|
·
|
The
exchange offer expires at 5:00 p.m., New York City time, on June
12, 2007,
unless extended.
|
|
·
|
Completion
of the exchange offer is subject to certain customary conditions,
which
Berry Holding may waive.
|
|
·
|
The
exchange offer is not conditioned upon any minimum principal amount
of the
outstanding notes being tendered for
exchange.
|
|
·
|
You
may withdraw tenders of outstanding notes at any time before the
exchange
offer expires.
|
|
·
|
All
outstanding notes that are validly tendered and not withdrawn will
be
exchanged for exchange notes.
|
|
·
|
The
exchange of outstanding notes for exchange notes pursuant to the
exchange
offer should not be a taxable event for U.S. federal income tax
purposes.
|
|
·
|
There
is no existing market for the exchange notes to be issued, and
Berry
Holding does not intend to apply for listing or quotation on any
exchange
or other securities market to be issued, and Berry Holding does
not intend
to apply for listing or quotation on any exchange or other securities
market.
|
|
Prospectus
Summary
|
1
|
|
Summary
Historical and Pro Forma Financial and Other Data
|
14
|
|
Where
You Can Find More Information About Us
|
17
|
|
Disclosure
Regarding Forward-Looking Statements
|
18
|
|
Terms
Used in this Prospectus
|
20
|
|
Risk
Factors
|
22
|
|
Risks
Related to Our Business
|
32
|
|
The
Exchange Offer
|
37
|
|
Use
of Proceeds
|
48
|
|
Capitalization
|
49
|
|
Unaudited
Pro Forma Condensed Supplemental Combined Financial
Information
|
50
|
|
Selected
Historical Financial Data of Old Berry Holding
|
57
|
|
Selected
Historical Financial Data of Old Covalence
|
59
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations -
Old Berry Holding
|
61
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations -
Old Covalence
|
73
|
|
Old
Covalence Management’s Discussion and Analysis of Financial Condition and
Results of Operations
|
83
|
|
Principal
Credit Facilities of Berry Holding
|
104
|
|
Old
Berry Holding Business
|
107
|
|
Old
Covalence Business
|
119
|
|
Recent
Developments
|
130
|
|
Management
|
131
|
|
Certain
Relationships and Related Party Transactions
|
141
|
|
Principal
Stockholders of Berry Plastics Group
|
143
|
|
Description
of Other Indebtedness
|
145
|
|
Description
of the Exchange Notes
|
149
|
|
Material
United States Federal Income Tax Consequences
|
211
|
|
Plan
of Distribution
|
213
|
|
Legal
Matters
|
214
|
|
Experts
|
214
|
|
Where
You Can Find Additional Information
|
215
|
|
Index
to Financial Statements
|
F-1
|
|
Securities
Offered
|
Up
to $265,000,000 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
|
Berry
Holding is offering to exchange the exchange notes for a like principal
amount of the outstanding notes.
|
|
|
Berry
Holding will accept any and all outstanding notes validly tendered
and not
withdrawn prior to 5:00 p.m., New York City time, on June 12, 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. 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 $265,000,000
aggregate principal amount of outstanding 10¼% Series A Senior
Subordinated Notes due 2016. Berry Holding 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 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
June 12,
2007, unless Berry Holding extends 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. Berry Holding 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. Berry Holding
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, Berry
Holding
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 February 16, 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, Berry Holding 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
|
Berry
Holding will not recognize any gain or loss for accounting purposes
upon
the completion of the exchange offer. The expenses of the exchange
offer
that Berry Holding 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
|
Berry
Holding will not receive any proceeds from the issuance of exchange
notes
in the exchange offer. Berry Holding will pay all expenses incident
to the
exchange offer. See “Use of
Proceeds.”
|
|
Issuer
|
Berry
Plastics Holding Corporation (successor by merger to Covalence
Specialty
Materials Corp.)
|
|
|
Securities
|
Up
to $265,000,000 in aggregate principal amount of 10¼% Senior Subordinated
Notes due 2016.
|
|
|
Maturity
|
March
1, 2016.
|
|
|
Interest
|
Annual
rate: 10¼%
|
|
|
Payment
frequency: semiannually on March 1 and September 1.
|
||
|
First
payment: September 1, 2006.
|
||
|
Ranking
|
The
exchange notes will be our general unsecured senior subordinated
obligations. Accordingly, they will rank:
|
|
|
• junior
to all of our existing and future senior debt, including all borrowings
under our senior secured credit facilities and the Second Priority
Fixed
and Floating Rate Notes;
|
||
|
• effectively
junior to our secured indebtedness to the extent of the value of
the
assets securing that debt;
|
||
|
• equally
with all of our future senior subordinated debt;
|
||
|
• senior
to any of our future debt that expressly provides that it is subordinated
to the exchange notes; and
|
||
|
• effectively
junior to all of the liabilities of our subsidiaries that are not
guarantors.
|
||
|
As
of December 30, 2006, we had outstanding on a combined pro forma
basis:
· No
borrowings outstanding under our $400 million Asset Based Revolving
Line
of Credit. We did have $21.4 million of outstanding letters of
credit and
borrowing availability of $378.6 million subject to a borrowing
base.
· $1,974.6
million of secured senior indebtedness consisting primarily of
first
priority term B loans under the senior secured credit facilities
and
Second Priority Fixed and Floating Rate Notes.
· $425
million of 11% unsecured senior secured subordinated indebtedness,
consisting of the senior subordinated notes.
|
|
Guarantees
|
The
exchange notes will be guaranteed, jointly and severally, on a
senior
subordinated basis, by each of our domestic subsidiaries that guarantees
our senior secured credit facilities.
|
|
|
The
guarantees of the exchange notes will be general unsecured senior
subordinated obligations of the exchange note guarantors. Accordingly,
they will rank:
|
||
|
• junior
to all existing and future senior debt of the exchange note guarantors,
including the exchange note guarantors’ guarantees of borrowings under our
senior secured credit facilities and floating rate
loan,.
|
||
|
• effectively
junior to all secured indebtedness of that guarantor to the extent
of the
value of the assets securing that debt;
|
||
|
• equally
with any future senior subordinated debt of the exchange note guarantors;
and
|
||
|
• senior
to all future debt of the exchange note guarantors that expressly
provides
that it is subordinated to the guarantees of the exchange
notes.
|
||
|
As
of December 30, 2006, on a pro forma basis the guarantees of the
notes
were subordinated to $1,974.6 million of senior debt of the note
guarantors, which primarily consists of guarantees of our borrowings
under
our senior secured credit facilities and second priority fixed
and
floating rate notes.
|
||
|
Optional
Redemption
|
Berry
Holding may redeem the exchange notes, in whole or in part, at
any time on
or after March 1, 2011, at the redemption prices described in “Description
of the Exchange Notes—Optional Redemption,” plus accrued and unpaid
interest, if any. Prior to March 1, 2011, Berry Holding may redeem
the
exchange notes, in whole or in part, at a price equal to 100% of
the
principal amount plus a “make- whole” premium, plus accrued and unpaid
interest, if any, to the date of
redemption.
|
|
In
addition, on or before March 1, 2009, Berry Holding may redeem
up to 35%
of the exchange notes with the net cash proceeds from certain equity
offerings at a redemption price of 100% of the principal amount
of the
notes redeemed. However, Berry Holding may only make such redemptions
if
at least 65% of the aggregate principal amount of the exchange
notes
issued under the indenture remains outstanding immediately after
the
occurrence of such redemption.
|
||
|
Change
of Control
|
If
Berry Holding experiences specific kinds of changes of control,
Berry
Holding must offer to purchase the exchange notes at 101% of their
face
amount, plus accrued interest.
|
|
|
Certain
Covenants
|
The
indenture governing the exchange notes will, among other things,
limit our
ability and the ability of our restricted subsidiaries
to:
|
|
|
• borrow
money or sell disqualified stock or preferred stock;
|
||
|
• pay
dividends on or redeem or repurchase stock;
|
||
|
• make
certain types of investments;
|
||
|
• sell
assets;
|
||
|
• incur
certain liens;
|
||
|
• restrict
dividends or other payments from restricted
subsidiaries;
|
||
|
• enter
into transactions with affiliates; and
|
||
|
• consolidate,
merge or sell all or substantially all of our assets.
|
||
|
These
covenants contain important exceptions, limitations and qualifications.
For more details, see “Description of the Exchange
Notes.”
|
|
|
•
|
|
the
results of operations of Covalence Specialty Materials Corp. for
the
period from February 17, 2006 to September 29, 2006 and the three
months
ended December 29, 2006, which reflect purchase accounting adjustments
from the date of acquisition of Covalence by Apollo on February
16,
2006;
|
|
|
•
|
|
the
results of operations of Berry Plastics Holding Corporation (Old
Berry
Holding) for the period from September 20, 2006 to September 30,
2006 and
the three months ended December 30, 2006, which reflect purchase
accounting adjustments from the date of acquisition of Old Berry
Holding
by Apollo on September 20, 2006.
|
|
Historical
|
Pro
Forma
|
||||||||||||
|
Period
from February 17,
|
Three
months
|
Three
months
|
|||||||||||
|
2006
to
September
30, 2006
|
ended
December
30, 2006
|
Year
Ended September 30, 2006
|
Ended
December
30, 2006
|
||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||
|
Net
sales
|
$
|
1,138.8
|
$
|
703.6
|
$
|
3,173.4
|
$
|
703.6
|
|||||
|
Cost
of goods sold
|
1,022.9
|
617.2
|
2,701.4
|
617.6
|
|||||||||
|
Gross
profit
|
115.9
|
86.4
|
472.0
|
86.0
|
|||||||||
|
Operating
expenses
|
108.2
|
78.9
|
326.6
|
79.5
|
|||||||||
|
Operating
income
|
7.7
|
7.5
|
145.4
|
6.5
|
|||||||||
|
Other
expense (income)
|
(1.3
|
)
|
0.1
|
(1.3
|
)
|
0.1
|
|||||||
|
Interest
expense, net
|
46.5
|
59.9
|
236.4
|
59.1
|
|||||||||
|
Loss
on extinguished debt
|
13.6
|
-
|
13.6
|
-
|
|||||||||
|
Loss
before taxes
|
(51.1
|
)
|
(52.5
|
)
|
(103.3
|
)
|
(52.7
|
)
|
|||||
|
Income
tax benefit
|
(18.1
|
)
|
(19.5
|
)
|
(38.7
|
)
|
(19.8
|
)
|
|||||
|
Minority
interest
|
(1.8
|
)
|
(2.2
|
)
|
-
|
-
|
|||||||
|
Net
loss
|
$
|
(31.2
|
)
|
$
|
(30.8
|
)
|
$
|
(64.6
|
)
|
$
|
(32.9
|
)
|
|
|
Cash
Flow Data
|
|||||||||||||
|
Cash
flows provided by operating activities
|
$
|
96.7
|
$
|
59.8
|
$
|
-
|
$
|
-
|
|||||
|
Cash
flows used in investing activities
|
(3,252.0
|
)
|
(44.4
|
)
|
-
|
-
|
|||||||
|
Cash
flows provided by financing activities
|
3,212.5
|
|
(24.7
|
)
|
-
|
-
|
|||||||
|
Other
Data:
|
|||||||||||||
|
Capital
expenditures
|
34.8
|
14.2
|
-
|
14.2
|
|||||||||
|
Bank
Compliance EBITDA(b)
|
80.3
|
-
|
-
|
-
|
|||||||||
|
Depreciation
and amortization
|
54.6
|
49.1
|
198.5
|
50.1
|
|||||||||
|
Ratio
of earnings to fixed charges
|
(c)
|
(c)
|
(c)
|
(c)
|
|||||||||
|
Balance
Sheet Data (at end of period)
|
|||||||||||||
|
Cash
and equivalents
|
$
|
83.1
|
$
|
73.6
|
$
|
-
|
$
|
107.5
|
|||||
|
Working
capital(a)
|
442.3
|
403.8
|
-
|
438.1
|
|||||||||
|
Total
assets
|
3,821.4
|
3,658.5
|
-
|
3,900.3
|
|||||||||
|
Total
debt
|
2,628.3
|
2,605.1
|
-
|
2,658.3
|
|||||||||
|
Total
liabilities
|
3,346.6
|
3,215.5
|
-
|
3,302.2
|
|||||||||
|
Total
shareholders’ equity
|
409.6
|
379.7
|
-
|
598.1
|
|
Historical
|
||||
|
Period
from February 17, 2006 to
September
30, 2006
|
||||
|
Net
loss
|
$
|
(31.2
|
)
|
|
|
Interest
expense, net
|
46.5
|
|||
|
Income
taxes (benefit)
|
(18.1
|
)
|
||
|
Depreciation
and amortization
|
54.6
|
|||
|
Loss
on extinguished debt
|
13.6
|
|||
|
Management
fees
|
1.6
|
|||
|
Inventory
fair value step up
|
9.7
|
|||
|
Severance
costs
|
3.6
|
|||
|
Bank
Compliance EBITDA
|
$
|
80.3
|
||
|
·
|
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 “Apollo” refers to Apollo Management, L.P. and its affiliates;
|
|
·
|
the
term “BPC Holding Corporation” refers to Berry Plastics Holding
Corporation prior to the consummation of the Acquisition by Apollo
and
before it changed its name to Berry Plastics Holding
Corporation;
|
|
·
|
the
term “Berry Group” refers to Berry Plastics Group, Inc., a Delaware
corporation; the former parent of Old Berry
Holdings.
|
|
·
|
the
term “Berry Holding” refers to Berry Plastics Holding Corporation combined
together with Covalence Specialty Materials
Corp.;
|
|
·
|
the
terms “Berry Plastics Business” and “Berry” refer to the business segments
operated by Berry Plastics Corporation, which includes the
following
products: open top containers, drink cups, bottles, closures and
overcaps,
tubes and prescription vials.
|
|
·
|
the
terms “Covalence
Business” and “Covalence” refer to the business segments operated by Berry
Holding (successor to Covalence Specialty Materials Corp.), Covalence
Adhesives LLC and Covalence Specialty Materials LLC, which include
the
following
products: private
label trash bags, stretch films, plastic sheeting, can liners,
custom and
plastic film products, coated and laminated products and specialty
adhesive and flexible packaging application
businesses;
|
|
·
|
the
term “exchange notes” refers to the 10¼% Senior Subordinated Notes due
2016 that are registered under the Securities Act of 1933, and
which we
are hereby offering to exchange for the outstanding
notes;
|
|
·
|
the
term “Goldman” refers to The Goldman Sachs Group, Inc. and its
affiliates;
|
|
·
|
the
term “Graham Partners” refers to Graham Partners, Inc. and its affiliates;
|
|
·
|
the
term “guarantors” refers to each of the existing and future domestic
subsidiaries of Holdings that will guarantee the notes;
|
|
·
|
the
term “HDPE” refers to high density polyethylene;
|
|
·
|
the
term “LDPE” refers to low density
polyethylene;
|
|
·
|
the
term “notes” refers to the outstanding notes and the exchange
notes;
|
|
·
|
the
term “Old Berry Holdings” refers to Berry Plastics Holding Corporation
(f/k/a BPC Holding Corporation), the parent company of Berry Plastics
Corporation prior to the Covalence
Merger;
|
|
·
|
the
term “Old Covalence” refers to Covalence Specialty Materials
Corporation;
|
|
·
|
the
term “outstanding notes” refers to the 10¼% Senior Subordinated Notes due
2016 which we issued previously without registration under the
Securities
Act.
|
|
·
|
the
term “PE” refers to polyethylene;
|
|
·
|
the
term “PET” refers to polyethylene terephthalate;
|
|
·
|
the
term “PP” refers to polypropylene;
|
|
·
|
the
term “Sponsors” refers to Apollo and Graham Partners;
and
|
|
·
|
the
terms “we,” “us” and the “Company” refer to Berry Group and its
predecessors and consolidated subsidiaries, including Berry Holding;
|
|
·
|
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.
|
|
·
|
borrow
money or sell “disqualified stock” (as defined in the indenture) or
preferred stock;
|
|
·
|
pay
dividends on or redeem or repurchase
stock;
|
|
·
|
make
certain types of investments;
|
|
·
|
sell
assets;
|
|
·
|
incur
certain liens;
|
|
·
|
restrict
dividends or other payments from
subsidiaries;
|
|
·
|
enter
into transactions with affiliates;
and
|
|
·
|
consolidate
or merge or sell our assets substantially as an
entirety.
|
|
·
|
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.
|
|
·
|
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.
|
|
·
|
issued
the exchange notes or provided the guarantee with the intent of
hindering,
delaying or defrauding any present or future creditor;
or
|
|
·
|
received
less than reasonably equivalent value or fair consideration for
the
incurrence of such indebtedness or guarantee; and
|
|
·
|
were
insolvent or rendered insolvent by reason of such incurrence;
or
|
|
·
|
were
engaged in a business or transaction for which our or the exchange
note
guarantor’s remaining assets constituted unreasonably small capital to
carry on its business; or
|
|
·
|
intended
to incur, or believed that we or it would incur, debts beyond our
or its
ability to pay such debts as they
mature.
|
|
·
|
the
sum of its debts, including contingent liabilities, was greater
than the
fair saleable value of all of its assets;
or
|
|
·
|
if
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, including contingent liabilities, as they become absolute
and
mature; or
|
|
·
|
it
could not pay its debts as they become
due.
|
|
·
|
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.
|
|
·
|
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.
|
|
·
|
will
not be able to rely on the interpretation of the staff of the SEC
set
forth in the no-action letters described above;
and
|
|
·
|
must
comply with the registration and prospectus delivery requirements
of the
Securities Act in connection with any sale or transfer of the exchange
notes, unless the sale or transfer is made pursuant to an exemption
from
those requirements.
|
|
·
|
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;
|
|
·
|
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;
|
|
·
|
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.
|
|
·
|
Berry
Holding determines 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 Berry Holding 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 December 30, 2006
|
||||||
|
Unaudited
|
|||||||
|
|
Actual
|
Pro Forma
|
|||||
|
|
(in
millions)
|
||||||
|
Cash
|
$
|
73.6
|
$
|
107.5
|
|||
|
|
|||||||
|
Long-term
debt, including current portion:
|
|||||||
|
Revolving
Credit Facility(1)
|
$
|
—
|
$
|
—
|
|||
|
First
priority term loan B
|
—
|
1,200.0
|
|||||
|
Term
B loans - Berry
|
673.3
|
—
|
|||||
|
Term
C loans - Covalence
|
298.5
|
—
|
|||||
|
Second
priority floating and fixed rate notes - Berry
|
750.0
|
750.0
|
|||||
|
Second
priority floating notes - Covalence
|
175.0
|
—
|
|||||
|
11%
Senior subordinated notes - Berry
|
425.0
|
425.0
|
|||||
|
10.25%
senior subordinated notes - Covalence
|
265.0
|
265.0
|
|||||
|
Discount
on 10.25% senior subordinated notes - Covalence
|
(6.3
|
)
|
(6.3
|
)
|
|||
|
Other
indebtedness - Berry
|
0.9
|
0.9
|
|||||
|
Capital
leases - Berry
|
23.7
|
23.7
|
|||||
|
Total
long-term debt, including current portion
|
2,605.1
|
2,658.3
|
|||||
|
Total
stockholders’ equity
|
379.7
|
598.1
|
|||||
|
Total
capitalization
|
$
|
2,984.8
|
$
|
3,256.4
|
|||
|
|
|||||||
|
|
•
|
|
the
exchange by minority shareholders of their interests as part of
the
Covalence Merger;
|
|
|
•
|
|
the
borrowing under our new asset based revolving line of credit and
senior
secured term loan, and the repayment of Berry and Covalence’s existing
credit facilities.
|
|
Acquisition
|
Pro
Forma
|
||||||||||||||||||
|
Combined
|
Refinancing
|
of
Minority
|
Balance
Sheet
|
||||||||||||||||
|
12/30/2006
|
Adjustments
|
Interest
|
12/30/2006
|
||||||||||||||||
|
Cash
|
$
|
73.6
|
$
|
33.9
|
(A
|
)
|
$
|
-
|
$
|
107.5
|
|||||||||
|
Accounts
receivable, net
|
292.1
|
-
|
-
|
292.1
|
|||||||||||||||
|
Inventory
|
352.1
|
-
|
2.6
|
(F
|
)
|
354.7
|
|||||||||||||
|
Deferred
income taxes
|
21.5
|
-
|
-
|
21.5
|
|||||||||||||||
|
Prepaid
expenses and other current assets
|
34.1
|
-
|
-
|
34.1
|
|||||||||||||||
|
Total
current assets
|
773.4
|
33.9
|
2.6
|
809.9
|
|||||||||||||||
|
Property,
plant and equipment, net
|
797.1
|
-
|
7.9
|
(F
|
)
|
805.0
|
|||||||||||||
|
Goodwill
|
989.2
|
-
|
106.2
|
(F
|
)
|
1,095.4
|
|||||||||||||
|
Deferred
financing fees, net
|
62.7
|
(9.8
|
)
|
(B
|
)
|
-
|
52.9
|
||||||||||||
|
Intangible
assets, net
|
1,035.5
|
-
|
101.0
|
(F
|
)
|
1,136.5
|
|||||||||||||
|
Other
assets
|
0.6
|
-
|
-
|
0.6
|
|||||||||||||||
|
Total
assets
|
$
|
3,658.5
|
$
|
24.1
|
$
|
217.7
|
$
|
3,900.3
|
|||||||||||
|
Accounts
payable
|
$
|
211.8
|
$
|
-
|
$
|
-
|
$
|
211.8
|
|||||||||||
|
Accrued
expenses and other current liabilities
|
142.4
|
-
|
-
|
142.4
|
|||||||||||||||
|
Current
portion of long-term debt
|
15.4
|
2.2
|
(C
|
)
|
-
|
17.6
|
|||||||||||||
|
Total
current liabilities
|
369.6
|
2.2
|
-
|
371.8
|
|||||||||||||||
|
Long-term
debt
|
2,589.7
|
51.0
|
(D
|
)
|
-
|
2,640.7
|
|||||||||||||
|
Deferred
income taxes
|
234.2
|
(10.9
|
)
|
(E
|
)
|
44.8
|
(F
|
)
|
268.1
|
||||||||||
|
Other
long-term liabilities
|
22.1
|
-
|
(0.5
|
)
|
(F
|
)
|
21.6
|
||||||||||||
|
Minority
Interest
|
63.2
|
-
|
(63.2
|
)
|
(F
|
)
|
-
|
||||||||||||
|
Stockholders’
equity
|
379.7
|
(18.2
|
)
|
(E
|
)
|
236.6
|
(F
|
)
|
598.1
|
||||||||||
|
Total
liabilities, minority interest and equity
|
$
|
3,658.5
|
$
|
24.1
|
$
|
217.7
|
$
|
3,900.3
|
|||||||||||
|
(A)
|
Represents
additional proceeds of $53.2 million from the incurrence of the
new credit
facility which consists of a $400 million asset based revolving
line of
credit and $1.2 billion term loan less pre-payment penalties of
$1.8
million related to the retired credit facilities and financing
fees of
$17.5 million.
|
|
(B)
|
This
adjustment represents the new deferred financing fees of $17.5
million
incurred in connection with the new credit facility less the write-off
of
deferred financing fees of $14.3 million for the retirement of
the Old
Berry Holdings credit facility and $13.0 million for the Old Covalence
credit facility.
|
|
(C)
|
-
This adjustment reflects the elimination of the current portion
of
long-term debt for the retirement of the Berry credit facility
and the
Covalence credit facility offset by the current portion of the
new credit
facility incurred in connection with the Covalence
Merger.
|
|
Current
portion of Old Berry Holdings term loans
|
$
|
(6.8
|
)
|
|
|
Current
portion of Old Covalence term loans
|
(3.0
|
)
|
||
|
Current
portion of new first lien term loan
|
12.0
|
|||
|
Net
adjustment
|
$
|
2.2
|
|
(D)
|
-
This adjustment reflects the incurrence of the new credit facility
offset
by the elimination of the Berry and Covalence credit
facilities.
|
|
Old
Berry Holdings revolving line of credit
|
$
|
-
|
||
|
Old
Covalence revolving line of credit
|
-
|
|||
|
Old
Berry Holdings term loan B
|
(673.3
|
)
|
||
|
Old
Covalence term loan C
|
(298.5
|
)
|
||
|
Old
Covalence senior secured second priority floating rate
notes
|
(175.0
|
)
|
||
|
New
asset based revolving line of credit
|
-
|
|||
|
New
first lien term loan B
|
1,200.0
|
|||
|
53.2
|
||||
|
Less
current portion of long-term debt
|
(2.2
|
)
|
||
|
Net
adjustment
|
$
|
51.0
|
|
(E)
|
-
This adjustment represents the write-off of deferred financing
fees of
$14.3 million for the retirement of the Old Berry Holdings credit
facility
and $13.0 million for the Old Covalence credit facility and the
prepayment
penalty of $1.8 million, net of the tax impact of $10.9
million.
|
|
(F)
|
-
This adjustment reflects the exchange of minority interests following
the
combination and the step-up to fair value of the minority interest
shareholders as follows:
|
|
Inventory
|
$
|
2.6
|
||
|
Property,
plant and equipment
|
7.9
|
|||
|
Goodwill
|
106.2
|
|||
|
Intangible
assets
|
101.0
|
|||
|
Deferred
income taxes
|
(44.8
|
)
|
||
|
Other
long-term liabilities
|
0.5
|
|||
|
Minority
interests
|
63.2
|
|||
|
Exchange
of minority interests
|
$
|
236.6
|
|
Old
Berry Holdings
(1)
|
Old
Covalence (2)
|
Pro
Forma
|
||||||||||||||||||||
|
Berry
Holding
|
10/1
- 12/31/05
|
1/1
- 9/19/06
|
10/1/05
- 2/16/06
|
Adjustments
|
Pro
Forma
|
|||||||||||||||||
|
Net
sales
|
$
|
1,138.8
|
$
|
319.2
|
$
|
1,048.5
|
$
|
666.9
|
$
|
-
|
$
|
3,173.4
|
||||||||||
|
Cost
of goods sold
|
1,022.9
|
252.8
|
839.4
|
579.0
|
7.3
|
(A),
(B
|
)
|
2,701.4
|
||||||||||||||
|
Gross
profit
|
115.9
|
66.4
|
209.1
|
87.9
|
(7.3
|
)
|
472.0
|
|||||||||||||||
|
Operating
expenses
|
108.2
|
38.3
|
97.5
|
61.0
|
21.6
|
(C),(D
|
)
|
326.6
|
||||||||||||||
|
Merger
expenses
|
-
|
-
|
70.1
|
-
|
(70.1
|
)
|
(E
|
)
|
-
|
|||||||||||||
|
Operating
income
|
7.7
|
28.1
|
41.5
|
26.9
|
41.2
|
145.4
|
||||||||||||||||
|
Other
expense (income)
|
(1.3
|
)
|
0.3
|
(0.3
|
)
|
-
|
-
|
(1.3
|
)
|
|||||||||||||
|
Interest
expense, net
|
46.5
|
22.0
|
63.8
|
7.6
|
96.5
|
(F
|
)
|
236.4
|
||||||||||||||
|
Loss
on extinguished debt
|
13.6
|
-
|
34.0
|
-
|
(34.0
|
)
|
(G
|
)
|
13.6
|
|||||||||||||
|
Income
(loss) before taxes
|
(51.1
|
)
|
5.8
|
(56.0
|
)
|
19.3
|
(21.3
|
)
|
(103.3
|
)
|
||||||||||||
|
Income
tax expense (benefit)
|
(18.1
|
)
|
0.7
|
1.0
|
1.6
|
(23.9
|
)
|
(H
|
)
|
(38.7
|
)
|
|||||||||||
|
Minority
interest
|
(1.8
|
)
|
-
|
-
|
-
|
1.8
|
(I
|
)
|
-
|
|||||||||||||
|
Net
income (loss)
|
$
|
(31.2
|
)
|
$
|
5.1
|
$
|
(57.0
|
)
|
$
|
17.7
|
$
|
0.8
|
$
|
(64.6
|
)
|
|||||||
|
(1)
|
The
acquisition of Old Berry Holdings by Apollo occurred on September
20,
2006. The historical data with respect to Old Berry Holdings is
presented
in the unaudited pro forma supplemental combined statement of operations
for the year ended September 30, 2006 relates to the period from
October
1, 2005 to September 19, 2006. From September 20, 2006, data with
respect
to Old Berry Holdings is included in the Berry Holding supplemental
combined financial results.
|
|
(2)
|
The
acquisition of Old Covalence by Apollo occurred on February 16,
2006. The
historical data with respect to Old Covalence is presented in the
unaudited pro forma supplemental combined statement of operations
for the
year ended September 29, 2006 relates to the Old Covalence predecessor,
Tyco Plastics & Adhesives for the period from October 1, 2005 to
February 16, 2006. From February 17, 2006, data with respect to
Old
Covalence is included in the Berry Holding supplemental combined
financial
results.
|
|
(A)
|
This
adjustment reflects the additional depreciation expense in connection
with
the Covalence acquisition, the Berry acquisition and the minority
interest
combination as follows:
|
|
Eliminate
historical depreciation - Old Berry Holdings (1/1 - 9/30)
|
$
|
(64.5
|
)
|
|
|
Eliminate
historical depreciation - Old Berry Holdings (10/1 to
12/31/05)
|
(21.7
|
)
|
||
|
Eliminate
historical depreciation - Old Covalence (2/17/06 to 9/29/06)
|
(29.4
|
)
|
||
|
Eliminate
historical depreciation - Tyco Plastics & Adhesives (10/1/05 to
2/16/06)
|
(14.6
|
)
|
||
|
Combined
Company Holding depreciation
|
134.9
|
|||
|
Net
adjustment
|
$
|
4.7
|
|
(B)
|
This
adjustment reflects the additional expense of $2.6 million related
to the
write-up of inventory to fair value in connection with exchange
of the
minority interests.
|
|
(C)
|
This
adjustment reflects the additional amortization expense for definite
lived
intangible assets acquired in connection with the Old Covalence
acquisition, the Old Berry Holdings acquisition and the minority
interest
combination as follows:
|
|
Eliminate
historical amortization - Old Berry Holdings (1/1 - 9/30)
|
$
|
(15.1
|
)
|
|
|
Eliminate
historical amortization - Old Berry Holdings (10/1 to
12/31/05)
|
(7.1
|
)
|
||
|
Eliminate
historical amortization - Covalence (2/17/06 to 9/29/06)
|
(21.7
|
)
|
||
|
Eliminate
historical amortization - Tyco Plastics & Adhesives (10/1/05 to
2/16/06)
|
(1.0
|
)
|
||
|
Combined
company amortization
|
63.6
|
|||
|
Net
adjustment
|
$
|
18.7
|
|
(D)
|
This
adjustment relates to the termination of the Old Covalence management
fee
agreement and the pro forma impact of the Berry Holding management
fee
agreement for the entire year. The management agreement requires
New Berry
to pay a management fee equal to 1.25% of adjusted EBITDA, or
$5.3 million for the period from October 1, 2005 to September 29,
2006.
This adjustment includes an increase in management fees of $2.9
million
from what was previously recorded for the period from February
17, 2006 to
September 30, 2006.
|
|
(E)
|
This
adjustment represents the elimination of merger costs incurred
by the
selling shareholders of BPC Holding of $70.1 million to Apollo.
These
merger costs consisted of investment banking fees, special one
time
transaction bonuses, acceleration and modification of stock options
in
connection with the sale of BPC Holding, legal costs related to
the sale
and other miscellaneous expenses related to the merger incurred
by the
selling shareholders.
|
|
(F)
|
This
adjustment represents the elimination of the historical interest
expense
of Old Berry Holdings and Old Covalence and its predecessors including
the
amortization of deferred financing fees and the new pro forma interest
expense related to the acquisition of Berry and Covalence and the
new
credit facility entered into at the time of the merger. LIBOR used
in our
calculation of our assumed interest rates was 5.4%. This adjustment
also
assumes the s effective interest method amortization of $50.8 million
of
deferred financing fees and the amortization of $6.4 million of
debt
premium which are amortized using the Effective Interest Method
over the
life of the related debt. The adjustment is as
follows:
|
|
Interest
|
Pro
Forma
|
|||||||||
|
Amount
|
Rate
|
Interest
Expense
|
||||||||
|
Eliminate
historical interest expense
|
$
|
(139.9
|
)
|
|||||||
|
New
Asset based revolving line of credit
|
$
|
-
|
6.65
|
%
|
-
|
|||||
|
New
First lien term loan B
|
1,200.0
|
7.40
|
%
|
88.8
|
||||||
|
Berry
Second Priority Senior Secured Fixed Notes
|
525.0
|
8.75
|
%
|
45.9
|
||||||
|
Berry
Second Priority Senior Secured Floating Notes
|
225.0
|
9.27
|
%
|
20.8
|
||||||
|
Berry
11% Senior Subordinated Notes
|
425.0
|
11.00
|
%
|
46.8
|
||||||
|
Covalence
10.25% Senior Subordinated Notes
|
265.0
|
10.25
|
%
|
27.2
|
||||||
|
Amortization
of deferred financing fees and discount
|
6.9
|
|||||||||
|
Net
adjustment
|
$
|
96.5
|
||||||||
|
(G)
|
This
adjustment relates to the tender offer and consent solicitation
fees
related to the retirement of the $335 million 10 ¾% Senior Subordinated
Notes, write-off of premium on the 10 ¾% Senior Subordinated Notes,
termination of interest rate swaps and write-off of deferred financing
fees incurred by the selling shareholders in connection with the
sale of
BPC Holding to Apollo.
|
|
(H)
|
This
adjustment reflects the elimination of the historic tax expense
(benefit)
on the income (loss) of Old Berry Holdings and Old Covalence and
the new
calculation of tax expense (benefit) based on a rate of 37.5% on
pro-forma
pre-tax loss.
|
|
(I)
|
This
adjustment reflects the elimination of minority interest in connection
with the exchange of the minority interest ownership in connection
with
the consummation of the Covalence
Merger.
|
|
Combined
|
Pro
Forma
|
Pro
Forma
|
|||||||||||
|
Berry
Holding
|
Adjustments
|
Berry
Holding
|
|||||||||||
|
Net
sales
|
$
|
703.6
|
$
|
-
|
$
|
703.6
|
|||||||
|
Cost
of goods sold
|
617.2
|
0.4
|
(A
|
)
|
617.6
|
||||||||
|
Gross
profit
|
86.4
|
(0.4
|
)
|
86.0
|
|||||||||
|
Operating
expenses
|
78.9
|
0.6
|
(B
|
)
|
79.5
|
||||||||
|
Operating
income (loss)
|
7.5
|
(1.0
|
)
|
6.5
|
|||||||||
|
Other
income
|
0.1
|
-
|
0.1
|
||||||||||
|
Interest
expense, net
|
59.9
|
(0.8
|
)
|
(C
|
)
|
59.1
|
|||||||
|
Loss
before taxes
|
(52.5
|
)
|
(0.2
|
)
|
(52.7
|
)
|
|||||||
|
Income
tax benefit
|
(19.5
|
)
|
(0.3
|
)
|
(D
|
)
|
(19.8
|
)
|
|||||
|
Minority
interest
|
(2.2
|
)
|
2.2
|
(E
|
)
|
-
|
|||||||
|
Net
loss
|
$
|
(30.8
|
)
|
$
|
(2.1
|
)
|
$
|
(32.9
|
)
|
||||
|
(A)
|
This
adjustment reflects the additional depreciation expense of $0.4
million
related to the exchange of minority
interests.
|
|
(B)
|
This
adjustment reflects the additional amortization expense of $0.6
million
for definite lived intangible assets acquired in connection with
the
exchange of minority interests.
|
|
(C)
|
This
adjustment represents the elimination of the historical interest
expense
of Old Berry Holdings and Old Covalence and its predecessors including
the
amortization of deferred financing fees and the new pro forma interest
expense related to the acquisition of Old Berry Holdings and Old
Covalence
and the new credit facility entered into at the time of the Covalence
Merger. LIBOR used in our calculation of our assumed interest rates
was
5.4%. This adjustment also assumes the effective interest method
amortization of $50.8 million of deferred financing fees and the
amortization of $6.4 million of debt premium which are amortized
on the
effective interest method over the life of the related debt. This
adjustment results in a decrease in interest expense of $0.8 million
for
the three months ended December 30,
2006.
|
|
(D)
|
This
adjustment reflects the elimination of the historic tax expense
(benefit)
on the income (loss) of Berry and Covalence and the new calculation
of tax
expense (benefit) based on a rate of 37.5% on pro-forma pre-tax
loss.
|
|
(E)
|
This
adjustment reflects the elimination of minority interest in connection
with the exchange of the minority interest ownership in connection
with
the consummation of the Covalence
Merger.
|
|
Berry
Plastics Holding Corporation
|
||||||||||||||||
|
Fiscal
|
||||||||||||||||
|
Combined
Company & Old Berry Holding
|
Old
Berry Holding
|
Old
Berry Holding
|
Old
Berry Holding
|
Old
Berry Holding
|
||||||||||||
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
|
(in
thousands of dollars)
|
||||||||||||||||
|
Statement
of Operations Data:
|
||||||||||||||||
|
Net
sales
|
1,431,764
|
$
|
1,169,704
|
$
|
814,213
|
$
|
551,876
|
$
|
494,303
|
|||||||
|
Cost
of goods sold
|
1,156,368
|
943,370
|
639,329
|
420,750
|
371,273
|
|||||||||||
|
Gross
profit
|
275,396
|
226,334
|
174,884
|
131,126
|
123,030
|
|||||||||||
|
Operating
expenses (a)
|
209,462
|
110,545
|
81,008
|
59,936
|
77,467
|
|||||||||||
|
Operating
income
|
65,934
|
115,789
|
93,876
|
71,190
|
45,563
|
|||||||||||
|
Other
expenses (income) (b)
|
(299
|
)
|
1,354
|
—
|
(7
|
)
|
299
|
|||||||||
|
Loss
on extinguished debt (c)
|
39,916
|
7,045
|
—
|
250
|
25,328
|
|||||||||||
|
Interest
expense, net (d)
|
111,280
|
73,274
|
53,185
|
45,413
|
49,254
|
|||||||||||
|
Income
(loss) before income taxes
|
(84,963
|
)
|
34,116
|
40,691
|
25,534
|
(29,318
|
)
|
|||||||||
|
Income
taxes (benefit)
|
(9,795
|
)
|
14,325
|
17,740
|
12,486
|
3,298
|
||||||||||
|
Net
income (loss)
|
(75,168
|
)
|
19,791
|
22,951
|
13,048
|
(32,616
|
)
|
|||||||||
|
Preferred
stock dividends
|
—
|
—
|
—
|
—
|
6,468
|
|||||||||||
|
Amortization
of preferred stock discount
|
—
|
—
|
—
|
—
|
574
|
|||||||||||
|
Net
income (loss) attributable to common stockholders
|
$
|
(75,168
|
)
|
$
|
19,791
|
$
|
22,951
|
$
|
13,048
|
$
|
(39,658
|
)
|
||||
|
Balance
Sheet Data (at end of year):
|
||||||||||||||||
|
Working
capital
|
$
|
175,553
|
$
|
201,781
|
$
|
90,094
|
$
|
87,571
|
$
|
64,201
|
||||||
|
Fixed
assets
|
463,977
|
423,444
|
281,972
|
282,977
|
193,132
|
|||||||||||
|
Total
assets
|
2,568,656
|
1,647,830
|
1,005,144
|
1,015,806
|
760,576
|
|||||||||||
|
Total
debt
|
1,872,874
|
1,160,620
|
697,558
|
751,605
|
609,943
|
|||||||||||
|
Stockholders’
equity
|
294,187
|
203,388
|
183,891
|
152,591
|
75,163
|
|||||||||||
|
Other
Data:
|
||||||||||||||||
|
Depreciation
and amortization (e)
|
109,359
|
88,720
|
60,816
|
44,078
|
41,965
|
|||||||||||
|
Capital
expenditures
|
92,062
|
57,829
|
52,624
|
29,949
|
28,683
|
|||||||||||
|
Predecessor
|
Successor
|
||||||||||||||||||
|
($
in millions)
|
Year
ended September 30, 2002
|
Year
ended September 30, 2003
|
Year
ended September 30, 2004
|
Year
ended September 30, 2005
|
Period
from October 1, 2005 to February 16, 2006
|
Period
from February 17 to September 29, 2006
|
|||||||||||||
|
(Unaudited)
|
|||||||||||||||||||
|
Statement
of Operations Data:
|
|||||||||||||||||||
|
Net
revenue(1)
|
$
|
1,455.1
|
$
|
1,597.8
|
$
|
1,658.8
|
$
|
1,725.2
|
$
|
666.9
|
$
|
1,092.4
|
|||||||
|
Cost
of sales
|
1,154.6
|
1,344.1
|
1,366.2
|
1,477.4
|
579.0
|
980.7
|
|||||||||||||
|
Gross
profit
|
300.5
|
253.7
|
292.6
|
247.8
|
87.9
|
111.7
|
|||||||||||||
|
Charges
and allocations from Tyco and affiliates
|
100.8
|
95.3
|
65.0
|
56.4
|
10.4
|
—
|
|||||||||||||
|
Selling,
general and administrative expenses
|
133.3
|
108.3
|
130.2
|
124.6
|
50.0
|
102.6
|
|||||||||||||
|
Restructuring
and impairment charges (credits), net
|
4.4
|
(0.8
|
)
|
57.9
|
3.3
|
0.6
|
0.5
|
||||||||||||
|
Operating
income
|
62.0
|
50.9
|
39.5
|
63.5
|
26.9
|
8.6
|
|||||||||||||
|
Other
income
|
—
|
—
|
—
|
—
|
—
|
(1.3
|
)
|
||||||||||||
|
Interest
expense, net
|
—
|
6.5
|
6.3
|
4.5
|
2.1
|
49.7
|
|||||||||||||
|
Interest
expense (income), net—Tyco and affiliates
|
(0.2
|
)
|
3.6
|
(1.7
|
)
|
11.2
|
5.5
|
—
|
|||||||||||
|
Income
(loss) before income taxes
|
62.2
|
40.8
|
34.9
|
47.8
|
19.3
|
(39.8
|
)
|
||||||||||||
|
Predecessor
|
Successor
|
||||||||||||||||||
|
($
in millions)
|
Year
ended September 30, 2002
|
Year
ended September 30, 2003
|
Year
ended September 30, 2004
|
Year
ended September 30, 2005
|
Period
from October 1, 2005 to February 16, 2006
|
Period
from February 17 to September 29,
2006
|
|||||||||||||
|
Income
tax expense (benefit)
|
3.2
|
2.9
|
2.4
|
3.8
|
1.6
|
(13.7
|
)
|
||||||||||||
|
Minority
interest
|
—
|
0.2
|
0.2
|
—
|
—
|
—
|
|||||||||||||
|
Cumulative
effect of accounting change
|
—
|
17.8
|
—
|
—
|
—
|
—
|
|||||||||||||
|
Net
income (loss)
|
$
|
59.0
|
$
|
19.9
|
$
|
32.3
|
$
|
44.0
|
$
|
17.7
|
$
|
(26.1
|
)
|
||||||
|
Balance
Sheet Data (at period end):
|
|||||||||||||||||||
|
Cash
and cash equivalents
|
$
|
4.7
|
$
|
7.9
|
$
|
3.7
|
$
|
2.7
|
$
|
4.9
|
$
|
66.8
|
|||||||
|
Property,
plant and equipment, net
|
255.8
|
342.8
|
291.1
|
283.1
|
275.6
|
334.8
|
|||||||||||||
|
Total
assets
|
1,403.3
|
1,283.3
|
1,215.0
|
1,206.7
|
1,279.5
|
1,203.7
|
|||||||||||||
|
Total
long-term obligations (at end of period)
|
—
|
136.5
|
79.5
|
—
|
—
|
729.9
|
|||||||||||||
|
Shareholders’
equity
|
1,151.2
|
877.0
|
822.8
|
855.1
|
877.7
|
171.8
|
|||||||||||||
|
Cash
Flow and other Financial Data:
|
|||||||||||||||||||
|
Net
cash provided by (used in) operating activities
|
$
|
146.0
|
$
|
123.8
|
$
|
89.2
|
$
|
117.3
|
$
|
(119.2
|
)
|
$
|
88.8
|
||||||
|
Net
cash used in investing activities
|
(83.9
|
)
|
(13.2
|
)
|
(15.5
|
)
|
(29.2
|
)
|
(9.1
|
)
|
(950.6
|
)
|
|||||||
|
Net
cash provided by (used in) financing activities
|
(61.5
|
)
|
(106.8
|
)
|
(77.7
|
)
|
(89.2
|
)
|
130.6
|
902.5
|
|||||||||
|
Capital
expenditures
|
31.2
|
14.6
|
16.5
|
32.1
|
12.2
|
23.7
|
|
Year
Ended December 30,
2006
|
||||
|
Bank
compliance EBITDA
|
$
|
289,731
|
||
|
Net
interest expense
|
(111,280
|
)
|
||
|
Depreciation
|
(86,678
|
)
|
||
|
Amortization
|
(22,681
|
)
|
||
|
Income
tax benefit
|
9,795
|
|||
|
Gain
on investment in Southern Packaging
|
299
|
|||
|
Loss
on extinguished debt
|
(39,916
|
)
|
||
|
Merger
expense
|
(81,309
|
)
|
||
|
Business
optimization expense
|
(14,287
|
)
|
||
|
Pro
forma synergies
|
(14,557
|
)
|
||
|
Non-cash
stock compensation
|
(3,385
|
)
|
||
|
Management
fees
|
(900
|
)
|
||
|
Net
loss
|
$
|
(75,168
|
)
|
|
|
Payments
Due by Period at December 30, 2006
|
||||||||||||||||
|
Total
|
<
1 year
|
1-3
years
|
4-5
years
|
>
5 years
|
||||||||||||
|
Long-term
debt, excluding capital leases
|
$
|
1,849,187
|
$
|
6,750
|
$
|
13,500
|
$
|
13,500
|
$
|
1,815,437
|
||||||
|
Capital
leases
|
27,049
|
6,799
|
11,372
|
8,878
|
—
|
|||||||||||
|
Fixed
interest rate payments
|
1,287,336
|
162,155
|
324,310
|
324,310
|
476,561
|
|||||||||||
|
Operating
leases
|
209,533
|
26,291
|
46,921
|
39,558
|
96,763
|
|||||||||||
|
Purchase
obligations (1)
|
80,757
|
80,757
|
—
|
—
|
—
|
|||||||||||
|
Total
contractual cash obligations
|
$
|
3,453.862
|
$
|
282,752
|
$
|
396,103
|
$
|
386,246
|
$
|
2,388,761
|
||||||
|
•
|
The
investment by affiliates of Apollo and certain members of our senior
management and the subsequent contribution of the cash proceeds
to us as
common equity;
|
|
•
|
Our
issuance of the $265.0 million outstanding notes;
|
|
•
|
Term
loan borrowings under our senior secured credit facilities of $350.0
million (subsequently refinanced as described below under “Principal
Credit Facilities”);
|
|
•
|
Borrowings
under the floating rate loan of $175.0 million;
and
|
|
•
|
Pursuant
to the terms of the Stock and Asset Purchase Agreement, a favorable
net
working capital adjustment of $59.1 million.
|
|
Successor
|
Predecessor
|
||||||||
|
December
29,
2006
|
December
30,
2005
|
||||||||
|
Net
revenue,
including related party revenue
|
$
|
366.7
|
$
|
450.2
|
|||||
|
Cost
of sales
|
342.5
|
385.5
|
|||||||
|
Gross
profit
|
24.2
|
64.7
|
|||||||
|
Charges
and allocations from Parent Company and affiliates
|
—
|
10.1
|
|||||||
|
Selling,
general and administrative expenses
|
41.8
|
33.5
|
|||||||
|
Restructuring
and impairment charges (credits), net
|
0.2
|
—
|
|||||||
|
Operating
income (loss)
|
(17.8
|
)
|
21.1
|
||||||
|
Other
Expense
|
0.1
|
—
|
|||||||
|
Interest
expense
|
17.6
|
1.1
|
|||||||
|
Interest
income
|
(0.6
|
)
|
—
|
||||||
|
Interest
expense - Parent Company and affiliates
|
—
|
3.0
|
|||||||
|
Interest
income - Parent Company and affiliates
|
—
|
(0.1
|
)
|
||||||
|
Income
(loss) before income taxes
|
(34.9
|
)
|
17.1
|
||||||
|
Income
taxes
|
(13.1
|
)
|
0.7
|
||||||
|
Net
income (loss)
|
$
|
(21.8
|
)
|
$
|
16.4
|
||||
|
•
|
Beginning
with the Company’s 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);
and
|
|
|
•
|
100%
of the net cash proceeds of all non-ordinary course asset sales
and
casualty and condemnation events, if the Company does not reinvest
or
commit to reinvest those proceeds in assets to be used in its
business or
to make certain other permitted investments within 15 months,
subject to
certain limitations.
|
|
•
|
The
investment by affiliates of Apollo and certain members of our senior
management in Holdings and the subsequent contribution of the cash
proceeds to us as common equity;
|
|
•
|
Our
issuance of the $265.0 million outstanding
notes;
|
|
•
|
Term
loan borrowings under our senior secured credit facilities of $350.0
million (subsequently refinanced as described below under “Principal
Credit Facilities”);
|
|
•
|
Borrowings
under the floating rate loan of $175.0 million;
and
|
|
•
|
Pursuant
to the terms of the Stock and Asset Purchase Agreement, a favorable
net
working capital adjustment of $59.1
million.
|
|
•
|
closed
11 of its 48 manufacturing facilities (TP&A subsequently opened one
manufacturing facility in India) and reduced the number of SKUs
produced;
|
|
•
|
reduced
headcount by approximately 12%; and
|
|
•
|
implemented
programs designed to identify and reduce variation in our manufacturing
and operations, and introduced lean manufacturing processes to
reduce
costs.
|
|
Employee
Severance
and
Benefits
|
Facilities
Exit
Costs
|
Other
|
Non-cash
Charges
|
Total
|
||||||||||||||
|
Balance
at September 30, 2003
|
$
|
0.7
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
0.7
|
||||||||
|
Charges
|
11.1
|
14.2
|
3.4
|
29.2
|
57.9
|
|||||||||||||
|
Utilization
|
(8.4
|
)
|
(11.0
|
)
|
(3.4
|
)
|
(29.2
|
)
|
(52.0
|
)
|
||||||||
|
Balance
at September 30, 2004
|
3.4
|
3.2
|
—
|
—
|
6.6
|
|||||||||||||
|
Charges,
net(a)
|
2.4
|
2.4
|
—
|
—
|
4.8
|
|||||||||||||
|
Utilization
|
(3.3
|
)
|
(4.6
|
)
|
0.3
|
—
|
(7.6
|
)
|
||||||||||
|
Transfers/reclass
|
(0.3
|
)
|
0.6
|
(0.3
|
)
|
—
|
—
|
|||||||||||
|
Balance
at September 30, 2005
|
2.2
|
1.6
|
—
|
—
|
3.8
|
|||||||||||||
|
Transferred
to Tyco
|
(1.3
|
)
|
—
|
—
|
—
|
(1.3
|
)
|
|||||||||||
|
Charges
|
—
|
1.5
|
—
|
—
|
1.5
|
|||||||||||||
|
Utilization.
|
(0.9
|
)
|
(2.4
|
)
|
—
|
—
|
(3.3
|
)
|
||||||||||
|
Balance
at September 29, 2006
|
$
|
—
|
$
|
0.7
|
$
|
—
|
$
|
—
|
$
|
0.7
|
||||||||
|
a)
|
During
fiscal 2005, TP&A recorded a credit for previously impaired property,
plant and equipment of $1.5 million, which was sold for amounts
higher
than previously estimated.
|
|
•
|
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);
and
|
|
•
|
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, subject to
certain
limitations.
|
|
•
|
Adjusted
EBITDA also does not represent funds available for dividends, reinvestment
or other discretionary uses, or account for one-time expenses and
charges;
|
|
•
|
Adjusted EBITDA
does not reflect cash outlays for capital expenditures or contractual
commitments;
|
|
•
|
Adjusted EBITDA
does not reflect changes in or cash requirements for, working
capital;
|
|
•
|
Adjusted EBITDA
does not reflect the interest expense or the cash requirements
necessary
to service interest of principal payments, on
indebtedness;
|
|
•
|
Adjusted EBITDA
does not reflect income tax expense or the cash necessary to pay
income
taxes;
|
|
•
|
although
depreciation and amortization are non-cash charges, the assets
being
depreciated and amortized will often have to be replaced in the
future,
and Adjusted EBITDA does not reflect cash requirements for such
replacements;
|
|
•
|
Adjusted EBITDA
does not reflect the impact of earnings or charges resulting from
matters
we consider not to be indicative of our ongoing operations;
and
|
|
•
|
other
companies, including other companies in our industry, may calculate
Adjusted EBITDA differently, limiting its usefulness as a comparative
measure.
|
|
Predecessor
|
Successor
|
|||||||||
|
Year
ended
September
30,
2005
|
Period
from
October
1,
2005
to
February
16,
2006
|
Period
from
February
17 to
September
29,
2006
|
||||||||
|
Net
income (loss)
|
$
|
44.0
|
$
|
17.7
|
$
|
(26.1
|
)
|
|||
|
Depreciation
and amortization
|
41.6
|
15.6
|
51.0
|
|||||||
|
Income
taxes
|
3.8
|
1.6
|
(13.7
|
)
|
||||||
|
Interest
expense, net
|
15.7
|
7.6
|
48.4
|
|||||||
|
Charges
and allocations from Tyco and affiliates(a).
|
56.4
|
10.4
|
—
|
|||||||
|
Restructuring
and impairment charges (credits), net(b)
|
3.3
|
0.6
|
0.5
|
|||||||
|
Inventory
fair value step up(c)
|
—
|
—
|
6.8
|
|||||||
|
Korean
Adhesives Business(d)
|
0.4
|
0.7
|
0.8
|
|||||||
|
Management
Fee(e)
|
—
|
—
|
1.6
|
|||||||
|
Severance
costs(f)
|
—
|
—
|
3.6
|
|||||||
|
Other,
Net(g)
|
4.3
|
1.1
|
9.8
|
|||||||
|
Adjusted EBITDA
|
$
|
169.5
|
$
|
55.3
|
$
|
82.7
|
|
(a)
|
Since
TP&A’s formal inception in 2002, it was charged management fees and
other allocations as discussed in Note 11 to the audited financial
statements. As a result of the Acquisition, the former TP&A businesses
became an independent entity, which resulted in changes to some
aspects of
its operations, including the elimination of such charges and
allocations.
|
|
(b)
|
Represents
restructuring and severance costs for employee terminations and
facility
closures related to a restructuring program initiated in 2003 to
rationalize TP&A’s cost structure and improve operations. For
additional discussion about the restructuring program, see Note
6 to the
financial statements.
|
|
(c)
|
Represents
the $6.8 million charge the Company incurred during the Successor
period
in Cost of Sales relating to the sale of inventory that had been
stepped
up to fair value. See Note 2 to the Financial Statements for further
discussion.
|
|
(d)
|
Relates
to the Company’s Korean Adhesives operations, which is in the process of
being liquidated.
|
|
(e)
|
Includes
accrued expenses related to the management agreement we have with
Apollo,
pursuant to which Apollo or its affiliates provide us with management
services. See “Certain Relationships and Related Party
Transactions—Management Agreement with Apollo” for further
discussion.
|
|
(f)
|
Severance
Costs for the Successor period relate to the termination charges
incurred
attributable to the Acquisition.
|
|
(g)
|
Consists
of bank covenant adjustment in Successor period and in the Predecessor
Period consists of (i) costs savings generated by the Company’s head count
reduction and cost structure rationalization program initiated
in 2003
discussed on page 51, (ii) selling, general and administrative
related
charges and allocations for services provided by Tyco discussed
on page
48, (iii) cost from Tyco’s equity-based compensation plans; (iv) the
one-time write-off of certain
|
|
Total
|
Less
Than
1
Year
|
1-3
Years
($
millions)
|
3-5
Years
|
More
than
5
Years
|
||||||||||||
|
Long-term
debt obligations
|
$
|
739.3
|
$
|
3.0
|
$
|
6.0
|
$
|
6.0
|
$
|
724.3
|
||||||
|
Operating
lease obligations
|
30.7
|
8.3
|
18.2
|
3.0
|
1.2
|
|||||||||||
|
Estimated
interest
|
497.3
|
64.3
|
127.9
|
127.0
|
178.1
|
|||||||||||
|
Total
|
$
|
1,267.3
|
$
|
75.6
|
$
|
152.1
|
$
|
136.0
|
$
|
903.6
|
||||||
|
•
|
Beginning
with the Company’s first 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);
and
|
|
•
|
100%
of the net cash proceeds of all non-ordinary course asset sales
and
casualty and condemnation events, if the Company does not reinvest
or
commit to reinvest those proceeds in assets to be used in its business
or
to make certain other permitted investments within 15 months, subject
to
certain limitations.
|
|
($
in millions)
|
2002
|
2003
|
2004
|
2005
|
2006
|
|||||||||||
|
Open-Top
|
$
|
360.4
|
$
|
404.6
|
$
|
659.2
|
$
|
775.7
|
$
|
836.9
|
||||||
|
Closed-Top
|
133.9
|
147.3
|
155.0
|
394.0
|
594.9
|
|||||||||||
|
Total
net sales
|
$
|
494.3
|
$
|
551.9
|
$
|
814.2
|
$
|
1,169.7
|
$
|
1,431.8
|
||||||
|
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
|
|
|
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
|
|
|
Toluca,
Mexico
|
172,000
|
Manufacturing
|
Leased
|
|
|
5,313,000
|
||||
|
Product
Groups
|
Sample
Products
|
Customers
and End Users
|
||||||
|
Plastics:
|
||||||||
|
Do-It-Yourself
|
Plastic
sheeting
|
Wholesale
distributors, hardware/home centers, paint stores, mass merchandisers,
agricultural product distributors
|
||||||
|
Institutional
|
Can
liners, food bags, meal kits
|
Offices,
restaurants, schools, hospitals, hotels, municipalities and manufacturing
facilities
|
||||||
|
Custom
Films
|
Shrink
bundling, bags, sheeting, barrier films
|
Converters,
distributors
|
||||||
|
Stretch
Films
|
Machine
and hand-wrap stretch films
|
Distributors,
manufacturers
|
||||||
|
Retail
|
Trash
bags, food-contact products
|
Mass
merchandisers, grocery stores, drug
stores
|
||||||
|
Adhesives:
|
||||||||
|
Tapes
|
Cloth,
foil, splicing, laminating, flame-retardant, vinyl-coated, electrical
and
a variety of specialty tapes
|
Industrial,
heating, ventilation and air conditioning, automotive, retail,
medical,
construction companies through distributors and directly to end
users
|
||||||
|
Corrosion
Protection
|
Heat-shrinkable
sleeves, pipeline tapes, pipeline cathodic protection, epoxy
coatings
|
Oil,
gas and water supply, construction and rehabilitation contractors
and
through distributors
|
||||||
|
Specialty
Adhesives
|
Single-
and double-coated transfer tapes, toll coating
|
Medical,
specialty industrial, automotive assembly end users
|
||||||
|
Coatings:
|
||||||||
|
Flexible
Packaging
|
Specialty
laminated and coated products
|
Converters,
distributors
|
||||||
|
Other
|
Wall
sheathing, housewrap, window and floor flashings, and flexible
intermediate-bulk containers,
|
Building
and construction, agricultural, mining, resin, and dry chemicals
end
users
|
||||||
|
Location
|
Operating
Segment
|
Owned/Leased
|
Square
Footage
|
|||
|
Albertville,
AL
|
Adhesives
|
Owned
|
318,000
|
|||
|
Aurora,
IL
|
Plastics
|
Leased
|
66,900
|
|||
|
Battleboro,
NC.
|
Plastics
|
Owned
|
390,654
|
|||
|
Beaumont,
TX
|
Plastics
|
Owned
|
42,300
|
|||
|
Bremen,
GA
|
Plastics
|
Owned
|
140,000
|
|||
|
Bristol,
RI.
|
Adhesives
|
Owned
|
23,000
|
|||
|
Charlotte,
NC
|
Plastics
|
Leased
|
53,095
|
|||
|
City
of Industry, CA
|
Plastics
|
Leased
|
189,924
|
|||
|
Columbus,
GA
|
Plastics
|
Owned
|
48,420
|
|||
|
Columbus,
GA
|
Coatings
|
Owned
|
70,000
|
|||
|
Constantine,
MI
|
Coatings
|
Owned
|
144,000
|
|||
|
Coon
Rapids, MN
|
Plastics
|
Owned
|
64,890
|
|||
|
Covington,
GA.
|
Plastics
|
Owned
|
306,889
|
|||
|
Doswell,
VA
|
Coatings
|
Owned
|
249,456
|
|||
|
Elizabeth,
NJ
|
Plastics
|
Leased
|
46,258
|
|||
|
Franklin,
KY
|
Adhesives
|
Owned
|
513,000
|
|||
|
Greenville,
SC
|
Plastics
|
Owned
|
70,000
|
|||
|
Homer,
LA
|
Coatings
|
Owned
|
186,000
|
|||
|
Houston,
TX
|
Adhesives
|
Owned
|
18,000
|
|
Lakeville,
MN.
|
Plastics
|
Owned
|
200,000
|
|||
|
Meridian,
MS
|
Coatings
|
Owned
|
150,000
|
|||
|
Middlesex,
NJ
|
Adhesives
|
Owned
|
29,020
|
|||
|
Minneapolis,
MN
|
Plastics
|
Owned
|
200,645
|
|||
|
Monroe,
LA.
|
Plastics
|
Owned/Leased
|
452,500
|
|||
|
Pryor,
OK.
|
Plastics
|
Owned
|
198,000
|
|||
|
Santa
Fe Springs, CA
|
Plastics
|
Leased
|
106,000
|
|||
|
Sioux
Falls, SD.
|
Plastics
|
Owned
|
230,000
|
|||
|
Sparks,
NV.
|
Plastics
|
Leased
|
42,811
|
|||
|
Vancouver,
WA
|
Plastics
|
Leased
|
23,000
|
|||
|
Victoria,
TX
|
Plastics
|
Owned
|
190,000
|
|||
|
Yonkers,
NY
|
Plastics
|
Leased
|
43,000
|
|||
|
Aarschot,
Belgium
|
Adhesives
|
Leased
|
70,611
|
|||
|
Altacomulco,
Mexico.
|
Coatings
|
Owned
|
116,250
|
|||
|
Baroda,
India
|
Adhesives
|
Owned
|
24,196
|
|||
|
Belleville,
Canada
|
Plastics
|
Owned
|
46,000
|
|||
|
San
Luis Potosi, Mexico.
|
Coatings
|
Leased
|
114,000
|
|||
|
Tijuana,
Mexico
|
Adhesives
|
Owned
|
260,831
|
|
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
|
|
Layle
K. Smith
|
51
|
Executive
Director - Covalence Division
|
|
Anthony
M. Civale
|
32
|
Director
|
|
Robert
V. Seminara
|
34
|
Director
|
|
·
|
Pay
compensation that is competitive with the practices of other competing
businesses
|
|
·
|
Pay
for performance by:
|
|
·
|
Setting
performance goals for our officers and providing a short-term incentive
through a bonus plan that is based upon achievement of these goals;
and
|
|
·
|
Providing
long-term incentives in the form of stock options, in order to
retain
those individuals with the leadership abilities necessary for increasing
long-term shareholder value while aligning with the interests of
our
investors
|
|
Name
and Principal
Position
|
Fiscal
Year
|
Salary
|
Option
Awards
($)
|
|
Bonus
(1)
|
All
Other
Compensation
|
Total
($)
|
||||||||||||
|
Ira
G. Boots
President
and Chief
Executive
Officer
|
2006
2005
2004
|
|
$
|
655,088
455,749
442,226
|
$
|
704,178
—
—
|
$
|
10,291,398
299,323
214,200
|
$
|
—
—
—
|
$
|
11,650,664
755,072
656,426
|
|||||||
|
James
M. Kratochvil
Executive
Vice President, Chief Financial Officer, Treasurer and
Secretary
|
2006
2005
2004
|
$
|
359,089
293,373
284,909
|
$
|
403,332
—
—
|
$
|
4,543,798
192,422
137,700
|
$
|
—
—
—
|
$
|
5,306,219
485,795
422,609
|
||||||||
|
R.
Brent Beeler
Executive
Vice President and
Chief
Operating Officer
|
2006
2005
2004
|
$
|
552,788
382,828
345,995
|
$
|
403,332
135,000
—
|
$
|
4,359,213
236,325
156,503
|
$
|
—
—
—
|
$
|
5,315,333
754,153
502,498
|
||||||||
|
Randall
J. Hobson
President
- Rigid Closed Top Division
|
2006
2005
2004
|
$
|
253,075
177,805
140,374
|
$
|
264,480
56,520
—
|
$
|
1,023,955
95,900
66,634
|
$
|
—
—
—
|
$
|
1,541,510
330,225
207,008
|
||||||||
|
G.
Adam Unfried
President
- Rigid Open Top Division
|
2006
2005
2004
|
$
|
248,148
183,447
132,556
|
$
|
264,480
56,520
—
|
$
|
1,029,591
90,420
53,550
|
$
|
—
—
—
|
$
|
1,542,219
330,387
186,106
|
||||||||
|
Name
|
Grant
Date
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price of
Option
Awards
($/sh)
|
Grant
Date
Fair
Value of
Stock
and Option
Awards
|
|
Ira
G. Boots (1)
|
9/20/06
|
12,141
|
$100
|
$376,371
|
|
Ira
G. Boots (2)
|
9/20/06
|
12,141
|
$100
|
$315,666
|
|
Ira
G. Boots (3)
|
9/20/06
|
12,141
|
$100
|
$12,141
|
|
James
M. Kratochvil (1)
|
9/20/06
|
6,954
|
$100
|
$215,574
|
|
James
M. Kratochvil (2)
|
9/20/06
|
6,954
|
$100
|
$180,804
|
|
James
M. Kratochvil (3)
|
9/20/06
|
6,954
|
$100
|
$6,954
|
|
R.
Brent Beeler (1)
|
9/20/06
|
6,954
|
$100
|
$215,574
|
|
R.
Brent Beeler (2)
|
9/20/06
|
6,954
|
$100
|
$180,804
|
|
R.
Brent Beeler (3)
|
9/20/06
|
6,954
|
$100
|
$6,954
|
|
Randall
J. Hobson (1)
|
9/20/06
|
4,560
|
$100
|
$141,360
|
|
Randall
J. Hobson (2)
|
9/20/06
|
4,560
|
$100
|
$118,560
|
|
Randall
J. Hobson (3)
|
9/20/06
|
4,560
|
$100
|
$4,560
|
|
G.
Adam Unfried (1)
|
9/20/06
|
4,560
|
$100
|
$141,360
|
|
G.
Adam Unfried (2)
|
9/20/06
|
4,560
|
$100
|
$118,560
|
|
G.
Adam Unfried (3)
|
9/20/06
|
4,560
|
$100
|
$4,560
|
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options (#) Unexercisable
|
Option
Exercise
Price
|
Option
Expiration
Date
|
|
Ira
G. Boots
|
—
|
36,423
|
$100
|
9/20/16
|
|
James
M. Kratochvil
|
—
|
20,862
|
$100
|
9/20/16
|
|
R.
Brent Beeler
|
—
|
20,862
|
$100
|
9/20/16
|
|
Randall
J. Hobson
|
—
|
13,680
|
$100
|
9/20/16
|
|
G.
Adam Unfried
|
—
|
13,680
|
$100
|
9/20/16
|
|
Option
Awards
|
||
|
Name
|
Shares
Acquired
on
Exercise
(1)
|
Value
Realized
on
Exercise
(1)
|
|
Ira
G. Boots
|
80,475
|
$14,862,455
|
|
James
M. Kratochvil
|
46,570
|
$8,683,395
|
|
R.
Brent Beeler
|
48,259
|
$8,943,221
|
|
Randall
J. Hobson
|
12,567
|
$2,362,964
|
|
G.
Adam Unfried
|
8,803
|
$1,668,161
|
|
Name
|
Fees
Earned
or
Paid in
Cash
($)
|
Option
Awards
($)
|
Total
($)
|
|||||||
|
Anthony
M. Civale
|
$
|
25,000
|
$
|
41,354
|
$
|
66,354
|
||||
|
Patrick
J. Dalton
|
25,000
|
41,354
|
66,354
|
|||||||
|
Donald
C. Graham
|
25,000
|
41,354
|
66,354
|
|||||||
|
Steven
C. Graham
|
25,000
|
41,354
|
66,354
|
|||||||
|
Joshua
J. Harris
|
25,000
|
41,354
|
66,354
|
|||||||
|
Robert
V. Seminara
|
25,000
|
41,354
|
66,354
|
|||||||
|
Plan
category
|
Number
of securities to be
issued
upon exercise of
outstanding
options,
warrants
and rights
|
Weighted
Average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plan
(excluding
securities
referenced
in column (a))
|
|
(a)
|
(b)
|
(c)
|
|
|
Equity
compensation plans
approved
by security holders
|
—
|
—
|
—
|
|
Equity
compensation plans not
approved
by security holders (1)
|
500,184
(2)
|
100
|
77,068
|
|
Total
|
500,184
|
100
|
77,068
|
|
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
|
|
51.4
|
%
|
|
Apollo
Investment Fund V, L.P.
|
1,802,524
|
26.0
|
%
|
||
|
AP
Berry Holdings, LLC(3)
|
|
1,641,269
|
|
23.7
|
%
|
|
Graham
Berry Holdings, LP(4)
|
|
500,000
|
|
7.2
|
%
|
|
Ira
G. Boots(5)
|
119,395
|
1.7
|
%
|
||
|
R.
Brent Beeler(5)
|
68,010
|
*
|
%
|
||
|
Layle
K. Smith(5)
|
16,246
|
*
|
%
|
||
|
James
M. Kratochvil(5)
|
67,787
|
*
|
%
|
||
|
Anthony
M. Civale(6),(7)
|
3,531
|
*
|
|||
|
Patrick
J. Dalton(6),(7)
|
2,000
|
*
|
|||
|
Donald
C. Graham(6),(8)
|
2,000
|
*
|
|||
|
Steven
C. Graham(6),(8)
|
2,000
|
*
|
|||
|
Joshua
J. Harris(6),(7)
|
3,531
|
*
|
|||
|
Robert
V. Seminara(6),(7)
|
3,531
|
*
|
|||
|
All
directors and executive officers as
a group (9 persons)
(6)
|
288,031
|
4.2
|
%
|
||
|
(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 V, L.P and Apollo Investment
Fund VI,
L.P., including AP Berry Holdings, LLC and BPC Co-Investment Holdings,
LLC. Apollo Management V, L.P. and 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
V, L.P.
and Apollo Management VI, L.P., except to the extent of any pecuniary
interest therein. Each of Apollo Management V, L.P., Apollo Management
VI,
L.P., AP Berry Holdings, LLC and its affiliated investment
funds
|
|
(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, Smith, and Kratochvil is c/o
Berry
Plastics Holding Corporation, 101 Oakley Street, Evansville, Indiana
47710
|
|
(6)
|
Includes
shares underlying options that are vested or scheduled to vest
within 60
days of April 3, 2007 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.
|
|
•
|
a
$1,200.0 million term loan facility that matures on April 3, 2015;
and
|
|
•
|
a
revolving credit facility with borrowing availability equal to
the lesser
of (a) $400.0 million or (b) the borrowing base, which is a function
primarily of the value of our eligible accounts receivable and
eligible
inventory. The revolving credit facility matures on April 3,
2013.
|
|
•
|
85%
of the net amount of eligible accounts receivable; and
|
|
•
|
85%
of the net orderly liquidation value of eligible
inventory.
|
|
•
|
beginning
with our first 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);
and
|
|
•
|
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, subject to
certain
limitations.
|
|
•
|
a
pledge of our capital stock by Holdings, a pledge of 100% of the
capital
stock of all U.S. Guarantors and a pledge of 65% of the capital
stock of
certain of our foreign subsidiaries and certain other subsidiaries;
and
|
|
•
|
a
security interest in substantially all of our tangible and intangible
assets as well as those of each U.S.
Guarantor.
|
|
•
|
sell
assets;
|
|
•
|
incur
additional indebtedness;
|
|
•
|
repay
other indebtedness (including the
notes);
|
|
•
|
pay
dividends and distributions or repurchase our capital
stock;
|
|
•
|
create
liens on assets;
|
|
•
|
make
investments, loans, guarantees or
advances;
|
|
•
|
make
certain acquisitions;
|
|
•
|
engage
in mergers or consolidations;
|
|
•
|
enter
into sale-and-leaseback
transactions;
|
|
•
|
engage
in certain transactions with
affiliates;
|
|
•
|
amend
certain material agreements governing our indebtedness, including
the
notes;
|
|
•
|
amend
our organizational documents;
|
|
•
|
change
the business conducted by us and our subsidiaries;
|
|
•
|
change
our fiscal year end; and
|
|
•
|
enter
into agreements that restrict dividends from
subsidiaries.
|
|
·
|
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
|
|||
|
2011
|
105.125%
|
|||
|
2012
|
103.417%
|
|||
|
2013
|
101.708%
|
|||
|
2014
and thereafter
|
100.000%
|
|||
|
(1)
|
the
Issuer and its Subsidiaries had $1,974.6 million aggregate principal
amount of Senior Indebtedness outstanding (excluding approximately
$21.4
million of letters of credit and unused commitments and up to $378.6
million that may be borrowed under our revolving credit facility)
subject
to a borrowing base, all of which would have been Secured Indebtedness;
and
|
|
(2)
|
the
Issuer and its Subsidiaries had no Pari Passu Indebtedness outstanding
(other than the notes), and no Subordinated Indebtedness
outstanding.
|
|
(3)
|
any
obligation of the Issuer to any Subsidiary of the Issuer (other
than any
Receivables Repurchase Obligation) or of any Subsidiary of the
Issuer to
the Issuer, or of any Subsidiary to the Issuer or any other Subsidiary
of
the Issuer,
|
|
(4)
|
any
liability for U.S. federal, state, local or other taxes owed or
owing by
the Issuer or such Restricted
Subsidiary,
|
|
(5)
|
any
accounts payable or other liability to trade creditors (including
guarantees thereof or instruments evidencing such
liabilities),
|
|
(6)
|
any
Indebtedness or obligation of the Issuer or any Restricted Subsidiary
which is subordinate or junior in any respect to any other Indebtedness
or
obligation of the Issuer or such Restricted Subsidiary, as applicable,
including any Pari Passu Indebtedness and any Subordinated
Indebtedness,
|
|
(7)
|
any
obligations with respect to any Capital Stock,
or
|
|
(8)
|
any
Indebtedness Incurred in violation of the indenture but, as to
any such
Indebtedness Incurred under the Credit Agreement, no such violation
shall
be deemed to exist for purposes of this clause (6) if the holders
of such
Indebtedness or their Representative shall have received an Officers’
Certificate to the effect that the Incurrence of such Indebtedness
does
not (or, in the case of a revolving credit facility thereunder,
the
Incurrence of the entire committed amount thereof at the date on
which the
initial borrowing thereunder is made would not) violate the
indenture.
|
|
(1)
|
a
default in the payment of the principal of, premium, if any, or
interest
on any Designated Senior Indebtedness of the Issuer occurs and
is
continuing or any other amount owing in respect of any Designated
Senior
Indebtedness of the Issuer is not paid when due,
or
|
|
(2)
|
any
other default on Designated Senior Indebtedness of the Issuer occurs
and
the maturity of such Designated Senior Indebtedness of the Issuer
is
accelerated in accordance with its
terms,
|
|
(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 which after the Issue Date
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,” 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
|
|
(3)
|
individuals
who on the Issue Date constituted the Board of Directors of the
Issuer
(together with any new directors whose election by such Board of
Directors
of the Issuer or whose nomination for election by the stockholders
of the
Issuer was approved by (a) a vote of a majority of the directors
of the
Issuer then still in office who were either directors on the Issue
Date or
whose election or nomination for election was previously so approved
or
(b) the Permitted Holders) cease for any reason to constitute a
majority
of the Board of Directors of the Issuer then in
office.
|
|
(1)
|
repay
in full all Bank Indebtedness and such Senior Indebtedness;
or
|
|
(2)
|
obtain
the requisite consent, if required, under the agreements governing
the
Bank Indebtedness and such Senior 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 purchase such holder’s notes at a purchase 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
purchase
(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)
|
the
Issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, Incur any Indebtedness (including
Acquired
Indebtedness) or issue any shares of Disqualified Stock;
and
|
|
(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) up to an aggregate principal amount of $750.0
million
outstanding at any one time;
|
|
(b)
|
the
Incurrence by the Issuer, the Floating Rate Guarantors and the
Note
Guarantors of Indebtedness represented by the Floating Rate Loan,
the
Floating Rate Guarantees, the notes and the Note
Guarantees;
|
|
(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 to finance (whether prior to or within
270
days after) the purchase, lease 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)) in an aggregate principal amount which, when aggregated
with the
principal amount of all other Indebtedness then outstanding that
was
Incurred pursuant to this clause (d), does not exceed the greater
of $75.0
million and 4.0% of Total Assets at the time of
Incurrence;
|
|
(e)
|
Indebtedness
Incurred by the Issuer or any of its Restricted Subsidiaries constituting
reimbursement obligations with respect to letters of credit issued
in the
ordinary course of business, including without limitation letters
of
credit in respect of workers’ compensation claims, health, disability or
other employee benefits or property, casualty or liability insurance
or
self-insurance, or other Indebtedness with respect to reimbursement
type
obligations regarding workers’ compensation claims; provided,
however,
that upon the drawing of such letters of credit, such obligations
are
reimbursed within 30 days following such
drawing;
|
|
(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 lending 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: (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 with respect to any commodity
purchases or sales;
|
|
(k)
|
obligations
in respect of performance, bid 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 not otherwise permitted hereunder in an aggregate principal
amount,
which when aggregated with the principal amount or liquidation
preference
of all other Indebtedness and Disqualified Stock then outstanding
and
Incurred pursuant to this clause (l), does not exceed $100.0 million
at
any one time outstanding (it being understood that any Indebtedness
Incurred under this clause (l) shall cease to be deemed Incurred
or
outstanding for purposes of this clause (l) but shall be deemed
Incurred
for purposes of the first paragraph of this covenant from and after
the
first date on which the Issuer, or
|
|
(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), (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 shorter of
(x) the
remaining Weighted Average Life to Maturity of the Indebtedness,
Disqualified Stock or Preferred Stock being refunded or refinanced
and (y)
the Weighted Average Life to Maturity that would result if all
payments of
principal on the Indebtedness, Disqualified Stock and Preferred
Stock
being refunded or refinanced that were due on or after the date
one year
following the last maturity date of any notes then outstanding
were
instead due on such date one year following the last date of maturity
of
the notes;
|
|
(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)
one year
following the last 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), (s) or (t), shall be
deemed to
have been Incurred and to be outstanding under such clause (d),
(s) or
(t), as applicable, and not this clause (n) for purposes of determining
amounts outstanding under such clauses (d), (s) and
(t);
|
|
(o)
|
Indebtedness,
Disqualified Stock or Preferred Stock of Persons that are acquired
by the
Issuer or any of its Restricted Subsidiaries or merged into a Restricted
Subsidiary in accordance with the terms of the indenture; provided,
however,
that such Indebtedness, Disqualified Stock or Preferred Stock is
not
Incurred in contemplation of such acquisition or merger or to provide
all
or a portion of the funds or credit support required to consummate
such
acquisition or merger; provided,
further, however,
that after giving effect to such acquisition and the Incurrence
of such
Indebtedness 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 would be greater than immediately prior
to
such acquisition;
|
|
(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 two Business Days
of its
Incurrence;
|
|
(r)
|
Indebtedness
of the Issuer or any Restricted Subsidiary supported by a letter
of credit
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 Restricted Subsidiaries that are not Note Guarantors Incurred
for
working capital purposes, 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 the greater of $15.0 million and 10% of the consolidated
assets of the Restricted Subsidiaries that are not Note Guarantors;
and
|
|
(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.
|
|
(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 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 scheduled maturity, any Subordinated Indebtedness (other than
the
payment, redemption, repurchase, defeasance, acquisition or retirement
of
(A) Subordinated Indebtedness in anticipation of satisfying a sinking
fund
obligation, principal installment or final maturity, in each case
due
within one year of the date of such payment, redemption, repurchase,
defeasance, acquisition or retirement and (B) Indebtedness permitted
under
clauses (g) and (i) of the second paragraph of the covenant described
under “Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock”);
or
|
|
(4)
|
make
any Restricted Investment (all such payments and other actions
set forth
in clauses (1) through (4) above being collectively referred to
as
“Restricted
Payments”),
unless, at the time of such Restricted
Payment:
|
|
(a)
|
no
Default or Event of Default shall have occurred and be continuing
or would
occur as a consequence thereof;
|
|
(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), (8) and (13) (only to the extent of one-half
of the
amounts paid pursuant to such clause) 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 April 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 accordance with the next succeeding sentence)
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 upon
exercise of warrants or options (other than an issuance or sale
to a
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 accordance
with the next succeeding
|
|
(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
accordance
with the next succeeding sentence) 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 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 next 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 of the Issuer, the
Fair Market
Value (as determined in accordance with the next succeeding sentence)
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 next succeeding paragraph or constituted a Permitted
Investment).
|
|
(A)
|
in
the event of property with a Fair Market Value in excess of $7.5
million,
shall be set forth in an Officers’ Certificate
or
|
|
(B)
|
in
the event of property with a Fair Market Value in excess of $15.0
million,
shall be set forth in a resolution approved by at least a majority
of the
Board of Directors of the Issuer.
|
|
(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 or any
Note
Guarantor in exchange for, or out of the proceeds of the substantially
concurrent sale of, Equity Interests of the Issuer or contributions
to the
equity capital of the Issuer (other than any Disqualified Stock
or any
Equity Interests sold 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) (collectively, including any such contributions,
“Refunding
Capital Stock”); and
|
|
(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 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)
one year following the Stated Maturity of the notes, and
|
|
(d)
|
such
Indebtedness has a Weighted Average Life to Maturity at the time
Incurred
which is not less than the shorter of (x) the remaining Weighted
Average
Life to Maturity of the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired and (y) the Weighted Average Life
to
Maturity that would
|
|
(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
$12.5
million in any calendar year (with unused amounts in any calendar
year
being permitted to be carried over for the two succeeding calendar
years
subject to a maximum payment (without giving effect to the following
proviso) of $20.0 million in any calendar year); provided,
further, however,
that such amount in any calendar year may be increased by an amount
not to
exceed:
|
|
(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 immediately
preceding paragraph); 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, (A) 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 (B) 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
|
|
(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 $25.0 million 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, as the
case may
be, to fund the payment by any direct or indirect parent of the
Issuer, as
the case may be, of dividends on such entity’s common stock) of up to 6%
per annum of the net proceeds received by the Issuer from any public
offering of common stock of the Issuer or any direct or indirect
parent of
the Issuer;
|
|
(9)
|
Investments
that are made with Excluded
Contributions;
|
|
(10)
|
other
Restricted Payments in an aggregate amount not to exceed $50.0
million;
|
|
(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
U.S.
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 equal to the 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;
and
|
|
(b)
|
in
amounts equal to 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”;
|
|
(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 Transactions and the
|
|
(15)
|
repurchases
of Equity Interests deemed to occur upon exercise of stock options
if such
Equity Interests represent a portion of the exercise price of such
options;
|
|
(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)
|
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
|
|
(18)
|
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 Transactions 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 Senior Credit
Documents;
|
|
(2)
|
the
Floating Rate Loan, the indenture and the notes (and any exchange
notes
and guarantees thereof);
|
|
(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)
|
any
restriction with respect to a Restricted Subsidiary imposed pursuant
to an
agreement entered into for the sale or disposition of 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 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 3% of Total Assets and $35.0 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) shall be deemed to be Cash Equivalents for the
purposes
of this provision.
|
|
(1)
|
to
permanently reduce Obligations under the Credit Agreement (and,
in the
case of revolving Obligations, to correspondingly reduce commitments
with
respect thereto) or other Senior Indebtedness or Pari Passu Indebtedness
(provided
that if the Issuer or any Note Guarantor shall so reduce Obligations
under
Pari Passu Indebtedness, the Issuer will equally and ratably reduce
Obligations under the notes 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,
and/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 $20.0
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)
|
(a)
transactions between or among the Issuer and/or any of its Restricted
Subsidiaries and (b) 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 to pay, and the payment of,
annual
management, consulting, monitoring and advisory fees and expenses
to the
Sponsors in an aggregate amount in any fiscal year not to exceed
the
greater of (A) $2.5 million and (B) 1.5% of EBITDA of the Issuer
and its
Restricted Subsidiaries for the immediately preceding fiscal year;
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 from a financial point of view or meets the requirements
of
clause (a) of the preceding
paragraph;
|
|
(7)
|
payments
or 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 certain transaction specified in the
indenture;
|
|
(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 amendment thereto or similar agreements 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 agreement or under any similar agreement entered
into
after the Issue Date shall only be permitted by this clause (9)
to the
extent that the terms of any such existing agreement together with
all
amendments thereto, taken as a whole, or new agreement are not
otherwise
more disadvantageous to the holders of the notes in any material
respect
than the original agreement as in effect on the Issue
Date;
|
|
(10)
|
the
execution of the Transactions and the payment of all fees and expenses
related to the Transactions, including fees to the
Sponsors,
|
|
(11)
|
(a)
transactions with customers, clients, suppliers or purchasers or
sellers
of goods or services, in each case in the ordinary course of business
and
otherwise in compliance
|
|
(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, 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;
and
|
|
(20)
|
any
employment agreements entered into by the Issuer or any of its
Restricted
Subsidiaries in the ordinary course of
business.
|
|
(1)
|
pari
passu in right of payment with the notes or such Note Guarantor’s Note
Guarantee, as the case may be, or
|
|
(2)
|
subordinate
in right of payment to the notes or such Note Guarantor’s Note Guarantee,
as the case may be.
|
|
(1)
|
within
90 days after the end of each fiscal year (or such shorter period
as may
be required by the SEC), 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
45 days after the end of each of the first three fiscal quarters
of each
fiscal year (or such shorter period as may be required by the SEC),
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 for
filing
current reports on Form 8-K by the SEC), 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, 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 and the notes 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 or Event of 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,
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)
|
such
Note Guarantor is the surviving Person or the Person formed by
or
surviving any such consolidation 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”);
|
|
(2)
|
the
Successor Note Guarantor (if other than such Note Guarantor) expressly
assumes all the obligations of such Note Guarantor under the indenture
and
such Note Guarantors’ Note Guarantee pursuant to a supplemental indenture
or other documents or instruments in form reasonably satisfactory
to the
Trustee; and
|
|
(3)
|
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, merger or transfer and such supplemental indenture
(if any)
comply with the indenture.
|
|
(1)
|
a
default in any payment of interest on any note when due, whether
or not
prohibited by the provisions described under “Ranking” above, continued
for 30 days,
|
|
(2)
|
a
default in the payment of principal or premium, if any, of any
note when
due at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise, whether or not prohibited
by
the provisions described under “Ranking”
above,
|
|
(3)
|
the
failure by the Issuer to comply with its obligations under the
covenant
described under “Merger, Consolidation or Sale of All or Substantially All
Assets” above,
|
|
(4)
|
the
failure by the Issuer or any of its Restricted Subsidiaries to
comply with
any of its agreements in the notes or the indenture (other than
those
referred to in clauses (1), (2) or (3) above) and such failure
continues
for 60 days after the notice of default is delivered to the issuer
by the
Trustee or holders of at least 25% in aggregate principal amount
of the
notes (the “breach of agreement
provision”),
|
|
(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 of the Issuer) 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 $20.0 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 $20.0 million or its foreign currency
equivalent
(net of any amounts which are covered by enforceable insurance
policies
issued by solvent carriers), which judgments are not discharged,
waived or
stayed for a period of 60 days (the “judgment default provision”),
or
|
|
(8)
|
any
Note Guarantee of a Significant Subsidiary 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 and such Default continues for 10
days.
|
|
(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 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
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)
|
make
any change to the subordination provisions of the indenture that
adversely
affects the rights of any holder,
|
|
(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, or
|
|
(9)
|
modify
any Note Guarantee in any manner adverse to the
holders.
|
|
(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 stated maturity within one
year or
(iii) if redeemable at
|
|
(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)
|
Indebtedness
of any other Person existing at the time such other Person is merged
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 note;
and
|
|
(2)
|
the
excess of:
|
|
(a)
|
the
present value at such redemption date of (i) the redemption price
of the
note, at March 1, 2011 (such redemption price being set forth in
the
applicable table appearing above under “Optional Redemption”) plus (ii)
all required interest payments due on the note through March 1,
2011
(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
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 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,
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 for assets related to a Similar Business of
comparable
or greater market value, as determined in good faith by the Issuer,
which
in the event of an exchange of assets with a Fair Market Value
in excess
of (1) $7.5 million shall be evidenced by an Officers’ Certificate, and
(2) $15.0 million shall be set forth in a resolution approved in
good
faith by at least a majority of the Board of Directors of 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)
|
a
sale of accounts receivable and related assets of the type specified
in
the definition of “Receivables Financing” to a Receivables Subsidiary in a
Qualified Receivables Financing or in factoring or similar
transactions;
|
|
(k)
|
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;
|
|
(l)
|
the
grant in the ordinary course of business of any licenses of patents,
trademarks, knowhow and any other intellectual property;
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;
|
|
(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 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 United
States
government or any agency or instrumentality thereof in each case
maturing,
unless such securities are deposited to defease any Indebtedness,
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;
|
|
(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 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 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);
|
|
(2)
|
consolidated
capitalized interest of such Person and its Restricted Subsidiaries
for
such period, whether paid or
accrued;
|
|
(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;
and
|
|
(4)
|
less
interest income for such period.
|
|
(1)
|
any
net after-tax extraordinary, nonrecurring or unusual gains or losses
or
income or expenses (less all fees and expenses relating thereto),
including, without limitation, any severance expenses, and fees,
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
resulting from purchase accounting (such as, without limitation,
capitalized profit inventory) 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 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
|
|
(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 Nos. 142 and 144 and the amortization
of
intangibles arising pursuant to No. 141 shall be
excluded;
|
|
(11)
|
any
non-cash compensation expense realized from 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) 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 FAS 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 one times such cash contributions to the capital of
the
Issuer, 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)
|
the
Bank Indebtedness;
|
|
(2)
|
the
Floating Rate Loan; and
|
|
(3)
|
any
other Senior Indebtedness of the Issuer or such Note Guarantor
which, at
the date of determination, has an aggregate principal amount outstanding
of, or under which, at the date of determination, the holders thereof
are
committed to lend up to, at least $25.0 million and is specifically
designated by the Issuer or such Note Guarantor in
the
|
|
(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,
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; 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)
|
|
(6)
|
non-cash
items increasing Consolidated Net Income for such period (excluding
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.
|
|
(1)
|
contributions
to its common equity capital, and
|
|
(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)
|
investments
in any fund that invests exclusively in investments of the type
described
in clause (1) which fund may also hold immaterial amounts of cash
pending
investment and/or distribution, and
|
|
(3)
|
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 that is primarily engaged in a Similar Business 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 the Issue
Date;
|
|
(6)
|
advances
to employees not in excess of $15.0 million outstanding at any
one time in
the aggregate;
|
|
(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
|
|
(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 (other than an Investment in an Unrestricted Subsidiary
or any direct or indirect parent of the Issuer) having an aggregate
Fair
Market Value, taken together with all other Investments made pursuant
to
this clause (9), not to exceed the greater of (x) $50.0 million
and (y)
6.5% 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), not to exceed the greater of
(x) $50.0
million and (y) 6.5% 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 purchases and acquisitions of inventory, supplies,
materials
and 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 $15.0 million
at any
one time; 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
a
Restricted Subsidiary of the Issuer in a transaction that is not
prohibited by the covenant described under “Merger, 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 United States 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 securing Senior Indebtedness, and Liens on assets of a Restricted
Subsidiary that is not a Note Guarantor securing Indebtedness of
such
Restricted Subsidiary, in each case 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”
and (B) 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 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 property at the time the Issuer or a Restricted Subsidiary of
the
Issuer acquired the property, including any acquisition by means
of a
merger 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;
|
|
(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;
|
|
(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;
and
|
|
(22)
|
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)
|
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)
|
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
|
|
·
|
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
|
|
|
BERRY
PLASTICS HOLDING CORPORATION (SUPPLEMENTAL COMBINED FINANCIAL
STATEMENTS)
|
|
|
Audited
Supplemental Combined Financial Statements
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-4
|
|
Supplemental
Combined Balance Sheet as of September 30, 2006
|
F-5
|
|
Supplemental
Combined Statement of Operations for the period from February 17,
2006 to
September 30, 2006
|
F-6
|
|
Supplemental
Combined Statement of Changes in Stockholders’ Equity for the period from
February 17, 2006 to September 30, 2006
|
F-7
|
|
Supplemental
Combined Statement of Cash Flows for the period from February 17,
2006 to
September 30, 2006
|
F-8
|
|
Notes
to Supplemental Combined Financial Statements
|
F-9
|
|
Unaudited
Supplemental Combined Financial Statements for the Three
Months Ended December 30, 2006
|
|
|
Supplemental
Combined Balance Sheet as of December 30, 2006
|
F-43
|
|
Supplemental
Combined Statement of Operations for the three months ended December
30,
2006
|
F-44
|
|
Supplemental
Combined Statement of Changes in Stockholders’ Equity for the three months
ended December 30, 2006
|
F-45
|
|
Supplemental
Combined Statement of Cash Flows for the three months ended
December 30, 2006
|
F-46
|
|
Notes
to Unaudited Supplemental Combined Financial Statements (Combined
First
Quarter)
|
F-47
|
|
BERRY
PLASTICS HOLDING CORPORATION
|
|
|
Audited
Consolidated Financial Statements
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-66
|
|
Consolidated
Balance Sheets at December 30, 2006 and December 31, 2005
|
F-67
|
|
Consolidated
Statements of Operations for
the periods ended December 30, 2006, December 31, 2005 and January
1,
2005
|
F-69
|
|
Consolidated
Statements of Changes in Stockholders’ Equity for the periods ended
December 30, 2006, December 31, 2005, and January 1, 2005
|
F-70
|
|
Consolidated
Statements of Cash Flows for the periods ended December 30, 2006,
December
31, 2005 and January 1, 2005
|
F-71
|
|
Notes
to Consolidated Financial Statements
|
F-72
|
|
COVALENCE
SPECIALTY MATERIALS CORP. (SUCCESSOR) AND
TYCO
PLASTICS AND ADHESIVES (PREDECESSOR)
|
|
|
Unaudited
Consolidated Financial Statements
|
|
|
Statements
of Operations for the Three Months Ended December 29, 2006 (Successor)
and
December 30, 2005 (Predecessor)
|
F-98
|
|
Balance
Sheets (Successor) as of December 29, 2006 and September 29,
2006
|
F-99
|
|
Statements
of Cash Flows for the Three Months Ended December 29, 2006 (Successor)
and
December 30, 2005 (Predecessor)
|
F-100
|
|
Statements
of Equity and Comprehensive Income (Loss) (Successor) and Parent
Company
Equity and Comprehensive Income (Predecessor) for the Three Months
Ended
December 29, 2006 and December 30, 2005
|
F-102
|
|
Notes
to Financial Statements (unaudited)
|
F-103
|
|
Audited
Consolidated Financial Statements
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-120
|
|
Statements
of Operations For The Periods from February 17, 2006 to September
29,
2006, October 1, 2005 to February 16, 2006, and the Years Ended September
30, 2005 and 2004
|
F-122
|
|
Balance
Sheets as of September 29, 2006 and September 30, 2005
|
F-123
|
|
Statements
of Cash Flows For The Periods from February 17, 2006 to September
29,
2006, October 1, 2005 to February 16, 2006, and the Years Ended September
30, 2005 and 2004
|
F-125
|
|
Statements
of Equity and Comprehensive Income (Loss) (Successor) Company Equity
and
Comprehensive Income (Predecessor) For The Periods from February
17, 2006
to September 29, 2006, October 1, 2005 to February 16, 2006, and
the Years
Ended September 30, 2005 and 2004
|
F-127
|
|
|
|
|
Notes
to Financial Statements
|
F-129
|
|
Assets
|
||||
|
Current
assets:
|
||||
|
Cash
and cash equivalents
|
$
|
83.1
|
||
|
Accounts
receivable (less allowance for doubtful accounts of $9.6)
|
357.1
|
|||
|
Inventories:
|
||||
|
Finished
goods
|
238.3
|
|||
|
Raw
materials and supplies
|
166.8
|
|||
|
405.1
|
||||
|
Deferred
income taxes
|
17.0
|
|||
|
Prepaid
expenses and other current assets
|
41.6
|
|||
|
Total
current assets
|
903.9
|
|||
|
Property
and equipment:
|
||||
|
Land
|
32.6
|
|||
|
Buildings
and improvements
|
177.1
|
|||
|
Equipment
and construction in progress
|
638.6
|
|||
|
848.3
|
||||
|
Less
accumulated depreciation
|
31.7
|
|||
|
816.6
|
||||
|
Deferred
financing fees, net
|
64.8
|
|||
|
Goodwill
|
989.2
|
|||
|
Intangible
assets, net
|
1,046.2
|
|||
|
Other
assets
|
0.7
|
|||
|
Total
assets
|
$
|
3,821.4
|
||
|
Liabilities
and stockholders’ equity
|
||||
|
Current
liabilities:
|
||||
|
Accounts
payable
|
$
|
272.1
|
||
|
Accrued
expenses and other current liabilities
|
173.5
|
|||
|
Current
portion of long-term debt
|
16.0
|
|||
|
Total
current liabilities
|
461.6
|
|||
|
Long-term
debt, less current portion
|
2,612.3
|
|||
|
Deferred
income taxes
|
249.6
|
|||
|
Other
long-term liabilities
|
23.1
|
|||
|
Total
liabilities
|
3,346.6
|
|||
|
Minority
interest
|
65.2
|
|||
|
Stockholders’
equity:
|
||||
|
Capital
stock (see Note 11)
|
440.6
|
|||
|
Accumulated
Deficit
|
(31.2
|
)
|
||
|
Accumulated
other comprehensive income
|
0.2
|
|||
|
Total
stockholders’ equity
|
409.6
|
|||
|
Total
liabilities, minority interest and stockholders’ equity
|
$
|
3,821.4
|
||
|
Net
sales
|
$
|
1,138.8
|
||
|
Cost
of goods sold
|
1,022.9
|
|||
|
Gross
profit
|
115.9
|
|||
|
Operating
expenses
|
108.2
|
|||
|
Operating
income
|
7.7
|
|||
|
Interest
expense, net
|
46.5
|
|||
|
Loss
on extinguishment of debt
|
13.6
|
|||
|
Other
income
|
(1.3
|
)
|
||
|
Loss
before income taxes
|
(51.1
|
)
|
||
|
Income
tax benefit
|
(18.1
|
)
|
||
|
Minority
interest, net of tax
|
(1.8
|
)
|
||
|
Net
loss
|
$
|
(31.2
|
)
|
|
Capital
Stock
|
Accumulated
Deficit
|
Accumulated
Other Comprehensive Income
|
Total
|
Comprehensive
Loss
|
||||||||||||
|
Balance
at inception
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
|
Contribution
of equity - Covalence
|
190.5
|
—
|
—
|
190.5
|
||||||||||||
|
Contribution
of equity - Berry
|
356.0
|
—
|
—
|
356.0
|
||||||||||||
|
Adjustment
for negative minority interest - Berry
|
(106.2
|
)
|
—
|
—
|
(106.2
|
)
|
||||||||||
|
Stock-based
compensation
|
0.3
|
—
|
—
|
0.3
|
||||||||||||
|
Translation
gains
|
—
|
—
|
0.2
|
0.2
|
$
|
0.2
|
||||||||||
|
Net
loss
|
—
|
(31.2
|
)
|
—
|
(31.2
|
)
|
(31.2
|
)
|
||||||||
|
Balance
at September 30, 2006
|
$
|
440.6
|
$
|
(31.2
|
)
|
$
|
0.2
|
$
|
409.6
|
$
|
(31.0
|
)
|
||||
|
Operating
activities
|
||||
|
Net
loss
|
$
|
(31.2
|
)
|
|
|
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
||||
|
Depreciation
|
31.9
|
|||
|
Non-cash
interest expense
|
2.2
|
|||
|
Loss
on extinguished debt
|
13.6
|
|||
|
Amortization
of intangibles
|
22.7
|
|||
|
Non-cash
compensation
|
0.3
|
|||
|
Deferred
income taxes (benefit)
|
(20.7
|
)
|
||
|
Minority
interest
|
(1.8
|
)
|
||
|
Changes
in operating assets and liabilities:
|
||||
|
Accounts
receivable, net
|
(26.1
|
)
|
||
|
Inventories
|
27.5
|
|||
|
Prepaid
expenses and other assets
|
8.0
|
|||
|
Accounts
payable, accrued expenses and other liabilities
|
70.3
|
|||
|
Net
cash provided by operating activities
|
96.7
|
|||
|
Investing
activities
|
||||
|
Additions
to property and equipment
|
(34.8
|
)
|
||
|
Apollo
Acquisition of Covalence
|
(927.7
|
)
|
||
|
Apollo
Acquisition of Berry Plastics
|
(2,290.3
|
)
|
||
|
Proceeds
from disposal of assets
|
0.8
|
|||
|
Net
cash used for investing activities
|
(3,252.0
|
)
|
||
|
Financing
activities
|
||||
|
Proceeds
from long-term borrowings
|
2,653.4
|
|||
|
Payments
on long-term borrowings
|
(50.7
|
)
|
||
|
Contributions
from shareholders
|
680.8
|
|||
|
Debt
financing costs
|
(71.0
|
)
|
||
|
Net
cash provided by financing activities
|
3,212.5
|
|||
|
Effect
of exchange rate changes on cash
|
(1.1
|
)
|
||
|
Net
increase in cash and cash equivalents
|
56.1
|
|||
|
Cash
and cash equivalents at beginning of period
|
27.0
|
|||
|
Cash
and cash equivalents at end of period
|
$
|
83.1
|
||
|
|
•
|
|
the
former Covalence Specialty Materials Corp, as of September 29, 2006
and
for the period from February 17, 2006 (the date of acquisition) to
September 29, 2006;
|
|
|
•
|
|
the
former Berry Plastics Holding Corporation, as of September 30, 2006
and
for the period from September 20, 2006 (the date of acquisition)
to
September 30, 2006.
|
|
Berry
|
Covalence
|
||
|
Period
from 9/20/06-9/30/06
|
Period
from 2/17/06-9/30/06
|
||
|
Risk-free
interest rate
|
4.5%
|
4.5
- 4.9%
|
|
|
Dividend
yield
|
0.0%
|
0.0%
|
|
|
Volatility
factor
|
.20
|
.45
|
|
|
Expected
option life
|
6.0
years
|
3.73
- 6.86 years
|
|
|
Fair
value of allowance for doubtful accounts from acquisition
dates
|
$10.1
|
|
Charged
to costs and expenses
|
(0.2)
|
|
Deductions
and currency translation
|
(0.3)
|
|
Balance
at September 30, 2006
|
$9.6
|
|
Estimated
Fair
Value at
February
16, 2006
|
Allocation
of Excess
Fair
Value over
Purchase
Price
|
Allocation
of
Purchase
Price at
February
16, 2006
|
||||||||||||||
|
(in
millions)
|
||||||||||||||||
|
Current
assets
|
$
|
434.6
|
$
|
—
|
$
|
434.6
|
||||||||||
|
Property,
plant and equipment
|
345.4
|
(4.8
|
)
|
340.6
|
||||||||||||
|
Intangible
assets.
|
365.8
|
(7.3
|
)
|
358.5
|
||||||||||||
|
Deferred
financing fees and other
non-current
assets
|
24.1
|
—
|
24.1
|
|||||||||||||
|
Assets
acquired
|
1,169.9
|
(12.1
|
)
|
1,157.8
|
||||||||||||
|
Current
liabilities.
|
174.6
|
—
|
174.6
|
|||||||||||||
|
Non
current liabilities
|
67.1
|
—
|
67.1
|
|||||||||||||
|
Liabilities
assumed.
|
241.7
|
—
|
241.7
|
|||||||||||||
|
$
|
928.2
|
$
|
(12.1
|
)
|
$
|
916.1
|
||||||||||
|
September
20, 2006
|
||||
|
Current
assets
|
$
|
389.3
|
||
|
Property
and equipment
|
473.2
|
|||
|
Goodwill
|
989.2
|
|||
|
Customer
relationships
|
511.9
|
|||
|
Trademarks
|
182.2
|
|||
|
Other
intangibles and deferred financing fees
|
59.0
|
|||
|
Total
assets
|
2,604.8
|
|||
|
Current
liabilities
|
197.5
|
|||
|
Long-term
liabilities
|
2,103.3
|
|||
|
Total
liabilities
|
2,300.8
|
|||
|
Net
assets acquired
|
$
|
304.0
|
||
|
Unaudited
|
||||||||||
|
Berry
Plastics Holding Corporation -
Combined
|
Berry
Plastics - Historical
|
Covalence
-
Historical
|
||||||||
|
Pro
forma net sales
|
$
|
3,173.4
|
$
|
1,414.1
|
$
|
1,759.3
|
||||
|
Pro
forma net loss
|
$
|
(64.6
|
)
|
$
|
(26.8
|
)
|
$
|
(37.8
|
)
|
|
|
Term
loan - Berry
|
$
|
675.0
|
||
|
Revolving
line of credit - Berry
|
20.0
|
|||
|
Second
Priority Senior Secured Fixed Rate Notes - Berry
|
525.0
|
|||
|
Second
Priority Senior Secured Floating Rate Notes - Berry
|
225.0
|
|||
|
11%
Senior Subordinated Notes - Berry
|
425.0
|
|||
|
Capital
leases - Berry
|
25.4
|
|||
|
Term
loan - Covalence
|
299.3
|
|||
|
Revolving
line of credit - Covalence
|
—
|
|||
|
Second
Priority Floating Rate Notes - Covalence
|
175.0
|
|||
|
10
¼% Senior Subordinated Notes - Covalence
|
265.0
|
|||
|
Less
debt discount on 10 ¼% Notes - Covalence
|
6.4
|
|||
|
2,628.3
|
||||
|
Less
current portion of long-term debt
|
16.0
|
|||
|
$
|
2,612.3
|
|||
|
•
|
Beginning
with Covalence’s 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);
and
|
|
•
|
100%
of the net cash proceeds of all non-ordinary course asset sales and
casualty and condemnation events, if Covalence does not reinvest
or commit
to reinvest those proceeds in assets to be used in its business or
to make
certain other permitted investments within 15 months, subject to
certain
limitations.
|
|
2007
|
$
|
16.0
|
||
|
2008
|
14.5
|
|||
|
2009
|
13.4
|
|||
|
2010
|
12.4
|
|||
|
2011
|
17.7
|
|||
|
Thereafter
|
2,560.7
|
|||
|
$
|
2,634.7
|
|
Gross
Carrying Amount
|
Amortization
Period
|
||
|
Deferred
financing fees
|
$67.0
|
Respective
debt
|
|
|
Customer
relationships
|
624.6
|
11
- 20 years
|
|
|
Goodwill
|
989.2
|
Indefinite
lived
|
|
|
Trademarks
|
182.2
|
Indefinite
lived
|
|
|
Patents
|
15.8
|
12
- 20 years
|
|
|
Licenses
|
111.4
|
11
years
|
|
|
Technology
|
134.8
|
10
years
|
|
|
Accumulated
amortization
|
(24.8)
|
||
|
$2,100.2
|
|
At
September 30, 2006
|
|||||||
|
Capital
Leases
|
Operating
Leases
|
||||||
|
2007
|
$
|
7.4
|
$
|
35.6
|
|||
|
2008
|
5.7
|
31.8
|
|||||
|
2009
|
5.7
|
29.0
|
|||||
|
2010
|
1.7
|
26.4
|
|||||
|
2011
|
8.2
|
22.0
|
|||||
|
Thereafter
|
—
|
102.1
|
|||||
|
28.7
|
$
|
246.9
|
|||||
|
Less:
amount representing interest
|
(3.3
|
)
|
|||||
|
Present
value of net minimum lease payments
|
$
|
25.4
|
|
(in
millions)
|
|||||
|
Net
loss
|
$
|
(31.2
|
)
|
||
|
Foreign
currency translation adjustment.
|
0.2
|
||||
|
Comprehensive
loss
|
$
|
(31.0
|
)
|
||
|
Current
|
||||
|
United
States:
|
||||
|
Federal
|
$
|
—
|
||
|
State
|
—
|
|||
|
Non-U.S.
|
2.6
|
|||
|
Current
income tax provision
|
2.6
|
|||
|
Deferred:
|
||||
|
United
States:
|
||||
|
Federal
|
(17.5
|
)
|
||
|
State
|
(1.0
|
)
|
||
|
Non-U.S.
|
(2.2
|
)
|
||
|
Deferred
income tax benefit
|
(20.7
|
)
|
||
|
Benefit
for income taxes
|
$
|
(18.1
|
)
|
|
U.S.
Federal income tax benefit at the statutory rate
|
$
|
(17.9
|
)
|
|
|
Adjustments
to reconcile to the income tax provision:
|
||||
|
U.S.
state income tax benefit
|
(2.3
|
)
|
||
|
Permanent
differences
|
0.3
|
|||
|
Change
in Valuation Allowance - Foreign
|
1.8
|
|||
|
Rate
difference between U.S. and Foreign
|
(0.2
|
)
|
||
|
Other
|
0.2
|
|||
|
Benefit
for income taxes
|
$
|
(18.1
|
)
|
|
Deferred
tax assets
|
||||
|
Allowance
for doubtful accounts
|
$
|
1.9
|
||
|
Accrued
liabilities and reserves
|
17.6
|
|||
|
Amortization
of tax deductible goodwill
|
2.0
|
|||
|
Inventories
|
0.3
|
|||
|
Net
operating loss carryforward
|
116.9
|
|||
|
Alternative
minimum tax (AMT) credit carryforward
|
7.4
|
|||
|
Others
|
1.9
|
|||
|
Total
deferred tax assets
|
148.0
|
|||
|
Valuation
allowance
|
(11.5
|
)
|
||
|
Total
deferred tax assets, net of valuation allowance
|
$
|
136.5
|
||
|
Deferred
tax liabilities :
|
||||
|
Property
and Equipment
|
$
|
38.4
|
||
|
Intangible
assets
|
327.3
|
|||
|
Prepaid
expenses
|
1.3
|
|||
|
Foreign
earnings
|
1.3
|
|||
|
Others
|
0.8
|
|||
|
Total
deferred tax liabilities
|
$
|
369.1
|
||
|
Net
deferred tax liability
|
$
|
(232.6
|
)
|
|
Defined
Benefit Pension Plans
|
Retiree
Health Plan
|
||||
|
Berry
|
|||||
|
Period
from 9/20/06-9/30/06
|
|||||
|
Change
in Projected Benefit Obligations (PBO)
|
|
||||
|
PBO
at beginning of period
|
$41.6
|
$ 6.9
|
|||
|
Service
cost
|
0.1
|
0.1
|
|||
|
Interest
cost
|
0.1
|
—
|
|||
|
Benefits
paid
|
(0.2)
|
(0.1)
|
|||
|
PBO
at end of period
|
$41.6
|
$ 6.9
|
|||
|
|
|
||||
|
Change
in Fair Value of Plan Assets
|
|
||||
|
Plan
assets at beginning of period
|
$33.7
|
$ —
|
|||
|
Actual
return on plan assets
|
0.1
|
—
|
|||
|
Company
contributions
|
0.1
|
0.1
|
|||
|
Benefits
paid
|
(0.2)
|
(0.1)
|
|||
|
Plan
assets at end of period
|
33.7
|
—
|
|||
|
Funded
status
|
$(7.9)
|
$ (6.9)
|
|||
|
Unrecognized
net actuarial loss/gain
|
(0.4)
|
—
|
|||
|
Net
amount recognized
|
$(8.3)
|
$ (6.9)
|
|||
|
Amounts
recognized in the Supplemental Combined Balance Sheet consist
of:
|
|
||
|
Prepaid
pension
|
$0.2
|
$ —
|
|
|
Accrued
benefit liability
|
(8.5)
|
(6.9)
|
|
|
Net
amount recognized
|
$(8.3)
|
|
$ (6.9)
|
|
Defined
Benefit Pension Plans
|
Retiree
Health Plan
|
|
|
Berry
|
Berry
|
|
|
(Percents)
|
Period
from 9/20/06-9/30/06
|
Period
from 9/20/06-9/30/06
|
|
Weighted-average
assumptions:
|
||
|
Discount
rate for benefit obligation
|
5.5
|
5.5
|
|
Discount
rate for net benefit cost
|
5.6
|
5.0
|
|
Expected
return on plan assets for net benefit costs
|
8.0
|
—
|
|
One-Percentage
Point
|
Increase
|
Decrease
|
|
Accumulated
Postretirement benefit obligation
|
$
0.2
|
$
(0.2)
|
|
Sum
of service cost and interest cost
|
$
0.1
|
$
(0.1)
|
|
Defined
Benefit Pension Plans
|
Retiree
Health Plan
|
||
|
Berry
|
|||
|
Period
from
|
Period
from
|
||
|
9/20/06-9/30/06
|
9/20/06-9/30/06
|
||
|
2007
|
$
3.4
|
$
1.3
|
|
|
2008
|
3.4
|
1.2
|
|
|
2009
|
3.3
|
1.0
|
|
|
2010
|
3.3
|
0.8
|
|
|
2011
|
3.2
|
0.8
|
|
|
2012-2015
|
17.0
|
3.1
|
|
|
Berry
|
||||
|
Period
from
9/20/06-9/30/06
|
||||
|
Components
of net period benefit cost:
|
||||
|
Defined
Benefit Pension Plans
|
||||
|
Service
cost
|
$
|
0.1
|
||
|
Interest
cost
|
0.1
|
|||
|
Expected
return on plan assets
|
(0.1
|
)
|
||
|
Net
periodic benefit cost
|
$
|
0.1
|
||
|
Retiree
Health Benefit Plan
|
||||
|
Interest
cost
|
0.1
|
|||
|
Net
periodic benefit cost
|
$
|
0.1
|
|
Berry
|
||
|
September
30, 2006
|
||
|
Asset
Category
|
||
|
Equity
securities and equity-like instruments
|
51%
|
|
|
Debt
securities
|
47
|
|
|
Other
|
2
|
|
|
Total
|
100%
|
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
|
Options
outstanding, beginning of period
|
—
|
$
—
|
|
Options
granted
|
500,184
|
100
|
|
Options
exercised or cash settled
|
—
|
—
|
|
Options
forfeited or cancelled
|
—
|
—
|
|
Options
outstanding, end of period
|
500,184
|
$100
|
|
Option
price range at end of period
|
$100
|
|
|
Options
exercisable at end of period
|
12,000
|
|
|
Options
available for grant at period end
|
77,068
|
|
|
Weighted
average fair value of options granted during period
|
19
|
|
Range
of
Exercise
Prices
|
Number
Outstanding
at
September 30, 2006
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
at
December
30, 2006
|
|
$100
|
500,184
|
10
years
|
$100
|
12,000
|
|
2006
|
||||
|
Expected
Volatility
|
45.0%
|
|||
|
Expected
dividends
|
0.0%
|
|||
|
Expected
term (in years)
|
3.73-6.86
|
|||
|
Risk-free
rate
|
4.5%-4.9%
|
|||
|
2006
|
||||||||||
|
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||
|
Outstanding
as of 2/16/2006
|
—
|
—
|
||||||||
|
Granted
|
413,183
|
$
|
10.00
|
|||||||
|
Forfeited
|
(129,077
|
)
|
$
|
10.00
|
||||||
|
Outstanding
as of 9/30/2006
|
284,106
|
$
|
10.00
|
|||||||
|
Options
vested at 9/30/2006
|
18,958
|
$
|
10.00
|
|||||||
|
2006
|
||||||||||
|
Shares
|
Weighted
Average
Fair
Valuation
|
|||||||||
|
Nonvested
at 02/16/2006
|
—
|
—
|
||||||||
|
Granted
|
413,183
|
$
|
4.68
|
|||||||
|
Vested
|
(18,958
|
)
|
$
|
4.67
|
||||||
|
Forfeited
|
(129,077
|
)
|
$
|
4.68
|
||||||
|
Nonvested
of 9/30/2006
|
265,148
|
$
|
4.67
|
|||||||
|
February
17
to
September
30,
2006
|
||||
|
(in
millions)
|
||||
|
Net
Revenue
|
||||
|
Plastics
|
$
|
705.5
|
||
|
Adhesives
|
235.5
|
|||
|
Coatings
|
157.2
|
|||
|
Open
Top
|
27.0
|
|||
|
Closed
top
|
19.4
|
|||
|
Less
intercompany revenue
|
(5.8
|
)
|
||
|
$
|
1,138.8
|
|||
|
Operating
income
|
||||
|
Plastics
|
$
|
4.2
|
||
|
Adhesives
|
12.8
|
|||
|
Coatings
|
8.4
|
|||
|
Open
Top
|
(0.5
|
)
|
||
|
Closed
top
|
(0.4
|
)
|
||
|
Corporate
expenses - Covalence
|
(16.8
|
)
|
||
|
$
|
7.7
|
|||
|
September
30,
2006
|
|||
|
(in
millions)
|
|||
|
Total
Assets:
|
|||
|
Plastics
|
$
|
676.9
|
|
|
Adhesives
|
264.1
|
||
|
Coatings.
|
185.8
|
||
|
Open
Top
|
1,950.8
|
||
|
Closed
top
|
666.9
|
||
|
Corporate
- Covalence
|
76.9
|
||
|
$
|
3,821.4
|
||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
666.8
|
$
|
385.8
|
$
|
109.4
|
$
|
(23.2
|
)
|
$
|
1,138.8
|
|||||
|
Cost
of sales.
|
619.6
|
329.0
|
93.1
|
(18.8
|
)
|
1,022.9
|
||||||||||
|
Gross
profit
|
47.2
|
56.8
|
16.3
|
(4.4
|
)
|
115.9
|
||||||||||
|
Selling,
general and administrative expenses.
|
59.9
|
41.0
|
6.8
|
—
|
107.7
|
|||||||||||
|
Restructuring
and impairment charges, net
|
—
|
0.5
|
—
|
—
|
0.5
|
|||||||||||
|
Operating
income
|
(12.7
|
)
|
15.3
|
9.5
|
(4.4
|
)
|
7.7
|
|||||||||
|
Other
(income) expense
|
(1.4
|
)
|
(5.0
|
)
|
5.1
|
—
|
(1.3
|
)
|
||||||||
|
Loss
on extinguished debt…
|
54.6
|
—
|
1.0
|
55.6
|
||||||||||||
|
Interest
expense, net.
|
1.0
|
3.4
|
0.1
|
—
|
4.5
|
|||||||||||
|
Equity
in net income of subsidiaries.
|
17.8
|
(0.3
|
)
|
—
|
(17.5
|
)
|
—
|
|||||||||
|
Income
(loss) before income taxes.
|
(49.1
|
)
|
16.6
|
3.3
|
(21.9
|
)
|
(51.1
|
)
|
||||||||
|
Minority
interest
|
(1.8)
|
—
|
—
|
—
|
(1.8)
|
|||||||||||
|
Income
tax expense (benefit)
|
(16.1
|
)
|
(3.7)
|
1.7
|
—
|
(18.1
|
)
|
|||||||||
|
Net
income (loss).
|
$
|
(31.2
|
)
|
$
|
20.3
|
$
|
1.6
|
$
|
(21.9
|
)
|
$
|
(31.2
|
)
|
|||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$
|
62.3
|
$
|
15.0
|
$
|
5.8
|
$
|
—
|
$
|
83.1
|
||||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
124.9
|
204.7
|
27.5
|
—
|
357.1
|
|||||||||||
|
Inventories
|
158.3
|
222.8
|
24.0
|
—
|
405.1
|
|||||||||||
|
Prepaid
expenses and other current assets
|
10.1
|
35.8
|
12.7
|
—
|
58.6
|
|||||||||||
|
Total
current assets
|
355.6
|
478.3
|
70.0
|
—
|
903.9
|
|||||||||||
|
Property,
plant and equipment, net
|
219.4
|
556.5
|
40.7
|
—
|
816.6
|
|||||||||||
|
Intangible
assets, net
|
1,835.6
|
192.1
|
7.7
|
—
|
2,035.4
|
|||||||||||
|
Investment
in Subsidiaries
|
353.2
|
24.1
|
—
|
(377.3
|
)
|
—
|
||||||||||
|
Other
assets
|
64.9
|
0.6
|
—
|
—
|
65.5
|
|||||||||||
|
Total
Assets
|
$
|
2,828.7
|
$
|
1,251.6
|
$
|
118.4
|
$
|
(377.3
|
)
|
$
|
3,821.4
|
|||||
|
Liabilities
and Equity
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$
|
108.2
|
$
|
147.8
|
$
|
16.1
|
$
|
—
|
$
|
272.1
|
||||||
|
Accrued
and other current liabilities
|
63.2
|
102.0
|
8.3
|
—
|
173.5
|
|||||||||||
|
Long-term
debt—current portion
|
9.8
|
5.9
|
0.3
|
—
|
16.0
|
|||||||||||
|
Intercompany
accounts, net
|
(468.1
|
)
|
417.8
|
45.9
|
4.4
|
—
|
||||||||||
|
Total
current liabilities
|
(286.9)
|
673.5
|
70.6
|
4.4
|
461.6
|
|||||||||||
|
Long-term
debt.
|
2,593.2
|
18.3
|
0.8
|
—
|
2,612.3
|
|||||||||||
|
Deferred
tax liabilities
|
47.4
|
199.1
|
3.1
|
—
|
249.6
|
|||||||||||
|
Other
non current liabilities
|
0.3
|
20.9
|
1.9
|
—
|
23.1
|
|||||||||||
|
Total
long-term liabilities
|
2,640.9
|
238.3
|
5.8
|
—
|
2,885.0
|
|||||||||||
|
Total
Liabilities
|
2,354.0
|
911.8
|
76.4
|
4.4
|
3,346.6
|
|||||||||||
|
Commitments
and contingencies
|
||||||||||||||||
|
Minority
interest
|
65.2
|
—
|
—
|
65.2
|
||||||||||||
|
Contributions
from Holdings
|
190.8
|
368.5
|
35.1
|
(403.6
|
)
|
190.8
|
||||||||||
|
Stock
|
—
|
—
|
24.1
|
(24.1)
|
—
|
|||||||||||
|
Additional
paid-in capital
|
249.8
|
—
|
—
|
—
|
249.8
|
|||||||||||
|
Retained
deficit
|
(31.2
|
)
|
(28.7
|
)
|
(17.4
|
)
|
46.1
|
(31.2
|
)
|
|||||||
|
Cumulative
translation
|
0.1
|
—
|
0.2
|
(0.1
|
)
|
0.2
|
||||||||||
|
Total
Equity
|
409.5
|
339.8
|
42.0
|
(381.7
|
)
|
409.6
|
||||||||||
|
Total
Liabilities and Equity
|
$
|
2,828.7
|
$
|
1,251.6
|
$
|
118.4
|
$
|
(377.3
|
)
|
$
|
3,821.4
|
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
50.8
|
$
|
45.1
|
$
|
0.8
|
$
|
—
|
$
|
96.7
|
||||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(18.7
|
)
|
(15.4
|
)
|
(0.7
|
)
|
—
|
(34.8
|
)
|
|||||||
|
Proceeds
from disposal of assets
|
0.6
|
—
|
0.2
|
—
|
0.8
|
|||||||||||
|
Acquisition
of business net of cash acquired
|
(3,205.7
|
)
|
(14.7)
|
2.4
|
—
|
(3,218.0
|
)
|
|||||||||
|
Net
cash used in investing activities
|
(3,223.80
|
)
|
(30.1
|
)
|
1.9
|
—
|
(3,252.0
|
)
|
||||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Issuance
of long-term debt
|
2,653.4
|
—
|
—
|
—
|
2,653.4
|
|||||||||||
|
Equity
contributions
|
680.8
|
—
|
—
|
—
|
680.8
|
|||||||||||
|
Repayment
of long-term debt
|
(50.7
|
)
|
—
|
—
|
—
|
(50.7
|
)
|
|||||||||
|
Long-term
debt financing costs
|
(25.2
|
)
|
—
|
—
|
—
|
(25.2
|
)
|
|||||||||
|
Long-term
debt refinancing costs
|
(45.8
|
)
|
—
|
—
|
—
|
(45.8
|
)
|
|||||||||
|
Net
cash provided by financing activities
|
3,212.5
|
—
|
—
|
—
|
3,212.5
|
|||||||||||
|
Effect
of currency translation on cash
|
—
|
—
|
(1.1
|
)
|
—
|
(1.1
|
)
|
|||||||||
|
Net
increase in cash and cash equivalents
|
39.5
|
15.0
|
1.6
|
—
|
56.1
|
|||||||||||
|
Cash
and cash equivalents at beginning of period
|
22.8
|
—
|
4.2
|
—
|
27.0
|
|||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
62.3
|
$
|
15.0
|
$
|
5.8
|
$
|
—
|
$
|
83.1
|
||||||
|
Assets
|
||||
|
Current
assets:
|
||||
|
Cash
and cash equivalents
|
$
|
73.6
|
||
|
Accounts
receivable (less allowance for doubtful accounts of $8.8)
|
292.1
|
|||
|
Inventories:
|
||||
|
Finished
goods
|
188.5
|
|||
|
Raw
materials and supplies
|
163.6
|
|||
|
352.1
|
||||
|
Deferred
income taxes
|
21.5
|
|||
|
Prepaid
expenses and other current assets
|
34.1
|
|||
|
Total
current assets
|
773.4
|
|||
|
Property
and equipment:
|
||||
|
Land
|
35.8
|
|||
|
Buildings
and improvements
|
179.3
|
|||
|
Equipment
and construction in progress
|
647.9
|
|||
|
863.0
|
||||
|
Less
accumulated depreciation
|
65.9
|
|||
|
797.1
|
||||
|
Deferred
financing fees, net
|
62.7
|
|||
|
Goodwill
|
989.2
|
|||
|
Intangible
assets, net
|
1,035.5
|
|||
|
Other
assets
|
0.6
|
|||
|
Total
assets
|
$
|
3,658.5
|
||
|
Liabilities
and stockholders’ equity
|
||||
|
Current
liabilities:
|
||||
|
Accounts
payable
|
$
|
211.8
|
||
|
Accrued
expenses and other current liabilities
|
142.4
|
|||
|
Current
portion of long-term debt
|
15.4
|
|||
|
Total
current liabilities
|
369.6
|
|||
|
Long-term
debt, less current portion
|
2,589.7
|
|||
|
Deferred
income taxes
|
234.2
|
|||
|
Other
long-term liabilities
|
22.1
|
|||
|
Total
liabilities
|
3,215.6
|
|||
|
Minority
interest
|
63.2
|
|||
|
Stockholders’
equity:
|
||||
|
Capital
stock
|
439.6
|
|||
|
Accumulated
Deficit
|
(62.0
|
)
|
||
|
Accumulated
other comprehensive income
|
2.1
|
|||
|
Total
stockholders’ equity
|
379.7
|
|||
|
Total
liabilities and stockholders’ equity
|
$
|
3,658.5
|
||
|
Net
sales
|
$
|
703.6
|
||
|
Cost
of goods sold
|
617.2
|
|||
|
Gross
profit
|
86.4
|
|||
|
Operating
expenses
|
78.9
|
|||
|
Operating
income
|
7.5
|
|||
|
Interest
expense, net
|
59.9
|
|||
|
Other
income
|
0.1
|
|||
|
Loss
before income taxes
|
(52.5
|
)
|
||
|
Income
tax benefit
|
(19.5
|
)
|
||
|
Minority
interest, net of tax
|
(2.2
|
)
|
||
|
Net
loss
|
$
|
(30.8
|
)
|
|
Capital
Stock
|
Accumulated
Deficit
|
Accumulated
Other Comprehensive Income
|
Total
|
Comprehensive
Loss
|
||||||||||||
|
Balance
at September 30, 2006
|
$
|
440.6
|
$
|
(31.2
|
)
|
$
|
0.2
|
$
|
409.6
|
|||||||
|
Distributions
— Covalence
|
(1.3
|
)
|
—
|
—
|
(1.3
|
)
|
||||||||||
|
Interest
on notes receivable
|
(0.1
|
)
|
—
|
—
|
(0.1
|
)
|
||||||||||
|
Treasury
stock purchases
|
(0.1
|
)
|
—
|
—
|
(0.1
|
)
|
||||||||||
|
Stock-based
compensation
|
0.5
|
—
|
—
|
0.5
|
||||||||||||
|
Translation
gains
|
—
|
—
|
1.3
|
1.3
|
$
|
1.3
|
||||||||||
|
Other
comprehensive gains
|
—
|
—
|
0.6
|
0.6
|
0.6
|
|||||||||||
|
Net
loss
|
—
|
(30.8
|
)
|
—
|
(30.8
|
)
|
(30.8
|
)
|
||||||||
|
Balance
at December 30, 2006
|
$
|
439.6
|
$
|
(62.0
|
)
|
$
|
2.1
|
$
|
379.7
|
$
|
(28.9
|
)
|
||||
|
Operating
activities
|
||||
|
Net
loss
|
$
|
(30.8
|
)
|
|
|
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
||||
|
Depreciation
|
33.8
|
|||
|
Non-cash
interest expense
|
2.2
|
|||
|
Amortization
of intangibles
|
15.3
|
|||
|
Non-cash
compensation
|
0.5
|
|||
|
Deferred
income taxes (benefit)
|
(19.5
|
)
|
||
|
Minority
interest
|
(2.2
|
)
|
||
|
Changes
in operating assets and liabilities:
|
||||
|
Accounts
receivable, net
|
65.3
|
|||
|
Inventories
|
47.7
|
|||
|
Prepaid
expenses and other assets
|
7.6
|
|||
|
Accounts
payable, accrued expenses and other liabilities
|
(60.1
|
)
|
||
|
Net
cash provided by operating activities
|
59.8
|
|||
|
Investing
activities
|
||||
|
Additions
to property and equipment
|
(14.2
|
)
|
||
|
Apollo
acquisition of Covalence
|
(30.2
|
)
|
||
|
Net
cash used for investing activities
|
(44.4
|
)
|
||
|
Financing
activities
|
||||
|
Payments
on long-term borrowings
|
(23.4
|
)
|
||
|
Distributions
to Covalence Specialty Materials Holding Corporation
|
(1.3
|
)
|
||
|
Net
cash used for financing activities
|
(24.7
|
)
|
||
|
Effect
of exchange rate changes on cash
|
(0.2
|
)
|
||
|
Net
decrease in cash and cash equivalents
|
(9.5
|
)
|
||
|
Cash
and cash equivalents at beginning of period
|
83.1
|
|||
|
Cash
and cash equivalents at end of period
|
$
|
73.6
|
||
|
|
•
|
|
the
former Covalence Specialty Materials Corp as of December 29, 2006
and for
the period from September 30, 2006 to December 29, 2006;
|
|
|
•
|
|
the
former Berry Plastics Holding Corporation as of December 30, 2006
and for
the period from October 1, 2006 to December 30, 2006.
|
|
Estimated
Fair
Value at
February
16, 2006
|
Allocation
of Excess
Fair
Value over
Purchase
Price
|
Allocation
of
Purchase
Price At
February
16, 2006
|
|||||||||||||||||
|
(in
millions)
|
|||||||||||||||||||
|
Current
assets
|
$
|
429.0
|
$
|
—
|
$
|
429.0
|
|||||||||||||
|
Property,
plant and equipment
|
345.4
|
(1.6
|
)
|
343.8
|
|||||||||||||||
|
Intangible
assets
|
364.4
|
(1.5
|
)
|
362.9
|
|||||||||||||||
|
Other
non current assets
|
24.1
|
—
|
24.1
|
||||||||||||||||
|
Assets
acquired
|
1,162.9
|
(3.1
|
)
|
1,159.8
|
|||||||||||||||
|
Current
liabilities
|
176.6
|
—
|
176.6
|
||||||||||||||||
|
Non
current liabilities
|
67.1
|
—
|
67.1
|
||||||||||||||||
|
Liabilities
assumed
|
243.7
|
—
|
243.7
|
||||||||||||||||
|
$
|
919.2
|
$
|
(3.1
|
)
|
$
|
916.1
|
|||||||||||||
|
September
20, 2006
|
||||
|
Current
assets
|
$
|
389.3
|
||
|
Property
and equipment
|
473.2
|
|||
|
Goodwill
|
989.2
|
|||
|
Customer
relationships
|
511.9
|
|||
|
Trademarks
|
182.2
|
|||
|
Other
intangibles and deferred financing fees
|
59.0
|
|||
|
Total
assets
|
2,604.8
|
|||
|
Current
liabilities
|
197.4
|
|||
|
Long-term
liabilities
|
2,103.4
|
|||
|
Total
liabilities
|
2,300.8
|
|||
|
Net
assets acquired
|
$
|
304.0
|
||
|
Term
loan - Berry
|
$
|
673.3
|
|
Revolving
line of credit - Berry
|
—
|
|||
|
Second
Priority Senior Secured Fixed Rate Notes - Berry
|
525.0
|
|||
|
Second
Priority Senior Secured Floating Rate Notes - Berry
|
225.0
|
|||
|
11%
Senior Subordinated Notes - Berry
|
425.0
|
|||
|
Capital
leases - Berry
|
23.7
|
|||
|
Other
- Berry
|
0.9
|
|||
|
Term
loan - Covalence
|
298.5
|
|||
|
Revolving
line of credit - Covalence
|
—
|
|||
|
Second
Priority Floating Rate Notes - Covalence
|
175.0
|
|||
|
10
¼% Senior Subordinated Notes - Covalence
|
265.0
|
|||
|
Less
debt discount on 10 ¼% Notes - Covalence
|
6.3
|
|||
|
2,605.1
|
||||
|
Less
current portion of long-term debt
|
15.4
|
|||
|
$
|
2,589.7
|
|
•
|
Beginning
with Covalence’s 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);
and
|
|
•
|
100%
of the net cash proceeds of all non-ordinary course asset sales and
casualty and condemnation events, if Covalence does not reinvest
or commit
to reinvest those proceeds in assets to be used in its business or
to make
certain other permitted investments within 15 months, subject to
certain
limitations.
|
|
2007
|
$
|
15.4
|
||
|
2008
|
14.3
|
|||
|
2009
|
15.0
|
|||
|
2010
|
9.9
|
|||
|
2011
|
17.8
|
|||
|
Thereafter
|
2,539.0
|
|||
|
$
|
2,611.4
|
|
Carrying
Value
|
||||
|
Deferred
financing fees
|
$
|
67.0
|
||
|
Customer
relationships
|
628.2
|
|||
|
Goodwill
|
989.2
|
|||
|
Trademarks
|
182.2
|
|||
|
Patents
|
15.8
|
|||
|
Licenses
|
106.8
|
|||
|
Technology
|
140.4
|
|||
|
Accumulated
amortization
|
(42.2
|
)
|
||
|
$
|
2,087.4
|
|||
|
Income
tax expense (benefit) computed at statutory rate
|
$
|
(18.4
|
)
|
|
|
State
income tax expense (benefit), net of federal taxes
|
(2.4
|
)
|
||
|
Expenses
not deductible for income tax purposes
|
(0.2
|
)
|
||
|
Change
in valuation allowance
|
1.6
|
|||
|
Other
|
(0.1
|
)
|
||
|
Income
tax benefit
|
$
|
(19.5
|
)
|
|
Components
of net period benefit cost:
|
||||
|
Defined
Benefit Pension Plans
|
||||
|
Service
cost
|
$
|
-
|
||
|
Interest
cost
|
0.5
|
|||
|
Expected
return on plan assets
|
(0.6
|
)
|
||
|
Amortization
of prior service cost
|
-
|
|||
|
Recognized
actuarial loss
|
-
|
|||
|
Net
periodic benefit cost
|
$
|
(0.1
|
)
|
|
|
Retiree
Health Benefit Plan
|
||||
|
Service
cost
|
$
|
-
|
||
|
Interest
cost
|
0.1
|
|||
|
Recognized
actuarial loss
|
-
|
|||
|
Net
periodic benefit cost
|
$
|
0.1
|
||
|
Net
loss
|
$
|
(30.8
|
)
|
|
|
Other
comprehensive income
|
0.6
|
|||
|
Currency
translation income
|
1.3
|
|||
|
Comprehensive
losses
|
$
|
(28.9
|
)
|
|
Berry
|
Covalence
|
||
|
Risk-free
interest rate
|
4.5%
|
4.5
-4.9%
|
|
Dividend
yield
|
0.0%
|
0.0%
|
|
|
Volatility
factor
|
.20
|
.45
|
|
|
Expected
option life
|
6.0
years
|
3.73
-6.83
years
|
|
October
1 to
December
30,
2006
|
||||
|
(in
millions)
|
||||
|
Net
Revenue
|
||||
|
Plastics
|
$
|
246.1
|
||
|
Adhesives
|
73.0
|
|||
|
Coatings
|
49.1
|
|||
|
Open
Top
|
193.7
|
|||
|
Closed
top
|
143.2
|
|||
|
Less
intercompany revenue
|
(1.5
|
)
|
||
|
$
|
703.6
|
|||
|
Operating
income
|
||||
|
Plastics
|
$
|
(8.9
|
)
|
|
|
Adhesives
|
(0.2
|
)
|
||
|
Coatings
|
(2.9
|
)
|
||
|
Open
Top
|
15.8
|
|||
|
Closed
top
|
9.5
|
|||
|
Corporate
expenses - Covalence
|
(5.8
|
)
|
||
|
$
|
7.5
|
|||
|
Total
Assets
|
||||
|
Plastics
|
$
|
596.0
|
||
|
Adhesives
|
235.5
|
|||
|
Coatings
|
175.5
|
|||
|
Open
Top
|
1,550.0
|
|||
|
Closed
top
|
1,018.7
|
|||
|
Corporate
- Covalence
|
82.8
|
|||
|
$
|
3,658.5
|
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
237.1
|
430.6
|
$
|
43.4
|
$
|
(7.5
|
)
|
$
|
703.6
|
||||||
|
Cost
of sales.
|
226.3
|
356.5
|
41.5
|
(7.1
|
)
|
617.2
|
||||||||||
|
Gross
profit
|
10.8
|
74.1
|
1.9
|
(0.4
|
)
|
86.4
|
||||||||||
|
Selling,
general and administrative expenses.
|
24.1
|
50.8
|
3.7
|
—
|
78.6
|
|||||||||||
|
Restructuring
and impairment charges, net
|
0.3
|
—
|
—
|
—
|
0.3
|
|||||||||||
|
Operating
income (loss)
|
(13.6
|
)
|
23.3
|
(1.8
|
)
|
(0.4
|
)
|
7.5
|
||||||||
|
Other
(income) expense
|
—
|
—
|
0.1
|
—
|
0.1
|
|||||||||||
|
Interest
expense, net.
|
43.0
|
16.6
|
0.3
|
—
|
59.9
|
|||||||||||
|
Equity
in net income of subsidiaries.
|
(10.3
|
)
|
2.0
|
—
|
8.3
|
—
|
||||||||||
|
Income
(loss) before income taxes.
|
(46.3
|
)
|
4.7
|
(2.2
|
)
|
(8.7
|
)
|
(52.5
|
)
|
|||||||
|
Income
tax expense (benefit)
|
(13.3
|
)
|
(6.5
|
)
|
0.3
|
—
|
(19.5
|
)
|
||||||||
|
Minority
interest
|
(2.2
|
)
|
—
|
—
|
—
|
(2.2
|
)
|
|||||||||
|
Net
income (loss).
|
$
|
(30.8
|
)
|
$
|
11.2
|
$
|
(2.5
|
)
|
$
|
(8.7
|
)
|
$
|
(30.8
|
)
|
||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$
|
50.8
|
$
|
18.6
|
$
|
4.2
|
$
|
—
|
$
|
73.6
|
||||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
94.2
|
171.2
|
26.7
|
—
|
292.1
|
|||||||||||
|
Inventories
|
117.8
|
211.5
|
22.8
|
—
|
352.1
|
|||||||||||
|
Prepaid
expenses and other current assets
|
3.2
|
42.3
|
10.1
|
—
|
55.6
|
|||||||||||
|
Total
current assets
|
266.0
|
443.6
|
63.8
|
—
|
773.4
|
|||||||||||
|
Property,
plant and equipment, net
|
220.8
|
531.7
|
44.6
|
—
|
797.1
|
|||||||||||
|
Intangible
assets, net
|
1,170.6
|
846.4
|
7.7
|
—
|
2,024.7
|
|||||||||||
|
Investment
in Subsidiaries
|
419.2
|
24.1
|
—
|
(443.3
|
)
|
—
|
||||||||||
|
Other
assets
|
62.7
|
0.6
|
—
|
—
|
63.3
|
|||||||||||
|
Total
Assets
|
$
|
2,139.3
|
$
|
1,846.4
|
$
|
116.1
|
$
|
(443.3
|
)
|
$
|
3,658.5
|
|||||
|
Liabilities
and Equity
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$
|
77.1
|
$
|
121.9
|
$
|
12.8
|
$
|
—
|
$
|
211.8
|
||||||
|
Accrued
and other current liabilities
|
58.2
|
77.2
|
7.0
|
—
|
142.4
|
|||||||||||
|
Long-term
debt—current portion
|
9.8
|
5.3
|
0.3
|
—
|
15.4
|
|||||||||||
|
Intercompany
accounts, net
|
(1,067.0
|
)
|
1,038.9
|
27.7
|
0.4
|
—
|
||||||||||
|
Total
current liabilities
|
(921.9)
|
1,243.3
|
47.8
|
0.4
|
369.6
|
|||||||||||
|
Long-term
debt.
|
2,570.8
|
17.2
|
1.7
|
—
|
2,589.7
|
|||||||||||
|
Deferred
tax liabilities
|
33.6
|
198.0
|
2.6
|
—
|
234.2
|
|||||||||||
|
Other
non current liabilities
|
0.5
|
19.4
|
2.2
|
—
|
22.1
|
|||||||||||
|
Total
long-term liabilities
|
2,604.9
|
234.6
|
6.5
|
—
|
2,846.0
|
|||||||||||
|
Total
Liabilities
|
1,683.0
|
1,477.9
|
54.3
|
0.4
|
3,215.6
|
|||||||||||
|
Commitments
and contingencies
|
||||||||||||||||
|
Minority
interest
|
63.2
|
—
|
—
|
—
|
63.2
|
|||||||||||
|
Contributions
from Holdings
|
190.5
|
368.6
|
35.1
|
(403.7
|
)
|
190.5
|
||||||||||
|
Stock
|
—
|
—
|
28.0
|
(28.0
|
)
|
—
|
||||||||||
|
Additional
paid-in capital
|
249.3
|
—
|
—
|
—
|
249.3
|
|||||||||||
|
Retained
deficit
|
(46.8
|
)
|
(0.4
|
)
|
(3.1
|
)
|
(11.7
|
)
|
(62.0
|
)
|
||||||
|
Treasury
stock
|
(0.1
|
)
|
—
|
—
|
—
|
(0.1
|
)
|
|||||||||
|
Note
receivable-stockholders
|
(0.1
|
)
|
—
|
—
|
—
|
(0.1
|
)
|
|||||||||
|
Cumulative
translation
|
0.3
|
(0.4
|
)
|
1.8
|
(0.3
|
)
|
1.4
|
|||||||||
|
Minimum
pension liability
|
—
|
0.7
|
—
|
—
|
0.7
|
|||||||||||
|
Total
Equity
|
393.1
|
368.5
|
61.8
|
(443.7
|
)
|
379.7
|
||||||||||
|
Total
Liabilities and Equity
|
$
|
2,139.3
|
$
|
1,846.4
|
$
|
116.1
|
$
|
(443.3
|
)
|
$
|
3,658.5
|
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
51.0
|
$
|
10.4
|
$
|
(1.6
|
)
|
$
|
—
|
$
|
59.8
|
|||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(7.1
|
)
|
(6.7
|
)
|
(0.4
|
)
|
—
|
(14.2
|
)
|
|||||||
|
Acquisition
of business net of cash acquired
|
(30.2
|
)
|
—
|
(30.2
|
)
|
|||||||||||
|
Net
cash used in investing activities
|
(37.3
|
)
|
(6.7
|
)
|
(0.4
|
)
|
—
|
(44.4
|
)
|
|||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Payments
on long-term borrowings
|
(23.9
|
)
|
(0.1
|
)
|
0.6
|
—
|
(23.4
|
)
|
||||||||
|
Distributions
to Covalence Specialty Materials Holding Corporation
|
(1.3
|
)
|
—
|
—
|
—
|
(1.3
|
)
|
|||||||||
|
Net
cash provided by financing activities
|
(25.2
|
)
|
(0.1
|
)
|
0.6
|
—
|
(24.7
|
)
|
||||||||
|
Effect
of currency translation on cash
|
—
|
—
|
(0.2
|
)
|
—
|
(0.2
|
)
|
|||||||||
|
Net
increase in cash and cash equivalents
|
(11.5
|
)
|
3.6
|
(1.6
|
)
|
—
|
(9.5
|
)
|
||||||||
|
Cash
and cash equivalents at beginning of period
|
62.3
|
15.0
|
5.8
|
—
|
83.1
|
|||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
50.8
|
$
|
18.6
|
$
|
4.2
|
$
|
—
|
$
|
73.6
|
||||||
|
Company
|
Predecessor
|
||||||
|
December
30,
2006
|
December
31,
2005
|
||||||
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
19,549
|
$
|
24,756
|
|||
|
Accounts
receivable (less allowance for doubtful accounts of $5,369
at
December 30, 2006 and $5,766 at December 31, 2005)
|
145,387
|
140,443
|
|||||
|
Inventories:
|
|||||||
|
Finished
goods
|
111,635
|
101,632
|
|||||
|
Raw
materials and supplies
|
48,885
|
50,716
|
|||||
|
160,520
|
152,348
|
||||||
|
Deferred
income taxes
|
21,531
|
22,905
|
|||||
|
Prepaid
expenses and other current assets
|
24,416
|
39,037
|
|||||
|
Total
current assets
|
371,403
|
379,489
|
|||||
|
Property
and equipment:
|
|||||||
|
Land
|
15,504
|
12,292
|
|||||
|
Buildings
and improvements
|
83,329
|
92,810
|
|||||
|
Equipment
and construction in progress
|
390,018
|
497,364
|
|||||
|
488,851
|
602,466
|
||||||
|
Less
accumulated depreciation
|
24,874
|
179,022
|
|||||
|
463,977
|
423,444
|
||||||
|
Intangible
assets:
|
|||||||
|
Deferred
financing fees, net
|
41,763
|
18,333
|
|||||
|
Customer
relationships, net
|
504,663
|
255,981
|
|||||
|
Goodwill
|
989,181
|
495,258
|
|||||
|
Trademarks,
net
|
182,200
|
47,065
|
|||||
|
Other
intangibles, net
|
15,469
|
28,260
|
|||||
|
1,733,276
|
844,897
|
||||||
|
Total
assets
|
$
|
2,568,656
|
$
|
1,647,830
|
|||
|
Company
|
Predecessor
|
||||||
|
December
30,
2006
|
December
31,
2005
|
||||||
|
Liabilities
and stockholders' equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
89,030
|
$
|
64,970
|
|||
|
Accrued
interest
|
26,010
|
20,165
|
|||||
|
Employee
compensation, payroll and other taxes
|
37,113
|
43,915
|
|||||
|
Accrued
expenses and other current liabilities
|
31,297
|
34,730
|
|||||
|
Current
portion of long-term debt
|
12,400
|
13,928
|
|||||
|
Total
current liabilities
|
195,850
|
177,708
|
|||||
|
Long-term
debt, less current portion
|
1,860,474
|
1,146,692
|
|||||
|
Deferred
income taxes
|
197,801
|
94,934
|
|||||
|
Other
long-term liabilities
|
20,344
|
25,108
|
|||||
|
Total
liabilities
|
2,274,469
|
1,444,442
|
|||||
|
Stockholders'
equity:
|
|||||||
|
Common
stock; $.01 par value: 200,000,000 shares authorized;
4,931,011 shares issued and outstanding at December 30,
2006
|
49
|
—
|
|||||
|
Additional
paid-in capital
|
493,581
|
346,943
|
|||||
|
Adjustment
of the carryover basis of continuing stockholders
|
(173,422
|
)
|
(196,603
|
)
|
|||
|
Notes
receivable - common stock
|
(9,935
|
)
|
(14,273
|
)
|
|||
|
Treasury
stock: 629 shares
|
(63
|
)
|
—
|
||||
|
Common
Stock (Predecessor)
|
—
|
34
|
|||||
|
Treasury
Stock (Predecessor)
|
—
|
(3,547
|
)
|
||||
|
Retained
earnings
|
(18,065
|
)
|
58,969
|
||||
|
Accumulated
other comprehensive income
|
2,042
|
11,865
|
|||||
|
Total
stockholders’ equity
|
294,187
|
203,388
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
2,568,656
|
$
|
1,647,830
|
|||
|
Company
|
Predecessor
|
||||||||||||
|
Period
from 9/20/06-
12/30/06
|
Period
from 01/01/06-09/19/06
|
Year
ended
December
31,
2005
|
Year
ended
January
1,
2005
|
||||||||||
|
Net
sales
|
$
|
383,288
|
$
|
1,048,476
|
$
|
1,169,704
|
$
|
814,213
|
|||||
|
Cost
of goods sold
|
316,939
|
839,429
|
943,370
|
639,329
|
|||||||||
|
Gross
profit
|
66,349
|
209,047
|
226,334
|
174,884
|
|||||||||
|
Operating
expenses:
|
|||||||||||||
|
Selling
|
10,253
|
28,255
|
34,145
|
26,361
|
|||||||||
|
General
and administrative
|
17,369
|
43,885
|
49,477
|
38,518
|
|||||||||
|
Research
and development
|
2,373
|
5,455
|
6,131
|
3,825
|
|||||||||
|
Amortization
of intangibles
|
7,554
|
15,127
|
15,574
|
6,513
|
|||||||||
|
Merger
expenses
|
—
|
70,122
|
—
|
—
|
|||||||||
|
Other
expenses
|
4,325
|
4,744
|
5,218
|
5,791
|
|||||||||
|
Operating
income
|
24,475
|
41,459
|
115,789
|
93,876
|
|||||||||
|
Other
expense (income):
|
|||||||||||||
|
Unrealized
loss (gain) on investment in
Southern Packaging
|
—
|
(299
|
)
|
1,354
|
—
|
||||||||
|
Income
before interest and taxes
|
24,475
|
41,758
|
114,435
|
93,876
|
|||||||||
|
Interest:
|
|||||||||||||
|
Expense
|
47,773
|
64,710
|
74,445
|
54,076
|
|||||||||
|
Loss
on extinguished debt
|
5,875
|
34,041
|
7,045
|
—
|
|||||||||
|
Income
|
(302
|
)
|
(901
|
)
|
(1,171
|
)
|
(891
|
)
|
|||||
|
Income
(loss) before income taxes
|
(28,871
|
)
|
(56,092
|
)
|
34,116
|
40,691
|
|||||||
|
Income
tax expense (benefit)
|
(10,806
|
)
|
1,011
|
14,325
|
17,740
|
||||||||
|
Net
income (loss)
|
$
|
(18,065
|
)
|
$
|
(57,103
|
)
|
$
|
19,791
|
$
|
22,951
|
|||
|
Common
Stock
|
Additional
Paid-In
Capital
|
Adjustment
of the carryover basis of continuing stockholders
|
Notes
receivable - common stock
|
Treasury
Stock
|
Retained
Earnings
(Deficit)
|
Accumulated
Other Comprehensive Income
|
Total
|
Comprehensive
Income
|
|
|
Predecessor:
|
|||||||||
|
Balance
at December 27, 2003
|
$
34
|
$344,363
|
$(196,603)
|
$(14,157)
|
$
(1,972)
|
$
16,227
|
$
4,699
|
$152,591
|
|
|
|
|||||||||
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
Collection
on notes receivable
|
—
|
—
|
—
|
3,234
|
—
|
—
|
—
|
3,234
|
—
|
|
Purchase
of treasury stock
|
—
|
(204)
|
—
|
—
|
(827)
|
—
|
—
|
(1,031)
|
—
|
|
Sale
of treasury stock
|
—
|
—
|
—
|
—
|
873
|
—
|
—
|
873
|
—
|
|
Interest
on notes receivable
|
—
|
—
|
—
|
(488)
|
—
|
—
|
—
|
(488)
|
—
|
|
Stock-based
compensation
|
—
|
12,638
|
—
|
—
|
—
|
—
|
—
|
12,638
|
—
|
|
Translation
gains
|
—
|
—
|
—
|
—
|
—
|
—
|
2,145
|
2,145
|
2,145
|
|
Other
comprehensive losses
|
—
|
—
|
—
|
—
|
—
|
—
|
(6,328)
|
(6,328)
|
(6,328)
|
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(57,103)
|
—
|
(57,103)
|
(57,103)
|
|
Redemption
of predecessor stock
|
(34)
|
(359,377)
|
196,603
|
11,527
|
3,501
|
(1,866)
|
(7,682)
|
(157,328)
|
61,286
|
|
Balance
at September 19, 2006
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Company:
|
|
|
|
|
|
|
|
|
|
|
Fair
value adjustment on rolled stock
|
—
|
—
|
(173,422)
|
—
|
—
|
—
|
—
|
(173,422)
|
—
|
|
Issuance
of common stock
|
49
|
493,052
|
—
|
(9,805)
|
—
|
—
|
—
|
483,296
|
—
|
|
Purchase
of treasury stock
|
—
|
—
|
—
|
—
|
(148)
|
—
|
—
|
(148)
|
—
|
|
Sale
of treasury stock
|
—
|
—
|
—
|
—
|
85
|
—
|
—
|
85
|
—
|
|
Interest
on notes receivable
|
—
|
—
|
—
|
(130)
|
—
|
—
|
—
|
(130)
|
—
|
|
Stock-based
compensation
|
—
|
529
|
—
|
—
|
—
|
—
|
—
|
529
|
—
|
|
Translation
gains
|
—
|
—
|
—
|
—
|
—
|
—
|
1,358
|
1,358
|
1,358
|
|
Other
comprehensive gains
|
—
|
—
|
—
|
—
|
—
|
—
|
684
|
684
|
—
|
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(18,065)
|
—
|
(18,065)
|
(18,065)
|
|
Balance
at December 30, 2006
|
$
49
|
$493,581
|
$
(173,422)
|
$
(9,935)
|
$
(63)
|
$
(18,065)
|
$
2,042
|
$
294,187
|
$
(16,707)
|
|
Company
|
Predecessor
|
|||||||||||||||
|
Period
from 09/20/06-12/30/06
|
Period
from 01/01/06-09/19/06
|
Year
ended
December
31,
2005
|
Year
ended
January
1,
2005
|
|||||||||||||
|
Operating
activities
|
||||||||||||||||
|
Net
income (loss)
|
$
|
(18,065
|
)
|
$
|
(57,103
|
)
|
$
|
19,791
|
$
|
22,951
|
||||||
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||||||||||
|
Depreciation
|
24,634
|
62,044
|
73,146
|
54,303
|
||||||||||||
|
Non-cash
interest expense
|
1,582
|
1,369
|
1,945
|
1,862
|
||||||||||||
|
Loss
on extinguished debt
|
5,875
|
34,041
|
7,045
|
—
|
||||||||||||
|
Amortization
of intangibles
|
7,554
|
15,127
|
15,574
|
6,513
|
||||||||||||
|
Non-cash
compensation
|
529
|
2,856
|
2,152
|
585
|
||||||||||||
|
Unrealized
loss (gain) on investment
|
—
|
(299
|
)
|
1,354
|
—
|
|||||||||||
|
Deferred
income taxes (benefit)
|
(10,746
|
)
|
—
|
12,769
|
16,772
|
|||||||||||
|
Merger
expenses
|
—
|
70,122
|
—
|
—
|
||||||||||||
|
Changes
in operating assets and liabilities:
|
||||||||||||||||
|
Accounts
receivable, net
|
10,562
|
(14,582
|
)
|
(13,004
|
)
|
(7,216
|
)
|
|||||||||
|
Inventories
|
16,523
|
(14,214
|
)
|
(8,720
|
)
|
(27,200
|
)
|
|||||||||
|
Prepaid
expenses and other assets
|
2,794
|
3,697
|
309
|
(7,022
|
)
|
|||||||||||
|
Accrued
interest
|
26,010
|
(10,300
|
)
|
1,349
|
683
|
|||||||||||
|
Payables
and accrued expenses
|
(29,988
|
)
|
40,694
|
(12,164
|
)
|
13,002
|
||||||||||
|
Net
cash provided by operating activities
|
37,264
|
133,452
|
101,546
|
75,233
|
||||||||||||
|
Investing
activities
|
||||||||||||||||
|
Additions
to property and equipment
|
(15,002
|
)
|
(77,060
|
)
|
(57,829
|
)
|
(52,624
|
)
|
||||||||
|
Proceeds
from disposal of property and equipment
|
16
|
71
|
2,223
|
2,986
|
||||||||||||
|
Proceeds
from working capital settlement on business acquisition
|
—
|
—
|
—
|
7,397
|
||||||||||||
|
Investment
in Southern Packaging
|
—
|
—
|
—
|
(3,236
|
)
|
|||||||||||
|
Acquisitions
of businesses
|
(2,290,341
|
)
|
—
|
(464,392
|
)
|
—
|
||||||||||
|
Net
cash used for investing activities
|
(2,305,327
|
)
|
(76,989
|
)
|
(519,998
|
)
|
(45,477
|
)
|
||||||||
|
Financing
activities
|
||||||||||||||||
|
Proceeds
from long-term borrowings
|
1,850,832
|
—
|
465,052
|
880
|
||||||||||||
|
Payments
on long-term borrowings
|
(3,485
|
)
|
(84,845
|
)
|
(12,882
|
)
|
(55,996
|
)
|
||||||||
|
Proceeds
from notes receivable
|
—
|
3,234
|
1,361
|
73
|
||||||||||||
|
Issuance
of common stock
|
483,296
|
—
|
—
|
53
|
||||||||||||
|
Purchase
of treasury stock
|
(148
|
)
|
(1,031
|
)
|
(5,513
|
)
|
(192
|
)
|
||||||||
|
Sale
of treasury stock
|
85
|
873
|
3,805
|
115
|
||||||||||||
|
Debt
financing costs
|
(43,348
|
)
|
—
|
(8,637
|
)
|
(641
|
)
|
|||||||||
|
Net
cash provided by (used for) financing activities
|
2,287,232
|
(81,769
|
)
|
443,186
|
(55,708
|
)
|
||||||||||
|
Effect
of exchange rate changes on cash
|
380
|
550
|
(242
|
)
|
24
|
|||||||||||
|
Net
increase (decrease) in cash and cash equivalents
|
19,549
|
(24,756
|
)
|
24,492
|
(25,928
|
)
|
||||||||||
|
Cash
and cash equivalents at beginning of period
|
—
|
24,756
|
264
|
26,192
|
||||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
19,549
|
$
|
—
|
$
|
24,756
|
$
|
264
|
||||||||
|
Company
|
Predecessor
|
||||||||||||
|
Period
from
9/20/06-
12/30/06
|
Period
from
1/1/06-
9/19/06
|
Year
Ended
December
31,
2005
|
Year
Ended
January
1,
2005
|
||||||||||
|
Balance
at beginning of period
|
$
|
6,277
|
$
|
5,766
|
$
|
3,207
|
$
|
2,717
|
|||||
|
Charged
to costs and expenses
|
(1,031
|
)
|
21
|
592
|
323
|
||||||||
|
Allocated
to other accounts (1)
|
—
|
—
|
1,851
|
—
|
|||||||||
|
Deductions
and currency translation (2)
|
123
|
490
|
116
|
167
|
|||||||||
|
Balance
at end of period
|
$
|
5,369
|
$
|
6,277
|
$
|
5,766
|
$
|
3,207
|
|||||
|
(1)
|
Primarily
relates to purchase of accounts receivable and related allowance
through
acquisitions.
|
|
(2)
|
Uncollectible
accounts written off, net of recoveries, and currency translation
on
foreign operations.
|
|
Company
|
Predecessor
|
|||||||||||||||
|
Period
from
9/20/06-
12/30/06
|
Period
from
1/1/06-
9/19/06
|
Year
ended
December
31,
2005
|
Year
ended
January
1,
2005
|
|||||||||||||
|
Risk-free
interest rate
|
4.5
|
%
|
4.5
|
%
|
4.5
|
%
|
3.1
|
%
|
||||||||
|
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||||||
|
Volatility
factor
|
.20
|
.25
|
.25
|
.25
|
||||||||||||
|
Expected
option life
|
6.0
years
|
5.0
years
|
5.0
years
|
5.0
years
|
||||||||||||
|
Predecessor
|
Predecessor
|
||||||
|
Year
Ended
December
31,
2005
|
Year
Ended
January
1,
2005
|
||||||
|
Reported
net income
|
$
|
19,791
|
$
|
22,951
|
|||
|
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
|
)
|
|||
|
Pro
forma net income
|
$
|
18,574
|
$
|
21,008
|
|||
|
September
20,
2006
|
||||
|
Current
assets
|
$
|
389,318
|
||
|
Property
and equipment
|
473,160
|
|||
|
Goodwill
|
989,181
|
|||
|
Customer
relationships
|
511,900
|
|||
|
Trademarks
|
182,200
|
|||
|
Other
intangibles
|
59,045
|
|||
|
Total
assets
|
2,604,804
|
|||
|
Current
liabilities
|
197,449
|
|||
|
Long-term
liabilities
|
2,103,357
|
|||
|
Total
liabilities
|
2,300,806
|
|||
|
Net
assets acquired
|
$
|
303,998
|
||
|
Unaudited
|
||||||||||
|
Year
ended
December
30,
2006
|
Year
ended
December
31,
2005
|
Year
ended January 1,
2005
|
||||||||
|
Pro
forma net sales
|
$
|
1,431,764
|
$
|
1,338,019
|
$
|
1,189,059
|
||||
|
Pro
forma net loss
|
$
|
(19,488
|
)
|
$
|
(40,322
|
)
|
$
|
(39,623
|
)
|
|
|
Company
|
Predecessor
|
||||||
|
December
30,
2006
|
December
31,
2005
|
||||||
|
Deferred
financing fees
|
$
|
43,348
|
$
|
24,402
|
|||
|
Customer
relationships
|
511,900
|
275,614
|
|||||
|
Goodwill
|
989,181
|
495,258
|
|||||
|
Trademarks
|
182,200
|
49,588
|
|||||
|
Technology-based
|
15,785
|
27,206
|
|||||
|
Covenants
not to compete and other
|
—
|
4,613
|
|||||
|
Accumulated
amortization
|
(9,138
|
)
|
(31,784
|
)
|
|||
|
$
|
1,733,276
|
$
|
844,897
|
||||
|
Company
|
Predecessor
|
||||||
|
December
30,
2006
|
December
31,
2005
|
||||||
|
Term
loans
|
$
|
673,313
|
$
|
791,025
|
|||
|
Revolving
line of credit
|
—
|
—
|
|||||
|
Italian
revolving line of credit
|
874
|
—
|
|||||
|
Second
Priority Senior Secured Fixed Rate Notes
|
525,000
|
—
|
|||||
|
Second
Priority Senior Secured Floating Rate Notes
|
225,000
|
—
|
|||||
|
Senior
Subordinated Notes
|
425,000
|
—
|
|||||
|
Capital
leases
|
23,687
|
26,896
|
|||||
|
Berry
10 ¾% Senior Subordinated Notes
|
—
|
335,000
|
|||||
|
Debt
premium on 10 ¾% Notes, net
|
—
|
7,699
|
|||||
|
1,872,874
|
1,160,620
|
||||||
|
Less
current portion of long-term debt
|
12,400
|
13,928
|
|||||
|
$
|
1,860,474
|
$
|
1,146,692
|
||||
|
2007
|
$
|
12,400
|
||
|
2008
|
11,269
|
|||
|
2009
|
12,048
|
|||
|
2010
|
6,931
|
|||
|
2011
|
14,789
|
|||
|
Thereafter
|
1,815,437
|
|||
|
$
|
1,872,874
|
|
At
December 30, 2006
|
|||||||
|
Capital
Leases
|
Operating
Leases
|
||||||
|
2007
|
$
|
6,799
|
$
|
26,291
|
|||
|
2008
|
5,345
|
24,086
|
|||||
|
2009
|
6,027
|
22,835
|
|||||
|
2010
|
793
|
21,172
|
|||||
|
2011
|
8,085
|
18,386
|
|||||
|
Thereafter
|
—
|
96,763
|
|||||
|
27,049
|
$
|
209,533
|
|||||
|
Less:
amount representing interest
|
(3,362
|
)
|
|||||
|
Present
value of net minimum lease payments
|
$
|
23,687
|
|||||
|
Company
|
Predecessor
|
||||||||||||
|
Period
from 9/20/06-
12/30/06
|
Period
from 1/1/06-
9/19/06
|
Year
Ended December 31, 2005
|
Year
Ended January 1,
2005
|
||||||||||
|
Domestic
|
$
|
(26,692
|
)
|
$
|
(50,507
|
)
|
$
|
43,519
|
$
|
44,841
|
|||
|
Foreign
|
(2,179
|
)
|
(5,585
|
)
|
(9,403
|
)
|
(4,150
|
)
|
|||||
|
$
|
(28,871
|
)
|
$
|
(56,092
|
)
|
$
|
34,116
|
$
|
40,691
|
||||
|
Company
|
Predecessor
|
||||||
|
December
30, 2006
|
December
31, 2005
|
||||||
|
Deferred
tax assets:
|
|||||||
|
Allowance
for doubtful accounts
|
$
|
1,928
|
$
|
1,877
|
|||
|
Inventory
|
4,825
|
1,918
|
|||||
|
Compensation
and benefit accruals
|
13,235
|
17,114
|
|||||
|
Insurance
reserves
|
1,543
|
1,557
|
|||||
|
Net
operating loss carryforwards
|
101,658
|
32,843
|
|||||
|
Alternative
minimum tax (AMT) credit carryforwards
|
7,389
|
6,398
|
|||||
|
Other
|
1,926
|
96
|
|||||
|
Total
deferred tax assets
|
132,504
|
61,803
|
|||||
|
Valuation
allowance
|
(8,932
|
)
|
(6,741
|
)
|
|||
|
Deferred
tax assets, net of valuation allowance
|
123,572
|
55,062
|
|||||
|
Deferred
tax liabilities:
|
|||||||
|
Intangibles
|
256,736
|
88,837
|
|||||
|
Property
and equipment
|
41,506
|
35,888
|
|||||
|
Other
|
1,600
|
2,366
|
|||||
|
Total
deferred tax liabilities
|
299,842
|
127,091
|
|||||
|
Net
deferred tax liability
|
$
|
(176,270
|
)
|
$
|
(72,029
|
)
|
|
|
Company
|
Predecessor
|
||||||||||||
|
Period
from 9/20/06-
12/30/06
|
Period
from 1/1/06-
9/19/06
|
Year
Ended December 31, 2005
|
Year
Ended January 1,
2005
|
||||||||||
|
Current:
|
|||||||||||||
|
Federal
|
$
|
(341
|
)
|
$
|
287
|
$
|
735
|
$
|
363
|
||||
|
Foreign
|
47
|
186
|
189
|
133
|
|||||||||
|
State
|
234
|
538
|
632
|
472
|
|||||||||
|
Total current
|
(60
|
)
|
1,011
|
1,556
|
968
|
||||||||
|
Deferred:
|
|||||||||||||
|
Federal
|
(9,394
|
)
|
—
|
11,779
|
13,543
|
||||||||
|
Foreign
|
—
|
—
|
—
|
(173
|
)
|
||||||||
|
State
|
(1,352
|
)
|
—
|
990
|
3,402
|
||||||||
|
Total deferred
|
(10,746
|
)
|
—
|
12,769
|
16,772
|
||||||||
|
Income
tax expense (benefit)
|
$
|
(10,806
|
)
|
$
|
1,011
|
$
|
14,325
|
$
|
17,740
|
||||
|
Company
|
Predecessor
|
|||||||||||||||
|
Period
from 9/20/06-12/30/06
|
Period
from 1/1/06-
9/19/06
|
Year
Ended December 31, 2005
|
Year
Ended January 1,
2005
|
|||||||||||||
|
Income
tax expense computed at statutory rate
|
$
|
(10,105
|
)
|
$
|
(19,632
|
)
|
$
|
11,941
|
$
|
14,244
|
||||||
|
State
income tax expense, net of federal taxes
|
(1,554
|
)
|
(3,029
|
)
|
1,622
|
2,518
|
||||||||||
|
Expenses
not deductible for income tax purposes
|
91
|
321
|
375
|
394
|
||||||||||||
|
Change
in valuation allowance
|
626
|
22,317
|
557
|
1,288
|
||||||||||||
|
Other
|
136
|
1,034
|
(170
|
)
|
(704
|
)
|
||||||||||
|
Income
tax expense (benefit)
|
$
|
(10,806
|
)
|
$
|
1,011
|
$
|
14,325
|
$
|
17,740
|
|||||||
|
Defined
Benefit Pension Plans
|
Retiree
Health Plan
|
|||||||||||||||||||||
|
Company
|
Predecessor
|
Company
|
Predecessor
|
|||||||||||||||||||
|
Period
from 9/20/06-12/30/06
|
Period
from 1/1/06-9/19/06
|
Year
ended
December
31, 2005
|
Year
ended
January
1, 2005
|
Period
from 9/20/06-12/30/06
|
Period
from 1/1/06-9/19/06
|
Year
ended
December
31, 2005
|
||||||||||||||||
|
Change
in Projected Benefit Obligations (PBO)
|
||||||||||||||||||||||
|
PBO
at beginning of period
|
$
|
41,575
|
$
|
42,285
|
$
|
44,026
|
$
|
5,639
|
$
|
6,896
|
$
|
7,664
|
$
|
9,338
|
||||||||
|
Service
cost
|
68
|
204
|
257
|
269
|
5
|
11
|
11
|
|||||||||||||||
|
Interest
cost
|
619
|
1,614
|
1,457
|
352
|
103
|
283
|
268
|
|||||||||||||||
|
Participant
contributions
|
—
|
—
|
—
|
—
|
—
|
50
|
—
|
|||||||||||||||
|
Increase
due to discount rate change
|
176
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Actuarial
loss (gain)
|
—
|
6
|
(1,186
|
)
|
42
|
—
|
(466
|
)
|
(1,589
|
)
|
||||||||||||
|
Benefits
paid
|
(842
|
)
|
(2,534
|
)
|
(2,269
|
)
|
(198
|
)
|
(214
|
)
|
(646
|
)
|
(364
|
)
|
||||||||
|
PBO
at end of period
|
$
|
41,596
|
$
|
41,575
|
$
|
42,285
|
$
|
6,104
|
$
|
6,790
|
$
|
6,896
|
$
|
7,664
|
||||||||
|
Change
in Fair Value of Plan Assets
|
||||||||||||||||||||||
|
Plan
assets at beginning of period
|
$
|
33,687
|
$
|
33,681
|
$
|
33,558
|
$
|
4,775
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
|
Actual
return on plan assets
|
1,044
|
2,421
|
1,898
|
190
|
—
|
—
|
—
|
|||||||||||||||
|
Company
contributions
|
195
|
119
|
494
|
415
|
215
|
646
|
364
|
|||||||||||||||
|
Benefits
paid
|
(842
|
)
|
(2,534
|
)
|
(2,269
|
)
|
(198
|
)
|
(215
|
)
|
(646
|
)
|
(364
|
)
|
||||||||
|
Plan
assets at end of period
|
34,084
|
33,687
|
33,681
|
5,182
|
—
|
—
|
—
|
|||||||||||||||
|
Funded
status
|
$
|
(7,512
|
)
|
$
|
(7,888
|
)
|
$
|
(8,604
|
)
|
$
|
(922
|
)
|
$
|
(6,790
|
)
|
$
|
(6,896
|
)
|
$
|
(7,664
|
)
|
|
|
Unrecognized
net actuarial loss/gain
|
—
|
(1,854
|
)
|
(645
|
)
|
765
|
—
|
(1,947
|
)
|
(1,589
|
)
|
|||||||||||
|
Unrecognized
prior service cost
|
—
|
—
|
597
|
686
|
—
|
—
|
—
|
|||||||||||||||
|
Net
amount recognized
|
$
|
(7,512
|
)
|
$
|
(9,742
|
)
|
$
|
(8,652
|
)
|
$
|
529
|
$
|
(6,790
|
)
|
$
|
(8,843
|
)
|
$
|
(9,253
|
)
|
||
|
Amounts
recognized in the Consolidated Balance Sheet consist
of:
|
||||||||||||||||||||||
|
Prepaid
pension
|
$
|
—
|
$
|
204
|
$
|
413
|
$
|
529
|
—
|
—
|
—
|
|||||||||||
|
Accrued
benefit liability
|
(7,512
|
)
|
(10,523
|
)
|
(10,624
|
)
|
(1,456
|
)
|
(6,790
|
)
|
(8,843
|
)
|
(9,253
|
)
|
||||||||
|
Intangible
assets
|
—
|
—
|
597
|
685
|
—
|
—
|
—
|
|||||||||||||||
|
Accumulated
other comprehensive (gains) losses before income taxes
|
—
|
577
|
962
|
771
|
—
|
—
|
—
|
|||||||||||||||
|
Net
amount recognized
|
$
|
(7,512
|
)
|
$
|
(9,742
|
)
|
$
|
(8,652
|
)
|
$
|
529
|
$
|
(6,790
|
)
|
$
|
(8,843
|
)
|
$
|
(9,253
|
)
|
||
|
Defined
Benefit Pension Plans
|
Retiree
Health Plan
|
|||||||||||||||||||||
|
Company
|
Predecessor
|
Company
|
Predecessor
|
|||||||||||||||||||
|
(Percents)
|
Period
from 9/20/06-12/30/06
|
Period
from 1/1/06-
9/19/06
|
Year
Ended December 31, 2005
|
Year
Ended January 1,
2005
|
Period
from 9/20/06-12/30/06
|
Period
from 1/1/06-
9/19/06
|
Year
Ended December 31, 2005
|
|||||||||||||||
|
Weighted-average
assumptions:
|
||||||||||||||||||||||
|
Discount
rate for benefit obligation
|
5.5
|
5.5
|
5.5
|
6.3
|
5.5
|
5.5
|
5.5
|
|||||||||||||||
|
Discount
rate for net benefit cost
|
5.6
|
5.6
|
5.3
|
6.3
|
5.0
|
5.0
|
5.0
|
|||||||||||||||
|
Expected
return on plan assets for net benefit costs
|
8.0
|
8.0
|
8.0
|
8.0
|
—
|
—
|
—
|
|||||||||||||||
|
One-Percentage
Point
|
Increase
|
Decrease
|
|||||
|
Accumulated
Postretirement benefit obligation
|
$
|
146
|
$
|
(143
|
)
|
||
|
Sum
of service cost and interest cost
|
$
|
10
|
$
|
(10
|
)
|
||
|
Defined
Benefit Pension Plans
|
Retiree
Health
Plan
|
||||||
|
2007
|
$
|
3,436
|
$
|
1,314
|
|||
|
2008
|
3,373
|
1,153
|
|||||
|
2009
|
3,320
|
972
|
|||||
|
2010
|
3,250
|
840
|
|||||
|
2011
|
3,218
|
773
|
|||||
|
2012-2015
|
16,275
|
2,958
|
|||||
|
Company
|
Predecessor
|
||||||||||||
|
Period
from 9/20/06-
12/30/06
|
Period
from 1/1/06-
9/19/06
|
Year
Ended
December
31,
2005
|
Year
Ended
January
1,
2005
|
||||||||||
|
Components
of net period benefit cost:
|
|||||||||||||
|
Defined
Benefit Pension Plans
|
|||||||||||||
|
Service
cost
|
$
|
68
|
$
|
204
|
$
|
257
|
$
|
269
|
|||||
|
Interest
cost
|
619
|
1,614
|
1,457
|
352
|
|||||||||
|
Expected
return on plan assets
|
(704
|
)
|
(1,830
|
)
|
(1,692
|
)
|
(399
|
)
|
|||||
|
Amortization
of prior service cost
|
—
|
73
|
91
|
94
|
|||||||||
|
Recognized
actuarial loss
|
—
|
17
|
60
|
36
|
|||||||||
|
Net
periodic benefit cost
|
$
|
(17
|
)
|
$
|
78
|
$
|
173
|
$
|
352
|
||||
|
Retiree
Health Benefit Plan
|
|||||||||||||
|
Service
cost
|
$
|
5
|
$
|
11
|
$
|
11
|
$
|
—
|
|||||
|
Interest
cost
|
103
|
283
|
268
|
—
|
|||||||||
|
Amortization
of net actuarial gain
|
—
|
(91
|
)
|
—
|
—
|
||||||||
|
Net
periodic benefit cost
|
$
|
108
|
$
|
203
|
$
|
279
|
$
|
—
|
|||||
|
Company
|
Predecessor
|
|||||||||
|
December
30, 2006
|
December
31, 2005
|
January
1,
2005
|
||||||||
|
Asset
Category
|
||||||||||
|
Equity
securities and equity-like instruments
|
51
|
%
|
51
|
%
|
60
|
%
|
||||
|
Debt
securities
|
47
|
47
|
34
|
|||||||
|
Other
|
2
|
2
|
6
|
|||||||
|
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
||||
|
Company
|
Predecessor
|
Predecessor
|
Predecessor
|
||||||||||||||||||||||
|
December
30, 2006
|
September
19, 2006
|
December
31, 2005
|
January
1, 2005
|
||||||||||||||||||||||
|
Number
Of
Shares
|
Weighted
Average
Exercise
Price
|
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
|
—
|
$
|
—
|
625,209
|
$
|
113
|
590,156
|
$
|
102
|
530,662
|
$
|
94
|
|||||||||||||
|
Options
granted
|
500,184
|
100
|
21,558
|
172
|
96,051
|
145
|
65,465
|
120
|
|||||||||||||||||
|
Options
exercised or cash settled
|
—
|
—
|
(570,717
|
)
|
112
|
(31,652
|
)
|
105
|
(1,640
|
)
|
53
|
||||||||||||||
|
Options
forfeited or cancelled
|
—
|
—
|
(76,050
|
)
|
137
|
(29,346
|
)
|
117
|
(4,331
|
)
|
93
|
||||||||||||||
|
Options
outstanding, end of period
|
500,184
|
$
|
100
|
—
|
—
|
625,209
|
113
|
590,156
|
102
|
||||||||||||||||
|
Option
price range at end of period
|
$100
|
—
|
$32
- $163
|
$32-$142
|
|||||||||||||||||||||
|
Options
exercisable at end of period
|
12,000
|
—
|
365,265
|
291,879
|
|||||||||||||||||||||
|
Options
available for grant at period end
|
77,068
|
—
|
4,216
|
43,489
|
|||||||||||||||||||||
|
Weighted
average fair value of options granted during period
|
$19
|
$51
|
$45
|
$34
|
|||||||||||||||||||||
|
Range
of
Exercise
Prices
|
Number
Outstanding
At
December 30, 2006
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
at
December
30, 2006
|
|
$100
|
500,184
|
10
years
|
$100
|
12,000
|
|
Company
|
Predecessor
|
||||||
|
December
30, 2006
|
December
31, 2005
|
||||||
|
Currency
translation
|
$
|
1,358
|
$
|
5,214
|
|||
|
Impact
of SFAS No. 158
|
684
|
—
|
|||||
|
Minimum
pension liability adjustment
|
—
|
(577
|
)
|
||||
|
Unrealized
gain on interest rate hedges
|
—
|
3,548
|
|||||
|
Unrealized
gain on resin hedge contracts
|
—
|
3,680
|
|||||
|
$
|
2,042
|
$
|
11,865
|
||||
|
Year
Ended
|
||||||||||
|
Company/
Predecessor
|
Predecessor
|
Predecessor
|
||||||||
|
December
30,
2006
|
December
31,
2005
|
January
1,
2005
|
||||||||
|
Net
sales:
|
||||||||||
|
Open
Top
|
$
|
836,847
|
$
|
775,677
|
$
|
659,257
|
||||
|
Closed
Top
|
594,917
|
394,027
|
154,956
|
|||||||
|
Total
net sales
|
1,431,764
|
1,169,704
|
814,213
|
|||||||
|
Adjusted
EBITDA:
|
||||||||||
|
Open
Top
|
169,677
|
141,432
|
131,188
|
|||||||
|
Closed
Top
|
120,054
|
71,154
|
29,880
|
|||||||
|
Total
adjusted EBITDA
|
289,731
|
212,586
|
161,068
|
|||||||
|
Total
assets:
|
||||||||||
|
Open
Top
|
1,550,034
|
858,555
|
789,592
|
|||||||
|
Closed
Top
|
1,018,622
|
789,275
|
215,552
|
|||||||
|
Total
assets
|
2,568,656
|
1,647,830
|
1,005,144
|
|||||||
|
Goodwill,
net:
|
||||||||||
|
Open
Top
|
558,384
|
284,644
|
280,508
|
|||||||
|
Closed
Top
|
430,797
|
210,614
|
78,375
|
|||||||
|
Total
goodwill, net
|
989,181
|
495,258
|
358,883
|
|||||||
|
Reconciliation
of Bank Compliance EBITDA to net income (loss):
|
||||||||||
|
Bank
Compliance EBITDA for reportable segments
|
$
|
289,731
|
$
|
212,586
|
$
|
161,068
|
||||
|
Net
interest expense
|
(111,280
|
)
|
(73,274
|
)
|
(53,185
|
)
|
||||
|
Depreciation
|
(86,678
|
)
|
(73,146
|
)
|
(54,303
|
)
|
||||
|
Amortization
|
(22,681
|
)
|
(15,574
|
)
|
(6,513
|
)
|
||||
|
Income
taxes (benefit)
|
9,795
|
(14,325
|
)
|
(17,740
|
)
|
|||||
|
Unrealized
gain (loss) on investment in Southern Packaging
|
299
|
(1,354
|
)
|
—
|
||||||
|
Merger
expenses
|
(81,309
|
)
|
—
|
—
|
||||||
|
Business
optimization expense
|
(14,287
|
)
|
(5,925
|
)
|
(5,791
|
)
|
||||
|
Loss
on extinguished debt
|
(39,916
|
)
|
(7,045
|
)
|
—
|
|||||
|
Non-cash
compensation
|
(3,385
|
)
|
(2,152
|
)
|
(585
|
)
|
||||
|
Management
fees
|
(900
|
)
|
—
|
—
|
||||||
|
Pro
forma synergies
|
(14,557
|
)
|
—
|
—
|
||||||
|
Net
income (loss)
|
$
|
(75,168
|
)
|
$
|
19,791
|
$
|
22,951
|
|||
|
December
30, 2006 (Company)
|
|||||||||||||
|
Combined
Guarantor Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
||||||||||
|
Consolidating
Balance Sheet
|
|||||||||||||
|
Current
assets
|
$
|
347,762
|
$
|
23,641
|
$
|
—
|
$
|
371,403
|
|||||
|
Net
property and equipment
|
437,859
|
26,118
|
—
|
463,977
|
|||||||||
|
Other
noncurrent assets
|
1,757,348
|
24
|
(24,096
|
)
|
1,733,276
|
||||||||
|
Total
assets
|
$
|
2,542,969
|
$
|
49,783
|
$
|
(
24,096
|
)
|
$
|
2,568,656
|
||||
|
Current
liabilities
|
$
|
187,691
|
$
|
8,159
|
$
|
—
|
$
|
195,850
|
|||||
|
Noncurrent
liabilities
|
2,060,219
|
18,400
|
—
|
2,078,619
|
|||||||||
|
Equity
(deficit)
|
295,059
|
23,224
|
(24,096
|
)
|
294,187
|
||||||||
|
Total
liabilities and equity (deficit)
|
$
|
2,542,969
|
$
|
49,783
|
$
|
(24,096
|
)
|
$
|
2,568,656
|
||||
|
December
31, 2005 (Predecessor)
|
|||||||||||||
|
Combined
Guarantor Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
||||||||||
|
Consolidating
Balance Sheet
|
|||||||||||||
|
Current
assets
|
$
|
356,663
|
$
|
22,826
|
$
|
—
|
$
|
379,489
|
|||||
|
Net
property and equipment
|
403,480
|
19,964
|
—
|
423,444
|
|||||||||
|
Other
noncurrent assets
|
854,021
|
13,214
|
(22,338
|
)
|
844,897
|
||||||||
|
Total
assets
|
$
|
1,614,164
|
$
|
56,004
|
$
|
(22,338
|
)
|
$
|
1,647,830
|
||||
|
Current
liabilities
|
$
|
168,618
|
$
|
9,090
|
$
|
—
|
$
|
177,708
|
|||||
|
Noncurrent
liabilities
|
1,225,951
|
40,783
|
—
|
1,266,734
|
|||||||||
|
Equity
(deficit)
|
219,595
|
6,131
|
(22,338
|
)
|
203,388
|
||||||||
|
Total
liabilities and equity (deficit)
|
$
|
1,614,164
|
$
|
56,004
|
$
|
(22,338
|
)
|
$
|
1,647,830
|
||||
|
Period
from September 20, 2006 to December 30, 2006
(Company)
|
|||||||||||||
|
Combined
Guarantor Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
||||||||||
|
Consolidating
Statement of Operations
|
|||||||||||||
|
Net
sales
|
$
|
372,775
|
$
|
10,513
|
$
|
—
|
$
|
383,288
|
|||||
|
Cost
of goods sold
|
305,560
|
11,379
|
—
|
316,939
|
|||||||||
|
Gross
profit
|
67,215
|
(866
|
)
|
—
|
66,349
|
||||||||
|
Operating
expenses
|
40,955
|
919
|
—
|
41,874
|
|||||||||
|
Operating
income (loss)
|
26,250
|
(1,785
|
)
|
—
|
24,475
|
||||||||
|
Loss
on extinguished debt
|
5,875
|
—
|
—
|
5,875
|
|||||||||
|
Interest
expense, net
|
47,077
|
394
|
—
|
47,471
|
|||||||||
|
Income
tax expense (benefit)
|
(10,853
|
)
|
47
|
—
|
(10,806
|
)
|
|||||||
|
Equity
in net (income) loss from subsidiary
|
2,226
|
—
|
(2,226
|
)
|
—
|
||||||||
|
Net
income (loss)
|
$
|
(18,065
|
)
|
$
|
(2,226
|
)
|
$
|
2,226
|
$
|
(18,065
|
)
|
||
|
Consolidating
Statement of Cash Flows
|
|||||||||||||
|
Net
income (loss)
|
$
|
(18,065
|
)
|
$
|
(2,226
|
)
|
$
|
2,226
|
$
|
(18,065
|
)
|
||
|
Non-cash
expenses
|
27,714
|
1,714
|
—
|
29,428
|
|||||||||
|
Equity
in net (income) loss from subsidiary
|
2,226
|
—
|
(2,226
|
)
|
—
|
||||||||
|
Changes
in working capital
|
27,877
|
(1,976
|
)
|
—
|
25,901
|
||||||||
|
Net
cash provided by (used for) operating activities
|
39,752
|
(2,488
|
)
|
—
|
37,264
|
||||||||
|
Net
cash provided by (used for) investing activities
|
(2,327,975
|
)
|
22,648
|
—
|
(2,305,327
|
)
|
|||||||
|
Net
cash provided by (used for) financing activities
|
2,306,827
|
(19,595
|
)
|
—
|
2,287,232
|
||||||||
|
Effect
of exchange rate changes on cash
|
—
|
380
|
—
|
380
|
|||||||||
|
Net
(decrease) in cash and cash equivalents
|
18,604
|
945
|
—
|
19,549
|
|||||||||
|
Cash
and cash equivalents at beginning of period
|
2
|
(2
|
)
|
—
|
—
|
||||||||
|
Cash
and cash equivalents at end of period
|
$
|
18,606
|
$
|
943
|
$
|
¾
|
$
|
19,549
|
|||||
|
Period
from January 1, 2006 to September 19, 2006
(Predecessor)
|
|||||||||||||
|
Combined
Guarantor Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
||||||||||
|
Consolidating
Statement of Operations
|
|||||||||||||
|
Net
sales
|
$
|
1,025,159
|
$
|
23,317
|
$
|
—
|
$
|
1,048,476
|
|||||
|
Cost
of goods sold
|
815,271
|
24,158
|
—
|
839,429
|
|||||||||
|
Gross
profit
|
209,888
|
(841
|
)
|
—
|
209,047
|
||||||||
|
Operating
expenses
|
164,721
|
2,867
|
—
|
167,588
|
|||||||||
|
Operating
income (loss)
|
45,167
|
(3,708
|
)
|
—
|
41,459
|
||||||||
|
Other
income
|
—
|
(299
|
)
|
—
|
(299
|
)
|
|||||||
|
Loss
on extinguished debt
|
34,041
|
—
|
—
|
34,041
|
|||||||||
|
Interest
expense, net
|
61,633
|
2,176
|
—
|
63,809
|
|||||||||
|
Income
tax expense (benefit)
|
824
|
187
|
—
|
1,011
|
|||||||||
|
Equity
in net (income) loss from subsidiary
|
5,772
|
—
|
(5,772
|
)
|
—
|
||||||||
|
Net
income (loss)
|
$
|
(57,103
|
)
|
$
|
(5,772
|
)
|
$
|
5,772
|
$
|
(57,103
|
)
|
||
|
Net
income (loss)
|
$
|
(57,103
|
)
|
$
|
(5,772
|
)
|
5,772
|
$
|
(57,103
|
)
|
|||
|
Non-cash
expenses
|
182,410
|
2,850
|
—
|
185,260
|
|||||||||
|
Equity
in net (income) loss from subsidiary
|
5,772
|
—
|
(5,772
|
)
|
—
|
||||||||
|
Changes
in working capital
|
4,852
|
443
|
—
|
5,295
|
|||||||||
|
Net
cash provided by (used for) operating activities
|
135,931
|
(2,479
|
)
|
—
|
133,452
|
||||||||
|
Net
cash provided by (used for) investing activities
|
(73,404
|
)
|
(3,585
|
)
|
—
|
(76,989
|
)
|
||||||
|
Net
cash provided by (used for) financing activities
|
(85,652
|
)
|
3,883
|
—
|
(81,769
|
)
|
|||||||
|
Effect
of exchange rate changes on cash
|
—
|
550
|
—
|
550
|
|||||||||
|
Net
(decrease) in cash and cash equivalents
|
(23,125
|
)
|
(1,631
|
)
|
—
|
(24,756
|
)
|
||||||
|
Cash
and cash equivalents at beginning of period
|
23,125
|
1,631
|
—
|
24,756
|
|||||||||
|
Cash
and cash equivalents at end of period
|
$
|
¾
|
$
|
¾
|
$
|
¾
|
$
|
¾
|
|
Year
Ended December 31, 2005 ( Predecessor)
|
|||||||||||||
|
Combined
Guarantor Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
||||||||||
|
Consolidating
Statement of Operations
|
|||||||||||||
|
Net
sales
|
$
|
1,142,453
|
$
|
27,251
|
$
|
—
|
$
|
1,169,704
|
|||||
|
Cost
of goods sold
|
914,956
|
28,414
|
—
|
943,370
|
|||||||||
|
Gross
profit
|
227,497
|
(1,163
|
)
|
—
|
226,334
|
||||||||
|
Operating
expenses
|
105,803
|
4,742
|
—
|
110,545
|
|||||||||
|
Operating
income (loss)
|
121,694
|
(5,905
|
)
|
—
|
115,789
|
||||||||
|
Other
income
|
—
|
1,354
|
—
|
1,354
|
|||||||||
|
Loss
on extinguished debt
|
7,045
|
—
|
—
|
7,045
|
|||||||||
|
Interest
expense (income), net
|
71,130
|
2,144
|
—
|
73,274
|
|||||||||
|
Income
taxes
|
14,136
|
189
|
—
|
14,325
|
|||||||||
|
Equity
in net (income) loss from subsidiary
|
9,592
|
—
|
(9,592
|
)
|
—
|
||||||||
|
Net
income (loss)
|
$
|
19,791
|
$
|
(9,592
|
)
|
$
|
9,592
|
$
|
19,791
|
||||
|
Consolidating
Statement of Cash Flows
|
|||||||||||||
|
Net
income (loss)
|
$
|
19,791
|
$
|
(9,592
|
)
|
9,592
|
$
|
19,791
|
|||||
|
Non-cash
expenses
|
108,315
|
5,670
|
—
|
113,985
|
|||||||||
|
Equity
in net (income) loss from subsidiary
|
9,592
|
—
|
(9,592
|
)
|
—
|
||||||||
|
Changes
in working capital
|
(28,819
|
)
|
(3,411
|
)
|
—
|
(32,230
|
)
|
||||||
|
Net
cash provided by (used for) operating activities
|
108,879
|
(7,333
|
)
|
—
|
101,546
|
||||||||
|
Net
cash used for investing activities
|
(503,181
|
)
|
(16,817
|
)
|
—
|
(519,998
|
)
|
||||||
|
Net
cash provided by (used for) financing activities
|
417,302
|
25,884
|
—
|
443,186
|
|||||||||
|
Effect
of exchange rate changes on cash
|
—
|
(242
|
)
|
—
|
(242
|
)
|
|||||||
|
Net
increase (decrease) in cash and cash equivalents
|
23,000
|
1,492
|
—
|
24,492
|
|||||||||
|
Cash
and cash equivalents at beginning of period
|
127
|
137
|
—
|
264
|
|||||||||
|
Cash
and cash equivalents at end of period
|
$
|
23,127
|
$
|
1,629
|
$
|
¾
|
$
|
24,756
|
|||||
|
Year
Ended January 1, 2005 (Predecessor)
|
|||||||||||||
|
Combined
Guarantor Subsidiaries
|
Combined
Non-guarantor
Subsidiaries
|
Consolidating
Adjustments
|
Consolidated
|
||||||||||
|
Consolidating
Statement of Operations
|
|||||||||||||
|
Net
sales
|
$
|
790,555
|
$
|
23,658
|
$
|
—
|
$
|
814,213
|
|||||
|
Cost
of goods sold
|
616,008
|
23,321
|
—
|
639,329
|
|||||||||
|
Gross
profit
|
174,547
|
337
|
—
|
174,884
|
|||||||||
|
Operating
expenses
|
77,259
|
3,749
|
—
|
81,008
|
|||||||||
|
Operating
income (loss)
|
97,288
|
(3,412
|
)
|
—
|
93,876
|
||||||||
|
Interest
expense (income), net
|
52,447
|
738
|
—
|
53,185
|
|||||||||
|
Income
taxes
|
17,781
|
(41
|
)
|
—
|
17,740
|
||||||||
|
Equity
in net (income) loss from subsidiary
|
4,109
|
—
|
(4,109
|
)
|
—
|
||||||||
|
Net
income (loss)
|
$
|
22,951
|
$
|
(4,109
|
)
|
$
|
4,109
|
$
|
22,951
|
||||
|
Consolidating
Statement of Cash Flows
|
|||||||||||||
|
Net
income (loss)
|
$
|
22,951
|
$
|
(4,109
|
)
|
$
|
4,109
|
$
|
22,951
|
||||
|
Non-cash
expenses
|
76,746
|
3,485
|
—
|
80,231
|
|||||||||
|
Equity
in net (income) loss from subsidiary
|
4,109
|
—
|
(4,109
|
)
|
—
|
||||||||
|
Changes
in working capital
|
(26,944
|
)
|
(1,005
|
)
|
—
|
(27,949
|
)
|
||||||
|
Net
cash provided by (used for) operating activities
|
76,862
|
(1,629
|
)
|
—
|
75,233
|
||||||||
|
Net
cash used for investing activities
|
(47,551
|
)
|
2,074
|
—
|
(45,477
|
)
|
|||||||
|
Net
cash provided by (used for) financing activities
|
(55,140
|
)
|
(568
|
)
|
—
|
(55,708
|
)
|
||||||
|
Effect
of exchange rate changes on cash
|
—
|
24
|
—
|
24
|
|||||||||
|
Net
increase (decrease) in cash and cash equivalents
|
(25,829
|
)
|
(99
|
)
|
—
|
(25,928
|
)
|
||||||
|
Cash
and cash equivalents at beginning of period
|
25,956
|
236
|
—
|
26,192
|
|||||||||
|
Cash
and cash equivalents at end of period
|
$
|
127
|
$
|
137
|
$
|
¾
|
$
|
264
|
|||||
|
2006
|
2005
|
||||||||||||||||||||||||
|
First
|
Second
|
Third
|
Fourth
|
First
|
Second
|
Third
|
Fourth
|
||||||||||||||||||
|
Net
sales
|
$
|
355,964
|
$
|
375,114
|
$
|
363,805
|
$
|
336,881
|
$
|
225,310
|
$
|
282,871
|
$
|
342,305
|
$
|
319,218
|
|||||||||
|
Cost
of sales
|
284,621
|
299,320
|
297,736
|
274,691
|
184,016
|
233,477
|
273,129
|
252,748
|
|||||||||||||||||
|
Gross
profit
|
$
|
71,343
|
$
|
75,794
|
$
|
66,069
|
$
|
62,190
|
$
|
41,294
|
$
|
49,394
|
$
|
69,176
|
$
|
66,470
|
|||||||||
|
Net
income (loss)
|
$
|
8,180
|
$
|
9,732
|
$
|
(86,286
|
)
|
$
|
(6,794
|
)
|
$
|
3,799
|
$
|
1,751
|
$
|
9,085
|
$
|
5,156
|
|||||||
|
Successor
|
Predecessor
|
||||||
|
Three
Months
Ended
December 29, 2006
|
Three
Months
Ended
December 30, 2005
|
||||||
|
Net
revenue,
including related party revenue
|
$
|
366.7
|
$
|
450.2
|
|||
|
Cost
of sales
|
342.5
|
385.5
|
|||||
|
Gross
profit
|
24.2
|
64.7
|
|||||
|
Charges
and allocations from Parent Company and affiliates
|
—
|
10.1
|
|||||
|
Selling,
general and administrative expenses
|
41.8
|
33.5
|
|||||
|
Restructuring
and impairment charges (credits), net
|
0.2
|
—
|
|||||
|
Operating
income (loss)
|
(17.8
|
)
|
21.1
|
||||
|
Other
Expense
|
0.1
|
—
|
|||||
|
Interest
expense
|
17.6
|
1.1
|
|||||
|
Interest
income
|
(0.6
|
)
|
—
|
||||
|
Interest
expense - Parent Company and affiliates
|
—
|
3.0
|
|||||
|
Interest
income - Parent Company and affiliates
|
—
|
(0.1
|
)
|
||||
|
Income
(loss) before income taxes
|
(34.9
|
)
|
17.1
|
||||
|
Income
taxes
|
(13.1
|
)
|
0.7
|
||||
|
Net
income (loss)
|
$
|
(21.8
|
)
|
$
|
16.4
|
||
|
Successor
|
|||||||
|
December
29,
|
September
29,
|
||||||
|
2006
|
2006
|
||||||
|
Assets
|
|||||||
|
Current
Assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
54.1
|
$
|
66.8
|
|||
|
Accounts
receivable, less allowance for doubtful accounts of $3.4, $3.3,
respectively
|
146.7
|
195.7
|
|||||
|
Inventories
|
191.6
|
233.9
|
|||||
|
Prepaid
expenses and other current assets
|
9.7
|
13.0
|
|||||
|
Total
current assets
|
402.1
|
509.4
|
|||||
|
Property,
plant and equipment, net
|
333.1
|
334.8
|
|||||
|
Intangible
assets, net
|
333.1
|
337.2
|
|||||
|
Other
assets
|
21.5
|
22.3
|
|||||
|
Total
Assets
|
$
|
1,089.8
|
$
|
1,203.7
|
|||
|
Liabilities
and Equity
|
|||||||
|
Current
Liabilities:
|
|||||||
|
Accounts
payable
|
122.7
|
170.4
|
|||||
|
Accrued
and other current liabilities
|
47.9
|
77.4
|
|||||
|
Long
Term Debt - current
|
3.0
|
3.0
|
|||||
|
Total
current liabilities
|
173.6
|
250.8
|
|||||
|
Long
Term Debt
|
729.2
|
729.9
|
|||||
|
Deferred
Income Tax Liabilities
|
36.4
|
49.7
|
|||||
|
Other
liabilities
|
1.8
|
1.5
|
|||||
|
Total
Liabilities
|
941.0
|
1,031.9
|
|||||
|
Commitments
and contingencies
|
|||||||
|
Contributions
from Holdings
|
196.4
|
197.8
|
|||||
|
Retained
Deficit
|
(47.9
|
)
|
(26.1
|
)
|
|||
|
Accumulated
Other Comprehensive Income
|
0.3
|
0.1
|
|||||
|
Total
Equity
|
148.8
|
171.8
|
|||||
|
Total
Liabilities and Equity
|
$
|
1,089.8
|
$
|
1,203.7
|
|||
|
Successor
|
Predecessor
|
||||||
|
Three
Months Ended December 29, 2006
|
Three
Months Ended December 30, 2005
|
||||||
|
Cash
Flows from Operating Activities:
|
|||||||
|
Net
Income (loss)
|
$
|
(21.8
|
)
|
$
|
16.4
|
||
|
Adjustments
to reconcile net cash from operating activities
|
|||||||
|
Depreciation
and amortization
|
20.3
|
10.3
|
|||||
|
Amortization
of debt issuance costs
|
0.8
|
—
|
|||||
|
Provisions
for losses on accounts receivable and inventory
|
1.6
|
1.9
|
|||||
|
Deferred
income taxes
|
(13.1
|
)
|
—
|
||||
|
Changes
in assets and liabilities
|
|||||||
|
Accounts
receivable, net
|
47.2
|
(6.0
|
)
|
||||
|
Inventories
|
36.8
|
(90.9
|
)
|
||||
|
Prepaid
expenses and other current assets
|
3.4
|
—
|
|||||
|
Other
non-current assets
|
—
|
—
|
|||||
|
Accounts
payable
|
(47.6
|
)
|
55.0
|
||||
|
Due
to Tyco International, Ltd and affiliates
|
—
|
(109.9
|
)
|
||||
|
Accrued
and other current liabilities
|
2.6
|
(3.7
|
)
|
||||
|
Income
taxes
|
0.2
|
0.8
|
|||||
|
Other,
net
|
(0.1
|
)
|
0.1
|
||||
|
Net
cash provided by (used in) operating activities
|
30.3
|
(126.0
|
)
|
||||
|
Cash
Flows from Investing Activities:
|
|||||||
|
Purchase
of property, plant and equipment
|
(10.3
|
)
|
(8.6
|
)
|
|||
|
Proceeds
from disposal of assets
|
—
|
1.3
|
|||||
|
Acquisition
of business, net of cash acquired
|
(30.2
|
)
|
—
|
||||
|
Net
cash used in investing activities
|
(40.5
|
)
|
(7.3
|
)
|
|||
|
Cash
Flows from Financing Activities:
|
|||||||
|
Return
of equity to Holdings
|
(1.3
|
)
|
—
|
||||
|
Repayment
of long-term debt
|
(0.7
|
)
|
—
|
||||
|
Change
in book overdraft
|
—
|
1.1
|
|||||
|
Change
in Predecessor parent company investment
|
—
|
135.0
|
|||||
|
Net
cash provided by (used in) financing activities
|
(2.0
|
)
|
136.1
|
||||
|
Effect
of currency translation on cash
|
(0.5
|
)
|
(0.3
|
)
|
|||
|
Net
increase (decrease) in cash and cash equivalents
|
(12.7
|
)
|
2.5
|
||||
|
Successor
|
Predecessor
|
||||||
|
Three
Months Ended December 29, 2006
|
Three
Months Ended December 30, 2005
|
||||||
|
Cash
and cash equivalents, beginning of period
|
66.8
|
2.7
|
|||||
|
Cash
and cash equivalents, end of period
|
$
|
54.1
|
$
|
5.2
|
|||
|
Supplementary
Cash Flow Information:
|
|||||||
|
Interest
paid
|
10.7
|
0.2
|
|||||
|
Income
taxes paid
|
0.1
|
0.4
|
|||||
|
Total
Parent Company Equity
|
Parent
Company Investment
|
Currency
Translation
|
Minimum
Pension
Liability
|
Comprehensive
Income
|
||||||||||||
|
Balance
at September 30, 2005
(Predecessor)
|
$
|
855.1
|
$
|
895.0
|
$
|
(25.5
|
)
|
$
|
(14.4
|
)
|
||||||
|
Comprehensive
income:
|
||||||||||||||||
|
Net
income
|
16.4
|
16.4
|
—
|
—
|
$
|
16.4
|
||||||||||
|
Currency
translation
|
(3.9
|
)
|
—
|
(3.9
|
)
|
—
|
(3.9
|
)
|
||||||||
|
Total
comprehensive income
|
$
|
12.5
|
||||||||||||||
|
Net
transfers to parent
|
8.2
|
8.2
|
—
|
—
|
||||||||||||
|
Balance
at December 30, 2005
(Predecessor)
|
$
|
875.8
|
$
|
919.6
|
$
|
(29.4
|
)
|
$
|
(14.4
|
)
|
||||||
|
Total
Equity
|
Retained
Deficit
|
Contributions
from Holdings
|
Currency
Translation
|
Comprehensive
Income
|
||||||||||||
|
Balance
at September 29, 2006
(Successor)
|
$
|
171.8
|
$
|
(26.1
|
)
|
$
|
197.8
|
$
|
0.1
|
|||||||
|
Comprehensive
loss:
|
||||||||||||||||
|
Net
loss
|
(21.8
|
)
|
(21.8
|
)
|
—
|
—
|
$
|
(21.8
|
)
|
|||||||
|
Currency
translation
|
0.2
|
—
|
—
|
0.2
|
0.2
|
|||||||||||
|
Total
comprehensive loss
|
$
|
(21.6
|
)
|
|||||||||||||
|
Compensation
expense
|
(0.1
|
)
|
—
|
(0.1
|
)
|
—
|
||||||||||
|
Contributions
from Holdings
|
(1.3
|
)
|
—
|
(1.3
|
)
|
—
|
||||||||||
|
Balance
at December 29, 2006
(Successor)
|
$
|
148.8
|
$
|
(47.9
|
)
|
$
|
196.4
|
$
|
0.3
|
|||||||
|
Estimated
Fair Value at
February
16, 2006
|
Allocation
of Excess
Fair
Value over Purchase Price
|
Allocation
of Purchase Price at February 16, 2006
|
||||||||
|
(in
millions)
|
||||||||||
|
Current
assets
|
$
|
429.0
|
$
|
—
|
$
|
429.0
|
||||
|
Property,
plant and equipment
|
345.4
|
(1.6
|
)
|
343.8
|
||||||
|
Intangible
assets
|
364.4
|
(1.5
|
)
|
362.9
|
||||||
|
Other
non current assets
|
24.1
|
—
|
24.1
|
|||||||
|
Assets
acquired
|
1,162.9
|
(3.1
|
)
|
1,159.8
|
||||||
|
Current
liabilities
|
176.6
|
—
|
176.6
|
|||||||
|
Non
current liabilities
|
67.1
|
—
|
67.1
|
|||||||
|
Liabilities
assumed
|
243.7
|
—
|
243.7
|
|||||||
|
$
|
919.2
|
$
|
(3.1
|
)
|
$
|
916.1
|
||||
|
•
|
Beginning
with the Company’s 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);
and
|
|
•
|
100%
of the net cash proceeds of all non-ordinary course asset sales and
casualty and condemnation events, if the Company does not reinvest
or
commit to reinvest those proceeds in assets to be used in its business
or
to make certain other permitted investments within 15 months, subject
to
certain limitations.
|
|
Payments
Due by Period
|
||||||||||||||||
|
Total
|
Less
than 1 year
|
1-3
years
|
4-5
years
|
More
than 5 years
|
||||||||||||
|
(in
millions)
|
||||||||||||||||
|
Term
Loan
|
$
|
298.5
|
$
|
3.0
|
$
|
6.0
|
$
|
6.0
|
$
|
283.5
|
||||||
|
Second
Lien Floating Rate Loan
|
175.0
|
—
|
—
|
—
|
175.0
|
|||||||||||
|
Senior
Subordinated Notes
|
265.0
|
—
|
—
|
—
|
265.0
|
|||||||||||
|
Total
|
$
|
738.5
|
$
|
3.0
|
$
|
6.0
|
$
|
6.0
|
$
|
723.5
|
||||||
|
December
29, 2006
Successor
|
September
29, 2006
Successor
|
||||||||||||||||||
|
(in
millions)
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Weighted
Average Amortization Period
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Weighted
Average Amortization Period
|
|||||||||||||
|
Contracts
and related customer
relationships
|
$
|
116.3
|
$
|
9.2
|
11
years
|
$
|
112.7
|
$
|
6.4
|
11
years
|
|||||||||
|
Technology
|
140.4
|
11.2
|
11
years
|
134.8
|
7.9
|
11
years
|
|||||||||||||
|
Licenses
|
106.8
|
10.0
|
10
years
|
111.4
|
7.4
|
10
years
|
|||||||||||||
|
Total
|
$
|
363.5
|
$
|
30.4
|
11
years
|
$
|
358.9
|
$
|
21.7
|
11
years
|
|||||||||
|
Successor
|
Predecessor
|
||||||
|
(in
millions)
|
Three
months ended
December
29, 2006
|
Three
months ended
December
30, 2005
|
|||||
|
Intangible
asset amortization expense
|
$
|
8.7
|
$
|
0.7
|
|||
|
Fiscal
Year
|
Estimated
Aggregate
Amortization
Expense
(in
millions)
|
|
2008
|
$35.4
|
|
2009
|
34.6
|
|
2010
|
34.6
|
|
2011
|
33.6
|
|
2012
|
33.3
|
|
Employee
Severance and Benefits
|
Facilities
Exit Costs
|
Other
|
Non-cash
Charges
|
Total
|
||||||||||||
|
Balance
at September 30, 2005
|
$
|
2.2
|
$
|
1.6
|
$
|
—
|
$
|
—
|
$
|
3.8
|
||||||
|
Charges
|
—
|
0.3
|
—
|
—
|
0.3
|
|||||||||||
|
Utilization
|
(0.9
|
)
|
(0.9
|
)
|
—
|
—
|
(1.8
|
)
|
||||||||
|
Balance
at December 30, 2005
|
$
|
1.3
|
$
|
1.0
|
$
|
—
|
$
|
—
|
$
|
2.3
|
||||||
|
Employee
Severance and Benefits
|
Facilities
Exit Costs
|
Other
|
Non-cash
Charges
|
Total
|
||||||||||||
|
Balance
at September 29, 2006
|
$
|
—
|
$
|
0.7
|
$
|
—
|
$
|
—
|
$
|
0.7
|
||||||
|
Charges,
net
|
—
|
0.1
|
—
|
—
|
0.1
|
|||||||||||
|
Utilization
|
—
|
(0.2
|
)
|
—
|
—
|
(0.2
|
)
|
|||||||||
|
Balance
at December 29, 2006
|
$
|
—
|
$
|
0.6
|
$
|
—
|
$
|
—
|
$
|
0.6
|
||||||
|
Successor
|
Predecessor
|
||||||
|
(in
millions)
|
Three
Months
Ended
December
29, 2006
|
Three
Months
Ended
December
30, 2005
|
|||||
|
Net
revenue:
|
|||||||
|
Plastics
|
$
|
246.1
|
$
|
305.4
|
|||
|
Adhesives
|
73.0
|
87.6
|
|||||
|
Coatings
|
49.1
|
60.3
|
|||||
|
Less:
intercompany revenue
|
(1.5
|
)
|
(3.1
|
)
|
|||
|
$
|
366.7
|
$
|
450.2
|
||||
|
Operating
income (loss):
|
|||||||
|
Plastics
|
$
|
(8.9
|
)
|
$
|
16.5
|
||
|
Adhesives
|
(0.2
|
)
|
4.0
|
||||
|
Coatings
|
(2.9
|
)
|
2.1
|
||||
|
Corporate
Expenses
|
(5.8
|
)
|
(1.5
|
)
|
|||
|
$
|
(17.8
|
)
|
$
|
21.1
|
|||
|
Depreciation
& amortization:
|
|||||||
|
Plastics
|
$
|
10.8
|
$
|
6.5
|
|||
|
Adhesives
|
5.3
|
2.5
|
|||||
|
Coatings
|
3.7
|
1.3
|
|||||
|
Corporate
|
0.5
|
0.0
|
|||||
|
$
|
20.3
|
$
|
10.3
|
||||
|
Capital
expenditures, net:
|
|||||||
|
Plastics
|
$
|
7.0
|
$
|
3.9
|
|||
|
Adhesives
|
2.0
|
1.3
|
|||||
|
Coatings
|
0.8
|
1.5
|
|||||
|
Corporate
|
0.5
|
0.6
|
|||||
|
$
|
10.3
|
$
|
7.3
|
||||
|
Net
revenue:
|
|||||||
|
United
States
|
$
|
332.8
|
$
|
415.4
|
|||
|
North
America excluding U.S.
|
17.5
|
18.5
|
|||||
|
Europe
|
15.6
|
12.3
|
|||||
|
Asia
|
0.8
|
4.0
|
|||||
|
$
|
366.7
|
$
|
450.2
|
||||
|
Successor
|
Successor
|
||||||
|
December
29,
2006
|
September
29,
2006
|
||||||
|
Total
assets:
|
|||||||
|
Plastics
|
$
|
596.0
|
$
|
676.9
|
|||
|
Adhesives
|
235.5
|
264.1
|
|||||
|
Coatings
|
175.5
|
185.8
|
|||||
|
Corporate
|
82.8
|
76.9
|
|||||
|
$
|
1,089.8
|
$
|
1,203.7
|
||||
|
Long-lived
assets:
|
|||||||
|
United
States
|
$
|
314.9
|
$
|
315.9
|
|||
|
North
America excluding U.S.
|
16.2
|
16.9
|
|||||
|
Europe
|
1.0
|
1.0
|
|||||
|
Asia
|
1.0
|
1.0
|
|||||
|
$
|
333.1
|
$
|
334.8
|
||||
|
Successor
|
Successor
|
||||||
|
(in
millions)
|
December
29,
2006
|
September
29,
2006
|
|||||
|
Inventories:
|
|||||||
|
Purchased
Materials and Manufactured Parts
|
$
|
114.7
|
$
|
112.2
|
|||
|
Work
in Process
|
14.7
|
13.8
|
|||||
|
Finished
Goods
|
62.2
|
107.9
|
|||||
|
Total
Inventories
|
$
|
191.6
|
$
|
233.9
|
|||
|
Prepaid
expenses and other current assets:
|
|||||||
|
Prepaid
Taxes
|
$
|
2.3
|
$
|
2.3
|
|||
|
Prepaid
Insurance
|
0.9
|
0.8
|
|||||
|
Rent
and Deposits
|
1.0
|
1.0
|
|||||
|
Other
|
5.5
|
8.9
|
|||||
|
Prepaid
expenses and other current assets:
|
$
|
9.7
|
$
|
13.0
|
|||
|
Property,
plant and equipment:
|
|||||||
|
Land
|
$
|
20.3
|
$
|
20.3
|
|||
|
Buildings
|
93.1
|
92.3
|
|||||
|
Machinery
and equipment
|
238.2
|
233.3
|
|||||
|
Property
under capital leases
|
0.2
|
0.2
|
|||||
|
Leasehold
improvements
|
2.9
|
2.7
|
|||||
|
Construction
in progress
|
19.4
|
15.2
|
|||||
|
Accumulated
depreciation
|
(41.0
|
)
|
(29.2
|
)
|
|||
|
Property,
plant and equipment, net:
|
$
|
333.1
|
$
|
334.8
|
|||
|
Accrued
and other current liabilities:
|
|||||||
|
Accrued
Salaries & Wages
|
$
|
3.7
|
$
|
4.9
|
|||
|
Accrued
Vacation & Holidays.
|
2.9
|
3.7
|
|||||
|
Accrued
Bonus
|
2.3
|
5.1
|
|||||
|
Sales
Commission Payable.
|
1.9
|
2.3
|
|||||
|
Accrued
Taxes
|
2.6
|
4.1
|
|||||
|
Accrued
Restructuring.
|
0.3
|
0.3
|
|||||
|
Accrued
Insurance.
|
5.8
|
5.7
|
|||||
|
Accrued
Interest.
|
9.4
|
3.4
|
|||||
|
Accrued
purchase price adjustment.
|
0.6
|
31.2
|
|||||
|
Other
Accrued Expenses
|
18.4
|
16.7
|
|||||
|
Accrued
and other current liabilities
|
$
|
47.9
|
$
|
77.4
|
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
237.1
|
$
|
103.2
|
$
|
33.9
|
$
|
(7.5
|
)
|
$
|
366.7
|
|||||
|
Cost
of sales
|
226.3
|
92.1
|
31.2
|
(7.1
|
)
|
342.5
|
||||||||||
|
Gross
profit
|
10.8
|
11.1
|
2.7
|
(0.4
|
)
|
24.2
|
||||||||||
|
Selling,
general and administrative expenses
|
24.1
|
14.8
|
2.9
|
—
|
41.8
|
|||||||||||
|
Restructuring
and impairment charges, net
|
0.2
|
—
|
—
|
—
|
0.2
|
|||||||||||
|
Operating
income
|
(13.5
|
)
|
(3.7
|
)
|
(0.2
|
)
|
(0.4
|
)
|
(17.8
|
)
|
||||||
|
Other
income
|
—
|
—
|
(0.1
|
)
|
—
|
(0.1
|
)
|
|||||||||
|
Equity
in net income (loss) of subsidiaries
|
(4.7
|
)
|
—
|
—
|
4.7
|
—
|
||||||||||
|
Interest
expense, net
|
17.0
|
—
|
—
|
—
|
17.0
|
|||||||||||
|
Income
(loss) before income taxes
|
(35.2
|
)
|
(3.7
|
)
|
(0.3
|
)
|
4.3
|
(34.9
|
)
|
|||||||
|
Income
tax benefit
|
(13.4
|
)
|
—
|
0.3
|
—
|
(13.1
|
)
|
|||||||||
|
Net
income (loss)
|
$
|
(21.8
|
)
|
$
|
(3.7
|
)
|
$
|
(0.6
|
)
|
$
|
4.3
|
$
|
(21.8
|
)
|
||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
295.6
|
$
|
121.8
|
$
|
34.9
|
$
|
(2.1
|
)
|
$
|
450.2
|
|||||
|
Cost
of sales
|
256.5
|
102.5
|
28.1
|
(1.6
|
)
|
385.5
|
||||||||||
|
Gross
profit
|
39.1
|
19.3
|
6.8
|
(0.5
|
)
|
64.7
|
||||||||||
|
Charges
and allocations from Tyco International,
Ltd.
and affiliates
|
7.1
|
3.0
|
—
|
—
|
10.1
|
|||||||||||
|
Selling,
general and administrative expenses
|
20.1
|
11.1
|
2.3
|
—
|
33.5
|
|||||||||||
|
Restructuring
and impairment charges
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Operating
income
|
11.9
|
5.2
|
4.5
|
(0.5
|
)
|
21.1
|
||||||||||
|
Other
income
|
—
|
1.4
|
(1.4
|
)
|
—
|
—
|
||||||||||
|
Equity
in net income of subsidiaries
|
9.8
|
—
|
—
|
(9.8
|
)
|
—
|
||||||||||
|
Interest
expense (income), net
|
5.3
|
(1.2
|
)
|
(0.1
|
)
|
—
|
4.0
|
|||||||||
|
Income
(loss) before income taxes
|
16.4
|
7.8
|
3.2
|
(10.3
|
)
|
17.1
|
||||||||||
|
Income
tax expense
|
—
|
—
|
0.7
|
—
|
0.7
|
|||||||||||
|
Net
income (loss)
|
$
|
16.4
|
$
|
7.8
|
$
|
2.5
|
$
|
(10.3
|
)
|
$
|
16.4
|
|||||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$
|
50.8
|
$
|
—
|
$
|
3.3
|
$
|
—
|
$
|
54.1
|
||||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
94.2
|
37.1
|
15.4
|
—
|
146.7
|
|||||||||||
|
Inventories
|
117.8
|
57.2
|
16.6
|
—
|
191.6
|
|||||||||||
|
Prepaid
expenses and other current assets
|
3.2
|
1.7
|
4.8
|
—
|
9.7
|
|||||||||||
|
Total
current assets
|
266.0
|
96.0
|
40.1
|
—
|
402.1
|
|||||||||||
|
Property,
plant and equipment, net
|
220.8
|
93.8
|
18.5
|
—
|
333.1
|
|||||||||||
|
Intangible
assets, net
|
148.2
|
177.2
|
7.7
|
—
|
333.1
|
|||||||||||
|
Investment
in Subsidiaries
|
419.2
|
—
|
—
|
(419.2
|
)
|
—
|
||||||||||
|
Other
assets
|
20.9
|
0.6
|
—
|
—
|
21.5
|
|||||||||||
|
Total
Assets
|
$
|
1,075.1
|
$
|
367.6
|
$
|
66.3
|
$
|
(419.2
|
)
|
$
|
1,089.8
|
|||||
|
Liabilities
and Equity
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$
|
77.1
|
$
|
38.8
|
$
|
6.8
|
$
|
—
|
$
|
122.7
|
||||||
|
Accrued
and other current liabilities
|
31.7
|
10.9
|
5.3
|
—
|
47.9
|
|||||||||||
|
Long-term
debt—current portion
|
3.0
|
—
|
—
|
—
|
3.0
|
|||||||||||
|
Intercompany
accounts, net
|
51.2
|
(64.2
|
)
|
12.6
|
0.4
|
—
|
||||||||||
|
Total
current liabilities
|
163.0
|
(14.5
|
)
|
24.7
|
0.4
|
173.6
|
||||||||||
|
Long-term
debt
|
729.2
|
—
|
—
|
—
|
729.2
|
|||||||||||
|
Deferred
tax liabilities
|
33.6
|
0.6
|
2.2
|
—
|
36.4
|
|||||||||||
|
Other
non current liabilities
|
0.5
|
0.3
|
1.0
|
—
|
1.8
|
|||||||||||
|
Total
long-term liabilities
|
763.3
|
0.9
|
3.2
|
—
|
767.4
|
|||||||||||
|
Total
Liabilities
|
926.3
|
(13.6
|
)
|
27.9
|
0.4
|
941.0
|
||||||||||
|
Commitments
and contingencies
|
||||||||||||||||
|
Contributions
from Holdings
|
196.4
|
368.6
|
35.1
|
(403.7
|
)
|
196.4
|
||||||||||
|
Subsidiary
stock
|
—
|
—
|
3.9
|
(3.9
|
)
|
—
|
||||||||||
|
Retained
deficit
|
(47.9
|
)
|
12.6
|
(0.9
|
)
|
(11.7
|
)
|
(47.9
|
)
|
|||||||
|
Cumulative
translation
|
0.3
|
—
|
0.3
|
(0.3
|
)
|
0.3
|
||||||||||
|
Total
Equity
|
148.8
|
381.2
|
38.4
|
(419.6
|
)
|
148.8
|
||||||||||
|
Total
Liabilities and Equity
|
$
|
1,075.1
|
$
|
367.6
|
$
|
66.3
|
$
|
(419.2
|
)
|
$
|
1,089.8
|
|||||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$
|
62.3
|
$
|
0.1
|
$
|
4.4
|
$
|
—
|
$
|
66.8
|
||||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
124.9
|
52.4
|
18.4
|
—
|
195.7
|
|||||||||||
|
Inventories
|
158.3
|
57.8
|
17.8
|
—
|
233.9
|
|||||||||||
|
Prepaid
expenses and other current assets
|
6.0
|
1.6
|
5.4
|
—
|
13.0
|
|||||||||||
|
Total
current assets
|
351.5
|
111.9
|
46.0
|
—
|
509.4
|
|||||||||||
|
Property,
plant and equipment, net
|
219.4
|
96.4
|
19.0
|
—
|
334.8
|
|||||||||||
|
Intangible
assets, net
|
146.7
|
182.8
|
7.7
|
—
|
337.2
|
|||||||||||
|
Investment
in Subsidiaries
|
353.2
|
—
|
—
|
(353.2
|
)
|
—
|
||||||||||
|
Other
assets
|
21.7
|
0.6
|
—
|
—
|
22.3
|
|||||||||||
|
Total
Assets
|
$
|
1,092.5
|
$
|
391.7
|
$
|
72.7
|
$
|
(353.2
|
)
|
$
|
1,203.7
|
|||||
|
Liabilities
and Equity
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$
|
108.2
|
$
|
52.3
|
$
|
9.9
|
$
|
—
|
$
|
170.4
|
||||||
|
Accrued
and other current liabilities
|
57.3
|
14.8
|
5.3
|
—
|
77.4
|
|||||||||||
|
Long-term
debt—current portion
|
3.0
|
—
|
—
|
—
|
3.0
|
|||||||||||
|
Intercompany
accounts, net
|
(25.4
|
)
|
(9.2
|
)
|
30.2
|
4.4
|
—
|
|||||||||
|
Total
current liabilities
|
143.1
|
57.9
|
45.4
|
4.4
|
250.8
|
|||||||||||
|
Long-term
debt
|
729.9
|
—
|
—
|
—
|
729.9
|
|||||||||||
|
Deferred
tax liabilities
|
47.4
|
(0.4
|
)
|
2.7
|
—
|
49.7
|
||||||||||
|
Other
non current liabilities
|
0.3
|
0.5
|
0.7
|
—
|
1.5
|
|||||||||||
|
Total
long-term liabilities
|
777.6
|
0.1
|
3.4
|
—
|
781.1
|
|||||||||||
|
Total
Liabilities
|
920.7
|
58.0
|
48.8
|
4.4
|
1,031.9
|
|||||||||||
|
Commitments
and contingencies
|
||||||||||||||||
|
Contributions
from Holdings
|
197.8
|
368.5
|
35.1
|
(403.6
|
)
|
197.8
|
||||||||||
|
Retained
deficit
|
(26.1
|
)
|
(34.8
|
)
|
(11.3
|
46.1
|
(26.1
|
)
|
||||||||
|
Cumulative
translation
|
0.1
|
—
|
0.1
|
(0.1
|
)
|
0.1
|
||||||||||
|
Total
Equity
|
171.8
|
333.7
|
23.9
|
(357.6
|
)
|
171.8
|
||||||||||
|
Total
Liabilities and Equity
|
$
|
1,092.5
|
$
|
391.7
|
$
|
72.7
|
$
|
(353.2
|
)
|
$
|
1,203.7
|
|||||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
27.8
|
$
|
2.3
|
$
|
0.2
|
$
|
—
|
$
|
30.3
|
||||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(7.1
|
)
|
(2.4
|
)
|
(0.8
|
)
|
—
|
(10.3
|
)
|
|||||||
|
Acquisition
of business net of cash acquired
|
(30.2
|
)
|
—
|
—
|
—
|
(30.2
|
)
|
|||||||||
|
Net
cash used in investing activities
|
(37.3
|
)
|
(2.4
|
)
|
(0.8
|
)
|
—
|
(40.5
|
)
|
|||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Return
of equity to Holdings
|
(1.3
|
)
|
—
|
—
|
—
|
(1.3
|
||||||||||
|
Repayment
of long-term debt
|
(0.7
|
)
|
—
|
—
|
—
|
(0.7
|
)
|
|||||||||
|
Net
cash provided by financing activities
|
(2.0
|
)
|
—
|
—
|
—
|
(2.0
|
)
|
|||||||||
|
Effect
of currency translation on cash
|
—
|
—
|
(0.5
|
)
|
—
|
(0.5
|
)
|
|||||||||
|
Change
in cash and cash equivalents
|
(11.5
|
)
|
(0.1
|
)
|
(1.1
|
)
|
—
|
(12.7
|
)
|
|||||||
|
Cash
and cash equivalents, beginning of period
|
62.3
|
0.1
|
4.4
|
—
|
66.8
|
|||||||||||
|
Cash
and cash equivalents, end of period
|
$
|
50.8
|
$
|
—
|
$
|
3.3
|
$
|
—
|
$
|
54.1
|
||||||
|
Parent
Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
(120.8
|
)
|
$
|
(7.1
|
)
|
$
|
1.9
|
$
|
—
|
(126.0
|
)
|
||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(5.6
|
)
|
(2.8
|
)
|
(0.2
|
)
|
—
|
(8.6
|
)
|
|||||||
|
Proceeds
from disposal of assets
|
1.3
|
—
|
—
|
—
|
1.3
|
|||||||||||
|
Net
cash used in investing activities
|
(4.3
|
)
|
(2.8
|
)
|
(0.2
|
)
|
—
|
(7.3
|
)
|
|||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Change
in Predecessor Parent Company Investment
|
126.4
|
7.4
|
1.2
|
—
|
135.0
|
|||||||||||
|
Change
in book overdraft
|
(1.3
|
)
|
2.4
|
—
|
—
|
1.1
|
||||||||||
|
Net
cash provided by financing activities
|
125.1
|
9.8
|
1.2
|
—
|
136.1
|
|||||||||||
|
Effect
of currency translation on cash
|
—
|
—
|
(0.3
|
)
|
—
|
(0.3
|
)
|
|||||||||
|
Change
in cash and cash equivalents
|
—
|
(0.1
|
)
|
2.6
|
—
|
2.5
|
||||||||||
|
Cash
and cash equivalents, beginning of period
|
—
|
0.1
|
2.6
|
—
|
2.7
|
|||||||||||
|
Cash
and cash equivalents, end of period
|
$
|
—
|
$
|
—
|
$
|
5.2
|
$
|
—
|
$
|
5.2
|
||||||
|
Successor
|
Predecessor
|
||||||||||||
|
February
17
to
September
29, 2006
|
October
1,
2005
to
February
16,
2006
|
Twelve
Months
Ended
September 30, 2005
|
Twelve
Months
Ended
September 30, 2004
|
||||||||||
|
Net
revenue, including related party revenue (see Note 11)
|
$
|
1,092.4
|
$
|
666.9
|
$
|
1,725.2
|
$
|
1,658.8
|
|||||
|
Cost
of Sales
|
980.7
|
579.0
|
1,477.4
|
1,366.2
|
|||||||||
|
Gross
Profit
|
111.7
|
87.9
|
247.8
|
292.6
|
|||||||||
|
Charges
and allocations from Tyco International, Ltd. And
affiliates
|
—
|
10.4
|
56.4
|
65.0
|
|||||||||
|
Selling,
general and administrative expenses
|
102.6
|
50.0
|
124.6
|
130.2
|
|||||||||
|
Restructuring
and impairment charges, net
|
0.5
|
0.6
|
3.3
|
57.9
|
|||||||||
|
Operating
Income
|
8.6
|
26.9
|
63.5
|
39.5
|
|||||||||
|
Other
Income
|
1.3
|
—
|
—
|
—
|
|||||||||
|
Interest
expense, net
|
49.7
|
2.1
|
4.5
|
6.3
|
|||||||||
|
Interest
expense (income), net—Tyco International Ltd. And
affiliates
|
—
|
5.5
|
11.2
|
(1.7
|
)
|
||||||||
|
Income
(loss) before income taxes
|
(39.8
|
)
|
19.3
|
47.8
|
34.9
|
||||||||
|
Income
tax expense (benefit)
|
(13.7
|
)
|
1.6
|
3.8
|
2.4
|
||||||||
|
Minority
interest
|
—
|
—
|
—
|
0.2
|
|||||||||
|
Net
income (loss)
|
$
|
(26.1
|
)
|
$
|
17.7
|
$
|
44.0
|
$
|
32.3
|
||||
|
COVALENCE
SPECIALTY MATERIALS CORP. (SUCCESSOR) AND
TYCO
PLASTICS AND ADHESIVES (PREDECESSOR)
As
of September 29, 2006 and September 30, 2005
(in
millions)
|
|||||||
|
September
29,
2006
|
September
30,
2005
|
||||||
|
Successor
|
Predecessor
|
||||||
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
66.8
|
$
|
2.7
|
|||
|
Accounts
receivable, net of allowance for doubtful accounts, of $3.3 and
$4.3
million, respectively
|
195.7
|
196.1
|
|||||
|
Inventories
|
233.9
|
159.7
|
|||||
|
Prepaid
expenses and other assets
|
13.0
|
15.9
|
|||||
|
Total
current assets
|
509.4
|
374.4
|
|||||
|
Property,
plant and equipment, net
|
334.8
|
283.1
|
|||||
|
Goodwill
|
—
|
531.7
|
|||||
|
Intangible
assets, net
|
337.2
|
15.1
|
|||||
|
Other
assets
|
22.3
|
2.4
|
|||||
|
Total
Assets
|
$
|
1,203.7
|
$
|
1,206.7
|
|||
|
Liabilities,
Equity and Predecessor’s Parent Company Equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
170.4
|
94.4
|
|||||
|
Accrued
and other current liabilities
|
77.4
|
37.2
|
|||||
|
Long-term
debt—current portion
|
3.0
|
—
|
|||||
|
Due
to Tyco International, Ltd. and affiliates
|
—
|
111.8
|
|||||
|
Capital
Lease Obligations—current portion
|
—
|
79.5
|
|||||
|
Total
current liabilities
|
250.8
|
322.9
|
|||||
|
Long-term
debt (see Note 3)
|
729.9
|
—
|
|||||
|
Deferred
tax liabilities
|
49.7
|
2.7
|
|||||
|
Other
non current liabilities
|
1.5
|
23.3
|
|||||
|
Total
long-term liabilities
|
781.1
|
26.0
|
|||||
|
Total
Liabilities
|
1,031.9
|
348.9
|
|||||
|
September
29,
2006
|
September
30,
2005
|
||||||
|
Successor
|
Predecessor
|
||||||
|
Minority
Interest
|
—
|
2.7
|
|||||
|
Commitments
and contingencies (see Note 9)
|
|||||||
|
Contributions
from Holdings
|
197.8
|
—
|
|||||
|
Predecessor
Parent Company Investment
|
—
|
895.0
|
|||||
|
Retained
deficit
|
(26.1
|
)
|
—
|
||||
|
Cumulative
translation
|
0.1
|
(25.5
|
)
|
||||
|
Minimum
pension liability
|
—
|
(14.4
|
)
|
||||
|
Total
Equity and Parent Company Investment
|
171.8
|
855.1
|
|||||
|
Total
Liabilities, Equity and Parent Company Investment
|
$
|
1,203.7
|
$
|
1,206.7
|
|
COVALENCE
SPECIALTY MATERIALS CORP. (SUCCESSOR) AND
TYCO
PLASTICS AND ADHESIVES (PREDECESSOR)
For
The Periods from February 17, 2006 to September 29,
2006,
October
1, 2005 to February 16, 2006,
and
the Years Ended September 30, 2005 and 2004
(in
millions)
|
|||||||||||||
|
Successor
|
Predecessor
|
||||||||||||
|
February
17
to
September
29,
2006
|
October
1,
2005
to
February
16,
2006
|
Twelve
Months
Ended
September
30,
2005
|
Twelve
Months
Ended
September
30,
2004
|
||||||||||
|
Cash
Flows from Operating Activities:
|
|||||||||||||
|
Net
Income (loss)
|
$
|
(26.1
|
)
|
$
|
17.7
|
$
|
44.0
|
$
|
32.3
|
||||
|
Adjustments
to reconcile net cash from operating activities
|
|||||||||||||
|
Depreciation
and amortization
|
51.1
|
15.6
|
41.6
|
45.2
|
|||||||||
|
Amortization
of debt issuance costs
|
2.1
|
—
|
—
|
—
|
|||||||||
|
Provisions
for losses on accounts receivable and inventory
|
1.0
|
3.5
|
5.3
|
2.0
|
|||||||||
|
Deferred
income taxes
|
(16.4
|
)
|
1.2
|
||||||||||
|
(Gain)
loss on disposal of fixes assets
|
—
|
(3.0
|
)
|
0.5
|
3.0
|
||||||||
|
Non-cash
restructuring
|
—
|
0.3
|
(1.2
|
)
|
29.2
|
||||||||
|
Other
non-cash Items
|
0.3
|
—
|
0.9
|
(0.8
|
)
|
||||||||
|
Changes
in assets and liabilities
|
|||||||||||||
|
Accounts
receivable, net
|
(21.2
|
)
|
17.0
|
(11.1
|
)
|
(11.4
|
)
|
||||||
|
Inventories
|
21.9
|
(94.3
|
)
|
3.3
|
20.3
|
||||||||
|
Prepaid
expenses and other current assets
|
6.2
|
(11.0
|
)
|
—
|
—
|
||||||||
|
Other
non-current assets
|
3.2
|
—
|
—
|
—
|
|||||||||
|
Accounts
payable
|
52.9
|
44.3
|
26.1
|
(7.5
|
)
|
||||||||
|
Due
to Tyco International, Ltd and affiliates
|
—
|
(106.7
|
)
|
28.1
|
(14.1
|
)
|
|||||||
|
Accrued
and other current liabilities
|
16.0
|
(5.8
|
)
|
(21.2
|
)
|
(13.5
|
)
|
||||||
|
Income
taxes
|
2.7
|
1.6
|
(2.1
|
)
|
1.6
|
||||||||
|
Other,
net
|
(4.9
|
)
|
0.4
|
3.1
|
2.9
|
||||||||
|
Net
cash provided by (used in) operating activities
|
88.8
|
(119.2
|
)
|
117.3
|
89.2
|
||||||||
|
Cash
Flows from Investing Activities:
|
|||||||||||||
|
Purchase
of property, plant and equipment
|
(23.7
|
)
|
(12.2
|
)
|
(32.1
|
)
|
(16.5
|
)
|
|||||
|
Proceeds
from disposal of assets
|
0.8
|
3.1
|
2.9
|
1.0
|
|||||||||
|
Acquisition
of business, net of cash acquired
|
(927.7
|
)
|
—
|
—
|
—
|
||||||||
|
Net
cash used in investing activities
|
(950.6
|
)
|
(9.1
|
)
|
(29.2
|
)
|
(15.5
|
)
|
|||||
|
COVALENCE
SPECIALTY MATERIALS CORP. (SUCCESSOR) AND
TYCO
PLASTICS AND ADHESIVES (PREDECESSOR)
For
The Periods from February 17, 2006 to September 29,
2006,
October
1, 2005 to February 16, 2006,
and
the Years Ended September 30, 2005 and 2004
(in
millions)
|
|||||||||||||
|
Successor
|
Predecessor
|
||||||||||||
|
February
17
to
September
29,
2006
|
October
1,
2005
to
February
16,
2006
|
Twelve
Months
Ended
September
30,
2005
|
Twelve
Months
Ended
September
30,
2004
|
||||||||||
|
Cash
Flows from Financing Activities:
|
|||||||||||||
|
Issuance
of long-term debt
|
783.4
|
—
|
—
|
—
|
|||||||||
|
Equity
contributions
|
197.5
|
—
|
—
|
—
|
|||||||||
|
Repayment
of long-term debt
|
(50.7
|
)
|
—
|
—
|
—
|
||||||||
|
Long-term
debt financing costs
|
(23.7
|
)
|
—
|
—
|
—
|
||||||||
|
Long-term
debt refinancing costs
|
(4.0
|
)
|
—
|
—
|
—
|
||||||||
|
Change
in book overdraft
|
—
|
(14.2
|
)
|
(12.1
|
)
|
13.4
|
|||||||
|
Payments
of capital lease obligations
|
—
|
(79.4
|
)
|
(61.1
|
)
|
(3.8
|
)
|
||||||
|
Change
in Predecessor parent company investment
|
—
|
224.2
|
(13.2
|
)
|
(87.1
|
)
|
|||||||
|
Other,
net
|
(2.8
|
)
|
(0.2
|
)
|
|||||||||
|
Net
cash provided by (used in) financing activities
|
902.5
|
130.6
|
(89.2
|
)
|
(77.7
|
)
|
|||||||
|
Effect
of currency translation on cash
|
(0.9
|
)
|
(0.2
|
)
|
0.1
|
(0.2
|
)
|
||||||
|
Net
increase (decrease) in cash and cash equivalents
|
39.8
|
2.1
|
(1.0
|
)
|
(4.2
|
)
|
|||||||
|
Cash
and cash equivalents at beginning of period
|
27.0
|
2.7
|
3.7
|
7.9
|
|||||||||
|
Cash
and cash equivalents at end of period
|
66.8
|
4.8
|
2.7
|
3.7
|
|||||||||
|
Supplementary
Cash Flow Information:
|
|||||||||||||
|
Interest
paid
|
38.0
|
0.6
|
5.4
|
6.4
|
|||||||||
|
Income
taxes paid
|
—
|
0.8
|
3.8
|
1.6
|
|
COVALENCE
SPECIALTY MATERIALS CORP. (SUCCESSOR) AND
TYCO
PLASTICS AND ADHESIVES (PREDECESSOR)
STATEMENTS
OF EQUITY AND COMPREHENSIVE INCOME (LOSS) (SUCCESSOR)
AND
PARENT
COMPANY EQUITY AND COMPREHENSIVE INCOME
(PREDECESSOR)
For
The Periods from February 17, 2006 to September 29, 2006, October
1, 2005
to
February
16, 2006,
and
the Years Ended September 30, 2005 and 2004
(in
millions)
|
||||||||||||||||
|
Total
Parent Company Equity
|
Parent
Company Investment
|
Currency
Translation
|
Minimum
Pension Liability
|
Comprehensive
Income
|
||||||||||||
|
Balance
at September 30, 2003
|
$
|
877.0
|
$
|
910.0
|
$
|
(23.4
|
)
|
$
|
(9.6
|
)
|
||||||
|
Comprehensive
income:
|
||||||||||||||||
|
Net
income
|
32.3
|
32.3
|
—
|
—
|
32.3
|
|||||||||||
|
Currency
translation
|
(5.7
|
)
|
—
|
(5.7
|
)
|
—
|
(5.7
|
)
|
||||||||
|
Minimum
pension liability
|
(2.4
|
)
|
—
|
—
|
(2.4
|
)
|
(2.4
|
)
|
||||||||
|
Total
comprehensive income
|
$
|
24.2
|
||||||||||||||
|
Net
transfers to parent
|
(78.4
|
)
|
(78.4
|
)
|
—
|
—
|
||||||||||
|
Balance
at September 30, 2004
|
822.8
|
863.9
|
(29.1
|
)
|
(12.0
|
)
|
||||||||||
|
Comprehensive
income:
|
||||||||||||||||
|
Net
income
|
44.0
|
44.0
|
—
|
—
|
$
|
44.0
|
||||||||||
|
Currency
translation
|
3.6
|
—
|
3.6
|
—
|
3.6
|
|||||||||||
|
Minimum
pension liability
|
(2.4
|
)
|
—
|
—
|
(2.4
|
)
|
(2.4
|
)
|
||||||||
|
Total
comprehensive income
|
$
|
45.2
|
||||||||||||||
|
Net
transfers to parent
|
(12.9
|
)
|
(12.9
|
)
|
—
|
—
|
||||||||||
|
Balance
at September 30, 2005
|
855.1
|
895.0
|
(25.5
|
)
|
(14.4
|
)
|
||||||||||
|
Comprehensive
income:
|
||||||||||||||||
|
Net
income
|
17.7
|
17.7
|
—
|
—
|
$
|
17.7
|
||||||||||
|
Currency
translation
|
1.7
|
—
|
1.7
|
—
|
1.7
|
|||||||||||
|
Minimum
pension liability
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Total
comprehensive income
|
$
|
19.4
|
||||||||||||||
|
Net
transfers to parent
|
224.2
|
224.2
|
—
|
—
|
||||||||||||
|
Balance
at February 16, 2006 (Predecessor)
|
$
|
1,098.7
|
$
|
1,136.9
|
$
|
(23.8
|
)
|
$
|
(14.4
|
)
|
||||||
|
COVALENCE
SPECIALTY MATERIALS CORP. (SUCCESSOR) AND
TYCO
PLASTICS AND ADHESIVES (PREDECESSOR)
STATEMENTS
OF EQUITY AND COMPREHENSIVE INCOME (LOSS) (SUCCESSOR)
AND
PARENT
COMPANY EQUITY AND COMPREHENSIVE INCOME
(PREDECESSOR)
For
The Periods from February 17, 2006 to September 29, 2006, October
1, 2005
to
February
16, 2006,
and
the Years Ended September 30, 2005 and 2004
(in
millions)
|
|||||||||||||||||||
|
Total
Equity
|
Retained
Deficit
|
Contributions
from
Holdings
|
Currency
Translation
|
Minimum
Pension
Liability
|
Comprehensive
Loss
|
||||||||||||||
|
Comprehensive
loss:
|
|||||||||||||||||||
|
Net
loss
|
(26.1
|
)
|
(26.1
|
)
|
—
|
—
|
—
|
$
|
(26.1
|
)
|
|||||||||
|
Currency
translation
|
0.1
|
—
|
—
|
0.1
|
—
|
0.1
|
|||||||||||||
|
Minimum
pension liability
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
|
Total
comprehensive loss
|
—
|
$
|
(26.0
|
)
|
|||||||||||||||
|
Compensation
expense
|
0.3
|
—
|
0.3
|
—
|
—
|
—
|
|||||||||||||
|
Contributions
from Holdings
|
197.5
|
—
|
197.5
|
||||||||||||||||
|
Balance
at September 29, 2006
(Successor)
|
$
|
171.8
|
$
|
(26.1
|
)
|
$
|
197.8
|
$
|
0.1
|
$
|
—
|
||||||||
|
Successor
|
Predecessor
|
|||
|
February
17
to
September
29,
2006
|
October
1
2005
to
February
16,
2006
|
Twelve
Months
Ended
September
30,
2005
|
Twelve
Months
Ended
September
30,
2004
|
|
|
(in
millions)
|
||||
|
Research
and development
|
$4.7
|
$3.1
|
$8.0
|
$6.7
|
|
Successor
|
Predecessor
|
|||
|
February
17
to
September
29,
2006
|
October
1
2005
to
February
16,
2006
|
Twelve
Months
Ended
September
30,
2005
|
Twelve
Months
Ended
September
30,
2004
|
|
|
(in
millions)
|
||||
|
Advertising
Costs
|
$2.5
|
$1.1
|
$3.1
|
$2.9
|
|
Successor
|
Predecessor
|
|||
|
February
17
to
September
29,
2006
|
October
1
2005
to
February
16,
2006
|
Twelve
Months
Ended
September
30,
2005
|
Twelve
Months
Ended
September
30,
2004
|
|
|
(in
millions)
|
||||
|
Depreciation
expense
|
$29.4
|
$14.6
|
$39.0
|
$43.2
|
|
Buildings
and related improvements
|
6
to 50 years
|
|
Leasehold
improvements
|
Lesser
of remaining term of the lease or economic useful life
|
|
Other
machinery, equipment and furniture and fixtures
|
2
to 10 years
|
|
Estimated
Fair
Value at
February
16,
2006
|
Allocation
of
Excess
Fair Value over
Purchase
Price
|
Allocation
of
Purchase
Price
At
February
16, 2006
|
||||||||
|
(in
millions)
|
||||||||||
|
Current
assets
|
$
|
434.6
|
$
|
—
|
$
|
434.6
|
||||
|
Property,
plant and equipment
|
345.4
|
(4.8
|
)
|
340.6
|
||||||
|
Intangible
assets
|
365.8
|
(7.3
|
)
|
358.5
|
||||||
|
Other
non current assets
|
24.1
|
—
|
24.1
|
|||||||
|
Assets
acquired
|
1,169.9
|
(12.1
|
)
|
1,157.8
|
||||||
|
Current
liabilities
|
174.6
|
—
|
174.6
|
|||||||
|
Non
current liabilities
|
67.1
|
—
|
67.1
|
|||||||
|
Liabilities
assumed
|
241.7
|
—
|
241.7
|
|||||||
|
$
|
928.2
|
$
|
(12.1
|
)
|
$
|
916.1
|
||||
|
•
|
Beginning
with the Company’s 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);
and
|
|
•
|
100%
of the net cash proceeds of all non-ordinary course asset sales and
casualty and condemnation events, if the Company does not reinvest
or
commit to reinvest those proceeds in assets to be used in its business
or
to make certain other permitted investments within 15 months, subject
to
certain limitations.
|
|
Payments
Due by Period
|
||||||||||||||||
|
Total
|
Less
than
1
year
|
1-3
years
|
4-5
years
|
More
Than
5
years
|
||||||||||||
|
(in
millions)
|
||||||||||||||||
|
Term
Loan
|
$
|
299.3
|
$
|
3.0
|
$
|
6.0
|
$
|
6.0
|
$
|
284.3
|
||||||
|
Second
Lien Floating Rate Loan
|
175.0
|
—
|
—
|
—
|
175.0
|
|||||||||||
|
Senior
Subordinated Notes
|
265.0
|
—
|
—
|
—
|
265.0
|
|||||||||||
|
Total
|
$
|
739.3
|
$
|
3.0
|
$
|
6.0
|
$
|
6.0
|
$
|
724.3
|
||||||
|
September
29, 2006
Successor
|
September
30, 2005
Predecessor
|
||||||||||||||||||
|
(in
millions)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Weighted
Average
Amortization
Period
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Weighted
Average
Amortization
Period
|
|||||||||||||
|
Contracts
and related customer relationships
|
$
|
112.7
|
$
|
6.4
|
11
years
|
$
|
17.3
|
$
|
10.9
|
15
years
|
|||||||||
|
Technology
|
134.8
|
7.9
|
11
years
|
8.7
|
3.5
|
25
years
|
|||||||||||||
|
Licenses
|
111.4
|
7.4
|
10
years
|
3.9
|
0.6
|
24
years
|
|||||||||||||
|
Other
|
—
|
—
|
1.1
|
0.9
|
5
years
|
||||||||||||||
|
Total
|
$
|
358.9
|
$
|
21.7
|
11
years
|
$
|
31.0
|
$
|
15.9
|
24
years
|
|||||||||
|
Successor
|
Predecessor
|
|||
|
February
17
to
September
29,
2006
|
October
1
2005
to
February
16,
2006
|
Twelve
Months
Ended
September
30,
2005
|
Twelve
Months
Ended
September
30,
2004
|
|
|
Intangible
asset amortization expense
|
$21.7
|
$1.0
|
$2.6
|
$2.0
|
|
Fiscal
Year
|
Estimated
Aggregate
Amortization
Expense
(in
millions)
|
|
|
2007
|
$34.8
|
|
|
2008
|
34.8
|
|
|
2009
|
34.3
|
|
|
2010
|
34.0
|
|
|
2011
|
33.3
|
|
|
Successor
|
Predecessor
|
||||||||||||
|
(in
millions)
|
February
17
to
September
29,
2006
|
October
1
2005
to
February
16,
2006
|
Twelve
Months
Ended
September
30,
2005
|
Twelve
Months
Ended
September
30,
2004
|
|||||||||
|
Net
income (loss)
|
$
|
(26.1
|
)
|
$
|
17.7
|
$
|
44.0
|
$
|
32.3
|
||||
|
Minimum
pension liability
|
—
|
—
|
(2.4
|
)
|
(2.4
|
)
|
|||||||
|
Foreign
currency translation adjustment
|
0.1
|
1.7
|
3.6
|
(5.7
|
)
|
||||||||
|
Accumulated
comprehensive income (loss)
|
$
|
(26.0
|
)
|
19.4
|
45.2
|
24.2
|
|||||||
|
Employee
Severance
and
Benefits
|
Facilities
Exit
Costs
|
Other
|
Non-
cash
Charges
|
Total
|
||||||||||||
|
Balance
at September 30, 2003
|
$
|
0.7
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
0.7
|
||||||
|
Charges
|
11.1
|
14.2
|
3.4
|
29.2
|
57.9
|
|||||||||||
|
Utilization
|
(8.4
|
)
|
(11.0
|
)
|
(3.4
|
)
|
(29.2
|
)
|
(52.0
|
)
|
||||||
|
Transfers/reclass
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Balance
at September 30, 2004
|
3.4
|
3.2
|
—
|
—
|
6.6
|
|||||||||||
|
Charges
|
2.4
|
2.4
|
—
|
—
|
4.8
|
|||||||||||
|
Utilization
|
(3.3
|
)
|
(4.6
|
)
|
0.3
|
—
|
(7.6
|
)
|
||||||||
|
Transfers/reclass
|
(0.3
|
)
|
0.6
|
(0.3
|
)
|
—
|
—
|
|||||||||
|
Balance
at September 30, 2005
|
$
|
2.2
|
$
|
1.6
|
$
|
—
|
$
|
—
|
$
|
3.8
|
||||||
|
Transfers
to Tyco
|
(1.3
|
)
|
—
|
—
|
—
|
(1.3
|
)
|
|||||||||
|
Charges
|
—
|
1.5
|
—
|
—
|
1.5
|
|||||||||||
|
Utilization
|
(0.9
|
)
|
(2.4
|
)
|
—
|
—
|
(3.3
|
)
|
||||||||
|
Balance
at September 29, 2006
|
$
|
—
|
$
|
0.7
|
$
|
—
|
$
|
—
|
$
|
0.7
|
||||||
|
2006
|
||||
|
Current
|
||||
|
United
States:
|
||||
|
Federal
|
$
|
—
|
||
|
State
|
—
|
|||
|
Non-U.S.
|
2.7
|
|||
|
Current
income tax provision
|
2.7
|
|||
|
Deferred:
|
||||
|
United
States:
|
||||
|
Federal
|
(13.7
|
)
|
||
|
State
|
(1.7
|
)
|
||
|
Non-U.S.
|
(1.0
|
)
|
||
|
Deferred
income tax benefit
|
(16.4
|
)
|
||
|
$
|
(13.7
|
)
|
||
|
2006
|
||||
|
U.S.
Federal income tax benefit at the statutory rate
|
$
|
(13.9
|
)
|
|
|
Adjustments
to reconcile to the income tax provision:
|
||||
|
U.S.
state income tax (benefit) provision, net
|
(1.7
|
)
|
||
|
Permanent
differences
|
0.3
|
|||
|
Foreign
losses not recognized
|
0.5
|
|||
|
Rate
difference between U.S. and Foreign
|
(0.1
|
)
|
||
|
Foreign
earnings
|
1.2
|
|||
|
Benefit
for income taxes
|
$
|
(13.7
|
)
|
|
|
2006
|
||||
|
Deferred
tax assets:
|
||||
|
Property,
plant, and equipment
|
$
|
6.1
|
||
|
Accrued
liabilities and reserves
|
2.2
|
|||
|
Net
operating loss
|
15.1
|
|||
|
Amortization
of tax deductible goodwill
|
2.1
|
|||
|
Others
|
0.1
|
|||
|
Total
deferred tax assets
|
$
|
25.6
|
||
|
Deferred
tax liabilities:
|
||||
|
Inventories
|
$
|
1.4
|
||
|
Intangible
assets
|
67.6
|
|||
|
Prepaid
expenses
|
1.3
|
|||
|
Allowance
for doubtful accounts
|
0.1
|
|||
|
Foreign
earnings
|
1.3
|
|||
|
Others
|
0.5
|
|||
|
Total
deferred tax liabilities
|
$
|
72.2
|
||
|
Net
deferred tax liability before valuation allowance
|
46.6
|
|||
|
Valuation
allowance
|
3.1
|
|||
|
Net
deferred tax liability
|
$
|
49.7
|
||
|
October
1, 2005
to
February 16,
2006
|
2005
|
2004
|
||||||||
|
Notional
U.S. federal income tax expense at the statutory rate
|
$
|
6.8
|
$
|
16.7
|
$
|
12.2
|
||||
|
Adjustments
to reconcile to the Company’s income tax provision:
|
||||||||||
|
U.S.
partnership income taxed at the partner level
|
(6.8
|
)
|
(15.4
|
)
|
(10.6
|
)
|
||||
|
Non-U.S.
earnings
|
1.6
|
0.6
|
0.7
|
|||||||
|
Other
|
1.9
|
0.1
|
||||||||
|
Provision
for income taxes
|
1.6
|
3.8
|
2.4
|
|||||||
|
Deferred
provision (benefit)
|
—
|
2.0
|
(0.7
|
)
|
||||||
|
Current
provision
|
$
|
1.6
|
$
|
1.8
|
$
|
3.1
|
||||
|
2005
|
||||
|
Deferred
tax assets:
|
||||
|
Tax
loss and credit carryforwards
|
$
|
3.2
|
||
|
Inventories
|
—
|
|||
|
Postretirement
benefits
|
0.5
|
|||
|
Accrued
liabilities and reserves
|
0.4
|
|||
|
$
|
4.1
|
|||
|
Deferred
tax liabilities:
|
||||
|
Property,
plant and equipment
|
$
|
1.3
|
||
|
Intangible
assets
|
1.7
|
|||
|
Other
|
1.0
|
|||
|
$
|
4.0
|
|||
|
Net
deferred tax asset before valuation allowance
|
$
|
0.1
|
||
|
Valuation
allowance
|
2.8
|
|||
|
Net
deferred tax liability
|
$
|
(2.7
|
)
|
|
|
Successor
|
Predecessor
|
|||
|
February
17
to
September
29,
2006
|
October
1,
2005
to
February
16,
2006
|
Twelve
months
ended
September
30,
2005
|
Twelve
months
ended
September
30,
2004
|
|
|
Rental
expense
|
$
5.7
|
$
2.6
|
$
10.2
|
$
13.1
|
|
(in
millions)
|
Operating
Leases
|
|||
|
2007
|
$
|
8.3
|
||
|
2008
|
7.4
|
|||
|
2009
|
5.9
|
|||
|
2010
|
4.9
|
|||
|
2011
|
3.0
|
|||
|
Thereafter
|
1.2
|
|||
|
Total
minimum lease payments
|
$
|
30.7
|
||
|
U.S.
Plans
|
Non-U.S.
Plans
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Service
Cost
|
$
|
0.3
|
$
|
0.3
|
$
|
0.3
|
$
|
0.3
|
|||||
|
Interest
Cost
|
2.0
|
1.9
|
0.2
|
0.1
|
|||||||||
|
Expected
return on plan assets
|
(2.1
|
)
|
(1.6
|
)
|
(0.1
|
)
|
(0.1
|
)
|
|||||
|
Amortization
of net actuarial loss
|
0.8
|
0.6
|
—
|
—
|
|||||||||
|
Curtailment/settlement
loss
|
—
|
—
|
0.3
|
0.5
|
|||||||||
|
Net
periodic benefit costs
|
$
|
1.0
|
$
|
1.2
|
$
|
0.7
|
$
|
0.8
|
|||||
|
Weighted-average
assumptions used to determine net pension costs during the
period:
|
|||||||||||||
|
Discount
rate
|
6.00
|
%
|
6.00
|
%
|
5.68
|
%
|
6.15
|
%
|
|||||
|
Expected
return on plan assets
|
8.00
|
%
|
8.00
|
%
|
6.75
|
%
|
6.40
|
%
|
|||||
|
Rate
of compensation increase
|
4.25
|
%
|
4.30
|
%
|
3.62
|
%
|
3.82
|
%
|
|
U.S.
Plans
|
Non-U.S.
Plans
|
||||||
|
Change
in benefit obligation:
|
2005
|
2005
|
|||||
|
Benefit
obligation at beginning of year
|
$
|
34.6
|
$
|
2.4
|
|||
|
Service
cost
|
0.3
|
0.3
|
|||||
|
Interest
cost
|
2.0
|
0.2
|
|||||
|
Actuarial
loss
|
4.2
|
0.2
|
|||||
|
Benefits
and administrative expenses paid
|
(3.7
|
)
|
(0.1
|
)
|
|||
|
Plan
settlements and curtailments
|
—
|
(0.1
|
)
|
||||
|
Currency
translation
|
—
|
—
|
|||||
|
Benefit
obligation at end of year
|
$
|
37.4
|
$
|
2.9
|
|||
|
U.S.
Plans
|
Non-U.S.
Plans
|
||||||
|
Change
in plan assets:
|
2005
|
2005
|
|||||
|
Fair
value of plan assets at beginning of year
|
$
|
27.0
|
$
|
1.1
|
|||
|
Actual
return on plan assets
|
3.0
|
0.1
|
|||||
|
Employer
contributions
|
—
|
0.6
|
|||||
|
Plan
settlements and curtailments
|
—
|
(0.3
|
)
|
||||
|
Benefits
and administrative expenses paid
|
(3.7
|
)
|
(0.1
|
)
|
|||
|
Currency
translation
|
—
|
—
|
|||||
|
Fair
value of plan assets at end of year
|
$
|
26.3
|
$
|
1.4
|
|||
|
U.S.
Plans
|
Non-U.S.
Plans
|
||||||
|
Change
in plan assets:
|
2005
|
2005
|
|||||
|
Funded
status
|
$
|
(11.1
|
)
|
$
|
(1.5
|
)
|
|
|
Unrecognized
net actuarial loss
|
14.4
|
0.2
|
|||||
|
Unrecognized
prior service cost
|
—
|
0.2
|
|||||
|
Net
amount recognized
|
$
|
3.3
|
$
|
(1.1
|
)
|
||
|
Amounts
recognized on the Combined Balance Sheets:
|
|||||||
|
Accrued
benefit liability
|
$
|
(11.1
|
)
|
$
|
(1.1
|
)
|
|
|
Accumulated
other comprehensive income
|
14.4
|
—
|
|||||
|
Net
amount recognized
|
$
|
3.3
|
$
|
(1.1
|
)
|
||
|
Weighted-average
assumptions used to determine pension benefit obligations at year
end:
|
|||||||
|
Discount
rate
|
5.25
|
%
|
4.96
|
%
|
|||
|
Rate
of compensation increase
|
4.00
|
%
|
3.51
|
%
|
|
U.S.
Plans
|
Non-U.S.
Plans
|
||||||
|
2005
|
2005
|
||||||
|
Asset
Category:
|
|||||||
|
Equity
securities
|
59
|
%
|
31
|
%
|
|||
|
Debt
securities
|
38
|
%
|
55
|
%
|
|||
|
Insurance
contracts
|
—
|
14
|
%
|
||||
|
Cash
and cash equivalents
|
3
|
%
|
—
|
||||
|
Total
|
100
|
%
|
100
|
%
|
|||
|
2005
|
2004
|
||||||
|
Interest
cost
|
$
|
0.1
|
$
|
0.3
|
|||
|
Amortization
of net actuarial loss
|
—
|
0.1
|
|||||
|
Net
periodic postretirement benefit cost
|
$
|
0.1
|
$
|
0.4
|
|||
|
Weighted-average
discount rate used to determine net postretirement benefit cost
during the
period
|
5.5
|
%
|
5.5
|
%
|
|||
|
2005
|
||||
|
Change
in benefit obligation:
|
||||
|
Benefit
obligation at beginning of year
|
$
|
5.3
|
||
|
Interest
cost
|
0.1
|
|||
|
Actuarial
gain
|
(0.9
|
)
|
||
|
Benefits
paid
|
(0.3
|
)
|
||
|
Benefit
obligation at end of year
|
$
|
4.2
|
||
|
Change
in plan assets:
|
||||
|
Employer
contributions
|
$
|
0.3
|
||
|
Benefits
paid
|
(0.3
|
)
|
||
|
Fair
value of plan assets at end of year
|
$
|
—
|
||
|
Funded
status
|
$
|
(4.2
|
)
|
|
|
Unrecognized
net loss
|
0.9
|
|||
|
Unrecognized
prior service cost
|
—
|
|||
|
Accrued
postretirement benefit cost
|
$
|
3.3
|
||
|
Weighted-average
discount rate used to determine postretirement benefit obligation
at year
end
|
4.75
|
%
|
||
|
1-Percentage-
Point
Increase
|
1-Percentage-
Point
Decrease
|
|
|
Effect
on total of service and interest cost
|
$
—
|
$
—
|
|
Effect
on postretirement benefit obligation
|
0.5
|
(0.2)
|
|
2006
|
|
|
Expected
Volatility
|
45.0%
|
|
Expected
dividends
|
0.0%
|
|
Expected
term (in years)
|
3.73-6.86
|
|
Risk-free
rate
|
4.5%-4.9%
|
|
2006
|
|||||||
|
Shares
|
Weighted
Average
Exercise
Price
|
||||||
|
Outstanding
as of 2/16/2006
|
0
|
—
|
|||||
|
Granted
|
413,183
|
$
|
10.00
|
||||
|
Forfeited
|
(129,077
|
)
|
$
|
10.00
|
|||
|
Outstanding
as of 9/29/2006
|
284,106
|
$
|
10.00
|
||||
|
Options
vested at 9/29/2006
|
18,958
|
$
|
10.00
|
||||
|
2006
|
|||||||
|
Shares
|
Weighted
Average
Fair
Valuation
|
||||||
|
Nonvested
at 02/16/2006
|
0
|
—
|
|||||
|
Granted
|
413,183
|
$
|
4.68
|
||||
|
Vested
|
(18,958
|
)
|
$
|
4.67
|
|||
|
Forfeited
|
(129,077
|
)
|
$
|
4.68
|
|||
|
Nonvested
of 9/29/2006
|
265,148
|
$
|
4.67
|
||||
|
Outstanding
|
Weighted-
Average
Exercise
Price
|
||||||
|
At
September 30, 2003
|
2,534,035
|
28.75
|
|||||
|
Granted
|
513,800
|
27.62
|
|||||
|
Exercised
|
(387,071
|
)
|
18.63
|
||||
|
Cancelled
|
(389,281
|
)
|
36.03
|
||||
|
At
September 30, 2004
|
2,271,483
|
28.97
|
|||||
|
Granted
|
470,595
|
35.80
|
|||||
|
Exercised
|
(289,709
|
)
|
14.93
|
||||
|
Transfers
out
|
(90,300
|
)
|
22.00
|
||||
|
Cancelled
|
(226,348
|
)
|
36.80
|
||||
|
At
September 30, 2005
|
2,135,721
|
31.84
|
|||||
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
|
Range
of
Exercise
Prices
|
Number
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life—
Years
|
Number
|
Weighted
Average
Exercise
Price
|
|||||||||||
|
$ 2.33
to $ 9.16
|
2,720
|
$
|
7.27
|
0.5
|
2,720
|
$
|
7.27
|
|||||||||
|
10.16
to 19.90
|
378,973
|
15.07
|
6.7
|
207,487
|
15.95
|
|||||||||||
|
20.13
to 29.51
|
656,083
|
26.44
|
7.1
|
381,044
|
25.67
|
|||||||||||
|
30.67
to 39.03
|
668,917
|
35.73
|
7.6
|
218,690
|
35.72
|
|||||||||||
|
41.20
to 49.48
|
268,786
|
44.55
|
5.3
|
268,786
|
44.55
|
|||||||||||
|
50.50
to 56.28
|
142,760
|
50.89
|
4.6
|
142,760
|
50.89
|
|||||||||||
|
At
102.14
|
17,482
|
102.14
|
4.8
|
17,482
|
102.14
|
|||||||||||
|
Total
|
2,135,721
|
31.84
|
6.8
|
1,238,969
|
33.86
|
|||||||||||
|
2005
|
2004
|
|
|
Expected
stock price volatility
|
33%
|
47%
|
|
Risk
free interest rate
|
4.09%
|
2.52%
|
|
Expected
annual dividend per share
|
$
0.40
|
$
0.05
|
|
Expected
life of options (years)
|
4.5
|
4.0
|
|
Successor
|
Predecessor
|
||||||||||||
|
February
17
to
September
29,
2006
|
October
1,
2005
to
February
16,
2006
|
Twelve
Months
ended
September
30, 2005
|
Twelve
Months
ended
September
30, 2004
|
||||||||||
|
(in
millions)
|
|||||||||||||
|
Net
Revenue
|
|||||||||||||
|
Plastics
|
$
|
705.5
|
$
|
449.5
|
$
|
1,129.2
|
$
|
1,060.3
|
|||||
|
Adhesives
|
235.5
|
128.7
|
340.4
|
321.2
|
|||||||||
|
Flexible
Packaging
|
157.2
|
92.7
|
268.4
|
286.1
|
|||||||||
|
Less
intercompany revenue
|
(5.8
|
)
|
(4.0
|
)
|
(12.8
|
)
|
(8.8
|
)
|
|||||
|
$
|
1,092.4
|
$
|
666.9
|
$
|
1,725.2
|
$
|
1,658.8
|
||||||
|
Operating
income
|
|||||||||||||
|
Plastics
|
4.2
|
22.8
|
34.4
|
5.9
|
|||||||||
|
Adhesives
|
12.8
|
5.6
|
25.2
|
24.1
|
|||||||||
|
Flexible
Packaging
|
8.4
|
4.1
|
12.6
|
26.1
|
|||||||||
|
Corporate
expenses
|
(16.8
|
)
|
(5.6
|
)
|
(8.7
|
)
|
(16.6
|
)
|
|||||
|
$
|
8.6
|
$
|
26.9
|
$
|
63.5
|
$
|
39.5
|
||||||
|
Depreciation
& amortization
|
|||||||||||||
|
Plastics
|
$
|
27.6
|
$
|
9.6
|
$
|
25.4
|
$
|
27.3
|
|||||
|
Adhesives
|
13.4
|
3.9
|
10.7
|
12.1
|
|||||||||
|
Flexible
Packaging
|
9.2
|
2.0
|
5.3
|
5.8
|
|||||||||
|
Corporate
|
0.9
|
0.1
|
0.2
|
—
|
|||||||||
|
$
|
51.1
|
$
|
15.6
|
$
|
41.6
|
$
|
45.2
|
||||||
|
Successor
|
Predecessor
|
||||||||||||
|
February
17
to
September
29,
2006
|
October
1,
2005
to
February
16,
2006
|
Twelve
Months
ended
September
30, 2005
|
Twelve
Months
ended
September
30, 2004
|
||||||||||
|
(in
millions)
|
|||||||||||||
|
Capital
expenditures, net
|
|||||||||||||
|
Plastics
|
$
|
17.5
|
$
|
4.5
|
$
|
16.2
|
$
|
12.5
|
|||||
|
Adhesives
|
3.7
|
2.1
|
8.4
|
1.7
|
|||||||||
|
Flexible
Packaging
|
1.3
|
1.9
|
3.9
|
1.3
|
|||||||||
|
Corporate
|
0.3
|
0.6
|
0.7
|
—
|
|||||||||
|
22.8
|
9.1
|
29.2
|
15.5
|
||||||||||
|
Net
Revenue
|
|||||||||||||
|
United
States
|
$
|
981.9
|
$
|
616.7
|
$
|
1,600.6
|
$
|
1,566.9
|
|||||
|
North
America excluding U.S.
|
61.3
|
26.6
|
54.5
|
36.4
|
|||||||||
|
Europe.
|
41.2
|
17.7
|
55.6
|
41.7
|
|||||||||
|
Asia.
|
8.0
|
5.9
|
14.5
|
13.8
|
|||||||||
|
$
|
1,092.4
|
$
|
666.9
|
$
|
1,725.2
|
$
|
1,658.8
|
|
September
29,
2006
|
September
30,
2005
|
||||||
|
Successor
|
Predecessor
|
||||||
|
(in
millions)
|
|||||||
|
Total
Assets:
|
|||||||
|
Plastics
|
$
|
676.9
|
$
|
715.6
|
|||
|
Adhesives
|
264.1
|
250.4
|
|||||
|
Flexible
Packaging
|
185.8
|
239.6
|
|||||
|
Corporate
|
76.9
|
1.1
|
|||||
|
$
|
1,203.7
|
$
|
1,206.7
|
||||
|
Long-lived
assets:
|
|||||||
|
United
States
|
$
|
315.9
|
$
|
208.1
|
|||
|
North
America excluding U.S.
|
16.9
|
15.7
|
|||||
|
Europe
|
1.0
|
56.1
|
|||||
|
Asia
|
1.0
|
3.2
|
|||||
|
$
|
334.8
|
$
|
283.1
|
||||
|
September
29,
2006
|
September
30,
2005
|
||||||
|
(in
millions)
|
Successor
|
Predecessor
|
|||||
|
Inventories
|
|||||||
|
Purchased
Materials and Manufacturing Parts
|
$
|
112.2
|
$
|
80.3
|
|||
|
Work
in Process
|
13.8
|
12.1
|
|||||
|
Finished
Goods
|
107.9
|
67.3
|
|||||
|
Total
Inventories.
|
$
|
233.9
|
$
|
159.7
|
|||
|
Prepaid
expenses and other current assets
|
|||||||
|
Prepaid
Taxes
|
$
|
2.3
|
$
|
4.9
|
|||
|
Prepaid
Insurance
|
0.8
|
0.1
|
|||||
|
Rent
and Deposits.
|
1.0
|
1.0
|
|||||
|
Inventory
Parts
|
—
|
8.4
|
|||||
|
Other.
|
8.9
|
1.5
|
|||||
|
Prepaid
expenses and other current assets
|
$
|
13.0
|
$
|
15.9
|
|||
|
Property,
plant and equipment
|
|||||||
|
Land
|
$
|
20.3
|
$
|
7.9
|
|||
|
Buildings
|
92.3
|
111.7
|
|||||
|
Machinery
and Equipment
|
233.3
|
323.4
|
|||||
|
Property
Under Capital Leases
|
0.2
|
61.4
|
|||||
|
Leasehold
Improvements
|
2.7
|
7.2
|
|||||
|
Construction
In Progress
|
15.2
|
14.3
|
|||||
|
Accumulated
Depreciation
|
(29.2
|
)
|
(242.8
|
)
|
|||
|
$
|
334.8
|
$
|
283.1
|
||||
|
September
29,
2006
|
September
30,
2005
|
||||||
|
(in
millions)
|
Successor
|
Predecessor
|
|||||
|
Accrued
and other current liabilities
|
|||||||
|
Accrued
Salaries & Wages
|
$
|
4.9
|
$
|
4.9
|
|||
|
Accrued
Vacation & Holidays.
|
3.7
|
3.5
|
|||||
|
Accrued
Bonus
|
5.1
|
4.4
|
|||||
|
Sales
Commission Payable.
|
2.3
|
3.5
|
|||||
|
Accrued
Taxes
|
4.1
|
2.9
|
|||||
|
Accrued
Restructuring.
|
0.3
|
3.1
|
|||||
|
Accrued
Insurance.
|
5.7
|
4.3
|
|||||
|
Accrued
Interest.
|
3.4
|
0.9
|
|||||
|
Accrued
purchase price adjustment.
|
31.2
|
—
|
|||||
|
Other
Accrued Expenses
|
16.7
|
9.7
|
|||||
|
Accrued
and other current liabilities
|
$
|
77.4
|
$
|
37.2
|
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
666.8
|
$
|
340.5
|
$
|
108.3
|
$
|
(23.2
|
)
|
$
|
1,092.4
|
|||||
|
Cost
of sales
|
619.6
|
287.9
|
92.0
|
(18.8
|
)
|
980.7
|
||||||||||
|
Gross
profit
|
47.2
|
52.6
|
16.3
|
(4.4
|
)
|
111.7
|
||||||||||
|
Selling,
general and administrative expenses.
|
59.9
|
36.1
|
6.6
|
—
|
102.6
|
|||||||||||
|
Restructuring
and impairment charges, net
|
—
|
0.5
|
—
|
—
|
0.5
|
|||||||||||
|
Operating
income
|
(12.7
|
)
|
16.0
|
9.7
|
(4.4
|
)
|
8.6
|
|||||||||
|
Other
(income) expense
|
(1.4
|
)
|
(5.0
|
)
|
5.1
|
—
|
(1.3
|
)
|
||||||||
|
Interest
expense, net
|
48.7
|
—
|
1.0
|
—
|
49.7
|
|||||||||||
|
Equity
in net income of subsidiaries
|
17.8
|
—
|
—
|
(17.8
|
)
|
—
|
||||||||||
|
Income
(loss) before income taxes.
|
(42.2
|
)
|
21.0
|
3.6
|
(22.2
|
)
|
(39.8
|
)
|
||||||||
|
Income
tax expense (benefit)
|
(16.1
|
)
|
0.7
|
1.7
|
—
|
(13.7
|
)
|
|||||||||
|
Net
income (loss).
|
$
|
(26.1
|
)
|
$
|
20.3
|
$
|
1.9
|
$
|
(22.2
|
)
|
$
|
(26.1
|
)
|
|||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
420.4
|
$
|
196.3
|
$
|
52.8
|
$
|
(2.6
|
)
|
$
|
666.9
|
|||||
|
Cost
of sales
|
369.6
|
168.5
|
43.1
|
(2.2
|
)
|
579.0
|
||||||||||
|
Gross
profit
|
50.8
|
27.8
|
9.7
|
(0.4
|
)
|
87.9
|
||||||||||
|
Charges
and allocations from Tyco International, Ltd. and
affiliates
|
1.3
|
9.1
|
—
|
—
|
10.4
|
|||||||||||
|
Selling,
general and administrative expenses
|
28.7
|
17.6
|
3.7
|
—
|
50.0
|
|||||||||||
|
Restructuring
and impairment charges, net
|
0.6
|
—
|
—
|
—
|
0.6
|
|||||||||||
|
Operating
income
|
20.2
|
1.1
|
6.0
|
(0.4
|
)
|
26.9
|
||||||||||
|
Other
(income) expense.
|
7.9
|
(9.6
|
)
|
1.7
|
—
|
—
|
||||||||||
|
Interest
expense, net
|
1.6
|
0.1
|
0.4
|
—
|
2.1
|
|||||||||||
|
Interest
expense, net—Tyco International Ltd. and affiliates
|
7.8
|
(2.3
|
)
|
—
|
—
|
5.5
|
||||||||||
|
Equity
in net income of subsidiaries
|
14.8
|
—
|
—
|
(14.8
|
)
|
—
|
||||||||||
|
Income
(loss) before income taxes
|
17.7
|
12.9
|
3.9
|
(15.2
|
)
|
19.3
|
||||||||||
|
Income
tax expense
|
—
|
—
|
1.6
|
—
|
1.6
|
|||||||||||
|
Net
income (loss)
|
$
|
17.7
|
$
|
12.9
|
$
|
2.3
|
$
|
(15.2
|
)
|
$
|
17.7
|
|||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
1,053.1
|
$
|
549.4
|
$
|
129.1
|
$
|
(6.4
|
)
|
$
|
1,725.2
|
|||||
|
Cost
of sales
|
914.6
|
460.2
|
107.9
|
(5.3
|
)
|
1,477.4
|
||||||||||
|
Gross
profit
|
138.5
|
89.2
|
21.2
|
(1.1
|
)
|
247.8
|
||||||||||
|
Charges
and allocations from Tyco International, Ltd. and
affiliates
|
45.5
|
10.0
|
0.9
|
—
|
56.4
|
|||||||||||
|
Selling,
general and administrative expenses
|
63.5
|
51.5
|
9.6
|
—
|
124.6
|
|||||||||||
|
Restructuring
and impairment charges, net
|
2.9
|
0.1
|
0.3
|
—
|
3.3
|
|||||||||||
|
Operating
income
|
26.6
|
27.6
|
10.4
|
(1.1
|
)
|
63.5
|
||||||||||
|
Other
(income) expense
|
6.1
|
(12.9
|
)
|
6.8
|
—
|
—
|
||||||||||
|
Interest
expense (income), net.
|
(3.3
|
)
|
8.1
|
(0.3
|
)
|
—
|
4.5
|
|||||||||
|
Interest
expense, net—Tyco International Ltd. and affiliates
|
12.1
|
(1.0
|
)
|
0.1
|
—
|
11.2
|
||||||||||
|
Equity
in net income of subsidiaries
|
35.2
|
—
|
—
|
(35.2
|
)
|
—
|
||||||||||
|
Income
(loss) before income taxes
|
46.9
|
33.4
|
3.8
|
(36.3
|
)
|
47.8
|
||||||||||
|
Income
tax expense
|
2.9
|
—
|
0.9
|
—
|
3.8
|
|||||||||||
|
Net
income (loss)
|
$
|
44.0
|
$
|
33.4
|
$
|
2.9
|
$
|
(36.3
|
)
|
$
|
44.0
|
|||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Net
revenue, including related party revenue
|
$
|
1,018.4
|
$
|
554.0
|
$
|
94.7
|
$
|
(8.3
|
)
|
$
|
1,658.8
|
|||||
|
Cost
of sales
|
858.4
|
440.6
|
73.2
|
(6.0
|
)
|
1,366.2
|
||||||||||
|
Gross
profit
|
160.0
|
113.4
|
21.5
|
(2.3
|
)
|
292.6
|
||||||||||
|
Charges
and allocations from Tyco International, Ltd. and
affiliates
|
26.4
|
38.6
|
—
|
—
|
65.0
|
|||||||||||
|
Selling,
general and administrative expenses
|
91.5
|
28.7
|
10.0
|
130.2
|
||||||||||||
|
Restructuring
and impairment charges, net
|
44.5
|
11.7
|
1.7
|
57.9
|
||||||||||||
|
Operating
income
|
(2.4
|
)
|
34.4
|
9.8
|
(2.3
|
)
|
39.5
|
|||||||||
|
Other
(income) expense
|
1.4
|
(4.9
|
)
|
3.5
|
—
|
—
|
||||||||||
|
Interest
expense, net
|
3.9
|
2.4
|
—
|
—
|
6.3
|
|||||||||||
|
Interest
expense, net—Tyco International Ltd. and affiliates
|
3.4
|
(5.9
|
)
|
0.8
|
—
|
(1.7
|
)
|
|||||||||
|
Equity
in net income of subsidiaries
|
40.5
|
—
|
—
|
(40.5
|
)
|
—
|
||||||||||
|
Income
(loss) before income taxes
|
29.4
|
42.8
|
5.5
|
(42.8
|
)
|
34.9
|
||||||||||
|
Income
tax expense (benefit).
|
(3.0
|
)
|
1.6
|
3.8
|
—
|
2.4
|
||||||||||
|
Minority
Interest
|
0.1
|
0.1
|
—
|
—
|
0.2
|
|||||||||||
|
Net
income (loss)
|
$
|
32.3
|
$
|
41.1
|
$
|
1.7
|
$
|
(42.8
|
)
|
$
|
32.3
|
|||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$
|
62.3
|
$
|
0.1
|
$
|
4.4
|
$
|
—
|
$
|
66.8
|
||||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
124.9
|
52.4
|
18.4
|
—
|
195.7
|
|||||||||||
|
Inventories
|
158.3
|
57.8
|
17.8
|
—
|
233.9
|
|||||||||||
|
Prepaid
expenses and other current assets
|
6.0
|
1.6
|
5.4
|
—
|
13.0
|
|||||||||||
|
Total
current assets
|
351.5
|
111.9
|
46.0
|
—
|
509.4
|
|||||||||||
|
Property,
plant and equipment, net
|
219.4
|
96.4
|
19.0
|
—
|
334.8
|
|||||||||||
|
Intangible
assets, net
|
146.7
|
182.8
|
7.7
|
—
|
337.2
|
|||||||||||
|
Investment
in Subsidiaries
|
353.2
|
—
|
—
|
(353.2
|
)
|
—
|
||||||||||
|
Other
assets
|
21.7
|
0.6
|
—
|
—
|
22.3
|
|||||||||||
|
Total
Assets
|
$
|
1,092.5
|
$
|
391.7
|
$
|
72.7
|
$
|
(353.2
|
)
|
$
|
1,203.7
|
|||||
|
Liabilities,
Equity and Predecessor’s Parent Company Equity
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$
|
108.2
|
$
|
52.3
|
$
|
9.9
|
$
|
—
|
$
|
170.4
|
||||||
|
Accrued
and other current liabilities
|
57.3
|
14.8
|
5.3
|
—
|
77.4
|
|||||||||||
|
Long-term
debt—current portion
|
3.0
|
—
|
—
|
—
|
3.0
|
|||||||||||
|
Intercompany
accounts, net
|
(25.4
|
)
|
(9.2
|
)
|
30.2
|
4.4
|
—
|
|||||||||
|
Total
current liabilities
|
143.1
|
57.9
|
45.4
|
4.4
|
250.8
|
|||||||||||
|
Long-term
debt.
|
729.9
|
—
|
—
|
—
|
729.9
|
|||||||||||
|
Deferred
tax liabilities
|
47.4
|
(0.4
|
)
|
2.7
|
—
|
49.7
|
||||||||||
|
Other
non current liabilities
|
0.3
|
0.5
|
0.7
|
—
|
1.5
|
|||||||||||
|
Total
long-term liabilities
|
777.6
|
0.1
|
3.4
|
—
|
781.1
|
|||||||||||
|
Total
Liabilities
|
920.7
|
58.0
|
48.8
|
4.4
|
1,031.9
|
|||||||||||
|
Commitments
and contingencies
|
||||||||||||||||
|
Contributions
from Holdings
|
197.8
|
368.5
|
35.1
|
(403.6
|
)
|
197.8
|
||||||||||
|
Retained
deficit
|
(26.1
|
)
|
(34.8
|
)
|
(11.3
|
)
|
46.1
|
(26.1
|
)
|
|||||||
|
Cumulative
translation
|
0.1
|
—
|
0.1
|
(0.1
|
)
|
0.1
|
||||||||||
|
Minimum
pension liability
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Total
Equity
|
171.8
|
333.7
|
23.9
|
(357.6
|
)
|
171.8
|
||||||||||
|
Total
Liabilities and Equity
|
$
|
1,092.5
|
$
|
391.7
|
$
|
72.7
|
$
|
(353.2
|
)
|
$
|
1,203.7
|
|||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$
|
—
|
$
|
0.1
|
$
|
2.6
|
$
|
—
|
$
|
2.7
|
||||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
127.1
|
51.8
|
17.2
|
—
|
196.1
|
|||||||||||
|
Inventories
|
94.6
|
49.0
|
16.1
|
—
|
159.7
|
|||||||||||
|
Prepaid
expenses and other current assets
|
5.8
|
5.5
|
4.6
|
—
|
15.9
|
|||||||||||
|
Total
current assets.
|
227.5
|
106.4
|
40.5
|
—
|
374.4
|
|||||||||||
|
Property,
plant and equipment, net.
|
166.5
|
96.2
|
20.4
|
—
|
283.1
|
|||||||||||
|
Goodwill
|
319.4
|
202.8
|
9.5
|
—
|
531.7
|
|||||||||||
|
Intangible
assets, net
|
—
|
13.7
|
1.4
|
—
|
15.1
|
|||||||||||
|
Investment
in Subsidiaries
|
587.7
|
—
|
—
|
(587.7
|
)
|
—
|
||||||||||
|
Other
assets
|
0.5
|
1.1
|
0.8
|
—
|
2.4
|
|||||||||||
|
Total
Assets
|
$
|
1,301.6
|
$
|
420.2
|
$
|
72.6
|
$
|
(587.7
|
)
|
$
|
1,206.7
|
|||||
|
Liabilities,
Equity and Predecessor’s Parent Company Equity
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$
|
45.1
|
$
|
41.9
|
$
|
7.4
|
$
|
—
|
$
|
94.4
|
||||||
|
Accrued
and other current liabilities
|
11.4
|
18.5
|
7.3
|
—
|
37.2
|
|||||||||||
|
Due
to Tyco International, Ltd. and affiliates
|
326.4
|
(217.3
|
)
|
1.6
|
1.1
|
111.8
|
||||||||||
|
Capital
Lease Obligations—current portion
|
59.4
|
20.1
|
—
|
—
|
79.5
|
|||||||||||
|
Total
current liabilities
|
442.3
|
(136.8
|
)
|
16.3
|
1.1
|
322.9
|
||||||||||
|
Other
non current liabilities
|
2.0
|
22.6
|
1.4
|
—
|
26.0
|
|||||||||||
|
Total
long-term liabilities
|
2.0
|
22.6
|
1.4
|
—
|
26.0
|
|||||||||||
|
Total
liabilities
|
444.3
|
(114.2
|
)
|
17.7
|
1.1
|
348.9
|
||||||||||
|
Minority
Interest
|
2.2
|
0.5
|
—
|
—
|
2.7
|
|||||||||||
|
Commitments
and contingencies
|
||||||||||||||||
|
Predecessor
Parent Company Investment
|
895.0
|
574.6
|
52.9
|
(627.5
|
)
|
895.0
|
||||||||||
|
Cumulative
translation
|
(25.5
|
)
|
(26.3
|
)
|
2.0
|
24.3
|
(25.5
|
)
|
||||||||
|
Minimum
pension liability
|
(14.4
|
)
|
(14.4
|
)
|
—
|
14.4
|
(14.4
|
)
|
||||||||
|
Total
Parent Company Investment
|
855.1
|
533.9
|
54.9
|
(588.8
|
)
|
855.1
|
||||||||||
|
Total
Liabilities Parent Company Investment
|
$
|
1,301.6
|
$
|
420.2
|
$
|
72.6
|
$
|
(587.7
|
)
|
$
|
1,206.7
|
|||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
82.8
|
$
|
4.4
|
$
|
1.6
|
$
|
—
|
$
|
88.8
|
||||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(18.7
|
)
|
(4.3
|
)
|
(0.7
|
)
|
—
|
(23.7
|
)
|
|||||||
|
Proceeds
from disposal of assets
|
0.6
|
—
|
0.2
|
—
|
0.8
|
|||||||||||
|
Acquisition
of business net of cash acquired
|
(927.7
|
)
|
—
|
—
|
—
|
(927.7
|
)
|
|||||||||
|
Net
cash used in investing activities
|
(945.8
|
)
|
(4.3
|
)
|
(0.5
|
)
|
—
|
(950.6
|
)
|
|||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Issuance
of long-term debt
|
783.4
|
—
|
—
|
—
|
783.4
|
|||||||||||
|
Equity
contributions
|
197.5
|
—
|
—
|
—
|
197.5
|
|||||||||||
|
Repayment
of long-term debt
|
(50.7
|
)
|
—
|
—
|
—
|
(50.7
|
)
|
|||||||||
|
Long-term
debt financing costs
|
(23.7
|
)
|
—
|
—
|
—
|
(23.7
|
)
|
|||||||||
|
Long-term
debt refinancing costs
|
(4.0
|
)
|
—
|
—
|
—
|
(4.0
|
)
|
|||||||||
|
Net
cash provided by financing activities
|
902.5
|
—
|
—
|
—
|
902.5
|
|||||||||||
|
Effect
of currency translation on cash
|
—
|
—
|
(0.9
|
)
|
—
|
(0.9
|
)
|
|||||||||
|
Net
increase in cash and cash equivalents
|
39.5
|
0.1
|
0.2
|
—
|
39.8
|
|||||||||||
|
Cash
and cash equivalents at beginning of period
|
22.8
|
—
|
4.2
|
—
|
27.0
|
|||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
62.3
|
$
|
0.1
|
$
|
4.4
|
$
|
—
|
$
|
66.8
|
||||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
(126.2
|
)
|
$
|
3.8
|
$
|
3.2
|
$
|
—
|
$
|
(119.2
|
)
|
||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(9.2
|
)
|
(2.8
|
)
|
(0.2
|
)
|
—
|
(12.2
|
)
|
|||||||
|
Proceeds
from disposal of assets
|
3.0
|
—
|
0.1
|
—
|
3.1
|
|||||||||||
|
Purchase
accounting assets and liabilities
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Net
cash used in investing activities
|
(6.2
|
)
|
(2.8
|
)
|
(0.1
|
)
|
—
|
(9.1
|
)
|
|||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Payments
of capital lease obligations
|
(59.4
|
)
|
(20.0
|
)
|
—
|
—
|
(79.4
|
)
|
||||||||
|
Long-term
debt refinancing costs
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Change
in book overdraft
|
(9.8
|
)
|
(4.4
|
)
|
—
|
—
|
(14.2
|
)
|
||||||||
|
Payments
of capital lease obligations
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Change
in Predecessor parent company investment
|
203.8
|
24.4
|
(4.0
|
)
|
—
|
224.2
|
||||||||||
|
Distributions
to minority interests
|
(2.2
|
)
|
(0.6
|
)
|
2.8
|
—
|
—
|
|||||||||
|
Net
cash (used in) provided by financing activities
|
132.4
|
(0.6
|
)
|
(1.2
|
)
|
—
|
130.6
|
|||||||||
|
Effect
of currency translation on cash
|
—
|
—
|
(0.2
|
)
|
—
|
(0.2
|
)
|
|||||||||
|
Net
increase in cash and cash equivalents
|
—
|
0.4
|
1.7
|
—
|
2.1
|
|||||||||||
|
Cash
and cash equivalents at beginning of period
|
—
|
0.1
|
2.6
|
—
|
2.7
|
|||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
—
|
$
|
0.5
|
$
|
4.3
|
$
|
—
|
$
|
4.8
|
||||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
27.2
|
$
|
62.0
|
$
|
28.1
|
$
|
—
|
$
|
117.3
|
||||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(17.3
|
)
|
(11.8
|
)
|
(3.0
|
)
|
—
|
(32.1
|
)
|
|||||||
|
Proceeds
from disposal of assets
|
2.9
|
—
|
—
|
—
|
2.9
|
|||||||||||
|
Purchase
accounting assets and liabilities
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Net
cash used in investing activities
|
(14.4
|
)
|
(11.8
|
)
|
(3.0
|
)
|
—
|
(29.2
|
)
|
|||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Payment
of capital lease obligations
|
(31.0
|
)
|
(30.0
|
)
|
(0.1
|
)
|
—
|
(61.1
|
)
|
|||||||
|
Long-term
debt refinancing costs
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Change
in book overdraft
|
(13.2
|
)
|
1.1
|
—
|
—
|
(12.1
|
)
|
|||||||||
|
Change
in Predecessor parent company investment
|
32.3
|
(20.0
|
)
|
(25.5
|
)
|
—
|
(13.2
|
)
|
||||||||
|
Distributions
to minority interests
|
(1.4
|
)
|
(1.5
|
)
|
0.1
|
—
|
(2.8
|
)
|
||||||||
|
Net
cash used in financing activities
|
(13.3
|
)
|
(50.4
|
)
|
(25.5
|
)
|
—
|
(89.2
|
)
|
|||||||
|
Effect
of currency translation on cash
|
—
|
—
|
0.1
|
—
|
0.1
|
|||||||||||
|
Net
decrease in cash and cash equivalents
|
(0.5
|
)
|
(0.2
|
)
|
(0.3
|
)
|
—
|
(1.0
|
)
|
|||||||
|
Cash
and cash equivalents at beginning of period
|
0.5
|
0.3
|
2.9
|
—
|
3.7
|
|||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
—
|
$
|
0.1
|
$
|
2.6
|
$
|
—
|
$
|
2.7
|
||||||
|
Parent
Company
(Restated)
|
Guarantor
Subsidiaries
(Restated)
|
Non-
Guarantor
Subsidiaries
|
Eliminations
|
Total
|
||||||||||||
|
Cash
Flow from Operating Activities
|
$
|
11.5
|
$
|
64.4
|
$
|
13.3
|
$
|
—
|
$
|
89.2
|
||||||
|
Cash
Flow from Investing Activities
|
||||||||||||||||
|
Purchase
of property, plant, and equipment
|
(12.8
|
)
|
(3.1
|
)
|
(0.6
|
)
|
—
|
(16.5
|
)
|
|||||||
|
Proceeds
from disposal of assets
|
—
|
1.4
|
(0.4
|
)
|
—
|
1.0
|
||||||||||
|
Purchase
accounting assets and liabilities
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
|
Net
cash used in investing activities
|
(12.8
|
)
|
(1.7
|
)
|
(1.0
|
)
|
—
|
(15.5
|
)
|
|||||||
|
Cash
Flow from Financing Activities
|
||||||||||||||||
|
Payments
of capital lease obligations
|
(1.8
|
)
|
(2.0
|
)
|
—
|
—
|
(3.8
|
)
|
||||||||
|
Change
in book overdraft
|
16.1
|
(2.7
|
)
|
—
|
—
|
13.4
|
||||||||||
|
Change
in Predecessor parent company investment
|
(12.4
|
)
|
(62.1
|
)
|
(12.6
|
)
|
—
|
(87.1
|
)
|
|||||||
|
Distributions
to minority interests
|
(0.2
|
)
|
—
|
—
|
—
|
(0.2
|
)
|
|||||||||
|
Net
cash (used in) provided by financing activities
|
1.7
|
(66.8
|
)
|
(12.6
|
)
|
—
|
(77.7
|
)
|
||||||||
|
Effect
of currency translation on cash
|
—
|
—
|
(0.2
|
)
|
—
|
(0.2
|
)
|
|||||||||
|
Net
decrease in cash and cash equivalents
|
0.4
|
(4.1
|
)
|
(0.5
|
)
|
—
|
(4.2
|
)
|
||||||||
|
Cash
and cash equivalents at beginning of period
|
0.1
|
4.4
|
3.4
|
—
|
7.9
|
|||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
0.5
|
$
|
0.3
|
$
|
2.9
|
$
|
—
|
$
|
3.7
|
||||||