##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


|                                             |  |                                                                                             
|-------------------------------------------- |  | --------------------------------------------------------------------------------------------
|(Mark One)                                   |  |                                                                                             
|þ                                            |  | Quarterly Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934 
|For the Quarterly Period Ended June 30, 2006
|or                                          
|                                            
|o                                            |  | Transition Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934
|Commission File Number 1-08262              

Dean Holding Company







|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 75-2932967                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. employer
    identification no.)

2515 McKinney Avenue, Suite 1200


Dallas, Texas 75201


(214) 303-3400






þ o


12b-2


o o þ


12b-2 o þ




10-Q 10-Q.










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##### 










Table of Contents


|                                             |                                                                                                        |      |    |    | 
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ---- | -- | -- | 
|                                             |                                                                                                        | Page |   
|                                             |                                                                                                        |      |   
|Part I  Financial
    Information           |                                                                                                        |      |    |   
|                                             | Item 1  Financial
    Statements                                                                      |      |    | 3  | 
|                                             | Item 2  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations |      |    | 13 | 
|                                             | Item 4  Controls and
    Procedures                                                                   |      |    | 16 | 
|Part II  Other
    Information              |                                                                                                        |      | 18 |   
|                                             | Item 1  Legal
    Proceedings                                                                         |      |    | 18 | 
|                                             | Item 1A  Risk Factors                                                                                 |      |    | 18 | 
|                                             | Item 6  Exhibits                                                                                      |      |    | 19 | 
|Certification of CEO Pursuant to Section 302
|Certification of CFO Pursuant to Section 302
|Certification of CEO Pursuant to Section 906
|Certification of CFO Pursuant to Section 906



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##### Table of Contents






Part I  Financial Information







|        |                     
|------- | --------------------
|Item 1. | Financial Statements

DEAN HOLDING COMPANY


CONDENSED CONSOLIDATED BALANCE SHEETS




|                                         |                                           |                               |           |         |              |  |           |         |           | 
|---------------------------------------- | ----------------------------------------- | ----------------------------- | --------- | ------- | ------------ |  | --------- | ------- | --------- | 
|                                         |                                           | June 30,                      |           |         | December 31, | 
|                                         |                                           | 2006                          |           |         | 2005         | 
|                                         |                                           |                               |           |         |              | 
|                                         |                                           | (unaudited)                   |          
|Assets                                   |                                           |                               |           |         |              |  |           |        
|Current assets:                          |                                           |                               |           |         |              |  |           |        
|                                         | Cash and cash equivalents                 |                               | $         | 17,501  |              |  | $         | 16,056  |          
|                                         | Receivables, net                          |                               |           | 241,544 |              |  |           | 283,905 |          
|                                         | Inventories                               |                               |           | 100,015 |              |  |           | 104,488 |          
|                                         | Deferred income taxes                     |                               |           | 33,576  |              |  |           | 37,071  |          
|                                         | Prepaid expenses and other current assets |                               |           | 13,895  |              |  |           | 11,157  |          
|                                         |                                           |                               |           |         |              | 
|                                         |                                           | Total current assets          |           |         | 406,531      |  |           |         | 452,677   | 
|Property, plant and equipment, net       |                                           |                               | 503,882   |         |              |  | 508,963   |        
|Goodwill                                 |                                           |                               | 1,080,529 |         |              |  | 1,080,529 |        
|Identifiable intangible and other assets |                                           |                               | 196,718   |         |              |  | 195,704   |        
|                                         |                                           |                               |           |         |              | 
|                                         |                                           | Total                         |           | $       | 2,187,660    |  |           | $       | 2,237,873 | 
|                                         |                                           |                               |           |         |              | 
|                                        
|Liabilities and Parents Net Investment  |                                           |                               |           |         |              |  |           |        
|Current liabilities:                     |                                           |                               |           |         |              |  |           |        
|                                         | Accounts payable and accrued expenses     |                               | $         | 265,156 |              |  | $         | 292,163 |          
|                                         | Income taxes payable                      |                               |           | 3,234   |              |  |           | 5,492   |          
|                                         | Current portion of long-term debt         |                               |           | 29      |              |  |           | 28      |          
|                                         |                                           |                               |           |         |              | 
|                                         |                                           | Total current liabilities     |           |         | 268,419      |  |           |         | 297,683   | 
|Long-term debt                           |                                           |                               | 746,440   |         |              |  | 757,743   |        
|Deferred income taxes                    |                                           |                               | 152,085   |         |              |  | 148,396   |        
|Other long-term liabilities              |                                           |                               | 68,322    |         |              |  | 71,079    |        
|Commitments and contingencies (Note 9)   |                                           |                               |           |         |              |  |           |        
|Parents net investment:                 |                                           |                               |           |         |              |  |           |        
|                                         | Parents net investment                   |                               |           | 952,844 |              |  |           | 963,546 |          
|                                         | Accumulated other comprehensive loss      |                               |           | (450    | )            |  |           | (574    | )        
|                                         |                                           |                               |           |         |              | 
|                                         |                                           | Total parents net investment |           |         | 952,394      |  |           |         | 962,972   | 
|                                         |                                           |                               |           |         |              | 
|                                         |                                           | Total                         |           | $       | 2,187,660    |  |           | $       | 2,237,873 | 
|                                         |                                           |                               |           |         |              | 



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##### Table of Contents



DEAN HOLDING COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF INCOME




|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |         |         |   |           |         |         | 
|----------------------------------------------------- | ----------------------------------------- | ---------------------------------- | ------- | ------- | ---------------- | - | ------- | ------- | ------- | - | --------- | ------- | ------- | - | --------- | ------- | ------- | 
|                                                      |                                           | Three Months Ended                 |         |         | Six Months Ended |  
|                                                      |                                           | June 30                            |         |         | June 30          |  
|                                                      |                                           |                                    |         |         |                  |  
|                                                      |                                           | 2006                               |         |         | 2005             |   |         | 2006    |         |   | 2005      |        
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|                                                      |                                           | (unaudited)                        |        
|Net sales                                             |                                           | $                                  | 893,952 |         |                  | $ | 917,427 |         |         | $ | 1,806,565 |         |         | $ | 1,823,567 |        
|Cost of sales                                         |                                           |                                    | 651,037 |         |                  |   | 686,305 |         |         |   | 1,336,208 |         |         |   | 1,372,502 |        
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|Gross profit                                          |                                           |                                    | 242,915 |         |                  |   | 231,122 |         |         |   | 470,357   |         |         |   | 451,065   |        
|Operating costs and expenses:                         |                                           |                                    |         |         |                  |   |         |         |         |   |           |         |         |   |           |        
|                                                      | Selling and distribution                  |                                    |         | 145,869 |                  |   |         | 137,390 |         |   |           | 288,414 |         |   |           | 272,381 |        
|                                                      | General and administrative                |                                    |         | 30,229  |                  |   |         | 26,056  |         |   |           | 59,583  |         |   |           | 57,779  |        
|                                                      | Amortization of intangibles               |                                    |         | 212     |                  |   |         | 327     |         |   |           | 411     |         |   |           | 647     |        
|                                                      | Facility closing and reorganization costs |                                    |         | 143     |                  |   |         | 597     |         |   |           | 320     |         |   |           | 2,120   |        
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|                                                      |                                           | Total operating costs and expenses |         |         | 176,453          |   |         |         | 164,370 |   |           |         | 348,728 |   |           |         | 332,927 | 
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|Operating income                                      |                                           |                                    | 66,462  |         |                  |   | 66,752  |         |         |   | 121,629   |         |         |   | 118,138   |        
|Other (income) expense:                               |                                           |                                    |         |         |                  |   |         |         |         |   |           |         |         |   |           |        
|                                                      | Interest expense                          |                                    |         | 11,842  |                  |   |         | 13,473  |         |   |           | 23,635  |         |   |           | 27,216  |        
|                                                      | Other (income) expense, net               |                                    |         | (34     | )                |   |         | 97      |         |   |           | (66     | )       |   |           | (54     | )      
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|                                                      |                                           | Total other expense                |         |         | 11,808           |   |         |         | 13,570  |   |           |         | 23,569  |   |           |         | 27,162  | 
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|Income from continuing operations before income taxes |                                           |                                    | 54,654  |         |                  |   | 53,182  |         |         |   | 98,060    |         |         |   | 90,976    |        
|Income taxes                                          |                                           |                                    | 18,433  |         |                  |   | 20,289  |         |         |   | 36,304    |         |         |   | 34,899    |        
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|Income from continuing operations                     |                                           |                                    | 36,221  |         |                  |   | 32,893  |         |         |   | 61,756    |         |         |   | 56,077    |        
|Income from discontinued operations, net of tax       |                                           |                                    |        |         |                  |   | 2,934   |         |         |   |          |         |         |   | 13,446    |        
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        
|Net income                                            |                                           | $                                  | 36,221  |         |                  | $ | 35,827  |         |         | $ | 61,756    |         |         | $ | 69,523    |        
|                                                      |                                           |                                    |         |         |                  |   |         |         |         |   |           |        



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DEAN HOLDING COMPANY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




|                                      |                                                                                       |                                       |                                              |         |         |         |   |          |         |          |  
|------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------- | -------------------------------------------- | ------- | ------- | ------- | - | -------- | ------- | -------- | -
|                                      |                                                                                       | Six Months Ended                      |                                             
|                                      |                                                                                       | June 30                               |                                             
|                                      |                                                                                       |                                       |                                             
|                                      |                                                                                       | 2006                                  |                                              |         | 2005    |        
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      |                                                                                       | (unaudited)                           |                                             
|Cash flows from operating activities: |                                                                                       |                                       |                                              |         |         |         |   |         
|                                      | Net income                                                                            |                                       | $                                            | 61,756  |         |         | $ | 69,523   |        
|                                      | Income from discontinued operations                                                   |                                       |                                              |        |         |         |   | (13,446  | )      
|                                      | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                       |                                              |         |         |         |   |          |        
|                                      |                                                                                       | Depreciation and amortization         |                                              |         | 38,769  |         |   |          | 35,818  |         
|                                      |                                                                                       | Share-based compensation expense      |                                              |         | 1,208   |         |   |          | 1,476   |         
|                                      |                                                                                       | Gain on disposition of assets         |                                              |         | (201    | )       |   |          | (82     | )       
|                                      |                                                                                       | Deferred income taxes                 |                                              |         | 7,184   |         |   |          | 5,492   |         
|                                      |                                                                                       | Other                                 |                                              |         | (657    | )       |   |          | 2,138   |         
|                                      | Changes in operating assets and liabilities, net of acquisitions:                     |                                       |                                              |         |         |         |   |          |        
|                                      |                                                                                       | Receivables                           |                                              |         | 42,361  |         |   |          | 12,619  |         
|                                      |                                                                                       | Inventories                           |                                              |         | 4,473   |         |   |          | (5,580  | )       
|                                      |                                                                                       | Prepaid expenses and other assets     |                                              |         | (1,437  | )       |   |          | 10,126  |         
|                                      |                                                                                       | Accounts payable and accrued expenses |                                              |         | (29,877 | )       |   |          | (22,487 | )       
|                                      |                                                                                       | Income taxes payable                  |                                              |         | (2,258  | )       |   |          | (542    | )       
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      |                                                                                       |                                       | Net cash provided by continuing operations   |         |         | 121,321 |   |          |         | 95,055   |  
|                                      |                                                                                       |                                       | Net cash provided by discontinued operations |         |         |        |   |          |         | 32,076   |  
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      |                                                                                       |                                       | Net cash provided by operating activities    |         |         | 121,321 |   |          |         | 127,131  |  
|Cash flows from investing activities: |                                                                                       |                                       |                                              |         |         |         |   |         
|                                      | Additions to property, plant and equipment                                            |                                       |                                              | (32,966 | )       |         |   | (25,130  | )      
|                                      | Proceeds from sale of fixed assets                                                    |                                       |                                              | 806     |         |         |   | 670      |        
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      |                                                                                       |                                       | Net cash used in continuing operations       |         |         | (32,160 | ) |          |         | (24,460  | )
|                                      |                                                                                       |                                       | Net cash used in discontinued operations     |         |         |        |   |          |         | (7,631   | )
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      |                                                                                       |                                       | Net cash used in investing activities        |         |         | (32,160 | ) |          |         | (32,091  | )
|Cash flows from financing activities: |                                                                                       |                                       |                                              |         |         |         |   |         
|                                      | Repayment of debt                                                                     |                                       |                                              | (13,019 | )       |         |   | (114,520 | )      
|                                      | Distribution to parent                                                                |                                       |                                              | (74,697 | )       |         |   | 5,499    |        
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      |                                                                                       |                                       | Net cash used in continuing operations       |         |         | (87,716 | ) |          |         | (109,021 | )
|                                      |                                                                                       |                                       | Net cash provided by discontinued operations |         |         |        |   |          |         | 11,153   |  
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      |                                                                                       |                                       | Net cash used in financing activities        |         |         | (87,716 | ) |          |         | (97,868  | )
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      | Increase (decrease) in cash and cash equivalents                                      |                                       |                                              | 1,445   |         |         |   | (2,828   | )      
|                                      | Cash and cash equivalents, beginning of period                                        |                                       |                                              | 16,056  |         |         |   | 12,490   |        
|                                      |                                                                                       |                                       |                                              |         |         |        
|                                      | Cash and cash equivalents, end of period                                              |                                       | $                                            | 17,501  |         |         | $ | 9,662    |        
|                                      |                                                                                       |                                       |                                              |         |         |        



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DEAN HOLDING COMPANY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2006






|   |        
|-- | -------
|1. | General

Basis of Presentation 10-K 10-K










Shipping and Handling Fees


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Share-Based Compensation




|             |                     |                |   |     |            |  |   |      |  |  |      |       |  |  |   |       | 
|------------ | ------------------- | -------------- | - | --- | ---------- |  | - | ---- |  |  | ---- | ----- |  |  | - | ----- | 
|             |                     | Three Months   |   |     | Six Months | 
|             |                     | Ended          |   |     | Ended      | 
|             |                     | June 30        |   |     | June 30    | 
|             |                     |                |   |     |            | 
|             |                     | 2006           |   |     | 2005       |  |   | 2006 |  |  | 2005 |      
|             |                     |                |   |     |            |  |   |      |  |  |      |      
|             |                     | (In thousands) |  
|Decrease in: |                     |                |   |     |            |  |   |      |  |  |      |       |  |  |   |      
|             | Income before taxes |                | $ | 655 |            |  | $ | 727  |  |  | $    | 1,208 |  |  | $ | 1,476 | 
|             | Net income          |                |   | 413 |            |  |   | 562  |  |  |      | 623   |  |  |   | 1,139 | 

Recently Adopted Accounting Pronouncements




Recently Issued Accounting Pronouncements




|   |                        
|-- | -----------------------
|2. | Discontinued Operations



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|                    |  |                |         |  |               |   |         | 
|------------------- |  | -------------- | ------- |  | ------------- | - | ------- | 
|                    |  | Three Months   |         |  | Six Months    |  
|                    |  | Ended          |         |  | Ended         |  
|                    |  | June 30, 2005  |         |  | June 30, 2005 |  
|                    |  |                |         |  |               |  
|                    |  | (In thousands) |        
|Net sales           |  | $              | 175,142 |  |               | $ | 332,299 | 
|Income before taxes |  |                | 7,959   |  |               |   | 24,692  | 





|   |            
|-- | -----------
|3. | Inventories

|                           |       |                |        |         |              |   |        |         | 
|-------------------------- | ----- | -------------- | ------ | ------- | ------------ | - | ------ | ------- | 
|                           |       | June 30,       |        |         | December 31, |  
|                           |       | 2006           |        |         | 2005         |  
|                           |       |                |        |         |              |  
|                           |       | (In thousands) |       
|Raw materials and supplies |       | $              | 30,047 |         |              | $ | 34,530 |        
|Finished goods             |       |                | 69,968 |         |              |   | 69,958 |        
|                           |       |                |        |         |              |  
|                           | Total |                | $      | 100,015 |              |   | $      | 104,488 | 
|                           |       |                |        |         |              |  



|   |                  
|-- | -----------------
|4. | Intangible Assets



|                                         |                  |                |         |         |                   |   |        |          |   |       |          |         |  |              |         |         |          |   |        |        |   |   |         |         | 
|---------------------------------------- | ---------------- | -------------- | ------- | ------- | ----------------- | - | ------ | -------- | - | ----- | -------- | ------- |  | ------------ | ------- | ------- | -------- | - | ------ | ------ | - | - | ------- | ------- | 
|                                         |                  | June 30, 2006  |         |         | December 31, 2005 |  
|                                         |                  |                |         |         |                   |  
|                                         |                  | Gross          |         |         |                   |   | Net    |          |   | Gross |          |         |  |              | Net     |        
|                                         |                  | Carrying       |         |         | Accumulated       |   |        | Carrying |   |       | Carrying |         |  | Accumulated  |         |         | Carrying |  
|                                         |                  | Amount         |         |         | Amortization      |   |        | Amount   |   |       | Amount   |         |  | Amortization |         |         | Amount   |  
|                                         |                  |                |         |         |                   |   |        |          |   |       |          |         |  |              |         |         |          |  
|                                         |                  | (In thousands) |        
|Intangible assets with indefinite lives: |                  |                |         |         |                   |   |        |          |   |       |          |         |  |              |         |         |          |   |        |        |   |   |         |        
|                                         | Trademarks       |                | $       | 179,310 |                   |   | $      |         |   |       | $        | 179,310 |  |              | $       | 179,310 |          |   | $      |       |   |   | $       | 179,310 | 
|Intangible assets with finite lives:     |                  |                |         |         |                   |   |        |          |   |       |          |         |  |              |         |         |          |   |        |        |   |   |         |        
|                                         | Customer-related |                |         | 20,904  |                   |   |        | (9,156   | ) |       |          | 11,748  |  |              |         | 19,929  |          |   |        | (8,015 | ) |   |         | 11,914  | 
|                                         |                  |                |         |         |                   |   |        |          |   |       |          |         |  |              |         |         |          |  
|Total                                    |                  | $              | 200,214 |         |                   | $ | (9,156 | )        |   | $     | 191,058  |         |  | $            | 199,239 |         |          | $ | (8,015 | )      |   | $ | 191,224 |        
|                                         |                  |                |         |         |                   |   |        |          |   |       |          |         |  |              |         |         |          |  

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|     |  |   |              | 
|---- |  | - | ------------ | 
|2006 |  | $ | 2.4  million | 
|2007 |  |   | 2.4 million  | 
|2008 |  |   | 2.4 million  | 
|2009 |  |   | 2.4 million  | 
|2010 |  |   | 2.3 million  | 



|   |               
|-- | --------------
|5. | Long-Term Debt

|                                                   |                      |                |         |     |                   |  |       |             |  |   |          |     |         |  |       |   |  | 
|-------------------------------------------------- | -------------------- | -------------- | ------- | --- | ----------------- |  | ----- | ----------- |  | - | -------- | --- | ------- |  | ----- | - |  | 
|                                                   |                      | June 30, 2006  |         |     | December 31, 2005 | 
|                                                   |                      |                |         |     |                   | 
|                                                   |                      | Amount         |         |     | Interest          |  |       | Amount      |  |   | Interest |    
|                                                   |                      | Outstanding    |         |     | Rate              |  |       | Outstanding |  |   | Rate     |    
|                                                   |                      |                |         |     |                   |  |       |             |  |   |          |    
|                                                   |                      | (In thousands) |        
|$250 million senior notes maturing in August 2007  |                      | $              | 250,141 |     |                   |  | 8.150 | %           |  | $ | 250,198  |     |         |  | 8.150 | %
|$200 million senior notes maturing in May 2009     |                      |                | 191,432 |     |                   |  | 6.625 |             |  |   | 190,192  |     |         |  | 6.625 |  
|$150 million senior notes maturing in October 2017 |                      |                | 128,638 |     |                   |  | 6.900 |             |  |   | 128,103  |     |         |  | 6.900 |  
|Receivables-backed facility                        |                      |                | 176,162 |     |                   |  | 5.500 |             |  |   | 189,168  |     |         |  | 4.600 |  
|Other                                              |                      |                | 96      |     |                   |  |       |             |  |   | 110      |     |         |  |       |  
|                                                   |                      |                |         |     |                   |  |       |             |  |   |          |    
|                                                   |                      |                | 746,469 |     |                   |  |       |             |  |   | 757,771  |     |         |  |       |  
|                                                   | Less current portion |                |         | (29 | )                 |  |       |             |  |   |          | (28 | )       |  |       |   | 
|                                                   |                      |                |         |     |                   |  |       |             |  |   |          |    
|                                                   |                      | Total          |         | $   | 746,440           |  |       |             |  |   |          | $   | 757,743 |  |       |   |  | 
|                                                   |                      |                |         |     |                   |  |       |             |  |   |          |    

Senior Notes


Receivables-Backed Facility


Letters of Credit


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##### Table of Contents





|   |                            
|-- | ---------------------------
|6. | Comprehensive Income (Loss)



|                                   |                                                            |                |        |      |            |   |        |      |  |   |        |      |   |   |        |      |  
|---------------------------------- | ---------------------------------------------------------- | -------------- | ------ | ---- | ---------- | - | ------ | ---- |  | - | ------ | ---- | - | - | ------ | ---- | -
|                                   |                                                            | Three Months   |        |      | Six Months |  
|                                   |                                                            | Ended          |        |      | Ended      |  
|                                   |                                                            | June 30        |        |      | June 30    |  
|                                   |                                                            |                |        |      |            |  
|                                   |                                                            | 2006           |        |      | 2005       |   |        | 2006 |  |   | 2005   |     
|                                   |                                                            |                |        |      |            |   |        |      |  |   |        |     
|                                   |                                                            | (In thousands) |       
|Net income                         |                                                            | $              | 36,221 |      |            | $ | 35,827 |      |  | $ | 61,756 |      |   | $ | 69,523 |     
|Other comprehensive income (loss): |                                                            |                |        |      |            |   |        |      |  |   |        |      |   |   |        |     
|                                   | Cumulative translation adjustment                          |                |        | (150 | )          |   |        | 132  |  |   |        | (281 | ) |   |        | 150  |  
|                                   | Transfer to parent                                         |                |        |     |            |   |        |     |  |   |        | (31  | ) |   |        |     |  
|                                   | Change in fair value of derivative instruments, net of tax |                |        | 187  |            |   |        |     |  |   |        | 436  |   |   |        |     |  
|                                   | Minimum pension liability adjustment, net of tax           |                |        |     |            |   |        | 108  |  |   |        |     |   |   |        | (738 | )
|                                   |                                                            |                |        |      |            |   |        |      |  |   |        |     
|                                   |                                                            |                | 37     |      |            |   | 240    |      |  |   | 124    |      |   |   | (588   | )   
|                                   |                                                            |                |        |      |            |   |        |      |  |   |        |     
|Comprehensive income               |                                                            | $              | 36,258 |      |            | $ | 36,067 |      |  | $ | 61,880 |      |   | $ | 68,935 |     
|                                   |                                                            |                |        |      |            |   |        |      |  |   |        |     



|   |                                 
|-- | --------------------------------
|7. | Employee Postretirement Benefits



|                               |                       |                |     |     |            |   |     |      |  |   |       |     |  |   |       |     | 
|------------------------------ | --------------------- | -------------- | --- | --- | ---------- | - | --- | ---- |  | - | ----- | --- |  | - | ----- | --- | 
|                               |                       | Three Months   |     |     | Six Months |  
|                               |                       | Ended          |     |     | Ended      |  
|                               |                       | June 30        |     |     | June 30    |  
|                               |                       |                |     |     |            |  
|                               |                       | 2006           |     |     | 2005       |   |     | 2006 |  |   | 2005  |    
|                               |                       |                |     |     |            |   |     |      |  |   |       |    
|                               |                       | (In thousands) |    
|Components of net period cost: |                       |                |     |     |            |   |     |      |  |   |       |     |  |   |       |    
|                               | Service cost          |                | $   | 219 |            |   | $   | 238  |  |   | $     | 504 |  |   | $     | 476 | 
|                               | Interest cost         |                |     | 292 |            |   |     | 209  |  |   |       | 543 |  |   |       | 418 | 
|Amortizations:                 |                       |                |     |     |            |   |     |      |  |   |       |     |  |   |       |    
|                               | Unrecognized net loss |                |     | 404 |            |   |     | 64   |  |   |       | 493 |  |   |       | 128 | 
|                               |                       |                |     |     |            |   |     |      |  |   |       |    
|Net periodic benefit cost      |                       | $              | 915 |     |            | $ | 511 |      |  | $ | 1,540 |     |  | $ | 1,022 |    
|                               |                       |                |     |     |            |   |     |      |  |   |       |    





|   |                                          
|-- | -----------------------------------------
|8. | Facility Closing and Reorganization Costs

Facility Closing and Reorganization Costs






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##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Workforce reductions as a result of facility closings, facility
    reorganizations and consolidation of administrative functions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Shutdown costs, including those costs necessary to prepare
    abandoned facilities for closure;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Costs incurred after shutdown such as lease obligations or
    termination costs, utilities and property taxes; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Write-downs of property, plant and equipment and other assets,
    primarily for asset impairments as a result of facilities that
    are no longer used in operations. The impairments relate
    primarily to owned buildings, land and equipment at the
    facilities, which are written down to their estimated fair value
    and held for sale. The effect of suspending depreciation on the
    buildings and equipment related to the closed facilities was not
    significant. The carrying value of closed facilities at
    June 30, 2006 was approximately $1.7 million. We are
    marketing these properties for sale.





|              |                             |                |   |     |             |  |   |          |            |          |      |      |   |  |   |    | 
|------------- | --------------------------- | -------------- | - | --- | ----------- |  | - | -------- | ---------- | -------- | ---- | ---- | - |  | - | -- | 
|              |                             | Accrued        |   |     |             |  |   |          | Accrued    |         
|              |                             | Charges at     |   |     |             |  |   |          | Charges at |         
|              |                             | December 31,   |   |     | Charges     |  |   |          |            | June 30, |     
|              |                             | 2005           |   |     | (Reversals) |  |   | Payments |            |          | 2006 |     
|              |                             |                |   |     |             |  |   |          |            |          |      |     
|              |                             | (In thousands) |  
|Cash charges: |                             |                |   |     |             |  |   |          |            |          |      |      |   |  |   |   
|              | Workforce reduction costs   |                | $ | 449 |             |  | $ | (138     | )          |          | $    | (288 | ) |  | $ | 23 | 
|              | Shutdown costs              |                |   |    |             |  |   | 276      |            |          |      | (276 | ) |  |   |   | 
|              | Lease obligations and other |                |   | 58  |             |  |   | 182      |            |          |      | (190 | ) |  |   | 50 | 
|              |                             |                |   |     |             |  |   |          |            |          |      |     
|              | Total                       |                | $ | 507 |             |  | $ | 320      |            |          | $    | (754 | ) |  | $ | 73 | 
|              |                             |                |   |     |             |  |   |          |            |          |      |     



|   |                              
|-- | -----------------------------
|9. | Commitments and Contingencies

Contingent Obligations Related to Divested
Operations


Guaranty of Dean Foods Companys Obligations Under Its
Senior Credit Facility


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##### Table of Contents







| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | $56.3 million quarterly beginning on December 31, 2006
    through September 30, 2008;
|
| |  | $262.5 million quarterly beginning on December 31,
    2008 through June 30, 2009; and
|
| |  | A final payment of $262.5 million on the maturity date of
    August 13, 2009.        











Guaranty of Dean Foods Companys Obligations Under Its
Senior Notes




Insurance


Leases


Litigation, Investigations and Audits


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##### Table of Contents







|    |                                           
|--- | ------------------------------------------
|10. | Geographic Information and Major Customers

Geographic Information


Significant Customers







|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



10-Q,


Results of Operations




|                              |                                           |                                    |       |       |                          |  |       |         |      |   |         |       |       |         |       |      |         |   |         |         |       |  |         |      |      |   |         |       |       |  |       |      |      | 
|----------------------------- | ----------------------------------------- | ---------------------------------- | ----- | ----- | ------------------------ |  | ----- | ------- | ---- | - | ------- | ----- | ----- | ------- | ----- | ---- | ------- | - | ------- | ------- | ----- |  | ------- | ---- | ---- | - | ------- | ----- | ----- |  | ----- | ---- | ---- | 
|                              |                                           | Quarter Ended June 30              |       |       | Six Months Ended June 30 | 
|                              |                                           |                                    |       |       |                          | 
|                              |                                           | 2006                               |       |       | 2005                     |  |       | 2006    |      |   | 2005    |      
|                              |                                           |                                    |       |       |                          |  |       |         |      |   |         |      
|                              |                                           | Dollars                            |       |       | Percent                  |  |       | Dollars |      |   | Percent |       |       | Dollars |       |      | Percent |   |         | Dollars |       |  | Percent |     
|                              |                                           |                                    |       |       |                          |  |       |         |      |   |         |       |       |         |       |      |         |   |         |         |       |  |         |     
|                              |                                           | (Dollars in millions)              |      
|Net sales                     |                                           | $                                  | 894.0 |       |                          |  | 100.0 | %       |      | $ | 917.4   |       |       |         | 100.0 | %    |         | $ | 1,806.6 |         |       |  | 100.0   | %    |      | $ | 1,823.6 |       |       |  | 100.0 | %   
|Cost of sales                 |                                           |                                    | 651.0 |       |                          |  | 72.8  |         |      |   | 686.3   |       |       |         | 74.8  |      |         |   | 1,336.2 |         |       |  | 74.0    |      |      |   | 1,372.5 |       |       |  | 75.3  |     
|                              |                                           |                                    |       |       |                          |  |       |         |      |   |         |       |       |         |       |      |         |   |         |         |       |  |         |     
|Gross profit                  |                                           |                                    | 243.0 |       |                          |  | 27.2  |         |      |   | 231.1   |       |       |         | 25.2  |      |         |   | 470.4   |         |       |  | 26.0    |      |      |   | 451.1   |       |       |  | 24.7  |     
|Operating costs and expenses: |                                           |                                    |       |       |                          |  |       |         |      |   |         |       |       |         |       |      |         |   |         |         |       |  |         |      |      |   |         |       |       |  |       |     
|                              | Selling and distribution                  |                                    |       | 145.9 |                          |  |       | 16.4    |      |   |         | 137.4 |       |         |       | 15.0 |         |   |         | 288.5   |       |  |         | 16.0 |      |   |         | 272.4 |       |  |       | 14.9 |     
|                              | General and administrative                |                                    |       | 30.2  |                          |  |       | 3.4     |      |   |         | 26.0  |       |         |       | 2.8  |         |   |         | 59.6    |       |  |         | 3.3  |      |   |         | 57.8  |       |  |       | 3.2  |     
|                              | Amortization of intangibles               |                                    |       | 0.2   |                          |  |       |        |      |   |         | 0.3   |       |         |       |     |         |   |         | 0.4     |       |  |         |     |      |   |         | 0.7   |       |  |       |     |     
|                              | Facility closing and reorganization costs |                                    |       | 0.2   |                          |  |       |        |      |   |         | 0.6   |       |         |       | 0.1  |         |   |         | 0.3     |       |  |         |     |      |   |         | 2.1   |       |  |       | 0.1  |     
|                              |                                           |                                    |       |       |                          |  |       |         |      |   |         |       |       |         |       |      |         |   |         |         |       |  |         |     
|                              |                                           | Total operating costs and expenses |       |       | 176.5                    |  |       |         | 19.8 |   |         |       | 164.3 |         |       |      | 17.9    |   |         |         | 348.8 |  |         |      | 19.3 |   |         |       | 333.0 |  |       |      | 18.2 | 
|                              |                                           |                                    |       |       |                          |  |       |         |      |   |         |       |       |         |       |      |         |   |         |         |       |  |         |     
|Operating income              |                                           | $                                  | 66.5  |       |                          |  | 7.4   | %       |      | $ | 66.8    |       |       |         | 7.3   | %    |         | $ | 121.6   |         |       |  | 6.7     | %    |      | $ | 118.1   |       |       |  | 6.5   | %   
|                              |                                           |                                    |       |       |                          |  |       |         |      |   |         |       |       |         |       |      |         |   |         |         |       |  |         |     

Quarter Ended June 30, 2006 Compared to Quarter Ended
June 30, 2005


Net Sales




|               |                         |                       |       |       |         |  |      |      |  
|-------------- | ----------------------- | --------------------- | ----- | ----- | ------- |  | ---- | ---- | -
|               |                         | Dollars               |       |       | Percent | 
|               |                         |                       |       |       |         | 
|               |                         | (Dollars in millions) |      
|2005 Net sales |                         | $                     | 917.4 |       |         |  |      |     
|               | Volume                  |                       |       | 23.3  |         |  |      | 2.5  | %
|               | Pricing and product mix |                       |       | (46.7 | )       |  |      | (5.1 | )
|               |                         |                       |       |       |         | 
|2006 Net sales |                         | $                     | 894.0 |       |         |  | (2.6 | )%  
|               |                         |                       |       |       |         | 

-13-



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##### Table of Contents





|                                  |  |                        |      |     |      |   |      |          |  |  |     |   
|--------------------------------- |  | ---------------------- | ---- | --- | ---- | - | ---- | -------- |  |  | --- | --
|                                  |  | Quarter Ended June 30* |     
|                                  |  |                        |     
|                                  |  | 2006                   |      |     | 2005 |   |      | % Change | 
|                                  |  |                        |      |     |      |   |      |          | 
|Class I raw skim milk mover(3)    |  | $                      | 6.83 | (1) |      | $ | 8.69 | (1)      |  |  | (21 | )%
|Class I butterfat mover(3)        |  |                        | 1.26 | (2) |      |   | 1.66 | (2)      |  |  | (24 | ) 
|Class II raw skim milk minimum(4) |  |                        | 7.03 | (1) |      |   | 7.63 | (1)      |  |  | (8  | ) 
|Class II butterfat minimum(4)     |  |                        | 1.25 | (2) |      |   | 1.62 | (2)      |  |  | (23 | ) 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | The prices noted in this table are not the prices that we
    actually pay. The federal order minimum prices at any given
    location for Class I raw skim milk or Class I
    butterfat are based on the Class I mover prices plus a
    location differential. Class II prices noted in the table
    are federal minimum prices, applicable at all locations. Our
    actual cost also includes producer premiums, procurement costs
    and other related charges that vary by location and vendor.
|   
|(1) | Prices are per hundredweight.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(2) | Prices are per pound.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | We process Class I raw skim milk and butterfat into fluid
    milk products.                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) | We process Class II raw skim milk and butterfat into
    products such as cottage cheese, creams and creamers, ice cream
    and sour cream.                                                                                                                                                                                                                                                                                                                                                            



Cost of Sales


Operating Costs and Expenses


Operating Income


-14-



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##### Table of Contents



Other (Income) Expense


Income Taxes


Six Months Ended June 30, 2006 Compared to Six Months
Ended June 30, 2005


Net Sales




|               |                         |                       |         |       |         |  |      |      |  
|-------------- | ----------------------- | --------------------- | ------- | ----- | ------- |  | ---- | ---- | -
|               |                         | Dollars               |         |       | Percent | 
|               |                         |                       |         |       |         | 
|               |                         | (Dollars in millions) |        
|2005 Net sales |                         | $                     | 1,823.6 |       |         |  |      |     
|               | Volume                  |                       |         | 55.3  |         |  |      | 3.0  | %
|               | Pricing and product mix |                       |         | (72.3 | )       |  |      | (3.9 | )
|               |                         |                       |         |       |         | 
|2006 Net sales |                         | $                     | 1,806.6 |       |         |  | (0.9 | )%  
|               |                         |                       |         |       |         | 



|                                  |  |                           |      |     |      |   |      |          |  |  |     |   
|--------------------------------- |  | ------------------------- | ---- | --- | ---- | - | ---- | -------- |  |  | --- | --
|                                  |  | Six Months Ended June 30* |     
|                                  |  |                           |     
|                                  |  | 2006                      |      |     | 2005 |   |      | % Change | 
|                                  |  |                           |      |     |      |   |      |          | 
|Class I raw skim milk mover(3)    |  | $                         | 7.56 | (1) |      | $ | 8.89 | (1)      |  |  | (15 | )%
|Class I butterfat mover(3)        |  |                           | 1.35 | (2) |      |   | 1.76 | (2)      |  |  | (23 | ) 
|Class II raw skim milk minimum(4) |  |                           | 7.53 | (1) |      |   | 7.48 | (1)      |  |  | 1   |   
|Class II butterfat minimum(4)     |  |                           | 1.31 | (2) |      |   | 1.69 | (2)      |  |  | (22 | ) 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | The prices noted in this table are not the prices that we
    actually pay. The federal order minimum prices at any given
    location for Class I raw skim milk or Class I
    butterfat are based on the Class I mover prices plus a
    location differential. Class II prices noted in the table
    are federal minimum prices, applicable at all locations. Our
    actual cost also includes producer premiums, procurement costs
    and other related charges that vary by location and vendor.
|   
|(1) | Prices are per hundredweight.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(2) | Prices are per pound.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | We process Class I raw skim milk and butterfat into fluid
    milk products.                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) | We process Class II raw skim milk and butterfat into
    products such as cottage cheese, creams and creamers, ice cream
    and sour cream.                                                                                                                                                                                                                                                                                                                                                            



-15-



---



##### Table of Contents



Cost of Sales


Operating Costs and Expenses


Operating Income


Other (Income) Expense


Income Taxes







|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Quarterly Controls Evaluation and Related CEO and CFO
Certifications




13a-14


Definition of Disclosure Controls




-16-



---



##### Table of Contents





Limitations on the Effectiveness of Controls




Scope of the Controls Evaluation




Conclusions




-17-



---



##### Table of Contents






Part II  Other Information







|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings






Item 1A. Risk Factors




Changes in Laws, Regulations and Accounting Standards
Could Have an Adverse Effect on Our Financial Results




Changes in Raw Milk and Other Input Costs Can Adversely
Affect Us






-18-



---



##### Table of Contents



Loss of Rights to Any of Our Licensed Brands Could
Adversely Affect Our Sales and Profits


LAND OLAKES


Decisions Made by Dean Foods Company Could Affect Our
Performance




Dean Foods Company has Substantial Debt and Other
Financial Obligations that We Guarantee











|        |         
|------- | --------
|Item 6. | Exhibits



| |     |         
| | --- | --------
| | (a) | Exhibits

| |    |    |  |                                                                                                       
| | -- | -- |  | ------------------------------------------------------------------------------------------------------
| | 31 | .1 |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002
|
| | 31 | .2 |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002
|
| | 32 | .1 |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002
|
| | 32 | .2 |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002

-19-



---



##### Table of Contents



SIGNATURES






| |                                                   
| | --------------------------------------------------
| | DEAN HOLDING COMPANY                              
|
| | /s/ Ronald L. McCrummen                           
| |                                                   
| | Ronald L. McCrummen                               
| | Senior Vice President and Chief Accounting Officer



-20-



---



##### Table of Contents



EXHIBIT INDEX


|        |    |             |  |                                                                                                       
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 31 | .1          |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002
|       
|        | 31 | .2          |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002
|       
|        | 32 | .1          |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002
|       
|        | 32 | .2          |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002

-21-