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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

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

Dean Holding Company

2515 McKinney Avenue, Suite 1200

     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 [X]    No [ ]

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

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

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Part I — Financial Information

DEAN HOLDING COMPANY

See Notes to Condensed Consolidated Financial Statements.

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DEAN HOLDING COMPANY

See Notes to Condensed Consolidated Financial Statements.

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DEAN HOLDING COMPANY

See Notes to Condensed Consolidated Financial Statements.

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DEAN HOLDING COMPANY

March 31, 2004

      Basis of Presentation — The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2003. In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments) in order to present fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. Certain reclassifications have been made to conform the prior year’s Consolidated Financial Statements to current year’s classifications. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. Our results of operations for the period ended March 31, 2004 may not be indicative of our operating results for the full year. The Condensed Consolidated Financial Statements contained in this Quarterly Report should be read in conjunction with our 2003 Consolidated Financial Statements contained in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 30, 2004.

      Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Dean Holding Company and its subsidiaries, taken as a whole.

      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, a portion which is then allocated to us. Dean Foods Company charged us management fees of $10.1 million and $9.3 million for the three months ended March 31, 2004 and 2003. 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.

      Recently Adopted Accounting Pronouncements — In December 2003, the Financial Accounting Standards Board (“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 are 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.

      Recently Issued Accounting Pronouncements — 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.

      Shipping and Handling Fees — Our shipping and handling costs are included in both costs of sales and selling and distribution expense, depending on the nature of such cost. Shipping and handling costs included in cost of sales reflect inventory warehouse costs, product loading and handling costs and costs associated with transporting finished products from our manufacturing facilities to our own distribution

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      On January 26, 2004, the 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 transitioned the majority of Ross Swiss Dairies’ manufacturing needs into our southern California plants in May 2004. We paid approximately $21 million, including transaction costs, for the purchase of Ross Swiss Dairies and funded the purchase price with borrowings under Dean Foods Company’s receivables-backed facility.

      We have not completed the final allocation of purchase price to the fair values of assets and liabilities acquired in the Ross Swiss transaction, or the related business integration plan. 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.

      Approximately $77.4 million and $97.6 million of our inventory was accounted for under the last-in, first-out (LIFO) method of accounting at March 31, 2004 and December 31, 2003, respectively. There was no material excess of current cost over the stated value of LIFO inventories at either date.

      Changes in the carrying amount of goodwill for the three months ended March 31, 2004 are as follows:

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      The gross carrying amount and accumulated amortization of our intangible assets other than goodwill as of March 31, 2004 and December 31, 2003 are as follows:

      Amortization expense on intangible assets for the three months ended March 31, 2004 and 2003 was $0.8 million and $1.2 million, respectively. Estimated aggregate intangible asset amortization expense for the next five years is as follows:

      Senior Notes — We had $700 million (face value) of senior notes outstanding at March 31, 2004. 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 material real estate 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 — We participate in Dean Foods Company’s $500 million receivables securitization facility. Certain of our subsidiaries sell their accounts receivable to wholly-owned special

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      Industrial Development Revenue Bond — We have an industrial development revenue bond outstanding, which is secured by first mortgages on the related real property and equipment. Interest on this bond is due semiannually at an interest rate that varies 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.

      Comprehensive income consists of net income plus all other changes in equity from non-owner sources. Consolidated comprehensive income was $34.4 million for the three months ended March 31, 2004. The amounts of income tax (expense) benefit allocated to each component of other comprehensive income during the three months ended March 31, 2004 are included below.

      Defined Benefit Plans — The benefits under our defined benefit plans are based on years of service and employee compensation.

      We expect to contribute $30.6 million to our pension plans during 2004.

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      Postretirement Benefits — Certain of our subsidiaries provide health care benefits to certain retirees who are covered under specific group contract.

      We expect to contribute $2 million to our postretirement health plans during 2004.

      Plant Closing and Rationalization Costs — As part of an overall rationalization and cost reduction program, we recorded charges of $2.7 million during the first three months of 2004.

      The charges recorded during the first three months of 2004 are primarily related to the closing of two Dairy Group manufacturing facilities in California, one of which was closed in the first quarter of 2004 and one of which is scheduled to close later this year.

      These charges were accounted for in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which became effective for us in January 2003. We expect to incur additional charges of approximately $2.8 million including an additional $0.3 million in workforce reduction costs, $2.2 million in shutdown and other costs and $0.2 million in lease obligation costs. The majority of these additional charges are expected to be completed by December of 2004.

      The principal components of our overall rationalization and cost reduction program include the following:

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

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      Activity with respect to plant closing and rationalization is summarized below:

      There have not been significant adjustments to the plans and the majority of future cash requirements to reduce the liability at March 31, 2004 are expected to be completed within a year.

      Transaction Closing Costs — As part of our acquisition by Dean Foods Company, we accrued costs in 2002 pursuant to a plan to exit certain activities and businesses in order to rationalize production and reduce costs and inefficiencies. As part of this plan we closed two Specialty Foods Group plants, in Atkins, Arkansas and Cairo, Georgia, and one Dairy Group plant in Escondido, California. We also eliminated our administrative offices, closed Dairy Group distribution 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. During the first quarter of 2004 we recorded certain adjustments to reduce the liability by approximately $1.5 million related to the closures in our Specialty Foods Group segment. These adjustments also reduced goodwill.

      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;
	•	Shutdown costs, including those costs that are necessary to clean and prepare the abandoned facilities for closure; and
	•	Costs incurred after shutdown such as lease obligations or termination costs, utilities and property taxes after shutdown of the facility.

      Activity with respect to these liabilities for the first three months of 2004 is summarized below:

      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

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      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. At March 31, 2004 the senior credit facility provided 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 March 31, 2004 there were outstanding term loan borrowings of $1.63 billion under this facility, and $240.4 million outstanding under the revolving line of credit. Letters of credit in the aggregate amount of $117 million were issued but undrawn. At March 31, 2004 approximately $642.6 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 (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 Dean Foods Company’s 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 March 31, 2004, 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 Dean Foods Company’s 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;

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	•	$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 and an interest coverage ratio (computed as the ratio of EBITDA to interest expense). 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 March 31, 2004, Dean Foods Company’s leverage ratio, calculated according to the definitions contained in the credit agreement, was 3.34 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 March 31, 2004, Dean Foods Company’s interest coverage ratio, calculated according to the definitions contained in the credit agreement, was 5.58 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 December 31, 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 March 31, 2004, the minimum net worth requirement was $1.89 billion, and Dean Foods Company’s actual net worth (as defined in the credit agreement) was $2.65 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.

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      Litigation, Investigations and Audits — We and our subsidiaries are parties from time to time to certain other claims, litigation, audits and investigations. 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.

      Segment Data — We currently have two reportable segments: Dairy Group and Specialty Foods Group.

      Our Dairy Group segment 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.

      Specialty Foods Group is the nation’s leading pickle processor, and one of the largest manufacturers and sellers of powdered non-dairy coffee creamers in the United States. The Specialty Foods Group also manufactures and sells a variety of speciality foods, such as powdered ingredients, aseptic sauces and nutritional beverages.

      We evaluate the performance of our segments based on operating profit or loss before gains (losses) on sale of assets, plant closing and rationalization costs and foreign exchange gains (losses). Therefore, the measure of segment profit or loss presented below is before such items.

      The accounting policies of the segments are the same as those described in the summary of significant accounting policies set forth in Note 1 to our 2003 Consolidated Financial Statements contained in our 2003 Annual Report on Form 10-K.

      The amounts in the following tables are obtained from reports used by our executive management team and do not include any allocated income taxes or management fees. There are no significant non-cash items reported in segment profit or loss other than depreciation and amortization.

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      Substantially all of our business is within the United States.

      Significant Customers — Our Dairy Group and Specialty Foods Group segments had one customer that represented greater than 10% of their sales in the first quarter of 2004. Approximately 13.2% of our consolidated sales in the first quarter of 2004 were to that same customer.

11.     Subsequent Event

      Dean Foods Company’s Senior Credit Facility — On April 5, 2004, Dean Foods Company amended their senior credit facility to add a Tranche C term loan in the amount of $400 million, which will mature in July 2008. Borrowings under Dean Foods Company’s Tranche C term loan bear interest at a rate per annum equal to one of the following rates, at their 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 50 basis points, or
	•	LIBOR divided by the product of one minus the Eurodollar Reserve Percentage, plus a margin of 175 basis points.

      The amendment also added a $250 million “accordion” feature to Dean Foods Company’s revolving line of credit. This feature allows Dean Foods Company to expand their revolving line of credit from $1 billion to $1.25 billion if they are in compliance with all of the terms of their credit facility, and they can show that they will continue to be in compliance with the financial covenants after giving effect to the increase. The accordion feature only gives Dean Foods Company the ability to request increases to the revolver; the lenders are not obligated to increase their revolving credit commitments.

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      We are a wholly-owned subsidiary of Dean Foods Company. Our operations consist of two segments: Dairy Group and Specialty Foods Group. Our Dairy Group is part of the 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.

      As permitted by General Instruction H to Form 10-Q, in lieu of providing the information required by Item 2, we are providing only the information required by General Instruction H(2)(a).

Results of Operations

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

Quarter Ended March 31, 2004 Compared to Quarter Ended March 31, 2003 — Consolidated Results

      Net Sales — Consolidated net sales increased approximately 8.1% to $993.2 million during the first quarter of 2004 from $919.1 million during the first quarter of 2003. Net sales by segment are shown in the table below.