**UNITED STATES****SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

 

**FORM 10-Q**

 
| **ý****QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d)**                     |
|------------------------------------------------------------------------------------------|
| **OF THE SECURITIES EXCHANGE ACT OF  1934**                                              |
|                                                                                     |
| **For the  quarterly period ended July 2, 2005**                                    |
|                                                                                     |
| **or**                                                                                   |
|                                                                                     |
| **o****TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE  SECURITIES** |
| **EXCHANGE ACT OF 1934**                                                                 |

 

**For thetransition period from           to           **

 

**CommissionFile Number: 333-124826**

 

**TWC Holding LLC**

(Exact name of registrant asspecified in its charter)

 
| **Delaware**                                                     |   | **59-3781176**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or  organization) |   | (I.R.S. Employer  Identification No.) |
|                                                             |   |                                  |
| **10825  Kenwood Road, Cincinnati, Ohio**                        |   | **42542**                             |
| (Address of principal  executive offices)                        |   | (Zip Code)                            |

 

**(513) 794-9800**

(Registrant’s telephone number,including area code)

 

**N/A**

(Former name, former addressand former fiscal year, if changed since last report)

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  o  Yes    ý  No

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2of the Exchange Act).  o  Yes    ý  No

 

 

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**TWCHolding LLC**

**Table ofContents**

 
| **PART I - FINANCIAL INFORMATION**                                                                                                                 | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                                                                                                              | ** ** |
| Item 1. Financial Statements  (unaudited)                                                                                                               |       |
| Unaudited Condensed  Consolidated Balance Sheets  at December 31, 2004 and July 2, 2005                                                       |       |
|                                                                                                                                                    |       |
| Unaudited  Condensed Consolidated Statements of Operations for  the thirteen weeks and twenty six weeks Ended June 30, 2004 and July 2,  2005 |       |
|                                                                                                                                                    |       |
| Unaudited  Condensed Consolidated Statements of Cash Flows for  the thirteen weeks and twenty six weeks Ended June 30, 2004 and July 2,  2005 |       |
|                                                                                                                                                    |       |
| Notes to Unaudited Consolidated Consolidated Financial Statements                                                                                       |       |
|                                                                                                                                                    |       |
| Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of  Operations                                                    |       |
|                                                                                                                                                    |       |
| Item 3.  Quantitative and Qualitative Disclousres About Market Risk                                                                                     |       |
|                                                                                                                                                    |       |
| Item 4. Controls  and Procedures                                                                                                                        |       |
|                                                                                                                                                    |       |
| Forward-Looking  Statements                                                                                                                             |       |
|                                                                                                                                                    |       |
| **PART II - OTHER  INFORMATION**                                                                                                                   | ** ** |
| ** **                                                                                                                                              | ** ** |
| Item 1. Legal  Proceedings                                                                                                                              |       |
|                                                                                                                                                    |       |
| Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                                                                    |       |
|                                                                                                                                                    |       |
| Item 3.  Defaults Upon Senior Securities                                                                                                                |       |
|                                                                                                                                                    |       |
| Item 4.  Submissions of Matters to a Vote of Security Holders                                                                                           |       |
|                                                                                                                                                    |       |
| Item 5. Other  Information                                                                                                                              |       |
|                                                                                                                                                    |       |
| Item 6. Exhibits                                                                                                                                        |       |
|                                                                                                                                                    |       |
| Signatures                                                                                                                                              |       |

 

----

 

**Part 1 Financial Information**

**Item 1.****                                                                                                                                                                                                                                                                     FinancialStatements**

 

**TWCHolding LLC**

**Consolidated Balance Sheets**

**(Unaudited)**

 
| ** **                                             | ** ** | **December 31,** | ** **  | ** **            | ** ** |
|--------------------------------------------------------|------------|-----------------------|-------------|-----------------------|------------|
| ** **                                             | ** ** | **2004**              | ** **  | **July 2, 2005** | ** ** |
| **Assets**                                             |       |                  |        |                  |       |
| Current  assets                                        |       |                  |        |                  |       |
| Cash and  cash equivalents                             |       | $                     | 3,289,030   |                  | $          | 3,097,706 |   |
| Trade  accounts receivable, net                        |       | 13,856,294            |        | 11,833,111            |       |
| Inventories                                            |       | 24,132,116            |        | 21,282,382            |       |
| Prepaid  expenses and other current assets             |       | 531,106               |        | 950,249               |       |
| Total  current assets                                  |       | 41,808,546            |        | 37,163,448            |       |
|                                                   |       |                  |        |                  |       |
| Property and  equipment, net                           |       | 32,794,239            |        | 38,068,631            |       |
| Goodwill                                               |       | 77,573,207            |        | 77,573,207            |       |
| Intangible  assets, net                                |       | 21,822,710            |        | 19,475,418            |       |
| Other  noncurrent assets                               |       | 5,675,939             |        | 7,816,028             |       |
| Total assets                                           |       | $                     | 179,674,641 |                  | $          | 180,096,732 |   |
|                                                   |       |                  |        |                  |       |
| **Liabilities  and Stockholder’s/Members Equity** |       |                  |        |                  |       |
| Current  liabilities                                   |       |                  |        |                  |       |
| Trade  accounts payable                                |       | $                     | 6,167,826   |                  | $          | 5,969,169 |   |
| Accrued  expenses                                      |       | 3,122,446             |        | 4,212,135             |       |
| Accrued  interest                                      |       | 6,796,875             |        | 6,230,469             |       |
| Taxes  payable                                         |       | 51,950                |        | —                |       |
| Total  current liabilities                             |       | 16,139,097            |        | 16,411,773            |       |
| Deferred  income taxes                                 |       | 912,067               |        | 1,824,067             |       |
| Long-term  debt                                        |       | 125,000,000           |        | 152,412,938           |       |
| Total  liabilities                                     |       | 142,051,164           |        | 170,648,778           |       |
| **Commitments  and Contingencies**                     |       |                  |        |                  |       |
| ** **                                             |       |                  |        |                  |       |
| Stockholder’s  equity/Members equity              |       |                  |        |                  |       |
| Class A  and Class B Membership Interests    |       | 37,500,000            |        | 14,038,007            |       |
| Common stock  issued and outstanding                   |       | —                |        | —                |       |
| Additional  paid-in capital                            |       | 146,400               |        | 156,383               |       |
| Retained  earnings                                     |       | (22,923               | )           | (4,746,436            | )          |
| Total  stockholder’s equity                       |       | 37,623,477            |        | 9,447,954             |       |
| Total  liabilities and stockholder’s equity       |       | $                     | 179,674,641 |                  | $          | 180,096,732 |   |

 

The accompanyingnotes are an integral part of these consolidated financial statements.

 

1

----

 

**TWC Holding LLC**

**Consolidated Statements of Operations**

**(Unaudited)**

 
| ** **                                    | ** ** | **Thirteen Weeks Ended** | ** ** | **Twenty-Six Weeks Ended** | ** ** |
|-----------------------------------------------|------------|--------------------------|------------|----------------------------|------------|
| ** **                                    | ** ** | **June 30, 2004**   | ** ** | **July 2, 2005**      | ** ** | **June 30, 2004** | ** ** | **July 2, 2005** | ** ** |
| ** **                                    | ** ** | **(Predecessor)**        | ** ** | **(Successor)**            | ** ** | **(Predecessor)** | ** ** | **(Successor)** | ** ** |
| Net sales                                     |       | $                        | 44,821,208 |                       | $          | 44,392,948 |   | $ | 80,923,839 |   | $ | 103,225,163 |   |
| Cost of  sales                                |       | 37,915,653               |       | 36,418,430                 |       | 67,668,529 |   | 88,801,955 |   |
| Gross profit                                  |       | 6,905,555                |       | 7,974,518                  |       | 13,255,310 |   | 14,423,208 |   |
| Selling,  general and administrative expenses |       | 7,137,472                |       | 4,702,290                  |       | 12,458,600 |   | 9,554,540 |   |
| Operating  profit                             |       | (231,917                 | )          | 3,272,228                  |       | 796,710 |   | 4,868,668 |   |
| Other  (expense) income                       |       |                     |       |                       |       |   |   |   |   |
| Interest  income                              |       | 301,019                  |       | 65,153                     |       | 506,553 |   | 98,934 |   |
| Interest  expense                             |       | (49,931                  | )          | (4,590,684                 | )          | (99,791 | ) | (8,703,720 | ) |
| Other income  (expense), net                  |       | 84,809                   |       | (107,664                   | )          | 284,921 |   | (27,225 | ) |
| Total other  income (expense)                 |       | 335,897                  |       | (4,633,195                 | )          | 691,683 |   | (8,632,011 | ) |
| Income  before income taxes                   |       | 103,980                  |       | (1,360,967                 | )          | 1,488,393 |   | (3,763,343 | ) |
| Income tax  (benefit) expense                 |       | 13,700                   |       | 404,050                    |       | 41,052 |   | 960,170 |   |
| Net  income/(loss)                            |       | $                        | 90,280     |                       | $          | (1,765,017 | ) | $ | 1,447,341 |   | $ | (4,723,513 | ) |
|                                          |       |                     |       |                       |       |   |   |   |   |
| Pro forma  income data (unaudited)            |       |                     |       |                       |       |   |   |   |   |
| Income  before income taxes                   |       | $                        | 103,980    |                       |       |   | $ | 1,488,393 |   |   |   |
| Pro forma  income tax expense                 |       | 249,509                  |       |                       |       | 949,825 |   |   |   |
| Pro forma  net income                         |       | $                        | (145,529   | )                          |       |   | $ | 538,568 |   |   |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

2

----

 

TWC HoldingLLC

Consolidated Statement of Cash Flows

(Unaudited)

 
| ** **                                                                                   | ** ** | **Twenty-Six Weeks ended** | ** ** |
|----------------------------------------------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                                                   | ** ** | **June 30, 2004**     | ** ** | **July 2, 2005** | ** ** |
| ** **                                                                                   | ** ** | **(Predecessor)**          | ** ** | **(Successor)** | ** ** |
| **Cash  flows from operating activities**                                                    |       |                       |       |   |   |
| Net income  (loss)                                                                           |       | $                          | 1,447,341  |   | $ | (4,723,513 | ) |
| Adjustments  to reconcile net income to net cash provided by (used in) operating  activities |       |                       |       |   |   |
| Depreciation  of property and equipment                                                      |       | 1,386,904                  |       | 1,911,292 |   |
| Amortization  of intangibles                                                                 |       | —                     |       | 2,347,292 |   |
| Amortization  of bond issuance cost                                                          |       | —                     |       | 489,128 |   |
| Deferred  income tax (benefit) expense                                                       |       | —                     |       | 912,000 |   |
| Compensation  expense for Employee Stock                                                     |       |                       |       | 9,983 |   |
| Ownership  Trust shares released and committed to be released                                |       | 2,344,292                  |       | — |   |
| Compensation  expense for stock options                                                      |       | 713,433                    |       | — |   |
| Other equity  based compensation plans                                                       |       | 3,266,814                  |       |   |   |
| Stock  compensation plans                                                                    |       | (4,270,995                 | )          | — |   |
| Changes in  assets and liabilities                                                           |       |                       |       |   |   |
| Trade  accounts receivable                                                                   |       | 1,189,462                  |       | 2,023,183 |   |
| Inventories                                                                                  |       | (4,693,075                 | )          | 2,849,734 |   |
| Prepaid  expenses and other current assets                                                   |       | 162,149                    |       | (419,143 | ) |
| Other noncurrent  asset                                                                      |       | (56,901                    | )          | (38,625 | ) |
| Trade  accounts payable and accrued expenses                                                 |       | (1,961,207                 | )          | 891,032 |   |
| Accrued bond  interest                                                                       |       | —                     |       | 846,552 |   |
| Taxes  payable                                                                               |       | —                     |       | (51,950 | ) |
| Net cash  provided by (used in) operating activities                                         |       | (471,783                   | )          | 7,046,965 |   |
| **Cash  flows from investing activities**                                                    |       |                       |       |   |   |
| Capitalized  bond issuance cost                                                              |       |                       |       | (2,590,612 | ) |
| Payments  received on notes receivable                                                       |       | 610,100                    |       | — |   |
| Proceeds  from the sale of investments                                                       |       | 19,988,514                 |       | — |   |
| Purchase of  investments                                                                     |       | (30,007,514                | )          | — |   |
| Capital expenditures                                                                         |       | (2,382,720                 | )          | (7,185,684 | ) |
| Net cash  used in investing activities                                                       |       | (11,791,620                | )          | (9,776,296 | ) |
| **Cash  flows from financing activities**                                                    |       |                       |       |   |   |
| Change in  book overdrafts                                                                   |       | 243,027                    |       | — |   |
| Net increase  (decrease) in the line of credit                                               |       | 8,700,000                  |       |   |   |
| Proceeds  from issuance of long-term debt                                                    |       | —                     |       | 26,000,000 |   |
| Principal  payments on long-term debt                                                        |       | (629,305                   | )          | — |   |
| Return of  Capital Dividend                                                                  |       | —                     |       | (23,461,993 | ) |
| Net cash  provided by (used in) financing activities                                         |       | 8,313,722                  |       | 2,538,007 |   |
| Net  (decrease) increase in cash and cash equivalents                                        |       | (3,949,681                 | )          | (191,324 | ) |
| **Cash and  cash equivalents**                                                               |       |                       |       |   |   |
| Beginning of  period                                                                         |       | 5,290,667                  |       | 3,289,030 |   |
| End of  period                                                                               |       | $                          | 1,340,986  |   | $ | 3,097,706 |   |

 

The accompanying notes are an integral part of these consolidated financialstatements.

 

3

----

 

**1.****                                      Organizationand Basis of Presentation**

 

TWCHolding LLC (the “Company” or “Successor”) and its wholly owned subsidiariesThe Wornick Company, a Delaware corporation (“Wornick” or the “OperatingCompany”) and TWC Holding Corp were formed by The Veritas Capital Fund II,L.P., and its general partner, Veritas Capital Management II,L.L.C.(collectively “Veritas”). Wornick and Veritas entered into an AssetPurchase and Sale Contract with The Wornick Company, a Nevada corporation (the “Predecessor”),and its subsidiaries, The Wornick Company Right Away Division, a Nevadacorporation, The Wornick Company Right Away Division, L.P., a Texas limitedpartnership, and Right Away Management Corporation, a Texas corporation, whichwas consummated on June 30, 2004, and resulted in the purchase by theSuccessor and its subsidiaries, and the sale by the Predecessor and itssubsidiaries, of the business of the Predecessor and its subsidiaries as agoing concern, including substantially all of the operating assets of thePredecessor and its subsidiaries. TWC Holding Corp. has no operations or assetsand de minimus equity and was formed for the purpose of being a co-issuer ofthe Senior PIK notes described in Note 6.

 

TheCompany, through Wornick, produces, packages and distributes extendedshelf-life foods, both shelf stable and frozen, in flexible pouches andsemi-rigid containers, primarily for the U.S. Department of Defense andcommercial customers, as well as for its own consumer-branded products.

 

**2.****                                      Basisof Presentation**

 

Theaccompanying unaudited interim consolidated financial statements have beenprepared in accordance with accounting principles generally accepted in theUnited States of America for interim financial information and the instructionsto Form 10-Q and Article 10 of Regulation S-X under theSecurities Exchange Act of 1934, as amended. Accordingly, they do not includeall of the information and footnotes normally included in financial statementsprepared in conformity with accounting principles generally accepted in theUnited States of America. In the opinion of management, the interimconsolidated financial statements reflect all adjustments of a normal recurringnature considered necessary for a fair presentation of the results for theperiods presented. Operating results for interim periods are not necessarilyindicative of results that may be expected for the fiscal year as a whole. Thepreparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets,liabilities, revenues, expenses, and related disclosures at the date of the financialstatements and during the reporting period. Actual amounts could differ fromthese estimates. These unaudited interim consolidated financial statementsshould be read in conjunction with the audited consolidated financialstatements and notes thereto included in the Company’s Registration Statementon Form S-4 (File No. 333-124826) filed with the Securities andExchange Commission.

 

Asdiscussed in Note 1 above, the acquisition was consummated on June 30,2004. As such, the financial information presented represents: (i) theConsolidated Balance Sheets of the Successor at December 31, 2004 and July 2,2005, (ii) the Consolidated Statements of Operations of the Predecessorfor the thirteen and twenty-six week periods ended June 30, 2004, (iii) theConsolidated Statements of Operations of the Successor for the thirteen andtwenty-six week periods ended July 2, 2005, (iv) the ConsolidatedStatement of Cash Flows of the Predecessor for the twenty-six week period endedJune 30, 2004 and (v) the Consolidated Statement of Cash Flows of theSuccessor for the twenty-six week period ended July 2, 2005.

 

Asthe Successor conformed its interim accounting periods to those of thePredecessor, the operating activity of the Successor for the period July 1,2004 through July 3, 2004 is included in the results of the period ended October 2,2004 of the Successor.  Its impact wasnot significant as operations were substantially shut down during the periodfrom July 1, 2004 through July 3, 2004 to accommodate the closing of theJune 30, 2004 acquisition.

 

4

----

 

Forthe purpose of these financial statements, references to the Predecessorthirteen week period ended June 30, 2004, reflect the result of operationsfor the period from April 4, 2004 to June 30, 2004 and references tothe Predecessor twenty-six week period ended June 30, 2004, reflect theresult of operations for the period from January 1, 2004 through June 30,2004.

 

Certainitems in the predecessor statement of operations have been reclassified toconform to current year presentations.  These reclassifications had noimpact on previously reported net income or stockholder’s equity.

 

**3.****                                     ****Acquisition**

 

OnJune 30, 2004 (the “Acquisition Date”), pursuant to the acquisition describedabove in Note 1, the Operating Company acquired all of the operatingassets of the Predecessor. The acquisition was financed through a combinationof debt and equity issuances. The Purchase price of $165.0 millionincluded approximately $10.1 million of transaction costs. Goodwill of$77.6 million represented the excess of the acquisition cost over theestimated fair value of the identifiable assets acquired. The identifiableintangible assets relate to the value of existing long-term customer supplycontracts in place at the Acquisition Date. The purchase price has beenallocated to the assets acquired in accordance with the purchase method ofaccounting as follows:

 
| Inventory                    |   | $          | 27,062,776  |   |
|------------------------------|--------|------------|-------------|--------|
| Property and  equipment      |   | 30,320,502 |        |
| Intangible  assets           |   | 24,170,000 |        |
| Goodwill                     |   | 77,573,207 |        |
| Deferred  debt issuance cost |   | 4,458,990  |        |
| Other  noncurrent assets     |   | 1,449,777  |        |
|                         |   | $          | 165,035,252 |   |

 

Infinancing the acquisition, the Operating Company received $165.5 million inproceeds from debt and equity financing, including a $3.0 million advance on aworking capital facility.

 

Summaryselected pro forma information of the Predecessor as though the transaction wascompleted at the beginning of the respective period presented (and as thoughthe Operating Company was taxed as a C-Corporation) is as follows:

 
| ** **                    | ** ** | **Thirteen**           | ** ** | **Twenty-Six**         | ** ** |
|-------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                    | ** ** | **Weeks Ended**        | ** ** | **Weeks Ended**        | ** ** |
| **(in thousands of dollars)** | ** ** | **June 30, 2004** | ** ** | **June 30, 2004** | ** ** |
|                          |       |                   |       |                   |       |
| Net sales                     |       | $                      | 44,821     |                   | $          | 80,924 |   |
| Net income  (loss)            |       | (3,370                 | )          | (5,950                 | )          |
|                               |            |                        |            |                        |            |  |  |

 

5

----

 

**4.****                                     ****Supplemental Balance SheetInformation**

 

**Inventories**

 

Asummary of inventories is as follows:

 
| ** **       | ** ** | **December 31,** | ** ** | **July 2,** | ** ** |
|------------------|------------|-----------------------|------------|------------------|------------|
| ** **       | ** ** | **2004**              | ** ** | **2005**         | ** ** |
|             |       |                  |       |             |       |
| Raw  materials   |       | $                     | 15,187,856 |             | $          | 13,937,613 |   |
| Work in  process |       | 1,838,828             |       | 1,358,557        |       |
| Finished  goods  |       | 7,105,432             |       | 5,986,212        |       |
|             |       | $                     | 24,132,116 |             | $          | 21,282,382 |   |

 

**Propertyand Equipment, Net**

 

A summary of property andequipment, net is as follows:

 
| ** **                                       | ** ** | **December 31,** | ** ** | **July 2,** | ** ** |
|--------------------------------------------------|------------|-----------------------|------------|------------------|------------|
| ** **                                       | ** ** | **2004**              | ** ** | **2005**         | ** ** |
|                                             |       |                  |       |             |       |
| Leasehold  improvements                          |       | $                     | 1,771,322  |             | $          | 2,670,772 |   |
| Machinery  and equipment                         |       | 26,166,475            |       | 27,743,006       |       |
| Office  equipment, fixtures and vehicles         |       | 2,395,476             |       | 1,881,820        |       |
| Construction  in progress                        |       | 4,216,827             |       | 9,440,186        |       |
|                                             |       | 34,550,100            |       | 41,735,784       |       |
| Less:  Accumulated depreciation and amortization |       | (1,755,861            | )          | (3,667,153       | )          |
|                                             |       | $                     | 32,794,239 |             | $          | 38,068,631 |   |

 

Depreciationexpense for the twenty-six week periods ended June 30, 2004 and July 2,2005 was approximately $1,387,000 and $1,911,000, respectively.

 

**5.****                                     ****Intangible Assets**

 

Inconnection with the acquisition described in Note 3, a portion of thepurchase price was allocated to identifiable intangible assets related to thevalue of long-term customer supply contracts in place at the AcquisitionDate.  The original value of these contracts was $24,170,000 and theiruseful lives range from three to eight years.  Aggregate accumulatedamortization of intangibles at December 31, 2004 and July 2, 2005amounted to $2,347,290 and $4,694,582, respectively.  Expense related toamortization of intangible assets for the twenty-six week period ended July 2,2005, amounted to $2,347,292.

 

Scheduledamortization of these assets is as follows:

 
| July 3,  2005 through December 31, 2005 |   | $         | 2,347,288  |   |
|---------------------------------------------------|--------|-----------|------------|--------|
| 2006                                              |   | 4,694,580 |       |
| 2007                                              |   | 4,627,918 |       |
| 2008                                              |   | 4,856,248 |       |
| 2009                                              |   | 2,421,226 |       |
| Thereafter                                        |   | 528,158   |       |
|                                              |   | $         | 19,475,418 |   |

 

6

----

 

**6.****                                     ****Notes Payable and Long-TermDebt**

 

Asummary of long-term debt at December 31, 2004 and July 2, 2005, isas follows:

 
| ** **                                    | ** ** | **December 31,** | ** **  | **July 2,** | ** ** |
|-----------------------------------------------|------------|-----------------------|-------------|------------------|------------|
| ** **                                    | ** ** | **2004**              | ** **  | **2005**         | ** ** |
|                                          |       |                  |        |             |       |
| 10-7/8%  Senior secured notes; due 2011       |       | $                     | 125,000,000 |             | $          | 125,000,000 |   |
|                                          |       |                  |        |             |       |
| 13-7/8%  Senior secured PIK notes; due 2011   |       | —                |        | 27,412,938       |       |
|                                          |       | 125,000,000           |        | 152,412,938      |       |
| Less:  Current maturities                     |       | —                |        | —           |       |
| Long-term  debt, excluding current maturities |       | $                     | 125,000,000 |             | $          | 152,412,938 |   |

 

Inconnection with the financing of the acquisition described in Note 3, theCompany’s wholly owned subsidiary, Wornick, issued $125.0 million 107/8% Senior Secured Notes due 2011 and also secured additional financingthrough a Revolving Loan Agreement which provides Wornick with$15.0 million of revolving loan financing through June 30, 2009, withan additional revolving credit facility of $10.0 million becomingavailable upon certain events. Amounts outstanding under the Revolving LoanAgreements ($0 at December 31, 2004 and July 2, 2005) are due June 30,2009, and amounts outstanding are subject to limitations as determined by acalculated borrowing base.

 

Intereston amounts outstanding under the Revolving Loan Agreement will vary at afluctuating rate per annum that is equal to the prime rate (5.25% at December 31,2004 and 6.25% at July 2, 2005) as published daily by *The Wall Street Journal*. Amountsoutstanding under the Revolving Loan Agreement are collateralized bysubstantially all of the operating assets of Wornick. The lien on suchcollateral is senior to the lien on the collateral that secures the seniorsecured notes. In connection with completing the acquisition, the OperatingCompany borrowed $3.0 million against the revolving loan facility to fundthe acquisition and initial working capital of the Operating Company. Thisamount was subsequently repaid prior to December 31, 2004. There are noamounts outstanding under the revolving loan agreement at July 2, 2005.

 

Thesenior secured notes are collateralized by substantially all assets and otherproperty of the Operating Company. The lien on such collateral, however, issubordinate to the lien on the collateral securing the Revolving Loan Agreement.Interest on the senior secured notes is payable semi-annually. Interest expenseon the senior secured notes and revolving loan facility for the twenty-six weekperiod ended July 2, 2005 amounted to $6,796,876 and $4,778, respectively.

 

Amountsdue under the senior secured notes and the revolving loan facility are subjectto an intercreditor agreement. Wornick is required to meet certain financialcovenants related primarily to minimum working capital amounts and minimumworking capital ratios as well as minimum profitability and minimum net worthcalculations.

 

OnFebruary 11, 2005, the Company and its wholly-owned finance subsidiary,TWC Holding Corp., co-issued their 13.875% Senior PIK Notes due 2011, or the “SeniorPIK Notes,” in the approximate aggregate principal amount of $62,259,000 with adiscount of approximately $36,259,000.  The Senior PIK Notes earn interestat the rate of 13.875% per annum, mature on August 15, 2011 and areunsecured obligations of TWC Holding LLC and TWC Holding Corp.  Neitherthe Operating Company nor any of its subsidiaries guaranteed the Senior PIKnotes.  The notes limit the Company’s ability to incur additionalindebtedness and pay

 

7

----

 

dividendsor make other distributions as well as to make certain investments and sellcertain assets or merge with or into other companies.  Because theCompany is a holding company with no operations and has only itsinvestment in the Operating Company and because TWC Holding Corp. has noindependent operations or assets, future cash flows of the Operating Companythrough 2011 may be required to service the $62.3 million Senior PIK notes,upon their maturity.

 

Assumingthe offering of the Senior PIK notes took place at the beginning of the year,the Company would have incurred approximately $415,000 of additional interestexpense for the thirteen week period ended April 2, 2005.  Actual interest expense was approximately$919,000 and $1,413,000 for the thirteen and twenty-six week periods ended July 2,2005.

 

**7.****                                     ****Income Taxes**

 

Inconnection with the transactions described in Note 3, the Successor’s whollyowned subsidiary “Wornick” is taxed as a C-Corporation whereas, the Predecessorwas a pass-through entity qualified under Subchapter S of the Internal RevenueCode.  The Operating Company provides forincome taxes utilizing the asset liability method, current income tax expenseor benefit represents income taxes expected to be payable or refundable for thecurrent period.  Deferred income taxes are recognized for the taxconsequences in future years as a result of differences between the tax andfinancial reporting bases of assets and liabilities and for the expected futuretax benefit to be derived from tax credit and loss carry-forwards.  Valuationallowances are established when necessary to reduce deferred tax assets to theamounts management believes are more likely than not to be realized in futuretax returns.  Tax rate changes are reflected in the period such changesare enacted.  The Operating Company has recorded deferred tax liabilitiesof approximately $1,824,000 related to the indefinite reversal period relatedto goodwill.

 

**8.****                                     ****Members Equity**

 

TWCHolding LLC has two classes of membership interests, Class A interests andClass B interests. In connection with completing the Acquisition, certainmembers of Wornick management and outside directors received Class Binterests. Pursuant to the terms of the operating agreement governing TWCHolding LLC, the holders of Class B interests are entitled to receive upto 7.875%, in aggregate, of all distributions made by TWC Holding LLC after theholders of Class A interests have received a return of their investedcapital provided that the holders of the Class A interests have receivedan 8% per annum internal rate of return on their invested capital. The Class Binterests are subject to a five-year vesting schedule with any unvestedinterest reverting to the holders of Class A interests. Because these Class Binterests were issued to members of management and directors of the OperatingCompany, these awards are considered to be compensatory to the OperatingCompany over the vesting period. The total fair value of these class Binterests as of their issuance date was determined to be $1,464,000. During theperiod ended April 2, 2005, certain members of management terminated theiremployment with Wornick and forfeited their Class B interests. As such,previously recognized compensation expense of approximately $78,000 wasreversed which resulted in compensation income of approximately $44,000 for thethirteen week period ended April 2, 2005 related to the vesting provisionsof these Class B interests.

 

OnApril 11, 2005, the Company issued additional Class B membershipinterests to recently retained senior management of the Operating Company.  These Class B membership interests willvest over a five year period. Approximately $88,000 of compensation expense was recognized in thetwenty-six week period ended July 2, 2005, resulting in net compensationexpense for Class B membership interests for the twenty-six week periodended July 2, 2005 of $9,983.

 

8

----

 

**9.****                                     ****Operating SegmentInformation**

 

TheCompany has two operating segments: the Right Away Division (“RAD”) and thePrepared Foods Division (“PFD”).  RAD is located in Texas and primarilysells its product to the U.S. Department of Defense.  PFD is located inOhio and also sells directly to the U.S. Department of Defense as well as tocommercial branded food companies and inter-segment sales to RAD. Management evaluates segment performance based on several factors, includingoperating profit.

 

Consistentwith the Predecessor’s internal management reporting, corporate operations forthe Predecessor include investment and interest income, compensation expensefor The Wornick Company (Predecessor) Employee Stock Ownership Trust (“ESOT”),stock options and other stock-based compensation expense and overheadcosts.  Corporate assets primarily include investments in subsidiaryguarantors (which are eliminated in consolidation), other investments andgoodwill.  Other significant noncash items include compensation expensefor ESOT shares released and committed to be released as well as compensationexpense related to stock options and other stock-based compensation plans.

 

TheCompany’s sales by product line for the periods indicated are as follows (inthousands):

 
| ** **                     | ** ** | **Thirteen  Weeks Ended** | ** ** | **Twenty-Six  Weeks Ended** | ** ** |
|--------------------------------|------------|---------------------------|------------|-----------------------------|------------|
| **(in  thousands of dollars)** | ** ** | **June 30,  2004**   | ** ** | **July 2,  2005**      | ** ** | **June 30,  2004** | ** ** | **July 2,  2005** | ** ** |
| ** **                     | ** ** | **(Predecessor)**         | ** ** | **(Successor)**             | ** ** | **(Predecessor)** | ** ** | **(Successor)** | ** ** |
| DOD Sales                      |       |                      |       |                        |       |   |   |   |   |
| Meals  Ready-to-Eat            |       | $                         | 18,649     |                        | $          | 25,072 |   | $ | 39,078 |   | $ | 58,765 |   |
| Unitized  Group Rations        |       | 16,592                    |       | 7,715                       |       | 24,518 |   | 22,300 |   |
| Tray-Pack                      |       | 1,348                     |       | 1,511                       |       | 2,410 |   | 2,218 |   |
| Military  Other                |       | 588                       |       | 775                         |       | 793 |   | 1,316 |   |
| Total DOD  sales               |       | 37,177                    |       | 35,073                      |       | 66,799 |   | 84,599 |   |
| Co-manufactured                |       | 5,299                     |       | 8,570                       |       | 10,329 |   | 16,774 |   |
| Branded                        |       | 1,508                     |       | 537                         |       | 2,359 |   | 1,389 |   |
| Other                          |       | 837                       |       | 213                         |       | 1,437 |   | 463 |   |
|                           |       | $                         | 44,821     |                        | $          | 44,393 |   | $ | 80,924 |   | $ | 103,225 |   |

 

Duringthe twenty-six week periods ended June 30, 2004 and July 2, 2005, theCompany had one major customer, which accounted for approximately $66,799,000and $84,599,000, or 82.5% and 82.0% of net revenue, respectively. Approximately $10,528,000, or 78.0% and $7,613,000, or 64.3%, of netreceivables were attributed to this customer at June 30, 2004 and July 2,2005, respectively.

 

9

----

 

Unauditedreportable operating segment financial information for the thirteen weekperiods ended July 2, 2005 and June 30, 2004, is a follows (inthousands):

 
| ** **                        | ** ** | ** **  | ** ** | ** **        | ** ** | **Operating** | ** ** |
|-----------------------------------|------------|-------------|------------|-------------------|------------|---------------|------------|
| ** **                        | ** ** | **Trade**   | ** ** | **Inter-segment** | ** ** | **Profit**    | ** ** |
| **Operating  Segments**           | ** ** | **Revenue** | ** ** | **Revenue**       | ** ** | **(Loss)**    | ** ** |
|                              |       |        |       |              |       |          |       |
| **Right Away Division**           |       |        |       |              |       |          |       |
| June 30,  2004 (Predecessor) |       | 36,259,041  |       | —            |       | 3,134,541     |       |
| July 2,  2005 (Successor)    |       | 33,627,700  |       | —            |       | 7,190,901     |       |
| **Prepared Foods**                |       |        |       |              |       |          |       |
| June 30,  2004 (Predecessor) |       | 8,562,167   |       | 7,882,881         |       | 1,665,239     |       |
| July 2,  2005 (Successor)    |       | 10,765,248  |       | 7,465,984         |       | (2,828,248    | )          |
| **Corporate**                     |       |        |       |              |       |          |       |
| June 30,  2004 (Predecessor) |       | —      |       | —            |       | (5,031,697    | )          |
| July 2,  2005 (Successor)    |       | —      |       | —            |       | (1,017,519    | )          |
| **Eliminations**                  |       |        |       |              |       |          |       |
| June 30,  2004 (Predecessor) |       | —      |       | (7,882,881        | )          | —        |       |
| July 2,  2005 (Successor)    |       | —      |       | (7,465,984        | )          | —        |       |
| **TWC Holding LLC**               |       |        |       |              |       |          |       |
| June 30,  2004 (Predecessor) |       | —      |       | —            |       | —        |       |
| July 2,  2005 (Successor)    |       | —      |       | —            |       | (72,906       | )          |
| **Total Company**                 |       |        |       |              |       |          |       |
| June 30,  2004 (Predecessor) |       | 44,821,208  |       | —            |       | (231,917      | )          |
| July 2,  2005 (Successor)    |       | 44,392,948  |       | —            |       | 3,272,228     |       |

 

10

----

 

Unauditedreportable operating segment financial information for the twenty-six weekperiods ended July 2, 2005 and June 30, 2004, is a follows (inthousands):

 
| ** **                        | ** ** | ** **  | ** ** | ** **        | ** ** | **Operating** | ** ** | ** **        | ** ** | ** **  | ** ** | ** **       | ** ** |
|-----------------------------------|------------|-------------|------------|-------------------|------------|---------------|------------|-------------------|------------|-------------|------------|------------------|------------|
| ** **                        | ** ** | **Trade**   | ** ** | **Inter-segment** | ** ** | **Profit**    | ** ** | **Depreciation/** | ** ** | **Total**   | ** ** | **Capital**      | ** ** |
| **Operating  Segments**           | ** ** | **Revenue** | ** ** | **Revenue**       | ** ** | **(Loss)**    | ** ** | **Amortization**  | ** ** | **Assets**  | ** ** | **Expenditures** | ** ** |
|                              |       |        |       |              |       |          |       |              |       |        |       |             |       |
| **Right Away Division**           |       |        |       |              |       |          |       |              |       |        |       |             |       |
| June 30,  2004 (Predecessor) |       | 65,266,652  |       | —            |       | 4,358,847     |       | 486,473           |       |        |       | 773,591          |       |
| July 2,  2005 (Successor)    |       | 82,595,537  |       | —            |       | 12,077,800    |       | 1,064,279         |       | 32,928,896  |       | 175,325          |       |
| **Prepared Foods**                |       |        |       |              |       |          |       |              |       |        |       |             |       |
| June 30,  2004 (Predecessor) |       | 15,657,187  |       | 19,815,600        |       | 4,413,202     |       | 891,518           |       |        |       | 1,609,129        |       |
| July 2,  2005 (Successor)    |       | 20,629,626  |       | 20,119,597        |       | (5,064,532    | )          | 3,194,305         |       | 62,982,950  |       | 7,010,359        |       |
| **Corporate**                     |       |        |       |              |       |          |       |              |       |        |       |             |       |
| June 30,  2004 (Predecessor) |       | —      |       | —            |       | (7,975,339    | )          | 8,913             |       | —      |       | —           |       |
| July 2,  2005 (Successor)    |       | —      |       | —            |       | (2,071,964    | )          | 341,400           |       | 112,499,592 |       | —           |       |
| **Eliminations**                  |       |        |       |              |       |          |       |              |       |        |       |             |       |
| June 30,  2004 (Predecessor) |       | —      |       | (19,815,600       | )          | —        |       | —            |       | —      |       | —           |       |
| July 2,  2005 (Successor)    |       | —      |       | (20,119,597       | )          | —        |       | —            |       | (65,547,191 | )          | —           |       |
| **TWC Holding LLC**               |       |        |       |              |       |          |       |              |       |        |       |             |       |
| June 30,  2004 (Predecessor) |       | —      |       | —            |       | —        |       | —            |       | —      |       |             |       |
| July 2,  2005 (Successor)    |       | —      |       | —            |       | (72,906       | )          | 147,728           |       | 37,232,485  |       |             |       |
| **Total Company**                 |       |        |       |              |       |          |       |              |       |        |       |             |       |
| June 30,  2004 (Predecessor) |       | 80,923,839  |       | —            |       | 796,710       |       | 1,386,904         |       |        |       | 2,382,720        |       |
| July 2,  2005 (Successor)    |       | 103,225,163 |       | —            |       | 4,868,398     |       | 4,747,712         |       | 180,096,732 |       | 7,185,684        |       |

 

11

----

 

**10.****                              ****Condensed ConsolidatingFinancial Information**

 

Thefollowing information presents the unaudited condensed consolidating balancesheets of the Successor at December 31, 2004 and July 2, 2005, theunaudited condensed consolidating statements of operations of the Predecessorfor the thirteen and twenty-six week periods ended June 30, 2004, theunaudited condensed consolidating statements of operations of the Successor forthe thirteen and twenty-six week periods ended July 2, 2005 and theunaudited statement of cash flows of the Predecessor and Successor for thetwenty-six week periods ended June 30, 2004 and July 2, 2005,respectively.

 

Condensedconsolidated balance sheet as of December 31, 2004 (unaudited):

 
| ** **                                    | ** ** | ** **       | ** ** | **The  Wornick** | ** ** | ** **     | ** ** | ** **       | ** ** | ** **  | ** ** |
|-----------------------------------------------|------------|------------------|------------|------------------|------------|----------------|------------|------------------|------------|-------------|------------|
| ** **                                    | ** ** | **TWC  Holding** | ** ** | **Company**      | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** **  | ** ** |
| ** **                                    | ** ** | **LLC**          | ** ** | **Delaware**     | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**   | ** ** |
|                                          |       |             |       |             |       |           |       |             |       |        |       |
| **Assets**                                    |       |             |       |             |       |           |       |             |       |        |       |
| Current  assets                               |       |             |       |             |       |           |       |             |       |        |       |
| Cash and  cash equivalents                    |       | $                | —     |             | $          | 1,085,474      |       | $                | 2,203,556  |        | $          | — |   | $ | 3,289,030 |   |
| Trade  accounts receivable                    |       | —           |       | 4,413,429        |       | 9,442,865      |       | —           |       | 13,856,294  |       |
| Interdivision  receivables                    |       | —           |       | 4,822,266        |       | —         |       | (4,822,266       | )          | —      |       |
| Inventories                                   |       | —           |       | 10,491,680       |       | 13,640,436     |       | —           |       | 24,132,116  |       |
| Prepaid  expenses and other current assets    |       | —           |       | 246,316          |       | 284,790        |       | —           |       | 531,106     |       |
| Total  current assets                         |       | —           |       | 21,059,165       |       | 25,571,647     |       | (4,822,266       | )          | 41,808,546  |       |
| Investments  in subsidiary guarantors         |       | 37,623,477       |       | 28,579,956       |       | —         |       | (66,203,433      | )          | —      |       |
| Property and  equipment, net                  |       |             |       | 25,845,617       |       | 6,948,622      |       | —           |       | 32,794,239  |       |
| Goodwill                                      |       |             |       | 77,573,207       |       | —         |       | —           |       | 77,573,207  |       |
| Intangible  assets, net                       |       |             |       | 18,434,375       |       | 3,388,335      |       |             |       | 21,822,710  |       |
| Other  noncurrent assets                      |       |             |       | 5,531,183        |       | 144,756        |       | —           |       | 5,675,939   |       |
| Total assets                                  |       | $                | 37,623,477 |             | $          | 177,023,503    |       | $                | 36,053,360 |        | $          | (71,025,699 | ) | $ | 179,674,641 |   |
| **Liabilities and Members Equity**            |       |             |       |             |       |           |       |             |       |        |       |
| Current  liabilities                          |       |             |       |             |       |           |       |             |       |        |       |
| Trade  accounts payable                       |       | $                | —     |             | $          | 4,556,681      |       | $                | 1,611,145  |        | $          | — |   | $ | 6,167,826 |   |
| Interdivision  payables                       |       | —           |       | 101,605          |       | 4,720,661      |       | (4,822,266       | )          | —      |       |
| Accrued  expenses                             |       | —           |       | 1,980,848        |       | 1,141,598      |       | —           |       | 3,122,446   |       |
| Accrued  interest                             |       | —           |       | 6,796,875        |       | —         |       | —           |       | 6,796,875   |       |
| Taxes  payable                                |       | —           |       | 51,950           |       | —         |       | —           |       | 51,950      |       |
| Total  current liabilities                    |       | —           |       | 13,487,959       |       | 7,473,404      |       | (4,822,266       | )          | 16,139,097  |       |
|                                          |       |             |       |             |       |           |       |             |       |        |       |
| Deferred tax  liabilities                     |       | $                | —     |             | $          | 912,067        |       | —           |       | —      |       | $ | 912,067 |   |
| Long-term  debt, excluding current maturities |       | —           |       | 125,000,000      |       | —         |       | —           |       | 125,000,000 |       |
| Total  liabilities                            |       | —           |       | 139,400,026      |       | 7,473,404      |       | (4,822,266       | )          | 142,051,164 |       |
| Member’s  equity                         |       |             |       |             |       |           |       |             |       |        |       |
| Members  equity                               |       | 37,500,000       |       | —           |       | —         |       | —           |       | 37,500,000  |       |
| Additional  paid-in capital                   |       | 146,400          |       | 37,646,400       |       | 26,624,729     |       | (64,271,129      | )          | 146,400     |       |
| Retained  earnings/(deficit)                  |       | (22,923          |       | (22,923          | )          | 1,955,227      |       | (1,932,304       | )          | (22,923     | )          |
| Total Member’s  equity (deficit)         |       | 37,623,477       |       | 37,623,477       |       | 28,579,956     |       | (66,203,433      | )          | 37,623,477  |       |
| Total  liabilities and Member’s equity   |       | $                | 37,623,477 |             | $          | 177,023,503    |       | $                | 36,053,360 |        | $          | (71,025,699 | ) | $ | 179,674,641 |   |

 

12

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Condensed consolidated balance sheet as of July 2,2005 (unaudited):

 
| ** **                                    | ** ** | ** **      | ** ** | **The Wornick** | ** ** | ** **     | ** ** | ** **       | ** ** | ** **  | ** ** |
|-----------------------------------------------|------------|-----------------|------------|-----------------|------------|----------------|------------|------------------|------------|-------------|------------|
| ** **                                    | ** ** | **TWC Holding** | ** ** | **Company**     | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** **  | ** ** |
| ** **                                    | ** ** | **LLC**         | ** ** | **Delaware**    | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**   | ** ** |
|                                          |       |            |       |            |       |           |       |             |       |        |       |
| **Assets**                                    |       |            |       |            |       |           |       |             |       |        |       |
| Current  assets                               |       |            |       |            |       |           |       |             |       |        |       |
| Cash and  cash equivalents                    |       | $               | 216,435    |            | $          | (2,486,855     | )          | $                | 5,368,126  |        | $          | — |   | $ | 3,097,706 |   |
| Trade  accounts receivable                    |       | —          |       | 4,193,943       |       | 7,639,168      |       | —           |       | 11,833,111  |       |
| Interdivision  receivables                    |       | —          |       | —          |       | —         |       | —           |       | —      |       |
| Inventories                                   |       | —          |       | 11,429,558      |       | 9,852,824      |       | —           |       | 21,282,382  |       |
| Prepaid  expenses and other current assets    |       | 29,667          |       | 459,114         |       | 461,468        |       | —           |       | 950,249     |       |
| Total  current assets                         |       | 246,102         |       | 13,595,760      |       | 23,321,586     |       | —           |       | 37,163,448  |       |
| Investments  in subsidiaries                  |       | 34,543,519      |       | 31,003,672      |       | —         |       | (65,547,191      | )          | —      |       |
| Property and  equipment, net                  |       | —          |       | 31,597,296      |       | 6,471,335      |       | —           |       | 38,068,631  |       |
| Goodwill                                      |       | —          |       | 77,573,207      |       | —         |       | —           |       | 77,573,207  |       |
| Intangible  assets, net                       |       | —          |       | 16,498,750      |       | 2,976,668      |       | —           |       | 19,475,418  |       |
| Other  noncurrent assets                      |       | 2,442,864       |       | 5,213,857       |       | 159,307        |       | —           |       | 7,816,028   |       |
| Total assets                                  |       | $               | 37,232,485 |            | $          | 175,482,542    |       | $                | 32,928,896 |        | $          | (65,547,191 | ) | $ | 180,096,732 |   |
| **Liabilities  and Members Equity**           |       |            |       |            |       |           |       |             |       |        |       |
| Current  liabilities                          |       |            |       |            |       |           |       |             |       |        |       |
| Trade  accounts payable                       |       | $               | 371,593    |            | $          | 4,729,615      |       | $                | 867,961    |        | $          | — |   | $ | 5,969,169 |   |
| Interdivision  payables                       |       | —          |       | —          |       | —         |       | —           |       | —      |       |
| Accrued  expenses                             |       | —          |       | 3,154,872       |       | 1,057,263      |       | —           |       | 4,212,135   |       |
| Accrued  interest                             |       | —          |       | 6,230,469       |       | —         |       | —           |       | 6,230,469   |       |
| Total  current liabilities                    |       | 371,593         |       | 14,114,956      |       | 1,925,224      |       | —           |       | 16,411,773  |       |
|                                          |       |            |       |            |       |           |       |             |       |        |       |
| Deferred tax  liabilities                     |       | —          |       | 1,824,067       |       | —         |       | —           |       | 1,824,067   |       |
| Long-term  debt, excluding current maturities |       | 27,412,938      |       | 125,000,000     |       | —         |       | —           |       | 152,412,938 |       |
| Total  liabilities                            |       | 27,784,531      |       | 140,939,023     |       | 1,925,224      |       | —           |       | 170,648,778 |       |
| Members  equity                               |       |            |       |            |       |           |       |             |       |        |       |
| Members  equity                               |       | 14,038,007      |       | —          |       | —         |       | —           |       | 14,038,007  |       |
| Additional  paid-in capital                   |       | 156,383         |       | 37,656,383      |       | 26,624,729     |       | (64,281,112      | )          | 156,383     |       |
| Retained  earnings                            |       | (4,746,436      | )          | (3,112,864      | )          | 4,378,943      |       | (1,266,079       | )          | (4,746,436  | )          |
| Total  members equity (deficit)               |       | 9,447,954       |       | 34,543,519      |       | 31,003,672     |       | (65,547,191      | )          | 9,447,954   |       |
| Total  liabilities and members equity         |       | $               | 37,232,485 |            | $          | 175,482,542    |       | $                | 32,928,896 |        | $          | (65,547,191 | ) | $ | 180,096,732 |   |

 

13

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Condensedconsolidated statement of operations of the Predecessor for the thirteen weekperiod from April 4, 2004 through June 30, 2004 (unaudited):

 
| ** **                                    | ** ** | ** ** | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** ** | ** ** |
|-----------------------------------------------|------------|------------|------------|----------------|------------|------------------|------------|------------|------------|
| ** **                                    | ** ** | **Parent** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**  | ** ** |
|                                          |       |       |       |           |       |             |       |       |       |
| Net sales                                     |       | $          | 16,445,048 |           | $          | 36,259,041       |       | $          | (7,882,881 | ) | $ | 44,821,208 |   |
| Cost of  sales                                |       | 13,649,243 |       | 32,149,291     |       | (7,882,881       | )          | 37,915,653 |       |
| Gross profit                                  |       | 2,795,805  |       | 4,109,750      |       | —           |       | 6,905,555  |       |
| Selling,  general and administrative expenses |       | 6,162,263  |       | 975,209        |       | —           |       | 7,137,472  |       |
| Operating  (loss) profit                      |       | (3,366,458 | )          | 3,134,541      |       | —           |       | (231,917   | )          |
| Other income  (expense)                       |       |       |       |           |       |             |       |       |       |
| Interest  income                              |       | 285,614    |       | 15,405         |       | —           |       | 301,019    |       |
| Interest  expense                             |       | (45,543    | )          | (4,388         | )          | —           |       | (49,931    | )          |
| Executive/administration  income (expense)    |       | 724,500    |       | (724,500       | )          | —           |       | —     |       |
| Other  income, net                            |       | 92,912     |       | (8,103         | )          | —           |       | 84,809     |       |
| Equity in  earnings of subsidiary guarantors  |       | 2,412,955  |       | —         |       | (2,412,955       | )          | —     |       |
| Total other  income (expense)                 |       | 3,470,438  |       | (721,586       | )          | (2,412,955       | )          | 335,897    |       |
| Income  before income taxes                   |       | 103,980    |       | 2,412,955      |       | (2,412,955       | )          | 103,980    |       |
| Income tax  expense                           |       | 13,700     |       | —         |       | —           |       | 13,700     |       |
| Net income                                    |       | $          | 90,280     |           | $          | 2,412,955        |       | $          | (2,412,955 | ) | $ | 90,280 |   |

 

Condensedconsolidated statement of operations of the Successor for the Thirteen weekperiod from April 3, 2005 through July 2, 2005 (unaudited):

 
| ** **                                    | ** ** | ** **      | ** ** | **The Wornick** | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** |
|-----------------------------------------------|------------|-----------------|------------|-----------------|------------|----------------|------------|------------------|------------|------------|------------|
| ** **                                    | ** ** | **TWC**         | ** ** | **Company**     | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                    | ** ** | **Holding LLC** | ** ** | **Delaware**    | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**  | ** ** |
|                                          |       |            |       |            |       |           |       |             |       |       |       |
| Net sales                                     |       | $               | —     |            | $          | 18,231,232     |       | $                | 33,627,700 |       | $          | (7,465,984 | ) | $ | 44,392,948 |   |
| Cost of  sales                                |       | —          |       | 18,807,855      |       | 25,076,559     |       | (7,465,984       | )          | 36,418,430 |       |
| Gross profit                                  |       | —          |       | (576,623        | )          | 8,551,141      |       | —           |       | 7,974,518  |       |
| Selling,  general and administrative expenses |       | 72,906          |       | 3,269,144       |       | 1,360,240      |       | —           |       | 4,702,290  |       |
| Operating  (loss) profit                      |       | (72,906         | )          | (3,845,767      | )          | 7,190,901      |       | —           |       | 3,272,228  |       |
| Other income  (expense)                       |       |            |       |            |       |           |       |             |       |       |       |
| Interest  income                              |       | —          |       | 4,163           |       | 60,990         |       | —           |       | 65,153     |       |
| Interest  expense                             |       | (1,021,547      | )          | (3,569,137      | )          | —         |       | —           |       | (4,590,684 | )          |
| Executive/administration  income (expense)    |       | —          |       | 5,786,998       |       | (5,786,998     | )          | —           |       | —     |       |
| Other  (expense) income, net                  |       | —          |       | (95,337         | )          | (12,327        | )          | —           |       | (107,664   | )          |
| Equity in  earnings (loss) of subsidiaries    |       | (670,564        | )          | 1,452,566       |       | —         |       | (782,002         | )          | —     |       |
| Total other  income (expense)                 |       | (1,692,111      | )          | 3,579,253       |       | (5,738,335     | )          | (782,002         | )          | (4,633,195 | )          |
| Income  (loss) before income taxes            |       | (1,765,017      | )          | (266,514        | )          | 1,452,566      |       | (782,002         | )          | (1,360,967 | )          |
| Income tax  expense                           |       | —          |       | 404,050         |       | —         |       | —           |       | 404,050    |       |
| Net income  (loss)                            |       | $               | (1,765,017 | )               | $          | (670,564       | )          | $                | 1,452,566  |       | $          | (782,002 | ) | $ | (1,765,017 | ) |

 

14

----

 

Condensedconsolidated statement of operations of the Predecessor for the twenty-six weekperiod from January 1, 2004 through June 30, 2004 (unaudited):

 
| ** **                                    | ** ** | ** ** | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** ** | ** **  |
|-----------------------------------------------|------------|------------|------------|----------------|------------|------------------|------------|------------|-------------|
| ** **                                    | ** ** | **Parent** | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**  | ** **  |
|                                          |       |       |       |           |       |             |       |       |        |
| Net sales                                     |       | $          | 35,472,787 |           | $          | 65,266,652       |       | $          | (19,815,600 | ) | $ | 80,923,839 |   |
| Cost of  sales                                |       | 28,838,375 |       | 58,645,754     |       | (19,815,600      | )          | 67,668,529 |        |
| Gross profit                                  |       | 6,634,412  |       | 6,620,898      |       | —           |       | 13,255,310 |        |
| Selling, general  and administrative expenses |       | 10,196,549 |       | 2,262,051      |       | —           |       | 12,458,600 |        |
| Operating  (loss) profit                      |       | (3,562,137 | )          | 4,358,847      |       | —           |       | 796,710    |        |
| Other income  (expense)                       |       |       |       |           |       |             |       |       |        |
| Interest  income                              |       | 483,029    |       | 23,524         |       | —           |       | 506,553    |        |
| Interest  expense                             |       | (95,403    | )          | (4,388         | )          | —           |       | (99,791    | )           |
| Executive/administration  income (expense)    |       | 483,000    |       | (483,000       | )          | —           |       | —     |        |
| Other  income, net                            |       | 92,912     |       | 192,009        |       | —           |       | 284,921    |        |
| Equity in  earnings of subsidiary guarantors  |       | 4,086,992  |       | —         |       | (4,086,992       | )          | —     |        |
| Total other  income (expense)                 |       | 5,050,530  |       | (271,855       | )          | (4,086,992       | )          | 691,683    |        |
| Income  before income taxes                   |       | 1,488,393  |       | 4,086,992      |       | (4,086,992       | )          | 1,488,393  |        |
| Income tax  expense                           |       | 41,052     |       | —         |       | —           |       | 41,052     |        |
| Net income                                    |       | $          | 1,447,341  |           | $          | 4,086,992        |       | $          | (4,086,992  | ) | $ | 1,447,341 |   |

 

Condensedconsolidated statement of operations of the Successor for the twenty-six weekperiod from January 1, 2005 through July 2, 2005 (unaudited):

 
| ** **                                    | ** ** | ** **      | ** ** | **The Wornick** | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** |
|-----------------------------------------------|------------|-----------------|------------|-----------------|------------|----------------|------------|------------------|------------|------------|------------|
| ** **                                    | ** ** | **TWC Holding** | ** ** | **Company**     | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                                    | ** ** | **LLC**         | ** ** | **Delaware**    | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**  | ** ** |
|                                          |       |            |       |            |       |           |       |             |       |       |       |
| Net sales                                     |       | $               | —     |            | $          | 40,749,223     |       | $                | 82,595,537 |       | $          | (20,119,597 | ) | $ | 103,225,163 |   |
| Cost of  sales                                |       | —          |       | 41,238,078      |       | 67,683,474     |       | (20,119,597      | )          | 88,801,955 |       |
| Gross profit                                  |       | —          |       | (488,855        | )          | 14,912,063     |       | —           |       | 14,423,208 |       |
| Selling,  general and administrative expenses |       | 72,906          |       | 6,647,371       |       | 2,834,263      |       | —           |       | 9,554,540  |       |
| Operating  (loss) profit                      |       | (72,906         | )          | (7,136,226      | )          | 12,077,800     |       | —           |       | 4,868,668  |       |
| Other income  (expense)                       |       |            |       |            |       |           |       |             |       |       |       |
| Interest  income                              |       | —          |       | 10,578          |       | 88,356         |       | —           |       | 98,934     |       |
| Interest expense                              |       | (1,560,666      | )          | (7,142,960      | )          | (94            | )          | —           |       | (8,703,720 | )          |
| Executive/administration  income (expense)    |       | —          |       | 9,881,150       |       | (9,881,150     | )          | —           |       | —     |       |
| Other  (expense) income, net                  |       | —          |       | (166,029        | )          | 138,804        |       | —           |       | (27,225    | )          |
| Equity in  earnings(loss) of subsidiaries     |       | (3,089,941      | )          | 2,423,716       |       | —         |       | 666,225          |       | —     |       |
| Total other  income (expense)                 |       | (4,650,607      | )          | 5,006,455       |       | (9,654,084     | )          | 666,225          |       | (8,632,011 | )          |
| Income  (loss) before income taxes            |       | (4,723,513      | )          | (2,129,771      | )          | 2,423,716      |       | 666,225          |       | (3,763,343 | )          |
| Income tax  expense                           |       | —          |       | 960,170         |       | —         |       | —           |       | 960,170    |       |
| Net income  (loss)                            |       | $               | (4,723,513 | )               | $          | (3,089,941     | )          | $                | 2,423,716  |       | $          | 666,225 |   | $ | (4,723,513 | ) |

 

15

----

 

Condensedconsolidated statement of cash flows of the Predecessor for the twenty-six weekperiod from January 1, 2004 through June 30, 2004 (unaudited):

 
| ** **                                                                                             | ** ** | ** **  | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** **  | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|-------------|------------|----------------|------------|------------------|------------|-------------|------------|
| ** **                                                                                             | ** ** | **Parent**  | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**   | ** ** |
| **Cash  flows from operating activities**                                                              |       |        |       |           |       |             |       |        |       |
| Net income  (loss)                                                                                     |       | $           | 1,447,341  |           | $          | 4,086,992        |       | $           | (4,086,992 | ) | $ | 1,447,341 |   |
| Adjustments  to reconcile net income to net cash provided by (used in) operating  activities           |       |        |       |           |       |             |       |        |       |
| Depreciation  of property and equipment                                                                |       | 900,431     |       | 486,473        |       | —           |       | 1,386,904   |       |
| Equity in  earnings of subsidiary guarantors                                                           |       | (4,086,992  | )          | —         |       | 4,086,992        |       | —      |       |
| Compensation  expense for Employee Stock Ownership Trust shares released and committed to  be released |       | 2,344,292   |       | —         |       | —           |       | 2,344,292   |       |
| Compensation  expense for stock options                                                                |       | 713,433     |       | —         |       | —           |       | 713,433     |       |
| Other  stock-based compensation expense                                                                |       | 3,266,814   |       | —         |       | —           |       | 3,266,814   |       |
| Stock  compensation plans                                                                              |       | (4,270,995  | )          | —         |       | —           |       | (4,270,995  | )          |
| Changes in  assets and liabilities                                                                     |       |        |       |           |       |             |       |        |       |
| Trade  accounts receivable                                                                             |       | (1,294,593  | )          | 2,484,055      |       | —           |       | 1,189,462   |       |
| Interdivisional  receivables/payables, net                                                             |       | 3,768,359   |       | (3,768,359     | )          | —           |       | —      |       |
| Inventories                                                                                            |       | (1,351,831  | )          | (3,341,244     | )          | —           |       | (4,693,075  | )          |
| Prepaid  expenses and other current assets                                                             |       | 7,032       |       | 155,117        |       | —           |       | 162,149     |       |
| Other  noncurrent asset                                                                                |       | (36,950     | )          | (19,951        | )          | —           |       | (56,901     | )          |
| Trade  accounts payable and accrued expenses                                                           |       | 59,727      |       | (2,020,934     | )          | —           |       | (1,961,207  | )          |
| Net cash  provided by (used in) operating activities                                                   |       | 1,466,068   |       | (1,937,851     | )          | —           |       | (471,783    | )          |
| **Cash  flows from investing activities**                                                              |       |        |       |           |       |             |       |        |       |
| Payments  received on notes receivable                                                                 |       | 610,100     |       | —         |       | —           |       | 610,100     |       |
| Proceeds  from the sale of investments                                                                 |       | 19,988,514  |       | —         |       | —           |       | 19,988,514  |       |
| Purchases of  investments                                                                              |       | (30,007,514 | )          | —         |       | —           |       | (30,007,514 | )          |
| Capital  expenditures                                                                                  |       | (1,609,129  | )          | (773,591       | )          | —           |       | (2,382,720  | )          |
| Net cash  used in investing activities                                                                 |       | (11,018,029 | )          | (773,591       | )          | —           |       | (11,791,620 | )          |
| **Cash  flows from financing activities**                                                              |       |        |       |           |       |             |       |        |       |
| Change in  book overdraft                                                                              |       | 990,692     |       | (747,665       | )          | —           |       | 243,027     |       |
| Net increase  in the line of credit                                                                    |       | 8,700,000   |       | —         |       | —           |       | 8,700,000   |       |
| Principal  payments on long-term debt                                                                  |       | (618,096    | )          | (11,209        | )          | —           |       | (629,305    | )          |
| Net cash  provided by (used in) financing activities                                                   |       | 9,072,596   |       | (758,874       | )          | —           |       | 8,313,722   |       |
| Net decrease  in cash and cash equivalents                                                             |       | (479,365    | )          | (3,470,316     | )          | —           |       | (3,949,681  | )          |
| **Cash and  cash equivalents**                                                                         |       |        |       |           |       |             |       |        |       |
| Beginning of  period                                                                                   |       | 1,652,570   |       | 3,638,097      |       | —           |       | 5,290,667   |       |
| End of  period                                                                                         |       | $           | 1,173,205  |           | $          | 167,781          |       | $           | —     |   | $ | 1,340,986 |   |

 

16

----

 

Condensedconsolidated statement of cash flows of the Successor for the twenty-six weekperiod from January 1, 2005 through July 2, 2005 (unaudited):

 
| ** **                                                                                   | ** ** | ** **      | ** ** | **The Wornick** | ** ** | ** **     | ** ** | ** **       | ** ** | ** **  | ** ** |
|----------------------------------------------------------------------------------------------|------------|-----------------|------------|-----------------|------------|----------------|------------|------------------|------------|-------------|------------|
| ** **                                                                                   | ** ** | **TWC Holding** | ** ** | **Company**     | ** ** | **Subsidiary** | ** ** | ** **       | ** ** | ** **  | ** ** |
| ** **                                                                                   | ** ** | **LLC**         | ** ** | **Delaware**    | ** ** | **Guarantors** | ** ** | **Eliminations** | ** ** | **Total**   | ** ** |
| **Cash  flows from operating activities**                                                    |       |            |       |            |       |           |       |             |       |        |       |
| Net income  (loss)                                                                           |       | $               | (4,723,513 | )               | $          | (3,089,941     | )          | $                | 2,423,716  |        | $          | 666,225 |   | $ | (4,723,513 | ) |
| Adjustments  to reconcile net income to net cash provided by (used-in) operating  activities |       |            |       |            |       |           |       |             |       |        |       |
| Depreciation  of property and equipment                                                      |       | —          |       | 1,258,680       |       | 652,612        |       | —           |       | 1,911,292   |       |
| Amortization  of intangibles                                                                 |       | —          |       | 1,935,625       |       | 411,667        |       | —           |       | 2,347,292   |       |
| Amortization  of bond issuance cost                                                          |       | 147,728         |       | 341,400         |       | —         |       | —           |       | 489,128     |       |
| Equity in  earnings of subsidiary guarantors                                                 |       | 3,089,941       |       | (2,423,716      | )          | —         |       | (666,225         | )          | —      |       |
| Deferred tax  liability                                                                      |       | —          |       | 912,000         |       | —         |       | —           |       | 912,000     |       |
| Compensation  expense for stock options                                                      |       | —          |       | 9,983           |       | —         |       | —           |       | 9,983       |       |
| Changes in  assets and liabilities                                                           |       |            |       |            |       |           |       |             |       |        |       |
| Trade  accounts receivable                                                                   |       |            |       | 219,486         |       | 1,803,697      |       | —           |       | 2,023,183   |       |
| Interdivisional  receivables/payables, net                                                   |       |            |       | 4,720,661       |       | (4,720,661     | )          | —           |       | —      |       |
| Inventories                                                                                  |       |            |       | (937,878        | )          | 3,787,612      |       | —           |       | 2,849,734   |       |
| Prepaid  expenses and other current assets                                                   |       | (29,667         | )          | (212,798        | )          | (176,678       | )          | —           |       | (419,143    | )          |
| Other  noncurrent asset                                                                      |       | —          |       | (24,074         | )          | (14,551        | )          | —           |       | (38,625     | )          |
| Trade  accounts payable and accrued expenses                                                 |       | 371,593         |       | 1,346,958       |       | (827,519       | )          | —           |       | 891,032     |       |
| Payment-in-kind  interest and bond interest                                                  |       | 1,412,958       |       | (566,406        | )          | —         |       | —           |       | 846,552     |       |
| Taxes  Payable                                                                               |       |            |       | (51,950         | )          | —         |       | —           |       | (51,950     | )          |
| Net cash  provided by (used-in) operating activities                                         |       | 269,040         |       | 3,438,030       |       | 3,339,895      |       | —           |       | 7,046,965   |       |
| **Cash  flows from investing activities**                                                    |       |            |       |            |       |           |       |             |       |        |       |
| Capitalized  bond issuance cost                                                              |       | (2,590,612      | )          | —          |       | —         |       | —           |       | (2,590,612  | )          |
| Capital  expenditures                                                                        |       | —          |       | (7,010,359      | )          | (175,325       | )          | —           |       | (7,185,684  | )          |
| Net cash  used in investing activities                                                       |       | (2,590,612      | )          | (7,010,359      | )          | (175,325       | )          | —           |       | (9,776,296  | )          |
| **Cash  flows from financing activities**                                                    |       |            |       |            |       |           |       |             |       |        |       |
| Proceeds  from issuance of long-term debt                                                    |       | 26,000,000      |       | —          |       | —         |       | —           |       | 26,000,000  |       |
| Return of  Capital Payments                                                                  |       | (23,461,993     | )          | —          |       | —         |       | —           |       | (23,461,993 | )          |
| Net cash  provided by financing activities                                                   |       | 2,538,007       |       | —          |       | —         |       | —           |       | 2,538,007   |       |
| Net increase  (decrease) in cash and cash equivalents                                        |       | 216,435         |       | (3,572,329      | )          | 3,164,570      |       | —           |       | (191,324    | )          |
| **Cash and  cash equivalents**                                                               |       |            |       |            |       |           |       |             |       |        |       |
| Beginning of  period                                                                         |       | —          |       | 1,085,474       |       | 2,203,556      |       | —           |       | 3,289,030   |       |
| End of  period                                                                               |       | $               | 216,435    |            | $          | (2,486,855     | )          | $                | 5,368,126  |        | $          | — |   | $ | 3,097,706 |   |

 

17

----

 

**Item 2.****                                   Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

 

As a result of theacquisition transaction discussed below and in Note 3 to our unauditedConsolidated Financial Statements, the following discussion relates to thefinancial condition and results of operations of our Company, or the “Successor”as of and for the periods ended July 2, 2005.  Included in ourdiscussions are the results of operations of our predecessor company, or the “Predecessor”for the periods ended June 30, 2004.  This section should beread in conjunction with our unaudited Consolidated Financial Statements andconsidered with “—Quantitative and Qualitative Disclosures About Market Risk”and “Cautionary Statements Regarding Forward Looking Statement,” includedelsewhere in our filing.

 

As a result of theacquisition transaction in which we acquired our business and relatedfinancings, the historical consolidated financial data of the Predecessor maynot be comparable to the Successor’s consolidated financial data.  Mostnotably, the liquidity position of the Successor is substantially differentthan that of the Predecessor, including the overall level of debt and resultingamount of interest expense in fiscal periods subsequent to June 30, 2004,as well as the revaluation of the assets and liabilities as a result ofapplying purchase accounting.

 

**Our Company**

 

Through our wholly ownedsubsidiary, “Wornick”, we are the leading supplier of individual and groupmilitary field rations to the Department of Defense (the “DoD”).  We specialize in the production, packagingand distribution of extended shelf-life, shelf stable and frozen foods inflexible pouches and semi-rigid containers. With over 30 years of experience inthe food manufacturing and food processing businesses, we believe we have areputation for superior quality and service in developing and producing uniquemeal solutions for the military and for the consumer and foodservice markets.We are a primary supplier to the DoD of Meals Ready-to-Eat, Unitized GroupRations-A and the polymeric trays used in the Unitized Group Rations-Heat &Serve program.  Our customers alsoinclude Kraft Foods, Inc., Gerber Products Company, Quaker Oats Company,the Canadian Ministry of Defense, retail and grocery stores including WalgreenCompany, 7-Eleven, Inc., The Kroger Company, Publix Super Markets andMeijer.

 

**The Transaction**

 

On December 3, 2003,our Operating Company “Wornick” and Veritas Capital Management II, L.L.C.entered into an Assets Purchase and Sale Contract with the Predecessor and itssubsidiaries, The Wornick Company Right Away Division, a Nevada corporation,The Wornick Company Right Away Division, L.P., a Texas limited partnership, andRight Away Management Corporation, a Texas corporation.  The grosspurchase price of the business was $155 million, of which $150 million was paidto the sellers at the closing and the remaining $5 million was paid to anescrow agent as escrow for the sellers’ obligations under the Assets Purchaseand Sale Contract.  The acquisition transaction closed on June 30,2004.

 

Wornick funded the purchaseprice and the related fees and expenses with the proceeds of its offering ofthe original notes and the equity investments in TWC Holding LLC as follows:

 

•                  the purchase by the equity investors of Class Ainterests in TWC Holding LLC for $37.5 million in cash; and

 

•                  the contribution by TWC Holding LLC to thecapital of the Successor of all cash received by it from the equity investors;and

 

•                  net proceeds to the Successor ofapproximately $121.0 million from the issuance and sale of the original$125.0 million of senior notes; and

 

•                  advance of $3.0 million under the Successor’sworking capital facility.

 

18

----

 

The closing of the offeringof the original notes occurred simultaneously with the closing of theAcquisition, the Wornick new working capital facility (described below) and theother financing transactions described above.

 

Wornick entered into a newsenior secured revolving working capital credit facility of up to $25 millionconcurrently with the closing of the Acquisition and the offering. TheOperating Company makes monthly interest payments on amounts borrowed under thefacility at an annual adjustable interest rate calculated in accordance with theterms of the applicable promissory note.

 

**Results of Operations**

 

**Comparisonof the thirteen weeks ended July 2, 2005 to the thirteen weeks ended June 30,2004**

 

*Net Sales*.  Our net sales for the thirteen weeks ended July 2, 2005were $44.4 million, representing a decrease of approximately $428,000, or 1%,compared to net sales of $44.8 million for the thirteen week period ended June 30,2004. The decrease in net sales resulted primarily from lower military sales tothe DoD of $2.1 million (increased MRE sales of approximately $6.4 million,decreased Unitized Group Rations-A (UGR-A’s) of approximately $8.9 million,increased Tray-Pack and other military sales of approximately $350,000) andincreased Co-manufacturing sales of approximately $3.3 million ($2.1 million innew business initiatives in fiscal year 2005, increased sales to Gerber andKraft $1.1 million) offset by lower sales of our Branded and other productlines of approximately $1.6 million.

 

*Gross Profit.*  Our gross profit for the thirteenweeks ended July 2, 2005 was $8.0 million, representing an increase ofapproximately $1.1 million, or 15.5%, compared to gross profit of $6.9million for the thirteen weeks ended June 30, 2004. As a percentage of netsales, our gross profit was 18.0% and 15.4% for the thirteen weeks ended July 2,2005 and June 30, 2004, respectively.  Gross profit on sales to theDoD increased by $2.2 million or 37.6% (approximately $8.0 million and $5.8million, for the thirteen week periods ended July 2, 2005 and June 30,2004, respectively) due to higher prices and volumes on the current MRE-25 basecontract which began in the current quarter as compared to add-on and surgevolumes and pricing under the MRE-24 contract for the thirteen week periodended June 30, 2004 .  Gross profiton Co-manufacturing sales was 7.3% versus 13.2% for the thirteen weeks ended July 2,2005 and June 30, 2004 respectively. This represents a decrease of approximately $71,000 largely attributableto Co-manufacturing start-up inefficiencies of new contracts.    Branded gross profit decreased byapproximately $1.0 million, primarily due to lower than expected sales volumesand current period charges against inventory for excess and obsolete ofapproximately $336,000.

 

*Selling, General and Administrative Expenses.*  Our selling, general andadministrative expenses for the thirteen weeks ended July 2, 2005 were$4.7 million, representing a decrease of approximately $2.4 million, or 34.1%, comparedto selling, general and administrative expenses of $7.1 million for thethirteen weeks ended June 30, 2004.  Selling, general andadministrative expenses were 10.6% of net sales for the thirteen weeks ended July 2,2005 as compared to 15.9% for the thirteen weeks ended June 30,2004.  The decrease was largely due to equity based compensation chargesrecorded by the Predecessor relating to the value of shares committed to bereleased to the ESOT and other compensatory stock plans maintained by thePredecessor, which did not recur in 2005 and which were partially offset bycharges related to increased depreciation and amortization related to theacquisition that was completed on June 30, 2004 and resulted in a chargeto income from operations of approximately $1.2 million for amortization ofintangible assets.

 

*Operating Profit.*  Our profit from operations wasapproximately $3.3 million for the thirteen weeks ended July 2, 2005,representing an increase of approximately $3.5 million, compared to anoperating loss of approximately $232,000 for the thirteen weeks ended June 30,2004. This increase in profit from operations resulted from decreased costassociated with the various Predecessor stock compensation plans describedabove and increased MRE volume and pricing for the thirteen weeks ended July 2,2005 as compared to thirteen weeks ended June 30, 2004.

 

19

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*Interest Expense.*  Our interest expense for the thirteenweeks ended July 2, 2005 was approximately $4.6 million, representing anincrease of approximately $4.5 million compared to interest expense ofapproximately $50,000 for the thirteen weeks ended June 30, 2004. Theincrease in interest expense resulted from the issuance of Wornick’s $125million principal amount of our long-term debt, which accounts for approximately$3.4 million of interest expense, approximately $171,000 in bond issue costamortization.  The remaining charges tointerest expense relate to the issuance our Senior PIK Note.  Interest expense and amortization of bondissuance cost for the thirteen week period ended July 2, 2005 wasapproximately $919,000 and $103,000, respectively.

 

*Interest Income.*  Our interest income for the thirteenweeks ended July 2, 2005 was approximately $65,000, representing andecrease of approximately $236,000 compared to interest income of approximately$301,000 for the thirteen weeks ended June 30, 2004. The decrease ininterest income resulted from interest earned on investments held by thePredecessor which were not purchased by Wornick in the acquisition transaction.

 

*Other Income (Expense), Net.*  Our other income (expense), net forthe thirteen weeks ended July 2, 2005 was approximately ($108,000),representing a decrease of approximately $192,000 compared to other income(expense), net of approximately $85,000 for the thirteen weeks ended June 30,2004. The decrease in other income was partially the result of thereductions of approximately $91,000 of U.S. government payments from the ValueEngineering Change program (the “VE program”).  The VE program providesincentives for U.S. Government contractors to make cost savings proposals tothe Defense Supply Center Philadelphia (“DSCP”). Once the DSCP accepts acontractor’s VE proposal, the contractor is awarded 50% of the resultingindustry-wide savings for a period of three years following the issuance by theDSCP, which is responsible for the procurement of military field rations forthe DoD, of a contract modification requiring implementation of the proposedchange as outlined in the accepted VE proposal. Other expense was also increased as the result of $75,000 in managementfees to Veritas.  The remaining decreasesare attributable to approximately $20,000 in other minor expenses andapproximately $5,000 in gains on sale of fixed assets by the PredecessorCompany.

 

*Income Tax Expense.*  Expenses related to federal, state andlocal taxes for the thirteen weeks ended July 2, 2005 was approximately$404,000 compared to approximately $14,000 for the thirteen weeks ended June 30,2004.  As described further in note 7 to our financial statements, thePredecessor Company was qualified under Subchapter-S of the Internal RevenueCode, and therefore not subject to Federal Tax whereas the Wornick Company istaxed as a C-Corporation.  During the thirteen weeks ended July 2,2005, Wornick recorded approximately $456,000 of additional deferred taxliabilities related to the indefinite reversal period related to Goodwill andapproximately $52,000 of income related to reversals of local and city taxes atour Prepared Foods Division.

 

*Net Income (Loss).*  As a result of the foregoing, weincurred a net loss of approximately $1.8 million for the thirteen weeks ended July 2,2005, representing a decrease in net income of approximately $1.9 millioncompared to net income of approximately $90,000 in the thirteen weeks ended June 30,2004.

 

**Comparison of the twenty-six weeksended July 2, 2005 to the twenty-six weeks ended June 30, 2004**

 

*Net Sales.*  Our net sales for the twenty-six weeks ended July 2, 2005were $103.2 million, representing an increase of approximately $22.3 million,or 27.6%, compared to net sales of $80.9 million for the twenty-six weeks endedJune 30, 2004. The increase in net sales resulted primarily from increasedsales to the DoD of approximately $17.8 million (increased net sales of MRE$19.7 million, decreased net sales of URG-A $2.2 million and increasedTray-pack and other military sales of approximately $331,000).  Co-manufacturing net sales increasedapproximately $6.4 million due primarily to new Co-manufacturing projects ofapproximately $4.2 million (Quaker $2.1 million, Keefe $2.0 million andDelMonte $78,000) and increased sales volumes on Kraft ($937,000) and Gerber($1.3 million).  Increased military andCo-manufacturing net sales were partially offset by decreased net sales onBranded and other product sales of approximately $1.9 million.

 

20

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*Gross Profit.*  Our gross profit for the twenty-sixweeks ended July 2, 2005 was $14.4 million, representing an increase ofapproximately $1.2 million, or 8.8%, compared to gross profit of $13.3 millionfor the twenty-six weeks ended June 30, 2004. As a percentage of netsales, our gross profit was 14.0% and 16.4% for the twenty-six weeks ended July 2,2005 and June 30, 2004, respectively. Gross profit on sales to the DoD increased by approximately $2.2 millionor 19.5% (approximately $13.7 million and $11.5 million, for the twenty-sixweeks ended July 2, 2005 and June 30, 2004, respectively) due tohigher volumes and higher base prices on MRE 25 contract sales as compared topricing on add-on and surge pricing under the MRE 24 contract. As a percentageof sales, gross profit on DoD sales decreased by approximately 1% (16.3% ascompared to 17.2% for the twenty-six weeks ended July 2, 2005 and June 30,2004, respectively) due to lower surge pricing on sales of MRE’s in the firstthirteen weeks of fiscal 2005. Co-manufacturing gross profit increased by $249,000 or 17.3% due tohigher than anticipated volumes offset by new start-up cost on newCo-manufacturing contracts.  As apercentage of sales, Co-manufacturing gross profit decreased by 3.9% (10.1% ascompared to 14.0% for the twenty-six weeks ended July 2, 2005 and June 30,2005, respectively) due to start-up cost on new contracts.  Gross profit on Branded net sales decreasedby approximately $1.4 million due to decreased sales volumes and chargesrelated to excess and obsolete inventory.

 

*Selling, General and Administrative Expenses.*  Our selling, general andadministrative expenses for the twenty-six weeks ended July 2, 2005 were$9.6 million, representing a decrease of $2.9 million, or 23.3%, compared toselling, general and administrative expenses of approximately $12.5 million forthe twenty-six weeks ended June 30, 2004. Selling, general and administrative expenses were 9.3% of net sales forthe twenty-six weeks ended July 2, 2005 as compared to 15.4% for thetwenty-six weeks ended June 30, 2004. The decrease was largely due to equity based compensation chargesrecorded by the Predecessor relating to value of shares committed to bereleased to the ESOT and other compensatory stock plans maintained by thePredecessor, which did not recur in the first twenty-six weeks of 2005 andwhich were partially offset by charges related to increased depreciation andamortization related to the acquisition that was completed on June 30,2004 and resulted in a charge to income from operations of approximately $2.3million for amortization of intangible assets. The remaining difference relates to TWC Holding in which we incurredcharges of approximately $73,000 associated with Senior PIK Note.

 

  *Operating Profit.* Our profit from operations was approximately $4.9 million for the twenty-sixweeks ended July 2, 2005, representing an increase of approximately $4.1million compared to operating profit of approximately $797,000 for thetwenty-six weeks ended June 30, 2004. This increase in operating profitprimarily resulted from higher sales volumes and prices on sales of MRE’s tothe DoD which was offset by increased cost in depreciation and amortization ofintangibles associated with the acquisition. Acquisition cost were partially offset by decreases in selling, generaland administrative expenses associated with the Predecessor relating to the valueof shares committed to be released to the ESOT and other compensatory stockplans that did not recur in 2005.

 

*Interest Expense.*  Our interest expense for thetwenty-six weeks ended July 2, 2005 was approximately $8.7 million,representing an increase of approximately $8.6 million, compared to interestexpense of approximately $100,000 for the twenty-six weeks ended June 30,2004. The increase in interest expense was due to approximately $6.8 million ininterest expense resulting from the issuance of the $125 million 10 7/8%Senior Secured Notes and $341,00 in amortization of bond issuance cost for thetwenty-six weeks ended July 2, 2005. The remaining charges to interest expense relate to the issuance ourSenior PIK Note.  Interest expense andamortization for the twenty-six week period ended July 2, 2005 wasapproximately $1.4 million and $148,000, respectively.

 

*Interest Income.*  Our interest income for the twenty-sixweeks ended July 2, 2005 was approximately $99,000, representing adecrease of approximately $408,000 compared to interest income of approximately$507,000 for the twenty-six weeks ended June 30, 2004. The decrease ininterest income resulted primarily from short-term investments held by thePredecessor that were not purchased in the acquisition on June 30, 2004.

 

21

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*Other Income(Expense), Net.*  Our other income (expense), net forthe twenty-six weeks ended July 2, 2005 was approximately ($27,000),representing a decrease of approximately $312,000, compared to other income(expense) of $285,000 for the twenty-six weeks ended June 30, 2004. Thisdecrease in other income (expense) was the result of final settlement on priorperiod U.S. Government contracts by the Predecessor which resulted in approximately$176,000 of other income.  Other income(expense) was also increased by approximately $150,000 relating to managementfees paid to Veritas.

 

*Income Tax Expense.*  Expenses related to federal, state andlocal taxes for the twenty-six weeks ended July 2, 2005 was approximately$960,000 compared to approximately $41,052 for the twenty-six weeks ended June 30,2004.  As described further in note 7 toour financial statements, the Predecessor Company was qualified underSubchapter-S of the Internal Revenue Code, and therefore not subject to FederalTax where as the Wornick Company is taxed as aC-Corporation.  During the twenty-sixweeks ended July 2, 2005, we recorded approximately $912,000 of additionaldeferred tax liabilities related to the indefinite reversal period related toGoodwill and approximately $100,000 for Ohio Franchise taxes, which were offsetby reversal of approximately $52,000 for local Ohio income taxes recorded inprior periods.

 

*Net Income. *As a result of the foregoing, we incurred anet loss of approximately $4.7 million for the twenty-six weeks ended July 2,2005, representing a decrease in net income of approximately $6.2 millioncompared to net income of approximately $1.5 million for the twenty-six weeksended June 30, 2004.

 

**Operating Segment Results**

 

**Comparison of the thirteen weeks ended July 2,2005 to the thirteen weeks ended June 30, 2004**

 

*Net Sales.*  Net sales for our Right Away Division (“RAD”) segment decreasedby approximately $2.6 million primarily due to a decreased sales to the DoD(increased MRE sales $6.4 million and decreased URG-A sales $8.9million).   Net sales for our Prepared Foods Division (“PFD”)increased approximately $2.2 million (excluding inter-segment sales ofapproximately $7.5 million for the thirteen weeks ended July 2, 2005 and$7.9 million for the thirteen weeks ended June 30, 2004).  Theincrease in PFD sales is primarily due to increased Co-manufacturing sales ofapproximately $3.3 million offset by lower sales of our Branded products ofapproximately $1.0 million.

 

*Operating Profit.*  Profit from operations increased byapproximately $4.1 million for the RAD segment.  Included in the operatingprofit for the RAD segment is an estimated $2.8 million in gross profit thatwould have been previously recognized by our PFD segment.  Increased volume and pricing on MRE shipmentsin the thirteen weeks ended July 2, 2005 contributed to the remainingincrease in operating profit which were offset by charges for amortization ofintangibles acquired in the purchase of approximately $206,000 and pricingpressure on UGR-A sales outside the continental United States.  Profit from operations decreased byapproximately $4.5 million for the PFD segment. This decrease is largely attributable to the estimated $2.8 million ofgross profit included in our RAD segment, offset by approximately $351,000 intray-pack and Co-manufacturing gross profit and additional charges to selling,general and administrative expenses for amortization of intangibles ofapproximately $968,000.  The remainingdecrease is primarily attributable to our Branded and Other products due tolower sales volumes and charges against inventory of approximately $1.1million.

 

**Comparison of the twenty-six week ended July 2, 2005 to thetwenty-six weeks ended June 30, 2004**

 

*Net Sales.*  Net sales for the RAD segment increased by $17.3 million due toincreased sales to the DoD.  Net sales for the PFD segment increasedapproximately $5.0 million (excluding inter-segment sales of approximately$20.1 million for the twenty-six weeks ended July 2, 2005 and $19.8million for the twenty-six weeks ended June 30, 2004).  The increase in PFD sales is attributable tothe increase in Co-manufacturing net sale of approximately $6.4 which wasoffset by decreased Branded and tray pack sales of approximately $1.2 million.

 

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*Operating Profit.*  Profit from operations increased byapproximately $7.7 million for the RAD segment. Included in operating profit for the RAD segment is an estimated $5.0million of gross profit that would have been previously recognized by our PFDsegment.  Increased volume and pricing onMRE shipments to the DoD in the first twenty-six week of 2005 contributed tothe remaining increase offset by charges for amortization of intangiblesacquired in the purchase of approximately $412,000 and continued pricingpressure and sales volumes on URG-A sales outside of the continental UnitedStates.  Profit from operations decreasedby approximately $9.5 million for the PFD segment.  This decrease was primarily attributable to areduction in operating profits from DoD sales of approximately $5.9 million($5.0 million of gross profit included in our RAD segment and approximately$900,000 related to the change in mix of surge and add-on MRE case sales in thefirst thirteen weeks of 2005), decreased gross profits from our Brandedproducts of approximately $1.4 million due to decreased sales volumes andcharges against Branded inventory for excess and obsolete.   The remaining decrease in operating profitfor our PFD segment is due to additional charges to selling, general andadministrative expense for approximately $1.9 million related to amortizationof intangibles and approximately increased selling, general and administrativedepartmental charges of approximately $300,000 primarily related to IT spending($95,000), employee recruiting and training and marketing ($245,000),Engineering ($88,000) and offset by other decreased departmental savings ofapproximately ($128,000) and offset by savings in other departments.

 

**Liquidity and Capital Resources**

 

Thefollowing table summarizes our net cash provided by or (used in) our operatingactivities, investing activities and financing activities and our capitalexpenditures for twenty-six weeks ended July 2, 2005 and June 30,2004:

 
| ** **                       | ** ** | **Predecessor**        | ** ** | **Successor**         | ** ** |
|----------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                       | ** ** | **Twenty-Six**         | ** ** | **Twenty-Six**        | ** ** |
| ** **                       | ** ** | **Period Ended**       | ** ** | **Period Ended**      | ** ** |
| ** **                       | ** ** | **June 30, 2004** | ** ** | **July 2, 2005** | ** ** |
| Net cash  provided by (used-in): |       |                   |       |                  |       |
| Operating  activities            |       | $                      | (471,783   | )                     | $          | 7,046,945 |   |
| Investing  activities            |       | (11,791,620            | )          | (9,776,296            | )          |
| Financing  activities            |       | 8,313,722              |       | 2,538,007             |       |
| Capital  expenditures            |       | (2,382,720             | )          | (7,185,684            | )          |
|                                  |            |                        |            |                       |            |  |  |

 

*Operating Activities.*Net cash provided by (used in) operatingactivities was approximately $7.0 million and ($472,000) for the Successortwenty-six week period ended July 2, 2005, and the Predecessor twenty-sixweek period ended June 30, 2004, respectively.  Cash generated fromoperations increased during the first twenty-six week period ended July 2,2005 compared to the Predecessor twenty-six week period ended June 30,2004 due mostly to increased sales to the DoD and our Co-manufacturingcustomers, and increased by collections of trade receivables and reductions incurrent period inventory levels.

 

*Investing Activities.*Net cash (used in) investing activities wasapproximately $(9.8) million and $(11.8) million for the Successor twenty-sixweek period ended July 2, 2005 and the Predecessor twenty-six week periodended June 30, 2004, respectively.  Thechange in the Successor twenty-six week period ended July 2, 2005 wasprimarily the result of reduced net investment activity of the Predecessor ofapproximately $(10.0) million and principle payments received by thePredecessor on notes receivable of approximately $610,000 which were offset byincreased capital expenditures of approximately $2.4 million.  Capitalexpenditures were approximately $7.2 million and $2.4 million for the periodsended July 2, 2005 and June 30, 2004, respectively.  The remaining difference is due tocapitalized bond issuance cost related to the issuance of our Senior PIK Noteon February 11, 2005.

 

*Financing Activities*. Net cash provided by (used in) financingactivities was approximately $2.5 million and $8.3 million for the Successortwenty-six week period ended July 2, 2005 and the Predecessor

 

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twenty-sixweek period ended June 30, 2004, respectively.  Financing activity inthe first twenty-six week period ended July 2, 2005 related to theissuance of the Senior PIK noted discussed below.  Activity of the Predecessor for thetwenty-six week period ended June 30, 2004 was primarily associated withborrowings against it credit facility of approximately $8.7 million offset by principlepayments on it’s long-term debt arrangement of approximately $(629,000).  The remaining difference relates to bookoverdrafts of approximately $243,000.

 

*Long-Term Debt Expenditures*

 

Inconnection with the closing of the acquisition transactions on June 30,2004, the Predecessor’s long-term debt was repaid, and we issued $125 millionin Senior Secured Notes and entered into our new working capital facility. As aresult, we will continue to incur significant debt service payments includinginterest in future years. Total cash interest payments related to the SeniorSecured Notes will be approximately $13.6 million on an annual basis. We incurred approximately $7.1 million of interest expense (includingapproximately $341,000 of bond amortization cost) relating to the SeniorSecured Notes and our working capital facilities in the twenty-six week periodended July 2, 2005. To the extent we have borrowings outstanding under ourworking capital facility, we will have additional cash interest payments. Ourborrowings against our working capital facility was $0 at July 2, 2005.

 

The indenture governing the Senior Secured Notes, and our new workingcapital facility, impose significant operating and financial restrictions onus. These restrictions limit or prohibit, among other things, our ability toincur additional indebtedness, repay indebtedness prior to stated maturities,pay dividends on or redeem or repurchase our stock, issue capital stock, makeinvestments, create liens, sell certain assets or merge with or into othercompanies, enter into certain transactions with stockholders and affiliates,make capital expenditures, sell stock in our subsidiaries and restrictdividends, distributions or other payments from our subsidiaries. In addition,our new working capital facility requires us to meet certain financial ratiosand financial condition tests.

 

On February 11, 2005, the Company and its wholly-owned financesubsidiary, TWC Holding Corp., co-issued their 13.875% Senior PIK Notes due2011, or the “Senior PIK Notes,” in the approximate aggregate principal amountof $62,259,000 net of a discount of approximately $36,259,000.  The SeniorPIK Notes earn interest at the rate of 13.875% per annum, mature on August 15,2011 and are unsecured obligations of TWC Holding LLC and TWC HoldingCorp.  Neither the Company nor any of its subsidiaries guaranteed theSenior PIK notes.  The notes limit the Company’s ability to incuradditional indebtedness and pay dividends or make other distributions as wellas to make certain investments and sell certain assets or merge with or intoother companies.  Because the Company is a holding company with nooperations and has only its investment in the Operating Company and because TWCHolding Corp. has no independent operations or assets, future cash flows of theOperating Company through 2011 may be required to service the $62.3 millionSenior PIK notes, upon their maturity.

 

We expect our remaining capital expenditures in 2005 to beapproximately $1.0 million, primarily to support plant renewal, efficiencyimprovements and expansion of our co-manufacturing business.

 

Our principal sources of liquidity are cash flow generated fromoperations and borrowings under our new working capital facility.  As of July 2,2005, we had no borrowings under the working capital facility.  We haveincurred approximately $5,000 in interest expense on the working capitalfacility since December 31, 2004.  In addition to fluctuations inbusiness volume, cash flows from operations are affected by contract terms forbilling and collection. Our liquidity will also continue to be dependent on anumber of other factors, including the timing of collection on our contractreceivables, processing of weekly and bi-weekly payroll and associated taxesand payment to our suppliers. Our principal uses of cash will be utilized tomeet debt service requirements, finance our capital expenditures and provideworking capital. Based on our current level of operations, our revolving lineof credit facility and our anticipated growth, we believe that the cash flowsgenerated by operations and our revolving line of credit will be sufficient tofund our operations for the next 12 months and for our currentlyanticipated needs beyond that period. Our

 

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futureoperating performance and ability to extend or refinance our indebtedness willbe dependent on future economic conditions and financial, business and otherfactors that are beyond our control.

 

**Item 3.****                                                          ****Quantitative and QualitativeDisclosures about Market Risk**

 

We are exposed to market risk, primarily from the impact of interestrate changes on our use of variable rate debt. Our exposure to market risksfrom foreign currency and commodity price fluctuations is limited since most ofour purchases and sales are denominated in U.S. dollars and raw commodities donot comprise a significant percentage of our costs. Our sales to the Canadianmilitary comprised approximately 1% of our sales in 2004, on a pro forma basis,and we anticipate entering into, from time to time,  foreign currencyforward contracts and other hedges to manage our exposure to fluctuations inforeign currency exchange rates for the Canadian dollar, the impact of which isnot significant.  Other than with respect to our sales to the Canadianmilitary, we generally do not have exposure to foreign currency risk.  Inaddition, because our customary contract terms pass through increase in cost ofcommodities underlying our products to our customers, we generally do not haveexposure to commodity price risk.  Other than with respect to our sales tothe Canadian military, we do not hedge our exposure to foreign currency orcommodity price risk.  We do not hold any derivatives for trading orspeculative purposes. Changes in the fair value of derivatives are recorded incurrent earnings along with the change in the fair value of the underlyinghedged item.

 

All of our outstanding bank debt bears interest at variable interestrates tied to the prime interest rate. The use of variable rate debt to financeour operations and capital improvements exposes us to variability in interestpayments due to changes in interest rates.

 

We had no exposure to variable rates at July 2, 2005.  Webelieve that a hypothetical 1% increase in interest rates on our variable ratedebt for a one-year period would have had no significant impact on our netincome.

 

**Item 4.****                                                          ****Controls and Procedures**

 

Based on a recent evaluation, as of the end of the period covered bythe Quarterly Report on Form 10-Q, the Company’s Chief Executive Officerand Chief Financial Officer have concluded that the Company’s disclosurecontrols and procedures as defined in the Exchange Act Rules 13a-15(e) and15d-15(e) are effective in timely alerting them to material informationrelating to the Company required to be included in periodic reports filed orsubmitted under the Securities and Exchange Act of 1934, as amended.

 

There were no changes in the Company’s internal control over financialreporting that occurred during the thirteen week period ended July 2,2005, constituting the Company’s latest fiscal quarter, that have materiallyaffected, or are reasonably likely to materially affect, the Company’s internalcontrol over financial reporting.

 

**FORWARD-LOOKING STATEMENTS**

 

This report includes “forward-lookingstatements” within the meaning of the Private Securities Litigation Reform Actof 1995. Forward-looking statements are those that do not relate solely tohistorical fact. They include, but are not limited to, any statement that maypredict, forecast, indicate or imply future results, performance, achievementsor events. They may contain words such as “believe,” “anticipate,” “expect,” “estimate,”“intend,” “project,” “plan,” “will,” or words or phrases of similar meaning.They may relate to, among other things:

 

•                  our liquidity and capital resources;

 

•                  our contracts with the U.S. Government;

 

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•                  the U.S. Department of Defense budget ingeneral and U.S. military activity in particular;

 

•                  our co-manufacturing plans;

 

•                  competitive pressures and trends in ourindustry;

 

•                  prevailing interest rates;

 

•                  legal proceedings and regulatory matters;

 

•                  other risks related to our Senior SecuredNotes (including the value of the collateral);

 

•                  statements with respect to the Transactions(as defined herein);

 

•                  general economic conditions; and

 

•                  our development and expansion plans andexpectations for the future.

 

These forward-lookingstatements reflect our current views with respect to future events and arebased on assumptions and subject to risks and uncertainties, including, but notlimited to, economic, competitive and governmental factors outside of ourcontrol, that may cause actual results to differ materially from trends, plansor expectations set forth in the forward-looking statements and may adverselyaffect us. It is not possible for us to predict all of these risks, nor can weassess the extent to which any factor, or combination of factors, may causeactual results to differ from those contained in forward-looking statements.

 

**PART II – OTHER INFORMATION**

 

**Item 1.****                                                          ****Legal Proceedings.**

 

We are a defendant invarious legal actions arising in the normal course of business, the outcomes ofwhich, in the opinion of management, neither individually nor in the aggregateare likely to result in a material adverse effect on our business, results ofoperations, financial position or cash flows.

 

**Item 2.****                                                          ****Unregistered Sales of EquitySecurities and Use of Proceeds.**

 

None.

 

**Item 3.****                                                          ****Defaults Upon Senior Notes.**

 

None.

 

**Item 4.****                                                          ****Submission of Matters to aVote of Securities Holders.**

 

None.

 

**Item 5.****                                                          ****Other Information.**

 

None.

 

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**Item 6.****                                                          ****Exhibits.**

 
| **No.** | ** ** | **Description**                                                                                                                                                            |
|---------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |       |                                                                                                                                                                       |
| 3.1*    |       | Certificate of formation of TWC Holding LLC, filed with the Delaware  Secretary of State on January 29, 2004                                                          |
|    |       |                                                                                                                                                                       |
| 3.2*    |       | Limited  Liability Company Operating Agreement of TWC Holding LLC, dated as of June 30,  2004                                                                         |
|    |       |                                                                                                                                                                       |
| 3.3*    |       | Amendment  No. 1 to the Limited Liability Company Operating Agreement of TWC  Holding LLC, effective as of August 18, 2004                                       |
|    |       |                                                                                                                                                                       |
| 3.4*    |       | Amendment  No. 2 to the Limited Liability Company Operating Agreement of TWC  Holding LLC, effective as of April 11, 2005                                        |
|    |       |                                                                                                                                                                       |
| 31.1    |       | Certification pursuant to Section 302 of the  Sarbanes Oxley Act of 2002 (President and Chief Executive Officer)                                                      |
|    |       |                                                                                                                                                                       |
| 31.2    |       | Certification pursuant to Section 302 of the  Sarbanes Oxley Act of 2002 (Chief Financial Officer)                                                                    |
|    |       |                                                                                                                                                                       |
| 32.1    |       | Certification pursuant to 18 U.S.C. Section 1350,  as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002  (President and Chief Executive Officer) |
|    |       |                                                                                                                                                                       |
| 32.2    |       | Certification pursuant to 18 U.S.C. Section 1350,  as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002  (Chief Financial Officer)               |

 

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*             Incorporatedherein by reference to the Registrant’s Registration Statement on Form S-4(File No. 333-124826) filed with the Commission on May 12, 2005

 

**Signatures**

 

Pursuant to the requirements of the Securities andExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 

 
|                                  | TWC Holding LLC |
|---------------------------------------|-----------------|
|                                  | (Registrant)    |
|                                  |            |   |
| Date:  August 16, 2005 | By:             | /s/ MICHAEL M. THOMPSON |   |
|                                  |            | Michael M. Thompson |
|                                  |            | President and Chief Executive Officer |
|                                  |            | (Principal Executive Officer) |
|                                  |            |   |
|                                  |            |   |
| Date:  August 16, 2005 | By:             | /s/ Brian A. Lutes |   |
|                                  |            | Brian A. Lutes |
|                                  |            | Chief Financial Officer and Treasurer |
|                                  |            | (Principal Financial Officer and |
|                                  |            | Principal Accounting Officer) |

 

27

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