##### 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,
    2003                                                    
|          
|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)


(DEAN FOODS LOGO)



---

|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 75-2932967                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

2515 McKinney Avenue

Suite 1200


Dallas, Texas 75201


(214) 303-3400


(Address, including zip code, and telephone
number, including


area code, of Registrants principal
executive offices)


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

None


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

None


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.    Yes þ         No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this
Form 10-K:    þ

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).    Yes o         No þ

The registrant meets the conditions specified in
General Instruction I(1)(a) and (b) of Form 10-K
and, therefore, is filing this form with the reduced disclosure
format permitted by General Instruction I(2).



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TABLE OF CONTENTS

|                                                  |  |                                                                                           |     |      |    | 
|------------------------------------------------- |  | ----------------------------------------------------------------------------------------- | --- | ---- | -- | 
|                                                  |  |                                                                                           |     | Page
|                                                  |  |                                                                                           |     |     
|PART I                                           
|1                                                 |  | Business                                                                                  |     |      | 2  | 
|                                                  |  | General                                                                                   |     |      | 2  | 
|                                                  |  | Developments
    since January 1, 2003.                                                   |     |      | 5  | 
|2                                                 |  | Properties                                                                                |     |      | 8  | 
|                                                 
|PART II                                          
|7                                                 |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations |     |      | 10 | 
|8                                                 |  | Consolidated Financial
    Statements                                                     |     |      | 14 | 
|9                                                 |  | Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosure  |     |      | 15 | 
|                                                 
|9a                                                |  | Controls and Procedures                                                                   |     |      | 15 | 
|                                                 
|PART III                                         
|10.                                               |  | Directors and Executive
    Officers                                                      |     |      | 16 | 
|11.                                               |  | Executive Compensation                                                                    |     |      | 16 | 
|12.                                               |  | Security Ownership of
    Certain Beneficial Owners and Management                        |     |      | 16 | 
|13.                                               |  | Certain Relationships and
    Related Transactions                                        |     |      | 16 | 
|PART IV                                          
|15                                                |  | Exhibits, Financial
    Statement Schedules and Reports on Form 8-K                       |     |      | 17 | 
|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     





1



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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 2003 Annual Report on
Form 10-K of our parent, Dean Foods Company, as filed with
the Securities and Exchange Commission on March 15,
2004.




General

We are a wholly-owned subsidiary of Dean Foods
Company (formerly known as Suiza Foods Corporation), a leading
food and beverage company. Our Dairy Group segment is part of
the larger Dairy Group segment of Dean Foods Company and our
Specialty Foods Group segment comprises the entirety of Dean
Foods Companys Specialty Foods Group segment.

Segments



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

Our Dairy Group manufactures, markets and
distributes a wide variety of branded and private label
dairy case products to retailers, distributors,
foodservice outlets, schools and governmental entities across
the United States.

Our Dairy Groups sales totaled
approximately $3.19 billion in 2003, or approximately 82%
of our consolidated 2003 sales. The following charts graphically
depict our Dairy Groups 2003 sales by product and by
channel, and indicate the percentage of private label versus
branded sales.

|                    |  |                      |  |                       
|------------------- |  | -------------------- |  | ----------------------
|(PRODUCTS PI CHART) |  | (CUSTOMERS PI CHART) |  | (PRODUCT MIX 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, non-dairy coffee
    creamers, condensed milk and non-dairy dips.                                                        
|   
|(6) | Such as restaurants and hotels.                                                                                                                        

2



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Products not sold under customer brands are sold
under the Dairy Groups local and regional proprietary or
licensed brands, including the following:

|                    |  |                     |  |                   |  |                    
|------------------- |  | ------------------- |  | ----------------- |  | -------------------
|Northeast Region(1) |  | Southeast Region(1) |  | Midwest Region(1) |  | Southwest Region(1)
|                    |  |                     |  |                   |  |                    
|Chug®               |  | Barbers®           |  | Chug®             |  | Adohr Farms®       
|Deans®             |  | Chug®               |  | Deans®           |  | Alta Dena®         
|Fairmont®           |  | Deans®             |  | Land OLakes®     |  | BerkeleyFarmsTM    
|Meadowbrook®        |  | Mayfield®           |  | (licensed brand)  |  | Chug®              
|Reiter®             |  | McArthur®           |  | Liberty®          |  | CreamlandTM        
|Swiss®              |  | PurityTM            |  | Maplehurst®       |  | Deans®            
|                    |  | TG Lee®             |  | Reiter®           |  | Gandys®           
|                    |  |                     |  | Verifine®         |  | PricesTM          
|                    |  |                     |  |                   |  | SwissTM            



---



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

Our Dairy Group sells its products primarily on a
local or regional basis through its local and regional sales
forces, although some national customer relationships are
coordinated by Dean Foods Companys Dairy Group corporate
sales department. Most of our Dairy Groups customers
purchase products from us either by purchase order or pursuant
to contracts that are generally terminable at will by the
customer. The Dairy Groups sales are slightly seasonal,
with sales tending to be higher in the third and fourth quarters.

Our Dairy Group currently operates 35
manufacturing plants in 17 states. For more information
about plants in our Dairy Group, see
 Item 2. Properties.

Due to the perishable nature of the its products,
our Dairy Group delivers the majority of its products from its
plants or distribution branches directly to its customers
stores in refrigerated trucks that we own or lease. This form of
delivery is called a direct store delivery or
DSD system. Our Dairy Group has one of the most
extensive refrigerated DSD systems in the United States, with
delivery routes spanning virtually the entire country.

The primary raw material used in our Dairy Group
is raw milk. We purchase our raw milk primarily from
farmers cooperatives, typically pursuant to requirements
contracts (with no minimum purchase obligation). Raw milk is
generally readily available. The minimum price of raw milk is
regulated in most parts of the country by the federal
government. Several states also regulate raw milk pricing
through their own programs. Other raw materials used by the
Dairy Group, such as juice concentrates and sweeteners, in
addition to packaging supplies, are generally available from
numerous suppliers and we are not dependent on any single
supplier for these materials. Certain of our Dairy Groups
raw materials and packaging supplies are purchased under
long-term contracts in order to obtain lower costs. The prices
of our raw materials increase and decrease based on supply and
demand.

The Dairy Group generally increases or decreases
the prices of its fluid dairy products on a monthly basis in
correlation to fluctuations in the costs of raw materials and
packaging supplies.

The dairy industry is a mature industry which has
traditionally been characterized by slow to flat growth, low
profit margins, fragmentation and excess capacity. Excess
capacity resulted from the development of more efficient
manufacturing techniques, the establishment of captive dairy
manufacturing operations by some grocery retailers and declining
demand for fluid milk products. Since 1990, the dairy industry
has experienced significant consolidation led in part by Dean
Foods Company. Consolidation has tended to lower costs and raise
efficiency. However, consumption of traditional fluid dairy
products has continued to decline. According to the United
States Department of Agriculture, per capita consumption of
fluid milk and cream has decreased by over 10% from 1990 to the
end of 2002, and total consumption has remained relatively flat
over the same period due to population increases. Therefore,
sales growth across the industry generally remains

3



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modest, profit margins generally remain low and
excess manufacturing capacity continues to exist. Many
processors, including us, are now placing an increased emphasis
on product differentiation and branding, as well as reducing
costs, in an effort to increase consumption, sales and margins.


The dairy industry is highly competitive. Our
Dairy Group has several competitors in each of our major product
and geographic markets. Competition between dairy processors for
shelf-space with retailers is based primarily on price, service
and quality, while competition for consumer sales is based on a
variety of factors such as brand recognition, price, taste
preference and quality. Dairy products also compete with many
other beverages and nutritional products for consumer sales.

For more financial information about our Dairy
Groups recent operations, see
Part II  Item 7. Managements
Discussion and Analysis of Financial Condition and Results of
Operations and Note 19 to our Consolidated Financial
Statements.



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

Our Specialty Foods Group is one of the
nations leading pickle processors, and the largest
manufacturer and seller of powdered non-dairy coffee creamers in
the United States. The Specialty Foods Group also manufactures
and sells a variety of specialty foods, such as powdered
ingredients, aseptic sauces and nutritional beverages. The
Specialty Foods Groups sales totaled $684.2 million
in 2003, or approximately 18% of our consolidated 2003 sales.
The following charts graphically depict the Specialty Foods
Groups 2003 sales by product category and channel, and
indicate the percentage of private label versus branded sales:

|                    |  |                      |  |                       
|------------------- |  | -------------------- |  | ----------------------
|(PRODUCTS PI CHART) |  | (CUSTOMERS PI CHART) |  | (PRODUCT MIX PI CHART)



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Approximately 67% of the Specialty Foods
    Groups pickle, relish and pepper products are sold under
    customer brands, with the remaining 33% sold under our
    proprietary brands including Atkins®,
    Cates®, Heifetz®,
    Nalleys®, SteinfeldTM,
    Farmans--Registered Trademark--, Paramount--Registered
    Trademark--, Peter Piper--Registered Trademark--,
    Roddenberry--Registered Trademark-- and
    Schwartz--Registered Trademark--. Branded products are
    sold to retailers and private label products are sold to
    retailers, foodservice customers and in bulk to other food
    processors.
|   
|(2) | In addition to powdered coffee creamers, the
    Specialty Foods Group also sells shortening powders and other
    high-fat powder formulas used in baking, beverage mixes, gravies
    and sauces, and premium and low-fat powdered products. In 2003,
    all of the Specialty Foods Groups powdered products were
    sold under customer brands to retailers, distributors and in
    bulk to other food companies for use as ingredients in their
    products.                                                                                                                                                            
|   
|(3) | Aseptic products are sterilized using a process
    which allows storage for prolonged periods without
    refrigeration. Our Specialty Foods Group manufactures aseptic
    cheese sauces, puddings and nutritional beverages. Our cheese
    sauces and puddings are sold primarily under private labels to
    distributors. Aseptic nutritional beverages (which are in the
    meal supplement, weight loss/gain and sports categories) are
    sold entirely under private labels to retailers and distributors.                                                                                                           
|   
|(4) | Includes shrimp, seafood, tarter, 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--Registered
    Trademark-- and Hoffman House--Registered Trademark--
    brand names.                                                                                                                                                                                                                                                                                                              
|   
|(5) | Includes mass merchandisers, club stores,
    convenience stores, and grocery stores.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

4



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The Specialty Foods Groups products are
delivered to customers stores and warehouses primarily by
common carrier. The Specialty Foods Group sells its products
through its internal sales force and through independent
brokers. Most of the Specialty Foods Groups customers
purchase products from the Specialty Foods Group either by
purchase order or pursuant to contracts that are generally
terminable at will by the customer. Sales of the Specialty Foods
Groups pickle products are generally higher in the second
and fourth quarters and sales of its powdered products are
generally higher in the fourth quarter.

Our Specialty Foods Group uses a wide variety of
raw materials. The main raw material used by the Specialty Foods
Group is cucumbers. The Specialty Foods Group purchases
cucumbers under seasonal grower contracts with a variety of
growers. We supply seeds and advise growers regarding planting
techniques. We also monitor and arrange for the control of
insects, direct the harvest and, for some crops, provide
automated harvesting services. Other raw materials used by the
Specialty Foods Group, such as corn syrup, soy bean oil and
casein, in addition to packaging materials, are generally
available from numerous suppliers and we are not dependent on
any single supplier for these materials. Certain of the
Specialty Foods Groups raw materials and packaging
supplies are purchased under long-term contracts in order to
guarantee supply and to obtain lower costs. The prices of the
Specialty Foods Groups raw material increase and decrease
based on supply and demand.

The Specialty Foods Group produces its products
in 11 plants located across the United States. For more
information about the Specialty Foods Groups manufacturing
plants, see  Item 2. Properties.

The Specialty Foods Group has several competitors
in each of its product markets. For most of Specialty Foods
Groups products, competition to obtain shelf-space with
retailers is based on the expected or historical sales
performance of the product compared to its competitors. In rare
cases, the Specialty Foods Group pays fees to retailers to
obtain shelf-space for a particular company-branded product.
Competition for consumer sales is based on brand recognition,
price, taste preferences and quality. The Specialty Foods Group
also competes with other food and nutritional products for
consumer sales.

For more information about our Specialty Foods
Group segment, see Part II  Item 7.
Managements Discussion and Analysis of Financial Condition
and Results of Operations and Note 19 to our
Consolidated Financial Statements.




Developments Since January 1,
2003



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

On January 26, 2004, our Dairy Group
acquired Ross Swiss Dairies, a dairy distributor based in Los
Angeles, California, which had net sales of approximately
$120 million in 2003. As a result of this acquisition, we
have increased the distribution capability of our Dairy Group in
southern California, allowing us to better serve our customers.
Ross Swiss Dairies has historically purchased a significant
portion of its products from other processors. We intend to
shift the manufacturing of substantially all of Ross Swiss
Dairies product needs into our southern California plants
in 2004. We paid approximately $20 million for the purchase
of Ross Swiss Dairies and funded the purchase price with
borrowings under Dean Foods Companys receivables-backed
facility.

On December 24, 2003, our Specialty Foods
Group acquired the Cremora® branded
non-dairy powdered coffee creamer business from Eagle Family
Foods. Prior to the acquisition, we had been producing
Cremora creamers for Eagle Family Foods pursuant to a
co-packing arrangement, which generated approximately
$8.9 million of net sales for us in 2003. The
Cremora brand had sales of approximately
$15.8 million for the 12 months ended June 30,
2003. We purchased the Cremora business for a purchase
price of approximately $12.6 million, all of which was
funded using borrowings under Dean Foods Companys senior
credit facility.

5



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| |                           
| | --------------------------
| | Rationalization Activities

As part of Dean Foods Companys overall
integration and cost reduction strategy, we closed or announced
the closure of two facilities in 2003 and reduced (or intend to
reduce) our workforce accordingly. We also restructured certain
administrative functions of our Dairy Group.

5.1



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We incurred expenses of approximately
$5.9 million during 2003 related to these plant closings
and reorganization. These charges included the following costs:



| |   |                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Workforce reduction costs, which were charged
    against our earnings in the period that the plan was established
    in detail and employee severance and benefits had been
    appropriately communicated;                                                                                                                                           
|
| |  | Shutdown costs, including those costs necessary
    to prepare the plant facilities for re-sale or closure;                                                                                                                                                                                                                                             
|
| |  | Costs incurred after shutdown such as lease
    obligations or termination costs, utilities and property
    taxes; and                                                                                                                                                                                                                                 
|
| |  | Write-downs of property, plant and equipment and
    other assets, primarily for asset impairments as a result of
    facilities no longer used in operations. The impairments related
    primarily to owned building, land and equipment at the
    facilities that were written down to their estimated fair value
    and sold or marketed for sale.

See Note 16 to our Consolidated Financial
Statements.

Employees

As of December 31, 2003 we had the following
employees:

|                      |  |           |        |       |  |  |       |  
|--------------------- |  | --------- | ------ | ----- |  |  | ----- | -
|                      |  | Number of |        | % of 
|                      |  | Employees |        | Total
|                      |  |           |        |      
|Dairy Group           |  |           | 9,234  |       |  |  | 83.1  | %
|Specialty Foods Group |  |           | 1,880  |       |  |  | 16.9  |  
|                      |  |           |        |       |  |  |       |  
|                      |  |           | 11,114 |       |  |  | 100.0 | %
|                      |  |           |        |       |  |  |       |  

Where You Can Get More Information

Our fiscal year ends on December 31. We file
annual, quarterly and current reports with the Securities and
Exchange Commission. In addition, Dean Foods Company, our sole
shareholder, also files annual, quarterly and current reports,
proxy statements and other information with the Securities and
Exchange Commission.

You may read and copy any reports, statements or
other information that we or Dean Foods Company file with the
Securities and Exchange Commission at the Securities and
Exchange Commissions Public Reference Room at
450 Fifth Street, N.W., Washington D.C. 20549. You can
request copies of these documents, upon payment of a duplicating
fee, by writing to the Securities and Exchange Commission.
Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the operation of the
Public Reference Room.

We file our reports with the Securities and
Exchange Commission electronically via the Securities and
Exchange Commissions Electronic Data Gathering, Analysis
and Retrieval system (EDGAR). The Securities and
Exchange Commission maintains an Internet site that contains
reports, proxy and information statements, and other information
regarding companies that file electronically with the Securities
and Exchange Commission via EDGAR. The address of this Internet
site is http://www.sec.gov.

We also make available free of charge through
Dean Food Companys website at www.deanfoods.comour
annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and amendments
to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934 as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the Securities and
Exchange Commission.

6



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Our Code of Ethics, which is applicable to all
employees and directors of Dean Foods Company and its
subsidiaries, is available on Dean Foods Companys
corporate website at www.deanfoods.com. Any waivers that
may be granted to our executive officers or directors under the
Code of Ethics, and any amendments to our Code of Ethics, will
be posted on our corporate website. If you would like hard
copies of any of these documents, or any of our filings with the
Securities and Exchange Commission, write or call us at:



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

7



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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.

Our Dairy Group currently conducts its
manufacturing operations from the following plants, most of
which are owned:

|                  |  |           |    |                     |  |                                 
|----------------- |  | --------- | -- | ------------------- |  | --------------------------------
|                  |  | Number    |    |                    
|Geographic Region |  | of Plants |    | Locations of Plants
|                  |  |           |    |                    
|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         |  |           | 9  |                     |  |  Buena Park, California(2)     
|                  |  |           |    |                     |  |  City of Industry,   California
|                  |  |           |    |                     |  |  Hayward, California           
|                  |  |           |    |                     |  |  San Leandro, California       
|                  |  |           |    |                     |  |  Albuquerque, New Mexico(2)    
|                  |  |           |    |                     |  |  El Paso, Texas                
|                  |  |           |    |                     |  |  Lubbock, Texas                

Each of the Dairy Groups manufacturing
plants also serves as a distribution facility. In addition, our
Dairy Group has numerous distribution branches across the
country, some of which are owned, but most of which are leased.
The Dairy Groups headquarters are located in Dallas, Texas
in leased premises.

8



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Our Specialty Foods Group segment currently
conducts its manufacturing operations from plants in the
following locations, all but one of which are owned:



| |   |                        
| | - | -----------------------
| |  | La Junta, Colorado     
| |  | New Hampton, Iowa      
| |  | Chicago, Illinois      
| |  | Dixon, Illinois        
| |  | Pecatonica, Illinois   
| |  | Plymouth, Indiana      
| |  | Benton Harbor, Michigan
| |  | Wayland, Michigan      
| |  | Faison, North Carolina 
| |  | Portland, Oregon       
| |  | Green Bay, Wisconsin   

Our Specialty Foods Groups headquarters are
located at its plant in Green Bay, Wisconsin.

9



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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

The table set forth below presents certain
information concerning our results of operations, including
information presented as a percentage of net sales.

|                                   |                               |                                         |           |         |         |         |       |         |      |   |           |         |         |  |       |      |      | 
|---------------------------------- | ----------------------------- | --------------------------------------- | --------- | ------- | ------- | ------- | ----- | ------- | ---- | - | --------- | ------- | ------- |  | ----- | ---- | ---- | 
|                                   |                               |                                        
|                                   |                               | Year Ended                             
|                                   |                               | December 31                            
|                                   |                               |                                        
|                                   |                               |                                         |           |        
|                                   |                               | 2003                                    |           | 2002   
|                                   |                               |                                         |           |        
|                                   |                               | Dollars                                 |           | Percent |         | Dollars |       | Percent
|                                   |                               |                                         |           |         |         |         |       |        
|                                   |                               |                                        
|                                   |                               | (Dollars in thousands)                 
|Net sales                          |                               | $                                       | 3,877,038 |         |         |         | 100.0 | %       |      | $ | 3,855,506 |         |         |  | 100.0 | %   
|Cost of sales                      |                               |                                         | 2,913,553 |         |         |         | 75.1  |         |      |   | 2,895,647 |         |         |  | 75.1  |     
|                                   |                               |                                         |           |         |         |         |       |         |      |   |           |         |         |  |       |     
|                                   | Gross profit                  |                                         |           | 963,485 |         |         |       | 24.9    |      |   |           | 959,859 |         |  |       | 24.9 |     
|                                   | Operating costs and expenses: |                                         |           |         |         |         |       |         |      |   |           |         |         |  |       |      |     
|                                   |                               | Selling and distribution                |           |         | 515,626 |         |       |         | 13.3 |   |           |         | 525,466 |  |       |      | 13.7 | 
|                                   |                               | General and administrative              |           |         | 130,399 |         |       |         | 3.4  |   |           |         | 131,918 |  |       |      | 3.4  | 
|                                   |                               | Amortization of intangibles             |           |         | 3,040   |         |       |         | .1   |   |           |         | 5,367   |  |       |      | .1   | 
|                                   |                               | Plant closing and rationalization costs |           |         | 5,919   |         |       |         | .1   |   |           |         |         |  |       |      |      | 
|                                   |                               |                                         |           |         |         |         |       |         |      |   |           |         |         |  |       |     
|Total operating costs and expenses |                               |                                         | 654,984   |         |         |         | 16.9  |         |      |   | 662,751   |         |         |  | 17.2  |     
|                                   |                               |                                         |           |         |         |         |       |         |      |   |           |         |         |  |       |     
|Total operating income             |                               | $                                       | 308,501   |         |         |         | 8.0   | %       |      | $ | 297,108   |         |         |  | 7.7   | %   
|                                   |                               |                                         |           |         |         |         |       |         |      |   |           |         |         |  |       |     



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared
    to Year Ended December 31, 2002  Consolidated
    Results

Net
Sales Consolidated net
sales increased slightly to $3.88 billion in 2003 from
$3.86 billion in 2002. Net sales by segment are shown in
the table below.

|                      |       |                        |           |           |  |          |           |            |  |   |        |        |  |  |     |     |  
|--------------------- | ----- | ---------------------- | --------- | --------- |  | -------- | --------- | ---------- |  | - | ------ | ------ |  |  | --- | --- | -
|                      |       |                       
|                      |       | Net Sales             
|                      |       |                       
|                      |       | 2003                   |           | 2002      |  | Increase |           | % Increase
|                      |       |                        |           |           |  |          |           |           
|                      |       |                       
|                      |       | (Dollars in thousands)
|Dairy Group           |       | $                      | 3,192,831 |           |  | $        | 3,181,902 |            |  | $ | 10,929 |        |  |  | 0.3 | %  
|Specialty Foods Group |       |                        | 684,207   |           |  |          | 673,604   |            |  |   | 10,603 |        |  |  | 1.6 |    
|                      |       |                        |           |           |  |          |           |            |  |   |        |        |  |  |     |    
|                      | Total |                        | $         | 3,877,038 |  |          | $         | 3,855,506  |  |   | $      | 21,532 |  |  |     | 0.6 | %
|                      |       |                        |           |           |  |          |           |            |  |   |        |        |  |  |     |    

The change in net sales was due to the following:

|                      |       |                                   |         |                 |   |          |        |        |  |   |        |        | 
|--------------------- | ----- | --------------------------------- | ------- | --------------- | - | -------- | ------ | ------ |  | - | ------ | ------ | 
|                      |       |                                  
|                      |       | Change in Net Sales 2003 vs. 2002
|                      |       |                                  
|                      |       |                                   |         | Pricing, Volume |   |         
|                      |       |                                   |         | and Product     |   | Total   
|                      |       | Divestitures                      |         | Mix Changes     |   | Increase
|                      |       |                                   |         |                 |   |         
|                      |       |                                  
|                      |       | (In thousands)                   
|Dairy Group           |       |                                   |         |                 |   | $        | 10,929 |        |  | $ | 10,929 |       
|Specialty Foods Group |       | $                                 | (13,668 | )               |   |          | 24,271 |        |  |   | 10,603 |       
|                      |       |                                   |         |                 |   |          |        |        |  |   |        |       
|                      | Total |                                   | $       | (13,668         | ) |          | $      | 35,200 |  |   | $      | 21,532 | 
|                      |       |                                   |         |                 |   |          |        |        |  |   |        |       

Cost of
Sales All expenses
incurred to bring a product to completion are included in cost
of sales, such as raw material, ingredient and packaging costs;
labor costs; plant and equipment costs, including costs to
operate and maintain our coolers and freezers; costs associated
with transporting our finished products from

10



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##### Table of Contents



our manufacturing facilities to our own
distribution facilities; and the cost of shipping products to
customers through third-party carriers. Our cost of sales ratio
was 75.1% in 2003 and 2002. Increased raw material costs
affected all of our segments in 2003 but were generally offset
by increased sales prices or reduced promotional spending, which
is recorded as a reduction of revenue.


Operating Costs and
Expenses Our operating
expense ratio was 16.9% in 2003 compared to 17.2% during 2002.
Our operating expense ratio decreased due to lower expenses at
our former corporate headquarters and the Specialty Foods Group
offset by increased costs at the Dairy Group. Corporate expenses
were down significantly as our former corporate headquarters in
Franklin Park, IL was closed in 2002 resulting in general
and administrative and amortization savings of
$17.2 million. This was partially offset by an increase in
the management fee charged to us by Dean Foods Company in 2003.
The 2003 management fee was $12.7 million higher than the
2002 management fee.

Operating
Income Operating income
during 2003 was $308.5 million, an increase of
$11.4 million from 2002 operating income of
$297.1 million. Our operating margin in 2003 was 8%
compared to 7.7% in 2002.

Other (Income)
Expense Total other
expense decreased by $2.3 million in 2003 compared to 2002.
Interest expense decreased to $55.2 million in 2003 from
$56.3 million in 2002. This decrease was the result of
lower interest rates and lower average debt balances in 2003.

Income
Taxes We are included in
Dean Foods Companys consolidated tax return. Income tax
expense, as if we were filing a separate tax return, was
recorded at an effective rate of 37% in 2003 compared to 38% in
2002. Our tax rate varies as the mix of earnings contributed by
our various business units changes and as tax savings
initiatives are adopted.



| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared
    to Year Ended December 31, 2002  Results by
    Segment



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

|                             |  |                        |           |         |  |         |       |         |  |   |           |  |  |  |       |  
|---------------------------- |  | ---------------------- | --------- | ------- |  | ------- | ----- | ------- |  | - | --------- |  |  |  | ----- | -
|                             |  |                        |           |        
|                             |  | 2003                   |           | 2002   
|                             |  |                        |           |        
|                             |  | Dollars                |           | Percent |  | Dollars |       | Percent
|                             |  |                        |           |         |  |         |       |        
|                             |  |                       
|                             |  | (Dollars in thousands)
|Net sales                    |  | $                      | 3,192,831 |         |  |         | 100.0 | %       |  | $ | 3,181,902 |  |  |  | 100.0 | %
|Cost of sales                |  |                        | 2,400,360 |         |  |         | 75.2  |         |  |   | 2,392,624 |  |  |  | 75.2  |  
|                             |  |                        |           |         |  |         |       |         |  |   |           |  |  |  |       |  
|Gross profit                 |  |                        | 792,471   |         |  |         | 24.8  |         |  |   | 789,278   |  |  |  | 24.8  |  
|Operating costs and expenses |  |                        | 539,389   |         |  |         | 16.9  |         |  |   | 533,958   |  |  |  | 16.8  |  
|                             |  |                        |           |         |  |         |       |         |  |   |           |  |  |  |       |  
|Total operating income       |  | $                      | 253,082   |         |  |         | 7.9   | %       |  | $ | 255,320   |  |  |  | 8.0   | %
|                             |  |                        |           |         |  |         |       |         |  |   |           |  |  |  |       |  

The Dairy Groups net sales increased by
approximately $10.9 million or 0.3% in 2003 versus 2002.
The change in sales from 2002 to 2003 was due to the following:

|                        |  |                       |         |         |  |  |      |   
|----------------------- |  | --------------------- | ------- | ------- |  |  | ---- | --
|                        |  | Dollars               |         | Percent
|                        |  |                       |         |        
|                        |  |                      
|                        |  | (Dollars in millions)
|2002 Net sales          |  | $                     | 3,181.9 |         |  |  |      |   
|Volume                  |  |                       | (22.3   | )       |  |  | (0.7 | )%
|Pricing and product mix |  |                       | 33.2    |         |  |  | 1.0  |   
|                        |  |                       |         |         |  |  |      |   
|2003 Net sales          |  | $                     | 3,192.8 |         |  |  | 0.3  | % 
|                        |  |                       |         |         |  |  |      |   

11



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##### Table of Contents



Volume change for all products declined 0.7% in
2003 compared to 2002. Equivalent gallons of fluid dairy
products (including milk, cream and ice cream mix, which
represented 71% of the Dairy Groups 2003 sales) sold were
flat in 2003 when compared to 2002. Ice cream and ice cream
novelties volumes (which represented 15% of the Dairy
Groups 2003 sales) declined by 5.3% in 2003 compared to
2002, primarily because we sell our ice cream under private
labels and local brands, and we lost sales during the year to
nationally branded products which were promoted more
aggressively than our products. Other volumes
decreased approximately 14% in 2003 primarily due to the loss of
the butter volumes of a customer of our southern California
plants.

In general, we change the prices that we charge
our customers for fluid dairy products on a monthly basis, as
the costs of our raw materials fluctuate. The increase in sales
due to price and product mix shown in the above table primarily
results from higher raw milk costs in 2003 than in 2002. These
price increases due to increases in the cost of raw milk were
offset somewhat by price concessions that were granted in some
markets in 2003 due to the competitive environment. The
following table sets forth the average monthly Class I
mover and average monthly Class II minimum
prices for raw skim milk and butterfat for 2003 compared to 2002:

|                                  |  |                         |      |      |  |          |      |     |  |  |     |  
|--------------------------------- |  | ----------------------- | ---- | ---- |  | -------- | ---- | --- |  |  | --- | -
|                                  |  |                        
|                                  |  | Year Ended December 31*
|                                  |  |                        
|                                  |  | 2003                    |      | 2002 |  | % Change
|                                  |  |                         |      |      |  |         
|Class I raw skim milk mover(3)    |  | $                       | 7.47 | (1)  |  | $        | 7.01 | (1) |  |  | 7   | %
|Class I butterfat mover(3)        |  |                         | 1.19 | (2)  |  |          | 1.21 | (2) |  |  | (2  | )
|Class II raw skim milk minimum(4) |  |                         | 6.74 | (1)  |  |          | 7.62 | (1) |  |  | (12 | )
|Class II butterfat minimum(4)     |  |                         | 1.22 | (2)  |  |          | 1.20 | (2) |  |  | 2   |  



---



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | The prices noted in this table are not the prices
    that we actually pay. The federal order minimum prices at any
    given location for Class I raw skim milk or Class I
    butterfat are based on the Class I mover prices plus a
    location differential. Class II prices noted in the table
    are federal minimum prices, applicable at all locations. Our
    actual cost also includes producer premiums, procurement costs
    and other related charges that vary by location and vendor.



|    |                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------
|(1) | Prices are per hundredweight.                                                                                                 
|   
|(2) | Prices are per pound.                                                                                                         
|   
|(3) | We process Class I raw skim milk and
    butterfat into fluid milk products.                                                  
|   
|(4) | We process Class II raw skim milk and
    butterfat into products such as cottage cheese, creams, ice
    cream and sour cream

The Dairy Groups cost of sales ratio
remained flat in 2003. Prices of raw milk were significantly
lower in the first 8 months of 2003 than in 2002. Increased
raw milk prices in the last 4 months of the year did not
adversely affect the cost of sales for the full year.

The increase in the operating expense ratio at
the Dairy Group was primarily due to plant closing costs
recorded in 2003. In 2002 all of our plant closings were as a
result of our acquisition by Dean Foods Company and were accrued
for under purchase accounting. In 2003, we recorded plant
closing costs of $5.9 million as a component of operating
income.

The Dairy Groups operating margin declined
slightly due to the effects of higher plant closing costs in
2003.

12



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##### Table of Contents





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

|                             |  |                        |         |         |  |         |       |         |  |   |         |  |  |  |       |  
|---------------------------- |  | ---------------------- | ------- | ------- |  | ------- | ----- | ------- |  | - | ------- |  |  |  | ----- | -
|                             |  |                       
|                             |  | Year Ended December 31
|                             |  |                       
|                             |  |                        |         |        
|                             |  | 2003                   |         | 2002   
|                             |  |                        |         |        
|                             |  | Dollars                |         | Percent |  | Dollars |       | Percent
|                             |  |                        |         |         |  |         |       |        
|                             |  |                       
|                             |  | (Dollars in thousands)
|Net sales                    |  | $                      | 684,207 |         |  |         | 100.0 | %       |  | $ | 673,604 |  |  |  | 100.0 | %
|Cost of sales                |  |                        | 513,188 |         |  |         | 75.0  |         |  |   | 498,085 |  |  |  | 73.9  |  
|                             |  |                        |         |         |  |         |       |         |  |   |         |  |  |  |       |  
|Gross profit                 |  |                        | 171,019 |         |  |         | 25.0  |         |  |   | 175,519 |  |  |  | 26.1  |  
|Operating costs and expenses |  |                        | 67,963  |         |  |         | 9.9   |         |  |   | 76,645  |  |  |  | 11.4  |  
|                             |  |                        |         |         |  |         |       |         |  |   |         |  |  |  |       |  
|Total operating income       |  | $                      | 103,056 |         |  |         | 15.1  | %       |  | $ | 98,874  |  |  |  | 14.7  | %
|                             |  |                        |         |         |  |         |       |         |  |   |         |  |  |  |       |  

The Specialty Foods Groups net sales
increased by $10.6 million or 1.6%, in 2003 versus 2002.
The change in net sales from 2002 to 2003 was due to the
following:

|                        |  |                       |       |         |  |  |      |   
|----------------------- |  | --------------------- | ----- | ------- |  |  | ---- | --
|                        |  | Dollars               |       | Percent
|                        |  |                       |       |        
|                        |  |                      
|                        |  | (Dollars in millions)
|2002 Net sales          |  | $                     | 673.6 |         |  |  |      |   
|Divestitures            |  |                       | (13.7 | )       |  |  | (2.0 | )%
|Volume                  |  |                       | 15.9  |         |  |  | 2.4  |   
|Pricing and product mix |  |                       | 8.4   |         |  |  | 1.2  |   
|                        |  |                       |       |         |  |  |      |   
|2003 Net sales          |  | $                     | 684.2 |         |  |  | 1.6  | % 
|                        |  |                       |       |         |  |  |      |   

The Specialty Foods Group sold EBI Foods, Ltd in
October 2002. See Note 2 to our Consolidated Financial
Statements. Net of the effects of this divestiture, the
Specialty Foods Groups pickle volumes declined 1.6% in
2003 compared to 2002 due to the bankruptcy of a large customer,
and to the overall effects of economic difficulties in the
foodservice sector as a whole. Approximately 28% of the
Specialty Foods Groups sales were to foodservice customers
in 2003. This decrease was more than offset by a 12.8% increase
in unit volumes of powdered coffee creamers as a result of new
business and a 15.2% increase in unit volumes of nutritional
beverages due to increased demand.

Pricing was up in all categories primarily due to
increased raw material costs that were passed on to customers in
the form of higher selling prices. Also, promotional spending
that is recorded as a reduction of revenue was down by
$15.3 million in 2003 compared to 2002.

The Specialty Foods Groups cost of sales
ratio increased in 2003 as a result of higher raw material
prices, especially glass, and increases in natural gas prices.
The Specialty Foods Group uses a significant amount of natural
gas in its operations.

The operating expense ratio for Specialty Foods
Group declined in 2003 compared to 2002 primarily due to the
sale of EBI Foods, Ltd. in October 2002, which had higher
operating expenses, and to lower bonus expense. Bonus expenses
were $1.3 million less in 2003 as a result of our actual
performance compared to bonus targets.

13



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##### Table of Contents








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

Our Consolidated Financial Statements are
included in this report on the following pages.

|                                                                                                                                                                                                        |                                                                |                                               |     |      |      | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | --------------------------------------------- | --- | ---- | ---- | 
|                                                                                                                                                                                                        |                                                                | Page                                         
|                                                                                                                                                                                                        |                                                                |                                              
|Independent Auditors Report                                                                                                                                                                            |                                                                |                                               | F-1 |     
|Report of Independent Accountants                                                                                                                                                                       |                                                                |                                               | F-2 |     
|Consolidated Balance Sheets as of
    December 31, 2003 and 2002                                                                                                                                        |                                                                |                                               | F-3 |     
|Consolidated Statements of Income for the years
    ended December 31, 2003 and 2002 and the period from
    May 28, 2001 to December 31, 2001 and the fiscal year
    ended May 27, 2001               |                                                                |                                               | F-4 |     
|Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2003 and 2002 and
    the period from May 28, 2001 to December 31, 2001 and
    the fiscal year ended May 27, 2001 |                                                                |                                               | F-5 |     
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2003 and 2002 and the period from
    May 28, 2001 to December 31, 2001 and the fiscal year
    ended May 27, 2001           |                                                                |                                               | F-6 |     
|Notes to Consolidated Financial Statements:                                                                                                                                                             |                                                                |                                               |     |     
|                                                                                                                                                                                                        |                                                                | 1. Summary of Significant Accounting Policies |     |      | F-7  | 
|                                                                                                                                                                                                        |                                                                | 2. Acquisition by Dean Foods Company          |     |      | F-12 | 
|                                                                                                                                                                                                        |                                                                | 3. Acquisitions                               |     |      | F-15 | 
|                                                                                                                                                                                                        |                                                                | 4. Discontinued Operations                    |     |      | F-16 | 
|                                                                                                                                                                                                        |                                                                | 5. Gain on Sale of Note                       |     |      | F-16 | 
|                                                                                                                                                                                                        |                                                                | 6. Inventories                                |     |      | F-16 | 
|                                                                                                                                                                                                        |                                                                | 7. Property, Plant and Equipment              |     |      | F-17 | 
|                                                                                                                                                                                                        |                                                                | 8. Intangible Assets                          |     |      | F-17 | 
|                                                                                                                                                                                                        |                                                                | 9. Accounts Payable and Accrued Expenses      |     |      | F-19 | 
|                                                                                                                                                                                                        | 10. Income Taxes                                               |                                               |     | F-19 |     
|                                                                                                                                                                                                        | 11. Long-Term Debt                                             |                                               |     | F-21 |     
|                                                                                                                                                                                                        | 12. Stockholders Equity                                       |                                               |     | F-22 |     
|                                                                                                                                                                                                        | 13. Other Comprehensive Income                                 |                                               |     | F-23 |     
|                                                                                                                                                                                                        | 14 Employee Retirement and Profit Sharing
    Plans            |                                               |     | F-24 |     
|                                                                                                                                                                                                        | 15. Postretirement Benefits Other Than
    Pensions            |                                               |     | F-27 |     
|                                                                                                                                                                                                        | 16. Plant Closing and Rationalization Costs                    |                                               |     | F-29 |     
|                                                                                                                                                                                                        | 17. Supplemental Cash Flow Information                         |                                               |     | F-31 |     
|                                                                                                                                                                                                        | 18. Commitments and Contingencies                              |                                               |     | F-32 |     
|                                                                                                                                                                                                        | 19. Fair Value of Financial Instruments                        |                                               |     | F-34 |     
|                                                                                                                                                                                                        | 20. Segment and Geographic Information and
    Major Customers |                                               |     | F-34 |     
|                                                                                                                                                                                                        | 21. Quarterly Results of Operations
    (Unaudited)            |                                               |     | F-36 |     
|                                                                                                                                                                                                        | 22. Subsequent Events                                          |                                               |     | F-37 |     

14



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors

Dean Holding Company


Dallas, Texas


We have audited the accompanying consolidated
balance sheets of Dean Holding Company and subsidiaries (the
Company) (formerly known as Dean Foods Company) as
of December 31, 2003 and 2002 (reflecting the new basis of
accounting as a result of the purchase business combination
discussed in Note 2). We have also audited the consolidated
statements of income, stockholders equity and cash flows
for the years ended December 31, 2003 and 2002 and the
period from May 28, 2001 to December 31, 2001. These
consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the consolidated financial position of the Company as
of December 31, 2003 and 2002, and their results of
operations and their cash flows of the Company for the years
ended December 31, 2003 and 2002 and the period from
May 28, 2001 to December 31, 2001 in conformity with
accounting principles generally accepted in the United States of
America.

As discussed in Note 1 to the consolidated
financial statements, in 2002 the Company changed its method of
accounting for goodwill and other intangible assets to conform
to Statement of Financial Accounting Standards No. 142.



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

Dallas, Texas

March 11, 2004


F-1



---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and

Shareholder of Dean Holding Company


In our opinion, the consolidated statements of
income, stockholders equity and cash flows for the fiscal
year ended May 27, 2001 present fairly, in all material
respects, the financial position, results of operations and cash
flows of Dean Holding Company and its subsidiaries (formerly
Dean Foods Company, the Predecessor Company) for the
fiscal year ended May 27, 2001, in conformity with
accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of
Dean Holding Companys management; our responsibility is to
express an opinion on these financial statements based on our
audit. We conducted our audit of these statements in accordance
with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.



| |                               
| | ------------------------------
| | /s/ PRICEWATERHOUSECOOPERS LLP

June 26, 2001, except as to Notes 2 and
4, which

are as of December 21, 2001


Chicago, Illinois


F-2



---



##### Table of Contents



DEAN HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS

|                                         |                                                                                                                             |                            |           |           |           |  |           |           |           | 
|---------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | --------- | --------- |  | --------- | --------- | --------- | 
|                                         |                                                                                                                             |                           
|                                         |                                                                                                                             | Successor                 
|                                         |                                                                                                                             |                           
|                                         |                                                                                                                             |                           
|                                         |                                                                                                                             | December 31               
|                                         |                                                                                                                             |                           
|                                         |                                                                                                                             | 2003                       |           | 2002     
|ASSETS                                   |                                                                                                                             |                            |           |          
|                                         |                                                                                                                             |                           
|                                         |                                                                                                                             | (Dollars in thousands     
|                                         |                                                                                                                             | except share data)        
|Current assets:                          |                                                                                                                             |                            |           |           |           |  |           |          
|                                         | Cash and cash equivalents                                                                                                   |                            | $         | 23,963    |           |  | $         | 27,831    |          
|                                         | Receivables, net of allowance for doubtful
    accounts of $12,017 and $8,872                                               |                            |           | 269,792   |           |  |           | 247,432   |          
|                                         | Inventories                                                                                                                 |                            |           | 234,311   |           |  |           | 218,124   |          
|                                         | Deferred income taxes                                                                                                       |                            |           | 71,946    |           |  |           | 93,018    |          
|                                         | Prepaid expenses and other current assets                                                                                   |                            |           | 16,047    |           |  |           | 20,651    |          
|                                         |                                                                                                                             |                            |           |           |           |  |           |          
|                                         |                                                                                                                             | Total current assets       |           |           | 616,059   |  |           |           | 607,056   | 
|Property, plant and equipment            |                                                                                                                             |                            | 638,267   |           |           |  | 615,573   |          
|Goodwill                                 |                                                                                                                             |                            | 1,421,711 |           |           |  | 1,425,398 |          
|Identifiable intangible and other assets |                                                                                                                             |                            | 230,570   |           |           |  | 227,796   |          
|                                         |                                                                                                                             |                            |           |           |           |  |           |          
|                                         |                                                                                                                             | Total                      |           | $         | 2,906,607 |  |           | $         | 2,875,823 | 
|                                         |                                                                                                                             |                            |           |           |           |  |           |          
|                                        
|LIABILITIES AND STOCKHOLDERS
    EQUITY
|Current liabilities:                     |                                                                                                                             |                            |           |           |           |  |           |          
|                                         | Accounts payable and accrued expenses                                                                                       |                            | $         | 345,806   |           |  | $         | 367,884   |          
|                                         | Income taxes payable                                                                                                        |                            |           | 37,475    |           |  |           | 58,987    |          
|                                         | Current portion of long-term debt                                                                                           |                            |           | 3,509     |           |  |           | 307       |          
|                                         |                                                                                                                             |                            |           |           |           |  |           |          
|                                         |                                                                                                                             | Total current liabilities  |           |           | 386,790   |  |           |           | 427,178   | 
|Long-term debt                           |                                                                                                                             |                            | 794,062   |           |           |  | 727,873   |          
|Other long-term liabilities              |                                                                                                                             |                            | 174,044   |           |           |  | 186,417   |          
|Deferred income taxes                    |                                                                                                                             |                            | 212,889   |           |           |  | 166,302   |          
|Commitments and contingencies (Note 18)  |                                                                                                                             |                            |           |           |           |  |           |          
|Stockholders equity:                    |                                                                                                                             |                            |           |           |           |  |           |          
|                                         | Common stock, 1,000 shares issued and
    outstanding at December 31, 2003 and 2002 with a par value
    of $0.01 per share |                            |           |           |           |  |           |           |          
|                                         | Additional paid-in capital                                                                                                  |                            |           | 1,369,392 |           |  |           | 1,356,816 |          
|                                         | Retained earnings                                                                                                           |                            |           | 310,529   |           |  |           | 149,643   |          
|                                         | Receivable from parent                                                                                                      |                            |           | (330,651  | )         |  |           | (138,331  | )        
|                                         | Accumulated other comprehensive loss                                                                                        |                            |           | (10,448   | )         |  |           | (75       | )        
|                                         |                                                                                                                             |                            |           |           |           |  |           |          
|                                         |                                                                                                                             | Total stockholders equity |           |           | 1,338,822 |  |           |           | 1,368,053 | 
|                                         |                                                                                                                             |                            |           |           |           |  |           |          
|                                         |                                                                                                                             | Total                      |           | $         | 2,906,607 |  |           | $         | 2,875,823 | 
|                                         |                                                                                                                             |                            |           |           |           |  |           |          

See Notes to Consolidated Financial Statements.

F-3



---



##### Table of Contents



DEAN HOLDING COMPANY

CONSOLIDATED STATEMENTS OF INCOME

|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |         |         | 
|--------------------------------------------------------- | --------------------------------------- | ---------------------------------- | --------- | ---------------------- | ------- | ------------- | --------- | ------- | ------- | - | --------- | ------- | ------- | - | --------- | ------- | ------- | 
|                                                          |                                         |                                    |           |                       
|                                                          |                                         | Successor                          |           | Predecessor           
|                                                          |                                         |                                    |           |                       
|                                                          |                                         |                                    |           |                       
|                                                          |                                         | Year Ended                         |           | Period from            |         |              
|                                                          |                                         | December 31                        |           | May 28, 2001 to        |         | Fiscal Year  
|                                                          |                                         |                                    |           | December 31,           |         | Ended May 27,
|                                                          |                                         | 2003                               |           | 2002                   |         | 2001          |           | 2001   
|                                                          |                                         |                                    |           |                        |         |               |           |        
|                                                          |                                         |                                    |           |                       
|                                                          |                                         | (Dollars in thousands)             |           | (Dollars in thousands)
|Net sales                                                 |                                         | $                                  | 3,877,038 |                        |         | $             | 3,855,506 |         |         | $ | 2,470,818 |         |         | $ | 3,982,669 |        
|Cost of sales                                             |                                         |                                    | 2,913,553 |                        |         |               | 2,895,647 |         |         |   | 1,930,185 |         |         |   | 3,074,635 |        
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|Gross profit                                              |                                         |                                    | 963,485   |                        |         |               | 959,859   |         |         |   | 540,633   |         |         |   | 908,034   |        
|Operating costs and expenses:                             |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|                                                          | Selling and distribution                |                                    |           | 515,626                |         |               |           | 525,466 |         |   |           | 311,403 |         |   |           | 563,272 |        
|                                                          | General and administrative              |                                    |           | 130,399                |         |               |           | 131,918 |         |   |           | 105,904 |         |   |           | 135,300 |        
|                                                          | Amortization of intangibles             |                                    |           | 3,040                  |         |               |           | 5,367   |         |   |           | 12,983  |         |   |           | 22,774  |        
|                                                          | Plant closing and rationalization costs |                                    |           | 5,919                  |         |               |           |         |         |   |           | 366     |         |   |           |         |        
|                                                          | Transaction costs                       |                                    |           |                        |         |               |           |         |         |   |           | 29,981  |         |   |           | 22,151  |        
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|                                                          |                                         | Total operating costs and expenses |           |                        | 654,984 |               |           |         | 662,751 |   |           |         | 460,637 |   |           |         | 743,497 | 
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|Operating income                                          |                                         |                                    | 308,501   |                        |         |               | 297,108   |         |         |   | 79,996    |         |         |   | 164,537   |        
|Other (income) expense:                                   |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|                                                          | Interest expense, net                   |                                    |           | 55,183                 |         |               |           | 56,287  |         |   |           | 38,417  |         |   |           | 70,655  |        
|                                                          | Gain on the sale of note                |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           | (10,000 | )      
|                                                          | Other (income) expense, net             |                                    |           | (1,909                 | )       |               |           | (727    | )       |   |           | 5,078   |         |   |           | (6,668  | )      
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|                                                          |                                         | Total other expense                |           |                        | 53,274  |               |           |         | 55,560  |   |           |         | 43,495  |   |           |         | 53,987  | 
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|Income from continuing operations before income
    taxes |                                         |                                    | 255,227   |                        |         |               | 241,548   |         |         |   | 36,501    |         |         |   | 110,550   |        
|Income taxes                                              |                                         |                                    | 94,341    |                        |         |               | 91,905    |         |         |   | 13,727    |         |         |   | 42,009    |        
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|Income from continuing operations                         |                                         |                                    | 160,886   |                        |         |               | 149,643   |         |         |   | 22,774    |         |         |   | 68,541    |        
|Income from discontinued operations, net of tax           |                                         |                                    |           |                        |         |               |           |         |         |   | 13,141    |         |         |   | 6,111     |        
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        
|Net income                                                |                                         | $                                  | 160,886   |                        |         | $             | 149,643   |         |         | $ | 35,915    |         |         | $ | 74,652    |        
|                                                          |                                         |                                    |           |                        |         |               |           |         |         |   |           |         |         |   |           |        

See Notes to Consolidated Financial Statements.

F-4



---



##### Table of Contents



DEAN HOLDING COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   |         |         |  
|------------ | -------------------------- | --------------------------------------------------------- | ------------------------------------ | ------------ | ------- | ---------- | - | -------- | ------- | ---------- |  | ------------- | - | -------- | - | ------------- |  | ------------- | - | --------- | --------- | ------ | - | ------- | -------- | - | - | -------- | -------- | - | - | ------- | ------ | ------ | - | -------- | -------- | - | - | --------- | --------- | ------ | - | - | ------- | ------- | -
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   | Accumulated   |  |               |   |           |           |       
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  | Other         |   |          |   |               |  |              
|             |                            | Common Stock                                              |                                      | Common Stock |         | Additional |   |          |         | Receivable |  | Comprehensive |   |          |   | Total         |  |              
|             |                            |                                                           |                                      |              |         | Paid-In    |   | Retained |         | from       |  | Income        |   | Treasury |   | Stockholders |  | Comprehensive
|             |                            | Shares                                                    |                                      | Amount       |         | Shares     |   | Amount   |         | Capital    |  | Earnings      |   | Parent   |   | (Loss)        |  | Stock         |   | Equity    |           | Income
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |       
|             |                            |                                                          
|             |                            | (In thousands)                                           
|Predecessor: |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             | Balance, May 29, 2000      |                                                           |                                      | 35,485       |         |            | $ | 42,365   |         |            |  |               |   |          | $ |               |  |               | $ | 65,172    |           |        | $ | 803,096 |          |   | $ |          |          |   | $ | (361    | )      |        | $ | (252,587 | )        |   | $ | 657,685   |           |        |   |   |        
|             |                            | Issuance of common stock                                  |                                      |              | 46      |            |   |          | 46      |            |  |               |   |          |   |               |  |               |   |           | 1,494     |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | 1,540     |        |   |   |         |        
|             |                            | Exercise of stock options                                 |                                      |              | 105     |            |   |          | 105     |            |  |               |   |          |   |               |  |               |   |           | 3,191     |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | 3,296     |        |   |   |         |        
|             |                            | Issuance of treasury stock                                |                                      |              | 4       |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           | (82       | )      |   |         |          |   |   |          |          |   |   |         |        |        |   |          | 82       |   |   |           |           |        |   |   |         |        
|             |                            | Net income                                                |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         | 74,652   |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | 74,652    |        |   | $ | 74,652  |        
|             |                            | Cash dividend declared $.90 per share                     |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         | (32,028  | ) |   |          |          |   |   |         |        |        |   |          |          |   |   |           | (32,028   | )      |   |   |         |        
|             |                            | Other                                                     |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           | 745       |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          | (745     | ) |   |           |           |        |   |   |         |        
|             |                            | Other comprehensive income (Note 13):                     |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   |         |        
|             |                            |                                                           | Cumulative translation adjustment    |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        | (529   | ) |          |          |   |   |           |           | (529   | ) |   |         | (529    | )
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             |                            |                                                           | Comprehensive income                 |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   | $       | 74,123  |  
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             | Balance, May 27, 2001      |                                                           |                                      | 35,640       |         |            |   | 42,516   |         |            |  |               |   |          |   |               |  |               |   | 70,520    |           |        |   | 845,720 |          |   |   |          |          |   |   | (890    | )      |        |   | (253,250 | )        |   |   | 704,616   |           |        |   |   |        
|             |                            | Exercise of stock options                                 |                                      |              | 401     |            |   |          | 401     |            |  |               |   |          |   |               |  |               |   |           | 17,470    |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | 17,871    |        |   |   |         |        
|             |                            | Net income                                                |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         | 35,915   |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | 35,915    |        |   | $ | 35,915  |        
|             |                            | Cash dividend declared $.45 per share                     |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         | (16,164  | ) |   |          |          |   |   |         |        |        |   |          |          |   |   |           | (16,164   | )      |   |   |         |        
|             |                            | Other comprehensive income (Note 13):                     |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   |         |        
|             |                            |                                                           | Cumulative translation adjustment    |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        | (138   | ) |          |          |   |   |           |           | (138   | ) |   |         | (138    | )
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             |                            |                                                           | Comprehensive income                 |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   | $       | 35,777  |  
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             |                            | Predecessor balance, December 31, 2001                    |                                      |              | 36,041  |            |   |          | 42,917  |            |  |               |   |          |   |               |  |               |   |           | 87,990    |        |   |         | 865,471  |   |   |          |          |   |   |         | (1,028 | )      |   |          | (253,250 | ) |   |           | 742,100   |        |   |   |         |        
|Successor:   |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             |                            | Net consideration paid for acquisition                    |                                      |              |         |            |   |          |         |            |  |               | 1 |          |   |               |  |               |   |           | 1,640,387 |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | 1,640,387 |        |   |   |         |        
|             |                            | Receivable from parent activity                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          | (29,000  | ) |   |         |        |        |   |          |          |   |   |           | (29,000   | )      |   |   |         |        
|             |                            | Purchase accounting adjustments and
    reclassifications |                                      |              | (36,041 | )          |   |          | (42,917 | )          |  |               |   |          |   |               |  |               |   |           | (87,990   | )      |   |         | (865,471 | ) |   |          |          |   |   |         | 1,028  |        |   |          | 253,250  |   |   |           | (742,100  | )      |   |   |         |        
|             |                            | Dividend of National Refrigerated Products to
    parent  |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           | (408,252  | )      |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | (408,252  | )      |   |   |         |        
|             |                            | Contribution of Dean SoCal from parent                    |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           | 94,220    |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           | 94,220    |        |   |   |         |        
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             | Balance, December 31, 2001 |                                                           |                                      | 0            |         |            |   | 0        |         |            |  | 1             |   |          |   | 0             |  |               |   | 1,326,355 |           |        |   | 0       |          |   |   | (29,000  | )        |   |   | 0       |        |        |   | 0        |          |   |   | 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 13):                     |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   |         |        
|             |                            |                                                           | Cumulative translation adjustment    |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        | (75    | ) |          |          |   |   |           |           | (75    | ) |   |         | (75     | )
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             |                            |                                                           | Comprehensive income                 |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   | $       | 149,568 |  
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  
|             | Balance, December 31, 2002 |                                                           |                                      | 0            |         |            |   | 0        |         |            |  | 1             |   |          |   | 0             |  |               |   | 1,356,816 |           |        |   | 149,643 |          |   |   | (138,331 | )        |   |   | (75     | )      |        |   | 0        |          |   |   | 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 13):                     |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |   |         |        
|             |                            |                                                           | 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 |                                                           |                                      | 0            |         |            | $ | 0        |         |            |  | 1             |   |          | $ | 0             |  |               | $ | 1,369,392 |           |        | $ | 310,529 |          |   | $ | (330,651 | )        |   | $ | (10,448 | )      |        | $ | 0        |          |   | $ | 1,338,822 |           |        |   |   |        
|             |                            |                                                           |                                      |              |         |            |   |          |         |            |  |               |   |          |   |               |  |               |   |           |           |        |   |         |          |   |   |          |          |   |   |         |        |        |   |          |          |   |   |           |           |        |   |  

See Notes to Consolidated Financial Statements.

F-5



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##### Table of Contents



DEAN HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |          |         |          |  
|---------------------------------------------------------- | ------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ------------------------------------------------------- | --------------- | ------- | ------------- | ------ | -------- | ------- | -------- | ------ | ------- | ------- | ------- | ------- | -------- | ------- | -------- | -
|                                                           |                                                                                       |                                                                       |                                                         |                
|                                                           |                                                                                       | Successor                                                             |                                                         | Predecessor    
|                                                           |                                                                                       |                                                                       |                                                         |                
|                                                           |                                                                                       |                                                                       |                                                         | Period from     |         |              
|                                                           |                                                                                       | Year Ended December 31                                                |                                                         | May 28, 2001    |         | Fiscal Year  
|                                                           |                                                                                       |                                                                       |                                                         | to December 31, |         | Ended May 27,
|                                                           |                                                                                       | 2003                                                                  |                                                         | 2002            |         | 2001          |        | 2001    
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |         
|                                                           |                                                                                       |                                                                       |                                                         |                
|                                                           |                                                                                       | (In thousands)                                                        |                                                         | (In thousands) 
|Cash flows from operating activities:                      |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|                                                           | Net income from continuing operations                                                 |                                                                       | $                                                       | 160,886         |         |               | $      | 149,643  |         |          | $      | 22,774  |         |         | $       | 68,541   |        
|                                                           | Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |          |        
|                                                           |                                                                                       | Depreciation and amortization                                         |                                                         |                 | 72,996  |               |        |          | 67,798  |          |        |         | 64,635  |         |         |          | 118,709 |         
|                                                           |                                                                                       | (Gain) loss on disposition of assets                                  |                                                         |                 | 120     |               |        |          |         |          |        |         | 6,383   |         |         |          | (3,848  | )       
|                                                           |                                                                                       | Deferred income taxes                                                 |                                                         |                 | 66,783  |               |        |          | 62,079  |          |        |         | (8,648  | )       |         |          | 29,984  |         
|                                                           |                                                                                       | Other                                                                 |                                                         |                 | (3,113  | )             |        |          | 1,155   |          |        |         | (54     | )       |         |          | 6,455   |         
|                                                           |                                                                                       | Changes in operating assets and liabilities, net
    of acquisitions: |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |          |         |         
|                                                           |                                                                                       | Receivables                                                           |                                                         |                 | (22,764 | )             |        |          | 38,946  |          |        |         | 46,112  |         |         |          | (15,692 | )       
|                                                           |                                                                                       | Inventories                                                           |                                                         |                 | (13,354 | )             |        |          | 7,670   |          |        |         | (23,232 | )       |         |          | (26,574 | )       
|                                                           |                                                                                       | Prepaid expenses and other assets                                     |                                                         |                 | 26,895  |               |        |          | 21,305  |          |        |         | 11,373  |         |         |          | 1,608   |         
|                                                           |                                                                                       | Accounts payable and accrued expenses                                 |                                                         |                 | (51,190 | )             |        |          | (94,546 | )        |        |         | (80,415 | )       |         |          | 38,156  |         
|                                                           |                                                                                       | Income taxes payable                                                  |                                                         |                 | (21,512 | )             |        |          | 14,160  |          |        |         | 17,585  |         |         |          | (2,840  | )       
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|                                                           |                                                                                       |                                                                       | Net cash provided by operating activities               |                 |         | 215,747       |        |          |         | 268,210  |        |         |         | 56,513  |         |          |         | 214,499  |  
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|Cash flows from investing activities:                      |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|                                                           | Additions to property, plant and equipment                                            |                                                                       |                                                         | (95,122         | )       |               |        | (74,619  | )       |          |        | (48,269 | )       |         |         | (105,978 | )      
|                                                           | Proceeds from the sale of fixed assets                                                |                                                                       |                                                         | 3,335           |         |               |        | 1,727    |         |          |        | 2,742   |         |         |         | 7,445    |        
|                                                           | Capitalized information systems costs                                                 |                                                                       |                                                         |                 |         |               |        |          |         |          |        | (2,765  | )       |         |         | (4,100   | )      
|                                                           | Cash outflows for acquisitions and investments                                        |                                                                       |                                                         | (13,763         | )       |               |        | (17,156  | )       |          |        | (1,816  | )       |         |         | (171,182 | )      
|                                                           | Net proceeds from divestitures                                                        |                                                                       |                                                         |                 |         |               |        | 29,962   |         |          |        |         |         |         |         |          |        
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|                                                           |                                                                                       |                                                                       | Net cash used in investing activities                   |                 |         | (105,550      | )      |          |         | (60,086  | )      |         |         | (50,108 | )       |          |         | (273,815 | )
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|Cash flows from financing activities:                      |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|                                                           | Proceeds from issuance of debt                                                        |                                                                       |                                                         | 71,979          |         |               |        |          |         |          |        | 4,678   |         |         |         | 245,818  |        
|                                                           | Repayment of debt                                                                     |                                                                       |                                                         | (6,300          | )       |               |        | (86,552  | )       |          |        | (52,216 | )       |         |         | (273,666 | )      
|                                                           | Borrowing under revolving credit agreement, net                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        | 40,000  |         |         |         | 209,000  |        
|                                                           | Issuance of common stock, net of expenses                                             |                                                                       |                                                         |                 |         |               |        |          |         |          |        | 17,871  |         |         |         | 4,554    |        
|                                                           | Cash dividends paid                                                                   |                                                                       |                                                         |                 |         |               |        |          |         |          |        | (24,367 | )       |         |         | (31,701  | )      
|                                                           | Additional investment from parent                                                     |                                                                       |                                                         | 12,576          |         |               |        |          |         |          |        |         |         |         |         |          |        
|                                                           | Distribution to parent                                                                |                                                                       |                                                         | (192,320        | )       |               |        | (109,661 | )       |          |        | (29,000 | )       |         |         |          |        
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|                                                           |                                                                                       |                                                                       | Net cash provided by (used in) financing
    activities |                 |         | (114,065      | )      |          |         | (196,213 | )      |         |         | (43,034 | )       |          |         | 154,005  |  
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|Net cash provided by (used in) discontinued
    operations |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          | 27,564 |         |         |         | (96,317 | )       
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|Increase (decrease) in cash and cash equivalents           |                                                                                       |                                                                       | (3,868                                                  | )               |         |               | 11,911 |          |         |          | (9,065 | )       |         |         | (1,628  | )       
|Cash and cash equivalents, beginning of period             |                                                                                       |                                                                       | 27,831                                                  |                 |         |               | 15,920 |          |         |          | 24,985 |         |         |         | 26,613  |         
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         
|Cash and cash equivalents, end of period                   |                                                                                       | $                                                                     | 23,963                                                  |                 |         | $             | 27,831 |          |         | $        | 15,920 |         |         | $       | 24,985  |         
|                                                           |                                                                                       |                                                                       |                                                         |                 |         |               |        |          |         |          |        |         |         |         |         |         

See Notes to Consolidated Financial Statements.

F-6



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##### Table of Contents



DEAN HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended December 31, 2003 and 2002
and the Period From May 28, 2001 to December 31,
2001,


and the Fiscal Year Ended May 27,
2001




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

Nature of Our
Business We are a
wholly-owned subsidiary of Dean Foods Company (formerly known as
Suiza Foods Corporation), a leading food and beverage company.
Our Dairy Group segment is part of the larger Dairy Group
segment of Dean Foods Company and our Specialty Foods Group
segment comprises the entirety of Dean Foods Companys
Specialty Foods Group segment.

Change in Fiscal
Year Effective
December 31, 2001, we changed our fiscal year end to
December 31, rather than on the last Sunday in May.

Basis of
Presentation Our
Consolidated Financial Statements include the accounts of our
wholly-owned subsidiaries. All significant intercompany balances
and transactions are eliminated in consolidation.

We have chosen December 31, 2001 as a
date of convenience for recording the effects of our
acquisition by Dean Foods Company. See Note 2. Accordingly,
for financial statement purposes, we have treated the merger as
if it occurred on December 31, 2001 rather than
December 21, 2001.

Our financial statements for all periods prior to
December 31, 2001 have been prepared using our historical
basis of accounting and are indicated in our consolidated
financial statements as Predecessor.

We are a wholly-owned subsidiary of Dean Foods
Company. Dean Foods Company provides us with management support
in return for a management fee. The management fee is based on
budgeted annual expenses for Dean Foods Companys corporate
headquarters, which is then allocated among the segments of Dean
Foods Company. Dean Foods Company began charging us management
fees in the second quarter of 2002. Dean Foods Company charged
us management fees of $37 million and $24.3 million
for the years ended December 31, 2003 and 2002. Our cash is
available for use by, and is regularly transferred to, Dean
Foods Company at its discretion. Cash that has been transferred
to Dean Foods Company is included in Receivable from
Parent on our balance sheet.

Use of
Estimates The preparation
of our Consolidated Financial Statements in conformity with
generally accepted accounting principles
(GAAP)requires us to use our judgment to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the Consolidated Financial Statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these
estimates under different assumptions or conditions.

Cash
Equivalents We consider
temporary cash investments with a remaining maturity of three
months or less to be cash equivalents.

Inventories
Inventories are stated at the lower of cost or market. Dairy and
certain specialty products inventories are valued on the
first-in, first-out (FIFO) method, while our pickle
inventories are valued on the last-in, first-out
(LIFO) method. The costs of finished goods
inventories include raw materials, direct labor and indirect
production and overhead costs.

Property, Plant and
Equipment Property, plant
and equipment are stated at acquisition cost, plus capitalized
interest on borrowings during the actual construction period of
major capital projects. Also included in property, plant and
equipment are certain direct costs related to the implementation
of computer

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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

software for internal use. Depreciation and
amortization are calculated using the straight-line method over
the estimated useful lives of the assets as follows:

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

Predecessor depreciation and amortization were
provided using the straight-line method over the estimated
useful lives of the assets, as follows:

|                           |  |              
|-------------------------- |  | -------------
|Asset                      |  | Useful Life  
|                           |  |              
|Buildings and improvements |  | 5 to 40 years
|Machinery and equipment    |  | 2 to 25 years
|Transportation equipment   |  | 5 to 12 years

Impairment tests are performed when circumstances
indicate the carrying value may not be recoverable. Capitalized
leases are amortized over the shorter of their lease term or
their estimated useful lives. Expenditures for repairs and
maintenance which do not improve or extend the life of the
assets are expensed as incurred.

Intangible and Other
Assets Prior to
January 1, 2002, intangibles were amortized over their
related estimated useful lives as follows:

|                                |                            |                                          |                                                          
|------------------------------- | -------------------------- | ---------------------------------------- | ---------------------------------------------------------
|Asset                           |                            | Useful Life                             
|                                |                            |                                         
|Goodwill                        |                            | Straight-line method over 25 to 40 years
|Identifiable intangible assets: |                            |                                         
|                                | Customer lists             |                                          | Straight-line method over 7 to 10 years                  
|                                | Customer supply contracts  |                                          | Straight-line method over the terms of the
    agreements
|                                | Non-competition agreements |                                          | Straight-line method over 15 years                       

Effective January 1, 2002, in accordance
with Statement of Financial Accounting Standards
(SFAS) No. 142, goodwill and other intangible
assets determined to have indefinite lives are no longer
amortized. Instead, we now conduct impairment tests on our
goodwill, trademarks and other intangible assets with indefinite
lives annually and when circumstances indicate that the carrying
value may not be recoverable. To determine whether an impairment
exists, we use present value techniques.

Foreign Currency
Translation The financial
statements of our foreign subsidiaries are translated to
U.S. dollars in accordance with the provisions of
SFAS No. 52, Foreign Currency Translation.
The functional currency of our foreign subsidiaries is generally
the local currency of the country. Accordingly, assets and
liabilities of the foreign subsidiaries are translated to
U.S. dollars at year-end exchange rates. Income and expense
items are translated at the average rates prevailing during the
year. Changes in exchange rates, which affect cash flows and the
related receivables or payables are recognized as transaction
gains and losses in the determination of net income. The
cumulative translation adjustment in stockholders equity
reflects the unrealized adjustments resulting from translating
the financial statements of our foreign subsidiaries.

Employee Stock-Based
Compensation Prior to our
acquisition by Dean Foods Company, we measured compensation
expense for our stock-based employee compensation plans using
the intrinsic value method and provided the required pro forma
disclosures of the effect on net income and earnings per share
as if the fair value-based method had been applied in measuring
compensation expense. As a result of our acquisition by Dean
Foods Company, unexercised stock options at the transaction date
that had been granted under our

F-8



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

plans were automatically converted into options
to acquire Dean Foods Company shares. The estimated fair value
assigned to such options as of the transaction date was
accounted for by Dean Foods Company as part of the cost of the
acquisition. We had no options outstanding at December 31,
2003 and 2002.

We followed Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for
our stock options. All options granted were to employees,
officers or directors. Stock options were granted under these
plans at exercise prices which approximated or exceeded market
value at the grant date. Compensation expense was recognized for
certain option grants under plans that were modified, thereby
requiring variable plan accounting. Had compensation expense
been determined for stock option grants using fair value methods
provided for in SFAS No. 123, Accounting for
Stock-Based Compensation, our pro forma net income and net
income per common share would have been the amounts indicated
below:

|                                                  |                                     |                |        |       |    
|------------------------------------------------- | ----------------------------------- | -------------- | ------ | ----- | ---
|                                                  |                                     | Predecessor   
|                                                  |                                     |               
|                                                  |                                     | Fiscal Year   
|                                                  |                                     | Ended May 27, 
|                                                  |                                     | 2001          
|                                                  |                                     |               
|                                                  |                                     | (In thousands)
|Net income, as reported                           |                                     | $              | 74,652 |      
|Less: stock based compensation, net of income tax |                                     |                | 5,910  |      
|                                                  |                                     |                |        |      
|Pro forma net income                              |                                     | $              | 68,742 |      
|                                                  |                                     |                |        |      
|Stock option share data:                          |                                     |                |        |      
|                                                  | Stock options granted during period |                |        | 1,187 |    
|                                                  | Weighted average option fair value  |                | $      | 11.55 | (a)



---



|    |  |                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Calculated in accordance with the Black-Scholes
    option pricing model, using the following assumptions: expected
    volatility of 26.8%; expected dividend yield of 2.0%; expected
    option term of eight years and risk-free rates of return as of
    the date of grant of 6.4% based on the yield of seven-year
    U.S. Treasury securities.

Revenue Recognition and Accounts
Receivable Revenue is
recognized when persuasive evidence of an arrangement exists,
the price is fixed or determinable, the product has been shipped
to the customer and there is reasonable assurance of collection
of the sale proceeds. In accordance with Emerging Issues Task
Force (EITF) 01-09, Accounting for
Consideration Given by a Vendor or to a Customer, revenue
is reduced by certain sales incentives, some of which are
recorded by estimating expense based on our historical
experience. We provide credit terms to customers generally
ranging up to 30 days, perform ongoing credit evaluation of
our customers and maintain allowances for potential credit
losses based on historical experience.

Income
Taxes We (including all of
our wholly-owned U.S. operating subsidiaries) are included
in Dean Foods Companys consolidated tax return. Our income
taxes are determined as if we were filing a separate tax return.
Our foreign subsidiary is required to file separate income tax
returns in its local jurisdictions. Certain distributions from
this subsidiary are subject to U.S. income taxes; however,
available tax credits of the subsidiary may reduce or eliminate
these U.S. tax liabilities. Our foreign earnings are expected to
be reinvested indefinitely. At December 31, 2003 no
provision had been made for U.S. federal or state income
tax on approximately $1.9 million of accumulated foreign
earnings.

Deferred income taxes are provided for temporary
differences between amounts recorded in the Consolidated
Financial Statements and tax bases of assets and liabilities
using current tax rates. Deferred tax assets, including the
benefit of net operating loss carry-forwards, are evaluated
based on the guidelines for realization and may be reduced by a
valuation allowance if deemed necessary.

F-9



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Advertising
Expense Advertising
expense is comprised of media, agency and production expenses.
Advertising expenses are charged to income during the period
incurred, except for expenses related to the development of a
major commercial or media campaign, which are charged to income
during the period in which the advertisement or campaign is
first presented by the media. Advertising expenses charged to
income totaled $27 million and $25.4 million for the
years ended December 31, 2003 and 2002, $18.4 million
for the period from May 28, 2001 to December 31, 2001,
and $39.4 million in fiscal year 2001. Additionally,
prepaid advertising costs for media advertising not yet released
were $0 and $1.7 million at December 31, 2003 and
2002, respectively.

Shipping and Handling
Fees In September 2000,
the EITF reached a consensus on Issue No. 00-10,
Accounting for Shipping and Handling Fees and Costs,
which became effective for us in the fourth quarter of fiscal
year 2001. This issue required the disclosure of our accounting
policies for shipping and handling costs and their income
statement classification. Previously, we classified shipping and
handling amounts billed to customers as revenue. However,
certain costs incurred related to shipping and handling were
classified as a reduction of revenue. As a result of our
adoption of Issue No. 00-10 in the fourth quarter of fiscal
2001, our shipping and handling costs are now included either in
cost of products sold or delivery, selling and administrative
expenses, depending on the nature of such costs. Accordingly,
prior years shipping and handling costs were reclassified
from net sales to cost of products sold and delivery, selling
and administrative expenses. Those amounts totaled
$30.2 million in fiscal year 2001. Shipping and handling
costs included in costs of sales reflect the cost of shipping
products to customers through third party carriers, inventory
warehouse costs, product loading and handling costs and costs
associated with transporting finished products from our
manufacturing facilities to our own distribution warehouses.
Shipping and handling costs in selling and distribution expense
consist primarily of route delivery costs for both company-owned
delivery routes and independent distributor routes, to the
extent that such independent distributors are paid a delivery
fee. Shipping and handling costs that were recorded as a
component of selling and distribution expense were approximately
$386.6 million, $375 million, $252 million, and
$393.1 million during the years ended December 31,
2003 and 2002 and the period from May 28, 2001 to
December 31, 2001 and fiscal year 2001, respectively.

Insurance
Accruals We retain
selected levels of property and casualty risks, primarily
related to employee health care, workers compensation
claims and other casualty losses. Many of these potential losses
are covered under conventional insurance programs with third
party carriers with high deductible limits. In other areas we
are self-insured with stop-loss coverages. Accrued liabilities
for incurred but not reported losses related to these retained
risks are calculated based upon loss development factors which
contemplate a number of factors including claims history and
expected trends. These loss development factors are developed by
us in consultation with external insurance brokers and
actuaries. Some of our self-insured programs are administered by
Dean Foods Company.

Plant Closing and Rationalization Costs We have an on-going
overall plant closing and rationalization strategy. We
periodically record plant closing and rationalization charges
when we have identified a plant for closure or other
rationalization opportunity, developed a plan, and notified the
affected employees. We record these charges in accordance with
SFAS No. 146 Accounting for Costs Associated
with Exit or Disposal Activities.

Comprehensive
Income We consider all
changes in equity from transactions and other events and
circumstances, except those resulting from investments by owners
and distributions to owners, to be comprehensive income.

Recently Adopted Accounting
Pronouncements In June
2001, Financial Accounting Standards Board (FASB)
issued SFAS No. 143, Accounting for Asset
Retirement Obligations. This statement requires that the
fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset
retirement costs are

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DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

capitalized as part of the carrying amount of the
long-lived asset. SFAS No. 143 became effective for us
January 1, 2003. The adoption of this pronouncement did not
have a material impact on our Consolidated Financial Statements.

SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections, was issued in April
2002 and is applicable to fiscal years beginning after
May 15, 2002. One of the provisions of this technical
statement is the rescission of SFAS No. 4,
Reporting Gains and Losses from Extinguishment of
Debt, whereby any gain or loss on the early extinguishment
of debt that was classified as an extraordinary item in prior
periods in accordance with SFAS No. 4, which does not
meet the criteria of an extraordinary item as defined by APB
Opinion 30, must be reclassified. Adoption of this standard
required us to reclassify extraordinary losses previously
reported from the early extinguishment of debt as a component of
other expense. We have not previously reported
extraordinary gains or losses, therefore, this pronouncement had
no effect on our Consolidated Financial Statements.

In June 2002, FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. This statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in
Restructuring). The statement requires that a liability
for a cost associated with an exit or disposal activity be
recognized when the liability is incurred and is effective for
exit or disposal activities that are initiated after
December 31, 2002. Our adoption of this standard changed
the timing of the recognition of certain charges associated with
exit and disposal activities.

In November 2002, FASB issued FASB Interpretation
(FIN) No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN
No. 45 clarifies the requirements of SFAS No. 5
Accounting for Contingencies, relating to the
accounting for and disclosures of certain guarantees issued and
indemnification obligations incurred. FIN No. 45 requires
disclosure of certain guarantees and indemnification
obligations. It also requires liability recognition for the fair
value of certain guarantees and indemnification obligations made
or incurred after December 31, 2002. We adopted the
requirements of FIN No. 45 effective January 1, 2003.
See Note 18 for disclosures required by FIN No. 45.
The adoption of this pronouncement did not have a material
effect on our Consolidated Financial Statements.

In December 2003, FASB issued
FIN No. 46(R), Consolidation of Variable
Interest Entities  an interpretation of
ARB No. 51. FIN No. 46(R) provides
guidance for identifying a controlling interest in a Variable
Interest Entity (VIE) established by means other
than voting interests. FIN 46(R) also requires
consolidation of a VIE by an enterprise that holds such a
controlling interest. The effective date for interest
qualification is December 31, 2003. We currently utilize
special purpose limited liability entities to facilitate our
receivable-backed facility. Since their formation, these
entities have been consolidated in our financial statements for
financial reporting purposes. Therefore, the adoption of FIN
No. 46(R) had no impact on our Consolidated Financial
Statements.

In April of 2003, FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This
statement amends and clarifies financial accounting and
reporting for derivative instruments, including derivative
instruments embedded in other contracts and hedging activities
under SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement
requires that contracts with comparable characteristics be
accounted for similarly and is effective for contracts entered
into or modified after June 30, 2003. We have no
derivatives. Therefore, SFAS No. 149 had no impact on
our Consolidated Financial Statements.

In May of 2003, FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and
Equity. This statement, which became effective for us on
July 1, 2003,

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DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

requires that certain financial instruments which
had previously been classified as equity be classified with
liabilities. We have no outstanding securities that meet the
criteria of SFAS No. 150. Therefore,
SFAS No. 150 had no impact on our Consolidated
Financial Statements.

In December 2003, the FASB issued
SFAS No. 132 (revised 2003), Employers
Disclosures about Pensions and Other Postretirement
Benefits, to improve financial statement disclosures for
defined benefit plans. This standard requires that companies
provide more details about their plan assets, benefit
obligations, cash flows, benefit costs and other relevant
information. In addition to expanded annual disclosures, we will
be required to report the various elements of pension and other
postretirement benefit costs on a quarterly basis.
SFAS No. 132 (revised 2003) is effective for fiscal
years ending after December 15, 2003, and for quarters
beginning after December 15, 2003. The expanded disclosure
requirements are included in this report.

In January 2004, the FASB issued FASB Staff
Position (FSP) 106-1, Accounting and
Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 in
response to a new law regarding prescription drug benefits under
Medicare as well as a federal subsidy to sponsors of retiree
health care benefit plans. Currently, SFAS No. 106,
Employers Accounting for Postretirement Benefits
Other Than Pensions, requires that changes in relevant law
be considered in current measurement of postretirement benefit
costs. We are currently evaluating the impact of the new law and
will defer recognition, as permitted by FSP 106-1, until
authoritative guidance is issued.

Reclassifications Certain reclassifications have been
made to conform the prior years Consolidated Financial
Statements to the current year classifications.



|   |                                  
|-- | ---------------------------------
|2. | ACQUISITION BY DEAN FOODS COMPANY

General
On December 21, 2001, we were acquired by Dean Foods
Company (formerly known as Suiza Foods Corporation). Immediately
upon completion of the transaction, we changed our name to Dean
Holding Company and the acquiror took our former name. As a
result of the transaction, we are now a wholly-owned subsidiary
of Dean Foods Company.

As a result of the transaction, each share of our
common stock was converted into 1.287 shares (on a split
adjusted basis) of Dean Foods Company common stock and the right
to receive $21 in cash.

Dean Foods Company accounted for its acquisition
of us as a purchase. The aggregate purchase price recorded at
Dean Foods Company was $1.6 billion, including
$756.8 million of cash and common stock valued at
$739.4 million. The value of the approximately
46 million common shares issued was determined based on the
average market price of Dean Foods Company common stock around
the date of the announcement. This purchase price and the
related purchase accounting adjustments, including goodwill,
have been pushed down and are reflected in our
December 31, 2003 and 2002 balance sheets.

Transaction
Costs We recorded costs of
$30 million and $22.2 million in the period from
May 28, 2001 to December 31, 2001 and fiscal year
2001, respectively, related to our acquisition by Dean Foods
Company. These costs include $14.2 million and
$15 million in the period from May 28, 2001 to
December 31, 2001 and fiscal year 2001, respectively, for a
lease commitment for new corporate headquarters on office space
that we elected not to take possession of after we agreed to be
acquired by Dean Foods Company. The charges related to the lease
commitment reflect the rental payments over the term of the
lease and other termination costs reduced by estimated sublease
income. The incremental charge we recorded in the period from
May 28, 2001 to December 31, 2001 reflects a change in
our estimate based on updated assumptions. We also recorded
other costs related to the transaction including professional
fees of $11.4 million and $4.5 million and severance
and employee stay bonus costs of $4.3 million
and $2.7 million in the period from May 28, 2001 to
December 31, 2001 and fiscal year 2001, respectively.

F-12



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Divestiture of
Plants In order to obtain
regulatory approval for the transaction, certain plants located
in areas where our operations overlapped with the operations of
the acquiror were required to be divested. Four of the divested
dairies were owned by us, including Coburg Dairy based in North
Charleston, South Carolina; Cream O Weber based in Salt Lake
City, Utah; H. Meyer Dairy based in Cincinnati, Ohio; and U.C.
Milk (Goldenrod) based in Madisonville, Kentucky. In
order to accomplish the divestitures, on December 21, 2001,
immediately after our acquisition by Dean Foods Company, we
transferred these dairies, via dividend, to Dean Foods Company,
our sole shareholder. The dividend was recorded at book value
after applicable purchase accounting adjustments, with no gain
or loss recorded. Prior periods have not been restated to
reflect the divestitures.

Exchange of National Refrigerated Products for
Dean SoCal Also in
connection with the transaction, on December 21, 2001, we
entered into a Securities Exchange Agreement with Morningstar
Foods Inc., another wholly-owned subsidiary of Dean Foods
Company, pursuant to which, on December 21, 2001
immediately after consummation of the transaction, we exchanged
the operations of our former National Refrigerated Products (or
NRP) group for the operations of Dean SoCal, a
subsidiary of Dean Foods Companys Dairy Group.
Accordingly, we no longer have our NRP segment, and we have
presented this group as a discontinued operation in the
accompanying financial statements (see Note 4). We have
accounted for this exchange as a dividend in our Consolidated
Financial Statements. Dean SoCal operates in southern California
and produces dairy products under the Swiss brand.
Dean SoCal is now operated as part of our Dairy Group and was
accounted for as a contribution in our Consolidated Financial
Statements at December 31, 2003 and 2002. Dean SoCals
operating results are included in our Consolidated Financial
Statements for the years ended December 31, 2003 and 2002.
Our financial statements for all periods prior to the
transaction have been restated to reflect NRP as a discontinued
operation.

Divestitures
During 2002 we completed the sale of three non-core businesses
that were part of our Specialty Foods segment. On
January 4, 2002, we completed the sale of DFC
Transportation Company, a contract hauler. On February 7,
2002, we completed the sale of a boiled peanuts business, and on
October 11, 2002 we completed the sale of our 94% interest
in EBI Foods, Limited, a U.K. based manufacturer of powdered
food coatings. The combined proceeds from these sales were
approximately $30 million. Prior periods have not been
restated to reflect the divestitures.

The following table presents our comparative
results of operations for the years ended December 31,
2003, 2002 and 2001:

|                                                  |  |                |           |                |  |              |           |  |  |   |           | 
|------------------------------------------------- |  | -------------- | --------- | -------------- |  | ------------ | --------- |  |  | - | --------- | 
|                                                  |  |                |           |               
|                                                  |  | Successor      |           | Predecessor   
|                                                  |  |                |           |               
|                                                  |  |                |           | Year Ended    
|                                                  |  | Year Ended     |           | Year Ended     |  | December 31,
|                                                  |  | December 31,   |           | December 31,   |  | 2001        
|                                                  |  | 2003           |           | 2002           |  | (unaudited) 
|                                                  |  |                |           |                |  |             
|                                                  |  |                |           | (In thousands)
|                                                  |  | (In thousands) |           |               
|Net sales                                         |  | $              | 3,877,038 |                |  | $            | 3,855,506 |  |  | $ | 4,111,221 | 
|Gross profit                                      |  |                | 963,485   |                |  |              | 959,859   |  |  |   | 905,406   | 
|Income from continuing operations                 |  |                | 160,886   |                |  |              | 149,643   |  |  |   | 31,343    | 
|Income from discontinued operations, net of taxes |  |                |           |                |  |              |           |  |  |   | 15,141    | 
|Net income                                        |  |                | 160,886   |                |  |              | 149,643   |  |  |   | 46,484    | 



---

Note: The comparability of the results in the
table above is affected by the implementation of
SFAS No. 142, the exchange of NRP for Dean SoCal, the
divestiture of four dairies and changes in amortization and
depreciation amounts as a result of our acquisition by Dean
Foods Company and the corresponding re-valuing of our assets and
re-assessing their remaining useful lives.

F-13



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Allocation of Purchase
Price The following table
summarizes the fair values of the assets acquired by Dean Foods
Company and liabilities assumed by Dean Foods Company as a
result of the transaction, and includes the effects of divesting
four of our plants. The table does not include the effects of
the NRP/ Dean SoCal exchange.

|                                          |                                                 |                |           |           | 
|----------------------------------------- | ----------------------------------------------- | -------------- | --------- | --------- | 
|                                          |                                                 | At            
|                                          |                                                 | December 31,  
|                                          |                                                 | 2001          
|                                          |                                                 |               
|                                          |                                                 | (In thousands)
|Current assets                            |                                                 | $              | 723,326   |          
|Property, plant, and equipment            |                                                 |                | 725,258   |          
|Intangible assets                         |                                                 |                | 236,978   |          
|Goodwill                                  |                                                 |                | 1,515,267 |          
|Other assets                              |                                                 |                | 79,945    |          
|                                          |                                                 |                |           |          
|                                          | Total assets acquired by Dean Foods Company     |                | $         | 3,280,774 | 
|                                          |                                                 |                |           |          
|Current liabilities                       |                                                 |                | 540,678   |          
|Other liabilities                         |                                                 |                | 285,209   |          
|Long-term debt                            |                                                 |                | 814,500   |          
|                                          |                                                 |                |           |          
|                                          | Total liabilities assumed by Dean Foods Company |                |           | 1,640,387 | 
|                                          |                                                 |                |           |          
|Net assets acquired by Dean Foods Company |                                                 | $              | 1,640,387 |          
|                                          |                                                 |                |           |          

The purchase price disclosed above differs from
that reported by Dean Foods Company due to the timing effects of
the sale of certain of our subsidiaries accounts
receivable into Dean Foods Companys receivables-backed
facility and a distribution made to Dean Foods Company not
reflected in its purchase price due to our accounting for the
acquisition as of December 31, 2001, the date of
convenience.

Of the $237 million of acquired intangible
assets, approximately $206.5 million was assigned to
trademarks and trade names that are not subject to amortization
and approximately $30.5 million was assigned to customer
contracts that have a weighted-average economic life of
approximately 17 years.

Approximately $1.5 billion of goodwill was
assigned to our Dairy Group, NRP and Specialty segments in the
amounts of $1.01 billion, $215 million and
$290 million, respectively. None of the goodwill is
expected to be deductible for tax purposes.

The final allocation of the purchase price to the
fair values of our assets and liabilities and the related
business integration plans were completed in the fourth quarter
of 2002. The final allocation process increased goodwill by
approximately $67.1 million, primarily as a result of the
final determination of the fair values of depreciable tangible
assets and business integration plans.

F-14



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The unaudited results of operations on a pro
forma basis for the period from May 28, 2001 to
December 31, 2001 and the fiscal year ended May 27,
2001 as if the acquisition by Dean Foods Company, including the
effects of the NRP/ Dean SoCal exchange, had occurred as of the
beginning of fiscal year 2001 are as follows:

|                                               |  |                   |           |              |  |   |           | 
|---------------------------------------------- |  | ----------------- | --------- | ------------ |  | - | --------- | 
|                                               |  |                  
|                                               |  | Predecessor      
|                                               |  |                  
|                                               |  | Period from       |           | Fiscal Year 
|                                               |  | May 28, 2001 to   |           | Ended       
|                                               |  | December 31, 2001 |           | May 27, 2001
|                                               |  |                   |           |             
|                                               |  |                  
|                                               |  | (In thousands)   
|Net sales                                      |  | $                 | 2,491,273 |              |  | $ | 4,063,514 | 
|Income from continuing operations before taxes |  |                   | 106,707   |              |  |   | 167,104   | 
|Net income from continuing operations          |  |                   | 67,372    |              |  |   | 103,178   | 



|   |             
|-- | ------------
|3. | ACQUISITIONS

All of our acquisitions were accounted for using
the purchase method of accounting as of their respective
acquisition dates and, accordingly, only the results of
operations of the acquired companies subsequent to their
respective acquisition dates are included in our Consolidated
Financial Statements.

We have not completed the final allocation of
purchase price to the fair values of assets and liabilities
acquired in 2003, or the related business integration plans. We
expect that the ultimate purchase price allocation may include
additional adjustments to the fair values of depreciable
tangible assets, identifiable intangible assets and the carrying
values of certain liabilities. Accordingly, to the extent that
such assessments indicate that the fair value of the assets and
liabilities differ from their preliminary purchase price
allocation, such difference would adjust the amounts allocated
to the assets and liabilities and would change the amounts
allocated to goodwill.



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

Cremora
On December 24, 2003, our Specialty Foods Group acquired
the Cremora® branded non-dairy
powdered coffee creamer business from Eagle Family Foods. Prior
to the acquisition, we had been producing Cremora
creamers for Eagle Family Foods pursuant to a co-packing
arrangement, which generated approximately $8.9 million of
net sales for us in 2003. Cremorais the first branded
powdered coffee creamer offering for our Specialty Foods Group.
The Cremorabrand had sales of approximately
$15.8 million in the 12 months ended June 30,
2003. We purchased the Cremorabusiness for a purchase
price of approximately $12.6 million, all of which was
funded using borrowings under Dean Foods Companys senior
credit facility.

Other
During 2003, our Dairy Group completed the following
acquisitions for an aggregate purchase price of
$1.2 million:



| |   |                                                                   
| | - | ------------------------------------------------------------------
| |  | In September a distributor located in Veguita,
    New Mexico; and
|
| |  | In March a distributor located in Nashville,
    Tennessee.       

Goodwill arising from the 2003 acquisitions was
$8.6 million.



| |                                    
| | -----------------------------------
| | 2001 Acquisitions (Fiscal
    Year)

During fiscal year 2001, we completed the
following two acquisitions:



| |   |                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------
| |  | In July 2000, Land O Lakes upper midwest
    dairy operations, some of which merged into our Dairy Group and
    NRP segments; and
|
| |  | In June 2000, Nalleys Pickle business in
    our Specialty Foods Group segment.                                                   

F-15



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Each of these acquisitions was an asset purchase
for cash consideration. We also assumed certain liabilities in
addition to cash consideration paid. On a pro forma basis, which
assumes the above acquisitions occurred at the beginning of each
period presented, sales and net income were not materially
impacted. Also during fiscal year 2001, we made an additional
equity investment in White Wave, Inc., maker of
Silk® soymilk. The acquisitions and equity
investments were made for cash consideration totaling
$220.3 million, net of cash acquired. Goodwill arising from
the acquisitions was recorded at $124.5 million for fiscal
year 2001; however, goodwill was revalued as a purchase
accounting adjustment as part of our acquisition by Dean Foods
Company.



|   |                        
|-- | -----------------------
|4. | DISCONTINUED OPERATIONS

In December 2001, in connection with our
acquisition by Dean Foods Company, we exchanged the operations
of NRP for the operations of Dean SoCal. See Note 2.
Accordingly, NRP is presented as a discontinued operation.

The following table presents selected activity
related to the discontinued operations:

|                   |  |                       |       |              |  |   |       | 
|------------------ |  | --------------------- | ----- | ------------ |  | - | ----- | 
|                   |  |                      
|                   |  | Predecessor          
|                   |  |                      
|                   |  | Period from           |       | Fiscal Year 
|                   |  | May 28, 2001 to       |       | Ended       
|                   |  | December 31, 2001     |       | May 27, 2001
|                   |  |                       |       |             
|                   |  |                      
|                   |  | (Dollars in millions)
|Net sales          |  | $                     | 234.1 |              |  | $ | 399.6 | 
|Income tax expense |  |                       | 7.2   |              |  |   | 4.2   | 



|   |                     
|-- | --------------------
|5. | GAIN ON SALE OF NOTE

On December 1, 2000, we sold, for
$10 million cash, a $30 million subordinated note
which we received as part of the proceeds from the sale of our
former Vegetables segment to Agrilink Foods, Inc. in fiscal year
1999. Due to the uncertainty of the realizability of the
$30 million subordinated note, the note was originally
valued at a nominal amount. When we sold the note, we reversed
$10 million of the original reserve against the note,
resulting in the recognition of a $10 million gain in the
second quarter of fiscal year 2001.



|   |            
|-- | -----------
|6. | INVENTORIES

|                           |       |                |         |              |  |   |         |         | 
|-------------------------- | ----- | -------------- | ------- | ------------ |  | - | ------- | ------- | 
|                           |       |               
|                           |       | Successor     
|                           |       |               
|                           |       | December 31,   |         | December 31,
|                           |       | 2003           |         | 2002        
|                           |       |                |         |             
|                           |       |               
|                           |       | (In thousands)
|Raw materials and supplies |       | $              | 71,331  |              |  | $ | 68,723  |        
|Finished goods             |       |                | 162,980 |              |  |   | 149,401 |        
|                           |       |                |         |              |  |   |         |        
|                           | Total |                | $       | 234,311      |  |   | $       | 218,124 | 
|                           |       |                |         |              |  |   |         |        

Approximately $97.6 million and
$97.3 million of our inventory was accounted for under the
LIFO method of accounting at December 31, 2003 and 2002,
respectively. There was no material excess of cost over the
stated value of LIFO inventories at these dates.

F-16



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |                              
|-- | -----------------------------
|7. | PROPERTY, PLANT AND EQUIPMENT

|                              |       |                |          |              |  |   |         |         | 
|----------------------------- | ----- | -------------- | -------- | ------------ |  | - | ------- | ------- | 
|                              |       |               
|                              |       | Successor     
|                              |       |               
|                              |       | December 31,   |          | December 31,
|                              |       | 2003           |          | 2002        
|                              |       |                |          |             
|                              |       |               
|                              |       | (In thousands)
|Land                          |       | $              | 47,496   |              |  | $ | 47,799  |        
|Buildings and improvements    |       |                | 257,272  |              |  |   | 237,617 |        
|Machinery and equipment       |       |                | 462,336  |              |  |   | 395,205 |        
|                              |       |                |          |              |  |   |         |        
|                              |       |                | 767,104  |              |  |   | 680,621 |        
|Less accumulated depreciation |       |                | (128,837 | )            |  |   | (65,048 | )      
|                              |       |                |          |              |  |   |         |        
|                              | Total |                | $        | 638,267      |  |   | $       | 615,573 | 
|                              |       |                |          |              |  |   |         |        

For 2003, we capitalized $0.5 million in
interest related to borrowings during the actual construction
period of major capital projects, which is included as part of
the cost of the related asset.



|   |                  
|-- | -----------------
|8. | INTANGIBLE ASSETS

On January 1, 2002, we adopted
SFAS No. 142, which requires, among other things, that
goodwill and other intangible assets with indefinite lives no
longer be amortized, and that recognized intangible assets with
finite lives be amortized over their respective useful lives. As
required by SFAS No. 142, our results for the period
from May 28, 2001 to December 31, 2001 and fiscal year
ended May 27, 2001 have not been restated. The following
sets forth a reconciliation of net income for the period from
May 28, 2001 to December 31, 2001 and the fiscal year
ended May 27, 2001, eliminating amortization of goodwill
and intangible assets with indefinite lives.

|                                           |  |                |         |                 |  |                   |         |              |  |   |        |  |  |   |        | 
|------------------------------------------ |  | -------------- | ------- | --------------- |  | ----------------- | ------- | ------------ |  | - | ------ |  |  | - | ------ | 
|                                           |  |                |         |                
|                                           |  | Successor      |         | Predecessor    
|                                           |  |                |         |                
|                                           |  |                |         |                
|                                           |  | December 31,   |         | Period from     |  | Fiscal Year      
|                                           |  |                |         | May 28, 2001 to |  | Ended            
|                                           |  | 2003           |         | 2002            |  | December 31, 2001 |         | May 27, 2001
|                                           |  |                |         |                 |  |                   |         |             
|                                           |  |                |         |                
|                                           |  | (In thousands) |         | (In thousands) 
|Reported income from continuing operations |  | $              | 160,886 |                 |  | $                 | 149,643 |              |  | $ | 22,774 |  |  | $ | 68,541 | 
|Goodwill amortization, net of tax          |  |                |         |                 |  |                   |         |              |  |   | 5,835  |  |  |   | 10,454 | 
|Trademark amortization, net of tax         |  |                |         |                 |  |                   |         |              |  |   | 61     |  |  |   | 558    | 
|                                           |  |                |         |                 |  |                   |         |              |  |   |        |  |  |   |        | 
|Adjusted income from continuing operations |  | $              | 160,886 |                 |  | $                 | 149,643 |              |  | $ | 28,670 |  |  | $ | 79,553 | 
|                                           |  |                |         |                 |  |                   |         |              |  |   |        |  |  |   |        | 
|Reported net income                        |  | $              | 160,886 |                 |  | $                 | 149,643 |              |  | $ | 35,915 |  |  | $ | 74,652 | 
|Goodwill amortization, net of tax          |  |                |         |                 |  |                   |         |              |  |   | 7,006  |  |  |   | 10,959 | 
|Trademark amortization, net of tax         |  |                |         |                 |  |                   |         |              |  |   | 61     |  |  |   | 558    | 
|                                           |  |                |         |                 |  |                   |         |              |  |   |        |  |  |   |        | 
|Adjusted net income                        |  | $              | 160,886 |                 |  | $                 | 149,643 |              |  | $ | 42,982 |  |  | $ | 86,169 | 
|                                           |  |                |         |                 |  |                   |         |              |  |   |        |  |  |   |        | 

F-17



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The changes in the carrying amount of goodwill
for the years ended December 31, 2003 and 2002 are as
follows:

|                                |  |                |           |             |  |       |         |  |  |   |           |  
|------------------------------- |  | -------------- | --------- | ----------- |  | ----- | ------- |  |  | - | --------- | -
|                                |  |                |           | Specialty   |  |      
|                                |  | Dairy Group    |           | Foods Group |  | Total
|                                |  |                |           |             |  |      
|                                |  |               
|                                |  | (In thousands)
|Successor:                      |  |                |           |             |  |       |         |  |  |   |           |  
|Balance at December 31, 2001    |  | $              | 1,068,270 |             |  | $     | 290,000 |  |  | $ | 1,358,270 |  
|Purchase accounting adjustments |  |                | 52,838    |             |  |       | 14,290  |  |  |   | 67,128    |  
|                                |  |                |           |             |  |       |         |  |  |   |           |  
|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 |  
|                                |  |                |           |             |  |       |         |  |  |   |           |  

The gross carrying amount and accumulated
amortization of our intangible assets other than goodwill as of
December 31, 2003 and 2002 are as follows:

|                                         |                         |                   |   |                   |  |          |   |          |   |              |   |          |  |  |   |         |  |  |   |        |   |  |   |         | 
|---------------------------------------- | ----------------------- | ----------------- | - | ----------------- |  | -------- | - | -------- | - | ------------ | - | -------- |  |  | - | ------- |  |  | - | ------ | - |  | - | ------- | 
|                                         |                         |                  
|                                         |                         | Successor        
|                                         |                         |                  
|                                         |                         |                   |   |                  
|                                         |                         | December 31, 2003 |   | December 31, 2002
|                                         |                         |                   |   |                  
|                                         |                         | 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  |  |  | $ | 188,010 |  |  |   |        |   |  | $ | 188,010 | 
|Intangible assets with finite lives:     |                         |                   |   |                   |  |          |   |          |   |              |   |          |  |  |   |         |  |  |   |        |   |  |   |        
|                                         | Customer-related        |                   |   | 28,455            |  |          | $ | (6,514   | ) |              |   | 21,941   |  |  |   | 31,173  |  |  | $ | (5,532 | ) |  |   | 25,641  | 
|                                         |                         |                   |   |                   |  |          |   |          |   |              |   |          |  |  |   |         |  |  |   |        |   |  |   |        
|                                         | Total other intangibles |                   | $ | 218,465           |  |          | $ | (6,514   | ) |              | $ | 211,951  |  |  | $ | 219,183 |  |  | $ | (5,532 | ) |  | $ | 213,651 | 
|                                         |                         |                   |   |                   |  |          |   |          |   |              |   |          |  |  |   |         |  |  |   |        |   |  |   |        

Amortization expense on intangible assets for the
years ended December 31, 2003 and 2002 and the period from
May 28, 2001 to December 31, 2001 and the fiscal year
ended May 27, 2001 was $3.7 million,
$5.4 million, $3.6 million and $5.9 million,
respectively. Estimated aggregate intangible asset amortization
expense for the next five years is as follows:

|     |  |   |              | 
|---- |  | - | ------------ | 
|2004 |  | $ | 3.2  million | 
|2005 |  | $ | 3.2  million | 
|2006 |  | $ | 3.2  million | 
|2007 |  | $ | 3.0  million | 
|2008 |  | $ | 3.0  million | 

F-18



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|   |                                          
|-- | -----------------------------------------
|9. | ACCOUNTS PAYABLE AND ACCRUED
    EXPENSES

|                                                                      |       |                |         |              |  |   |         |         | 
|--------------------------------------------------------------------- | ----- | -------------- | ------- | ------------ |  | - | ------- | ------- | 
|                                                                      |       |               
|                                                                      |       | Successor     
|                                                                      |       |               
|                                                                      |       | December 31,   |         | December 31,
|                                                                      |       | 2003           |         | 2002        
|                                                                      |       |                |         |             
|                                                                      |       |               
|                                                                      |       | (In thousands)
|Accounts payable                                                      |       | $              | 180,362 |              |  | $ | 158,832 |        
|Payroll and benefits                                                  |       |                | 69,791  |              |  |   | 63,014  |        
|Health insurance, workers compensation and
    other insurance costs |       |                | 14,209  |              |  |   | 21,025  |        
|Other accrued liabilities                                             |       |                | 81,444  |              |  |   | 125,013 |        
|                                                                      |       |                |         |              |  |   |         |        
|                                                                      | Total |                | $       | 345,806      |  |   | $       | 367,884 | 
|                                                                      |       |                |         |              |  |   |         |        



|    |             
|--- | ------------
|10. | INCOME TAXES

The following table presents the provisions for
income taxes for the years ended December 31, 2003 and 2002
and the period from May 28, 2001 to December 31, 2001
and the fiscal year ended May 27, 2001.

|                       |                   |                         |        |                 |        |                   |        |              |        |  |        |        |        |  |        |       |        | 
|---------------------- | ----------------- | ----------------------- | ------ | --------------- | ------ | ----------------- | ------ | ------------ | ------ |  | ------ | ------ | ------ |  | ------ | ----- | ------ | 
|                       |                   |                         |        |                
|                       |                   | Successor               |        | Predecessor    
|                       |                   |                         |        |                
|                       |                   |                         |        |                
|                       |                   | Year Ended December 31, |        | Period from     |        | Fiscal Year      
|                       |                   |                         |        | May 28, 2001 to |        | Ended            
|                       |                   | 2003                    |        | 2002            |        | December 31, 2001 |        | May 27, 2001
|                       |                   |                         |        |                 |        |                   |        |             
|                       |                   |                         |        |                
|                       |                   | (In thousands)          |        | (In thousands) 
|Current taxes payable: |                   |                         |        |                 |        |                   |        |              |        |  |        |        |        |  |        |      
|                       | Federal           |                         | $      | 20,898          |        |                   | $      | 27,400       |        |  | $      | 20,536 |        |  | $      | 8,194 |       
|                       | State             |                         |        | 6,252           |        |                   |        | 5,981        |        |  |        | 1,622  |        |  |        | 2,964 |       
|                       | Foreign and other |                         |        | 408             |        |                   |        | 205          |        |  |        | 217    |        |  |        | 867   |       
|Deferred income taxes  |                   |                         | 66,783 |                 |        |                   | 58,319 |              |        |  | (8,648 | )      |        |  | 29,984 |      
|                       |                   |                         |        |                 |        |                   |        |              |        |  |        |        |        |  |        |      
|                       |                   | Total                   |        | $               | 94,341 |                   |        | $            | 91,905 |  |        | $      | 13,727 |  |        | $     | 42,009 | 
|                       |                   |                         |        |                 |        |                   |        |              |        |  |        |        |        |  |        |      

The following is a reconciliation of income taxes
computed at the U.S. federal statutory tax rate to the
income taxes reported in the consolidated statements of income:

|                               |       |                         |        |                 |  |                   |        |              |  |   |        |        |  |   |        |        | 
|------------------------------ | ----- | ----------------------- | ------ | --------------- |  | ----------------- | ------ | ------------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                               |       |                         |        |                
|                               |       | Successor               |        | Predecessor    
|                               |       |                         |        |                
|                               |       |                         |        |                
|                               |       | Year Ended December 31, |        | Period from     |  | Fiscal Year      
|                               |       |                         |        | May 28, 2001 to |  | Ended            
|                               |       | 2003                    |        | 2001            |  | December 31, 2001 |        | May 27, 2001
|                               |       |                         |        |                 |  |                   |        |             
|                               |       |                         |        |                
|                               |       | (In thousands)          |        | (In thousands) 
|Tax expense at statutory rates |       | $                       | 89,329 |                 |  | $                 | 84,558 |              |  | $ | 12,775 |        |  | $ | 38,692 |       
|State income taxes             |       |                         | 7,172  |                 |  |                   | 7,379  |              |  |   | 1,128  |        |  |   | 3,279  |       
|Non-deductible goodwill        |       |                         |        |                 |  |                   |        |              |  |   | 953    |        |  |   | 1,590  |       
|Other                          |       |                         | (2,160 | )               |  |                   | (32    | )            |  |   | (1,129 | )      |  |   | (1,552 | )     
|                               |       |                         |        |                 |  |                   |        |              |  |   |        |        |  |   |        |       
|                               | Total |                         | $      | 94,341          |  |                   | $      | 91,905       |  |   | $      | 13,727 |  |   | $      | 42,009 | 
|                               |       |                         |        |                 |  |                   |        |              |  |   |        |        |  |   |        |       

F-19



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The tax effects of temporary differences giving
rise to deferred income tax assets and liabilities were:

|                                 |                                   |                                   |        |              |          |   |         |          |         |  
|-------------------------------- | --------------------------------- | --------------------------------- | ------ | ------------ | -------- | - | ------- | -------- | ------- | -
|                                 |                                   |                                  
|                                 |                                   | Successor                        
|                                 |                                   |                                  
|                                 |                                   | December 31,                      |        | December 31,
|                                 |                                   | 2003                              |        | 2002        
|                                 |                                   |                                   |        |             
|                                 |                                   |                                  
|                                 |                                   | (In thousands)                   
|Deferred income tax assets:      |                                   |                                   |        |              |          |   |         |         
|                                 | Net operating loss carry-forwards |                                   | $      | 4,279        |          |   | $       | 3,928    |        
|                                 | Asset valuation reserves          |                                   |        | 4,907        |          |   |         | 377      |        
|                                 | Non-deductible accruals           |                                   |        | 90,140       |          |   |         | 94,283   |        
|                                 | State and foreign credits         |                                   |        | 3,177        |          |   |         | 2,706    |        
|                                 | Other                             |                                   |        | (3,716       | )        |   |         | 2,799    |        
|                                 | Valuation allowances              |                                   |        | (3,100       | )        |   |         | (2,435   | )      
|                                 |                                   |                                   |        |              |          |   |         |         
|                                 |                                   |                                   | 95,687 |              |          |   | 101,658 |         
|Deferred income tax liabilities: |                                   |                                   |        |              |          |   |         |         
|                                 | Depreciation and amortization     |                                   |        | (236,630     | )        |   |         | (174,942 | )      
|                                 |                                   |                                   |        |              |          |   |         |         
|                                 |                                   | Net deferred income tax liability |        | $            | (140,943 | ) |         | $        | (73,284 | )
|                                 |                                   |                                   |        |              |          |   |         |         

These net deferred income tax liabilities are
classified in our consolidated balance sheets as follows:

|                       |       |                |          |              |   |   |          |         |  
|---------------------- | ----- | -------------- | -------- | ------------ | - | - | -------- | ------- | -
|                       |       |               
|                       |       | Successor     
|                       |       |               
|                       |       | December 31,   |          | December 31,
|                       |       | 2003           |          | 2002        
|                       |       |                |          |             
|                       |       |               
|                       |       | (In thousands)
|Current assets         |       | $              | 71,946   |              |   | $ | 93,018   |        
|Noncurrent liabilities |       |                | (212,889 | )            |   |   | (166,302 | )      
|                       |       |                |          |              |   |   |          |        
|                       | Total |                | $        | (140,943     | ) |   | $        | (73,284 | )
|                       |       |                |          |              |   |   |          |        

At December 31, 2003, we had no federal net
operating losses and approximately $0.8 million of federal
tax credits available for carry-over to future years. These
losses are subject to certain limitations and will expire
beginning in 2007.

A valuation allowance of $3.1 million has
been established because we believe it is more likely than
not that all of the deferred tax assets relating to state
net operating loss and credit carryovers, foreign tax credit
carryovers and capital loss carryovers will not be realized
prior to the date they are scheduled to expire.

F-20



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|    |               
|--- | --------------
|11. | LONG-TERM DEBT

|                                           |       |                        |         |                   |  |             |           |          |  |   |         |         |  |  |           |   | 
|------------------------------------------ | ----- | ---------------------- | ------- | ----------------- |  | ----------- | --------- | -------- |  | - | ------- | ------- |  |  | --------- | - | 
|                                           |       |                       
|                                           |       | Successor             
|                                           |       |                       
|                                           |       |                        |         |                  
|                                           |       | December 31, 2003      |         | December 31, 2002
|                                           |       |                        |         |                  
|                                           |       | Amount                 |         | Interest          |  | Amount      |           | Interest
|                                           |       | Outstanding            |         | Rate              |  | Outstanding |           | Rate    
|                                           |       |                        |         |                   |  |             |           |         
|                                           |       |                       
|                                           |       | (Dollars in thousands)
|$250 million senior notes maturing in 2007 |       | $                      | 250,402 |                   |  |             | 8.150     | %        |  | $ | 250,493 |         |  |  | 8.150     | %
|$200 million senior notes maturing in 2009 |       |                        | 186,070 |                   |  |             | 6.625     |          |  |   | 184,306 |         |  |  | 6.625     |  
|$150 million senior notes maturing in 2017 |       |                        | 126,185 |                   |  |             | 6.900     |          |  |   | 125,346 |         |  |  | 6.900     |  
|$100 million senior notes maturing in 2005 |       |                        | 98,006  |                   |  |             | 6.750     |          |  |   | 96,806  |         |  |  | 6.750     |  
|Receivables-backed facility                |       |                        | 125,174 |                   |  |             | 1.838     |          |  |   | 53,197  |         |  |  | 2.280     |  
|Industrial development revenue bonds       |       |                        | 11,700  |                   |  |             | 1.35-1.40 |          |  |   | 18,000  |         |  |  | 1.65-1.90 |  
|Other                                      |       |                        | 34      |                   |  |             |           |          |  |   | 32      |         |  |  |           |  
|                                           |       |                        |         |                   |  |             |           |          |  |   |         |         |  |  |           |  
|                                           |       |                        | 797,571 |                   |  |             |           |          |  |   | 728,180 |         |  |  |           |  
|Less current portion                       |       |                        | (3,509  | )                 |  |             |           |          |  |   | (307    | )       |  |  |           |  
|                                           |       |                        |         |                   |  |             |           |          |  |   |         |         |  |  |           |  
|                                           | Total |                        | $       | 794,062           |  |             |           |          |  |   | $       | 727,873 |  |  |           |   | 
|                                           |       |                        |         |                   |  |             |           |          |  |   |         |         |  |  |           |  

The scheduled maturities of long-term debt, at
December 31, 2003, were as follows (in thousands):

|           |                               |   |         |         |  
|---------- | ----------------------------- | - | ------- | ------- | -
|2004       |                               | $ | 3,509   |        
|2005       |                               |   | 100,005 |        
|2006       |                               |   | 125,177 |        
|2007       |                               |   | 250,003 |        
|2008       |                               |   | 3       |        
|Thereafter |                               |   | 358,211 |        
|           |                               |   |         |        
|           | Subtotal                      |   |         | 836,908 |  
|           | Less discount on senior notes |   |         | (39,337 | )
|           |                               |   |         |        
|           | Total outstanding debt        |   | $       | 797,571 |  
|           |                               |   |         |        

Senior
Notes We had
$700 million (face value) of senior notes outstanding at
December 31, 2003. The related indentures do not contain
financial covenants but they do contain certain restrictions
including a prohibition against us and our subsidiaries granting
liens on our real property interests and a prohibition against
granting liens on the stock of our subsidiaries. The indentures
also place certain restrictions on our ability to divest assets
not in the ordinary course of business. At the date of our
acquisition by Dean Foods Company, our long-term debt was
re-valued to its current market value. The adjustment to fair
value is reflected as a discount on senior notes in our
Consolidated Financial Statements.

Receivables-Backed
Facility On
December 21, 2001, immediately upon completion of our
acquisition by Dean Foods Company, certain of our subsidiaries
sold their accounts receivable into Dean Foods Company
receivables securitization facility. Certain of our subsidiaries
sell their accounts receivable to two wholly-owned special
purpose entities intended to be bankruptcy-remote. These special
entities then transfer the receivables to third-party
asset-backed commercial paper conduits sponsored by major
financial institutions. The assets and liabilities of these two
special purpose entities are fully reflected on our balance
sheet, and the securitization is treated as a borrowing for
accounting purposes. The receivables-backed facility bears
interest at a variable rate based on the commercial paper yield,
as defined in the agreement.

F-21



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Industrial Development Revenue
Bonds We have certain
revenue bonds outstanding, some of which require nominal annual
sinking fund redemptions. Typically, these bonds are secured by
irrevocable letters of credit issued by financial institutions,
along with first mortgages on the related real property and
equipment. Interest on these bonds is due semiannually at
interest rates that vary based on market conditions.

Other
Other obligations include various promissory notes for the
purchase of property, plant, and equipment. The various
promissory notes payable provide for interest at varying rates
and are payable in monthly installments of principal and
interest until maturity, when the remaining principal balances
are due.

Letters of
Credit At
December 31, 2003, $91.6 million of letters of credit
were outstanding. The majority of letters of credit were
required by various utilities and government entities for
performance and insurance guarantees.

Interest Rate
Agreements
SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities (as amended) became
effective for us as of May 28, 2001. We do not currently
have any derivative instruments. Prior to our acquisition by
Dean Foods Company, we entered into interest rate swap
agreements from time to time in order to hedge a portion of our
interest rate exposure. On December 19, 2001, we sold our
interest rate swap in anticipation of our acquisition by Dean
Foods Company. During the period from May 28, 2001 to
December 31, 2001, we recorded derivatives as of the
effective date on our consolidated balance sheet at fair value,
as required by SFAS No. 133. Any ineffectiveness in
cash flow hedges or fair value hedges was recorded as an
adjustment to earnings.

Our adoption of this accounting standard as of
May 28, 2001 resulted in the recognition of an asset
related to our cash flow hedges of $2.1 million.



|    |                     
|--- | --------------------
|12. | STOCKHOLDERS EQUITY

We have 1,000 shares of common stock with a
par value of $0.01 per share currently authorized and
issued to Dean Foods Company.

Stock Option and Restricted Stock
Plans Upon our acquisition
by Dean Foods Company, outstanding options to purchase our
common stock were automatically converted into options to
purchase shares of Dean Foods Company. Upon consummation of our
acquisition by Dean Foods Company our stock option holders had
the right to surrender their options to Dean Foods Company, in
lieu of exercise, in exchange for cash, provided the options
were surrendered prior to March 21, 2002. At
December 31, 2001 we had a liability recorded for these
stock option surrenders. Cash payments of approximately
$44.2 million were made related to the cash provisions of
our stock option surrenders. At the conclusion of the surrender
period, the remaining liability of approximately
$30.5 million was transferred to stockholders equity
as the underlying stock options remained outstanding.

Prior to our acquisition by Dean Foods Company,
we had stock option plans for certain key employees and
directors. Options were typically granted at fair market value
at the date of grant. We no longer award options.

F-22



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The following table summarizes the status of our
stock-based compensation programs as of the dates shown:

|                                 |                                 |         |           |                  |   |   |       |       | 
|-------------------------------- | ------------------------------- | ------- | --------- | ---------------- | - | - | ----- | ----- | 
|                                 |                                 |         |           | Weighted Average
|                                 |                                 | Options |           | Exercise Price  
|                                 |                                 |         |           |                 
|Outstanding at May 29, 2000      |                                 |         | 3,216,727 |                  |   | $ | 35.28 |      
|                                 | Granted                         |         |           | 1,187,345        |   |   |       | 31.67 | 
|                                 | Canceled                        |         |           | (199,654         | ) |   |       | 35.83 | 
|                                 | Exercised                       |         |           | (150,498         | ) |   |       | 26.13 | 
|                                 |                                 |         |           |                  |   |   |       |      
|Outstanding at May 27, 2001      |                                 |         | 4,053,920 |                  |   |   | 34.53 |      
|                                 | Canceled                        |         |           | (53,663          | ) |   |       | 36.90 | 
|                                 | Exercised                       |         |           | (428,720         | ) |   |       | 32.72 | 
|                                 | Converted to Dean Foods Company |         |           | (3,571,537       | ) |   |       | 34.71 | 
|                                 |                                 |         |           |                  |   |   |       |      
|Outstanding at December 31, 2001 |                                 |         | 0         |                  |   |   |       |      
|                                 |                                 |         |           |                  |   |   |       |      
|Exercisable at May 28, 2000      |                                 |         | 1,693,572 |                  |   | $ | 31.33 |      
|Exercisable at May 27, 2001      |                                 |         | 2,160,569 |                  |   |   | 33.71 |      
|Exercisable at December 31, 2001 |                                 |         | 0         |                  |   |   |       |      



|    |                           
|--- | --------------------------
|13. | OTHER COMPREHENSIVE INCOME

Comprehensive income comprises net income plus
all other changes in equity from non-owner sources. The amount
of income tax (expense) benefit allocated to each component
of other comprehensive income during the years ended
December 31, 2003 and 2002 are included below.

|           |                                                              |                |   |           |   |          |   |       |   |  |   |         |  
|---------- | ------------------------------------------------------------ | -------------- | - | --------- | - | -------- | - | ----- | - |  | - | ------- | -
|           |                                                              |                |   | Tax       |   |         
|           |                                                              | Pre-Tax        |   | Benefit   |   |         
|           |                                                              | Loss           |   | (Expense) |   | Net Loss
|           |                                                              |                |   |           |   |         
|           |                                                              |               
|           |                                                              | (In thousands)
|Successor: |                                                              |                |   |           |   |          |   |       |   |  |   |        
|           | Accumulated other comprehensive income
    January 1, 2002   |                | $ | 0         |   |          | $ | 0     |   |  | $ | 0       |  
|           | Cumulative translation adjustment                            |                |   | (115      | ) |          |   | 40    |   |  |   | (75     | )
|           |                                                              |                |   |           |   |          |   |       |   |  |   |        
|           | Accumulated other comprehensive income
    December 31, 2002 |                |   | (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 | )
|           |                                                              |                |   |           |   |          |   |       |   |  |   |        

F-23



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|    |                                                 
|--- | ------------------------------------------------
|14. | EMPLOYEE RETIREMENT AND PROFIT SHARING
    PLANS

We sponsor various defined benefit and defined
contribution retirement plans, including various employee
savings and profit sharing plans and contribute to various
multi-employer pension plans on behalf of our employees.
Substantially all full-time union and non-union employees who
have completed one or more years of service and have met other
requirements pursuant to the plans are eligible to participate
in these plans. During 2003 and 2002 and for the period from
May 28, 2001 to December 31, 2001 and the fiscal year
ended May 27, 2001, our retirement and profit sharing plan
expenses were as follows:

|                                               |       |                |        |                 |  |            |       |        |  |   |        |        |  |   |        |        | 
|---------------------------------------------- | ----- | -------------- | ------ | --------------- |  | ---------- | ----- | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                               |       |                |        |                
|                                               |       | Successor      |        | Predecessor    
|                                               |       |                |        |                
|                                               |       |                |        |                
|                                               |       | Year Ended     |        | Period from     |  | Fiscal    
|                                               |       | December 31,   |        | May 28, 2001 to |  | Year Ended
|                                               |       |                |        | December 31,    |  | May 27,   
|                                               |       | 2003           |        | 2002            |  | 2001       |       | 2001  
|                                               |       |                |        |                 |  |            |       |       
|                                               |       |                |        |                
|                                               |       | (In thousands) |        | (In thousands) 
|Defined benefit plans                          |       | $              | 7,213  |                 |  | $          | 6,356 |        |  | $ | 14,293 |        |  | $ | 16,609 |       
|Defined contribution plans                     |       |                | 7,241  |                 |  |            | 4,829 |        |  |   | 4,010  |        |  |   | 7,547  |       
|Multi-employer pension and certain union plans |       |                | 15,736 |                 |  |            | 8,023 |        |  |   | 9,146  |        |  |   | 12,706 |       
|                                               |       |                |        |                 |  |            |       |        |  |   |        |        |  |   |        |       
|                                               | Total |                | $      | 30,190          |  |            | $     | 19,208 |  |   | $      | 27,449 |  |   | $      | 36,862 | 
|                                               |       |                |        |                 |  |            |       |        |  |   |        |        |  |   |        |       

Defined Benefit
Plans The benefits under
our defined benefit plans are based on years of service and
employee compensation. Our funding policy is to contribute
annually the minimum amount required under ERISA regulations.
Benefits are based on years of service and comprehensive or
stated amounts for each year of service. The pension and
postretirement liabilities at December 31, 2003 and 2002
include the allocation of purchase price to record these
liabilities at fair value based on our acquisition by Dean Foods
Company.

As of December 31, 2003, the latest
measurement date, the accumulated benefit obligation of the
pension plan exceeded the fair value of plan assets. In
accordance with SFAS No. 87, Employers
Accounting for Pensions, we recorded an additional minimum
pension liability of $14.4 million ($8.9 million, net
of income tax benefit). The adjustment to the additional minimum
pension liability was included in other accumulated
comprehensive loss as a direct charge to stockholders
equity. As of December 31, 2003, the cumulative additional
minimum pension charge included in accumulated other
comprehensive income was $14.4 million ($8.9 million
net of income tax benefit).

F-24



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The following table sets forth the funded status
of our defined benefit plans and the amounts recognized in our
consolidated balance sheets:

|                                        |                       |                |         |         |   |   |         |         |  
|--------------------------------------- | --------------------- | -------------- | ------- | ------- | - | - | ------- | ------- | -
|                                        |                       |               
|                                        |                       | Successor     
|                                        |                       |               
|                                        |                       |               
|                                        |                       | December 31,  
|                                        |                       |               
|                                        |                       | 2003           |         | 2002   
|                                        |                       |                |         |        
|                                        |                       |               
|                                        |                       | (In thousands)
|Change in benefit obligation            |                       |                |         |         |   |   |         |        
|Benefit obligation at beginning of year |                       | $              | 150,655 |         |   | $ | 186,506 |        
|                                        | Service cost          |                |         | 1,004   |   |   |         |         |  
|                                        | Interest cost         |                |         | 10,513  |   |   |         | 11,612  |  
|                                        | Plan amendments       |                |         | 9,528   |   |   |         |         |  
|                                        | Divested entities     |                |         |         |   |   |         |         |  
|                                        | Actuarial (gain) loss |                |         | 12,341  |   |   |         | (3,163  | )
|                                        | Impact of acquisition |                |         |         |   |   |         | 11,615  |  
|                                        | Benefits paid         |                |         | (20,596 | ) |   |         | (55,915 | )
|                                        |                       |                |         |         |   |   |         |        
|Benefit obligation at end of year       |                       | $              | 163,445 |         |   | $ | 150,655 |        
|                                        |                       |                |         |         |   |   |         |        

|                                                                          |                                 |                |         |         |   |   |         |         |  
|------------------------------------------------------------------------- | ------------------------------- | -------------- | ------- | ------- | - | - | ------- | ------- | -
|                                                                          |                                 |               
|                                                                          |                                 | Successor     
|                                                                          |                                 |               
|                                                                          |                                 |               
|                                                                          |                                 | December 31   
|                                                                          |                                 |               
|                                                                          |                                 | 2003           |         | 2002   
|                                                                          |                                 |                |         |        
|                                                                          |                                 |               
|                                                                          |                                 | (In thousands)
|Change in plan assets                                                     |                                 |                |         |         |   |   |         |        
|Fair value of plan assets at beginning of year                            |                                 | $              | 58,707  |         |   | $ | 99,012  |        
|                                                                          | Actual return on plan assets    |                |         | 12,097  |   |   |         | (11,032 | )
|                                                                          | Employer contribution           |                |         | 23,340  |   |   |         | 26,530  |  
|                                                                          | Impact of acquisition           |                |         |         |   |   |         | 112     |  
|                                                                          | Benefits paid                   |                |         | (20,596 | ) |   |         | (55,915 | )
|                                                                          |                                 |                |         |         |   |   |         |        
|Fair value of plan assets at end of year                                  |                                 |                | 73,548  |         |   |   | 58,707  |        
|                                                                          |                                 |                |         |         |   |   |         |        
|Funded status                                                             |                                 |                | (89,897 | )       |   |   | (91,948 | )      
|                                                                          | Unrecognized prior service cost |                |         | 9,026   |   |   |         |         |  
|                                                                          | Unrecognized net loss           |                |         | 16,663  |   |   |         | 13,126  |  
|                                                                          |                                 |                |         |         |   |   |         |        
|Net amount recognized                                                     |                                 | $              | (64,208 | )       |   | $ | (78,822 | )      
|                                                                          |                                 |                |         |         |   |   |         |        
|Amounts recognized in the statement of financial
    position consist of: |                                 |                |         |         |   |   |         |        
|Prepaid benefit cost                                                      |                                 |                | 9,026   |         |   |   |         |        
|Accrued benefit liability                                                 |                                 |                | (87,597 | )       |   |   | (78,822 | )      
|Accumulated other comprehensive income                                    |                                 |                | 14,363  |         |   |   |         |        
|                                                                          |                                 |                |         |         |   |   |         |        
|Net amount recognized                                                     |                                 | $              | (64,208 | )       |   | $ | (78,822 | )      
|                                                                          |                                 |                |         |         |   |   |         |        

F-25



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

A summary of our key actuarial assumptions used
to determine benefit obligations as of December 31, 2003
and 2002 follows:

|                               |  |              |      |      |  |  |      |  
|------------------------------ |  | ------------ | ---- | ---- |  |  | ---- | -
|                               |  |             
|                               |  | Successor   
|                               |  |             
|                               |  |             
|                               |  | Year Ended  
|                               |  | December 31,
|                               |  |             
|                               |  | 2003         |      | 2002
|                               |  |              |      |     
|Weighted-average assumptions:  |  |              |      |      |  |  |      |  
|Discount rate                  |  |              | 6.50 | %    |  |  | 6.75 | %
|Expected return on plan assets |  |              | 8.50 | %    |  |  | 8.50 | %
|Rate of compensation increase  |  |              | 4.00 | %    |  |  | 4.00 | %

A summary of our key actuarial assumptions used
to determine net periodic benefit cost for the years ended
December 31, 2003 and 2002 and the period from May 28,
2001 to December 31, 2001 and the fiscal year ended
May 27, 2001 follows:

|                               |  |              |       |                 |  |             |         |      |  |  |         |  |  |  |         | 
|------------------------------ |  | ------------ | ----- | --------------- |  | ----------- | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                               |  |              |       |                
|                               |  | Successor    |       | Predecessor    
|                               |  |              |       |                
|                               |  |              |       |                
|                               |  | Year Ended   |       | Period from     |  | Fiscal Year
|                               |  | December 31, |       | May 28, 2001 to |  | Ended      
|                               |  |              |       | December 31,    |  | May 27,    
|                               |  | 2003         |       | 2002            |  | 2001        |         | 2001
|                               |  |              |       |                 |  |             |         |     
|Weighted-average assumptions:  |  |              |       |                 |  |             |         |      |  |  |         |  |  |  |         | 
|Discount rate                  |  |              | 6.75% |                 |  |             | 6.75%   |      |  |  | 7.25%   |  |  |  | 7.50%   | 
|Expected return on plan assets |  |              | 8.50% |                 |  |             | 9.00%   |      |  |  | 9.00%   |  |  |  | 9.00%   | 
|Rate of compensation increase  |  |              | 4.00% |                 |  |             | 0-5.00% |      |  |  | 0-5.00% |  |  |  | 0-5.00% | 

|                                         |                                    |                |       |                 |   |             |       |        |   |   |        |        |   |   |        |        |  
|---------------------------------------- | ---------------------------------- | -------------- | ----- | --------------- | - | ----------- | ----- | ------ | - | - | ------ | ------ | - | - | ------ | ------ | -
|                                         |                                    |                |       |                
|                                         |                                    | Successor      |       | Predecessor    
|                                         |                                    |                |       |                
|                                         |                                    |                |       |                
|                                         |                                    | Year Ended     |       | Period from     |   | Fiscal Year
|                                         |                                    | December 31,   |       | May 28, 2001 to |   | Ended      
|                                         |                                    |                |       | December 31,    |   | May 27,    
|                                         |                                    | 2003           |       | 2002            |   | 2001        |       | 2001  
|                                         |                                    |                |       |                 |   |             |       |       
|                                         |                                    |                |       |                
|                                         |                                    | (In thousands) |       | (In thousands) 
|Components of net periodic benefit cost: |                                    |                |       |                 |   |             |       |        |   |   |        |        |   |   |        |       
|                                         | Service cost                       |                | $     | 1,004           |   |             |       |        |   |   | $      | 13,717 |   |   | $      | 16,039 |  
|                                         | Interest cost                      |                |       | 10,513          |   |             | $     | 11,612 |   |   |        | 7,627  |   |   |        | 9,536  |  
|                                         | Expected return on plan assets     |                |       | (5,021          | ) |             |       | (8,287 | ) |   |        | (7,158 | ) |   |        | (9,035 | )
|Amortizations:                           |                                    |                |       |                 |   |             |       |        |   |   |        |        |   |   |        |       
|                                         | Unrecognized transition obligation |                |       |                 |   |             |       |        |   |   |        | (366   | ) |   |        | (488   | )
|                                         | Prior service cost                 |                |       | 501             |   |             |       |        |   |   |        | 206    |   |   |        | 260    |  
|                                         | Unrecognized net gain              |                |       | 216             |   |             |       |        |   |   |        | 267    |   |   |        | 297    |  
|Effect of settlement                     |                                    |                |       |                 |   |             | 3,031 |        |   |   |        |        |   |   |        |       
|                                         |                                    |                |       |                 |   |             |       |        |   |   |        |        |   |   |        |       
|Net periodic benefit cost                |                                    | $              | 7,213 |                 |   | $           | 6,356 |        |   | $ | 14,293 |        |   | $ | 16,609 |       
|                                         |                                    |                |       |                 |   |             |       |        |   |   |        |        |   |   |        |       

Included in the above pension benefits table is
an unfunded supplemental retirement plan with a liability of
$5.8 million and $7.3 million at December 31,
2003 and 2002, respectively.

In 2003 Dean Foods Company decided to consolidate
the assets of our pension plan and the assets of their other
qualified pension plans into one master trust. This
consolidation is expected to be completed in the first quarter
of 2004. Also in 2003, Dean Foods Company retained investment
consultants to assist their Investment Committee with the
transition of the plans assets to the master trust and to
help their Investment Committee formulate a long-term investment
policy for the newly established master trust. The Investment

F-26



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

Committee developed an interim investment policy
to ensure a smooth transition to the master trust. Our current
asset mix guidelines under the interim investment policy target
equities at 65-75% of the portfolio and fixed income at 25-35%.
Dean Foods Companys Investment Committee expects to
develop and adopt a long-term investment policy in mid 2004.

We determine expected long-term rate of return
based on our expectations of future returns for the pension
plans investments based on interim target allocations of
investments. Additionally, we consider the weighted-average
return of a capital markets model that was developed by the
plans investment consultants and historical returns on
comparable equity, fixed income and other investments. The
resulting weighted average expected long-term rate of return on
plan assets is 8.5%.

Our pension plan weighted average asset
allocations at December 31, 2003 and 2002 by asset category
were as follows:

|                        |  |              |     |              |  |  |     |  
|----------------------- |  | ------------ | --- | ------------ |  |  | --- | -
|                        |  |             
|                        |  | Successor   
|                        |  |             
|                        |  | December 31, |     | December 31,
|                        |  | 2003         |     | 2002        
|                        |  |              |     |             
|Asset category:         |  |              |     |              |  |  |     |  
|Equity securities       |  |              | 66  | %            |  |  | 70  | %
|Fixed income securities |  |              | 9   |              |  |  | 26  |  
|Cash                    |  |              | 25  |              |  |  | 4   |  
|                        |  |              |     |              |  |  |     |  
|Total                   |  |              | 100 | %            |  |  | 100 | %
|                        |  |              |     |              |  |  |     |  

Equity securities of the plan did not include any
investment in the common stock of Dean Foods Company at
December 31, 2003 or 2002.

We expect to contribute $30.6 million to the
pension plan for 2004.

Defined Contribution
Plans Certain of our
non-union personnel may elect to participate in savings and
profit sharing plans sponsored by us. These plans generally
provide for salary reduction contributions to the plans on
behalf of the participants between 1% and 17% of a
participants annual compensation and provide for employer
matching and profit sharing contributions as determined by the
Dean Foods Company Board of Directors.

Multi-Employer Pension and Certain Union
Plans Certain of our
subsidiaries contribute to various multi-employer pension and
certain union plans, which are administered jointly by
management and union representatives and cover substantially all
full-time and certain part-time union employees who are not
covered by our other plans. The Multi-Employer Pension Plan
Amendments Act of 1980 amended ERISA to establish funding
requirements and obligations for employers participating in
multi-employer plans, principally related to employer withdrawal
from or termination of such plans. We could, under certain
circumstances, be liable for unfunded vested benefits or other
expenses of jointly administered union/management plans. At this
time, we have not established any liabilities because withdrawal
from these plans is not probable or reasonably possible.



|    |                                                
|--- | -----------------------------------------------
|15. | POSTRETIREMENT BENEFITS OTHER THAN
    PENSIONS

We provide health care and life insurance
benefits to certain retired employees and their eligible
dependents. Employees are eligible for such benefits subject to
minimum age and service requirements. Eligible employees that
retire before normal retirement age, along with their
dependents, are entitled to benefits on a shared contribution
basis. We retain the right to modify or eliminate these benefits.

F-27



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The following table sets forth the funded status
of these plans and the amounts recognized in our consolidated
balance sheets:

|                                                      |                                 |                |         |        |   |   |         |        |  
|----------------------------------------------------- | ------------------------------- | -------------- | ------- | ------ | - | - | ------- | ------ | -
|                                                      |                                 |               
|                                                      |                                 | Successor     
|                                                      |                                 |               
|                                                      |                                 |               
|                                                      |                                 | December 31,  
|                                                      |                                 |               
|                                                      |                                 | 2003           |         | 2002  
|                                                      |                                 |                |         |       
|                                                      |                                 |               
|                                                      |                                 | (In thousands)
|Change in benefit obligation                          |                                 |                |         |        |   |   |         |       
|Benefit obligation at beginning of year               |                                 | $              | 11,151  |        |   | $ | 13,793  |       
|                                                      | Service cost                    |                |         | 978    |   |   |         | 861    |  
|                                                      | Interest cost                   |                |         | 680    |   |   |         | 571    |  
|                                                      | Actuarial loss                  |                |         | 3,141  |   |   |         | 2,162  |  
|                                                      | Divested entities               |                |         |        |   |   |         |        |  
|                                                      | Impact of acquisition           |                |         |        |   |   |         | (4,872 | )
|                                                      | Benefits paid                   |                |         | (1,778 | ) |   |         | (1,364 | )
|                                                      |                                 |                |         |        |   |   |         |       
|Benefit obligation at end of year                     |                                 |                | 14,172  |        |   |   | 11,151  |       
|Fair value of plan assets at end of year              |                                 |                |         |        |   |   |         |       
|                                                      |                                 |                |         |        |   |   |         |       
|Funded status                                         |                                 |                | (14,172 | )      |   |   | (11,151 | )     
|                                                      | Unrecognized prior service cost |                |         |        |   |   |         |        |  
|                                                      | Unrecognized net loss           |                |         | 5,219  |   |   |         | 2,162  |  
|                                                      |                                 |                |         |        |   |   |         |       
|Net amount recognized  accrued benefit
    liability |                                 | $              | (8,953  | )      |   | $ | (8,989  | )     
|                                                      |                                 |                |         |        |   |   |         |       

A summary of our key actuarial assumptions used
to determine the benefit obligation as of December 31, 2003
and 2002 follows:

|                       |                                   |              |      |       |   |  |      |       |  
|---------------------- | --------------------------------- | ------------ | ---- | ----- | - |  | ---- | ----- | -
|                       |                                   |             
|                       |                                   | Successor   
|                       |                                   |             
|                       |                                   |             
|                       |                                   | December 31,
|                       |                                   |             
|                       |                                   | 2003         |      | 2002 
|                       |                                   |              |      |      
|Health care inflation: |                                   |              |      |       |   |  |      |      
|                       | Initial rate                      |              |      | 12.00 | % |  |      | 11.00 | %
|                       | Ultimate rate                     |              |      | 5.00  | % |  |      | 5.00  | %
|                       | Year of ultimate rate achievement |              |      | 2009  |   |  |      | 2013  |  
|Discount rate          |                                   |              | 6.50 | %     |   |  | 6.75 | %    

F-28



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The weighted-average discount rate used to
determine net periodic benefit cost is 6.75%, 6.75%, 7.25% and
7.5% in the years ended December 31, 2003 and 2002 and the
period from May 28, 2001 to December 31, 2001 and the
fiscal year ended May 27, 2001, respectively.

|                                         |                           |                |   |                 |  |             |   |       |  |  |   |       |  |  |   |       | 
|---------------------------------------- | ------------------------- | -------------- | - | --------------- |  | ----------- | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                         |                           |                |   |                
|                                         |                           | Successor      |   | Predecessor    
|                                         |                           |                |   |                
|                                         |                           |                |   |                
|                                         |                           | Year Ended     |   | Period from     |  | Fiscal Year
|                                         |                           | December 31,   |   | May 28, 2001 to |  | Ended      
|                                         |                           |                |   | December 31,    |  | May 27,    
|                                         |                           | 2003           |   | 2002            |  | 2001        |   | 2001 
|                                         |                           |                |   |                 |  |             |   |      
|                                         |                           |                |   |                
|                                         |                           | (In thousands) |   | (In thousands) 
|Components of net periodic benefit cost: |                           |                |   |                 |  |             |   |       |  |  |   |       |  |  |   |      
|                                         | Service and interest cost |                | $ | 1,658           |  |             | $ | 1,432 |  |  | $ | 781   |  |  | $ | 1,017 | 
|Amortizations:                           |                           |                |   |                 |  |             |   |       |  |  |   |       |  |  |   |      
|                                         | Unrecognized net gain     |                |   | 84              |  |             |   |       |  |  |   | 190   |  |  |   | 484   | 
|                                         | Prior service cost        |                |   |                 |  |             |   |       |  |  |   | 450   |  |  |   | 253   | 
|                                         |                           |                |   |                 |  |             |   |       |  |  |   |       |  |  |   |      
|                                         | Net periodic benefit cost |                | $ | 1,742           |  |             | $ | 1,432 |  |  | $ | 1,421 |  |  | $ | 1,754 | 
|                                         |                           |                |   |                 |  |             |   |       |  |  |   |       |  |  |   |      

Assumed health care cost trend rates have a
significant effect on the amounts reported for the health care
plans. A one percent change in assumed health care cost trend
rates would have the following effects:

|                                                            |  |                |     |                |  |   |      |  
|----------------------------------------------------------- |  | -------------- | --- | -------------- |  | - | ---- | -
|                                                            |  | 1-Percentage-  |     | 1-Percentage- 
|                                                            |  | Point Increase |     | Point Decrease
|                                                            |  |                |     |               
|                                                            |  |               
|                                                            |  | (In thousands)
|Effect on total of service and interest cost
    components |  | $              | 150 |                |  | $ | (134 | )
|Effect on postretirement obligation                         |  | $              | 645 |                |  | $ | (577 | )

We retained the earned pension and other
postretirement benefits liabilities related to NRP for
liabilities through the date of acquisition by Dean Foods
Company. Accordingly the information disclosed in the tables
above includes continuing and discontinued operations. The
corresponding liabilities for Dean SoCal are retained by our
parent through December 21, 2001, the date of acquisition.

We expect to contribute $2 million to the
postretirement health care plan for 2004.



|    |                                            
|--- | -------------------------------------------
|16. | PLANT CLOSING AND RATIONALIZATION
    COSTS

Plant Closing and Rationalization
Costs As part of Dean Food
Companys overall rationalization and cost reduction
program, we recorded charges of $5.9 million during 2003.
The charges recorded during 2003 are related to the following:



| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | Elimination of certain administrative functions
    at our Dairy Group;               
|
| |  | Closing of a Dairy Group ice cream operation and
    maintenance facility in Ohio; and
|
| |  | Closing of a Dairy Group manufacturing facility
    in California.                    

These charges were accounted for in accordance
with SFAS No. 146 which became effective for us in
January 2003. Under SFAS No. 146, the timing of
certain costs associated with restructurings are accrued
differently than in the past. We expect to incur additional
charges of approximately $2.4 million, including an
additional $0.3 million for workforce reduction costs,
$1.8 million in shutdown and other costs and
$0.3 million in lease obligation costs. These additional
charges related to these restructuring plans are expected to be
completed by December 2004.

F-29



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

The principal components of the plans included
the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Workforce reductions as a result of plant
    closings, plant rationalizations and consolidation of
    administrative functions and offices;                                                                                                                                                                                                                                                                                                                                              
|
| |  | Shutdown costs, including those costs that were
    necessary to clean and prepare the plant facilities for resale
    or closure;                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Costs incurred after shutdown such as lease
    obligations or termination costs, utilities and property
    taxes; and                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Write-downs of property, plant and equipment and
    other assets primarily for asset impairments as a result of
    facilities that are no longer used in operations. The
    impairments related primarily to owned buildings, land and
    equipment at the facilities which were written down to their
    estimated fair values and are being sold. The effect of
    suspending depreciation on the buildings and equipment related
    to the closed facilities was not significant.

We consider several factors when evaluating a
potential plant closure, including, among other things, the
impact of such a closure on our customers, the impact on
production, distribution and overhead costs, the investment
required to complete any such closure, and the impact on future
investment decisions. Some plant closures are pursued to improve
our operating cost structure, while others enable us to avoid
unnecessary capital expenditures, allowing us to more prudently
invest our capital expenditure dollars in our production
facilities.

Activity with respect to plant closing and
rationalization for exit plans approved in 2003 is summarized
below:

|                  |                                  |                |   |              |  |      |   |        |   |  |   |       | 
|----------------- | -------------------------------- | -------------- | - | ------------ |  | ---- | - | ------ | - |  | - | ----- | 
|                  |                                  |               
|                  |                                  | Successor     
|                  |                                  |               
|                  |                                  |                |   | Accrued     
|                  |                                  |                |   | Charges At  
|                  |                                  |                |   | December 31,
|                  |                                  | Charges        |   | Payments     |  | 2003
|                  |                                  |                |   |              |  |     
|                  |                                  |               
|                  |                                  | (In thousands)
|Cash charges:     |                                  |                |   |              |  |      |   |        |   |  |   |      
|                  | Workforce reduction costs        |                | $ | 4,151        |  |      | $ | (604   | ) |  | $ | 3,547 | 
|                  | Shutdown costs                   |                |   | 127          |  |      |   | (127   | ) |  |   |       | 
|                  | Lease obligations after shutdown |                |   | 445          |  |      |   | (445   | ) |  |   |       | 
|                  |                                  |                |   |              |  |      |   |        |   |  |   |      
|                  | Subtotal                         |                |   | 4,723        |  |      | $ | (1,176 | ) |  | $ | 3,547 | 
|                  |                                  |                |   |              |  |      |   |        |   |  |   |      
|Non cash charges: |                                  |                |   |              |  |      |   |        |   |  |   |      
|                  | Write down of assets             |                |   | 1,196        |  |      |   |        |   |  |   |       | 
|                  |                                  |                |   |              |  |      |   |        |   |  |   |      
|                  | Total charges                    |                | $ | 5,919        |  |      |   |        |   |  |   |       | 
|                  |                                  |                |   |              |  |      |   |        |   |  |   |      

There have not been significant adjustments to
the plans and the majority of future cash requirements to reduce
the liability at December 31, 2003 are expected to be
completed within a year.

We recorded plant closing costs of
$0.4 million during the period from May 28, 2001 to
December 31, 2001 to close one Specialty Foods Group plant.

Transaction closing costs As part of our acquisition by Dean
Foods Company, we accrued costs in 2002 pursuant to plans to
exit certain activities and operations of businesses in order to
rationalize production and reduce costs and inefficiencies. In
connection with our acquisition by Dean Foods Company, plants in
Atkins, Arkansas and Cairo, Georgia in our Specialty Foods Group
and a plant in Escondido, California in our Dairy Group were
closed. We also eliminated our administrative offices, closed
Dairy Group distribution

F-30



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

depots in Parker Ford, Pennsylvania and Camp
Hill, Pennsylvania, shut down two pickle tank yards and
relocated production between plants as part of our overall
integration and efficiency efforts.

The principal components of the plans include the
following:



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

Activity with respect to these liabilities for
2003 is summarized below:

|                          |  |                |        |             |  |              |     |      |  |   |         |   |  |   |       | 
|------------------------- |  | -------------- | ------ | ----------- |  | ------------ | --- | ---- |  | - | ------- | - |  | - | ----- | 
|                          |  |               
|                          |  | Successor     
|                          |  |               
|                          |  | Accrued        |        |             |  | Accrued     
|                          |  | Charges at     |        |             |  | Charges 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 | 
|                          |  |                |        |             |  |              |     |      |  |   |         |   |  |   |       | 

Activity with respect to these liabilities for
2002 is summarized below:

|                          |  |                |        |          |  |              |        |      |  |   |         |   |  |   |        | 
|------------------------- |  | -------------- | ------ | -------- |  | ------------ | ------ | ---- |  | - | ------- | - |  | - | ------ | 
|                          |  |               
|                          |  | Successor     
|                          |  |               
|                          |  | Accrued        |        |          |  | Accrued     
|                          |  | Charges at     |        |          |  | Charges at  
|                          |  | December 31,   |        |          |  | December 31,
|                          |  | 2001           |        | Accruals |  | Payments     |        | 2002
|                          |  |                |        |          |  |              |        |     
|                          |  |               
|                          |  | (In thousands)
|Workforce reduction costs |  | $              | 19,357 |          |  | $            | 10,112 |      |  | $ | (21,743 | ) |  | $ | 7,726  | 
|Shutdown costs            |  |                | 8,647  |          |  |              | 8,881  |      |  |   | (9,320  | ) |  |   | 8,208  | 
|                          |  |                |        |          |  |              |        |      |  |   |         |   |  |   |        | 
|Total                     |  | $              | 28,004 |          |  | $            | 18,993 |      |  | $ | (31,063 | ) |  | $ | 15,934 | 
|                          |  |                |        |          |  |              |        |      |  |   |         |   |  |   |        | 

These liabilities were established on
December 31, 2001 in connection with our acquisition by
Dean Foods Company.



|    |                                   
|--- | ----------------------------------
|17. | SUPPLEMENTAL CASH FLOW INFORMATION

|                                                                              |                                         |                                 |        |                |  |             |        |      |  |  |  |        |          |   |        |  |  | 
|----------------------------------------------------------------------------- | --------------------------------------- | ------------------------------- | ------ | -------------- |  | ----------- | ------ | ---- |  |  |  | ------ | -------- | - | ------ |  |  | 
|                                                                              |                                         |                                 |        |               
|                                                                              |                                         | Successor                       |        | Predecessor   
|                                                                              |                                         |                                 |        |               
|                                                                              |                                         |                                 |        | Period from    |  |            
|                                                                              |                                         | Year Ended                      |        | May 28,        |  | Fiscal Year
|                                                                              |                                         | December 31,                    |        | 2001 to        |  | Ended      
|                                                                              |                                         |                                 |        | December 31,   |  | May 27,    
|                                                                              |                                         | 2003                            |        | 2002           |  | 2001        |        | 2001
|                                                                              |                                         |                                 |        |                |  |             |        |     
|                                                                              |                                         |                                 |        |               
|                                                                              |                                         | (In thousands)                  |        | (In thousands)
|Cash paid for interest and financing charges, net
    of capitalized interest |                                         | $                               | 51,496 |                |  | $           | 56,053 |      |  |  |  |        |          | $ | 39,325 | 
|Cash paid for taxes                                                           |                                         |                                 | 3,695  |                |  |             | 6,073  |      |  |  |  |        |          |   | 4,178  | 
|Non-cash transactions:                                                        |                                         |                                 |        |                |  |             |        |      |  |  |  |        |          |   |        | 
|                                                                              | Dividend of National                    |                                 |        |                |  |             |        |      |  |  |  |        |          |   |        |  | 
|                                                                              |                                         | Refrigerated Products to parent |        |                |  |             |        |      |  |  |  | $      | (408,252 | ) |        |  |  | 
|                                                                              | Contributions of Dean SoCal from parent |                                 |        |                |  |             |        |      |  |  |  | 94,220 |          |   |        |  | 

F-31



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)



|    |                              
|--- | -----------------------------
|18. | COMMITMENTS AND CONTINGENCIES

Leases
We lease certain property, plant and equipment used in our
operations under operating lease agreements. Such leases, which
are primarily for machinery, equipment and vehicles, have lease
terms ranging from 1 to 20 years. Certain of the operating
lease agreements require the payment of additional rentals for
maintenance, along with additional rentals based on miles driven
or units produced. Certain leases require us to guarantee a
minimum value of the leased asset at the end of the lease. Our
maximum exposure under those guarantees is not a material
amount. Rent expense, including additional rent, was
$41.1 million, $40.9 million, $33.6 million, and
$55.8 million for the years ended December 31, 2003
and 2002 and the period from May 28, 2001 to
December 31, 2001 and the fiscal year ended May 27,
2001, respectively.

We had no capital leases at December 31,
2003. Future minimum payments at December 31, 2003, under
non-cancelable operating leases with terms in excess of one year
are summarized below:

|                             |  |                |         | 
|---------------------------- |  | -------------- | ------- | 
|                             |  | Operating     
|                             |  | Leases        
|                             |  |               
|                             |  | (In thousands)
|2004                         |  | $              | 31,196  | 
|2005                         |  |                | 25,072  | 
|2006                         |  |                | 22,101  | 
|2007                         |  |                | 19,087  | 
|2008                         |  |                | 18,656  | 
|Thereafter                   |  |                | 86,463  | 
|                             |  |                |         | 
|Total minimum lease payments |  | $              | 202,575 | 
|                             |  |                |         | 

Guaranty of Dean Foods Companys
Obligations Under Its Senior Credit
Facility Certain of Dean
Foods Companys subsidiaries, including us, are required to
guarantee Dean Foods Companys indebtedness under its
senior credit facility. We have pledged substantially all of our
assets (other than our real property and our ownership interests
in our subsidiaries) as security for our guaranty. The senior
credit facility provides for a $1 billion multi-currency
revolving line of credit (which provides for borrowings up to
$200 million in euros), a Tranche A $1 billion
term loan and a Tranche B $750 million term loan. At
December 31, 2003 there were outstanding term loan
borrowings of $1.67 billion under this facility, and
$112.8 million outstanding under the revolving line of
credit. Letters of credit in the aggregate amount of
$108.9 million were issued but undrawn. At
December 31, 2003 approximately $778.3 million was
available for future borrowings under Dean Foods Companys
revolving credit facility. Dean Foods Company is currently in
compliance with all covenants contained in their credit
agreement.

Amounts outstanding under Dean Foods
Companys revolver and Dean Foods Companys
Tranche A term loan bear interest at a rate per annum equal
to one of the following rates, at Dean Foods Companys
option:



| |   |                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a base rate equal to the higher of the Federal
    Funds rate plus 50 basis points or the prime rate, plus a
    margin that varies from 0 to 75 basis points, depending on
    Dean Foods Companys leverage ratio (which is computed as
    the ratio of indebtedness to EBITDA, as such terms are defined
    in Dean Foods Companys credit agreement) or
|
| |  | the London Interbank Offering Rate
    (LIBOR) divided by the product of one minus the
    Eurodollar Reserve Percentage, plus a margin that varies from
    125 to 200 basis points, depending on Dean Foods
    Companys leverage ratio (as defined in Dean Foods
    Companys credit agreement).                                                      

EBITDA is defined in Dean Foods Companys
credit agreement for any period as, the sum of (i) net
income (excluding extraordinary items) after taxes for such
period as determined in accordance with GAAP, plus

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DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(ii) an amount which, in the determination
of such net income, has been deducted for (a) all interest
expense, including the interest component under capital leases
and the implied interest component under our receivables-backed
facility, plus net amounts payable (or minus net amounts
receivable) under hedging agreements, minus interest income for
such period, in each case as determined in accordance with GAAP,
(b) total federal, state, local and foreign income, value
added and similar taxes, (c) depreciation, amortization
expense and other noncash charges, (d) pro forma cost
savings add-backs resulting from non-recurring charges related
to acquisitions to the extent permitted under the credit
agreement and under Regulation S-X of the Securities
Exchange Act of 1934 or as approved by the representative of the
lenders and (e) other adjustments reasonably acceptable to
the representative of the lenders.

Borrowings under the Tranche B term loan
bear interest at a rate per annum equal to one of the following
rates, at Dean Foods Companys option:



| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | a base rate equal to the higher of the Federal
    Funds rate plus 50 basis points or the prime rate, plus a
    margin of 75 basis points, or
|
| |  | LIBOR divided by the product of one minus the
    Eurodollar Reserve Percentage, plus a margin of 200 basis
    points.                       

As of December 31, 2003, Dean Foods Company
had interest rate swap agreements in place that hedged
$1.13 billion of their borrowings under this facility at an
average rate of 4.32%, plus the applicable interest rate margin.

Principal payments are required on the
Tranche A term loan as follows:



| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | $37.5 million quarterly beginning on
    September 30, 2003 through December 31, 2004;
|
| |  | $43.75 million quarterly on March 31,
    2005 through December 31, 2005;             
|
| |  | $50 million quarterly on March 31, 2006
    through December 31, 2006;                
|
| |  | $62.5 million quarterly on March 31,
    2007 and June 30, 2007; and                  
|
| |  | A final payment of $275 million on
    July 15, 2007.                                 

Principal payments are required on the
Tranche B term loan as follows:



| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | $1.875 million quarterly beginning on
    September 30, 2003 through December 31, 2007;
|
| |  | $358.1 million on each of March 31,
    2008 and July 15, 2008.                        

No principal payments are due on the
$1 billion line of credit until maturity on July 15,
2007.

Dean Foods Companys credit agreement also
requires mandatory principal prepayments upon the occurrence of
certain asset dispositions not in the ordinary course of
business.

The senior credit facility contains various
financial and other restrictive covenants and requires that Dean
Foods Company maintain certain financial ratios, including a
leverage ratio (computed as the ratio of the aggregate
outstanding principal amount of indebtedness to EBITDA as such
terms are defined in Dean Foods Companys credit agreement)
and an interest coverage ratio (computed as the ratio of EBITDA
to interest expense as such terms are defined in Dean Foods
Companys credit agreement). In addition, this facility
requires that Dean Foods Company maintain a minimum level of net
worth (as defined by Dean Foods Companys credit agreement).

For the period from December 31, 2003
through March 31, 2005, Dean Foods Companys leverage
ratio must be less than or equal to 4 to 1. Beginning
April 1, 2005, Dean Foods Companys leverage ratio,
calculated according to the definitions contained in the credit
agreement, must be less than or equal to 3.75 to 1. As of

F-33



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

December 31, 2003, Dean Foods Companys
leverage ratio, calculated according to the definitions
contained in the credit agreement, was 3.16 to 1.

EBITDA, as used in Dean Foods Companys
credit agreement, is not intended to represent cash flow from
operations as defined by GAAP and should not be used as an
alternative to net income as an indicator of their operating
performance or to cash flow as a measure of their liquidity.
Moreover, EBITDA is a term used by many companies to mean many
different things. Therefore, neither Dean Foods Companys
EBITDA nor their leverage ratio, calculated under their credit
agreement, should be compared to any other companys EBITDA
or leverage ratio. We present Dean Foods Companys leverage
ratio in this discussion not as a measure of their liquidity or
performance but only to demonstrate their level of compliance
with their credit agreement.

Dean Foods Companys interest coverage ratio
must be greater than or equal to 3 to 1. As of December 31,
2003, Dean Foods Companys interest coverage ratio,
calculated according to the definitions contained in the credit
agreement, was 5.24 to 1.

Dean Foods Companys consolidated net worth
must be greater than or equal to $1.75 billion, as
increased each quarter (beginning with the quarter ended
September 30, 2003) by an amount equal to 50% of its
consolidated net income for the quarter, plus 50% of the amount
by which stockholders equity is increased by certain
equity issuances. As of December 31, 2003, the minimum net
worth requirement was $1.85 billion, and Dean Foods
Companys actual net worth (as defined in the credit
agreement) was $2.54 billion.

The credit facility is secured by liens on
substantially all of Dean Foods Companys domestic assets
(including ours and those of our subsidiaries, but excluding the
capital stock of our subsidiaries and the real property owned by
us and our subsidiaries).

The agreement contains standard default triggers
including without limitation: failure to maintain compliance
with the financial and other covenants contained in the
agreement, default on certain of Dean Foods Companys other
debt, a change in control and certain other material adverse
changes in their business. The agreement does not contain any
default triggers based on Dean Foods Companys debt rating.

Litigation, Investigations and
Audits We are party, in
the ordinary course of business to certain other claims,
litigation, audits and investigations. We believe we have
adequate reserves for any liability we may incur in connection
with any such currently pending or threatened matter. In our
opinion, the settlement of any such currently pending or
threatened matter is not expected to have a material adverse
impact on our financial position, results of operations or cash
flows.



|    |                                    
|--- | -----------------------------------
|19. | FAIR VALUE OF FINANCIAL INSTRUMENTS

Pursuant to SFAS No. 107,
Disclosure About Fair Value of Financial
Instruments, we are required to disclose an estimate of
the fair value of our financial instruments as of
December 31, 2003 and 2002. SFAS No. 107 defines
the fair value of financial instruments as the amount at which
the instrument could be exchanged in a current transaction
between willing parties.

Due to their near-term maturities, the carrying
amounts of accounts receivable and accounts payable are
considered equivalent to fair value. We have senior notes with
an aggregate face value of $700 million with fixed interest
rates ranging from 6.625% to 8.15% at December 31, 2003. At
December 31, 2003 and 2002 the fair value of senior notes
was estimated at $699.2 million and $702.8 million,
respectively. In addition, because the interest rates on most of
our other debt are variable, their fair value approximates their
carrying value.



|    |                                                           
|--- | ----------------------------------------------------------
|20. | SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR
    CUSTOMERS

Segment
Information We currently
have two reportable segments: Dairy Group and Specialty Foods
Group. Our Dairy Group segment manufactures and distributes
fluid milk, ice cream and ice cream novelties,

F-34



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

half-and-half and whipping cream, sour cream,
cottage cheese, yogurt and dips as well as fruit juices and
other flavored drinks and bottled water. The Specialty Foods
Group processes and markets pickles, powdered products such as
non-dairy coffee creamers, aseptic sauces and puddings and
nutritional beverages.

Prior to our acquisition by Dean Foods Company,
we had an NRP segment. As a result of the acquisition by Dean
Foods Company, as discussed in Note 2, we no longer have an
NRP segment. Prior periods have been restated to reflect NRP as
a discontinued operation. We exchanged our former NRP segment
for Dean SoCal, which is included in our Dairy Group.

The accounting policies of the segments are the
same as those described in the summary of significant accounting
policies. We evaluate performance based on operating profit not
including non-recurring gains and losses and foreign exchange
gains and losses.

We do not allocate income taxes, management fees
or unusual items to segments. In addition, there are no
significant non-cash items reported in segment profit or loss
other than depreciation and amortization. The amounts in the
following tables are the amounts obtained from reports used by
our executive management team for the years ended
December 31, 2003 and 2002 and the period from May 28,
2001 to December 31, 2001 and the fiscal year ended
May 27, 2001:

|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |           |  
|---------------------------------- | ------------------------------------------------------------- | -------------- | - | -------------- | - | --------------- | - | --------- | - |  | - | --------- | - |  | - | --------- | -
|                                   |                                                               |                |   |                |   |                
|                                   |                                                               |                |   | Predecessor   
|                                   |                                                               | Successor      |   |               
|                                   |                                                               |                |   | Period from    |   | Fiscal Year    
|                                   |                                                               | Year Ended     |   | Year Ended     |   | May 28, 2001 to |   | Ended    
|                                   |                                                               | December 31,   |   | December 31,   |   | December 31,    |   | May 27,  
|                                   |                                                               | 2003           |   | 2002           |   | 2001            |   | 2001     
|                                   |                                                               |                |   |                |   |                 |   |          
|                                   |                                                               |                |   |               
|                                   |                                                               | (In thousands) |   | (In thousands)
|Net sales from external customers: |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Dairy Group                                                   |                | $ | 3,192,831      |   |                 | $ | 3,181,902 |   |  | $ | 2,043,639 |   |  | $ | 3,246,463 |  
|                                   | Specialty Foods Group                                         |                |   | 684,207        |   |                 |   | 673,604   |   |  |   | 427,179   |   |  |   | 736,206   |  
|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Total                                                         |                | $ | 3,877,038      |   |                 | $ | 3,855,506 |   |  | $ | 2,470,818 |   |  | $ | 3,982,669 |  
|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|Operating income:                  |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Dairy Group(1)                                                |                | $ | 253,082        |   |                 | $ | 255,320   |   |  | $ | 88,448    |   |  | $ | 153,580   |  
|                                   | Specialty Foods Group(2)                                      |                |   | 103,056        |   |                 |   | 98,874    |   |  |   | 46,524    |   |  |   | 70,464    |  
|                                   | Corporate                                                     |                |   | (47,637        | ) |                 |   | (57,086   | ) |  |   | (54,976   | ) |  |   | (59,507   | )
|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Total                                                         |                |   | 308,501        |   |                 |   | 297,108   |   |  |   | 79,996    |   |  |   | 164,537   |  
|Other (income) expense:            |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Interest expense and financing charges                        |                |   | 55,183         |   |                 |   | 56,287    |   |  |   | 38,417    |   |  |   | 70,655    |  
|                                   | Gain on sale of note                                          |                |   |                |   |                 |   |           |   |  |   |           |   |  |   | (10,000   | )
|                                   | Other (income) expense, net                                   |                |   | (1,909         | ) |                 |   | (727      | ) |  |   | 5,078     |   |  |   | (6,668    | )
|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Consolidated income from continuing operations
    before tax |                | $ | 255,227        |   |                 | $ | 241,548   |   |  | $ | 36,501    |   |  | $ | 110,550   |  
|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|Depreciation and amortization:     |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Dairy Group                                                   |                |   | 53,453         |   |                 | $ | 47,306    |   |  | $ | 48,234    |   |  | $ | 90,273    |  
|                                   | Specialty Foods Group                                         |                |   | 14,505         |   |                 |   | 14,101    |   |  |   | 12,439    |   |  |   | 20,763    |  
|                                   | Corporate                                                     |                |   | 5,038          |   |                 |   | 6,391     |   |  |   | 3,962     |   |  |   | 7,673     |  
|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          
|                                   | Total                                                         |                | $ | 72,996         |   |                 | $ | 67,798    |   |  | $ | 64,635    |   |  | $ | 118,709   |  
|                                   |                                                               |                |   |                |   |                 |   |           |   |  |   |           |   |  |   |          

F-35



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

|                      |                                |                |   |                |  |                 |   |           |  |  |   |           |  |  |   |           | 
|--------------------- | ------------------------------ | -------------- | - | -------------- |  | --------------- | - | --------- |  |  | - | --------- |  |  | - | --------- | 
|                      |                                |                |   |                |  |                
|                      |                                |                |   | Predecessor   
|                      |                                | Successor      |   |               
|                      |                                |                |   | Period from    |  | Fiscal Year    
|                      |                                | Year Ended     |   | Year Ended     |  | May 28, 2001 to |   | Ended    
|                      |                                | December 31,   |   | December 31,   |  | December 31,    |   | May 27,  
|                      |                                | 2003           |   | 2002           |  | 2001            |   | 2001     
|                      |                                |                |   |                |  |                 |   |          
|                      |                                |                |   |               
|                      |                                | (In thousands) |   | (In thousands)
|Assets:               |                                |                |   |                |  |                 |   |           |  |  |   |           |  |  |   |          
|                      | Dairy Group                    |                | $ | 2,186,955      |  |                 | $ | 2,161,081 |  |  | $ | 2,143,132 |  |  | $ | 1,526,818 | 
|                      | Specialty Foods Group          |                |   | 635,321        |  |                 |   | 617,210   |  |  |   | 636,192   |  |  |   | 418,185   | 
|                      | National Refrigerated Products |                |   |                |  |                 |   |           |  |  |   |           |  |  |   | 215,535   | 
|                      | Corporate                      |                |   | 84,331         |  |                 |   | 97,532    |  |  |   | 132,105   |  |  |   | 121,132   | 
|                      |                                |                |   |                |  |                 |   |           |  |  |   |           |  |  |   |          
|                      | Total                          |                | $ | 2,906,607      |  |                 | $ | 2,875,823 |  |  | $ | 2,911,429 |  |  | $ | 2,281,670 | 
|                      |                                |                |   |                |  |                 |   |           |  |  |   |           |  |  |   |          
|Capital expenditures: |                                |                |   |                |  |                 |   |           |  |  |   |           |  |  |   |          
|                      | Dairy Group                    |                | $ | 76,611         |  |                 | $ | 63,016    |  |  | $ | 37,057    |  |  | $ | 84,530    | 
|                      | Specialty Foods Group          |                |   | 18,511         |  |                 |   | 11,176    |  |  |   | 6,434     |  |  |   | 15,610    | 
|                      | Corporate                      |                |   |                |  |                 |   | 427       |  |  |   | 4,778     |  |  |   | 5,838     | 
|                      |                                |                |   |                |  |                 |   |           |  |  |   |           |  |  |   |          
|                      | Total                          |                | $ | 95,122         |  |                 | $ | 74,619    |  |  | $ | 48,269    |  |  | $ | 105,978   | 
|                      |                                |                |   |                |  |                 |   |           |  |  |   |           |  |  |   |          



---



|    |                                                                                         
|--- | ----------------------------------------------------------------------------------------
|(1) | Operating income includes plant closing charges
    of $5.9 million in 2003.            
|   
|(2) | Operating income includes plant closing charges
    of $0.4 million in fiscal year 2001.

Substantially all of our business is within the
United States. Intersegment sales are not material.

Major
Customers Our Dairy Group
had two customers that represented greater than 10% of their
2003 sales. The largest customer represented 13.6% of Dairy
Group sales and 12.8% of consolidated sales. Our second-largest
customer represented 10.5% of Dairy Group sales and 8.9% of
consolidated sales.



|    |                                                
|--- | -----------------------------------------------
|21. | QUARTERLY RESULTS OF OPERATIONS
    (UNAUDITED)

The following is a summary of the unaudited
quarterly results of operations for 2003 and 2002.

|                              |               |                |   |         |  |       |   |         |  |  |   |         |  |  |   |           | 
|----------------------------- | ------------- | -------------- | - | ------- |  | ----- | - | ------- |  |  | - | ------- |  |  | - | --------- | 
|                              |               |               
|                              |               | Quarter       
|                              |               |               
|                              |               | First          |   | Second  |  | Third |   | Fourth 
|                              |               |                |   |         |  |       |   |        
|                              |               |               
|                              |               | (In thousands)
|Successor:                    |               |                |   |         |  |       |   |         |  |  |   |         |  |  |   |          
|Year Ended December 31, 2003: |               |                |   |         |  |       |   |         |  |  |   |         |  |  |   |          
|                              | Net sales     |                | $ | 919,063 |  |       | $ | 949,438 |  |  | $ | 979,867 |  |  | $ | 1,028,670 | 
|                              | Gross profit  |                |   | 234,965 |  |       |   | 244,777 |  |  |   | 241,817 |  |  |   | 241,926   | 
|                              | Net income(1) |                |   | 36,462  |  |       |   | 44,108  |  |  |   | 41,036  |  |  |   | 39,280    | 
|Year Ended December 31, 2002: |               |                |   |         |  |       |   |         |  |  |   |         |  |  |   |          
|                              | Net sales     |                | $ | 956,485 |  |       | $ | 994,367 |  |  | $ | 959,970 |  |  | $ | 944,684   | 
|                              | Gross profit  |                |   | 227,040 |  |       |   | 248,416 |  |  |   | 242,899 |  |  |   | 241,504   | 
|                              | Net income    |                |   | 28,857  |  |       |   | 38,633  |  |  |   | 40,556  |  |  |   | 41,597    | 



---



|    |                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The results of the second, third and fourth
    quarters include plant closing charges, net of tax, of
    $0.3 million, $0.3 million, and $3.1 million,
    respectively.

F-36



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##### Table of Contents



DEAN HOLDING COMPANY


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

22.     SUBSEQUENT
EVENTS

On January 26, 2004, our Dairy Group
acquired Ross Swiss Dairies, a dairy distributor based in Los
Angeles, California, which had net sales of approximately
$120 million in 2003. As a result of this acquisition, we
have increased the distribution capability of our Dairy Group in
southern California, allowing us to better serve our customers.
Ross Swiss Dairies has historically purchased a significant
portion of its products from other processors. We intend to
shift the manufacturing of substantially all of Ross Swiss
Dairies product needs into our southern California plants
in 2004. We paid approximately $20 million for the purchase
of Ross Swiss Dairies and funded the purchase price with
borrowings under Dean Foods Companys receivables-backed
facility.

F-37



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##### Table of Contents








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

During our two most recent fiscal years, no
independent accountant who was engaged as the principal
accountant to audit our financial statements, nor any
independent accountant who was engaged to audit a significant
subsidiary and on whom our principal accountant expressed
reliance in its report, has resigned or been dismissed.






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

Controls Evaluation and Related CEO and CFO
Certifications

We conducted an evaluation of the effectiveness
of the design and operation of our disclosure controls and
procedures (Disclosure Controls) as of the end
of the period covered by this annual report. The controls
evaluation was done under the supervision and with the
participation of management, including our Chief Executive
Officer (CEO) and Chief Financial Officer (CFO).

Attached as exhibits to this annual report are
certifications of the CEO and the CFO, which are required in
accordance with Rule 13a-14 of the Exchange Act. This
Controls and Procedures section includes the information
concerning the controls evaluation referred to in the
certifications and it should be read in conjunction with the
certifications for a more complete understanding of the topics
presented.

Definition of Disclosure Controls

Disclosure Controls are controls and procedures
designed to reasonably assure that information required to be
disclosed in our reports filed with the Securities and Exchange
Commission (the SEC) is recorded, processed,
summarized and reported within the time periods specified in the
SECs rules and forms. Disclosure Controls are also
designed to reasonably assure that such information is
accumulated and communicated to our management, including the
CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure. Our Disclosure Controls include components
of our internal control over financial reporting, which consists
of control processes designed to provide reasonable assurance
regarding the reliability of our financial reporting and the
preparation of financial statements in accordance with US
generally accepted accounting principles.

Limitations on the Effectiveness of
Controls

We do not expect that our Disclosure Controls or
our internal controls over financial reporting will prevent all
error and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not
absolute, assurance that the control systems objectives
will be met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the
company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty,
and that breakdowns can occur because of simple error or
mistake. Controls can also be circumvented by the individual
acts of some persons, by collusion of two or more people, or by
management override of the controls. The design of any system of
controls is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that
any design will succeed in achieving its stated goals under all
potential future conditions. Over time, controls may become
inadequate because of changes in conditions or deterioration in
the degree of compliance with policies or procedures. Because of
the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be
detected.

Scope of the Controls Evaluation

Our evaluations of our Disclosure Controls
include reviews of the controls objectives and design, our
implementation of the controls and the effect of the controls on
the information generated for use in our SEC filings. In the
course of our controls evaluations, we seek to identify data
errors, controls problems or acts of

15



---



##### Table of Contents



fraud and confirm that appropriate corrective
actions, including process improvements, are undertaken. Many of
the components of our Disclosure Controls are evaluated on an
ongoing basis by our Audit Services department. The overall
goals of these various evaluation activities are to monitor our
Disclosure Controls, and to modify them as necessary. Our intent
is to maintain the Disclosure Controls as dynamic systems that
change as conditions warrant.


Conclusions

Based upon our most recent controls evaluation,
our CEO and CFO have concluded that, as of the end of the period
covered by this annual report, our Disclosure Controls were
effective to provide reasonable assurance that material
information is made known to management, particularly during the
period when our periodic reports are being prepared. In the
fourth quarter of 2003, there was no change in our internal
control over financial reporting that has materially affected,
or is reasonably likely to materially affect, our internal
control over financial reporting.

PART III



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

Omitted as permitted by General Instruction
I(2)(c) to Form 10-K.



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

Omitted as permitted by General Instruction
I(2)(c) to Form 10-K.



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

Omitted as permitted by General Instruction
I(2)(c) to Form 10-K.



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

Omitted as permitted by General Instruction
I(2)(c) to Form 10-K.

16



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##### Table of Contents






PART IV






|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K

Financial Statements

The following Consolidated Financial Statements
are filed as part of this report or are incorporated herein as
indicated:

|                                                                                                                                                                                                                                      |  |      |     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                                                                                                                      |  | Page
|                                                                                                                                                                                                                                      |  |     
|Independent Auditors Reports                                                                                                                                                                                                         |  |      | F-1 | 
|Report of Independent Accountants                                                                                                                                                                                                     |  |      | F-2 | 
|Consolidated Balance Sheets as of
    December 31, 2003 and 2002 (Successor)                                                                                                                                                          |  |      | F-3 | 
|Consolidated Statements of Income for the years
    ended December 31, 2003 and 2002 (Successor) and the period
    from May 28, 2001 to December 31, 2001 and the fiscal
    year ended May 27, 2001 (Predecessor)                   |  |      | F-4 | 
|Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2003 and 2002
    (Successor) and the period from May 28, 2001 to
    December 31, 2001 and the fiscal year ended May 27,
    2001 (Predecessor) |  |      | F-5 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2003 and 2002 (Successor) and the
    period from May 28, 2001 to December 31, 2001 and the
    fiscal year ended May 27, 2001 (Predecessor)               |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                            |  |      | F-7 | 

Financial Statement Schedules



| |                                                                      
| | ---------------------------------------------------------------------
| | Independent Auditors Report                                         
|
| | Report of Independent Accountants on Financial
    Statement Schedule
|
| | Schedule II  Valuation and
    Qualifying Accounts                  

Exhibits



| |                       
| | ----------------------
| | See Index to Exhibits.

Reports on Form 8-K.



| |     
| | ----
| | None

17



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##### Table of Contents



Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



| |     |                      
| | --- | ---------------------
| | By: | /s/ BARRY A. FROMBERG

| |                             
| | ----------------------------
| |                             
| | Barry A. Fromberg           
| | Executive Vice President and
| | Chief Financial Officer     

Dated March 30, 2004

Pursuant to the requirements of the Securities
Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|                                           |  |                              |  |                |  | 
|------------------------------------------ |  | ---------------------------- |  | -------------- |  | 
|                                           |  |                              |  |               
|Name                                       |  | Title                        |  | Date          
|                                           |  |                              |  |               
|                                          
|/s/ BARRY A. FROMBERGBarry A. Fromberg     |  | Principal Accounting Officer |  | March 30, 2004
|                                          
|/s/ MICHELLE P. GOOLSBYMichelle P. Goolsby |  | Sole Director                |  | March 30, 2004

S-1



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors

Dean Holding Company


Dallas, Texas


We have audited the consolidated financial
statements of Dean Holding Company and subsidiaries (the
Company) (formerly known as Dean Foods Company) as
of December 31, 2003 and 2002 and for the years ended
December 31, 2003 and 2002 and for the period from
May 28, 2001 to December 31, 2001, and have issued our
report thereon dated March 11, 2004 (which report expresses
an unqualified opinion and includes an explanatory paragraph
relating to the change in 2002 in the method of accounting for
goodwill and other intangible assets to conform to Statement of
Financial Accounting Standard No. 142); such report is
included elsewhere in this Form 10-K. Our audits also
included the consolidated financial statement schedule of the
Company listed in Item 15. This consolidated financial
statement schedule is the responsibility of the Companys
management. Our responsibility is to express an opinion based on
our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.



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

Dallas, Texas

March 11, 2004




---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS ON

FINANCIAL STATEMENT SCHEDULE


To the Board of Directors and

Shareholder of Dean Holding Company:


Our audit of the consolidated financial
statements referred to in our report dated June 26, 2001,
except as to Notes 2 and 4, which are as of
December 21, 2001, appearing in this Annual Report on
Form 10-K for year ended December 31, 2003 also
included an audit of the financial statement schedule for the
fiscal year ended May 27, 2001 listed in Item 15 of
this Form 10-K. In our opinion, the financial statement
schedule for the fiscal year ended May 27, 2001 presents
fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated
financial statements.



| |                           
| | --------------------------
| | PRICEWATERHOUSECOOPERS LLP

June 26, 2001, except as to Notes 2 and
4,

which are as of
December 21, 2001


Chicago, Illinois




---



##### Table of Contents



SCHEDULE II

DEAN HOLDING COMPANY

VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2003 and 2002,
the Period from May 28, 2001 to


December 31, 2001 and Fiscal Year Ended
May 27, 2001


Allowance for doubtful accounts deducted from
accounts receivable:

|             |                                                   |                |  |            |  |              |  |              |  |             |  |               |  |             |  |      |   |  |  |     |  |  |  |       |  |  |  |        | 
|------------ | ------------------------------------------------- | -------------- |  | ---------- |  | ------------ |  | ------------ |  | ----------- |  | ------------- |  | ----------- |  | ---- | - |  |  | --- |  |  |  | ----- |  |  |  | ------ | 
|             |                                                   |                |  |            |  |              |  |              |  | 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)
|Predecessor: |                                                   |                |  |            |  |              |  |              |  |             |  |               |  |             |  |      |   |  |  |     |  |  |  |       |  |  |  |       
|             | Fiscal year 2001                                  |                |  | 6,057      |  |              |  | 2,093        |  |             |  | 400           |  |             |  |      |   |  |  |     |  |  |  | 2,695 |  |  |  | 5,855  | 
|             | Period from May 28, 2001 to
    December 31, 2001 |                |  | 5,855      |  |              |  | 4,388        |  |             |  | 188           |  |             |  | (550 | ) |  |  |     |  |  |  | 1,584 |  |  |  | 8,297  | 
|Successor:   |                                                   |                |  |            |  |              |  |              |  |             |  |               |  |             |  |      |   |  |  |     |  |  |  |       |  |  |  |       
|             | 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 | 



---



##### Table of Contents



INDEX TO EXHIBITS

Explanatory Note: References in this Index to
Legacy Dean are references to the registrant, Dean
Holding Company.

|        |    |    |  |             |  |                                                                                                                                                                                                                                                            
|------- | -- | -- |  | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |  |            
|Number  |    |    |  | Description
|        |    |    |  |            
|        | 2  | .1 |  |            |  | Agreement and Plan of Merger, dated April 4,
    2001 among us, Blackhawk Acquisition Corp. and Suiza Foods
    Corporation (incorporated by reference from Dean Foods Company
    8-K dated April 5, 2001, File No. 1-12755).                             
|        | 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 | .1 |  |            |  | Securities Exchange Agreement dated
    December 21, 2001 between us and Morningstar
    Foods, Inc. regarding the Dean SoCal/ NRP exchange
    (incorporated by reference from Legacy Deans 8-K dated
    January 7, 2002, File No. 1-08262).            
|        | 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.