##### 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
    1934For the Quarterly Period Ended
    September 30, 2006oro

Transition Report Pursuant to
    Section 13 or 15(d) of the Securities Exchange Act of
    1934   Commission File Number 1-08262
  Dean Holding Company
 (Exact name of Registrant as
    specified in its charter)
  
  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 (Address,
    including zip code, and telephone number, including
    area code, of registrants principal executive
    offices)
   þ o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
    Form 10-Q Form 10-Q.




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##### 



Table of
    Contents
  
  PagePart I 
    Financial InformationItem 1 
    Financial Statements


3Item 2 
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations


13Item 4 
    Controls and Procedures


17Part II 
    Other InformationItem 1 
    Legal Proceedings


19Item 1A 
    Risk Factors


19Item 6 
    Exhibits


21Signatures


22Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906   -2-




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##### Table of Contents



Part I 
    Financial Information  Item 1.
    Financial
    Statements  DEAN
    HOLDING COMPANY
    CONDENSED CONSOLIDATED BALANCE SHEETS (In
    thousands)
  September 30,


December 31,2006


2005(unaudited)AssetsCurrent assets:Cash and cash equivalents

$
18,939


$
16,056Receivables, net


259,801



283,905Inventories


100,922



104,488Deferred income taxes


35,764



37,071Prepaid expenses and other current
    assets


13,790



11,157Total current assets


429,216



452,677Property, plant and equipment, net


504,108



508,963Goodwill


1,080,827



1,080,529Identifiable intangible and other
    assets


195,760



195,704Total

$
2,209,911


$
2,237,873Liabilities and Parents
    Net InvestmentCurrent liabilities:Accounts payable and accrued
    expenses

$
272,711


$
292,163Income taxes payable


3,705



5,492Current portion of long-term debt


250,141



28Total current liabilities


526,557



297,683Long-term debt


488,055



757,743Deferred income taxes


152,490



148,396Other long-term liabilities


62,377



71,079Commitments and contingencies
    (Note 9)Parents net investment:Parents net investment


981,135



963,546Accumulated other comprehensive
    loss


(703
)


(574
)Total parents net investment


980,432



962,972Total

$
2,209,911


$
2,237,873    -3-




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DEAN
    HOLDING COMPANY
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In
    thousands)
  Three Months Ended


Nine Months EndedSeptember 30


September 302006


2005


2006


2005(unaudited)Net sales

$
912,853


$
940,276


$
2,719,418


$
2,763,843Cost of sales


668,186



705,878



2,004,329



2,078,380Gross profit


244,667



234,398



715,089



685,463Operating costs and expenses:Selling and distribution


150,861



141,285



439,340



413,666General and administrative


28,862



30,821



88,445



88,600Amortization of intangibles


236



217



647



864Facility closing and
    reorganization costs


91



406



411



2,526Total operating costs and expenses


180,050



172,729



528,843



505,656Operating income


64,617



61,669



186,246



179,807Other (income) expense:Interest expense


11,862



11,798



35,497



39,014Other (income), net






(15
)


(66
)


(69
)Total other expense


11,862



11,783



35,431



38,945Income from continuing operations
    before income taxes


52,755



49,886



150,815



140,862Income taxes


18,987



18,899



55,291



53,798Income from continuing operations


33,768



30,987



95,524



87,064Income (loss) from discontinued
    operations, net of tax


(3,328
)


(580
)


(3,328
)


12,866Net income

$
30,440


$
30,407


$
92,196


$
99,930    -4-




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DEAN
    HOLDING COMPANY
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
    thousands)
  Nine Months EndedSeptember 302006


2005(unaudited)Cash flows from operating
    activities:Net income

$
92,196


$
99,930Loss (income) from discontinued
    operations


3,328



(12,866
)Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation and amortization


58,258



54,632Share-based compensation expense


1,789



2,205Loss (gain) on disposition of
    assets


(382
)


83Deferred income taxes


5,401



12,812Other


(89
)


2,218Changes in operating assets and
    liabilities, net of acquisitions:Receivables


24,104



5,847Inventories


3,566



(2,775
)Prepaid expenses and other assets


(1,425
)


11,991Accounts payable and accrued
    expenses


(28,157
)


(20,121
)Income taxes payable


(5,115
)


(473
)Net cash provided by continuing
    operations


153,474



153,483Net cash provided by discontinued
    operations






31,496Net cash provided by operating
    activities


153,474



184,979Cash flows from investing
    activities:Additions to property, plant and
    equipment


(51,857
)


(42,944
)Proceeds from sale of fixed assets


1,317



718Net cash used in continuing
    operations


(50,540
)


(42,226
)Net cash used in discontinued
    operations






(7,631
)Net cash used in investing
    activities


(50,540
)


(49,857
)Cash flows from financing
    activities:Net repayment of debt


(22,623
)


(115,968
)Distribution to parent


(77,428
)


(24,814
)Net cash used in continuing
    operations


(100,051
)


(140,782
)Net cash provided by discontinued
    operations






11,153Net cash used in financing
    activities


(100,051
)


(129,629
)Increase in cash and cash
    equivalents


2,883



5,493Cash and cash equivalents,
    beginning of period


16,056



12,490Cash and cash equivalents, end of
    period

$
18,939


$
17,983    -5-




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DEAN
    HOLDING COMPANY
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    September 30, 2006 (unaudited)
  1.
    General  Basis of Presentation Form 10-K Form 10-K
          Shipping and Handling Fees
 -6-




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Share-Based Compensation
    Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2005


2005(In thousands)Decrease in:Income before taxes

$
729


$
2,205Net income


565



1,704     Recently Adopted Accounting Pronouncements
    Recently Issued Accounting Pronouncements
   -7-




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2.
    Discontinued
    Operations          Nine MonthsEndedSeptember 30, 2005(In thousands)Net sales

$
332,299Income before taxes


24,692     3.
    Inventories  September 30,


December 31,2006


2005(In thousands)Raw materials and supplies

$
32,181


$
34,530Finished goods


68,741



69,958Total

$
100,922


$
104,488  -8-




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4.
    Intangible
    Assets    Balance at December 31, 2005

$
1,080,529Purchase accounting adjustments


298Balance at September 30, 2006

$
1,080,827     September 30, 2006


December 31, 2005Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


CarryingAmount


Amortization


Amount


Amount


Amortization


Amount(In thousands)Intangible assets with indefinite
    lives:Trademarks

$
179,310


$



$
179,310


$
179,310


$



$
179,310Intangible assets with finite
    lives:Customer-related


20,904



(9,762
)


11,142



19,929



(8,015
)


11,914Total

$
200,214


$
(9,762
)

$
190,452


$
199,239


$
(8,015
)

$
191,224     2007

$
2.4 million2008


2.4 million2009


2.4 million2010


2.4 million2011


0.6 million   5.
    Long-Term
    Debt  September 30, 2006


December 31, 2005Amount


Interest


Amount


InterestOutstanding


Rate


Outstanding


Rate(In thousands)$250 million senior notes
    maturing in August 2007

$
250,112



8.150
%

$
250,198



8.150
%$200 million senior notes
    maturing in May 2009


192,088



6.625



190,192



6.625$150 million senior notes
    maturing in October 2017


128,914



6.900



128,103



6.900Receivables-backed facility


166,510



5.680



189,168



4.600Other


572







110738,196







757,771Less current portion


(250,141
)






(28
)Total

$
488,055






$
757,743   Senior Notes
 -9-




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##### Table of Contents



Receivables-Backed Facility
  Letters of Credit
  6.
    Comprehensive
    Income (Loss)    Three Months


Nine MonthsEnded


EndedSeptember 30


September 302006


2005


2006


2005(In thousands)Net income

$
30,440


$
30,407


$
92,196


$
99,930Other comprehensive income (loss):Cumulative translation adjustment


176



(7
)


(105
)


143Transfer to parent










(31
)


Change in fair value of derivative
    instruments, net of tax


(429
)






7



Minimum pension liability
    adjustment, net of tax














(738
)(253
)


(7
)


(129
)


(595
)Comprehensive income

$
30,187


$
30,400


$
92,067


$
99,335   7.
    Employee
    Postretirement Benefits    Three Months


Nine MonthsEnded


EndedSeptember 30


September 302006


2005


2006


2005(In thousands)Components of net period cost:Service cost

$
252


$
238


$
756


$
714Interest cost


272



209



815



626Amortizations:Unrecognized net loss


247



64



740



193Net periodic benefit cost

$
771


$
511


$
2,311


$
1,533    -10-




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8.
    Facility
    Closing and Reorganization Costs          
    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
    September 30, 2006 was approximately $1.7 million. We
    are marketing these properties for sale.      Accrued








AccruedCharges at








Charges atDecember 31,


Charges





September 30,2005


(Reversals)


Payments


2006(In thousands)Cash charges:Workforce reduction costs

$
449


$
(139
)

$
(310
)

$
Shutdown costs






349



(349
)


Lease obligations and other


58



201



(221
)


38Total

$
507


$
411


$
(880
)

$
38   9.
    Commitments
    and Contingencies  Contingent Obligations Related to Divested
    Operations and/or
 -11-




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Guaranty of Dean Foods Companys Obligations Under Its
    Senior Credit Facility
    
    $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
 -12-




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Leases
  Litigation, Investigations and Audits
      10.
    Geographic
    Information and Major Customers  Geographic Information
  Significant Customers
  Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Form 10-Q,
 -13-




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Results
    of Operations
    Quarter Ended September 30


Nine Months Ended September 302006


2005


2006


2005Dollars


Percent


Dollars


Percent


Dollars


Percent


Dollars


Percent(Dollars in millions)Net sales

$
912.9



100.0
%

$
940.3



100.0
%

$
2,719.4



100.0
%

$
2,763.8



100.0
%Cost of sales


668.2



73.2



705.9



75.1



2,004.3



73.7



2,078.3



75.2Gross profit


244.7



26.8



234.4



24.9



715.1



26.3



685.5



24.8Operating costs and expenses:Selling and distribution


150.9



16.5



141.3



15.0



439.3



16.2



413.7



15.0General and administrative


28.9



3.2



30.8



3.3



88.5



3.3



88.6



3.2Amortization of intangibles


0.2







0.2







0.7







0.9



Facility closing and
    reorganization costs


0.1







0.4







0.4







2.5



0.1Total operating costs and expenses


180.1



19.7



172.7



18.3



528.9



19.5



505.7



18.3Operating income

$
64.6



7.1
%

$
61.7



6.6
%

$
186.2



6.8
%

$
179.8



6.5
%   Quarter
    Ended September 30, 2006 Compared to Quarter Ended
    September 30, 2005
  Net Sales
    Dollars


Percent(Dollars in millions)2005 Net sales

$
940.3Volume


5.4



0.6
%Pricing and product mix


(32.8
)


(3.5
)2006 Net sales

$
912.9



(2.9
)%     Quarter Ended September 30*2006


2005


% ChangeClass I raw skim milk mover(3)

$
6.95
(1)

$
8.24
(1)


(16
)%Class I butterfat mover(3)


1.24
(2)


1.73
(2)


(28
)Class II raw skim milk
    minimum(4)


6.86
(1)


7.85
(1)


(13
)Class II butterfat minimum(4)


1.32
(2)


1.84
(2)


(28
)     *
    
    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 -14-




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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
  Other (Income) Expense
  Income Taxes
  Nine
    Months Ended September 30, 2006 Compared to Nine Months
    Ended September 30, 2005
  Net Sales
    Dollars


Percent(Dollars in millions)2005 Net sales

$
2,763.8Volume


60.4



2.2
%Pricing and product mix


(104.8
)


(3.8
)2006 Net sales

$
2,719.4



(1.6
)%  -15-




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##### Table of Contents



Nine Months Ended September 30*2006


2005


% ChangeClass I raw skim milk mover(3)

$
7.36
(1)

$
8.67
(1)


(15
)%Class I butterfat mover(3)


1.32
(2)


1.75
(2)


(25
)Class II raw skim milk
    minimum(4)


7.30
(1)


7.60
(1)


(4
)Class II butterfat minimum(4)


1.31
(2)


1.74
(2)


(25
)     *
    
    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
  Other (Income) Expense
 -16-




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Income Taxes
  Item 4.
    Controls
    and Procedures  Quarterly
    Controls Evaluation and Related Certifications
    Rule 13a-14
  Definition
    of Disclosure Controls
    Limitations
    on the Effectiveness of Controls
    Scope of
    the Controls Evaluation
   -17-




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Conclusions
   -18-




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Part II 
    Other Information  Item 1.
    Legal
    Proceedings        Item 1A.
    Risk
    Factors  Form 10-Q Form 10-K
  Reorganization
    of Dean Foods Companys Dairy Group Segment Could
    Temporarily Adversely Affect Our Performance
   -19-




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The
    Consolidation of Retail Customers May Put Pressures on the
    Companys Operating Margins and Profitability
    Changes
    in Raw Milk and Other Input Costs Can Adversely Affect
    Us
      The
    Company May Experience Liabilities or Negative Effects on its
    Reputation as a Result of Product Recalls, Product Injuries or
    Other Legal Claims
    Changes
    in Laws, Regulations and Accounting Standards Could Have an
    Adverse Effect on Our Financial Results
   -20-




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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 200231
.2

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1

Certification of Chief Executive
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2

Certification of Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002  -21-




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SIGNATURES      
       -22-




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description31
.1

Certification of Chief Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1

Certification of Chief Executive
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2

Certification of Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002  -23-