Nature of Our Business — We are a leading food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States, with a vision to be the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion.

We manufacture, market and distribute a wide variety of branded and private label dairy and dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. Our portfolio includes DairyPure^®, the country's first and largest fresh, white milk national brand, and TruMoo^®, the leading national flavored milk brand, along with well-known regional dairy brands such as Alta Dena^®, Berkeley Farms^®, Country Fresh^®, Dean’s^®, Friendly's^®, Garelick Farms^®, LAND O LAKES ^® milk and cultured products (licensed brand), Lehigh Valley Dairy Farms^®, Mayfield ^®, McArthur^®, Meadow Gold ^®, Oak Farms^®, PET ^® (licensed brand), T.G. Lee^®, Tuscan^® and more. In all, we have more than 50 national, regional and local dairy brands, as well as private labels. ~~Additionally, with our acquisition of Uncle Matt's Organic, Inc., which was completed on June 22, 2017, we now~~We also sell and distribute organic juice, probiotic-infused juices, and fruit-infused waters under the Uncle Matt's Organic^®brand. Additionally, we are party to the Organic Valley Fresh joint venture which distributes organic milk under the Organic Valley^®brand to retailers. With our majority interest acquisition of Good Karma Foods, Inc., which was completed on June 29, 2018, we now sell and distribute flax-based milk and yogurt products under the Good Karma^® brand. Dean Foods also makes and distributes ~~ice cream, cultured products,~~ juices, teas and bottled water. Due to the perishable nature of our products, we deliver the majority of our products directly to our customers’ locations in refrigerated trucks or trailers that we own or lease. We believe that we have one of the most extensive refrigerated direct-to-store delivery ("DSD") systems in the United States. We sell our products primarily on a local or regional basis through our local and regional sales forces, and in some instances, with the assistance of national brokers. Some national customer relationships are coordinated by our centralized corporate sales department or national brokers.

Basis of Presentation and Consolidation — The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q have been prepared on the same basis as the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the ~~“2016~~“2017 Annual Report on Form 10-K”), which we filed with the Securities and Exchange Commission on February ~~22, 2017.~~26, 2018. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and entities controlled by the Company through its direct ownership of a majority interest. The Company eliminates from its financial results all intercompany transactions between entities included in the consolidated financial statements. In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments) to present fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. Our results of operations for the three and six month periods ended June 30, ~~2017~~2018 may not be indicative of our operating results for the full year. The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements contained in our ~~2016~~2017 Annual Report on Form 10-K.

Unless otherwise indicated, references in this report to “we,” “us,” “our” or "the Company" refer to Dean Foods Company and its subsidiaries, taken as a whole.

We have determined that we satisfy our performance obligations related to our customer contracts at a point in time, as opposed to over time, and, accordingly, revenue is recognized at a point in time across all of our revenue streams. Therefore, we do not have any contract balances with our customers recorded on our unaudited Condensed Consolidated Balance Sheets.

Uncle Matt's Organic — On June 22, 2017, we completed the acquisition of Uncle Matt's Organic, Inc. ("Uncle Matt's"). Uncle Matt's is a leading organic juice company offering a wide range of organic juices, including probiotic-infused juices and fruit-infused waters. The total purchase price was $22.0 million. Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values and include identifiable intangible assets of $8.4 million, of which $6.6 million relates to an indefinite-lived trademark and $1.8 million relates to customer relationships that are subject to amortization over a period of 10 years.

We recorded goodwill of ~~$13.4~~$13.3 million in connection with the acquisition, which consists of the excess of the net purchase price over the fair value of the net assets acquired. This goodwill represents the expected value attributable to our expansion into the organic juice category. The goodwill is not deductible for tax purposes.

The acquisition was funded through a combination of cash on hand and borrowings under our receivables securitization facility. The ~~values reflected above may change as we finalize our assessment of the acquired assets and liabilities. A change in these valuations may also impact the income tax related accounts and goodwill. The~~ pro forma impact of the acquisition on consolidated net earnings would not have materially changed reported net earnings. Uncle Matt's results of operations ~~will be included in our Consolidated Statements of Operations from the date of acquisition.~~

During the ~~final fair value assessments are complete.~~second quarter of 2018, we recognized a net gain from discontinued operations of $1.9 million, net of tax, resulting from a tax refund received from the settlement of a state tax refund claim related to our 2013 sale of Morningstar Foods, LLC.

~~Good Karma~~Organic Valley Fresh Joint Venture — ~~On May 4,~~In the third quarter of 2017, we ~~acquired a non-controlling interest in, and entered into a distribution agreement~~commenced the operations of our previously announced 50/50 strategic joint venture with ~~Good Karma Foods, Inc.~~Cooperative Regions of Organic Producer Pools (“~~Good Karma”~~CROPP”), ~~the leading producer of flax-based~~an independent farmer cooperative that distributes organic milk and ~~yogurt products. This investment allows us~~other organic dairy products under the Organic Valley^® brand. The joint venture, called Organic Valley Fresh, combines our processing plants and refrigerated DSD system with CROPP's portfolio of recognized brands and products, marketing expertise, and access to ~~diversify our portfolio~~an organic milk supply from America's largest cooperative of organic dairy farmers to ~~include plant-based dairy alternatives~~bring the Organic Valley^® brand to retailers. We and ~~provides Good Karma~~CROPP each made a capital contribution of $2.0 million to the ~~ability to more rapidly expand distribution across~~joint venture during the ~~U.S., as well as increase investments in brand building and product innovation.~~ third quarter of 2017.

We have concluded that Organic Valley Fresh is a variable interest entity, but we have determined that we are not the primary beneficiary of the Organic Valley Fresh joint venture because we do not ~~expect~~have the power to direct the activities that most significantly affect the economic performance of the joint venture; therefore, the financial results of the joint venture have not been consolidated in our ~~equity in the earnings of this investment to materially impact our consolidated financial statements.~~unaudited Condensed Consolidated Financial Statements. We are accounting for this investment under the equity method of ~~accounting based upon~~accounting. Our equity in the earnings of the joint venture are included as a component of operating income as we have determined that the joint venture's operations are integral to, and an extension of, our ~~ability to exercise significant influence over~~business operations. Our equity in the ~~investee through our ownership interest~~earnings of the joint venture was $1.7 million and ~~representation on Good Karma's board~~$3.6 million for the three and six months ended June 30, 2018, respectively. We received cash distributions from the joint venture of ~~directors.~~$2.8 million for each of the three and six months ended June 30, 2018.

As of June 30, ~~2017,~~2018, the gross carrying value of goodwill was ~~$2.24~~$2.26 billion and accumulated goodwill impairment was $2.08 billion. We recorded a goodwill impairment charge of $2.08 billion in 2011 with no goodwill impairment charges in subsequent years.

The changes in the net carrying amounts of goodwill as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017 were as follows (in thousands):

The net carrying amounts of our intangible assets other than goodwill as of June 30, ~~2017~~2018 and December 31, ~~2016~~2017 were as follows:

Our ~~trademark values~~finite-lived trademarks will be amortized on a straight-line basis over their remaining useful lives, which range from approximately 32 to 98 years, with a weighted-average remaining useful life of approximately 5 years. Amortization expense on intangible assets for the three months ended June 30, 2018 and 2017 ~~and 2016~~ was ~~$5.2~~$5.1 million and ~~$4.1~~$5.2 million, respectively. Amortization expense on intangible assets for the six months ended June 30, 2018 and 2017 ~~and 2016~~ was ~~$10.3~~$10.2 million and ~~$10.4~~$10.3 million, respectively. The amortization of intangible assets is reported on a separate line item in our unaudited Condensed Consolidated Statements of Operations.

Senior Secured Revolving Credit Facility — In March 2015, we entered into a credit agreement, as amended on January 4, 2017 and as described below (as amended, the "Credit Agreement"), pursuant to which the lenders provided us with a senior secured revolving credit facility in the amount of up to $450 million (the “Credit Facility”). Under the Credit Agreement, we have the right to request an increase of the aggregate commitments under the Credit Facility by up to $200 million, which we may request to be made available as either term loans or revolving loans, without the consent of any lenders not participating in such increase, subject to specified conditions. The Credit Facility is available for the issuance of up to $75 million of letters of credit and up to $100 million of swing line loans.

On January 4, 2017, we amended the Credit Agreement to, among other things, (i) extend the maturity date of the Credit Facility to January 4, 2022; (ii) modify the leverage ratio covenant to add a requirement that we comply with a maximum total net leverage ratio (which, for purposes of calculating indebtedness, excludes borrowings under our receivables securitization facility) not to exceed 4.25 to 1.00 and to eliminate the maximum senior secured net leverage ratio requirement; (iii) modify the definition of “Consolidated EBITDA” to permit certain pro forma cost savings add-backs in connection with permitted acquisitions and dispositions; (iv) modify the definition of “Applicable Rate” to reduce the interest rate margins such that loans outstanding under the Credit Facility will bear interest, at our option, at either (x) the LIBO Rate (as defined in the Credit Agreement) plus a

In connection with the execution of the amendment to the Credit Agreement, we paid certain arrangement fees of approximately $0.7 million to lenders and other fees of approximately $0.3 million, which were capitalized and will be amortized to interest expense over the remaining term of the facility. Additionally, we wrote off $0.9 million of unamortized deferred financing costs in connection with this amendment.

We may make optional prepayments of loans under the Credit Facility, in whole or in part, without premium or penalty (other than applicable breakage costs). Subject to certain exceptions and conditions described in the Credit Agreement, we will be obligated to prepay the Credit Facility, but without a corresponding commitment reduction, with the net cash proceeds of certain asset sales and with casualty insurance proceeds. The Credit Facility is guaranteed by our existing and future domestic material restricted subsidiaries (as defined in the Credit Agreement), which are substantially all of our wholly-owned U.S. subsidiaries other than the receivables securitization facility subsidiaries (the “Guarantors”).

The Credit Facility is secured by a first priority perfected security interest in substantially all of our assets and the assets of the Guarantors, whether consisting of personal, tangible or intangible property, including a pledge of, and a perfected security interest in, (i) all of the shares of capital stock of the Guarantors and (ii) 65% of the shares of capital stock of our and the Guarantors' first-tier foreign subsidiaries that are material restricted subsidiaries, in each case subject to certain exceptions as set forth in the Credit Agreement. The collateral does not include, among other things, (a) any of our real property, (b) the capital stock and any assets of any unrestricted subsidiary, (c) any capital stock of any direct or indirect subsidiary of Dean Holding Company ("Legacy Dean"), a wholly owned subsidiary of the Company, which owns any real property, or (d) receivables sold pursuant to the receivables securitization facility.

The Credit Agreement contains customary representations, warranties and covenants, including, but not limited to specified restrictions on indebtedness, liens, guarantee obligations, mergers, acquisitions, consolidations, liquidations and dissolutions, sales of assets, leases, payment of dividends and other restricted payments during a default or non-compliance with the financial covenants, investments, loans and advances, transactions with affiliates and sale and leaseback transactions. The Credit Agreement also contains customary events of default and related cure provisions. We are required to comply with (a) a maximum total net leverage ratio of 4.25x (which, for purposes of calculating indebtedness, excludes borrowings under our receivables securitization facility); and (b) a minimum consolidated interest coverage ratio of 2.25x. In addition, the Credit Agreement imposes certain restrictions on our ability to pay dividends and make other restricted payments if our total net leverage ratio (including borrowings under our receivables securitization facility) is in excess of 3.50x.

At June 30, ~~2017,~~2018, we had no outstanding borrowings ~~of $1.3 million~~ under the Credit Facility. Our average daily balance under the Credit Facility during the six months ended June 30, ~~2017~~2018, was ~~$1.7~~$2.6 million. There were no letters of credit issued under the Credit Facility as of June 30, ~~2017.~~2018.

Dean Foods Receivables Securitization Facility — We have a $450 million receivables securitization facility pursuant to which certain of our subsidiaries sell their accounts receivable to two wholly-owned entities intended to be bankruptcy-remote. The entities then transfer the receivables to third-party asset-backed commercial paper conduits sponsored by major financial institutions. The assets and liabilities of these two entities are fully reflected in our unaudited Condensed Consolidated Balance Sheets, and the securitization is treated as a borrowing for accounting purposes.

On January 4, 2017, we amended the purchase agreement governing the receivables securitization facility to, among other things, (i) extend the liquidity termination date to January 4, 2020, (ii) reduce the maximum size of the receivables securitization facility to $450 million, (iii) replace the senior secured net leverage ratio with a total net leverage ratio to be consistent with the amended leverage ratio covenant under the amended Credit Agreement described above, and (iv) modify certain pricing terms such that advances outstanding under the receivables securitization facility will bear interest between 0.90% and 1.05%, and the Company will pay an unused fee between 0.40% and 0.55% on undrawn amounts, in each case based on the Company's total net leverage ratio.

In connection with the amendment to the receivables purchase agreement, we paid certain arrangement fees of approximately $0.6 million to lenders and other fees of approximately $0.1 million, which were capitalized and will be amortized to interest expense over the remaining term of the facility. Additionally, we wrote off $0.2 million of unamortized deferred financing costs in connection with the amendment.

Based on the monthly borrowing base formula, we had the ability to borrow up to ~~$448.4~~$435.7 million of the total commitment amount under the receivables securitization facility as of June 30, ~~2017.~~2018. The total amount of receivables sold to these entities as of June 30, ~~2017~~2018 was ~~$561.5~~$557.8 million. During the first six months of ~~2017,~~2018, we borrowed ~~$1.1~~$1.2 billion and repaid ~~$1.1~~$1.3 billion under the facility with a remaining balance of ~~$65.0~~$160.0 million as of June 30, ~~2017.~~2018. In addition to letters of credit in the aggregate amount of ~~$117.2~~$108.7 million that were issued but undrawn, the remaining available borrowing capacity was ~~$266.2~~$167.0 million at June 30, ~~2017.~~2018. Our average daily balance under this facility during the six months ended June 30, ~~2017~~2018 was ~~$44.2~~$168.8 million. The receivables securitization facility bears interest at a variable rate based upon commercial paper and one-month LIBO rates plus an applicable margin based on our total net leverage ratio.

The 2023 Notes will mature on March 15, 2023, and bear interest at an annual rate of 6.50%. Interest on the 2023 Notes is payable semi-annually in arrears in March and September of each year.

We may, at our option, redeem all or a portion of the 2023 Notes at any time on or after March 15, 2018, at the applicable redemption prices specified in the indenture governing the 2023 Notes (the "Indenture"), plus any accrued and unpaid interest to, but excluding, the applicable redemption date. We are also entitled to redeem up to 40% of the aggregate principal amount of the 2023 Notes before March 15, 2018 with the net cash proceeds that we receive from certain equity offerings at a redemption price equal to 106.5% of the principal amount of the 2023 Notes, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, prior to March 15, 2018, we may redeem all or a portion of the 2023 Notes, at a redemption price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

The Indenture contains covenants that, among other things, limit our ability to: (i) create certain liens; (ii) enter into sale and lease-back transactions; (iii) assume, incur or guarantee indebtedness for borrowed money that is secured by a lien on certain principal properties (or on any shares of capital stock of our subsidiaries that own such principal properties) without securing the 2023 Notes on a pari passu basis; and (iv) consolidate with or merge with or into, or sell, transfer, convey or lease all or substantially all of our properties and assets, taken as a whole, to another person.

The carrying value under the 2023 Notes at June 30, ~~2017~~2018 was ~~$693.8~~$694.9 million, net of unamortized debt issuance costs of ~~$6.2~~$5.1 million.

See Note 68 for information regarding the fair value of the 2023 Notes ~~and the subsidiary senior notes due 2017~~ as of June 30, ~~2017.~~2018.

Capital Lease Obligations and Other — Capital lease obligations of ~~$3.1~~$2.1 million and ~~$4.0~~$2.7 million as of June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, were primarily comprised of our leases for information technology equipment.

Commodities — We are exposed to commodity price fluctuations, including in the prices of milk, butterfat, sweeteners and other commodities used in the manufacturing, packaging and distribution of our products, such as natural gas, resin and diesel fuel. To secure adequate supplies of materials and bring greater stability to the cost of ingredients and their related manufacturing, packaging and distribution, we routinely enter into forward purchase contracts and other purchase arrangements with suppliers. Under the forward purchase contracts, we commit to purchasing agreed-upon quantities of ingredients and commodities at agreed-upon prices at specified future dates. The outstanding purchase commitment for these commodities at any point in time typically ranges from one month’s to one year’s anticipated requirements, depending on the ingredient or commodity. These contracts are considered normal purchases.

In addition to entering into forward purchase contracts, from time to time we may purchase over-the-counter contracts from qualified financial institutions or enter into exchange-traded commodity futures contracts for raw materials that are ingredients of our products or components of such ingredients. All commodities contracts are marked to market in our income statement at each reporting period and a derivative asset or liability is recorded on our balance sheet.

Although we may utilize forward purchase contracts and other instruments to mitigate the risks related to commodity price fluctuation, such strategies do not fully mitigate commodity price risk. Adverse movements in commodity prices over the terms of the contracts or instruments could decrease the economic benefits we derive from these strategies. At June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, our derivatives recorded at fair value in our unaudited Condensed Consolidated Balance Sheets consisted of the following:

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, we follow a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

A summary of our derivative assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2016~~2017 is as follows (in thousands):

Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. In addition, because the interest rates on our Credit Facility, receivables securitization facility, and certain other debt are variable, their fair values approximate their carrying values.

The fair ~~values~~value of the 2023 Notes ~~and subsidiary senior notes were~~was determined based on quoted market prices obtained through an external pricing source which derives its price valuations from daily marketplace transactions, with adjustments to reflect the spreads of benchmark bonds, credit risk and certain other variables. We have determined these fair values to be Level 2 measurements as all significant inputs into the quotes provided by our pricing source are observable in active markets. The following table presents the outstanding principal ~~amounts~~amount and fair ~~values~~value of the 2023 Notes ~~and subsidiary senior notes~~ at June 30, ~~2017~~2018 and December 31, ~~2016:~~2017:

Additionally, we maintain a Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified deferred compensation arrangement for our executive officers and other employees earning compensation in excess of the maximum compensation that can be taken into account with respect to our 401(k) plan. The SERP is designed to provide these employees with retirement benefits from us that are equivalent, as a percentage of total compensation, to the benefits provided to other employees. The assets related to the SERP are primarily invested in money market and mutual funds and are held at fair value. We classify these assets as Level 2 as fair value can be corroborated based on quoted market prices for identical or similar instruments in markets that are not active. The following table presents a summary of the SERP assets measured at fair value on a recurring basis as of June 30, ~~2017~~2018 (in thousands):

The following table presents a summary of the SERP assets measured at fair value on a recurring basis as of December 31, ~~2016~~2017 (in thousands):

Our authorized shares of capital stock include one million shares of preferred stock and 250 million shares of common stock with a par value of $0.01 per share.

Cash Dividends — In ~~November 2013, we announced that~~accordance with our ~~Board of Directors had adopted a~~ cash dividend ~~policy. Under the~~ policy, holders of our common stock will receive dividends when and as declared by our Board of Directors. Beginning in 2015, all awards of restricted stock units, performance stock units and phantom shares provide for cash dividend equivalent units, which vest in cash at the same time as the underlying award. Quarterly dividends of $0.09 per share were paid in March and June of ~~2017~~2018 and ~~2016,~~2017, totaling approximately $16.4 million ~~and $16.5 million~~ for each of the first six months of ~~2017~~2018 and ~~2016, respectively.~~2017. We expect to pay quarterly dividends of $0.09 per share ($0.36 per share annually) for the remainder of ~~2017.~~2018. Our cash dividend policy is subject to modification, suspension or cancellation in any manner and at any time. Dividends are presented as a reduction to retained earnings in our unaudited Condensed Consolidated Statement of Stockholders’ Equity unless we have an accumulated deficit as of the end of the period, in which case they are reflected as a reduction to additional paid-in capital.

Stock Repurchase Program — Since 1998, our Board of Directors has from time to time authorized the repurchase of our common stock up to an aggregate of $2.38 billion, excluding fees and commissions. We made no share repurchases during the three and six months ended June 30, ~~2017. We repurchased 1,371,185 shares for $25.0 million during the three~~2018 and ~~six months ended June 30, 2016.~~2017. As of June 30, ~~2017,~~2018, $197.1 million remained available for repurchases under this program (excluding fees and commissions). Our management is authorized to purchase shares from time to time through open market transactions at prevailing prices or in privately-negotiated transactions, subject to market conditions and other factors. Shares, when repurchased, are retired.

Restricted Stock Units — We issue restricted stock units ("RSUs") to certain senior employees and non-employee directors as part of our long-term incentive compensation program. An RSU represents the right to receive one share of common stock in the future. RSUs have no exercise price. RSUs granted to employees generally vest ratably over three years, subject to certain accelerated vesting provisions based primarily on a change of control, or in certain cases upon death or qualified disability. RSUs granted to non-employee directors vest ratably over three years.

The following table summarizes RSU activity during the six months ended June 30, ~~2017:~~2018:

Stock Options — The following table summarizes stock option activity during the six months ended June 30, ~~2017:~~2018:

We recognize share-based compensation expense for stock options ratably over the vesting period. The fair value of each option award is estimated on the date of grant using a Black-Scholes valuation model. We did not grant any stock options during ~~2016~~2017 or ~~2017,~~2018, nor do we currently plan to in the future. At June 30, ~~2017,~~2018, there was no remaining unrecognized stock option expense related to unvested awards.

Share-Based Compensation Expense — The following table summarizes the share-based compensation expense recognized during the three and six months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

Basic earnings (loss) per share (“EPS”) is based on the weighted average number of common shares outstanding during each period. Diluted EPS is based on the weighted average number of common shares outstanding and the effect of all dilutive common stock equivalents outstanding during each period. Stock option and stock unit conversions were not included in the computation of diluted loss per share for the three and six months ended June 30, 2018 as we incurred a loss from continuing operations for these periods and any effect on loss per share would have been anti-dilutive. The following table reconciles the numerators and denominators used in the computations of both basic and diluted EPS:

The changes in accumulated other comprehensive income (loss) by component, net of tax, during the three months ended June 30, ~~2017~~2018 were as follows (in thousands):

The changes in accumulated other comprehensive income (loss) by component, net of tax, during the six months ended June 30, ~~2017~~2018 were as follows (in thousands):

We sponsor various defined benefit and defined contribution retirement plans, including various employee savings and profit sharing plans, and contribute to various multiemployer pension plans on behalf of our employees. All full-time union and non-union employees who have met requirements pursuant to the plans are eligible to participate in one or more of these plans.

Defined Benefit Plans — The benefits under our defined benefit plans are based on years of service and employee compensation. The following table sets forth the components of net periodic benefit cost for our defined benefit plans during the three and six months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

~~On April 3, 2017, we made a discretionary contribution of $38.5 million to our company-sponsored pension plans.~~ We do not expect to ~~contribute an additional $0.8 million~~make any contributions to the company-sponsored pension plans ~~during the remainder of 2017.~~in 2018.

Postretirement Benefits — Certain of our subsidiaries provide health care benefits to certain retirees who are covered under specific group contracts. The following table sets forth the components of net periodic benefit cost for our postretirement benefit plans during the three and six months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

We evaluate our finite-lived intangible and long-lived assets for impairment when circumstances indicate that the carrying value may not be recoverable. Indicators of impairment could include, among other factors, significant changes in the business environment, or the planned closure of a ~~facility.~~facility, or deteriorations in operating cash flows. Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows.

Testing the assets for recoverability involves developing estimates of future cash flows directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of the assets. Other inputs are based on assessment of an individual asset’s alternative use within other production facilities, evaluation of recent market data and historical liquidation sales values for similar assets. As the inputs for testing recoverability are largely based on management’s judgments and are not generally observable in active markets, we consider such measurements to be Level 3 measurements in the fair value hierarchy. See Note 68.

The results of our analysis indicated an impairment to our property, plant and equipment at one of our production facilities of $2.2 million. The impairment was the result of declines in operating cash flows at this facility on both a historical and forecasted basis. This charge was recorded during the three months ended June 30, 2018.

The results of our analysis indicated no impairment of our property, plant and equipment, outside of facility closing and reorganization costs, for the three and six months ended June 30, ~~2017 and 2016.~~ 2017.

We can provide no assurance that we will not have impairment charges in future periods as a result of changes in our business environment, operating results or the assumptions and estimates utilized in our impairment tests.

Costs associated with approved plans within our ongoing network optimization strategies are summarized as follows:

Contingent Obligations Related to Divested Operations — We have divested certain businesses in recent years. In each case, we have retained certain known contingent obligations related to those businesses and/or assumed an obligation to indemnify the purchasers of the businesses for certain unknown contingent liabilities, including environmental liabilities. We believe that we have established adequate reserves, which are immaterial to the financial statements, for potential liabilities and indemnifications related to our divested businesses. Moreover, we do not expect any liability that we may have for these retained liabilities, or any indemnification liability, to materially exceed amounts accrued.

Contingent Obligations Related to Milk Supply Arrangements — On December 21, 2001, in connection with our acquisition of Legacy Dean, we purchased Dairy Farmers of America’s (“DFA”) 33.8% interest in our operations. In connection with that transaction, we issued a contingent, subordinated promissory note to DFA in the original principal amount of $40 million. The promissory note has a 20-year term that bears interest based on the consumer price index. Interest will not be paid in cash but will be added to the principal amount of the note annually, up to a maximum principal amount of $96 million. We may prepay the note in whole or in part at any time, without penalty. The note will become payable only if we materially breach or terminate one of our related milk supply agreements with DFA without renewal or replacement. Otherwise, the note will expire in 2021, without any obligation to pay any portion of the principal or interest. Payments made under the note, if any, would be expensed as incurred. We have not terminated, and we have not materially breached, any of our milk supply agreements with DFA related to the promissory note. We have previously terminated unrelated supply agreements with respect to several plants that were supplied by DFA. In connection with our continued focus on cost control and increased supply chain efficiency, we continue to evaluate our sources of raw milk supply.

Insurance — We use a combination of insurance and self-insurance for a number of risks, including property, workers’ compensation, general liability, automobile liability, product liability and employee health care utilizing high deductibles. Deductibles vary due to insurance market conditions and risk. Liabilities associated with these risks are estimated considering historical claims experience and other actuarial assumptions. Based on current information, we believe that we have established adequate reserves to cover these claims.

We have entered into various contracts, in the normal course of business, obligating us to purchase minimum quantities of raw materials used in our production and distribution processes, including conventional raw milk, diesel fuel, sugar and other ingredients that are inputs into our finished products. We enter into these contracts from time to time to ensure a sufficient supply of raw ingredients. In addition, we have contractual obligations to purchase various services that are part of our production process.

Litigation, Investigations and Audits — On August 9, 2007, two plaintiffs filed a putative class action antitrust complaint against Dean Foods and other milk processors in the United States District Court for the Eastern District of Tennessee. Plaintiffs alleged generally that we, either acting alone or in conjunction with others in the milk industry, lessened competition in the Southeastern United States for the sale of processed fluid Grade A milk to retail outlets and other customers. Plaintiffs further alleged that the defendants’ conduct artificially inflated wholesale prices paid by direct milk purchasers. On January 25, 2016, the district court denied plaintiffs’ motion for class certification. On February 8, 2016, plaintiffs filed a petition for permission to appeal the district court’s order denying class certification. That petition was denied by the Sixth Circuit on June 14, 2016. Although the courts refused to certify the case as a class action, the two original plaintiffs decided to pursue their individual claims for damages. The case was scheduled for trial on March 28, 2017. Prior to trial, the plaintiffs agreed with us to settle the lawsuit. We agreed to pay settlements to the plaintiffs and the parties resolved all outstanding claims in the litigation and agreed to voluntarily dismiss the litigation. The litigation was dismissed on March 21, 2017 with respect to one plaintiff, and on March 26, 2017 with respect to the other plaintiff. We recorded a charge and a corresponding liability in connection with the settlements in the first quarter of 2017.

We operate as a single reportable segment in manufacturing, marketing, selling and distributing a wide variety of branded and private label dairy and dairy case products. We operate 6665 manufacturing facilities which are geographically located largely based on local and regional customer needs and other market factors. We manufacture, market and distribute a wide variety of branded and private label dairy and dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. Our products are primarily delivered through what we believe to be one of the most extensive refrigerated ~~direct-to-store delivery (“DSD”)~~DSD systems in the United States. Our Chief Executive Officer evaluates the performance of our business based on ~~sales and~~ operating income or loss before facility closing and reorganization costs, litigation settlements, impairments of long-lived assets, gains and losses on the sale of businesses and certain other non-recurring gains and losses.

Geographic Information — Net sales related to our foreign operations comprised less than 1% of our consolidated net sales during each of the three and six months ended June 30, ~~2017~~2018 and ~~2016.~~2017. None of our long-lived assets are associated with our foreign operations.

Significant Customers — Our largest customer accounted for approximately ~~17.0%~~15.6% and ~~16.2%~~17.0% of our consolidated net sales in the three months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively and accounted for approximately ~~17.1%~~16.1% and ~~16.3%~~17.1% of our consolidated net sales in the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are predictions based on our current expectations and our projections about future events, and are not statements of historical fact. Forward-looking statements include statements concerning our business strategy, among other things, including anticipated trends and developments in, and management plans for, our business and the markets in which we operate. In some cases, you can identify these statements by forward-looking words, such as “estimate,” “expect,” “anticipate,” “project,” “plan,” “intend,” “believe,” “forecast,” “foresee,” “likely,” “may,” “should,” “goal,” “target,” “might,” “will,” “could,” “predict,” and “continue,” the negative or plural of these words and other comparable terminology. All forward-looking statements included in this Form 10-Q are based upon information available to us as of the filing date of this Form 10-Q, and we undertake no obligation to update any of these forward-looking statements for any reason. You should not place undue reliance on these forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed in “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the ~~"2016~~"2017 Annual Report on Form 10-K"), as updated herein, and elsewhere in this Form 10-Q. You should carefully consider the risks and uncertainties described under these sections.

We are a leading food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States, with a vision to be the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion. As we continue to evaluate and seek to maximize the value of our national operational network and our leading brands and product offerings, we have aligned our leadership team, operating strategy, and ~~sales, logistics~~commercial and supply chain initiatives into a single operating and reportable segment.

We manufacture, market and distribute a wide variety of branded and private label dairy and dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. Our portfolio includes DairyPure^®, the country's first and largest fresh, white milk national brand, and TruMoo^®, the leading national flavored milk brand, along with well-known regional dairy brands such as Alta Dena^®, Berkeley Farms^®, Country Fresh^®, Dean’s^®, Friendly's^®, Garelick Farms^®, LAND O LAKES ^® milk and cultured products (licensed brand), Lehigh Valley Dairy Farms^®, Mayfield ^®, McArthur^®, Meadow Gold ^®, Oak Farms^®, PET ^® (licensed brand), T.G. Lee^®, Tuscan^® and more. In all, we have more than 50 national, regional and local dairy brands as well as private labels. ~~Additionally, with our acquisition of Uncle Matt's Organic, Inc., which was completed on June 22, 2017, we now~~We also sell and distribute organic juice, probiotic-infused juices, and fruit-infused waters under the Uncle Matt's Organic^®brand. Additionally, we are party to the Organic Valley Fresh joint venture which distributes organic milk under the Organic Valley^®brand to retailers. With our majority interest acquisition of Good Karma Foods, Inc. ("Good Karma"), which was completed on June 29, 2018, we now sell and distribute flax-based milk and yogurt products under the Good Karma^® brand. Dean Foods also makes and distributes ~~ice cream, cultured products,~~ juices, teas, and bottled water. Due to the perishable nature of our products, we deliver the majority of our products directly to our customers' locations in refrigerated trucks or trailers that we own or lease. We believe that we have one of the most extensive refrigerated direct-to-store delivery ("DSD") systems in the United States. We sell our products primarily on a local or regional basis through our local and regional sales forces, and in some instances, with the assistance of national brokers. Some national customer relationships are coordinated by our centralized corporate sales department or national brokers.

Our discussion of the results of operations for the three and six months ended June 30, 2018 and 2017 ~~we acquired a non-controlling interest in, and entered into a distribution agreement~~is affected by our adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with ~~Good Karma Foods, Inc. (“Good Karma”~~Customers ("ASC 606"), on January 1, 2018. Historically, we presented sales of excess raw materials as a reduction of cost of sales within our unaudited Condensed

Sales of excess raw materials included in net sales were $122.9 million and yogurt products. This investment allows us to diversify our portfolio to include plant-based dairy alternatives and provides Good Karma the ability to more rapidly expand distribution across the U.S., as well as increase investments in brand building and product innovation. We do not expect our equity$274.7 million in the ~~earnings~~three and six months ended June 30, 2018, respectively. Sales of ~~this investment~~excess raw materials included as a reduction to ~~materially impact~~cost of sales were $137.2 million and $308.2 million in the three and six months ended June 30, 2017, respectively. See Notes 1 and 2 to our ~~consolidated financial statements. We are accounting~~unaudited Condensed Consolidated Financial Statements for this investment under the equity method of accounting based upon our ability to exercise significant influence over the investee through our ownership interest and representation on Good Karma's board of directors.additional information.

Our key performance indicators are brand mix and achieving low cost, ~~and volume performance,~~ which are reflected in gross ~~profit,~~margin and operating income, ~~and net sales,~~ respectively. We evaluate our financial performance based on ~~sales and~~ operating ~~profit~~income or loss before gains and losses on the sale of businesses, facility closing and reorganization costs, asset impairment charges, litigation settlements and other nonrecurring gains and losses. The following table presents certain information concerning our financial results, including information presented as a percentage of net sales:

Net sales increased ~~$77.9~~$24.5 million, or ~~4.2%~~1.3%, during the second quarter of ~~2017~~2018 as compared to the second quarter of ~~2016,~~2017, primarily due to ~~increased~~sales of excess raw materials of $122.9 million during the second quarter of 2018. Excluding the impact of sales of excess raw materials, net sales decreased $98.4 million, or 5.1%. Net sales declines were primarily due to fluid milk volume declines from year-ago levels, driven predominantly by overall category declines and the loss of volume from two large retailers starting in the second quarter of 2018, and also lower branded fluid milk volumes due to continued retailer investment in private label products. Net sales were further impacted by decreased pricing, as a result of ~~increases~~decreases in dairy commodity costs from year-ago levels. On average, during the second quarter of ~~2017,~~2018, the Class I price was ~~14.7% above~~5.9% below prior-year levels. ~~Additionally,~~Net sales declines were partially offset by volumes associated with the Uncle Matt's acquisition, ~~of Friendly's Ice Cream Holdings Corp. ("Friendly's")~~which contributed ~~$45.2~~$3.6 million to net sales in the second quarter of 2017 as compared to $8.7 million in the second quarter of 2016. The Friendly's acquisition closed on June 20, 2016 and net sales in the second quarter of 2016 reflect 11 days of Friendly's operations. See Note 2 to our unaudited Condensed Consolidated Financial Statements. Net sales increases were partially offset by a 2.7% total sales volume decline across all products from year-ago levels. This decline was in excess of our expectations. Volume declines across our fluid milk business, which accounted for approximately 76% of our total sales volume in the second quarter of 2017, represented an approximately 3.4% year-over-year decrease. Our total branded white milk volumes decreased 6.0% year-over-year. These decreases were partially offset by a 1.4% year-over-year increase in our flavored milk volumes.2018.

Cost of Sales — All expenses incurred to bring a product to completion are included in cost of sales, such as raw material, ingredient and packaging costs; labor costs; and plant and equipment costs. Cost of sales increased ~~7.7%~~$59.2 million, or 4.1%, in the second quarter of ~~2017~~2018 as compared to the second quarter of ~~2016,~~2017, primarily due to ~~increased~~the change in reporting of sales of excess raw materials discussed above. Excluding the impact of sales of excess raw materials, cost of sales decreased $63.7 million, or 4.4%, primarily due to decreased dairy commodity costs. The Class I price was ~~14.7% above~~5.9% below prior-year levels.

Operating Costs and Expenses — Operating costs and expenses increased ~~$1.7~~$52.4 million, or ~~0.4%~~12.4%, in the second quarter of ~~2017~~2018 as compared to the second quarter of ~~2016.~~2017. Significant changes to operating costs and expenses in the second quarter of ~~2017~~2018 as compared to the second quarter of ~~2016~~2017 include the following:

Other ~~(Income)~~ Expense — Other expense ~~increased $1.0~~decreased $1.8 million during the second quarter of ~~2017~~2018 as compared to the second quarter of ~~2016.~~2017. This ~~increase~~decrease in expense was primarily due to ~~declines in foreign currency exchange gains in the second quarter of 2017 as compared to the prior period, partially offset by slightly~~ lower interest expense in the second quarter of ~~2017 as~~2018 compared to the ~~second quarter~~prior period, primarily due to the repayment in full of ~~2016.~~the $142 million outstanding aggregate principal amount of subsidiary senior notes on October 16, 2017.

Income Taxes — Income tax ~~expense~~benefit was recorded at an effective rate of ~~40.3%~~24.6% for the second quarter of ~~2017 as~~2018 compared to income tax expense at a ~~42.6%~~40.3% effective tax rate for the second quarter of ~~2016.~~2017. Generally, our effective tax rate varies primarily based on our profitability level and the relative earnings of our business units. In the second quarter of 2018, the company recorded a discrete tax benefit of $16.2 million, primarily related to one-time tax impacts related to facility closing and reorganization costs and impairment charges. Excluding the impact of these discrete items, our effective tax rate for the second quarter of 2018 was 27.5%.

Net sales increased ~~$194.8~~$9.3 million, or ~~5.2%~~0.2%, during the first six months of ~~2017~~2018 as compared to the first six months of ~~2016,~~2017, primarily due to ~~increased~~sales of excess raw materials of $274.7 million during the first six months of 2018. Excluding the impact of sales of excess raw materials, net sales decreased $265.4 million, or 6.8%. Net sales declines were primarily due to fluid milk volume declines from year-ago levels, driven predominantly by overall category declines, the loss of volume from two large retailers starting in the second quarter of 2018 and lower branded fluid milk volumes due to continued retailer investment in private

The following table sets forth the average monthly Class I “mover” and its components, as well as the average monthly Class II minimum prices for raw skim milk and butterfat for the first six months of ~~2017~~2018 in comparison to the first six months of ~~2016:~~2017:

Cost of Sales — Cost of sales increased ~~9.6%~~$57.7 million, or 1.9%, in the first six months of ~~2017~~2018 as compared to the first six months of ~~2016,~~2017, primarily due to ~~increased~~the change in reporting of sales of excess raw materials discussed above. Excluding the impact of sales of excess raw materials, costs of sales decreased $216.9 million, or 7.2%, primarily due to decreased dairy commodity costs. The Class I price was ~~16.1% above~~11.1% below prior-year levels.

Gross ~~Profit~~Margin — Our gross ~~profit percentage~~margin decreased to 22.4% for the first six months of 2018 as compared to 23.7% for the first six months of ~~2017 as compared~~2017. This decrease was primarily due to ~~26.8%~~the change in reporting of excess raw materials discussed above. Excluding the impact of the change in reporting of excess raw materials, our gross margin would have been 24.1% for the first six months of ~~2016. This decrease was primarily due to higher input costs and overall volume declines discussed above.~~2018.

Operating Costs and Expenses — Operating costs and expenses increased ~~$35.4~~$27.4 million, or ~~4.2%~~3.1%, in the first six months of ~~2017~~2018 as compared to the first six months of ~~2016.~~2017. Significant changes to operating costs and expenses in the first six months of ~~2017~~2018 as compared to the first six months of ~~2016~~2017 include the following:

Net cash provided by operating activities ~~was $79.2~~increased by $41.6 million in the six months ended June 30, ~~2017~~2018 compared to ~~$125.3 million~~the six months ended June 30, 2017. The increase was primarily attributable to lower dairy commodity costs and better working capital management in comparison to the prior period, partially offset by lower operating income in the first six months of 2018. Additionally, in the six months ended June 30, ~~2016. The decrease was primarily attributable to~~2017, we made a discretionary pension contribution of $38.5 million to our company-sponsored pension ~~plans and lower operating income in the first six months of 2017.~~plans.

Net cash used in investing activities decreased by ~~$129.7~~$24.5 million in the six months ended June 30, ~~2017~~2018 compared to the six months ended June 30, ~~2016. This~~2017. The decrease was primarily attributable ~~to the $157.3 million purchase price for the Friendly's acquisition, recorded in the second quarter of 2016, as compared~~ to the purchase price, net of cash acquired, of $21.6 million paid for the Uncle Matt's acquisition, which closed in the second quarter of 2017, and other investments of $9.0 million in the first six months ~~ended June 30, 2017.~~of 2017, as compared to the purchase price, net of cash acquired, of $13.3 million paid for the Good Karma acquisition, which closed in the second quarter of 2018. Additionally, proceeds from the sale of fixed assets were $9.9 million higher in the first six months of 2018 in comparison to the prior period. Partially offsetting the decrease, capital expenditures were $2.7 million higher in the first six months of 2018 in comparison to the prior period.

Net cash used in financing activities ~~was $3.0~~increased by $70.7 million in the six months ended June 30, ~~2017~~2018 compared to ~~net cash provided by financing activities of $30.9 million in~~ the six months ended June 30, ~~2016.~~2017. This ~~change~~increase was ~~driven by~~primarily attributable to net debt ~~proceeds from borrowings~~repayments of ~~$17.2~~$56.8 million in the first six months of ~~2017,~~2018 as compared to ~~$73.3~~net debt proceeds of $16.4 million in the first six months of ~~2016.~~2017. Net debt proceeds were partially offset by payments of financing costs related to the amendments to our Credit Agreement and receivables purchase agreement of $1.8 million in the first six months of 2017. ~~Additionally, we made $25.0 million of share repurchases under our stock repurchase program in the first six months of 2016.~~

~~As of June 30, 2017, there were~~There have been no material changes outside the ordinary course of business to the information provided with respect to our contractual obligations, including indebtedness and purchase and lease obligations, as ~~reported~~disclosed in our ~~2016~~2017 Annual Report on Form ~~10-K, except as reflected in the table below:~~10-K.

We offer pension benefits through various defined benefit pension plans and also offer certain health care and life insurance benefits to eligible employees and their eligible dependents upon the retirement of such employees. Reported costs of providing non-contributory defined pension benefits and other postretirement benefits are dependent upon numerous factors, assumptions and estimates. For example, these costs are impacted by actual employee demographics (including age, compensation levels and employment periods), the level of contributions made to the plan and earnings on plan assets. Pension and postretirement costs also may be significantly affected by changes in key actuarial assumptions, including anticipated rates of return on plan assets and the discount rates used in determining the projected benefit obligation and annual periodic pension costs.

On April 3, 2017, we made a discretionary contribution of $38.5 million to our company-sponsored pension plans. We do not expect to ~~contribute an additional $0.8 million~~make any contributions to ~~the~~our company-sponsored pension plans ~~and $2.1 million to the postretirement health plans during the remainder of 2017.~~in 2018.

In 2001, in connection with our acquisition of Legacy Dean, we purchased Dairy Farmers of America’s (“DFA”) 33.8% interest in our operations. In connection with that transaction, we issued a contingent, subordinated promissory note to DFA in the original principal amount of $40 million. The promissory note has a 20-year term and bears interest based on the consumer price index. Interest will not be paid in cash but will be added to the principal amount of the note annually, up to a maximum principal amount of $96 million. We may prepay the note in whole or in part at any time, without penalty. The note will become payable only if we materially breach or terminate one of our related milk supply agreements with DFA without renewal or replacement. Otherwise, the note will expire in 2021, without any obligation to pay any portion of the principal or interest. Payments made under the note, if any, would be expensed as incurred. We have not terminated, and we have not materially breached, any of our related milk supply agreements with DFA related to the promissory note. We have previously terminated unrelated

We also have the following commitments and contingent liabilities, in addition to contingent liabilities related to ordinary course litigation, investigations and audits:

See Note 1214 to our unaudited Condensed Consolidated Financial Statements.

During ~~2017,~~2018, we intend to invest a total of approximately ~~$120~~$125 million to ~~$130~~$150 million in capital expenditures, primarily in support of our enterprise-wide cost productivity plan and other strategic initiatives and for our existing manufacturing ~~facilities and in support of our strategic initiatives. We~~facilities. For 2018, we expect cash interest to be approximately ~~$59 million to $60~~$56 million based upon current debt levels and projected forward interest rates under our Credit ~~Facility.~~Facility and receivables securitization facility. Cash interest excludes amortization of deferred financing fees ~~and bond discounts~~ of approximately $5$3 million.

On an ongoing basis, we evaluate and consider strategic acquisitions, divestitures, joint ventures, or other transactions to create shareholder value and enhance financial performance. We have also instituted a cash dividend policy and may repurchase shares of our common ~~stock opportunistically.~~stock.

The fluid milk industry remains highly competitive, and we are currently navigating a number of challenging dynamics across our cost structure, volumes, customers, and product mix. We continue to navigate a rapidly-changing industry landscape and a dynamic retail environment. Within private label fluid milk, competition for volume has increased significantly, and in some cases, we have lost volume. As a result, we have experienced increased levels of volume deleverage that have negatively impacted our operating income. In addition, retailers continue to aggressively price their private label products, which we believe negatively impacts our branded product sales, resulting in compressed margins.

During the six months ended June 30, 2018, we experienced fluid milk volume declines from year-ago levels, driven predominantly by overall category declines and the loss of volume from two large retailers starting in the second quarter of 2018.

We expect marketplace volume and mix challenges to continue for the remainder of 2018. These challenges make the execution of our commercial initiatives and our enterprise-wide cost productivity plan critical to navigating our volume and competitive pressures.

We have historically targeted annual cost productivity savings mainly to offset cost inflation and volume deleverage, and in 2018, we are challenging ourselves to generate additional savings. In addition, we are implementing an aggressive enterprise-wide cost productivity plan to significantly reset our cost structure with targeted cost savings incremental to our annual productivity savings. We currently have legacy processes and systems that are fragmented and decentralized in many areas, which has created a cost structure that is disproportionately sensitive to small percentage declines in volume. We have organized our enterprise-wide cost productivity plan into three targeted work streams: rescaling our supply chain, optimizing spend management and integrating our operating model.We believe this plan is necessary to support our business strategy and deliver more consistent earnings and cash flow over the long term. The plan will be phased over several years and will require significant one-time investments, including investments in people, infrastructure, technology and systems, which will negatively impact our profitability and cash flows in 2018.

Due to the phased implementation and timing of our initiatives and investments, we will not generate enough cost savings in 2018 to offset the planned investments, cost inflation and volume pressures. In addition, inflation, declining volumes and competitive pricing pressures have negated, and may continue to negate, some of the impact of our cost saving efforts. We also must execute our plans within our projected time frames in order to meet our financial projections and to remain competitive in the marketplace. For further discussion of the risks relating to our cost productivity plan, see “Part I - Item 1A. Risk Factors - Business, Competitive and Strategic Risks - We may not realize anticipated benefits from our enterprise-wide cost productivity plan, and we may not complete this plan within our projected time frames, either of which could materially adversely impact our business, financial condition, results of operations and cash flows" in our 2017 Annual Report on Form 10-K.

Conventional Raw Milk and Butterfat — — The primary raw materials used in the products we manufacture, distribute and sell are conventional raw milk (which contains both raw skim milk and butterfat) and bulk cream. On a monthly basis, the federal government and certain state governments set minimum prices for raw milk. The regulated minimum prices differ based on how the raw milk is utilized. Raw milk processed into fluid milk is priced at the Class I price and raw milk processed into products such as cottage cheese, creams and creamers, ice cream and sour cream is priced at the Class II price. Generally, we pay the federal minimum prices for raw milk, plus certain producer premiums (or “over-order” premiums) and location differentials. We also incur other raw milk procurement costs in some locations (such as hauling and field personnel). A change in the federal minimum price does not necessarily mean an identical change in our total raw milk costs as over-order premiums may increase or decrease. This relationship is different in every region of the country and can sometimes differ within a region based on supplier arrangements. However, in general, the overall change in our raw milk costs can be linked to the change in federal minimum prices. Because our Class II products typically have a higher fat content than that contained in raw milk, we also purchase bulk cream for use in some of our Class II products. Bulk cream is typically purchased based on a multiple of the Grade AA butter price on the Chicago Mercantile Exchange.

Prices for conventional raw milk induring the second quarter of ~~2017~~2018 were approximately ~~14.7% higher~~6% lower than year-ago levels and ~~decreased~~increased approximately 9%2% sequentially from the first quarter of ~~2017.~~2018. We are currently ~~expect~~projecting Class I raw milk costs to ~~increase by approximately 8% sequentially~~remain relatively benign for the remainder of 2018. Commodity price changes primarily impact our branded business as the changes in ~~the third quarter of 2017 (an approximately 11% increase year-over-year).~~raw milk costs are essentially a pass-through cost on our private label products. Given the multitude of factors that influence the dairy commodity environment, we acknowledge the potential for future volatility.

Fuel, Resin and ~~Resin~~External Freight Costs — — We purchase diesel fuel to operate our extensive DSD system, and we incur fuel surcharge expense related to the products we deliver through third-party carriers. Although we may utilize forward purchase contracts and other instruments to mitigate the risks related to commodity price fluctuations, such strategies do not fully mitigate commodity price risk. Adverse movements in commodity prices over the terms of the contracts or instruments could decrease the economic benefits we derive from these strategies. Another significant raw material we use is resin, which is a fossil fuel-based product used to make plastic bottles. The prices of diesel and resin are subject to fluctuations based on changes in crude oil and natural gas prices.

Income tax ~~expense~~benefit was recorded at an effective rate of ~~50.7%~~23.0% in the first six months of ~~2017~~2018 compared to income tax expense at a ~~39.9%~~50.7% effective tax rate in the first six months of ~~2016.~~2017. Our effective tax rate decreased in the first six months of 2018, primarily as a result of the 2017 Tax Act and the one-time tax impacts related to facility closing and reorganization costs

See the risk factors described in “Part I — Item 1A — Risk Factors” in our ~~2016~~2017 Annual Report on Form 10-K and elsewhere in this Form 10-Q for a description of various other risks and uncertainties concerning our business.

There have been no material changes in our quantitative and qualitative disclosures about market risk as set forth in our ~~2016~~2017 Annual Report on Form 10-K.

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), referred to herein as “Disclosure Controls”) as of the end of the period covered by this quarterly report. The controls evaluation was performed under the supervision and with the participation of management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). Based upon our most recent controls evaluation, our CEO and CFO have concluded that our Disclosure Controls were effective as of June 30, ~~2017.~~2018.

During the period covered by this quarterly report, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes in the Company's risk factors from those set forth in our ~~2016~~2017 Annual Report on Form ~~10-K, except as follows:~~



Delaware		75-2559681
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)



Large accelerated filer	ý		Accelerated filer	¨

Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

			Emerging growth company	¨



			Page
Part I — Financial Information

Item 1	—	Condensed Consolidated Financial Statements (Unaudited)	3
Item 2	—	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2931
Item 3	—	Quantitative and Qualitative Disclosures About Market Risk	4043
Item 4	—	Controls and Procedures	4143

Part II — Other Information

Item 1A	—	Risk Factors	4244
Item 6	—	Exhibits	4344

Signatures			4445


	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	31,509		$	17,980		$	25,434		$	16,512
Receivables, net of allowances of $6,189 and $5,118	601,869			669,200
Receivables, net of allowances of $3,949 and $5,583							593,207			675,826
Income tax receivable	7,191			5,578			1,461			2,140
Inventories	287,222			284,484			276,656			278,063
Deferred income taxes	—			37,504
Prepaid expenses and other current assets	40,292			43,884			41,396			47,338
Assets held for sale							5,127			—
Total current assets	968,083			1,058,630			943,281			1,019,879
Property, plant and equipment, net	1,124,089			1,163,851			1,001,808			1,094,064
Goodwill	167,535			154,112			190,707			167,535
Identifiable intangible and other assets, net	213,231			207,897			207,684			211,620
Deferred income taxes	21,310			21,737			14,083			10,731
Total	$	2,494,248		$	2,606,227		$	2,357,563		$	2,503,829
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	655,298		$	706,981		$	642,514		$	671,070
Current portion of debt	142,173			140,806			1,150			1,125
Total current liabilities	797,471			847,787			643,664			672,195
Long-term debt, net	762,125			745,245			855,809			912,074
Deferred income taxes	99,942			126,009			50,450			60,018
Other long-term liabilities	226,499			276,630			190,179			203,595
Commitments and contingencies (Note 12)
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, none issued	—			—			—			—
Common stock, 90,913,564 and 90,586,741 shares issued and outstanding, with a par value of $0.01 per share	909			906
Common stock, 91,368,529 and 91,123,759 shares issued and outstanding, with a par value of $0.01 per share							914			911
Additional paid-in capital	656,721			653,629			662,883			659,227
Retained earnings	36,938			45,654			33,943			74,219
Accumulated other comprehensive loss	(86,357		)	(89,633		)	(92,031		)	(78,410		)
Total Dean Foods Company stockholders’ equity							605,709			655,947
Non-controlling interest							11,752			—
Total stockholders’ equity	608,211			610,556			617,461			655,947
Total	$	2,494,248		$	2,606,227		$	2,357,563		$	2,503,829


	Three Months Ended June 30						Six Months Ended June 30						Three Months Ended June 30					Six Months Ended June 30
	2017			2016			2017			2016			2018			2017		2018			2017
Net sales	$	1,926,722		$	1,848,788		$	3,922,408		$	3,727,616		$	1,951,230		$	1,926,722	$	3,931,737		$	3,922,408
Cost of sales	1,459,342			1,355,535			2,992,903			2,730,295			1,518,446			1,459,242		3,050,450			2,992,709
Gross profit	467,380			493,253			929,505			997,321			432,784			467,480		881,287			929,699
Operating costs and expenses:
Selling and distribution	338,144			331,150			683,340			664,037			336,721			338,010		682,717			683,073
General and administrative	73,100			86,614			172,636			171,765			65,972			72,281		141,494			170,945
Amortization of intangibles	5,155			4,120			10,310			10,445			5,078			5,155		10,156			10,310
Facility closing and reorganization costs, net	5,817			(1,400		)	15,103			(234		)	67,661			5,817		76,123			15,103
Impairment of long-lived assets													2,232			—		2,232			—
Other operating income													(2,289		)	—		(2,289		)	—
Equity in (earnings) loss of unconsolidated affiliate													(1,699		)	—		(3,599		)	—
Total operating costs and expenses	422,216			420,484			881,389			846,013			473,676			421,263		906,834			879,431
Operating income	45,164			72,769			48,116			151,308
Other (income) expense:
Operating income (loss)													(40,892		)	46,217		(25,547		)	50,268
Other expense:
Interest expense	16,419			16,830			33,883			33,706			14,069			16,419		28,102			33,883
Other income, net	(805		)	(2,210		)	(1,761		)	(3,207		)
Other expense, net													782			248		1,252			391
Total other expense	15,614			14,620			32,122			30,499			14,851			16,667		29,354			34,274
Income before income taxes	29,550			58,149			15,994			120,809
Income tax expense	11,903			24,778			8,106			48,237
Net income	$	17,647		$	33,371		$	7,888		$	72,572
Income (loss) before income taxes													(55,743		)	29,550		(54,901		)	15,994
Income tax expense (benefit)													(13,727		)	11,903		(12,620		)	8,106
Income (loss) from continuing operations													(42,016		)	17,647		(42,281		)	7,888
Gain on sale of discontinued operations, net of tax													1,922			—		1,922			—
Net income (loss)													(40,094		)	17,647		(40,359		)	7,888
Net (income) loss attributable to non-controlling interest													—			—		—			—
Net income (loss) attributable to Dean Foods Company													$	(40,094	)	$	17,647	$	(40,359	)	$	7,888
Average common shares:
Basic	90,882,415			91,244,745			90,796,585			91,406,969			91,342,652			90,882,415		91,267,748			90,796,585
Diluted	91,369,030			91,679,813			91,365,946			91,995,078			91,342,652			91,369,030		91,267,748			91,365,946
Basic income per common share:
Net income	$	0.19		$	0.37		$	0.09		$	0.79
Diluted income per common share:
Net income	$	0.19		$	0.36		$	0.09		$	0.79
Basic income (loss) per common share:
Income (loss) from continuing operations attributable to Dean Foods Company													$	(0.46	)	$	0.19	$	(0.46	)	$	0.09
Income from discontinued operations attributable to Dean Foods Company													0.02			—		0.02			—
Net income (loss) attributable to Dean Foods Company													$	(0.44	)	$	0.19	$	(0.44	)	$	0.09
Diluted income (loss) per common share:
Income (loss) from continuing operations attributable to Dean Foods Company													$	(0.46	)	$	0.19	$	(0.46	)	$	0.09
Income from discontinued operations attributable to Dean Foods Company													0.02			—		0.02			—
Net income (loss) attributable to Dean Foods Company													$	(0.44	)	$	0.19	$	(0.44	)	$	0.09
Cash dividends declared per common share	$	0.09		$	0.09		$	0.18		$	0.18		$	0.09		$	0.09	$	0.18		$	0.18



(Mark One)
ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


(1)	Refer to Note 1 - Recently Adopted Accounting Pronouncements within our Notes to unaudited Condensed Consolidated Financial Statements for additional details on the adoption of Accounting Standards Update ("ASU") No. 2018-02 during the first quarter of 2018.



	Common Stock						Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	Shares	Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance, January 1, 2017	90,586,741	$	906	$	653,629		$	45,654		$	(89,633	)	$	610,556
Issuance of common stock	326,823	3		(883		)	—			—			(880		)
Share-based compensation expense	—	—		3,975			—			—			3,975
Net income	—	—		—			7,888			—			7,888
Dividends	—	—		—			(16,604		)	—			(16,604		)
Other comprehensive income (loss):
Pension and other postretirement benefit liability adjustment, net of tax of $2,057	—	—		—			—			3,276			3,276
Balance, June 30, 2017	90,913,564	$	909	$	656,721		$	36,938		$	(86,357	)	$	608,211



	Dean Foods Company Stockholders
	Common Stock						Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest		Total Stockholders’ Equity
	Shares	Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest		Total Stockholders’ Equity
Balance, January 1, 2018	91,123,759	$	911	$	659,227		$	74,219		$	(78,410	)	$	—	$	655,947
Issuance of common stock	244,770	3		(36		)	—			—			—		(33		)
Share-based compensation expense	—	—		3,692			—			—			—		3,692
Reclassification of stranded tax effects related to the Tax Act(1)	—	—		—			16,847			(16,847		)	—		—
Net loss attributable to Dean Foods Company	—	—		—			(40,359		)	—			—		(40,359		)
Fair value of non-controlling interest acquired	—	—		—			—			—			11,752		11,752
Dividends	—	—		—			(16,764		)	—			—		(16,764		)
Other comprehensive income:
Pension and other postretirement benefit liability adjustment, net of tax of $1,060	—	—		—			—			3,226			—		3,226
Balance, June 30, 2018	91,368,529	$	914	$	662,883		$	33,943		$	(92,031	)	$	11,752	$	617,461



	Three Months Ended June 30, 2017						Six Months Ended June 30, 2017
	As Previously Reported		Pro Forma Results Assuming Retrospective Adoption of ASU 2014-09		Increase (Decrease) to Previously Reported Amounts		As Previously Reported		Pro Forma Results Assuming Retrospective Adoption of ASU 2014-09		Increase (Decrease) to Previously Reported Amounts
Net sales	$	1,926,722	$	2,063,926	$	137,204	$	3,922,408	$	4,230,615	$	308,207
Cost of sales	1,459,342		1,596,546		137,204		2,992,903		3,301,110		308,207
Gross profit	467,380		467,380		—		929,505		929,505		—



	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017(1)		June 30, 2018		June 30, 2017(1)
	(In thousands)
Fluid milk	$	1,157,288	$	1,266,688	$	2,417,222	$	2,683,344
Ice cream(2)	321,005		324,955		560,603		580,339
Fresh cream(3)	99,816		92,911		191,766		180,782
Extended shelf life and other dairy products(4)	46,183		46,578		91,425		94,716
Cultured	65,504		72,111		129,670		144,185
Other beverages(5)	66,700		72,100		137,044		147,034
Other(6)	30,794		27,795		63,098		55,019
Subtotal	1,787,290		1,903,138		3,590,828		3,885,419
Sales of excess raw materials(7)	122,880		—		274,682		—
Sales of other bulk commodities	41,060		23,584		66,227		36,989
Total net sales	$	1,951,230	$	1,926,722	$	3,931,737	$	3,922,408


(1)	Prior period amounts have not been restated as we have elected to adopt ASC 606 using the modified retrospective method. Sales of excess raw materials of $137.2 million and $308.2 million for the three and six months ended June 30, 2017, respectively, were included as a reduction of cost of sales in our unaudited Condensed Consolidated Statements of Operations.


(2)	Includes ice cream, ice cream mix and ice cream novelties.


(5)	Includes fruit juice, fruit flavored drinks, iced tea and water.


(3)	Includes half-and-half and whipping creams.


(6)	Includes items for resale such as butter, cheese, eggs and milkshakes.


	June 30, 2017										December 31, 2016										June 30, 2018										December 31, 2017
	Acquisition Costs(1)		Impairment			Accumulated Amortization			Net Carrying Amount		Acquisition Costs		Impairment			Accumulated Amortization			Net Carrying Amount		Acquisition Costs(1)		Impairment			Accumulated Amortization			Net Carrying Amount		Acquisition Costs		Impairment			Accumulated Amortization			Net Carrying Amount
	(In thousands)																				(In thousands)
Intangible assets with indefinite lives:
Trademarks	$	58,600	$	—		$	—		$	58,600	$	52,000	$	—		$	—		$	52,000	$	69,315	$	—		$	—		$	69,315	$	58,600	$	—		$	—		$	58,600
Intangible assets with finite lives:
Customer-related and other	80,685		—			(39,211		)	41,474		78,925		—			(37,050		)	41,875		83,545		—			(43,339		)	40,206		80,685		—			(41,398		)	39,287
Trademarks	230,709		(109,910		)	(49,973		)	70,826		229,777		(109,910		)	(41,824		)	78,043		230,709		(109,910		)	(66,405		)	54,394		230,709		(109,910		)	(58,189		)	62,610
Total	$	369,994	$	(109,910	)	$	(89,184	)	$	170,900	$	360,702	$	(109,910	)	$	(78,874	)	$	171,918	$	383,569	$	(109,910	)	$	(109,744	)	$	163,915	$	369,994	$	(109,910	)	$	(99,587	)	$	160,497


2017	$	20.7
2018	20.3		$	20.5
2019	20.3		20.6
2020	12.2		12.5
2021	10.5		10.8
2022			8.1



Balance at December 31, 2016	$	154,112
Acquisitions (Note 2)	13,423
Balance at June 30, 2017	$	167,535



Balance at December 31, 2017	$	167,535
Acquisitions(1)	23,172
Balance at June 30, 2018	$	190,707


(1)	The increase in the net carrying amount of goodwill from December 31, 2017 to June 30, 2018 is related to the Good Karma acquisition and the finalization of tax matters associated with the Uncle Matt's acquisition. See Note 3.


2017	$	142,457
2018	1,125			$	516
2019	1,174			1,174
2020	65,392			160,392
2021	—			—
2022				—
Thereafter	701,300			700,000
Subtotal	911,448			862,082
Less unamortized discounts and debt issuance costs	(7,150		)
Less unamortized debt issuance costs				(5,123		)
Total debt	$	904,298		$	856,959


	Derivative Assets				Derivative Liabilities				Derivative Assets				Derivative Liabilities
	June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
	(In thousands)								(In thousands)
Commodities contracts — current(1)	$	6,945	$	2,416	$	2,037	$	12	$	2,226	$	1,431	$	1,450	$	1,829
Commodities contracts — non-current(2)	1		—		10		—		2		—		—		15
Total derivatives	$	6,946	$	2,416	$	2,047	$	12	$	2,228	$	1,431	$	1,450	$	1,844


(1)	Derivative assets and liabilities that have settlement dates equal to or less than 12 months from the respective balance sheet date are included in prepaid expenses and other current assets and accounts payable and accrued expenses, respectively, in our unaudited Condensed Consolidated Balance Sheets.


	Fair Value as of June 30, 2017		Level 1		Level 2		Level 3		Fair Value as of June 30, 2018		Level 1		Level 2		Level 3
Asset — Commodities contracts	$	6,946	$	—	$	6,946	$	—	$	2,228	$	—	$	2,228	$	—
Liability — Commodities contracts	2,047		—		2,047		—		1,450		—		1,450		—


	Fair Value as of December 31, 2016		Level 1		Level 2		Level 3		Fair Value as of December 31, 2017		Level 1		Level 2		Level 3
Asset — Commodities contracts	$	2,416	$	—	$	2,416	$	—	$	1,431	$	—	$	1,431	$	—
Liability — Commodities contracts	12		—		12		—		1,844		—		1,844		—



	June 30, 2017				December 31, 2016
	Amount Outstanding		Fair Value		Amount Outstanding		Fair Value
	(In thousands)
Dean Foods Company senior notes due 2023	$	700,000	$	736,750	$	700,000	$	736,750
Subsidiary senior notes due 2017	142,000		143,775		142,000		146,615


	Employees			Non-Employee Directors			Total			Employees			Non-Employee Directors			Total
RSUs outstanding at January 1, 2017	872,785			80,207			952,992
RSUs outstanding at January 1, 2018										545,405			85,829			631,234
RSUs granted	395,097			45,528			440,625			717,744			95,669			813,413
Shares issued upon vesting of RSUs	(221,992		)	(37,204		)	(259,196		)	(166,389		)	(38,454		)	(204,843		)
RSUs canceled or forfeited(1)	(296,696		)	(2,112		)	(298,808		)	(164,033		)	(1,915		)	(165,948		)
RSUs outstanding at June 30, 2017	749,194			86,419			835,613
RSUs outstanding at June 30, 2018										932,727			141,129			1,073,856
Weighted average grant date fair value	$	17.91		$	18.46		$	17.97		$	11.52		$	11.98		$	11.58


(1)	Pursuant to the terms of our plans, employees have the option of forfeiting RSUs to cover their minimum statutory tax withholding when shares are issued. Any RSUs surrendered or canceled in satisfaction of participants’ tax withholding obligations are not available for future grants under the plans.


	PSUs		Weighted Average Grant Date Fair Value		PSUs		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017	90,583		$	19.13
Outstanding at January 1, 2018					121,807		$	18.62
Granted	158,402		18.84		290,609		8.79
Vested	—		—		—		—
Forfeited or canceled	(81,217	)	19.29		(21,870	)	10.98
Outstanding at June 30, 2017	167,768		$	18.78
Performance adjustment(1)					(85,795	)	18.13
Outstanding at June 30, 2018					304,751		$	9.93


(1)	Represents an adjustment to the 2017 tranche of the 2016 and 2017 PSU awards based on actual performance during the 2017 annual performance period in relation to the established performance goal for that period. The actual performance for the 2017 annual performance period was certified by the Compensation Committee of our Board of Directors in the first quarter of 2018.


	Options		Weighted Average Exercise Price		Weighted Average Contractual Life (Years)	Aggregate Intrinsic Value		Options		Weighted Average Exercise Price		Weighted Average Contractual Life (Years)	Aggregate Intrinsic Value
Options outstanding and exercisable at January 1, 2017	2,038,829		$	19.78
Options outstanding and exercisable at January 1, 2018								700,467		$	17.21
Forfeited and canceled	(557,329	)	26.18					(270,922	)	21.00
Exercised	(49,879	)	15.12					—		—
Options outstanding and exercisable at June 30, 2017	1,431,621		$	17.45	1.15	$	2,709,128
Options outstanding and exercisable at June 30, 2018								429,545		$	14.81	1.41	$	65,143


	Three Months Ended June 30					Six Months Ended June 30					Three Months Ended June 30					Six Months Ended June 30
	2017			2016		2017			2016		2018		2017			2018		2017
	(In thousands)										(In thousands)
RSUs	$	1,046		$	2,068	$	2,654		$	3,437	$	1,399	$	1,046		$	2,545	$	2,654
PSUs	(1,051		)	451		(551		)	839		551		(1,051		)	1,147		(551		)
Phantom shares	2,707			3,210		4,556			7,521		2,520		2,707			2,933		4,556
Total	$	2,702		$	5,729	$	6,659		$	11,797	$	4,470	$	2,702		$	6,625	$	6,659



	Pension and Other Postretirement Benefits Items			Foreign Currency Items			Total
Balance at March 31, 2017	$	(83,208	)	$	(4,781	)	$	(87,989	)
Other comprehensive income before reclassifications	3,278			—			3,278
Amounts reclassified from accumulated other comprehensive income(1)	(1,646		)	—			(1,646		)
Net current-period other comprehensive income	1,632			—			1,632
Balance at June 30, 2017	$	(81,576	)	$	(4,781	)	$	(86,357	)


(1)	The accumulated other comprehensive loss reclassification is related to amortization of unrecognized actuarial losses and prior service costs, both of which are included in the computation of net periodic benefit cost. See Note 1012.


(2)	See Note 1 for additional details on the adoption of ASU No. 2018-02 during the first quarter of 2018.


	Accrued Charges at December 31, 2016		Charges and Adjustments		Payments			Accrued Charges at June 30, 2017		Accrued Charges at December 31, 2017		Charges and Adjustments			Payments			Accrued Charges at June 30, 2018
	(In thousands)									(In thousands)
Cash charges:
Workforce reduction costs	$	3,610	$	7,464	$	(3,572	)	$	7,502	$	5,863	$	30,318		$	(5,019	)	$	31,162
Shutdown costs	—		2,557		(2,557		)	—		—		1,833			(1,833		)	—
Lease obligations after shutdown	3,932		166		(814		)	3,284		2,606		48			(672		)	1,982
Other	—		163		(163		)	—		—		190			(190		)	—
Subtotal	$	7,542	10,350		$	(7,106	)	$	10,786	$	8,469	32,389			$	(7,714	)	$	33,144
Other charges:
Non-cash charges:
Write-down of assets(1)			4,678									44,700
Loss on sale of related assets			67
Other, net			8
Gain on sale/disposal of related assets												(966		)
Subtotal			4,753									43,734
Total			$	15,103								$	76,123


(1)	As disclosed in Note 1 to the Consolidated Financial Statements in our ~~2016~~2017 Annual Report on Form 10-K, we include certain shipping and handling costs within selling and distribution expense. As a result, our gross profit may not be comparable to other entities that present all shipping and handling costs as a component of cost of sales.