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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission File Number 001-12755

2515 McKinney Avenue

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

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 þ          No o

      The aggregate market value of the Registrant’s voting and non-voting common stock held by non-affiliates of the Registrant at June 30, 2003, based on the $31.50 per share closing price for the Registrant’s common stock on the New York Stock Exchange on June 30, 2003, was approximately $4.75 billion.

      The number of shares of the registrant’s common stock outstanding as of March 10, 2004 was 156,998,652.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on or about May 18, 2004 (to be filed) are incorporated by reference into Part III of this Form 10-K.

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PART I

Item 1.     Business

      We are a leading food and beverage company. Our Dairy Group is the largest processor and distributor of milk and various other dairy products in the United States. Our Branded Products Group markets and sells a variety of well known dairy and dairy-related branded products including, for example: Silk® soymilk; Horizon Organic® dairy products and juices; International Delight® coffee creamers; Marie’s® refrigerated dips and dressings; and Hershey’s® milks and milkshakes. Our Specialty Foods Group is one of the leading pickle processors in the United States and a maker of a variety of other specialty food products. We also own the fourth largest dairy processor in Spain.

      Our principal executive offices are located at 2515 McKinney Avenue, Suite 1200, Dallas, Texas 75201. Our telephone number is (214) 303-3400. We maintain a worldwide web site at www.deanfoods.com. We were incorporated in Delaware in 1994.

Segments and Operating Divisions

      In 2003, we had three reportable segments, including the Dairy Group, Morningstar/ White Wave and the Specialty Foods Group. Effective January 1, 2004, we reorganized our former Morningstar Foods division, which has resulted in a new segment reporting structure. See “— Developments Since January 1, 2003.” We now have the following reportable segments: the Dairy Group, the Branded Products Group and the Specialty Foods Group. Our reportable segments and other operating divisions are described below.

     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. The Dairy Group also manufactures most of the products marketed and sold by our Branded Products Group. See “— Branded Products Group.”

      The Dairy Group’s sales totaled approximately $7.15 billion in 2003, or approximately 78% of our consolidated 2003 sales. The following charts graphically depict the Dairy Group’s 2003 sales by product and by channel, and indicate the percentage of private label versus branded sales.

(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)	The Dairy Group’s largest customer is Wal-Mart (including its subsidiaries, such as Sam’s Club), which accounted for 13.4% of the Dairy Group’s 2003 sales.

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(7)	Such as restaurants and hotels.

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

(1)	Our Dairy Group operates in a generally decentralized manner organized by geographic region.

      The 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 the Dairy Group’s corporate sales department. Most of the Dairy Group’s customers purchase products from the Dairy Group 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 110 manufacturing plants in 35 states. For more information about plants in the Dairy Group, see “— Item 2. Properties.”

      Due to the perishable nature of the Dairy Group’s 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.

      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.

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      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 us. 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 decreased by over 10% from 1990 to the end of 2002, although total consumption has remained relatively flat over the same period due to population increases. Therefore, sales growth across the industry generally remains 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 20 to our Consolidated Financial Statements.

      Our Branded Products Group consists of three distinct operating divisions: White Wave, Horizon Organic and the National Brand Group. Our Branded Products Group develops, markets and sells our portfolio of strategic brands, including Silk® soymilk, Horizon Organic® dairy products, juices and infant formula, International Delight® coffee creamers, Hershey’s® milks and milkshakes, Land O’Lakes® Dairy Ease® and Land O’Lakes® creamers, Marie’s® dips and dressings, The Organic Cow of Vermont® organic milk, Rachel’s Organic^TM organic dairy products (sold in the U.K.), Folgers® Jakada® milk and coffee beverages and Dean’s® dips. The Branded Products Group also sells certain branded products that we do not include in our portfolio of strategic brands.

      Prior to 2004, we had a Morningstar Foods division that manufactured, marketed and sold all of our strategic brands except for our soy products, and also manufactured and sold private label dairy products. Approximately half of Morningstar Foods’ 2003 sales consisted of private label dairy products. In mid-2003, we began the process of reorganizing the operations of our Morningstar Foods division, as part of a company-wide effort to sharpen our focus on our strategic brands and to maximize our manufacturing efficiency. Effective January 1, 2004, we completed the shift of all of Morningstar Foods’ private label sales and all of its manufacturing operations to the Dairy Group. We also created the National Brand Group and assigned it the sole responsibility of developing, marketing and selling the former Morningstar Foods’ strategic brands and certain other branded products. These changes have resulted in a new segment reporting structure, which will commence in the first quarter of 2004.

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      We acquired Horizon Organic on January 2, 2004. Its financial results will be included in our new Branded Products Group segment beginning with the first quarter of 2004.

      The former Morningstar/ White Wave segment had sales of $1.11 billion in 2003, or approximately 12% of our consolidated 2003 sales. 2003 sales to Morningstar/ White Wave’s largest customer, Wal-Mart (including its subsidiaries), represented 12.8% of Morningstar/ White Wave’s 2003 sales. The following chart graphically depicts our former Morningstar/ White Wave segment’s 2003 sales by product category.

(1)	Includes tofu, tempeh and seitan sold under the White Wave® brand; Silk cultured soy; Morningstar Foods’ frozen pre-whipped topping and frozen creamer operations sold in July 2003; Mocha Mix® non-dairy liquid coffee creamer; Second Nature® egg substitute and Naturally Yours® sour cream.

      For more information about our former Morningstar/ White Wave segment, see “Part II — Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 20 to our Consolidated Financial Statements.

      White Wave — White Wave markets and sells Silk soymilk, the leading brand of soymilk in the United States; Sun Soy soymilk; Silk cultured soy products; and White Wave branded tofu, tempeh and seitan to a variety of customers across the United States and in several foreign countries, including mass merchandisers, club stores, grocery stores, natural foods stores, convenience stores and foodservice outlets, using its internal sales force and independent brokers. Most of White Wave’s customers purchase products from White Wave either by purchase order or pursuant to contracts that are generally terminable at will by the customer.

      Soymilk and cultured soy are manufactured by blending soymilk concentrate extracted from soybeans with certain proprietary ingredients. White Wave produces soymilk concentrate at three facilities that we own or lease. Due to recent rapid growth in Silk sales, all of White Wave’s extraction facilities were operating at full capacity in 2003. Therefore, in order to meet demand, White Wave purchased approximately 48% of its 2003 soymilk concentrate requirements from third parties. In 2004, we intend to install additional extraction operations in certain of our company-owned plants. Silk products and Sun Soy are processed into finished products at four company-owned plants across the country. White Wave also contracts with various third parties to co-pack Silk products at their plants. White Wave’s tofu, tempeh and seitan products are produced at White Wave’s owned facility in Boulder, Colorado.

      Most of White Wave’s products are delivered by common carrier to customer warehouses, although some of its products are distributed through our Dairy Group’s DSD system.

      The primary raw materials used by White Wave are organic soybeans and organic soybean concentrate. We purchase organic soybeans and organic soybean concentrate from a number of suppliers. Organic soybeans and other raw materials used by White Wave, such as organic sugar, flavorings and packaging materials, are generally available from several suppliers and we are not dependent on any single supplier for these materials. Certain of White Wave’s raw materials are purchased under contracts in order to guarantee supply and to obtain lower costs. The prices of White Wave’s raw materials increase and decrease based on supply and demand.

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      White Wave has several competitors in each of its product markets. Competition to obtain shelf-space with retailers for a particular product is based primarily on the expected or historical sales performance of the product compared to its competitors. Also, in some cases, White Wave pays fees to retailers to obtain shelf-space for a particular product. Competition for consumer sales is based on many different factors, including brand recognition, price, taste preferences and quality. Consumer demand for soy foods has grown rapidly in recent years due to growing consumer confidence in the health benefits of soy. White Wave has a leading position in the soy foods category, and particularly the soymilk segment. However, soy foods and soymilk compete with many other beverages and nutritional products for consumer sales, including traditional milk products.

      Horizon — Horizon Organic markets and sells a full-line of branded and private label organic dairy products and juices to retailers across the United States and in the U.K. using its internal sales force and independent brokers. Horizon Organic’s product offerings include milk, cheese, yogurt, butter, sour cream, cottage cheese, pudding, fruit jells, half and half, whipping cream, cream cheese, fruit juice and infant formula. All of Horizon Organic’s products are “certified organic products,” as defined by the USDA’s Organic Regulations.

      Approximately 50% of Horizon Organics’ product offerings are sold under the Horizon Organic brand. Another 6% are sold under our proprietary The Organic Cow of Vermont brand, 25% are sold in the U.K. under our Rachel’s Organic brand and 19% are sold under private labels. We have licensed the Horizon Organic brand to third parties for use on eggs in the United States and on organic dairy products in Japan.

      The majority of Horizon Organic’s fluid dairy products are pasteurized at ultra-high temperatures (“UHT”) and, therefore, they have longer shelf-lives than conventional fluid dairy products.

      Horizon Organic sells most of its products either by purchase order or pursuant to contracts that are generally terminable at will by the customer. Sales of Horizon Organic’s products are slightly seasonal, with sales tending to be higher in the fourth quarter.

      In the United States, Horizon Organic outsources the processing of all of its products to third party processors, including our Dairy Group. In 2003, our Dairy Group manufactured approximately 27% of Horizon Organic’s fluid dairy products. In the U.K., we outsource all production except for organic yogurt, which is processed at our company-owned plant in Aberystwyth, Wales.

      The majority of Horizon Organic’s products are delivered by common carrier to customer warehouses, although some are distributed through third-party distributors or through our Dairy Group’s DSD system.

      The primary raw material used by Horizon Organic is organic raw milk. Organic raw milk is not readily available and the growth of our business will depend on us being able to procure sufficient quantities of organic raw milk in time to meet our needs. We currently purchase organic raw milk from a network of over 200 producers across the United States. We generally enter into supply agreements with dairy farmers, with typical terms of one to two years, that obligate us to purchase certain minimum quantities. The minimum price of raw milk is regulated in most parts of the U.S. by the federal government and some states. The prices we pay for organic raw milk, however, generally far exceed the statutory minimums. We also produce certain of our own organic raw milk needs in the U.S. at two organic farms that we own and operate. In the U.K. we source all of our organic raw milk from two farmers’ cooperatives and three independent farmers pursuant to formal supply agreements. Other raw materials used by Horizon Organic, such as organic juice concentrate and sweeteners, in addition to packaging supplies, are generally readily available from several suppliers and we are not dependent on any single supplier for these materials. Certain of these materials are purchased under long-term contracts in order to obtain lower costs. The prices of Horizon Organic’s raw materials increase and decrease based on supply and demand.

      Horizon Organic has numerous competitors in each of its product markets. Competition to obtain shelf-space with retailers for a particular product is based primarily on the expected or historical sales performance of the products compared to its competitors. Also, in some cases, Horizon Organic pays fees to retailers to obtain shelf-space for a particular product. Competition for consumer sales is based on many different factors, including brand recognition, price, taste preferences and quality. Consumer demand for organic foods has

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      National Brand Group — Our National Brand Group markets and sells the following brands included in our strategic brand portfolio: International Delight coffee creamers, Hershey’s milks and milkshakes, Land O’Lakes Dairy Ease and Land O’Lakes creamers, Marie’s dips and dressings, Folgers Jakada milk and coffee beverage and Dean’s dips. Other branded products sold by the National Brand Group include Mocha Mix® non-dairy liquid coffee creamer, Naturally Yours^TM sour cream and Second Nature® egg substitute. We license the Hershey’s, Land O’Lakes and Folgers names from third parties for use on certain of our products. All of the National Brand Group’s products are manufactured by the Dairy Group.

      The National Brand Group sells its products to a wide variety of retail outlets, foodservice customers and distributors across the United States and in a number of foreign countries through its internal sales force and independent brokers. Most of the National Brand Group’s customers purchase products from the National Brand Group either by purchase order or pursuant to contracts that are generally terminable at will by the customer. Sales of the National Brand Group’s products are seasonal, with sales tending to be higher in the fourth quarter.

      Most of the National Brand Group’s products are delivered by common carrier, although some of its products are distributed through our Dairy Group’s DSD system.

      The National Brand Group competes in a number of different product markets and competition is intense in all of its markets. For most of its products, competition to obtain shelf-space with retailers is based primarily on the expected or historical sales performance of the product compared to its competitors. Also, in some cases, the National Brand Group pays fees to retailers to obtain shelf-space for a particular product. Competition for consumer sales is based on many different factors, including brand recognition, price, taste preferences and quality. All of the National Brand Group’s products compete with other food products and beverages for consumer sales.

      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 7.4% 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 sales versus branded sales:

(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®, Paramount®, Peter Piper®, Roddenberry® and Schwartz®. Branded products are sold to retailers and private label products are sold to retailers, foodservice customers and in bulk to other food processors.

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(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® and Hoffman House® brand names.
(5)	Includes mass merchandisers, club stores, convenience stores and grocery stores.

      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 materials 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 20 to our Consolidated Financial Statements.

      Our International Group manufactures, markets and sells private label and branded milk, butter, cream and cheese through its internal sales force to retailers and distributors across Spain and Portugal. The International Group’s sales totaled $244.9 million in 2003, or approximately 2.6% of our consolidated sales.

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      The following charts graphically depict the International Group’s 2003 sales by product category and channel, and indicate the percentage of private label sales versus company branded sales.

(1)	All of our International Group’s milk and cream are pasteurized at ultra-high temperatures, which is referred to in the industry as “UHT.”
(2)	Our International Group’s largest customers are Distribución Internacional de Alimentación S.A., Lidl Supermercados S.A. and Eroski Sociedad Cooperativa, which accounted for approximately 14%, 12% and 12%, respectively, of the International Group’s 2003 sales.
(3)	Including our proprietary Celta® and Campobueno® brands.

      Our International Group manufactures its products in four plants located in the Galicia and Cantabria regions of Spain. For more information about our International Group plants, see “— Item 2. Properties.” We are currently building a fifth plant, located in Alpiarca, Portugal, which we expect to commence operations in the third quarter of 2004. Our International Group operates its business primarily from its headquarters located in Pontedeume, Galicia.

      The long shelf-life of our International Group’s UHT fluid milk products allows delivery by common carrier. Most of the International Group’s customers purchase its products either by purchase order or by contracts that are generally terminable at will by the customer. Our International Group’s sales are slightly seasonal, with sales tending to be lower in the third quarter.

      The primary raw material used by our International Group is raw milk. We purchase our raw milk from farmers’ cooperatives and other intermediaries pursuant to formal and informal contractual arrangements. Raw milk production volume is regulated by European Union quotas which sometimes limit the availability of raw milk to processors. The price of raw milk is defined solely by supply and demand and can fluctuate widely. Our International Group purchases its packaging materials from two leading suppliers. Packaging materials represent a significant portion of our International Group’s raw material costs and are purchased under long-term contracts in order to obtain lower costs.

      The Iberian fluid dairy market, which includes Spain and Portugal, is characterized by relatively high per capita consumption and the UHT “brick pack” format dominates the industry. The combination of these factors makes the Iberian region one of the largest UHT markets in the world. The Iberian fluid dairy market has been characterized over the past 20 years by slow growth in the core products and faster growth for value-added products such as nutritionally enriched milks. The Iberian fluid dairy industry is highly competitive, with leading companies investing heavily in innovation and branding. The industry has undergone significant consolidation in the past 5 to 10 years leading to the emergence of several national brands, including our Celta® brand. Our International Group competes with all the leading fluid dairy processors operating in the Iberian region. Competition between dairy processors for private label business has intensified recently as a result of retailer consolidation, and is based primarily on price, service and quality. Competition for branded sales to consumers is based on a number of factors, including brand recognition, price and quality.

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Current Business Strategy

      We are focused on consistently creating and maximizing shareholder value primarily through the following strategies:

      We believe that investing in our brands is key to growing our sales and our profitability. In 2004, we intend to spend approximately $210 million marketing the strategic brands of our Branded Products Group, with an emphasis on our largest and most successful brands: Silk, Horizon Organic, International Delight and Hershey’s. In addition, during 2004 we expect to spend approximately $50 million marketing our regional Dairy Group brands.

      An important part of our strategy is reducing costs and ensuring that our resources are properly aligned with our strategic direction. Therefore, in 2004 we intend to continue (i) rationalizing production between manufacturing facilities and realigning Dairy Group delivery routes, (ii) closing facilities with overlapping markets or excess capacity, and (iii) eliminating duplicative administrative functions.

      Our company generates a significant amount of cash flow from operating activities. In addition to investing in our brands, we intend to invest our capital where we believe returns are greatest, which could include acquisitions in our core lines of business, repurchases of our stock and/or reductions of indebtedness.

Developments Since January 1, 2003

      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 our receivables-backed facility.

      On January 2, 2004, we completed the acquisition of the 87% of Horizon Organic Holding Corporation that we did not already own. Horizon Organic Holding Corporation had sales of approximately $214 million during 2003. We already owned approximately 13% of the outstanding common stock of Horizon Organic Holding Corporation as a result of investments made in 1998. All of Horizon Organic’s manufacturing has historically been done by third-party co-packers, including us. During 2003, we produced approximately 27% of Horizon Organic’s dairy products. We also distributed Horizon Organic’s products in several parts of the country. Over time, we intend to increase the percentage of Horizon Organic’s manufacturing that is done in our plants, which we believe will lower its manufacturing costs. We also believe that we can achieve greater distribution for Horizon Organic’s products by leveraging our Dairy Group’s DSD system. Horizon Organic is the leading branded organic foods company in the United States. Because organic foods are gaining popularity with consumers and because Horizon Organic’s products offer consumers an alternative to our Dairy Group’s traditional dairy products, we believe Horizon Organic is an important addition to our portfolio of strategic brands. The purchase price for the 87% of Horizon Organic that we did not already own was approximately $216 million, all of which was funded using borrowings under our senior credit facility and our receivables-backed facility. We also repaid approximately $40 million of borrowings under Horizon Organic’s former credit facilities. Beginning with the first quarter of 2004, Horizon Organic’s financial results will be reported in our Branded Products Group segment.

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      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. Cremora is the first branded powdered coffee creamer offering for Specialty Foods. The Cremora brand had sales of approximately $15.8 million for the 12 months ended June 30, 2003. We purchased the Cremora business from Eagle Family Foods for a purchase price of approximately $12.6 million, all of which was funded using borrowings under our senior credit facility.

      On October 15, 2003, we acquired Kohler Mix Specialties, Inc., the dairy products division of Michael Foods, Inc. Kohler’s product line consists primarily of private label ultra-pasteurized ice cream mixes, creamers and creams, sold primarily in the foodservice channel. From the time of the acquisition through the end of 2003, Kohler was part of our former Morningstar/White Wave segment. Effective January 1, 2004, Kohler became part of our Dairy Group, along with all of Morningstar Foods’ other private label and manufacturing operations. The acquisition of Kohler increased the Dairy Group’s UHT processing capacity, which we need to meet the expanding needs of our Branded Products Group. Kohler had net sales of approximately $187.5 million for the 12 months ended August 31, 2003 and has three plants located in White Bear Lake, Minnesota, Sulphur Springs, Texas and Newington, Connecticut. We paid approximately $158.6 million for the purchase of Kohler, all of which was funded using borrowings under our receivables-backed facility.

      On July 31, 2003, our Morningstar/White Wave segment sold its frozen pre-whipped topping and frozen coffee creamer operations for cash proceeds of approximately $90 million, all of which was used to reduce indebtedness. The divested operations were our only operations with frozen warehouse distribution, and we sold it in order to more closely align our financial and management resources with our strategic direction and expertise.

      On June 9, 2003, our Dairy Group acquired Melody Farms, LLC. Melody Farms, which is now a part of the Midwest region of our Dairy Group, is a regional dairy processor based in Livonia, Michigan, that produces fluid dairy and ice cream products from two plants in Michigan. Our acquisition of Melody Farms expands our distribution reach and allows us to better serve our customers in the Michigan area. Melody Farms had net sales of approximately $116 million during the 12 months ended March 31, 2003. We paid approximately $52.7 million for Melody Farms, all of which was funded using borrowings under our receivables-backed facility.

      In mid-2003, we began the process of reorganizing the operations of our Morningstar Foods division as part of a company-wide effort to sharpen our focus on our strategic brands and to maximize our manufacturing efficiency. We shifted all of Morningstar Foods’ private label sales and all of its manufacturing operations to our Dairy Group. We then created the National Brand Group and assigned it the sole responsibility of developing, marketing and selling Morningstar Foods’ nationally branded products. The reorganization was completed effective January 1, 2004. The National Brand Group is part of our Branded Products Group segment.

      As part of our overall integration and cost reduction strategy, we closed or announced the closure of five Dairy Group facilities in 2003 and reduced (or intend to reduce) our workforce accordingly. We also restructured certain administrative functions in the Northeast and Midwest regions of our Dairy Group, in addition to Morningstar Foods.

      We incurred expenses of approximately $11.8 million during 2003 related to these plant closings and reorganizations. 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;

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	•	Shutdown costs, including those costs necessary to prepare 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 15 to our Consolidated Financial Statements.

      Our nationally branded products were a significant focus for us in 2003. We spent approximately $188 million marketing and gaining additional distribution for our strategic brands during 2003. Unit sales of our strategic brands increased by more than 27% in 2003, on a pro forma basis as if White Wave had been owned for all of 2002. Some highlights of our 2003 branded product initiatives included the following:

      International Delight Coffee Creamers — In the first half of 2003, we launched the national rollout of International Delight in its newly designed plastic pint bottle, and in the second half of the year we introduced International Delight in a quart-sized plastic bottle. In the first quarter of 2004, we introduced two flavors of International Delight with a low-carb formulation.

      Silk Soymilk — In the first quarter of 2003, we announced that White Wave had entered into a three-year agreement with Starbucks pursuant to which, beginning in the summer of 2003, Silk became the exclusive soymilk used in handcrafted beverages in all Starbucks locations throughout the United States. Single-serve bottles of Silk are also sold separately in certain Starbucks locations. In the fourth quarter of 2003, White Wave launched five new Silk product offerings, including 128-ounce plain, vanilla, very vanilla, unsweetened and enhanced.

      Marie’s Dressings — At the end of the first quarter of 2003, Marie’s dressings were re-launched nationally in a newly redesigned oval jar. Historically, Marie’s dressings were sold in different packages and pack sizes in different parts of the country because rights to the brand had been licensed to another processor in the western United States. In 2002, we purchased all outstanding rights to the Marie’s brand and became the sole owner, marketer and distributor of the brand. In addition to the 2003 packaging change, the brand was supported with increased marketing and focus on new distribution.

      Hershey’s — A strawberry milkshake was added to the Hershey’s product line in 2003.

      On May 7, 2003, our Board of Directors declared a three-for-two split of our common stock, which entitled shareholders of record on May 23, 2003 to receive an additional half share of common stock for each share held on that date. The new shares were issued after the market closed on June 9, 2003. All of the share numbers in this Annual Report on Form 10-K have been adjusted for all periods to reflect the stock split.

      In three separate transactions during the second quarter of 2003, we called for redemption all of our trust-issued preferred securities (“TIPES”). We originally issued $600 million of TIPES in a private placement in 1998. The TIPES were convertible at the option of the holders, at any time, into shares of our common stock and were redeemable, at our option, at any time at specified premiums. In response to our three announced redemption transactions, holders of more than 99% of all outstanding TIPES elected to convert their TIPES into shares of our common stock rather than receive the cash redemption price. Accordingly, during the second quarter of 2003, we issued a total of approximately 23 million shares of common stock to holders of TIPES in lieu of cash redemption payments, and we paid approximately $2.4 million in cash to holders who did not elect to convert. There are no remaining TIPES outstanding.

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      During 2003, we spent approximately $185.5 million to repurchase 6.7 million shares of our common stock for an average purchase price of $27.82 per share. At March 10, 2004, approximately $114.6 million remained available under our current authorization.

      During the third quarter of 2003, we amended our senior credit facility to (1) lower the interest rates, (2) increase the available amount of the revolver from $800 million to $1 billion, (3) increase the principal balance of the Tranche A term loan from $765 million to $1 billion, (4) lower the principal balance of the Tranche B term loan (which bears a higher interest rate than the Tranche A term loan) from $990 million to $750 million, (5) fix the leverage ratio requirement at 3.75 to 1, and (6) make certain other financial covenant changes. In December 2003, we amended our senior credit facility again to (1) provide for borrowings in euros up to $200 million under the existing $1 billion revolver, and (2) amend the leverage ratio to 4 to 1 through March 31, 2005.

Employees

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

      9,360, or approximately 41%, of the Dairy Group’s employees and 970, or approximately 52%, of the Specialty Foods Group’s employees are members of labor unions.

Government Regulation

     Public Health

      As a manufacturer and distributor of food products, we are subject to a number of food-related regulations, including the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the U.S. Food and Drug Administration (“FDA”). This comprehensive regulatory framework governs the manufacture (including composition and ingredients), labeling, packaging and safety of food in the United States. The FDA:

	•	regulates manufacturing practices for foods through its current good manufacturing practices regulations,
	•	specifies the standards of identity for certain foods, including many of the products we sell, and
	•	prescribes the format and content of certain information required to appear on food product labels.

      In addition, the FDA enforces the Public Health Service Act and regulations issued thereunder, which authorize regulatory activity necessary to prevent the introduction, transmission or spread of communicable diseases. These regulations require, for example, pasteurization of milk and milk products. We are also subject to numerous other federal, state and local regulations involving such matters as the licensing and registration of manufacturing facilities, enforcement by government health agencies of standards for our products, inspection of our facilities and regulation of our trade practices in connection with the sale of food products.

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      We use quality control laboratories in our manufacturing facilities to test raw ingredients. Product quality and freshness are essential to the successful distribution of our products. To monitor product quality at our facilities, we maintain quality control programs to test products during various processing stages. We believe that our facilities and manufacturing practices comply with all material government regulations.

     Employee Safety Regulations

      We are subject to certain safety regulations including regulations issued pursuant to the U.S. Occupational Safety and Health Act. These regulations require us to comply with certain manufacturing safety standards to protect our employees from accidents. We believe that we are in material compliance with all employee safety regulations.

     Environmental Regulations

      We are subject to various environmental regulations. Ammonia, a refrigerant used extensively in our operations, is considered an “extremely” hazardous substance pursuant to U.S. federal environmental laws due to its toxicity. Also, certain of our facilities discharge biodegradable wastewater into municipal waste treatment facilities in excess of levels permitted under local regulations. Because of this, certain of our subsidiaries are required to pay wastewater surcharges or to construct waste water pretreatment facilities. To date, such wastewater surcharges have not had a material effect on our Consolidated Financial Statements.

      We maintain above-ground or underground petroleum storage tanks at many of our facilities. These tanks are periodically inspected to determine compliance with applicable regulations. We are required to make expenditures from time to time in order to maintain compliance of these tanks. To date, such expenditures have not had a material effect on our Consolidated Financial Statements.

      We do not expect environmental compliance to have a material impact on our capital expenditures, earnings or competitive position in the foreseeable future.

     Milk Industry Regulation

      The federal government establishes minimum prices that we must pay to producers in federally regulated areas for raw milk. Raw milk contains primarily raw skim milk, in addition to a small percentage of butterfat. The federal government establishes separate minimum prices for raw skim milk and butterfat. Raw milk delivered to our facilities is tested to determine the percentage of butterfat, and we pay our suppliers separate prices for the raw skim milk and butterfat based on the results of these tests.

      The federal government’s minimum prices are calculated by economic formula based on supply and demand and vary depending on the processor’s geographic location and the type of product manufactured using the raw product. Federal minimum prices change monthly. Class I butterfat and raw skim milk prices (which are the minimum prices we are required to pay for butterfat and raw skim milk that is processed into milk) and Class II raw skim milk prices (which are the prices we are required to pay for raw skim milk that is processed into products such as cottage cheese, creams, creamers, ice cream and sour cream) for each month are announced by the federal government by the 23rd day of the immediately preceding month. Class II butterfat prices for each month are announced on or before the fifth day after the end of that month.

      Some states have established their own rules for determining minimum prices for raw milk. In addition to the federal or state minimum prices, we also pay producer premiums, procurement costs and other related charges that vary by location and vendor. A few states also have retail pricing requirements.

      In Spain, the government has established a quota system regulating the amount of milk that can be sold by individual farmers and farm cooperatives, which affects the prices we pay for raw milk.

Brief History

      We commenced operations in 1988 through a predecessor entity. Our original operations consisted solely of a packaged ice business.

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      We entered the dairy business in December 1993 when we acquired Suiza Dairy Corporation, a regional dairy processor located in Puerto Rico. We have grown our dairy business rapidly since then, primarily through a focused acquisition strategy.

      In April 1996, we completed our initial public offering (under our former name: “Suiza Foods Corporation”). Initially our common stock was traded in the Nasdaq National Market. In January 1997, we completed a second public offering. Our common stock began trading on the New York Stock Exchange in March 1997 under the symbol “SZA.” Our common stock continues to trade on the New York Stock Exchange, now under the symbol “DF.”

      In August 1997, we acquired Franklin Plastics, Inc., a company engaged in the business of manufacturing and selling plastic containers, in connection with our acquisition of a dairy company related to Franklin Plastics. We then began acquiring other companies in the plastic container business.

      In November 1997, we bought Morningstar Foods Inc., which greatly expanded our branded and value-added product lines. See “— Segments and Operating Divisions — Branded Products Group” for more information about Morningstar Foods.

      As a result of our acquisition strategy in the packaged ice industry, by 1998 we had become one of the largest manufacturers and distributors of packaged ice in the United States. In April 1998, however, we sold our packaged ice operations in order to focus our resources on our dairy and packaging operations.

      In 1999, we made a decision to further focus our resources on our core dairy business. In July 1999, therefore, we sold all of our U.S. plastic packaging operations to Consolidated Container Company in exchange for cash and a minority interest in the purchaser, and in March and May 2000, we sold our European packaging operations. Except for our minority interest in Consolidated Container Company, we no longer have any investments in the packaging industry.

      Effective January 1, 2000, we completed the acquisition of Southern Foods Group, L.P., the third largest dairy processor in the United States at the time of the acquisition. As a result of that transaction, we greatly expanded the geographic reach of our Dairy Group and became the largest fluid dairy company in the United States. See “— Segments and Operating Divisions — Dairy Group” for more information about our Dairy Group. The Southern Foods transaction was completed through a joint venture with Dairy Farmers of America (“DFA”), the nation’s largest dairy farmers’ cooperative, pursuant to which DFA obtained a 33.8% interest in our Dairy Group.

      In February 2000, we entered the European dairy industry by purchasing Leche Celta, one of the largest dairy processors in Spain. See “— Segments and Operating Divisions — International Group” for more information about our international operations.

      On December 21, 2001, we acquired Dean Foods Company (“Legacy Dean”). As a result, we are now one of the leading food and beverage companies in the United States. In connection with that transaction, we purchased the 33.8% minority interest in our Dairy Group held by DFA in exchange for cash, the operations of 11 plants that we were required to divest in connection with the Legacy Dean acquisition and certain other consideration. Also on December 21, 2001, immediately after we completed the acquisition of Legacy Dean, Legacy Dean changed its name to Dean Holding Company and we changed our name from Suiza Foods Corporation to Dean Foods Company.

      In May 2002, we bought the portion of White Wave, Inc., maker of Silk soy products, that we did not already own, and in January 2004, we bought the portion of Horizon Organic Holding Company, which markets Horizon Organic dairy and dairy-related products, that we did not already own. See Notes 2 and 22 to our Consolidated Financial Statements. Both of these acquisitions significantly expanded our portfolio of strategic brands.

Minority Holdings

      We own an approximately 40% interest in Consolidated Container Company (“CCC”), one of the nation’s largest manufacturers of rigid plastic containers and our largest supplier of plastic bottles and bottle

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      We also own an approximately 16% interest in Momentx, Inc., the owner and operator of dairy.com, an online vertical exchange focused on bringing farmers, farm cooperatives, processors and manufacturers together in an electronic marketplace for the exchange of goods and services, supply chain efficiency tools and dairy farm optimization tools. The remaining interests in Momentx, Inc. are owned by various other dairy processing companies, dairy cooperatives and certain other individual investors who are not affiliated with us. Pursuant to existing shareholder agreements, the founding stockholders, of which we are one, are entitled collectively to elect four of the seven seats on Momentx, Inc.’s Board of Directors. Gregg Engles, our Chairman of the Board and Chief Executive Officer, is currently Chairman of the Board of Momentx, Inc. We are also a user of dairy.com’s services and in 2003 we spent approximately $0.6 million on services purchased from Momentx, Inc.

      See Note 3 to our Consolidated Financial Statements for more information about our investments in CCC and Momentx, Inc.

Where You Can Get More Information

      Our fiscal year ends on December 31. We furnish our stockholders with annual reports containing audited financial statements. In addition, we file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. Legacy Dean, which is now known as Dean Holding Company and is a wholly-owned subsidiary of ours, also files annual, quarterly and current reports with the Securities and Exchange Commission.

      You may read and copy any reports, statements or other information that we or Dean Holding 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 our website at www.deanfoods.com our 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.

      Our Code of Ethics, which is applicable to all of our employees and directors, is available on our corporate website at www.deanfoods.com, together with the Corporate Governance Principles of our Board of Directors and the charters of all of the Committees of our Board of Directors. Any waivers that we may grant to our executive officers or directors under the Code of Ethics, and any amendments to our Code of Ethics,

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

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Item 2.     Properties

Dairy Group

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

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      Each of the Dairy Group’s manufacturing plants also serves as a distribution facility. In addition, our Dairy Group has numerous distribution branches located 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.

Branded Products Group

      White Wave, which is part of our Branded Products Group segment, currently owns or leases the following properties:

	•	Boulder, Colorado – tofu manufacturing plant
	•	Jacksonville, Florida – extraction facility
	•	Bridgeton, New Jersey – extraction facility
	•	Cedar City, Utah – extraction facility

      White Wave’s corporate headquarters are located in leased premises in Boulder, Colorado.

      Horizon Organic Holding Corporation, also part of our Branded Products Group segment, owns or leases the following properties:

	•	(near) Paul, Idaho – organic dairy farm
	•	Kennedyville, Maryland – organic dairy farm
	•	Wilton, California – farm land
	•	Aberystwyth, Wales – office and production space

      Horizon Organic Holding Corporation’s corporate headquarters are located in leased premises in Longmont, Colorado.

      The National Brand Group’s corporate headquarters are located in leased premises in Dallas, Texas.

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Specialty Foods Group

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

	•	LaJunta, 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

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

International Group

      Our International Group currently manufactures its products from plants in the following locations, all of which are owned:

	•	Pontedeume, Galicia
	•	Meira, Galicia
	•	Meruelo, Cantabria
	•	Escairón, Galicia

      The International Group’s headquarters are located in owned premises in Pontedeume, Galicia.

Corporate

      Our corporate headquarters are located in leased premises at 2515 McKinney Avenue, Suite 1200, Dallas, Texas 75201.

Item 3.     Legal Proceedings

      On November 4, 2003, we received a notice (a so-called “Wells Notice”) from the staff of the Securities and Exchange Commission (the “SEC”) informing us that the staff was planning to recommend that the SEC bring a civil injunctive action against our company. The notice cites the staff’s belief that we aided and abetted The Fleming Companies in Fleming’s acceleration of revenue recognition by providing Fleming with correspondence that allowed Fleming to characterize two payments totaling $2.7 million made by us to Fleming as current income rather than deferred revenue to be recognized over future periods. Two officers of our Dairy Group received similar notices. We expensed the two payments made to Fleming during the quarters in which they were paid, and the Wells Notice contains no allegations regarding our financial statements. We have cooperated fully in the investigation, and we are currently engaged in settlement discussions with the staff. We do not expect the investigation or a settlement thereof to have a material adverse impact on our company.

Item 4.     Submission of Matters to a Vote of Security Holders

      No matter was submitted by us during the fourth quarter of 2003 to a vote of security holders, through the solicitation of proxies or otherwise.

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PART II

Item 5.     Market for Our Common Stock and Related Matters

      Our common stock began trading on the Nasdaq National Market on April 17, 1996, and continued trading on the Nasdaq until March 5, 1997, when it began trading on the New York Stock Exchange under the symbol “SZA.” We changed our trading symbol to “DF” effective December 24, 2001. The following table sets forth the high and low sales prices of our common stock as quoted on the New York Stock Exchange for the last two fiscal years. At March 10, 2004, there were approximately 6,200 record holders of our common stock.

      We have never declared or paid a cash dividend on our common stock. Our current intention is to retain all earnings to cover working capital fluctuations and to fund capital expenditures, scheduled debt repayments, stock buybacks and acquisitions and we do not anticipate paying cash dividends on our common stock in the foreseeable future. Moreover, our senior credit facility contains certain restrictions on our ability to pay cash dividends. See “— Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Current Debt Obligations” and Note 9 to our Consolidated Financial Statements for further information regarding the terms of our senior credit facility.

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Item 6.     Selected Financial Data

      The following selected financial data as of and for each of the five years in the period ended December 31, 2003 has been derived from our audited Consolidated Financial Statements. The selected financial data do not purport to indicate results of operations as of any future date or for any future period. The selected financial data should be read in conjunction with our Consolidated Financial Statements and related Notes.

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(1)	Balances for 1999 through 2002 have been adjusted to remove our Puerto Rico operations which have been reclassified as discontinued operations.
(2)	Net sales have been restated to reflect the adoption of EITF Issue No. 01-09 “Accounting for Consideration Given by a Vendor to a Customer.” The net effect was to decrease net sales by $33.7 million, $29.9 million and $22.2 million in 2001, 2000 and 1999, respectively.
(3)	On January 1, 2002, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” 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 periods prior to 2002 have not been restated.
(4)	Results for 2003 include a gain of $66.2 million on the sale of our frozen pre-whipped topping and frozen coffee creamer operations and a gain of $2.5 million related to the divestiture of 11 plants in 2001. Results for 2001 include a gain of $47.5 million on the divestiture of 11 plants offset by an expense of $28.5 million resulting from a payment to a supplier as consideration for modifications to an agreement and an impairment charge of $1.7 million on a water plant. Results in 2000 include litigation settlement costs of $7.5 million.
(5)	Results for 2001 and 2000 have been restated to reflect the adoption of SFAS No. 145 “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections.” Gains and losses that were previously recorded as extraordinary items related to the early extinguishment of debt, which were a $7.3 million loss in 2001 and a $7.7 million gain in 2000, have been reclassified to interest expense. There was no effect on net income.
(6)	In December 2001, in connection with our acquisition of Legacy Dean, we purchased Dairy Farmers of America’s 33.8% stake in our Dairy Group.
(7)	For purposes of calculating the ratio of earnings to combined fixed charges and preferred stock dividends, “earnings” represents income before income taxes plus fixed charges. “Fixed charges” consist of interest on all debt, amortization of deferred financing costs and the portion of rental expense that we believe is representative of the interest component of rent expense.
(8)	Includes amounts outstanding under subsidiary lines of credit and the current portion of long-term debt.

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Business Overview

      We are a leading food and beverage company. Our Dairy Group is the largest processor and distributor of milk and various other dairy products in the United States. Our Branded Products Group markets and sells a variety of well known dairy and dairy-related branded products including, for example: Silk soymilk; Horizon Organic dairy products and juices; International Delight coffee creamers; Marie’s refrigerated dips and dressings; and Hershey’s milks and milkshakes. Our Specialty Foods Group is one of the leading pickle processors in the United States and a maker of a variety of other specialty food products. We also own the fourth largest dairy processor in Spain.

     Segments and Operating Divisions

      In 2003, we had three reportable segments, including the Dairy Group, Morningstar/ White Wave and the Specialty Foods Group. Effective January 1, 2004, we reorganized our former Morningstar Foods division, which has resulted in a new segment reporting structure. We now have the following reportable segments: the Dairy Group, the Branded Products Group and the Specialty Foods Group. Our reportable segments and other operating divisions are described below.

      Dairy Group — Our Dairy Group segment is our largest segment, with approximately 78% of our 2003 consolidated sales. Our Dairy Group manufactures, markets and distributes a wide variety of branded and private label “dairy case” products, such as milk, cream, ice cream, cultured dairy products and juices, to retailers, distributors, foodservice outlets, schools and governmental entities across the United States. The Dairy Group also manufactures most of the products marketed and sold by our Branded Products Group. Due to the perishable nature of the Dairy Group’s products, our Dairy Group delivers the majority of its products 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 and we have one of the most extensive DSD systems in the United States.

      Branded Products Group — Our Branded Products Group develops, markets and sells our portfolio of strategic brands, including Silk soymilk, Horizon Organic dairy products, juices and infant formula, International Delight coffee creamers, Hershey’s milks and milkshakes, Land O’Lakes Dairy Ease and Land O’Lakes creamers, Marie’s dips and dressings, The Organic Cow of Vermont organic milk, Rachel’s Organic organic dairy products (sold in the U.K.), Folgers Jakada milk and coffee beverage and Dean’s dips. Our Branded Products Group consists of three distinct operating divisions: the National Brand Group, White Wave and Horizon Organic.

      Prior to 2004, we had a Morningstar Foods division that manufactured, marketed and sold all of our strategic brands except for our soy products, and also manufactured and sold private label dairy products. Approximately half of Morningstar Foods’ 2003 sales consisted of private label dairy products. In mid-2003, we began the process of reorganizing the operations of our Morningstar Foods division, as part of a company-wide effort to sharpen our focus on our strategic brands and to maximize our manufacturing efficiency. Effective January 1, 2004, we completed the shift of all of Morningstar Foods’ private label sales and all of its manufacturing operations to the Dairy Group. We also created the National Brand Group and assigned it the sole responsibility of developing, marketing and selling the former Morningstar Foods’ strategic brands, which include International Delight coffee creamers, Hershey’s milks and milkshakes, Land O’Lakes Dairy Ease and Land O’Lakes creamers, Marie’s dips and dressings, Folgers Jakada milk and coffee beverage and Dean’s dips. Other branded products sold by the National Brand Group include Mocha Mix® non-dairy liquid coffee creamer, Naturally Yours^TM sour cream and Second Nature® egg substitute. We license the Hershey’s, Land O’Lakes and Folgers names from third parties for use on certain of our products.

      White Wave markets and sells Silk soymilk, the leading brand of soymilk in the United States; Sun Soy soymilk; Silk cultured soy products; and White Wave branded tofu, tempeh and seitan to a variety of customers across the United States and in several foreign countries, including mass merchandisers, club

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      Horizon Organic, which we acquired on January 2, 2004, markets and sells a full-line of branded and private label organic dairy products and juices to retailers across the United States and in the U.K. using its internal sales force and independent brokers, under the Horizon Organic, The Organic Cow of Vermont, and Rachel’s Organic brands. All of Horizon Organic’s products are “certified organic products,” as defined by the USDA’s Organic Regulations.

      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.

      International Group — Our International Group, which does not qualify as a reportable segment, manufactures, markets and sells private label and branded milk, butter, cream and cheese through its internal sales force to retailers and distributors across Spain and Portugal.

     Current Business Strategy

      We are focused on consistently creating and maximizing shareholder value primarily through the following strategies:

      Investing in Our Brands — We believe that investing in our brands is key to growing our sales and our profitability. In 2004, we intend to spend approximately $210 million marketing the strategic brands of our Branded Products Group, with an emphasis on our largest and most successful brands: Silk, Horizon Organic, International Delight and Hershey’s. In addition, during 2004 we expect to spend approximately $50 million marketing our regional Dairy Group brands.

      Rationalizing Our Operations — An important part of our strategy is reducing costs and ensuring that our resources are properly aligned with our strategic direction. Therefore, in 2004 we intend to continue (i) rationalizing production between manufacturing facilities and realigning Dairy Group delivery routes, (ii) closing facilities with overlapping markets or excess capacity, and (iii) eliminating duplicative administrative functions.

      Investing Our Cash — Our company generates a significant amount of cash flow from operating activities. In addition to investing in our brands, we intend to invest our capital where we believe returns are greatest, which could include acquisitions in our core lines of business, repurchases of our stock and/or reductions of indebtedness.

     Developments Since January 1, 2003

      Acquisitions and Divestitures — 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 our receivables-backed facility.

      On January 2, 2004, we completed the acquisition of the 87% of Horizon Organic Holding Corporation that we did not already own. Horizon Organic Holding Corporation had sales of approximately $214 million during 2003. We already owned approximately 13% of the outstanding common stock of Horizon Organic Holding Corporation as a result of investments made in 1998. All of Horizon Organic’s manufacturing has historically been done by third-party co-packers, including us. During 2003, we produced approximately 27% of Horizon Organic’s fluid dairy products. We intend to increase that percentage over time. We also distribute

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      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 our senior credit facility.

      On October 15, 2003, we acquired Kohler Mix Specialties, Inc., whose product line consists primarily of private label ultra-pasteurized ice cream mixes, creamers and creams, sold primarily in the foodservice channel. From the time of the acquisition through the end of 2003, Kohler was part of our former Morningstar/ White Wave segment. Effective January 1, 2004, Kohler became part of our Dairy Group, along with all of Morningstar Foods’ other private label and manufacturing operations. Kohler had net sales of approximately $187.5 million for the 12 months ended August 31, 2003. We paid approximately $158.6 million for the purchase of Kohler, all of which was funded using borrowings under our receivables-backed facility.

      On July 31, 2003, our Morningstar/ White Wave segment sold its frozen pre-whipped topping and frozen coffee creamer operations for cash proceeds of approximately $90 million, all of which was used to reduce indebtedness. The divested operations were our only operations with frozen warehouse distribution, and we sold it in order to more closely align our financial and management resources with our strategic direction and expertise.

      On June 9, 2003, our Dairy Group acquired Melody Farms, LLC, a regional dairy processor based in Livonia, Michigan. Melody Farms had net sales of approximately $116 million during the 12 months ended March 31, 2003. We paid approximately $52.7 million for Melody Farms, all of which was funded using borrowings under our receivables-backed facility.

      Plant Closing and Rationalization Activities — As part of our overall integration and cost reduction strategy, we closed or announced the closure of five Dairy Group facilities in 2003 and reduced (or intend to reduce) our workforce accordingly. We also restructured certain administrative functions in the Northeast and Midwest regions of our Dairy Group, in addition to Morningstar Foods.

      Branded Product Initiatives — Our nationally branded products were a significant focus for us in 2003. We spent approximately $188 million marketing and gaining additional distribution for our strategic brands during 2003.

      TIPES — In three separate transactions during the second quarter of 2003, we called for redemption all of our trust-issued preferred securities (“TIPES”). The TIPES were convertible at the option of the holders, at any time, into shares of our common stock and were redeemable, at our option, at any time at specified premiums. In response to our three announced redemption transactions, holders of more than 99% of all outstanding TIPES elected to convert their TIPES into shares of our common stock rather than receive the cash redemption price. Accordingly, during the second quarter of 2003, we issued a total of approximately 23 million shares of common stock to holders of TIPES in lieu of cash redemption payments, and we paid approximately $2.4 million in cash to holders who did not elect to convert. There are no remaining TIPES outstanding.

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      Stock Buyback — During 2003, we spent approximately $185.5 million to repurchase 6.7 million shares of our common stock for an average purchase price of $27.82 per share. At March 10, 2004, approximately $114.6 million remained available under our current authorization.

      The following table presents certain information concerning our financial results, including information presented as a percentage of net sales.