At Dean Foods, we have always been committed to doing business responsibly. We believe this duty extends to protecting our environment and positively affecting society and the communities where we work and live. This responsibility is truly no small matter and we are absolutely committed to doing our part. Corporate Responsibility Report | 2008 Letter from our Chairman and CEO Dean Foods is in the midst of transforming our many legacy companies into a single, focused, best-in-class food and beverage company. This transformation will require our unwavering commitment to continuously improve our capabilities, our processes and systems, and our business. We believe our progress should be measured not only by our financial performance but also by the impact we have on society, our communities and our environment. We are proud of the many companies we have acquired to make Dean Foods the company it is today. These companies have provided wholesome, nutritious dairy case products trusted by families for many decades. Our companies and their products have been sources of pride in their local communities, supporting their economies, their people and their causes. We are building on that legacy of trust and pride as we work to become a better steward of the environment and the larger community in which we all live. We have taken many first steps in our journey this past year. We completed our first baseline greenhouse gas (GHG) audit and reported our results to the Carbon Disclosure Project and the California Climate Action Registry. I am very pleased to report that we have now set specific targets and begun implementing action plans to reduce our greenhouse gas emissions, water consumption, and the amount of waste we send to landfills. Those targets are set out in our Environmental 2013 Roadmap that is included in this report. We are also increasing our efforts to engage and develop our workforce, support our communities and provide consumers with even more healthy choices in the dairy case. This first comprehensive Corporate Responsibility Report is a milestone for Dean Foods. In this report, we highlight some of the actions we are taking to improve our business and our impacts. But more importantly, we are acknowledging the responsibility we all share to improve the world around us. We believe this responsibility is truly no small matter and we are absolutely committed to doing our part. We know that by taking these actions today, we will be fortifying our future for generations to come. Sincerely, G regg L. Engles Chairman of the Board and Chief Executive Officer Dean Foods Company Corporate Responsibility Report | Page 1 About This Report Welcome to our first comprehensive Corporate Responsibility Report. In April 2008, we published a Corporate Responsibility Update in which we publicly discussed our preliminary corporate responsibility efforts and plans. This report provides more tangible data concerning our environmental and social impacts and greater specificity regarding our plans. As the largest processor and distributor of milk and dairyrelated products in the United States, we are committed to responsibly managing our social, environmental, marketplace, and community impacts. This report is intended to provide stakeholders with an updated and more focused perspective on our corporate responsibility programs and policies. We expect that future reports will contain more complete and in-depth data as we develop our reporting systems and prioritize and further develop the individual elements of our corporate responsibility program. Scope and Repo r t ing Year This report covers the activities of Dean Foods Company, a Delaware corporation, and its wholly-owned subsidiaries. All of our operations are located in the United States, with the exception of one facility in the United Kingdom. We do not publicly report on suppliers, family farms or entities in which we have a minority ownership position. The information contained in this report includes benchmark data from 2007 to the extent available and certain current or anecdotal data from 2008. Page 2 | Corporate Responsibility Report Th e I s sues Co vered – Materialit y Pro ces s We operate a large number of manufacturing facilities and a substantial distribution fleet. As a result, our operations have numerous social, community and environmental impacts. In line with the principles of the Global Reporting Initiative (GRI) and with the help of Business for Social Responsibility (BSR), we undertook a materiality process to identify those issues that most significantly impact our business success and influence the perspectives and decisions of our key stakeholders, and over which we have a reasonable level of control. For each of the topics covered in this report, we worked with BSR to provide a clear view of why these issues are important, our management approach (principles and policies), our key activities to address these issues, and the indicators we use (or plan to use) to measure our performance. I nfo rm at io n and D ata We have endeavored to provide data and information on our corporate responsibility efforts that is both comprehensive and balanced. Because our company has grown by acquisition and consolidation, much of our business remains decentralized and is managed at the local operating level. As a result, many of our systems for collecting and reporting data, including data regarding social and environmental performance, are still being developed. We intend to expand the amount of information we report and improve data integrity over the coming years. The information presented in this report has been collected and verified in accordance with our internal standards, and we believe it provides an accurate representation of our performance and activities. As the largest processor and distributor of milk and dairy-related products in the United States, we are committed to responsibly managing our social, environmental, marketplace, and community impacts. This report is intended to provide stakeholders with an updated and more focused perspective on our corporate responsibility programs and policies. Contents D ean Fo ods Co mp any Pro file D ean Fo ods and Co rp orat e Res p o ns ib ilit y Product Steward s h ip Res po nsib le Sourcing The Environm ent Our Emplo yees The Communit y Governance and Eth ics Lo o king t o t h e Future 5 8 10 12 16 22 24 26 28 Page 4 | Corporate Responsibility Report Dean Foods Company Profile We are the largest processor and distributor of dairy products in the United States. We have achieved this position through a series of acquisitions that have helped transform and modernize the American dairy industry. Our principal product offerings are milk and other dairy-related items, including creams and creamers, cottage cheese, yogurt, sour cream and ice cream, soymilk and other soy-based products. Our Histo r y and Strategy Dairy processing in the United States has historically been a local industry serving local markets, due to the expense of transporting milk and its highly perishable nature. With cold storage and refrigerated transportation, dairy processing has become more regional, but the industry remained fragmented with excess capacity. The strategic premise of the formation and growth of our company was that, by consolidating this fragmented industry, we could achieve greater economies of scale, become more efficient, and better serve the needs of a consolidating base of retail customers. DEAN 1925 Samuel E. Dean Sr. purchases the Pecatonica Marketing Company, an evaporated milk processing facility located in northwestern Illinois. 1927 Company changes name to Dean Evaporated Milk Company. Additional Illinois dairy plants are purchased. 1929 Company changes name to Dean Milk Company. 1981 After acquisitions of several dairies nationwide, Dean Foods Company is listed on the New York Stock Exchange under the symbol “DF.” FOOD S CORPORATE 1993 Recognizing an opportunity to consolidate the highly fragmented dairy industry, Suiza Foods’ founders make their first dairy acquisition with the purchase of Suiza Dairy in San Juan, Puerto Rico. Additional local and regional dairy acquisitions follow. 1997 Suiza Foods is listed on the New York Stock Exchange under the symbol “SZA.” Suiza Foods merges with The Morningstar Group, Inc., expanding Suiza’s branded and value-added product line. 2000 We began acquiring local and regional dairy operations in 1993. Between 1993 and 2000, operating as Suiza Foods Corporation, we completed more than 40 acquisitions and became the largest fluid milk processor in the United States. In 2001, we acquired Dean Foods Company, then the second largest fluid milk company in the United States, and assumed its name for the combined entity. The combined Dean Foods Company has continued to acquire local and regional dairies, and we have added national brands such as Horizon Organic® and Silk® to our portfolio. Today, Dean Foods Company accounts for approximately 35% of total milk sales in the United States. Notwithstanding our size, our company is still evolving as we continue our efforts to transform Dean Foods into a focused, best-inclass food and beverage company. While we have achieved meaningful economies of scale to date, our future success will require that we continue to reduce costs and improve our manufacturing and distribution operations systemically across the company. We must also deliver more innovation to the dairy case, providing consumers with differentiated, value-added products to stem the decline in per capita milk consumption. After more than 40 dairy acquisitions, Suiza Foods Corporation becomes the nation’s largest dairy processor and distributor. HISTORY 2001 Suiza Foods Corporation’s acquisition of Dean Foods Company is complete. Suiza changes its name to Dean Foods Company and its ticker symbol on the NYSE changes from "SZA" to “DF.” The combined company’s headquarters is located in Dallas, Texas. 2002 Dean Foods acquires Boulder, Colorado-based White Wave, Inc., maker of Silk, the nation’s leading refrigerated soymilk. 2004 Dean Foods acquires Horizon Organic® Holding Corporation, maker of a full line of organic milk and dairy products. 2004 Dean Foods consolidates Silk, Horizon Organic and other branded businesses as WhiteWave Foods Company, headquartered in Broomfield, Colorado. 2005 Dean Foods spins off Dean Specialty Foods Group, which includes pickles, dips, dressings and foodservice products, as TreeHouse Foods (NYSE: THS). 2006 Standard & Poor’s announces that Dean Foods will be added to the S&P 500 Index. Corporate Responsibility Report | Page 5 locations. Our extensive network of refrigerated transportation vehicles is one of the largest in the country. We operate over 4,700 refrigerated trucks, 2,600 tractors and 6,000 refrigerated trailers. At year-end 2007, we had approximately 26,000 employees, the majority of whom are involved in our manufacturing and distribution operations. Ho w We A re St ruct ured We are organized into two business divisions that reflect the distinct supply chains and characteristics of our different product categories. Our DSD Dairy (Direct Store Delivery) segment includes the majority of our manufacturing facilities and primarily involves highly perishable products that require “direct” delivery to customers’ stores in refrigerated trucks or trailers. Our WhiteWave-Morningstar segment manufactures and sells products with more extended shelf lives that are typically delivered to customer warehouses through third-party transporters or distributors. Our Pro d uct s and Brand s What We Do We purchase agricultural inputs – the most significant being raw milk – and process them into consumer products, then transport them for final sale to a wide variety of outlets. The conventional raw milk that we purchase comes from approximately 12,000 dairy farmers across the United States. Our organic raw milk is supplied from almost 500 organic family farms and from two organic farms that we own and operate. We have more than 100 manufacturing facilities located in 36 states and one manufacturing facility in the United Kingdom. Our products are distributed to a wide variety of outlets, including grocery and mass merchandise retailers, hotels, restaurants, convenience stores, schools, hospitals and other institutions, via approximately 6,500 different delivery routes that service more than 150,000 Through the DSD Dairy and WhiteWaveMorningstar platforms, we sell a wide variety of dairy and soy-based products, including conventional and organic milk, ice cream, soymilk and other cultured soy products, half-and-half, whipping cream, yogurt, cottage cheese, sour cream, butter and coffee creamers. We also sell a small amount of non-dairy and non-soy products, including fruit juices, iced tea and water. Our products are sold under well-known local, regional and national brands and numerous private labels. Our national brands include Horizon Organic, Silk, International Delight® and LAND O’LAKES®, which we Our products are distributed to a wide variety of outlets, including grocery and mass merchandise retailers, hotels, restaurants, convenience stores, schools, hospitals and other institutions, via approximately 6,500 different delivery routes that service more than 150,000 locations. Page 6 | Corporate Responsibility Report D ean Foods – Key Financial Per formance Dat a (Dollars in thousands – except share data) Net Sales Net Earnings Income Taxes Free Cash Flow Long-Term Debt Earnings Per Share 2006 2007 10,098,555 225,414 175,450 324,310 3,355.851 $1.68 11,821,903 131,353 84,007 108,802 5,272,351 $1.01 ABOUT use under a license from Land O’ Lakes, Inc., a Minnesota dairy cooperative. Our five largest regional brands are Dean's®, Garelick Farms®, Country Fresh®, Alta Dena® and Mayfield®. In addition, we sell a significant portion of our products under private label or “store” brands of major retailers. For a list of our brands, please visit our website at www.deanfoods.com. Our Cust omers and Suppliers of conventional raw milk is Dairy Farmers of America (DFA), which is the largest dairy cooperative in the United States. We purchase the balance of our conventional milk and most of our organic milk from other dairy cooperatives and independent family farmers. Resin is typically purchased through Consolidated Container Holdings, LLC, in which we own a 25% minority interest. For the remaining inputs, we do not rely heavily on any single supplier. RAW MI LK Raw Milk Pricing The dairy industry has a long history of government regulation intended to stabilize pay prices to dairy farmers. Federal milk marketing orders (FMMO) established by the Secretary of Agriculture specify minimum prices to ensure orderly marketing of raw milk from the farmer (producer) Our largest customers are major retailers who account for well over half of our sales, followed by food service providers (hotels, restaurants, etc.) and convenience stores. The primary inputs utilized in producing our products are conventional and organic raw milk, natural or organic soybeans, conventional and organic sugar, flavorings, juice concentrates, palm oil, and resin (to make plastic bottles). Our primary supplier Geo g rap h ic Reach to the processor. The federal government’s minimum prices are calcu- Dean Foods’ dairy processing plants and distribution system are located and operate in every region of the country except the Pacific Northwest. Our products are sold in all major urban centers. The principal executive and administrative offices of Dean Foods are located in Dallas, Texas. lated monthly based on supply and demand. The prices vary depending on the processor’s geographic location and the end use of the product. The Class I (fluid milk) price is the higher of Class III or IV prices plus a fixed differential, varying by market order and location. Processors often pay a premium for milk meeting exceptional quality standards. Raw Milk Classes Raw milk is divided into four classes, based on its end product. Class I is milk that is used for fluid (or beverage) milk, Class II is used for “soft” products (sour cream, cottage cheese, ice cream, yogurt), Class III is used for hard cheeses, and Class IV refers to milk used for butter and dry products (non-fat dry milk). Dean Foods Processing Facilities Corporate Responsibility Report | Page 7 Dean Foods and Corporate Responsibility Corporate responsibility covers a wide range of activities at Dean Foods, from local volunteer initiatives to reducing our greenhouse gas emissions to improving safety in our workplace. We believe that all of these efforts are interrelated. We look at them as ways to make us a better corporate citizen, an employer of choice, a responsible vendor, a steward of the environment and a trusted partner in the community. Our Approach to Corporate Res ponsib ilit y As a large processor and distributor of dairy and dairy-related products, we understand that our operations have both positive and negative environmental and social impacts. We are committed to managing these impacts in a responsible way and communicating our goals and progress. We know this is the expectation of all our stakeholders, including our employees, shareholders, customers, consumers, suppliers and vendors. A critical aspect of managing our impacts is to prioritize those that are most significant. We have done this through a materiality analysis through which we ranked issues according to their importance to our stakeholders and our business success. The most material issues identified through this analysis are addressed in the remainder of this report. Because our company has grown through multiple acquisitions, we have many disparate plant configurations and processes. Implementing a comprehensive corporate responsibility program requires us to analyze each of our facilities across the country. We are in the process of doing that difficult work – collecting information, identifying areas that need improvement and Page 8 | Corporate Responsibility Report sharing best practices across our company. Over the coming years, we expect to improve processes for consolidating information and implementing standards in many areas, including corporate responsibility. Our successful implementation of a corporate responsibility program will also require that all our employees recognize the importance of linking sound business strategies with social responsibility and environmental stewardship. Ho w We Manag e Co rp orat e Res p ons ib ility We have created an organizational structure with clear lines of accountability to support the day-to-day management of corporate responsibility policies and programs and allow for the identification of emerging issues important to our stakeholders. Board Accountability. The Senior Vice President, Corporate Responsibility and Sustainability, reports to the audit committee of the Board of Directors on a regular basis regarding our corporate responsibility activities. The audit committee oversees our work in the areas of corporate responsibility and sustainability, providing feedback and input on corporate responsibility efforts as needed. Management Structure. Our Senior Vice President, Corporate Responsibility and Sustainability, coordinates programs associated with our corporate responsibility efforts, including cross-functional implementation of policies. This senior executive works with key employees throughout the organization who are helping us define and reach our CSR goals. For example, many of our ethics and compliance activities are administered by the HR organization and many of our sustainability efforts require the experience of our Supply Chain experts, including our energy, environmental, and safety professionals. WhiteWave Foods also has a Vice President, Responsible Livelihood, who concentrates on corporate responsibility and sustainability programs across its business. Sustainability Advisory Group. We formed an advisory group to involve a number of senior executives from across the company in our corporate responsibility efforts. The group’s mission is to provide strategic guidance on the policy framework and programs within the corporate responsibility area; review progress against sustainability objectives; and provide a forum where environmental and social issues may be discussed and decided. Issues Management Working Group. This cross-functional team works together to identify, prioritize and manage issues and trends that are related to our corporate reputation and the interests of our stakeholders. The group ensures that the viewpoints of various constituencies are appropriately considered, and that our corporate positions are communicated and applied consistently across the company. Third-Party Advocates. We work with a number of industry and trade associations on both the local and national levels. With organizations such as the International Dairy Foods Association (IDFA), Dairy Management, Inc. (DMI), and Grocery Manufacturers of America (GMA), we support industry sustainability efforts and campaigns to educate consumers and customers about our products and practices. We also support their efforts to have the voice of the dairy industry heard by government decision-makers. Corporate Responsibility Report | Page 9 Product Stewardship First and foremost, we are committed to helping people live better by providing them with wholesome and nutritious food and beverage options. From traditional dairy products such as milk, yogurt and cottage cheese, to alternatives like lactosefree milk, soymilk and organic milk, we sell products that help consumers live healthy and nutritionally balanced lives. We are proud to be in the business of sustaining healthy lifestyles through the lasting benefits of our dairy case products. Th e Nat ural Go o d nes s of Dair y Dean Foods’ dairy products provide natural health benefits. About 73 percent of the calcium available in the food supply is provided by milk and other dairy products. According to the United States Surgeon General, the rise in bone deterioration (osteoporosis) in the United States is directly linked to a decline in the nutritional quality of many Americans’ diets. Among the Surgeon General’s recommendations is the consumption of calcium- and vitamin-rich foods, including dairy products. In addition to promoting bone health, several studies, including one recently published by the American Heart Association, show that increasing dairy intake as part of a lowcalorie, nutrient-rich diet could lead to a significant reduction on overall chronic disease risk. To find out more about the health benefits of our products, please visit our website at: http://www.deanfoods.com. About 73 percent of the calcium available in the food supply is provided by milk and other dairy products. Page 10 | Corporate Responsibility Report B ring ing Soy into th e Mainst ream We sell a full line of Silk soy products, including plain and flavored soymilk, enhanced and light soymilk, soy creamers and soy yogurts. According to the U.S. Food and Drug Administration, a diet low in saturated fat and cholesterol that includes 25 grams of soy protein a day may reduce the risk of heart disease. Soy protein may also help to promote bone health, alleviate symptoms of menopause and reduce the risk of certain types of cancer. These benefits have been found only from whole soy products and not from highly processed soy isoflavones. We use whole soybeans in the manufacture of our products, ensuring the maximum benefits of soy. To find out more about the benefits of soy, please visit the Silk website at www.silksoymilk.com. by a 20-member board, which is monitored by the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service. We also take seriously our role in helping consumers better understand the health benefits of soy and encouraging them to introduce soy into their diets. For example, WhiteWave Foods supports the World Soy Foundation, a program of the World Initiative for Soy in Human Health (WISHH). Founded by U.S. soybean farmers, the World Soy Foundation (WSF) is a 501(c)(3) organization that works collaboratively with humanitarian organizations, corporations, public and private foundations, international organizations, U.S. and international governments, and private individuals to deliver soy protein and nutrition education to people in developing nations. The WSF works under the auspices of WISHH. sustainable source of DHA that does not use fish oil and does no harm to our threatened aquaculture. In 2008, we will also begin to introduce DHA-fortified milk in certain regions of the country under our trusted regional brands. We recently established a Research and Innovation center in Broomfield, Colorado, and have been developing our capabilities in the areas of research and product development and innovation. With new capabilities and resources, we expect to be in a position to find ways to improve our packaging and the taste, quality and nutritional benefits of our products. Our focus will be on improving the natural goodness of our dairy and soy products with added nutritional benefits such as Omega-3s and probiotics. One of the new products to be launched nationally will provide our con- Res earch and Develo p m ent sumers with a line of fortified low-fat and fat-free milks. These products are designed to provide rich and creamy tastes of 2% or whole milk with lower fat content. We will explore other possible product extensions, as well as the introduction of new products that leverage our manufacturing and distribution systems. Nutritional Education Consumers are becoming increasingly concerned with nutrition and product content. We work continuously to advance nutritional education and promote healthy choices. To help consumers, we post nutritional information on our corporate and brand websites and on many lines of packaging. We often include educational information in our advertising and support scientific studies to further our collective understanding of nutrition. We are actively engaged with MilkPEP®, the Milk Processor Education Program, which directs the national “got milk?”® campaign in the United States. MilkPEP is funded by the nation’s milk producers who are committed to increasing fluid milk consumption. Activities are led In 2007, we introduced Horizon Organic Milk Plus DHA Omega-3. DHA is an Omega-3 fatty acid that has been shown to support brain, eye and heart health through every stage of life. Our Silk Plus and Horizon Organic Milk Plus DHA Omega-3 are both fortified with life’sDHA®, a vegetarian and Corporate Responsibility Report | Page 11 Responsible Sourcing As the largest dairy processor in the United States, we have a significant impact on the food and agriculture value chain. Our first priority is to ensure superior quality and safety of our products for our consumers. That duty requires that we understand where our inputs originate and how they are processed. Conventional R aw Milk Our largest purchase is raw, unprocessed milk. We source our conventional raw milk from approximately 12,000 dairy farmers located throughout the United States. Approximately 80% of our total purchases of conventional raw milk are from dairy cooperatives and the remaining 20% is purchased from individual farmers. Over the past few years, many of our consumers and retail customers have requested that we provide products made from milk produced by dairy cows that are not treated with the artificial growth hormone rbST (recombinant bovine somatotropin). The FDA has approved the commercial use of rbST in the U.S. and determined that no significant difference can be shown in milk from cows treated with rbST and those not so treated. However, to meet the growing requests of consumers and retailers, last year we began to request that our dairy suppliers provide us with raw milk from cows not treated with rbST. Effective July 1, 2008, virtually all of our fluid milk is sourced from cows not treated with rbST. We have also taken the position that we will not accept raw milk produced from cloned animals. Numerous surveys have shown that Americans are not inclined to buy dairy products that contain milk from cloned cows. Although the FDA has determined that meat and milk from cloned animals is safe for consumption, it has put in place a voluntary moratorium on the sale of these products in the U.S. In the event that this moratorium is lifted, we will implement appropriate procedures to ensure that the raw milk we purchase is not from cloned cows. We encourage the roughly 12,000 producers across the country that provide us with raw milk to meet or exceed industry and federal standards for humane animal treatment. Treating animals with respect and compassion is part of every dairy farmer’s heritage. Farmers recognize that animal well-being practices lead to the production of high-quality, safe and wholesome milk. We expect our farmers to provide their animals with a nutritious diet; quality medical care; clean, healthy and comfortable living conditions; sanitary milking areas; and safe transportation. For more CASE STUDY Greening t he Mar yland Farm The Maryland dairy has been certified organic since 1998, with a history of conserving natural resources and land preservation. The farm is located in the ecologically sensitive Chesapeake Bay area and uses a variety of environmental practices to help build the soil and care for its cows while protecting this watershed and the diversity of the ecosystem. A berm and dam structure was put in place along the creek to minimize erosion and capture rainwater as part of the ongoing efforts to improve biodiversity and riparian areas. The dam, which is 15 feet deep at its deepest point, can hold up to six million gallons of rainwater runoff. Cattails (Typha) were planted in the wetland area to create a habitat for local wildlife, and to capture and filter runoff water from the compost area. All manure produced on the farm is composted to use as a soil amendment. This farm is an active grazing operation, using Holistic Management International as a guide for land management and grazing principles. In addition, the Maryland dairy worked with the state’s Conservation Reserve Enhancement Program to create a buffer area to increase wildlife habitat. Other environmentally sound improvements to the dairy include the addition of solar panels which were installed on the farm’s shop building to heat the water used in the shop, as well as radiant heating of the floor. information on our policies regarding treatment of dairy animals, please refer to http://www.deanfoods.com. Org anic Farm ing We sell a wide range of certified organic dairy products, such as plain and flavored milk, yogurt, ice cream and cheese, through our Horizon Organic brand. Horizon Organic uses only organic raw milk that is sourced from almost 500 family farms across the United States. We source 85% of the raw organic milk from farmer partners around the country and 15% from two organic dairy farms that we own. Our goal is to share the practices and procedures on the two farms that we own with the rest of the industry. Today, we work extensively with those family farmers who provide us with milk to ensure organic standards are met. In addition, we work directly with dairy farmers considering converting to organic, helping them understand the benefits of organic production and the requirements for certification. The Horizon Organic brand has been a pioneer in setting standards and best Corporate Responsibility Report | Page 13 practices for organic farming. Horizon’s founders played a key role in helping to develop the National Organic Standards and the USDA organic seal. The National Organic Program (NOP) develops, implements and administers national production, handling and labeling standards for organic agricultural products. We have worked to ensure that these standards are set at the highest levels and are strictly enforced. We have also developed our own additional Standards of Care for the two organic dairy farms we own and operate. Our Horizon Organic Standards of Care are guided by a number of core beliefs, focused on providing holistic, preventative and natural animal care and welfare, and managing pastures to improve the quality of the soil, enhancing its ability to sequester carbon and promoting the biodiversity and nutritional value of our crops. (See http://www.horizonorganic.com/aboutus/ press/2007_3_8.html for the Horizon Organic Standards of Care.) N o n - d a i r y S o u r c i n g . Dean Foods also purchases non-dairy inputs for the manufacture of our products. Our principal nondairy inputs include organic and natural soybeans (used for the manufacture of our Silk products), packaging materials (plastic bottles, plastic resins and paper board), and sugar, sweeteners and cocoa. S o y b e a n s . We source more than 700,000 bushels of organic and non-genetically modified (non-GMO) soybeans annually, farmed on more than 3,000 acres of farmland. We currently source all of our soybeans in North America and they are subject to robust quality testing and evaluation protocols. We have partnered with Conservation International to develop sourcing guidelines, which will incorporate best practices from farmers and vendors that share our values and commitment to sourcing soybeans that are produced in a sustainable, socially responsible and ethical manner. P a c k a g i n g M a t e r i a l s . We purchase approximately 40% of our plastic bottles from Page 14 | Corporate Responsibility Report third-party U.S. suppliers, and we manufacture the remaining 60% from plastic resins which we purchase. We purchase our paper board (used to make cartons for our fluid milk and soymilk products) from one or more North American suppliers. S u g a r s , S w e e t e n e r s , C o c o a s . Our sugars, sweeteners and cocoas are sourced principally from U.S. suppliers. Some of these suppliers depend on international markets for their inputs. For these product categories we have begun to include overall sustainability standards in our procurement criteria and supplier contracts. We recently developed our “Total Customer Satisfaction” criteria, including corporate responsibility criteria, and have begun to require that our suppliers meet these requirements. We are guided in our purchasing activities by the corporate responsibility principles of the Institute for Supply Management (ISM). These principles set out requirements for supply chain partners to adhere to regarding community, supplier diversity, upstream and downstream environmental practices, ethics and human rights. We are now incorporating these new strategic sourcing principles in purchasing contracts with our key suppliers. Food Safety We are committed to providing safe, quality products that consumers trust. The many local dairy companies that have been brought together to make up today’s Dean Foods have been making quality dairy products that families trust for decades. The quality of our products and health of our consumers remain our first and foremost responsibility. All segments of the dairy industry, including milk producers, bulk milk transporters and milk processors, are required to be certified by and comply with the provisions of the Grade A Pasteurized Milk Ordinance (PMO). The PMO requires the application of stringent sanitation measures throughout the production, handling and pasteurization of milk and milk products. Our quality control procedures begin with our raw milk. As tankers of raw milk are brought into our manufacturing plants, the milk is inspected and tested by our onsite labs to ensure that our quality standards, as well as those mandated by federal and state regulations, are met. We have adopted policies requiring that tankers of raw milk be sealed and arrive at our facilities with accurate logs maintained and seals intact to protect against tampering. In our plants, we rely on our regional quality and safety experts to ensure that federal and state regulations for quality and safety are met. Our finished products are tested and samples are retained to ensure product quality and stability for the dura- Hor izon Or ganic Pro ducer Education (HOP E ) p ro gram Farmers are the backbone of our business. We have long supported American family farms in their transition from conventional to organic farming. The HOPE program was established in 2001 to assist conventional farmers with the transition to organic, and to provide ongoing support and education for Horizon Organic family farmers. The program provides hands-on support from our producer relations staff, financial and technical assistance during the conversion to organic, access to dairy and land conservation experts, assistance in obtaining organic certification and a scholarship program to encourage students to study organic dairy production. (See http://www.horizonorganicfacts.com/supporting-family-farmers.html.) tion of the product shelf life. Our facilities receive routine internal and external quality assurance and food safety assessments. We have begun adoption of third-party audits that have been recognized by the Global Food Safety Initiative (GFSI). The GFSI approach to measuring the effectiveness of a firm’s food safety and quality programs is in line with our customers’ expectations. By year-end 2008, 90 of our facilities will have Level 2 certification and 22 will have Level 3 certification by the GFSI-approved audit firm, Safe Quality Foods (SQF). Our objective during 2009 is to achieve Level 3 certification in all of our facilities, which is the highest qualification a firm may receive. For our organic products, we comply with stringent internal quality standards as well as the requirements set forth in the National Organic Program. We maintain organic certification requirements and are inspected by third-party auditors accredited by the USDA. Whenever one of our products poses a serious and immediate threat to consumer health, we initiate a recall of the product from the marketplace. In 2007, we implemented one such product recall. The recall was the result of an undeclared allergen in an ice cream product. In response, we are improving our processing technologies to ensure that packaging and allergenic ingredients are appropriately managed. In 2008, through September, we implemented one recall as the result of an undeclared milk allergen in a soy product. We also initiate product withdrawals from time to time when we learn that the quality of a product in the market does not meet our standards or expectations. Our goal is to continuously improve our processes and ensure the highest quality of all of our products. In 2008, we implemented a Quality Improvement Program that is currently in the pilot phase in five plants. Our 2009 objective is to roll the program out to another twenty plants across the company. Corporate Responsibility Report | Page 15 The Environment We are proud of the wholesome, nutritious products that we manufacture and sell and the vital role our products play in creating healthy lifestyles. At the same time, we recognize that our operations have a significant impact on the environment and we have a responsibility to manage that impact. With the escalating concerns surrounding climate change and ever-increasing demands on our limited natural resources, this responsibility has never been greater. Within this complex landscape, we have established our Environmental 2013 Roadmap which prioritizes our efforts to reduce our impact on the environment in three key areas – 1 greenhouse gas emissions, 2 water usage, and 3 solid waste. Page 16 | Corporate Responsibility Report 2 Greenh ous e Gas Emissions We believe that there are opportunities throughout the business to be more energyefficient. We have set a goal to reduce our carbon footprint by 20% by 2013. We plan to achieve this reduction through energyefficiency initiatives, renewable energy investments, and industry collaborations. In 2007, we compiled our first comprehensive greenhouse gas inventory consistent with the principles and guidance of the World Resources Institute’s Greenhouse Gas Protocol. Since then, we have % Based on the work we completed in measuring and understanding our footprint, we have set a target to reduce our carbon emissions by 20% per gallon of product by 2013. submitted overall data for our 2006 and 2007 emissions to the Carbon Disclosure Project (CDP) and facility-level data for our California operations to the California Climate Action Registry. We plan to continue providing data to the CDP. We will report our 2009 carbon footprint to the Climate Registry in 2010. For our initial footprint, we chose to include emissions from operations that we operate and control. This includes the plants we operate across the United States, the trucks and trailers we operate nationwide, and the two organic dairy farms we own and operate in Idaho and Maryland. We have not included (1) the upstream emissions associated with agricultural inputs and the packaging or products provided to us by third-party suppliers or (2) the downstream emissions from third-party distributors and haulers of our products or from the retail stores where our products are sold. Our total calculated annual emissions for 2007 were approximately 1.6 million metric tons of CO2e (carbon dioxide equivalents), or 1.03 pounds per gallon of product produced. Our three largest sources of greenhouse gas (GHG) emissions are from: purchased electricity and onsite fuel combustion to operate our plants (64%); mobile fuel combustion and refrigerants to operate our trucks and trailers (32%); and our farms in Maryland and Idaho and waste treatment operations (4%). Based on the work we completed in measuring and understanding our footprint, we have set a target to reduce our carbon emissions by 20% per gallon of product by 2013. P l a n t O p e r a t i o n s . Our plant operations are the largest component of our carbon footprint. We are committed to removing at least 200,000 metric tons of CO2e by 2013 by replacing current amounts of purchased electricity and onsite fuel combustion with renewable or clean energy and reducing energy demands with investments in more energy-efficient equipment and machines. To assist in achieving this goal, we have conducted energy audits at several of our larger manufacturing facilities. All of these audits have identified opportunities to Corporate Responsibility Report | Page 17 reduce our use of electricity and fuel and resulting carbon emissions. Specific examples of projects we expect to implement in our facilities include: Converting biogas into energy Utilizing Cogeneration (CHP) plants as a viable, cleaner alternative to traditional energy sources Retrofitting/replacing inefficient equipment and lighting Adopting high-efficiency technology Upgrading insulation and reducing thermal loss Investing in methane recovery systems Recovering unused heating/cooling stream systems Installing state-of-the-art and real-time controls and software in our production facilities We are actively researching opportunities to generate our own energy, and complementing those opportunities with purchases of Page 18 | Corporate Responsibility Report renewable energy. Cogeneration is one of our core strategies to reduce our carbon footprint. Cogeneration captures excess heat from natural gas–fired generators and uses it to produce steam and hot water for processing operations, reducing our total energy consumption and total emissions into the atmosphere. Our first cogeneration project was implemented in 2004 and has been followed by four others. In 2007, our cogeneration projects produced 23,508 MWh of energy. Another of our key strategies is to convert and/or capture biogas from our waste water to use as a renewable source of energy. We have been awarded multiple $300,000 grants by the Massachusetts Technology Collaborative to build two biogas power generation units at our plants in Franklin and Lynn, Massachusetts. The biogas will be captured from onsite waste water treatment facilities and then converted into energy for each plant. (To learn more about the Massachusetts Technology Collaborative, go to http://www.mtpc.org/.) We continue to encourage the development of more renewable energy initiatives and have supplemented our energy purchases with purchases of renewable energy. In our WhiteWave division, we have committed to offsetting 100% of the electricity used in the production of our Silk and Horizon Organic products. In 2007, we purchased 64,398 MWh of renewable energy. Tr a n s p o r t a t i o n . We own and operate one of the largest refrigerated distribution fleets in the food and beverage industry. Each day, our network delivers products from our processing plants to more than 150,000 locations from coast to coast. The scale of our distribution network enables us to deliver our dairy products anywhere in the country. It also gives us the ability to meet customer needs and, over time, to optimize our routes for maximum efficiency. This network is one of our most important and strategic assets; however, it is also a significant contributor to our carbon footprint. We have begun to more closely monitor and manage the environmental impacts associated with our fleet, and we strive to be an environmental leader in product distribution within our industry. Our goal is to remove 50,000 metric tons of CO2e from our transportation system by 2013, based on current production volumes. To achieve this goal, we launched our Smart Fleet initiative in 2007. Through this initiative, we are currently focused on: (1) optimizing routes, (2) investing in new technology and equipment, and (3) training our drivers. Over the past few years, we have invested in on-board computers that enable us to better manage deliveries, including the frequency of visits to a location, the order of visits, and the amount of time spent at each visit. By the end of 2008, 25% of our fleet of 7,300 power units will be using these on-board computers, with the remainder of the fleet scheduled to be outfitted in 2009. This technology has assisted in saving fuel and improving the efficiency of our delivery resources. Another benefit of the on-board system is to continually improve our safety and driving records by providing real-time computerized records for use in understanding driver behavior and aiding the Department of Transportation during inspections. We continually seek to improve the performance of our distribution network, identifying key areas for innovation and investment each year. We have partnered with our suppliers to develop and improve our fleet technology – creating lasting value for our company, our customers, and the many other companies who benefit from the development of improved transportation equipment. In 2007, our efforts focused on the adoption of new cold-plate refrigeration technology to replace mechanical refrigeration systems in our trucks. The cold-plate technology has shown to reduce diesel fuel consumption by an average of 900 gallons per truck with 18,000 pounds of associated GHG emissions. Advances in autodefrost have further helped conserve water and reduce waste. We have replaced nearly 400 mechanical refrigerated trucks with cold-plate refrigerated trucks and are working to convert all of our truck purchases to coldplates by 2011. This should reduce our annual diesel usage by nearly one million gallons or the equivalent of taking 200 trucks off the road per year. During 2008, we took a number of steps to improve the fuel efficiency of our fleet, including the programming of each power-unit’s electronic control module for a top speed of 65 mph, elimination of excessive idle-time and the introduction of progressive shifting of manual transmission. We also added automatic tire inflation systems to approximately 15% of our trailers. Local driver training and incentive programs have helped decrease fuel usage and improve our fleet’s fuel efficiency. In addition, as active members of the American Trucking Association’s Technology Maintenance Council, we have adopted many of that group’s recommended maintenance practices to further help improve the safety, efficiency and reliability of our fleet. Even small actions by our employees, when carried out across our system, can have a significant effect on our overall environmental impact. Our local driver training and incentive programs are designed to decrease fuel usage and improve our fleet’s fuel efficiency. Training programs educate drivers about the environmental benefits of everyday activities such as proper vehicle maintenance, reduction of engine idling, tire pressure, driving speeds, and the loading and unloading of product from refrigerated compartments. In 2007, approximately 10% of our drivers completed this type of training. In 2008, we are expanding the training programs and tracking their direct impact. Improving our fleet’s overall fuel efficiency by just one mile per gallon will reduce our annual greenhouse gas emissions by approximately 80 million pounds. Our extensive network of refrigerated transportation vehicles is one of the largest in the country. Corporate Responsibility Report | Page 19 We have focused on reducing the number of grams of resin required to make our plastic containers. We also reuse any flawed plastic jugs or excess plastic, returning such material to our blow mold system to be melted down and remade – reducing our total input and creating zero waste in the process. Water Management Protection of our water resources is a pressing priority, both nationally and globally. As a manufacturer of perishable dairy products, we use significant amounts of water in our processing activities and in the cleaning and sanitizing of our equipment. Our goal is to reduce water consumption by 30% per unit of product produced by 2013. While our first priority is to minimize the amount of water we use, we must also continue to find ways to return clean water to the ecosystem after it has been used in our operations. In 2008, we performed two water audits and, in both cases, found opportunities to reduce our water usage. We are taking the findings from these audits and other best practices across the business to build a catalog of potential conservation projects for use by our plant managers. For example, many of our plants have implemented automatic shut-offs on hoses, reduced the amount of water used to rinse tanks, and attached water meters to certain waterintensive equipment, like boilers and condenser water towers, to better monitor usage. In 2009, we will research and pursue technologies to reuse as much water as possible (without compromising quality or sanitation), and we will also create a baseline of our water usage and establish key performance indicators to measure, track and reduce our usage. Solid Was te Managem ent Our most significant solid waste results from the packages we use for our products and the waste generated by our plants. The majority of our packages are made from High Density Polyethylene (HDPE) resin (gallons and half gallons) and paper cartons (half gallons, quarts, pints and half pints). Each of these packages has environmental tradeoffs when comparing total carbon emissions, recyclability, and use of water and other natural resources. Over the past few years, we have focused on reducing the number of grams of resin required to make our plastic containers. We also reuse any flawed plastic jugs or excess plastic, returning such material to our blow mold system to be melted down and remade – reducing our total input and creating zero waste in the process. We are also switching many of our packages from Polyethylene Terephthalate (PET) to HDPE, because HDPE results in less waste and requires less energy to produce. Consumers also have more opportunities to recycle HDPE. We converted 2.1 million pounds of plastic packaging to HDPE in 2007 and will convert another 3.4 million pounds this year. The dairy industry minimizes its solid waste through the use of plastic milk crates. Each crate is made of highly durable plastic (and, in some cases, recycled content) that can be used repeatedly. We believe this system to be more efficient and less harmful to the environment than typical distribution containers, such as corrugated cardboard or shrink wrap, which have limited reuse potential before entering the recycling or waste stream. We have also begun to address unnecessary waste in our plant operations. Our scheduled to have a comprehensive internal audit approximately every three years. In 2007, 24 plants were audited for compliance with company policies and procedures. In this process, plants are notified of areas needing improvement and are required to develop appropriate remediation plans. Progress against the plan is communicated quarterly to the corporate EH&S staff, which provides ongoing assistance and support to ensure improvements are made. We expect 40 plants to be audited in 2008 and an additional 50 plants in 2009. I nd us tr y Co llab o ratio n goal is to reduce the amount of waste currently going to landfills or incinerators by 30% by 2013. In 2007, we began a milk recycling program at selected plants, whereby retailers may return products not sold before their “sell by” dates. We work with a third party who collects the product, and then dries and uses it as protein in animal feed. In addition, our WhiteWave Foods headquarters in Broomfield, Colorado, is working to become a zero waste facility. These initiatives reduce waste that would otherwise have gone to a landfill or into a waste water treatment facility. In 2009, we will be developing a method of tracking our total tonnage sent to landfills, incinerators and recycling operations. We have significant opportunities to eliminate waste and find beneficial uses for waste which we cannot eliminate. We are taking steps to raise awareness about the importance of reducing waste in our plants and challenging our workforce to reduce, reuse and recycle. Environmental Management Syst em Our goal is to exceed minimum expectations set by local, state, and federal environmental laws and regulations. To further this goal, we support our local Environmental, Health and Safety (EH&S) teams in their environmental performance management through environmental policies, procedures and auditing programs overseen by our Vice President, Environmental, Health and Safety. Our corporate and regional EH&S staff meet for quarterly meetings to share best practices and develop company-wide programs. In 2006, the Environmental Protection Agency (EPA) conducted seven audits resulting in $2,800 in penalty citations; in 2007, there were eight audits resulting in $7,500 in penalty citations. We have not tracked local and state environmental audits or inspections in the past, but we plan to begin collecting this data for 2009. While all of our environmental compliance efforts are important to our business, we believe the use of ammonia, which poses significant health risks if improperly released, in our refrigeration systems across the country deserves special attention. Accordingly, we have developed customized training programs on the safe use of ammonia in our business. We use a common auditing program across the company that is based on the well-regarded Dakota Environmental Auditing Plan. Each processing plant is In the next decade, the food and agricultural sectors (including dairy) will play an integral part in efforts to reduce the amount of greenhouse gases emitted into the atmosphere. The dairy industry’s most significant impact is due to methane, a powerful GHG emitted by dairy cows. We believe, as do other industry participants, that there is great opportunity to use that methane to generate clean, renewable power for communities, our own plants, and farmers. In 2008, we invested in a partnership and began development of an anaerobic digester on the Big Sky Dairy farm in Idaho and expect to be operational in 2009. The anaerobic digester will capture methane from animal waste which will then be converted into electricity. We expect to generate more than one megawatt of renewable “green” power, which is equivalent to the annual electricity usage of approximately 650 homes. In addition, the digester will produce a sanitary fiber by-product that can be used as clean animal bedding or as soil enhancement. We also support and are participating in a collaborative industry initiative started by Dairy Management, Inc. (DMI) to focus on creating a reliable and credible carbon footprint of the industry; set carbon reduction goals; and establish action plans to implement carbon reduction projects. Corporate Responsibility Report | Page 21 Our Employees At the end of 2007, Dean Foods had approximately 26,000 employees. The most common job at Dean Foods is truck driving, followed by plant operation and maintenance. The majority of Dean Foods’ workforce is hired from the local community at our manufacturing plants or distribution centers where we produce and distribute milk and other dairy-related products. We believe the health, safety and job satisfaction of our employees are essential to our future success. Our policies and procedures are designed to retain a loyal and committed workforce, and we historically experience very low turnover at our facilities. As Dean Foods has grown and acquired locally-owned, family-run businesses, we have worked to preserve the local heritage and values, while providing competitive benefits and compensation, as well as additional resources, including training and support. Em ployee Policies We benchmark our compensation and benefits packages against other leading companies in our sector to ensure that we remain competitive. We know that a comprehensive and affordable medical plan, programs to improve employee and family health, a 401(k) plan with a company match, adoption and school tuition assistance, support for professional development, and a confidential program that offers advice and support for employees dealing with difficult issues are needed to find and keep the best employees. We believe performance incentives help attract, motivate and retain employees and, therefore, we use them as appropriate in certain positions. In 2008, we began implementing a common performance management system for exempt employees to ensure Page 22 | Corporate Responsibility Report that we develop managerial talent and a deep bench for the future. Em plo yee E ng ag em ent We believe the best way to ensure the success of Dean Foods today and in the future is to have employees who are dedicated to the company and its shared objectives, believe the company supports them, and know the company values the work they do. As part of our efforts to determine levels of employee engagement, we have engaged an external organization to survey a segment of our employee population and benchmark against other companies. We plan on expanding this process over the next two years throughout our organization. The results of this survey will be used to develop strategies to promote employee engagement at all levels of the organization. Healt h and Safet y We are committed to ensuring that our employees have a healthy and safe work environment. Each manufacturing facility includes safety management and training for higher-risk jobs. Safety precautions and training for all employees is taken very seriously. Our products must adhere to the highest quality standards and our workers must follow the highest health and safety standards. Proper attire, including hair and beard nets, hard hats, safety glasses, work shoes, lab coats and other standardized safety wear, is standard at all Dean Foods facilities. The majority of our jobs are physical but not hazardous. For example, the loading and unloading of product is often strenuous work required of our drivers. Working conditions inside our plants can range from very cold (working in ice cream freezers) to very warm (working in storage warehouses). Dean Foods tracks several safety key performance indicators (KPIs) on a monthly basis for employee safety. These are tracked on a plant, regional, divisional and company-wide basis. The two most significant KPIs are the Days Away (lost time) rate and the DART (days away, restricted and transferred) rate. These rates are D iversity at D ean Food s computed using OSHA protocols and are used to monitor trends in safety performance. The Dean Foods 2007 Days Away Rate was 2.3. The Dean Foods DART rate was 5.7. (Note: This data does not include our WhiteWave Foods locations.) Diversity We believe that a diverse, engaged workforce is a powerful competitive advantage in today’s marketplace. We continue to work hard to attract and retain a workforce that reflects the communities in which we live and work. The breakdown of our current workforce in terms of diversity is shown in the table above and, regarding overall demographics in the United States, it tracks quite closely with all segments. We recognize that we have a less-thanoptimal representation of women in our workforce, and we are initiating programs, including mentoring and training, targeted to attract and retain more women throughout the company. Each of the Dean Foods manufacturing plants has a separate Affirmative Action Plan (AAP) that includes specific goals for the recruitment of women and minori- (US Labor Force) Dean Foods Employees Female (46.4%) 16% Male (53.6%) 84% Asian / Pacific Islander (4.4%) 4% African American (11.4%) 15% Hispanic / Latino (13.3%) 15% White (69.1%) 64% Other (2.3%) 2% Total 100% ties in underutilized job groups. These plans, which are updated annually in compliance with applicable federal law, also include examples of outreach to attract women, minorities, disabled workers, and veterans for job opportunities. Our efforts to broaden our employee base and expand opportunities throughout the company include the implementation of a job posting system that will serve both local and national hiring efforts. Facilit y R at ionaliz atio n Our marketplace is increasingly competitive, and we must continue our efforts to optimize our manufacturing assets and become more efficient. As a result, we sometimes must make the difficult decision to close a facility. We understand the impact that closing a facility and losing a number of jobs can have on a local economy. We try to work with the local communities to mitigate the effects of diminished tax revenues and job losses. We provide transition support to our employees through severance and benefits packages which frequently include outplacement services and support. Where possible, we look for other internal opportunities within Dean Foods through our new national database of open positions. When closing any facility, we show the utmost respect to our employees and minimize the impact to our customers. lective bargaining agreements at the end of 2007. Most of the workers covered by union contracts are employed in our manufacturing plants or in our distribution system. The terms of these collective bargaining agreements vary by location. All jurisdictions in which we have employees protect the right of freedom of association and collective bargaining, and it is our policy to fully comply with such applicable laws and regulations. Lo oking A h ead In the future, one of our key goals will be to retain current employees while recruiting the next generation of Dean Foods’ workers and leaders. Attracting individuals from diverse backgrounds will be a key determinant of our future success. We have made progress in enhancing our human resource policies and practices, and our objectives going forward include: Be the employer of choice in the communities where we do business; Provide career paths across the organization; Continue to unify human resources policies across all operations; Improve our employee safety record; Increase the recruitment of females at all levels of the organization; and Extend efforts to understand and improve employee engagement. Unio n Relat io ns Approximately 38% of Dean Foods’ eligible employees were covered by over 100 col- Corporate Responsibility Report | Page 23 The Community At Dean Foods, we believe that all business – no matter how large or small – can play a vital and beneficial role in strengthening the social, economic and environmental conditions of a community. Dean Foods is committed to nurturing and supporting the communities in which we do business. We do this by supporting both national and local organizations at the corporate level, as well as through our local facilities. We encourage volunteerism among our employees and provide them with opportunities to actively support their local and global neighbors. Focus Areas In our communities, we have historically focused our support in three areas: Health, hunger and nutrition: We work to expand nutrition education, encourage healthy lifestyles, and combat hunger and its devastating effects on our communities. Environmental stewardship and conservation: We work to promote conservation of natural resources, animal welfare, sustainable agriculture, renewable energy, and the preservation of family farms. Education and arts: We work to better the lives of children through increased access to education for the disadvantaged, educational programs for children with disabilities, and academic research and outreach programs that create economic opportunities for families. We also support organizations that increase children’s access to the visual, literary and performing arts. These areas are of critical importance to our customers, consumers, and the communities in which we operate. We recognize that each of our businesses has the best sense of the unique needs of its surrounding community. We encourage active community in- Page 24 | Corporate Responsibility Report volvement and support at a local level and empower those businesses to address the most pressing and relevant needs in their local geographies. Co rp orate G iving At the corporate level, we provide financial support to worthy organizations both nationally and in the Dallas area, home to our headquarters. These philanthropic contributions are governed by a set of corporate giving guidelines, which are available on our website at www.deanfoods.com. We are currently reviewing these guidelines to ensure our corporate giving is having the greatest possible impact in our communities. We accept written requests from 501(c)(3) organizations and hope to begin accepting online applications in 2009. Some of our current community partners include: Feeding America (formerly America’s Second Harvest) and the North Texas Food Bank Dean Foods LEAN (Lifestyle, Education and Nutrition) Families Program at Children’s Medical Center Dallas Notre Dame School of Dallas Students in Free Enterprise Dallas Center for the Performing Arts and Dallas Theater Center Dallas Symphony Orchestra’s Young Strings Program American Red Cross Locally, a number of our businesses support the Feeding America network and other food banks, either by donating product or selling it deeply discounted. In 2007, our businesses donated more than 2 million pounds of food to more than 30 food banks in 20 states. Our businesses also contribute financially to other local charitable organizations in their communities. CA SE STUDIES Commu nity A f fairs Goes Local Dean Foods’ WhiteWave division sponsors a munities. Regionally, they partner with char- than $12,000 has been donated to local itable and non-profit organizations, including schools in Georgia, Alabama and Tennessee. schools, medical centers and fire departments. Two examples of local programs follow: Values-in-Action (VIA) program, which rewards Meadow Gold Dairies in Salt Lake City, Utah, supports the Utah Foster Care Founda- employees with “VIA points” that are earned Mayfield Dairy Farms’ Caps for Cash is a tion which helps find, educate and nurture doing community service and through partici- simple and effective program that raises money families to meet the needs of children in foster pation in environmental initiatives. Employees for local schools. Consumers collect Mayfield care. Meadow Gold sells ice cream cones at accumulate and track their VIA points on the milk caps and give them to a participating stu- discounted prices at community events and do- company intranet and can exchange them for dent or school. A group of local consumers, the nates the proceeds to the Utah Foster Care paid time off or other prizes. The intranet also “Mayfield Moms,” collect the caps from school Foundation. In the past two years, the company includes information about general sustainabil- coordinators at the end of each quarter and tally raised more than $5,000 for the Foundation, ity issues and specific company initiatives. them up. Schools can earn up to $2,000 each, while helping with public service advertising, and the school from each system that collects press conferences and promotional materials to local dairies have long been the most Mayfield caps receives an additional raise awareness and encourage Utah families active, concerned members of their local com- $500. Since the program was launched, more to participate in foster care. Our WhiteWave division also actively supports a number of organizations that promote healthy, sustainable living. Some of WhiteWave’s partners include: matched their personal contributions dollar for dollar. Our local businesses have played important roles in relief efforts in their communities. In cases when the disaster directly affected an area where we have a facility, we have responded first to the immediate needs of our employees, then to the needs of the community by donating product and, in some cases, logistical support including trucking and refrigeration. Our network of processing facilities is able to serve customer and consumer needs should any one plant be affected by a catastrophic event, ensuring the availability of safe and nutritious products. vide opportunities for involvement. From corporate office volunteer days to participation by our businesses in local fundraising events, we encourage community action among our employees. Dean Foods’ Feeding America and Community Food Share World Soy Foundation, a program of the World Initiative for Soy in Human Health (WISHH) Healthy Mothers Healthy Babies Farm Aid Disaster Relief In addition to our ongoing philanthropic partnerships, we’ve provided opportunities for our employees to respond to natural and other disasters through relationships with major relief organizations, and have Lo oking to th e Future In the area of community relations, we expect to further integrate and coordinate our efforts across our company. We realize that having a clear, consistent and focused strategy for community investment will enable us to have an even more positive impact on the communities in which we operate. Em p lo yee Vo lunt eeris m We are proud that our employees are active in their local communities, and work to pro- Corporate Responsibility Report | Page 25 Governance and Ethics We have designed our approach to governance and ethics to build and maintain the trust of our shareholders, employees, and other stakeholders. Our governance structure aims to ensure that the company and its officers, directors, and employees are held accountable for creating value in a responsible and ethical manner. Board Independence and Operation We believe the Board of Directors should be a forceful advocate for ethical business conduct and accountability to shareholders and the communities in which we do business. Most of our Board members are independent, non-employee directors, in keeping with New York Stock Exchange and Securities and Exchange Commission criteria. The Board committees for Audit, Compensation, and Governance are comprised solely of independent directors. Independent members of the Board hold meetings on a regular basis without management representation to discuss specific issues and general company business. The Board of Directors has adopted a set of Corporate Governance Principles that include director qualification and continuing education, as well as principles for operation of the Board. The Governance Committee’s responsibilities include ensuring that these principles are applied and evaluating possible conflicts of interest that may arise from Board members and senior executives. Diversity of Board members is sought in terms of personal and professional background and other characteristics that provide unique perspectives on our business. Page 26 | Corporate Responsibility Report Co d e of E th ics Applying and upholding the highest ethical standards is critical to the continued success of Dean Foods because it assures our business partners that we are committed to integrity in all transactions and interactions. The Code provides the standards all employees and directors are expected to uphold. Our individual responsibilities to one another, to consumers and customers, to shareholders, and to the communities in which we operate, are clearly defined. In fact, compliance with the Code is included in the performance goals of corporate officers, senior executives and managers, ensuring that all are indeed held to the same standard. The Code of Ethics is available in English and Spanish and may be found on our website at www.deanfoods.com. Communication and Education. There are a number of mechanisms in place to ensure that the Code is widely distributed, its content is understood and applied, and suspected violations are reported. New employees are provided with a printed copy of the Code and are required to acknowledge receipt, certify understanding and agree to abide by its content. Printed copies are routinely distributed by local Human Resources management, and posters are hung throughout work areas highlighting the Code. But no standard or code can provide guidance for every potential workplace situation. That is why the education component of our compliance program is so important. The Dean Foods Company Ethics & Compliance Training Center provides webbased education designed to enhance our compliance program. Mandatory coursework is assigned according to primary job In 2007, 4,802 non-hourly employees completed a total of 32,516 training modules focused on subjects ranging from our Code of Ethics to matters of general business ethics and specific legal compliance. On average, seven courses were completed by each employee that reporting year. function and level of responsibility, with a high level of proficiency required to receive completion credit within a designated period of time. Exempt employees are assigned training upon new hire and promotion, and our active professional, management, and executive personnel are required to participate in ongoing semiannual compliance training periods. Reporting Violations. Our employees are charged with reporting all instances of suspected violation of the law or Company policy. Retaliation of any kind against those who report violations is strictly prohibited and grounds for dismissal. In order to make the process less intimidating and ensure that all of our employees are afforded the same opportunity to voice concerns, we established a tollfree Code of Ethics HelpLine available to all employees. Calls are received and recorded by an independent third party; a written report is prepared by the receiving operator of each call and forwarded to our Chief Compliance Officer. Complaints are then dispatched for investigation by the appropriate investigating authority. All reports are investigated, and resolution of each investigation is monitored and reported quarterly to the Audit Committee of the Board of Directors. Ass ess ing Risk We regularly assess risks to our business from a variety of perspectives. In our Our Code of Ethics 2007 Annual Report, we disclosed a number of material risk factors. We have also discussed the risk to our business associated with potential climate change in our Climate Disclosure Project response. In addition, in 2006, we conducted a comprehensive enterprise risk assessment project. In this project, we evaluated a number of risk factors in the following areas: financial, personal injury or health, legal and criminal, and reputational. Go vernm ent Relat io ns Given the nature of the dairy industry, almost every aspect of Dean Foods’ business is regulated in one way or another by the government. We strongly believe this requires the Company to maintain close contact with government representatives and agencies. Our engagement takes place at the federal level, as well as at the local and state levels. We have significant contact with government offices and regulatory agencies at each of our manufacturing facilities. It is our practice to uphold the highest standards of ethical behavior as set forth in various laws and regulations, including the Federal Electoral Commission guidelines. Polit ical Co nt rib utio ns Dean Foods has a political action committee (PAC) that is funded by voluntary contributions from employees. It is strictly non-partisan and seeks to support those government representatives, regardless of party affiliation, that support positions we consider important to our success. Employees are not permitted under any circumstances to provide gifts, cash donations, or in-kind contributions to government officials on behalf of Dean Foods Company. I nd us tr y Par t ners hips Dean Foods is an active participant in a number of industry associations and trade groups, including the International Dairy Foods Association, the Grocery Manufacturers Association, the Organic Trade Association, the National Association of Manufacturers, and the Soyfoods Association of North America. We are committed to enhancing our effectiveness in promoting solutions to issues of concern within our industry. provides the standards all employees and directors are expected to uphold. Our individual responsibilities to one another, to consumers and customers, to shareholders, and to the communities in which we operate, are clearly defined. Corporate Responsibility Report | Page 27 Looking to the Future Assembling the contents and data included in this report was no small task. While working on the report, we established processes and created databases that will help us continue to be more transparent as we report our social and environmental impacts in the future. We are committed to publicly reporting on our performance in achieving our goals and key performance targets. Our intent is to report on a regular basis (at least every two years) so that our stakeholders may assess our progress in addressing our most material environmental, social, community, and governance issues. As we continue our efforts to transform our company into a best-in-class food and beverage company, we will continue to develop our CSR data management and reporting systems. We will embed our key environmental performance measures throughout our operations as we strive to continuously improve our business. Our Environmental 2013 Roadmap, as summarized below, will become an integral part of our overall business strategy. E nvironmental 2013 Road map Focus Area Greenhouse Gas Emissions Water Conservation Solid Waste Disposal Strategic Approach 2013 Target 20% Reduction Reduce 30% Reduction Communicate to our employees the limits of carbon-based energy the need across the organization to reduce energy costs and create an enduring business model Identify opportunities to use clean and renewable sources of energy Reinforce water consumption with training and investment in use of precision water applications Reuse water whenever possible without compromising product quality or plant sanitation Reduce plastic and paper waste by encouraging development of local and regional recycling opportunities Reduce waste of all kinds with the development of specific recycling policies and procedures Work with vendors to redesign packaging to reduce the environmental impacts 30% Reduction We know that we still have much to do across our business. Our goal is to use our Environmental 2013 Roadmap to prepare realistic yet ambitious plans to create value for all our stakeholders. As a leader in our industry, we know that we have both significant responsibilities and opportunities – and we are excited to meet the challenges ahead. Sincerely, E arl M. “Chip” Jo nes, III Senior Vice President Corporate Responsibility and Sustainability Page 28 | Corporate Responsibility Report This report will be available to view on our website at www.deanfoods.com. Please consider the environment before printing. To view the Global Reporting Initiative Index (GRI), please visit our website at www.deanfoods.com.