measure, adjusted for the items
above as well as interest, taxes, depreciation and amortization. We
believe Adjusted EBITDA is a useful measure for analyzing the
performance of our business and is an indicator of our ability to
incur and service indebtedness and generate free cash flow. We also
believe that EBITDA measures are commonly reported and widely used
by investors and other interested parties as measures of a
company's operating performance and debt servicing ability because
such measures assist in comparing performance on a consistent basis
without regard to capital structure, depreciation or amortization
(which can vary significantly) and non-operating factors (such as
historical cost). EBITDA is also a widely-accepted financial
indicator of a company's ability to incur and service indebtedness.
The reconciliation of net income to Adjusted EBITDA for the three
and six months ended June 30, 2015
and 2014 is included in the tables below.
Additionally, we believe free cash flow provided by continuing
operations ("Free Cash Flow") is a meaningful non-GAAP measure that
offers supplemental information and insight regarding the liquidity
of our operations and our ability to generate sufficient cash flow
above what is required in our business to sustain our
operations.
We define Free Cash Flow as net cash provided by continuing
operations less cash payments for capital expenditures. A
reconciliation of net cash provided by continuing operations, which
is the most comparable GAAP financial measure to Free Cash Flow is
included in the tables below.
This non-GAAP financial information is provided as additional
information for investors and is not in accordance with, or an
alternative to, GAAP. Additionally, these non-GAAP measures may be
different than similar measures used by other companies. We believe
that the presentation of these non-GAAP financial measures, when
considered together with our GAAP financial measures and the
reconciliations to the corresponding GAAP financial measures,
provides investors with a more complete understanding of the
factors and trends affecting our business than could be obtained
absent these disclosures. A full reconciliation of our
results and financial measures reported in accordance with GAAP for
the three and six months ended June 30,
2015 and 2014 to the non-GAAP financial measures described
above is set forth herein.
Conference Call/Webcast
A webcast to discuss the
Company's financial results and outlook will be held at
9:00 a.m. ET today and may be heard
live by visiting the "Webcast" section of the Company's website at
http://www.deanfoods.com/. A slide presentation will accompany the
webcast.
About Dean Foods
Dean Foods® is a leading
food and beverage company and the largest processor and
direct-to-store distributor of fluid milk and other dairy and dairy
case products in the United
States. Headquartered in Dallas,
Texas, the Dean Foods portfolio includes
DairyPure®, the country's first and largest fresh, white
milk national brand, and TruMoo®, the leading national flavored
milk brand, along with well-known regional dairy brands such as
Alta Dena®, Berkeley
Farms®, Country Fresh®, Dean's®,
Garelick Farms®, LAND O LAKES®* milk and
cultured products*, Lehigh Valley Dairy Farms®,
Mayfield®, McArthur®, Meadow
Gold®, Oak Farms®, PET®**,
T.G. Lee®,
Tuscan® and more. In all, Dean Foods has more than 50
local and regional dairy brands and private labels. Dean Foods also
makes and distributes ice cream, cultured products, juices, teas,
and bottled water. Over 17,000 employees across the country work
every day to make Dean Foods the most admired and trusted provider
of wholesome, great-tasting dairy products at every occasion. For
more information about Dean Foods and its brands, visit
www.deanfoods.com.
*The LAND O LAKES brand is owned by Land O'Lakes, Inc. and is used
by license.
**PET is a trademark of The J.M. Smucker Company and is used by
license.
Some of the statements made 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,
including statements relating to: (1) projected sales (including
specific product lines and the Company as a whole), profit margins,
net income, earnings per share, free cash flow and debt covenant
compliance, (2) the Company's regional and national branding
initiatives, (3) the Company's innovation, research and development
plans and its ability to successfully launch new products or
brands, (4) commodity prices and other inputs and the Company's
ability to forecast or predict commodity prices, milk production
and milk exports, (5) the Company's cost-savings initiatives,
including plant closures and route reductions, and its ability to
achieve expected savings, (6) planned capital expenditures, (7) the
status of the Company's litigation matters, (8) the Company's
plans related to its capital structure, (9) the Company's dividend
policy and (10) possible repurchases of shares of common stock.
These statements involve risks and uncertainties that may cause
results to differ materially from those set forth in this press
release. Financial projections are based on a number of
assumptions. Actual results could be materially different
than projected if those assumptions are erroneous. The cost
and supply of commodities and other raw materials are determined by
market forces over which the Company has limited or no control.
Sales, operating income, net income, debt covenant compliance,
financial performance and adjusted earnings per share can vary
based on a variety of economic, governmental and competitive
factors, which are identified 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 its products. The
declaration and payment of cash dividends under the Company's
dividend policy remains at the sole discretion of the Board of
Directors or a committee thereof and will depend upon its financial
results, cash requirements, future prospects, restrictions in its
credit agreement and debt covenant compliance, applicable law and
other factors that may be deemed relevant by the Board or such
committee. All forward-looking statements in this press release
speak only as of the date of this press release. The Company
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any such statements to reflect
any change in our expectations with regard thereto or any changes
in the events, conditions or circumstances on which any such
statement is based except as required by law.
CONTACT: Corporate Communications, Jamaison Schuler, +1-214-721-7766; or Investor
Relations, Scott Vopni,
+1-214-303-3438
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Three months
ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
GAAP
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ 2,014,706
|
|
$ 2,393,869
|
|
$ 2,014,706
|
|
$ 2,393,869
|
|
Cost of
sales
|
|
|
1,519,065
|
|
1,994,781
|
|
1,518,925
|
(d)
|
1,993,488
|
(a)
(d)
|
Gross
profit
|
|
|
495,641
|
|
399,088
|
|
495,781
|
|
400,381
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
|
338,092
|
|
334,932
|
|
340,288
|
(d)
|
334,863
|
(d)
|
General and
administrative
|
|
|
87,243
|
|
70,777
|
|
87,237
|
(d)
|
70,692
|
(b)
|
Amortization of
intangibles
|
|
|
8,206
|
|
717
|
|
784
|
(a)
|
717
|
|
Facility
closing and reorganization costs
|
|
|
5,408
|
|
728
|
|
-
|
(b)
|
-
|
(b)
|
Other operating
income
|
|
|
-
|
|
(4,535)
|
|
-
|
|
-
|
(a)
|
Total operating
costs and expenses
|
|
|
438,949
|
|
402,619
|
|
428,309
|
|
406,272
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
|
56,692
|
|
(3,531)
|
|
67,472
|
|
(5,891)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
16,974
|
|
15,221
|
|
16,548
|
(d)
|
14,592
|
(d)
|
Other (income)
expense, net
|
(294)
|
|
48
|
|
(294)
|
|
48
|
|
Income (loss)
from continuing operations before income taxes
|
40,012
|
|
(18,800)
|
|
51,218
|
|
(20,531)
|
|
Income tax
expense (benefit)
|
|
|
13,493
|
|
(17,837)
|
|
19,464
|
(e)
|
(7,801)
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
26,519
|
|
(963)
|
|
31,754
|
|
(12,730)
|
|
Gain on sale of
discontinued operations, net of tax
|
|
-
|
|
318
|
|
-
|
|
-
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
$ 26,519
|
|
$
(645)
|
|
$ 31,754
|
|
$ (12,730)
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
94,386
|
|
93,561
|
|
94,386
|
|
93,561
|
|
Diluted
|
|
|
94,900
|
|
93,561
|
|
94,900
|
|
93,561
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
0.28
|
|
$
(0.01)
|
|
$
0.34
|
|
$
(0.14)
|
|
Income from
discontinued operations
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
0.28
|
|
$
(0.01)
|
|
$
0.34
|
|
$
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
0.28
|
|
$
(0.01)
|
|
$
0.33
|
|
$
(0.14)
|
|
Income from
discontinued operations
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
0.28
|
|
$
(0.01)
|
|
$
0.33
|
|
$
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
|
|
|
|
|
|
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
|
|
Six months
ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
GAAP
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ 4,065,468
|
|
$ 4,734,909
|
|
$ 4,065,468
|
|
$ 4,734,909
|
|
Cost of
sales
|
|
|
3,091,518
|
|
3,919,646
|
|
3,092,659
|
(d)
|
3,918,760
|
(a)
(d)
|
Gross
profit
|
|
|
973,950
|
|
815,263
|
|
972,809
|
|
816,149
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
|
676,276
|
|
674,311
|
|
677,482
|
(d)
|
674,278
|
(d)
|
General and
administrative
|
|
|
174,719
|
|
143,076
|
|
174,731
|
(d)
|
139,447
|
(b)
(d)
|
Amortization of
intangibles
|
|
|
8,912
|
|
1,461
|
|
1,490
|
(a)
|
1,461
|
|
Facility
closing and reorganization costs
|
|
|
6,653
|
|
1,705
|
|
-
|
(b)
|
-
|
(b)
|
Litigation
settlements
|
|
|
-
|
|
(2,521)
|
|
-
|
|
-
|
(d)
|
Impairment of
intangibles
|
|
|
109,910
|
|
-
|
|
-
|
(a)
|
-
|
|
Other operating
income
|
|
|
-
|
|
(4,535)
|
|
-
|
|
-
|
(a)
|
Total operating
costs and expenses
|
|
|
976,470
|
|
813,497
|
|
853,703
|
|
815,186
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
|
(2,520)
|
|
1,766
|
|
119,106
|
|
963
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
33,502
|
|
30,244
|
|
32,650
|
(d)
|
29,169
|
(d)
|
Loss on early
retirement of debt
|
|
|
43,609
|
|
-
|
|
-
|
(c)
|
-
|
|
Other income,
net
|
|
|
(740)
|
|
(273)
|
|
(740)
|
|
(273)
|
|
Income (loss)
from continuing operations before income taxes
|
|
|
(78,891)
|
|
(28,205)
|
|
87,196
|
|
(27,933)
|
|
Income tax
expense (benefit)
|
|
|
(31,759)
|
|
(17,450)
|
|
33,136
|
(e)
|
(10,614)
|
(e)
|
Income (loss)
from continuing operations
|
|
(47,132)
|
|
(10,755)
|
|
54,060
|
|
(17,319)
|
|
Gain (loss) on
sale of discontinued operations
|
|
(89)
|
|
1,154
|
|
-
|
(d)
|
-
|
(d)
|
Net income
(loss)
|
|
|
$ (47,221)
|
|
$
(9,601)
|
|
$ 54,060
|
|
$ (17,319)
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
94,308
|
|
93,978
|
|
94,308
|
|
93,978
|
|
Diluted
|
|
|
94,308
|
|
93,978
|
|
94,762
|
(f)
|
93,978
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
(0.50)
|
|
$
(0.11)
|
|
$
0.57
|
|
$
(0.18)
|
|
Income from
discontinued operations
|
|
|
-
|
|
0.01
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
(0.50)
|
|
$
(0.10)
|
|
$
0.57
|
|
$
(0.18)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
(0.50)
|
|
$
(0.11)
|
|
$
0.57
|
|
$
(0.18)
|
|
Income from
discontinued operations
|
|
|
-
|
|
0.01
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
(0.50)
|
|
$
(0.10)
|
|
$
0.57
|
|
$
(0.18)
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
|
|
|
|
|
|
|
DEAN FOODS
COMPANY
|
Computation of
Adjusted EBITDA
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$ 31,754
|
|
$(12,730)
|
|
$ 54,060
|
|
$(17,319)
|
Interest
expense
|
|
16,548
|
|
14,592
|
|
32,650
|
|
29,169
|
Income tax
expense (benefit)
|
|
19,464
|
|
(7,801)
|
|
33,136
|
|
(10,614)
|
Depreciation
and amortization
|
|
38,983
|
|
39,440
|
|
76,880
|
|
78,117
|
Adjusted
EBITDA
|
|
|
$ 106,749
|
|
$ 33,501
|
|
$ 196,726
|
|
$ 79,353
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
ASSETS
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 105,690
|
|
$
16,362
|
|
|
|
|
|
|
Other current
assets
|
|
959,118
|
|
1,163,698
|
|
|
|
|
|
|
Total current
assets
|
|
|
1,064,808
|
|
1,180,060
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
1,140,784
|
|
1,172,596
|
|
|
|
|
|
|
Intangibles and
other assets, net
|
|
303,327
|
|
416,980
|
|
|
|
|
|
|
Total
Assets
|
|
|
$ 2,508,919
|
|
$ 2,769,636
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities, excluding debt
|
|
|
$ 718,508
|
|
$
793,753
|
|
|
|
|
|
|
Total long-term
debt, including current portion
|
|
839,266
|
|
917,179
|
|
|
|
|
|
|
Other long-term
liabilities
|
|
376,976
|
|
431,386
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
574,169
|
|
627,318
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
|
$ 2,508,919
|
|
$ 2,769,636
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
Six months
ended
|
|
|
June
30,
|
Operating
Activities
|
2015
|
|
2014
|
Net cash provided by
operating activities
|
|
$ 271,771
|
|
$ 25,268
|
|
|
|
|
|
Investing
Activities
|
|
|
|
Payments for
property, plant and equipment
|
(48,051)
|
|
(53,622)
|
Proceeds from
sale of fixed assets
|
12,815
|
|
17,556
|
Net cash used in investing
activities
|
|
(35,236)
|
|
(36,066)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Net proceeds
from debt
|
394,099
|
|
87,930
|
Early
retirement of long-term debt
|
(476,188)
|
|
-
|
Premiums paid
on early retirement of debt
|
(37,309)
|
|
-
|
Payments of
financing costs
|
(15,091)
|
|
(1,107)
|
Issuance of
common stock, net of share repurchases
|
-
|
|
(25,000)
|
Cash dividend
paid
|
(13,212)
|
|
(13,089)
|
Issuance of
common stock, net of share repurchases
|
939
|
|
4,953
|
Other
|
199
|
|
284
|
Net cash provided by
(used in) financing activities
|
|
(146,563)
|
|
53,971
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(644)
|
|
(171)
|
|
|
|
|
|
Increase in
cash and cash equivalents
|
89,328
|
|
43,002
|
Cash and cash
equivalents, beginning of period
|
16,362
|
|
16,762
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
$ 105,690
|
|
$ 59,764
|
|
|
|
|
|
|
|
|
|
|
Computation
of Free Cash Flow provided by (used in) continuing
operations
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
|
$ 271,771
|
|
$ 25,268
|
Payments for
property, plant and equipment
|
|
(48,051)
|
|
(53,622)
|
|
|
|
|
|
Free cash flow provided by
(used in) continuing operations
|
|
$ 223,720
|
|
$ (28,354)
|
DEAN FOODS
COMPANY
|
Reconciliation
of GAAP to Adjusted Earnings
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
June 30,
2015
|
|
|
|
|
|
|
|
|
|
|
|
Asset
write-downs and (gain) loss on
|
|
Facility
closing, reorganization and
|
|
Other
|
|
Income
|
|
|
|
|
|
|
|
|
sale of
assets
|
|
realignment
costs
|
|
adjustments
|
|
tax
|
|
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
|
|
$ 69,522
|
|
$
-
|
|
$
-
|
|
$ (2,050)
|
|
$
-
|
|
$ 67,472
|
Facility
closing and reorganization costs
|
|
|
|
(5,408)
|
|
-
|
|
5,408
|
|
-
|
|
-
|
|
-
|
Amortization of
intangibles
|
|
|
|
(7,422)
|
|
7,422
|
|
-
|
|
-
|
|
-
|
|
-
|
Total operating
income
|
56,692
|
|
7,422
|
|
5,408
|
|
(2,050)
|
|
-
|
|
67,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
16,974
|
|
-
|
|
-
|
|
(426)
|
|
-
|
|
16,548
|
Other income,
net
|
|
|
|
(294)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(294)
|
Income tax
expense
|
|
|
|
13,493
|
|
-
|
|
-
|
|
-
|
|
5,971
|
|
19,464
|
Income from
continuing operations
|
26,519
|
|
7,422
|
|
5,408
|
|
(1,624)
|
|
(5,971)
|
|
31,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$ 26,519
|
|
$
7,422
|
|
$
5,408
|
|
$ (1,624)
|
|
$ (5,971)
|
|
$ 31,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$ 0.28
|
|
$
0.08
|
|
$
0.05
|
|
$ (0.02)
|
|
$ (0.06)
|
|
$ 0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
write-downs and (gain) loss
on sale of assets
|
|
Facility
closing, reorganization
and realignment
costs
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
|
|
$ (7,338)
|
|
$
852
|
|
$
85
|
|
$
510
|
|
$
-
|
|
$ (5,891)
|
Facility
closing and reorganization costs
|
|
|
|
(728)
|
|
-
|
|
728
|
|
-
|
|
-
|
|
-
|
Other operating
income
|
|
|
|
4,535
|
|
(4,535)
|
|
-
|
|
-
|
|
-
|
|
-
|
Total operating
income (loss)
|
(3,531)
|
|
(3,683)
|
|
813
|
|
510
|
|
-
|
|
(5,891)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
15,221
|
|
-
|
|
-
|
|
(629)
|
|
-
|
|
14,592
|
Other expense,
net
|
|
|
|
48
|
|
-
|
|
-
|
|
-
|
|
-
|
|
48
|
Income tax
expense (benefit)
|
|
|
|
(17,837)
|
|
-
|
|
-
|
|
-
|
|
10,036
|
|
(7,801)
|
Income (loss)
from continuing operations
|
(963)
|
|
(3,683)
|
|
813
|
|
1,139
|
|
(10,036)
|
|
(12,730)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax
|
318
|
|
-
|
|
-
|
|
(318)
|
|
-
|
|
-
|
Net income
(loss)
|
$ (645)
|
|
$
(3,683)
|
|
$
813
|
|
$
821
|
|
$ (10,036)
|
|
$ (12,730)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per share
|
$ (0.01)
|
|
$
(0.04)
|
|
$
0.01
|
|
$ 0.01
|
|
$ (0.11)
|
|
$ (0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
|
|
|
|
|
|
|
|
|
|
DEAN FOODS
COMPANY
|
Reconciliation
of GAAP to Adjusted Earnings
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
|
|
|
|
|
June 30,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
write-downs
|
|
Facility
closing,
|
|
Loss on
early
|
|
|
|
|
|
|
|
|
|
|
|
|
and (gain) loss
on
|
|
reorganization
and
|
|
retirement
of
|
|
Other
|
|
Income
|
|
|
|
|
|
|
|
|
sale of
assets
|
|
realignment
costs
|
|
debt
|
|
adjustments
|
|
tax
|
|
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
|
|
$ 121,465
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
(2,359)
|
|
$
-
|
|
$ 119,106
|
Facility
closing and reorganization costs
|
|
|
|
(6,653)
|
|
-
|
|
6,653
|
|
-
|
|
-
|
|
-
|
|
-
|
Impairment of
intangibles
|
|
|
|
(109,910)
|
|
109,910
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Amortization of
intangibles
|
|
|
|
(7,422)
|
|
7,422
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total operating
income (loss)
|
(2,520)
|
|
117,332
|
|
6,653
|
|
-
|
|
(2,359)
|
|
-
|
|
119,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
33,502
|
|
-
|
|
-
|
|
-
|
|
(852)
|
|
-
|
|
32,650
|
Loss on early
retirement of debt
|
|
|
|
43,609
|
|
-
|
|
-
|
|
(43,609)
|
|
-
|
|
-
|
|
-
|
Other income,
net
|
|
|
|
(740)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(740)
|
Income tax
expense (benefit)
|
|
|
|
(31,759)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
64,895
|
|
33,136
|
Income (loss)
from continuing operations
|
(47,132)
|
|
117,332
|
|
6,653
|
|
43,609
|
|
(1,507)
|
|
(64,895)
|
|
54,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
discontinued operations, net of tax
|
(89)
|
|
-
|
|
-
|
|
-
|
|
89
|
|
-
|
|
-
|
Net income
(loss)
|
$ (47,221)
|
|
$
117,332
|
|
$
6,653
|
|
$
43,609
|
|
$
(1,418)
|
|
$ (64,895)
|
|
$ 54,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per share (f)
|
$ (0.50)
|
|
$
1.25
|
|
$
0.06
|
|
$
0.46
|
|
$
(0.01)
|
|
$
(0.69)
|
|
$ 0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
|
|
|
|
|
June 30,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
write-downs
|
|
Facility
closing,
|
|
Loss on
early
|
|
|
|
|
|
|
|
|
|
|
|
|
and (gain) loss
on
|
|
reorganization
and
|
|
retirement
of
|
|
Other
|
|
Income
|
|
|
|
|
|
|
|
|
sale of
assets
|
|
realignment
costs
|
|
debt
|
|
adjustments
|
|
tax
|
|
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
|
|
$ (3,585)
|
|
$
1,278
|
|
$
3,739
|
|
$
-
|
|
$
(469)
|
|
$
-
|
|
$
963
|
Facility
closing and reorganization costs
|
|
|
|
(1,705)
|
|
-
|
|
1,705
|
|
-
|
|
-
|
|
-
|
|
-
|
Litigation
settlements
|
|
|
|
2,521
|
|
-
|
|
-
|
|
-
|
|
(2,521)
|
|
-
|
|
-
|
Other operating
income
|
|
|
|
4,535
|
|
(4,535)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total operating
income
|
1,766
|
|
(3,257)
|
|
5,444
|
|
-
|
|
(2,990)
|
|
-
|
|
963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
30,244
|
|
-
|
|
-
|
|
-
|
|
(1,075)
|
|
-
|
|
29,169
|
Other income,
net
|
|
|
|
(273)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(273)
|
Income tax
expense (benefit)
|
|
|
|
(17,450)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
6,836
|
|
(10,614)
|
Income (loss)
from continuing operations
|
(10,755)
|
|
(3,257)
|
|
5,444
|
|
-
|
|
(1,915)
|
|
(6,836)
|
|
(17,319)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax
|
|
|
|
1,154
|
|
-
|
|
-
|
|
-
|
|
(1,154)
|
|
-
|
|
-
|
Net income
(loss)
|
$ (9,601)
|
|
$
(3,257)
|
|
$
5,444
|
|
$
-
|
|
$
(3,069)
|
|
$ (6,836)
|
|
$ (17,319)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per share
|
$ (0.10)
|
|
$
(0.04)
|
|
$
0.06
|
|
$
-
|
|
$
(0.03)
|
|
$
(0.07)
|
|
$ (0.18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three and six
months ended June 30, 2015 and 2014, the adjusted results and
certain other non-GAAP financial measures differ from the Company's
results under GAAP due to the exclusion of net gains or net losses
associated with certain non-recurring items, including facility
closing, reorganization and realignment costs; costs associated
with the early retirement of long-term debt; (gains) losses on the
mark-to-market of our derivative contracts; litigation settlements;
discontinued operations; as well as asset impairment and
amortization charges. These adjustments are made to facilitate
meaningful comparisons of our operating performance between periods
as the Company cannot predict the timing and amount of charges
associated with such items.
|
|
|
(a)
|
The adjustment
reflects the elimination of the following:
|
|
|
|
a.
|
In conjunction with
our decision to launch DairyPure in the first quarter of 2015, we
changed certain indefinite lived assets to finite lived resulting
in a triggering event for impairment testing purposes. As a result,
we recorded a non-cash charge of $109.9 million ($68.7 million net
of tax) related to the impairment of certain of our intangible
assets during the six months ended June 30, 2015. In addition, we
recorded amortization expense on the finite lived trademarks of
$7.4 million for the three and six months ended June 30,
2015;
|
|
|
|
b.
|
Accelerated
depreciation related to machinery and equipment at certain of our
production facilities as a result of revisions made to the
estimated remaining useful lives due to our evaluation of the
impact that we expect changes in our business to have on estimated
future cash flows at those production facilities in 2014;
and
|
|
|
|
c.
|
Other operating
income related to the final disposal of assets associated with the
closure of one of our manufacturing facilities in 2014.
|
|
|
|
|
|
(b)
|
The adjustment
reflects the elimination of severance charges and non-cash asset
write-downs related to approved facility closings and restructuring
plans, as well as other organizational realignment
activities.
|
|
|
|
|
|
(c)
|
During the first
quarter of 2015, we retired the remaining principal amount of
$476.2 million of our 2016 senior notes. As a result we recorded a
$38.3 million pre-tax loss on the early extinguishment of debt in
the first quarter of 2015, which consisted of debt redemption
premiums of $37.3 million, a write-off of unamortized debt issue
costs of $0.8 million and a write-off of the remaining bond
discount and interest rate swaps of $0.2 million. In addition, in
conjunction with the execution of a new credit agreement and
amendment our receivables-backed facility in the first quarter of
2015, we wrote off unamortized debt issue costs of $5.3 million.
The adjustment reflects the elimination of these losses.
|
|
|
(d)
|
The adjustment
reflects the elimination of the following:
|
|
|
|
a.
|
The (gain) loss on
the mark to market of our commodity derivative contracts. Effective
January 1, 2014, we de-designated all open commodity derivative
positions that were previously designated as hedges. As of the
de-designation date, all commodities contracts are now marked to
market in our income statement at each reporting period and a
derivative asset or liability is recorded on our balance
sheet;
|
|
|
|
b.
|
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. The Court granted final approval of the
settlement agreement on June 15, 2012;
|
|
|
|
c.
|
A reduction in a
litigation settlement liability due to plaintiff class "opt-outs"
of $2.5 million during the six months ended June 30, 2014;
and
|
|
|
|
d.
|
A taxing authority
settlement of certain retained contingent obligations related to
prior discontinued operations.
|
|
|
(e)
|
The adjustment
reflects the income tax impact on adjustments (a) through (d) and
to reflect our adjusted tax rate at 38%, which we believe
represents our normalized long-term effective tax rate as a U.S.
domiciled business.
|
|
|
(f)
|
The adjustment
reflects an add-back of the dilutive shares, which were
anti-dilutive for GAAP purposes.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dean-foods-announces-second-quarter-2015-results-300125817.html
SOURCE Dean Foods Company