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Dean Foods Reports Net Income of $69.2 Million for First Quarter
DALLAS -- Dean Foods Co., parent of Dean Dairy, Sharpsville, Pa., earned 43 cents per diluted share for the quarter ended March 31. Net income for the first quarter increased to $69.2 million from $63.2 million in the prior year first quarter.Net sales for the first quarter totaled $2.5 billion, an increase of 14% over the first quarter of 2003, primarily due to the acquisitions of Horizon Organic and Ross-Swiss Dairies in 2004 and the acquisitions of Melody Farms and Kohler Mix Specialties last year; increased selling prices resulting from higher raw material costs; and growth in strategic brand volumes."I'm pleased with our results for the first quarter, particularly in light of the difficult raw material environment we are experiencing," says Gregg Engles, chairman and chief executive officer. "The Dairy Group reported another quarter of solid results, and we recorded strong volume growth in our Branded Products Group."Operating income in the first quarter totaled $152.4 million versus $157 million in the first quarter of 2003.Long-term debt at March 31 was approximately $3 billion, including $181 million due within one year that is reported as a current liability. At the end of the quarter, approximately $642 million was available for future borrowings under the company's senior credit facilities.In the first quarter, Dean Foods completed the closure of one Dairy Group plant in South Gate, Calif., and identified five additional Dairy Group plants for closure, all as part of its strategy to lower costs and rationalize manufacturing assets. The 5 plants slated for closing are located in Madison, Wis., San Leandro, Calif., Lansing, Mich., Sulphur Springs, Tex., and Wilkesboro, N.C. The Madison, San Leandro, Lansing and Wilkesboro plants are expected to close in the second quarter of 2004, and the Sulphur Springs plant is expected to close in early 2005. In the first quarter of 2004, Dean Foods recorded costs of $7.6 million in plant closing charges primarily related to the South Gate, Madison and San Leandro facilities.Dean Foods has accelerated its plant rationalization program in light of the difficult commodity environment, and it will close more plants in 2004 than originally anticipated. The company now estimates that it will close a total of 8 to 10 facilities this year."We are currently facing one of the most challenging commodity environments we have ever seen," Engles says. "Inflationary pressures began to impact our business in the first quarter. However, the brunt of record high commodity costs will affect us in the second quarter, adding to the inflationary environment we are already experiencing across our various lines of business."For the full year, we continue to expect sales of approximately $10 billion and marketing spending of $210 million," Engles continues. "However, we now expect to generate adjusted earnings per share in the range of $2.21 to $2.28 this year, consistent with our long-term guidance of 8% to 10% despite the most difficult commodity environment we have ever seen. Where we fall within this range will be determined by how long these record high raw material costs, particularly raw milk and butterfat, continue and the timing of their decline."The company noted that second quarter adjusted earnings are expected to be in the range of 47 cents to 50 cents per share, due to the impact of unprecedented high costs of raw milk and other commodities across the business, coupled with heavy brand marketing spending in the quarter.Dean Foods Co. and its subsidiaries operate over 120 plants in 36 U.S. states, Spain and the United Kingdom, and employ approximately 28,000.Visit Dean Foods Co.: www.deanfoods.com"