Quarterly Report (10-q)

Date : 08/08/2019 @ 11:06AM
Source : Edgar (US Regulatory)
Stock : Dean Foods Company New (DF)
Quote : 1.32  -0.12 (-8.33%) @ 8:58PM
Dean Foods share price Chart

Quarterly Report (10-q)

false--12-31Q220190000931336599400054020000.01914387689188432091438768918843200.010.010.010P1Y0.50358000000521000539000291000000P3YP3Y000 0000931336 2019-01-01 2019-06-30 0000931336 2019-08-05 0000931336 2018-12-31 0000931336 2019-06-30 0000931336 2018-04-01 2018-06-30 0000931336 2018-01-01 2018-06-30 0000931336 2019-04-01 2019-06-30 0000931336 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0000931336 2018-01-01 2018-03-31 0000931336 us-gaap:RetainedEarningsMember 2017-12-31 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000931336 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0000931336 us-gaap:CommonStockMember 2017-12-31 0000931336 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0000931336 us-gaap:NoncontrollingInterestMember 2018-06-30 0000931336 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000931336 2018-03-31 0000931336 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0000931336 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000931336 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0000931336 us-gaap:CommonStockMember 2018-03-31 0000931336 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0000931336 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0000931336 us-gaap:CommonStockMember 2018-06-30 0000931336 2017-12-31 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0000931336 us-gaap:RetainedEarningsMember 2018-03-31 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000931336 2018-06-30 0000931336 us-gaap:RetainedEarningsMember 2018-06-30 0000931336 us-gaap:NoncontrollingInterestMember 2017-12-31 0000931336 us-gaap:NoncontrollingInterestMember 2018-03-31 0000931336 2019-01-01 2019-03-31 0000931336 us-gaap:CommonStockMember 2019-06-30 0000931336 us-gaap:RetainedEarningsMember 2018-12-31 0000931336 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0000931336 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000931336 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000931336 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000931336 us-gaap:RetainedEarningsMember 2019-03-31 0000931336 us-gaap:RetainedEarningsMember 2019-06-30 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000931336 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0000931336 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000931336 us-gaap:NoncontrollingInterestMember 2019-04-01 2019-06-30 0000931336 us-gaap:CommonStockMember 2019-03-31 0000931336 us-gaap:CommonStockMember 2018-12-31 0000931336 2019-03-31 0000931336 us-gaap:NoncontrollingInterestMember 2018-12-31 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000931336 us-gaap:NoncontrollingInterestMember 2019-06-30 0000931336 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000931336 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000931336 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000931336 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000931336 us-gaap:NoncontrollingInterestMember 2019-03-31 0000931336 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0000931336 df:CulturedMember 2019-01-01 2019-06-30 0000931336 df:OtherProductRevenuesMember 2019-04-01 2019-06-30 0000931336 df:CulturedMember 2018-04-01 2018-06-30 0000931336 df:SalesofOtherBulkCommoditiesMember 2019-01-01 2019-06-30 0000931336 df:IceCreamMember 2019-04-01 2019-06-30 0000931336 df:OtherBeveragesMember 2018-01-01 2018-06-30 0000931336 df:FluidMilkMember 2019-04-01 2019-06-30 0000931336 df:FluidMilkMember 2018-04-01 2018-06-30 0000931336 df:IceCreamMember 2018-01-01 2018-06-30 0000931336 df:IceCreamMember 2019-01-01 2019-06-30 0000931336 us-gaap:ProductMember 2019-04-01 2019-06-30 0000931336 df:FluidMilkMember 2019-01-01 2019-06-30 0000931336 df:IceCreamMember 2018-04-01 2018-06-30 0000931336 df:SalesofExcessRawMaterialsandBulkCommoditiesMember 2019-01-01 2019-06-30 0000931336 df:FreshCreamMember 2019-04-01 2019-06-30 0000931336 df:FreshCreamMember 2018-04-01 2018-06-30 0000931336 us-gaap:ProductMember 2018-04-01 2018-06-30 0000931336 df:FreshCreamMember 2018-01-01 2018-06-30 0000931336 df:SalesofExcessRawMaterialsandBulkCommoditiesMember 2018-01-01 2018-06-30 0000931336 df:OtherBeveragesMember 2018-04-01 2018-06-30 0000931336 df:FreshCreamMember 2019-01-01 2019-06-30 0000931336 df:CulturedMember 2019-04-01 2019-06-30 0000931336 df:SalesofOtherBulkCommoditiesMember 2018-04-01 2018-06-30 0000931336 df:ESLandOtherDairyProductsMember 2018-04-01 2018-06-30 0000931336 df:ESLandOtherDairyProductsMember 2019-04-01 2019-06-30 0000931336 us-gaap:ProductMember 2019-01-01 2019-06-30 0000931336 df:SalesofOtherBulkCommoditiesMember 2018-01-01 2018-06-30 0000931336 df:OtherProductRevenuesMember 2019-01-01 2019-06-30 0000931336 df:SalesofOtherBulkCommoditiesMember 2019-04-01 2019-06-30 0000931336 df:OtherBeveragesMember 2019-01-01 2019-06-30 0000931336 df:OtherProductRevenuesMember 2018-01-01 2018-06-30 0000931336 us-gaap:ProductMember 2018-01-01 2018-06-30 0000931336 df:SalesofExcessRawMaterialsandBulkCommoditiesMember 2018-04-01 2018-06-30 0000931336 df:OtherBeveragesMember 2019-04-01 2019-06-30 0000931336 df:CulturedMember 2018-01-01 2018-06-30 0000931336 df:FluidMilkMember 2018-01-01 2018-06-30 0000931336 df:OtherProductRevenuesMember 2018-04-01 2018-06-30 0000931336 df:ESLandOtherDairyProductsMember 2018-01-01 2018-06-30 0000931336 df:ESLandOtherDairyProductsMember 2019-01-01 2019-06-30 0000931336 df:SalesofExcessRawMaterialsandBulkCommoditiesMember 2019-04-01 2019-06-30 0000931336 df:PrivateLabelDairyProductsMember 2018-04-01 2018-06-30 0000931336 df:PrivateLabelDairyProductsMember 2019-01-01 2019-06-30 0000931336 df:BrandedDairyProductsMember 2019-04-01 2019-06-30 0000931336 df:BrandedDairyProductsMember 2018-01-01 2018-06-30 0000931336 df:BrandedDairyProductsMember 2019-01-01 2019-06-30 0000931336 df:PrivateLabelDairyProductsMember 2018-01-01 2018-06-30 0000931336 df:PrivateLabelDairyProductsMember 2019-04-01 2019-06-30 0000931336 df:BrandedDairyProductsMember 2018-04-01 2018-06-30 0000931336 df:OrganicValleyFreshJointVentureMember 2019-04-01 2019-06-30 0000931336 df:GoodKarmaMember 2018-06-29 2018-06-29 0000931336 df:OrganicValleyFreshJointVentureMember 2019-01-01 2019-06-30 0000931336 df:OrganicValleyFreshJointVentureMember 2018-01-01 2018-06-30 0000931336 df:GoodKarmaMember 2018-06-29 0000931336 df:GoodKarmaMember 2019-06-30 0000931336 df:OrganicValleyFreshJointVentureMember 2017-07-01 2017-09-30 0000931336 df:GoodKarmaMember 2018-10-12 2018-10-12 0000931336 df:OrganicValleyFreshJointVentureMember 2018-04-01 2018-06-30 0000931336 df:OrganicValleyFreshJointVentureMember 2017-09-30 0000931336 srt:MinimumMember us-gaap:TrademarksMember 2019-01-01 2019-06-30 0000931336 us-gaap:TrademarksMember 2019-01-01 2019-06-30 0000931336 2018-12-01 2018-12-31 0000931336 srt:MaximumMember us-gaap:TrademarksMember 2019-01-01 2019-06-30 0000931336 us-gaap:TrademarksMember 2018-12-31 0000931336 us-gaap:CustomerRelationshipsMember 2019-01-01 2019-06-30 0000931336 us-gaap:CustomerRelationshipsMember 2018-12-31 0000931336 us-gaap:TrademarksMember 2019-06-30 0000931336 us-gaap:CustomerRelationshipsMember 2019-06-30 0000931336 us-gaap:TrademarksMember 2018-01-01 2018-12-31 0000931336 us-gaap:TrademarksMember 2018-12-31 0000931336 2018-01-01 2018-12-31 0000931336 us-gaap:CustomerRelationshipsMember 2018-01-01 2018-12-31 0000931336 us-gaap:TrademarksMember 2019-06-30 0000931336 srt:MaximumMember 2019-01-01 2019-06-30 0000931336 srt:MinimumMember 2019-01-01 2019-06-30 0000931336 us-gaap:RevolvingCreditFacilityMember df:ReceivablesSecuritizationFacilityMember 2019-06-30 0000931336 us-gaap:RevolvingCreditFacilityMember df:ReceivablesSecuritizationFacilityMember us-gaap:LetterOfCreditMember 2019-06-30 0000931336 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember 2019-02-22 0000931336 df:SeniorNotesDue2023Member us-gaap:SeniorNotesMember 2015-02-25 0000931336 us-gaap:RevolvingCreditFacilityMember df:ReceivablesSecuritizationFacilityMember 2019-02-22 2019-02-22 0000931336 df:SeniorNotesDue2023Member us-gaap:SeniorNotesMember 2019-01-01 2019-06-30 0000931336 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember us-gaap:BaseRateMember 2019-02-22 2019-02-22 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember 2019-02-22 2019-02-22 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember 2019-01-01 2019-06-30 0000931336 us-gaap:RevolvingCreditFacilityMember df:ReceivablesSecuritizationFacilityMember 2019-01-01 2019-06-30 0000931336 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember us-gaap:EurodollarMember 2019-02-22 2019-02-22 0000931336 srt:SubsidiariesMember 2019-06-30 0000931336 df:SeniorNotesDue2023Member us-gaap:SeniorNotesMember 2019-06-30 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember 2019-02-22 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember 2019-06-30 0000931336 us-gaap:RevolvingCreditFacilityMember df:ReceivablesSecuritizationFacilityMember 2019-02-22 0000931336 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember us-gaap:EurodollarMember 2019-02-22 2019-02-22 0000931336 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember us-gaap:BaseRateMember 2019-02-22 2019-02-22 0000931336 srt:SubsidiariesMember 2018-12-31 0000931336 srt:MinimumMember us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember us-gaap:LetterOfCreditMember 2019-02-22 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember df:SwingLineLoanMember 2019-02-22 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember 2019-06-28 2019-06-28 0000931336 srt:MaximumMember us-gaap:RevolvingCreditFacilityMember df:ReceivablesSecuritizationFacilityMember 2019-01-17 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember us-gaap:LetterOfCreditMember 2019-02-22 0000931336 us-gaap:RevolvingCreditFacilityMember df:CreditFacilityMember us-gaap:LetterOfCreditMember 2019-06-30 0000931336 srt:ParentCompanyMember 2019-06-30 0000931336 srt:ParentCompanyMember us-gaap:SecuredDebtMember 2019-06-30 0000931336 srt:ParentCompanyMember df:SeniorNotesDue2023Member 2018-12-31 0000931336 srt:ParentCompanyMember df:SeniorNotesDue2023Member 2019-06-30 0000931336 srt:ParentCompanyMember us-gaap:SecuredDebtMember 2018-12-31 0000931336 srt:SubsidiariesMember df:ReceivablesSecuritizationFacilityMember 2019-06-30 0000931336 srt:SubsidiariesMember df:ReceivablesSecuritizationFacilityMember 2018-12-31 0000931336 srt:ParentCompanyMember 2018-12-31 0000931336 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0000931336 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member 2018-12-31 0000931336 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel3Member 2018-12-31 0000931336 us-gaap:CommodityContractMember 2018-12-31 0000931336 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2018-12-31 0000931336 us-gaap:MoneyMarketFundsMember 2018-12-31 0000931336 us-gaap:FairValueInputsLevel2Member df:MutualFundsMember 2018-12-31 0000931336 us-gaap:FairValueInputsLevel3Member df:MutualFundsMember 2018-12-31 0000931336 df:MutualFundsMember 2018-12-31 0000931336 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2018-12-31 0000931336 us-gaap:FairValueInputsLevel3Member us-gaap:MoneyMarketFundsMember 2018-12-31 0000931336 us-gaap:FairValueInputsLevel1Member df:MutualFundsMember 2018-12-31 0000931336 us-gaap:NondesignatedMember 2018-12-31 0000931336 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-12-31 0000931336 us-gaap:OtherCurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-06-30 0000931336 us-gaap:NondesignatedMember 2019-06-30 0000931336 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2019-06-30 0000931336 us-gaap:OtherNoncurrentAssetsMember us-gaap:CommodityContractMember us-gaap:NondesignatedMember 2018-12-31 0000931336 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel3Member 2019-06-30 0000931336 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel1Member 2019-06-30 0000931336 us-gaap:CommodityContractMember us-gaap:FairValueInputsLevel2Member 2019-06-30 0000931336 us-gaap:CommodityContractMember 2019-06-30 0000931336 us-gaap:FairValueInputsLevel1Member df:MutualFundsMember 2019-06-30 0000931336 us-gaap:FairValueInputsLevel3Member df:MutualFundsMember 2019-06-30 0000931336 us-gaap:FairValueInputsLevel2Member df:MutualFundsMember 2019-06-30 0000931336 df:MutualFundsMember 2019-06-30 0000931336 us-gaap:FairValueInputsLevel3Member us-gaap:MoneyMarketFundsMember 2019-06-30 0000931336 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2019-06-30 0000931336 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2019-06-30 0000931336 us-gaap:MoneyMarketFundsMember 2019-06-30 0000931336 us-gaap:PerformanceSharesMember 2019-04-01 2019-06-30 0000931336 us-gaap:PhantomShareUnitsPSUsMember 2019-04-01 2019-06-30 0000931336 us-gaap:RestrictedStockUnitsRSUMember 2018-01-01 2018-06-30 0000931336 us-gaap:RestrictedStockUnitsRSUMember 2019-04-01 2019-06-30 0000931336 us-gaap:RestrictedStockUnitsRSUMember 2018-04-01 2018-06-30 0000931336 us-gaap:PerformanceSharesMember 2019-01-01 2019-06-30 0000931336 us-gaap:PerformanceSharesMember 2018-01-01 2018-06-30 0000931336 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-06-30 0000931336 us-gaap:PhantomShareUnitsPSUsMember 2019-01-01 2019-06-30 0000931336 us-gaap:PerformanceSharesMember 2018-04-01 2018-06-30 0000931336 us-gaap:PhantomShareUnitsPSUsMember 2018-04-01 2018-06-30 0000931336 us-gaap:PhantomShareUnitsPSUsMember 2018-01-01 2018-06-30 0000931336 us-gaap:PerformanceSharesMember 2019-06-30 0000931336 us-gaap:PerformanceSharesMember 2018-12-31 0000931336 us-gaap:PhantomShareUnitsPSUsMember 2018-12-31 0000931336 us-gaap:PhantomShareUnitsPSUsMember 2019-06-30 0000931336 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000931336 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000931336 df:EmployeesMember us-gaap:RestrictedStockUnitsRSUMember 2019-06-30 0000931336 df:NonEmployeeDirectorsMember us-gaap:RestrictedStockUnitsRSUMember 2018-12-31 0000931336 us-gaap:RestrictedStockUnitsRSUMember 2019-06-30 0000931336 df:NonEmployeeDirectorsMember us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-06-30 0000931336 df:EmployeesMember us-gaap:RestrictedStockUnitsRSUMember 2018-12-31 0000931336 df:EmployeesMember us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-06-30 0000931336 df:NonEmployeeDirectorsMember us-gaap:RestrictedStockUnitsRSUMember 2019-06-30 0000931336 us-gaap:RestrictedStockUnitsRSUMember 2018-12-31 0000931336 srt:MinimumMember us-gaap:PerformanceSharesMember 2019-01-01 2019-06-30 0000931336 srt:MaximumMember us-gaap:PerformanceSharesMember 2019-01-01 2019-06-30 0000931336 2018-03-01 2018-03-31 0000931336 us-gaap:CommonStockMember 2019-01-01 2019-06-30 0000931336 us-gaap:CommonStockMember 2018-01-01 2018-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2019-04-01 2019-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2019-04-01 2019-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2018-04-01 2018-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2018-01-01 2018-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2018-04-01 2018-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2019-01-01 2019-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2019-04-01 2019-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2018-04-01 2018-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2018-04-01 2018-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2019-01-01 2019-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2019-04-01 2019-06-30 0000931336 df:RestrictedStockUnitsandPerformanceStockUnitsMember 2018-01-01 2018-06-30 0000931336 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-06-30 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 2019-06-30 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2019-04-01 2019-06-30 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-06-30 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-06-30 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-06-30 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2018-06-30 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2018-01-01 2018-06-30 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000931336 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-06-30 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-06-30 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2018-04-01 2018-06-30 0000931336 us-gaap:AccumulatedTranslationAdjustmentMember 2018-03-31 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-03-31 0000931336 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-04-01 2018-06-30 0000931336 us-gaap:PensionPlansDefinedBenefitMember 2018-04-01 2018-06-30 0000931336 us-gaap:PensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000931336 us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-06-30 0000931336 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-04-01 2018-06-30 0000931336 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-01-01 2018-06-30 0000931336 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000931336 us-gaap:FacilityClosingMember 2019-06-30 0000931336 df:RestructuringChargesCashMember df:RestructuringChargesOtherMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesCashMember df:ShutdownCostsMember 2018-12-31 0000931336 df:RestructuringChargesCashMember df:RestructuringChargesOtherMember 2019-06-30 0000931336 df:RestructuringChargesCashMember 2019-06-30 0000931336 df:RestructuringChargesCashMember df:RestructuringChargesOtherMember 2018-12-31 0000931336 df:RestructuringChargesCashMember us-gaap:EmployeeSeveranceMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesNoncashMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesCashMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesNoncashMember df:GainonSaleofRelatedAssetsMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesNoncashMember df:LossOnSaleOfRelatedAssetsMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesCashMember df:ShutdownCostsMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesCashMember us-gaap:EmployeeSeveranceMember 2019-06-30 0000931336 df:RestructuringChargesCashMember df:ShutdownCostsMember 2019-06-30 0000931336 df:RestructuringChargesCashMember df:LeaseObligationsAfterFacilityClosingMember 2019-01-01 2019-06-30 0000931336 df:RestructuringChargesCashMember us-gaap:EmployeeSeveranceMember 2018-12-31 0000931336 df:RestructuringChargesCashMember 2018-12-31 0000931336 df:RestructuringChargesCashMember df:LeaseObligationsAfterFacilityClosingMember 2019-06-30 0000931336 df:RestructuringChargesCashMember df:LeaseObligationsAfterFacilityClosingMember 2018-12-31 0000931336 df:RestructuringChargesNoncashMember df:RestructuringChargesOtherMember 2019-01-01 2019-06-30 0000931336 df:FacilityClosingandReorganizationMember 2018-01-01 2018-06-30 0000931336 us-gaap:FacilityClosingMember 2018-01-01 2018-06-30 0000931336 df:FacilityClosingandReorganizationMember 2018-04-01 2018-06-30 0000931336 us-gaap:FacilityClosingMember 2018-04-01 2018-06-30 0000931336 df:FacilityClosingandReorganizationMember 2019-01-01 2019-06-30 0000931336 df:FacilityClosingandReorganizationMember 2019-04-01 2019-06-30 0000931336 us-gaap:FacilityClosingMember 2019-01-01 2019-06-30 0000931336 us-gaap:FacilityClosingMember 2019-04-01 2019-06-30 0000931336 df:ContingentPromissoryNoteMember 2001-12-21 0000931336 srt:MaximumMember 2019-06-30 0000931336 df:ContingentPromissoryNoteMember 2001-12-21 2001-12-21 0000931336 2001-12-21 0000931336 srt:MinimumMember 2019-06-30 0000931336 us-gaap:SalesMember 2018-01-01 2018-06-30 0000931336 us-gaap:SalesMember 2018-04-01 2018-06-30 0000931336 us-gaap:SalesMember df:ForeignOperationsMember 2019-04-01 2019-06-30 0000931336 us-gaap:SalesMember 2019-04-01 2019-06-30 0000931336 us-gaap:SalesMember 2019-01-01 2019-06-30 0000931336 us-gaap:SalesMember df:ForeignOperationsMember 2018-04-01 2018-06-30 0000931336 us-gaap:SalesMember df:ForeignOperationsMember 2019-01-01 2019-06-30 0000931336 us-gaap:SalesMember df:ForeignOperationsMember 2018-01-01 2018-06-30 df:lease df:entity iso4217:USD xbrli:pure iso4217:USD xbrli:shares xbrli:shares df:Facility df:tranche

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q  
 

(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2019
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from              to             
Commission File Number 001-12755  
 
Dean Foods Co mpany
(Exact name of the registrant as specified in its charter)
G598080G41C46A02A01A121.JPG
 
Delaware
 
75-2559681
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. employer
identification no.)
2711 North Haskell Avenue, Suite 3400
Dallas , Texas 75204
( 214 ) 303-3400
(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)  
 
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $.01 par value
DF
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes        No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes        No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer
 
Accelerated filer
 
 
 
 
Non-accelerated filer
 
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes       No  
As of  August 5, 2019 , the number of shares of the registrant's common stock outstanding was: 91,893,614 .



Table of Contents
 


2


Part I — Financial Information
Item 1. Unaudited Condensed Consolidated Financial Statements
DEAN FOODS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
 
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
20,947

 
$
24,176

Receivables, net of allowances of $5,402 and $5,994
509,811

 
589,263

Inventories
283,092

 
255,484

Other current assets
47,352

 
43,357

Total current assets
861,202

 
912,280

Property, plant and equipment, net
965,334

 
1,006,182

Operating lease right of use assets
303,928

 

Identifiable intangible and other assets, net
191,833

 
197,512

Deferred income taxes

 
2,518

Total
$
2,322,297

 
$
2,118,492

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
654,035

 
$
699,661

Current maturities of long term debt and finance leases
1,060

 
1,174

Operating lease liabilities
93,090

 

Total current liabilities
748,185

 
700,835

Long-term debt, net
983,875

 
905,170

Deferred income taxes
4,008

 
13,707

Long-term operating lease liabilities
225,607

 

Other long-term liabilities
164,863

 
184,048

Commitments and contingencies (Note 14)

 

Stockholders’ equity:
 
 
 
Preferred stock, none issued

 

Common stock, 91,884,320 and 91,438,768 shares issued and outstanding, with a par value of $0.01 per share
919

 
914

Additional paid-in capital
664,732

 
661,630

Accumulated deficit
(386,932
)
 
(260,977
)
Accumulated other comprehensive loss
(94,059
)
 
(98,607
)
Total Dean Foods Company stockholders’ equity
184,660

 
302,960

Non-controlling interest
11,099

 
11,772

Total stockholders’ equity
195,759

 
314,732

Total
$
2,322,297

 
$
2,118,492

See Notes to unaudited Condensed Consolidated Financial Statements.

3


DEAN FOODS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
 
Three Months Ended 
 June 30
 
Six Months Ended 
 June 30
 
2019
 
2018
 
2019
 
2018
Net sales
$
1,843,498

 
$
1,951,230

 
$
3,638,932

 
$
3,931,737

Cost of sales
1,464,018

 
1,518,446

 
2,885,699

 
3,050,450

Gross profit
379,480

 
432,784

 
753,233

 
881,287

Operating costs and expenses:
 
 
 
 
 
 
 
Selling and distribution
335,852

 
336,721

 
673,564

 
682,717

General and administrative
71,546

 
65,972

 
144,631

 
141,494

Amortization of intangibles
5,150

 
5,078

 
10,300

 
10,156

Facility closing and reorganization costs, net
7,400

 
67,661

 
11,732

 
76,123

Impairment of long-lived assets
11,860

 
2,232

 
11,860

 
2,232

Other operating income

 
(2,289
)
 

 
(2,289
)
Equity in (earnings) loss of unconsolidated affiliate
(688
)
 
(1,699
)
 
(2,643
)
 
(3,599
)
Total operating costs and expenses
431,120

 
473,676

 
849,444

 
906,834

Operating loss
(51,640
)
 
(40,892
)
 
(96,211
)
 
(25,547
)
Other expense:
 
 
 
 
 
 
 
Interest expense
16,200

 
14,069

 
35,200

 
28,102

Other expense, net
1,500

 
782

 
1,712

 
1,252

Total other expense
17,700

 
14,851

 
36,912

 
29,354

Loss before income taxes
(69,340
)
 
(55,743
)
 
(133,123
)
 
(54,901
)
Income tax benefit
(4,477
)
 
(13,727
)
 
(6,433
)
 
(12,620
)
Loss from continuing operations
(64,863
)
 
(42,016
)
 
(126,690
)
 
(42,281
)
Gain on sale of discontinued operations, net of tax

 
1,922

 

 
1,922

Net loss
(64,863
)
 
(40,094
)
 
(126,690
)
 
(40,359
)
Net loss attributable to non-controlling interest
392

 

 
645

 

Net loss attributable to Dean Foods Company
$
(64,471
)
 
$
(40,094
)
 
$
(126,045
)
 
$
(40,359
)
Average common shares:
 
 
 
 
 
 
 
Basic
91,758,807

 
91,342,652

 
91,643,179

 
91,267,748

Diluted
91,758,807

 
91,342,652

 
91,643,179

 
91,267,748

Basic loss per common share:
 
 
 
 
 
 
 
Loss from continuing operations attributable to Dean Foods Company
$
(0.70
)
 
$
(0.46
)
 
$
(1.38
)
 
$
(0.46
)
Income from discontinued operations attributable to Dean Foods Company

 
0.02

 

 
0.02

Net loss attributable to Dean Foods Company
$
(0.70
)
 
$
(0.44
)
 
$
(1.38
)
 
$
(0.44
)
Diluted loss per common share:
 
 
 
 
 
 
 
Loss from continuing operations attributable to Dean Foods Company
$
(0.70
)
 
$
(0.46
)
 
$
(1.38
)
 
$
(0.46
)
Income from discontinued operations attributable to Dean Foods Company

 
0.02

 

 
0.02

Net loss attributable to Dean Foods Company
$
(0.70
)
 
$
(0.44
)
 
$
(1.38
)
 
$
(0.44
)
See Notes to unaudited Condensed Consolidated Financial Statements.

4


DEAN FOODS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
 
Three Months Ended 
 June 30
 
Six Months Ended 
 June 30
 
2019
 
2018
 
2019
 
2018
Net loss
$
(64,863
)
 
$
(40,094
)
 
$
(126,690
)
 
$
(40,359
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
Pension and other postretirement liability adjustment, net of tax
2,420

 
1,602

 
4,548

 
3,226

Other comprehensive income
2,420

 
1,602

 
4,548

 
3,226

Reclassification of stranded tax effects related to the Tax Act


 

 

 
(16,847
)
Comprehensive loss
(62,443
)
 
(38,492
)
 
(122,142
)
 
(53,980
)
Comprehensive loss attributable to non-controlling interest
392

 

 
645

 

Comprehensive loss attributable to Dean Foods Company
$
(62,051
)
 
$
(38,492
)
 
$
(121,497
)
 
$
(53,980
)

See Notes to unaudited Condensed Consolidated Financial Statements.

5


DEAN FOODS COMPANY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
 
Dean Foods Company Stockholders
 
 
 
 
 
Common Stock
 
 
 
Retained Earnings (Accumulated Deficit)
 
Accumulated Other Comprehensive Income (Loss)
 
Non-
controlling
Interest
 
Total
Stockholders’
Equity 
 
Shares
 
Amount
 
Additional
Paid-In Capital
 
 
 
Balance, January 1, 2018
91,123,759

 
$
911

 
$
659,227

 
$
74,219

 
$
(78,410
)
 
$

 
$
655,947

Issuance of common stock
246,180

 
2

 
40

 

 

 

 
42

Repurchase of shares for withholding taxes
(37,612
)
 

 
(365
)
 

 

 

 
(365
)
Share-based compensation expense

 

 
1,742

 

 

 

 
1,742

Net loss

 

 

 
(265
)
 

 

 
(265
)
Dividends

 

 

 
(8,365
)
 

 

 
(8,365
)
Reclassification of stranded tax effects related to the Tax Act(1)

 

 

 
16,847

 
(16,847
)
 

 

Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension and other postretirement benefit liability adjustment, net of tax of $521

 

 

 

 
1,624

 

 
1,624

Balance, March 31, 2018
91,332,327

 
913

 
660,644

 
82,436

 
(93,633
)
 

 
650,360

Issuance of common stock
41,628

 
1

 
337

 

 

 

 
338

Repurchase of shares for withholding taxes
(5,426
)
 

 
(48
)
 

 

 

 
(48
)
Share-based compensation expense

 

 
1,950

 

 

 

 
1,950

Net (loss) attributable to Dean Foods Company

 

 

 
(40,094
)
 

 

 
(40,094
)
Dividends

 

 

 
(8,399
)
 

 

 
(8,399
)
Fair value of non-controlling interest acquired

 

 

 

 

 
11,752

 
11,752

Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension and other postretirement benefit liability adjustment, net of tax of $539

 

 

 

 
1,602

 


 
1,602

Balance, June 30, 2018
91,368,529

 
$
914

 
$
662,883

 
$
33,943

 
$
(92,031
)
 
$
11,752

 
$
617,461

(1)
Refer to Note 1 - Recently Adopted Accounting Pronouncements within our Notes to unaudited Condensed Consolidated Financial Statements for additional details on the adoption of ASU No. 2018-02 during the first quarter of 2018.
See Notes to unaudited Condensed Consolidated Financial Statements.


6


DEAN FOODS COMPANY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
 
Dean Foods Company Stockholders
 
 
 
 
 
Common Stock
 
 
 
Retained Earnings (Accumulated Deficit)
 
Accumulated Other Comprehensive Income (Loss)
 
Non-
controlling
Interest
 
Total
Stockholders’
Equity 
 
Shares
 
Amount
 
Additional
Paid-In Capital
 
 
 
 
Balance, January 1, 2019
91,438,768

 
$
914

 
$
661,630

 
$
(260,977
)
 
$
(98,607
)
 
$
11,772

 
$
314,732

Issuance of common stock
390,640

 
4

 
159

 

 

 

 
163

Repurchase of shares for withholding taxes
(90,937
)
 
(1
)
 
(375
)
 

 

 

 
(376
)
Share-based compensation expense

 

 
1,293

 

 

 

 
1,293

Net loss attributable to Dean Foods Company

 

 

 
(61,574
)
 

 

 
(61,574
)
Net loss attributable to non-controlling interest

 

 

 

 

 
(253
)
 
(253
)
Repurchase of subsidiary's common stock
 
 
 
 
 
 
 
 
 
 
(28
)
 
(28
)
Dividends(1)

 

 

 
61

 

 

 
61

Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension and other postretirement benefit liability adjustment, net of tax of $291

 

 

 

 
2,128

 

 
2,128

Balance, March 31, 2019
91,738,471

 
917

 
662,707

 
(322,490
)
 
(96,479
)
 
11,491

 
256,146

Issuance of common stock
163,826

 
2

 
209

 

 

 

 
211

Repurchase of shares for withholding taxes
(17,977
)
 

 
(31
)
 

 

 

 
(31
)
Share-based compensation expense

 

 
1,847

 

 

 

 
1,847

Net loss attributable to Dean Foods Company

 

 

 
(64,471
)
 

 

 
(64,471
)
Net loss attributable to non-controlling interest

 

 

 

 

 
(392
)
 
(392
)
Dividends(1)

 

 

 
29

 

 

 
29

Other comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension and other postretirement benefit liability adjustment, net of tax of $0

 

 

 

 
2,420

 

 
2,420

Balance, June 30, 2019
91,884,320

 
$
919

 
$
664,732

 
$
(386,932
)
 
$
(94,059
)
 
$
11,099

 
$
195,759


(1)
During the three months ended March 31, 2019 and the three months ended June 30, 2019 , participants forfeited accrued dividends related to previously-granted restricted share units ("RSUs") and performance share units ("PSUs"), causing a reduction to our accumulated deficit position. Under our long-term incentive compensation program, cash dividend equivalent units for RSUs and PSUs are accrued over time as our Board of Directors declares cash dividends and vest in cash at the same time as the underlying award. No dividends were declared or paid during the three months ended March 31, 2019 and three months ended June 30, 2019 .
See Notes to unaudited Condensed Consolidated Financial Statements.

7


DEAN FOODS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
Six Months Ended 
 June 30
 
2019
 
2018
Operating activities:
 
 
 
Net loss
$
(126,690
)
 
$
(40,359
)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
76,048

 
80,102

Non-cash lease expense
63,028

 

Share-based compensation expense
3,731

 
6,625

Non-cash facility closing and reorganization costs, net
417

 
43,734

Impairment of long-lived assets
11,860

 
2,232

Write-off of financing costs
3,755

 

Other operating income

 
(2,289
)
Equity in earnings of unconsolidated affiliate
(2,643
)
 
(3,599
)
Deferred income taxes
(7,472
)
 
(16,472
)
Other, net
(5,377
)
 
(3,022
)
Changes in operating assets and liabilities:
 
 
 
Receivables, net
79,452

 
84,105

Inventories
(27,610
)
 
2,220

Prepaid expenses and other assets
(2,496
)
 
10,942

Accounts payable and accrued expenses
(32,987
)
 
(43,459
)
Operating lease liabilities
(62,222
)
 

Cash provided by (used in) operating activities
(29,206
)
 
120,760

Investing activities:
 
 
 
Capital spending
(44,983
)
 
(37,292
)
Payments for acquisitions, net of cash acquired

 
(13,324
)
Proceeds from sale of fixed assets
4,632

 
12,418

Cash used in investing activities
(40,351
)
 
(38,198
)
Financing activities:
 
 
 
Debt repayments
(773
)
 
(589
)
Payments of financing costs
(9,561
)
 

Proceeds from senior secured revolver
550,101

 
185,800

Payments for senior secured revolver
(563,001
)
 
(197,000
)
Proceeds from receivables securitization facility
615,000

 
1,240,000

Payments for receivables securitization facility
(525,000
)
 
(1,285,000
)
Repurchase of subsidiary's common stock
(28
)
 

Cash dividends paid

 
(16,438
)
Issuance of common stock, net of share repurchases for withholding taxes
(410
)
 
(413
)
Cash provided by (used in) financing activities
66,328

 
(73,640
)
Change in cash and cash equivalents
(3,229
)
 
8,922

Cash and cash equivalents, beginning of period
24,176

 
16,512

Cash and cash equivalents, end of period
$
20,947

 
$
25,434

See Notes to unaudited Condensed Consolidated Financial Statements.

8


DEAN FOODS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three and Six Months Ended June 30, 2019 and 2018
(Unaudited)
1. Basis of Presentation and Recently Adopted Accounting Pronouncements
Nature of Our Business — We are a leading food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States, with a vision to be the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion.
Basis of Presentation — The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information as well as instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, we have reflected all material adjustments of a normal and recurring nature necessary for the fair presentation of the results for the periods presented.
For further information, refer to the Consolidated Financial Statements and footnotes included in our Annual Report on Form 10-K for the years ended December 31, 2019 and 2018 .
Unless otherwise indicated, references in this report to “we,” “us,” “our” or "the Company" refer to Dean Foods Company and its subsidiaries, taken as a whole.
Recently Adopted Accounting Pronouncements
ASU No. 2016-02 — We adopted ASU 2016-02,  Leases (Topic 842) (the New Lease Standard) as of January 1, 2019. The New Lease Standard requires lessees to recognize a right-of-use (ROU) asset and a lease liability on the balance sheet for operating leases. Accounting for finance leases is substantially unchanged.

We adopted the New Lease Standard using the comparative reporting at adoption method. Under this method, financial results reported in periods prior to January 1, 2019 are unchanged. We also elected the package of practical expedients which among other things, does not require reassessment of lease classification. We have implemented processes and a lease accounting system to ensure adequate internal controls are in place to assess our contracts and enable proper accounting and reporting of financial information.

The adoption of this standard had a significant impact to our condensed consolidated balance sheet due to the recognition of approximately $358 million of operating lease liabilities with corresponding operating lease ROU assets as of January 1, 2019. See Note 6 for further discussion.

Recently Issued Accounting Pronouncements
Effective in 2020
ASU No. 2018-13 — In August 2018, the FASB issued ASU 2018-13, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement . The amendments were issued as a part of the FASB's disclosure framework project, which seeks to improve the effectiveness of disclosures in the notes to the financial statements. The new guidance is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance of this guidance. We do not intend to early adopt this ASU. We do not expect the adoption of ASU 2018-13 to have a material impact on our financial statements.
ASU No. 2018-15 — In August 2018, the FASB issued ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the impact ASU 2018-15 will have on our financial statements. We do not intend to early adopt this ASU. We do not expect the adoption of ASU 2018-15 to have a material impact on our financial statements.

9


Effective in 2021
ASU No. 2018-14 — In August 2018, the FASB issued ASU 2018-14, Compensation — Retirement Benefits —Defined Benefit Plans — General (Subtopic 715-20): Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans , which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures, and adding disclosure requirements identified as relevant. The amendments were issued as a part of the FASB's disclosure framework project, which seeks to improve the effectiveness of disclosures in the notes to the financial statements. The new guidance is effective for public entities for fiscal years beginning after December 15, 2020. Early adoption is permitted. We do not intend to early adopt this ASU. The amendments should be applied retrospectively. We do not expect the adoption of ASU 2018-14 to have a material impact on our financial statements.
2 . Revenue Recognition
Disaggregation of Net Sales
The following table presents a disaggregation of our net sales by product type and revenue source. We believe these categories most appropriately depict the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with our customers.
 
Three Months Ended
 
Six Months Ended
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
 
(In thousands)
Fluid milk
$
1,092,856

 
$
1,157,288

 
$
2,227,752

 
$
2,417,222

Ice cream(1)
316,398

 
321,005

 
541,598

 
560,603

Fresh cream(2)
104,143

 
99,816

 
200,518

 
191,766

Extended shelf life and other dairy products(3)
44,571

 
46,183

 
88,156

 
91,425

Cultured
64,839

 
65,504

 
126,746

 
129,670

Other beverages(4)
65,580

 
66,700

 
133,990

 
137,044

Other(5)
27,756

 
30,794

 
46,651

 
63,098

Subtotal
1,716,143

 
1,787,290

 
3,365,411

 
3,590,828

Sales of excess raw materials
90,122

 
122,880

 
208,515

 
274,682

Sales of other bulk commodities
37,233

 
41,060

 
65,006

 
66,227

Total net sales
$
1,843,498

 
$
1,951,230

 
$
3,638,932

 
$
3,931,737


(1)
Includes ice cream, ice cream mix and ice cream novelties.
(2)
Includes half-and-half and whipping creams.
(3)
Includes creamers and other extended shelf life fluids.
(4)
Includes fruit juice, fruit flavored drinks, iced tea, water and flax-based milk.
(5)
Includes items for resale such as butter, cheese, eggs and milkshakes.



10


The following table presents a disaggregation of our net product sales between sales of Company-branded products versus sales of private label products:
 
Three Months Ended
 
Six Months Ended
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
 
(In thousands)
Branded products
$
856,984

 
$
871,269

 
$
1,708,480

 
$
1,763,395

Private label products
859,159

 
916,021

 
1,656,931

 
1,827,433

Subtotal
1,716,143

 
1,787,290

 
3,365,411

 
3,590,828

Sales of excess raw materials
90,122

 
122,880

 
208,515

 
274,682

Sales of other bulk commodities
37,233

 
41,060

 
65,006

 
66,227

Total net sales
$
1,843,498

 
$
1,951,230

 
$
3,638,932

 
$
3,931,737


Revenue Recognition and Nature of Products and Services
We manufacture, market and distribute a wide variety of branded and private label dairy and dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. Revenue is recognized upon transfer of control of promised goods or services to our customers’ facility in an amount that reflects the consideration we expect to ultimately receive in exchange for those promised goods or services. Revenue is recognized net of allowances for product returns, trade promotions and prompt pay and other discounts.
The substantial majority of our revenue is derived from the sale of fluid milk, ice cream and other dairy products, which includes sales of both Company-branded products as well as private label products. In addition, we derive revenue from the sale of excess raw materials and the sale of other bulk commodities.
Our portfolio of products includes fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy and dairy case products. We sell these products under national, regional and local proprietary or licensed brands, or under private labels. Our sales of excess raw materials consist primarily of bulk cream sales. As a result of the purchase of raw milk, we obtain more butterfat than is needed in our production process. Excess butterfat is sold, primarily in the form of bulk cream, to third parties. Additionally, in certain cases we may be required to externally purchase bulk cream in order to fulfill minimum supply requirements for our customers. In these cases, we purchase bulk cream from other processors or suppliers and resell it to our customers to fulfill our contractual requirements with them.
In all cases, we recognize revenue upon delivery to our customers as we have determined that this is the point at which control is transferred, our performance obligation is complete, and we are entitled to consideration.
Contractual Arrangements with Customers
The majority of our sales are to retailers, warehouse clubs, distributors, foodservice outlets, educational institutions and governmental entities with whom we have contractual agreements. Our sales of excess raw materials and other bulk commodities are primarily to dairy cooperatives, dairy processors or other manufacturers for use as a raw ingredient in their respective manufacturing processes. Our customer contracts typically contain standard terms and conditions and a term sheet. In some cases, upon expiration, these arrangements may continue with the same terms and may not be formally renewed. Additionally, we have a number of informal sales arrangements with certain local and regional customers, which we consider to be contracts based on the criteria outlined in ASC 606. Payment terms and conditions vary by customer, but we generally provide credit terms to customers ranging up to 30 days; therefore, we have determined that our contracts do not include a significant financing component. We perform ongoing credit evaluations of our customers and maintain allowances for potential credit losses based on our historical experience.
We have determined that we satisfy our performance obligations related to our customer contracts at a point in time, as opposed to over time, and accordingly, revenue is recognized at a point in time across all of our revenue streams. Therefore, we do not have any contract balances with our customers recorded on our unaudited Condensed Consolidated Balance Sheets.

11


Sales Incentives and Other Promotional Programs
We routinely offer sales incentives and discounts through various regional and national programs to our customers and consumers. These programs include scan backs, product rebates, product returns, trade promotions and co-op advertising, product discounts, product coupons and amounts paid to customers for shelf space in retail stores. The expenses associated with these programs are accounted for as reductions to the transaction price of our products and are therefore recorded as reductions to gross sales.
Some of our sales incentives are recorded by estimating incentive costs or redemption rates based on our historical experience and expected levels of performance of the trade promotion or other program. We maintain liabilities at the end of each period for the estimated incentive costs incurred but unpaid for these programs. Differences between estimated and actual incentive costs are normally not material and are recognized in earnings in the period such differences are determined.
3 . Investment in Affiliates and Discontinued Operations
Unconsolidated Affiliate and Related Party
Organic Valley Fresh Joint Venture In the third quarter of 2017, we commenced the operations of our 50/50 strategic joint venture with Cooperative Regions of Organic Producer Pools (“CROPP”), an independent farmer cooperative that distributes organic milk and other organic dairy products under the Organic Valley ® brand. The joint venture, called Organic Valley Fresh, combines our processing plants and refrigerated DSD system with CROPP's portfolio of recognized brands and products, marketing expertise, and access to an organic milk supply from America's largest cooperative of organic dairy farmers to bring the Organic Valley ® brand to retailers. We and CROPP each made a capital contribution of $2.0 million to the joint venture during the third quarter of 2017.
We have concluded that Organic Valley Fresh is a variable interest entity, but we have determined that we are not the primary beneficiary of the Organic Valley Fresh joint venture because we do not have the power to direct the activities that most significantly affect the economic performance of the joint venture; therefore, the financial results of the joint venture have not been consolidated in our unaudited Condensed Consolidated Financial Statements. We are accounting for this investment under the equity method of accounting. Our equity in the earnings of the joint venture is included as a component of operating income as we have determined that the joint venture's operations are integral to, and an extension of, our business operations. Our equity in the earnings of the joint venture was $0.7 million and $1.7 million for the three months ended June 30, 2019 and 2018 , respectively, and $2.6 million and $3.6 million for the six months ended June 30, 2019 and 2018 , respectively.
Controlling Interest in Consolidated Affiliate
Good Karma On May 4, 2017, we acquired a non-controlling interest in, and entered into a distribution agreement with, Good Karma Foods, Inc. (“Good Karma”), the leading producer of flax-based beverage and yogurt products. This investment allows us to diversify our portfolio to include plant-based dairy alternatives and provides Good Karma the ability to more rapidly expand distribution across the U.S., as well as increase investments in brand building and product innovation.
On June 29, 2018, we increased our ownership interest in Good Karma to 67% with an additional investment of $15.0 million , resulting in control under acquisition method accounting. Good Karma’s results of operations have been consolidated in our unaudited Condensed Consolidated Statements of Operations from the date of acquisition.
Prior to the June 29, 2018 step-acquisition, we accounted for our investment in Good Karma under the equity method of accounting based upon our ability to exercise significant influence over the investee through our ownership interest and representation on Good Karma's board of directors. Our equity in the earnings of this investment was not material to our unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2018 .
On October 12, 2018, we made a capital contribution to Good Karma of $3 million . Our current ownership interest in Good Karma is 69% .
Discontinued Operations
During the second quarter of 2018 , we recognized a net gain from discontinued operations of $1.9 million , net of tax, resulting from a tax refund received from the settlement of a state tax refund claim related to our 2013 sale of Morningstar Foods, LLC.

12


4 . Inventories
Inventories at June 30, 2019 and December 31, 2018 consisted of the following:
 
June 30, 2019
 
December 31, 2018
 
(In thousands)
Raw materials and supplies
$
112,285

 
$
101,620

Finished goods
170,807

 
153,864

Total
$
283,092

 
$
255,484


5 . Goodwill and Intangible Assets
As of June 30, 2019 and December 31, 2018, the net carrying value of goodwill was zero . We recorded a total goodwill impairment charge of $190.7 million in December 2018 in connection with our quantitative impairment analysis. We have not acquired additional goodwill during the six months ended June 30, 2019 .
The net carrying amounts of our intangible assets other than goodwill as of June 30, 2019 and December 31, 2018 were as follows:
 
June 30, 2019
 
December 31, 2018
 
Acquisition Costs
 
Impairment
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Acquisition Costs
 
Impairment
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
(In thousands)
Intangible assets with indefinite lives:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trademarks
$
69,315

 
$

 
$

 
$
69,315

 
$
69,315

 
$

 
$

 
$
69,315

Intangible assets with finite lives:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer-related and other
83,545

 

 
(47,507
)
 
36,038

 
83,545

 

 
(45,423
)
 
38,122

Trademarks
230,709

 
(109,910
)
 
(82,837
)
 
37,962

 
230,709

 
(109,910
)
 
(74,621
)
 
46,178

Total
$
383,569

 
$
(109,910
)
 
$
(130,344
)
 
$
143,315

 
$
383,569

 
$
(109,910
)
 
$
(120,044
)
 
$
153,615


Our finite-lived trademarks will be amortized on a straight-line basis over their remaining useful lives, which range from approximately 1 to 7 years , with a weighted-average remaining useful life of approximately 5 years . Amortization expense on intangible assets for the three months ended June 30, 2019 and 2018 was $5.2 million and $5.1 million , respectively. The amortization of intangible assets is reported on a separate line item in our unaudited Condensed Consolidated Statements of Operations.
Estimated aggregate intangible asset amortization expense for the next five years is as follows (in millions):
2019
$
20.6

2020
12.5

2021
10.8

2022
8.1

2023
7.3



13


6 . Leases
We determine if an arrangement is or contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities and long-term operating lease liabilities in our unaudited Condensed Consolidated Balance Sheet. Finance leases are included in property, plant, and equipment, the current maturities of long-term debt and finance leases, as well as long-term debt, net in our unaudited Condensed Consolidated Balance Sheet. Our finance leases are not material.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing rate derived from information available at the lease commencement date to determine the present value of our lease payments if a discount rate is not stated within the lease agreement. To estimate the incremental borrowing rate, we utilize a risk-free rate plus our incremental interest rate spread for collateralized debt, which is updated on a quarterly basis. We use multiple incremental borrowing rates that correspond to the term of the lease.
We lease certain property, vehicles used in the distribution of our product, and equipment. As of June 30, 2019 , we had approximately 1,600 leases with remaining terms ranging from less than one year to 20 years . Our leases primarily consist of:
Land and buildings of our manufacturing facilities and corporate office
Leased vehicles within our direct-to-store delivery (“DSD”) system
Leased equipment primarily related to equipment used in the production of our products.
We also have certain storage service agreements that may be treated as real estate leases. Storage agreements providing us with both fully dedicated square footage and the right to designate how the space is utilized are classified as a lease and included in the ROU asset and corresponding lease liability. To determine if a storage agreement has an embedded real estate lease we analyze the agreement to determine if the facility has space that is fully dedicated to storing and managing our products. If the space is fully dedicated to our products, we analyze whether or not we have the right and ability to dictate how the designated space will be utilized to manage our refrigerated and frozen products. Fixed payment amounts related to those agreements are included in the determination of the ROU asset and lease liability.
Our senior secured revolving credit facility and our receivables backed securitization facility contain certain restrictions on finance lease activities as these are treated as indebtedness and subject to the indebtedness covenants pursuant to these credit agreements. See further discussion of debt facilities and covenant restrictions in Note 7 .
Our lease terms may include options to extend or terminate the lease. We include options to extend the lease when it is reasonably certain that we will exercise that option based on the individual lease and our business objectives at lease inception. We have elected to not record leases with a term of 12 months or less on the balance sheet. Certain vehicle leases contain residual value guarantees (“RVG”). We continue to monitor whether amounts related to RVGs are probable of being owed. As of June 30, 2019 and December 31, 2018, we do not expect to make any payments related to RVGs, and our maximum exposure under those guarantees is not a material amount; therefore, we have excluded from the determination of lease payments.
We have elected the practical expedient to combine the lease and non-lease components for all asset classes, except vehicles. For vehicles, we have three separate full service agreements, wherein the agreements provide for certain maintenance services to be included in the overall cost to lease the asset. We determined the stand-alone prices for each of the lease and non-lease components based on comparisons to similar supplier arrangements (such as the cost to lease a vehicle without maintenance services and the cost to obtain maintenance services for a non-leased vehicle). The total transaction price is allocated to the lease and non-lease components on a relative stand-alone price basis.

14


The components of lease expenses were as follows (in thousands):
 
Quarter ended
 
Six months ended
 
June 30, 2019
 
June 30, 2019
Operating lease cost
$
31,633

 
$
63,028

Finance lease cost
367

 
673

Amortization of ROU assets
324

 
609

Interest on lease liability
43

 
64

Short term lease cost (1)
$
3,895

 
$
8,741

Variable lease cost (2)
2,964

 
5,794

Sublease income
(1,744
)
 
(3,324
)
Total net lease cost
$
37,115

 
$
74,912

(1) Related to leases with a term of 12 months or less that are not recorded on the balance sheet.
(2)
Certain operating lease agreements require the payment of additional payments for maintenance, along with additional rentals based on miles driven or units produced.

Supplemental balance sheet information related to leases was as follows (in thousands):
 
As of
 
June 30, 2019
Operating leases:
 
Operating lease ROU asset
$
303,928

 
 
Current operating lease liabilities
93,090

Long-term operating lease liabilities
225,607

Total operating lease liabilities
$
318,697


The weighted-average remaining lease term of our operating leases as of June 30, 2019 was 4.8 years , and our weighted-average discount rate was 6.4% .
Supplemental cash flow and other information related to leases was as follows (in thousands):
 
Quarter ended
 
Six months ended
 
June 30, 2019
 
June 30, 2019
Operating cash flows information:


 
 
Cash paid for amounts included in the measurement of lease liabilities
$
31,208

 
$
62,222

 
 
 
 
Non-cash activity:
 
 
 
Right of use assets obtained in exchange for operating lease obligations
$
9,823

 
$
25,083



15


Maturities of operating lease liabilities were as follows (in thousands):
 
As of June 30, 2019
2019 (excluding the six months ended June 30, 2019)
$
58,667

2020
94,448

2021
69,190

2022
49,428

2023
37,071

2024
25,098

Thereafter
32,933

Total lease payments
$
366,835

Less: imputed interest
(48,138
)
Total lease obligations
$
318,697

Less: current obligations
93,090

Long-term lease obligations
$
225,607


Disclosures related to periods prior to adoption of the New Lease Standard

Prior to the adoption of this standard, our future minimum payments under non-cancelable operating leases with terms in excess of one year were as follows (in thousands):
 
As of December 31, 2018
2019
$
118,827

2020
90,615

2021
64,501

2022
45,049

2023
32,771

Thereafter
50,998

Total minimum lease payments
$
402,761



    

16


7 . Debt
Our long-term debt as of June 30, 2019 and December 31, 2018 consisted of the following:
 
June 30, 2019
 
 
December 31, 2018
 
 
Amount
 
Interest
Rate
 
 
Amount
 
Interest
Rate
 
 
(In thousands, except percentages)
 
Dean Foods Company debt obligations:
 
 
 
 
 
 
 
 
 
Senior secured revolving credit facility
$
6,400

 
7.25
% *
 
$
19,300

 
4.65
% *
Senior notes due 2023
700,000

 
6.50
 
 
700,000

 
6.50
 
 
706,400

 
 
 
 
719,300

 
 
 
Subsidiary debt obligations:
 
 
 
 
 
 
 
 
 
Receivables securitization facility
280,000

 
3.89
*
 
190,000

 
3.54
*
Finance lease and other
2,560

 
 
 
1,618

 
 
 
282,560

 
 
 
 
191,618

 
 
 
Subtotal
988,960

 
 
 
 
910,918

 
 
 
Unamortized debt issuance costs
(4,025
)
 
 
 
 
(4,574
)
 
 
 
Total debt
984,935

 
 
 
 
906,344

 
 
 
Less current portion
(1,060
)
 
 
 
 
(1,174
)
 
 
 
Total long-term portion
$
983,875

 
 
 
 
$
905,170

 
 
 
*    Represents a weighted average rate, including applicable interest rate margins.
The scheduled debt maturities were as follows (in thousands):
 
As of June 30, 2019
2019
$
557

2020
541

2021
159

2022
280,170

2023
700,182

Thereafter(1)
7,351

Subtotal
988,960

Less unamortized debt issuance costs
(4,025
)
Total debt
$
984,935


(1) Our senior secured revolving credit facility was extended on February 22, 2019 to a maturity date of February 22, 2024 that springs to September 15, 2022 in the event we don’t repay or refinance $700 million in aggregate principal amount of 6.50% senior notes due 2023 (the “2023 Notes”) on or prior to July 15, 2022.
Senior Secured Revolving Credit Facility — On February 22, 2019, we entered into that certain Credit Agreement, by and among the Company, Coöperatieve Rabobank U.A., New York Branch, as administrative agent, and the lenders party thereto (the “Credit Agreement”), pursuant to which the lenders party thereto have provided us with a senior secured revolving borrowing base credit facility with a maximum facility amount of up to $265 million (the “Credit Facility”). Borrowings under the Credit Facility are limited to the lower of the maximum facility amount and borrowing base availability. The borrowing base availability amount is equal to 65% of the appraised value of certain of our real property and equipment. We have currently elected to include real estate and equipment with appraised values sufficient to support a borrowing base of $265 million . Our ability to access the full borrowing base is limited by the requirement under the Credit Agreement to maintain liquidity (defined to include available commitments under the Credit Facility and unrestricted cash on hand and/or cash restricted in favor of the lenders in an aggregate amount of up to $25 million for all such cash) in an amount equal to 50% of the borrowing base under the Credit Facility at any time when the Company's fixed charge coverage ratio is less than 1.05 to 1.00. The Credit Facility matures on February 22, 2024, with a September 15, 2022 springing maturity date in the event the 2023 Notes are not refinanced or repaid on or prior to July 15,

17


2022. A portion of the Credit Facility is available for the issuance of up to $25 million of standby letters of credit and up to $10 million of swing line loans.
Loans outstanding under the Credit Facility bear interest, at our option, at either: (i) the Base Rate (as defined in the Credit Agreement) or (ii) the Adjusted Eurodollar Rate (as defined in the Credit Agreement), plus a margin of between 1.25% and 1.75% (in the case of Base Rate loans) or 2.25% and 2.75% (in the case of Eurodollar Rate loans), in each case based on our total net leverage ratio.
We may make optional prepayments of the loans, in whole or in part, without penalty (other than applicable breakage and redeployment costs). Subject to certain exceptions and conditions described in the Credit Agreement, we will be obligated to prepay the Credit Facility, and with a 50% commitment reduction, with the net cash proceeds of certain asset sales and with casualty insurance proceeds relating to the assets not included in the borrowing base. The Credit Facility is guaranteed by our existing and future wholly owned material domestic subsidiaries, which are substantially all of our existing domestic subsidiaries other than the subsidiaries that are sellers under the Receivables Securitization Facility.
The Credit Agreement contains customary representations, warranties and covenants, including, but not limited to specified restrictions on indebtedness, liens, guarantee obligations, mergers, acquisitions, consolidations, liquidations and dissolutions, sales of assets, leases, payment of dividends and other restricted payments, voluntary payments of the 2023 Notes, investments, loans and advances, transactions with affiliates and sale and leaseback transactions. The Credit Agreement also contains customary events of default and related cure provisions. The Credit Agreement includes a fixed charge covenant that requires us to maintain a fixed charge coverage ratio of at least 1.05 to 1.00 at any time that our liquidity (defined to include available commitments under the Credit Facility and unrestricted cash on hand and/or cash restricted in favor of the lenders in an aggregate amount of up to $25 million for all such cash) at such time is less than 50% of the borrowing base under the Credit Facility.
On June 28, 2019, we amended the Credit Agreement to, among other things, permit our borrowing base to equal 65% of the appraised value of the real property and equipment included in the appraisal report delivered to the administrative agent (up to maximum facility amount).
In connection with the execution of the Credit Agreement, including the amendment thereof and post-closing appraisal work, we paid certain arrangement fees of approximately $4.9 million to lenders and other fees of approximately $1.9 million , which were capitalized and will be amortized to interest expense over the remaining term of the facility. Additionally, we wrote off $3.3 million of unamortized deferred financing costs in connection with the termination of that certain Credit Agreement, originally dated as of March 26, 2015, among the Company, Bank of America, N.A., as Administrative Agent and the lenders party thereto (as amended, the “prior credit agreement”).
At June 30, 2019 , we had $6.4 million outstanding borrowings under the Credit Facility. Our average daily balance under the Credit Facility during the six months ended June 30, 2019 was $16.1 million . There were no letters of credit issued under the Credit Facility as of June 30, 2019 .

Dean Foods Receivables Securitization Facility — We have a $450 million receivables securitization facility pursuant to which certain of our subsidiaries sell their accounts receivable to two wholly-owned entities intended to be bankruptcy-remote, as is customary for receivables securitization facilities. The entities then transfer the receivables to third-party asset-backed commercial paper conduits sponsored by major financial institutions. The assets and liabilities of these two entities are fully reflected in our unaudited Condensed Consolidated Balance Sheets, and the Receivables Securitization Facility is treated as a borrowing for accounting purposes.

On January 17, 2019, we amended and restated the existing receivables purchase agreement ("Receivables Purchase Agreement") governing our Receivables Securitization Facility to, among other things, (i) waive compliance with the financial covenant in the Receivables Purchase Agreement requiring the Company to maintain a total net leverage ratio (as defined in the Receivables Purchase Agreement) of less than or equal to 4.25 to 1.00 for the test period ended December 31, 2018 (the “Financial Covenant”) and (ii) any cross default under the Receivables Purchase Agreement arising from non-compliance with the Financial Covenant under the prior Credit Facility.

On February 22, 2019, we amended and restated the Receivables Purchase Agreement to, among other things, extend the liquidity termination date. The Receivables Purchase Agreement contains covenants consistent with those contained in the Credit Agreement.


18


In connection with the execution of this amendment and restatement of the Receivables Purchase Agreement, we paid certain arrangement fees of approximately $2.2 million to lenders and other fees of approximately $0.5 million , which were capitalized and will be amortized to interest expense over the remaining term of the facility. Additionally, we wrote off $0.4 million of unamortized deferred financing costs in connection with prior amendments to the Receivables Purchase Agreement.

Based on the monthly borrowing base formula, we had the ability to borrow up to $428.8 million of the total commitment amount under the Receivables Securitization Facility as of June 30, 2019 . The total amount of receivables sold to these entities as of June 30, 2019 was $496.5 million . During the first six months of 2019 , we borrowed $0.6 billion and repaid $0.5 billion under the facility with a remaining balance of $280.0 million as of June 30, 2019 . In addition to letters of credit in the aggregate amount of $147.9 million that were issued but undrawn, the remaining available borrowing capacity was $0.9 million at June 30, 2019 . Our average daily balance under this facility during the six months ended June 30, 2019 was $265.1 million . The receivables securitization facility bears interest at a variable rate based upon commercial paper and one-month LIBO rates plus an applicable margin based on our total net leverage ratio.
Dean Foods Company Senior Notes due 2023 — On February 25, 2015, we issued $700 million in aggregate principal amount of 6.50% senior notes due 2023 at an issue price of 100% of the principal amount of the 2023 Notes in a private placement for resale to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and in offshore transactions pursuant to Regulation S under the Securities Act.
In connection with the issuance of the 2023 Notes, we paid certain arrangement fees of approximately $7.0 million to initial purchasers and other fees of approximately $1.8 million , which were deferred and netted against the outstanding debt balance, and will be amortized to interest expense over the remaining term of the 2023 Notes.
The 2023 Notes are our senior unsecured obligations. Accordingly, the 2023 Notes rank equally in right of payment with all of our existing and future senior obligations and are effectively subordinated in right of payment to all of our existing and future secured obligations, including obligations under our Credit Facility and receivables securitization facility, to the extent of the value of the collateral securing such obligations. The 2023 Notes are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by our subsidiaries that guarantee obligations under the Credit Facility.
The 2023 Notes will mature on March 15, 2023, and bear interest at an annual rate of 6.50% . Interest on the 2023 Notes is payable semi-annually in arrears in March and September of each year.
We may, at our option, redeem all or a portion of the 2023 Notes at the applicable redemption prices specified in the indenture governing the 2023 Notes (the "Indenture"), plus any accrued and unpaid interest to, but excluding, the applicable redemption date. If we undergo certain kinds of changes of control, holders of the 2023 Notes have the right to require us to repurchase all or any portion of such holder’s 2023 Notes at 101% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest to, but excluding, the date of repurchase.
The Indenture contains covenants that, among other things, limit our ability to: (i) create certain liens; (ii) enter into sale and lease-back transactions; (iii) assume, incur or guarantee indebtedness for borrowed money that is secured by a lien on certain principal properties (or on any shares of capital stock of our subsidiaries that own such principal properties) without securing the 2023 Notes on a pari passu basis; and (iv) consolidate with or merge with or into, or sell, transfer, convey or lease all or substantially all of our properties and assets, taken as a whole, to another person unless certain customary conditions are met.
The carrying value under the 2023 Notes at June 30, 2019 was $696.0 million , net of unamortized debt issuance costs of $4.0 million .
See Note 8 for information regarding the fair value of the 2023 Notes as of June 30, 2019 .
Finance Lease Obligations and Other — Finance lease obligations of $2.6 million and $1.6 million as of June 30, 2019 and December 31, 2018 , respectively, were primarily comprised of our leases for information technology equipment. See further discussion of our lease obligations in Note 6 .

19


8 . Derivative Financial Instruments and Fair Value Measurements
Derivative Financial Instruments
Commodities — We are exposed to commodity price fluctuations, including in the prices of milk, butterfat, sweeteners and other commodities used in the manufacturing, packaging and distribution of our products, such as natural gas, resin and diesel fuel. To secure adequate supplies of materials and bring greater stability to the cost of ingredients and their related manufacturing, packaging and distribution, we routinely enter into forward purchase contracts and other purchase arrangements with suppliers. Under the forward purchase contracts, we commit to purchasing agreed-upon quantities of ingredients and commodities at agreed-upon prices at specified future dates. The outstanding purchase commitment for these commodities at any point in time typically ranges from one month ’s to one year ’s anticipated requirements, depending on the ingredient or commodity. These contracts are considered normal purchases.
In addition to entering into forward purchase contracts, from time to time we may purchase over-the-counter contracts from qualified financial institutions or enter into exchange-traded commodity futures contracts for raw materials that are ingredients of our products or components of such ingredients. All commodities contracts are marked to market in our income statement at each reporting period and a derivative asset or liability is recorded on our balance sheet.
Although we may utilize forward purchase contracts and other instruments to mitigate the risks related to commodity price fluctuation, such strategies do not fully mitigate commodity price risk. Adverse movements in commodity prices over the terms of the contracts or instruments could decrease the economic benefits we derive from these strategies. At June 30, 2019 and December 31, 2018 , our derivatives recorded at fair value in our unaudited Condensed Consolidated Balance Sheets consisted of the following:
 
Derivative Assets
 
Derivative Liabilities
 
June 30, 2019
 
December 31, 2018
 
June 30, 2019
 
December 31, 2018
 
(In thousands)
Commodities contracts — current(1)
$
935

 
$
11

 
$
666

 
$
4,328

Commodities contracts — non-current(2)

 

 

 

Total derivatives
$
935

 
$
11

 
$
666

 
$
4,328

(1)
Derivative assets and liabilities that have settlement dates equal to or less than 12 months from the respective balance sheet date are included in prepaid expenses and other current assets and accounts payable and accrued expenses, respectively, in our unaudited Condensed Consolidated Balance Sheets.
(2)
Derivative assets and liabilities that have settlement dates greater than 12 months from the respective balance sheet date are included in identifiable intangible and other assets, net and other long-term liabilities, respectively, in our unaudited Condensed Consolidated Balance Sheets.

Fair Value Measurements
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, we follow a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.
Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

20


A summary of our derivative assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 is as follows (in thousands):
 
Fair Value as of June 30, 2019
 
Level 1
 
Level 2
 
Level 3
Asset — Commodities contracts
$
935

 
$

 
$
935

 
$

Liability — Commodities contracts
666

 

 
666

 

A summary of our derivative assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 is as follows (in thousands):
 
Fair Value as of December 31, 2018
 
Level 1
 
Level 2
 
Level 3
Asset — Commodities contracts
$
11

 
$

 
$
11

 
$

Liability — Commodities contracts
4,328

 

 
4,328

 



Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. In addition, because the interest rates on our Credit Facility, receivables securitization facility, and certain other debt are variable, their fair values approximate their carrying values.
The fair value of the 2023 Notes was determined based on quoted market prices obtained through an external pricing source which derives its price valuations from daily marketplace transactions, with adjustments to reflect the spreads of benchmark bonds, credit risk and certain other variables. We have determined these fair values to be Level 2 measurements as all significant inputs into the quotes provided by our pricing source are observable in active markets. The following table presents the outstanding principal amount and fair value of the 2023 Notes at June 30, 2019 and December 31, 2018 :
 
June 30, 2019
 
December 31, 2018
 
Amount Outstanding
 
Fair Value
 
Amount Outstanding
 
Fair Value
 
(In thousands)
Dean Foods Company senior notes due 2023
$
700,000

 
$
374,500

 
$
700,000

 
$
560,000


Additionally, we maintain a Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified deferred compensation arrangement for our executive officers and other employees earning compensation in excess of the maximum compensation that can be taken into account with respect to our 401(k) plan. The SERP is designed to provide these employees with retirement benefits from us that are equivalent, as a percentage of total compensation, to the benefits provided to other employees. The assets related to the SERP are primarily invested in money market and mutual funds and are held at fair value. We classify these assets as Level 2 as fair value can be corroborated based on quoted market prices for similar instruments in active markets. The following table presents a summary of the SERP assets measured at fair value on a recurring basis as of June 30, 2019 (in thousands):
 
Total
 
Level 1
 
Level 2
 
Level 3
Money market
$
3

 
$

 
$
3

 
$

Mutual funds
1,862

 

 
1,862

 


The following table presents a summary of the SERP assets measured at fair value on a recurring basis as of December 31, 2018 (in thousands):
 
Total
 
Level 1
 
Level 2
 
Level 3
Money market
$
6

 
$

 
$
6

 
$

Mutual funds
1,693

 

 
1,693

 



21


9 . Common Stock and Share-Based Compensation
Our authorized shares of capital stock include one million shares of preferred stock and 250 million shares of common stock with a par value of $0.01 per share.
Cash Dividends — In accordance with our cash dividend policy, holders of our common stock will receive dividends when and as declared by our Board of Directors. In February 2019, our Board of Directors reviewed the Company's dividend policy and determined that it would be in the best interest of the stockholders to suspend dividend payments. Consequently, no dividends were paid in the first six months of 2019 . From 2015 through 2018, all awards of restricted stock units, performance stock units and phantom shares provided for cash dividend equivalent units, which vested in cash at the same time as the underlying award. A quarterly dividend of $0.09 per share was paid in March and June 2018 , totaling approximately $16.4 million for the first six months of 2018 . Dividends are presented as a reduction to retained earnings in our unaudited Condensed Consolidated Statement of Stockholders’ Equity unless we have an accumulated deficit as of the end of the period, in which case they are reflected as a reduction to additional paid-in capital.
Stock Repurchase Program — Since 1998, our Board of Directors has from time to time authorized the repurchase of our common stock up to an aggregate of $2.38 billion , excluding fees and commissions. We made no share repurchases during the three and six months ended June 30, 2019 and 2018 . As of June 30, 2019 , $197.1 million remained available for repurchases under this program (excluding fees and commissions). Our management is authorized to purchase shares from time to time through open market transactions at prevailing prices or in privately-negotiated transactions, subject to market conditions and other factors. Shares, when repurchased, are retired.
Restricted Stock Units  — We issue restricted stock units ("RSUs") to certain senior employees and non-employee directors as part of our long-term incentive compensation program. An RSU represents the right to receive one share of common stock in the future. RSUs have no exercise price. RSUs granted to employees generally vest ratably over three years , subject to certain accelerated vesting provisions based primarily on a change of control, or in certain cases upon death or qualified disability. RSUs granted to non-employee directors vest ratably over three years .
The following table summarizes RSU activity during the six months ended June 30, 2019 :
 
Employees
 
Non-Employee Directors
 
Total
RSUs outstanding at January 1, 2019
840,431

 
140,539

 
980,970

RSUs granted
1,415,236

 
268,373

 
1,683,609

Shares issued upon vesting of RSUs
(198,935
)
 
(93,670
)
 
(292,605
)
RSUs canceled or forfeited(1)
(346,147
)
 
(17,528
)
 
(363,675
)
RSUs outstanding at June 30, 2019
1,710,585

 
297,714

 
2,008,299

Weighted average grant date fair value
$
4.76

 
$
4.84

 
$
4.77


(1)
Pursuant to the terms of our plans, employees have the option of forfeiting RSUs to cover their minimum statutory tax withholding when shares are issued. Any RSUs surrendered or canceled in satisfaction of participants’ tax withholding obligations are not available for future grants under the plans.

22


Performance Stock Units — In 2016, we began granting performance stock units ("PSUs") as a part of our long-term incentive compensation program. PSUs cliff vest and settle in shares of our common stock at the end of a three -year performance period contingent upon the achievement of specific performance goals established for each calendar year during the performance period. The PSUs are deemed granted in three separate one year tranches on the dates in which our Compensation Committee establishes the applicable annual performance goals. The number of shares that may be earned at the end of the vesting period may range from  zero  to  200 percent of the target award amount based on the achievement of the performance goals. The fair value of PSUs is estimated using the market price of our common stock on the date of grant, and we recognize compensation expense ratably over the vesting period for the portion of the awards that are expected to vest. The fair value of the PSUs is remeasured at each reporting period. The following table summarizes PSU activity during the six months ended June 30, 2019 :
 
PSUs
 
Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019
291,773

 
$
9.94

Granted
761,335

 
3.06

Vested
(26,734
)
 
18.93

Forfeited or canceled
(86,659
)
 
4.71

Performance adjustment(1)
(240,761
)
 
8.92

Outstanding at June 30, 2019
698,954

 
$
3.10


(1)
Represents an adjustment to the 2018 tranche of the 2016 , 2017 and 2018 PSU awards based on actual performance during the 2018 annual performance period in relation to the established performance goal for that period. The actual performance for the 2018 annual performance period was certified by the Compensation Committee of our Board of Directors in the first quarter of 2019 .
Phantom Shares  — We grant phantom shares as part of our long-term incentive compensation program, which are similar to RSUs in that they are based on the price of our stock and vest ratably over a three -year period, but are cash-settled based upon the value of our stock at each vesting date. The fair value of the awards is remeasured at each reporting period. Compensation expense is recognized over the vesting period with a corresponding liability, which is recorded in accounts payable and accrued expenses in our unaudited Condensed Consolidated Balance Sheets. The following table summarizes the phantom share activity during the six months ended June 30, 2019 :
 
Shares
 
Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019
2,007,427

 
$
11.35

Granted
4,536,703

 
3.05

Converted/paid
(793,987
)
 
12.55

Forfeited
(711,805
)
 
5.67

Outstanding at June 30, 2019
5,038,338

 
$
4.49


Stock Options  — The following table summarizes stock option activity during the six months ended June 30, 2019 :
 
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Contractual
Life (Years)
 
Aggregate
Intrinsic
Value
Options outstanding and exercisable at January 1, 2019
385,538

 
$
14.55

 
 
 
 
Forfeited and canceled
(231,523
)
 
16.49

 
 
 
 
Options outstanding and exercisable at June 30, 2019
154,015

 
$
11.64

 
1.25
 


We recognize share-based compensation expense for stock options ratably over the vesting period. The fair value of each option award is estimated on the date of grant using a Black-Scholes valuation model. We did not grant any stock options during 2018 or 2019 , nor do we currently plan to in the future. At June 30, 2019 , there was no remaining unrecognized stock option expense related to unvested awards.

23


Share-Based Compensation Expense — The following table summarizes the share-based compensation expense recognized during the three and six months ended June 30, 2019 and 2018 :
 
Three Months Ended June 30
 
Six Months Ended June 30
 
2019
 
2018
 
2019
 
2018
 
(In thousands)
RSUs
$
1,345

 
$
1,399

 
$
2,083

 
$
2,545

PSUs
512

 
551

 
780

 
1,147

Phantom shares
(21
)
 
2,520

 
868

 
2,933

Total
$
1,836

 
$
4,470

 
$
3,731


$
6,625


10 . Earnings (Loss) Per Share
Basic earnings (loss) per share (“EPS”) is based on the weighted average number of common shares outstanding during each period. Diluted EPS is based on the weighted average number of common shares outstanding and the effect of all dilutive common stock equivalents outstanding during each period. Stock option and stock unit conversions were not included in the computation of diluted loss per share for the three and six months ended June 30, 2019 and 2018 as we incurred a loss from continuing operations for these periods and any effect on loss per share would have been anti-dilutive. The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS:
 
Three Months Ended June 30
 
Six Months Ended June 30
 
2019
 
2018
 
2019
 
2018
 
(In thousands, except share data)
Basic loss per share computation:
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
Loss from continuing operations