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Dean Foods Company (NYSE:DF)
Q1 2008 Earnings Call
April 30, 2008 9:30 am ET
Barry Sievert - VP of IR
Jack Callahan - EVP and CFO
Gregg Engles - Chairman and CEO
Eric Serotta - Merrill Lynch
Farha Aslam - Stephens Incorporated
Terry Bivens - Bear Stearns
Christina McGlone - Deutsche Bank
Pablo Zuanic - J.P. Morgan
Christine McCracken - Cleveland Research
David Palmer - UBS
Good morning, and welcome to the Dean Foods Company First Quarter Earnings Call. Please note that today's call is being recorded and is also being broadcast live over the Internet on the Dean Foods Corporate website. This broadcast is the property of Dean Foods. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of the company is strictly prohibited.
At this time I would like to turn the call over for opening remarks to Vice President of Investor Relations, Mr. Barry Sievert. Please go ahead, sir.
Barry Sievert
Thank you, Alan, and good morning, everyone. Thanks for joining us for our first quarter 2008 conference call. We issued a press release this morning, which is available on our website at deanfoods.com. The release is also available on the SEC's website at SEC.gov. Also available at the Dean Foods website there is a slide presentation which accompanies today's prepared remarks.
As part of today's press release, historical financial information related to the realignment of our business segments to reflect recent changes in the business have been included. A replay of today's call will be available on our website beginning this afternoon.
The consolidated earnings, operating income and operating margin information that will be provided today are from continuing operations. They have been adjusted to exclude the impact of discontinued operations, financing costs related to the recapitalization of our balance sheet, the expense related to facility closings and reorganizations and non-recurring items in order to enable you to make meaningful evaluation of our operating performance between periods.
The earnings release contains more detailed discussion of the reasons why these items are excluded from the consolidated results, along with the reconciliation between GAAP and adjusted earnings. We would also like to advise you that all forward-looking statements made on today's call are intended to fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
These statements will include among others disclosure of earnings targets, as well as expectations regarding our branding initiatives, expected cost savings and various other aspects of our business. These statements involve risks and uncertainties and may cause actual results to differ materially from the statements made on today's conference. Information concerning those risks is contained in the company's periodic reports on Forms 10-K and 10-Q and in today's press release.
With those formalities out of the way, I will now turn the call over to Jack Callahan, our Chief Financial Officer, who will review our first quarter financial results and update our financial guidance. Following Mr. Callahan, Gregg Engles, our Chairman and CEO, will provide an update on our strategic initiatives and further comments on our outlook. Following Mr. Engles' remarks, we will open the call for your questions. Jack?
Jack Callahan
Thank you, Barry, and good morning everyone. Given the inflationary headwinds the dairy industry and the entire food complex have been grappling with over the last year, it is a welcome change to be reporting a quarter that exceeded our expectations. A few of the highlights from the quarter include adjusted earnings per share for the first quarter of $0.23, $0.03 ahead of the high end of our guidance range.
The commodity environment that improved on a sequential basis from January to March. Our financial results also improved as the quarter went on. However, commodities remained well above year ago levels and continue to be volatile as we saw with the recent increase in the April Class 1 milk price.
In total, our operating profit was down 13.5% when compared to a very strong quarter of 2007. And please keep in mind, the first quarter a year ago benefited from several one-time items totaling over $12 million. Excluding these one-time items consolidated operating profit was down approximately 6%. This compares to third quarter and fourth quarter 2007 results that were down 29% and 19% respectively.
Like the fourth quarter of 2007, cash flow from operations was strong in the quarter, generating $114 million in free cash flow before spending related to acquisitions. We completed a $400 million equity offering that provides new flexibility to manage future commodity volatility and pursue attractive acquisitions or capital spending projects as they become available.
For example we have completed three acquisitions in our core milk business so far this year. And going forward, we now have the ability to consider further additions within the context of our current credit facility. Before discussing our financial results in depth this morning, I first want to discuss an important change in our business segment reporting to better reflect the way we are managing the business today.
As we previously discussed, our business consists primarily of four key business platforms. Number one, the DSD or direct store delivery business which is primarily a fluid milk business. It also includes other beverages and dairy products that are delivered through the largest refrigerated direct-store-delivery network in the country. Our ice cream business is the fourth largest in the country with multiple ice cream plants embedded within our fluid dairy operations.
We produce both private-label and regionally branded ice cream which is sold through both DSD and frozen warehouse channels. Morningstar is our private-label cultured and extended shelf life dairy business that is delivered through a refrigerated warehouse system.
It has a significant foodservice presence in addition to the retail private-label business. WhiteWave is our nationally branded product platform with significant consumer insight, innovation and product development capabilities largely sold through a refrigerated warehouse system. Key WhiteWave brands include Silk Soymilk, Horizon Organic, International Delight and Land O'Lakes.
On our last earnings call we discussed the change in reporting relationship for the Morningstar business which had previously been combined with the DSD and ice cream business in the Dairy Group. As we said then, Morningstar now reports to Joe Scalzo, who has taken responsibility for both of our warehouse delivered and longer shelf life businesses.
Beginning this quarter, we have formalized this realignment with the creation of the WhiteWave-Morningstar reporting segment. WhiteWave will remain focused on driving our nationally branded products and Morningstar will continue to focus on driving its private-label and foodservice business.
The similarities of the two business operations will allow us overtime to leverage certain aspects of the two businesses' capability. This includes manufacturing, distribution and systems across the larger base of longer shelf life businesses.
In addition, we believe there will be selective synergy opportunities going forward, including foodservice sales capability, the sharing of consumer insights and many other benefits that the combination fosters. The alignment of Morningstar with WhiteWave will also bring greater focus and clarity on our core dairy business, which has been renamed the DSD Dairy Segment and consists primarily of our fluid milk and ice cream operations.
We believe this increased clarity will help us to further intensify our efforts to drive down production costs across our fluid milk operations. Our goal is to be the lowest cost producer in every market we compete in, while better leveraging the strategic asset of our DSD system. As Barry said, recast financial information reflecting this change is included in the press release we issued this morning.
Now that I have discussed this change in our reporting segments, let me review our first quarter results. In DSD Dairy, fluid milk volumes remained relatively stable, down only 1% despite retail prices that were roughly 20% higher than year ago levels. Operating profits were $131 million, down approximately 15% versus the strong quarter a year ago.
WhiteWave-Morningstar grew sales 17% based on continued strong growth in our national brands. Morningstar results include both strong sales growth in the base business. This is added to the continued benefit from the Friendship Dairies acquisition that was completed in March of 2007. Overall, operating profits were just above last year's level at $45 million in the quarter, despite continued pressure from the investment behind the Horizon Organic brand.
Now let me review each segment in more detail and then discuss corporate items. 2007 net sales for the realigned WhiteWave-Morningstar segment were $2.4 billion balanced across each business. WhiteWave contributed 57% of 2007 sales and Morningstar accounted for 43%. As we said, the major business segments of Morningstar include long shelf life cultured products such as yogurts and sour creams and extended shelf life products like ice cream mix and creamers.
Looking at the last three-year results, sales growth has been strong at both WhiteWave and Morningstar. We will continue to give visibility at the sales level for each of the two businesses. On a combined operating profit basis, solid 2007 results for Morningstar and most of the WhiteWave portfolio offset the weakness we experienced during the year related to the increased investment behind Horizon Organic brand.
In total, combined WhiteWave-Morningstar operating income declined only marginally in 2007 after growing over 15% in 2006. On a quarterly basis sales accelerated in the latter half of 2007 due to continued strong sales growth in the key brands. This includes the sharp increase in Horizon Organic sales and due to strong sales volumes at Morningstar.
For the first quarter of this year total net sales for the WhiteWave side of the business, increased 13% to $364 million with continued strong sales growth across all of our core brands. Morningstar also posted strong sales growth in the quarter, increasing sales 23% to $255 million with a significant benefit from the Friendship Dairies acquisition, which was completed in March of 2007.
Looking at brand's performance in the first quarter, Horizon Organic milk sales continued to set the pace. It was up nearly 30% in the quarter on even higher volume. As we talked about last quarter, the oversupply of raw organic milk we experienced in 2007 is abating and supplies are tightening across the industry.
As a result, retail prices are beginning to rise. At the same time, pay prices to farmers are increasing to reflect the sharp rise in feed and farming costs experienced by our network of over 400 organic family farmers. Going forward, we expect the increased pricing and lower supply growth to slow overall category volumes this year as we lap the impact of the regulation change that contributed to the oversupply last year.
While Horizon Organic sales growth was exceptionally strong, the other key brands in the WhiteWave portfolio also continued to exhibit very strong growth. Silk and International Delight net sales both increased in the low double-digits on strong category growth in share performance. Land O'Lakes growth was in the high single-digits.
As a whole, the combined WhiteWave-Morningstar segment is reporting operating income of $45 million for the first quarter. This is inline with results from the first quarter of 2007 due to the continued solid performance in our Morningstar business and our national brands. The performance of Horizon continued to be a drag on overall profit performance.
Trade spending did begin to moderate a bit within the quarter. However, that benefit was more than offset by increased supply costs, which we expect will continue for the balance of the year. In the Morningstar business, we are seeing some weakness across the foodservice business due in part we believe to a slowdown in overall discretionary consumer spending.
Our largest business segment was well over $9 billion in 2007 net sales. DSD Dairy consists primarily of our fluid milk operations, which accounted for approximately two-thirds of segment sales. Ice cream, other dairy products and other beverages such as juices and teas make up the remainder.
Clearly 2007 was a difficult year for this segment. Sales growth of $1.4 billion was driven entirely by the pass through of sharply higher commodity costs. In spite of steeply higher pricing retail volumes were essentially flat for the year overall demonstrating the relatively low price elasticity in the category. Given the unprecedented increases in dairy input prices, operating profits were down 12% in 2007 from 2006 levels.
In spite of the higher commodity costs fluid milk volumes continue to show remarkable elasticity. In the first quarter, average prices were up over $0.60 a gallon, approximately 20%, while category volumes, as well as ours, were down a modest 1%.
Let's look at the results for the first quarter of 2008 in the DSD Dairy segment. We enjoyed some modest relief from the fourth quarter's record levels in dairy commodities as the Class 1 price fell in both February and March.
The Class 1 average price of $19.12 per hundredweight in the first quarter remained nearly 40% above year ago levels which in a continued drag on profitability caused by shrink and negative cream sales overlaps. Operating profits improved sequentially to reach $131 million, down 15% from the first quarter of 2007.
In the quarter strong execution, pricing realization and the benefits of the workforce reduction program completed in the last quarter of 2007 helped offset the year-over-year increase in shrink, higher energy costs, reduced proceeds from excess cream sales and continued consumer shift toward private-label.
Of the $23 million year-over-year operating profit decline, over three-fourths is attributable to the combination of higher shrink, lower proceeds from cream sales and lapping the first quarter 2007 one-time items of approximately $12 million, the largest of which was related to a customer settlement. Going forward, we do expect our volume to modestly improve given the current run rate in the business, the relatively easier overlaps over the balance of the year and the benefits of our recent acquisitions.
Corporate expenses in the first quarter totaled $38 million and was down a bit from year ago results since we balanced tight cost controls. This is combined with a need to invest behind our centralized capabilities and strategic initiatives. Going forward, we will continue to strategically invest at the corporate level to build capability necessary to execute our long-term strategy. However, we do intend to pace overall growth in spending during this challenging commodity environment.
For the company as a whole, consolidated adjusted operating income in the quarter was $138 million, down 13.5% from the first quarter of 2007. Interest expense came in at $84 million in the quarter as we lapped the last quarter completed under our old capital structure. Our tax rate ticked up a bit in the quarter due to certain changes in tax laws. Going forward we anticipate our full year tax rate to be between 39% and 40%.
Adjusted EPS for the quarter was $0.23. Our diluted share count increased to 143 million shares in the quarter due to the partial quarter impact of the shares issued in our recent equity offering. For the second quarter, we expect fully diluted shares of approximately 157 million, and for the full year about 154 million shares.
The anticipated decrease in full year interest expense related to the incremental pay down of debt from the offering offsets much of the diluted impact from the additional shares in 2008. We now expect full-year interest expense to be approximately $315 million. Gregg will give more color on the equity offering in just a moment.
Free cash flow from operations contributed $114 million to debt pay down in the quarter. This excludes acquisition-related spending, which totaled about $50 million. This strong cash flow combined with the proceeds of the equity offering reduced total debt by $460 million from yearend levels, and as of March 31, stood at $4.8 billion.
Our leverage ratio, as defined by our credit agreements, declined to 5.56 times funded debt-to-EBITDA, down from 5.95 times at yearend. This compares to a covenant in our credit agreements that stepped down to 6.25 times at the end of the first quarter.
In closing, I do want to update our forward outlook. For the second quarter, the commodity markets remain volatile. As the April Class 1 price jumped back up $1.91 per hundredweight to $18.61, while the May price declined $1.99 to $16.62 per hundredweight. June prices are expected to show another increase, most likely over a $1 per hundredweight.
In addition, it is challenging to read the rapidly shifting organic milk market. For the second quarter, we currently expect an adjusted EPS range $0.26 to $0.31 per share. For the full year of 2008, we obviously have greater confidence today, compared to the start of the year.
We believe it is too early to reassess our full year guidance given the volatility of today's commodity markets. We are maintaining our full year outlook for adjusted earnings per share of at least $1.20, and will revisit this guidance once the second quarter results are in and the commodity forecast for the back half of the year firm up.
In summary, I am pleased to see progress in our financial results in the first quarter, getting the New Year off to a solid start. With that, I would like to thank you for joining us today and turn the call over to Gregg Engles for additional comments. Gregg?
Gregg Engles
Thank you, Jack, and thank all of you for joining us on this morning's call. Today I would like to address a few points before opening the call up for your question. On the heels of the most challenging year in our history, I'm pleased with the progress we have made in the first quarter of 2008 across both of our business segments.
But it's clear we have entered a new era as it relates to all commodities and dairy commodities in particular. Going forward, inflation and volatility are the new business as usual. I'll spend a few minutes discussing that in more detail. I would also like to discuss the equity offering and the three recent acquisitions we have made and give you some summary comments on the forward outlook.
As Jack mentioned, in the short-term and particularly this year, our results will be highly dependent on the conventional and organic dairy markets. On the conventional side, the world markets continue to be affected by many of the same issues that resulted in the strong domestic price increases in 2007.
Global inventories of storable dairy commodities remain extremely low. The dollar remains weak against other world currencies. Australia and New Zealand continue to suffer from the effects of drought, and as a result, export growth from those countries has been anemic.
Exports from Europe are growing slowly due in part to quotas that are keeping the EU from participating more freely in the global dairy trade. At the same time, global demand continues to grow particularly in Southeastern Asia and China. This demand growth has outpaced overall global supply growth for the last several years, leading to an increase in US dairy exports of nearly 30% in 2007 and steep increases in the price of nonfat dry milk.
Exports accounted for approximately 11% of US dairy production in 2007, more than double the level just five years earlier. Thus far in 2008, these same factors have contributed to the strength and volatility we have seen in the cheese market recently as an increasing percentage of US produced cheese has been shipped abroad.
Cheese exports have led to increased volatility, and prices have remained stubbornly strong in spite of several months of supply growth well ahead of the modest growth in domestic milk demand. From the slide, you can see that cheese has become the main driver behind Class 1 milk prices in 2008. All of this activity leads to the type of volatility in Class 1 prices we have experienced so far this year.
In April of this year, prices spiked nearly $2.00 per hundredweight, only to fall by this same amount for May. As Jack mentioned, current expectations call for another significant price increase in June. Against the context of this volatility, first quarter operating income in the DSD Dairy business was down 15% from prior year, or 8% when normalized for the effect of last year's one-time items.
When compared against results from the previous two quarters, it's clear we are moving in the right direction. As the first quarter showed, it is possible for us to succeed in a volatile commodity environment with an increase in steady focus on processing efficiency, execution and price realization.
Looking out to the balance of the year, most dairy forecasts suggest favorability versus last year. However, recent revisions have tended to move forecasts higher. Given the general lack of storable dairy commodity inventories around the world, relatively small changes in global supply or demand dynamics are likely to have an outsized effect on domestic dairy prices.
Considering the volatility we've seen over the last 12 months, we find it hard to put too much faith in longer-term forecasts. At the WhiteWave-Morningstar segment, the overall business results turned in a strong first quarter performance with impressive net sales growth of 17%. Operating income performance was slightly above year ago results despite our significant investment in Horizon Organic.
The organic milk market remains extremely volatile and now appears to be shifting to undersupply. Over the near-term, we're anticipating reducing promotional activity and beginning to increase list prices. However, we anticipate that cost pressures on organic dairy farmers will begin to significantly impact the industry's cost and supply growth over the balance of 2008 and into 2009.
Organic feed costs have soured which challenged organic dairy farmer profitability. As we lap the large increases in supply from last year beginning in the second quarter, supply growth is likely to slow materially. This is due to higher organic feed costs and strong conventional pay prices discourage farmers from converting to organic.
While I know for investors this must be frustrating given how rapidly this market is shifting, the basic commodity inflation that is impacting the rest of the food industry is magnified several times in the organic space. Balancing this dramatic increase in our cost of supply with improved pricing will be a challenge as we remain focused on maintaining our leadership position in this important and growing category.
Although the organic milk oversupply has been financially painful, we invested in the long-term value of Horizon Organic brand during this period and are emerging from the over supply situation with a stronger leadership position in the largest organic food category. We believe it is important to the future of Dean that we continue to play a leadership role in this category's development.
Now let me make a few remarks about our recent stock offering. Our financing package was put in place last spring under very favorable terms. It is a strategic asset for the company, especially given the dramatic tightening of the credit markets over the past year. Today we're seeing a clear step up in opportunities to drive growth through acquisitions.
This increase in available acquisitions played a large part in our decision to raise equity in the first quarter. We successfully raised $400 million through an offering of 18.7 million shares. This offering allowed us to pay down a substantial amount of debt outstanding under our revolver, reducing our interest expense and effectively getting us back in line with our original debt pay down expectations.
The increased financial flexibility provided by the offering, gives us the ability to pursue selective acquisitions and further strengthen our portfolio within the context of our existing credit arrangements. So far this year, we've closed three synergistic acquisitions in our DSD Dairy segment. The acquisition of Wells' Dairy fluid milk operations in Le Mars, Iowa gives us our first facility in that state.
We also acquired the Rich Foods Dairy in Richmond, Virginia from SuperValu, building on our business strength in the Washington D.C. area. Our third acquisition so far this year was Atlanta Dairy, which included routes and customers but not facilities, adding to our overall volume and utilization in our network in the Southeast.
These activities or acquisitions were made at attractive valuations. We will look to make other selective acquisitions as they present themselves. Even as we were strengthening the business through acquisition, we also took steps to reduce costs through the announced closure of three facilities.
We had two in the DSD Dairy segment and one in the WhiteWave-Morningstar segment. This resulted in lowering our overall costs and driving increased asset utilization. We expect to have a few more opportunities to rationalize our network during the course of this year and even more in the years ahead.
To summarize, while significant challenges remain, the first quarter was a solid start to 2008. We're pleased with the first quarter results and the step forward they represent from previous quarters. As you have seen, we moved forward in the first quarter with the realignment of our reporting structure to better reflect our business and go to market strategies.
We think this change will allow greater focus for our business leaders and greater clarity into the business results for our investors. In the first quarter we acquired three strategic assets while announcing the closure of three non-strategic facilities. We provided important balance sheet flexibility through our successful equity offering which will allow us to continue to make strategic moves as they present themselves from time-to-time.
As we move forward throughout the remainder of the year, we will continue to focus on driving near-term results while continuing to transform our Company. We expect continued volatility in the dairy commodity markets this year, but believe we are better prepared to meet the challenges they create. We look forward to a return to growth in the second half of 2008.
With that, I would like to thank you for joining us on the call today, and we will open up the line to take your questions. Operator?
Question-and-Answer Session
(Operator Instructions). And it looks like we have a question Eric Serotta from Merrill Lynch.
Eric Serotta - Merrill Lynch
Good morning.
Gregg Engles
Hi, Eric.
Eric Serotta - Merrill Lynch
I just wanted to just delve into a couple of things in a little bit more detail. With increased commodity cost volatility becoming the new norm, are you approaching your customers differently and are your customers managing their retail prices differently than they have been in the past?
Gregg Engles
Well, we have certainly begun to approach our customers in a different way that specifically relates to the volatility. We have discussed this in prior quarters. Our pricing mechanism and our pass-through mechanism have historically assumed that the cost of shrink and other costs that we have described as friction costs were related to changes in the price of milk. These costs were not directly related to milk that got put in the bottle.
So shrink and commissions are assumed to be relatively stable. The cost of those items is in our P&L. As the commodity markets have clearly it has been demonstrated that that's not true. We have begun the process with our customers of embedding those costs more transparently in our pricing formulas and pricing actions in the marketplace.
So that clearly is a change. I believe that you are seeing somewhat the benefit of that as we move forward into 2008 from 2007. In terms of retail price strategy on the part of our customers, we do not see that changing dramatically yet. We still have volatility in this category. There is still largely a pass through set of behaviors in place all the way from the farm level through the retail level in the industry.
While I would say that prices change less at retail than they do at the wholesale level, nonetheless I expect our retailers will continue to reflect price changes in the marketplace.
Eric Serotta - Merrill Lynch
Do your expectations assume any improvement in mix between the regional brands and private-label within the Dairy Group going forward as consumers get used to this sticker price?
Gregg Engles
That's one of the areas, Eric that we continue to struggle with. Our brands as retailers reflect on a margin basis the price increases in our brands that have significant price premiums. They are under meaningful volume pressure. One of the things that we have to do in 2008 and in 2009 is get those brands and their pricing in line so that we maintain volume share in our branded marketplaces.
And frankly, the negative mix impact of shift away from those regional brands to private-label today is a meaningful drag on our P&L.
Eric Serotta - Merrill Lynch
Okay. And finally on the WhiteWave-Morningstar business, particularly Horizon Organic, could you give us some order of magnitude as to where raw organic milk prices are at the moment and what the course has been over the past couple of months in terms of? I know pay prices to farmers have been rising, but what kind of order of magnitude have we seen over the past few months?
Gregg Engles
Well, I'm digging up the exact data, Jack is.
Jack Callahan
Eric, for this year we think our sort of blended overall cost in Horizon Organic is probably going to go up at least 10%. The challenge is that that's on top of the reduced pricing that happened in the back half of last year. It is sort of a dual combination here. We are going to start to see a little bit of price realization, but in many ways we need that just to begin to offset this ever increasing cost for our acquired milk.
It's not just from our family farmers. We are also seeing it in the 20% of the farms that we operate because we have the same issues as it relates to some of inflationary cost on feed. That's kind of given how prices have been depressed. That is the challenge to reflect this fairly significant price increase in the base.
Gregg Engles
I want to just to expand a little bit on that. We mentioned in our prepared remarks that what's happening in the conventional agricultural sector is being magnified in organic. As bio fuels and global demand put pressure on our agricultural production capabilities, a small portion that's devoted to organic is really under pressure.
We have seen soaring feed prices for organic as row crop farmers convert back from organic farming to conventional farming. Land that was in the process of converting gets pulled back into the conventional system. We're even seeing problems with availability of organic grain crop up in the marketplace.
Our smallest farmers who do not have the kind of operating scale that some of the larger farmers have are under increasing amounts of pressure. We are actually seeing some of them exit the business. That's something that we are going to have to work hard to mitigate in order to keep this category growing.
It's frustrating for our shareholder base. It's frustrating for us as we swing from oversupply to undersupply. Both of those situations given what is happening in the underlying cost complex seem to pressure profitability.
But this category still continues to grow on the milk side in the high 30s to 40%. We believe it's worth investing in the long run, and when this industry ultimately does settle out and return to the kind of levels of profitability that we saw in 2006. This should be a tremendous boon to our overall profitability.
The performance in Horizon, frankly, is almost completely masking or offsetting tremendous underlying performance in the rest of our WhiteWave business in terms of growth and profitability.
Eric Serotta - Merrill Lynch
Great, I'll pass it on. Thank you.
Thank you. And next we'll hear from Farha Aslam from Stephens Incorporated.
Farha Aslam - Stephens Incorporated
Good morning.
Jack Callahan
Hello, Farha.
Farha Aslam - Stephens Incorporated
Hi. Just on those three acquisitions, what is the aggregate sales impact?
Jack Callahan
Sorry, once they get fully integrated into our systems, we are thinking in excess of $200 million. You will not see the full impact in the first year here in 2008 because of the sequencing of how they are coming in. One was closed in January, one late February and we're still working on integrating the most recent one as we speak. That one is a bit more complicated because it did not come with the plant. It came with routes and customers, but I think long-term as we bring them all in approximately $200 million.
Farha Aslam - Stephens Incorporated
That's helpful. And Gregg, what was the average selling price for a gallon or a half gallon of Horizon Organic in the fiscal first quarter?
Gregg Engles
I'm going to have to pencil that up while we are talking here. So hang on a second.
Farha Aslam - Stephens Incorporated
Jack Callahan
He is running his calculator.
Farha Aslam - Stephens Incorporated
We are calculating that a 10% increase in cost would have to pass along another $0.26 in pricing for that Horizon Organic gallon, is that right? How much do you think you have the ability to price in Horizon Organic today?
Gregg Engles
Well, clearly the price of organic milk is going to go up. So let me just remind you that we need to do two things. We need to recruit the decrease in the price of organic that we experienced last year as we promoted the product as an industry. This is in order to absorb the oversupply that we had from the regulatory change that happened midyear.
That represents a very meaningful price increase that's got to get worked into the marketplace. Plus we need to recruit the cost of rising raw organic milk prices. So the aggregate level of price increases in the industry that needs to happen in order to get back to profitability is well ahead of the 10% that would be required in order to just pass along raw material price increases.
So the industry is beginning to work its way through that. Trade promotions are starting to be eliminated. That is causing price at shelf to move off of what was kind of the floor of, say, $3.00 a half gallon. The bottom level of pricing needs to move back towards the $3.60 a half gallon mark that existed prior to the emergence of this surplus.
We're going to need to move the price up off of that level in order to recruit the cost of milk going up and in order to be able to support our farmer network. Prices here are going to have to move up meaningfully. It is going to be interesting to see how that progresses through the industry because not only do we have the competitive dynamic that exists out there amongst the various processes and sellers. You're also going to have to move in such a way that we are able to understand the elasticity effect of significant impact of higher prices in the marketplace.
It's uncertain how this is going to settle out and how the timelines are going to work in terms of changing pricing in the industry. I will just tell you that it's underway and it's industry-wide from what we can see so far. We believe the moves ultimately will have to be meaningful. We will just have to see what happens to volume along the way.
Farha Aslam - Stephens Incorporated
Okay. And sorry just the detail on the questions, but in the fourth quarter, you said your pricing was about $3.20. What would you comparatively put that for the first quarter?
Gregg Engles
Farha, I do not think that the $3.20 sounds a little low for the fourth quarter. Measured through IRI grocery for the first quarter retail pricing for a half gallon was about $3.80. We did not see a meaningful move up relative to the fourth quarter.
Jack Callahan
The problem that you have looking at this aggregate data Farha is that the price discounting on organic tended to occur more where the surplus milk was as opposed. It wasn't uniform nationally.
Farha Aslam - Stephens Incorporated
Jack Callahan
We had deeper discounting in the Eastern part of the US than the Western part of the US.
It's hard to give you an exact number that you're going to be able to use in a useful way. I would say that the end of the third and the fourth quarter were the deepest levels of discounting of 2007. We have begun to see prices move up in the first part of 2008.
Farha Aslam - Stephens Incorporated
Okay. Thank you very much.
And next we'll hear from Terry Bivens from Bear Stearns.
Terry Bivens - Bear Stearns
Good morning, everyone.
Jack Callahan
Good morning, Terry.
Terry Bivens - Bear Stearns
Jack, I'm not sure I caught this. You mentioned that the cream sales, the shrink and I guess the negative comparison with that $12 million from a year ago accounted for three quarters of something. What was that something?
Gregg Engles
Three quarters of the profit decline versus year ago, Terry.
Terry Bivens - Bear Stearns
Got it. Now, as we look into this year on your core dairy unit, you guys did give us a nice chart there in terms of the range of estimates on the Class 1 mover. Can you shed a little light on exactly are you at the upper end or the lower end or in the middle as you model out the rest of the year to get to your earnings number?
Gregg Engles
Terry, we have tended to be over the last year or so more cautious about milk prices than the forecasters.
Terry Bivens - Bear Stearns
Gregg Engles
So we continually refine our view here. We would be in the middle to slightly above the middle of forecasts, but our internal forecasts as of those of the rest of the industry have been trending up.
Jack Callahan
And Terry, this is the level of specificity that we give for guidance, I think building on Gregg's point I do think we have been on the conservative higher end I think particularly as it as we look out over the near-term to the first half of the year. Quite frankly, we continue to monitor very closely the back half. You can see with that wide range there. That is that volatility that wants us to be extraordinarily cautious as we approach the full year.
Gregg Engles
The upper end of the range of possibilities in the back half would be a very difficult environment again.
Terry Bivens - Bear Stearns
Okay. And I was just looking back the last time this happened I guess was in '04, a slightly different commodity spike there. But one thing that happened was the expected margin recovery got blunted because gasoline and resin costs in particular really took off. It looks like we are kind of in the same situation here.
I guess the question is, do you agree with that, number one? And number two, you mentioned some changes in your pricing. Are you making any changes there with regard to gasoline and resin prices as you go to the retailers?
Gregg Engles
Yeah. I mean just to the first part of your point, the overall inflationary environment is difficult. It is not just milk. It is everything.
Terry Bivens - Bear Stearns
Gregg Engles
In terms of our input, it's everything that is petroleum-based. It is all of our energy costs whether it is electricity or otherwise. There's a tremendous amount of inflation in real goods in the economy today, and we are experiencing it across our business. Our pricing mechanism the month-to-month pass through does not contemplate all of those non-milk items.
It is extraordinarily difficult to really build that into a pricing mechanism, or at least we haven't figured out how to do it yet. So the pass through of things such as fuel, or the passing along of those sort of costs is more episodic than it is regular.
And we just have to monitor the buildup of those costs from period-to-period and then go try and get it out of the market when the pressure becomes sufficiently high, so it is a less predictable part of our ability to pass on our rising cost structure.
Jack Callahan
Terry, one thing we have done, though, kind of given the lessons from last year, in the past people would move their price based on what they may have been seeing in their individual dairy P&L or what they were paying for a specific item.
We now have very rigorous pricing process and monthly calls where we look forward from based on what we are getting from our purchasing group on the real cost of our go-forward costs for resin, et, cetera.
So I think we're putting a bit more rigor and discipline and more of a look-forward in what we are seeing in our cost structure. I think we're doing a better job of staying on top of these ever moving assumptions in our cost space.
Terry Bivens - Bear Stearns
Okay. And just one last thing, I mean one of the things that I hear most about Dean is that you still have $5 billion in compressible costs to go after on the dairy side. I am hesitant to say "when commodities settle out", because they may never settle out. Is it fair to look at that as a likely '09 event, or do you guys think that you can get some significant progress done on that this year?
Jack Callahan
Terry, I think the best way to characterize this situation that we're in is '08 is more about the commodity and '09 and beyond. It's going to be a much longer timeframe than '09. It's going to be about the fundamental transformation of our supply chain network and our organizational structure. We still have an operating model in this business that reflects a lot of the legacy attributes of the companies that we acquired as Dean was built, and the evolution of that is going to take time.
We are consistently building the capability to do that with the way that we have built our senior management team and the additional capabilities that we're building in terms of processing systems, data and training, and our management capabilities in the Company. But for those capabilities that we're building to be brought to bare and for you to see it in the P&L is going to be '09 and beyond. That's where you really begin to see traction from that effort.
What's happening is that we're in the capability building mode today. You see us investing against that in terms of our leadership and our systems and those sorts of things. That will begin to bear fruit as we move past '08
Terry Bivens - Bear Stearns
Okay, great. Thanks a lot.
Jack Callahan
Thank you.
Gregg Engles
Yes. And next we're going to hear from Christina McGlone from Deutsche Bank.
Christina McGlone - Deutsche Bank
Good morning. Gregg, I just wanted to touch again on the supply of organic milk. It seems like it was one of your competitive advantages that you had kind of in-house supply and worked with smaller farmers for a long time. Is your supply at all at risk because of swapping back to conventional, or is it just you simply have to pay a higher price?
Gregg Engles
Well, the answer is yes and yes. At the end of the day, our smallest farmers are under the most pressure just because of economics of their businesses as compared to larger scale farmers. If we do not generate a pay price sufficient for them to fund their businesses and make money, they are going to exit the business.
It is part and parcel of the same thing. We're going to have to pay a price that provides our farmers a fair economic return. That's a moving target given the change in their cost structure with this very volatile input environment that they face. All the issues that we have, they have.
So the cost of feed, the cost of fuel, every input that they consume on their farms is rising in its cost as well. We are going to have to have a pay price that secures our supply or this category is going to slow growth dramatically.
Christina McGlone - Deutsche Bank
Okay. In terms of the drivers of basically milk inflation there are obviously a number of them. But it seems that Australia actually is improving. The wheat forecasts coming out are more than double, and they are saying that rain so far has been pretty good.
Do you think that we can see a reversal and they can actually contribute more? And what could that do to the price of milk? Maybe it would not hit until '09, but would that be meaningful if their production started to kick up?
Gregg Engles
At the margin it would help a little bit. The factors driving this are very complex. So part of it is the supply side constraints that we have experienced globally, really other than in the United States. So Europe is constrained by quota. The Oceania has been constrained by weather, so both New Zealand and Australia have been constrained by drought.
And the United States, China and India, frankly, have been the source of almost all supply growth globally over the last couple of years. Supply constraints are a part of the issue. Another big part of the issue is the demand side. And as long as you see the Asian countries and India and the BRIC countries growing as rapidly as they have, you are going to see increasing dairy protein consumption. That's going to continue to put pressure.
As an industry student recently said of this, the growth of the global dairy industry is going to be purely a function of supply growth. This being because demand for as far as the eye can see exceeds the planet's ability to produce dairy protein. There is always going to be supply pressure or demand pressure on this complex for the foreseeable future. And the question is going to be whether you catch up in terms of supply? Australia will make a little bit of difference but it won't change the basic dynamics of the equation.
Relating to US prices, what really is going to determine whether there are meaningful movements in global demand for US dairy proteins is going to be the value of the dollar. So the depreciation of our currency has made the US effectively the world's low cost producer of dairy proteins. And as long as that is the case, this excess of global demand over supply will be felt most keenly here.
Christina McGlone - Deutsche Bank
Okay, thank you. And then, Jack, you talked about foodservice deterioration in the Morningstar business or WhiteWave-Morningstar business. Are those sales lost, or do you see any benefit on the retail side as people eat at home more? The competitive climate seems to be getting better in Silk. Is there any way to regain those sales, or are they lost?
Jack Callahan
Well, it's hard to link some of the Silk sales back. Let me comment on Morningstar first, and then come back to Silk. We are within the Morningstar the retail private label business is doing just fine. No issue is off trend. We're seeing a little bit of weakness in some of the foodservice channels. Our business does do a bit better particularly the ice cream mix business in warmer weather.
We have been trying to sort out how much of it is actually consumers are spending less money at foodservice establishments. How much of it is our mix maybe impacted because of the way the weather has been. What we're continuing to look at is, I would say it is sort of modest. It is not dramatic but it is a little bit of a challenge as we work through the balance of the year in Morningstar.
Christina McGlone - Deutsche Bank
So you do not see the retail isn't being helped as foodservice slows? It is not really a trading?
Gregg Engles
It's just hard to parse that out because it is hard to isolate the impact on retail of price elasticity from the prices being so much higher in general in the marketplace. If you had a softening economy and you had level pricing, you could probably look at it and see if they were shifting from foodservice channel to retail, but you are also in an environment where prices are up 20% or more at retail. It's very difficult to parse out what the drivers are.
Jack Callahan
And just on Silk, the category continues to exhibit very strong growth. Silk continues to grow in global double-digits. It certainly is doing a good job picking up some incremental distribution. We feel very positive about the outlook currently on Silk.
Christina McGlone - Deutsche Bank
Okay, thank you. And last question-- How do we think about working capital as the year progresses?
Jack Callahan
We've got a little bit of a benefit from working capital obviously as prices have sort of moderated a bit in the fourth and first quarters. I don't expect we will have a huge working capital benefit in the second quarter. I think that will moderate a bit because the Class I prices are bouncing around a bit, but for the back half of the year, I think it will really depend on where we land on that range of Class I forecasts that Gregg laid out. I think if we start to see some of the lower end of that, we can get some very meaningful working capital benefit, which would be a further help to our debt pay down.
Gregg Engles
But at the high-end, we will end up investing more in working capital. It is going to be a function of what the selling price is of our products at the end of the day.
Christina McGlone - Deutsche Bank
All right. Thank you.
And next we'll hear from Pablo Zuanic from J.P. Morgan.
Pablo Zuanic - J.P. Morgan
Good morning, everyone.
Jack Callahan
Good morning, Pablo.
Gregg Engles
Good morning, Pablo.
Pablo Zuanic - J.P. Morgan
A couple of questions. Gregg, I'm trying to understand this stickiness in retail prices. If we look at retail prices for conventional milk since September to now are pretty much unchanged. I'm trying to see whether that is because of the historical lag. In this case the lag has just lasted longer but eventually will come down as the cost of C-1 is down from what 22 to 17 roughly now based on your June prediction. Is it really that we shouldn't think in terms of a lag? It is just that you are actually pricing for the higher energy costs and other costs that you talked about beyond dairy? And as a result, retail milk prices may not necessarily come down. How should we think about that?
Gregg Engles
I think you can't draw a straight line between what happens at retail and what Dean's price realization is. I'm not in the retail business, but my belief would be the retail prices have not moved around as much as the wholesale prices because the retailers see the volatility out there in the marketplace. We have gone from 19 to 16, to 19 to 17. It becomes a confusing environment for their shoppers if the price of milk moves around too much at retail. What I think we've historically seen is once prices settle out at a predictable price level. You will see the retails adjust overtime as the whatever either positive or negative margin that has resulted for them from the commodity change works its way competitively through the landscape, but they don't necessarily move their prices on the same cadence that we do, which is monthly.
Pablo Zuanic - J.P. Morgan
Right, so much for milk being a loss leader for retailers. To follow-up more at the industry level, when I look at non-fat dry milk, the prices have gone from $2 to about $1.30, $1.40. Cheese, on the other hand, has remained sticky there on that $1.90, $2 range. The part that I'm having a hard time understanding is that according to the data I'm looking at, less than 2% of U.S. cheese production gets exported. Is it really the export markets that are keeping cheese up, or is it just that there's not enough capacity out there?
And the reason why I asked that is because you have 3% raw milk growth, right, at the farm level. Fluid milk consumption is down. My numbers for non-fat dry milk don't show a big change. So are we expecting cheese production to be up north of 3% because a larger share of raw milk will be going to cheese, but prices remain high and exports are still, although growing significantly, are still less than 2% of cheese production. So how do you explain the stickiness in cheese?
Gregg Engles
Well, first of all, at the margin I think current exports of cheese are somewhat higher than the 2%. So I think our data suggests there is a little bit more export going on, but the export amount has doubled in cheese. If you take 1% additional volume even on your 2% number and you start shipping it out of the country that is a meaningful move in a huge part of the milk complex. But look dairy is just complex generally, but cheese is probably the most complex. Because the way milk for cheese pricing works is that there is a guaranteed profit for cheese makers.
It is what is called a make allowance, which is a minimum pricing for cheese that's built over the cost of milk for cheese on a current basis. But of course cheese does not get sold that way. You inventory cheese. The willingness of producers to make cheese inventory is a function of their cost of milk today and what they believe the price of cheese is going to be tomorrow.
And that equation has had cheese makers alternatively jumping in and out of this market over the last seven or eight months as milk price has spiked. So what's causing the volatility in the cheese price is that cheese makers are having a hard time figuring out when to really get back into the business and make cheese inventory.
The inventories have remained low. There is pressure on that inventory level from increasing levels of export. Until that sorts itself out this volatility is really making everybody's business more complicated. So if that milk does not go into cheese, it ends up in powder and butter because it is sure not ending up in fluid milk at these price levels. That's probably what is holding down the price of powder. When that flips back the other way, you will then start to see the price of powder move up.
Pablo Zuanic - J.P. Morgan
Right. That is very useful. Just a follow-up, Jack, on the private label side for conventional milk, can you give us some color in terms of how that mix has changed? The Nielsen data suggests that your branded fluid milk volumes on the branded side are actually down about 19%, 20%. Is it that bad, and if so, what would be the mix right now?
Jack Callahan
I think as you look across the brands there is an extraordinarily broad range. Some brands actually have held in there and maybe even do some modest growth. A number of our more stronger brands have been the most hit and have experienced anywhere between 10% to 15% declines. Overall, in terms of our aggregate branded decline, I put it more in a 10% to 12% range versus the 20%, Pablo that you suggested, but I would say that dairy is very much market to market.
Pablo Zuanic - J.P. Morgan
Okay, just one, last one. What if I use the same analogy in organic milk? I'm trying to understand the strategy. In the past, I guess two years ago, when we had shortages of organic milk and the cost of organic milk was going up, you were not passing it all on to the retailer because you wanted to preserve the growth potential of the organic milk market.
It sounds like now that costs may start to go up again and that are going up, you are pretty much still on the same thing. Even though you may not increase prices in full to recover the higher costs, you always end up with higher price points anyway.
Are you seeing the type of trade down to private-label in organic milk as we are seeing in conventional or is it just the consumer in organic milk really values the brand?
Gregg Engles
I think the brands are much more important today in the organic space than they are in the conventional space. So, in the organic category, the strategy is all going to be about maintaining an appropriate price gap to private-label. If we let the price gap get too big, we will start to see branded share move to private-label. So trust me, there is no unwillingness to raise the price on organic.
As we move forward out of the environment that we are in because there is an enormous amount of cost pressure on our business, and we need to raise our prices in the marketplace, but we are going to defend our share in the category as we move forward, and that is going to be a function of maintaining price gaps primarily to private-label but also to our other branded competitors.
So we are just going to have to see how this cost increase as we unwind the discounting from last year and as we reflect the cost increases that we are experiencing across our supply base. It is playing out at a different competitive level in the wholesale marketplace, and we are just going to have to let it play out, but trust me, we're trying to recapture our cost increases as a brand, and I think the industry has got to try and do the same thing because the industry is not in a profit making position today.
Jack Callahan
What you are seeing is just another sort of impact in the market is Horizon Organic is gaining share and so is private-label in some places. What really is being squeezed right now are some more regional players of organic milk. That may add another evolution of the category in addition to some of the price movements.
Pablo Zuanic - J.P. Morgan
Okay, great. Thank you.
And next we'll hear from Christine McCracken
Christine McCracken - Cleveland Research
Looking at the USDA data by type of milk, and it seems like flavored milks are the only area that is really getting hit. It is down like 17% year-on-year. I am wondering as you look at your portfolio if you're seeing the same type of trend and if this is all part of that movement to take flavored milk out of schools and/or kids going over to alternative beverages? If this is a part of a bigger structural change, when do we lap that? And could that be kind of driving those lower volumes in dairy?
Gregg Engles
You know, Christine, honestly, we do not see that or we haven't called that out on our business as a driver of volume changes. So, I'm really not familiar with the USDA data that you are speaking about. So I really can't give you a meaningful comment on it, but it has not appeared in our analytics as a driver of what is happening in our business.
Jack Callahan
But the issue you bring up in terms of flavored milk for kids, now we're starting to build some centralized marketing capability here that is one thing we are looking at to, look at different formulations of our flavored milks that have stronger nutritional credentials. It is I think an area we can come to a more comprehensive solution.
Christine McCracken - Cleveland Research
Ice Cream has been another area of weakness maybe over the last couple of years. It is 9% of your dairy portfolio. I am wondering as you head into the ice cream season and cream prices where they are. If you're adjusting your strategy at all in order to recapture market share or actually the fact that you're in private-label might actually be a benefit potentially as you go into this summer?
Gregg Engles
No, the ice cream category has been a difficult category for us as you correctly note over the last couple of years. We are beginning to meaningfully change our ice cream strategy. So we have operated our business on a much more regional disparate basis in terms of ice cream, and we are beginning to approach the category from a more centrally led perspective. And that is having a number of impacts on our ice cream business.
First of all, I think we understand the competitive dynamics much better today. So our pricing and promotion strategy is meaningfully altered to reflect the fact that. Nestle and Unilever have taken a very aggressive pricing and promotion strategy over the last several periods and have hurt all the regional brands, us included, and private-label. So, we have I think a much better grasp on what we need to do competitively in this category that is paying nice dividends today.
The category is also really changing in terms of package size and price point dynamics. The industry is downsizing package sizes again. Nestle and Unilever both going to 48 ounce packages from 56 ounce packages. We're doing that across much of our portfolio to make sure that we have the same level of price competitiveness that we need to have.
I feel better about our ice cream business in terms of its leadership. It is a very difficult competitive category with two really big tough competitors nationally and a couple of pretty good regional competitors. I frankly like our position better in ice cream in 2008 than I did in 2007.
Christine McCracken - Cleveland Research
Great. And just one last question then. In terms of your outlook on dairy production, we have seen an outlook I think by most analysts where a 2% increase for the balance of the year, primarily on a number of cows. As you look at increasing feed cost that you noted and the withdrawal from (inaudible), I am wondering are your expectations still for increased milk production in the back half of the year. Is there some risk as you note kind of in your uncertain outlook for overall costs? Could production could come in below earlier expectations?
Gregg Engles
Just back to the question we got on organic, it is just all about the price. So I think the economics suggest that at least the price of feed 30 days ago, we are going to have to be in that average price of say $17 a hundredweight give or take a buck for farmers to continue to make the kind of returns they need to keep milk production up. If you see milk production drop down into the $16 a hundredweight level, I think you will see production start to stall, and you will see prices go back up to where farmers start to expand their production again.
So we are oscillating with these $1 and $2 moves kind of around that $17, $17.50 a hundredweight number and I think that is an important number. So low prices beget high prices, and high prices beget low prices. It is all because of changes in production that those prices inspire. So we're triangulating on a price that ought to be more stable assuming currency and grain settles out.
Christine McCracken - Cleveland Research
Let's hope it does. Thanks.
Gregg Engles
Thank you. We will take one more question, operator.
Certainly. And next we'll hear from David Palmer from UBS.
David Palmer - UBS
Hey, guys.
Gregg Engles
Good morning, David.
Jack Callahan
Hi, David.
David Palmer - UBS
Good morning. I was wondering if you could comment if there a long-term brand strategy in the conventional milk business? I am wondering could you do things to consolidate your dairy brands into a collection of super regional brands for instance much like a Nestle Waters does. Is there some other moves just from doing something like that that can increase your scale? What about reinvesting into marketing to increase that brand premium?
And separately, could you comment on what sort of innovation could be brought to this conventional milk business such that you have seem. I know in your Horizon milk business you do some of this, but a little bit more on the conventional side. What about the Omega-3 and what you see going on in the other areas of the dairy aisle? Thanks
Gregg Engles
Yeah. I think the point you raise is an accurate and perceptive point. For brands to ultimately be successful in the marketplace they have to be big enough so that you can market against them. You have to build real points of differentiation in the product and the package so that consumers find it reasonable to pay a premium for the brands. It is very difficult to do across the portfolio of brands that we have today. It is too big a portfolio.
I think the question that we haven't sorted out yet is how we migrate to an optimal set and what that optimal set looks like. How do you innovate against this category in the way that provides the highest return for your shareholders and the biggest bang for consumers? So is that going to be our packages of conventional milk, or will it be more around the margins in smaller packages that are more tailored for individual needs and that have different shelf-life characteristics?
We have got a lot of work going on in that area, things that you will begin to see, Right now we don't have a holistic answer for you. Your point is well taken and I think is an accurate, insightful point.
David Palmer - UBS
Okay, thanks. Good luck.
Gregg Engles
Thank you. Thank you all for joining us on the call this morning. The first quarter was a solid start for the year. We're working to carry our momentum forward into the second quarter. We thank you again for your interest in Dean Foods and for joining us on today's call, and we look forward to speaking with you in August. Thank you very much.
And that does conclude today's Dean Foods first quarter conference call. We do thank you for your participation and ask that you enjoy the remainder of your day.
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Punishing incidents of racial insensitivity on college campuses makes moral sense, says philosopher Anita Allen.
Allen, associate professor of law at Georgetown University Law Center and a U-M alumna, discussed Why Punish Demeaning Expression, at a Department of Philosophy Martin Luther King Jr. Day program.
Using a 1991 Ugly Woman Contest at George Mason University as her example, Allen explained that the fraternity-sponsored mock beauty contest raised $1,500 for charity.
A financial success, the event was a disaster as a social event, Allen said, after a white male contestant dressed as an ugly Black woman. Performing in blackface, the student wore a kinky-haired wig with hair curlers. He stuffed pillows under his shirt and in the seat of his pants to denote big breasts and large buttocks.
In response to student complaints about the blackface performance, the dean of the Virginia school banned the fraternity from engaging in social activities for two years. However, the courts decided the dean could not enforce the punishment against the fraternity.
Allen, who also is a lawyer, poked holes in a number of potential arguments against punishing the fraternity, including:
Allen noted that many philosophers believe in flouting the law, particularly if it is a bad law. Martin Luther King was famous for breaking laws to further the cause of civil rights. The deans initial decision was correct because minority students deserve an educational context where they can learn, she maintained.
Allen said it appears the students obtained permission to sponsor a fund-raising event for charity, not to do blackface, which she described as a grotesque form of racial insensitivity.
Allen noted that society often excuses actions based on ignorance. However, she said, punishing racial insensitivitylike spanking children the first time they put their hands in fireis one way of teaching people that they are not entitled to be ignorant.
Allen said this argument implies that the educational environment and experiences of Black women are worth less than $1,500.
Acting out may have some justification, Allen said, but she does not think the benefit outweighs the harm done to minority women by the depiction of an ugly Black woman.
expression, which should be protected.
The need to protect artistic expression is a difficult argument to address, Allen admitted, but said she believes even some art deserves to be condemned on moral grounds and that it is not unreasonable to do ethical critiques of artistic expression.
Allen limited her call for punishment for inadvertent racial slights and intentional hate speech to campus communities because, she said, of the impact such insensitivity has on the educational environment for minority students.
Although she is not opposed to hate speech codes, Allen said she doesnt think universities have to have such codes. Enforcement of norms of civility would have the same effect. Members of the university community must take care not to undermine the ability of others to learn, Allen added.

subset: commoncrawl


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Due to the nature of these products, we are unable to offer return or exchange of these items. If you receive these items damaged, you must notify us within 48 hours. We will provide a replacement or store credit for damaged items.
Hydration Backpacks
Plastic covering the mouthpiece must be intact. If the plastic covering mouthpiece on a hydration backpack has been removed or broken, this hydration backpack will not be eligible for a return.
Intimate Exceptions
For the protection of our customer's hygiene, intimates (panties, stockings, pasties, etc.) may NOT be tried on. If you think that these items will not fit, you must return them UNOPENED. If these items arrive to us in an open package, these items will not be eligible for return and no refund will be given. Items which are not eligible for refund will be shipped back to the buyer and the buyer would have to pay for the return of items.
Return and Exchange for International Customers
International customers (besides Canada) please contact Global Checkout.
Exchange Policy
If you are unsure which size to buy, please contact us with your measurements. We will help you to choose the right size.
- We must be notified of the exchange within 7 days of receiving item(s) by emailing us at email@example.com to receive the authorization for exchange.
- The item you would like to exchange must be be CLEAN, UNUSED, tags must be ATTACHED to the item, and the item must be in the ORIGINAL PACKAGING. If the item has been used, is dirty, broken, does not have attached tag, arrived to us not in original packaging, this item will not be eligible for exchange and we will not be able to give you a refund.
- After receiving the authorization for exchange from us, items must be shipped to us within 48 hours.
- Buyer must pay return shipping to ship the item back to us.
- Items must be shipped to us with a tracking number.
- Items which are not eligible for exchange will be shipped back to the buyer and the buyer would have to pay for the return of items.
- If you would like to exchange the same item to a different size, we will attempt to make an exchange without withholding 20% restocking fee.
- If you would like to exchange your item to another item in our store, you must first return your item per the above return policy. Upon the receipt of your item, we will issue a store credit and you will then be able to choose another item.


text:
GENIRE-L ArchivesArchiver > GENIRE > 2003-03 > 1047432357
From: Eve McLaughlin <>
Subject: Re: What is the meaning of the term "Scot-Irish"
Date: Wed, 12 Mar 2003 01:25:57 +0000
References: <firstname.lastname@example.com><firstname.lastname@example.com><email@example.com><email@example.com><email@example.com><email@example.com><email@example.com><email@example.com><email@example.com><Ob7ba.32095$L1.6666@sccrnsc02><firstname.lastname@example.com><V2nba.41841$L1.8170@sccrnsc02>
In article <V2nba.41841$>, Edith Gomez
<> writes
>I guess you aren't as smart as I even thought you were. Eadgyth is old
>Anglo-Saxon for Edith as I looked it up in some old records on the net.
We do all know that (without needing to look it up on the net) - but the
point being made was that it was not American, though otherwise, you
were being aggressively so in trying to foist US terms on our older
>Why I do believe some of you are jealous, what is wrong with being a Bible
Dear me. When you think of the problems caused worldwide by religion
even now.........
Eve McLaughlin
Author of the McLaughlin Guides for family historians
Secretary Bucks Genealogical Society
This thread:
|Re: What is the meaning of the term "Scot-Irish" by Eve McLaughlin <>


text: ok was on methadone started using fent daily so took the opritunity to get on sub i didnt do a shot for 24hrs but was afraid of precip wd so took 2mg then 2mg and stoped cuz hubby took 8 and went into precp wd so we stuc it out i didnt get sick but didnt feel good ne ways went back the next day n got 8mg.... its been 2 days on 8 mg and i feel nautious and my back is killing me what is going on? will it get better ? what di i do i feel like ????! i ust want to feel ok again help!!!


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About the Program
In New York's Lower East Side, four tenement buildings have housed the Streit's Matzo factory since 1925. Over five generations, the Streit's family business has held firmly to tradition, but even they are not immune to the forces that challenge small businesses everywhere.
Feast your eyes on this inspiring documentary as it traces the history of Streit's from the 1920s to today. As Los Angeles Times hails, "this lively and engaged documentary lives up to its name."
Directed by Michael Levine. (2016, 75 min. No MPAA rating.)
Make a day of it! Before the film, grab lunch at Zeidler's Café, or browse the carefully selected merchandise available in Audrey's Museum Store.


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Arousal Fluid: Arousal fluid is a fluid that is produced in response to either physical or mental sexual stimulation. Some mothers who breastfeed their infants might also experience this fluid while breastfeeding. The fluid is produced by two glands, called Bartholin Glands, that are situated near the opening of the vagina. The physiological purpose of the fluid is to lubricate the vagina for the possibility of intercourse. The characteristics of arousal fluid are clear, wet, moist, and slippery. Unlike cervical fluid, however, arousal fluid dissipates quickly (i.e., within one hour). The guidelines for arousal fluid with the use of NFP are as follows:
Seminal Fluid: Seminal fluid is the fluid released from the man at the time of intercourse. Seminal fluid, of course, contains sperm and other fluids that nourish, protect and prepare them (the sperm) for possible fertilization of the ovum. After intercourse it is a common practice (and recommended for hygienic purposes) that a woman get up and void (urinate). However, she should not get up immediately after intercourse. The time after intercourse obviously is a special intimate time that is important for bonding. Approximately 20-30 minutes after intercourse, the seminal fluid becomes very watery. At this time it is recommended that a woman rid herself of the seminal fluid that has remained in her vagina. To do this she should (after urinating) in alternating fashion (a) bear down (like she is having a bowel movement) and (b) do 5 or 6 Kegel's exercises (i.e., tightening the muscles of the vagina and the muscles that stop or start urination). After she does 4-5 sets of bearing down and Kegel's exercises, she should wipe until all the seminal fluid is gone. The next day, whatever mucus or sensations are observed should be charted on their merits.
Some women may not wish to get up after intercourse, but may choose to remain bonded with her husband or just fall asleep. If this is so, and if she is confident what she observes the next day is seminal fluid, she can ignore it. She also might just ignore her observations until after 12:00 noon. By that time most of the seminal fluid should have left the vagina.


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There was a delicate, pale green china cup and saucer on top of the nightstand.
You need not look at the cup and saucer before you, Mr. Catley; those came from Derbyshire.
Guest (touching his lips with the cup and then returning it to its saucer).
Lay out flat in a pan of salt and water for an hour, with a weighted plate or saucer on top to hold under the water.
Peggy splashed the milk over the brim of Doggies cup and into the saucer.
Do you know that this morning Jonas broke that valuable Dresden cup and saucer that I have always set such store by?
Poor master was so astonished that he nearly dropped the saucer.
When the dawn was creeping ghostlike into the room and the night-light was tottering in its saucer, Essie stirred and woke.
Make a circle as big as a saucer, or a square equal in area.
When he picked up a piece as large as a saucer beside my pillow, I realized my narrow escape.
mid-14c., from Anglo-Latin saucerium and Old French saussier (Modern French saucière) "sauce dish," from Late Latin salsarium, neuter of salsarius "of or for salted things," from Latin salsus (see sauce (n.)). Originally a small dish or pan in which sauce is set on a table. Meaning "small, round, shallow vessel for supporting a cup and retaining any liquid which might be spilled" is attested from c.1702.


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THE Old Down and Beggarwood Wildlife Group will be holding a free Bugs and Butterflies event on August 23.
The event, which will be held at Old Down Hall, in Kempshott Lane between 2pm and 4pm, will see visitors of all ages given an opportunity to study photographic displays of Old Down and find out more information on the work the group do to promote biodiversity.
Volunteers will be on hand to help participants catch and identify a range of different wildlife while children can take part in a butterfly trail.
Teas, coffee and cake will be available to purchase on the day for a small cost.
For more information, visit old-down.org.uk.


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Parisian luxury label Hermes have released a new iteration of its Quantum high-top sneaker for the fall season. Breaking away from the traditional all-leather uppers, this version sports a prune-colored suede upper with black leather detailing and a black midfoot strap with steel buckle. Sitting atop a black rubber sole and featuring a soft leather lining inside, these are guaranteed to keep your feet comfortable and well-dressed. Available at Hermes boutiques as well as the company's online store, retail on these is $8,400 HKD (approximately $1,083 USD).
Photography: HYPEBEAST


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DALLAS, Oct. 25, 2012 /PRNewswire/-Southwest Airlines Co. (NYSE:LUV) today introduced southwest.com/vamonos, a translated, Spanish version of southwest.com. Southwest.com/Vamonos was specifically designed to provide Southwest's Spanish-speaking Customers the best online experience in the language of their choice.
"At Southwest Airlines, we tailor our products to be relevant to our Customers. With our new international service provided by AirTran Airways, and the imminent growth of our airline, we knew translating southwest.com into Spanish was the smartest way to enhance our website," said Kevin Krone, Vice President of Marketing, Sales, and Distribution for Southwest Airlines. "This enhancement will provide Customers who prefer Spanish the same level of Customer Service provided by our regular website."
Southwest.com/vamonos is not just a landing page; it's a translated option for Customers who prefer to make all their travel bookings in Spanish. Southwest.com, the most visited airline website in the world, partnered with MotionPoint to manage the Spanish version of the site. MotionPoint, a South Florida-based company supports the business goals of many Fortune 500 Companies by translating, localizing and optimizing their websites for new markets. Additionally, Southwest also provides live bilingual Customer Service assistance through the 1-800-Vamonos number, available 365 days a year.
"At MotionPoint, we pride ourselves on our ability to deliver meaningful business results for the best companies on the planet and Southwest Airlines is certainly on that list," said Chuck Whiteman, Senior Vice President of Client Services for MotionPoint. To read more about this new service, visit: blogsouthwest.com
In its 42(nd) year of service, Dallas-based Southwest Airlines (NYSE: LUV) continues to differentiate itself from other low-fare carriers by providing a reliable product and exemplary Customer Service delivered by 46,000 Employees to more than 100 million Customers every year. Including wholly owned subsidiary AirTran Airways, the Company operates the largest fleet of Boeing aircraft in the world to serve 97 destinations in 41 states, the District of Columbia, the Commonwealth of Puerto Rico, and six near-international countries. Visit southwest.com/citizenship to read the Southwest Airlines One Report(TM) and see how Southwest is doing its part to be a good citizen while underscoring a commitment to the triple bottom line of Performance, People, and Planet.
Southwest Airlines
From its first flights on June 18, 1971, Southwest Airlines launched an era of unprecedented affordability in air travel quantified by the US Department of Transportation as "The Southwest Effect," observable improvement in service and a lowering of fares wherever the carrier serves. Southwest now flies the most passengers nonstop of any US airline and stands alone among major air carriers in offering all Customers the first two pieces of checked luggage (weight and size limitations apply) and all ticket changes without additional fees. On every flight, Southwest Airlines consistently offers leather seating and the comfort of full-size cabins across the world's largest fleet of Boeing 737 aircraft, many of which are being equipped with satellite-based WiFi connectivity and a new, eco-friendly cabin interior featuring sustainable materials. Having achieved a 39(th) consecutive year of profitability, the People of Southwest operate more than 3,200 flights a day and serve communities around 77 airports in Southwest's network of domestic destinations. Southwest Airlines' frequent flights and low fares are available only at southwest.com.
AirTran Airways
AirTran Airways, a wholly owned subsidiary of Southwest Airlines Co., has been ranked top airline in the Airline Quality Rating study three times in the past five years. AirTran offers coast-to-coast and near-international service with nearly 600 flights a day to 56 destinations. The carrier's low-cost, high-quality product includes assigned seating and Business Class. As Southwest continues to integrate AirTran's People, places, and planes into Southwest Airlines, Customers of both carriers may book flights at airtran.com and exchange earned loyalty points between both AirTran's A+ Rewards® and Southwest's Rapid Rewards® for reward travel on either airline.
SOURCE Southwest Airlines Co.
MotionPoint helps world-class brands grow by engaging and enriching the lives of new customers in markets around the globe.
Far more than the world's most effective website translation service, MotionPoint's turn-key platform combines innovative technology, big data, world-class translation and deep international marketing expertise. MotionPoint's approach guarantees the quality, security and scalability required to succeed in an evermore competitive global marketplace - both online and offline.


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One-Door Office Gym Shed Storage Locker
At school, at home, or at work, the 1-Door Clothing Locker gives you, your employees, or your students the storage space they need for clothing and much more.
These vertically-stacked lockers each feature clothing rods to keep clothing wrinkle-free, while air vents provide sufficient ventilation. Naturally, books, valuables, and any number of personal belongings could also be stored in this versatile unit in addition to clothing.
The locker is constructed with solid cold-rolled steel plate for excellent sturdiness and durability, not to mention an attractive look. The steel is also powder-coated to resist corrosion. The locker measures 180 x 38 x 45 cm, and the maximum recommended weight capacity is approximately 30kg. Privacy and security are assured with a simple lock and key design. And there are spaces designated for labels to help identify lockers. Each lock comes with 2 keys.
For even more storage, consider buying two or more units, which can be placed together for a fully customisable configuration.
A simple design makes assembly easy, and your locker could be up and ready in about 10 minutes. Full assembly instructions are included.
For handy extra storage, the 1-Door Clothing Locker is your storage solution. Order today and take advantage of our everyday low price.
1 lockers, vertically positioned
Colour: Grey
Locker dimensions: 180 x 38 x 45 cm (H x W x D)
Carton dimensions: 192.5 x 60 x 7 cm (H x W x D)
Clothing rod for each locker; built-in air vents for locker ventilation
Privacy and security with lock-and-key design
Recommended total weight capacity: 30kg
Durable cold-rolled steel plate construction
Powder-coated to resist corrosion
Easy to assemble; instructions included
2 Keys per Lock. 1 Lock in total
1 x One-Door Office Gym Shed Storage Locker
Australia Shipping
Free Shipping (5 to 8 working days from date of dispatch)
$15 for Express Shipping (2 to 4 working days from date of dispatch)
International Shipping
$25 for Normal Shipping (5 to 10 working days from date of dispatch)
$35 for Express Shipping (3 to 5 working days from date of dispatch)