1. D EAN F OODS C OMPANY (NYSE:DF) December 3, 2013 1 Dan Ballantine Jason Chan Michael DeRenzo Dan Kleeman

2. A GENDA 2 Introduction Macroeconomic Outlook Industry Overview Company Overview Financial Analysis Valuation Recommendation

3. D EAN F OODS C OMPANY (NYSE: DF) Dean Foods was founded in 1925 and is headquartered in Dallas, Texas Global food and beverages company that specializes in dairy products – Largest processor and direct-to-store distributor of fluid milk and dairy products in the United States – Branded & private label product base includes: fluid milk, ice cream, cultured dairy products, creamers, ice cream mix, etc. – Portfolio includes more than 50 brands and private labels 3 Company History Source: Dean Foods Company Q3 2013 10-Q Pg. 41 Dean Foods Regional Brands

4. M ACROECONOMIC O UTLOOK 4 Positive job growth, improved housing market, positive equity performance and lower overall savings (more positive consumer sentiment) will aid future disposable income gains An increase in disposable income results in an increase in overall demand for dairy products from restaurants and households Consumer preferences: shift towards “healthier” dietary habits Projected Disposable Income Source: IBISWorld Business Environment Profiles – Per Capita Disposable Income, September 2013 US Disposable Income YOY Growth

5. M ACROECONOMIC O UTLOOK 5 $21.92 per hundredweight in 2013 vs. a forecasted value of $24.50 per hundredweight in 2018 – 2008 – 2013 CAGR of 1.7% vs. 2013 – 2018 CAGR of 2.2% Projected prices increases largely driven by increased foreign demand WTO continues to push US to withdraw its price support for Milk – Removal of price supports will result in price volatility and potentially lower milk prices Source: IBISWorld Business Environment Profiles – Price of Milk, April 2013 Raw Milk Prices Forecasted Price of Raw Milk

6. I NDUSTRY O VERVIEW 6 Source: Hoover’s – Dairy Products Manufacturing, Industry Description Dairy Products Manufacturing Companies that manufacture dairy-based products from raw & manufactured milk and milk substitutes US dairy products manufacturing market has about 1,100 companies with combined revenue of $107 billion annually High degree of economies of distribution – 50 largest fluid milk producers claim 85% of annual fluid milk revenue Industry heavily relies on direct- to-store delivery (DSD) Dairy Products Manufacturing – Product Breakdown by Revenue

7. I NDUSTRY O VERVIEW Overall industry consolidation – Acquisitions of local dairy farms and local manufacturers – Creating more efficient production and distribution networks Continued declining milk consumption in US Increased competition from large grocery chains 7 Industry Trends & Challenges Source: Hoover’s – Dairy Products Manufacturing,

8. I NDUSTRY F ORCES A NALYSIS 8 Rivalry: High Buyers: High Substitutes: Medium Suppliers: Medium New Entrants: Low

9. I NDUSTRY F ORCES A NALYSIS Bargaining Power of Suppliers: MEDIUM – Inputs are commodities and input pricing is subject to fluctuation – Recent consolidation within dairy farming industry Bargaining Power of Buyers: HIGH – Low-end customer perception of difference between private label and branded products makes it hard to exercise pricing power – Primarily commodity products Threat of New Entrants: LOW – Distribution networks hard to create – Limited profitability in the long run 9 Source: Hoover’s – Dairy Products Manufacturing, Industry Description

10. I NDUSTRY F ORCES A NALYSIS Threat of Substitutes: MEDIUM – Declining demand for milk as a product – Increased usage of traditional dairy milk substitutes Rivalry among Competitors: HIGH – Private labels price significantly below branded products to drive customer traffic at times 10 Source: Hoover’s – Dairy Products Manufacturing, Industry Description

11. C OMPANY O VERVIEW 11 Fresh Dairy Direct Segment Breakdown (Fiscal Year 2012) Source: Dean Foods Company 2012 10-K, Pg. 5 Dean Foods has a very concentrated product mix (74% fluid milk) Majority of Dean Foods sales comes from private labels

12. C OMPANY O VERVIEW During the fiscal year of 2013 Dean Foods spun off two major business segments in order to focus on its “core business” – January 3, 2013: Dean Foods sold Morningstar division to Saputo Inc. – July 25, 2013: Dean Foods sold its final stake in WhiteWave On November 12, 2013 announced adoption of company cash dividend policy – First dividend distribution will take place during in Q1 2014 – Quarterly dividend rate of $0.07/share ($0.28/share annually) 12 Dean Foods Recent Company Developments Source: Dean Foods Company Q3 2013 10-Q

13. R ECENT F INANCIAL I NFORMATION 13 Source: Dean Foods Company 2012 10-K, Dean Food Company 2010 10-K

14. C OMPANY S TRATEGY Dean Foods recently sold its two “high-growth potential” divisions and decided to solely focus on Fresh Dairy Direct – Much less dynamic business model – Focused on new successful brands like TruMoo flavored milk Continue to cut costs across the board and expand market share Significantly reduce the debt on the balance sheet and continue to strengthen it moving forward Primarily focused on offsetting the weak margins within the fresh dairy business – Maximize sales, increase volume and efficient operations (cutting costs) 14 Change in Company Strategy Source: Sosland, Josh. "A New Day at Dean Foods." Food Business Week. N.p., 6 June 2013. Web. 2 Dec. 2013.

15. M ANAGEMENT ’ S O UTLOOK Increasing and continually volatile raw milk prices continue to impact management’s outlook moving forward Dean Foods lost a large contract for private-label milk in early 2013 – Management expects an overall volume decline of 7% for fluid milk in 2013 Primary focus is on its Fresh Dairy Direct division and cutting costs in order to improve its bottom line – Improve asset utilization through utilizing its national network more efficiently – Closed 7 production facilities during first three quarters of 2013 Management expects to have closed 10 – 15% (8 – 12 facilities) of its production facilities by the middle of 2014 – Includes elimination of distribution routes and associated SG&A expenses 15 Source: Dean Foods Company 2012 10-K, Pg. 9; Dean Foods Company Q3 2013 10-Q, Pg. 43, 44

16. SWOT A NALYSIS 16 StrengthsWeaknesses - Extensive DSD network - Management’s focus on core business segment - Management’s cost-reduction and debt-reduction initiatives -Heavy US concentration could limit DF’s ability to enter global markets -Highly concentrated customer base -Only operates Fresh Dairy Direct segment (74% of sales from FFD from fluid milk) OpportunitiesThreats - Increasing trend of health and wellness - Continued increase in global demand for dairy products -Steadily increasing (and volatile) price of raw milk -Non-dairy substitutes -Increased competition from large grocery chains Source: Hoover’s – Dairy Products Manufacturing, Trends & Opportunities; MarketLine Advantage

17. C URRENT S TOCK I NFORMATION 17 MetricValue Current Stock Price $18.17 Trailing P/E 10.7 Forward P/E 17.6 Dividend Yield N/A* Market Cap ($ millions) $1,677.9 Source: Capital IQ, Yahoo Finance, Dean Foods Q3 2013 Earnings Release * DF will begin paying a $0.07/share quarterly dividend in 2014, implying a current dividend yield of 1.6%

18. F INANCIAL A NALYSIS 18

19. F INANCIAL A NALYSIS 19

20. C OMPARABLE C OMPANIES 20 CompanyTickerMarket Cap ($ millions) The J. M. Smucker Company(NYSE:SJM) $11,023.9 General Mills, Inc.(NYSE:GIS)$32,615.6 Campbell Soup Company(NYSE:CPB)$12,161.2 Saputo, Inc.(TSX: SAP)$9,401.5 The WhiteWave Foods Company(NYSE:WWAV)$4,047.5 Dean Foods Company(NYSE:DF)$1,677.9 Source: Capital IQ

21. S TOCK P ERFORMANCE 21 Source: Yahoo Finance

22. C OMPARABLE C OMPANY A NALYSIS 22 Source: Capital IQ

23. C OMPARABLE C OMPANY A NALYSIS 23 Source: Capital IQ

24. D ISCOUNT R ATE 24 Source: Yahoo Finance

25. D ISCOUNT R ATE 25

26. DCF A NALYSIS 26

27. D ECISION D RIVERS Strengths – GICS Diversification – Cost and debt reduction initiatives – Extensive and improving production and distribution networks – Renewed focus on returning cash to shareholders Concerns – Concentrated geographic, product, and customer bases – Limited growth in core geographic market – Exited higher margin business lines in 2013 – Increasingly negative industry outlook 27

28. R ECOMMENDATION Valuation Summary – Current Stock Price: $18.17 – Comparable Companies Valuation: $30.41 – DCF Valuation: $9.77 Recommendation: WATCH LIST – Place DF on the RCMP Watch List 28

29. 29 Q UESTIONS ?