##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For Quarterly Period Ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-01982
 
 Constar International Inc.
 (Exact name of registrant as specified in its charter)
 
 Delaware
    
    13-1889304(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer
Identification Number)One Crown Way, Philadelphia, PA
    
    19154(Address of principal executive offices)
    
    (Zip Code)
 (215) 552-3700
(Registrants telephone number, including area code)
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
 þ o




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##### 



TABLE OF CONTENTS
 PageNumberPART IFINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    39Item 4. Controls and Procedures
    
    
    55PART IIOTHER INFORMATIONItem 1. Legal Proceedings
    
    
    55Item 1A. Risk Factors
    
    
    55Item 6. Exhibits
    
    
    58Signatures
    
    
    59Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Constar International Inc.
 
 Condensed Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
 SuccessorSeptember 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,490
    
    
    $
    2,469Accounts receivable, net
    
    
    42,913
    
    
    
    39,054Inventories, net
    
    
    37,453
    
    
    
    44,058Prepaid expenses and other current assets
    
    
    7,836
    
    
    
    7,896Deferred income taxes
    
    
    1,973
    
    
    
    Assets held for sale
    
    
    2,516
    
    
    
    Restricted cash
    
    
    
    
    
    
    7,589Total current assets
    
    
    95,181
    
    
    
    101,066Property, plant and equipment, net
    
    
    127,418
    
    
    
    151,526Goodwill
    
    
    73,282
    
    
    
    118,682Intangible assets, net
    
    
    23,866
    
    
    
    31,398Other assets
    
    
    5,418
    
    
    
    3,592Total assets
    
    $
    325,165
    
    
    $
    406,264LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term debt
    
    $
    10,354
    
    
    $
    5,000Accounts payable
    
    
    42,944
    
    
    
    59,128Accrued expenses and other current liabilities
    
    
    26,422
    
    
    
    25,253Deferred income taxes
    
    
    
    
    
    
    1,222Total current liabilities
    
    
    79,720
    
    
    
    90,603Long-term debt
    
    
    184,717
    
    
    
    167,919Pension and postretirement liabilities
    
    
    28,200
    
    
    
    31,105Deferred income taxes
    
    
    12,916
    
    
    
    23,531Other liabilities
    
    
    15,275
    
    
    
    14,503Total liabilities
    
    
    320,828
    
    
    
    327,661Commitments and contingencies (Note 12)Stockholders Equity:Common stock, $.01 par value, 75,000 shares authorized, 1,750 shares
issued and outstanding at September 30, 2010 and December 31, 2009
    
    
    18
    
    
    
    18Additional paid-in capital
    
    
    101,466
    
    
    
    101,466Accumulated other comprehensive loss, net of tax
    
    
    (2,324
    )
    
    
    (1,769
    )Accumulated deficit
    
    
    (94,823
    )
    
    
    (21,112
    )Total stockholders equity
    
    
    4,337
    
    
    
    78,603Total liabilities and stockholders equity
    
    $
    325,165
    
    
    $
    406,264
   3




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##### Table of Contents



Constar International Inc.
 
 Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 SuccessorThree Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009Net sales
    
    $
    146,843
    
    
    $
    158,630Cost of products sold, excluding depreciation
    
    
    132,143
    
    
    
    141,148Depreciation and amortization
    
    
    9,294
    
    
    
    12,932Gross profit
    
    
    5,406
    
    
    
    4,550Selling and administrative expenses
    
    
    4,177
    
    
    
    4,897Goodwill impairment
    
    
    12,900
    
    
    
    Impairment of intangible asset
    
    
    1,300
    
    
    
    Research and technology expenses
    
    
    1,531
    
    
    
    1,865Provision for restructuring
    
    
    67
    
    
    
    816Gain on disposal of assets
    
    
    (270
    )
    
    
    (223
    )Total operating expenses
    
    
    19,705
    
    
    
    7,355Operating loss
    
    
    (14,299
    )
    
    
    (2,805
    )Interest expense
    
    
    (9,038
    )
    
    
    (8,606
    )Reorganization items, net
    
    
    
    
    
    
    (504
    )Other expense, net
    
    
    (1,401
    )
    
    
    (1,818
    )Loss from continuing operations before income taxes
    
    
    (24,738
    )
    
    
    (13,733
    )Benefit from income taxes
    
    
    413
    
    
    
    3,557Loss from continuing operations
    
    
    (24,325
    )
    
    
    (10,176
    )Loss from discontinued operations, net of taxes
    
    
    (120
    )
    
    
    (30
    )Net loss
    
    $
    (24,445
    )
    
    $
    (10,206
    )Basic and diluted loss per common share:Continuing operations
    
    $
    (13.90
    )
    
    $
    (5.81
    )Discontinued operations
    
    
    (0.07
    )
    
    
    (0.02
    )Net loss per share
    
    $
    (13.97
    )
    
    $
    (5.83
    )Weighted average common shares outstanding:Basic and diluted
    
    
    1,750
    
    
    
    1,750
   4




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##### Table of Contents



Constar International Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 Successor
    
    
    
    PredecessorNine Months
    
    
    Five Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    April 30,2010
    
    
    2009
    
    
    
    2009Net customer sales
    
    $
    439,020
    
    
    $
    280,148
    
    
    
    $
    214,204Net affiliate sales
    
    
    
    
    
    
    
    
    
    
    
    3,256Net sales
    
    
    439,020
    
    
    
    280,148
    
    
    
    
    217,460Cost of products sold, excluding depreciation
    
    
    395,271
    
    
    
    245,518
    
    
    
    
    189,816Depreciation and amortization
    
    
    27,848
    
    
    
    19,996
    
    
    
    
    9,733Gross profit
    
    
    15,901
    
    
    
    14,634
    
    
    
    
    17,911Selling and administrative expenses
    
    
    16,288
    
    
    
    8,036
    
    
    
    
    7,005Goodwill impairment
    
    
    45,400
    
    
    
    
    
    
    
    
    Impairment of intangible asset
    
    
    6,400
    
    
    
    
    
    
    
    
    Research and technology expenses
    
    
    4,855
    
    
    
    3,094
    
    
    
    
    2,698Provision for restructuring
    
    
    704
    
    
    
    1,081
    
    
    
    
    648Gain on disposal of assets
    
    
    (924
    )
    
    
    (226
    )
    
    
    
    (396
    )Total operating expenses
    
    
    72,723
    
    
    
    11,985
    
    
    
    
    9,955Operating income (loss)
    
    
    (56,822
    )
    
    
    2,649
    
    
    
    
    7,956Interest expense
    
    
    (26,862
    )
    
    
    (14,394
    )
    
    
    
    (5,512
    )Interest expense  related party
    
    
    
    
    
    
    
    
    
    
    
    (54
    )Reorganization items, net
    
    
    
    
    
    
    (1,671
    )
    
    
    
    144,168Other income (expense), net
    
    
    (3,302
    )
    
    
    1,590
    
    
    
    
    1,543Income (loss) from continuing operations before income taxes
    
    
    (86,986
    )
    
    
    (11,826
    )
    
    
    
    148,101(Provision for) benefit from income taxes
    
    
    13,302
    
    
    
    4,362
    
    
    
    
    (37,807
    )Income (loss) from continuing operations
    
    
    (73,684
    )
    
    
    (7,464
    )
    
    
    
    110,294Loss from discontinued operations, net of taxes
    
    
    (27
    )
    
    
    (90
    )
    
    
    
    (96
    )Net income (loss)
    
    $
    (73,711
    )
    
    $
    (7,554
    )
    
    
    $
    110,198Basic and diluted earnings (loss) per common share:Continuing operations
    
    $
    (42.11
    )
    
    $
    (4.27
    )
    
    
    $
    8.86Discontinued operations
    
    
    (0.02
    )
    
    
    (0.05
    )
    
    
    
    (0.01
    )Net earnings (loss) per share
    
    $
    (42.13
    )
    
    $
    (4.32
    )
    
    
    $
    8.85Weighted average common shares outstanding:Basic and diluted
    
    
    1,750
    
    
    
    1,750
    
    
    
    
    12,455
   5




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##### Table of Contents



Constar International Inc.
 
 Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Successor
    
    
    
    PredecessorNine Months
    
    
    Five Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    April 30,2010
    
    
    2009
    
    
    
    2009Cash flows from operating activities:Net income (loss)
    
    $
    (73,711
    )
    
    $
    (7,554
    )
    
    
    $
    110,198Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    28,416
    
    
    
    20,073
    
    
    
    
    10,060Impairment of goodwill and intangible assets
    
    
    51,800
    
    
    
    
    
    
    
    
    Debt accretion expense
    
    
    16,798
    
    
    
    8,392
    
    
    
    
    Bad debt expense (recoveries)
    
    
    126
    
    
    
    328
    
    
    
    
    (483
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    591Gain on disposal of assets and ARO settlements
    
    
    (924
    )
    
    
    (226
    )
    
    
    
    (396
    )Deferred income taxes
    
    
    (13,425
    )
    
    
    (4,614
    )
    
    
    
    37,835Gain on interest rate swap
    
    
    (1,247
    )
    
    
    
    
    
    
    
    Fresh start accounting adjustments
    
    
    
    
    
    
    
    
    
    
    
    (68,109
    )Reorganization items, net
    
    
    
    
    
    
    (6,489
    )
    
    
    
    (79,299
    )Changes in working capital and other
    
    
    (13,398
    )
    
    
    (14,146
    )
    
    
    
    7,104Net cash provided by (used in) operating activities
    
    
    (5,565
    )
    
    
    (4,236
    )
    
    
    
    17,501Cash flows from investing activities:Restricted cash
    
    
    7,589
    
    
    
    1,738
    
    
    
    
    (9,327
    )Purchases of property, plant and equipment
    
    
    (6,412
    )
    
    
    (5,056
    )
    
    
    
    (5,723
    )Proceeds from sale of property, plant, and equipment
    
    
    1,128
    
    
    
    6
    
    
    
    
    149Net cash provided by (used in) investing activities
    
    
    2,305
    
    
    
    (3,312
    )
    
    
    
    (14,901
    )Cash flows from financing activities:Costs associated with debt financing
    
    
    (1,937
    )
    
    
    (200
    )
    
    
    
    Proceeds from short-term financing
    
    
    442,393
    
    
    
    306,000
    
    
    
    
    212,723Repayment of short-term financing
    
    
    (437,176
    )
    
    
    (298,412
    )
    
    
    
    (227,723
    )Net cash provided by (used in) financing activities
    
    
    3,280
    
    
    
    7,388
    
    
    
    
    (15,000
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    1
    
    
    
    93
    
    
    
    
    (8
    )Net increase (decrease) in cash and cash equivalents
    
    
    21
    
    
    
    (67
    )
    
    
    
    (12,408
    )Cash and cash equivalents at beginning of period
    
    
    2,469
    
    
    
    1,884
    
    
    
    
    14,292Cash and cash equivalents at end of period
    
    $
    2,490
    
    
    $
    1,817
    
    
    
    $
    1,884
   6




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Constar International Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Dollar and share amounts in thousands, unless otherwise noted)
(Unaudited)
 1. Basis of Presentation
  Reorganizations
  Discontinued Operations
    7




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2. New Pronouncements
 Improving
Disclosures about Fair Value Measurements
 3. Reorganization Items
  SuccessorThree Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2010
    
    
    2009Professional fees associated with bankruptcy proceedings
    
    $
    
    
    
    $
    (642
    )Other, net
    
    
    
    
    
    
    138Total reorganization items, net
    
    $
    
    
    
    $
    (504
    )
 Successor
    
    
    
    PredecessorNine Months
    
    
    Five Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009Gain from discharge of debt
    
    $
    
    
    
    $
    
    
    
    
    $
    84,745Gain from fresh-start accounting adjustments
    
    
    
    
    
    
    
    
    
    
    
    68,109Contract termination expenses
    
    
    
    
    
    
    
    
    
    
    
    (523
    )Professional fees associated with bankruptcy proceedings
    
    
    
    
    
    
    (1,669
    )
    
    
    
    (6,905
    )Debtor-in-possession and Exit Financing fees
    
    
    
    
    
    
    
    
    
    
    
    (100
    )Other, net
    
    
    
    
    
    
    (2
    )
    
    
    
    (1,158
    )Total reorganization items, net
    
    $
    
    
    
    $
    (1,671
    )
    
    
    $
    144,168
  8




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4. Accounts Receivable
 SuccessorSeptember 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Trade accounts receivable
    
    $
    37,861
    
    
    $
    35,427Less: allowance for doubtful accounts
    
    
    (300
    )
    
    
    (322
    )Net trade accounts receivable
    
    
    37,561
    
    
    
    35,105Value added taxes recoverable
    
    
    4,673
    
    
    
    2,202Miscellaneous receivables
    
    
    679
    
    
    
    1,747Accounts receivable, net
    
    $
    42,913
    
    
    $
    39,054
 5. Inventories
 SuccessorSeptember 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Finished goods
    
    $
    22,941
    
    
    $
    28,900Raw materials and supplies
    
    
    15,602
    
    
    
    16,343Total
    
    
    38,543
    
    
    
    45,243Less: reserves for obsolete and slow-moving inventories
    
    
    (1,090
    )
    
    
    (1,185
    )Inventories, net
    
    $
    37,453
    
    
    $
    44,058
 6. Property, Plant and Equipment
 SuccessorSeptember 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Land and improvements
    
    $
    15,601
    
    
    $
    15,812Buildings and improvements
    
    
    46,361
    
    
    
    50,708Machinery and equipment
    
    
    126,996
    
    
    
    121,975188,958
    
    
    
    188,495Less: accumulated depreciation and amortization
    
    
    (64,585
    )
    
    
    (40,303
    )124,373
    
    
    
    148,192Construction in progress
    
    
    3,045
    
    
    
    3,334Property, plant and equipment, net
    
    $
    127,418
    
    
    $
    151,526
  7. Assets Held for Sale
   9




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SuccessorSeptember 30,(In thousands)
    
    2010Buildings and improvements
    
    $
    1,974Machinery and equipment
    
    
    5422,516
 8. Impairment of Long-Lived Assets
   9. Goodwill and Intangible Assets
   1.
    
    Income Approach (discounted cash flow analysis) the discounted cash flow (DCF)
valuation method requires an estimation of future cash flows of an entity and then
discounts those cash flows to their present value using an appropriate discount rate. The
discount rate selected should reflect the risks inherent in the
projected cash flows. The key inputs and assumptions of the DCF method are the projected
cash flows, the terminal value of the entity, and the discount rate. The Company used the
Gordon Growth Model and assumed a 2.75% growth rate to estimate the terminal value of the
business. Cash flows were discounted at a rate of 10.6%.
  10




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##### Table of Contents



2.
    
    Market Approach (market multiples) this method begins with the identification of
a group of peer companies. Peer companies represent a group of companies in the same or
similar industry as the company being valued. A valuation average multiple is then
computed for the peer group based upon a valuation metric. The Company selected a ratio
of enterprise value to projected earnings before interest, taxes, depreciation and
amortization (EBITDA) as an appropriate valuation multiple. Various operating
performance measurements of the company being valued are then benchmarked against the
peer group and a discount or premium is applied to the multiple to reflect favorable or
unfavorable comparisons. The resulting multiple is then applied to the company being
valued to arrive at an estimate of its total enterprise value. An equity value is derived
by subtracting the fair value of interest bearing debt from the total enterprise value. A
control premium is then applied to the equity value. The combined value of interest
bearing debt plus an equity value including control premium equals the estimated total,
or enterprise value, of the business. The Company selected 11 public companies in the
packaging industry as its peer group. The Company calculated for the peer group an
average multiple of 2010 projected EBITDA and a multiple of projected 2011 EBITDA. The
peer group average multiples were then discounted based upon an unfavorable comparison of
the Companys historical growth and profit margins as compared to the peer group. The
result was a market multiple of 5.2 for 2010 and a market multiple of 4.7 for 2011.
Weightings of 80% and 20% were assigned to the 2010 and 2011 valuation multiples,
respectively. The Company used quoted market prices to determine the fair value of its
debt. No control premium was assumed to determine the Companys equity value.
   (In millions)Assumed
    
    
    Decrease inValuation Method
    
    Assumption
    
    
    Change
    
    
    Fair ValueDiscounted cash flow
    
    Projected cash flows
    
    
    10% decrease
    
    
    $
    (9.6
    )Discounted cash flow
    
    Terminal year growth rate
    
    
    100 basis point decrease
    
    
    $
    (1.0
    )Discounted cash flow
    
    Discount rate
    
    
    100 basis point increase
    
    
    $
    (4.7
    )Market approach
    
    Projected cash flows
    
    
    10% decrease
    
    
    $
    (4.0
    )Market approach
    
    Market multiple
    
    
    20% discount to peer average
    
    
    $
    (4.4
    )
   11




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##### Table of Contents



Successor
    
    
    
    
    
    
    
    PredecessorNine Months
    
    
    Five Months
    
    
    
    May 1, 2009
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    Fresh-start
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    Accounting
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    Adjustments
    
    
    2009Beginning balance:Goodwill
    
    $
    118,682
    
    
    $
    117,313
    
    
    
    $
    381,872
    
    
    $
    381,872Accumulated impairment losses
    
    
    
    
    
    
    
    
    
    
    
    (233,059
    )
    
    
    (233,059
    )118,682
    
    
    
    117,313
    
    
    
    
    148,813
    
    
    
    148,813Fresh-start accounting adjustments, net
    
    
    
    
    
    
    
    
    
    
    
    (31,500
    )
    
    
    Impairment charges
    
    
    (45,400
    )
    
    
    
    
    
    
    
    
    
    
    
    Ending balance:Goodwill
    
    
    118,682
    
    
    
    117,313
    
    
    
    
    117,313
    
    
    
    381,872Accumulated impairment losses
    
    
    (45,400
    )
    
    
    
    
    
    
    
    
    
    
    
    (233,059
    )$
    73,282
    
    
    $
    117,313
    
    
    
    $
    117,313
    
    
    $
    148,813
    12




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##### Table of Contents



SuccessorSeptember 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Trade name
    
    
    25,500
    
    
    
    25,500Accumulated impairment losses
    
    
    (10,400
    )
    
    
    (4,000
    )Total
    
    $
    15,100
    
    
    $
    21,500
  SuccessorSeptember 30, 2010
    
    
    December 31, 2009Estimated
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossLife
    
    
    Carrying
    
    
    Accumulated
    
    
    Net Book
    
    
    Carrying
    
    
    Accumulated
    
    
    Net Book(In thousands)
    
    (in years)
    
    
    Amount
    
    
    Amortization
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    ValueTechnology
    
    4 to 12
    
    
    $
    9,700
    
    
    $
    (1,712
    )
    
    $
    7,988
    
    
    $
    9,700
    
    
    $
    (805
    )
    
    $
    8,895Leasehold interests
    
    
    4
    
    
    
    1,204
    
    
    
    (426
    )
    
    
    778
    
    
    
    1,204
    
    
    
    (201
    )
    
    
    1,003Total
    
    
    
    
    
    $
    10,904
    
    
    $
    (2,138
    )
    
    $
    8,766
    
    
    $
    10,904
    
    
    $
    (1,006
    )
    
    $
    9,898
   (In thousands)Three months ended December 31, 2010
    
    $
    3782011
    
    
    1,5092012
    
    
    1,5092013
    
    
    9092014
    
    
    608After 2014
    
    
    3,853$
    8,766
  13




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##### Table of Contents



10. Debt
 SuccessorSeptember 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Short-term debt:GE Credit Agreement
    
    $
    6,394
    
    
    $
    ING Credit Agreements
    
    
    3,960
    
    
    
    Exit Facility
    
    
    
    
    
    
    5,000Total short-term debt
    
    $
    10,354
    
    
    $
    5,000Long-term debt:Secured Notes
    
    $
    184,717
    
    
    $
    167,919
     (a)
    
    Up to 85% of the dollar equivalent of the book value of eligible
accounts receivable; plus(b)
    
    subject to certain limitations, the lesser of (i) 65% of the dollar
equivalent of the book value of eligible inventory valued at the lower
of cost on a first-in, first-out basis or market, and (ii) up to 85%
of the dollar equivalent of the book value of the net orderly
liquidation value of eligible inventory; minus(c)
    
    $5.0 million; minus(d)
    
    such reserves as the Agent may from time to time establish in its
discretion in connection with hedging arrangements; minus(e)
    
    such reserves as the Agent may from time to time establish in its
discretion.
    14




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15




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##### Table of Contents




    
    a dividend or other distribution from Constar Holland causing its
equity capital to amount to less than 35% of total assets;
 
    
    a breach of a covenant, representation, warranty or certification made
in connection with an ING Credit Agreement, including a default in the
payment of any amount due under the ING Credit Agreements;
 
    
    a default or acceleration with respect to financing or guarantee
agreements of Constar Holland of more than 50,000 or the occurrence
of certain insolvency events; and
 
    
    Constar Holland becoming subject to certain judgments.
    16




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11. Restructuring
     17




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##### Table of Contents



2007 Plan
    
    
    2008 PlansSeverance
    
    
    Contractand
    
    
    and LeaseTermination
    
    
    Termination
    
    
    Other(In thousands)
    
    Benefits
    
    
    Costs
    
    
    Costs
    
    
    TotalBalance, January 1, 2010 (Successor)
    
    $
    14
    
    
    $
    46
    
    
    $
    329
    
    
    $
    389Charges to income
    
    
    
    
    
    
    334
    
    
    
    370
    
    
    
    704Payments
    
    
    
    
    
    
    (380
    )
    
    
    (602
    )
    
    
    (982
    )Balance, September 30, 2010 (Successor)
    
    $
    14
    
    
    $
    
    
    
    $
    97
    
    
    $
    111
 12. Commitments and Contingencies
        18




---



##### Table of Contents



13. Other Comprehensive Income (Loss)
  SuccessorThree Months Ended
    
    
    Three Months EndedSeptember 30, 2010
    
    
    September 30, 2009Tax
    
    
    
    
    
    
    
    
    
    
    TaxPre-tax
    
    
    (Expense)
    
    
    After-tax
    
    
    Pre-tax
    
    
    (Expense)
    
    
    After-tax(In thousands)
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    Amount
    
    
    Benefit
    
    
    AmountNet loss
    
    
    
    
    
    
    
    
    
    $
    (24,445
    )
    
    
    
    
    
    
    
    
    
    $
    (10,206
    )Other comprehensive income (loss):Pension curtailment
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Pension remeasurement
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    Pension and postretirement amortization
    
    
    (16
    )
    
    
    6
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    Cash-flow hedge
    
    
    (95
    )
    
    
    37
    
    
    
    (58
    )
    
    
    (344
    )
    
    
    104
    
    
    
    (240
    )Foreign currency translation adjustments
    
    
    1,298
    
    
    
    
    
    
    
    1,298
    
    
    
    1,042
    
    
    
    
    
    
    
    1,042Total other comprehensive income
    
    
    1,190
    
    
    
    43
    
    
    
    1,233
    
    
    
    698
    
    
    
    104
    
    
    
    802Comprehensive loss
    
    
    
    
    
    
    
    
    
    $
    (23,212
    )
    
    
    
    
    
    
    
    
    
    $
    (9,404
    )
 Successor
    
    
    
    PredecessorNine Months Ended
    
    
    Five Months Ended
    
    
    
    Four Months EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    
    April 30, 2009Tax
    
    
    
    
    
    
    
    
    
    
    Tax
    
    
    
    
    
    
    
    
    
    
    
    TaxPre-tax
    
    
    (Expense)
    
    
    After-tax
    
    
    Pre-tax
    
    
    (Expense)
    
    
    After-tax
    
    
    
    Pre-tax
    
    
    (Expense)
    
    
    After-tax(In thousands)
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    
    Amount
    
    
    Benefit
    
    
    AmountNet income (loss)
    
    
    
    
    
    
    
    
    
    $
    (73,711
    )
    
    
    
    
    
    
    
    
    
    $
    (7,554
    )
    
    
    
    
    
    
    
    
    
    
    $
    110,198Other comprehensive income (loss):Pension curtailment
    
    
    617
    
    
    
    
    
    
    
    617
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pension remeasurement
    
    
    (127
    )
    
    
    
    
    
    
    (127
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pension and postretirement amortization
    
    
    (46
    )
    
    
    18
    
    
    
    (28
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,919
    
    
    
    
    
    
    
    1,919Cash-flow hedge
    
    
    (794
    )
    
    
    306
    
    
    
    (488
    )
    
    
    391
    
    
    
    (153
    )
    
    
    238
    
    
    
    
    951
    
    
    
    
    
    
    
    951Foreign currency translation adjustments
    
    
    (529
    )
    
    
    
    
    
    
    (529
    )
    
    
    553
    
    
    
    
    
    
    
    553
    
    
    
    
    (1,134
    )
    
    
    
    
    
    
    (1,134
    )Total other comprehensive income (loss)
    
    
    (879
    )
    
    
    324
    
    
    
    (555
    )
    
    
    944
    
    
    
    (153
    )
    
    
    791
    
    
    
    
    1,736
    
    
    
    
    
    
    
    1,736Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    $
    (74,266
    )
    
    
    
    
    
    
    
    
    
    $
    (6,763
    )
    
    
    
    
    
    
    
    
    
    
    $
    111,934
  SuccessorSeptember 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Pension and post-retirement liabilities, net of tax
    
    $
    (1,998
    )
    
    $
    (2,460
    )Cash-flow hedge, net of tax
    
    
    174
    
    
    
    662Foreign currency translation adjustments
    
    
    (500
    )
    
    
    29Accumulated other comprehensive loss
    
    $
    (2,324
    )
    
    $
    (1,769
    )
 14. Stock-Based Compensation
   19




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PredecessorFour Months Ended(In thousands)
    
    April 30, 2009Restricted stock
    
    $
    597Restricted stock units
    
    
    (6
    )$
    591
 15. Earnings (Loss) Per Common Share
   16. Pension and Other Postretirement Benefits
 Pension Benefits
  SuccessorThree Months Ended
    
    
    Three Months EndedSeptember 30, 2010
    
    
    September 30, 2009(In thousands)
    
    U.S.
    
    
    Europe
    
    
    Total
    
    
    U.S.
    
    
    Europe
    
    
    TotalService cost
    
    $
    159
    
    
    $
    60
    
    
    $
    219
    
    
    $
    133
    
    
    $
    128
    
    
    $
    261Interest cost
    
    
    1,304
    
    
    
    181
    
    
    
    1,485
    
    
    
    1,352
    
    
    
    152
    
    
    
    1,504Expected return on plan assets
    
    
    (1,361
    )
    
    
    (185
    )
    
    
    (1,546
    )
    
    
    (1,136
    )
    
    
    (139
    )
    
    
    (1,275
    )Total pension expense
    
    $
    102
    
    
    $
    56
    
    
    $
    158
    
    
    $
    349
    
    
    $
    141
    
    
    $
    490
 Successor
    
    
    
    PredecessorNine Months Ended
    
    
    Five Months Ended
    
    
    
    Four Months EndedSeptember 30, 2010
    
    
    September 30, 2009
    
    
    
    April 30, 2009(In thousands)
    
    U.S.
    
    
    Europe
    
    
    Total
    
    
    U.S.
    
    
    Europe
    
    
    Total
    
    
    
    U.S.
    
    
    Europe
    
    
    TotalService cost
    
    $
    478
    
    
    $
    267
    
    
    $
    745
    
    
    $
    222
    
    
    $
    222
    
    
    $
    444
    
    
    
    $
    207
    
    
    $
    168
    
    
    $
    375Interest cost
    
    
    3,910
    
    
    
    539
    
    
    
    4,449
    
    
    
    2,253
    
    
    
    265
    
    
    
    2,518
    
    
    
    
    1,752
    
    
    
    171
    
    
    
    1,923Expected return on plan assets
    
    
    (4,083
    )
    
    
    (548
    )
    
    
    (4,631
    )
    
    
    (1,893
    )
    
    
    (243
    )
    
    
    (2,136
    )
    
    
    
    (1,504
    )
    
    
    (168
    )
    
    
    (1,672
    )Amortization of net loss
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,585
    
    
    
    106
    
    
    
    1,691Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    (12
    )
    
    
    6Total pension expense
    
    $
    306
    
    
    $
    258
    
    
    $
    564
    
    
    $
    582
    
    
    $
    244
    
    
    $
    826
    
    
    
    $
    2,058
    
    
    $
    265
    
    
    $
    2,323
    20




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##### Table of Contents



Other Postretirement Benefits
  SuccessorThree Months Ended
    
    
    Three Months Ended(In thousands)
    
    September 30, 2010
    
    
    September 30, 2009Interest cost
    
    $
    64
    
    
    $
    87Amortization of net (gain) loss
    
    
    (16
    )
    
    
    Total other postretirement benefits expense
    
    $
    48
    
    
    $
    87
 Successor
    
    
    
    PredecessorNine Months Ended
    
    
    Five Months Ended
    
    
    
    Four Months Ended(In thousands)
    
    September 30, 2010
    
    
    September 30, 2009
    
    
    
    April 30, 2009Interest cost
    
    $
    191
    
    
    $
    145
    
    
    
    $
    109Amortization of net (gain) loss
    
    
    (47
    )
    
    
    
    
    
    
    
    261Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    (102
    )Total other postretirement benefits expense
    
    $
    144
    
    
    $
    145
    
    
    
    $
    268
 17. Income Taxes
       21




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##### Table of Contents



18. Derivative Financial Instruments
      SuccessorDerivative Liabilities(In thousands)
    
    Balance
    
    
    Fair ValueDerivatives designated as
    
    Sheet
    
    
    September 30,
    
    
    December 31,hedging instruments
    
    Location
    
    
    2010
    
    
    2009Interest rate swap
    
    Other liabilities
    
    
    $
    6,032
    
    
    $
    6,485
  22




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##### Table of Contents



SuccessorThree Months Ended September 30, 2010Amount of
    
    
    Amount of Pre-taxGain or (Loss)
    
    
    Gain or (Loss)
    
    
    Amount of Pre-taxRecognized in OCI
    
    
    Reclassified from
    
    
    Gain or (Loss)(In thousands)
    
    on Derivative,
    
    
    Accumulated
    
    
    Recognized in IncomeDerivatives in cash flow
    
    Net of Tax
    
    
    OCI into Income
    
    
    on Derivativehedging relationships
    
    (Effective Portion)
    
    
    (Effective Portion) (a)
    
    
    (Ineffective Portion) (a)Interest rate swaps
    
    $
    
    
    
    $
    
    
    
    $
    456SuccessorThree Months Ended September 30, 2009Amount of
    
    
    Amount of Pre-taxGain or (Loss)
    
    
    Gain or (Loss)Recognized in OCI
    
    
    Reclassified from(In thousands)
    
    
    
    
    
    on Derivative,
    
    
    AccumulatedDerivatives in cash flow
    
    
    
    
    
    Net of Tax
    
    
    OCI into Incomehedging relationships
    
    (Effective Portion)
    
    
    (Effective Portion) (a)Interest rate swaps
    
    
    
    
    
    $
    (240
    )
    
    $
    816SuccessorNine Months Ended September 30, 2010Amount of
    
    
    Amount of Pre-taxGain or (Loss)
    
    
    Gain or (Loss)
    
    
    Amount of Pre-taxRecognized in OCI
    
    
    Reclassified from
    
    
    Gain or (Loss)(In thousands)
    
    on Derivative,
    
    
    Accumulated
    
    
    Recognized in IncomeDerivatives in cash flow
    
    Net of Tax
    
    
    OCI into Income
    
    
    on Derivativehedging relationships
    
    (Effective Portion)
    
    
    (Effective Portion) (a)
    
    
    (Ineffective Portion) (a)Interest rate swaps
    
    $
    
    
    
    $
    116
    
    
    $
    883
 Amount of Gain or (Loss)
    
    
    Amount of Pre-tax Gain or (Loss)Recognized in OCI on Derivative,
    
    
    Reclassified from Accumulated OCINet of Tax (Effective Portion)
    
    
    into Income (Effective Portion) (a)Successor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    Predecessor(In thousands)
    
    Five Months
    
    
    
    Four Months
    
    
    Five Months
    
    
    
    Four MonthsDerivatives in cash flow
    
    Ended
    
    
    
    Ended
    
    
    Ended
    
    
    
    Endedhedging relationships
    
    September 30, 2009
    
    
    
    April 30, 2009
    
    
    September 30, 2009
    
    
    
    April 30, 2009Interest rate swap
    
    $
    238
    
    
    
    $
    951
    
    
    $
    1,115
    
    
    
    $
    974
 (a)
    
    Amounts are included in interest expense on the condensed consolidated statements of
operations.  23




---



##### Table of Contents



19. Fair Value Measurements
  SuccessorSeptember 30, 2010SignificantQuoted
    
    
    Significant Other
    
    
    Unobservable
    
    
    TotalPrices
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Fair(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueLiabilitiesInterest rate swap
    
    $
    
    
    
    $
    6,032
    
    
    $
    
    
    
    $
    6,032
 SuccessorDecember 31, 2009SignificantQuoted
    
    
    Significant Other
    
    
    Unobservable
    
    
    TotalPrices
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Fair(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueLiabilitiesInterest rate swap
    
    $
    
    
    
    $
    6,485
    
    
    $
    
    
    
    $
    6,485
   SuccessorSeptember 30, 2010
    
    
    December 31, 2009(In thousands)
    
    Carrying
    
    
    
    
    
    
    CarryingAsset (liability)
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueSenior Notes
    
    
    (184,717
    )
    
    
    (188,100
    )
    
    
    (167,919
    )
    
    
    (182,050
    )
  SuccessorSeptember 30, 2010Significant Other
    
    
    SignificantQuoted
    
    
    Observable
    
    
    Unobservable
    
    
    TotalPrices
    
    
    Inputs
    
    
    Inputs
    
    
    Fair(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueGoodwill
    
    $
    
    
    
    $
    
    
    
    $
    73,282
    
    
    $
    73,282Trade name
    
    
    
    
    
    
    
    
    
    
    15,100
    
    
    
    15,100$
    
    
    
    $
    
    
    
    $
    88,382
    
    
    $
    88,382
  24




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##### Table of Contents



20. Other Income (Expense)
  SuccessorThree Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2010
    
    
    2009Foreign exchange gains (losses)
    
    $
    389
    
    
    $
    (1,819
    )Royalty income
    
    
    172
    
    
    
    187Royalty expense
    
    
    (1,497
    )
    
    
    (185
    )Interest income
    
    
    23
    
    
    
    12Other income (expense)
    
    
    (488
    )
    
    
    (13
    )Other income (expense), net
    
    $
    (1,401
    )
    
    $
    (1,818
    )
 Successor
    
    
    
    PredecessorNine Months
    
    
    Five Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009Foreign exchange gains (losses)
    
    $
    (1,667
    )
    
    $
    1,527
    
    
    
    $
    1,321Royalty income
    
    
    427
    
    
    
    296
    
    
    
    
    418Royalty expense
    
    
    (1,621
    )
    
    
    (240
    )
    
    
    
    (185
    )Interest income
    
    
    50
    
    
    
    20
    
    
    
    
    12Other income (expense)
    
    
    (491
    )
    
    
    (13
    )
    
    
    
    (23
    )Other income (expense), net
    
    $
    (3,302
    )
    
    $
    1,590
    
    
    
    $
    1,543
  21. Supplemental Sales Information
   25




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##### Table of Contents



SuccessorThree months
    
    
    Three monthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2010
    
    
    2009United States
    
    $
    106,229
    
    
    $
    121,874United Kingdom
    
    
    30,359
    
    
    
    31,632Holland
    
    
    10,255
    
    
    
    5,124Net sales
    
    $
    146,843
    
    
    $
    158,630
 Successor
    
    
    
    PredecessorNine months
    
    
    Five months
    
    
    
    Four monthsEnded
    
    
    Ended
    
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009United States
    
    $
    327,733
    
    
    $
    217,127
    
    
    
    $
    180,086United Kingdom
    
    
    86,171
    
    
    
    54,911
    
    
    
    
    33,733Holland
    
    
    25,116
    
    
    
    8,110
    
    
    
    
    3,641Net sales
    
    $
    439,020
    
    
    $
    280,148
    
    
    
    $
    217,460
 22. Discontinued Operations
   SuccessorSeptember 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Assets of Discontinued Operations:Prepaid expenses and other current assets
    
    $
    332
    
    
    $
    337Liabilities of Discontinued Operations:Accounts payable and accrued expenses
    
    $
    108
    
    
    $
    44Total current liabilities of discontinued operations
    
    
    108
    
    
    
    44Other liabilities
    
    
    839
    
    
    
    881Total liabilities of discontinued operations
    
    $
    947
    
    
    $
    925
   26




---



##### Table of Contents



SuccessorThree Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,(In thousands)
    
    2010
    
    
    2009Net sales
    
    $
    
    
    
    $
    Loss from discontinued operations before income taxes
    
    
    (120
    )
    
    
    (28
    )Provision for income taxes
    
    
    
    
    
    
    (2
    )Loss from discontinued operations
    
    $
    (120
    )
    
    $
    (30
    )
 Successor
    
    
    
    PredecessorNine Months
    
    
    Five Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009Net sales
    
    $
    
    
    
    $
    
    
    
    
    $
    Loss from discontinued operations before income taxes
    
    
    (27
    )
    
    
    (87
    )
    
    
    
    (17
    )Provision for income taxes
    
    
    
    
    
    
    (3
    )
    
    
    
    (79
    )Loss from discontinued operations
    
    $
    (27
    )
    
    $
    (90
    )
    
    
    $
    (96
    )
 23. Condensed Consolidating Financial Information
   27




---



##### Table of Contents



Condensed Consolidating Balance Sheet
September 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    Reclassifications/
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    1,298
    
    
    $
    1,192
    
    
    $
    
    
    
    $
    2,490Intercompany receivables
    
    
    
    
    
    
    242,240
    
    
    
    441
    
    
    
    (242,681
    )
    
    
    Accounts receivable, net
    
    
    
    
    
    
    37,038
    
    
    
    5,875
    
    
    
    
    
    
    
    42,913Inventories, net
    
    
    
    
    
    
    33,767
    
    
    
    3,686
    
    
    
    
    
    
    
    37,453Prepaid expenses and other current assets
    
    
    
    
    
    
    6,969
    
    
    
    867
    
    
    
    
    
    
    
    7,836Deferred taxes
    
    
    533
    
    
    
    1,440
    
    
    
    
    
    
    
    
    
    
    
    1,973Asset held for sale
    
    
    
    
    
    
    2,516
    
    
    
    
    
    
    
    
    
    
    
    2,516Total current assets
    
    
    533
    
    
    
    325,268
    
    
    
    12,061
    
    
    
    (242,681
    )
    
    
    95,181Property, plant and equipment, net
    
    
    
    
    
    
    117,875
    
    
    
    9,543
    
    
    
    
    
    
    
    127,418Goodwill and intangible assets
    
    
    
    
    
    
    97,148
    
    
    
    
    
    
    
    
    
    
    
    97,148Investment in subsidiaries
    
    
    348,309
    
    
    
    20,388
    
    
    
    
    
    
    
    (368,697
    )
    
    
    Deferred income taxes
    
    
    69,122
    
    
    
    
    
    
    
    
    
    
    
    (69,122
    )
    
    
    Other assets
    
    
    
    
    
    
    5,132
    
    
    
    286
    
    
    
    
    
    
    
    5,418Total assets
    
    $
    417,964
    
    
    $
    565,811
    
    
    $
    21,890
    
    
    $
    (680,500
    )
    
    $
    325,165LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current Liabilities:Short-term debt
    
    $
    
    
    
    $
    6,394
    
    
    $
    3,960
    
    
    $
    
    
    
    $
    10,354Accounts payable and accrued liabilities
    
    
    1,523
    
    
    
    60,913
    
    
    
    6,930
    
    
    
    
    
    
    
    69,366Intercompany payable
    
    
    221,355
    
    
    
    33,654
    
    
    
    (12,328
    )
    
    
    (242,681
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total current liabilities
    
    
    222,878
    
    
    
    100,961
    
    
    
    (1,438
    )
    
    
    (242,681
    )
    
    
    79,720Long-term debt
    
    
    184,717
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184,717Pension and postretirement liabilities
    
    
    
    
    
    
    27,271
    
    
    
    929
    
    
    
    
    
    
    
    28,200Deferred income taxes
    
    
    
    
    
    
    80,866
    
    
    
    1,172
    
    
    
    (69,122
    )
    
    
    12,916Other liabilities
    
    
    6,032
    
    
    
    8,404
    
    
    
    839
    
    
    
    
    
    
    
    15,275Total liabilities
    
    
    413,627
    
    
    
    217,502
    
    
    
    1,502
    
    
    
    (311,803
    )
    
    
    320,828Commitments and contingenciesStockholders equity (deficit)
    
    
    4,337
    
    
    
    348,309
    
    
    
    20,388
    
    
    
    (368,697
    )
    
    
    4,337Total liabilities and stockholders
equity (deficit)
    
    $
    417,964
    
    
    $
    565,811
    
    
    $
    21,890
    
    
    $
    (680,500
    )
    
    $
    325,165
  28




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##### Table of Contents



Condensed Consolidating Balance Sheet
December 31, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantor
    
    
    Eliminations
    
    
    CompanyASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    2,022
    
    
    $
    447
    
    
    $
    
    
    
    $
    2,469Intercompany receivables
    
    
    
    
    
    
    216,779
    
    
    
    10,821
    
    
    
    (227,600
    )
    
    
    Accounts receivable, net
    
    
    
    
    
    
    36,785
    
    
    
    2,269
    
    
    
    
    
    
    
    39,054Inventories, net
    
    
    
    
    
    
    40,284
    
    
    
    3,774
    
    
    
    
    
    
    
    44,058Prepaid expenses and other current assets
    
    
    12
    
    
    
    7,218
    
    
    
    666
    
    
    
    
    
    
    
    7,896Restricted cash
    
    
    
    
    
    
    7,589
    
    
    
    
    
    
    
    
    
    
    
    7,589Deferred income taxes
    
    
    2,098
    
    
    
    
    
    
    
    
    
    
    
    (2,098
    )
    
    
    Total current assets
    
    
    2,110
    
    
    
    310,677
    
    
    
    17,977
    
    
    
    (229,698
    )
    
    
    101,066Property, plant and equipment, net
    
    
    
    
    
    
    141,521
    
    
    
    10,005
    
    
    
    
    
    
    
    151,526Goodwill and intangible assets
    
    
    
    
    
    
    150,080
    
    
    
    
    
    
    
    
    
    
    
    150,080Investment in subsidiaries
    
    
    405,700
    
    
    
    20,910
    
    
    
    
    
    
    
    (426,610
    )
    
    
    Deferred income taxes
    
    
    58,772
    
    
    
    
    
    
    
    
    
    
    
    (58,772
    )
    
    
    Other assets
    
    
    552
    
    
    
    2,728
    
    
    
    312
    
    
    
    
    
    
    
    3,592Total assets
    
    $
    467,134
    
    
    $
    625,916
    
    
    $
    28,294
    
    
    $
    (715,080
    )
    
    $
    406,264LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current Liabilities:Short-term debt
    
    $
    5,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,000Accounts payable and accrued liabilities
    
    
    1,681
    
    
    
    79,325
    
    
    
    3,375
    
    
    
    
    
    
    
    84,381Intercompany payable
    
    
    207,446
    
    
    
    19,325
    
    
    
    829
    
    
    
    (227,600
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    3,320
    
    
    
    
    
    
    
    (2,098
    )
    
    
    1,222Total current liabilities
    
    
    214,127
    
    
    
    101,970
    
    
    
    4,204
    
    
    
    (229,698
    )
    
    
    90,603Long-term debt
    
    
    167,919
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,919Pension and postretirement liabilities
    
    
    
    
    
    
    30,053
    
    
    
    1,052
    
    
    
    
    
    
    
    31,105Deferred income taxes
    
    
    
    
    
    
    81,056
    
    
    
    1,247
    
    
    
    (58,772
    )
    
    
    23,531Other liabilities
    
    
    6,485
    
    
    
    7,137
    
    
    
    881
    
    
    
    
    
    
    
    14,503Total liabilities
    
    
    388,531
    
    
    
    220,216
    
    
    
    7,384
    
    
    
    (288,470
    )
    
    
    327,661Commitments and contingenciesStockholders equity (deficit)
    
    
    78,603
    
    
    
    405,700
    
    
    
    20,910
    
    
    
    (426,610
    )
    
    
    78,603Total liabilities and stockholders
equity (deficit)
    
    $
    467,134
    
    
    $
    625,916
    
    
    $
    28,294
    
    
    $
    (715,080
    )
    
    $
    406,264
  29




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##### Table of Contents



Condensed Consolidating Statement of Operations
For the three months ended September 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    136,588
    
    
    $
    10,255
    
    
    $
    
    
    
    $
    146,843Cost of products sold, excluding depreciation
    
    
    
    
    
    
    122,809
    
    
    
    9,334
    
    
    
    
    
    
    
    132,143Depreciation and amortization
    
    
    
    
    
    
    9,038
    
    
    
    256
    
    
    
    
    
    
    
    9,294Gross profit
    
    
    
    
    
    
    4,741
    
    
    
    665
    
    
    
    
    
    
    
    5,406Selling and administrative expenses
    
    
    
    
    
    
    3,872
    
    
    
    305
    
    
    
    
    
    
    
    4,177Goodwill impairment
    
    
    
    
    
    
    12,900
    
    
    
    
    
    
    
    
    
    
    
    12,900Impairment of intangible assets
    
    
    
    
    
    
    1,300
    
    
    
    
    
    
    
    
    
    
    
    1,300Research and technology expenses
    
    
    
    
    
    
    1,531
    
    
    
    
    
    
    
    
    
    
    
    1,531Provision for restructuring
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    67Gain on disposal of assets
    
    
    
    
    
    
    (213
    )
    
    
    (57
    )
    
    
    
    
    
    
    (270
    )Total operating expenses
    
    
    
    
    
    
    19,457
    
    
    
    248
    
    
    
    
    
    
    
    19,705Operating income (loss)
    
    
    
    
    
    
    (14,716
    )
    
    
    417
    
    
    
    
    
    
    
    (14,299
    )Interest expense
    
    
    (8,475
    )
    
    
    (726
    )
    
    
    163
    
    
    
    
    
    
    
    (9,038
    )Other income (expense), net
    
    
    
    
    
    
    (1,508
    )
    
    
    107
    
    
    
    
    
    
    
    (1,401
    )Income (loss) from continuing
operations before income taxes
    
    
    (8,475
    )
    
    
    (16,950
    )
    
    
    687
    
    
    
    
    
    
    
    (24,738
    )(Provision for) benefit from income taxes
    
    
    3,070
    
    
    
    (2,531
    )
    
    
    (126
    )
    
    
    
    
    
    
    413Income (loss) from continuing operations
    
    
    (5,405
    )
    
    
    (19,481
    )
    
    
    561
    
    
    
    
    
    
    
    (24,325
    )Equity earnings
    
    
    (19,040
    )
    
    
    441
    
    
    
    
    
    
    
    18,599
    
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (120
    )
    
    
    
    
    
    
    (120
    )Net income (loss)
    
    $
    (24,445
    )
    
    $
    (19,040
    )
    
    $
    441
    
    
    $
    18,599
    
    
    $
    (24,445
    )
  30




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##### Table of Contents



Condensed Consolidating Statement of Operations
For the three months ended September 30, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    153,506
    
    
    $
    5,124
    
    
    $
    
    
    
    $
    158,630Cost of products sold, excluding depreciation
    
    
    
    
    
    
    136,526
    
    
    
    4,622
    
    
    
    
    
    
    
    141,148Depreciation and amortization
    
    
    
    
    
    
    12,761
    
    
    
    171
    
    
    
    
    
    
    
    12,932Gross profit
    
    
    
    
    
    
    4,219
    
    
    
    331
    
    
    
    
    
    
    
    4,550Selling and administrative expenses
    
    
    
    
    
    
    4,911
    
    
    
    (14
    )
    
    
    
    
    
    
    4,897Research and technology expenses
    
    
    
    
    
    
    1,865
    
    
    
    
    
    
    
    
    
    
    
    1,865Provision for restructuring
    
    
    
    
    
    
    816
    
    
    
    
    
    
    
    
    
    
    
    816Gain on disposal of assets
    
    
    
    
    
    
    (223
    )
    
    
    
    
    
    
    
    
    
    
    (223
    )Total operating expenses
    
    
    
    
    
    
    7,369
    
    
    
    (14
    )
    
    
    
    
    
    
    7,355Operating income (loss)
    
    
    
    
    
    
    (3,150
    )
    
    
    345
    
    
    
    
    
    
    
    (2,805
    )Interest expense
    
    
    (8,606
    )
    
    
    (158
    )
    
    
    158
    
    
    
    
    
    
    
    (8,606
    )Reorganization items, net
    
    
    866
    
    
    
    (1,370
    )
    
    
    
    
    
    
    
    
    
    
    (504
    )Other income (expense), net
    
    
    
    
    
    
    (1,855
    )
    
    
    37
    
    
    
    
    
    
    
    (1,818
    )Income (loss) from continuing
operations before income taxes
    
    
    (7,740
    )
    
    
    (6,533
    )
    
    
    540
    
    
    
    
    
    
    
    (13,733
    )(Provision for) benefit from income taxes
    
    
    5,790
    
    
    
    (2,154
    )
    
    
    (79
    )
    
    
    
    
    
    
    3,557Income (loss) from continuing operations
    
    
    (1,950
    )
    
    
    (8,687
    )
    
    
    461
    
    
    
    
    
    
    
    (10,176
    )Equity earnings
    
    
    (8,256
    )
    
    
    431
    
    
    
    
    
    
    
    7,825
    
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    (30
    )Net income (loss)
    
    $
    (10,206
    )
    
    $
    (8,256
    )
    
    $
    431
    
    
    $
    7,825
    
    
    $
    (10,206
    )
  31




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the nine months ended September 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    413,904
    
    
    $
    25,116
    
    
    $
    
    
    
    $
    439,020Cost of products sold, excluding depreciation
    
    
    
    
    
    
    371,719
    
    
    
    23,552
    
    
    
    
    
    
    
    395,271Depreciation and amortization
    
    
    
    
    
    
    27,199
    
    
    
    649
    
    
    
    
    
    
    
    27,848Gross profit
    
    
    
    
    
    
    14,986
    
    
    
    915
    
    
    
    
    
    
    
    15,901Selling and administrative expenses
    
    
    
    
    
    
    15,618
    
    
    
    670
    
    
    
    
    
    
    
    16,288Goodwill impairment
    
    
    
    
    
    
    45,400
    
    
    
    
    
    
    
    
    
    
    
    45,400Impairment of intangible assets
    
    
    
    
    
    
    6,400
    
    
    
    
    
    
    
    
    
    
    
    6,400Research and technology expenses
    
    
    
    
    
    
    4,855
    
    
    
    
    
    
    
    
    
    
    
    4,855Provision for restructuring
    
    
    
    
    
    
    704
    
    
    
    
    
    
    
    
    
    
    
    704Gain on disposal of assets
    
    
    
    
    
    
    (867
    )
    
    
    (57
    )
    
    
    
    
    
    
    (924
    )Total operating expenses
    
    
    
    
    
    
    72,110
    
    
    
    613
    
    
    
    
    
    
    
    72,723Operating income (loss)
    
    
    
    
    
    
    (57,124
    )
    
    
    302
    
    
    
    
    
    
    
    (56,822
    )Interest expense
    
    
    (25,101
    )
    
    
    (2,180
    )
    
    
    419
    
    
    
    
    
    
    
    (26,862
    )Other income (expense), net
    
    
    
    
    
    
    (3,193
    )
    
    
    (109
    )
    
    
    
    
    
    
    (3,302
    )Income (loss) from continuing
operations before income taxes
    
    
    (25,101
    )
    
    
    (62,497
    )
    
    
    612
    
    
    
    
    
    
    
    (86,986
    )Provision for (benefit from) income taxes
    
    
    8,785
    
    
    
    4,625
    
    
    
    (108
    )
    
    
    
    
    
    
    13,302Loss from continuing operations
    
    
    (16,316
    )
    
    
    (57,872
    )
    
    
    504
    
    
    
    
    
    
    
    (73,684
    )Equity earnings
    
    
    (57,395
    )
    
    
    477
    
    
    
    
    
    
    
    56,918
    
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    
    
    
    
    (27
    )Net income (loss)
    
    $
    (73,711
    )
    
    $
    (57,395
    )
    
    $
    477
    
    
    $
    56,918
    
    
    $
    (73,711
    )
  32




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the five months ended September 30, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    272,038
    
    
    $
    8,110
    
    
    $
    
    
    
    $
    280,148Cost of products sold, excluding depreciation
    
    
    
    
    
    
    238,629
    
    
    
    6,889
    
    
    
    
    
    
    
    245,518Depreciation and amortization
    
    
    
    
    
    
    19,741
    
    
    
    255
    
    
    
    
    
    
    
    19,996Gross profit
    
    
    
    
    
    
    13,668
    
    
    
    966
    
    
    
    
    
    
    
    14,634Selling and administrative expenses
    
    
    
    
    
    
    7,912
    
    
    
    124
    
    
    
    
    
    
    
    8,036Research and technology expenses
    
    
    
    
    
    
    3,094
    
    
    
    
    
    
    
    
    
    
    
    3,094Provision for restructuring
    
    
    
    
    
    
    1,081
    
    
    
    
    
    
    
    
    
    
    
    1,081Gain on disposal of assets
    
    
    
    
    
    
    (226
    )
    
    
    
    
    
    
    
    
    
    
    (226
    )Total operating expenses
    
    
    
    
    
    
    11,861
    
    
    
    124
    
    
    
    
    
    
    
    11,985Operating income
    
    
    
    
    
    
    1,807
    
    
    
    842
    
    
    
    
    
    
    
    2,649Interest expense
    
    
    (14,394
    )
    
    
    (264
    )
    
    
    264
    
    
    
    
    
    
    
    (14,394
    )Reorganization items, net
    
    
    (1,671
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,671
    )Other income (expense), net
    
    
    
    
    
    
    1,502
    
    
    
    88
    
    
    
    
    
    
    
    1,590Income (loss) from continuing
operations before income taxes
    
    
    (16,065
    )
    
    
    3,045
    
    
    
    1,194
    
    
    
    
    
    
    
    (11,826
    )(Provision for) benefit from income taxes
    
    
    5,790
    
    
    
    (1,124
    )
    
    
    (304
    )
    
    
    
    
    
    
    4,362Income (loss) from continuing operations
    
    
    (10,275
    )
    
    
    1,921
    
    
    
    890
    
    
    
    
    
    
    
    (7,464
    )Equity earnings
    
    
    2,721
    
    
    
    800
    
    
    
    
    
    
    
    (3,521
    )
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    (90
    )Net income (loss)
    
    $
    (7,554
    )
    
    $
    2,721
    
    
    $
    800
    
    
    $
    (3,521
    )
    
    $
    (7,554
    )
  33




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##### Table of Contents



Condensed Consolidating Statement of Income
For the four months ended April 30, 2009
(In thousands)
(Unaudited)
 PredecessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    213,819
    
    
    $
    3,641
    
    
    $
    
    
    
    $
    217,460Cost of products sold, excluding depreciation
    
    
    
    
    
    
    185,975
    
    
    
    3,841
    
    
    
    
    
    
    
    189,816Depreciation and amortization
    
    
    
    
    
    
    9,507
    
    
    
    226
    
    
    
    
    
    
    
    9,733Gross profit
    
    
    
    
    
    
    18,337
    
    
    
    (426
    )
    
    
    
    
    
    
    17,911Selling and administrative expenses
    
    
    
    
    
    
    6,802
    
    
    
    203
    
    
    
    
    
    
    
    7,005Research and technology expenses
    
    
    
    
    
    
    2,698
    
    
    
    
    
    
    
    
    
    
    
    2,698Provision for restructuring
    
    
    
    
    
    
    648
    
    
    
    
    
    
    
    
    
    
    
    648Gain on disposal of assets
    
    
    
    
    
    
    (396
    )
    
    
    
    
    
    
    
    
    
    
    (396
    )Total operating expenses
    
    
    
    
    
    
    9,752
    
    
    
    203
    
    
    
    
    
    
    
    9,955Operating income (loss)
    
    
    
    
    
    
    8,585
    
    
    
    (629
    )
    
    
    
    
    
    
    7,956Interest expense
    
    
    (5,566
    )
    
    
    (204
    )
    
    
    204
    
    
    
    
    
    
    
    (5,566
    )Reorganization items, net
    
    
    77,853
    
    
    
    61,679
    
    
    
    4,636
    
    
    
    
    
    
    
    144,168Other income (expense), net
    
    
    
    
    
    
    1,546
    
    
    
    (3
    )
    
    
    
    
    
    
    1,543Income from continuing
operations before income taxes
    
    
    72,287
    
    
    
    71,606
    
    
    
    4,208
    
    
    
    
    
    
    
    148,101Provision for income taxes
    
    
    
    
    
    
    (36,944
    )
    
    
    (863
    )
    
    
    
    
    
    
    (37,807
    )Income from continuing operations
    
    
    72,287
    
    
    
    34,662
    
    
    
    3,345
    
    
    
    
    
    
    
    110,294Equity earnings
    
    
    37,911
    
    
    
    3,249
    
    
    
    
    
    
    
    (41,160
    )
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (96
    )
    
    
    
    
    
    
    (96
    )Net income (loss)
    
    $
    110,198
    
    
    $
    37,911
    
    
    $
    3,249
    
    
    $
    (41,160
    )
    
    $
    110,198
  34




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the nine months ended September 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyCash flows from operating activities:Net income (loss)
    
    $
    (73,711
    )
    
    $
    (57,395
    )
    
    $
    477
    
    
    $
    56,918
    
    
    $
    (73,711
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    27,740
    
    
    
    676
    
    
    
    
    
    
    
    28,416Impairment of goodwill and intangible assets
    
    
    
    
    
    
    51,800
    
    
    
    
    
    
    
    
    
    
    
    51,800Debt accretion
    
    
    16,798
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,798Gain on disposal of assets
    
    
    
    
    
    
    (867
    )
    
    
    (57
    )
    
    
    
    
    
    
    (924
    )Equity earnings
    
    
    57,395
    
    
    
    (477
    )
    
    
    
    
    
    
    (56,918
    )
    
    
    Changes in operating assets and liabilities
    
    
    (14,391
    )
    
    
    (23,557
    )
    
    
    10,004
    
    
    
    
    
    
    
    (27,944
    )Net cash provided by (used in) operating activities
    
    
    (13,909
    )
    
    
    (2,756
    )
    
    
    11,100
    
    
    
    
    
    
    
    (5,565
    )Cash flows from investing activities:Restricted cash
    
    
    
    
    
    
    7,589
    
    
    
    
    
    
    
    
    
    
    
    7,589Purchases of property, plant and equipment
    
    
    
    
    
    
    (5,680
    )
    
    
    (732
    )
    
    
    
    
    
    
    (6,412
    )Proceeds from the sale of property, plant and equipment
    
    
    
    
    
    
    1,053
    
    
    
    75
    
    
    
    
    
    
    
    1,128Net cash provided by (used in) investing activities
    
    
    
    
    
    
    2,962
    
    
    
    (657
    )
    
    
    
    
    
    
    2,305Cash flows from financing activities:Costs associated with exit facility
    
    
    
    
    
    
    (1,937
    )
    
    
    
    
    
    
    
    
    
    
    (1,937
    )Proceeds from short-term financing
    
    
    
    
    
    
    420,650
    
    
    
    21,743
    
    
    
    
    
    
    
    442,393Repayment of short-term financing
    
    
    
    
    
    
    (419,256
    )
    
    
    (17,920
    )
    
    
    
    
    
    
    (437,176
    )Net change in intercompany loans
    
    
    13,909
    
    
    
    (383
    )
    
    
    (13,526
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    13,909
    
    
    
    (926
    )
    
    
    (9,703
    )
    
    
    
    
    
    
    3,280Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    (4
    )
    
    
    5
    
    
    
    
    
    
    
    1Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (724
    )
    
    
    745
    
    
    
    
    
    
    
    21Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    2,022
    
    
    
    447
    
    
    
    
    
    
    
    2,469Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    1,298
    
    
    $
    1,192
    
    
    $
    
    
    
    $
    2,490
  35




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the five months ended September 30, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyCash flows from operating activities:Net income (loss)
    
    $
    (7,554
    )
    
    $
    2,721
    
    
    $
    800
    
    
    $
    (3,521
    )
    
    $
    (7,554
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    13
    
    
    
    19,714
    
    
    
    346
    
    
    
    
    
    
    
    20,073Debt accretion
    
    
    8,392
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,392Gain on disposal of assets
    
    
    
    
    
    
    (226
    )
    
    
    
    
    
    
    
    
    
    
    (226
    )Reorganization items
    
    
    (6,489
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,489
    )Equity earnings
    
    
    (2,721
    )
    
    
    (800
    )
    
    
    
    
    
    
    3,521
    
    
    
    Changes in operating assets and liabilities
    
    
    (8,122
    )
    
    
    (7,781
    )
    
    
    (2,529
    )
    
    
    
    
    
    
    (18,432
    )Net cash provided by (used in)
operating activities
    
    
    (16,481
    )
    
    
    13,628
    
    
    
    (1,383
    )
    
    
    
    
    
    
    (4,236
    )Cash flows from investing activities:Restricted cash
    
    
    
    
    
    
    1,738
    
    
    
    
    
    
    
    
    
    
    
    1,738Purchases of property, plant and equipment
    
    
    
    
    
    
    (4,676
    )
    
    
    (380
    )
    
    
    
    
    
    
    (5,056
    )Proceeds from the sale of property, plant and equipment
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Net cash used in investing activities
    
    
    
    
    
    
    (2,932
    )
    
    
    (380
    )
    
    
    
    
    
    
    (3,312
    )Cash flows from financing activities:Costs associated with Exit Facility
    
    
    (200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (200
    )Proceeds from short-term financing
    
    
    306,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    306,000Repayment of short-term financing
    
    
    (298,412
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (298,412
    )Net change in intercompany loans
    
    
    9,093
    
    
    
    (10,642
    )
    
    
    1,549
    
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    16,481
    
    
    
    (10,642
    )
    
    
    1,549
    
    
    
    
    
    
    
    7,388Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    60
    
    
    
    33
    
    
    
    
    
    
    
    93Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    114
    
    
    
    (181
    )
    
    
    
    
    
    
    (67
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    1,317
    
    
    
    567
    
    
    
    
    
    
    
    1,884Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    1,431
    
    
    $
    386
    
    
    $
    
    
    
    $
    1,817
  36




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the four months ended April 30, 2009
(In thousands)
(Unaudited)
 PredecessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyCash flows from operating activities:Net income (loss)
    
    $
    110,198
    
    
    $
    37,911
    
    
    $
    3,249
    
    
    $
    (41,160
    )
    
    $
    110,198Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    317
    
    
    
    9,514
    
    
    
    229
    
    
    
    
    
    
    
    10,060Stock-based compensation
    
    
    
    
    
    
    591
    
    
    
    
    
    
    
    
    
    
    
    591Gain on disposal of assets
    
    
    
    
    
    
    (396
    )
    
    
    
    
    
    
    
    
    
    
    (396
    )Reorganization items
    
    
    (79,299
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,299
    )Fresh-start accounting adjustments
    
    
    2,654
    
    
    
    (66,127
    )
    
    
    (4,636
    )
    
    
    
    
    
    
    (68,109
    )Equity earnings
    
    
    (37,911
    )
    
    
    (3,249
    )
    
    
    
    
    
    
    41,160
    
    
    
    Changes in operating assets and liabilities
    
    
    (46
    )
    
    
    42,547
    
    
    
    1,955
    
    
    
    
    
    
    
    44,456Net cash provided by (used in)
operating activities
    
    
    (4,087
    )
    
    
    20,791
    
    
    
    797
    
    
    
    
    
    
    
    17,501Cash flows from investing activities:Restricted cash
    
    
    
    
    
    
    (9,327
    )
    
    
    
    
    
    
    
    
    
    
    (9,327
    )Purchases of property, plant and equipment
    
    
    
    
    
    
    (5,557
    )
    
    
    (166
    )
    
    
    
    
    
    
    (5,723
    )Proceeds from the sale of property, plant and equipment
    
    
    
    
    
    
    149
    
    
    
    
    
    
    
    
    
    
    
    149Net cash used in investing activities
    
    
    
    
    
    
    (14,735
    )
    
    
    (166
    )
    
    
    
    
    
    
    (14,901
    )Cash flows from financing activities:Proceeds from short-term financing
    
    
    212,723
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212,723Repayment of short-term financing
    
    
    (227,723
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (227,723
    )Net change in intercompany loans
    
    
    19,087
    
    
    
    (18,680
    )
    
    
    (407
    )
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    4,087
    
    
    
    (18,680
    )
    
    
    (407
    )
    
    
    
    
    
    
    (15,000
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    8
    
    
    
    (16
    )
    
    
    
    
    
    
    (8
    )Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (12,616
    )
    
    
    208
    
    
    
    
    
    
    
    (12,408
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    13,933
    
    
    
    359
    
    
    
    
    
    
    
    14,292Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    1,317
    
    
    $
    567
    
    
    $
    
    
    
    $
    1,884
  37




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##### Table of Contents



24. Subsequent Events
     38




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
       39




---



##### Table of Contents



®
 ® ®
      40




---



##### Table of Contents



Basis of Presentation
     Results of Operations
 Net Sales
 Three Months Ended September 30, 2010 and 2009
 Three months ended
    
    
    
    
    
    
    %September 30,
    
    
    Increase
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    (Decrease)United States
    
    $
    106.2
    
    
    $
    121.9
    
    
    $
    (15.7
    )
    
    
    (12.9
    )%Europe
    
    
    40.6
    
    
    
    36.7
    
    
    
    3.9
    
    
    
    10.6
    %Total
    
    $
    146.8
    
    
    $
    158.6
    
    
    $
    (11.8
    )
    
    
    (7.4
    )%
  41




---



##### Table of Contents



Gross Profit
 Three months endedSeptember 30,
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)United States
    
    $
    3.4
    
    
    $
    2.6
    
    
    $
    0.8Europe
    
    
    2.0
    
    
    
    2.0
    
    
    
    Total
    
    $
    5.4
    
    
    $
    4.6
    
    
    $
    0.8Percent of net sales
    
    
    3.7
    %
    
    
    2.9
    %
   Selling and Administrative Expenses
    42




---



##### Table of Contents



Goodwill and Intangible Asset Impairments
  Research and Technology Expenses
  Provision for Restructuring
   Interest Expense
  Reorganization Items, net
  Other Income (Expense), net
   Provision for Income Taxes
   43




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Nine Months Ended September 30, 2010 and 2009
 Net Sales
 Nine months ended
    
    
    
    
    
    
    %September 30,
    
    
    Increase
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    (Decrease)United States
    
    $
    327.7
    
    
    $
    397.2
    
    
    $
    (69.5
    )
    
    
    (17.5
    )%Europe
    
    
    111.3
    
    
    
    100.4
    
    
    
    10.9
    
    
    
    10.9
    %Total
    
    $
    439.0
    
    
    $
    497.6
    
    
    $
    (58.6
    )
    
    
    (11.8
    )%
    44




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Gross Profit
 Nine months endedSeptember 30,
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)United States
    
    $
    11.1
    
    
    $
    27.3
    
    
    $
    (16.2
    )Europe
    
    
    4.8
    
    
    
    5.2
    
    
    
    (0.4
    )Total
    
    $
    15.9
    
    
    $
    32.5
    
    
    $
    (16.6
    )Percent of net sales
    
    
    3.6
    %
    
    
    6.5
    %
   Selling and Administrative Expenses
  Goodwill and Intangible Asset Impairments
  Research and Technology Expenses
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Provision for Restructuring
   Interest Expense
  Reorganization Items, net
  Other Expense (Income), net
  Provision for Income Taxes
    46




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Liquidity and Capital Resources
 Nine months endedSeptember 30,
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)Net cash provided by (used in) operating activities
    
    $
    (5.6
    )
    
    $
    13.3
    
    
    $
    (18.9
    )Net cash provided by (used in) investing activities
    
    $
    2.3
    
    
    $
    (18.2
    )
    
    $
    20.5Net cash provided by (used in) financing activities
    
    $
    3.3
    
    
    $
    (7.6
    )
    
    $
    10.9
        47




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Term
    
    Original GE Credit Agreement
    
    AmendmentMinimum available credit less
outstanding loans and letters of
credit
    
    $15.0 million for any period of five consecutive
business days during any fiscal quarter
    
    $12.5 million for any period of five
consecutive business days during any fiscal
month or $7.5 million at any timeMinimum consolidated EBITDA for 
trailing twelve months
    
    $40.0 million, if minimum available credit less
outstanding loans and letters of credit are not
maintained
    
    N/AMinimum Fixed Charge Coverage Ratio
for trailing twelve months
    
    N/A
    
    1.0:1.0, if minimum available credit less
outstanding loans and letters of credit are
not maintainedLetters of Credit sublimit
    
    $15.0 million
    
    $20.0 millionEBITDA annual cash expense add-backs
    
    $1.5 million annually for cash restructuring expense
    
    $3.0 million annually for cash restructuring
expense for fiscal years ended December 31,
2010 and 2011, $1.5 million for fiscal year
ended December 31, 2012Availability Block
    
    $2.5 million
    
    $5.0 million
 LIBOR
    
    Base
    
    Fixed Charge
    
    LIBOR
    
    BaseUsage
    
    Spread
    
    Spread
    
    Coverage
    
    Spread
    
    SpreadInterest rate  either LIBOR or a Base Rate plus a spread
    
    <$30M
    
    
    
    3.75
    %
    
    
    2.75
    %
    
    >1.2:1.0
    
    
    
    3.75
    %
    
    
    2.75
    %$30  $50M
    
    
    
    4.00
    %
    
    
    3.00
    %
    
    1.0  1.2:1.0
    
    
    
    4.00
    %
    
    
    3.00
    %>$50M
    
    
    
    4.25
    %
    
    
    3.25
    %
    
    <1.0:1.0
    
    
    
    4.25
    %
    
    
    3.25
    %
    48




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
    
    a dividend or other distribution from Constar Holland causing its
equity capital to amount to less than 35% of total assets;
    
    a breach of a covenant, representation, warranty or certification made
in connection with an ING Credit Agreement, including a default in the
payment of any amount due under the ING Credit Agreements;
    
    a default or acceleration with respect to financing or guarantee
agreements of Constar Holland of more than 50,000 or the occurrence
of certain insolvency events; and
    
    Constar Holland becoming subject to certain judgments.
    50




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Capital Expenditures
  Pension Funding
    51




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Commitments and Contingent Liabilities
  Critical Accounting Policies and Estimates
  Impairment of Long-Lived Assets
     52




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Goodwill Impairment
     Impairment of Indefinite-Lived Intangible Assets
   53




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Recent Accounting Pronouncements
 Improving Disclosures about Fair Value Measurements
 Forward-Looking Statements
     54




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Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  
 PART IIOther Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   Our stock is not listed on a national securities exchange. It will likely be more difficult
for stockholders and investors to sell our common stock or to obtain accurate quotations of the
share price of our common stock.
   55




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As a result of liquidity constraints and the upcoming maturity of our Secured Notes, we are
pursuing strategic alternatives, particularly a restructuring of the Secured Notes. A restructuring
of our Secured Notes may result in substantial dilution to, or cancellation or delisting of, our
currently outstanding common stock.
    We have incurred, and may in the future incur, significant impairment charges, which result in
lower reported net income (or higher net losses) and a reduction to stockholders equity.
   We must comply with financial and other covenants in our GE Credit Agreement and other debt
agreements
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We expect our largest U.S. customer to increase its self-manufacturing of conventional
containers, which we expect will result in significant volume loss.
  Our declining stockholders equity may cause our common stock to be delisted from the NASDAQ
Capital Market, which could negatively impact the market value and liquidity of our common stock
and our ability to access the capital markets.
  If our auditors issue a going concern opinion in early 2011 we would be in default under our
Credit Agreement.
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Our ability to attract and retain employees may decline.
  Legislative changes could reduce demand for our products.
   Recent federal health care legislation could increase our expenses.
  
 Item  6. Exhibits
 10.1
    
    Executive Employment Agreement, by and between the Company and Grant H. Beard, dated as of
September 13, 2010 (incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K, filed on September 14, 2010).31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the SarbanesOxley Act of 2002.32.2
    
    Certification of Executive Vice President and Chief Financial Officer Pursuant to U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  58




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SIGNATURES
  Constar International Inc.Dated: November 15, 2010
    By:
    /s/ J. Mark BorsethJ. Mark BorsethExecutive Vice President and
Chief Financial Officer
(duly authorized officer and
principal financial officer)  59