Prospectus
Summary
|
1
|
Where
You Can Find More Information About Us
|
20
|
Disclosure
Regarding Forward-Looking
Statements
|
21 |
Terms Used in this Prospectus | 22 |
Risk
Factors
|
24
|
Risks Related to Our Business | 35 |
The
Exchange Offer
|
42
|
Use
of Proceeds
|
53
|
Capitalization
|
54
|
Unaudited Pro Forma Condensed Consolidated Financial Information | 55 |
Selected
Historical Financial Data
|
63
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
65
|
Business
|
80
|
Management
|
92
|
Certain
Relationships and Related Party Transactions
|
98
|
Principal
Stockholders of Berry Plastics Group
|
99
|
Description
of Other Indebtedness
|
101
|
Description
of the Exchange Notes
|
104
|
Material
United States Federal Income Tax Consequences
|
178
|
Plan
of Distribution
|
180
|
Legal
Matters
|
181
|
Experts
|
181
|
Where
You Can Find Additional Information
|
181
|
Index
to Financial Statements
|
F-1
|
· |
Proceeds
from our
issuance of $750.0 million aggregate principal amount of outstanding
notes;
|
· |
New
borrowings of $675.0 million in Term B loans and $20.0 million under
the revolving credit facility, both as available under the senior
secured
credit facilities; and
|
· |
Proceeds
from our issuance of $425.0 million aggregate principal amount of
senior
subordinated notes to affiliates of Goldman.
|
Securities
Offered
|
Up
to $750,000,000 aggregate principal amount of the exchange notes
which
have been registered under the Securities Act.
|
The
form and terms of these exchange notes are identical in all material
respects to those of the outstanding notes of the same series except
that:
|
|
· the
exchange notes have been registered under the U.S. federal securities
laws
and will not bear any legend restricting their transfer;
|
|
· the
exchange notes bear a different CUSIP number than the outstanding
notes;
|
|
· the
exchange notes will not be subject to transfer restrictions or entitled
to
registration rights; and
|
|
· the
exchange notes will not be entitled to additional interest provisions
applicable to the outstanding notes in some circumstances relating
to the
timing of the exchange offer. See “The Exchange
Offer―Terms
of the Exchange Offer; Acceptance of Tendered Notes.”
|
|
The
Exchange Offer
|
We
are offering to exchange the exchange notes for a like principal
amount of
the outstanding notes.
|
We
will accept any and all outstanding notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on February 9,
2007.
Holders may tender some or all of their outstanding notes pursuant
to the
exchange offer. However, outstanding notes may be tendered only in
integral multiples of $1,000 in principal amount, subject to a minimum
denomination of $2,000.
|
|
In
order to be exchanged, an outstanding note must be properly tendered
and
accepted. All outstanding notes that are validly tendered and not
withdrawn will be exchanged. As of the date of this prospectus, there
are
$750,000,000 aggregate principal amount of outstanding notes, comprised
of
$525,000,000 87/8%
Second Priority Senior Secured Fixed Rate Notes due 2014 and $225,000,000
Second Priority Senior Secured Floating Rate Notes due 2014. We will
issue
exchange notes promptly after the expiration of the exchange offer.
See
“The Exchange Offer―Terms
of the Exchange Offer―Acceptance of Tendered Notes.”
|
Transferability
of Exchange Notes
|
Based
on interpretations by the staff of the U.S. Securities and Exchange
Commission, or the "SEC", as detailed in previous no-action letters
issued
to third parties, we believe that the exchange notes issued in the
exchange offer may be offered for resale, resold or otherwise transferred
by you without compliance with the registration and prospectus delivery
requirements of the Securities Act as long as:
|
· you
are acquiring the exchange notes in the ordinary course of your
business;
|
|
· you
are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate in a
distribution of the exchange notes; and
|
|
· you
are not our “affiliate” as defined in Rule 405 under the Securities
Act.
|
|
If
you are an affiliate of ours, or are engaged in or intend to engage
in or
have any arrangement or understanding with any person to participate
in
the distribution of the exchange notes:
|
|
· you
cannot rely on the applicable interpretations of the staff of the
SEC;
|
|
· you
will not be entitled to participate in the exchange offer;
and
|
|
· you
must comply with the registration and prospectus delivery requirements
of
the Securities Act in connection with any resale transaction.
|
|
Each
broker or dealer that receives exchange notes for its own account
in the
exchange offer for outstanding notes that were acquired as a result
of
market-making or other trading activities must acknowledge that it
will
comply with the prospectus delivery requirements of the Securities
Act in
connection with any offer to resell or other transfer of the exchange
notes issued in the exchange offer.
|
Furthermore,
any broker-dealer that acquired any of its outstanding notes directly
from
us, in the absence of an exemption therefrom,
|
|
· may
not rely on the applicable interpretation of the staff of the SEC’s
position contained in Exxon Capital Holdings Corp., SEC no-action
letter
(April 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter
(June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2,
1993); and
|
|
· must
comply with the registration and prospectus delivery requirements
of the
Securities Act in connection with any resale of the exchange
notes.
|
|
See
“Plan of Distribution.”
|
|
We
do not intend to apply for listing of the exchange notes on any securities
exchange or to seek approval for quotation through an automated quotation
system. Accordingly, there can be no assurance that an active market
will
develop upon completion of the exchange offer or, if developed, that
such
market will be sustained or as to the liquidity of any
market.
|
|
Expiration
Date
|
The
exchange offer will expire at 5:00 p.m., New York City time, on February
9, 2007, unless we extend the expiration date.
|
Exchange
Date; Issuance of Exchange Notes
|
The
date of acceptance for exchange of the outstanding notes is the exchange
date, which will be the first business day following the expiration
date
of the exchange offer. We will issue the exchange notes in exchange
for
the outstanding notes tendered and accepted in the exchange offer
promptly
following the exchange date. See “The Exchange Offer―Terms
of the Exchange Offer; Acceptance of Tendered Notes.”
|
Conditions
to the Exchange Offer
|
The
exchange offer is subject to customary conditions. We may assert
or waive
these conditions in our reasonable discretion. See “The Exchange
Offer―Conditions
to the Exchange Offer” for more information regarding conditions to the
exchange offer.
|
Special
Procedures for Beneficial Holders
|
If
you beneficially own outstanding notes that are registered in the
name of
a broker, dealer, commercial bank, trust company or other nominee
and you
wish to tender in the exchange offer, you should contact such registered
holder promptly and instruct such person to tender on your behalf.
See
“The Exchange
Offer―Procedures for Tendering Outstanding
Notes.”
|
Effect
of Not Tendering
|
Any
outstanding notes that are not tendered in the exchange offer, or
that are
not accepted in the exchange, will remain subject to the restrictions
on
transfer. Since the outstanding notes have not been registered under
the
U.S. federal securities laws, you will not be able to offer or sell
the
outstanding notes except under an exemption from the requirements
of the
Securities Act or unless the outstanding notes are registered under
the
Securities Act. Upon the completion of the exchange offer, we will
have no
further obligations, except under limited circumstances, to provide
for
registration of the outstanding notes under the U.S. federal securities
laws. See “The Exchange
Offer―Effect of Not Tendering.”
|
Withdrawal
Rights
|
You
may withdraw your tender at any time before the exchange offer
expires.
|
Interest
on Exchange Notes and the Outstanding Notes
|
The
exchange notes will bear interest from the most recent interest payment
date to which interest has been paid on the outstanding notes, or,
if no
interest has been paid, from September 20, 2006. Interest on the
outstanding notes accepted for exchange will cease to accrue upon
the
issuance of the exchange notes.
|
Acceptance
of Outstanding Notes and Delivery of Exchange Notes
|
Subject
to the conditions
stated in the section “The Exchange Offer―Conditions to the Exchange
Offer”
of this prospectus, we will accept for exchange any and all outstanding
notes which are properly tendered in the exchange offer before 5:00
p.m.,
New York City time, on the expiration
date. The exchange notes will be delivered promptly after the expiration
date. See “The Exchange Offer―Terms of the Exchange Offer; Acceptance of
Tendered Notes.”
|
Material
United States Federal Income Tax Considerations
|
The
exchange by a holder of outstanding notes for exchange notes to be
issued
in the exchange offer should not result in a taxable transaction
for U.S.
federal income tax purposes. See “Material United States Federal Income
Tax Consequences.”
|
Accounting
Treatment
|
We
will not recognize any gain or loss for accounting purposes upon
the
completion of the exchange offer. The expenses of the exchange offer
that
we pay will be charged to expense in accordance with generally accepted
accounting principles. See “The
Exchange Offer―Accounting Treatment.”
|
Exchange
Agent
|
Wells
Fargo Bank, National Association, the trustee under the Indenture,
is
serving as exchange agent in connection with the exchange offer.
The
address and telephone number of the exchange agent are listed under
the
heading “The Exchange Offer―Exchange
Agent.”
|
Use
of Proceeds
|
We
will not receive any proceeds from the issuance of exchange notes
in the
exchange offer. We will pay all expenses incident to the exchange
offer.
See “Use of Proceeds.”
|
Issuer
|
Holdings
|
Securities
|
$750,000,000
aggregate principal amount of Second Priority Senior Secured Notes
due
2014, comprised of $525,000,000 aggregate principal amount of our
8
7/8%
second priority senior secured fixed rate notes due 2014 and $225,000,000
aggregate principal amount of our second priority senior secured
floating
rate notes due 2014.
|
Maturity
Date
|
September
15, 2014.
|
Fixed
Rate Notes
|
The
fixed rate notes will bear interest at a rate of 8 7/8%
per annum, payable semiannually on March 15 and September 15 of
each year, commencing March 15, 2007.
|
Floating
Rate Notes
|
The
floating rate notes will bear interest at a rate of LIBOR plus 3.875%
per
annum, which will reset quarterly. Interest on the floating rate
notes
will be payable quarterly on March 15, June 15,
September 15 and December 15 of each year, commencing December
15, 2006.
|
Collateral
|
The
exchange notes and the guarantees of the exchange notes will be secured
by
a second priority security interest in the collateral granted to
the
collateral agent for the benefit of the holders of the exchange notes
and
other future parity lien debt that may be issued pursuant to the
terms of
the Indenture governing the exchange notes. These liens will be junior
in
priority to the liens on the same collateral securing our senior
secured
credit facilities and to all other permitted prior liens, including
liens
securing certain hedging obligations and cash management obligations.
The
liens securing priority lien obligations are held by the collateral
agent
under our senior secured credit facilities.
|
The
collateral securing the exchange notes will be substantially all
of our
and the guarantors’ property and assets that will secure our senior
secured credit facilities, which excludes (i) any license, contract
or
agreement of ours or the guarantors, if and only for so long as the
grant
of a security interest under the security documents would result
in a
breach or default under, or abandonment, invalidation or unenforceability
of that license, contract or agreement; (ii) any bank accounts, securities
accounts or cash and (iii) certain other limited exclusions. While
the collateral securing our senior secured credit facilities will
include
the equity interests of substantially all of our domestic subsidiaries
and
“first-tier” foreign subsidiaries, the collateral securing the exchange
notes will not include securities and other equity interests of our
subsidiaries (including all guarantor subsidiaries). For more information,
see “Description
of the Notes—Security for the Exchange Notes.”
At
July 1, 2006, the estimated book value of the collateral which secures
the
senior secured credit facilities and the exchange notes was $793.6
million.
|
|
Intercreditor
Agreement
|
The
trustee under the Indenture governing the exchange notes and the
collateral agent under our senior secured credit facilities have
entered
into an intercreditor agreement as to the relative priorities of
their
respective security interests in our assets securing the exchange
notes
and borrowings under our senior secured credit facilities and certain
other matters relating to the administration of security interests.
The
terms of the intercreditor agreement are set forth under “Description of
the Notes—Security for the Exchange Notes.”
|
Optional
Redemption
|
|
Fixed
Rate Notes
|
Prior
to September 15, 2010, we may redeem some or all of the fixed rate
exchange notes at a price equal to 100% of the principal amount of
the
fixed rate exchange notes redeemed plus accrued and unpaid interest
and
additional interest, if any, to the redemption date plus the “applicable
premium.” On or after September 15, 2010, we may redeem some or all of the
fixed rate exchange notes at the redemption prices set forth in this
prospectus. Additionally, on or prior to September 15, 2009, we may
redeem
up to 35% of the aggregate principal amount of the fixed rate exchange
notes with the net proceeds of specified equity offerings at the
redemption price set forth in this prospectus. See “Description of the
Exchange Notes—Optional Redemption—Fixed Rate Exchange
Notes.”
|
Floating
Rate Notes
|
On
or after September 15, 2008, we may redeem some or all of the floating
rate exchange notes at the redemption prices set forth in this prospectus.
Additionally, on or prior to September 15, 2008, we may redeem up
to 35%
of the aggregate principal amount of the floating rate exchange notes
with
the net proceeds of specified equity offerings at the redemption
price set
forth in this prospectus. See “Description of the Exchange Notes—Optional
Redemption—Floating Rate Exchange Notes.”
|
Change
of Control
|
If
a change of control occurs, we must give holders of the exchange
notes an
opportunity to sell to us their exchange notes at a purchase price
of 101%
of the principal amount of such exchange notes, plus accrued and
unpaid
interest to the date of purchase. The term “Change of Control” is defined
under “Description of the Exchange Notes—Change of Control.”
|
Guarantees
|
The
exchange notes will be guaranteed, jointly and severally, on a second
priority senior secured basis, by each of our domestic subsidiaries
that
guarantees our senior secured credit facilities.
|
Ranking
|
The
exchange notes and the guarantees thereof will be our and the guarantors’
second priority senior secured obligations and will:
|
· rank
equally in right of payment with all of our and the guarantors’ existing
and future senior indebtedness;
|
|
· rank
senior to all of our and the guarantors’ existing and future subordinated
indebtedness, including the senior subordinated notes; and
|
|
· be
effectively subordinated to all of our first priority secured debt,
including the borrowings under the senior secured credit facilities,
to
the extent of the collateral securing such debt.
|
|
The
exchange notes will also be effectively junior to liabilities of
the
non-guarantor subsidiaries. As of July 1, 2006, our non-guarantor
subsidiaries had liabilities of $56.5 million.
|
|
As
of September 20, 2006, we had outstanding on a consolidated
basis:
|
· $720.4
million of secured senior indebtedness constituting first priority
lien
obligations, primarily consisting of the term B loans under the senior
secured credit facilities;
|
|
· $1,470.4
million of secured senior indebtedness, consisting primarily of the
term B
loans under the senior secured credit facilities and the outstanding
notes; and
|
|
· $425.0
million of unsecured senior subordinated indebtedness, consisting
of the
senior subordinated notes.
|
|
Restrictive
Covenants
|
The
Indenture governing the exchange notes contains covenants that will
limit
our ability and certain of our subsidiaries’ ability to:
|
· incur
or guarantee additional indebtedness;
· pay
dividends and make other restricted payments;
· create
restrictions on the payment of dividends or other distributions to
us from
our restricted subsidiaries;
· create
or incur certain liens;
· make
certain investments;
· engage
in sales of assets and subsidiary stock; and
· transfer
all or substantially all of our assets or enter into merger or
consolidation Acquisition.
|
|
These
covenants are subject to a number of important limitations and exceptions
as described under “Description of the Exchange Notes—Certain Covenants.”
Certain covenants will cease to apply to the exchange notes at all
times
after the exchange notes have investment grade ratings from both
Moody’s
Investors Service, Inc., or Moody’s, and Standard & Poor’s
Ratings Group, or S&P; provided that no event of default has occurred
and is continuing. Similarly, the “Change of Control” covenant will be
suspended with respect to the exchange notes during all periods when
the
notes have investment grade ratings from Moody’s and S&P; provided
that no event of default has occurred and is
continuing.
|
Listing
|
We
expect that the exchange notes will be eligible for trading in PORTAL,
a
subsidiary of The Nasdaq Stock Market, Inc.
|
Historical
|
Pro
Forma
|
||||||||||||||||||||||||
26
Weeks Ended
|
26
Weeks Ended
|
||||||||||||||||||||||||
Fiscal
2003
|
Fiscal
2004
|
Fiscal
2005
|
July 2,
2005
|
July 1,
2006
|
Fiscal
2005
|
July
2,
2005
|
July 1,
2006
|
||||||||||||||||||
(dollars
in thousands)
|
|||||||||||||||||||||||||
Statement
of Income Data:
|
|||||||||||||||||||||||||
Net
sales
|
$
|
551,876
|
$
|
814,213
|
$
|
1,169,704
|
$
|
508,181
|
$
|
731,078
|
$
|
1,338,019
|
$
|
676,496
|
$
|
731,078
|
|||||||||
Cost
of goods sold
|
420,750
|
639,329
|
943,370
|
417,493
|
583,941
|
1,082,478
|
556,601
|
583,941
|
|||||||||||||||||
Gross
profit
|
131,126
|
174,884
|
226,334
|
90,688
|
147,137
|
255,541
|
119,895
|
147,137
|
|||||||||||||||||
Operating
expenses
|
59,936
|
81,008
|
110,545
|
40,227
|
70,282
|
134,162
|
62,344
|
71,921
|
|||||||||||||||||
Operating
income
|
71,190
|
93,876
|
115,789
|
50,461
|
76,855
|
121,379
|
57,551
|
75,216
|
|||||||||||||||||
Other
expenses (income)(1)
|
(7
|
)
|
—
|
1,354
|
1,569
|
(299
|
)
|
8,705
|
8,920
|
(299
|
)
|
||||||||||||||
Loss
on extinguished debt(2)
|
250
|
—
|
7,045
|
7,045
|
—
|
—
|
—
|
—
|
|||||||||||||||||
Interest
expense, net(3)
|
45,413
|
53,185
|
73,274
|
30,123
|
44,511
|
167,861
|
83,815
|
84,114
|
|||||||||||||||||
Income
(loss)before income taxes
|
25,534
|
40,691
|
34,116
|
11,724
|
32,643
|
(55,187
|
)
|
(35,184
|
)
|
(8,599
|
)
|
||||||||||||||
Income
taxes (benefit)
|
12,486
|
17,740
|
14,325
|
6,174
|
14,731
|
(24,835
|
)
|
(15,832
|
)
|
(3,869
|
)
|
||||||||||||||
Net
income (loss)
|
$
|
13,048
|
$
|
22,951
|
$
|
19,791
|
$
|
5,550
|
$
|
17,912
|
$
|
(30,352
|
)
|
$
|
(19,352
|
)
|
$
|
(4,730
|
)
|
||||||
Balance
Sheet Data
(at
period end):
|
|||||||||||||||||||||||||
Working
capital(4)
|
$
|
88,850
|
$
|
118,981
|
$
|
211,118
|
$
|
154,675
|
$
|
196,032
|
$
|
196,032
|
|||||||||||||
Total
assets
|
1,015,806
|
1,005,144
|
1,647,830
|
1,553,641
|
1,673,286
|
2,672,929
|
|||||||||||||||||||
Total
debt
|
751,605
|
697,558
|
1,160,620
|
1,167,554
|
1,135,820
|
1,896,659
|
|||||||||||||||||||
Stockholders’
equity
|
152,591
|
183,891
|
203,388
|
182,692
|
227,669
|
483,519
|
|||||||||||||||||||
Other
Data:
|
|||||||||||||||||||||||||
Depreciation
and Amortization(5)
|
$
|
44,078
|
$
|
60,816
|
$
|
88,720
|
$
|
34,149
|
$
|
53,996
|
$
|
105,368
|
$
|
50,797
|
$
|
53,996
|
|||||||||
Capital
Expenditure(6)
|
29,949
|
52,624
|
57,829
|
32,303
|
52,217
|
68,681
|
43,155
|
52,217
|
|||||||||||||||||
Ratio
of Earnings to Fixed Charges(7)
|
1.5X
|
1.7X
|
1.4X
|
1.4X
|
1.7X
|
(7
|
)
|
(7
|
)
|
(7
|
)
|
||||||||||||||
EBITDA(8)
|
115,275
|
154,692
|
203,155
|
83,041
|
131,150
|
212,708
|
94,094
|
129,511
|
|||||||||||||||||
Bank
Compliance EBITDA(8)
|
$
|
250,602
|
$
|
113,059
|
$
|
149,547
|
Historical
|
Pro
Forma
|
||||||||||||||||||||||||
26
Weeks Ended
|
26
Weeks Ended
|
||||||||||||||||||||||||
Fiscal
2003
|
Fiscal
2004
|
Fiscal
2005
|
July 2,
2005
|
July 1,
2006
|
Fiscal
2005
|
July
2, 2005
|
July
1, 2006
|
||||||||||||||||||
(dollars
in thousands)
|
|||||||||||||||||||||||||
Net
income (loss)
|
$
|
13,048
|
$
|
22,951
|
$
|
19,791
|
$
|
5,550
|
$
|
17,912
|
$
|
(30,352
|
)
|
$
|
(19,352
|
)
|
$
|
(4,730
|
)
|
||||||
Interest
expense, net(a)
|
45,663
|
53,185
|
80,319
|
37,168
|
44,511
|
167,861
|
83,815
|
84,114
|
|||||||||||||||||
Income
taxes (benefit)
|
12,486
|
17,740
|
14,325
|
6,174
|
14,731
|
(24,835
|
)
|
(15,832
|
)
|
(3,869
|
)
|
||||||||||||||
Depreciation
and amortization
|
44,078
|
60,816
|
88,720
|
34,149
|
53,996
|
100,034
|
45,463
|
53,996
|
|||||||||||||||||
EBITDA
|
$
|
115,275
|
$
|
154,692
|
$
|
203,155
|
$
|
83,041
|
$
|
131,150
|
$
|
212,708
|
$
|
94,094
|
$
|
129,511
|
|||||||||
Adjustments
to Pro Forma EBITDA:
|
|||||||||||||||||||||||||
Management
fees
|
$
|
3,000
|
1,500
|
1,639
|
|||||||||||||||||||||
Non-cash
compensation(b)
|
2,152
|
—
|
1,976
|
||||||||||||||||||||||
One-time
expenses(c)
|
9,742
|
2,965
|
7,921
|
||||||||||||||||||||||
Pro
forma synergies(d)
|
23,000
|
14,500
|
8,500
|
||||||||||||||||||||||
Bank
Compliance EBITDA
|
$
|
250,602
|
$
|
113,059
|
$
|
149,547
|
Pro
Forma
|
||||||||||
26
Weeks Ended
|
||||||||||
Fiscal
2005
|
July
2, 2005
|
July
1, 2006
|
||||||||
Net
cash provided by operating activities (historical)
|
101,546
|
51,385
|
87,142
|
|||||||
Pro
forma adjustments:
|
||||||||||
Management
fees
|
(3,000
|
)
|
(1,500
|
)
|
(1,639
|
)
|
||||
Kerr
acquisition
|
11,199
|
11,199
|
-
|
|||||||
Cash
interest expense
|
(91,132
|
)
|
(51,974
|
)
|
(37,857
|
)
|
||||
Net
cash provided by operating activities (pro forma)
|
18,613
|
9,110
|
47,646
|
|||||||
Cash
income taxes
|
1,556
|
533
|
898
|
|||||||
Cash
interest expense
|
162,461
|
81,115
|
81,414
|
|||||||
Increase
in working capital
|
32,230
|
3,336
|
1,529
|
|||||||
Management
fees
|
3,000
|
1,500
|
1,639
|
|||||||
One-time
expenses (See Note (c) in previous table)
|
9,742
|
2,965
|
7,921
|
|||||||
Pro
forma synergies (See Note (d) in previous table)
|
23,000
|
14,500
|
8,500
|
|||||||
Bank
Compliance EBITDA
|
250,602
|
113,059
|
149,547
|
· |
risks
associated with our substantial indebtedness and debt service;
|
· |
changes
in prices and availability of resin and other raw materials and our
ability to pass on changes in raw material prices on a timely basis;
|
· |
risks
of competition, including foreign competition, in our existing and
future
markets;
|
· |
risks
related to our acquisition strategy and integration of acquired
businesses;
|
· |
reliance
on unpatented proprietary know-how and trade secrets;
|
· |
increases
in the cost of compliance with laws and regulations, including
environmental laws and regulations;
|
· |
catastrophic
loss of one of our key manufacturing facilities;
|
· |
increases
in the amounts we are required to contribute to our pension plans;
|
· |
our
ownership structure following the Acquisition;
|
· |
reduction
in net worth; and
|
· |
the
other factors discussed in the section of this prospectus titled
“Risk
Factors.”
|
· |
the
term “Holdings” refers to Berry Plastics Holding Corporation (f/k/a BPC
Holding Corporation), the parent company of Berry Plastics
Corporation;
|
· |
the
terms “we,” “us” and the “Company” refer to Holdings and its predecessors
and consolidated subsidiaries, which are being acquired pursuant
to the
Acquisition;
|
· |
the
term “BPC Holding Corporation” refers to Berry Plastics Holding
Corporation prior to the consummation of the Acquisition and before
it
changed its name to Berry Plastics Holding
Corporation;
|
· |
the
term “Berry Plastics Group” refers to Berry Plastics Group, Inc., a
Delaware corporation;
|
· |
the
term “Merger Sub” refers to BPC Acquisition Corp., a Delaware corporation
and wholly-owned subsidiary of Berry Plastics Group which merged
with and
into BPC Holding Corporation pursuant to the Merger Agreement;
|
· |
the
term “Apollo” refers to Apollo Management, L.P. and its affiliates;
|
· |
the
term “Graham Partners” refers to Graham Partners, Inc. and its affiliates;
|
· |
the
term “Sponsors” refers to Apollo and Graham Partners;
|
· |
the
term “guarantors” refers to each of the existing and future domestic
subsidiaries of Holdings that will guarantee the notes;
|
· |
the
term “outstanding notes” refers to the 8
7/8%
Second Priority Senior Secured Fixed Rate Notes due 2014 and the
Second
Priority Senior Secured Floating Rate Notes due 2014 which we issued
previously without registration under the Securities Act.
|
· |
the
term “exchange notes” refers to 8
7/8%
Second Priority Senior Secured Fixed Rate Notes due 2014 and the
Second
Priority Senior Secured Floating Rate Notes due 2014 that are registered
under the Securities Act of 1933, and which we are hereby offering
to
exchange for the outstanding notes;
|
· |
the
term “fixed rate notes” refers to the portion of the exchange notes
comprised of the 8
7/8%
Second Priority Senior Secured Fixed Rate Notes due 2014;
|
· |
the
term “floating rate notes” refers to the portion of the exchange notes
comprised of the Second Priority Senior Secured Floating Rate Notes
due
2014;
|
· |
the
term “Goldman” refers to The Goldman Sachs Group, Inc. and its
affiliates;
|
· |
the
term “notes” refers to the outstanding notes and the exchange
notes;
|
· |
the
term “PE” refers to polyethylene;
|
· |
the
term “PET” refers to polyethylene terephthalate;
|
· |
the
term “PP” refers to polypropylene;
|
· |
the
term “HDPE” refers to high density polyethylene; and
|
· |
the
term “LDPE” refers to low density polyethylene.
|
· |
make
it more difficult for us to satisfy our obligations under our
indebtedness, including
the exchange notes;
|
· |
limit
our ability to borrow money for our working capital, capital expenditures,
debt service requirements or other corporate purposes;
|
· |
require
us to dedicate a substantial portion of our cash flow to payments
on our
indebtedness, which would reduce the amount of cash flow available
to fund
working capital, capital expenditures, product development and other
corporate requirements;
|
· |
increase
our vulnerability to general adverse economic and industry conditions;
|
· |
limit
our ability to respond to business opportunities; and
|
· |
subject
us to financial and other restrictive covenants, which, if we fail
to
comply with these covenants and our failure is not waived or cured,
could
result in an event of default under our debt.
|
· |
our
future financial and operating performance, which will be affected
by
prevailing
economic conditions and financial, business, regulatory and other
factors,
many of which are beyond our control; and
|
· |
the
future availability of borrowings under our senior secured credit
facilities, which depends on, among other things, our complying with
the
covenants in our senior secured credit facilities.
|
· |
how
long payments under the exchange notes could be delayed following
commencement
of a bankruptcy case;
|
· |
whether
or when the collateral agent could repossess or dispose of the collateral;
|
· |
the
value of the collateral at the time of the bankruptcy petition; or
|
· |
whether
or to what extent holders of the exchange notes would be compensated
for
any delay in payment or loss of value of the collateral through the
requirement of “adequate protection.”
|
· |
we
or any of our subsidiary exchange Note Guarantors were or was insolvent
or
rendered insolvent by reason of issuing the exchange notes or the
exchange
note guarantees;
|
· |
payment
of the consideration left us or any of our subsidiary exchange Note
Guarantors with an unreasonably small amount of capital to carry
on the
business; or
|
· |
we
or any of our subsidiary exchange Note Guarantors intended to, or
believed
that we or it would, incur debts beyond our or its ability to pay
as they
mature.
|
· |
the
sum of its debts, including contingent liabilities, was greater than
the
fair saleable
value of all its assets;
|
· |
the
present fair saleable value of its assets was less than the amount
that
would be required to pay its probable liability on its existing debts
and
liabilities, including contingent liabilities, as they become absolute
and
mature; or
|
· |
it
could not pay its debts as they become due.
|
· |
incur
or guarantee additional debt;
|
· |
pay
dividends and make other restricted payments;
|
· |
create
or incur certain liens;
|
· |
make
certain investments;
|
· |
engage
in sales of assets and subsidiary stock;
|
· |
enter
into transactions with affiliates;
|
· |
transfer
all or substantially all of our assets or enter into merger or
consolidation transactions; and
|
· |
make
capital expenditures.
|
· |
will
not be required to lend any additional amounts to us;
|
· |
could
elect to declare all borrowings outstanding, together with accrued
and
unpaid interest and fees, to be due and payable;
|
· |
may
have the ability to require us to apply all of our available cash
to repay
these borrowings; or
|
· |
may
prevent us from making debt service payments under our other agreements,
including the Indenture governing the exchange notes, any of which
could
result in an event of default under the exchange notes.
|
· |
our
operating performance and financial condition;
|
· |
our
ability to complete this offer to exchange the outstanding notes
for the
exchange notes;
|
· |
the
interest of securities dealers in making a market; and
|
· |
the
market for similar securities.
|
· |
the
diversion of management’s attention to the assimilation of the acquired
companies
and their employees and on the management of expanding operations;
|
· |
the
incorporation of acquired products into our product line;
|
· |
the
increasing demands on our operational systems;
|
· |
possible
adverse effects on our reported operating results, particularly during
the
first several reporting periods after such acquisitions are completed;
and
|
· |
the
loss of key employees and the difficulty of presenting a unified
corporate
image.
|
· |
the
exchange offer is not permitted by applicable law or SEC policy;
|
· |
the
exchange offer is not consummated within 30 days of the date on which
the
exchange offer is required to be mailed to the holders of outstanding
notes; or
|
· |
any
holder of outstanding notes notifies us prior to the 20th day following
consummation of the exchange offer that:
|
(a) |
it
is prohibited by law or SEC policy from participating in the exchange
offer; or
|
(b) |
that
it may not resell the exchange notes acquired by it in the exchange
offer
to the public without delivering a prospectus (other than by reason
of
such holder’s status as our affiliate) and the prospectus contained in
this exchange offer registration statement is not appropriate or
available
for such resales; or
|
(c) |
that
it is a broker-dealer and owns outstanding notes acquired directly
from us
or our affiliate.
|
· |
you,
or the person or entity receiving such exchange notes, is acquiring
such
exchange
notes in the ordinary course of business;
|
· |
neither
you nor any such person or entity is participating in or intends
to
participate
in a distribution of the exchange notes within the meaning of the
U.S.
federal securities laws;
|
· |
neither
you nor any such person or entity has an arrangement or understanding
with
any person or entity to participate in any distribution of the exchange
notes;
|
· |
neither
you nor any such person or entity is our “affiliate” as such term is
defined under Rule 405 under the Securities Act;
and
|
· |
you
are not acting on behalf of any person or entity who could not truthfully
make these statements.
|
· |
such
holder is not an affiliate of ours;
|
· |
such
holder is not engaged in and does not intend to engage in, and has
no
arrangement or understanding with any person to participate in a
distribution of the exchange notes;
and
|
· |
any
exchange notes such holder receives will be acquired in the ordinary
course business.
|
· |
the
exchange notes have been registered under the U.S. federal securities
laws
and will not bear any legend restricting their
transfer;
|
· |
the
exchange notes bear a different CUSIP number from the outstanding
notes;
|
· |
the
exchange notes will not be subject to transfer restrictions or entitled
to
registration rights; and
|
· |
the
holders of the exchange notes will not be entitled to certain rights
under
the registration rights agreement, including the provisions for an
increase in the interest rate on the outstanding notes in some
circumstances relating to the timing of the exchange
offer.
|
· |
complete,
sign and date the letter of transmittal, or a facsimile of the letter
of
transmittal;
|
· |
have
the signatures guaranteed if required by the letter of transmittal;
and
|
· |
mail
or otherwise deliver the letter of transmittal or such facsimile,
together
with the outstanding notes and any other required documents, to the
exchange agent prior to 5:00 p.m., New York City time, on the expiration
date.
|
· |
by
a registered holder who has not completed the box entitled “Special
Issuance Instructions” or “Special Delivery Instructions” on the letter of
transmittal; and
|
· |
for
the account of an eligible guarantor
institution.
|
· |
a
member firm of a registered national securities exchange of the National
Association
of Securities Dealers, Inc.;
|
· |
a
commercial bank or trust company having an office or correspondent
in the
United States; and
|
· |
another
eligible guarantor institution.
|
· |
you
must effect your tender through an “eligible guarantor institution,” which
is defined above under the heading “Guarantee of
Signatures.”
|
· |
a
properly completed and duly executed notice of guaranteed delivery,
substantially in the form provided by us herewith, or an agent’s message
with respect to guaranteed delivery that is accepted by us, is received
by
the exchange agent on or prior to the expiration date as provided
below;
and
|
· |
the
certificates for the tendered notes, in proper form for transfer
(or a
book entry confirmation of the transfer of such notes into the exchange
agent account at DTC as described above), together with a letter
of
transmittal (or a manually signed facsimile of the letter of transmittal)
properly completed and duly executed, with any signature guarantees
and
any other documents required by the letter of transmittal or a properly
transmitted agent’s message, are received by the exchange agent within
three New York Stock Exchange, Inc. trading days after the date of
execution of the notice of guaranteed
delivery.
|
· |
specify
the name of the person having tendered the outstanding notes to be
withdrawn;
|
· |
identify
the outstanding notes to be withdrawn (including the certificate
number(s)
of the outstanding notes physically delivered) and principal amount
of
such notes, or, in the case of notes transferred by book-entry transfer,
the name and number of the account at
DTC;
|
· |
be
signed by the holder in the same manner as the original signature
on the
letter of transmittal by which such outstanding notes were tendered,
with
any required signature guarantees, or be accompanied by documents
of
transfer sufficient to have the trustee with respect to the outstanding
notes register the transfer of such outstanding notes into the name
of the
person withdrawing the tender; and
|
· |
specify
the name in which any such notes are to be registered, if different
from
that of the registered holder.
|
· |
we
determine that the exchange offer violates any law, statute, rule,
regulation or interpretation by the staff of the SEC or any order
of any
governmental agency or court of competent jurisdiction;
or
|
· |
any
action or proceeding is instituted or threatened in any court or
by or
before any governmental agency relating to the exchange offer which,
in
our judgment, could reasonably be expected to impair our ability
to
proceed with the exchange offer.
|
· |
to
us or our subsidiaries;
|
· |
pursuant
to a registration statement which has been declared effective under
the
Securities Act;
|
· |
for
so long as the outstanding notes are eligible for resale pursuant
to Rule
144A under the Securities Act to a person the seller reasonably believes
is a qualified institutional buyer that purchases for its own account
or
for the account of a qualified
institutional buyer to whom notice is given that the transfer is
being
made in reliance on Rule 144A;
or
|
· |
pursuant
to any other available exemption from the registration requirements
of the
Securities Act (in which case we and the trustee shall have the right
to
require the delivery of an opinion of counsel, certifications and/or
other
information satisfactory to us and the trustee), subject in each
of the
foregoing cases to any requirements of law that the disposition of
the
seller’s property or the property of such investor account or accounts be
at all times within its or their control and in compliance with any
applicable state securities laws.
|
· |
exchange
notes are to be delivered to, or issued in the name of, any person
other
than the registered holder of the outstanding notes
tendered;
|
· |
tendered
outstanding notes are registered in the name of any person other
than the
person signing the letter of transmittal;
or
|
· |
a
transfer tax is imposed for any reason other than the exchange of
outstanding notes in connection with the exchange
offer,
|
|
|
|
||
By
Registered or Certified Mail:
|
|
Wells
Fargo Bank, N.A.
Corporate
Trust Operations
MAC
N9303-121
P.O.
Box 1517
Minneapolis,
MN 55480
|
By
Overnight Courier or Regular Mail:
|
|
Wells
Fargo Bank, N.A.
Corporate
Trust Operations
MAC
N9303-121
6th
& Marquette Avenue
Minneapolis,
MN 55479
|
||
By
Hand Delivery:
|
|
Wells
Fargo Bank, N.A.
Corporate
Trust Services
608
2nd Avenue South
Northstar
East
Building―12th Floor
Minneapolis,
MN 55402
|
||
Confirm
by Telephone:
|
|
(800)
344-5128
|
||
|
As
of July 1, 2006
|
||||||
|
Actual
|
Pro Forma
|
|||||
|
(in
millions)
|
||||||
Cash
|
$
|
35.3
|
$
|
20.0
|
|||
|
|||||||
Long-term
debt, including current portion:
|
|||||||
Revolving
Credit Facility(1)
|
$
|
—
|
$
|
20.0
|
|||
Term
B loans
|
—
|
675.0
|
|||||
Notes
offered hereby
|
—
|
750.0
|
|||||
Senior
subordinated notes
|
—
|
425.0
|
|||||
Other
existing debt
|
1,135.8
|
26.7(2
|
)
|
||||
|
|||||||
Total
long-term debt, including current portion
|
1,135.8
|
1,896.7
|
|||||
Total
stockholders’ equity
|
227.7
|
483.5(3
|
)
|
||||
|
|||||||
Total
capitalization
|
$
|
1,363.5
|
$
|
2,380.2
|
|||
|
(1)
|
Our
current revolving credit facility provides for available borrowings
of
$200.0 million. On the closing date of the Acquisition, $165.1 million
of
the revolving credit facility was available for borrowing.
|
(2)
|
Consists
of capital leases that remained outstanding after the Acquisition.
|
(3)
|
Pro
forma stockholders’ equity consists of cash equity investments in Berry
Plastics Group.
|
|
Historical
|
Pro
Forma
Adjustments
|
Pro
Forma
|
|||||||
Assets
|
|
|
|
|||||||
Current
Assets:
|
|
|
|
|||||||
Cash
and cash equivalents
|
$
|
35,251
|
$
|
(15,251(a
|
))
|
$
|
20,000
|
|||
Accounts
receivable (less allowance for doubtful accounts of $6,376 at July
1,
2006)
|
166,924
|
—
|
166,924
|
|||||||
Inventories
|
163,354
|
—
|
163,354
|
|||||||
Other
current assets
|
37,868
|
—
|
37,868
|
|||||||
|
||||||||||
Total
current assets
|
403,397
|
(15,251
|
)
|
388,146
|
||||||
Property,
plant and equipment (less accumulated depreciation)
|
436,470
|
—
|
436,470
|
|||||||
Intangible
assets
|
833,419
|
1,014,894(b
|
)
|
1,848,313
|
||||||
|
||||||||||
Total
assets
|
$
|
1,673,286
|
$
|
999,643
|
$
|
2,672,929
|
||||
|
||||||||||
Liabilities
and Stockholders’ Equity
|
||||||||||
Current
Liabilities:
|
||||||||||
Accounts
payable
|
$
|
97,310
|
$
|
—
|
$
|
97,310
|
||||
Accrued
interest
|
17,046
|
(17,046(c
|
))
|
—
|
||||||
Other
current liabilities
|
74,804
|
—
|
74,804
|
|||||||
Current
portion of long-term debt
|
14,419
|
(1,200(d
|
))
|
13,219
|
||||||
|
||||||||||
Total
current liabilities
|
203,579
|
(18,246
|
)
|
185,333
|
||||||
Long-term
debt, less current portion
|
1,121,401
|
762,039(e
|
)
|
1,883,440
|
||||||
Other
liabilities
|
120,637
|
—
|
120,637
|
|||||||
|
||||||||||
Total
liabilities
|
1,445,617
|
743,793
|
2,189,410
|
|||||||
Total
stockholders’ equity
|
227,669
|
255,850(f
|
)
|
483,519
|
||||||
|
||||||||||
Total
liabilities and stockholders’ equity
|
$
|
1,673,286
|
$
|
999,643
|
$
|
2,672,929
|
||||
|
Purchase
price
|
$
|
2,223,300
|
||
Estimated
transaction costs
|
110,219
|
|||
|
||||
Total
consideration
|
2,333,519
|
|||
Less:
Net assets acquired(1)
|
1,318,625
|
|||
|
||||
Net
adjustments(2)
|
$
|
1,014,894
|
||
|
Current
portion of debt being repurchased or repaid
|
$
|
(7,950
|
)
|
|
Current
portion of debt being incurred
|
6,750
|
|||
|
||||
Net
adjustment
|
$
|
(1,200
|
)
|
|
|
Term
B loans
|
$
|
675,000
|
||
Revolving
Credit Facility
|
20,000
|
|||
Senior
subordinated notes
|
425,000
|
|||
Outstanding
notes
|
750,000
|
|||
Long-term
debt being repurchased or repaid, less current portion
|
(1,107,961
|
)
|
||
|
||||
Net
adjustment
|
$
|
762,039
|
||
|
|
Historical
|
Pro
Forma
Adjustments
|
Pro Forma
|
|||||||
Net
sales
|
$
|
731,078
|
$
|
—
|
$
|
731,078
|
||||
Cost
of goods sold
|
583,941
|
—
|
583,941
|
|||||||
|
||||||||||
Gross
profit
|
147,137
|
—
|
147,137
|
|||||||
Operating
expenses
|
70,282
|
1,639(a,h
|
)
|
71,921
|
||||||
|
||||||||||
Operating
income (loss)
|
76,855
|
(1,639)
|
75,216
|
|||||||
Other
income
|
(299
|
)
|
—
|
(299
|
)
|
|||||
Interest
expense, net
|
44,511
|
39,603(b
|
)
|
84,114
|
||||||
|
||||||||||
Income
(loss) before taxes
|
32,643
|
(41,242
|
)
|
(8,599
|
)
|
|||||
Taxes
(benefit)
|
14,731
|
(18,600(c
|
))
|
(3,869
|
)
|
|||||
|
||||||||||
Net
income (loss)
|
$
|
17,912
|
$
|
(22,642
|
)
|
$
|
(4,730
|
)
|
||
|
|
Historical
|
Kerr(d)
|
Adjustments
Relating
to
Kerr Acquisition
|
Adjustments
Relating
to
the Transactions
|
Pro Forma
|
|||||||||||
Net
sales
|
$
|
508,181
|
$
|
168,315
|
$
|
—
|
$
|
—
|
$
|
676,496
|
||||||
Cost
of goods sold
|
417,493
|
139,108
|
—
|
—
|
556,601
|
|||||||||||
|
||||||||||||||||
Gross
profit
|
90,688
|
29,207
|
—
|
—
|
119,895
|
|||||||||||
Operating
expenses
|
40,227
|
15,283
|
5,334(e
|
)
|
1,500(a,h)
|
62,344
|
||||||||||
|
||||||||||||||||
Operating
income (loss)
|
50,461
|
13,924
|
(5,334
|
)
|
(1,500)
|
57,551
|
||||||||||
Other
expenses
|
1,569
|
7,351
|
—
|
—
|
8,920
|
|||||||||||
Interest
expense, net
|
30,123
|
4,343
|
8,081(f
|
)
|
41,268(b
|
)
|
83,815
|
|||||||||
Debt
extinguishment fee
|
7,045
|
—
|
—
|
(7,045(g
|
))
|
—
|
||||||||||
|
||||||||||||||||
Income
(loss) before taxes
|
11,724
|
2,230
|
(13,415
|
)
|
(35,723
|
)
|
(35,184
|
)
|
||||||||
Taxes
(benefit)
|
6,174
|
701
|
(5,138
|
)
|
(17,569(c
|
))
|
(15,832
|
)
|
||||||||
|
||||||||||||||||
Net
income (loss)
|
$
|
5,550
|
$
|
1,529
|
$
|
(8,277
|
)
|
$
|
(18,154
|
)
|
$
|
(19,352
|
)
|
|||
|
|
Historical
|
Kerr(d)
|
Adjustments
Relating
to
Kerr Acquisition
|
Adjustments
Relating
to
the Transactions
|
Pro Forma
|
|||||||||||
Net
sales
|
$
|
1,169,704
|
$
|
168,315
|
$
|
—
|
$
|
—
|
$
|
1,338,019
|
||||||
Cost
of goods sold
|
943,370
|
139,108
|
—
|
—
|
1,082,478
|
|||||||||||
|
||||||||||||||||
Gross
profit
|
226,334
|
29,207
|
—
|
—
|
255,541
|
|||||||||||
Operating
expenses
|
110,545
|
15,283
|
5,334(e
|
)
|
3,000(ah
|
)
|
134,162
|
|||||||||
|
||||||||||||||||
Operating
income (loss)
|
115,789
|
13,924
|
(5,334
|
)
|
(3,000)
|
121,379
|
||||||||||
Other
expenses
|
1,354
|
7,351
|
—
|
—
|
8,705
|
|||||||||||
Interest
expense, net
|
73,274
|
4,343
|
8,081(f
|
)
|
82,163(b
|
)
|
167,861
|
|||||||||
Debt
extinguishment fee
|
7,045
|
—
|
—
|
(7,045(g
|
))
|
—
|
||||||||||
|
||||||||||||||||
Income
(loss) before taxes
|
34,116
|
2,230
|
(13,415
|
)
|
(78,118
|
)
|
(55,187
|
)
|
||||||||
Taxes
(benefit)
|
14,325
|
701
|
(5,138
|
)
|
(34,723(c
|
))
|
(24,835
|
)
|
||||||||
|
||||||||||||||||
Net
income (loss)
|
$
|
19,791
|
$
|
1,529
|
$
|
(8,277
|
)
|
$
|
(43,395
|
)
|
$
|
(30,352
|
)
|
|||
|
|
Predecessor
|
Combined
Company
&
Predecessor
|
Company
|
Company
|
Company
|
26
Weeks Ended
|
||||||||||||||||
|
Fiscal Year
|
July 2,
2005
|
July 1,
2006
|
|||||||||||||||||||
|
2001
|
2002
|
2003
|
2004
|
2005
|
|||||||||||||||||
|
(dollars in
thousands)
(unaudited)
|
|||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||
Statement
of Income Data:
|
|
|
|
|
|
|
|
|||||||||||||||
Net
sales
|
$
|
461,659
|
$
|
494,303
|
$
|
551,876
|
$
|
814,213
|
$
|
1,169,704
|
$
|
508,181
|
$
|
731,078
|
||||||||
Cost
of goods sold
|
338,000
|
371,273
|
420,750
|
639,329
|
943,370
|
417,493
|
583,941
|
|||||||||||||||
|
||||||||||||||||||||||
Gross
profit
|
123,659
|
123,030
|
131,126
|
174,884
|
226,334
|
90,688
|
147,137
|
|||||||||||||||
Operating
expenses(1)
|
70,192
|
77,467
|
59,936
|
81,008
|
110,545
|
40,227
|
70,282
|
|||||||||||||||
Operating
income
|
53,467
|
45,563
|
71,190
|
93,876
|
115,789
|
50,461
|
76,855
|
|||||||||||||||
Other
expenses (income)(2)
|
473
|
299
|
(7
|
)
|
—
|
1,354
|
1,569
|
(299
|
)
|
|||||||||||||
Loss
on extinguished debt(3)
|
—
|
25,328
|
250
|
—
|
7,045
|
7,045
|
—
|
|||||||||||||||
Interest
expense, net(4)
|
54,355
|
49,254
|
45,413
|
53,185
|
73,274
|
30,123
|
44,511
|
|||||||||||||||
Income
(loss) before income taxes
|
(1,361
|
)
|
(29,318
|
)
|
25,534
|
40,691
|
34,116
|
11,724
|
32,643
|
|||||||||||||
Income
taxes
|
734
|
3,298
|
12,486
|
17,740
|
14,325
|
6,174
|
14,731
|
|||||||||||||||
Net
income (loss)
|
(2,095
|
)
|
(32,616
|
)
|
13,048
|
22,951
|
19,791
|
5,550
|
17,912
|
|||||||||||||
Preferred
stock dividends
|
9,790
|
6,468
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Amortization
of preferred stock discount
|
1,024
|
574
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Net
income (loss) attributable to common stockholders
|
$
|
(12,909
|
)
|
$
|
(39,658
|
)
|
$
|
13,048
|
$
|
22,951
|
$
|
19,791
|
$
|
5,550
|
$
|
17,912
|
||||||
|
||||||||||||||||||||||
Balance
Sheet Data (at period end):
|
||||||||||||||||||||||
Working
capital(5)
|
$
|
48,351
|
$
|
71,468
|
$
|
88,850
|
$
|
118,981
|
$
|
211,118
|
$
|
154,675
|
$
|
196,032
|
||||||||
Total
assets
|
446,876
|
760,576
|
1,015,806
|
1,005,144
|
1,647,830
|
1,553,641
|
1,673,286
|
|||||||||||||||
Total
debt
|
485,881
|
609,943
|
751,605
|
697,558
|
1,160,620
|
1,167,554
|
1,135,820
|
|||||||||||||||
Stockholders’
equity (deficit)
|
(139,601
|
)
|
75,163
|
152,591
|
183,891
|
203,388
|
182,692
|
227,669
|
||||||||||||||
Other
Data:
|
||||||||||||||||||||||
Depreciation
and amortization(6)
|
50,907
|
41,965
|
44,078
|
60,816
|
88,720
|
34,149
|
53,996
|
|||||||||||||||
Capital
expenditures
|
32,834
|
28,683
|
29,949
|
52,624
|
57,829
|
32,303
|
52,217
|
(1)
|
Operating
expenses include $20,987 related to the Goldman merger during fiscal
2002.
|
(2)
|
Other
expenses (income) consist of net losses (gains) on disposal of property
and equipment and unrealized loss (gain) on investment in Southern
Packaging.
|
(3)
|
In
2005, the loss on extinguished debt represents unamortized deferred
financing costs on our existing term loan expensed as a result of
an
amendment to our old senior secured credit facilities. The loss on
extinguished debt in 2003 represents the legal costs associated with
amending our old senior secured credit facilities in connection with
the
Landis Acquisition. As a result of the retirement of outstanding
indebtedness, $6,600 of existing deferred financing fees and $18,700
of
prepayment fees and related charges were charged to expense in 2002
as a
loss on extinguished debt.
|
(4)
|
Includes
non-cash interest expense of $11,268, $2,476, $2,318, $1,862, $1,945,
$982
and $954 in fiscal 2001, 2002, 2003, 2004, and 2005 and the 26 weeks
ended
July 2, 2005 and July 1, 2006, respectively.
|
(5)
|
Represents
total current assets (other than cash) less total current liabilities
(other than accrued interest and the current portion of long-term
debt).
|
(6)
|
Depreciation
and amortization excludes non-cash amortization of deferred financing
fees
and debt premium/discount amortization, which are included in interest
expense.
|
· |
Proceeds
from our
issuance of $750.0 million aggregate principal amount of outstanding
notes;
|
· |
New
borrowings of $675.0 million in Term B loans and $20.0 million under
the revolving credit facility, both as available under the senior
secured
credit facilities; and
|
· |
Proceeds
from our issuance of $425.0 million aggregate principal amount of
senior
subordinated notes to Goldman.
|
· |
Proceeds
from our issuance of $750.0 million aggregate principal amount of
outstanding notes;
|
· |
New
borrowings of $675.0 million in Term B loans and $20.0 million under
the revolving credit facility, both as available under the senior
secured
credit facilities; and
|
· |
Proceeds
from our issuance of $425.0 million aggregate principal amount of
senior
subordinated notes to Goldman.
|
|
Total Debt at
September
20, 2006
|
Short-Term Debt
and
Current
Maturities
of
Long-Term Debt
|
Long-Term
Portion
|
|||||||
Senior
secured credit facilities:
|
||||||||||
Term
B Loans
|
$
|
675.0
|
$
|
5.1
|
$
|
669.9
|
||||
Revolving
Credit Facility
|
20.0
|
—
|
20.0
|
|||||||
Senior
Subordinated notes
|
425.0
|
—
|
425.0
|
|||||||
Outstanding
Notes
|
750.0
|
—
|
750.0
|
|||||||
Capital
Leases
|
25.4
|
6.3
|
19.1
|
|||||||
|
|
|
||||||||
|
$
|
1,895.4
|
$
|
11.4
|
$
|
1,884.0
|
|
Payments
Due by Period at December 31, 2005
|
|||||||||||||||
Pro
Forma Contractual Obligations
|
Total
|
<
1 year
|
1-3
years
|
4-5
years
|
>
5 years
|
|||||||||||
(dollars
in thousands)
|
||||||||||||||||
Term
B loans
|
$
|
675,000
|
$
|
6,750
|
$
|
13,500
|
$
|
13,500
|
$
|
641,250
|
||||||
Revolving
Credit Facility
|
20,000
|
—
|
—
|
—
|
20,000
|
|||||||||||
Outstanding
notes
|
750,000
|
—
|
—
|
—
|
750,000
|
|||||||||||
Senior
subordinated notes
|
425,000
|
—
|
—
|
—
|
425,000
|
|||||||||||
Other
long-term debt—capital leases
|
31,048
|
6,925
|
9,743
|
6,351
|
8,029
|
|||||||||||
Interest
on long-term debt obligations(1)
|
1,335,063
|
161,313
|
322,625
|
322,625
|
528,500
|
|||||||||||
Operating
lease obligations
|
187,804
|
25,015
|
40,797
|
33,157
|
88,835
|
|||||||||||
Purchase
obligations(2)
|
61,504
|
61,504
|
—
|
—
|
—
|
|||||||||||
Totals
|
$
|
3,485,419
|
$
|
261,507
|
$
|
386,665
|
$
|
375,633
|
$
|
2,461,614
|
(1)
|
Based
on long-term debt obligations outstanding as of July 1, 2006 after
giving pro forma effect to the Acquisition.
|
(2)
|
Represents
open purchase commitments for purchases of resin and capital expenditures
in the normal course of operations.
|
($
in millions)
|
2001
|
2002
|
2003
|
2004
|
2005
|
|||||||||||
Open
Top
|
$
|
329.3
|
$
|
360.4
|
$
|
404.6
|
$
|
659.2
|
$
|
775.7
|
||||||
Closed
Top
|
132.4
|
133.9
|
147.3
|
155.0
|
394.0
|
|||||||||||
Total
Net Sales
|
$
|
461.7
|
$
|
494.3
|
$
|
551.9
|
$
|
814.2
|
$
|
1,169.7
|
Location
|
Square Footage
|
Use
|
Owned/Leased
|
Evansville,
IN
|
552,000
|
Headquarters and manufacturing
|
Owned
|
Evansville,
IN
|
223,000
|
Manufacturing
|
Leased
|
Henderson,
NV
|
175,000
|
Manufacturing
|
Owned
|
Iowa
Falls, IA
|
100,000
|
Manufacturing
|
Owned
|
Charlotte,
NC
|
150,000
|
Manufacturing
|
Owned
|
Lawrence,
KS
|
424,000
|
Manufacturing
|
Owned
|
Suffolk,
VA
|
110,000
|
Manufacturing
|
Owned
|
Monroeville,
OH
|
350,000
|
Manufacturing
|
Owned
|
Norwich,
England
|
88,000
|
Manufacturing
|
Owned
|
Woodstock,
IL
|
170,000
|
Manufacturing
|
Owned
|
Streetsboro,
OH
|
140,000
|
Manufacturing
|
Owned
|
Baltimore,
MD
|
244,000
|
Manufacturing
|
Owned
|
Milan,
Italy
|
125,000
|
Manufacturing
|
Leased
|
Chicago,
IL
|
472,000
|
Manufacturing
|
Leased
|
Richmond,
IN
|
160,000
|
Manufacturing
|
Owned
|
Syracuse,
NY
|
215,000
|
Manufacturing
|
Leased
|
Phoenix,
AZ
|
266,000
|
Manufacturing
|
Leased
|
Ahoskie,
NC
|
150,000
|
Manufacturing
|
Owned
|
Bowling
Green, KY
|
168,000
|
Manufacturing
|
Leased
|
Sarasota,
FL
|
74,000
|
Manufacturing
|
Owned
|
Jackson,
TN
|
211,000
|
Manufacturing
|
Leased
|
Anaheim,
CA
|
248,000
|
Manufacturing
|
Leased
|
Cranbury,
NJ
|
204,000
|
Manufacturing
|
Leased
|
Easthampton,
MA
|
210,000
|
Manufacturing
|
Leased
|
Oxnard,
CA
|
110,000
|
Manufacturing
|
Leased
|
Toluca,
Mexico
|
172,000
|
Manufacturing
|
Leased
|
5,511,000
|
Name
|
Age
|
Title
|
Ira
G. Boots
|
52
|
President,
Chief Executive Officer and Director
|
R.
Brent Beeler
|
53
|
Executive
Vice President and Chief Operating Officer
|
James
M. Kratochvil
|
50
|
Executive
Vice President, Chief Financial Officer, Treasurer and
Secretary
|
Anthony
M. Civale
|
32
|
Director
|
Patrick
J. Dalton
|
38
|
Director
|
Donald
C. Graham
|
73
|
Director
|
Steven
C. Graham
|
47
|
Director
|
Joshua
J. Harris
|
41
|
Director
|
Robert
V. Seminara
|
34
|
Director
|
Name
|
Age
|
Title
|
Ira
G. Boots
|
52
|
President,
Chief Executive Officer and Director
|
R.
Brent Beeler
|
53
|
Executive
Vice President and Chief Operating Officer
|
James
M. Kratochvil
|
50
|
Executive
Vice President, Chief Financial Officer, Treasurer and
Secretary
|
Anthony
M. Civale
|
32
|
Director
|
Robert
V. Seminara
|
34
|
Director
|
Annual
Compensation
|
Long
Term
Compensation
|
||||
Name
and Principal Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Securities
Underlying
Options
(#)
|
Other
Compensation
(1)
|
Ira
G. Boots
President
and Chief Executive Officer
|
2005
|
$
455,749
|
$
299,323
|
—
|
$
15,494
|
2004
|
442,226
|
214,200
|
—
|
15,494
|
|
2003
|
432,836
|
150,231
|
2,383
|
12,343
|
|
James
M. Kratochvil
Executive
Vice President, Chief Financial Officer, Treasurer and
Secretary
|
2005
|
$
293,373
|
$
192,422
|
—
|
$
11,685
|
2004
|
284,909
|
137,700
|
—
|
11,576
|
|
2003
|
278,867
|
96,577
|
1,356
|
10,151
|
|
R.
Brent Beeler
Executive
Vice President and Chief Operating Officer
|
2005
|
$
382,828
|
$
236,325
|
3,000
|
$
5,034
|
2004
|
345,995
|
156,503
|
—
|
4,028
|
|
2003
|
313,761
|
111,476
|
1,356
|
3,105
|
|
Randall
J. Hobson
President
- Closed Top Division
|
2005
|
$
177,805
|
$
95,900
|
1,256
|
$
3,021
|
2004
|
140,374
|
66,634
|
—
|
2,774
|
|
2003
|
133,662
|
46,734
|
432
|
2,733
|
|
G.
Adam Unfried
President
- Open Top Division
|
2005
|
$
183,447
|
$
90,420
|
1,256
|
$
3,262
|
2004
|
132,556
|
53,550
|
—
|
3,244
|
|
2003
|
107,436
|
35,471
|
432
|
2,660
|
Individual
Grants
|
Exercise
Price($)
|
Expiration
Date
|
Potential
Realizable
Value
at Assumed
Rates
of Stock Price
Appreciation
for
Option
Term
|
|||
Number
of
Securities
Underlying
Options
Granted
(#)
|
%
of Total
Options
Granted
to
Employees
per
Fiscal
Year
|
|||||
Name
|
5%($)
|
10%($)
|
||||
Ira
Boots(1)
|
12,141
|
2.4
|
100
|
9/19/2016
|
763,547
|
1,934,911
|
Ira
Boots(2)
|
12,141
|
2.4
|
100
|
9/19/2016
|
763,547
|
1,934,911
|
Ira
Boots(3)
|
12,141
|
2.4
|
100
|
9/19/2016
|
—
|
—
|
James
M. Kratochvil(1)
|
6,954
|
1.4
|
100
|
9/19/2016
|
437,337
|
1,108,259
|
James
M. Kratochvil(2)
|
6,954
|
1.4
|
100
|
9/19/2016
|
437,337
|
1,108,259
|
James
M. Kratochvil(3)
|
6,954
|
1.4
|
100
|
9/19/2016
|
—
|
—
|
R.
Brent Beeler(1)
|
6,954
|
1.4
|
100
|
9/19/2016
|
437,337
|
1,108,259
|
R.
Brent Beeler(2)
|
6,954
|
1.4
|
100
|
9/19/2016
|
437,337
|
1,108,259
|
R.
Brent Beeler(3)
|
6,954
|
1.4
|
100
|
9/19/2016
|
—
|
—
|
Randall
J. Hobson(1)
|
4,560
|
0.9
|
100
|
9/19/2016
|
286,778
|
726,727
|
Randall
J. Hobson(2)
|
4,560
|
0.9
|
100
|
9/19/2016
|
286,778
|
726,727
|
Randall
J. Hobson(3)
|
4,560
|
0.9
|
100
|
9/19/2016
|
—
|
—
|
G.
Adam Unfried(1)
|
4,560
|
0.9
|
100
|
9/19/2016
|
286,778
|
726,727
|
G.
Adam Unfried(2)
|
4,560
|
0.9
|
100
|
9/19/2016
|
286,778
|
726,727
|
G.
Adam Unfried(3)
|
4,560
|
0.9
|
100
|
9/19/2016
|
—
|
—
|
(1)
|
Represents
options granted on September 20, 2006, which (i) have an exercise
price
fixed at $100 per share, which was the fair market value of a share
of
Berry Plastics Group’s common stock on the date of grant, and (ii) vest
and become exercisable over a five year period beginning on January
1,
2007 and ending on the last day of 2011 based on continued service
with
the Company.
|
(2)
|
Represents
options granted on September 20, 2006, which (i) have an exercise
price
fixed at $100 per share, which was the fair market value of a share
of
Berry Plastics Group’s common stock on the date of grant, and (ii) vest
and become exercisable based on the achievement by Holdings of certain
financial targets, or if such targets are not achieved, based on
continued
service with the Company.
|
(3)
|
Represents
options granted on September 20, 2006, which (i) have an exercise
price
which commenced at $100 per share, which was the fair market value
of a
share of Berry Plastics Group’s common stock on the date of grant and will
increase at the rate of 15% per year during the term of the option,
and
(ii) vest and become exercisable over a five year period beginning
on
January 1, 2007 and ending on the last day of 2011 based on continued
service with the Company.
|
Name
and Address of Owner(1)
|
|
Number
of Shares of
Common
Stock(1)
|
Percent
of Class
|
||
Apollo
Investment Fund VI, L.P.(2)
|
|
3,559,930
|
|
72.1
|
%
|
AP
Berry Holdings, LLC(3)
|
|
1,641,269
|
|
33.3
|
%
|
Graham
Berry Holdings, LP(4)
|
|
500,000
|
|
10.1
|
%
|
Ira
G. Boots(5)
|
119,395
|
2.4
|
%
|
||
R.
Brent Beeler(5)
|
68,010
|
1.4
|
%
|
||
James
M. Kratochvil(5)
|
67,787
|
1.4
|
%
|
||
Anthony
M. Civale(6),(7)
|
1,334
|
*
|
|||
Patrick
J. Dalton(6),(7)
|
1,334
|
*
|
|||
Donald
C. Graham(6),(8)
|
1,334
|
*
|
|||
Steven
C. Graham(6),(8)
|
1,334
|
*
|
|||
Joshua
J. Harris(6),(7)
|
1,334
|
*
|
|||
Robert
V. Seminara(6),(7)
|
1,334
|
*
|
|||
All
directors and executive officers as
a group (9 persons)
(6)
|
263,196
|
5.3
|
%
|
(1) |
The
amounts and percentages of common stock beneficially owned are reported
on
the basis of regulations of the SEC governing the determination of
beneficial ownership of securities. Under the rules of the SEC, a
person
is deemed to be a “beneficial owner” of a security if that person has or
shares voting power, which includes the power to vote or direct the
voting
of such security, or investment power, which includes the power to
dispose
of or to direct the disposition of such security. A person is also
deemed
to be a beneficial owner of any securities of which that person has
a
right to acquire beneficial ownership within 60 days. Securities
that can
be so acquired are deemed to be outstanding for purposes of computing
such
person’s ownership percentage, but not for purposes of computing any other
person’s percentage. Under these rules, more than one person may be deemed
beneficial owner of the same securities and a person may be deemed
to be a
beneficial owner of securities as to which such person has no economic
interest. Except as otherwise indicated in these footnotes, each
of the
beneficial owners has, to our knowledge, sole voting and investment
power
with respect to the indicated shares of common
stock.
|
(2) |
Represents
all equity interests of Berry Plastics Group held of record by controlled
affiliates of Apollo Investment Fund VI, L.P., including AP Berry
Holdings, LLC and BPC Co-Investment Holdings, LLC. Apollo Management
VI,
L.P. has the voting and investment power over the shares held on
behalf of
Apollo. Each of Messrs. Civale,
|
Dalton,
Harris, and Seminara, who have relationships with Apollo, disclaim
beneficial ownership of any shares of Berry Plastics Group that may
be
deemed beneficially owned by Apollo Management VI, L.P., except to
the
extent of any pecuniary interest therein. Each of Apollo Management
VI,
L.P., AP Berry Holdings, LLC and its affiliated investment funds
disclaims
beneficial ownership of any such shares in which it does not have
a
pecuniary interest. The address of Apollo Management VI, L.P., Apollo
Investment Fund VI, L.P., and AP Berry Holdings LLC is c/o Apollo
Management, L.P., 9 West 57th Street, New York, New York
10019.
|
(3) |
The
address of AP Berry Holdings LLC is c/o Apollo Management, L.P.,
9 West
57th Street, New York, New York 10019.
|
(4) |
Represents
all equity interests of Berry Plastics Group held of record by controlled
affiliates of Graham Berry Holdings, LLC. Graham Partners II, L.P.
has the
voting and investment power over the shares held by Graham Berry
Holdings,
LLC. Each of Messrs. Steven Graham and Donald Graham, who have
relationships with Graham Partners II, L.P., disclaim beneficial
ownership
of any shares of Berry Plastics Group that may be deemed beneficially
owned by Graham Partners II, L.P. except to the extent of any pecuniary
interest therein. Each of Graham Partners II, L.P. and its affiliates
disclaims beneficial ownership of any such shares in which it does
not
have a pecuniary interest. The address of Graham Partners II, L.P.
and
Graham Berry Holdings, LLC is 3811 West Chester Pike, Building 2,
Suite
200 Newton Square, Pennsylvania 19073.
|
(5) |
The
address of Messrs. Boots, Beeler and Kratochvil is c/o Berry Plastics
Holding Corporation, 101 Oakley Street, Evansville, Indiana
47710
|
(6) |
Includes
1,334 shares underlying options that are vested or scheduled to vest
within 60 days of September 20, 2006 for each of Messrs. Civale,
Dalton,
Donald Graham, Steven Graham, Harris and
Seminara.
|
(7) |
The
address of Messrs. Civale, Harris, Seminara and Dalton is c/o Apollo
Management, L.P., 9 West 57th Street, New York, New York
10019.
|
(8) |
The
address of Messrs. Steven Graham and Donald Graham is c/o Graham
Partners
II, L.P. is 3811 West Chester Pike, Building 2, Suite 200 Newton
Square,
Pennsylvania 19073.
|
· |
$675.0
million in term B loans that mature on September 20, 2013, all of
which
has been drawn in connection with the consummation of the Acquisition;
and
|
· |
a
$200.0 million revolving credit facility, that matures on September
20,
2012, $20.0 million of which has been drawn in connection with the
consummation of the Acquisition, which includes borrowing capacity
available for letters of credit and for borrowings on same-day notice,
referred to as swingline loans.
|
· |
beginning
with our first full fiscal year after the closing, 50% (which percentage
is subject to a minimum of 0% upon the achievement of certain leverage
ratios) of excess cash flow (as defined in the credit agreement)
less the
amount of certain voluntary prepayments as described in the credit
agreement;
|
· |
so
long as our total net first lien leverage ratio is above a certain
threshold, 100% of the net cash proceeds of any incurrence of debt
other
than excluded debt issuances (as defined in the credit agreement);
and
|
· |
so
long as our total net first lien leverage ratio is above a certain
threshold, 100% of the net cash proceeds of all non-ordinary course
asset
sales and casualty and condemnation events, if we do not reinvest
or
commit to reinvest those proceeds
|
· |
in
assets to be used in our business or to make certain other permitted
investments within 15 months.
|
· |
a
first priority pledge of all of our equity interests by Holdings,
a pledge
of 100% of the equity interests of all U.S. Guarantors and a first
priority pledge of 65% of the voting
equity interests of certain of our foreign subsidiaries; and
|
· |
a
first priority security interest in substantially all of our tangible
and
intangible assets as well as those of Berry Plastics Group and each
U.S.
Guarantor.
|
· |
the
exchange notes will have been registered under the Securities
Act;
|
· |
the
exchange notes will not contain transfer restrictions and registration
rights that relate to the outstanding notes;
and
|
· |
the
exchange notes will not contain provisions relating to the payment
of
additional interest to the holders of the outstanding notes under
the
circumstances related to the timing of the exchange
offer.
|
Period
|
Redemption Price
|
|
2010
|
104.438%
|
|
2011
|
102.219%
|
|
2012
and thereafter
|
100.000%
|
|
Period
|
Redemption Price
|
2008
|
102.000%
|
2009
|
101.000%
|
2010
and thereafter
|
100.000%
|
(1) |
if
the First Lien Agent shall desire to permit the use of cash collateral
or
to permit the Issuer or any Note Guarantor to obtain financing under
Section 363 or Section 364 of Title 11 of the United States Code
or any similar provision in any Bankruptcy Law (“DIP
Financing”), then
the Trustee and the holders agree not to
|
object
to such use of cash collateral or DIP Financing and will not request
adequate protection or any other relief in connection therewith (except
to
the extent permitted by the clause 5 below) and, to the extent the
Liens
securing the First Priority Lien Obligations are subordinated or
pari
passu with such DIP Financing, will subordinate its Liens in the
Collateral to such DIP Financing (and all Obligations relating thereto)
on
the same basis as they are subordinated to the First Priority Lien
Obligations;
|
(2) |
they
will not object to, and will not otherwise contest any motion for
relief
from the automatic stay or from any injunction against foreclosure
or
enforcement in respect of the First Priority Lien Obligations made
by the
First Lien Agent or any holder of such obligations;
|
(3) |
they
will not object to, and will not otherwise contest any order relating
to a
sale of assets of the Issuer or any Note Guarantor for which the
First
Lien Agent has consented that provides, to the extent the sale is
to be
free and clear of Liens, that the Liens securing the First Priority
Lien
Obligations and the notes will attach to the proceeds of the sale
on the
same basis of priority as the existing Liens in accordance with the
Intercreditor Agreement;
|
(4) |
until
the Discharge of Senior Lender Claims, none of them will seek relief
from
the automatic stay or any other stay in any insolvency or liquidation
proceeding in respect of the Collateral, without the prior written
consent
of the First Lien Agent and the required lenders under the Credit
Agreement;
|
(5) |
none
of them shall contest (or support any other Person contesting)
(a) any request by the First Lien Agent or the holders of First
Priority Lien Obligations for adequate protection or (b) any
objection by the First Lien Agent or the holders of First Priority
Lien
Obligations to any motion, relief, action or proceeding based on
the First
Lien Agent’s or the holders of First Priority Lien Obligations’ claiming a
lack of adequate protection. Notwithstanding the foregoing, in any
insolvency or liquidation proceeding, (i) if the holders of First
Priority Lien Obligations (or any subset thereof) are granted adequate
protection in the form of additional collateral in connection with
any DIP
Financing or use of cash collateral under Section 363 or
Section 364 of Title 11 of the United States Bankruptcy Code or any
similar law, then the Trustee (A) may seek or request adequate protection
in the form of a replacement Lien on such additional collateral,
which
Lien is subordinated to the Liens securing the First Priority Lien
Obligations and such DIP Financing (and all Obligations relating
thereto)
on the same basis as the other Liens securing the notes are so
subordinated to the Liens securing First Priority Lien Obligations
under
the Intercreditor Agreement and (B) agrees that it will not seek
or
request, and will not accept, adequate protection in any other form,
and
(ii) in the event the Trustee seeks or requests adequate protection
and such adequate protection is granted in the form of additional
collateral, then the Trustee and the noteholders agree that the holders
of
the First Priority Lien Obligations shall also be granted a senior
Lien on
such additional collateral as security for the applicable First Priority
Lien Obligations and any such DIP Financing and that any Lien on
such
additional collateral securing the notes shall be subordinated to
the
Liens on such collateral securing the First Priority Lien Obligations
and
any such DIP Financing (and all Obligations relating thereto) and
any
other Liens granted to the holders of First Priority Lien Obligations
as
adequate protection on the same basis as the other Liens securing
the
notes are
so
subordinated to such Liens securing First Priority Lien Obligations
under
the Intercreditor Agreement; and
|
(6) |
until
the Discharge of Senior Lender Claims has occurred, the Trustee,
on behalf
of itself and each noteholder, (i) will not assert or enforce any
claim
under Section 506(c) of the United States Bankruptcy Code senior to
or on a parity with the Liens securing the First Priority Lien Obligations
for costs or expenses of preserving or disposing of any collateral,
and
(ii) will waive any claim it may have arising out of the election
by any
holder of First Priority Lien Obligations of the application of Section
1111(b)(2) of the United States Bankruptcy Code.
|
(7) |
upon
the Discharge of Senior Lender Claims and concurrent release of all
other
Liens on such property or assets securing First Priority Lien Obligations
(including all commitments and letters of credit thereunder); provided,
however,
that if the Issuer or any Note Guarantor subsequently incurs First
Priority Lien Obligations that are secured by Liens on property or
assets
of the Issuer or any Note Guarantor of the type constituting the
Collateral and the related Liens are incurred in reliance on clause
(6)(B) of the definition of Permitted Liens, then the Issuer and its
Restricted Subsidiaries will be required to reinstitute the security
arrangements with respect to the Collateral in favor of the notes,
which,
in the case of any such subsequent First Priority Lien Obligations,
will
be second priority Liens on the Collateral securing such First Priority
Lien Obligations to the same extent provided by the Security Documents
and
on the terms and conditions of the security documents relating to
such
First Priority Lien Obligations, with the second priority Lien held
either
by the administrative agent, collateral agent or other representative
for
such First Priority Lien Obligations or by a collateral agent or
other
representative designated by the Issuer to hold the second priority
Liens
for the benefit of the holders of the notes and subject to an
intercreditor agreement that provides the administrative agent or
collateral agent substantially the same rights and powers as afforded
under the Intercreditor Agreement;
|
(8) |
to
enable us to consummate the disposition of such property or assets
to the
extent not prohibited under the covenant described under “—Certain
Covenants—Asset Sales”;
|
(9) |
in
the case of a Note Guarantor that is released from its Note Guarantee
with
respect to the notes, the release of the property and assets of such
Note
Guarantor; or
|
(10) |
as
described under “—Amendments and Waivers” below.
|
(1) |
remain
in full force and effect until payment in full of all the Guaranteed
Obligations;
|
(2) |
subject
to the next succeeding paragraph, be binding upon each such Note
Guarantor
and its successors; and
|
(3) |
inure
to the benefit of and be enforceable by the Trustee, the holders
and their
successors, transferees and assigns.
|
(1)
|
(a)
|
the
sale, disposition or other transfer (including through merger or
consolidation) of the Capital Stock (including any sale, disposition
or
other transfer following which the applicable Note Guarantor is
no longer
a Restricted Subsidiary), of the applicable Note Guarantor if such
sale,
disposition or other transfer is made in compliance with the
Indenture,
|
(b)
|
the
Issuer designating such Note Guarantor to be an Unrestricted Subsidiary
in
accordance with the provisions set forth under “—Certain
Covenants—Limitation on Restricted Payments” and the definition of
“Unrestricted Subsidiary,”
|
(c)
|
in
the case of any Restricted Subsidiary that after September 20,
2006, is
required to guarantee the notes pursuant to the covenant described
under
“—Certain Covenants—Future Note Guarantors,” the release or discharge of
the guarantee by such Restricted Subsidiary of Indebtedness of
the Issuer
or any Restricted Subsidiary of the Issuer or such Restricted Subsidiary
or the repayment of the Indebtedness or Disqualified Stock, in
each case,
which resulted in the obligation to guarantee the notes, and
|
(d)
|
the
Issuer’s exercise of its legal defeasance option or covenant defeasance
option as described under “—Defeasance,” provided,
however,
that in the case of this clause (4), no floating rate notes are then
outstanding, or if the Issuer’s obligations under the Indenture are
discharged in accordance with the terms of the Indenture; and
|
(2)
|
in
the case of clause (1)(a) above, such Note Guarantor is released from
its guarantees, if any, of, and all pledges and security, if any,
granted
in connection with, the Credit Agreement and any other Indebtedness
of the
Issuer or any Restricted Subsidiary of the Issuer.
|
(1) |
the
sale, lease or transfer, in one or a series of related transactions,
of
all or substantially all the assets of the Issuer and its Subsidiaries,
taken as a whole, to a Person other than any of the Permitted Holders;
or
|
(2) |
the
Issuer becomes aware (by way of a report or any other filing pursuant
to
Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) of the acquisition by any Person or group (within the
meaning
of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or
any successor provision), including any group acting for the purpose
of
acquiring, holding or disposing of securities (within the meaning
of Rule
13d-5(b)(1) under the Exchange Act), other than any of the Permitted
Holders, in a single transaction or in a related series of transactions,
by way of merger, consolidation or other business combination or
purchase
of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision), of more than 50% of the
total
voting power of the Voting Stock of the Issuer or any direct or indirect
parent of the Issuer.
|
(1) |
repay
in full all Bank Indebtedness or, if doing so will allow the purchase
of
notes, offer to repay in full all Bank Indebtedness and repay the
Bank
Indebtedness of each lender who has accepted such offer; or
|
(2) |
obtain
the requisite consent under the agreements governing the Bank Indebtedness
to permit the repurchase of the notes as provided for in the immediately
following paragraph.
|
(1) |
that
a Change of Control has occurred and that such holder has the right
to
require the Issuer to repurchase such holder’s notes at a repurchase price
in cash equal to 101% of the principal amount thereof, plus accrued
and
unpaid interest and additional interest, if any, to the date of repurchase
(subject to the right of holders of record on a record date to receive
interest on the relevant interest payment date);
|
(2) |
the
circumstances and relevant facts and financial information regarding
such
Change of Control;
|
(3) |
the
repurchase date (which shall be no earlier than 30 days nor later
than 60
days from the date such notice is mailed); and
|
(4) |
the
instructions determined by the Issuer, consistent with this covenant,
that
a holder must follow in order to have its notes purchased.
|
(1)
|
“—Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and
Preferred Stock”;
|
(7)
|
clause
(4) of the first paragraph of “—Merger, Amalgamation, Consolidation
or Sale of All or Substantially All Assets.”
|
(2)
|
the
Issuer will not permit any of its Restricted Subsidiaries (other
than a
Note Guarantor) to issue any shares of Preferred Stock;
|
(a)
|
the
Incurrence by the Issuer or its Restricted Subsidiaries of Indebtedness
under the Credit Agreement and the issuance and creation of letters
of
credit and bankers’ acceptances thereunder (with letters of credit and
bankers’ acceptances being deemed to have a principal amount equal to the
face amount thereof) in the aggregate principal amount of
$875.0 million plus an aggregate additional principal amount
outstanding at any one time that does not cause the Secured Indebtedness
Leverage Ratio of the Issuer to exceed 4.00 to 1.00, determined
on a pro
forma basis (including a pro forma application of the net proceeds
therefrom);
|
(b)
|
the
Incurrence by the Issuer and the Note Guarantors of Indebtedness
represented by (i) the notes and the Note Guarantees and
(ii) the Senior Subordinated Notes and the related guarantees
thereof;
|
(c)
|
Indebtedness
existing on the Issue Date (other than Indebtedness described in
clauses
(a) and (b));
|
(d)
|
Indebtedness
(including Capitalized Lease Obligations) Incurred by the Issuer
or any of
its Restricted Subsidiaries, Disqualified Stock issued by the Issuer
or
any of its Restricted Subsidiaries and Preferred Stock issued by
any
Restricted Subsidiaries of the Issuer to finance (whether prior
to or
within 270 days after) the purchase, lease, construction or improvement
of
property (real or personal) or equipment (whether through the direct
purchase of assets or the Capital Stock of any Person owning such
assets
(but no other material assets));
|
(e)
|
Indebtedness
Incurred by the Issuer or any of its Restricted Subsidiaries constituting
reimbursement obligations with respect to letters of credit and
bank
guarantees issued in the ordinary course of business, including
without
limitation letters of credit in respect of workers’ compensation claims,
health, disability or other benefits to employees or former employees
or
their families or property, casualty or liability insurance or
self-insurance, and letters of credit in connection with the maintenance
of, or pursuant to the requirements of, environmental or other
permits or
licenses from governmental authorities, or other Indebtedness with
respect
to reimbursement type obligations regarding workers’ compensation claims;
|
(f)
|
Indebtedness
arising from agreements of the Issuer or a Restricted Subsidiary
providing
for indemnification, adjustment of purchase price or similar obligations,
in each case, Incurred in connection with the Acquisition or any
other
acquisition or disposition of any business, assets or a Subsidiary
of the
Issuer in accordance with the terms of the Indenture, other than
guarantees of Indebtedness Incurred by any Person acquiring all
or any
portion of such business, assets or Subsidiary for the purpose
of
financing such acquisition;
|
(g)
|
Indebtedness
of the Issuer to a Restricted Subsidiary; provided
that any such Indebtedness owed to a Restricted Subsidiary that
is not a
Note Guarantor is subordinated in right of payment to the obligations
of
the Issuer under the notes; provided,
further,
that any subsequent issuance or transfer of any Capital Stock or
any other
event which results in any such Restricted Subsidiary ceasing to
be a
Restricted Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Issuer or another Restricted Subsidiary)
shall
be deemed, in each case, to be an Incurrence of such Indebtedness;
|
(h)
|
shares
of Preferred Stock of a Restricted Subsidiary issued to the Issuer
or
another Restricted Subsidiary; provided
that any subsequent issuance or transfer of any Capital Stock or
any other
event which results in any Restricted Subsidiary that holds such
shares of
Preferred Stock of another Restricted Subsidiary ceasing to be
a
Restricted Subsidiary or any other subsequent transfer of any such
shares
of Preferred Stock (except to the Issuer or another Restricted
Subsidiary)
shall be deemed, in each case, to be an issuance of shares of Preferred
Stock;
|
(i)
|
Indebtedness
of a Restricted Subsidiary to the Issuer or another Restricted
Subsidiary;
provided
that if a Note Guarantor incurs such Indebtedness to a Restricted
Subsidiary that is not a Note Guarantor, such Indebtedness is subordinated
in right of payment to the Note Guarantee of such Note Guarantor;
provided,
further,
that any subsequent issuance or transfer of any Capital Stock or
any other
event which results in any Restricted Subsidiary holding such Indebtedness
ceasing to be a Restricted Subsidiary or any other subsequent transfer
of
any such Indebtedness (except to the Issuer or another Restricted
Subsidiary) shall be deemed, in each case, to be an Incurrence
of such
Indebtedness;
|
(j)
|
Hedging
Obligations that are not incurred for speculative purposes and
either
(1) for the purpose of fixing or hedging interest rate risk with
respect to any Indebtedness that is permitted by the terms of the
Indenture to be outstanding; (2) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges;
or
(3) for the purpose of fixing or hedging commodity price risk
(including resin price risk) with respect to any commodity purchases
or
sales;
|
(k)
|
obligations
in respect of performance, bid, appeal and surety bonds and completion
guarantees provided by the Issuer or any Restricted Subsidiary
in the
ordinary course of business;
|
(l)
|
Indebtedness
or Disqualified Stock of the Issuer or any Restricted Subsidiary
of the
Issuer and Preferred Stock of any Restricted Subsidiary of the
Issuer not
otherwise permitted hereunder in an aggregate principal amount,
which
when
|
(m)
|
any
guarantee by the Issuer or a Note Guarantor
of
Indebtedness or other obligations of the Issuer or any of its Restricted
Subsidiaries so long as the Incurrence of such Indebtedness Incurred
by
the Issuer or such Restricted Subsidiary is permitted under the
terms of
the Indenture; provided
that if such Indebtedness is by its express terms subordinated
in right of
payment to the notes or the Note Guarantee of such Restricted Subsidiary,
as applicable, any such guarantee of such Note Guarantor with respect
to
such Indebtedness shall be subordinated in right of payment to
such Note
Guarantor’s Note Guarantee with respect to the notes substantially to the
same extent as such Indebtedness is subordinated to the notes or
the Note
Guarantee of such Restricted Subsidiary, as applicable;
|
(n)
|
the
Incurrence by the Issuer or any of its Restricted Subsidiaries
of
Indebtedness or Disqualified Stock or Preferred Stock of a Restricted
Subsidiary of the Issuer which serves to refund, refinance or defease
any
Indebtedness Incurred or Disqualified Stock or Preferred Stock
issued as
permitted under the first paragraph of this covenant and clauses
(b), (c),
(d), (n), (o), (s) and (t) of this paragraph or any
Indebtedness, Disqualified Stock or Preferred Stock Incurred to
so refund
or refinance such Indebtedness, Disqualified Stock or Preferred
Stock,
including any Indebtedness, Disqualified Stock or Preferred Stock
Incurred
to pay premiums and fees in connection therewith (subject to the
following
proviso, “Refinancing Indebtedness”) prior to its respective maturity;
provided,
however,
that such Refinancing Indebtedness:
|
(1)
|
has
a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is Incurred which is not less than the remaining Weighted
Average Life to Maturity of the Indebtedness, Disqualified Stock
or
Preferred Stock being refunded or refinanced;
|
(2)
|
has
a Stated Maturity which is not earlier than the earlier of (x) the
Stated Maturity of the Indebtedness being refunded or refinanced
or
(y) 91 days following the maturity date of the notes;
|
(3)
|
to
the extent such Refinancing Indebtedness refinances (a) Indebtedness
junior to the notes or the Note Guarantee of such Restricted Subsidiary,
as applicable, such Refinancing Indebtedness is junior to the notes
or the
Note Guarantee of such Restricted Subsidiary, as applicable, or
(b) Disqualified Stock or Preferred Stock, such Refinancing
Indebtedness is Disqualified Stock or Preferred Stock;
|
(4)
|
is
Incurred in an aggregate amount (or if issued with original issue
discount, an aggregate issue price) that is equal to or less than
the
aggregate amount (or if issued with original issue discount, the
aggregate
accreted
value) then outstanding of the Indebtedness being refinanced plus
premium,
fees and expenses Incurred in connection with such refinancing;
|
(5)
|
shall
not include (x) Indebtedness of a Restricted Subsidiary of the Issuer
that is not a Note Guarantor that refinances Indebtedness of the
Issuer or
a Restricted Subsidiary that is a Note Guarantor, or (y) Indebtedness
of the Issuer or a Restricted Subsidiary that refinances Indebtedness
of
an Unrestricted Subsidiary; and
|
(6)
|
in
the case of any Refinancing Indebtedness Incurred to refinance
Indebtedness outstanding under clause (d) or (t), shall be deemed to
have been Incurred and to be outstanding under such clause (d) or
(t), as applicable, and not this clause (n) for purposes of
determining amounts outstanding under such clauses (d) and (t);
provided,
further,
that subclauses (1) and (2) of this clause (n) will not
apply to any refunding or refinancing of any Secured Indebtedness
constituting First Priority Lien Obligations.
|
(o)
|
Indebtedness,
Disqualified Stock or Preferred Stock of (x) the Issuer or any of its
Restricted Subsidiaries incurred to finance an acquisition or
(y) Persons that are acquired by the Issuer or any of its Restricted
Subsidiaries or merged with or into the Issuer or any of its Restricted
Subsidiaries in accordance with the terms of the Indenture; provided,
however,
that after giving effect to such acquisition or merger, either
|
(1)
|
the
Issuer would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in
the first sentence of this covenant; or
|
(2)
|
the
Fixed Charge Coverage Ratio of the Issuer would be greater than
immediately prior to such acquisition or merger;
|
(p)
|
Indebtedness
Incurred by a Receivables Subsidiary in a Qualified Receivables
Financing
that is not recourse to the Issuer or any Restricted Subsidiary
other than
a Receivables Subsidiary (except for Standard Securitization
Undertakings);
|
(q)
|
Indebtedness
arising from the honoring by a bank or other financial institution
of a
check, draft or similar instrument drawn against insufficient funds
in the
ordinary course of business; provided
that such Indebtedness is extinguished within five Business Days
of its
Incurrence;
|
(r)
|
Indebtedness
of the Issuer or any Restricted Subsidiary supported by a letter
of credit
or bank guarantee issued pursuant to the Credit Agreement, in a
principal
amount not in excess of the stated amount of such letter of credit;
|
(s)
|
Contribution
Indebtedness;
|
(t)
|
Indebtedness
of Foreign Subsidiaries; provided,
however,
that the aggregate principal amount of Indebtedness Incurred under
this
clause (t), when aggregated with the principal amount of all other
Indebtedness then outstanding and Incurred pursuant to this
clause (t), does not exceed $25.0 million at any one time
outstanding;
|
(u)
|
Indebtedness
of the Issuer or any Restricted Subsidiary consisting of (x) the
financing of insurance premiums or (y) take-or-pay obligations
contained in supply arrangements, in each case, in the ordinary
course of
business; and
|
(v)
|
Indebtedness
incurred on behalf of, or representing Guarantees of Indebtedness
of,
joint ventures of the Issuer or any Restricted Subsidiary not in
excess,
at any one time outstanding, of $7.5 million.
|
(1)
|
declare
or pay any dividend or make any distribution on account of the
Issuer’s or
any of its Restricted Subsidiaries’ Equity Interests, including any
payment made in connection with any merger, amalgamation or consolidation
involving the Issuer (other than (A) dividends or distributions by
the Issuer payable solely in Equity Interests (other than Disqualified
Stock) of the Issuer; or (B) dividends or distributions by a
Restricted Subsidiary so long as, in the case of any dividend or
distribution payable on or in respect of any class or series of
securities
issued by a Restricted Subsidiary other than a Wholly Owned Restricted
Subsidiary, the Issuer or a Restricted Subsidiary receives at least
its
pro rata share of such dividend or distribution in accordance with
its
Equity Interests in such class or series of securities);
|
(2)
|
purchase
or otherwise acquire or retire for value any Equity Interests of
the
Issuer or any direct or indirect parent of the Issuer;
|
(3)
|
make
any principal payment on, or redeem, repurchase, defease or otherwise
acquire or retire for value, in each case prior to any scheduled
repayment
or
|
(4)
|
make
any Restricted Investment
|
(b)
|
immediately
after giving effect to such transaction on a pro forma basis, the
Issuer
could Incur $1.00 of additional Indebtedness under the provisions
of the
first paragraph of the covenant described under “—Limitation on Incurrence
of Indebtedness and Issuance of Disqualified Stock and Preferred
Stock”;
and
|
(c)
|
such
Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Issuer and its Restricted Subsidiaries
after the Issue Date (including Restricted Payments permitted by
clauses
(1), (4) (only to the extent of one-half of the amounts paid pursuant
to such clause), (6) and (8) of the next succeeding paragraph,
but excluding all other Restricted Payments permitted by the next
succeeding paragraph), is less than the amount equal to the Cumulative
Credit.
|
(1)
|
50%
of the Consolidated Net Income of the Issuer for the period (taken
as one
accounting period, the “Reference Period”) from July 1, 2006 to the
end of the Issuer’s most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment
(or, in the case such Consolidated Net Income for such period is
a
deficit, minus 100% of such deficit), plus
|
(2)
|
100%
of the aggregate net proceeds, including cash and the Fair Market
Value
(as determined in good faith by the Issuer) of property other than
cash,
received by the Issuer after the Issue Date from the issue or sale
of
Equity Interests of the Issuer (excluding Refunding Capital Stock
(as
defined below), Designated Preferred Stock, Excluded Contributions,
Disqualified Stock and the Cash Contribution Amount), including
Equity
Interests issued upon conversion of Indebtedness or Disqualified
Stock or
upon exercise of warrants or options (other than an issuance or
sale to a
Restricted Subsidiary of the Issuer or an employee stock ownership
plan or
trust established by the Issuer or any of its Subsidiaries), plus
|
(3)
|
100%
of the aggregate amount of contributions to the capital of the
Issuer
received in cash and the Fair Market Value (as determined in good
faith by
the Issuer) of property other than cash after the Issue Date (other
than
Excluded
|
(4)
|
the
principal amount of any Indebtedness, or the liquidation preference
or
maximum fixed repurchase price, as the case may be, of any Disqualified
Stock of the Issuer or any Restricted Subsidiary thereof issued
after the
Issue Date (other than Indebtedness or Disqualified Stock issued
to a
Restricted Subsidiary) which has been converted into or exchanged
for
Equity Interests in the Issuer (other than Disqualified Stock)
or any
direct or indirect parent of the Issuer (provided in the case of
any
parent, such Indebtedness or Disqualified Stock is retired or
extinguished), plus
|
(5)
|
100%
of the aggregate amount received by the Issuer or any Restricted
Subsidiary in cash and the Fair Market Value (as determined in
good faith
by the Issuer) of property other than cash received by the Issuer
or any
Restricted Subsidiary from:
|
(A)
|
the
sale or other disposition (other than to the Issuer or a Restricted
Subsidiary of the Issuer) of Restricted Investments made by the
Issuer and
its Restricted Subsidiaries and from repurchases and redemptions
of such
Restricted Investments from the Issuer and its Restricted Subsidiaries
by
any Person (other than the Issuer or any of its Restricted Subsidiaries)
and from repayments of loans or advances which constituted Restricted
Investments (other than in each case to the extent that the Restricted
Investment was made pursuant to clause (7) or (10) of the
succeeding paragraph),
|
(B)
|
the
sale (other than to the Issuer or a Restricted Subsidiary of the
Issuer)
of the Capital Stock of an Unrestricted Subsidiary, or
|
(C)
|
a
distribution or dividend from an Unrestricted Subsidiary, plus
|
(6)
|
in
the event any Unrestricted Subsidiary of the Issuer has been redesignated
as a Restricted Subsidiary or has been merged, consolidated or
amalgamated
with or into, or transfers or conveys its assets to, or is liquidated
into, the Issuer or a Restricted Subsidiary, the Fair Market Value
(as
determined in good faith by the Issuer or, if such Fair Market
Value may
exceed $25.0 million, in writing by an Independent Financial Advisor)
of
the Investment of the Issuer in such Unrestricted Subsidiary at
the time
of such redesignation, combination or transfer (or of the assets
transferred or conveyed, as applicable), after taking into account
any
Indebtedness associated with the Unrestricted Subsidiary so designated
or
combined or any Indebtedness associated with the assets so transferred
or
conveyed (other than in each case to the extent that the designation
of
such Subsidiary as an Unrestricted Subsidiary was made pursuant
to clause
(7) or (10) of the succeeding paragraph or constituted a
Permitted Investment).
|
(1)
|
the
payment of any dividend or distribution within 60 days after the
date of
declaration thereof, if at the date of declaration such payment
would have
complied with the provisions of the Indenture;
|
(2)
|
(a)
|
the
repurchase, retirement or other acquisition of any Equity Interests
(“Retired Capital Stock”) of the Issuer or any direct or indirect parent
of the Issuer or Subordinated Indebtedness of the Issuer, any direct
or
|
(b)
|
the
declaration and payment of accrued dividends on the Retired Capital
Stock
out of the proceeds of the substantially concurrent sale (other
than to a
Subsidiary of the Issuer or to an employee stock ownership plan
or any
trust established by the Issuer or any of its Subsidiaries) of
Refunding
Capital Stock;
|
(3)
|
the
redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness of the Issuer or any Note Guarantor made by exchange
for, or
out of the proceeds of the substantially concurrent sale of, new
Indebtedness of the Issuer or a Note Guarantor which is Incurred
in
accordance with the covenant described under “—Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock” so
long as
|
(a)
|
the
principal amount of such new Indebtedness does not exceed the principal
amount of the Subordinated Indebtedness being so redeemed, repurchased,
acquired or retired for value (plus the amount of any premium required
to
be paid under the terms of the instrument governing the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired
plus any
fees incurred in connection therewith),
|
(b)
|
such
Indebtedness is subordinated to the notes or the related Note Guarantee,
as the case may be, at least to the same extent as such Subordinated
Indebtedness so purchased, exchanged, redeemed, repurchased, acquired
or
retired for value,
|
(c)
|
such
Indebtedness has a final scheduled maturity date equal to or later
than
the earlier of (x) the final scheduled maturity date of the
Subordinated Indebtedness being so redeemed, repurchased, acquired
or
retired or (y) 91 days following the maturity date of the notes, and
|
(d)
|
such
Indebtedness has a Weighted Average Life to Maturity at the time
Incurred
which is not less than the remaining Weighted Average Life to Maturity
of
the Subordinated Indebtedness being so redeemed, repurchased, acquired
or
retired;
|
(4)
|
the
repurchase, retirement or other acquisition (or dividends to any
direct or
indirect parent of the Issuer to finance any such repurchase, retirement
or other acquisition) for value of Equity Interests of the Issuer
or any
direct or indirect parent of the Issuer held by any future, present
or
former employee, director or consultant of the Issuer or any direct
or
indirect parent of the Issuer or any Subsidiary of the Issuer pursuant
to
any management equity plan or stock option plan or any other management
or
employee benefit plan or other agreement or arrangement; provided,
however,
that the aggregate amounts paid under this clause (4) do not exceed
$15.0 million in any calendar year (with unused amounts in any
calendar year being permitted to be carried over for the
two
|
(a)
|
the
cash proceeds received by the Issuer or any of its Restricted Subsidiaries
from the sale of Equity Interests (other than Disqualified Stock)
of the
Issuer or any direct or indirect parent of the Issuer (to the extent
contributed to the Issuer) to members of management, directors
or
consultants of the Issuer and its Restricted Subsidiaries or any
direct or
indirect parent of the Issuer that occurs after the Issue Date
(provided
that the amount of such cash proceeds utilized for any such repurchase,
retirement, other acquisition or dividend will not increase the
amount
available for Restricted Payments under clause (c) of the first
paragraph under “—Limitation on Restricted Payments”); plus
|
(b)
|
the
cash proceeds of key man life insurance policies received by the
Issuer or
any direct or indirect parent of the Issuer (to the extent contributed
to
the Issuer) or the Issuer’s Restricted Subsidiaries after the Issue Date;
|
(5)
|
the
declaration and payment of dividends or distributions to holders
of any
class or series of Disqualified Stock of the Issuer or any of its
Restricted Subsidiaries issued or incurred in accordance with the
covenant
described under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
|
(6)
|
the
declaration and payment of dividends or distributions (a) to holders
of any class or series of Designated Preferred Stock (other than
Disqualified Stock) issued after the Issue Date and (b) to any direct
or indirect parent of the Issuer, the proceeds of which will be
used to
fund the payment of dividends to holders of any class or series
of
Designated Preferred Stock (other than Disqualified Stock) of any
direct
or indirect parent of the Issuer issued after the Issue Date; provided,
however,
that, (x) for the most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding
the date of issuance of such Designated Preferred Stock, after
giving
effect to such issuance (and the payment of dividends or distributions)
on
a pro forma basis, the Issuer would have had a Fixed Charge Coverage
Ratio
of at least 2.00 to 1.00 and (y) the aggregate amount of dividends
declared and paid pursuant to this clause (6) does not exceed the net
cash proceeds actually received by the Issuer from any such sale
of
Designated Preferred Stock (other than Disqualified Stock) issued
after
the Issue Date;
|
(7)
|
Investments
in Unrestricted Subsidiaries having an aggregate Fair Market Value,
taken
together with all other Investments made pursuant to this clause
(7) that are at that time outstanding, not to exceed the greater of
$25.0 million and 1.0% of Total Assets at the time of such Investment
(with the Fair Market Value of each Investment being measured at
the time
made and without giving effect to subsequent changes in value);
|
(8)
|
the
payment of dividends on the Issuer’s common stock (or the payment of
dividends to any direct or indirect parent of the Issuer to fund
the
payment by such direct or indirect parent of the Issuer of dividends
on
such entity’s common
|
(9)
|
Investments
that are made with Excluded Contributions;
|
(10)
|
other
Restricted Payments in an aggregate amount not to exceed the greater
of
$50.0 million and 2.0% of Total Assets at the time made;
|
(11)
|
the
distribution, as a dividend or otherwise, of shares of Capital
Stock of,
or Indebtedness owed to the Issuer or a Restricted Subsidiary of
the
Issuer by, Unrestricted Subsidiaries;
|
(12)
|
the
payment of dividends or other distributions to any direct or indirect
parent of the Issuer in amounts required for such parent to pay
federal,
state or local income taxes (as the case may be) imposed directly
on such
parent to the extent such income taxes are attributable to the
income of
the Issuer and its Restricted Subsidiaries (including, without
limitation,
by virtue of such parent being the common parent of a consolidated
or
combined tax group of which the Issuer and/or its Restricted Subsidiaries
are members);
|
(13)
|
the
payment of dividends, other distributions or other amounts or the
making
of loans or advances by the Issuer, if applicable:
|
(a)
|
in
amounts required for any direct or indirect parent of the Issuer,
if
applicable, to pay fees and expenses (including franchise or similar
taxes) required to maintain its corporate existence, customary
salary,
bonus and other benefits payable to, and indemnities provided on
behalf
of, officers and employees of any direct or indirect parent of
the Issuer,
if applicable, and general corporate overhead expenses of any direct
or
indirect parent of the Issuer, if applicable, in each case to the
extent
such fees and expenses are attributable to the ownership or operation
of
the Issuer, if applicable, and its Subsidiaries;
|
(b)
|
in
amounts required for any direct or indirect parent of the Issuer,
if
applicable, to pay interest and/or principal on Indebtedness the
proceeds
of which have been contributed to the Issuer or any of its Restricted
Subsidiaries and that has been guaranteed by, or is otherwise considered
Indebtedness of, the Issuer Incurred in accordance with the covenant
described under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”; and
|
(c)
|
in
amounts required for any direct or indirect parent of the Issuer
to pay
fees and expenses, other than to Affiliates of the Issuer, related
to any
unsuccessful equity or debt offering of such parent.
|
(14)
|
cash
dividends or other distributions on the Issuer’s Capital Stock used to, or
the making of loans to any direct or indirect parent of the Issuer
to,
fund the Acquisition and the payment of fees and expenses incurred
in
connection with the Acquisition or owed by the Issuer or any direct
or
indirect parent of the Issuer, as the case may be, or Restricted
Subsidiaries of the Issuer to Affiliates, in each case to the extent
permitted by the covenant described under “—Transactions with Affiliates”;
|
(15)
|
repurchases
of Equity Interests deemed to occur upon exercise of stock options
or
warrants if such Equity Interests represent a portion of the exercise
price of such options or warrants;
|
(16)
|
purchases
of receivables pursuant to a Receivables Repurchase Obligation
in
connection with a Qualified Receivables Financing and the payment
or
distribution of Receivables Fees;
|
(17)
|
payments
of cash, or dividends, distributions or advances by the Issuer
or any
Restricted Subsidiary to allow the payment of cash in lieu of the
issuance
of fractional shares upon the exercise of options or warrants or
upon the
conversion or exchange of Capital Stock of any such Person;
|
(18)
|
the
repurchase, redemption or other acquisition or retirement for value
of any
Subordinated Indebtedness pursuant to the provisions similar to
those
described under the captions “—Change of Control” and “—Asset Sales”;
provided
that all notes tendered by holders of the notes in connection with
a
Change of Control or Asset Sale Offer, as applicable, have been
repurchased, redeemed or acquired for value; and
|
(19)
|
any
payments made, including any such payments made to any direct or
indirect
parent of the Issuer to enable it to make payments, in connection
with the
consummation of the Acquisition or as contemplated by the Acquisition
Documents (other than payments to any Permitted Holder or any Affiliate
thereof);
|
(a)
|
(i) pay
dividends or make any other distributions to the Issuer or any
of its
Restricted Subsidiaries (1) on its Capital Stock; or (2) with
respect to any other interest or participation in, or measured
by, its
profits; or (ii) pay any Indebtedness owed to the Issuer or any of
its Restricted Subsidiaries;
|
(b)
|
make
loans or advances to the Issuer or any of its Restricted Subsidiaries;
or
|
(c)
|
sell,
lease or transfer any of its properties or assets to the Issuer
or any of
its Restricted Subsidiaries;
|
(1)
|
contractual
encumbrances or restrictions in effect on the Issue Date, including
pursuant to the Credit Agreement and the other Credit Agreement
Documents;
|
(2)
|
(i) the
Indenture, the notes, the Security Documents and the Intercreditor
Agreement and (ii) the Senior Subordinated Note Purchase Agreement
(as defined under “Description of Other Indebtedness”), the Senior
Subordinated Notes and the indenture governing the Senior Subordinated
Notes;
|
(3)
|
applicable
law or any applicable rule, regulation or order;
|
(4)
|
any
agreement or other instrument relating to Indebtedness of a Person
acquired by the Issuer or any Restricted Subsidiary which was in
existence
at the time of such acquisition (but not created in contemplation
thereof
or to provide all or any portion of the funds or credit support
utilized
to consummate such acquisition), which encumbrance or restriction
is not
applicable to any Person, or the properties or assets of any Person,
other
than the Person, or the property or assets of the Person, so acquired;
|
(5)
|
contracts
or agreements for the sale of assets, including any restriction
with
respect to a Restricted Subsidiary imposed pursuant to an agreement
entered into for the sale or disposition of the Capital Stock or
assets of
such Restricted Subsidiary pending the closing of such sale or
disposition;
|
(6)
|
Secured
Indebtedness otherwise permitted to be Incurred pursuant to the
covenants
described under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock” and “—Liens” that limit the right
of the debtor to dispose of the assets securing such Indebtedness;
|
(7)
|
restrictions
on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business;
|
(8)
|
customary
provisions in joint venture agreements and other similar agreements
entered into in the ordinary course of business;
|
(9)
|
purchase
money obligations for property acquired in the ordinary course
of business
that impose restrictions of the nature discussed in clause (c) above
on the property so acquired;
|
(10)
|
customary
provisions contained in leases, licenses and other similar agreements
entered into in the ordinary course of business that impose restrictions
of the type described in clause (c) above on the property subject to
such lease;
|
(11)
|
any
encumbrance or restriction of a Receivables Subsidiary effected
in
connection with a Qualified Receivables Financing; provided,
however,
that such restrictions apply only to such Receivables Subsidiary;
|
(12)
|
other
Indebtedness, Disqualified Stock or Preferred Stock of any Restricted
Subsidiary of the Issuer (i) that is a Note Guarantor that is
Incurred subsequent to the Issue Date pursuant to the covenant
described
under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock” or (ii) that is Incurred by a
Foreign Subsidiary of the Issuer subsequent to the Issue Date pursuant
to
clause (d), (l) or (t) of the second paragraph of the covenant
described under “—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”;
|
(13)
|
any
Restricted Investment not prohibited by the covenant described
under
“—Limitation on Restricted Payments” and any Permitted Investment; or
|
(14)
|
any
encumbrances or restrictions of the type referred to in clauses
(a),
(b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred
to
in clauses (1) through (13) above; provided
that
such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the
good
faith judgment of the Issuer, no more restrictive with respect
to such
dividend and other payment restrictions than those contained in
the
dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
|
(a)
|
any
liabilities (as shown on the Issuer’s or such Restricted Subsidiary’s most
recent balance sheet or in the notes thereto) of the Issuer or
any
Restricted Subsidiary of the Issuer (other than liabilities that
are by
their terms subordinated to the notes or any Note Guarantee) that
are
assumed by the transferee of any such assets,
|
(b)
|
any
notes or other obligations or other securities or assets received
by the
Issuer or such Restricted Subsidiary of the Issuer from such transferee
that are converted by the Issuer or such Restricted Subsidiary
of the
Issuer into cash within 180 days of the receipt thereof (to the
extent of
the cash received), and
|
(c)
|
any
Designated Non-cash Consideration received by the Issuer or any
of its
Restricted Subsidiaries in such Asset Sale having an aggregate
Fair Market
Value, taken together with all other Designated Non-cash Consideration
received pursuant to this clause (c) that is at that time
outstanding, not to exceed the greater of 2.0% of Total Assets
and $50.0
million at the time of the receipt of such Designated Non-cash
Consideration (with the Fair Market Value of each item of Designated
Non-cash Consideration being measured at the time received and
without
giving effect to subsequent changes in value)
|
(1)
|
to
repay Indebtedness constituting First Priority Lien Obligations
(and, if
the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto), Indebtedness
of
a Foreign Subsidiary or Pari Passu Indebtedness (provided
that if the Issuer or any Note Guarantor shall so reduce Obligations
under
Pari Passu Indebtedness (other than any First Priority Lien Obligation),
the Issuer will equally and ratably reduce Obligations under the
notes
through open-market purchases (provided
that such purchases are at or above 100% of the principal amount
thereof)
or by making an offer (in accordance with the procedures set forth
below
for an Asset Sale Offer) to all holders to purchase at a purchase
price
equal to 100% of the principal amount thereof, plus accrued and
unpaid
interest and additional interest, if any, the pro rata principal
amount of
notes) or Indebtedness of a Restricted Subsidiary that is not a
Note
Guarantor, in each case other than Indebtedness owed to the Issuer
or an
Affiliate of the Issuer,
|
(2)
|
to
make an investment in any one or more businesses (provided that
if such
investment is in the form of the acquisition of Capital Stock of
a Person,
such acquisition results in such Person becoming a Restricted Subsidiary
of the Issuer), assets, or property or capital expenditures, in
each case
used or useful in a Similar Business, or
|
(3)
|
to
make an investment in any one or more businesses (provided that
if such
investment is in the form of the acquisition of Capital Stock of
a Person,
such acquisition results in such Person becoming a Restricted Subsidiary
of the Issuer), properties or assets that replace the properties
and
assets that are the subject of such Asset Sale.
|
(a)
|
such
Affiliate Transaction is on terms that are not materially less
favorable
to the Issuer or the relevant Restricted Subsidiary than those
that could
have been obtained in a comparable transaction by the Issuer or
such
Restricted Subsidiary with an unrelated Person; and
|
(b)
|
with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0
million,
the Issuer delivers to the Trustee a resolution adopted in good
faith by
the majority of the Board of Directors of the Issuer, approving
such
Affiliate Transaction and set forth in an Officers’ Certificate certifying
that such Affiliate Transaction complies with clause (a) above.
|
(1)
|
transactions
between or among the Issuer and/or any of its Restricted Subsidiaries
and
any merger of the Issuer and any direct parent of the Issuer; provided
that such parent shall have no material liabilities and no material
assets
other than cash, Cash Equivalents and the Capital Stock of the
Issuer and
such merger is otherwise in compliance with the terms of the Indenture
and
effected for a bona fide business purpose;
|
(2)
|
Restricted
Payments permitted by the provisions of the Indenture described
above
under the covenant “—Limitation on Restricted Payments” and Permitted
Investments;
|
(3)
|
(x) the
entering into of any agreement (and any amendment or modification
of any
such agreement) to pay, and the payment of, annual management,
consulting,
monitoring and advisory fees to the Sponsors in an aggregate amount
in any
fiscal year not to exceed the greater of (A) $3.0 million and
(B) 1.25% of EBITDA of the Issuer and its Restricted Subsidiaries for
the immediately preceding fiscal year, and out-of-pocket expense
reimbursement; provided,
however,
that any payment not made in any fiscal year may be carried forward
and
paid in the following two fiscal years and (y) the payment of the
present value of all amounts payable pursuant to any agreement
described
in clause 3(x) in connection with the termination of such agreement;
|
(4)
|
the
payment of reasonable and customary fees and reimbursement of expenses
paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Issuer or any Restricted Subsidiary
or any
direct or indirect parent of the Issuer;
|
(5)
|
payments
by the Issuer or any of its Restricted Subsidiaries to the Sponsors
made
for any financial advisory, financing, underwriting or placement
services
or in respect of other investment banking activities, including,
without
limitation, in connection with acquisitions or divestitures, which
payments are (x) made pursuant to certain agreements between the
Issuer and the Sponsors described in this prospectus or (y) approved
by a majority of the Board of Directors of the Issuer in good faith;
|
(6)
|
transactions
in which the Issuer or any of its Restricted Subsidiaries, as the
case may
be, delivers to the Trustee a letter from an Independent Financial
Advisor
stating that such transaction is fair to the Issuer or such Restricted
Subsidiary
|
(7)
|
payments
or loans (or cancellation of loans) to employees or consultants
which are
approved by a majority of the Board of Directors of the Issuer
in good
faith;
|
(8)
|
any
agreement as in effect as of the Issue Date or any amendment thereto
(so
long as any such agreement together with all amendments thereto,
taken as
a whole, is not more disadvantageous to the holders of the notes
in any
material respect than the original agreement as in effect on the
Issue
Date) or any transaction contemplated thereby as determined in
good faith
by senior management or the Board of Directors of the Issuer;
|
(9)
|
the
existence of, or the performance by the Issuer or any of its Restricted
Subsidiaries of its obligations under the terms of, Acquisition
Documents,
any stockholders agreement (including any registration rights agreement
or
purchase agreement related thereto) to which it is a party as of
the Issue
Date, and any transaction, agreement or arrangement described in
this
prospectus and, in each case, any amendment thereto or similar
transactions, agreements or arrangements which it may enter into
thereafter; provided,
however,
that the existence of, or the performance by the Issuer or any
of its
Restricted Subsidiaries of its obligations under, any future amendment
to
any such existing transaction, agreement or arrangement or under
any
similar transaction, agreement or arrangement entered into after
the Issue
Date shall only be permitted by this clause (9) to the extent that
the terms of any such existing transaction, agreement or arrangement
together with all amendments thereto, taken as a whole, or new
transaction, agreement or arrangement are not otherwise more
disadvantageous to the holders of the notes in any material respect
than
the original transaction, agreement or arrangement as in effect
on the
Issue Date;
|
(10)
|
the
execution of the Acquisition and the payment of all fees and expenses
related to the Acquisition, including fees to the Sponsors;
|
(11)
|
(a) transactions
with customers, clients, suppliers or purchasers or sellers of
goods or
services, or transactions otherwise relating to the purchase or
sale of
goods or services, in each case in the ordinary course of business
and
otherwise in compliance with the terms of the Indenture, which
are fair to
the Issuer and its Restricted Subsidiaries in the reasonable determination
of the Board of Directors or the senior management of the Issuer,
or are
on terms at least as favorable as might reasonably have been obtained
at
such time from an unaffiliated party or (b) transactions with joint
ventures or Unrestricted Subsidiaries entered into in the ordinary
course
of business;
|
(12)
|
any
transaction effected as part of a Qualified Receivables Financing;
|
(13)
|
the
issuance of Equity Interests (other than Disqualified Stock) of
the Issuer
to any Person;
|
(14)
|
the
issuances of securities or other payments, awards or grants in
cash,
securities or otherwise pursuant to, or the funding of, employment
arrangements, stock option and stock ownership plans or similar
employee
benefit plans approved by the Board of Directors of the Issuer
or any
direct or indirect parent of the Issuer or of a Restricted Subsidiary
of
the Issuer, as appropriate, in good faith;
|
(15)
|
the
entering into of any tax sharing agreement or arrangement and any
payments
permitted by clause (12) of the second paragraph of the covenant
described under “—Limitation on Restricted Payments”;
|
(16)
|
any
contribution to the capital of the Issuer;
|
(17)
|
transactions
permitted by, and complying with, the provisions of the covenant
described
under “—Merger, Amalgamation, Consolidation or Sale of All or
Substantially All Assets”;
|
(18)
|
transactions
between the Issuer or any of its Restricted Subsidiaries and any
Person, a
director of which is also a director of the Issuer or any direct
or
indirect parent of the Issuer; provided,
however,
that such director abstains from voting as a director of the Issuer
or
such direct or indirect parent, as the case may be, on any matter
involving such other Person;
|
(19)
|
pledges
of Equity Interests of Unrestricted Subsidiaries;
|
(20)
|
any
employment agreements entered into by the Issuer or any of its
Restricted
Subsidiaries in the ordinary course of business; and
|
(21)
|
intercompany
transactions undertaken in good faith (as certified by a responsible
financial or accounting officer of the Issuer in an Officers’ Certificate)
for the purpose of improving the consolidated tax efficiency of
the Issuer
and its Subsidiaries and not for the purpose of circumventing any
covenant
set forth in the Indenture.
|
(1)
|
within
the time period specified in the SEC’s rules and regulations, annual
reports on Form 10-K (or any successor or comparable form) containing
the
information required to be contained therein (or required in such
successor or comparable form),
|
(2)
|
within
the time period specified in the SEC’s rules and regulations, reports on
Form 10-Q (or any successor or comparable form) containing the
information
required to be contained therein (or required in such successor
or
comparable form),
|
(3)
|
promptly
from time to time after the occurrence of an event required to
be therein
reported (and in any event within the time period specified in
the SEC’s
rules and regulations), such other reports on Form 8-K (or any
successor
or comparable form), and
|
(4)
|
any
other information, documents and other reports which the Issuer
would be
required to file with the SEC if it were subject to Section 13 or
15(d) of the Exchange Act;
|
(a)
|
the
rules and regulations of the SEC permit the Issuer and any direct
or
indirect parent of the Issuer to report at such parent entity’s level on a
consolidated basis; and
|
(b)
|
such
parent entity of the Issuer is not engaged in any business in any
material
respect other than incidental to its ownership, directly or indirectly,
of
the capital stock of the Issuer,
|
(a)
|
guarantees
any Indebtedness of the Issuer or any of its Restricted Subsidiaries;
or
|
(b)
|
incurs
any Indebtedness or issues any shares of Disqualified Stock permitted
to
be Incurred or issued pursuant to clauses (a) or (l) of the
second paragraph of the covenant described under “—Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock” or not permitted to be Incurred by such
covenant,
|
(1)
|
the
Issuer is the surviving person or the Person formed by or surviving
any
such consolidation, amalgamation, merger, winding up or conversion
(if
other than the Issuer) or to which such sale, assignment, transfer,
lease,
conveyance or other disposition will have been made is a corporation,
partnership or limited liability company organized or existing
under the
laws of the United States, any state thereof, the District of Columbia,
or
any territory thereof (the Issuer or such Person, as the case may
be,
being herein called the “Successor Company”); provided
that in the case where the surviving Person is not a corporation,
a
co-obligor of the notes is a corporation;
|
(2)
|
the
Successor Company (if other than the Issuer) expressly assumes
all the
obligations of the Issuer under the Indenture, the notes and the
Security
Documents pursuant to supplemental indentures or other documents
or
instruments in form reasonably satisfactory to the Trustee;
|
(3)
|
immediately
after giving effect to such transaction (and treating any Indebtedness
which becomes an obligation of the Successor Company or any of
its
Restricted Subsidiaries as a result of such transaction as having
been
Incurred by the Successor Company or such Restricted Subsidiary
at the
time of such transaction) no Default shall have occurred and be
continuing;
|
(4)
|
immediately
after giving pro forma effect to such transaction, as if such transaction
had occurred at the beginning of the applicable four-quarter period
(and
treating any Indebtedness which becomes an obligation of the Successor
Company or any of its Restricted Subsidiaries as a result of such
transaction as having been Incurred by the Successor Company or
such
Restricted Subsidiary at the time of such transaction), either
|
(a)
|
the
Successor Company would be permitted to Incur at least $1.00 of
additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in
the first sentence of the covenant described under “—Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”; or
|
(b)
|
the
Fixed Charge Coverage Ratio for the Successor Company and its Restricted
Subsidiaries would be greater than such ratio for the Issuer and
its
Restricted Subsidiaries immediately prior to such transaction;
|
(5)
|
each
Note Guarantor, unless it is the other party to the transactions
described
above, shall have by supplemental indenture confirmed that its
Note
Guarantee shall apply to such Person’s obligations under the Indenture and
the notes; and
|
(6)
|
the
Issuer shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger
or
transfer and such supplemental indentures (if any) comply with
the
Indenture.
|
(1)
|
either
(a) such Note Guarantor is the surviving Person or the Person formed
by or surviving any such consolidation, amalgamation or merger
(if other
than such Note Guarantor) or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made is a
corporation, partnership or limited liability company organized
or
existing under the laws of the United States, any state thereof,
the
District of Columbia, or any territory thereof (such Note Guarantor
or
such Person, as the case may be, being herein called the “Successor Note
Guarantor”) and the Successor Note Guarantor (if other than such Note
Guarantor) expressly assumes all the obligations of such Note Guarantor
under the Indenture, such Note Guarantors’ Note Guarantee and the Security
Documents pursuant to a supplemental indenture or other documents
or
instruments in form reasonably satisfactory to the Trustee, or
(b) such sale or disposition or consolidation, amalgamation or merger
is not in violation of the covenant described above under the caption
“—Certain Covenants—Asset Sales”; and
|
(2)
|
the
Successor Note Guarantor (if other than such Note Guarantor) shall
have
delivered or caused to be delivered to the Trustee an Officers’
Certificate and an Opinion of Counsel, each stating that such
consolidation, amalgamation, merger or transfer and such supplemental
indenture (if any) comply with the Indenture.
|
(1)
|
a
default in any payment of interest (including any additional interest)
on
any note of such series when due, continued for 30 days,
|
(2)
|
a
default in the payment of principal or premium, if any, of any
note of
such series when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise,
|
(3)
|
the
failure by the Issuer or any of Restricted Subsidiaries to comply
with the
covenant described under “—Merger, Amalgamation, Consolidation or Sale of
All or Substantially All Assets” above,
|
(4)
|
the
failure by the Issuer or any of Restricted Subsidiaries to comply
for 60
days after notice with its other agreements contained in the notes
of such
series or the Indenture,
|
(5)
|
the
failure by the Issuer or any Significant Subsidiary to pay any
Indebtedness (other than Indebtedness owing to the Issuer or a
Restricted
Subsidiary) within any applicable grace period after final maturity
or the
acceleration of any such Indebtedness by the holders thereof because
of a
default, in each case, if the total amount of such Indebtedness
unpaid or
accelerated exceeds $25.0 million or its foreign currency equivalent
(the
“cross-acceleration provision”),
|
(6)
|
certain
events of bankruptcy, insolvency or reorganization of the Issuer
or a
Significant Subsidiary (the “bankruptcy provisions”),
|
(7)
|
failure
by the Issuer or any Significant Subsidiary to pay final judgments
aggregating in excess of $25.0 million or its foreign currency
equivalent
(net of
|
(8)
|
any
Note Guarantee of a Significant Subsidiary with respect to such
series of
notes ceases to be in full force and effect (except as contemplated
by the
terms thereof) or any Note Guarantor denies or disaffirms its obligations
under the Indenture or any Note Guarantee with respect to such
series of
Notes and such Default continues for 10 days,
|
(9)
|
unless
all of the Collateral has been released from the second priority
Liens in
accordance with the provisions of the Security Documents with respect
to
such series of notes, the Issuer shall assert or any Note Guarantor
shall
assert, in any pleading in any court of competent jurisdiction,
that any
such security interest is invalid or unenforceable and, in the
case of any
such Person that is a Subsidiary of the Issuer, the Issuer fails
to cause
such Subsidiary to rescind such assertions within 30 days after
the Issuer
has actual knowledge of such assertions, or
|
(10)
|
the
failure by the Issuer or any Note Guarantor to comply for 60 days
after
notice with its other agreements contained in the Security Documents
except for a failure that would not be material to the holders
of the
notes of such series and would not materially affect the value
of the
Collateral taken as a whole (together with the defaults described
in
clauses (8) and (9) the “security default provisions”).
|
(1)
|
such
holder has previously given the Trustee notice that an Event of
Default is
continuing,
|
(2)
|
holders
of at least 25% in principal amount of the outstanding notes of
the
applicable series have requested the Trustee to pursue the remedy,
|
(3)
|
such
holders have offered the Trustee reasonable security or indemnity
against
any loss, liability or expense,
|
(4)
|
the
Trustee has not complied with such request within 60 days after
the
receipt of the request and the offer of security or indemnity,
and
|
(5)
|
the
holders of a majority in principal amount of the outstanding notes
of the
applicable series have not given the Trustee a direction inconsistent
with
such request within such 60-day period.
|
(1)
|
reduce
the amount of notes whose holders must consent to an amendment,
|
(2)
|
reduce
the rate of or extend the time for payment of interest on any note,
|
(3)
|
reduce
the principal of or change the Stated Maturity of any note,
|
(4)
|
reduce
the premium payable upon the redemption of any note or change the
time at
which any note may be redeemed as described under “—Optional Redemption”
above,
|
(5)
|
make
any note payable in money other than that stated in such note,
|
(6)
|
expressly
subordinate the notes or any Note Guarantee to any other Indebtedness
of
the Issuer or any Note Guarantor;
|
(7)
|
impair
the right of any holder to receive payment of principal of, premium,
if
any, and interest on such holder’s notes on or after the due dates
therefor or to institute suit for the enforcement of any payment
on or
with respect to such holder’s notes,
|
(8)
|
make
any change in the amendment provisions which require each holder’s consent
or in the waiver provisions,
|
(9)
|
modify
any Note Guarantee in any manner adverse to the holders, or
|
(10)
|
make
any change in the provisions in the Intercreditor Agreement or
the
Indenture dealing with the application of proceeds of Collateral
that
would adversely affect the holders of the notes.
|
(1)
|
either
(a) all the notes theretofore authenticated and delivered (except
lost, stolen or destroyed notes which have been replaced or paid
and notes
for whose payment money has theretofore been deposited in trust
or
segregated and held in trust by the Issuer and thereafter repaid
to the
Issuer or discharged from such trust) have been delivered to the
Trustee
for cancellation or (b) all of the notes (i) have become due and
payable, (ii) will become due and payable at
their
|
(2)
|
the
Issuer and/or the Note Guarantors have paid all other sums payable
under
the Indenture; and
|
(3)
|
the
Issuer has delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel stating that all conditions precedent under
the
Indenture relating to the satisfaction and discharge of the Indenture
have
been complied with.
|
(1)
|
the
Issuer and the Note Guarantors are not permitted to consummate
the
exchange offer because the exchange offer is not permitted by applicable
law or SEC policy; or
|
(2)
|
any
holder of fixed rate notes or the floating rate notes, as the case
may be,
notifies us prior to the 20th day following consummation of the
exchange
offer that:
|
(a)
|
it
is prohibited by law or SEC policy from participating in the exchange
offer; or
|
(b)
|
that
it may not resell the exchange notes acquired by it in the exchange
offer
to the public without delivering a prospectus (other than by reason
of
such holder’s status as our affiliate) and the prospectus contained in the
exchange offer registration statement is not appropriate or available
for
such resales; or
|
(c)
|
that
it is a broker-dealer and owns fixed rate notes or the floating
rate
notes, as the case may be, acquired directly from us or our affiliate,
|
(1)
|
the
Issuer and the Note Guarantors will use their commercially reasonable
efforts to have the exchange offer registration statement declared
effective by the SEC on or prior to 365 days after the Issue Date;
|
(2)
|
unless
the exchange offer would not be permitted by applicable law or
SEC policy,
the Issuer and the Note Guarantors will
|
(a)
|
commence
the exchange offer; and
|
(b)
|
issue
exchange notes in exchange for all outstanding notes tendered prior
thereto in the exchange offer; and
|
(3)
|
if
obligated to file the shelf registration statement, the Issuer
and the
note guarantors will file the shelf registration statement with
the SEC on
or prior to 180 days after such filing obligation arises and will
use
their commercially reasonable efforts to cause the Shelf Registration
to
be declared effective by the SEC on or prior to 365 days after
such
obligation arises.
|
(1)
|
any
of such registration statements is not declared effective by the
SEC on or
prior to the date specified for such effectiveness (the “Effectiveness
Target Date”); or
|
(2)
|
the
Issuer and the Note Guarantors fail to consummate the exchange
offer
within 30 business days of the Effectiveness Target Date with respect
to
the exchange offer registration statement; or
|
(3)
|
the
shelf registration statement or the exchange offer registration
statement
is declared effective but thereafter ceases to be effective or
usable,
subject to certain exceptions, in connection with resales or exchanges
of
outstanding notes during the periods specified in the Registration
Rights
Agreement (each such event referred to in clauses (1) through
(3) above, a “Registration Default”),
|
(1)
|
Indebtedness
of any other Person existing at the time such other Person is merged,
consolidated or amalgamated with or into or became a Restricted
Subsidiary
of such specified Person, and
|
(2)
|
Indebtedness
secured by a Lien encumbering any asset acquired by such specified
Person.
|
(1)
|
1%
of the then outstanding principal amount of the Fixed Rate Note;
and
|
(2)
|
the
excess of:
|
(a)
|
the
present value at such redemption date of (i) the redemption price of
the Fixed Rate Note, at September 15, 2010 (such redemption price
being set forth in the applicable table appearing above under “—Optional
Redemption”) plus (ii) all required interest payments due on the
Fixed Rate Note through September 15, 2010 (excluding accrued but
unpaid interest), computed using a discount rate equal to the Treasury
Rate as of such redemption date plus 50 basis points; over
|
(b)
|
the
then outstanding principal amount of the Fixed Rate Note.
|
(1)
|
the
sale, conveyance, transfer or other disposition (whether in a single
transaction or a series of related transactions) of property or
assets
(including by way of a Sale/ Leaseback Transaction) outside the
ordinary
course of business of the Issuer or any Restricted Subsidiary of
the
Issuer (each referred to in this definition as a “disposition”) or
|
(2)
|
the
issuance or sale of Equity Interests (other than directors’ qualifying
shares and shares issued to foreign nationals or other third parties
to
the extent required by applicable law) of any Restricted Subsidiary
(other
than to the Issuer or another Restricted Subsidiary of the Issuer)
(whether in a single transaction or a series of related transactions),
|
(a)
|
a
disposition of Cash Equivalents or Investment Grade Securities
or obsolete
or worn out property or equipment in the ordinary course of business;
|
(b)
|
the
disposition of all or substantially all of the assets of the Issuer
in a
manner permitted pursuant to the provisions described above under
“—Merger, Amalgamation, Consolidation or Sale of All or Substantially
All
Assets” or any disposition that constitutes a Change of Control;
|
(c)
|
any
Restricted Payment or Permitted Investment that is permitted to
be made,
and is made, under the covenant described above under “—Certain
Covenants—Limitation on Restricted Payments”;
|
(d)
|
any
disposition of assets or issuance or sale of Equity Interests of
any
Restricted Subsidiary, which assets or Equity Interests so disposed
or
issued have an aggregate Fair Market Value of less than $7.5 million;
|
(e)
|
any
disposition of property or assets, or the issuance of securities,
by a
Restricted Subsidiary of the Issuer to the Issuer or by the Issuer
or a
Restricted Subsidiary of the Issuer to a Restricted Subsidiary
of the
Issuer;
|
(f)
|
any
exchange of assets (including a combination of assets and Cash
Equivalents) for assets related to a Similar Business of comparable
or
greater market value or usefulness to the business of the Issuer
and its
Restricted Subsidiaries as a whole, as determined in good faith
by the
Issuer;
|
(g)
|
foreclosure
on assets of the Issuer or any of its Restricted Subsidiaries;
|
(h)
|
any
sale of Equity Interests in, or Indebtedness or other securities
of, an
Unrestricted Subsidiary;
|
(i)
|
the
lease, assignment or sublease of any real or personal property
in the
ordinary course of business;
|
(j)
|
any
sale of inventory or other assets in the ordinary course of business;
|
(k)
|
any
grant in the ordinary course of business of any license of patents,
trademarks, know-how or any other intellectual property;
|
(l)
|
a
transfer of accounts receivable and related assets of the type
specified
in the definition of “Receivables Financing” (or a fractional undivided
interest therein) by a Receivables Subsidiary in a Qualified Receivables
Financing; and
|
(m)
|
the
sale of any property in a Sale/Leaseback Transaction within six
months of
the acquisition of such property.
|
(1)
|
in
the case of a corporation, corporate stock or shares;
|
(2)
|
in
the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
|
(3)
|
in
the case of a partnership or limited liability company, partnership
or
membership interests (whether general or limited); and
|
(4)
|
any
other interest or participation that confers on a Person the right
to
receive a share of the profits and losses of, or distributions
of assets
of, the issuing Person.
|
(1)
|
U.S.
dollars, pounds sterling, euros, the national currency of any member
state
in the European Union or, in the case of any Foreign Subsidiary
that is a
Restricted Subsidiary, such local currencies held by it from time
to time
in the ordinary course of business;
|
(2)
|
securities
issued or directly and fully guaranteed or insured by the U.S.
government
or any country that is a member of the European Union or any agency
or
instrumentality thereof in each case maturing not more than two
years from
the date of acquisition;
|
(3)
|
certificates
of deposit, time deposits and eurodollar time deposits with maturities
of
one year or less from the date of acquisition, bankers’ acceptances, in
each case with maturities not exceeding one year and overnight
bank
deposits, in each case with any commercial bank having capital
and surplus
in excess of $250.0 million and whose long-term debt is rated “A” or the
equivalent thereof by Moody’s or S&P (or reasonably equivalent ratings
of another internationally recognized ratings agency);
|
(4)
|
repurchase
obligations for underlying securities of the types described in
clauses
(2) and (3) above entered into with any financial institution
meeting the qualifications specified in clause (3) above;
|
(5)
|
commercial
paper issued by a corporation (other than an Affiliate of the Issuer)
rated at least “A-1” or the equivalent thereof by Moody’s or S&P (or
reasonably equivalent ratings of another internationally recognized
ratings agency) and in each case maturing within one year after
the date
of acquisition;
|
(6)
|
readily
marketable direct obligations issued by any state of the United
States of
America or any political subdivision thereof having one of the
two highest
rating categories obtainable from either Moody’s or S&P (or reasonably
equivalent ratings of another internationally recognized ratings
agency)
in each case with maturities not exceeding two years from the date
of
acquisition;
|
(7)
|
Indebtedness
issued by Persons (other than the Sponsors or any of their Affiliates)
with a rating of “A” or higher from S&P or “A-2” or higher from
Moody’s in each case with maturities not exceeding two years from the
date
of acquisition; and
|
(8)
|
investment
funds investing at least 95% of their assets in securities of the
types
described in clauses (1) through (7) above.
|
(1)
|
consolidated
interest expense of such Person and its Restricted Subsidiaries
for such
period, to the extent such expense was deducted in computing Consolidated
Net Income (including amortization of original issue discount,
the
interest component of Capitalized Lease Obligations, and net payments
and
receipts (if any) pursuant to interest rate Hedging Obligations
and
excluding amortization of deferred financing fees and expensing
of any
bridge or other financing fees); plus
|
(2)
|
consolidated
capitalized interest of such Person and its Restricted Subsidiaries
for
such period, whether paid or accrued; plus
|
(3)
|
commissions,
discounts, yield and other fees and charges Incurred in connection
with
any Receivables Financing which are payable to Persons other than
the
Issuer and its Restricted Subsidiaries; minus
|
(4)
|
interest
income for such period.
|
(1)
|
any
net after-tax extraordinary, nonrecurring or unusual gains or losses
or
income, expenses or charges (less all fees and expenses relating
thereto),
including, without limitation, any severance expenses, any expenses
related to any reconstruction, recommissioning or reconfiguration
of fixed
assets for alternate uses and fees, expenses or charges relating
to new
product lines, plant shutdown costs, acquisition integration costs,
expenses or charges related to any Equity Offering, Permitted Investment,
acquisition or Indebtedness permitted to be Incurred by the Indenture
(in
each case, whether or not successful), including any such fees,
expenses,
charges or change in control payments made under the Acquisition
Documents
or otherwise related to the Transactions, in each case, shall be
excluded;
|
(2)
|
any
increase in amortization or depreciation or any one-time non-cash
charges
or increases or reductions in Net Income, in each case resulting
from
purchase accounting in connection with the Transactions or any
acquisition
that is consummated after the Issue Date shall be excluded;
|
(3)
|
the
Net Income for such period shall not include the cumulative effect
of a
change in accounting principles during such period;
|
(4)
|
any
net after-tax income or loss from discontinued operations and any
net
after-tax gains or losses on disposal of discontinued operations
shall be
excluded;
|
(5)
|
any
net after-tax gains or losses (less all fees and expenses or charges
relating thereto) attributable to business dispositions or asset
dispositions other than in the ordinary course of business (as
determined
in good faith by the Board of Directors of the Issuer) shall be
excluded;
|
(6)
|
any
net after-tax gains or losses (less all fees and expenses or charges
relating thereto) attributable to the early extinguishment of indebtedness
shall be excluded;
|
(7)
|
the
Net Income for such period of any Person that is not a Subsidiary
of such
Person, or is an Unrestricted Subsidiary, or that is accounted
for by the
equity method of accounting, shall be included only to the extent
of the
amount of dividends or distributions or other payments paid in
cash (or to
the extent converted into cash) to the referent Person or a Restricted
Subsidiary thereof in respect of such period;
|
(8)
|
solely
for the purpose of determining the amount available for Restricted
Payments under clause (1) of the definition of Cumulative Credit
contained in “—Certain Covenants—Limitation on Restricted Payments,” the
Net Income for such period of any Restricted Subsidiary (other
than any
Note Guarantor) shall be excluded to the extent that the declaration
or
payment of dividends or similar distributions by such Restricted
Subsidiary of its Net Income is not at the date of determination
permitted
without any prior governmental approval (which has not been obtained)
or,
directly or indirectly, by the operation of the terms of its charter
or
any agreement, instrument, judgment, decree, order, statute, rule
or
governmental regulation applicable to that Restricted Subsidiary
or its
stockholders, unless such restrictions with respect to the payment
of
dividends or similar distributions have been legally waived; provided
that the Consolidated Net Income of such Person shall be increased
by the
amount of dividends or other distributions or other payments actually
paid
in cash (or converted into cash) by any such Restricted Subsidiary
to such
Person, to the extent not already included therein;
|
(9)
|
an
amount equal to the amount of Tax Distributions actually made to
any
parent of such Person in respect of such period in accordance with
clause
(12) of the second paragraph under “—Certain Covenants—Limitation on
Restricted Payments” shall be included as though such amounts had been
paid as income taxes directly by such Person for such period;
|
(10)
|
any
non-cash impairment charges resulting from the application of Statement
of
Financial Accounting Standards (“SFAS”)
Nos. 142 and 144 and the amortization of intangibles arising pursuant
to
SFAS No. 141 shall be excluded;
|
(11)
|
any
non-cash expense realized or resulting from stock option plans,
employee
benefit plans or post-employment benefit plans, grants of stock
appreciation or similar rights, stock options or other rights to
officers,
directors and employees of such Person or any of its Restricted
Subsidiaries shall be excluded;
|
(12)
|
any
(a) severance or relocation costs or expenses, (b) one-time
non-cash compensation charges, (c) the costs and expenses after the
Issue Date related to employment of terminated employees, (d) costs
or expenses realized in connection with, resulting from or in anticipation
of the Transactions or (e) costs or expenses realized in connection
with or resulting from stock appreciation or similar rights, stock
options
or other rights existing on the Issue Date of officers, directors
and
employees, in each case of such Person or any of its Restricted
Subsidiaries, shall be excluded;
|
(13)
|
accruals
and reserves that are established within 12 months after the Issue
Date
and that are so required to be established in accordance with GAAP
shall
be excluded;
|
(14)
|
solely
for purposes of calculating EBITDA, (a) the Net Income of any Person
and its Restricted Subsidiaries shall be calculated without deducting
the
income attributable
to, or adding the losses attributable to, the minority equity interests
of
third parties in any non-wholly-owned Restricted Subsidiary except
to the
extent of dividends declared or paid in respect of such period
or any
prior period on the shares of Capital Stock of such Restricted
Subsidiary
held by such third parties and (b) any ordinary course dividend,
distribution or other payment paid in cash and received from any
Person in
excess of amounts included in clause (7) above shall be included;
|
(15)
|
(a)
(i) the non-cash portion of “straight-line” rent expense shall be excluded
and (ii) the cash portion of “straight-line” rent expense which
exceeds the amount expensed in respect of such rent expense shall
be
included and (b) non-cash gains, losses, income and expenses
resulting from fair value accounting required by Statement of Financial
Accounting Standards No. 133 shall be excluded;
|
(16)
|
unrealized
gains and losses relating to hedging transactions and mark-to-market
of
Indebtedness denominated in foreign currencies resulting from the
applications of Financial Accounting Standard 52 shall be excluded;
and
|
(17)
|
solely
for the purpose of calculating Restricted Payments, the difference,
if
positive, of the Consolidated Taxes of the Issuer calculated in
accordance
with GAAP and the actual Consolidated Taxes paid in cash by the
Issuer
during any Reference Period shall be included.
|
(1)
|
to
purchase any such primary obligation or any property constituting
direct
or indirect security therefor,
|
(2)
|
to
advance or supply funds:
|
(a)
|
for
the purchase or payment of any such primary obligation; or
|
(b)
|
to
maintain working capital or equity capital of the primary obligor
or
otherwise to maintain the net worth or solvency of the primary
obligor; or
|
(3)
|
to
purchase property, securities or services primarily for the purpose
of
assuring the owner of any such primary obligation of the ability
of the
primary obligor to make payment of such primary obligation against
loss in
respect thereof.
|
(1)
|
such
cash contributions have not been used to make a Restricted Payment,
|
(2)
|
if
the aggregate principal amount of such Contribution Indebtedness
is
greater than the aggregate amount of such cash contributions to
the
capital of the Issuer or such Note Guarantor, as the case may be,
the
amount in excess shall be Indebtedness (other than Secured Indebtedness)
with a Stated Maturity later than the Stated Maturity of the Notes,
and
|
(3)
|
such
Contribution Indebtedness (a) is Incurred within 180 days after the
making of such cash contributions and (b) is so designated as
Contribution Indebtedness pursuant to an Officers’ Certificate on the
Incurrence date thereof.
|
(1)
|
matures
or is mandatorily redeemable, pursuant to a sinking fund obligation
or
otherwise (other than as a result of a change of control or asset
sale;
provided
that the relevant asset sale or change of control provisions, taken
as a
whole, are no more favorable in any material respect to holders
of such
Capital Stock than the asset sale and change of control provisions
applicable to the Notes and any purchase requirement triggered
thereby may
not become operative until compliance with the asset sale and change
of
control provisions applicable to the Notes (including the purchase
of any
Notes tendered pursuant thereto)),
|
(2)
|
is
convertible or exchangeable for Indebtedness or Disqualified Stock
of such
Person, or
|
(3)
|
is
redeemable at the option of the holder thereof, in whole or in
part,
|
(1)
|
Consolidated
Taxes; plus
|
(2)
|
Consolidated
Interest Expense; plus
|
(3)
|
Consolidated
Non-cash Charges; plus
|
(4)
|
business
optimization expenses and other restructuring charges or expenses
(which,
for the avoidance of doubt, shall include, without limitation,
the effect
of inventory optimization programs, plant closures, retention,
systems
establishment costs and excess pension charges); provided
that with respect to each business optimization expense or other
restructuring charge, the Issuer shall have delivered to the Trustee
an
Officers’ Certificate specifying and quantifying such expense or charge
and stating that such expense or charge is a business optimization
expense
or other restructuring charge, as the case may be; plus
|
(5)
|
the
amount of management, monitoring, consulting and advisory fees
and related
expenses paid to the Sponsors (or any accruals relating to such
fees and
related expenses) during such period pursuant to the terms of the
agreements between the Sponsors and the Issuer and its Subsidiaries
as
described with particularity in this prospectus and as in effect
on the
Issue Date;
|
(6)
|
non-cash
items increasing Consolidated Net Income for such period (excluding
the
recognition of deferred revenue or any items which represent the
reversal
of any accrual of, or cash reserve for, anticipated cash charges
in any
prior period and any items for which cash was received in a prior
period).
|
(1)
|
public
offerings with respect to the Issuer’s or such direct or indirect parent’s
common stock registered on Form S-8; and
|
(2)
|
any
such public or private sale that constitutes an Excluded Contribution.
|
(2)
|
the
sale (other than to a Subsidiary of the Issuer or to any Subsidiary
management equity plan or stock option plan or any other management
or
employee benefit plan or agreement) of Capital Stock (other than
Disqualified Stock and Designated Preferred Stock) of the Issuer,
|
(1)
|
Consolidated
Interest Expense of such Person for such period, and
|
(2)
|
all
cash dividend payments (excluding items eliminated in consolidation)
on
any series of Preferred Stock or Disqualified Stock of such Person
and its
Restricted Subsidiaries.
|
(1)
|
currency
exchange, interest rate or commodity swap agreements, currency
exchange,
interest rate or commodity cap agreements and currency exchange,
interest
rate or commodity collar agreements; and
|
(2)
|
other
agreements or arrangements designed to protect such Person against
fluctuations in currency exchange, interest rates or commodity
prices.
|
(1)
|
the
principal and premium (if any) of any indebtedness of such Person,
whether
or not contingent, (a) in respect of borrowed money,
(b) evidenced by bonds, notes, debentures or similar instruments or
letters of credit or bankers’ acceptances (or, without duplication,
reimbursement agreements in respect thereof), (c) representing the
deferred and unpaid purchase price of any property, except any
such
balance that constitutes a trade payable or similar obligation
to a trade
creditor due within six months from the date on which it is Incurred,
in
each case Incurred in the ordinary course of business, which purchase
price is due more than six months after the date of placing the
property
in service or taking delivery and title thereto, (d) in respect of
Capitalized Lease Obligations, or (e) representing any Hedging
Obligations, if and to the extent that any of the foregoing indebtedness
(other than letters of credit and Hedging Obligations) would appear
as a
liability on a balance sheet (excluding the footnotes thereto)
of such
Person prepared in accordance with GAAP;
|
(2)
|
to
the extent not otherwise included, any obligation of such Person
to be
liable for, or to pay, as obligor, guarantor or otherwise, on the
Indebtedness of another Person (other than by endorsement of negotiable
instruments for collection in the ordinary course of business);
|
(3)
|
to
the extent not otherwise included, Indebtedness of another Person
secured
by a Lien on any asset owned by such Person (whether or not such
Indebtedness is assumed by such Person); provided,
however,
that the amount of such Indebtedness will be the lesser of: (a) the
Fair Market Value of such asset at such
date of determination, and (b) the amount of such Indebtedness of
such other Person; and
|
(4)
|
to
the extent not otherwise included, with respect to the Issuer and
its
Restricted Subsidiaries, the amount then outstanding (i.e.,
advanced, and received by, and available for use by, the Issuer
or any of
its Restricted Subsidiaries) under any Receivables Financing (as
set forth
in the books and records of the Issuer or any Restricted Subsidiary
and
confirmed by the agent, trustee or other representative of the
institution
or group providing such Receivables Financing);
|
(1)
|
securities
issued or directly and fully guaranteed or insured by the U.S.
government
or any agency or instrumentality thereof (other than Cash Equivalents),
|
(2)
|
securities
that have a rating equal to or higher than Baa3 (or equivalent)
by Moody’s
or BBB- (or equivalent) by S&P, or an equivalent rating by any other
Rating Agency, but excluding any debt securities or loans or advances
between and among the Issuer and its Subsidiaries,
|
(3)
|
investments
in any fund that invests exclusively in investments of the type
described
in clauses (1) and (2) which fund may also hold immaterial
amounts of cash pending investment and/or distribution, and
|
(4)
|
corresponding
instruments in countries other than the United States customarily
utilized
for high quality investments and in each case with maturities not
exceeding two years from the date of acquisition.
|
(1)
|
“Investments”
shall include the portion (proportionate to the Issuer’s equity interest
in such Subsidiary) of the Fair Market Value of the net assets
of a
Subsidiary of the Issuer at the time that such Subsidiary is designated
an
Unrestricted Subsidiary; provided,
however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Issuer shall be deemed to continue to have a permanent “Investment” in
an Unrestricted Subsidiary equal to an amount (if positive) equal
to:
|
(a)
|
the
Issuer’s “Investment” in such Subsidiary at the time of such redesignation
less
|
(b)
|
the
portion (proportionate to the Issuer’s equity interest in such Subsidiary)
of the Fair Market Value of the net assets of such Subsidiary at
the time
of such redesignation; and
|
(2)
|
any
property transferred to or from an Unrestricted Subsidiary shall
be valued
at its Fair Market Value at the time of such transfer, in each
case as
determined in good faith by the Board of Directors of the Issuer.
|
(1)
|
with
respect to the Issuer, the Notes and any Indebtedness which ranks
pari
passu in right of payment to the Notes; and
|
(2)
|
with
respect to any Note Guarantor, its Note Guarantee and any Indebtedness
which ranks pari passu in right of payment to such Note Guarantor’s Note
Guarantee.
|
(1)
|
any
Investment in the Issuer or any Restricted Subsidiary;
|
(2)
|
any
Investment in Cash Equivalents or Investment Grade Securities;
|
(3)
|
any
Investment by the Issuer or any Restricted Subsidiary of the Issuer
in a
Person if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Issuer, or (b) such Person, in one
transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys all or substantially
all of its assets to, or is liquidated into, the Issuer or a Restricted
Subsidiary of the Issuer;
|
(4)
|
any
Investment in securities or other assets not constituting Cash
Equivalents
and received in connection with an Asset Sale made pursuant to
the
provisions of “—Certain Covenants—Asset Sales” or any other disposition of
assets not constituting an Asset Sale;
|
(5)
|
any
Investment existing on, or made pursuant to binding commitments
existing
on, the Issue Date;
|
(6)
|
advances
to employees, taken together with all other advances made pursuant
to this
clause (6), not to exceed $15.0 million at any one time
outstanding;
|
(7)
|
any
Investment acquired by the Issuer or any of its Restricted Subsidiaries
(a) in exchange for any other Investment or accounts receivable held
by the Issuer or any such Restricted Subsidiary in connection with
or as a
result of a bankruptcy, workout, reorganization or recapitalization
of the
issuer of such other Investment or accounts receivable, or (b) as a
result of a foreclosure by the Issuer or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer
of
title with respect to any secured Investment in default;
|
(8)
|
Hedging
Obligations permitted under clause (j) of the second paragraph of the
covenant described under “—Certain Covenants—Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;
|
(9)
|
any
Investment by the Issuer or any of its Restricted Subsidiaries
in a
Similar Business having an aggregate Fair Market Value, taken together
with all other Investments made pursuant to this clause (9) that are
at that time outstanding, not to exceed the greater of (x) $100.0
million and (y) 4.5% of Total Assets at the time of such Investment
(with the Fair Market Value of each Investment being measured at
the time
made and without giving effect to subsequent changes in value);
provided,
however,
that if any Investment pursuant to this clause (9) is made in any
Person that is not a Restricted Subsidiary of the Issuer at the
date of
the making of such Investment and such Person becomes a Restricted
Subsidiary of the Issuer after such date, such Investment shall
thereafter
be deemed to have been made pursuant to clause (1) above and shall
cease to have been made pursuant to this clause (9) for so long as
such Person continues to be a Restricted Subsidiary;
|
(10)
|
additional
Investments by the Issuer or any of its Restricted Subsidiaries
having an
aggregate Fair Market Value, taken together with all other Investments
made pursuant to this clause (10) that are at that time outstanding,
not to exceed the greater of (x) $100.0 million and (y) 4.5% of
Total Assets at the time of such Investment
(with the Fair Market Value of each Investment being measured at
the time
made and without giving effect to subsequent changes in value);
|
(11)
|
loans
and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in
each case
Incurred in the ordinary course of business;
|
(12)
|
Investments
the payment for which consists of Equity Interests of the Issuer
(other
than Disqualified Stock) or any direct or indirect parent of the
Issuer,
as applicable; provided,
however,
that such Equity Interests will not increase the amount available
for
Restricted Payments under clause (3) of the definition of Cumulative
Credit contained in “—Certain Covenants—Limitation on Restricted
Payments”;
|
(13)
|
any
transaction to the extent it constitutes an Investment that is
permitted
by and made in accordance with the provisions of the second paragraph
of
the covenant described under “—Certain Covenants—Transactions with
Affiliates” (except transactions described in clauses (2), (6),
(7) and (11)(b) of such paragraph);
|
(14)
|
Investments
consisting of the licensing or contribution of intellectual property
pursuant to joint marketing arrangements with other Persons;
|
(15)
|
guarantees
issued in accordance with the covenants described under “—Certain
Covenants—Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock” and “—Certain Covenants—Future
Note Guarantors”;
|
(16)
|
Investments
consisting of or to finance purchases and acquisitions of inventory,
supplies, materials, services or equipment or purchases of contract
rights
or licenses or leases of intellectual property, in each case in
the
ordinary course of business;
|
(17)
|
any
Investment in a Receivables Subsidiary or any Investment by a Receivables
Subsidiary in any other Person in connection with a Qualified Receivables
Financing, including Investments of funds held in accounts permitted
or
required by the arrangements governing such Qualified Receivables
Financing or any related Indebtedness; provided,
however,
that any Investment in a Receivables Subsidiary is in the form
of a
Purchase Money Note, contribution of additional receivables or
an equity
interest;
|
(18)
|
additional
Investments in joint ventures of the Issuer or any of its Restricted
Subsidiaries existing on the Issue Date not to exceed at any one
time in
the aggregate outstanding, $15.0 million; and
|
(19)
|
Investments
of a Restricted Subsidiary of the Issuer acquired after the Issue
Date or
of an entity merged into, amalgamated with, or consolidated with
the
Issuer or a Restricted Subsidiary of the Issuer in a transaction
that is
not prohibited by the covenant described under “—Merger, Amalgamation,
Consolidation or Sale of All or Substantially All Assets” after the Issue
Date to the extent that such Investments were not made in contemplation
of
such acquisition, merger, amalgamation or consolidation and were
in
existence on the date of such acquisition, merger, amalgamation
or
consolidation.
|
(1)
|
pledges
or deposits by such Person under workmen’s compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in
connection
with bids, tenders, contracts (other than for the payment of Indebtedness)
or leases to which such Person is a party, or deposits to secure
public or
statutory obligations of such Person or deposits of cash or U.S.
government bonds to secure surety or appeal bonds to which such
Person is
a party, or deposits as security for contested taxes or import
duties or
for the payment of rent, in each case Incurred in the ordinary
course of
business;
|
(2)
|
Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in
each case for sums not yet due or being contested in good faith
by
appropriate proceedings or other Liens arising out of judgments
or awards
against such Person with respect to which such Person shall then
be
proceeding with an appeal or other proceedings for review;
|
(3)
|
Liens
for taxes, assessments or other governmental charges not yet due
or
payable or subject to penalties for nonpayment or which are being
contested in good faith by appropriate proceedings;
|
(4)
|
Liens
in favor of issuers of performance and surety bonds or bid bonds
or with
respect to other regulatory requirements or letters of credit issued
pursuant to the request of and for the account of such Person in
the
ordinary course of its business;
|
(5)
|
minor
survey exceptions, minor encumbrances, easements or reservations
of, or
rights of others for, licenses, rights-of-way, sewers, electric
lines,
telegraph and telephone lines and other similar purposes, or zoning
or
other restrictions as to the use of real properties or Liens incidental
to
the conduct of the business of such Person or to the ownership
of its
properties which were not Incurred in connection with Indebtedness
and
which do not in the aggregate materially adversely affect the value
of
said properties or materially impair their use in the operation
of the
business of such Person;
|
(6)
|
(A) Liens
on assets of a Restricted Subsidiary that is not a Note Guarantor
securing
Indebtedness of such Restricted Subsidiary permitted to be Incurred
pursuant to the covenant described under “—Certain Covenants—Limitation on
Incurrence of Indebtedness and Issuance of Disqualified Stock and
Preferred Stock”, (B) Liens securing an aggregate principal amount of
First Priority Lien Obligations not to exceed the greater of (x) the
aggregate amount of Indebtedness permitted to be incurred pursuant
to
clause (a) of the second paragraph of the covenant described under
“—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance
of Disqualified Stock and Preferred Stock” and (y) the maximum
principal amount of Indebtedness that, as of the date such Indebtedness
was Incurred, and after giving effect to the Incurrence of such
Indebtedness and the application of proceeds therefrom on such
date, would
not cause the Secured Indebtedness Leverage Ratio of the Issuer
to exceed
4.00 to 1.00 and (C) Liens securing Indebtedness permitted to be
Incurred pursuant to clause (d), (l) or (t) of the second
paragraph of the covenant described under “—Certain Covenants—Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and
Preferred Stock” (provided
that in the case of clause (t), such Lien does not extend to the
property
or assets of any Subsidiary of the Issuer other than a Foreign
Subsidiary);
|
(7)
|
Liens
existing on the Issue Date;
|
(8)
|
Liens
on assets, property or shares of stock of a Person at the time
such Person
becomes a Subsidiary; provided,
however,
that such Liens are not created or Incurred in connection with,
or in
contemplation of, such other Person becoming such a Subsidiary;
provided,
further,
however,
that such Liens may not extend to any other property owned by the
Issuer
or any Restricted Subsidiary of the Issuer;
|
(9)
|
Liens
on assets or property at the time the Issuer or a Restricted Subsidiary
of
the Issuer acquired the assets or property, including any acquisition
by
means of a merger, amalgamation or consolidation with or into the
Issuer
or any Restricted Subsidiary of the Issuer; provided,
however,
that such Liens are not created or Incurred in connection with,
or in
contemplation of, such acquisition; provided,
further,
however,
that the Liens may not extend to any other property owned by the
Issuer or
any Restricted Subsidiary of the Issuer;
|
(10)
|
Liens
securing Indebtedness or other obligations of a Restricted Subsidiary
owing to the Issuer or another Restricted Subsidiary of the Issuer
permitted to be Incurred in accordance with the covenant described
under
“—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance
of Disqualified Stock and Preferred Stock”;
|
(11)
|
Liens
securing Hedging Obligations not incurred in violation of the Indenture;
provided
that with respect to Hedging Obligations relating to Indebtedness,
such
Lien extends only to the property securing such Indebtedness;
|
(12)
|
Liens
on specific items of inventory or other goods and proceeds of any
Person
securing such Person’s obligations in respect of bankers’ acceptances
issued or created for the account of such Person to facilitate
the
purchase, shipment or storage of such inventory or other goods;
|
(13)
|
leases
and subleases of real property which do not materially interfere
with the
ordinary conduct of the business of the Issuer or any of its Restricted
Subsidiaries;
|
(14)
|
Liens
arising from Uniform Commercial Code financing statement filings
regarding
operating leases entered into by the Issuer and its Restricted
Subsidiaries in the ordinary course of business;
|
(15)
|
Liens
in favor of the Issuer or any Note Guarantor;
|
(16)
|
Liens
on accounts receivable and related assets of the type specified
in the
definition of “Receivables Financing” Incurred in connection with a
Qualified Receivables Financing;
|
(17)
|
deposits
made in the ordinary course of business to secure liability to
insurance
carriers;
|
(18)
|
Liens
on the Equity Interests of Unrestricted Subsidiaries;
|
(19)
|
grants
of software and other technology licenses in the ordinary course
of
business;
|
(20)
|
Liens
to secure any refinancing, refunding, extension, renewal or replacement
(or successive refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any Indebtedness secured
by any
Lien referred to in the foregoing clauses (6)(B), (7), (8), (9),
(10),
(11) and (15); provided,
however,
that (x) such new Lien shall be limited to all or part of the same
property that secured the
original Lien (plus improvements on such property), and (y) the
Indebtedness secured by such Lien at such time is not increased
to any
amount greater than the sum of (A) the outstanding principal amount
or, if greater, committed amount of the Indebtedness described
under
clauses (6)(B), (7), (8), (9), (10), (11) and (15) at the time
the original Lien became a Permitted Lien under the Indenture,
and
(B) an amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension, renewal
or
replacement; provided
further, however, that
in the case of any Liens to secure any refinancing, refunding,
extension
or renewal of Indebtedness secured by a Lien referred to in clause
(6)(B),
the principal amount of any Indebtedness Incurred for such refinancing,
refunding, extension or renewal shall be deemed secured by a Lien
under
clause (6)(B) and not this clause (20) for purposes of
determining the principal amount of Indebtedness outstanding under
clause
(6)(B), for purposes of clause (1) under “—Security for the Notes
—Release of Collateral” and for purposes of the definition of Secured Bank
Indebtedness;
|
(21)
|
Liens
on equipment of the Issuer or any Restricted Subsidiary granted
in the
ordinary course of business to the Issuer’s or such Restricted
Subsidiary’s client at which such equipment is located;
|
(22)
|
judgment
and attachment Liens not giving rise to an Event of Default and
notices of
lis pendens and associated rights related to litigation being contested
in
good faith by appropriate proceedings and for which adequate reserves
have
been made;
|
(23)
|
Liens
arising out of conditional sale, title retention, consignment or
similar
arrangements for the sale of goods entered into in the ordinary
course of
business;
|
(24)
|
Liens
incurred to secure cash management services in the ordinary course
of
business; and
|
(25)
|
other
Liens securing obligations incurred in the ordinary course of business
which obligations do not exceed $20.0 million at any one time
outstanding.
|
(1)
|
the
Board of Directors of the Issuer shall have determined in good
faith that
such Qualified Receivables Financing (including financing terms,
covenants, termination events and other provisions) is in the aggregate
economically fair and reasonable to the Issuer and the Receivables
Subsidiary;
|
(2)
|
all
sales of accounts receivable and related assets to the Receivables
Subsidiary are made at Fair Market Value (as determined in good
faith by
the Issuer); and
|
(3)
|
the
financing terms, covenants, termination events and other provisions
thereof shall be market terms (as determined in good faith by the
Issuer)
and may include Standard Securitization Undertakings.
|
(a) |
(a)no
portion of the Indebtedness or any other obligations (contingent
or
otherwise) of which (i) is guaranteed by the Issuer or any other
Subsidiary of
the Issuer (excluding guarantees of obligations (other than the principal
of and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Issuer or any
other Subsidiary of the Issuer in any way other than pursuant to
Standard
Securitization Undertakings, or (iii) subjects any property or asset
of the Issuer or any other Subsidiary of the Issuer, directly or
indirectly, contingently or otherwise, to the satisfaction thereof,
other
than pursuant to Standard Securitization Undertakings;
|
(b) |
with
which neither the Issuer nor any other Subsidiary of the Issuer has
any
material contract, agreement, arrangement or understanding other
than on
terms which the Issuer reasonably believes to be no less favorable
to the
Issuer or such Subsidiary than those that might be obtained at the
time
from Persons that are not Affiliates of the Issuer; and
|
(c) |
to
which neither the Issuer nor any other Subsidiary of the Issuer has
any
obligation to maintain or preserve such entity’s financial condition or
cause such entity to achieve certain levels of operating results.
|
(1)
|
any
officer within the corporate trust department of the Trustee, including
any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the
Trustee who
customarily performs functions similar to those performed by the
Persons
who at the time shall be such officers, respectively, or to whom
any
corporate trust matter is referred because of such person’s knowledge of
and familiarity with the particular subject, and
|
(2)
|
who
shall have direct responsibility for the administration of the
Indenture.
|
(1)
|
any
Subsidiary of the Issuer that at the time of determination shall
be
designated an Unrestricted Subsidiary by the Board of Directors
of such
Person in the manner provided below; and
|
(2)
|
any
Subsidiary of an Unrestricted Subsidiary.
|
(a) |
the
Subsidiary to be so designated has total consolidated assets of $1,000
or
less; or
|
(b) |
if
such Subsidiary has consolidated assets greater than $1,000, then
such
designation would be permitted under the covenant described under
“—Certain Covenants—Limitation on Restricted Payments.”
|
(x) |
(1) the
Issuer could Incur $1.00 of additional Indebtedness pursuant to the
Fixed
Charge Coverage Ratio test described under “—Certain Covenants—Limitation
on Incurrence of Indebtedness and Issuance of Disqualified Stock
and
Preferred Stock,” or (2) the Fixed Charge Coverage Ratio for the
Issuer and its Restricted Subsidiaries would be greater than such
ratio
for the Issuer and its Restricted Subsidiaries immediately prior
to such
designation, in each case on a pro forma basis taking into account
such
designation, and
|
(y) |
no
Event of Default shall have occurred and be continuing.
|
(1)
|
direct
obligations of the United States of America for the timely payment
of
which its full faith and credit is pledged, or
|
(2)
|
obligations
of a Person controlled or supervised by and acting as an agency
or
instrumentality of the United States of America, the timely payment
of
which is unconditionally guaranteed as a full faith and credit
obligation
by the United States of America,
|
· |
a
bank;
|
· |
a
financial institution;
|
· |
a
broker or dealer in securities or
currencies;
|
· |
a
trader in securities that elects to use a mark-to-market method of
accounting for securities holdings;
|
· |
an
insurance company;
|
· |
a
person whose functional currency is not the U.S.
dollar;
|
· |
a
tax-exempt organization;
|
· |
an
investor in a pass-through entity holding the
notes;
|
· |
an
S-corporation, a partnership or other entity treated as a partnership
for
tax purposes;
|
· |
a
U.S. expatriate;
|
· |
a
person holding notes as a part of a hedging, conversion or other
risk-reduction transaction or a straddle for tax purposes;
or
|
· |
a
foreign person or entity.
|
· |
may
not rely on the applicable interpretation of the staff of the SEC’s
position contained
in Exxon Capital Holdings Corp., SEC no-action letter (April 13,
1988),
Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and
Shearman & Sterling, SEC no-action letter (July 2, 1993);
and
|
· |
must
comply with the registration and prospectus delivery requirements
of the
Securities Act in connection with any resale of the exchange
notes.
|
Page
|
|
Unaudited
Consolidated Financial Statements
|
|
Consolidated
Balance Sheets at July 1, 2006 and December 31,
2005
|
F-2
|
Consolidated
Statements of Income for the 13 weeks ended July 1, 2006 and
July 2, 2005 and the 26 weeks ended July 1, 2006 and
July 2, 2005
|
F-4
|
Consolidated
Statements of Changes in Stockholders’ Equity for the 26 weeks ended
July 1, 2006
|
F-5
|
Consolidated
Statements of Cash Flows for the 26 weeks ended July 1, 2006 and
July 2, 2005
|
F-6
|
Notes
to Unaudited Consolidated Financial Statements
|
F-7
|
Audited
Consolidated Financial Statements
|
|
Report
of Independent Registered Public Accounting Firm
|
F-17
|
Consolidated
Balance Sheets at December 31, 2005 and January 1,
2005
|
F-18
|
Consolidated
Statements of Income for the periods ended December 31,
2005, January 1, 2005 and December 27, 2003
|
F-20
|
Consolidated
Statements of Changes in Stockholders’ Equity for the periods ended
December 31, 2005, January 1, 2005 and December 27,
2003
|
F-21
|
Consolidated
Statements of Cash Flows for the periods ended December 31,
2005, January 1, 2005 and December 27, 2003
|
F-22
|
Notes
to Audited Consolidated Financial Statements
|
F-23
|
|
July 1,
2006
|
December 31,
2005
|
|||||
|
(Unaudited)
|
|
|||||
Assets
|
|
|
|||||
Current
assets:
|
|
|
|||||
Cash
and cash equivalents
|
$
|
35,251
|
$
|
24,756
|
|||
Accounts
receivable (less allowance for doubtful accounts of $6,376
at July 1,
2006 and $5,766 at December 31, 2005)
|
166,924
|
140,443
|
|||||
Inventories:
|
|
|
|||||
Finished
goods
|
113,560
|
101,632
|
|||||
Raw
materials and supplies
|
49,794
|
50,716
|
|||||
|
163,354
|
152,348
|
|||||
Deferred
income taxes
|
8,623
|
22,905
|
|||||
Prepaid
expenses and other current assets
|
29,245
|
39,037
|
|||||
Total
current assets
|
403,397
|
379,489
|
|||||
Property
and equipment:
|
|
|
|||||
Land
|
12,345
|
12,292
|
|||||
Buildings
and improvements
|
95,139
|
92,810
|
|||||
Equipment
and construction in progress
|
551,547
|
497,364
|
|||||
|
659,031
|
602,466
|
|||||
Less
accumulated depreciation
|
222,561
|
179,022
|
|||||
|
436,470
|
423,444
|
|||||
Intangible
assets:
|
|
|
|||||
Deferred
financing fees, net
|
16,783
|
18,333
|
|||||
Customer
relationships, net
|
248,662
|
255,981
|
|||||
Goodwill
|
495,693
|
495,258
|
|||||
Trademarks,
net
|
45,131
|
47,065
|
|||||
Other
intangibles, net
|
27,150
|
28,260
|
|||||
|
833,419
|
844,897
|
|||||
Total
assets
|
$
|
1,673,286
|
$
|
1,647,830
|
|||
|
|
|
|
July 1,
2006
|
December 31,
2005
|
|||||
|
(Unaudited)
|
|
|||||
Liabilities
and stockholders’ equity
|
|
|
|||||
Current
liabilities:
|
|
|
|||||
Accounts
payable
|
$
|
97,310
|
$
|
64,970
|
|||
Accrued
interest
|
17,046
|
20,165
|
|||||
Employee
compensation, payroll and other taxes
|
44,472
|
43,915
|
|||||
Accrued
expenses and other current liabilities
|
30,332
|
34,730
|
|||||
Current
portion of long-term debt
|
14,419
|
13,928
|
|||||
Total
current liabilities
|
203,579
|
177,708
|
|||||
Long-term
debt, less current portion
|
1,121,401
|
1,146,692
|
|||||
Deferred
income taxes
|
94,466
|
94,934
|
|||||
Other
long-term liabilities
|
26,171
|
25,108
|
|||||
Total
liabilities
|
1,445,617
|
1,444,442
|
|||||
Stockholders’
equity:
|
|||||||
Preferred
Stock; $.01 par value: 500,000 shares authorized; 0 shares
issued and
outstanding at July 1, 2006 and December 31,
2005
|
—
|
—
|
|||||
Common
Stock; $.01 par value: 5,000,000 shares authorized; 3,398,807
shares
issued and 3,374,351 shares outstanding at July 1, 2006; and
3,398,807 shares issued and 3,374,348 shares outstanding at
December 31, 2005
|
34
|
34
|
|||||
Additional
paid-in capital
|
348,715
|
346,943
|
|||||
Adjustment
of the carryover basis of continuing stockholders
|
(196,603
|
)
|
(196,603
|
)
|
|||
Notes
receivable—common stock
|
(11,389
|
)
|
(14,273
|
)
|
|||
Treasury
stock: 23,196 and 24,459 shares of common stock at July 1, 2006 and
December 31, 2005, respectively
|
(3,525
|
)
|
(3,547
|
)
|
|||
Retained
earnings
|
76,881
|
58,969
|
|||||
Accumulated
other comprehensive income
|
13,556
|
11,865
|
|||||
Total
stockholders’ equity
|
227,669
|
203,388
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
1,673,286
|
$
|
1,647,830
|
|||
|
|
|
Thirteen
Weeks
Ended
|
Twenty-six
Weeks
Ended
|
|||||||||||
|
July 1,
2006
|
July 2,
2005
|
July 1,
2006
|
July 2,
2005
|
|||||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||||||
Net
sales
|
$
|
375,114
|
$
|
282,871
|
$
|
731,078
|
$
|
508,181
|
|||||
Cost
of goods sold
|
299,320
|
233,477
|
583,941
|
417,493
|
|||||||||
|
|
|
|
|
|||||||||
Gross
profit
|
75,794
|
49,394
|
147,137
|
90,688
|
|||||||||
Operating
expenses:
|
|
|
|
|
|||||||||
Selling
|
9,723
|
7,593
|
20,143
|
14,895
|
|||||||||
General
and administrative
|
16,991
|
9,546
|
31,794
|
18,425
|
|||||||||
Research
and development
|
1,899
|
1,428
|
3,875
|
2,456
|
|||||||||
Amortization
of intangibles
|
5,325
|
1,985
|
10,689
|
3,758
|
|||||||||
Other
expenses
|
2,724
|
389
|
3,781
|
693
|
|||||||||
Operating
income
|
39,132
|
28,453
|
76,855
|
50,461
|
|||||||||
Other
expenses (income):
|
|||||||||||||
Unrealized
loss (gain) on investment in Southern Packaging
|
(515
|
)
|
937
|
(299
|
)
|
1,569
|
|||||||
|
|
|
|
|
|||||||||
Income
before interest and taxes
|
39,647
|
27,516
|
77,154
|
48,892
|
|||||||||
Interest:
|
|
|
|
|
|||||||||
Expense
|
22,721
|
16,513
|
45,123
|
30,535
|
|||||||||
Loss
on extinguished debt
|
—
|
7,045
|
—
|
7,045
|
|||||||||
Income
|
(218
|
)
|
(208
|
)
|
(612
|
)
|
(412
|
)
|
|||||
Income
before income taxes
|
17,144
|
4,166
|
32,643
|
11,724
|
|||||||||
Income
taxes
|
7,412
|
2,415
|
14,731
|
6,174
|
|||||||||
Net
income
|
$
|
9,732
|
$
|
1,751
|
$
|
17,912
|
$
|
5,550
|
|||||
|
|
|
|
|
|
Common
Stock
|
Additional
Paid-In
Capital
|
Adjustment
of
the
carryover
basis
of
continuing
stockholders
|
Notes
receivable—
common
stock
|
Treasury
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
(Losses)
|
Total
|
Balance
at
December 31,
2005
|
$
34
|
$
346,943
|
$
(196,603)
|
$
(14,273)
|
$ (3,547)
|
$
58,969
|
$
11,865
|
$
203,388
|
Collection
on
notes
receivable
|
—
|
—
|
—
|
3,234
|
—
|
—
|
—
|
3,234
|
Purchase
of
treasury
stock
|
—
|
(204)
|
—
|
—
|
(827)
|
—
|
—
|
(1,031)
|
Sale
of
treasury
stock
|
—
|
—
|
—
|
—
|
849
|
—
|
—
|
849
|
Interest
on
notes
receivable
|
—
|
—
|
—
|
(350)
|
—
|
—
|
—
|
(350)
|
Stock-based
compensation
|
—
|
1,976
|
—
|
—
|
—
|
—
|
—
|
1,976
|
Translation
gains
|
—
|
—
|
—
|
—
|
—
|
—
|
1,758
|
1,758
|
Other
compre-
hensive
losses
|
—
|
—
|
—
|
—
|
—
|
—
|
(67)
|
(67)
|
Net
income
|
—
|
—
|
—
|
—
|
—
|
17,912
|
—
|
17,912
|
Balance
at
July 1,
2006
|
$
34
|
$
348,715
|
$
(196,603)
|
$
(11,389)
|
$
(3,525)
|
$
76,881
|
$
13,556
|
$
227,669
|
|
|
|
|
|
|
|
|
|
|
Twenty-six
Weeks Ended
|
||||||
|
July 1,
2006
|
July 2,
2005
|
|||||
|
(Unaudited)
|
(Unaudited)
|
|||||
Operating
activities:
|
|
|
|||||
Net
income
|
$
|
17,912
|
$
|
5,550
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|||||
Depreciation
|
43,307
|
30,391
|
|||||
Non-cash
interest expense
|
954
|
982
|
|||||
Write
off of deferred financing fees
|
—
|
7,045
|
|||||
Amortization
of intangibles
|
10,689
|
3,758
|
|||||
Non-cash
compensation
|
1,976
|
—
|
|||||
Unrealized
(gain) loss on investment in Southern Packaging
|
(299
|
)
|
1,569
|
||||
Deferred
income taxes
|
13,833
|
5,641
|
|||||
Changes
in operating assets and liabilities:
|
|
|
|||||
Accounts
receivable, net
|
(26,077
|
)
|
(21,910
|
)
|
|||
Inventories
|
(10,783
|
)
|
8,697
|
||||
Prepaid
expenses and other assets
|
9,452
|
4,007
|
|||||
Accrued
interest
|
(3,118
|
)
|
1,759
|
||||
Payables
and accrued expenses
|
29,296
|
3,896
|
|||||
Net
cash provided by operating activities
|
87,142
|
51,385
|
|||||
Investing
activities:
|
|
|
|||||
Additions
to property and equipment
|
(52,217
|
)
|
(32,303
|
)
|
|||
Proceeds
from disposal of property and equipment
|
23
|
1,710
|
|||||
Acquisitions
of businesses
|
—
|
(468,106
|
)
|
||||
Net
cash used for investing activities
|
(52,194
|
)
|
(498,699
|
)
|
|||
Financing
activities:
|
|
|
|||||
Proceeds
from long-term borrowings
|
—
|
466,457
|
|||||
Payments
on long-term borrowings
|
(27,624
|
)
|
(13,900
|
)
|
|||
Proceeds
from notes receivable
|
3,234
|
—
|
|||||
Purchase
of treasury stock
|
(1,031
|
)
|
—
|
||||
Sale
of treasury stock
|
849
|
134
|
|||||
Net
cash provided by (used for) financing activities
|
(24,572
|
)
|
452,691
|
||||
Effect
of exchange rate changes on cash
|
119
|
12
|
|||||
Net
increase in cash and cash equivalents
|
10,495
|
5,389
|
|||||
Cash
and cash equivalents at beginning of period
|
24,756
|
264
|
|||||
Cash
and cash equivalents at end of period
|
$
|
35,251
|
$
|
5,653
|
|||
|
|
|
Current
assets
|
$
|
85,417
|
||
Property
and equipment
|
145,688
|
|||
Goodwill
|
134,003
|
|||
Customer
relationships
|
182,094
|
|||
Trademarks
|
16,140
|
|||
Other
intangibles
|
22,291
|
|||
Total
assets
|
585,633
|
|||
Current
liabilities
|
56,862
|
|||
Long-term
liabilities
|
73,942
|
|||
Total
liabilities
|
130,804
|
|||
Net
assets acquired
|
$
|
454,829
|
|
Established
at
Opening
Balance
Sheet
|
|
||
January 1,
2006
|
Payments
|
July 1,
2006
|
||
EITF
95-3 reserves
|
$
2,700
|
$ 2,221
|
$
(588)
|
$
1,633
|
|
July 1,
2006
|
December 31,
2005
|
|||||
Outstanding
Notes
|
$
|
335,000
|
$
|
335,000
|
|||
Debt
premium on existing 10 3/4%
Notes, net
|
7,111
|
7,699
|
|||||
Existing
term loans
|
767,050
|
791,025
|
|||||
Capital
leases
|
26,659
|
26,896
|
|||||
|
1,135,820
|
1,160,620
|
|||||
Less
current portion of long-term debt
|
14,419
|
13,928
|
|||||
|
$
|
1,121,401
|
$
|
1,146,692
|
|
Thirteen Weeks
Ended
July 2,
2005
|
Twenty-six Weeks
Ended
July 2,
2005
|
|||||
Reported
net income
|
$
|
1,751
|
$
|
5,550
|
|||
Total
stock-based employee compensation expense determined under fair
value
based method, for all awards, net of tax
|
(571
|
)
|
(1,143
|
)
|
|||
Pro
forma net income
|
$
|
1,180
|
$
|
4,407
|
|
Thirteen
Weeks
Ended
|
Twenty-six
Weeks
Ended
|
|||||||||||
|
July 1,
2006
|
July 2,
2005
|
July 1,
2006
|
July 2,
2005
|
|||||||||
Net
income
|
$
|
9,732
|
$
|
1,751
|
$
|
17,912
|
$
|
5,550
|
|||||
Other
comprehensive income (losses)
|
675
|
(3,468
|
)
|
(67
|
)
|
(3,488
|
)
|
||||||
Currency
translation income (losses)
|
1,422
|
(1,819
|
)
|
1,758
|
(2,904
|
)
|
|||||||
Comprehensive
income (losses)
|
$
|
11,829
|
$
|
(3,536
|
)
|
$
|
19,603
|
$
|
(842
|
)
|
|
Thirteen
Weeks
Ended
|
Twenty-six
Weeks
Ended
|
|||||||||||
|
July 1,
2006
|
July 2,
2005
|
July 1,
2006
|
July 2,
2005
|
|||||||||
Income
tax expense computed at statutory rate
|
$
|
6,000
|
$
|
1,458
|
$
|
11,425
|
$
|
4,103
|
|||||
State
income tax expense, net of federal taxes
|
815
|
258
|
1,551
|
727
|
|||||||||
Expenses
not deductible for income tax purposes
|
189
|
120
|
359
|
241
|
|||||||||
Change
in valuation allowance
|
810
|
666
|
1,618
|
1,205
|
|||||||||
Other
|
(402
|
)
|
(87
|
)
|
(222
|
)
|
(102
|
)
|
|||||
Income
tax expense
|
$
|
7,412
|
$
|
2,415
|
$
|
14,731
|
$
|
6,174
|
|
Thirteen
Weeks
Ended
|
Twenty-six
Weeks
Ended
|
|||||||||||
|
July 1,
2006
|
July 2,
2005
|
July 1,
2006
|
July 2,
2005
|
|||||||||
Components
of net period benefit cost:
|
|
|
|
|
|||||||||
Defined
Benefit Pension Plans
|
|
|
|
|
|||||||||
Service
cost
|
$
|
64
|
$
|
70
|
$
|
128
|
$
|
140
|
|||||
Interest
cost
|
562
|
317
|
1,124
|
417
|
|||||||||
Expected
return on plan assets
|
(634
|
)
|
(284
|
)
|
(1,268
|
)
|
(394
|
)
|
|||||
Amortization
of prior service cost
|
23
|
28
|
46
|
56
|
|||||||||
Recognized
actuarial loss
|
4
|
2
|
8
|
4
|
|||||||||
Net
periodic benefit cost
|
$
|
19
|
$
|
133
|
$
|
38
|
$
|
223
|
|||||
Retiree
Health Benefit Plan
|
|
|
|
|
|||||||||
Service
cost
|
$
|
4
|
$
|
2
|
$
|
8
|
$
|
2
|
|||||
Interest
cost
|
97
|
50
|
194
|
50
|
|||||||||
Recognized
actuarial loss
|
(23
|
)
|
—
|
(46
|
)
|
—
|
|||||||
Net
periodic benefit cost
|
$
|
78
|
$
|
52
|
$
|
156
|
$
|
52
|
|
Thirteen
Weeks Ended
|
Twenty-six
Weeks Ended
|
|||||||||||
|
July 1,
2006
|
July 2,
2005
|
July 1,
2006
|
July 2,
2005
|
|||||||||
Net
sales:
|
|
|
|
|
|||||||||
Open
Top
|
$
|
222,835
|
$
|
204,470
|
$
|
429,066
|
$
|
388,378
|
|||||
Closed
Top
|
152,279
|
78,401
|
302,012
|
119,803
|
|||||||||
Total
net sales
|
375,114
|
282,871
|
731,078
|
508,181
|
|||||||||
Adjusted
EBITDA:
|
|
|
|
|
|||||||||
Open
Top
|
40,951
|
34,156
|
79,999
|
64,986
|
|||||||||
Closed
Top
|
29,446
|
13,769
|
56,617
|
21,020
|
|||||||||
Total
Adjusted EBITDA
|
70,397
|
47,925
|
136,616
|
86,006
|
|||||||||
Total
assets:
|
|
|
|
|
|||||||||
Open
Top
|
885,252
|
800,096
|
885,252
|
800,096
|
|||||||||
Closed
Top
|
788,034
|
753,545
|
788,034
|
753,545
|
|||||||||
Total
assets
|
1,673,286
|
1,553,641
|
1,673,286
|
1,553,641
|
|||||||||
Reconciliation
of Adjusted EBITDA to net income:
|
|
|
|
|
|||||||||
Adjusted
EBITDA for reportable segments
|
$
|
70,397
|
$
|
47,925
|
$
|
136,616
|
$
|
86,006
|
|||||
Net
interest expense
|
(22,503
|
)
|
(23,350
|
)
|
(44,511
|
)
|
(37,168
|
)
|
|||||
Depreciation
|
(22,222
|
)
|
(16,395
|
)
|
(43,307
|
)
|
(30,391
|
)
|
|||||
Amortization
|
(5,325
|
)
|
(1,985
|
)
|
(10,689
|
)
|
(3,758
|
)
|
|||||
Income
taxes
|
(7,412
|
)
|
(2,415
|
)
|
(14,731
|
)
|
(6,174
|
)
|
|||||
Unrealized
gain (loss) on investment in Southern Packaging
|
515
|
(937
|
)
|
299
|
(1,569
|
)
|
|||||||
Acquisition
integration expense
|
(2,730
|
)
|
(1,092
|
)
|
(3,789
|
)
|
(1,396
|
)
|
|||||
Non-cash
compensation
|
(988
|
)
|
—
|
(1,976
|
)
|
—
|
|||||||
Net
income
|
$
|
9,732
|
$
|
1,751
|
$
|
17,912
|
$
|
5,550
|
|
July 1,
2006
|
||||||||||||||||||
|
BPC Holding
Corporation
(Parent)
|
Berry Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
ConsolidatingBalance
Sheet
|
|
|
|
|
|
|
|||||||||||||
Current
assets
|
$
|
—
|
$
|
134,178
|
$
|
244,146
|
$
|
25,073
|
$
|
—
|
$
|
403,397
|
|||||||
Net
property and equipment
|
—
|
92,996
|
322,238
|
21,236
|
—
|
436,470
|
|||||||||||||
Other
noncurrent assets
|
227,669
|
1,308,083
|
693,392
|
13,669
|
(1,409,394
|
)
|
833,419
|
||||||||||||
Total
assets
|
$
|
227,669
|
$
|
1,535,257
|
$
|
1,259,776
|
$
|
59,978
|
$
|
(1,409,394
|
)
|
$
|
1,673,286
|
||||||
Current
liabilities
|
$
|
—
|
$
|
97,241
|
$
|
96,614
|
$
|
9,724
|
$
|
—
|
$
|
203,579
|
|||||||
Noncurrent
liabilities
|
—
|
1,210,347
|
1,349,490
|
46,806
|
(1,364,605
|
)
|
1,242,038
|
||||||||||||
Equity
(deficit)
|
227,669
|
227,669
|
(186,328
|
)
|
3,448
|
(44,789
|
)
|
227,669
|
|||||||||||
Total
liabilities and equity (deficit)
|
$
|
227,669
|
$
|
1,535,257
|
$
|
1,259,776
|
$
|
59,978
|
$
|
(1,409,394
|
)
|
$
|
1,673,286
|
|
December 31,
2005
|
||||||||||||||||||
|
BPC
Holding
Corporation
(Parent)
|
Berry
Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Balance Sheet
|
|
|
|
|
|
|
|||||||||||||
Current
assets
|
$
|
—
|
$
|
132,192
|
$
|
224,471
|
$
|
22,826
|
$
|
—
|
$
|
379,489
|
|||||||
Net
property and equipment
|
—
|
91,831
|
311,649
|
19,964
|
—
|
423,444
|
|||||||||||||
Other
noncurrent assets
|
203,388
|
1,292,315
|
703,500
|
13,214
|
(1,367,520
|
)
|
844,897
|
||||||||||||
Total
assets
|
$
|
203,388
|
$
|
1,516,338
|
$
|
1,239,620
|
$
|
56,004
|
$
|
(1,367,520
|
)
|
$
|
1,647,830
|
||||||
Current
liabilities
|
$
|
—
|
$
|
81,349
|
$
|
87,269
|
$
|
9,090
|
$
|
—
|
$
|
177,708
|
|||||||
Noncurrent
liabilities
|
—
|
1,231,601
|
1,333,925
|
40,783
|
(1,339,575
|
)
|
1,266,734
|
||||||||||||
Equity
(deficit)
|
203,388
|
203,388
|
(181,574
|
)
|
6,131
|
(27,945
|
)
|
203,388
|
|||||||||||
Total
liabilities and equity (deficit)
|
$
|
203,388
|
$
|
1,516,338
|
$
|
1,239,620
|
$
|
56,004
|
$
|
(1,367,520
|
)
|
$
|
1,647,830
|
|
Thirteen
Weeks Ended July 1, 2006
|
||||||||||||||||||
|
BPC Holding
Corporation
(Parent)
|
Berry Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Statement of Operations
|
|
|
|
|
|
|
|||||||||||||
Net
sales
|
$
|
—
|
$
|
86,928
|
$
|
279,706
|
$
|
8,480
|
$
|
—
|
$
|
375,114
|
|||||||
Cost
of goods sold
|
—
|
64,320
|
226,213
|
8,787
|
—
|
299,320
|
|||||||||||||
Gross
profit
|
—
|
22,608
|
53,493
|
(307
|
)
|
—
|
75,794
|
||||||||||||
Operating
expenses
|
988
|
10,387
|
24,339
|
948
|
—
|
36,662
|
|||||||||||||
Operating
income (loss)
|
(988
|
)
|
12,221
|
29,154
|
(1,255
|
)
|
—
|
39,132
|
|||||||||||
Other
income
|
—
|
—
|
—
|
(515
|
)
|
—
|
(515
|
)
|
|||||||||||
Interest
expense (income), net
|
(159
|
)
|
(10,214
|
)
|
31,983
|
893
|
—
|
22,503
|
|||||||||||
Income
taxes
|
14
|
7,206
|
66
|
126
|
—
|
7,412
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
(10,575
|
)
|
4,654
|
1,759
|
—
|
4,162
|
—
|
||||||||||||
Net
income (loss)
|
$
|
9,732
|
$
|
10,575
|
$
|
(4,654
|
)
|
$
|
(1,759
|
)
|
$
|
(4,162
|
)
|
$
|
9,732
|
|
Thirteen
Weeks Ended July 2, 2005
|
||||||||||||||||||
|
BPC
Holding
Corporation
(Parent)
|
Berry
Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Statement of Operations
|
|
|
|
|
|
|
|||||||||||||
Net
sales
|
$
|
—
|
$
|
79,937
|
$
|
195,520
|
$
|
7,414
|
$
|
—
|
$
|
282,871
|
|||||||
Cost
of goods sold
|
—
|
59,815
|
166,359
|
7,303
|
—
|
233,477
|
|||||||||||||
Gross
profit
|
—
|
20,122
|
29,161
|
111
|
—
|
49,394
|
|||||||||||||
Operating
expenses
|
—
|
7,773
|
12,230
|
938
|
—
|
20,941
|
|||||||||||||
Operating
income (loss)
|
—
|
12,349
|
16,931
|
(827
|
)
|
—
|
28,453
|
||||||||||||
Other
expenses
|
—
|
—
|
—
|
937
|
—
|
937
|
|||||||||||||
Interest
expense (income), net
|
(197
|
)
|
1,517
|
21,723
|
307
|
—
|
23,350
|
||||||||||||
Income
taxes
|
14
|
2,278
|
50
|
73
|
—
|
2,415
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
(1,568
|
)
|
6,986
|
2,144
|
—
|
(7,562
|
)
|
—
|
|||||||||||
Net
income (loss)
|
$
|
1,751
|
$
|
1,568
|
$
|
(6,986
|
)
|
$
|
(2,144
|
)
|
$
|
7,562
|
$
|
1,751
|
|
Twenty-six
Weeks Ended July 1, 2006
|
||||||||||||||||||
|
BPC Holding
Corporation
(Parent)
|
Berry Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Statement of Operations
|
|
|
|
|
|
|
|||||||||||||
Net
sales
|
$
|
—
|
$
|
157,488
|
$
|
557,036
|
$
|
16,554
|
$
|
—
|
$
|
731,078
|
|||||||
Cost
of goods sold
|
—
|
115,458
|
451,175
|
17,308
|
—
|
583,941
|
|||||||||||||
Gross
profit
|
—
|
42,030
|
105,861
|
(754
|
)
|
—
|
147,137
|
||||||||||||
Operating
expenses
|
1,976
|
19,258
|
46,755
|
2,293
|
—
|
70,282
|
|||||||||||||
Operating
income (loss)
|
(1,976
|
)
|
22,772
|
59,106
|
(3,047
|
)
|
—
|
76,855
|
|||||||||||
Other
income
|
—
|
—
|
—
|
(299
|
)
|
—
|
(299
|
)
|
|||||||||||
Interest
expense (income), net
|
(349
|
)
|
(20,268
|
)
|
63,576
|
1,552
|
—
|
44,511
|
|||||||||||
Income
taxes
|
21
|
14,276
|
293
|
141
|
—
|
14,731
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
(19,560
|
)
|
9,204
|
4,441
|
—
|
5,915
|
—
|
||||||||||||
Net
income (loss)
|
$
|
17,912
|
$
|
19,560
|
$
|
(9,204
|
)
|
$
|
(4,441
|
)
|
$
|
(5,915
|
)
|
$
|
17,912
|
||||
Consolidating
Statement of Cash Flows
|
|
|
|
|
|
|
|||||||||||||
Net
income (loss)
|
$
|
17,912
|
$
|
19,560
|
$
|
(9,204
|
)
|
$
|
(4,441
|
)
|
$
|
(5,915
|
)
|
$
|
17,912
|
||||
Non-cash
expenses
|
1,976
|
22,642
|
43,496
|
2,346
|
—
|
70,460
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
(19,560
|
)
|
9,204
|
4,441
|
—
|
5,915
|
—
|
||||||||||||
Changes
in working capital
|
(350
|
)
|
8,203
|
(9,806
|
)
|
723
|
—
|
(1,230
|
)
|
||||||||||
Net
cash provided by (used for operating activities
|
(22
|
)
|
59,609
|
28,927
|
(1,372
|
)
|
—
|
87,142
|
|||||||||||
Net
cash used for investing activities
|
—
|
(5,115
|
)
|
(44,234
|
)
|
(2,845
|
)
|
—
|
(52,194
|
)
|
|||||||||
Net
cash provided by (used for) financing activities
|
22
|
(45,048
|
)
|
15,288
|
5,166
|
—
|
(24,572
|
)
|
|||||||||||
Effect
of exchange rate changes on cash
|
—
|
—
|
—
|
119
|
—
|
119
|
|||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
—
|
9,446
|
(19
|
)
|
1,068
|
—
|
10,495
|
||||||||||||
Cash
and cash equivalents at beginning of period
|
—
|
22,814
|
313
|
1,629
|
—
|
24,756
|
|||||||||||||
Cash
and cash equivalents at end of period
|
$
|
—
|
$
|
32,260
|
$
|
294
|
$
|
2,697
|
$
|
—
|
$
|
35,251
|
|
Twenty-six
Weeks Ended July 2, 2005
|
||||||||||||||||||
|
BPC Holding
Corporation
(Parent)
|
Berry Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Statement of Operations
|
|
|
|
|
|
|
|||||||||||||
Net
sales
|
$
|
—
|
$
|
140,959
|
$
|
353,523
|
$
|
13,699
|
$
|
—
|
$
|
508,181
|
|||||||
Cost
of goods sold
|
—
|
104,532
|
299,193
|
13,768
|
—
|
417,493
|
|||||||||||||
Gross
profit
|
—
|
36,427
|
54,330
|
(69
|
)
|
—
|
90,688
|
||||||||||||
Operating
expenses
|
—
|
15,113
|
23,392
|
1,722
|
—
|
40,227
|
|||||||||||||
Operating
income (loss)
|
—
|
21,314
|
30,938
|
(1,791
|
)
|
—
|
50,461
|
||||||||||||
Other
expenses
|
—
|
—
|
—
|
1,569
|
—
|
1,569
|
|||||||||||||
Interest
expense (income), net
|
(397
|
)
|
(3,157
|
)
|
40,229
|
493
|
—
|
37,168
|
|||||||||||
Income
taxes
|
21
|
6,001
|
56
|
96
|
—
|
6,174
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
(5,174
|
)
|
13,296
|
3,949
|
—
|
(12,071
|
)
|
—
|
|||||||||||
Net
income (loss)
|
$
|
5,550
|
$
|
5,174
|
$
|
(13,296
|
)
|
$
|
(3,949
|
)
|
$
|
12,071
|
$
|
5,550
|
|||||
|
|
|
|
|
|
|
|||||||||||||
Consolidating
Statement of Cash Flows
|
|
|
|
|
|
|
|||||||||||||
Net
income (loss)
|
$
|
5,550
|
$
|
5,174
|
$
|
(13,296
|
)
|
$
|
(3,949
|
)
|
$
|
12,071
|
$
|
5,550
|
|||||
Non-cash
expenses
|
—
|
21,375
|
24,487
|
3,524
|
—
|
49,386
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
(5,174
|
)
|
13,296
|
3,949
|
—
|
(12,071
|
)
|
—
|
|||||||||||
Changes
in working capital
|
(396
|
)
|
(19,736
|
)
|
20,315
|
(3,734
|
)
|
—
|
(3,551
|
)
|
|||||||||
Net
cash provided by (used for) operating activities
|
(20
|
)
|
20,109
|
35,455
|
(4,159
|
)
|
—
|
51,385
|
|||||||||||
Net
cash used for investing activities
|
—
|
(473,294
|
)
|
(11,678
|
)
|
(13,727
|
)
|
—
|
(498,699
|
)
|
|||||||||
Net
cash provided by (used for) financing activities
|
20
|
453,149
|
(18,821
|
)
|
18,343
|
—
|
452,691
|
||||||||||||
Effect
of exchange rate changes on cash
|
—
|
—
|
—
|
12
|
—
|
12
|
|||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
—
|
(36
|
)
|
4,956
|
469
|
—
|
5,389
|
||||||||||||
Cash
and cash equivalents at beginning of period
|
—
|
85
|
42
|
137
|
—
|
264
|
|||||||||||||
Cash
and cash equivalents at end of period
|
$
|
—
|
$
|
49
|
$
|
4,998
|
$
|
606
|
$
|
—
|
$
|
5,653
|
|
December 31,
2005
|
January 1,
2005
|
|||||
Assets
|
|
|
|||||
Current
assets:
|
|
|
|||||
Cash
and cash equivalents
|
$
|
24,756
|
$
|
264
|
|||
Accounts
receivable (less allowance for doubtful accounts of $5,766 at
December 31, 2005 and $3,207 at January 1, 2005)
|
140,443
|
83,162
|
|||||
Inventories:
|
|
|
|||||
Finished
goods
|
101,632
|
70,371
|
|||||
Raw
materials and supplies
|
50,716
|
38,663
|
|||||
|
152,348
|
109,034
|
|||||
Deferred
income taxes
|
22,905
|
—
|
|||||
Prepaid
expenses and other current assets
|
39,037
|
27,339
|
|||||
Total
current assets
|
379,489
|
219,799
|
|||||
Property
and equipment:
|
|
|
|||||
Land
|
12,292
|
10,016
|
|||||
Buildings
and improvements
|
92,810
|
64,758
|
|||||
Equipment
and construction in progress
|
497,364
|
317,784
|
|||||
|
602,466
|
392,558
|
|||||
Less
accumulated depreciation
|
179,022
|
110,586
|
|||||
|
423,444
|
281,972
|
|||||
Intangible
assets:
|
|
|
|||||
Deferred
financing fees, net
|
18,333
|
19,883
|
|||||
Customer
relationships, net
|
255,981
|
84,959
|
|||||
Goodwill
|
495,258
|
358,883
|
|||||
Trademarks,
net
|
47,065
|
33,448
|
|||||
Other
intangibles, net
|
28,260
|
6,106
|
|||||
|
844,897
|
503,279
|
|||||
Other
|
—
|
94
|
|||||
Total
assets
|
$
|
1,647,830
|
$
|
1,005,144
|
|||
Liabilities
and stockholders’ equity
|
|
|
|||||
Current
liabilities:
|
|
|
|||||
Accounts
payable
|
$
|
64,970
|
$
|
55,671
|
|||
Accrued
interest
|
20,165
|
18,816
|
|||||
Employee
compensation, payroll and other taxes
|
43,915
|
28,190
|
|||||
Accrued
expenses and other current liabilities
|
34,730
|
16,693
|
|||||
Current
portion of long-term debt
|
13,928
|
10,335
|
|||||
Total
current liabilities
|
177,708
|
129,705
|
|||||
Long-term
debt, less current portion
|
1,146,692
|
687,223
|
|||||
Deferred
income taxes
|
94,934
|
1,030
|
|||||
Other
long-term liabilities
|
25,108
|
3,295
|
|||||
Total
liabilities
|
1,444,442
|
821,253
|
Stockholders’
equity:
|
|
|
|||||
Preferred
stock; $;01 par value: 500,000 shares authorized; 0 shares issued
and
outstanding at December 31, 2005 and January 1,
2005
|
—
|
—
|
|||||
Common
stock; $.01 par value: 5,000,000 shares authorized; 3,398,807
shares
issued and 3,374,348 shares outstanding at December 31, 2005; and
3,398,807 shares issued and 3,377,923 shares outstanding at
January 1, 2005
|
34
|
34
|
|||||
Additional
paid-in capital
|
346,943
|
345,001
|
|||||
Adjustment
of the carryover basis of continuing stockholders
|
(196,603
|
)
|
(196,603
|
)
|
|||
Notes
receivable—common stock
|
(14,273
|
)
|
(14,856
|
)
|
|||
Treasury
stock: 24,459 shares and 20,502 shares of common stock at
December 31, 2005 and January 1, 2005,
respectively
|
(3,547
|
)
|
(2,049
|
)
|
|||
Retained
earnings
|
58,969
|
39,178
|
|||||
Accumulated
other comprehensive income
|
11,865
|
13,186
|
|||||
Total
stockholders’ equity
|
203,388
|
183,891
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
1,647,830
|
$
|
1,005,144
|
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 27,
2003
|
|||||||
Net
sales
|
$
|
1,169,704
|
$
|
814,213
|
$
|
551,876
|
||||
Cost
of goods sold
|
943,370
|
639,329
|
420,750
|
|||||||
Gross
profit
|
226,334
|
174,884
|
131,126
|
|||||||
Operating
expenses:
|
|
|
|
|||||||
Selling
|
34,145
|
26,361
|
23,883
|
|||||||
General
and administrative
|
49,477
|
38,518
|
25,699
|
|||||||
Research
and development
|
6,131
|
3,825
|
3,459
|
|||||||
Amortization
of intangibles
|
15,574
|
6,513
|
3,326
|
|||||||
Other
expenses
|
5,218
|
5,791
|
3,569
|
|||||||
Operating
income
|
115,789
|
93,876
|
71,190
|
|||||||
Other
expense (income)
|
|
|
|
|||||||
Gain
on disposal of property and equipment
|
—
|
—
|
(7
|
)
|
||||||
Unrealized
loss on investment in Southern Packaging
|
1,354
|
—
|
—
|
|||||||
Income
before interest and taxes
|
114,435
|
93,876
|
71,197
|
|||||||
Interest:
|
|
|
|
|||||||
Expense
|
74,445
|
54,076
|
46,251
|
|||||||
Loss
on extinguished debt
|
7,045
|
—
|
250
|
|||||||
Income
|
(1,171
|
)
|
(891
|
)
|
(838
|
)
|
||||
Income
before income taxes
|
34,116
|
40,691
|
25,534
|
|||||||
Income
taxes
|
14,325
|
17,740
|
12,486
|
|||||||
Net
income
|
$
|
19,791
|
$
|
22,951
|
$
|
13,048
|
|
Common
Stock
|
Additional
Paid-In
Capital
|
Adjustment of
the
carryover
basis
of
continuing
stockholders
|
Notes
receivable—
common
stock
|
Treasury
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
|
Comprehensive
Income
|
|||||||||||||||||||
Balance
at
December 28,
2002
|
$
|
28
|
$
|
281,816
|
$
|
(196,603
|
)
|
$
|
(14,399
|
)
|
$
|
—
|
$
|
3,179
|
$
|
1,142
|
$
|
75,163
|
$
|
4,321
|
||||||||
Issuance
of
common
stock
|
6
|
62,547
|
—
|
—
|
—
|
—
|
—
|
62,553
|
—
|
|||||||||||||||||||
Purchase
of
treasury
stock
|
—
|
—
|
—
|
999
|
(1,972
|
)
|
—
|
—
|
(973
|
)
|
—
|
|||||||||||||||||
Interest
on
notes
receivable
|
—
|
—
|
—
|
(757
|
)
|
—
|
—
|
—
|
(757
|
)
|
—
|
|||||||||||||||||
Translation
gain
|
—
|
—
|
—
|
—
|
—
|
—
|
3,645
|
3,645
|
3,645
|
|||||||||||||||||||
Other
comprehensive
losses
|
—
|
—
|
—
|
—
|
—
|
—
|
(88
|
)
|
(88
|
)
|
(88
|
)
|
||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
13,048
|
—
|
13,048
|
13,048
|
|||||||||||||||||||
Balance
at
December 27,
2003
|
34
|
344,363
|
(196,603
|
)
|
(14,157
|
)
|
(1,972
|
)
|
16,227
|
4,699
|
152,591
|
16,605
|
||||||||||||||||
Issuance
of
common
stock
|
—
|
53
|
—
|
—
|
—
|
—
|
—
|
53
|
—
|
|||||||||||||||||||
Collection
on
notes
receivable
|
—
|
—
|
—
|
73
|
—
|
—
|
—
|
73
|
—
|
|||||||||||||||||||
Purchase
of
treasury
stock
|
—
|
—
|
—
|
—
|
(192
|
)
|
—
|
—
|
(192
|
)
|
—
|
|||||||||||||||||
Sale
of
treasury
stock
|
—
|
—
|
—
|
—
|
115
|
—
|
—
|
115
|
—
|
|||||||||||||||||||
Interest
on
notes
receivable
|
—
|
—
|
—
|
(772
|
)
|
—
|
—
|
—
|
(772
|
)
|
—
|
|||||||||||||||||
Stock-based
compensation
|
—
|
585
|
—
|
—
|
—
|
—
|
—
|
585
|
|
|||||||||||||||||||
Translation
gain
|
—
|
—
|
—
|
—
|
—
|
—
|
2,743
|
2,743
|
2,743
|
|||||||||||||||||||
Other
comprehensive
gains
|
—
|
—
|
—
|
—
|
—
|
—
|
5,744
|
5,744
|
5,744
|
|||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
22,951
|
—
|
22,951
|
22,951
|
|||||||||||||||||||
Balance
at
January 1,
2005
|
34
|
345,001
|
(196,603
|
)
|
(14,856
|
)
|
(2,049
|
)
|
39,178
|
13,186
|
183,891
|
31,438
|
||||||||||||||||
Collection
on
notes
receivable
|
—
|
—
|
—
|
1,361
|
—
|
—
|
—
|
1,361
|
—
|
|||||||||||||||||||
Purchase
of
treasury
stock
|
—
|
(15
|
)
|
—
|
—
|
(5,498
|
)
|
—
|
—
|
(5,513
|
)
|
—
|
||||||||||||||||
Sale
of
treasury
stock
|
—
|
(195
|
)
|
—
|
—
|
4,000
|
—
|
—
|
3,805
|
—
|
||||||||||||||||||
Interest
on
notes
receivable
|
—
|
—
|
—
|
(778
|
)
|
—
|
—
|
—
|
(778
|
)
|
—
|
|||||||||||||||||
Stock-based
compensation
|
—
|
2,152
|
—
|
—
|
—
|
—
|
—
|
2,152
|
—
|
|||||||||||||||||||
Translation
losses
|
—
|
—
|
—
|
—
|
—
|
—
|
(3,225
|
)
|
(3,225
|
)
|
(3,225
|
)
|
||||||||||||||||
Other
comprehensive
gains
|
—
|
—
|
—
|
—
|
—
|
—
|
1,904
|
1,904
|
1,904
|
|||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
19,791
|
—
|
19,791
|
19,791
|
|||||||||||||||||||
Balance
at
December 31,
2005
|
$
|
34
|
$
|
346,943
|
$
|
(196,603
|
)
|
$
|
(14,273
|
)
|
$
|
(3,547
|
)
|
$
|
58,969
|
$
|
11,865
|
$
|
203,388
|
$
|
18,470
|
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 27,
2003
|
|||||||
Operating
activities
|
|
|
|
|||||||
Net
income
|
$
|
19,791
|
$
|
22,951
|
$
|
13,048
|
||||
Adjustments
to reconcile net income to net cash
provided
by operating activities:
|
|
|
|
|||||||
Depreciation
|
73,146
|
54,303
|
40,752
|
|||||||
Non-cash
interest expense
|
1,945
|
1,862
|
2,318
|
|||||||
Write
off of deferred financing fees
|
7,045
|
—
|
—
|
|||||||
Amortization
of intangibles
|
15,574
|
6,513
|
3,326
|
|||||||
Non-cash
compensation
|
2,152
|
585
|
—
|
|||||||
Unrealized
loss on investment in Southern Packaging
|
1,354
|
—
|
—
|
|||||||
Gain
on sale of property and equipment
|
—
|
—
|
(7
|
)
|
||||||
Deferred
income taxes
|
12,769
|
16,772
|
11,791
|
|||||||
Changes
in operating assets and liabilities:
|
|
|
|
|||||||
Accounts
receivable, net
|
(13,004
|
)
|
(7,216
|
)
|
(598
|
)
|
||||
Inventories
|
(8,720
|
)
|
(27,200
|
)
|
5,600
|
|||||
Prepaid
expenses and other assets
|
309
|
(7,022
|
)
|
(2.550
|
)
|
|||||
Accrued
interest
|
1,349
|
683
|
3,894
|
|||||||
Payables
and accrued expenses
|
(12,164
|
)
|
13,002
|
2,199
|
||||||
Net
cash provided by operating activities
|
101,546
|
75,233
|
79,773
|
|||||||
Investing
activities
|
|
|
|
|||||||
Additions
to property and equipment
|
(57,829
|
)
|
(52,624
|
)
|
(29,949
|
)
|
||||
Proceeds
from disposal of property and equipment
|
2,223
|
2,986
|
7
|
|||||||
Proceeds
from working capital settlement on business acquisition
|
—
|
7,397
|
—
|
|||||||
Investment
in Southern Packaging
|
—
|
(3,236
|
)
|
—
|
||||||
Acquisitions
of businesses
|
(464,392
|
)
|
—
|
(235,710
|
)
|
|||||
Net
cash used for investing activities
|
(519,998
|
)
|
(45,477
|
)
|
(265,652
|
)
|
||||
Financing
activities
|
|
|
|
|||||||
Proceeds
from long-term borrowings
|
465,052
|
880
|
149,944
|
|||||||
Payments
on long-term borrowings
|
(12,882
|
)
|
(55,996
|
)
|
(10,111
|
)
|
||||
Issuance
of common stock
|
—
|
53
|
62,553
|
|||||||
Purchase
of treasury stock
|
(5,513
|
)
|
(192
|
)
|
(973
|
)
|
||||
Proceeds
from notes receivable
|
1,361
|
73
|
—
|
|||||||
Sale
of treasury stock
|
3,805
|
115
|
—
|
|||||||
Debt
financing costs
|
(8,637
|
)
|
(641
|
)
|
(4,592
|
)
|
||||
Net
cash provided by (used for) financing activities
|
443,186
|
(55,708
|
)
|
196,821
|
||||||
Effect
of exchange rate changes on cash
|
(242
|
)
|
24
|
(363
|
)
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
24,492
|
(25,928
|
)
|
10,579
|
||||||
Cash
and cash equivalents at beginning of year
|
264
|
26,192
|
15,613
|
|||||||
Cash
and cash equivalents at end of year
|
$
|
24,756
|
$
|
264
|
$
|
26,192
|
|
Year
Ended
|
|||||||||
|
December 31, 2005
|
January 1, 2005
|
December 27, 2003
|
|||||||
Balance
at beginning of period
|
$
|
3,207
|
$
|
2,717
|
$
|
1,990
|
||||
Charged
to costs and expenses
|
592
|
323
|
150
|
|||||||
Charged
to other accounts(1)
|
1,851
|
—
|
545
|
|||||||
Deductions
and currency translation(2)
|
116
|
167
|
32
|
|||||||
Balance
at end of period
|
$
|
5,766
|
$
|
3,207
|
$
|
2,717
|
|
Year
Ended
|
|||||||||
|
December 31, 2005
|
January 1, 2005
|
December 27, 2003
|
|||||||
Risk-free
interest rate
|
4.5
|
%
|
3.1
|
%
|
3.0
|
%
|
||||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||
Volatility
factor
|
.25
|
.25
|
.25
|
|||||||
Expected
option life
|
5.0
years
|
5.0
years
|
5.0
years
|
|
Year
Ended
|
|||||||||
|
December 31, 2005
|
January 1, 2005
|
December 27, 2003
|
|||||||
Reported
net income
|
$
|
19,791
|
$
|
22,951
|
$
|
13,048
|
||||
Stock-based
employee compensation expense included in reported income, net
of
tax
|
1,291
|
351
|
—
|
|||||||
Total
stock-based employee compensation expense determined under fair
value
based method, for all awards, net of tax
|
(2,508
|
)
|
(2,294
|
)
|
(2,044
|
)
|
||||
Pro
forma net income
|
$
|
18,574
|
$
|
21,008
|
$
|
11,004
|
|
June 3, 2005
|
|||
Current
assets
|
$
|
85,088
|
||
Property
and equipment
|
145,690
|
|||
Goodwill
|
134,280
|
|||
Customer
relationships
|
182,094
|
|||
Trademarks
|
16,140
|
|||
Other
intangibles
|
22,291
|
|||
Total
assets
|
585,583
|
|||
Current
liabilities
|
55,802
|
|||
Long-term
liabilities
|
73,942
|
|||
Total
liabilities
|
129,744
|
|||
Net
assets acquired
|
$
|
455,839
|
|
Year
Ended
|
|||||||||
|
December 31, 2005
|
January 1, 2005
|
December 27, 2003
|
|||||||
Pro
forma net sales
|
$
|
1,338,019
|
$
|
1,189,059
|
$
|
1,094,920
|
||||
Pro
forma net income (loss)
|
21,468
|
16,448
|
(4,267
|
)
|
|
December 31, 2005
|
January 1, 2005
|
|||||
Deferred
financing fees
|
$
|
24,402
|
$
|
26,681
|
|||
Customer
relationships
|
275,614
|
93,641
|
|||||
Goodwill
|
495,258
|
358,883
|
|||||
Trademarks
|
49,588
|
33,448
|
|||||
Technology-based
|
27,206
|
5,115
|
|||||
Covenants
not to compete and other
|
4,613
|
2,622
|
|||||
Accumulated
amortization
|
(31,784
|
)
|
(17,111
|
)
|
|||
|
$
|
844,897
|
$
|
503,279
|
|
December 31, 2005
|
January 1, 2005
|
|||||
Berry
10 3/4%
Senior Subordinated Notes
|
$
|
335,000
|
$
|
335,000
|
|||
Debt
premium on 10 3/4%
Notes, net
|
7,699
|
8,876
|
|||||
Term
loans
|
791,025
|
330,780
|
|||||
Revolving
lines of credit
|
—
|
480
|
|||||
Nevada
Industrial Revenue Bonds
|
—
|
1,500
|
|||||
Capital
leases
|
26,896
|
20,922
|
|||||
|
1,160,620
|
697,558
|
|||||
Less
current portion of long-term debt
|
13,928
|
10,335
|
|||||
|
$
|
1,146,692
|
$
|
687,223
|
2006
|
$13,928
|
2007
|
12,216
|
2008
|
14,193
|
2009
|
10,384
|
2010
|
194,369
|
Thereafter
|
907,831
|
|
$1,152,921
|
|
At
December 31, 2005
|
||||||
|
Capital Leases
|
Operating Leases
|
|||||
2006
|
$
|
6,925
|
$
|
25,015
|
|||
2007
|
4,842
|
21,628
|
|||||
2008
|
4,901
|
19,169
|
|||||
2009
|
5,658
|
17,305
|
|||||
2010
|
693
|
15,852
|
|||||
Thereafter
|
8,029
|
88,835
|
|||||
|
$
|
31,048
|
$
|
187,804
|
|||
Less:
amount representing interest
|
(4,152
|
)
|
|
||||
Present
value of net minimum lease payments
|
$
|
26,896
|
|
|
Year
Ended
|
|||||||||
|
December 31, 2005
|
January 1, 2005
|
December 27, 2003
|
|||||||
Domestic
|
$
|
43,519
|
$
|
44,841
|
$
|
29,556
|
||||
Foreign
|
(9,403
|
)
|
(4,150
|
)
|
(4,022
|
)
|
||||
|
$
|
34,116
|
$
|
40,691
|
$
|
25,534
|
|
December 31, 2005
|
January 1, 2005
|
|||||
Deferred
tax assets:
|
|
|
|||||
Allowance
for doubtful accounts
|
$
|
1,877
|
$
|
804
|
|||
Inventory
|
1,918
|
1,409
|
|||||
Compensation
and benefit accruals
|
17,114
|
4,032
|
|||||
Insurance
reserves
|
1,557
|
363
|
|||||
Net
operating loss carryforwards
|
32,843
|
29,318
|
|||||
Alternative
minimum tax (AMT) credit carryforwards
|
6,398
|
3,821
|
|||||
Other
|
96
|
—
|
|||||
Total
deferred tax assets
|
61,803
|
39,747
|
|||||
Valuation
allowance
|
(6,741
|
)
|
(6,184
|
)
|
|||
Deferred
tax assets, net of valuation allowance
|
55,062
|
33,563
|
|||||
Deferred
tax liabilities:
|
|
|
|||||
Intangibles
|
88,837
|
14,793
|
|||||
Property
and equipment
|
35,888
|
19,418
|
|||||
Other
|
2,366
|
382
|
|||||
Total
deferred tax liabilities
|
127,091
|
34,593
|
|||||
Net
deferred tax liability
|
$
|
(72,029
|
)
|
$
|
(1,030
|
)
|
|
Year
Ended
|
|||||||||
|
December 31, 2005
|
January 1, 2005
|
December 27, 2003
|
|||||||
Current:
|
|
|
|
|||||||
Federal
|
$
|
735
|
$
|
363
|
$
|
402
|
||||
Foreign
|
189
|
133
|
61
|
|||||||
State
|
632
|
472
|
232
|
|||||||
Total
current
|
1,556
|
968
|
695
|
|||||||
Deferred:
|
|
|
|
|||||||
Federal
|
11,779
|
13,543
|
8,608
|
|||||||
Foreign
|
—
|
(173
|
)
|
—
|
||||||
State
|
990
|
3,402
|
3,183
|
|||||||
Total
deferred
|
12,769
|
16,772
|
11,791
|
|||||||
Income
tax expense
|
$
|
14,325
|
$
|
17,740
|
$
|
12,486
|
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 27,
2003
|
|||||||
Income
tax expense computed at statutory rate
|
$
|
11,941
|
$
|
14,244
|
$
|
8,721
|
||||
State
income tax expense, net of federal taxes
|
1,622
|
2,518
|
2,220
|
|||||||
Expenses
not deductible for income tax purposes
|
375
|
394
|
160
|
|||||||
Change
in valuation allowance
|
557
|
1,288
|
1,285
|
|||||||
Other
|
(170
|
)
|
(704
|
)
|
100
|
|||||
Income
tax expense
|
$
|
14,325
|
$
|
17,740
|
$
|
12,486
|
|
Defined
Benefit
Pension
Plans
|
Retiree
Health
Plan
|
||||||||
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 31,
2005
|
|||||||
Change
in benefit obligation:
|
|
|
|
|||||||
Benefit
obligation at beginning of year
|
$
|
44,026
|
$
|
5,639
|
$
|
9,338
|
||||
Service
cost
|
257
|
269
|
11
|
|||||||
Interest
cost
|
1,457
|
352
|
268
|
|||||||
Actuarial
loss (gain)
|
(1,186
|
)
|
42
|
(1,589
|
)
|
|||||
Benefits
paid
|
(2,269
|
)
|
(198
|
)
|
(364
|
)
|
||||
Benefit
obligation at end of year
|
42,285
|
6,104
|
7,664
|
|||||||
Change
in plan assets:
|
|
|
|
|||||||
Fair
value of plan assets at beginning of year
|
33,558
|
4,775
|
—
|
|||||||
Actual
return on plan assets
|
1,898
|
190
|
—
|
|||||||
Employer
contribution
|
494
|
415
|
364
|
|||||||
Benefits
paid
|
(2,269
|
)
|
(198
|
)
|
(364
|
)
|
||||
Fair
value of plan assets at end of year
|
33,681
|
5,182
|
—
|
|||||||
Funded
status
|
(8,604
|
)
|
(922
|
)
|
(7,664
|
)
|
||||
Unrecognized
net actuarial loss (gain)
|
(645
|
)
|
765
|
(1,589
|
)
|
|||||
Unrecognized
prior service cost
|
597
|
686
|
—
|
|||||||
Net
amount recognized
|
$
|
(8,652
|
)
|
$
|
529
|
$
|
(9,253
|
)
|
|
Defined
Benefit
Pension
Plans
|
Retiree
Health
Plan
|
||||||||
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 31,
2005
|
|||||||
Amounts
recognized in the consolidation balance sheet consisted
of:
|
|
|
|
|||||||
Prepaid
pension
|
$
|
413
|
$
|
529
|
$
|
—
|
||||
Accrued
benefit liability
|
(10,624
|
)
|
(1,456
|
)
|
(9,253
|
)
|
||||
Intangible
assets
|
597
|
685
|
—
|
|||||||
Accumulated
other comprehensive losses before income taxes
|
962
|
771
|
—
|
|||||||
Net
amount recognized
|
$
|
(8,652
|
)
|
$
|
529
|
$
|
(9,253
|
)
|
|
Defined
Benefit
Pension
Plans
|
Retiree
Health
Plan
|
||||||||
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 31,
2005
|
|||||||
|
|
(Percents)
|
|
|||||||
Weighted
average assumptions
|
|
|
|
|||||||
Discount
rate for benefit obligation
|
5.5
|
6.3
|
5.5
|
|||||||
Discount
rate for net benefit cost
|
5.3
|
6.3
|
5.0
|
|||||||
Expected
return on plan assets for net benefit costs
|
8.0
|
8.0
|
—
|
|
Defined
Benefit
Pension Plans
|
Retiree
Health Plan
|
|||||
2006
|
$
|
3,482
|
$
|
1,277
|
|||
2007
|
3,412
|
1,173
|
|||||
2008
|
3,353
|
1,005
|
|||||
2009
|
3,311
|
819
|
|||||
2010
|
3,247
|
684
|
|||||
2011-2015
|
16,253
|
2,485
|
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 27,
2003
|
|||||||
Components
of net period benefit cost:
|
|
|
|
|||||||
Defined
Benefit Pension Plans
|
|
|
|
|||||||
Service
cost
|
$
|
257
|
$
|
269
|
$
|
223
|
||||
Interest
cost
|
1,457
|
352
|
320
|
|||||||
Expected
return on plan assets
|
(1,692
|
)
|
(399
|
)
|
(345
|
)
|
||||
Amortization
of prior service cost
|
91
|
94
|
83
|
|||||||
Recognized
actuarial loss
|
60
|
36
|
12
|
|||||||
Net
periodic benefit cost
|
$
|
173
|
$
|
352
|
$
|
293
|
||||
Retiree
Health Benefit Plan
|
|
|
|
|||||||
Service
cost
|
$
|
11
|
$
|
—
|
$
|
—
|
||||
Interest
cost
|
268
|
—
|
—
|
|||||||
Net
periodic benefit cost
|
$
|
279
|
$
|
—
|
$
|
—
|
|
Year
Ended
|
||||||
|
December 31, 2005
|
January 1, 2005
|
|||||
Asset
Category
|
|
|
|||||
Equity
securities and equity-like instruments
|
51
|
%
|
60
|
%
|
|||
Debt
securities
|
47
|
34
|
|||||
Other
|
2
|
6
|
|||||
Total
|
100
|
%
|
100
|
%
|
|||
|
December 31,
2005
|
January 1,
2005
|
December 27,
2003
|
||||||
|
Number
of
Shares
|
|
Weighted
Average
Exercise
Price
|
Number
Of
Shares
|
|
Weighted
Average
Exercise
Price
|
Number
Of
Shares
|
|
Weighted
Average
Exercise
Price
|
Options
outstanding,
beginning
of
period
|
$590,156
|
|
$102
|
$530,662
|
|
$94
|
$545,684
|
|
$86
|
Options
granted
|
96,051
|
|
145
|
65,465
|
|
120
|
38,713
|
|
100
|
Options
exercised
|
(31,652)
|
|
105
|
(1,640)
|
|
53
|
(9,757)
|
|
57
|
Options
forfeited
|
(29,346)
|
|
117
|
(4,331)
|
|
93
|
(43,978)
|
|
101
|
Options
outstanding,
end
of
period
|
625,209
|
|
113
|
590,156
|
|
102
|
530,662
|
|
94
|
Option
price range
at
end of price
|
|
$32-$163
|
|
|
$32-$142
|
|
|
$32-$124
|
|
Options
exercisable
at end
of
period
|
|
365,265
|
|
|
291,879
|
|
|
203,326
|
|
Options
available
for
grant at period
end
|
|
4,216
|
|
|
43,489
|
|
|
22,588
|
|
Weighted
average
fair
value of
options
granted
during
period
|
|
$45
|
|
|
$34
|
|
|
$28
|
|
Range
of
Exercise
Prices
|
Number
Outstanding
At
December 31,
2005
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
at
December 31,
2005
|
$32
- $72
|
126,700
|
7 years
|
$49
|
118,586
|
$100
|
209,297
|
7
years
|
$100
|
111,722
|
$120
|
45,526
|
8
years
|
$120
|
18,210
|
$145
|
92,946
|
9
years
|
$145
|
11,233
|
$163
|
150,740
|
7
years
|
$163
|
105,514
|
|
625,209
|
|
|
365,265
|
|
December 31,
2005
|
January 1,
2005
|
|||||
Currency
translation
|
$
|
5,214
|
$
|
8,479
|
|||
Minimum
pension liability adjustment
|
(577
|
)
|
(462
|
)
|
|||
Unrealized
loss on interest rate collar
|
—
|
(4
|
)
|
||||
Unrealized
gain on interest rate hedges
|
3,548
|
—
|
|||||
Unrealized
gain on resin hedge contracts
|
3,680
|
5,173
|
|||||
|
$
|
11,865
|
$
|
13,186
|
|
Year
Ended
|
|||||||||
|
December 31,
2005
|
January 1,
2005
|
December 27,
2003
|
|||||||
Net
sales:
|
|
|
|
|||||||
Closed
Top
|
$
|
394,027
|
$
|
154,956
|
$
|
147,297
|
||||
Open
Top
|
775,677
|
659,257
|
404,579
|
|||||||
Total
net sales
|
1,169,704
|
814,213
|
551,876
|
|||||||
Adjusted
EBITDA:
|
|
|
|
|||||||
Closed
Top
|
71,154
|
29,880
|
30,228
|
|||||||
Open
Top
|
141,432
|
131,188
|
88,609
|
|||||||
Total
adjusted EBITDA
|
212,586
|
161,068
|
118,837
|
|||||||
Total
assets:
|
|
|
|
|||||||
Closed
Top
|
789,275
|
215,552
|
237,848
|
|||||||
Open
Top
|
858,555
|
789,592
|
777,958
|
|||||||
Total
assets
|
1,647,830
|
1,005,144
|
1,015,806
|
|||||||
Goodwill,
net:
|
|
|
|
|||||||
Closed
Top
|
210,614
|
78,375
|
85,756
|
|||||||
Open
Top
|
284,644
|
280,508
|
291,013
|
|||||||
Total
goodwill, net
|
495,258
|
358,883
|
376,769
|
|||||||
Reconciliation
of Adjusted EBITDA to net income:
|
|
|
|
|||||||
Adjusted
EBITDA for reportable segments
|
$
|
212,586
|
$
|
161,068
|
$
|
118,837
|
||||
Net
interest expense
|
(73,274
|
)
|
(53,185
|
)
|
(45,413
|
)
|
||||
Depreciation
|
(73,146
|
)
|
(54,303
|
)
|
(40,752
|
)
|
||||
Amortization
|
(15,574
|
)
|
(6,513
|
)
|
(3,326
|
)
|
||||
Income
Taxes
|
(14,325
|
)
|
(17,740
|
)
|
(12,486
|
)
|
||||
Gain
on disposal of property and equipment
|
—
|
—
|
7
|
|||||||
Loss
on investment in Southern Packaging
|
(1,354
|
)
|
—
|
—
|
||||||
Loss
on extinguished debt
|
(7,045
|
)
|
—
|
(250
|
)
|
|||||
Uncompleted
acquisition expense
|
—
|
—
|
(1,041
|
)
|
||||||
Acquisition
integration expense
|
(5,925
|
)
|
(3,969
|
)
|
(1,424
|
)
|
||||
Plant
shutdown expense
|
—
|
(1,822
|
)
|
(1,104
|
)
|
|||||
Non-cash
compensation
|
(2,152
|
)
|
(585
|
)
|
—
|
|||||
Net
income
|
$
|
19,791
|
$
|
22,951
|
$
|
13,048
|
|
December 31,
2005
|
||||||||||||||||||
|
BPC Holding
Corporation
(Parent)
|
Berry
Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Current
assets
|
$
|
—
|
$
|
132,192
|
$
|
224,471
|
$
|
22,826
|
$
|
—
|
$
|
379,489
|
|||||||
Net
property and
equipment
|
—
|
91,831
|
311,649
|
19,964
|
—
|
423,444
|
|||||||||||||
Other
non-current
assets
|
203,388
|
1,292,315
|
703,500
|
13,214
|
(1,367,520
|
)
|
844,897
|
||||||||||||
Total
assets
|
$
|
203,388
|
$
|
1,516,338
|
$
|
1,239,620
|
$
|
56,004
|
$
|
(1,367,520
|
)
|
$
|
1,647,830
|
||||||
Current
liabilities
|
$
|
—
|
$
|
81,349
|
$
|
87,269
|
$
|
9,090
|
$
|
—
|
$
|
177,708
|
|||||||
Noncurrent
liabilities
|
—
|
1,231,601
|
1,333,925
|
40,783
|
(1,339,575
|
)
|
1,266,734
|
||||||||||||
Equity
(deficit)
|
203,388
|
203,388
|
(181,574
|
)
|
6,131
|
(27,945
|
)
|
203,388
|
|||||||||||
Total
liabilities and
equity
(deficit)
|
$
|
203,388
|
$
|
1,516,338
|
$
|
1,239,620
|
$
|
56,004
|
$
|
(1,367,520
|
)
|
$
|
1,647,830
|
||||||
|
January 1,
2005
|
||||||||||||||||||
Balance
Sheets
|
BPC
Holding
Corporation
(Parent)
|
Berry
Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Current
assets
|
$
|
—
|
$
|
68,449
|
$
|
139,338
|
$
|
12,012
|
$
|
—
|
$
|
219,799
|
|||||||
Net
property and
equipment
|
—
|
76,555
|
188,841
|
16,576
|
—
|
281,972
|
|||||||||||||
Other
non-current assets
|
183,891
|
770,971
|
363,091
|
12,328
|
(826,908
|
)
|
503,373
|
||||||||||||
Total
assets
|
$
|
183,891
|
$
|
915,975
|
$
|
691,270
|
$
|
40,916
|
$
|
(826,908
|
)
|
$
|
1,005,144
|
||||||
Current
liabilities
|
$
|
—
|
$
|
81,053
|
$
|
42,004
|
$
|
6,648
|
$
|
—
|
$
|
129,705
|
|||||||
Noncurrent
liabilities
|
—
|
651,031
|
747,720
|
27,258
|
(734,461
|
)
|
691,548
|
||||||||||||
Equity
(deficit)
|
183,891
|
183,891
|
(98,454
|
)
|
7,010
|
(92,447
|
)
|
183,891
|
|||||||||||
Total
liabilities and equity (deficit)
|
$
|
183,891
|
$
|
915,975
|
$
|
691,270
|
$
|
40,916
|
$
|
(826,908
|
)
|
$
|
1,005,144
|
|
Year
Ended December 31, 2005
|
||||||||||||||||||
|
BPC
Holding
Corporation
(Parent)
|
Berry
Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Statements of Income
|
|
|
|
|
|
|
|||||||||||||
Net
sales
|
$
|
—
|
$
|
283,261
|
$
|
859,192
|
$
|
27,251
|
$
|
—
|
$
|
1,169,704
|
|||||||
Cost
of goods sold
|
—
|
202,631
|
712,325
|
28,414
|
—
|
943,370
|
|||||||||||||
Gross
profit
|
—
|
80,630
|
146,867
|
(1,163
|
)
|
—
|
226,334
|
||||||||||||
Operating
expenses
|
(55,315
|
)
|
41,578
|
119,540
|
4,742
|
—
|
110,545
|
||||||||||||
Operating
income (loss)
|
55,315
|
39,052
|
27,327
|
(5,905
|
)
|
—
|
115,789
|
||||||||||||
Other
expense
|
—
|
—
|
—
|
1,354
|
—
|
1,354
|
|||||||||||||
Interest
expense (income), net
|
(778
|
)
|
(26,219
|
)
|
98,127
|
2,144
|
—
|
73,274
|
|||||||||||
Loss
on extinguished debt
|
—
|
7,045
|
—
|
—
|
—
|
7,045
|
|||||||||||||
Income
taxes
|
35
|
13,835
|
266
|
189
|
—
|
14,325
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
36,267
|
80,658
|
9,592
|
—
|
(126,517
|
)
|
—
|
||||||||||||
Net
income (loss)
|
$
|
19,791
|
$
|
(36,267
|
)
|
$
|
(80,658
|
)
|
$
|
(9,592
|
)
|
$
|
126,517
|
$
|
19,791
|
Consolidating
Statements of Cash Flows
|
|
|
|
|
|
|
|||||||||||||
Net
income (loss)
|
$
|
19,791
|
$
|
(36,267
|
)
|
$
|
(80,658
|
)
|
$
|
(9,592
|
)
|
$
|
126,517
|
$
|
19,791
|
||||
Non-cash
expenses
|
2,152
|
36,861
|
69,302
|
5,670
|
—
|
113,985
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
36,267
|
80,658
|
9,592
|
—
|
(126,517
|
)
|
—
|
||||||||||||
Changes
in working capital
|
(776
|
)
|
(17,902
|
)
|
(10,141
|
)
|
(3,411
|
)
|
—
|
(32,230
|
)
|
||||||||
Net
cash provided by (used for) operating activities
|
57,434
|
63,350
|
(11,905
|
)
|
(7,333
|
)
|
—
|
101,546
|
|||||||||||
Net
cash used for investing activities
|
—
|
(478,962
|
)
|
(24,219
|
)
|
(16,817
|
)
|
—
|
(519,998
|
)
|
|||||||||
Net
cash provided by (used for) financing activities
|
(57,434
|
)
|
438,341
|
36,395
|
25,884
|
—
|
443,186
|
||||||||||||
Effect
on exchange rate changes on cash
|
—
|
—
|
—
|
(242
|
)
|
—
|
(242
|
)
|
|||||||||||
Net
increase in cash and cash equivalents
|
—
|
22,729
|
271
|
1,492
|
—
|
24,492
|
|||||||||||||
Cash
and cash equivalents at beginning of year
|
—
|
85
|
42
|
137
|
—
|
264
|
|||||||||||||
Cash
and cash equivalents at end of year
|
$
|
—
|
$
|
22,814
|
$
|
313
|
$
|
1,629
|
$
|
—
|
$
|
24,756
|
|
Year
Ended January 1, 2005
|
||||||||||||||||||
|
BPC
Holding
Corporation
(Parent)
|
Berry
Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Statements of Income
|
|
|
|
|
|
|
|||||||||||||
Net
sales
|
$
|
—
|
$
|
236,448
|
$
|
554,107
|
$
|
23,658
|
$
|
—
|
$
|
814,213
|
|||||||
Cost
of goods sold
|
—
|
166,248
|
449,760
|
23,321
|
—
|
639,329
|
|||||||||||||
Gross
profit
|
—
|
70,200
|
104,347
|
337
|
—
|
174,884
|
|||||||||||||
Operating
expenses
|
(39,306
|
)
|
37,072
|
79,493
|
3,749
|
—
|
81,008
|
||||||||||||
Operating
income (loss)
|
39,306
|
33,128
|
24,854
|
(3,412
|
)
|
—
|
93,876
|
||||||||||||
Interest
expense (income), net
|
(772
|
)
|
(15,007
|
)
|
68,226
|
738
|
—
|
53,185
|
|||||||||||
Income
taxes (benefit)
|
42
|
17,458
|
281
|
(41
|
)
|
—
|
17,740
|
||||||||||||
Equity
in net (income) loss from subsidiary
|
17,085
|
47,762
|
4,109
|
—
|
(68,956
|
)
|
—
|
||||||||||||
Net
income (loss)
|
$
|
22,951
|
$
|
(17,085
|
)
|
$
|
(47,762
|
)
|
$
|
(4,109
|
)
|
$
|
68,956
|
$
|
22,951
|
Consolidating
Statements of Cash Flows
|
|
|
|
|
|
|
|||||||||||||
Net
income (loss)
|
$
|
22,951
|
$
|
(17,085
|
)
|
$
|
(47,762
|
)
|
$
|
(4,109
|
)
|
$
|
68,956
|
$
|
22,951
|
||||
Non-cash
expenses
|
585
|
33,596
|
42,565
|
3,485
|
—
|
80,231
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
17,085
|
47,762
|
4,109
|
—
|
(68,956
|
)
|
—
|
||||||||||||
Changes
in working capital
|
(775
|
)
|
10,520
|
(36,689
|
)
|
(1,005
|
)
|
—
|
(27,949
|
)
|
|||||||||
Net
cash provided by (used for) operating activities
|
39,846
|
74,793
|
(37,777
|
)
|
(1,629
|
)
|
—
|
75,233
|
|||||||||||
Net
cash provided by (used for) investing activities
|
—
|
(21,125
|
)
|
(26,426
|
)
|
2,074
|
—
|
(45,477
|
)
|
||||||||||
Net
cash provided by (used for) financing activities
|
(39,846
|
)
|
(77,869
|
)
|
62,575
|
(568
|
)
|
—
|
(55,708
|
)
|
|||||||||
Effect
on exchange rate changes on cash
|
—
|
—
|
—
|
24
|
—
|
24
|
|||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
—
|
(24,201
|
)
|
(1,628
|
)
|
(99
|
)
|
—
|
(25,928
|
)
|
|||||||||
Cash
and cash equivalents at beginning of year
|
—
|
24,286
|
1,670
|
236
|
—
|
26,192
|
|||||||||||||
Cash
and cash equivalents at end of year
|
$
|
—
|
$
|
85
|
$
|
42
|
$
|
137
|
$
|
—
|
$
|
264
|
|
Year
Ended December 27, 2003
|
||||||||||||||||||
|
BPC
Holding
Corporation
(Parent)
|
Berry
Plastics
Corporation
(Issuer)
|
Combined
Guarantor
Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
|||||||||||||
Consolidating
Statements of Income
|
|
|
|
|
|
|
|||||||||||||
Net
sales
|
$
|
—
|
$
|
200,886
|
$
|
328,984
|
$
|
22,006
|
$
|
—
|
$
|
551,876
|
|||||||
Cost
of goods sold
|
—
|
140,139
|
259,720
|
20,891
|
—
|
420,750
|
|||||||||||||
Gross
profit
|
—
|
60,747
|
69,264
|
1,115
|
—
|
131,126
|
|||||||||||||
Operating
expenses
|
(25,840
|
)
|
34,536
|
47,545
|
3,695
|
—
|
59,936
|
||||||||||||
Operating
income (loss)
|
25,840
|
26,211
|
21,719
|
(2,580
|
)
|
—
|
71,190
|
||||||||||||
Other
income
|
—
|
—
|
(7
|
)
|
—
|
—
|
(7
|
)
|
|||||||||||
Interest
expense, net
|
(763
|
)
|
(592
|
)
|
45,326
|
1,442
|
—
|
45,413
|
|||||||||||
Loss
on extinguished debt
|
—
|
250
|
—
|
—
|
—
|
250
|
|||||||||||||
Income
taxes
|
27
|
12,388
|
10
|
61
|
—
|
12,486
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
13,528
|
27,693
|
4,083
|
—
|
(45,304
|
)
|
—
|
||||||||||||
Net
income (loss)
|
$
|
13,048
|
$
|
(13,528
|
)
|
$
|
(27,693
|
)
|
$
|
(4,083
|
)
|
$
|
45,304
|
$
|
13,048
|
||||
Consolidating
Statements of Cash Flows
|
|
|
|
|
|
|
|||||||||||||
Net
income (loss)
|
$
|
13,048
|
$
|
(13,528
|
)
|
$
|
(27,693
|
)
|
$
|
(4,083
|
)
|
$
|
45,304
|
$
|
13,048
|
||||
Non-cash
expenses
|
—
|
26,817
|
28,136
|
3,227
|
—
|
58,180
|
|||||||||||||
Equity
in net (income) loss from subsidiary
|
13,528
|
27,693
|
4,083
|
—
|
(45,304
|
)
|
—
|
||||||||||||
Changes
in working capital
|
(758
|
)
|
1,159
|
7,463
|
681
|
—
|
8,545
|
||||||||||||
Net
cash provided by (used for) operating activities
|
25,818
|
42,141
|
11,989
|
(175
|
)
|
—
|
79,773
|
||||||||||||
Net
cash used for investing activities
|
—
|
(244,511
|
)
|
(16,474
|
)
|
(4,667
|
)
|
—
|
(265,652
|
)
|
|||||||||
Net
cash provided by (used for) financing activities
|
(25,819
|
)
|
211,499
|
5,891
|
5,250
|
—
|
196,821
|
||||||||||||
Effect
on exchange rate changes on cash
|
—
|
—
|
—
|
(363
|
)
|
—
|
(363
|
)
|
|||||||||||
Net
increase (decrease) in cash and cash equivalents
|
(1
|
)
|
9,129
|
1,406
|
45
|
—
|
10,579
|
||||||||||||
Cash
and cash equivalents at beginning of year
|
1
|
15,157
|
264
|
191
|
—
|
15,613
|
|||||||||||||
Cash
and cash equivalents at end of year
|
$
|
—
|
$
|
24,286
|
$
|
1,670
|
$
|
236
|
$
|
—
|
$
|
26,192
|
|
2005
|
2004
|
|||||||||||||||||||||||
|
First
|
Second
|
Third
|
Fourth
|
First
|
Second
|
Third
|
Fourth
|
|||||||||||||||||
Net
sales
|
$
|
225,310
|
$
|
282,871
|
$
|
342,305
|
$
|
319,218
|
$
|
191,726
|
$
|
211,041
|
$
|
204,803
|
$
|
206,643
|
|||||||||
Cost
of sales
|
184,016
|
233,477
|
273,129
|
252,748
|
148,615
|
164,565
|
160,824
|
165,325
|
|||||||||||||||||
Gross
profit
|
$
|
41,294
|
$
|
49,394
|
$
|
69,176
|
$
|
66,470
|
$
|
43,111
|
$
|
46,476
|
$
|
43,979
|
$
|
41,318
|
|||||||||
Net
income
|
$
|
3,799
|
$
|
1,751
|
$
|
9,085
|
$
|
5,156
|
$
|
4,822
|
$
|
7,391
|
$
|
6,641
|
$
|
4,097
|