Fitch Assigns 'BBB-' to Dean Foods' New Sr Sec Credit Facility; Outlook Positive

Business Wire, August 16, 2004

CHICAGO -- Fitch Ratings assigns a 'BBB-' rating to Dean Foods Company's (Dean) new senior secured credit facility and upgrades its senior unsecured notes rating to 'BB' from 'BB-'. Simultaneously, Fitch withdraws its 'BB ' rating from Dean's previous senior secured facility which included a revolver and a Term A, B, and C loan maturing in 2007. The Rating Outlook is Positive. This rating action affects approximately $3.1 billion of Dean's outstanding debt.

Fitch's 'BBB-' rating covers its new $1.5 billion senior secured revolver which expires August 2009 and its new $1.5 billion senior secured term loan A which matures August 2009. The security for these loans consists of all assets, excluding the capital stock of the legacy Dean's subsidiaries and the real property owned by the legacy Dean and its subsidiaries. Fitch's 'BB' rating covers approximately $661 million senior unsecured notes with maturities staggered between 2005 and 2017.

The ratings upgrade and outlook consider the improvement in Dean's credit profile over the past several years, the company's leading and growing market share in the fluid and soy milk industry, and its proven management team. Dean's management has established a track record of effectively integrating acquisitions, extracting cost savings from its businesses, and successfully managing through difficult operating environments. Management's successful navigation through the current unprecedented class one raw milk price environment provides reassurance that a degree of operating income stability is obtainable even in the most difficult and volatile environments.

For the latest 12 months ended June, 30 2004, Dean's total debt-to-EBITDA was 3.5 times (x) and Dean's EBITDA-to-interest incurred was 4.6x. Net cash flow from operations has increased approximately 40% since the 2001 merger of the legacy Dean Foods and Suiza Foods to over $400 million annually despite recent demands on working capital. Fitch expects the overall operating environment to improve going forward and Dean's working capital requirements to decline. As such, Fitch believes Dean is capable of sustaining a leverage ratio in the low 3.0x range for the foreseeable future.

Dean Foods Company is the largest processor of milk and the third largest producer of ice cream in the United States. In addition, Dean is the leading producer, distributor and marketer of value-added dairy and non-dairy products and the largest processor of private label pickles in the United States. Dean also has several joint ventures and sells products under partnerships and licensed brands such as Land O' Lakes, Hershey's, and Folgers Jakada. Dean has operations in 39 states, Spain, and the U.K.