Dallas-based Dean Foods Co, one of the largest food and beverage companies in the US, has announced pro forma earnings per share of US$0.57 for the Q1 ended 31 March 2002, up 12% year on year.

Pro forma net income for the Q1 grew 79% to US$56.1m, compared with US$31.3m in the Q1 2001.

Q1 net sales totalled US$2.3bn, an increase of 56% year on year, and pro forma operating income totalled US$149.5m, an increase of 54% over pro forma US$97.3m in the Q1 2001. Pro forma Q1 2002 operating income margin was 6.6%, a decrease of 9 basis points versus the pro forma results from the Q1 of last year.

"We are very pleased with our results this quarter," said chairman and CEO Gregg Engles: "We have accomplished a great deal in the five months following the closing of our merger. We realised about US$20m in synergies in the Q1, and we are increasingly confident that we will exceed our US$60m goal in 2002.

"As we have promised, we will devote excess synergies toward building our branded, value-added growth platforms so that we can consistently deliver 8-10% earnings per share growth into the foreseeable future.

"We are also delighted to announce the White Wave transaction today. As we step up our efforts toward building our branded platforms and leveraging our direct-store-delivery network, we are confident we will create an even more vibrant, more successful food and beverage company capable of delivering consistent shareholder value in the years to come," concluded Engles.

Segment results

Dairy Group sales for the Q1 totalled US$1.8bn, an increase of 48% year on year, and pro forma operating income in the Q1 increased 65% to US$127.4m, and pro forma operating margins increased 73 basis points to 7.2% of sales, due to lower raw milk costs. Raw milk costs declined about 8% compared with the prior year Q1.

Morningstar sales in the Q1 totalled US$238.6m, an increase of 43%, and pro forma operating income in the Q1 was US$23.1m, virtually flat to last year. Operating margins declined 428 basis points to 9.7%, as a result of increased investment in branded and value-added growth platforms, the inclusion of legacy Dean's lower margin National Refrigerated Products segment and the previously announced phase-out of the Lactaid and Nestle brands.

Specialty Foods sales totalled US$161.2m and operating income was US$20.8m, or 12.9% of sales.

Reported results

Reported operating income for the Q1 was US$148.3m or 6.5% of sales, compared with US$83.9m, or 5.7% of sales, in the Q1 2001. Reported net income was US$8m, compared with US$22.1m in the Q1 2001. Reported diluted earnings per share totalled US$0.12, compared with US$0.38 in the Q1 2001.

Q1 2002 pro forma results were adjusted to exclude restructuring charges of US$1.2m related to the closing of the company's Country Fresh facility in Port Huron, Mich. and to exclude a one-time charge of US$47.3m, net of income tax, related to the write-down of certain trademarks due to the implementation of Financial Accounting Standard (FAS) 142, "Goodwill and Other Intangible Assets." Q1 2001 pro forma results are adjusted to reflect the elimination of goodwill and other intangible amortization as if FAS 142 had been effective as of 1 January 2001. In addition, pro forma 2001 results exclude the cumulative effect of the accounting change for the adoption of FAS 133 in the Q1 2001 and plant closing costs of US$0.8m.

To read about Dean's acquisition of White Wave soymilk, click here.