##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


For Annual and Transition Reports Pursuant to
Sections 13 or 15(d)


of the Securities Exchange Act of 1934


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the Year Ended December 31, 2004                                                        
|          
|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


(Exact name of Registrant as specified in its charter)








|                                |                                |                  |                    
|------------------------------- | ------------------------------ | ---------------- | -------------------
|Delaware                        |                                | 75-2932967      
|(State or other jurisdiction of |                                | (I.R.S. Employer
|                                | incorporation or organization) |                  | 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)


Securities Registered Pursuant to Section 12(b) of the
Act:


None


Securities Registered Pursuant to Section 12(g) of the
Act:


None


þ o


þ


o þ












---










TABLE OF CONTENTS


|                                                  |            |                                                                                           |  |                                    |    |  |     | 
|------------------------------------------------- | ---------- | ----------------------------------------------------------------------------------------- |  | ---------------------------------- | -- |  | --- | 
|                                                  |            |                                                                                           |  | Page                               |   
|                                                  |            |                                                                                           |  |                                    |   
|                                                  |            |                                                                                           |  | PART I                             |    |  |     | 
|1.                                                |            | Business                                                                                  |  |                                    | 3  | 
|                                                  |            |                                                                                           |  | General                            |    |  | 3   | 
|                                                  |            |                                                                                           |  | Developments since January 1, 2004 |    |  | 6   | 
|2.                                                |            | Properties                                                                                |  |                                    | 9  | 
|                                                  |            |                                                                                           |  | PART II                            |    |  |     | 
|7.                                                |            | Managements Discussion and Analysis of Financial Condition
    and Results of Operations |  |                                    | 11 | 
|8.                                                |            | Consolidated Financial Statements                                                         |  |                                    | 16 | 
|9.                                                |            | Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure  |  |                                    | 17 | 
|9a.                                               |            | Controls and Procedures                                                                   |  |                                    | 17 | 
|                                                  |            |                                                                                           |  | PART III                           |    |  |     | 
|10.                                               |            | Directors and Executive Officers                                                          |  |                                    | 18 | 
|11.                                               |            | Executive Compensation                                                                    |  |                                    | 18 | 
|12.                                               |            | Security Ownership of Certain Beneficial Owners and Management                            |  |                                    | 18 | 
|13.                                               |            | Certain Relationships and Related Transactions                                            |  |                                    | 18 | 
|                                                  |            |                                                                                           |  | PART IV                            |    |  |     | 
|15.                                               |            | Exhibits and Financial Statement Schedule                                                 |  |                                    | 19 | 
|                                                  | Signatures |                                                                                           |  |                                    |    |  | S-1 | 
|Computation of Ratio of Earnings to Fixed Charges
|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     



2



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##### Table of Contents






PART I







|        |         
|------- | --------
|Item 1. | Business

Explanatory Note: As permitted by General
Instruction I(2)(d) to Form 10-K, in lieu of the
information required by Item 1 of Form 10-K, we are
providing only the information required by General
Instruction I(2)(d). For more information, this report
should be read in conjunction with the 2004 Annual Report on
Form 10-K of our parent, Dean Foods Company, as filed with
the Securities and Exchange Commission on March 16,
2005.


General




Segments




| |            
| | -----------
| | Dairy Group





|           |  |            |  |           
|---------- |  | ---------- |  | ----------
|(PI CHART) |  | (PI CHART) |  | (PI CHART)






|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes, among other things, regular milk, flavored milks,
    buttermilk, half-and-half, whipping cream, dairy coffee creamers
    and ice cream mix.            
|   
|(2) | Includes ice cream and ice cream novelties.                                                                                                                        
|   
|(3) | Includes yogurt, cottage cheese, sour cream and dairy-based dips.                                                                                                  
|   
|(4) | Includes fruit juice, fruit-flavored drinks and water.                                                                                                             
|   
|(5) | Includes, among other things, items for resale such as butter,
    cheese and eggs.                                                                                
|   
|(6) | The Dairy Groups largest customer is Wal-Mart (including
    its subsidiaries, such as Sams Club), which accounted for
    14.3% of the Dairy Groups 2004 sales.
|   
|(7) | Such as restaurants, hotels and other foodservice outlets.                                                                                                         

3



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##### Table of Contents





|                    |  |                     |  |                   |  |                     
|------------------- |  | ------------------- |  | ----------------- |  | --------------------
|                    |  |                     |  |                   |  | Southwest           
|Northeast Region(1) |  | Southeast Region(1) |  | Midwest Region(1) |  | Region(1)           
|                    |  |                     |  |                   |  |                     
|Chug®               |  | Barbers®           |  | Chug®             |  | Adohr Farms®        
|Deans®             |  | Chug®               |  | Deans®           |  | Alta Dena®          
|Fairmont®           |  | Deans®             |  | LAND OLAKES®     |  | Berkeley
    Farmstm
|Meadowbrook®        |  | Mayfield®           |  | (licensed brand)  |  | Chug®               
|Swiss Premium®®     |  | McArthur®           |  | Liberty®          |  | Creamlandtm         
|                    |  | Puritytm            |  | Maplehurst®       |  | Deans®             
|                    |  | Reiter®             |  | Verifine®         |  | Gandys®            
|                    |  | TG Lee®             |  |                   |  | Pricestm           
|                    |  |                     |  |                   |  | Swisstm             






|    |                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Dean Foods Companys Dairy Group segment operates in a
    generally decentralized manner organized by region. Our Dairy
    Group operations are disbursed among several of Dean Foods
    Companys Dairy Group regions.













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| |                      
| | ---------------------
| | Specialty Foods Group





|           |  |            |  |           
|---------- |  | ---------- |  | ----------
|(PI CHART) |  | (PI CHART) |  | (PI CHART)






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Approximately 75% of the Specialty Foods Groups pickle,
    relish and pepper products are sold under private labels, with
    the remaining 25% sold under our proprietary brands including
    Farmans®, Nalleys®, Peter
    Piper® and
    Steinfeldtm.
    Branded pickle products are sold to retailers. Private label
    products are sold to retailers, foodservice customers and in
    bulk to other food processors.                                                                           
|   
|(2) | Non-dairy powdered creamer is used as a coffee creamer and as an
    ingredient in baking, beverage mixes, gravies and sauces, and
    premium and low-fat powdered products. In 2004, Specialty Foods
    Group sold 14% of its non-dairy powdered creamer under our
    Cremora® brand, while the rest of the Specialty
    Foods Groups creamer products were sold under private
    labels to retailers, distributors and in bulk to other food
    companies for use as ingredients in their products.

5



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##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Aseptic products are sterilized, which allows storage for
    prolonged periods without refrigeration. Our Specialty Foods
    Group manufactures aseptic cheese sauces and puddings. Our
    cheese sauces and puddings are sold primarily under private
    labels to distributors. In 2004, our Specialty Foods Group also
    sold aseptic nutritional beverages in the meal supplement,
    weight loss/gain and sports categories, all of which were sold
    under customer brands to retailers and distributors. In the
    fourth quarter of 2004, we exited the nutritional beverage
    business due largely to significant declines in volume.
|   
|(4) | Includes shrimp, seafood, tartar, horseradish, chili, sweet and
    sour sauces and syrups sold to retail grocers in the eastern,
    midwestern and southern United States. These products are sold
    under the Bennetts®, Hoffman
    House® and Roddenberry®
    Northwoods® brand names.                                                                                                                                                                                                                                                                                                                                                           
|   
|(5) | Includes mass merchandisers, club stores, convenience stores and
    grocery stores. The Specialty Foods Groups largest
    customer is Wal-Mart (including its subsidiaries, such as
    Sams Club), which accounted for 10.1% of the Specialty
    Foods Groups 2004 sales.                                                                                                                                                                                                                                                                                                                                                                          









Developments Since January 1, 2004




| |                                           
| | ------------------------------------------
| | Tax-Free Spin-Off of Specialty Foods Group





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##### Table of Contents







| |             
| | ------------
| | Acquisitions



| |                   
| | ------------------
| | Ross Swiss Dairies







| |                                               
| | ----------------------------------------------
| | Facility Closing and Reorganization Activities









| |   |                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;                                                                                                                                                                                                                                       
|
| |  | 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.



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Employees




|                      |  |           |        |  |       |  |     |  
|--------------------- |  | --------- | ------ |  | ----- |  | --- | -
|                      |  | Number of |        |  | % of  | 
|                      |  | Employees |        |  | Total | 
|                      |  |           |        |  |       | 
|Dairy Group           |  |           | 9,550  |  |       |  | 85  | %
|Specialty Foods Group |  |           | 1,700  |  |       |  | 15  |  
|                      |  |           |        |  |       | 
|                      |  |           | 11,250 |  |       |  | 100 | %
|                      |  |           |        |  |       | 



Where You Can Get More Information






http://www.sec.gov.


www.deanfoods.com


www.deanfoods.com




| |                                 
| | --------------------------------
| | Dean Foods Company              
| | 2515 McKinney Avenue, Suite 1200
| | Dallas, Texas 75201             
| | (214) 303-3400                  
| | Attention: Investor Relations   

8



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|        |           
|------- | ----------
|Item 2. | Properties

Explanatory Note: As permitted by General Instruction I
to Form 10-K, in lieu of the information required by
Item 2 of Form 10-K, we are providing only the
information required by General Instruction I.




|          |  |            |    |  |                         |  |                                | 
|--------- |  | ---------- | -- |  | ----------------------- |  | ------------------------------ | 
|          |  | Number of  |    |  |                        
|Region    |  | Facilities |    |  | Locations of Facilities | 
|          |  |            |    |  |                         | 
|Northeast |  |            | 5  |  |                         |  |  Akron, Ohio                  | 
|          |  |            |    |  |                         |  |  Belleville, Pennsylvania     | 
|          |  |            |    |  |                         |  |  Erie, Pennsylvania           | 
|          |  |            |    |  |                         |  |  Lebanon, Pennsylvania        | 
|          |  |            |    |  |                         |  |  Sharpsville, Pennsylvania    | 
|Southeast |  |            | 9  |  |                         |  |  Birmingham, Alabama(2)       | 
|          |  |            |    |  |                         |  |  Miami, Florida               | 
|          |  |            |    |  |                         |  |  Orlando, Florida             | 
|          |  |            |    |  |                         |  |  Orange City, Florida         | 
|          |  |            |    |  |                         |  |  Braselton, Georgia           | 
|          |  |            |    |  |                         |  |  Louisville, Kentucky         | 
|          |  |            |    |  |                         |  |  Athens, Tennessee            | 
|          |  |            |    |  |                         |  |  Nashville, Tennessee         | 
|Midwest   |  |            | 12 |  |                         |  |  Belvidere, Illinois          | 
|          |  |            |    |  |                         |  |  Chemung, Illinois            | 
|          |  |            |    |  |                         |  |  Huntley, Illinois            | 
|          |  |            |    |  |                         |  |  Rockford, Illinois           | 
|          |  |            |    |  |                         |  |  Rochester, Indiana           | 
|          |  |            |    |  |                         |  |  Evart, Michigan              | 
|          |  |            |    |  |                         |  |  Thief River Falls, Minnesota | 
|          |  |            |    |  |                         |  |  Woodbury, Minnesota          | 
|          |  |            |    |  |                         |  |  Bismark, North Dakota        | 
|          |  |            |    |  |                         |  |  Springfield, Ohio            | 
|          |  |            |    |  |                         |  |  Sioux Falls, South Dakota    | 
|          |  |            |    |  |                         |  |  Sheboygan, Wisconsin         | 
|Southwest |  |            | 8  |  |                         |  |  Buena Park, California(2)    | 
|          |  |            |    |  |                         |  |  City of Industry, California | 
|          |  |            |    |  |                         |  |  Hayward, California          | 
|          |  |            |    |  |                         |  |  Albuquerque, New Mexico(2)   | 
|          |  |            |    |  |                         |  |  El Paso, Texas               | 
|          |  |            |    |  |                         |  |  Lubbock, Texas               | 



9



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|                         |  |            |    |  |                        |  |                          | 
|------------------------ |  | ---------- | -- |  | ---------------------- |  | ------------------------ | 
|                         |  | Number of  |    |  |                       
|                         |  | facilities |    |  | Location of facilities | 
|                         |  |            |    |  |                        | 
|Manufacturing Facilities |  |            | 10 |  |                        |  |  La Junta, Colorado     | 
|                         |  |            |    |  |                        |  |  New Hampton, Iowa      | 
|                         |  |            |    |  |                        |  |  Chicago, Illinois      | 
|                         |  |            |    |  |                        |  |  Dixon, Illinois        | 
|                         |  |            |    |  |                        |  |  Pecatonica, Illinois   | 
|                         |  |            |    |  |                        |  |  Plymouth, Indiana      | 
|                         |  |            |    |  |                        |  |  Wayland, Michigan      | 
|                         |  |            |    |  |                        |  |  Faison, North Carolina | 
|                         |  |            |    |  |                        |  |  Portland, Oregon       | 
|                         |  |            |    |  |                        |  |  Green Bay, Wisconsin   | 



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##### Table of Contents






PART II







|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Explanatory Note: As permitted by General
Instruction I(2)(a) to Form  10-K, in lieu of the
information required by Item 7, we are providing only the
information required by General Instruction I(2)(a).


Results of Operations




|                                   |                               |                                           |         |       |         |  |       |         |      |   |         |       |       |  |       |      |      | 
|---------------------------------- | ----------------------------- | ----------------------------------------- | ------- | ----- | ------- |  | ----- | ------- | ---- | - | ------- | ----- | ----- |  | ----- | ---- | ---- | 
|                                   |                               | Year Ended December 31                    |        
|                                   |                               |                                           |        
|                                   |                               | 2004                                      |         |       | 2003    | 
|                                   |                               |                                           |         |       |         | 
|                                   |                               | Dollars                                   |         |       | Percent |  |       | Dollars |      |   | Percent |      
|                                   |                               |                                           |         |       |         |  |       |         |      |   |         |      
|                                   |                               | (Dollars in millions)                     |        
|Net sales                          |                               | $                                         | 4,309.9 |       |         |  | 100.0 | %       |      | $ | 3,877.0 |       |       |  | 100.0 | %   
|Cost of sales                      |                               |                                           | 3,318.9 |       |         |  | 77.0  |         |      |   | 2,913.5 |       |       |  | 75.1  |     
|                                   |                               |                                           |         |       |         |  |       |         |      |   |         |      
|                                   | Gross profit                  |                                           |         | 991.0 |         |  |       | 23.0    |      |   |         | 963.5 |       |  |       | 24.9 |     
|                                   | Operating costs and expenses: |                                           |         |       |         |  |       |         |      |   |         |       |       |  |       |      |     
|                                   |                               | Selling and distribution                  |         |       | 570.3   |  |       |         | 13.2 |   |         |       | 515.6 |  |       |      | 13.3 | 
|                                   |                               | General and administrative                |         |       | 137.8   |  |       |         | 3.2  |   |         |       | 130.4 |  |       |      | 3.4  | 
|                                   |                               | Amortization of intangibles               |         |       | 2.7     |  |       |         | 0.1  |   |         |       | 3.0   |  |       |      | .1   | 
|                                   |                               | Facility closing and reorganization costs |         |       | 14.6    |  |       |         | 0.3  |   |         |       | 6.0   |  |       |      | .1   | 
|                                   |                               |                                           |         |       |         |  |       |         |      |   |         |      
|Total operating costs and expenses |                               |                                           | 725.4   |       |         |  | 16.8  |         |      |   | 655.0   |       |       |  | 16.9  |     
|                                   |                               |                                           |         |       |         |  |       |         |      |   |         |      
|Total operating income             |                               | $                                         | 265.6   |       |         |  | 6.2   | %       |      | $ | 308.5   |       |       |  | 8.0   | %   
|                                   |                               |                                           |         |       |         |  |       |         |      |   |         |      



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003  Consolidated Results

Net Sales


|                      |       |                       |         |             |      |   |             |            |  |   |            |       |  |  |      |      |  
|--------------------- | ----- | --------------------- | ------- | ----------- | ---- | - | ----------- | ---------- |  | - | ---------- | ----- |  |  | ---- | ---- | -
|                      |       | Net Sales             |        
|                      |       |                       |        
|                      |       |                       |         | $ Increase/ |      |   | % Increase/ |           
|                      |       | 2004                  |         |             | 2003 |   |             | (Decrease) |  |   | (Decrease) |      
|                      |       |                       |         |             |      |   |             |            |  |   |            |      
|                      |       | (Dollars in millions) |        
|Dairy Group           |       | $                     | 3,633.1 |             |      | $ | 3,192.8     |            |  | $ | 440.3      |       |  |  | 13.8 | %   
|Specialty Foods Group |       |                       | 676.8   |             |      |   | 684.2       |            |  |   | (7.4       | )     |  |  | (1.1 | )   
|                      |       |                       |         |             |      |   |             |            |  |   |            |      
|                      | Total |                       | $       | 4,309.9     |      |   | $           | 3,877.0    |  |   | $          | 432.9 |  |  |      | 11.2 | %
|                      |       |                       |         |             |      |   |             |            |  |   |            |      



|                      |       |                                   |       |                 |             |   |           |            |  |   |       |       | 
|--------------------- | ----- | --------------------------------- | ----- | --------------- | ----------- | - | --------- | ---------- |  | - | ----- | ----- | 
|                      |       | Change in Net Sales 2004 vs. 2003 |      
|                      |       |                                   |      
|                      |       |                                   |       | Pricing, Volume |             |   | Total     |           
|                      |       |                                   |       | and Product     |             |   | Increase/ |           
|                      |       | Acquisitions                      |       |                 | Mix Changes |   |           | (Decrease) | 
|                      |       |                                   |       |                 |             |   |           |            | 
|                      |       | (In millions)                     |      
|Dairy Group           |       | $                                 | 149.0 |                 |             | $ | 291.3     |            |  | $ | 440.3 |      
|Specialty Foods Group |       | $                                 | 6.7   |                 |             |   | (14.1     | )          |  |   | (7.4  | )    
|                      |       |                                   |       |                 |             |   |           |            | 
|                      | Total |                                   | $     | 155.7           |             |   | $         | 277.2      |  |   | $     | 432.9 | 
|                      |       |                                   |       |                 |             |   |           |            | 



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Cremora


Cost of Sales


Operating Costs and Expenses




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Acquisitions, which we estimate represented approximately
    $35.9 million of the increase in operating expenses.                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Increased distribution costs of approximately $27.4 million
    for 2004 as compared to last year.                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Net facility closing and reorganization costs that were
    approximately $8.6 million higher than 2003.                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Management fee charged to us by Dean Foods Company which was
    approximately $7.9 million higher than 2003. The management
    fee is based on budgeted annual expenses for Deans Food
    Companys corporate headquarters, which is then allocated
    among the segments of Dean Foods Company. The 2004 management
    fee was higher primarily as a result of $4.8 million in
    transaction-related costs incurred in 2004 for the spin-off of
    our Specialty Foods Group.

Operating Income


Other (Income) Expense


Income Taxes




| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003  Results by Segment





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| |              
| | -------------
| | Dairy Group 

|                             |  |                        |         |  |         |  |       |         |  |   |         |  |  |  |       |  
|---------------------------- |  | ---------------------- | ------- |  | ------- |  | ----- | ------- |  | - | ------- |  |  |  | ----- | -
|                             |  | Year Ended December 31 |        
|                             |  |                        |        
|                             |  | 2004                   |         |  | 2003    | 
|                             |  |                        |         |  |         | 
|                             |  | Dollars                |         |  | Percent |  |       | Dollars |  |   | Percent | 
|                             |  |                        |         |  |         |  |       |         |  |   |         | 
|                             |  | (Dollars in millions)  |        
|Net sales                    |  | $                      | 3,633.1 |  |         |  | 100.0 | %       |  | $ | 3,192.8 |  |  |  | 100.0 | %
|Cost of sales                |  |                        | 2,782.6 |  |         |  | 76.6  |         |  |   | 2,400.3 |  |  |  | 75.2  |  
|                             |  |                        |         |  |         |  |       |         |  |   |         | 
|Gross profit                 |  |                        | 850.5   |  |         |  | 23.4  |         |  |   | 792.5   |  |  |  | 24.8  |  
|Operating costs and expenses |  |                        | 587.0   |  |         |  | 16.1  |         |  |   | 533.5   |  |  |  | 16.7  |  
|                             |  |                        |         |  |         |  |       |         |  |   |         | 
|Total operating income       |  | $                      | 263.5   |  |         |  | 7.3   | %       |  | $ | 259.0   |  |  |  | 8.1   | %
|                             |  |                        |         |  |         |  |       |         |  |   |         | 



|               |                         |                       |         |       |         |  |      |      |  
|-------------- | ----------------------- | --------------------- | ------- | ----- | ------- |  | ---- | ---- | -
|               |                         | Dollars               |         |       | Percent | 
|               |                         |                       |         |       |         | 
|               |                         | (Dollars in millions) |        
|2003 Net sales |                         | $                     | 3,192.8 |       |         |  |      |     
|               | Acquisitions            |                       |         | 149.0 |         |  |      | 4.7  | %
|               | Volume                  |                       |         | (11.0 | )       |  |      | (0.3 | )
|               | Pricing and product mix |                       |         | 302.3 |         |  |      | 9.4  |  
|               |                         |                       |         |       |         | 
|2004 Net sales |                         | $                     | 3,633.1 |       |         |  | 13.8 | %   
|               |                         |                       |         |       |         | 



|                                  |  |                          |      |     |      |   |      |          |  |  |    |  
|--------------------------------- |  | ------------------------ | ---- | --- | ---- | - | ---- | -------- |  |  | -- | -
|                                  |  | Years Ended December 31* |     
|                                  |  |                          |     
|                                  |  | 2004                     |      |     | 2003 |   |      | % Change | 
|                                  |  |                          |      |     |      |   |      |          | 
|Class I raw skim milk mover(1)    |  | $                        | 8.44 | (2) |      | $ | 7.47 | (2)      |  |  | 13 | %
|Class I butterfat mover(1)        |  |                          | 1.95 | (3) |      |   | 1.19 | (3)      |  |  | 64 |  
|Class II raw skim milk minimum(4) |  |                          | 6.90 | (2) |      |   | 6.74 | (2)      |  |  | 2  |  
|Class II butterfat minimum(4)     |  |                          | 2.06 | (3) |      |   | 1.22 | (3)      |  |  | 69 |  






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | The prices noted in this table are not the prices that we
    actually pay. The minimum prices applicable at any given
    location for Class I raw skim milk or Class I
    butterfat are based on the Class I mover 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) | We process Class I raw skim milk and butterfat into fluid
    milk products.                                                                
|   
|(2) | Prices are per hundredweight.                                                                                                               
|   
|(3) | Prices are per pound.                                                                                                                       
|   
|(4) | We process Class II raw skim milk and butterfat into
    products such as cottage cheese, creams and creamers, ice cream
    and sour cream.



13



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##### Table of Contents











| |                        
| | -----------------------
| | Specialty Foods Group 

|                             |  |                        |       |  |         |  |       |         |  |   |         |  |  |  |       |  
|---------------------------- |  | ---------------------- | ----- |  | ------- |  | ----- | ------- |  | - | ------- |  |  |  | ----- | -
|                             |  | Year Ended December 31 |      
|                             |  |                        |      
|                             |  | 2004                   |       |  | 2003    | 
|                             |  |                        |       |  |         | 
|                             |  | Dollars                |       |  | Percent |  |       | Dollars |  |   | Percent | 
|                             |  |                        |       |  |         |  |       |         |  |   |         | 
|                             |  | (Dollars in millions)  |      
|Net sales                    |  | $                      | 676.8 |  |         |  | 100.0 | %       |  | $ | 684.2   |  |  |  | 100.0 | %
|Cost of sales                |  |                        | 536.7 |  |         |  | 79.3  |         |  |   | 514.9   |  |  |  | 75.3  |  
|                             |  |                        |       |  |         |  |       |         |  |   |         | 
|Gross profit                 |  |                        | 140.1 |  |         |  | 20.7  |         |  |   | 169.3   |  |  |  | 24.7  |  
|Operating costs and expenses |  |                        | 71.7  |  |         |  | 10.6  |         |  |   | 68.0    |  |  |  | 9.9   |  
|                             |  |                        |       |  |         |  |       |         |  |   |         | 
|Total operating income       |  | $                      | 68.4  |  |         |  | 10.1  | %       |  | $ | 101.3   |  |  |  | 14.8  | %
|                             |  |                        |       |  |         |  |       |         |  |   |         | 



|               |                         |                       |       |       |            |  |      |      |  
|-------------- | ----------------------- | --------------------- | ----- | ----- | ---------- |  | ---- | ---- | -
|               |                         | Dollars               |       |       | Percentage | 
|               |                         |                       |       |       |            | 
|               |                         | (Dollars in millions) |      
|2003 Net sales |                         | $                     | 684.2 |       |            |  |      |     
|               | Acquisitions            |                       |       | 6.7   |            |  |      | 1.0  | %
|               | Volume                  |                       |       | (13.3 | )          |  |      | (2.0 | )
|               | Pricing and product mix |                       |       | (0.8  | )          |  |      | (0.1 | )
|               |                         |                       |       |       |            | 
|2004 Net sales |                         | $                     | 676.8 |       |            |  | (1.1 | )%  
|               |                         |                       |       |       |            | 



14



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Cremora






15



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##### Table of Contents








|        |                                  
|------- | ---------------------------------
|Item 8. | Consolidated Financial Statements



|                                                                                                             |  |      |      | 
|------------------------------------------------------------------------------------------------------------ |  | ---- | ---- | 
|                                                                                                             |  | Page |     
|                                                                                                             |  |      |     
|Report of Independent Registered Public Accounting Firm                                                      |  |      | F-1  | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                             |  |      | F-2  | 
|Consolidated Statements of Income for the
    years ended December 31, 2004, 2003 and 2002                   |  |      | F-3  | 
|Consolidated Statements of
    Stockholders Equity for the years ended December 31,
    2004, 2003 and 2002 |  |      | F-4  | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2004, 2003 and 2002               |  |      | F-5  | 
|Notes to Consolidated Financial
    Statements:                                                              |  |      |      | 
|1. Summary of Significant Accounting
    Policies                                                            |  |      | F-6  | 
|2. Acquisitions and Divestitures                                                                             |  |      | F-9  | 
|3. Inventories                                                                                               |  |      | F-10 | 
|4. Property, Plant and Equipment                                                                             |  |      | F-10 | 
|5. Intangible Assets                                                                                         |  |      | F-11 | 
|6. Accounts Payable and Accrued
    Expenses                                                                 |  |      | F-12 | 
|7. Income Taxes                                                                                              |  |      | F-12 | 
|8. Long-Term Debt                                                                                            |  |      | F-14 | 
|9. Stockholders Equity                                                                                      |  |      | F-15 | 
|10. Other Comprehensive Income                                                                               |  |      | F-15 | 
|11. Employee Retirement and Profit
    Sharing Plans                                                         |  |      | F-15 | 
|12. Postretirement Benefits Other Than
    Pensions                                                          |  |      | F-19 | 
|13. Facility Closing and Reorganization
    Costs                                                            |  |      | F-21 | 
|14. Supplemental Cash Flow Information                                                                       |  |      | F-23 | 
|15. Commitments and Contingencies                                                                            |  |      | F-23 | 
|16. Fair Value of Financial Instruments                                                                      |  |      | F-25 | 
|17. Segment and Geographic Information and
    Major Customers                                               |  |      | F-25 | 
|18. Quarterly Results of Operations
    (unaudited)                                                          |  |      | F-27 | 
|19. Subsequent Events (unaudited)                                                                            |  |      | F-27 | 

16



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |                              
| | -----------------------------
| | /s/     DELOITTE & TOUCHE LLP





F-1



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##### Table of Contents



DEAN HOLDING COMPANY





CONSOLIDATED BALANCE SHEETS


|                                         |                                                                                                                             |                            |           |           |           |  |           |           |           | 
|---------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | --------- | --------- |  | --------- | --------- | --------- | 
|                                         |                                                                                                                             | December 31                |          
|                                         |                                                                                                                             |                            |          
|                                         |                                                                                                                             | 2004                       |           |           | 2003      | 
|                                         |                                                                                                                             |                            |           |           |           | 
|                                         |                                                                                                                             | (Dollars in thousands,     |          
|                                         |                                                                                                                             | except share data)         |          
|ASSETS                                  
|Current assets:                          |                                                                                                                             |                            |           |           |           |  |           |          
|                                         | Cash and cash equivalents                                                                                                   |                            | $         | 12,655    |           |  | $         | 23,963    |          
|                                         | Receivables, net of allowance for doubtful accounts of $9,630
    and $12,017                                               |                            |           | 294,188   |           |  |           | 269,792   |          
|                                         | Inventories                                                                                                                 |                            |           | 215,392   |           |  |           | 234,311   |          
|                                         | Deferred income taxes                                                                                                       |                            |           | 55,331    |           |  |           | 71,946    |          
|                                         | Prepaid expenses and other current assets                                                                                   |                            |           | 23,276    |           |  |           | 16,047    |          
|                                         |                                                                                                                             |                            |           |           |           | 
|                                         |                                                                                                                             | Total current assets       |           |           | 600,842   |  |           |           | 616,059   | 
|Property, plant and equipment            |                                                                                                                             |                            | 635,787   |           |           |  | 638,267   |          
|Goodwill                                 |                                                                                                                             |                            | 1,425,248 |           |           |  | 1,421,711 |          
|Identifiable intangible and other assets |                                                                                                                             |                            | 226,796   |           |           |  | 230,570   |          
|                                         |                                                                                                                             |                            |           |           |           | 
|                                         |                                                                                                                             | Total                      |           | $         | 2,888,673 |  |           | $         | 2,906,607 | 
|                                         |                                                                                                                             |                            |           |           |           | 
|                                        
|LIABILITIES AND STOCKHOLDERS EQUITY    
|Current liabilities:                     |                                                                                                                             |                            |           |           |           |  |           |          
|                                         | Accounts payable and accrued expenses                                                                                       |                            | $         | 344,721   |           |  | $         | 345,806   |          
|                                         | Income taxes payable                                                                                                        |                            |           | 4,897     |           |  |           | 37,475    |          
|                                         | Current portion of long-term debt                                                                                           |                            |           | 99,550    |           |  |           | 3,509     |          
|                                         |                                                                                                                             |                            |           |           |           | 
|                                         |                                                                                                                             | Total current liabilities  |           |           | 449,168   |  |           |           | 386,790   | 
|Long-term debt                           |                                                                                                                             |                            | 759,999   |           |           |  | 794,062   |          
|Deferred income taxes                    |                                                                                                                             |                            | 225,907   |           |           |  | 212,889   |          
|Other long-term liabilities              |                                                                                                                             |                            | 155,246   |           |           |  | 174,044   |          
|Commitments and contingencies (Note 15)  |                                                                                                                             |                            |           |           |           |  |           |          
|Stockholders equity:                    |                                                                                                                             |                            |           |           |           |  |           |          
|                                         | Common stock, 1,000 shares issued and outstanding at
    December 31, 2004 and 2003 with a par value of
    $0.01 per share |                            |           |          |           |  |           |          |          
|                                         | Additional paid-in capital                                                                                                  |                            |           | 1,391,603 |           |  |           | 1,369,392 |          
|                                         | Retained earnings                                                                                                           |                            |           | 441,889   |           |  |           | 310,529   |          
|                                         | Receivable from parent                                                                                                      |                            |           | (517,173  | )         |  |           | (330,651  | )        
|                                         | Accumulated other comprehensive income (loss)                                                                               |                            |           | (17,966   | )         |  |           | (10,448   | )        
|                                         |                                                                                                                             |                            |           |           |           | 
|                                         |                                                                                                                             | Total stockholders equity |           |           | 1,298,353 |  |           |           | 1,338,822 | 
|                                         |                                                                                                                             |                            |           |           |           | 
|                                         |                                                                                                                             | Total                      |           | $         | 2,888,673 |  |           | $         | 2,906,607 | 
|                                         |                                                                                                                             |                            |           |           |           | 



F-2



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##### Table of Contents



DEAN HOLDING COMPANY





CONSOLIDATED STATEMENTS OF INCOME


|                              |                                           |                                    |           |         |         |   |           |         |         |   |           |         |         | 
|----------------------------- | ----------------------------------------- | ---------------------------------- | --------- | ------- | ------- | - | --------- | ------- | ------- | - | --------- | ------- | ------- | 
|                              |                                           | Year Ended December 31             |          
|                              |                                           |                                    |          
|                              |                                           | 2004                               |           |         | 2003    |   |           | 2002    |        
|                              |                                           |                                    |           |         |         |   |           |         |        
|                              |                                           | (In thousands)                     |          
|Net sales                     |                                           | $                                  | 4,309,875 |         |         | $ | 3,877,038 |         |         | $ | 3,855,506 |        
|Cost of sales                 |                                           |                                    | 3,318,899 |         |         |   | 2,913,553 |         |         |   | 2,895,647 |        
|                              |                                           |                                    |           |         |         |   |           |         |        
|Gross profit                  |                                           |                                    | 990,976   |         |         |   | 963,485   |         |         |   | 959,859   |        
|Operating costs and expenses: |                                           |                                    |           |         |         |   |           |         |         |   |           |        
|                              | Selling and distribution                  |                                    |           | 570,317 |         |   |           | 515,626 |         |   |           | 525,466 |        
|                              | General and administrative                |                                    |           | 137,803 |         |   |           | 130,399 |         |   |           | 131,918 |        
|                              | Amortization of intangibles               |                                    |           | 2,700   |         |   |           | 3,040   |         |   |           | 5,367   |        
|                              | Facility closing and reorganization costs |                                    |           | 14,565  |         |   |           | 5,919   |         |   |           |        |        
|                              |                                           |                                    |           |         |         |   |           |         |        
|                              |                                           | Total operating costs and expenses |           |         | 725,385 |   |           |         | 654,984 |   |           |         | 662,751 | 
|                              |                                           |                                    |           |         |         |   |           |         |        
|Operating income              |                                           |                                    | 265,591   |         |         |   | 308,501   |         |         |   | 297,108   |        
|Other (income) expense:       |                                           |                                    |           |         |         |   |           |         |         |   |           |        
|                              | Interest expense                          |                                    |           | 55,074  |         |   |           | 55,183  |         |   |           | 56,287  |        
|                              | Other income, net                         |                                    |           | (1,984  | )       |   |           | (1,909  | )       |   |           | (727    | )      
|                              |                                           |                                    |           |         |         |   |           |         |        
|                              |                                           | Total other expense                |           |         | 53,090  |   |           |         | 53,274  |   |           |         | 55,560  | 
|                              |                                           |                                    |           |         |         |   |           |         |        
|Income before income taxes    |                                           |                                    | 212,501   |         |         |   | 255,227   |         |         |   | 241,548   |        
|Income taxes                  |                                           |                                    | 81,141    |         |         |   | 94,341    |         |         |   | 91,905    |        
|                              |                                           |                                    |           |         |         |   |           |         |        
|Net income                    |                                           | $                                  | 131,360   |         |         | $ | 160,886   |         |         | $ | 149,643   |        
|                              |                                           |                                    |           |         |         |   |           |         |        



F-3



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##### Table of Contents



DEAN HOLDING COMPANY





CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |   |        |   |           |          |        |   |   |         |        |  
|-------------------------- | ------------------------------------------ | ------------------------------------ | - | - | ---------- |  | - | -------- | - | ----- | ---------- | ------------- | - | ----------- | ------- | ------- | ------------- | - | -------- | ------------- | - | - | ------- | - | ------ | - | --------- | -------- | ------ | - | - | ------- | ------ | -
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            | Accumulated   |   |             |         |         |              
|                           |                                            |                                      |   |   |            |  |   |          |   | Other |            |               |   |             |        
|                           |                                            |                                      |   |   | Additional |  |   |          |   |       |            | Comprehensive |   |             | Total   |         |               |  
|                           |                                            | Common Stock                         |   |   | Paid-In    |  |   | Retained |   |       | Receivable |               |   | Income      |         |         | Stockholders |   |          | Comprehensive |  
|                           |                                            | Shares                               |   |   | Amount     |  |   | Capital  |   |       | Earnings   |               |   | from Parent |         |         | (Loss)        |   |          | Equity        |   |   | Income  |  
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  
|                           |                                            | (In thousands)                       |  
|Balance, January 1, 2002   |                                            |                                      | 1 |   |            |  |  |          |   | $     | 1,326,355  |               |   | $           |        |         |               | $ | (29,000  | )             |   | $ |        |   |        | $ | 1,297,355 |          |        |   |   |        
|                           | Net income                                 |                                      |   |  |            |  |   |         |   |       |            |              |   |             |         | 149,643 |               |   |          |              |   |   |         |  |        |   |           | 149,643  |        |   | $ | 149,643 |       
|                           | Receivable from parent activity            |                                      |   |  |            |  |   |         |   |       |            |              |   |             |         |        |               |   |          | (109,331      | ) |   |         |  |        |   |           | (109,331 | )      |   |   |        |       
|                           | Reclassification of stock option liability |                                      |   |  |            |  |   |         |   |       |            | 30,461        |   |             |         |        |               |   |          |              |   |   |         |  |        |   |           | 30,461   |        |   |   |        |       
|                           | Other comprehensive income (Note 10):      |                                      |   |  |            |  |   |         |   |       |            |               |   |             |         |        |               |   |          |              |   |   |         |  |        |   |           |          |        |   |   |         |       
|                           |                                            | Cumulative translation adjustment    |   |   |           |  |   |          |  |       |            |               |  |             |         |         |              |   |          |               |   |   |         |   | (75    | ) |           |          | (75    | ) |   |         | (75    | )
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  
|                           | Comprehensive income                       |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |   |        |   |           |          |        |   | $ | 149,568 |       
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  
|Balance, December 31, 2002 |                                            |                                      | 1 |   |            |  |  |          |   |       | 1,356,816  |               |   |             | 149,643 |         |               |   | (138,331 | )             |   |   | (75     | ) |        |   | 1,368,053 |          |        |   |   |        
|                           | Net income                                 |                                      |   |  |            |  |   |         |   |       |            |              |   |             |         | 160,886 |               |   |          |              |   |   |         |  |        |   |           | 160,886  |        |   | $ | 160,886 |       
|                           | Additional investment from parent          |                                      |   |  |            |  |   |         |   |       |            | 12,576        |   |             |         |        |               |   |          |              |   |   |         |  |        |   |           | 12,576   |        |   |   |        |       
|                           | Receivable from parent activity            |                                      |   |  |            |  |   |         |   |       |            |              |   |             |         |        |               |   |          | (192,320      | ) |   |         |   |        |   |           | (192,320 | )      |   |   |        |       
|                           | Other comprehensive income (Note 10):      |                                      |   |  |            |  |   |         |   |       |            |              |   |             |         |        |               |   |          |               |   |   |         |   |        |   |           |          |        |   |   |         |       
|                           |                                            | Cumulative translation adjustment    |   |   |           |  |   |          |  |       |            |               |  |             |         |         |              |   |          |               |  |   |         |   | (1,468 | ) |           |          | (1,468 | ) |   |         | (1,468 | )
|                           |                                            | Minimum pension liability adjustment |   |   |           |  |   |          |  |       |            |               |  |             |         |         |              |   |          |               |  |   |         |   | (8,905 | ) |           |          | (8,905 | ) |   |         | (8,905 | )
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  
|                           | Comprehensive income                       |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |   |        |   |           |          |        |   | $ | 150,513 |       
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  
|Balance, December 31, 2003 |                                            |                                      | 1 |   |            |  |  |          |   |       | 1,369,392  |               |   |             | 310,529 |         |               |   | (330,651 | )             |   |   | (10,448 | ) |        |   | 1,338,822 |          |        |   |   |        
|                           | Net income                                 |                                      |   |  |            |  |   |         |   |       |            |              |   |             |         | 131,360 |               |   |          |              |   |   |         |  |        |   |           | 131,360  |        |   | $ | 131,360 |       
|                           | Additional investment from parent          |                                      |   |  |            |  |   |         |   |       |            | 22,211        |   |             |         |         |               |   |          |              |   |   |         |  |        |   |           | 22,211   |        |   |   |        |       
|                           | Receivable from parent activity            |                                      |   |  |            |  |   |         |   |       |            |              |   |             |         |        |               |   |          | (186,522      | ) |   |         |  |        |   |           | (186,522 | )      |   |   |        |       
|                           | Other comprehensive income (Note 10):      |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |   |        |   |           |          |        |   |   |         |       
|                           |                                            | Cumulative translation adjustment    |   |   |           |  |   |          |  |       |            |               |  |             |         |         |              |   |          |               |  |   |         |   | 696    |   |           |          | 696    |   |   |         | 696    |  
|                           |                                            | Minimum pension liability adjustment |   |   |           |  |   |          |  |       |            |               |  |             |         |         |              |   |          |               |  |   |         |   | (8,214 | ) |           |          | (8,214 | ) |   |         | (8,214 | )
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  
|                           | Comprehensive income                       |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |   |        |   |           |          |        |   | $ | 123,842 |       
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  
|Balance, December 31, 2004 |                                            |                                      | 1 |   |            |  |  |          |   | $     | 1,391,603  |               |   | $           | 441,889 |         |               | $ | (517,173 | )             |   | $ | (17,966 | ) |        | $ | 1,298,353 |          |        |   |   |        
|                           |                                            |                                      |   |   |            |  |   |          |   |       |            |               |   |             |         |         |               |   |          |               |   |   |         |  



F-4



---



##### Table of Contents



DEAN HOLDING COMPANY





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |        |         |          |          |        |         |          |  
|------------------------------------------------ | ------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------- | ----------------------------------------- | ------ | ------- | -------- | -------- | ------ | ------- | -------- | -------- | ------ | ------- | -------- | -
|                                                 |                                                                                       | Year Ended December 31                                            |                                      
|                                                 |                                                                                       |                                                                   |                                      
|                                                 |                                                                                       | 2004                                                              |                                       |                                           | 2003   |         |          | 2002     |       
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|                                                 |                                                                                       | (In thousands)                                                    |                                      
|Cash flows from operating activities:            |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |        |         |          |         
|                                                 | Net income                                                                            |                                                                   | $                                     | 131,360                                   |        |         | $        | 160,886  |        |         | $        | 149,643  |       
|                                                 | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                   |                                       |                                           |        |         |          |          |        |         |          |          |       
|                                                 |                                                                                       | Depreciation and amortization                                     |                                       |                                           | 84,184 |         |          |          | 72,996 |         |          |          | 67,798 |        
|                                                 |                                                                                       | (Gain) loss on disposition of assets                              |                                       |                                           | (194   | )       |          |          | 120    |         |          |          |       |        
|                                                 |                                                                                       | Write-down of impaired assets                                     |                                       |                                           | 8,307  |         |          |          | 1,196  |         |          |          |       |        
|                                                 |                                                                                       | Deferred income taxes                                             |                                       |                                           | 37,363 |         |          |          | 66,783 |         |          |          | 62,079 |        
|                                                 |                                                                                       | Other                                                             |                                       |                                           | 983    |         |          |          | (3,113 | )       |          |          | 1,155  |        
|                                                 |                                                                                       | Changes in operating assets and liabilities, net of acquisitions: |                                       |                                           |        |         |          |          |        |         |          |          |        |        
|                                                 |                                                                                       |                                                                   | Receivables                           |                                           |        | (13,236 | )        |          |        | (22,764 | )        |          |        | 38,946  |         
|                                                 |                                                                                       |                                                                   | Inventories                           |                                           |        | 20,098  |          |          |        | (13,556 | )        |          |        | 7,670   |         
|                                                 |                                                                                       |                                                                   | Prepaid expenses and other assets     |                                           |        | 740     |          |          |        | 26,895  |          |          |        | 21,305  |         
|                                                 |                                                                                       |                                                                   | Accounts payable and accrued expenses |                                           |        | (44,378 | )        |          |        | (52,184 | )        |          |        | (94,546 | )       
|                                                 |                                                                                       |                                                                   | Income taxes payable                  |                                           |        | (16,790 | )        |          |        | (21,512 | )        |          |        | 14,160  |         
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|                                                 |                                                                                       |                                                                   |                                       | Net cash provided by operating activities |        |         | 208,437  |          |        |         | 215,747  |          |        |         | 268,210  |  
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|Cash flows from investing activities:            |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |        |         |          |         
|                                                 | Additions to property, plant and equipment                                            |                                                                   |                                       | (82,475                                   | )      |         |          | (95,122  | )      |         |          | (74,619  | )     
|                                                 | Cash out flows for acquisitions and investments                                       |                                                                   |                                       | (28,890                                   | )      |         |          | (13,763  | )      |         |          | (17,156  | )     
|                                                 | Proceeds from the sale of fixed assets                                                |                                                                   |                                       | 3,812                                     |        |         |          | 3,335    |        |         |          | 1,727    |       
|                                                 | Net proceeds from divestitures                                                        |                                                                   |                                       |                                          |        |         |          |         |        |         |          | 29,962   |       
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|                                                 |                                                                                       |                                                                   |                                       | Net cash used in investing activities     |        |         | (107,553 | )        |        |         | (105,550 | )        |        |         | (60,086  | )
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|Cash flows from financing activities:            |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |        |         |          |         
|                                                 | Proceeds from issuance of debt                                                        |                                                                   |                                       | 63,819                                    |        |         |          | 71,979   |        |         |          |         |       
|                                                 | Repayment of debt                                                                     |                                                                   |                                       | (11,700                                   | )      |         |          | (6,300   | )      |         |          | (86,552  | )     
|                                                 | Additional investment from parent                                                     |                                                                   |                                       | 22,211                                    |        |         |          | 12,576   |        |         |          |         |       
|                                                 | Distribution to parent                                                                |                                                                   |                                       | (186,522                                  | )      |         |          | (192,320 | )      |         |          | (109,661 | )     
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|                                                 |                                                                                       |                                                                   |                                       | Net cash used in financing activities     |        |         | (112,192 | )        |        |         | (114,065 | )        |        |         | (196,213 | )
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|Increase (decrease) in cash and cash equivalents |                                                                                       |                                                                   | (11,308                               | )                                         |        |         | (3,868   | )        |        |         | 11,911   |         
|Cash and cash equivalents, beginning of period   |                                                                                       |                                                                   | 23,963                                |                                           |        |         | 27,831   |          |        |         | 15,920   |         
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       
|Cash and cash equivalents, end of period         |                                                                                       | $                                                                 | 12,655                                |                                           |        | $       | 23,963   |          |        | $       | 27,831   |         
|                                                 |                                                                                       |                                                                   |                                       |                                           |        |         |          |          |       



F-5



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##### Table of Contents



DEAN HOLDING COMPANY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Years Ended December 31, 2004, 2003 and 2002







|   |                                           
|-- | ------------------------------------------
|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Our Business


Basis of Presentations




Use of Estimates


Cash Equivalents


Inventories


Property, Plant and Equipment


|                           |  |             |               | 
|-------------------------- |  | ----------- | ------------- | 
|Asset                      |  | Useful Life |              
|                           |  |             |              
|Buildings and improvements |  |             | 7 to 40 years | 
|Machinery and equipment    |  |             | 3 to 20 years | 



F-6



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Intangible and Other Assets


|                          |  |                                                      
|------------------------- |  | -----------------------------------------------------
|Asset                     |  | Useful Life                                          
|                          |  |                                                      
|Customer relationships    |  | Straight-line method over 5 to 15 years              
|Customer supply contracts |  | Straight-line method over the terms of the agreements
|Trademarks/trade names    |  | Straight-line method over 5 years                    
|Noncompetition agreements |  | Straight-line method over the terms of the agreements



Foreign Currency Translation


Sales Recognition and Accounts Receivable


Income Taxes




Advertising Expense


F-7



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Shipping and Handling Fees


Insurance Accruals


Facility Closing and Reorganization Costs


Comprehensive Income


Recently Adopted Accounting Pronouncements




Recently Issued Accounting Pronouncements


F-8



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Reclassifications







|   |                              
|-- | -----------------------------
|2. | ACQUISITIONS AND DIVESTITURES



| |        
| | -------
| | General







| |                  
| | -----------------
| | 2004 Acquisitions

Ross Swiss Dairies


Other






| |                  
| | -----------------
| | 2003 Acquisitions

Cremora Cremora®


F-9



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Cremora Cremora Cremora Cremora


Other






| |             
| | ------------
| | Divestitures








|   |            
|-- | -----------
|3. | INVENTORIES

|                           |       |                |         |         |      |   |         |         | 
|-------------------------- | ----- | -------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                           |       | December 31    |        
|                           |       |                |        
|                           |       | 2004           |         |         | 2003 |  
|                           |       |                |         |         |      |  
|                           |       | (In thousands) |        
|Raw materials and supplies |       | $              | 66,604  |         |      | $ | 71,331  |        
|Finished goods             |       |                | 148,788 |         |      |   | 162,980 |        
|                           |       |                |         |         |      |  
|                           | Total |                | $       | 215,392 |      |   | $       | 234,311 | 
|                           |       |                |         |         |      |  








|   |                              
|-- | -----------------------------
|4. | PROPERTY, PLANT AND EQUIPMENT

|                              |       |                |          |         |      |   |          |         | 
|----------------------------- | ----- | -------------- | -------- | ------- | ---- | - | -------- | ------- | 
|                              |       | December 31    |         
|                              |       |                |         
|                              |       | 2004           |          |         | 2003 |  
|                              |       |                |          |         |      |  
|                              |       | (In thousands) |         
|Land                          |       | $              | 50,584   |         |      | $ | 47,496   |        
|Buildings and improvements    |       |                | 287,015  |         |      |   | 257,272  |        
|Machinery and equipment       |       |                | 508,249  |         |      |   | 462,336  |        
|                              |       |                |          |         |      |  
|                              |       |                | 845,848  |         |      |   | 767,104  |        
|Less accumulated depreciation |       |                | (210,061 | )       |      |   | (128,837 | )      
|                              |       |                |          |         |      |  
|                              | Total |                | $        | 635,787 |      |   | $        | 638,267 | 
|                              |       |                |          |         |      |  



F-10



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







|   |                  
|-- | -----------------
|5. | INTANGIBLE ASSETS



|                                |  |                |           |           |             |   |         |       |  |   |           |  
|------------------------------- |  | -------------- | --------- | --------- | ----------- | - | ------- | ----- |  | - | --------- | -
|                                |  |                |           | Specialty |             |   |        
|                                |  | Dairy Group    |           |           | Foods Group |   |         | Total | 
|                                |  |                |           |           |             |   |         |       | 
|                                |  | (In thousands) |          
|Balance at December 31, 2002    |  | $              | 1,121,108 |           |             | $ | 304,290 |       |  | $ | 1,425,398 |  
|Purchase accounting adjustments |  |                | (12,238   | )         |             |   |        |       |  |   | (12,238   | )
|Acquisitions                    |  |                | 1,051     |           |             |   | 7,500   |       |  |   | 8,551     |  
|                                |  |                |           |           |             |   |         |       | 
|Balance at December 31, 2003    |  |                | 1,109,921 |           |             |   | 311,790 |       |  |   | 1,421,711 |  
|Purchase accounting adjustments |  |                | (15,295   | )         |             |   | (5,317  | )     |  |   | (20,612   | )
|Acquisitions                    |  |                | 24,149    |           |             |   |        |       |  |   | 24,149    |  
|                                |  |                |           |           |             |   |         |       | 
|Balance at December 31, 2004    |  | $              | 1,118,775 |           |             | $ | 306,473 |       |  | $ | 1,425,248 |  
|                                |  |                |           |           |             |   |         |       | 



|                                         |                         |                |   |         |              |  |     |          |   |       |          |         |  |              |     |         |          |  |   |        |   |  |   |         | 
|---------------------------------------- | ----------------------- | -------------- | - | ------- | ------------ |  | --- | -------- | - | ----- | -------- | ------- |  | ------------ | --- | ------- | -------- |  | - | ------ | - |  | - | ------- | 
|                                         |                         | December 31    |  
|                                         |                         |                |  
|                                         |                         | 2004           |   |         | 2003         | 
|                                         |                         |                |   |         |              | 
|                                         |                         | Gross          |   |         |              |  | Net |          |   | Gross |          |         |  |              | Net |        
|                                         |                         | Carrying       |   |         | Accumulated  |  |     | Carrying |   |       | Carrying |         |  | Accumulated  |     |         | Carrying | 
|                                         |                         | Amount         |   |         | Amortization |  |     | Amount   |   |       | Amount   |         |  | Amortization |     |         | Amount   | 
|                                         |                         |                |   |         |              |  |     |          |   |       |          |         |  |              |     |         |          | 
|                                         |                         | (In thousands) |  
|Intangible assets with indefinite lives: |                         |                |   |         |              |  |     |          |   |       |          |         |  |              |     |         |          |  |   |        |   |  |   |        
|                                         | Trademarks              |                | $ | 190,010 |              |  | $   |         |   |       | $        | 190,010 |  |              | $   | 190,010 |          |  | $ |       |   |  | $ | 190,010 | 
|Intangible assets with finite lives:     |                         |                |   |         |              |  |     |          |   |       |          |         |  |              |     |         |          |  |   |        |   |  |   |        
|                                         | Customer-related        |                |   | 31,764  |              |  |     | (9,932   | ) |       |          | 21,832  |  |              |     | 28,455  |          |  | $ | (6,514 | ) |  |   | 21,941  | 
|                                         |                         |                |   |         |              |  |     |          |   |       |          |         |  |              |     |         |          | 
|                                         | Total other intangibles |                | $ | 221,774 |              |  | $   | (9,932   | ) |       | $        | 211,842 |  |              | $   | 218,465 |          |  | $ | (6,514 | ) |  | $ | 211,951 | 
|                                         |                         |                |   |         |              |  |     |          |   |       |          |         |  |              |     |         |          | 



|     |  |   |             | 
|---- |  | - | ----------- | 
|2005 |  | $ | 3.7 million | 
|2006 |  |   | 3.6 million | 
|2007 |  |   | 3.5 million | 
|2008 |  |   | 3.5 million | 
|2009 |  |   | 3.4 million | 





F-11



---



##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)













|   |                                      
|-- | -------------------------------------
|6. | ACCOUNTS PAYABLE AND ACCRUED EXPENSES

|                                                                      |       |                |         |         |      |   |         |         | 
|--------------------------------------------------------------------- | ----- | -------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                                                      |       | December 31    |        
|                                                                      |       |                |        
|                                                                      |       | 2004           |         |         | 2003 |  
|                                                                      |       |                |         |         |      |  
|                                                                      |       | (In thousands) |        
|Accounts payable                                                      |       | $              | 197,555 |         |      | $ | 180,362 |        
|Payroll and benefits                                                  |       |                | 60,948  |         |      |   | 69,791  |        
|Health insurance, workers compensation and other insurance
    costs |       |                | 16,842  |         |      |   | 14,209  |        
|Other accrued liabilities                                             |       |                | 69,376  |         |      |   | 81,444  |        
|                                                                      |       |                |         |         |      |  
|                                                                      | Total |                | $       | 344,721 |      |   | $       | 345,806 | 
|                                                                      |       |                |         |         |      |  






|   |             
|-- | ------------
|7. | INCOME TAXES



|                       |                   |                        |        |        |        |  |        |        |        |  |        |        |        | 
|---------------------- | ----------------- | ---------------------- | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ------ | ------ | 
|                       |                   | Year Ended December 31 |       
|                       |                   |                        |       
|                       |                   | 2004                   |        |        | 2003   |  |        | 2002   |       
|                       |                   |                        |        |        |        |  |        |        |       
|                       |                   | (In thousands)         |       
|Current taxes payable: |                   |                        |        |        |        |  |        |        |        |  |        |       
|                       | Federal           |                        | $      | 34,510 |        |  | $      | 20,898 |        |  | $      | 27,400 |       
|                       | State             |                        |        | 6,487  |        |  |        | 6,252  |        |  |        | 5,981  |       
|                       | Foreign and other |                        |        | 649    |        |  |        | 408    |        |  |        | 205    |       
|Deferred income taxes  |                   |                        | 39,495 |        |        |  | 66,783 |        |        |  | 58,319 |       
|                       |                   |                        |        |        |        |  |        |        |       
|                       |                   | Total                  |        | $      | 81,141 |  |        | $      | 94,341 |  |        | $      | 91,905 | 
|                       |                   |                        |        |        |        |  |        |        |       



|                               |       |                        |        |        |      |   |        |        |  |   |        |        | 
|------------------------------ | ----- | ---------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                               |       | Year Ended December 31 |       
|                               |       |                        |       
|                               |       | 2004                   |        |        | 2003 |   |        | 2002   | 
|                               |       |                        |        |        |      |   |        |        | 
|                               |       | (In thousands)         |       
|Tax expense at statutory rates |       | $                      | 74,375 |        |      | $ | 89,329 |        |  | $ | 84,558 |       
|State income taxes             |       |                        | 6,441  |        |      |   | 7,172  |        |  |   | 7,379  |       
|Other                          |       |                        | 325    |        |      |   | (2,160 | )      |  |   | (32    | )     
|                               |       |                        |        |        |      |   |        |        | 
|                               | Total |                        | $      | 81,141 |      |   | $      | 94,341 |  |   | $      | 91,905 | 
|                               |       |                        |        |        |      |   |        |        | 

F-12



---



##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |                                   |                                   |        |          |          |   |        |          |          |  
|-------------------------------- | --------------------------------- | --------------------------------- | ------ | -------- | -------- | - | ------ | -------- | -------- | -
|                                 |                                   | December 31                       |       
|                                 |                                   |                                   |       
|                                 |                                   | 2004                              |        |          | 2003     |  
|                                 |                                   |                                   |        |          |          |  
|                                 |                                   | (In thousands)                    |       
|Deferred income tax assets:      |                                   |                                   |        |          |          |   |        |         
|                                 | Net operating loss carry-forwards |                                   | $      | 4,416    |          |   | $      | 4,279    |         
|                                 | Asset valuation reserves          |                                   |        | 4,103    |          |   |        | 4,907    |         
|                                 | Accrued liabilities               |                                   |        | 72,158   |          |   |        | 90,140   |         
|                                 | State and foreign credits         |                                   |        | 3,238    |          |   |        | 3,177    |         
|                                 | Other                             |                                   |        | (3,359   | )        |   |        | (3,716   | )       
|                                 | Valuation allowances              |                                   |        | (3,363   | )        |   |        | (3,100   | )       
|                                 |                                   |                                   |        |          |          |  
|                                 |                                   |                                   | 77,193 |          |          |   | 95,687 |         
|Deferred income tax liabilities: |                                   |                                   |        |          |          |   |        |         
|                                 | Depreciation and amortization     |                                   |        | (247,769 | )        |   |        | (236,630 | )       
|                                 |                                   |                                   |        |          |          |  
|                                 |                                   | Net deferred income tax liability |        | $        | (170,576 | ) |        | $        | (140,943 | )
|                                 |                                   |                                   |        |          |          |  



|                       |       |                |          |         |      |   |          |          |  
|---------------------- | ----- | -------------- | -------- | ------- | ---- | - | -------- | -------- | -
|                       |       | December 31    |         
|                       |       |                |         
|                       |       | 2004           |          |         | 2003 |  
|                       |       |                |          |         |      |  
|                       |       | (In thousands) |         
|Current assets         |       | $              | 55,331   |         |      | $ | 71,946   |         
|Noncurrent liabilities |       |                | (225,907 | )       |      |   | (212,889 | )       
|                       |       |                |          |         |      |  
|                       | Total |                | $        | 170,576 |      |   | $        | (140,943 | )
|                       |       |                |          |         |      |  





F-13



---



##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







|   |               
|-- | --------------
|8. | LONG-TERM DEBT

|                                           |       |                        |         |         |          |  |       |             |  |   |          |         |  |  |           |   | 
|------------------------------------------ | ----- | ---------------------- | ------- | ------- | -------- |  | ----- | ----------- |  | - | -------- | ------- |  |  | --------- | - | 
|                                           |       | December 31            |        
|                                           |       |                        |        
|                                           |       | 2004                   |         |         | 2003     | 
|                                           |       |                        |         |         |          | 
|                                           |       | Amount                 |         |         | Interest |  |       | Amount      |  |   | Interest |        
|                                           |       | Outstanding            |         |         | Rate     |  |       | Outstanding |  |   | Rate     |        
|                                           |       |                        |         |         |          |  |       |             |  |   |          |        
|                                           |       | (Dollars in thousands) |        
|$250 million senior notes maturing in 2007 |       | $                      | 250,304 |         |          |  | 8.150 | %           |  | $ | 250,402  |         |  |  | 8.150     | %
|$200 million senior notes maturing in 2009 |       |                        | 187,982 |         |          |  | 6.625 |             |  |   | 186,070  |         |  |  | 6.625     |  
|$150 million senior notes maturing in 2017 |       |                        | 127,102 |         |          |  | 6.900 |             |  |   | 126,185  |         |  |  | 6.900     |  
|$100 million senior notes maturing in 2005 |       |                        | 99,308  |         |          |  | 6.750 |             |  |   | 98,006   |         |  |  | 6.750     |  
|Receivables-backed facility                |       |                        | 189,185 |         |          |  | 2.830 |             |  |   | 125,174  |         |  |  | 1.838     |  
|Industrial development revenue bonds       |       |                        |        |         |          |  |       |             |  |   | 11,700   |         |  |  | 1.35-1.40 |  
|Other                                      |       |                        | 5,668   |         |          |  |       |             |  |   | 34       |         |  |  |           |  
|                                           |       |                        |         |         |          |  |       |             |  |   |          |        
|                                           |       |                        | 859,549 |         |          |  |       |             |  |   | 797,571  |         |  |  |           |  
|Less current portion                       |       |                        | (99,550 | )       |          |  |       |             |  |   | (3,509   | )       |  |  |           |  
|                                           |       |                        |         |         |          |  |       |             |  |   |          |        
|                                           | Total |                        | $       | 759,999 |          |  |       |             |  |   | $        | 794,062 |  |  |           |   | 
|                                           |       |                        |         |         |          |  |       |             |  |   |          |        



|           |                                |   |         |         |  
|---------- | ------------------------------ | - | ------- | ------- | -
|2005       |                                | $ | 100,241 |        
|2006       |                                |   | 251     |        
|2007       |                                |   | 439,436 |        
|2008       |                                |   | 189     |        
|2009       |                                |   | 200,191 |        
|Thereafter |                                |   | 154,545 |        
|           |                                |   |        
|           | Subtotal                       |   |         | 894,853 |  
|           | Less discounts on senior notes |   |         | (35,304 | )
|           |                                |   |        
|           | Total outstanding debt         |   | $       | 859,549 |  
|           |                                |   |        

Senior Notes


Receivables-Backed Facility


F-14



---



##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Industrial Development Revenue Bonds


Capital Lease Obligations and Other


Letters of Credit







|   |                     
|-- | --------------------
|9. | STOCKHOLDERS EQUITY








|    |                           
|--- | --------------------------
|10. | OTHER COMPREHENSIVE INCOME



|                                                         |  |                |         |     |           |   |        |          |  |   |         |  
|-------------------------------------------------------- |  | -------------- | ------- | --- | --------- | - | ------ | -------- |  | - | ------- | -
|                                                         |  |                |         | Tax |           |   |       
|                                                         |  | Pre-Tax        |         |     | Benefit   |   |        |         
|                                                         |  | Loss           |         |     | (Expense) |   |        | Net Loss | 
|                                                         |  |                |         |     |           |   |        |          | 
|                                                         |  | (In thousands) |        
|Accumulated other comprehensive income January 1, 2003   |  | $              | (115    | )   |           | $ | 40     |          |  | $ | (75     | )
|Cumulative translation adjustment                        |  |                | (1,428  | )   |           |   | (40    | )        |  |   | (1,468  | )
|Minimum pension liability adjustment                     |  |                | (14,363 | )   |           |   | 5,458  |          |  |   | (8,905  | )
|                                                         |  |                |         |     |           |   |        |          | 
|Accumulated other comprehensive income December 31, 2003 |  |                | (15,906 | )   |           |   | 5,458  |          |  |   | (10,448 | )
|Cumulative translation adjustment                        |  |                | 696     |     |           |   |       |          |  |   | 696     |  
|Minimum pension liability adjustment                     |  |                | (13,247 | )   |           |   | 5,033  |          |  |   | (8,214  | )
|                                                         |  |                |         |     |           |   |        |          | 
|Accumulated other comprehensive income December 31, 2004 |  | $              | (28,457 | )   |           | $ | 10,491 |          |  | $ | (17,966 | )
|                                                         |  |                |         |     |           |   |        |          | 






|    |                                             
|--- | --------------------------------------------
|11. | EMPLOYEE RETIREMENT AND PROFIT SHARING PLANS



F-15



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                               |       |                        |        |        |      |   |        |        |  |   |       |        | 
|---------------------------------------------- | ----- | ---------------------- | ------ | ------ | ---- | - | ------ | ------ |  | - | ----- | ------ | 
|                                               |       | Year Ended December 31 |       
|                                               |       |                        |       
|                                               |       | 2004                   |        |        | 2003 |   |        | 2002   | 
|                                               |       |                        |        |        |      |   |        |        | 
|                                               |       | (In thousands)         |       
|Defined benefit plans                          |       | $                      | 6,380  |        |      | $ | 9,298  |        |  | $ | 7,006 |       
|Defined contribution plans                     |       |                        | 8,198  |        |      |   | 7,241  |        |  |   | 4,829 |       
|Multi-employer pension and certain union plans |       |                        | 12,752 |        |      |   | 13,651 |        |  |   | 7,373 |       
|                                               |       |                        |        |        |      |   |        |        | 
|                                               | Total |                        | $      | 27,330 |      |   | $      | 30,190 |  |   | $     | 19,208 | 
|                                               |       |                        |        |        |      |   |        |        | 

Defined Benefit Plans




F-16



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                          |                                 |                |         |         |      |   |         |         |  
|------------------------------------------------------------------------- | ------------------------------- | -------------- | ------- | ------- | ---- | - | ------- | ------- | -
|                                                                          |                                 | December 31    |        
|                                                                          |                                 |                |        
|                                                                          |                                 | 2004           |         |         | 2003 |  
|                                                                          |                                 |                |         |         |      |  
|                                                                          |                                 | (In thousands) |        
|Change in benefit obligation                                              |                                 |                |         |         |      |   |         |        
|Benefit obligation at beginning of year                                   |                                 | $              | 172,711 |         |      | $ | 159,800 |        
|                                                                          | Service cost                    |                |         | 703     |      |   |         | 1,004   |  
|                                                                          | Interest cost                   |                |         | 11,164  |      |   |         | 11,085  |  
|                                                                          | Plan amendments                 |                |         |        |      |   |         | 9,528   |  
|                                                                          | Actuarial loss                  |                |         | 20,063  |      |   |         | 12,594  |  
|                                                                          | Benefits paid                   |                |         | (20,688 | )    |   |         | (21,300 | )
|                                                                          |                                 |                |         |         |      |  
|Benefit obligation at end of year                                         |                                 |                | 183,953 |         |      |   | 172,711 |        
|                                                                          |                                 |                |         |         |      |  
|Change in plan assets                                                     |                                 |                |         |         |      |   |         |        
|Fair value of plan assets at beginning of year                            |                                 |                | 73,548  |         |      |   | 58,707  |        
|                                                                          | Actual return on plan assets    |                |         | 7,522   |      |   |         | 12,097  |  
|                                                                          | Employer contribution           |                |         | 34,891  |      |   |         | 24,044  |  
|                                                                          | Benefits paid                   |                |         | (20,688 | )    |   |         | (21,300 | )
|                                                                          |                                 |                |         |         |      |  
|Fair value of plan assets at end of year                                  |                                 |                | 95,273  |         |      |   | 73,548  |        
|                                                                          |                                 |                |         |         |      |  
|Funded status                                                             |                                 |                | (88,680 | )       |      |   | (99,163 | )      
|                                                                          | Unrecognized prior service cost |                |         | 8,524   |      |   |         | 9,026   |  
|                                                                          | Unrecognized net loss           |                |         | 34,593  |      |   |         | 16,062  |  
|                                                                          |                                 |                |         |         |      |  
|Net amount recognized                                                     |                                 | $              | (45,563 | )       |      | $ | (74,075 | )      
|                                                                          |                                 |                |         |         |      |  
|Amounts recognized in the statement of financial position
    consist of: |                                 |                |         |         |      |   |         |        
|Prepaid benefit cost                                                      |                                 |                | 8,525   |         |      |   | 9,026   |        
|Accrued benefit liability                                                 |                                 |                | (81,698 | )       |      |   | (97,464 | )      
|Accumulated other comprehensive income                                    |                                 |                | 27,610  |         |      |   | 14,363  |        
|                                                                          |                                 |                |         |         |      |  
|Net amount recognized                                                     |                                 | $              | (45,563 | )       |      | $ | (74,075 | )      
|                                                                          |                                 |                |         |         |      |  



|                               |  |             |       |      |  |               
|------------------------------ |  | ----------- | ----- | ---- |  | --------------
|                               |  | December 31
|                               |  |            
|                               |  | 2004        |       | 2003
|                               |  |             |       |     
|Discount rate                  |  |             | 5.75% |      |  | 6.00% to 6.50%
|Expected return on plan assets |  |             | 8.50% |      |  | 8.50%         
|Rate of compensation increase  |  |             | 4.00% |      |  | 4.00%         

F-17



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |  |                        |              |   |      |  |      |      |  |  |         |  
|------------------------------ |  | ---------------------- | ------------ | - | ---- |  | ---- | ---- |  |  | ------- | -
|                               |  | Year Ended December 31 |             
|                               |  |                        |             
|                               |  | 2004                   |              |   | 2003 |  |      | 2002 | 
|                               |  |                        |              |   |      |  |      |      | 
|Discount rate                  |  |                        | 6.00 to 6.50 | % |      |  | 6.75 | %    |  |  | 6.75    | %
|Expected return on plan assets |  |                        | 8.50         |   |      |  | 8.50 | %    |  |  | 9.00    | %
|Rate of compensation increase  |  |                        | 4.00         |   |      |  | 4.00 | %    |  |  | 0- 5.00 | %

|                                         |                                |                |       |        |      |   |       |        |   |   |       |        |  
|---------------------------------------- | ------------------------------ | -------------- | ----- | ------ | ---- | - | ----- | ------ | - | - | ----- | ------ | -
|                                         |                                | December 31    |      
|                                         |                                |                |      
|                                         |                                | 2004           |       |        | 2003 |   |       | 2002   |  
|                                         |                                |                |       |        |      |   |       |        |  
|                                         |                                | (In thousands) |      
|Components of net periodic benefit cost: |                                |                |       |        |      |   |       |        |   |   |       |       
|                                         | Service cost                   |                | $     | 704    |      |   | $     | 1,004  |   |   | $     |       |  
|                                         | Interest cost                  |                |       | 11,164 |      |   |       | 11,085 |   |   |       | 12,262 |  
|                                         | Expected return on plan assets |                |       | (7,157 | )    |   |       | (5,021 | ) |   |       | (8,287 | )
|Amortizations:                           |                                |                |       |        |      |   |       |        |   |   |       |       
|                                         | Prior service cost             |                |       | 501    |      |   |       | 501    |   |   |       |       |  
|                                         | Unrecognized net loss          |                |       | 268    |      |   |       | 216    |   |   |       |       |  
|Effect of settlement                     |                                |                | 900   |        |      |   | 1,513 |        |   |   | 3,031 |       
|                                         |                                |                |       |        |      |   |       |        |  
|Net periodic benefit cost                |                                | $              | 6,380 |        |      | $ | 9,298 |        |   | $ | 7,006 |       
|                                         |                                |                |       |        |      |   |       |        |  









|                                           |  |                   |     |   |                   |  |     |  
|------------------------------------------ |  | ----------------- | --- | - | ----------------- |  | --- | -
|Asset Category                             |  | December 31, 2004 |     |   | December 31, 2003 | 
|                                           |  |                   |     |   |                   | 
|Equity securities and limited partnerships |  |                   | 74  | % |                   |  | 66  | %
|Fixed income securities                    |  |                   | 25  |   |                   |  | 9   |  
|Cash                                       |  |                   | 1   |   |                   |  | 25  |  
|                                           |  |                   |     |   |                   | 
|Total                                      |  |                   | 100 | % |                   |  | 100 | %
|                                           |  |                   |     |   |                   | 

F-18



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                |  |   |              | 
|--------------- |  | - | ------------ | 
|2005            |  | $ | 2.6 million  | 
|2006            |  |   | 2.6 million  | 
|2007            |  |   | 2.5 million  | 
|2008            |  |   | 2.5 million  | 
|2009            |  |   | 2.4 million  | 
|Next five years |  |   | 11.1 million | 

Defined Contribution Plans


Multi-Employer Pension and Certain Union
Plans







|    |                                            
|--- | -------------------------------------------
|12. | POSTRETIREMENT BENEFITS OTHER THAN PENSIONS



F-19



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                         |                       |                |         |        |      |   |         |        |  
|---------------------------------------- | --------------------- | -------------- | ------- | ------ | ---- | - | ------- | ------ | -
|                                         |                       | December 31    |        
|                                         |                       |                |        
|                                         |                       | 2004           |         |        | 2003 |  
|                                         |                       |                |         |        |      |  
|                                         |                       | (In thousands) |        
|Change in benefit obligation:            |                       |                |         |        |      |   |         |       
|Benefit obligation at beginning of year  |                       | $              | 15,369  |        |      | $ | 12,322  |       
|                                         | Service cost          |                |         | 866    |      |   |         | 978    |  
|                                         | Interest cost         |                |         | 937    |      |   |         | 754    |  
|                                         | Actuarial loss        |                |         | 1,926  |      |   |         | 3,162  |  
|                                         | Benefits paid         |                |         | (2,108 | )    |   |         | (1,847 | )
|                                         |                       |                |         |        |      |  
|Benefit obligation at end of year        |                       |                | 16,990  |        |      |   | 15,369  |       
|Fair value of plan assets at end of year |                       |                |        |        |      |   |        |       
|                                         |                       |                |         |        |      |  
|Funded status                            |                       |                | (16,990 | )      |      |   | (15,369 | )     
|                                         | Unrecognized net loss |                |         | 6,898  |      |   |         | 5,235  |  
|                                         |                       |                |         |        |      |  
|Net amount recognized                    |                       | $              | (10,092 | )      |      | $ | (10,134 | )     
|                                         |                       |                |         |        |      |  



|                       |                                   |             |      |       |      |  |                |        | 
|---------------------- | --------------------------------- | ----------- | ---- | ----- | ---- |  | -------------- | ------ | 
|                       |                                   | December 31 |     
|                       |                                   |             |     
|                       |                                   | 2004        |      |       | 2003 | 
|                       |                                   |             |      |       |      | 
|Health care inflation: |                                   |             |      |       |      |  |                |       
|                       | Initial rate                      |             |      | 10.00 | %    |  |                | 12.00% | 
|                       | Ultimate rate                     |             |      | 5.00  | %    |  |                | 5.00%  | 
|                       | Year of ultimate rate achievement |             |      | 2009  |      |  |                | 2009   | 
|Discount rate          |                                   |             | 5.75 | %     |      |  | 6.00% to 6.50% |       



|                                         |                           |                |   |       |      |  |   |       |  |  |   |       | 
|---------------------------------------- | ------------------------- | -------------- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                                         |                           | December 31    |  
|                                         |                           |                |  
|                                         |                           | 2004           |   |       | 2003 |  |   | 2002  | 
|                                         |                           |                |   |       |      |  |   |       | 
|                                         |                           | (In thousands) |  
|Components of net periodic benefit cost: |                           |                |   |       |      |  |   |       |  |  |   |      
|                                         | Service and interest cost |                | $ | 1,803 |      |  | $ | 1,733 |  |  | $ | 1,510 | 
|Amortizations:                           |                           |                |   |       |      |  |   |       |  |  |   |      
|                                         | Unrecognized net gain     |                |   | 263   |      |  |   | 83    |  |  |   |      | 
|                                         |                           |                |   |       |      |  |   |       | 
|                                         | Net periodic benefit cost |                | $ | 2,066 |      |  | $ | 1,816 |  |  | $ | 1,510 | 
|                                         |                           |                |   |       |      |  |   |       | 



|                                                        |  |                |       |  |                |   |        |  
|------------------------------------------------------- |  | -------------- | ----- |  | -------------- | - | ------ | -
|                                                        |  | 1-Percentage-  |       |  | 1-Percentage-  |  
|                                                        |  | Point Increase |       |  | Point Decrease |  
|                                                        |  |                |       |  |                |  
|                                                        |  | (In thousands) |      
|Effect on total of service and interest cost components |  | $              | 145   |  |                | $ | (130   | )
|Effect on postretirement obligation                     |  |                | 1,347 |  |                |   | (1,206 | )

F-20



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                |  |   |             | 
|--------------- |  | - | ----------- | 
|2005            |  | $ | 1.2 million | 
|2006            |  |   | 1.4 million | 
|2007            |  |   | 1.5 million | 
|2008            |  |   | 1.7 million | 
|2009            |  |   | 1.8 million | 
|Next five years |  |   | 9.1 million | 






|    |                                          
|--- | -----------------------------------------
|13. | FACILITY CLOSING AND REORGANIZATION COSTS

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 that are necessary to
    prepare abandoned facilities for closure;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Costs incurred after shutdown such as lease obligations or
    termination costs, utilities and property taxes;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | 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
    December 31, 2004 was approximately $7.2 million. We
    are marketing these properties for sale.



F-21



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                  |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |       |  |  |   |        |   |  |   |       | 
|----------------- | -------------------------------- | -------------- | - | ------- |  | - | -------- | ------------ |  | ---- | - | ------ | ------- |  | ------------ | -------- |  | - | ------ | ----- |  |  | - | ------ | - |  | - | ----- | 
|                  |                                  | Accrued        |   |         |  |   |          | Accrued      |  |      |   |        |         |  | Accrued      |         
|                  |                                  | Charges at     |   |         |  |   |          | Charges at   |  |      |   |        |         |  | Charges at   |         
|                  |                                  | December 31,   |   |         |  |   |          | December 31, |  |      |   |        |         |  | December 31, |         
|                  |                                  | 2002           |   | Charges |  |   | Payments |              |  | 2003 |   |        | Charges |  |              | Payments |  |   | 2004   |      
|                  |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |      
|                  |                                  | (In thousands) |  
|Cash charges:     |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |       |  |  |   |        |   |  |   |      
|                  | Workforce reduction costs        |                | $ |        |  |   | $        | 4,151        |  |      | $ | (604   | )       |  | $            | 3,547    |  |   | $      | 1,412 |  |  | $ | (3,253 | ) |  | $ | 1,706 | 
|                  | Shutdown costs                   |                |   |        |  |   |          | 127          |  |      |   | (127   | )       |  |              |         |  |   |        | 2,544 |  |  |   | (2,544 | ) |  |   |      | 
|                  | Lease obligations after shutdown |                |   |        |  |   |          | 445          |  |      |   | (445   | )       |  |              |         |  |   |        | 409   |  |  |   | (334   | ) |  |   | 75    | 
|                  | Other                            |                |   |        |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        | 1,893 |  |  |   | (1,888 | ) |  |   | 5     | 
|                  |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |       | 
|                  | Subtotal                         |                | $ |        |  |   |          | 4,723        |  |      | $ | (1,176 | )       |  | $            | 3,547    |  |   |        | 6,258 |  |  | $ | (8,019 | ) |  | $ | 1,786 | 
|                  |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |       | 
|Non cash charges: |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |       |  |  |   |        |   |  |   |      
|                  | Write down of assets             |                |   |         |  |   |          | 1,196        |  |      |   |        |         |  |              |          |  |   |        | 8,307 |  |  |   |        |   |  |   |       | 
|                  |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |       | 
|Total charges     |                                  |                |   |         |  | $ | 5,919    |              |  |      |   |        |         |  |              |          |  | $ | 14,565 |       |  |  |   |        |   |  |   |      
|                  |                                  |                |   |         |  |   |          |              |  |      |   |        |         |  |              |          |  |   |        |       | 

Transaction Closing Costs






| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Workforce reductions as a result of facility closings, facility
    reorganizations and consolidation of administrative functions
    and offices;
|
| |  | Shutdown costs, including those costs that are necessary to
    clean and prepare abandoned facilities for closure; and                           
|
| |  | Costs incurred after shutdown such as lease obligations or
    termination costs, utilities and property taxes after shutdown
    of the facility.





|                          |  |                |       |  |             |   |        |          |              |   |      |   |  |   |       | 
|------------------------- |  | -------------- | ----- |  | ----------- | - | ------ | -------- | ------------ | - | ---- | - |  | - | ----- | 
|                          |  | Accrued        |       |  |             |   |        |          | Accrued      |  
|                          |  | Charges at     |       |  |             |   |        |          | Charges at   |  
|                          |  | December 31,   |       |  |             |   |        |          | December 31, |  
|                          |  | 2003           |       |  | Adjustments |   |        | Payments |              |   | 2004 |  
|                          |  |                |       |  |             |   |        |          |              |   |      |  
|                          |  | (In thousands) |      
|Workforce reduction costs |  | $              | 2,181 |  |             | $ | (460   | )        |              | $ | (282 | ) |  | $ | 1,439 | 
|Shutdown costs            |  |                | 4,064 |  |             |   | (1,245 | )        |              |   | (630 | ) |  |   | 2,189 | 
|                          |  |                |       |  |             |   |        |          |              |   |      |  
|Total                     |  | $              | 6,245 |  |             | $ | (1,705 | )        |              | $ | (912 | ) |  | $ | 3,628 | 
|                          |  |                |       |  |             |   |        |          |              |   |      |  

F-22



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                          |  |                |        |  |             |   |     |          |              |   |         |   |  |   |       | 
|------------------------- |  | -------------- | ------ |  | ----------- | - | --- | -------- | ------------ | - | ------- | - |  | - | ----- | 
|                          |  | Accrued        |        |  |             |   |     |          | Accrued      |  
|                          |  | Costs at       |        |  |             |   |     |          | Costs at     |  
|                          |  | December 31,   |        |  |             |   |     |          | December 31, |  
|                          |  | 2002           |        |  | Adjustments |   |     | Payments |              |   | 2003    |  
|                          |  |                |        |  |             |   |     |          |              |   |         |  
|                          |  | (In thousands) |       
|Workforce reduction costs |  | $              | 7,726  |  |             | $ | 45  |          |              | $ | (5,590  | ) |  | $ | 2,181 | 
|Shutdown costs            |  |                | 8,208  |  |             |   | 756 |          |              |   | (4,900  | ) |  |   | 4,064 | 
|                          |  |                |        |  |             |   |     |          |              |   |         |  
|Total                     |  | $              | 15,934 |  |             | $ | 801 |          |              | $ | (10,490 | ) |  | $ | 6,245 | 
|                          |  |                |        |  |             |   |     |          |              |   |         |  






|    |                                   
|--- | ----------------------------------
|14. | SUPPLEMENTAL CASH FLOW INFORMATION

|                                                                              |  |                        |        |  |      |   |        |      |  |   |        | 
|----------------------------------------------------------------------------- |  | ---------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                                                              |  | Year Ended December 31 |       
|                                                                              |  |                        |       
|                                                                              |  | 2004                   |        |  | 2003 |   |        | 2002 | 
|                                                                              |  |                        |        |  |      |   |        |      | 
|                                                                              |  | (In thousands)         |       
|Cash paid for interest and financing charges, net of capitalized
    interest |  | $                      | 51,594 |  |      | $ | 51,496 |      |  | $ | 56,053 | 
|Cash paid for taxes                                                           |  |                        | 24,841 |  |      |   | 3,695  |      |  |   | 6,073  | 






|    |                              
|--- | -----------------------------
|15. | COMMITMENTS AND CONTINGENCIES

Leases and Purchase Obligations




|                              |  |   |       |  
|----------------------------- |  | - | ----- | -
|Machinery and equipment       |  | $ | 5,452 |  
|Other                         |  |   | 228   |  
|Less accumulated amortization |  |   | (194  | )
|                              |  |   |      
|                              |  | $ | 5,486 |  
|                              |  |   |      



F-23



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                           |  |                |        |   |           |   |         |             |  |   |        | 
|------------------------------------------ |  | -------------- | ------ | - | --------- | - | ------- | ----------- |  | - | ------ | 
|                                           |  | Capital        |        |   | Operating |   |         | Purchase    | 
|                                           |  | Leases         |        |   | Leases    |   |         | Obligations | 
|                                           |  |                |        |   |           |   |         |             | 
|                                           |  | (In thousands) |       
|2005                                       |  | $              | 995    |   |           | $ | 34,416  |             |  | $ | 46,321 | 
|2006                                       |  |                | 988    |   |           |   | 29,360  |             |  |   | 9,480  | 
|2007                                       |  |                | 968    |   |           |   | 25,667  |             |  |   | 9,322  | 
|2008                                       |  |                | 911    |   |           |   | 23,150  |             |  |   | 7,484  | 
|2009                                       |  |                | 881    |   |           |   | 21,112  |             |  |   | 7,234  | 
|Thereafter                                 |  |                | 10,013 |   |           |   | 69,730  |             |  |   | 10,637 | 
|                                           |  |                |        |   |           |   |         |             | 
|Total minimum lease payments               |  |                | 14,756 |   |           | $ | 203,435 |             |  | $ | 90,478 | 
|                                           |  |                |        |   |           |   |         |             | 
|Less amount representing interest          |  |                | (9,249 | ) |           |   |         |             |  |   |        | 
|                                           |  |                |        |   |           |   |         |             | 
|Present value of capital lease obligations |  | $              | 5,507  |   |           |   |         |             |  |   |        | 
|                                           |  |                |        |   |           |   |         |             | 

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






| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | $56.25 million quarterly beginning on December 31,
    2006 through September 30, 2008;
|
| |  | $262.5 million quarterly on December 31, 2008 through
    June 30, 2009; and           
|
| |  | A final payment of $262.5 million on the maturity date of
    August 13, 2009.         











F-24



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Insurance


Litigation, Investigations and Audits







|    |                                    
|--- | -----------------------------------
|16. | FAIR VALUE OF FINANCIAL INSTRUMENTS












|    |                                                       
|--- | ------------------------------------------------------
|17. | SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS

Segment Information








F-25



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |                                           |                |   |           |      |  |   |           |   |  |   |           |  
|-------------------------------- | ----------------------------------------- | -------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                 |                                           | 2004           |   |           | 2003 |  |   | 2002      |  
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 |                                           | (In thousands) |  
|Net sales to external customers: |                                           |                |   |           |      |  |   |           |   |  |   |          
|                                 | Dairy Group                               |                | $ | 3,633,107 |      |  | $ | 3,192,831 |   |  | $ | 3,181,902 |  
|                                 | Specialty Foods Group                     |                |   | 676,768   |      |  |   | 684,207   |   |  |   | 673,604   |  
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 | Total                                     |                | $ | 4,309,875 |      |  | $ | 3,877,038 |   |  | $ | 3,855,506 |  
|                                 |                                           |                |   |           |      |  |   |           |  
|Operating income:                |                                           |                |   |           |      |  |   |           |   |  |   |          
|                                 | Dairy Group                               |                | $ | 263,475   |      |  | $ | 259,001   |   |  | $ | 255,320   |  
|                                 | Specialty Foods Group                     |                |   | 68,426    |      |  |   | 101,292   |   |  |   | 98,874    |  
|                                 | Corporate                                 |                |   | (51,745   | )    |  |   | (45,873   | ) |  |   | (57,086   | )
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 | Segment operating income                  |                |   | 280,156   |      |  |   | 314,420   |   |  |   | 297,108   |  
|                                 | Facility closing and reorganization costs |                |   | 14,565    |      |  |   | 5,919     |   |  |   |          |  
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 | Total                                     |                |   | 265,591   |      |  |   | 308,501   |   |  |   | 297,108   |  
|Other (income) expense:          |                                           |                |   |           |      |  |   |           |   |  |   |          
|                                 | Interest expense and financing charges    |                |   | 55,074    |      |  |   | 55,183    |   |  |   | 56,287    |  
|                                 | Other income, net                         |                |   | (1,984    | )    |  |   | (1,909    | ) |  |   | (727      | )
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 | Consolidated income before income tax     |                | $ | 212,501   |      |  | $ | 255,227   |   |  | $ | 241,548   |  
|                                 |                                           |                |   |           |      |  |   |           |  
|Depreciation and amortization:   |                                           |                |   |           |      |  |   |           |   |  |   |          
|                                 | Dairy Group                               |                | $ | 63,235    |      |  | $ | 53,453    |   |  | $ | 47,306    |  
|                                 | Specialty Foods Group                     |                |   | 16,126    |      |  |   | 14,505    |   |  |   | 14,101    |  
|                                 | Corporate                                 |                |   | 4,823     |      |  |   | 5,038     |   |  |   | 6,391     |  
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 | Total                                     |                | $ | 84,184    |      |  | $ | 72,996    |   |  | $ | 67,798    |  
|                                 |                                           |                |   |           |      |  |   |           |  
|Assets:                          |                                           |                |   |           |      |  |   |           |   |  |   |          
|                                 | Dairy Group                               |                | $ | 2,217,628 |      |  | $ | 2,186,955 |   |  | $ | 2,161,081 |  
|                                 | Specialty Foods Group                     |                |   | 604,687   |      |  |   | 635,321   |   |  |   | 617,210   |  
|                                 | Corporate                                 |                |   | 66,358    |      |  |   | 84,331    |   |  |   | 97,532    |  
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 | Total                                     |                | $ | 2,888,673 |      |  | $ | 2,906,607 |   |  | $ | 2,875,823 |  
|                                 |                                           |                |   |           |      |  |   |           |  
|Capital expenditures:            |                                           |                |   |           |      |  |   |           |   |  |   |          
|                                 | Dairy Group                               |                | $ | 60,570    |      |  | $ | 76,611    |   |  | $ | 63,016    |  
|                                 | Specialty Foods Group                     |                |   | 21,905    |      |  |   | 18,511    |   |  |   | 11,176    |  
|                                 | Corporate                                 |                |   |          |      |  |   |          |   |  |   | 427       |  
|                                 |                                           |                |   |           |      |  |   |           |  
|                                 | Total                                     |                | $ | 82,475    |      |  | $ | 95,122    |   |  | $ | 74,619    |  
|                                 |                                           |                |   |           |      |  |   |           |  






F-26



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Major Customers







|    |                                            
|--- | -------------------------------------------
|18. | QUARTERLY RESULTS OF OPERATIONS (unaudited)



|     |               |                |   |         |        |  |   |           |  |  |        |           |  |  |   |           | 
|---- | ------------- | -------------- | - | ------- | ------ |  | - | --------- |  |  | ------ | --------- |  |  | - | --------- | 
|     |               | Quarter        |  
|     |               |                |  
|     |               | First          |   |         | Second |  |   | Third     |  |  | Fourth |          
|     |               |                |   |         |        |  |   |           |  |  |        |          
|     |               | (In thousands) |  
|2004 |               |                |   |         |        |  |   |           |  |  |        |           |  |  |   |          
|     | Net sales     |                | $ | 993,166 |        |  | $ | 1,125,817 |  |  | $      | 1,103,722 |  |  | $ | 1,087,170 | 
|     | Gross profit  |                |   | 243,596 |        |  |   | 251,696   |  |  |        | 240,171   |  |  |   | 255,513   | 
|     | Net income(1) |                |   | 33,424  |        |  |   | 38,883    |  |  |        | 23,066    |  |  |   | 35,987    | 
|2003 |               |                |   |         |        |  |   |           |  |  |        |           |  |  |   |          
|     | Net sales     |                | $ | 919,063 |        |  | $ | 949,438   |  |  | $      | 979,867   |  |  | $ | 1,028,670 | 
|     | Gross profit  |                |   | 234,965 |        |  |   | 244,777   |  |  |        | 241,817   |  |  |   | 241,926   | 
|     | Net income(2) |                |   | 36,462  |        |  |   | 44,108    |  |  |        | 41,036    |  |  |   | 39,280    | 






|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The results of the first, third and fourth quarters include
    facility closing and reorganization costs, net of tax, of
    $1.7 million, $6.6 million and $885,000, respectively.
|   
|(2) | The results for the second, third and fourth quarters
    include facility closing and reorganization costs, net of tax,
    of $325,000, $298,000, and $3.1 million, respectively. 






|    |                              
|--- | -----------------------------
|19. | SUBSEQUENT EVENTS (unaudited)

Tax Free Spin-Off of Specialty Foods Group 




F-27



---



##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Controls Evaluation and Related CEO and CFO Certifications






Definition of Disclosure Controls




Limitations on the Effectiveness of Controls




Scope of the Controls Evaluation




17



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##### Table of Contents





Conclusions







PART III







|         |                                 
|-------- | --------------------------------
|Item 10. | Directors and Executive Officers








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions



18



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##### Table of Contents






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Financial Statements




|                                                                                                         |  |      |     | 
|-------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                         |  | Page |    
|                                                                                                         |  |      |    
|Report of Independent Registered Public Accounting Firm                                                  |  |      | F-1 | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                             |  |      | F-2 | 
|Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002               |  |      | F-3 | 
|Consolidated Statements of Stockholders Equity for the
    years ended December 31, 2004, 2003 and 2002 |  |      | F-4 | 
|Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002           |  |      | F-5 | 
|Notes to Consolidated Financial Statements                                                               |  |      | F-6 | 

Financial Statement Schedule






Exhibits




19



---



##### Table of Contents







| |     |                        
| | --- | -----------------------
| | By: | /s/ RONALD L. MCCRUMMEN

| |                          
| | -------------------------
| |                          
| | Ronald L. McCrummen      
| | Senior Vice President and
| | Chief Accounting Officer 





|                                               |  |                          |  |                |  | 
|---------------------------------------------- |  | ------------------------ |  | -------------- |  | 
|Name                                           |  | Title                    |  | Date          
|                                               |  |                          |  |               
|                                              
|/s/ GREGG L. ENGLESGregg
    L. Engles         |  | Chief Executive Officer  |  | March 17, 2005
|                                              
|/s/ BARRY A. FROMBERGBarry
    A. Fromberg     |  | Chief Financial Officer  |  | March 17, 2005
|                                              
|/s/ RONALD L. MCCRUMMENRonald
    L. McCrummen |  | Chief Accounting Officer |  | March 17, 2005
|                                              
|/s/ LISA N. TYSONLisa
    N. Tyson             |  | Sole Director            |  | March 17, 2005

S-1



---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












| |                      
| | ---------------------
| | DELOITTE & TOUCHE LLP







---



##### Table of Contents



SCHEDULE II


DEAN HOLDING COMPANY


VALUATION AND QUALIFYING ACCOUNTS


Years Ended December 31, 2004, 2003 and 2002




|                  |  |                |        |  |            |   |       |              |  |            |              |          |  |              |               |   |          |         |     |             |  |   |       |  |  |   |        | 
|----------------- |  | -------------- | ------ |  | ---------- | - | ----- | ------------ |  | ---------- | ------------ | -------- |  | ------------ | ------------- | - | -------- | ------- | --- | ----------- |  | - | ----- |  |  | - | ------ | 
|                  |  |                |        |  |            |   |       |              |  | Recoveries |              |          |  |              |              
|                  |  | Balance        |        |  |            |   |       |              |  |            | of           |          |  | Write-Off of |               |   |         
|                  |  | Beginning      |        |  | Charged to |   |       |              |  |            |              | Accounts |  |              | Uncollectible |   |          | Balance |    
|Year              |  | of Year        |        |  | Income     |   |       | Acquisitions |  |            | Dispositions |          |  | Written Off  |               |   | Accounts |         |     | End of Year | 
|                  |  |                |        |  |            |   |       |              |  |            |              |          |  |              |               |   |          |         |     |             | 
|                  |  | (In thousands) |       
|December 31, 2002 |  | $              | 8,297  |  |            | $ | 6,137 |              |  | $          | 2,350        |          |  | $            | (38           | ) |          | $       | 314 |             |  | $ | 8,188 |  |  | $ | 8,872  | 
|December 31, 2003 |  |                | 8,872  |  |            |   | 5,253 |              |  |            |             |          |  |              |              |   |          |         | 195 |             |  |   | 2,303 |  |  |   | 12,017 | 
|December 31, 2004 |  |                | 12,017 |  |            |   | 1,423 |              |  |            | 1,660        |          |  |              |              |   |          |         | 830 |             |  |   | 6,300 |  |  |   | 9,630  | 



---



##### Table of Contents



INDEX TO EXHIBITS


Explanatory Note:


|        |    |    |  |             |  |                                                                                                                                                                                                                                                        
|------- | -- | -- |  | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |  |            
|Number  |    |    |  | Description
|        |    |    |  |            
|        | 3  | .1 |  |            |  | Certificate of Incorporation (incorporated by reference from our
    2002 Annual Report on Form 10-K, File No. 1-08262).                                                                                                                               
|        | 3  | .2 |  |            |  | Certificate of Amendment to Certificate of Incorporation
    (incorporated by reference from our 2002 Annual Report on
    Form 10-K, File No. 1-08262).                                                                                               
|        | 3  | .3 |  |            |  | Amended and Restated Bylaws (incorporated by reference from our
    2002 Annual Report on Form 10-K, File No. 1-08262).                                                                                                                                
|        | 4  | .1 |  |            |  | Specimen of Common Stock Certificate (incorporated by reference
    from our 2002 Annual Report on Form 10-K, File
    No. 1-08262).                                                                                                                   
|        | 4  | .2 |  |            |  | Form of Senior Indenture related to our 6.625%
    ($200 million) and 8.15% ($250 million) senior notes
    (incorporated by reference from Legacy Dean Registration
    Statement on Form S-3 filed on January 23, 1998, File
    No. 333-44851).     
|        | 4  | .3 |  |            |  | Form of senior debt securities (incorporated by reference from
    Legacy Dean Registration Statement on Form S-3 filed on
    January 23, 1998, File No. 333-44851).                                                                                  
|        | 4  | .4 |  |            |  | Form of Senior Indenture related to our 6.75%
    ($100 million) and 6.9% ($150 million) senior notes
    (incorporated by reference from Legacy Dean Registration
    Statement on Form S-3 filed January 19, 1995, File
    No. 33-57353).           
|        | 4  | .5 |  |            |  | Form of senior debt securities related to our 6.75%
    ($100 million) and 6.9% ($150 million) senior notes
    (incorporated by reference from Legacy Dean Registration
    Statement on Form S-3 filed January 19, 1995, File
    No. 33-57353).     
|        | 10 | .2 |  |            |  | Form of Joinder Agreement dated December 21, 2001 executed
    by us and certain of our subsidiaries in favor of certain
    lenders to our parent company (incorporated by reference from
    our 2002 Annual Report on Form 10-K, File No. 1-08262). 
|        | 10 | .3 |  |            |  | Form of Security Agreement dated December 21, 2001 executed
    by us and certain of our subsidiaries in favor of certain
    lenders to our parent company (incorporated by reference from
    our 2002 Annual Report on Form 10-K, File No. 1-08262).
|        | 12 |    |  |            |  | Computation of Ratio of Earnings to Fixed Charges (filed
    herewith).                                                                                                                                                                                
|        | 31 | .1 |  |            |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith).                                                                                                                           
|        | 31 | .2 |  |            |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith).                                                                                                                           
|        | 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.