Dean Foods Co. Reports Fourth Quarter Loss

Consolidated operating income in the fourth quarter totaled $63 million, compared to $136 million in the fourth quarter of 2009. Adjusted fourth quarter consolidated operating income totaled $112 million, compared to $151 million in the fourth quarter of 2009. The decline in fourth quarter consolidated adjusted operating income is due to a $49 million decline in operating income at fresh dairy direct-Morningstar, offset by $6 million of growth at WhiteWave-Alpro and a $4 million decline in corporate expense.

Total year fluid milk volumes at fresh dairy direct-Morningstar were essentially flat in 2010, including the benefit of acquisitions. Total product volumes for the segment declined 2 percent. This volume softness was offset by the pass-through of higher overall commodity costs driving an overall increase in Fresh Dairy Direct-Morningstar net sales of 7 percent to $10.2 billion for 2010 from $9.5 billion in 2009. The Class I Mover, which is an indicator of the company's raw milk costs, averaged $15.35 per hundred-weight for the year, 34 percent above the average price for 2009 of $11.48. Full year fresh dairy direct-Morningstar operating income was $504 million, a 33 percent decline from the $757 million recorded in the previous year.

Fresh dairy direct-Morningstar fluid milk volumes decreased by 3 percent in the fourth quarter, compared to the balance of the industry that experienced approximately 2.1 percent volume decline on a year over year basis, based on USDA data and company estimates. Total volumes from the segment declined 5 percent from the fourth quarter of 2009. The soft volume in the quarter was offset by the pass-through of higher average commodity costs in the quarter resulting in fresh dairy direct-Morningstar net sales of $2.6 billion, a 5 percent increase from $2.5 billion in net sales for the fourth quarter of 2009. The fourth quarter average Class I Mover was $16.93 per hundred-weight during the fourth quarter, 8 percent above the previous quarter and 30 percent above the fourth quarter of 2009.

Fresh dairy direct-Morningstar operating income in the fourth quarter was $114 million, a decrease of 30 percent from the $164 million reported in the fourth quarter of 2009. Volume weakness across the portfolio and continued pricing pressure offset continued strong progress on the company's cost reduction initiatives to drive the decline in operating income in the quarter.

For the full year, WhiteWave-Alpro net sales were $1.9 billion, a 19 percent increase over $1.6 billion in net sales for the full year 2009. The increase in full year WhiteWave-Alpro net sales was primarily driven by the overlap benefits from the Alpro acquisition, as well as continued strong growth across the product portfolio. For the full year 2010, WhiteWave-Alpro adjusted operating income increased 23 percent to $175 million from 2009 full year operating income of $143 million. The increase in full year operating income for WhiteWave-Alpro is the result of the positive impacts of the Alpro acquisition, as well as solid double-digit operating income growth at WhiteWave.