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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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ANNUAL REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended:

October 1, 2006

001-12415

(Commission File Number)



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BWAY CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                          |  |                                  
|--------------------------------------------------------- |  | ---------------------------------
|DELAWARE                                                  |  | 36-3624491                       
|(State of incorporation)                                  |  | (IRS Employer Identification No.)
|                                                          | 
|8607 Roberts Drive, Suite 250 Atlanta, Georgia 30350-2237 |  | (770) 645-4800                   
|(Address of principal executive offices)                  |  | (Registrants telephone number)  



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Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered
pursuant to Section 12(g) of the Act: None.



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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ̈No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ̈No  x

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act.

Large accelerated filer ̈Accelerated filer ̈Non-accelerated
filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).    Yes ̈No  x

As of April 2, 2006 (the registrants most recently completed second fiscal quarter), all of the voting and
non-voting common equity was held by affiliates. The registrants common equity is not publicly traded.

As of December 22, 2006, there were
1,000 shares of BWAY Corporations Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.



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BWAY CORPORATION

TABLE OF CONTENTS



|         |  |                                                                                                              |  |     
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|         |  |                                                                                                              |  | Page
|PART I   |  |                                                                                                              |  |     
|         |  |                                                                                                             
|Item 1.  |  | Business                                                                                                     |  | 1   
|         |  |                                                                                                             
|Item 1A. |  | Risk Factors                                                                                                 |  | 5   
|         |  |                                                                                                             
|Item 1B. |  | Unresolved Staff Comments                                                                                    |  | 7   
|         |  |                                                                                                             
|Item 2.  |  | Properties                                                                                                   |  | 8   
|         |  |                                                                                                             
|Item 3.  |  | Legal Proceedings                                                                                            |  | 8   
|         |  |                                                                                                             
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                          |  | 9   
|         |  |                                                                                                             
|PART II  |  |                                                                                                              |  |     
|         |  |                                                                                                             
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 9   
|         |  |                                                                                                             
|Item 6.  |  | Selected Financial Data                                                                                      |  | 10  
|         |  |                                                                                                             
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operation                         |  | 12  
|         |  |                                                                                                             
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 21  
|         |  |                                                                                                             
|Item 8.  |  | Financial Statements and Supplementary Data                                                                  |  | 21  
|         |  |                                                                                                             
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 21  
|         |  |                                                                                                             
|Item 9A. |  | Controls and Procedures                                                                                      |  | 21  
|         |  |                                                                                                             
|Item 9B. |  | Other Information                                                                                            |  | 21  
|         |  |                                                                                                             
|PART III |  |                                                                                                              |  |     
|         |  |                                                                                                             
|Item 10. |  | Directors and Executive Officers of the Registrant                                                           |  | 22  
|         |  |                                                                                                             
|Item 11. |  | Executive Compensation                                                                                       |  | 24  
|         |  |                                                                                                             
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 31  
|         |  |                                                                                                             
|Item 13. |  | Certain Relationships and Related Transactions                                                               |  | 32  
|         |  |                                                                                                             
|Item 14. |  | Principal Accounting Fees and Services                                                                       |  | 34  
|         |  |                                                                                                             
|PART IV  |  |                                                                                                              |  |     
|         |  |                                                                                                             
|Item 15. |  | Exhibits, Financial Statement Schedules                                                                      |  | 34  



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BWAY CORPORATION

Annual Report on Form 10-K

For the Fiscal Year Ended October 1, 2006

PART I

Item 1. Business

GENERAL

BWAY Corporation (BWAY), including its principal subsidiary, North America Packaging Corporation (NAMPAC), and each of their lesser subsidiaries (collectively the Company,
we, our or us) is a leading North American manufacturer of metal and rigid plastic containers for paint and certain other consumer and industrial products. Our product offerings include a wide variety of steel
containers such as paint, aerosol and specialty cans, which are used by our customers to package a diverse range of end-use products including paint, household and personal care products, automotive after-market products, paint thinners and driveway
and deck sealants. Our plastic containers include injection molded plastic pails and blow-molded tight head containers, drums and bottles. Our end-use markets have historically exhibited stable demand characteristics and our customer base includes
leading participants in these markets. The references in this report to market positions or market share are based on information derived from annual reports, trade publications and management estimates, which we believe are reliable.

We are the successor to a business founded in 1875. On February 7, 2003, we were acquired pursuant to a merger agreement dated September 30,
2002 whereby we became a wholly owned subsidiary of BCO Holding Company, which is a holding company controlled by affiliates of Kelso & Company, L.P., a private investment firm founded in 1971 (Kelso). Upon completion of the
acquisition, BWAY became a private company and our common stock was delisted from the New York Stock Exchange. The acquisition by Kelso will be referred to herein as the Transaction.

On November 4, 2003, the Registration Statement for our $200 million 10% Senior Subordinated Notes Due 2010 became effective under the Securities
Act of 1933 (the Senior Notes). In December 2003, we exchanged these notes for previously issued, unregistered notes in an equal principal amount.

Our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K are filed electronically with the Securities and Exchange Commission (the SEC). The SEC maintains an internet
site that contains these reports at www.sec.gov. You may also access these reports through links found on our website at www.bwaycorp.com.

Acquisitions and Dispositions

On July 17, 2006, we acquired substantially all of the assets and assumed certain of the
liabilities of Industrial Containers, Ltd. (ICL Ltd.), a Toronto based manufacturer of rigid plastic containers and steel pails for industrial packaging markets (the ICL Acquisition). The net assets were acquired by ICL
Industrial Containers ULC (ICL), a wholly owned subsidiary of BWAY created to effectuate the acquisition. For a further discussion of the ICL Acquisition, see Note 2 of the Notes to the Consolidated Financial Statements under Item 8
of this Form 10-K.

On July 7, 2004, we acquired all of the stock of NAMPAC, a manufacturer of rigid plastic containers for industrial
packaging markets, from MVOC, LLC, a Delaware limited liability company and sole owner of the common shares of NAMPAC (the NAMPAC Acquisition). As a result of the acquisition, NAMPAC became a wholly owned subsidiary of BWAY. For a
further discussion of the NAMPAC Acquisition, see Note 2 of the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K.

On August 25, 2003, we acquired substantially all of the assets of SST Industries (SST), a manufacturer of rigid plastic containers for industrial packaging markets (the SST Acquisition). We paid approximately
$23.0 million in cash, net of cash acquired, for the SST assets.

INDUSTRY SEGMENTS

Our business is organized on the basis of product type with two reportable segments: metal packaging and plastics packaging. We operate these reportable
segments as separate divisions and differentiate the segments based on the nature of the products and services they offer. The markets in which we participate can generally be placed into three broad categories: North American general line rigid
metal containers (excluding aerosol), North American general line aerosol containers and North American general line rigid plastic containers. Our metal packaging segment includes the North American general line rigid metal containers (including
aerosol) market and our plastics packaging segment includes the North American general line rigid plastic containers market.

Certain
financial information about our industry segments is set forth in Part II herein under Item 7 and in the Notes to the Consolidated Financial Statements under Item 8.

Metal Packaging Segment

Metal containers are produced for three primary markets: beverage, food and
general line. We compete primarily in the general line market. General line products include paint cans and components, aerosol cans, oblong cans, steel pails, ammunition boxes and a variety of other specialty cans. We estimate, based on industry
data published by the Can Manufacturers Institute (the trade association of the metal and composite can manufacturing industry in the United States), that calendar 2006 industry shipments in the United States will approximate 135 billion units as
follows: 75% to the beverage market, 21% to the food market and 4% to the general line market. General line cans generally have higher



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selling prices than food or beverage cans. Few companies compete in each of the three product markets.

Products and Markets

Our metal
packaging segment operates primarily in North America in the general line segment of the metal container market. In the United States, we are the leading producer of steel paint cans, the third largest producer of steel aerosol cans, and we have
established significant market positions in most of our other product lines.

The primary uses for our general line cans are for paint and
related products, lubricants, roof and driveway sealants, charcoal lighter fluid, and household and personal care products. Specific products include round cans with rings and plugs (generally paint cans), specialty cans (generally PVC or rubber
cement cans, brake fluid and other automotive after-market products cans, oblong or F style cans, ammunition boxes and an assortment of other specialty cans), aerosol cans and steel pails. We produce a full line of these products to
serve the specific requirements of a diversified base of nationally recognized customers. Most of our products are manufactured in facilities that are strategically located to allow us to deliver product to our customers within a one-day transit
time.

Paint Cans. We are the leading supplier in North America and the only national supplier of metal paint cans. We are the sole
supplier of metal paint cans to the leading domestic paint companies, and we are the sole supplier of metal paint can components to the primary manufacturer of hybrid (plastic and metal) paint cans in North America.

Specialty Cans. We are the leading supplier of metal specialty cans in North America. Specialty cans include screw top cans, pour top cans, oblong
or F style cans and ammunition boxes. Screw top cans typically have an applicator or brush attached to a screw cap and are typically used for PVC pipe cleaner, PVC cement and rubber cement. Pour top cans are typically used for packaging
specialty oils and automotive after-market products. Oblong or F style cans are typically used for packaging paint-related products, charcoal lighter fluid and waterproofing products. Ammunition boxes provide a hermetic seal, are coated
with a corrosion-resistant finish and are used to package small arms ammunitions and other ordnance products. We sell ammunition boxes to the U.S. Department of Defense as well as to major domestic and foreign producers of ordnance.

Aerosol Cans. We are the third largest supplier of aerosol cans in North America. We focus on serving as a primary supplier to small and medium
sized customers and as a secondary supplier to large customers. Aerosol cans are typically used for packaging various household and industrial products, including paint and related products, personal care products, lubricants and insecticides.

Steel Pails. We are one of the leading suppliers of steel pails in North America. Steel pails are typically used for packaging
paint and related products, roof and driveway sealants, marine coatings, vegetable oil, and water repellent.

Customers

Our metal packaging segment customers include many of the worlds leading paint, consumer and personal care companies. In 2006, sales to our 10
largest metal packaging segment customers accounted for approximately 43% of the segments net sales. Of the 2006 segment net sales, approximately 13% were to The Sherwin-Williams Company.

Consistent with industry practice, we enter into multi-year supply agreements with many of our major customers. However, many of our contracts are
requirements contracts under which we supply a percentage of a customers requirements for our products over a period of time, without any specific commitment to unit volume. In addition, many of our customer contracts, including those with our
major customers, provide that the customer may receive competitive proposals for all or a portion of the products we furnish to the customer under the contract, including proposals to reformulate the packaging to another material. We generally have
the right to retain the customers business subject to the terms of the competitive proposal.

We believe we have strong relationships
with our major customers due to: (i) the close proximity of our manufacturing facilities to key customer locations; (ii) our low-cost, flexible manufacturing capabilities; and (iii) our reputation for quality and customer service.

Raw Materials

Our
principal raw materials consist of tinplate, blackplate and cold rolled steel, energy, various coatings, inks and compounds. Steel products represent the largest component of raw material costs. With the exception of pails and ammunition boxes,
which are manufactured from either blackplate or cold rolled steel, all of our products are manufactured from tinplate steel. We purchase all required raw materials from outside sources.

Various domestic and foreign steel producers supply us with tinplate steel, although we currently purchase most of our tinplate steel from domestic
suppliers. Procurement from suppliers generally depends on the suppliers product offering, product quality, service and price. Historically, we have generally been able to increase the price of our products to reflect increases in the price of
steel, but we cannot be sure that we will be able to do so in the future.

A steel supply shortage could affect, among other things, our
ability to obtain steel, the timing of steel deliveries and the price we pay for steel. In the event of supply interruptions, we could



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experience higher costs due to underutilization of our manufacturing facilities and lower sales due to a reduction in our
ability to produce goods for sale.

In addition to steel products, we purchase energy from various suppliers as well as various coatings,
inks and compounds. We do not anticipate any future shortages or supply problems for these items based on their historical availability and the current number of suppliers.

Competition

The steel container
industry is highly competitive and some of our competitors have greater financial resources than we do. Competition is based primarily on price, manufacturing capacity, manufacturing flexibility and quality. We believe that (i) the close
proximity of our manufacturing facilities to key customer locations, (ii) our low-cost, flexible manufacturing capabilities and (iii) our reputation for quality and customer service enable us to compete effectively.

In addition, we face competitive risks from substitute products, such as plastics, and, to a lesser extent, composites and flexible packaging containers.
Steel containers continue to be the preferred package in the majority of our customers markets. We believe this is primarily due to: (i) their price stability and competitiveness, compared to alternative packaging; (ii) the
attractive strength and non-permeable characteristics of steel versus other materials, such as plastics; (iii) their lower storage and handling costs; (iv) their ability to hold highly volatile and solvent-based liquids; and (v) their
fire safety characteristics. In addition, we believe steel containers are easier and less costly to recycle and have a higher rate of recycling than alternative materials.

One of the objectives of our recent acquisitions of general line rigid plastic container manufacturers was to mitigate competitive risk from plastic
substitution. In addition, the broader product offering enables us to provide other products utilized by our existing customer base.

Plastics Packaging
Segment

Products and Markets

We are the largest manufacturer of general line rigid plastic containers in the North American market and we produce products in five broad categories: (1) open-head containers; (2) tight-head containers;
(3) F-Style plastic bottles; (4) plastic drums; and (5) plastic paint bottles.

Open-head Containers. Open-head
containers are injection-molded products made of high-density polyethylene (HDPE) that are used primarily by the paint and coating, petroleum, food, building materials, agricultural and janitorial supply industries.

Tight-head Containers.Tight-head containers are blow-molded made of HDPE that are used primarily by the food, petroleum, agricultural, chemical,
janitorial supply, beverage and coating industries.

F-Style Plastic Bottles. F-Style plastic bottles are one-piece, blow-molded
HDPE containers that are most commonly used for storing and shipping herbicides and pesticides for the crop protection industries.

Plastic Drums. Plastic drums are large transportable containers made from HDPE available in either an open-head or tight-head format. Plastic drums are most frequently used for shipping concentrated beverage syrup and chemicals.

Plastic Paint Bottles.We are the primary supplier to a leading paint manufacturer of an innovative plastic paint container made
from HDPE. The paint bottle is proprietary to the customer, and we cannot provide it to other paint manufacturers.

Customers

Our plastics packaging segment customers include some of the worlds leading paint, food and industrial companies, several of which
are also customers of our metal packaging segment. We have long-term relationships with our customers and in many cases we are the exclusive supplier of our customers plastic packaging requirements. In 2006, sales to our 10 largest plastics
packaging segment customers accounted for approximately 40% of the segments net sales. Of the 2006 segment net sales, approximately 18% were to The Sherwin-Williams Company.

We maintain a diversified customer base, which is broadly distributed among industries as diverse as paint, food, construction, petroleum and chemicals.
Consistent with industry practice, we enter into multi-year supply agreements with many of our major customers. However, many of our contracts are requirements contracts under which we supply a percentage of a customers requirements for our
products over a period of time, without any specific commitment to unit volume. In addition, many of our customer contracts, including those with our major customers, provide that the customer may receive competitive proposals for all or a portion
of the products we furnish to the customer under the contract, including proposals to reformulate the packaging to another material. We generally have the right to retain the customers business subject to the terms of the competitive proposal.



Raw Materials

The main raw material utilized in the plastics packaging segment is HDPE, a plastic resin used to produce rigid plastic packaging containers and
materials. HDPE is particularly suitable for our plastic packaging products because of its strength, stiffness and resistance to chemicals and moisture. Furthermore, the product is relatively easy to process and form. HDPE resin constitutes
approximately half of our plastics packaging segment total cost of products sold. As a commodity product, resin is susceptible to price fluctuations. Resin prices have increased approximately 27% during the last year.



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In order to mitigate the impact of resin price fluctuations, we have agreements with our customers, which
represent a substantial majority of our plastic packaging net sales, allowing changes in resin cost to be passed through to them. Most of these agreements are tied to specific chemical indices, such as the DeWitt Index, which provide a benchmark for
the price of resin. As a result, some or all of the change in resin price is passed through to the customer, consistent with industry practice.

HDPE is the primary plastic resin we use in the manufacture of our products, which we purchase from major HDPE suppliers. In addition, we employ a strategy to purchase resin opportunistically in spot markets when resin can be bought below
contract prices.

Competition

The general line rigid plastic containers market is very competitive. Competition is based primarily on service, manufacturing flexibility and price. We believe that (i) our low-cost, flexible manufacturing capacities, (ii) the
close proximity of our manufacturing facilities to key customer locations and (iii) our reputation for quality and customer service enable us to compete effectively.

Employees

As of October 1, 2006, we employed approximately 2,400 hourly employees and
approximately 500 salaried employees. Approximately 23% of our hourly workforce is covered by nine separate collective bargaining agreements.

Two of our collective bargaining agreements, representing approximately 47% of our unionized employees, will become amendable in fiscal 2007.

While we consider relations with our employees to be good, we may not be able to negotiate new or renegotiate existing collective bargaining agreements (as they become amendable) with the same terms. A labor dispute
could result in production interruptions, and a prolonged labor dispute, which could include a work stoppage, could adversely affect our ability to satisfy our customers requirements and could have a material adverse effect on our business,
including our financial condition, results of operations or cash flows.

Environmental, Health and Safety Matters

We are subject to a broad range of federal, state, provincial and local environmental, health and safety laws, including those governing discharges to
air, soil and water, the handling and disposal of hazardous substances and the investigation and remediation of contamination resulting from the release of hazardous substances. We believe that we are currently in compliance with all applicable
environmental, health and safety laws, though future expenditures may be necessary in order to maintain such compliance, including compliance with air emission control requirements for volatile organic compounds. In addition, in the course of our
operations we use, store and dispose of hazardous substances. Some of our current and former facilities are currently involved in environmental investigations and remediation resulting from the release of hazardous substances or the presence of
other contaminants. While we do not believe that any investigation or identified remediation obligations will have a material adverse effect on our financial condition, results of operations or cash flows, there are no assurances that such
obligations will not arise in the future. Many of our facilities have a history of industrial usage for which investigation and remediation obligations could arise in the future and which could have a material adverse effect on our financial
condition, results of operations or cash flows. However, except to the extent otherwise disclosed herein, we believe it is remote that any such material losses could result from environmental remediation matters or environmental investigations
relating to our current or former facilities.

We incurred approximately $1.1 million in capital expenditures in 2006 and approximately
$0.6 million in the first quarter of 2007 to comply with federal Maximum Achievable Control Technology (MACT) regulations related to air emission control requirements for Hazardous Air Pollutants (HAP) and volatile organic
compounds. In addition, we expect to incur approximately $1.1 million in capital expenditures in 2007 to comply with certain environmental laws at a facility related to the ICL Acquisition.

In the third quarter of 2005, we joined a potentially responsible party (PRP) group related to a waste disposal site in Georgia. Our status
as a PRP was based on documents indicating that waste materials were transported to the site from our Homerville, Georgia facility prior to our acquisition of the facility in 1989. We joined the PRP group in order to reduce our exposure, which we
estimate will approximate $0.1 million.

From time to time, we receive requests for information or are identified as a PRP pursuant to the
Federal Comprehensive Environmental Response, Compensation and Liability Act or analogous state laws with respect to off-site waste disposal sites utilized by its current or former facilities or its predecessors in interest. We do not believe that
any of these identified matters will have a material adverse effect on our financial condition, results of operations or cash flows.

We
record reserves for environmental liabilities when environmental investigation and remediation obligations are probable and related costs are reasonably estimable. We had accrued liabilities of approximately $0.3 million at the end of each of 2006
and 2005; however, future expenditures may exceed the amounts accrued.



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Item 1A. Risk Factors

The most significant risk factors affecting our business include the following:

An increase in the use of alternative packaging as a substitute for the steel and plastic containers we sell could adversely affect our profitability.

Our steel and plastic containers are used by our customers to package a diverse range of end-use products. A variety of substitute products are
available to package these end-use products, including steel and plastics, and to a lesser extent, composites and flexible packaging containers. From time to time our customers, including some of our larger customers, have used such alternative
methods to package their products.

A widespread introduction of alternative packages by these or other companies as a substitute for steel
or plastic containers could significantly reduce our sales to our customers. More generally, a decrease in the costs of substitute products, improvements in the performance characteristics of substitute products or the successful development or
introduction of new substitute products could significantly reduce our customers orders and our profitability.

Competition from other steel or
plastic container manufacturers could significantly impact our profitability, as could an election by our customers to self-manufacture their steel or plastic container requirements.

The container industries in which we do business are highly competitive and some of our competitors have greater financial, technical, sales and marketing
and other resources than we do. The principal methods of competition in our industry include price, manufacturing capacity, manufacturing flexibility and quality. We may not be able to compete successfully with respect to any of these factors.
Competition could force us to reduce our prices or could otherwise result in a loss of market share for our products. In addition, some manufacturers of products that are packaged in steel or plastic containers produce their own steel or plastic
containers for their products. The election by some of our existing customers, or potential future customers, to manufacture their steel or plastic containers in-house could significantly impact our profitability.

Our customer contracts generally allow our customers to change, and, in some cases, terminate their contracts on short notice.

Some of our 2006 sales were made to customers with whom we have contractual relationships. Many of these contracts, which are often with our largest
customers, are requirements contracts under which we supply a percentage of a customers requirements for our products over a period of time, without any specific commitment to unit volume. As such, we are not guaranteed any minimum level of
net sales under many of our contracts and many of our customers are under no obligation to continue to purchase products from us.

Moreover, if a customers requirements for our products exceeds our ability to supply that customer, as has occurred from time to time in the past, we may have a short-term or long-term inability to supply all of its requirements from
our own manufacturing facilities and may be required to purchase containers from third parties or take other proactive steps in order to fill that customers order. Our inability to supply a customers specific requirements from our
manufacturing facilities could materially adversely affect our relationship with that customer or otherwise increase our operating costs.

In addition, many of our requirements contracts with our customers provide that the customer may receive competitive proposals for all or a portion of the products we furnish to the customer under the contract. We generally have the right
to retain the customers business subject to the terms of the competitive proposal. If we match a competitive proposal, it may result in reduced sales prices for the products that are the subject of the competitive proposal. If we choose not to
match a competitive proposal, we may lose the sales that were the subject of the competitive proposal.

The loss of a key customer could have a
significant negative impact on our sales and profitability.

In 2006, approximately 34% of our net sales were to our top 10 customers.
Sales to our largest customer accounted for approximately 15% of our 2006 net sales.

The loss of, or major reduction in business from, one
or more of our major customers could create excess capacity within our manufacturing facilities and could result in the erosion of our gross margins and our market share position.

The loss of one or more members of our senior management team could adversely affect our ability to execute our business strategy.

We are dependent on the continued services of our senior management team. Although we believe we could replace key employees in an orderly fashion should the need arise, the loss of any such key personnel could have a
material adverse effect on our ability to execute our business strategy. We do not maintain key-person insurance for any of our officers, employees or directors.

Increases in the price of our raw materials or interruptions or shortages in the supply of raw materials could cause our production costs to increase, which could reduce our ability to compete effectively.

We require substantial amounts of raw materials in our operations, including steel, resin, energy, various inks and coatings. We purchase all raw
materials we require from outside sources, and



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consolidate our steel and resin purchases among a select group of suppliers in an effort to leverage purchasing power.
The availability and prices of our raw materials may be subject to curtailment or change due to new laws or regulations. For example, the United States previously imposed tariffs or quotas on imports of certain steel products and steel slabs. The
availability and prices of raw materials may also be subject to shortages in supply, suppliers allocations to other purchasers, interruptions in production by suppliers (including by reason of labor strikes or work stoppages at our
suppliers plants), our inability to leverage our purchasing power as successfully as we have in the past, changes in exchange rates and worldwide price levels. Historically, we have generally been able to increase the price of our products to
reflect increases in the price of steel and plastic resin, but we may not be able to do so in the future. We have generally not been able in the past to pass on any price increases to our customers in the prices of the raw materials, other than
steel and plastic resin, that we utilize in our business. To the extent we are not able to leverage our purchasing power in the future as successfully as we have in the past, we are not able to increase the price of our products to reflect increases
in the prices of raw materials or we experience any interruptions or shortages in the supply of raw materials, our operating costs could materially increase.

Labor disruptions with a portion of our workforce which is unionized could decrease our profitability.

At the end of 2006,
approximately 23% of our hourly employees worked under various collective bargaining agreements. Two of our nine collective bargaining agreements, representing approximately 47% of our unionized workforce, will become amendable in 2007. While we
believe that our relations with our employees are good, we may not be able to negotiate these or other collective bargaining agreements on the same or more favorable terms as the current agreements, or at all, and without production interruptions,
including labor stoppages. A prolonged labor dispute, which could include a work stoppage, could impact our ability to satisfy our customers requirements. In particular, a labor dispute with either of the major unions representing employees in
Cincinnati could have a material adverse effect on our ability to produce aerosol containers and could result in a deterioration of that business. The agreement with our largest union at the Cincinnati facility becomes amendable in August 2007.

In the event of a catastrophic loss of one of our manufacturing facilities, we may not be able to meet the volume requirements of our existing
customers or fulfill the requirements of potential customers.

We face the risk of a catastrophic loss of the use of all or a portion of
any of our facilities due to accident, terrorist attack, labor issues, weather conditions, other natural disasters or otherwise. Such a catastrophic loss could have a significant effect on our relationships with our customers, financial condition,
results of operations and cash flows. Although we maintain insurance covering our manufacturing facilities, including business interruption insurance, our insurance coverage may not be adequate to cover all of our losses in the event of a
catastrophic loss of any of our manufacturing facilities. In addition, such insurance, including business interruption insurance, could in the future become more expensive and difficult to maintain and may not be available on commercially reasonable
terms or at all. Under certain circumstances, we are required under our credit facility to utilize the proceeds of any casualty insurance, but not business interruption insurance, to repay outstanding indebtedness under the senior credit facility
rather than to reinvest such proceeds in rebuilding any such facility.

Our business may be subject to significant environmental investigation,
remediation and compliance costs.

We are subject to a broad range of federal, state and local environmental, health and safety laws,
including those governing discharges to air, soil and water, the handling and disposal of hazardous substances and the investigation and remediation of contamination resulting from the release of hazardous substances. We believe that we are in
material compliance with all applicable environmental, health and safety laws, though future expenditures may be necessary in order to maintain such compliance. In addition, in the course of our operations, we use, store and dispose of hazardous
substances. Some of our current and former facilities are currently involved in environmental investigations and remediation resulting from releases of hazardous substances or the presence of other constituents. While we do not believe that any
investigation or remediation obligations that we have identified will have a material adverse effect on our results of operations, financial condition or cash flows, many of our facilities have a history of industrial usage for which investigation
and remediation obligations could arise in the future and which could require us to make material expenditures or otherwise materially affect the way we operate our business. For further discussion of existing environmental issues relating to us,
see Environmental, Health and Safety Matters in Item 1.

Our revenues or operating costs could be adversely affected by product
liability or product recall costs involving our products or products of our customers.

We are subject to the risk of exposure to
product liability and product recall claims, however, if any of our products, such as the coatings we apply to certain containers through our material center services business, are alleged to have resulted in personal injury or death, or property
damage, based, for example, on alleged product defect. Although we do maintain product liability insurance, this insurance may not be adequate to cover any losses related to a product liability claim brought against us. Furthermore, products
liability insurance could in the future become more expensive and difficult to maintain and may not be available on commercially reasonable terms, if at all. In addition, we do not maintain any product recall insurance and should we be required to
initiate a product recall, such a recall could have a significant impact on our results of operations or cash flows.

In addition, several
leading paint manufacturers are defendants in various lawsuits, including class-action tort litigation brought by public entities, concerning exposure of children to lead-based paint applied thirty or more years ago, as well as alleging that lead
pigment in paint constitutes a public nuisance requiring abatement. While we do not believe that any of these lawsuits has resulted in an adverse verdict against any of these defendants, this or similar product liability related



6



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##### Table of Contents

##### Index to Financial Statements

litigation could have a material adverse effect on the financial condition of certain of our customers in the future,
including our paint container customers. To the extent our orders decrease or we are unable to collect receivables from customers due to the effects of product liability litigation on our customers, including the lead-based paint litigation referred
to above, our results of operations could be unfavorably affected. One of our subsidiaries, Armstrong Containers, Inc. (Armstrong), has been joined as a defendant in some of the lead-based paint litigation based upon allegations of its
corporate predecessors conduct that predated our ownership of Armstrong. See Item 3, Legal Proceedings, below.

We may not
succeed in our strategy of pursuing selective acquisitions.

We intend to continue to evaluate and selectively pursue acquisitions that
we believe are strategically important based on their potential to: (i) meet our customers needs; (ii) increase cash flow; (iii) diversify our product and customer base in related markets; and (iv) broaden our geographic
sales, distribution and manufacturing platform throughout the United States and Canada. However, we may not be able to locate or acquire suitable acquisition candidates at attractive cash flow multiples consistent with our strategy, and we may not
be able to fund future acquisitions because of limitations relating to our indebtedness or otherwise. In addition, to the extent that we make any acquisition in the future, our failure to integrate the acquired business successfully could
significantly impair our results of operations.

A disruption or failure in our computer systems could significantly disrupt our operations and impose
significant costs on us.

A significant part of our information technology systems used in connection with our internal operations is
centralized in our Atlanta, Georgia headquarters. In addition, other parts of our information technology systems are outsourced to third-party hosting vendors. We rely in the regular course of business on the proper operation of our information
technology systems. Any disruption or failure of our Atlanta-based or outsourced information technology systems could significantly disrupt our operations and impose significant costs on us.

We are controlled by affiliates of Kelso, and their interests as equity holders may conflict with the interests of our noteholders.

Certain private equity funds affiliated with Kelso own a substantial majority of our common stock. The Kelso affiliates are able to elect a majority of
our directors, appoint new management and approve any action requiring the vote of our outstanding common stock, including the amendment of our certificate of incorporation, mergers or sales of substantially all of our assets. The directors elected
by the Kelso affiliates will be able to make decisions affecting our capital structure, including decisions to issue additional capital stock and incur additional debt. The interests of Kelso and its affiliates may not in all cases be aligned with
the interests of our noteholders. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our equity holders might conflict with your interests as a noteholder. In addition, our equity
holders may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transaction might involve risks to holders of the Senior Notes.

Item 1B. Unresolved Staff Comments

None.



7



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##### Table of Contents

##### Index to Financial Statements

Item 2. Properties

The following table sets forth certain information with respect to our
headquarters and manufacturing facilities as of December 1, 2006. We believe our properties are generally in good condition, well maintained and suitable for their intended use. We have excluded from the table our warehouses and any
manufacturing facility that is permanently idled or otherwise not utilized by us in the production of our products.



|                                |  |                   |  |                            |  |                     |  |          
|------------------------------- |  | ----------------- |  | -------------------------- |  | ------------------- |  | ---------
|Location                        |  | General Character |  | Approximate Square Footage |  | Type of Interest(1) |  | Segment  
|Atlanta, Georgia (Headquarters) |  | Office            |  | 16,000                     |  | Leased              |  | Corporate
|Brampton, Ontario               |  | Manufacturing     |  | 41,000                     |  | Leased              |  | Metal    
|Bryan, Texas                    |  | Manufacturing     |  | 83,000                     |  | Leased              |  | Plastics 
|Cedar City, Utah                |  | Manufacturing     |  | 89,000                     |  | Owned               |  | Plastics 
|Chicago, Illinois (Kilbourn)    |  | Manufacturing     |  | 141,000                    |  | Owned               |  | Metal    
|Cidra, Puerto Rico              |  | Manufacturing     |  | 83,000                     |  | Leased              |  | Plastics 
|Cincinnati, Ohio                |  | Manufacturing     |  | 467,000                    |  | Leased              |  | Metal    
|Cleveland, Ohio                 |  | Manufacturing     |  | 248,000                    |  | Leased              |  | Plastics 
|Dayton, New Jersey              |  | Manufacturing     |  | 119,000                    |  | Leased              |  | Plastics 
|Fontana, California             |  | Manufacturing     |  | 72,000                     |  | Leased              |  | Metal    
|Franklin Park, Illinois         |  | Manufacturing     |  | 115,000                    |  | Leased              |  | Metal    
|Garland, Texas                  |  | Manufacturing     |  | 108,000                    |  | Leased              |  | Metal    
|Homerville, Georgia             |  | Manufacturing     |  | 395,000                    |  | Owned               |  | Metal    
|Indianapolis, Indiana           |  | Manufacturing     |  | 169,000                    |  | Leased              |  | Plastics 
|Lithonia, Georgia               |  | Manufacturing     |  | 75,000                     |  | Leased              |  | Plastics 
|Memphis, Tennessee              |  | Manufacturing     |  | 120,000                    |  | Leased              |  | Metal    
|St. Albert, Alberta             |  | Manufacturing     |  | 62,000                     |  | Leased              |  | Plastics 
|Sturtevant, Wisconsin           |  | Manufacturing     |  | 85,000                     |  | Leased              |  | Metal    
|Toccoa, Georgia                 |  | Manufacturing     |  | 121,000                    |  | Leased              |  | Plastics 
|Toronto, Ontario                |  | Manufacturing     |  | 73,000                     |  | Leased              |  | Plastics 
|Trenton, New Jersey             |  | Manufacturing     |  | 105,000                    |  | Leased              |  | Metal    
|Valparaiso, Indiana             |  | Manufacturing     |  | 106,000                    |  | Leased              |  | Plastics 
|York, Pennsylvania              |  | Manufacturing     |  | 97,000                     |  | Owned               |  | Metal    

---

|(1) | Our owned manufacturing facilities are subject to a mortgage lien in favor of Deutsche Bank Trust Company Americas as collateral agent for the lenders under our credit facility.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We regularly evaluate our various manufacturing facilities in light of current and expected market conditions and demand, and may further
consolidate our manufacturing facilities in the future.

Item 3. Legal Proceedings

We are involved in legal proceedings from time to time in the ordinary
course of business. Other than as described below, we are not currently involved in any litigation or other proceedings that we expect, either individually or in the aggregate, will have a material adverse effect on our financial condition, results
of operations or cash flows. We are also involved in certain proceedings relating to environmental matters as described under Item 1. Business - Environmental, Health and Safety Matters.

Lead Pigment Litigation

Angel Evans, a Minor, by
her guardian ad litem, Susan M. Gramling vs. American Cyanamid Co., Atlantic Richfield Company, BWAY Corp, Conagra Foods, Inc., E.I. Dupont De Nemours and Company, Millenium Holding, NL Industries, Inc., The Sherwin-Williams Company, Bobby Armon,
Department of Health and Family Services, State of Wisconsin;Circuit Court, Milwaukee County; State of Wisconsin; Case No. 05-CV-9281 (Evans).

Jomara Hardison, Minor by her guardian ad litem, Susan M. Gramling vs. American Cyanamid Co., BWAY Corp, E.I. Dupont De Nemours and Company, Conagra
Foods, Inc., Millenium Holding, Sylvia Kirkendoll, Joel Kirkendoll, Department of Health and Family Services, State of Wisconsin; Circuit Court, Milwaukee County; State of Wisconsin; Case No. 06-CV-00606 (Hardison).

Ruben Baez Godoy, Minor, by her guardian ad litem, Susan M. Gramling vs. American Cyanamid Co, BWAY Corporation, Cytec Industries,
Inc., E.I. Dupont De Nemours and Company, Conagra Foods, Inc., The Sherwin Williams Company, Walter Stankowski, Wayne Stankowski, and Wisconsin Electric Power Company; Circuit Court, Milwaukee County, State of Wisconsin; Case No. 06-CV-277
(Godoy).

In 2006, we were named as one of several defendants in the above-referenced personal injury cases in the state
of Wisconsin. Plaintiffs initially filed the Evans lawsuit in October 2005, and the Hardisonand Godoy lawsuits in January 2006. More recently, the plaintiffs in these actions agreed to the dismissal of BWAY Corporation as a
defendant and the substitution of our subsidiary, Armstrong Containers, Inc. (Armstrong) as a defendant.

These cases arise out
of the sale of lead pigment for use in lead-based paint. The claims have been asserted against Armstrong based on allegations that Armstrong assumed certain liabilities of MacGregor Lead Company (MacGregor), an entity that was involved
in the manufacture and sale of lead



8



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##### Table of Contents

##### Index to Financial Statements

pigment until 1971, when MacGregor sold its lead paint business to a third party. These cases seek to recover unspecified
monetary damages in excess of the statutory minimum for personal injuries due to alleged exposure to lead based paint. Armstrong has answered the complaints, denying the allegations contained therein. The cases currently are in the discovery phase.
We have been advised by plaintiffs counsel that other cases are likely to be filed which will name Armstrong as a defendant.

Separately, on December 18, 2006, Armstrong received a copy of a complaint in the case of City of Columbus, Ohio vs. Sherwin-Williams Company, Millennium Holdings, LLC, NL Industries, Inc., Conagra Grocery Products Company, E.I.
DuPont De Nemours and Company, Atlantic Ritchfield Company, Cytec Industries, Inc., American Cyanamid Company, Armstrong Containers, and John Doe Corporations; In the Court of Common Pleas Franklin County, Ohio, Civil Division; Case
No. 06CVH12 16480. In that case, which also arises from the alleged historic activities of MacGregor, the City of Columbus, Ohio, has alleged that lead pigment in paint constitutes a public nuisance under Ohio law and seeks abatement of that
nuisance. Other defendants in the case include Sherwin-Williams Company, Millennium Holdings, LLC, NL Industries, Inc., Conagra Grocery Products Company, E.I. DuPont De Nemours and Company, Atlantic Ritchfield Company, Cytec Industries, Inc., and
American Cyanamid Company.

While we believe that we have valid defenses to these cases and plan to vigorously defend them, we can neither
predict the outcome at this time due to the uncertainties involved nor can we reasonably determine the scope or amount of the potential costs and liabilities related to these matters. At the end of 2006, we had accrued approximately $0.5 million in
legal fees and expenses related to these matters. We have notified our general liability insurers, who are participating in the defense of the claims, subject to reservation of rights.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted during the
fourth quarter of 2006 to a vote of our security holders through the solicitation of proxies or otherwise.

PART II

Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

There is no established public market for our common equity, which is held entirely by BCO Holding.

During
the year we declared a $10.0 million cash dividend payable to BCO Holding. The dividend was used by BCO Holding to repurchase 45,482 shares of its common stock and to cash settle the exercise of 386,221 shares under option related to options held by
BWAYs chief executive officer.

With certain exceptions, we are prohibited by our long-term debt arrangements from paying dividends.
The dividend paid to BCO Holding discussed above was such an exception.



9



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##### Table of Contents

##### Index to Financial Statements

Item 6. Selected Financial Data

The following table sets forth our selected historical
consolidated financial and operating data, which should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this report and with our
consolidated financial statements and related notes included in Item 8 of this Form 10-K. The selected consolidated financial and other data as of and for each of the fiscal years in the three-year period ended October 1, 2006 have been
derived from our audited financial statements and related notes included in Item 8 of this report. The selected consolidated financial and other data as of and for each of the periods in the two-year period ended September 28, 2003 have
been derived from our audited financial statements and related notes which are not included in this report. In the discussion that follows, the Transaction, NAMPAC Acquisition and ICL Acquisition are defined in
Item 1 of this Form 10-K. Unless otherwise indicated, references to years in this report relate to fiscal years rather than to calendar years.



|                                                                                          |  |             |         |   |                  |   |         |                |  |   |         |   |  |      |          |   |      |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ---------------- | - | ------- | -------------- |  | - | ------- | - |  | ---- | -------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                                                                          |  | Predecessor |         |   | Successor        |  
|Fiscal periods ended (1) (Dollars in thousands)                                           |  | 2002        |         |   | Predecessor 2003 |   |         | Successor 2003 |  |   | 2004    |   |  | 2005 |          |   | 2006 |  
|STATEMENT OF OPERATIONS DATA                                                              |  |             |         |   |                  |   |         |                |  |   |         |   |  |      |          |   |      |   |         |   |  |   |         |  
|Net sales                                                                                 |  | $           | 527,601 |   |                  | $ | 186,726 |                |  | $ | 364,384 |   |  | $    | 611,588  |   |      | $ | 829,109 |   |  | $ | 918,513 |  
|                                                                                          |  |             |         |   |                  |   |         |                |  |   |         |   |  |      |          |   |      |   |         |   |  |   |         |  
|Cost of products sold (excluding depreciation and amortization) (2)                       |  |             | 456,788 |   |                  |   | 166,383 |                |  |   | 311,447 |   |  |      | 529,064  |   |      |   | 714,039 |   |  |   | 796,401 |  
|Gross profit (excluding depreciation and amortization)                                    |  |             | 70,813  |   |                  |   | 20,343  |                |  |   | 52,937  |   |  |      | 82,524   |   |      |   | 115,070 |   |  |   | 122,112 |  
|Depreciation and amortization (3)(4)                                                      |  |             | 19,582  |   |                  |   | 6,091   |                |  |   | 16,835  |   |  |      | 31,724   |   |      |   | 43,215  |   |  |   | 41,615  |  
|Selling and administrative expense (5)                                                    |  |             | 14,179  |   |                  |   | 14,875  |                |  |   | 8,675   |   |  |      | 14,040   |   |      |   | 22,120  |   |  |   | 29,777  |  
|Merger related transaction costs (6)                                                      |  |             | 1,478   |   |                  |   | 2,488   |                |  |   |        |   |  |      |         |   |      |   |        |   |  |   |        |  
|Restructuring and impairment charges (adjustment) (7)(8)(9)(10)(11)(12)                   |  |             | 1,250   |   |                  |   | (460    | )              |  |   | 260     |   |  |      | 352      |   |      |   | 5,265   |   |  |   | 1,511   |  
|Other (income) expense, net (13)(14)                                                      |  |             | (597    | ) |                  |   | 17      |                |  |   | 905     |   |  |      | 178      |   |      |   | (175    | ) |  |   | 1,813   |  
|Income (loss) from operations                                                             |  |             | 34,921  |   |                  |   | (2,668  | )              |  |   | 26,262  |   |  |      | 36,230   |   |      |   | 44,645  |   |  |   | 47,396  |  
|Interest expense, net (15)(16)(17)                                                        |  |             | 13,109  |   |                  |   | 11,190  |                |  |   | 16,935  |   |  |      | 26,889   |   |      |   | 32,165  |   |  |   | 34,660  |  
|Income (loss) before income taxes and cumulative effect of change in accounting principle |  |             | 21,812  |   |                  |   | (13,858 | )              |  |   | 9,327   |   |  |      | 9,341    |   |      |   | 12,480  |   |  |   | 12,736  |  
|Provision for (benefit from) income taxes                                                 |  |             | 9,556   |   |                  |   | (4,791  | )              |  |   | 3,462   |   |  |      | 3,634    |   |      |   | 4,351   |   |  |   | 6,941   |  
|Income (loss) before cumulative effect of change in accounting principle                  |  |             | 12,256  |   |                  |   | (9,067  | )              |  |   | 5,865   |   |  |      | 5,707    |   |      |   | 8,129   |   |  |   | 5,795   |  
|Cumulative effect of change in accounting principle, net of tax                           |  |             |        |   |                  |   |        |                |  |   |        |   |  |      |         |   |      |   |        |   |  |   | (398    | )
|                                                                                          |  |             |         |   |                  |   |         |                |  |   |         |   |  |      |          |   |      |   |         |   |  |   |         |  
|Net income (loss)                                                                         |  |             | 12,256  |   |                  |   | (9,067  | )              |  |   | 5,865   |   |  |      | 5,707    |   |      |   | 8,129   |   |  |   | 5,397   |  
|                                                                                          |  |             |         |   |                  |   |         |                |  |   |         |   |  |      |          |   |      |   |         |   |  |   |         |  
|OTHER FINANCIAL DATA                                                                      |  |             |         |   |                  |   |         |                |  |   |         |   |  |      |          |   |      |   |         |   |  |   |         |  
|EBITDA (18)                                                                               |  |             | 54,503  |   |                  |   | 3,423   |                |  |   | 43,097  |   |  |      | 67,594   |   |      |   | 87,860  |   |  |   | 89,011  |  
|EBITDA margin % (19)                                                                      |  |             | 10.3    | % |                  |   | 1.8     | %              |  |   | 11.8    | % |  |      | 11.1     | % |      |   | 10.6    | % |  |   | 9.7     | %
|Capital expenditures                                                                      |  |             | 10,586  |   |                  |   | 4,607   |                |  |   | 8,879   |   |  |      | 19,066   |   |      |   | 20,282  |   |  |   | 25,041  |  
|Cash interest paid, net                                                                   |  |             | 11,720  |   |                  |   | 5,374   |                |  |   | 18,611  |   |  |      | 22,595   |   |      |   | 29,866  |   |  |   | 33,200  |  
|                                                                                          |  |             |         |   |                  |  
|STATEMENT OF CASH FLOWS DATA                                                              |  |             |         |   |                  |   |         |                |  |   |         |   |  |      |          |   |      |   |         |   |  |   |         |  
|Net cash provided by (used in) operating activities                                       |  |             | 46,063  |   |                  |   | (2,135  | )              |  |   | 30,415  |   |  |      | 45,098   |   |      |   | 64,324  |   |  |   | 60,933  |  
|Net cash used in investing activities (20)(21)(22)                                        |  |             | (9,528  | ) |                  |   | (4,582  | )              |  |   | (52,006 | ) |  |      | (220,857 | ) |      |   | (19,247 | ) |  |   | (92,131 | )
|Net cash (used in) provided by financing activities (23)(24) (25)                         |  |             | (17,330 | ) |                  |   | (12,663 | )              |  |   | 21,729  |   |  |      | 202,836  |   |      |   | (20,513 | ) |  |   | 30,288  |  
|Ratio of earnings to fixed charges (26)                                                   |  |             | 2.46x   |   |                  |   |        |                |  |   | 1.51x   |   |  |      | 1.32x    |   |      |   | 1.35x   |   |  |   | 1.33x   |  



|                     |  |             |  |           |  |         |  |         |  |        
|-------------------- |  | ----------- |  | --------- |  | ------- |  | ------- |  | -------
|                     |  | Predecessor |  | Successor
|                     |  | 2002        |  | 2003      |  | 2004    |  | 2005    |  | 2006   
|BALANCE SHEET DATA   |  |             |  |           |  |         |  |         |  |        
|Working capital      |  | 20,467      |  | 17,451    |  | 52,382  |  | 53,709  |  | 70,988 
|Total assets (27)    |  | 306,686     |  | 443,325   |  | 741,404 |  | 771,994 |  | 833,745
|Total debt (28)(29)  |  | 100,291     |  | 217,465   |  | 415,810 |  | 395,975 |  | 440,444
|Stockholders equity |  | 72,648      |  | 79,487    |  | 115,005 |  | 123,436 |  | 127,483

---

Notes to Selected Financial Data Table:



|(1) | Our fiscal year ends on the Sunday closest to September 30. Fiscal years 2002, 2003, 2004, 2005 and 2006 ended September 29, 2002, September 28,
2003, October 3, 2004, October 2, 2005 and October 1, 2006, respectively. Fiscal 2003 consists of Predecessor 2003 (for the period from September 30, 2002 to February 6, 2003) and Successor 2003 (for the period
from February 7, 2003 to September 28, 2003). The fiscal years 2002, 2003, 2005 and 2006 consisted of 52 weeks. Fiscal year 2004 consisted of 53 weeks. Our financial statements for the periods presented include the results of operations
from and including August 25, 2003 related to the assets we acquired and liabilities assumed from SST Industries, from and including July 7, 2004 related to the NAMPAC Acquisition and from and including July 17, 2006 related to the
ICL Acquisition. Some of our subsidiaries report their financial position and results of operations on a calendar month basis with fiscal years ending on September 30 and have been consolidated as of September 30,
2004, September 30, 2005 and September 30, 2006. There were no significant or unusual transactions between the calendar month and fiscal month ending dates that should have been considered in the consolidated financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



10



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##### Table of Contents

##### Index to Financial Statements

Notes to Selected Financial Data Table:



|(2) | The following table summarizes stock-based compensation expense recorded by line item for the periods indicated. There was no stock-based compensation expense in 2002.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                |  |                  |        |                |   |       |  |      |       |      |   |       |  |   |       
|--------------------------------------------------------------- |  | ---------------- | ------ | -------------- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | ------
|                                                                |  | Predecessor      |        | Successor     
|Fiscal periods ended (a) (Dollars in thousands)                 |  | Predecessor 2003 |        | Successor 2003 |   | 2004  |  | 2005 |       | 2006
|STOCK-BASED COMPENSATION                                        |  |                  |        |                |   |       |  |      |       |      |   |       |  |   |       
|Cost of products sold (excluding depreciation and amortization) |  | $                | 2,900  |                | $ | 214   |  | $    | 206   |      | $ | 344   |  | $ | 274   
|Selling and administrative expense (b)                          |  |                  | 9,692  |                |   | 940   |  |      | 904   |      |   | 1,508 |  |   | 9,881 
|                                                                |  |                  |        |                |   |       |  |      |       |      |   |       |  |   |       
|TOTAL STOCK-BASED COMPENSATION (c)(d)(e)                        |  | $                | 12,592 |                | $ | 1,154 |  | $    | 1,110 |      | $ | 1,852 |  | $ | 10,155
|                                                                |  |                  |        |                |   |       |  |      |       |      |   |       |  |   |       



| | (a) | See Note 1 above.
| | --- | -----------------

| | (b) | Stock-based compensation expense in 2006 includes approximately $8.8 million related to the cash settlement of certain Exchange Options exercised by one of our officers.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Stock-based compensation expense in Predecessor 2003 relates to Predecessor stock option payouts associated with the Transaction.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

| | (d) | Stock-based compensation expense in Successor 2003, 2004 and 2005 relates to stock options issued subsequent to the Transaction.
| | --- | --------------------------------------------------------------------------------------------------------------------------------

| | (e) | Stock-based compensation expense for 2006 relates partially to stock options issued subsequent to the Transaction and to the cash settlement of certain Exchange Options as discussed
in (b) above.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Depreciation for 2002 includes an additional depreciation expense of $0.7 million related to shortened useful lives of certain computer systems.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Depreciation for Successor 2003, 2004 and 2005 includes $1.8 million, $5.8 million and $3.9 million, respectively, of additional depreciation related to shortened useful lives of
certain long-lived assets, primarily equipment.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | See Note 2 above.
|--- | -----------------

|(6) | Amounts relate to certain professional fees and other transaction costs relating to the Transaction.
|--- | ----------------------------------------------------------------------------------------------------

|(7) | Fiscal 2002 includes an additional $1.2 million restructuring charge related to the closing of one of our manufacturing facilities 2001.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(8) | Predecessor 2003 includes a $0.5 million adjustment related to revised expectations of future lease payments for closed facilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(9) | Successor 2003 includes a charge of $0.3 million primarily related to severance and benefits resulting from the closing of our Picayune, Mississippi manufacturing facility.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Fiscal 2004 includes a charge of $0.3 million related to severance and benefits, equipment disposition and other related costs associated with the closing of our Picayune,
Mississippi manufacturing facility.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Fiscal 2005 includes a $5.3 million charge for restructuring ($4.3 million) and asset impairment ($1.0 million). The restructuring charge consisted of $0.3 million related to costs
associated with the shutdown of our manufacturing facility in Picayune, Mississippi, $3.1 million related to costs associated with the shutdown of certain of our plastics manufacturing facilities, $1.0 million related to severance costs associated
with the closure of certain of the plastics manufacturing facilities and the elimination of redundant positions as a result of the NAMPAC Acquisition and a $(0.1) million adjustment to a previously recognized facility closure exit liability. The
$1.0 million impairment charge was taken to write down certain assets associated with the closed plastics manufacturing facilities to their estimated fair value.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Fiscal 2006 primarily relates to on-going severance and facility holding costs associated with the plastics manufacturing facility shutdowns discussed in Note 11 above. The facility
holding costs include an additional expense of approximately $0.8 million related to changes in our sublease assumptions on the remaining facility.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Includes financial advisory fees paid to Kelso of $0.3 million in Successor 2003 and $0.5 million in each of 2004, 2005 and 2006.
|---- | ---------------------------------------------------------------------------------------------------------------------------------

|(14) | Fiscal 2006 includes approximately $0.8 million in third party expenses incurred in connection with the refinancing of the term loan component of our credit facility that could not
be capitalized as deferred financing costs in accordance with applicable accounting guidance.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(15) | The period from September 30, 2002 to February 6, 2003 includes $6.8 million of interest expense related to the Transaction. The $6.8 million consists of $5.1 million
related to the tender, consent and redemption premiums and $1.7 million related to the write-off of deferred financing costs, each associated with the redemption of our $100.0 million 101/4% Senior Subordinated Notes due 2007.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(16) | The period from February 7, 2003 to September 28, 2003 includes $1.9 million related to the write-off of a bridge loan commitment fee, which was expensed when the bridge
loan commitment expired undrawn at the closing of the Transaction.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(17) | Fiscal 2004 includes approximately $1.3 million of unamortized deferred financing costs written-off as a result of refinancing the credit facility in connection with the NAMPAC
Acquisition.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(18) | Earnings before interest, taxes, depreciation and amortization (EBITDA) is reconciled to income (loss) before cumulative effect of change in accounting principle and to
net cash provided by (used in) operating activities in the tables below. EBITDA is not a GAAP measurement. However, we present EBITDA because it is one of the measures upon which management assesses our financial performance and is a primary metric
used in certain management incentive programs. Management also believes that EBITDA is a commonly used measurement of performance used by companies in our industry and is frequently used by securities analysts, investors and other interested parties
to measure our ability to service debt and as a measurement of financial performance. While providing useful information, EBITDA should not be considered in isolation or as a substitute for consolidated statement of operations and cash flows data
prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be construed as an indication of a companys operating performance or as a measure of liquidity. Our
definition of EBITDA is not calculated in the same way EBITDA is calculated under either the indenture governing the Senior Notes or the Credit Facility. Also, such non-GAAP information presented by other companies may not be comparable to our
presentation, since each company may define non-GAAP measures differently.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock-based compensation expense (see Note 2
above), restructuring and impairment charges (adjustments), other (income) expense, net and merger-related transaction costs, collectively representing $2.1 million, $14.6 million, $2.3 million, $1.6 million, $6.9 million and $14.0 million, in 2002,
Predecessor 2003, Successor 2003, 2004, 2005 and 2006, respectively, have not been added back to income (loss) before cumulative effect of change in accounting principle for purposes of calculating EBITDA. In addition, included in cost of products
sold (excluding depreciation and amortization), for Predecessor 2003, Successor 2003, 2004 and 2006 are costs of $0.5 million of other expense associated with the Transaction, $2.3 million of amortization of manufacturers profit recorded in
inventory primarily as a result of the Transaction, $0.4 million in amortization of manufacturers profit recorded in inventory as a result of the NAMPAC Acquisition and $0.5 million in amortization of manufacturers profit recorded in
inventory as a result of the ICL Acquisition respectively, that have not been added back to income (loss) before cumulative effect of change in accounting principle for purposes of calculating EBITDA.



|                                                                                           |  |             |        |                  |           |        |                |  |      |        |      |   |        |  |   |        |  |   |       
|------------------------------------------------------------------------------------------ |  | ----------- | ------ | ---------------- | --------- | ------ | -------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------ |  | - | ------
|                                                                                           |  | Predecessor |        |                  | Successor
|For the periods indicated (a) (Dollars in thousands)                                       |  | 2002        |        | Predecessor 2003 |           |        | Successor 2003 |  | 2004 |        | 2005 |   | 2006  
|RECONCILIATION OF EBITDA TO INCOME (LOSS) BEFORE CUMULATIVE CHANGE IN ACCOUNTING PRINCIPLE |  |             |        |                  |           |        |                |  |      |        |      |   |        |  |   |        |  |   |       
|Income (loss) before cumulative effect of change in accounting principle                   |  | $           | 12,256 |                  | $         | (9,067 | )              |  | $    | 5,865  |      | $ | 5,707  |  | $ | 8,129  |  | $ | 5,795 
|Depreciation and amortization (b)                                                          |  |             | 19,582 |                  |           | 6,091  |                |  |      | 16,835 |      |   | 31,724 |  |   | 43,215 |  |   | 41,615
|Interest expense, net (c)                                                                  |  |             | 13,109 |                  |           | 11,190 |                |  |      | 16,935 |      |   | 26,889 |  |   | 32,165 |  |   | 34,660
|Provision for (benefit from) income taxes                                                  |  |             | 9,556  |                  |           | (4,791 | )              |  |      | 3,462  |      |   | 3,634  |  |   | 4,351  |  |   | 6,941 
|                                                                                           |  |             |        |                  |           |        |                |  |      |        |      |   |        |  |   |        |  |   |       
|EBITDA                                                                                     |  | $           | 54,503 |                  | $         | 3,423  |                |  | $    | 43,097 |      | $ | 67,954 |  | $ | 87,860 |  | $ | 89,011
|                                                                                           |  |             |        |                  |           |        |                |  |      |        |      |   |        |  |   |        |  |   |       



11



---

##### Table of Contents

##### Index to Financial Statements

Notes to Selected Financial Data Table:



|                                                      |  |             |         |   |                  |   |        |                |  |   |        |   |  |      |        |   |      |   |        |   |  |   |         |  
|----------------------------------------------------- |  | ----------- | ------- | - | ---------------- | - | ------ | -------------- |  | - | ------ | - |  | ---- | ------ | - | ---- | - | ------ | - |  | - | ------- | -
|                                                      |  | Predecessor |         |   | Successor        |  
|For the periods indicated (a) (Dollars in thousands)  |  | 2002        |         |   | Predecessor 2003 |   |        | Successor 2003 |  |   | 2004   |   |  | 2005 |        |   | 2006 |  
|RECONCILIATION OF EBITDA TO CASH FLOW FROM OPERATIONS |  |             |         |   |                  |   |        |                |  |   |        |   |  |      |        |   |      |   |        |   |  |   |         |  
|Net cash provided by (used in) operating activities   |  | $           | 46,063  |   |                  | $ | (2,135 | )              |  | $ | 30,415 |   |  | $    | 45,098 |   |      | $ | 64,324 |   |  | $ | 60,933  |  
|Interest expense, net                                 |  |             | 13,109  |   |                  |   | 11,190 |                |  |   | 16,935 |   |  |      | 26,889 |   |      |   | 32,165 |   |  |   | 34,660  |  
|Provision for (benefit from) income taxes             |  |             | 9,556   |   |                  |   | (4,791 | )              |  |   | 3,462  |   |  |      | 3,634  |   |      |   | 4,351  |   |  |   | 6,941   |  
|Stock-based compensation expense                      |  |             |        |   |                  |   |       |                |  |   | (1,154 | ) |  |      | (1,110 | ) |      |   | (1,852 | ) |  |   | (10,155 | )
|Amortization of deferred financing costs              |  |             | (977    | ) |                  |   | (359   | )              |  |   | (1,168 | ) |  |      | (1,970 | ) |      |   | (2,120 | ) |  |   | (2,156  | )
|Change in operating assets, liabilities and other     |  |             | (13,248 | ) |                  |   | (482   | )              |  |   | (5,393 | ) |  |      | (4,587 | ) |      |   | (9,008 | ) |  |   | (1,212  | )
|                                                      |  |             |         |   |                  |   |        |                |  |   |        |   |  |      |        |   |      |   |        |   |  |   |         |  
|EBITDA                                                |  | $           | 54,503  |   |                  | $ | 3,423  |                |  | $ | 43,097 |   |  | $    | 67,954 |   |      | $ | 87,860 |   |  | $ | 89,011  |  
|                                                      |  |             |         |   |                  |   |        |                |  |   |        |   |  |      |        |   |      |   |        |   |  |   |         |  

|(a) | See Note (1) above.
|--- | -------------------

|(b) | See Notes (3) and (4) above.
|--- | ----------------------------

|(c) | See Notes (15) and (16) above.
|--- | ------------------------------

|(19) | EBITDA margin is defined as the ratio of EBITDA to net sales.
|---- | -------------------------------------------------------------

|(20) | Investing activities in Successor 2003 include the use of $19.9 million in transaction costs related to the Transaction and $23.2 million related to the SST Acquisition.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(21) | Investing activities in 2004 include the use of $202.5 million, which is net of $11.3 million in cash acquired, related to the NAMPAC Acquisition.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------

|(22) | Investing activities in 2006 include the use of $68.4 million related to the ICL Acquisition.
|---- | ---------------------------------------------------------------------------------------------

|(23) | Financing activities in Predecessor 2003 include $0.4 million used in financing costs incurred related to the Transaction. Financing activities Successor 2003 include $5.6 million
in net cash provided from the Transaction and $10.5 million used in financing costs incurred related to the financing of the Transaction.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(24) | Financing activities in 2004 include the proceeds of a $225.0 million term loan used, in part, to finance the NAMPAC Acquisition, $30.0 million of additional capital contributed by
BCO Holding and $6.8 million in financing costs incurred related to the term loan and the refinancing of our credit facility.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(25) | Financing activities in 2006 include the net proceeds of $74.7 million from refinancing the credit facility that were used, in part, to finance the ICL Acquisition. Also included in
financing activities in 2006 is the payment of a $10.0 million dividend to BCO Holding for the purposes of repurchasing certain stock and settling the exercise of certain Exchange Options by one of our officers.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(26) | For purposes of determining the ratio of fixed charges, earnings are defined as earnings (loss) before income taxes and cumulative effect of change in accounting
principle plus fixed charges. Fixed charges include interest on all indebtedness, amortization of capitalized expenses related to indebtedness and a portion of rental expense on operating leases, which is representative of an interest factor. In
Predecessor 2003, fixed charges exceeded our earnings by $13.9 million.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(27) | The increase in total assets at the end of 2004 from 2003 reflects the assets associated with the NAMPAC Acquisition and the increase in total assets at the end of 2006 from 2005
reflects the assets associated with the ICL Acquisition.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(28) | The increase in total debt at the end of 2004 from 2003 reflects the debt incurred in financing the NAMPAC Acquisition and the increase in total debt at the end of 2006 from 2005
reflects the debt incurred in financing the ICL Acquisition.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(29) | Total debt includes capital lease obligations of $0.3 million at the end of both 2002 and 2003, $0.8 million at the end of 2004, $0.7 million at the end of 2005 and $0.5 million at
the end of 2006.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation

The following discussion should be read in conjunction with our consolidated financial statements and related notes included in Item 8 of this report as well as with a general understanding of our business as discussed in Item 1
of this report. Unless otherwise indicated, references to years in our discussion and analysis relates to fiscal years rather than to calendar years.

Major Developments

ICL Acquisition. On July 17, 2006, we acquired substantially all of
the assets and certain of the liabilities of Industrial Containers, Ltd., (ICL Ltd.) a Toronto based manufacturer of rigid plastic containers and steel pails for industrial packaging markets (the ICL Acquisition). The assets
were acquired by ICL Industrial Containers ULC (ICL), a wholly owned subsidiary of BWAY created to effectuate the acquisition. We paid approximately $68.4 million in cash for the acquisition, which was funded by $50.0 million in term
loan borrowings by ICL and from a portion of the proceeds of additional term loan borrowings by BWAY. The term loans are further discussed in Note 6 to the consolidated financial statements in Item 8 of this report. The results of operations
related to this acquisition are included in the consolidated financial statements from the date of acquisition. Included in the purchase price is approximately $1.7 million in transaction costs associated with the acquisition. The purchase price
also includes purchase price adjustments of approximately $0.4 million settled in fiscal 2007, which were accrued as of October 1, 2006.

The ICL Acquisition enables us to expand in the Canadian market. We believe geographic expansion is important to our growth.

NAMPAC Acquisition. On July 7, 2004, we acquired all of the issued and outstanding shares of stock of NAMPAC, a manufacturer of rigid plastic containers for industrial packaging markets. We paid approximately $202.8 million in
cash, net of cash acquired, for the acquisition, which was funded by a $30.0 million equity contribution from Kelso and certain members of our senior management and from a portion of the proceeds from a $225.0 million term loan facility. The results
of operations related to this acquisition are included in the consolidated financial statements from the date of acquisition.

The NAMPAC
acquisition enabled us to enter the general line rigid plastic containers market, which we believe is important to our growth, and to provide our customers with a more diverse product offering.

Plastics Manufacturing Facility Restructuring.In October 2004, the Board of Directors approved a plan to close three plastics manufacturing
facilities and to eliminate certain positions that became redundant as a result of the NAMPAC Acquisition. We ceased operations and closed all three facilities



12



---

##### Table of Contents

##### Index to Financial Statements

one at the end of fiscal 2004 and the remaining two in the third quarter of 2005. We consolidated the business from these
closed facilities into our other plastics manufacturing facilities, which has resulted in lower overall manufacturing costs and improved manufacturing capacity. In closing the facilities, we relocated or terminated the workforce and disposed of,
stored or transferred certain equipment to other manufacturing facilities.

Results of Operations

2006 and 2005

The following table
sets forth changes in our statements of operations and line items as a percentage of net sales for 2006 (year ended October 1, 2006) and 2005 (year ended October 2, 2005).



|                                                                                   |  |      |         |   |      |   |         |        |  |   |                     |   |  |       |    |  |       |   |  |       |  
|---------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ------ |  | - | ------------------- | - |  | ----- | -- |  | ----- | - |  | ----- | -
|Fiscal years ended October 1, 2006 and October 2, 2005                             |  |      |         |   |      |   |         | Change |  |   | As a % of Net Sales |  
|(Dollars in thousands)                                                             |  | 2006 |         |   | 2005 |   |         | $      |  |   | %                   |   |  | 2006  |    |  | 2005  |  
|NET SALES                                                                          |  | $    | 918,513 |   |      | $ | 829,109 |        |  | $ | 89,404              |   |  | 10.8  | %  |  | 100.0 | % |  | 100.0 | %
|                                                                                   |  |      |         |   |      |   |         |        |  |   |                     |   |  |       |    |  |       |   |  |       |  
|Cost of products sold (excluding depreciation and amortization)                    |  |      | 796,401 |   |      |   | 714,039 |        |  |   | 82,362              |   |  | 11.5  |    |  | 86.7  |   |  | 86.1  |  
|Gross profit (excluding depreciation and amortization)                             |  |      | 122,112 |   |      |   | 115,070 |        |  |   | 7,042               |   |  | 6.1   |    |  | 13.3  |   |  | 13.9  |  
|Depreciation and amortization                                                      |  |      | 41,615  |   |      |   | 43,215  |        |  |   | (1,600              | ) |  | (3.7  | )  |  | 4.5   |   |  | 5.2   |  
|Selling and administrative expense                                                 |  |      | 29,777  |   |      |   | 22,120  |        |  |   | 7,651               |   |  | 34.6  |    |  | 3.2   |   |  | 2.7   |  
|Restructuring and impairment charge                                                |  |      | 1,511   |   |      |   | 5,265   |        |  |   | (3,754              | ) |  | (71.3 | )  |  | 0.2   |   |  | 0.6   |  
|Interest expense, net                                                              |  |      | 34,660  |   |      |   | 32,165  |        |  |   | 2,495               |   |  | 7.8   |    |  | 3.8   |   |  | 3.9   |  
|Other expense (income), net                                                        |  |      | 1,813   |   |      |   | (175    | )      |  |   | 1,988               |   |  |      |    |  | 0.2   |   |  |      |  
|Income before income taxes and cumulative effect of change in accounting principle |  |      | 12,736  |   |      |   | 12,480  |        |  |   | 256                 |   |  | 2.1   |    |  | 1.4   |   |  | 1.5   |  
|Provision for income taxes                                                         |  |      | 6,941   |   |      |   | 4,351   |        |  |   | 2,590               |   |  | 59.5  |    |  | 0.8   |   |  | 0.5   |  
|INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                  |  |      | 5,795   |   |      |   | 8,129   |        |  |   | (2,334              | ) |  | (28.7 | )  |  | 0.6   |   |  | 1.0   |  
|Cumulative effect of change in accounting principle, net of tax benefit            |  |      | (398    | ) |      |   |        |        |  |   | (398                | ) |  |      |    |  |      |   |  |      |  
|                                                                                   |  |      |         |   |      |   |         |        |  |   |                     |   |  |       |    |  |       |   |  |       |  
|NET INCOME                                                                         |  | $    | 5,397   |   |      | $ | 8,129   |        |  | $ | (2,732              | ) |  | (33.6 | )% |  | 0.6   | % |  | 1.0   | %
|                                                                                   |  |      |         |   |      |   |         |        |  |   |                     |   |  |       |    |  |       |   |  |       |  

As noted above under Major Developments, we acquired ICL in July 2006. The following
discussion refers to this acquisition as the ICL Acquisition.

Net Sales.



|                                                       |  |      |         |      |   |         |  |   |                     |  |      |   |  |       |   |  |       |  
|------------------------------------------------------ |  | ---- | ------- | ---- | - | ------- |  | - | ------------------- |  | ---- | - |  | ----- | - |  | ----- | -
|Fiscal years ended October 1, 2006 and October 2, 2005 |  |      |         |      |   | Change  |  |   | As a % of the Total | 
|(Dollars in thousands)                                 |  | 2006 |         | 2005 |   | $       |  | % |                     |  | 2006 |   |  | 2005  |  
|NET SALES BY SEGMENT                                   |  |      |         |      |   |         |  |   |                     |  |      |   |  |       |   |  |       |  
|Metal packaging                                        |  | $    | 552,968 |      | $ | 528,512 |  | $ | 24,456              |  | 4.6  | % |  | 60.2  | % |  | 63.7  | %
|Plastics packaging                                     |  |      | 365,545 |      |   | 300,597 |  |   | 64,948              |  | 21.6 |   |  | 39.8  |   |  | 36.3  |  
|                                                       |  |      |         |      |   |         |  |   |                     |  |      |   |  |       |   |  |       |  
|CONSOLIDATED NET SALES                                 |  | $    | 918,513 |      | $ | 829,109 |  | $ | 89,404              |  | 10.8 | % |  | 100.0 | % |  | 100.0 | %
|                                                       |  |      |         |      |   |         |  |   |                     |  |      |   |  |       |   |  |       |  

The increase in metal packaging segment net sales for 2006 over 2005 is primarily related to net
volume gains and to the ICL Acquisition. The increase in plastics packaging segment net sales for 2006 over 2005 is primarily due to higher selling prices related to higher resin costs and, to a lesser extent, revenue from the ICL Acquisition.

Cost of Products Sold.



|                                                                           |  |      |         |      |   |         |  |   |                     |  |       |   |  |       |   |  |       |  
|-------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | ------------------- |  | ----- | - |  | ----- | - |  | ----- | -
|Fiscal years ended October 1, 2006 and October 2, 2005                     |  |      |         |      |   | Change  |  |   | As a % of the Total | 
|(Dollars in thousands)                                                     |  | 2006 |         | 2005 |   | $       |  | % |                     |  | 2006  |   |  | 2005  |  
|COST OF PRODUCTS SOLD BY SEGMENT (excluding depreciation and amortization) |  |      |         |      |   |         |  |   |                     |  |       |   |  |       |   |  |       |  
|Metal packaging                                                            |  | $    | 459,217 |      | $ | 439,844 |  | $ | 19,373              |  | 4.4   | % |  | 57.7  | % |  | 61.6  | %
|Plastics packaging                                                         |  |      | 335,217 |      |   | 273,851 |  |   | 61,366              |  | 22.4  |   |  | 42.1  |   |  | 38.4  |  
|SEGMENT CPS                                                                |  |      | 794,434 |      |   | 713,695 |  |   | 80,739              |  | 11.3  |   |  | 99.8  |   |  | 100.0 |  
|Corporate undistributed expenses                                           |  |      | 1,967   |      |   | 344     |  |   | 1,623               |  | 471.8 |   |  | 0.2   |   |  |      |  
|                                                                           |  |      |         |      |   |         |  |   |                     |  |       |   |  |       |   |  |       |  
|CONSOLIDATED CPS                                                           |  | $    | 796,401 |      | $ | 714,039 |  | $ | 82,362              |  | 11.5  | % |  | 100.0 | % |  | 100.0 | %
|                                                                           |  |      |         |      |   |         |  |   |                     |  |       |   |  |       |   |  |       |  

The increase in cost of products sold, excluding depreciation and amortization, (CPS)
for the metal packaging segment for 2006 over 2005 is primarily due to the net increase in metal packaging sales volume and to the ICL Acquisition. Metal packaging CPS improved in 2006 over 2005 by approximately $3.5 million related to changes in
the LIFO reserve resulting from movements in raw material costs. Metal packaging segment CPS as a percentage of segment net sales decreased to 83.0% in 2006 from 83.2% in 2005.

The increase in CPS for the plastics packaging segment in 2006 from 2005 is primarily due to higher raw material costs and to the ICL Acquisition,
partially offset by reduced spending and manufacturing productivity. Plastics packaging segment CPS increased by approximately $3.0 million related to changes in the LIFO reserve due to movements in raw material costs. Plastics packaging segment CPS
as a percentage of segment net sales increased to 91.7% in 2006 from 91.1% in 2005 primarily



13



---

##### Table of Contents

##### Index to Financial Statements

as a result of higher raw material costs for plastic resin that could not be passed on through increases in selling
prices.

The increase in corporate undistributed expenses in 2006 over 2005 is primarily related to higher stock-based compensation expense
associated with options issued after the Transaction.

Depreciation and Amortization.



|                                                       |  |      |        |      |   |        |   |   |                     |      |  |      |      |  |       |   |  |       |  
|------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | - | - | ------------------- | ---- |  | ---- | ---- |  | ----- | - |  | ----- | -
|Fiscal years ended October 1, 2006 and October 2, 2005 |  | 2006 |        | 2005 |   | Change |   |   | As a % of the Total |     
|(Dollars in thousands)                                 |  |      |        | $    |   |        | % |   |                     | 2006 |  |      | 2005 | 
|DEPRECIATION AND AMORTIZATION BY SEGMENT               |  |      |        |      |   |        |   |   |                     |      |  |      |      |  |       |   |  |       |  
|Metal packaging                                        |  | $    | 21,381 |      | $ | 21,468 |   | $ | (87                 | )    |  | (0.4 | )%   |  | 51.4  | % |  | 49.7  | %
|Plastics packaging                                     |  |      | 18,331 |      |   | 19,646 |   |   | (1,315              | )    |  | (6.7 | )    |  | 44.0  |   |  | 45.5  |  
|SEGMENT D&A                                            |  |      | 39,712 |      |   | 41,114 |   |   | (1,402              | )    |  | (3.4 | )    |  | 95.4  |   |  | 95.1  |  
|Corporate                                              |  |      | 1,903  |      |   | 2,101  |   |   | (198                | )    |  | (9.4 | )    |  | 4.6   |   |  | 4.9   |  
|                                                       |  |      |        |      |   |        |   |   |                     |      |  |      |      |  |       |   |  |       |  
|CONSOLIDATED D&A                                       |  | $    | 41,615 |      | $ | 43,215 |   | $ | (1,600              | )    |  | (3.7 | )%   |  | 100.0 | % |  | 100.0 | %
|                                                       |  |      |        |      |   |        |   |   |                     |      |  |      |      |  |       |   |  |       |  

The decrease in metal packaging segment depreciation and amortization expense
(D&A) in 2006 from 2005 primarily relates to lower scheduled amortization of intangibles, which was partially offset by increased amortization associated with the ICL Acquisition.

The decrease in plastics packaging segment D&A in 2006 from 2005 primarily relates to approximately $3.9 million of additional depreciation in 2005
associated with the shortened useful lives on certain assets offset by higher scheduled amortization of intangibles and to the amortization of intangibles associated with the ICL Acquisition

Selling and Administrative Expense.



|                                                       |  |      |        |      |   |        |  |   |                     |   |  |       |    |  |       |   |  |       |  
|------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ |  | - | ------------------- | - |  | ----- | -- |  | ----- | - |  | ----- | -
|Fiscal years ended October 1, 2006 and October 2, 2005 |  |      |        |      |   | Change |  |   | As a % of the Total |  
|(Dollars in thousands)                                 |  | 2006 |        | 2005 |   | $      |  |   | %                   |   |  | 2006  |    |  | 2005  |  
|SELLING AND ADMINISTRATIVE EXPENSE BY SEGMENT          |  |      |        |      |   |        |  |   |                     |   |  |       |    |  |       |   |  |       |  
|Metal packaging                                        |  | $    | 6,558  |      | $ | 6,837  |  | $ | (279                | ) |  | (4.1  | )% |  | 22.0  | % |  | 30.9  | %
|Plastics packaging                                     |  |      | 3,974  |      |   | 4,561  |  |   | (587                | ) |  | (12.9 | )  |  | 13.3  |   |  | 20.6  |  
|SEGMENT S&A                                            |  |      | 10,532 |      |   | 11,398 |  |   | (866                | ) |  | (7.6  | )  |  | 35.4  |   |  | 51.5  |  
|Corporate undistributed expenses                       |  |      | 19,245 |      |   | 10,722 |  |   | 8,523               |   |  | 79.5  |    |  | 64.6  |   |  | 48.5  |  
|                                                       |  |      |        |      |   |        |  |   |                     |   |  |       |    |  |       |   |  |       |  
|CONSOLIDATED S&A                                       |  | $    | 29,777 |      | $ | 22,120 |  | $ | 7,657               |   |  | 34.6  | %  |  | 100.0 | % |  | 100.0 | %
|                                                       |  |      |        |      |   |        |  |   |                     |   |  |       |    |  |       |   |  |       |  

The increase in consolidated selling and administrative expense (S&A) in 2006 from
2005 is primarily due to stock-based compensation expense of $8.8 million in 2006 associated with the exercise of certain stock options partially offset by general cost savings and lower spending in each of the segments.

Other Changes

Restructuring and Impairment
Charges. In 2005, we recorded a $5.3 million charge consisting of a $1.0 million impairment charge and a $4.3 million restructuring charge. The impairment charge related to the write-down of certain manufacturing equipment. The majority of the
restructuring charge related to costs associated with the shutdown of certain of our plastics manufacturing facilities and related severance costs. A portion of the restructuring charge related to shutdown costs included the net present value of
future lease payments, net of expected sublease proceeds, and other obligations associated with facilities that were closed in the third quarter of 2005.

The restructuring charge in 2006 primarily related to on-going holding costs and severance related to the closures in 2005, including a charge of approximately $0.8 million related to a revision in our sublease
assumption for one of the closed facilities.

Interest Expense, Net. Interest expense, net, increased $2.4 million in 2006 from 2005
primarily due to higher interest rates and to additional borrowings associated with the ICL Acquisition. Interest expense, net, in 2006 includes $0.2 million in deferred financing costs written off associated with the refinancing of the revolver
component of the credit facility.

Other, Net. Other expense, net, in 2006 includes $0.8 million in third party expenses incurred in
connection with the refinancing of the term loan component of the credit facility that could not be capitalized as deferred financing costs in accordance with applicable accounting guidance. Other expense, net, in each of 2006 and 2005 includes $0.5
million in financial advisory fees paid to Kelso. Other income, net, in 2005 included gains on the sale of idled equipment and a vacant manufacturing facility in Dallas, Texas.

Provision for Income Taxes. The provision for income taxes increased approximately $2.5 million to $6.9 million in 2006 from $4.4 million in 2005.
The increase in the provision for income taxes was due primarily to a $0.9 million tax assessment by the Puerto Rican tax authority and to a $1.0 million adjustment to our estimated effective state tax rate.

Cumulative Effect of Change in Accounting Principle, Net of Tax Benefit. Upon adoption of FIN 47 in the fourth quarter of 2006, we recorded an
increase in property, plant and equipment of $0.6 million and recognized an asset retirement obligation of $1.2 million. This resulted in the recognition of a non-cash cumulative effect of a change in accounting principle of $0.4 million, net of a
$0.2 deferred tax benefit, in 2006.



14



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##### Table of Contents

##### Index to Financial Statements

2005 and 2004

The following table sets forth changes in our statements of operations and line items as a percentage of net sales for 2005 (year ended October 2, 2005) and 2004 (year ended October 3, 2004).



|                                                                |  |      |         |   |      |   |         |  |   |                     |   |  |       |   |  |       |   |  |       |  
|--------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- |  | - | ------------------- | - |  | ----- | - |  | ----- | - |  | ----- | -
|Fiscal years ended October 2, 2005 and October 3, 2004          |  | 2005 |         |   | 2004 |   | Change  |  |   | As a % of Net Sales |  
|(Dollars in thousands)                                          |  |      |         | $ |      |   | %       |  |   | 2005                |   |  | 2004  |  
|NET SALES                                                       |  | $    | 829,109 |   |      | $ | 611,588 |  | $ | 217,521             |   |  | 35.6  | % |  | 100.0 | % |  | 100.0 | %
|                                                                |  |      |         |   |      |   |         |  |   |                     |   |  |       |   |  |       |   |  |       |  
|Cost of products sold (excluding depreciation and amortization) |  |      | 714,039 |   |      |   | 529,064 |  |   | 184,975             |   |  | 35.0  |   |  | 86.1  |   |  | 86.5  |  
|Gross profit (excluding depreciation and amortization)          |  |      | 115,070 |   |      |   | 82,524  |  |   | 32,546              |   |  | 39.4  |   |  | 13.9  |   |  | 13.5  |  
|Depreciation and amortization                                   |  |      | 43,215  |   |      |   | 31,724  |  |   | 11,491              |   |  | 36.2  |   |  | 5.2   |   |  | 5.2   |  
|Selling and administrative expense                              |  |      | 22,120  |   |      |   | 14,040  |  |   | 8,080               |   |  | 57.5  |   |  | 2.7   |   |  | 2.3   |  
|Restructuring and impairment charge                             |  |      | 5,265   |   |      |   | 352     |  |   | 4,913               |   |  |      |   |  | 0.6   |   |  | 0.1   |  
|Interest expense, net                                           |  |      | 32,165  |   |      |   | 26,889  |  |   | 5,276               |   |  | 19.6  |   |  | 3.9   |   |  | 4.4   |  
|Other (income) expense, net                                     |  |      | (175    | ) |      |   | 178     |  |   | (353                | ) |  | 111.4 |   |  |      |   |  |      |  
|Income before income taxes                                      |  |      | 12,480  |   |      |   | 9,341   |  |   | 3,139               |   |  | 33.6  |   |  | 1.5   |   |  | 1.5   |  
|Provision for (income taxes                                     |  |      | 4,351   |   |      |   | 3,634   |  |   | 717                 |   |  | 19.7  |   |  | 0.5   |   |  | 0.6   |  
|                                                                |  |      |         |   |      |   |         |  |   |                     |   |  |       |   |  |       |   |  |       |  
|NET INCOME                                                      |  | $    | 8,129   |   |      | $ | 5,707   |  | $ | 2,422               |   |  | 42.4  | % |  | 1.0   | % |  | 0.9   | %
|                                                                |  |      |         |   |      |   |         |  |   |                     |   |  |       |   |  |       |   |  |       |  

As noted above under Major Developments, we acquired NAMPAC in July 2004. The
following discussion refers to this acquisition as the NAMPAC Acquisition.

Net Sales.



|                                                       |  |      |         |      |   |         |  |   |                     |  |       |      |  |       |   |  |       |  
|------------------------------------------------------ |  | ---- | ------- | ---- | - | ------- |  | - | ------------------- |  | ----- | ---- |  | ----- | - |  | ----- | -
|Fiscal years ended October 2, 2005 and October 3, 2004 |  | 2005 |         | 2004 |   | Change  |  |   | As a % of the Total | 
|(Dollars in thousands)                                 |  |      |         | $    |   | %       |  |   | 2005                |  |       | 2004 | 
|NET SALES BY SEGMENT                                   |  |      |         |      |   |         |  |   |                     |  |       |      |  |       |   |  |       |  
|Metal packaging                                        |  | $    | 528,512 |      | $ | 518,658 |  | $ | 9,854               |  | 1.9   | %    |  | 63.7  | % |  | 84.8  | %
|Plastics packaging                                     |  |      | 300,597 |      |   | 92,930  |  |   | 207,667             |  | 223.5 |      |  | 36.3  |   |  | 15.2  |  
|                                                       |  |      |         |      |   |         |  |   |                     |  |       |      |  |       |   |  |       |  
|CONSOLIDATED NET SALES                                 |  | $    | 829,109 |      | $ | 611,588 |  | $ | 217,521             |  | 35.6  | %    |  | 100.0 | % |  | 100.0 | %
|                                                       |  |      |         |      |   |         |  |   |                     |  |       |      |  |       |   |  |       |  

The increase in metal packaging segment net sales for 2005 over 2004 is primarily related to
volume gains in certain product lines and by higher selling prices related to the pass through of higher metal costs, partially offset by the loss of the Folgers coffee can business in the first half of 2004, to voluntary reductions in certain
unprofitable material center sales as capacity was redirected to meet internal needs and to volume decreases in other product lines.

The
increase in plastics packaging segment net sales for 2005 over 2004 is attributable to the NAMPAC Acquisition, which occurred in July 2004.

Cost of
Products Sold.



|                                                                           |  |      |         |      |   |         |   |   |                     |      |  |        |      |  |       |   |  |       |  
|-------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | - | - | ------------------- | ---- |  | ------ | ---- |  | ----- | - |  | ----- | -
|Fiscal years ended October 2, 2005 and October 3, 2004                     |  | 2005 |         | 2004 |   | Change  |   |   | As a % of the Total |     
|(Dollars in thousands)                                                     |  |      |         | $    |   |         | % |   |                     | 2005 |  |        | 2004 | 
|COST OF PRODUCTS SOLD BY SEGMENT (excluding depreciation and amortization) |  |      |         |      |   |         |   |   |                     |      |  |        |      |  |       |   |  |       |  
|Metal packaging                                                            |  | $    | 439,844 |      | $ | 455,459 |   | $ | (5,615              | )    |  | (1.3   | )%   |  | 61.6  | % |  | 84.2  | %
|Plastics packaging                                                         |  |      | 273,851 |      |   | 83,052  |   |   | 190,799             |      |  | 229.7  |      |  | 38.4  |   |  | 15.7  |  
|SEGMENT CPS                                                                |  |      | 713,695 |      |   | 528,511 |   |   | 185,184             |      |  | 35.0   |      |  | 100.0 |   |  | 99.9  |  
|Corporate undistributed expenses                                           |  |      | 344     |      |   | 206     |   |   | 138                 |      |  | 67.0   |      |  |      |   |  |      |  
|Acquisition related expenses                                               |  |      |        |      |   | 347     |   |   | (347                | )    |  | (100.0 | )    |  |      |   |  | 0.1   |  
|                                                                           |  |      |         |      |   |         |   |   |                     |      |  |        |      |  |       |   |  |       |  
|CONSOLIDATED CPS                                                           |  | $    | 714,039 |      | $ | 529,064 |   | $ | 184,975             |      |  | 35.0   | %    |  | 100.0 | % |  | 100.0 | %
|                                                                           |  |      |         |      |   |         |   |   |                     |      |  |        |      |  |       |   |  |       |  

The decrease in cost of products sold, excluding depreciation and amortization, (CPS)
for the metal packaging segment for 2005 from 2004 is primarily due to the net decrease in metal packaging sales volume partially offset by an increase in raw material costs associated with steel surcharges. Additionally, metal packaging segment CPS
was negatively impacted by approximately $5.1 million related to changes in the LIFO reserve resulting from movements in raw material costs.

Metal packaging segment CPS as a percentage of segment net sales decreased to 83.2% in 2005 from 85.9% in 2004. The decrease in CPS as a percentage of segment net sales is primarily a result of the pass through of steel surcharges as well
as manufacturing efficiencies. In the fourth quarter of 2004, we began the implementation of a lean manufacturing program in the metal packaging segment to increase its operating efficiency and productivity. We began realizing the benefits of this
initiative during the second quarter of 2005 and realized additional benefits in 2006. Some of the improvements in metal packaging segment CPS as a percentage of segment net sales were temporary.

The increase in CPS for the plastics packaging segment in 2005 from 2004 is primarily due to the NAMPAC Acquisition, which occurred in July 2004,
partially offset by the efficiencies from the closure of three plastics manufacturing facilities. Plastics packaging segment CPS was negatively impacted by approximately $2.5 million related to changes in the LIFO reserve resulting from movements in
raw material costs.



15



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##### Table of Contents

##### Index to Financial Statements

Plastics packaging segment CPS as a percentage of segment net sales increased to 91.1% in 2005 from 89.4%
in 2004 primarily as a result of higher operating costs associated with the NAMPAC Acquisition and to higher raw material costs for plastic resin.

Corporate undistributed expenses of $0.3 million and $0.2 million in 2005 and 2004, respectively, represent stock-based compensation associated with options issued after the Transaction. Acquisition related expenses in 2004 represent the
recognition of manufacturers profit in beginning inventory resulting from the NAMPAC Acquisition.

Depreciation and Amortization.



|                                                       |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  
|------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | - | - | ------------------- | ---- |  | ----- | ---- |  | ----- | - |  | ----- | -
|Fiscal years ended October 2, 2005 and October 3, 2004 |  | 2005 |        | 2004 |   | Change |   |   | As a % of the Total |     
|(Dollars in thousands)                                 |  |      |        | $    |   |        | % |   |                     | 2005 |  |       | 2004 | 
|DEPRECIATION AND AMORTIZATION BY SEGMENT               |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  
|Metal packaging                                        |  | $    | 21,468 |      | $ | 25,178 |   | $ | (3,710              | )    |  | (14.7 | )%   |  | 49.7  | % |  | 79.4  | %
|Plastics packaging                                     |  |      | 19,646 |      |   | 4,674  |   |   | 14,972              |      |  | 320.3 |      |  | 45.5  |   |  | 14.7  |  
|SEGMENT D&A                                            |  |      | 41,114 |      |   | 29,852 |   |   | 11,262              |      |  | 37.7  |      |  | 95.1  |   |  | 94.1  |  
|Corporate                                              |  |      | 2,101  |      |   | 1,872  |   |   | 229                 |      |  | 12.2  |      |  | 4.9   |   |  | 5.9   |  
|                                                       |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  
|CONSOLIDATED D&A                                       |  | $    | 43,215 |      | $ | 31,724 |   | $ | 11,491              |      |  | 36.2  | %    |  | 100.0 | % |  | 100.0 | %
|                                                       |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  

The decrease in metal packaging segment depreciation and amortization expense
(D&A) in 2005 from 2004 primarily relates to additional depreciation expense of $5.8 million related to the shortened useful lives of assets disposed of following the closure of our Picayune, Mississippi manufacturing facility in the
second half of 2004.

The increase in plastics packaging segment D&A in 2005 from 2004 is a result of the NAMPAC Acquisition. In
addition, 2005 includes approximately $3.9 million of additional depreciation associated with the shortened useful lives on certain assets, primarily equipment, which have been disposed of or reclassified to assets held for sale in connection with
the closure of certain of our plastics manufacturing facilities.

Selling and Administrative Expense.



|                                                       |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  
|------------------------------------------------------ |  | ---- | ------ | ---- | - | ------ | - | - | ------------------- | ---- |  | ----- | ---- |  | ----- | - |  | ----- | -
|Fiscal years ended October 2, 2005 and October 3, 2004 |  | 2005 |        | 2004 |   | Change |   |   | As a % of the Total |     
|(Dollars in thousands)                                 |  |      |        | $    |   |        | % |   |                     | 2005 |  |       | 2004 | 
|SELLING AND ADMINISTRATIVE EXPENSE BY SEGMENT          |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  
|Metal packaging                                        |  | $    | 6,837  |      | $ | 7,080  |   | $ | (243                | )    |  | (3.4  | )%   |  | 30.9  | % |  | 50.5  | %
|Plastics packaging                                     |  |      | 4,561  |      |   | 1,579  |   |   | 2,982               |      |  | 188.9 |      |  | 20.6  |   |  | 11.2  |  
|SEGMENT S&A                                            |  |      | 11,398 |      |   | 8,659  |   |   | 2,739               |      |  | 31.6  |      |  | 51.5  |   |  | 61.7  |  
|Corporate undistributed expenses                       |  |      | 10,722 |      |   | 5,381  |   |   | 5,341               |      |  | 99.3  |      |  | 48.5  |   |  | 38.3  |  
|                                                       |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  
|CONSOLIDATED S&A                                       |  | $    | 22,120 |      | $ | 14,040 |   | $ | 8,080               |      |  | 57.5  | %    |  | 100.0 | % |  | 100.0 | %
|                                                       |  |      |        |      |   |        |   |   |                     |      |  |       |      |  |       |   |  |       |  

The decrease in metal packaging segment selling and administrative expenses (S&A)
in 2005 from 2004 relates primarily to general cost savings and lower spending in 2005.

The increase in plastics packaging segment S&A
in 2005 over 2004 is primarily related to higher costs associated with the NAMPAC Acquisition, which occurred in the fourth quarter of 2004.

Corporate undistributed expenses include $1.5 million and $0.9 million in 2005 and 2004, respectively, of stock-based compensation expense. Excluding the increase in stock-based compensation, the net increase in corporate undistributed
S&A primarily relates to wages and expenses associated with the Sarbanes-Oxley compliance initiative, an increase in bonus expense and higher professional fees. Bonus expense increased approximately $2.4 million in 2005 over 2004 as a result of
the company meeting certain performance measures in 2005 that were not met in 2004.

Restructuring and Impairment, Interest, Taxes and Other

Restructuring and Impairment Charges. In 2005, we recorded a $5.3 million charge consisting of a $1.0 million impairment charge
and a $4.3 million restructuring charge. The impairment charge relates to the write-down of certain manufacturing equipment subsequently sold in 2006. The restructuring charge consists of $0.3 million related to costs associated with the shutdown of
our manufacturing facility in Picayune, Mississippi, $3.1 million related to costs associated with the shutdown of certain of our plastics manufacturing facilities, $1.0 million related to severance costs associated with the closure of certain of
the plastics manufacturing facilities and the elimination of redundant positions as a result of the NAMPAC Acquisition and $(0.1) million to adjust a previously recorded facility closure exit liability.

A portion of the $3.1 million restructuring charge related to shutdown costs, as discussed above, includes the net present value of future lease
payments, net of expected sublease proceeds, and other obligations associated with facilities that were closed in the third quarter of 2005.

Interest Expense, Net. Interest expense, net, increased $5.3 million in 2005 from 2004. The increase is primarily due to higher outstanding borrowings in 2005 associated with the financing of the NAMPAC Acquisition in the fourth
quarter of 2004. In addition, the increased borrowings are at variable



16



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##### Table of Contents

##### Index to Financial Statements

interest rates, which increased in 2005. Included in 2004 interest expense, net, is $1.3 million related to the write-off
of deferred financing fees associated with the refinancing of our revolving credit facility and approximately $0.4 million in additional interest related to the Senior Notes due to the additional week in 2004.

Other, Net. Other, net, in 2005 relates primarily to gains on the sale of idled equipment and a vacant manufacturing facility in Dallas, Texas.

Provision for Income Taxes. The provision for income taxes increased $0.8 million to $4.4 million in 2005 from $3.6 million in
2004. The effective tax rate decreased in 2005 to 34.9% from 38.9% in 2004 primarily due to the impact on the effective tax rate of foreign income from operations in Puerto Rico acquired in the NAMPAC Acquisition that are taxed at rates other than
the federal statutory rate.

Seasonality

Sales of certain of our products are to some extent seasonal, with sales levels generally higher in the second half of our fiscal year due primarily to higher demand for paint and related products during warmer periods.

Liquidity and Capital Resources

The ICL Acquisition
in 2006 required total cash of approximately $68.4 million, which was funded by $50.0 million in term loan borrowings by ICL and from a portion of the proceeds of additional term loan borrowings by BWAY. The term loans are further discussed below.
The $68.4 million includes approximately $1.7 million in transaction costs associated with the acquisition and approximately $0.4 million in purchase price adjustments settled in fiscal 2007, which were accrued as of October 1, 2006.

In connection with the ICL Acquisition, we refinanced our existing credit facility, which now provides a U.S. dollar term loan of $190.0 million and a
Canadian dollar term loan of $50.0 million, which is denominated in Canadian dollars (Cdn$56.4 million at the time of borrowing). The Canadian dollar term loan was borrowed by ICL. The $240.0 million in term loan proceeds were used to repay the
existing term loan outstanding of $165.3 million, to pay the consideration and transaction costs related to the ICL Acquisition of approximately $68.4 million and to pay financing fees and costs of approximately $3.5 million related to the new
credit facility. In addition, the new credit facility increases our revolver from $30.0 million to $50.0 million and provides for a $5.0 million revolver, which can be borrowed by ICL. There were no revolver borrowings drawn on the initial borrowing
date or outstanding at year-end.

The interest rates on our term loan borrowings are variable. The weighted-average borrowing rate on these
variable rate loans at the end of 2006 was approximately 7.0%.

During 2006, we used available cash on hand to pay a $10.0 million dividend
to BCO Holding. The dividend was used by BCO Holding to purchase shares of BCO Holding common stock controlled by our chairman and chief executive officer, and to cash settle the exercise of a portion of his Exchange Options.

Our cash requirements for operations and capital expenditures during 2006 and 2005 were primarily financed through internally generated cash flows and
borrowings under our revolving credit facility. During 2006, cash and cash equivalents decreased $0.9 million to $51.0 million. In the first quarter of 2007, we made a voluntary repayment of $20.0 million on the U.S. term loan. Repayments
permanently reduce the term loan.

Debt increased in 2006 by $44.7 million primarily as a result of borrowings to finance the ICL
Acquisition offset by a $30.0 million term loan payment in the first quarter of 2006.

At the end of 2006, we had $8.0 million in standby
letter of credit commitments that reduced our available borrowings under the U.S. Revolver to $42.0 million. There were no borrowings under the $5.0 million Canadian revolver at the end of 2006.

We expect that cash provided from operations and available borrowings under the revolvers will provide sufficient working capital to operate our
business, to make expected capital expenditures and to meet foreseeable liquidity requirements, including debt service on our long-term debt, including the Senior Notes, in the next 12 months. However, we cannot provide assurance that our business
will generate sufficient cash flows or that future borrowings will be available in an amount sufficient to enable us to service our debt or to fund our other liquidity needs in the long term.

The Senior Notes and the Credit Facility are subject to certain covenants, which we were in compliance with at October 1, 2006. For a discussion of
these covenants and for further information on our long-term debt, see Note 6 to the consolidated financial statements under Item 8 of this report.

The following table presents financial information on our cash flows and changes in cash and cash equivalents for 2006, 2005 and 2004:



17



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##### Table of Contents

##### Index to Financial Statements

|                                                                                               |  |      |         |   |      |   |         |      |  |   |                     |   |  |                     |         |   |  |   |          |  
|---------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------------------- | - |  | ------------------- | ------- | - |  | - | -------- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |  | 2006 |         |   | 2005 |   |         | 2004 |  |   | Change 2005 to 2006 |   |  | Change 2004 to 2005 |        
|Net cash provided by operating activities                                                      |  | $    | 60,933  |   |      | $ | 64,324  |      |  | $ | 45,098              |   |  | $                   | (3,391  | ) |  | $ | 19,226   |  
|Net cash used in investing activities                                                          |  |      | (92,131 | ) |      |   | (19,247 | )    |  |   | (220,857            | ) |  |                     | (72,884 | ) |  |   | 201,610  |  
|Net cash provided by (used in) financing activities                                            |  |      | 30,288  |   |      |   | (20,513 | )    |  |   | 202,836             |   |  |                     | 50,801  |   |  |   | (223,349 | )
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                           |  |      | (910    | ) |      |   | 24,564  |      |  |   | 27,077              |   |  |                     | (25,474 | ) |  |   | (2,513   | )
|                                                                                               |  |      |         |   |      |   |         |      |  |   |                     |   |  |                     |         |   |  |   |          |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                       |  | $    | 50,979  |   |      | $ | 51,889  |      |  | $ | 27,325              |   |  | $                   | (910    | ) |  | $ | 24,564   |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |                     |   |  |                     |         |   |  |   |          |  

The increase in cash provided by operating activities from 2004 to 2005 is primarily a result of
additional business associated with the NAMPAC Acquisition in the fourth quarter of 2004. We paid cash interest of $33.2 million, $29.9 million and $22.6 million in 2006, 2005 and 2004, respectively. The increase in interest is primarily due to
borrowings in 2004 related to the NAMPAC Acquisition and, to a lesser extent, higher interest rates. We paid income taxes of $20.0 million and $0.4 million in 2006 and 2005, respectively, and received an income tax refund of $2.5 million in 2004.

We used cash in investing activities for capital expenditures of $25.0 million, $20.3 million and $19.1 million in 2006, 2005 and 2004,
respectively. Increases in capital expenditures are primarily related to certain manufacturing improvement initiatives. Included in 2006 are capital expenditures for improvements required to meet certain environmental standards. Investing cash flows
related to business acquisitions were $68.4 million in 2006 (ICL) and $202.3 million in 2004 (primarily NAMPAC). We expect lower capital expenditures in FY 2007.

Changes in cash related to financing activities are due to the following: net long-term debt borrowings of $44.1 million in 2006 and $197.8 million in 2004 were primarily related to the funding of the acquisitions
discussed above. We had net repayments of $19.7 million in 2005. We received a capital contribution of $30.0 million in 2004 to partially fund the NAMPAC Acquisition and paid a dividend of $10.0 million in 2006 to fund the purchase of stock and
settlement of options by BCO Holding, as discussed above.

Market Risk

Our cash flows and earnings are exposed to the risk of interest rate changes resulting from variable rate borrowings under our Credit Facility. Borrowings under the Credit Facility bear interest on the outstanding
Term Loan and the Revolver borrowings at an applicable margin (based on certain ratios contained in the credit agreement) plus a market rate of interest. At the end of 2006, we had Term Loan borrowings of $240.0 million that were subject to interest
rate risk. Each 100 basis point increase in interest rates relative to these borrowings would reduce annual pretax earnings by approximately $2.4 million based on the debt level at the end of the year. There were no outstanding borrowings at the end
of 2006 under the Revolvers.

Our business is also exposed to variations in the prices of steel and of plastic resin. See Commodity
Risk below and Item 1, Business.

The fair value of the Senior Notes is exposed to the market risk of interest rate
changes. A 100 basis point increase in interest rates would reduce the market value of the Senior Notes by approximately $6.4 million.

Off-Balance
Sheet Arrangements

None.

Contractual Obligations and
Commercial Commitments

The following table summarizes our significant contractual obligations at the end of 2006:



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##### Index to Financial Statements

|                                        |  |                        |       |                  |   |             |  |             |      |                   |   |       |  |   |      
|--------------------------------------- |  | ---------------------- | ----- | ---------------- | - | ----------- |  | ----------- | ---- | ----------------- | - | ----- |  | - | -----
|                                        |  | Payments Due by Period
|(Dollars in millions)                   |  | Total                  |       | Less than 1 year |   | 1  3 years |  | 3  5 years |      | More than 5 years
|CONTRACTUAL OBLIGATIONS                 |  |                        |       |                  |   |             |  |             |      |                   |   |       |  |   |      
|Long-term debt obligations(1)(2)(3)     |  | $                      | 440.0 |                  | $ | 20.5        |  | $           | 4.5  |                   | $ | 204.4 |  | $ | 210.6
|Interest on the Senior Notes(4)         |  |                        | 90.0  |                  |   | 20.0        |  |             | 40.0 |                   |   | 30.0  |  |   |     
|Operating and capital lease obligations |  |                        | 57.9  |                  |   | 10.0        |  |             | 17.5 |                   |   | 13.2  |  |   | 17.2 
|Other long-term liabilities(5)          |  |                        | 21.3  |                  |   | 1.3         |  |             | 3.3  |                   |   | 3.5   |  |   | 13.2 
|                                        |  |                        |       |                  |   |             |  |             |      |                   |   |       |  |   |      
|TOTAL CONTRACTUAL OBLIGATIONS           |  | $                      | 609.2 |                  | $ | 51.8        |  | $           | 65.3 |                   | $ | 251.1 |  | $ | 241.0
|                                        |  |                        |       |                  |   |             |  |             |      |                   |   |       |  |   |      

---

|(1) | Includes $200.0 million in principal amount of our 10% Senior Subordinated Notes due 2010 and $240.0 million of outstanding borrowings under the Term Loans. There were no
outstanding borrowings under the Revolvers. In the event of a continuing event of default (as defined in the credit facility agreement), the agent could declare outstanding borrowings immediately due and payable and/or may terminate any future
borrowings under the facility. As of October 1, 2006, we had borrowing capacity under the Revolvers of approximately $47.0 million. The Revolvers expire July 17, 2012; the Term Loans have scheduled quarterly repayments due with final
maturity on July 17, 2013.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Included in the payments due in less than one year is a $ 20.0 million voluntary repayment on the US Term Loan made in November 2006. Prepayments reduce future scheduled
payments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | In the event of a continuing event of default (as defined in the indenture governing the Senior Notes due 2010), the trustee or holders of 25% of the outstanding principal could
declare the principal and accrued interest on all the notes to be immediately due and payable. In the event of a change in control (as defined in the indenture governing the Senior Notes), each holder of notes shall have the right to require us to
purchase all or a portion of the holders notes at 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. As of October 1, 2006, $200.0 million in principal amount was outstanding.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The table does not include variable interest payable on Term Loan borrowings. Based on outstanding Term Loan borrowings of $240.0 million and a weighted-average interest rate of
7.0% at October 1, 2006, our annual interest obligation would be approximately $16.8 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Other long-term obligations include certain future payments related to supplemental executive retirement benefit obligations for certain of our current and retired executives,
pension liabilities and other postretirement benefits. The amounts shown in the table are the maximum future benefit payments subject to certain actuarial assumptions regarding life expectancy, which differ from the actuarially determined liability
related to these obligations recorded in the financial statements. The current and long-term actuarially determined amounts are included in our consolidated balance sheet in Other Current Liabilities and Other Long-Term
Liabilities, respectively, as of October 1, 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At the end of 2006, we had standby letters of credit, which
expire in less than one year, in the aggregate amount of approximately $8.0 million in favor of our workers compensation insurers and purchasing card vendor. The standby letters of credit reduce the borrowing capacity under the U.S. Revolver,
and at the end of 2006, $42.0 million of the $50.0 million facility was available. All of the $5.0 million Canadian Revolver was available at the end of 2006.

Effect of Inflation

Historically, in certain circumstances, we have been able to pass through price increases in our
primary raw materials (steel and resin) to our customers. Although we generally have been able to increase the price of our products to reflect increases in the price of these raw materials, we cannot rely on our ability to do so in the future.
However, we believe that inflation in the near term will not have a material adverse impact on us.

New Accounting Standards

In December 2004, the Financial Accounting Standards Board (the FASB) issued Statement of Financial Accounting Standards (SFAS)
123 (revised 2004), Share-Based Payment (SFAS 123R), which eliminates the ability to account for share based compensation transactions using APB 25 and generally requires that such transactions be accounted for using a fair
value-based method with the resulting compensation cost recognized over the period that the employee is required to provide service in order to receive their compensation. SFAS 123R also amends SFAS 95, Statement of Cash Flows, requiring the
benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as currently required. For purposes of SFAS 123R, a nonpublic entity as defined in the Statement
includes entities that have only debt securities trading in a public market.

We adopted SFAS 123R as of
the required effective date for nonpublic entities, which, for us, was October 2, 2006, using the prospective transition method. Under the prospective transition method, compensation cost is recognized in the financial
statements beginning with the effective date for all new awards and to awards modified, repurchased or cancelled after the required effective date. As such, the adoption of the Statement did not result in a cumulative effect of a change in
accounting principle. However, SFAS 123R will have an impact on our consolidated financial statements for new awards and for awards modified, repurchased or cancelled after the required effective date.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error CorrectionsA Replacement of APB Opinion No. 20 and FASB
Statement No. 3 (SFAS 154). SFAS 154 requires retrospective application to prior periods financial statements for changes in accounting principle, unless it is impracticable to determine either the period specific effects
or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle, such as a change
in nondiscretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the accounting change. SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived
non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principle. The Statement does not change the transition provisions of any existing accounting pronouncements. SFAS 154 is effective for
accounting changes and errors in previously issued financial statements made in fiscal years beginning after December 15, 2005, which for us is the beginning of 2007. We will follow the provisions of this Statement in the event of any future
accounting changes.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan
interpretation of FASB Statement No. 109 (FIN 48). This interpretation clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return and requires that we recognize in our financial
statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. This interpretation also



19



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##### Index to Financial Statements

provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure
requirements for uncertain tax positions. The provisions of FIN 48 are effective for us at the beginning of 2008 (October 2007). We are currently evaluating the impact of FIN 48 on our consolidated financial statements.

In September 2006, the SEC issued SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements (SAB 108). SAB 108 states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement. The interpretations in SAB 108 contain
guidance on correcting errors under the dual approach as well as provide transition guidance for correcting errors. This interpretation does not change the requirements within SFAS 154 for the correction of an error on financial statements. SAB 108
is effective for annual financial statements covering the first fiscal year ending after November 15, 2006, which, for us, is fiscal 2007 ending September 30, 2007. We are currently evaluating the impact of SAB 108 on our consolidated
financial statements.

In September 2006, the FASB issued SFAS 157, Fair Value Measurements (SFAS 157). SFAS 157 defines
fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 is effective for us at the beginning of 2009 (October 2008). We are currently evaluating the impact of SFAS 157 on our
consolidated financial statements.

In September 2006, the FASB issued SFAS 158, Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). This Statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than
a multiemployer plan) as an asset or liability on its statement of financial position. SFAS 158 also requires an employer to recognize changes in that funded status in the year in which the changes occur through comprehensive income. In addition,
this statement requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. Since we do not have publicly traded equity securities, SFAS 158 is effective for us
at the end of the fiscal year ending after June 15, 2007, which is fiscal 2007 ending September 30, 2007. We are currently evaluating the impact of SFAS 158 on our consolidated financial statements.

Critical Accounting Policies

Our consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, which often require the judgment of management in the selection and application of certain accounting
principles and methods. We believe that the quality and reasonableness of our most critical policies enable the fair presentation of our financial position and results of operations. However, investors are cautioned that the sensitivity of financial
statements to these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.

In response to the SECs Release No. 33-8040, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, we have identified the following as the most critical accounting policies upon
which our financial status depends. These critical policies were determined by considering accounting policies that involve the most complex or subjective decisions or assessments. Our most critical accounting policies are as follows:

Revenue Recognition.We recognize revenue when persuasive evidence of an arrangement exists, our products have been shipped and title and risk of
loss have passed, the sales amount is fixed or determinable and collectibility of the amount billed is probable. We record provisions for discounts, returns, allowances, customer rebates and other adjustments in the same period as the related
revenues are recorded. We do not engage in revenue arrangements with multiple deliverables.

Accounts Receivable. Accounts
receivable are recorded net of an allowance for uncollectibility. The allowance for doubtful accounts is based on managements assessment of the collectibility of customer accounts. We regularly review the allowance by considering factors such
as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customers ability to pay. The determination of the amount of the allowance accounts is subject to
significant levels of judgment and estimation by management. If circumstances change or economic conditions deteriorate, we may need to increase the allowance for doubtful accounts.

Inventories.Inventories are carried at the lower of cost or market. Generally, inventory is determined under the last-in, first-out (LIFO) method
of inventory valuation. However, inventory at our ICL subsidiary is determined under the first-in, first-out (FIFO) method of inventory valuation. We estimate reserves for inventory obsolescence and shrinkage based on managements judgment of
future realization. Projected inventory losses are recognized at the time the loss is probable rather than when the goods are ultimately sold.

Accrued Rebates.We provide volume rebates to our customers on certain products. We accrue a provision for these rebates, which is recognized as a reduction of net sales, in the period that the goods are shipped. Accrued rebates may
be settled in cash or as a credit against customer accounts receivable.

Long-lived Assets. We review long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows
expected to be generated by the asset. If these assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.



20



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##### Index to Financial Statements

In addition, depreciation and amortization expense is affected by our determination of the estimated
useful lives of the related assets. We determine estimated useful lives of our fixed assets and finite lived intangible assets based on the type and expected usage of the asset.

Goodwill and Other Intangible Assets.Our intangible assets consist of identifiable intangibles (tradenames, customer relationships and covenants
not-to-compete) and goodwill. We amortize finite-lived, identifiable intangible assets over their remaining useful lives in proportion to the underlying cash flows that were used in determining the acquired value. Finite-lived, identifiable
intangible assets are also tested for impairment as noted above for long-lived assets. Indefinite-lived identifiable intangibles and goodwill are not amortized, but tested for impairment at least annually at the end of our fiscal year.

We have two reporting units that have goodwill: metal packaging and plastic packaging. We use an independent valuation specialist to assist us in
estimating the fair value of each reporting unit for purposes of impairment testing. Fair value estimates are based, in part, on discounted future cash flows and market multiples. If the fair value of a reporting unit exceeds its carrying value,
then no further testing is required. If the carrying value of a reporting unit exceeds its fair value, however, a second step is required to determine the amount of the impairment charge, if any. An impairment charge is recognized if the carrying
value of a reporting units goodwill exceeds its implied fair value.

We perform our impairment test for our indefinite-lived
intangible assets by comparing the fair value of each indefinite-lived intangible asset to its carrying value. The fair value of the asset is estimated based on its discounted future cash flows. We recognize an impairment charge if the carrying
value of the asset unit exceeds its estimated fair value.

Commodity Risk

We are subject to various risks and uncertainties related to changing commodity prices for and the availability of the materials (primarily steel and
resin) and processed energy (primarily electric power and natural gas) used in the manufacture of our products.

Environmental Matters

For information regarding environmental matters, see Item 1. Business - Environmental, Health and Safety Matters.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We do not purchase, sell or
hold derivatives or other market risk-sensitive instruments to hedge commodity price risk, interest rate risk or exchange rate risk or for trading purposes.

For a discussion of interest rate risk and its relation to our indebtedness, see Liquidity and Capital Resources in Item 7, which is incorporated herein by reference.

For a discussion of commodity risk and its relation to our cost of products sold, see Item 1, Business, and Commodity Risk
in Item 7, which is incorporated herein by reference.

Our purchases in transactions denominated in foreign currencies are not
significant and we do not believe we are exposed to a significant market risk of exchange rate changes related to fluctuations in the value of these foreign currencies in relation to the local currency.

Item 8. Financial Statements and Supplementary Data

See the attached Consolidated Financial
Statements on pages F-1 through F-34.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures: Our
management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has concluded, based upon its evaluation as of the end of the period covered by this report, that our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) are effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

Changes in Internal Control Over Financial Reporting: There have been no changes in our internal controls over financial reporting during the three months ended October 1, 2006 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.



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##### Index to Financial Statements

PART III

Item 10. Directors and Executive Officers of the Registrant

Our by-laws provide that the size of
the Board of Directors (the Board) shall be fixed from time to time by resolution of the Board and that the remaining directors may fill vacancies on the Board. The Board currently consists of six directors. Each director elected shall
hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as provided in the by-laws.

The Board has determined that each director serving on its audit committee is an independent financial expert in accordance with Item 401(h) of Regulation S-K. The Board determined independence as the term is defined in the
listing requirements of the New York Stock Exchange.

We have adopted a code of ethics that applies to our executive officers, including,
but not limited to, our chief executive and chief financial officers and to other members of management.

The following sets forth certain
information as of December 1, 2006 with respect to BWAYs Board and to certain of its officers (including all executive officers), who serve at the discretion of the Board.



|                                                                       |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---------------------------------------------------------------------- |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                                                                   |  | Age |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Jean-Pierre M. Ergas Chairman of the Board and
Chief Executive Officer |  | 67  |  | Mr. Ergas became our chairman and chief executive officer in January 2000. Mr. Ergas has served as one of our directors since August 1995 and served as our boards vice chairman from
July 1999 to December 1999. Mr. Ergas has also previously served as executive vice president, Europe of Alcan Aluminum Limited, president of Alcan Europe Limited, executive chairman of British Alcan Aluminum plc. and chief executive officer of Alcan
Deutschland GmbH from June 1996 to December 1999. Mr. Ergas served as senior advisor to the chief executive officer of Alcan Aluminum Limited from January 1995 to June 1996 and served as a trustee of DePaul University from February 1994 to December
1994. Prior thereto, Mr. Ergas served as senior executive vice president of Pechiney S.A. and as a member of the Pechiney Group executive committee from 1987 to January 1994 and also held several management positions with various subsidiaries of
Pechiney S.A., serving as: chief executive officer of American National Can Company from 1989 to January 1994 and chairman of the board from 1991 to January 1994; chief executive officer of Cegedur Pechiney from 1982 to 1988 and chairman of the
board from 1987 to 1988; chief executive officer of Cebal S.A. from 1974 to 1982 and chairman of the board during 1982; and marketing manager for Pechiney Aluminum from 1967 to 1974. Mr. Ergas is a trustee of DePaul and AUP Universities and a
director of Dover Corporation and Compagnie Plastic Omnium.
|                                                                       |  |    
|Warren J. Hayford Non-Executive Vice-Chairman of
the Board             |  | 77  |  | Mr. Hayford became the non-executive vice-chairman of our board in December 1999. From 1989 until December 1999, Mr. Hayford served as our chief executive officer and our boards
chairman. Mr. Hayford has held a number of senior positions within the packaging industry over the past 35 years including president and chief operating officer of Gaylord Container Corporation, a manufacturer of paper packaging products, 1986 to
1988, and vice chairman of Gaylord Container, 1988 through 1992. Prior to Gaylord Container, Mr. Hayford served as president and a director of Gencorp, Inc., president and a director of Navistar International Corporation and executive vice president
and a director of the Continental Group, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                       |  |    
|David I. Wahrhaftig Director                                           |  | 49  |  | Mr. Wahrhaftig became one of our directors in February 2003. Mr. Wahrhaftig joined Kelso in 1987 and has served as a managing director since 1998. Prior to becoming a managing director of
Kelso, he was a vice president. Mr. Wahrhaftig is also a director of DS Waters Enterprises, Inc., Insurance Auto Auctions, Inc., Renfro Corporation and U.S. Electrical Services, LLC. Mr. Wahrhaftig is also on the Board of Visitors at Wake Forest
University.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                       |  |    
|Thomas R. Wall, IV Director                                            |  | 48  |  | Mr. Wall became one of our directors in February 2003. Mr. Wall joined Kelso in 1983 and is currently a managing director. Mr. Wall spent the previous three years as a lending officer in the
corporate division of Chemical Bank, where his responsibilities included the analysis and evaluation of lending proposals for numerous leveraged buyouts. Mr. Wall is a director of Ellis Communications Group, LLC, Endurance Business Media, Inc.,
Mitchell Supreme Fuel Company, Renfro Corporation and U.S. Electrical Services, LLC. Mr. Wall is also a Trustee of Choate Rosemary Hall.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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##### Index to Financial Statements

|                                                                                                                                           |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------ |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                                                                                                                                       |  | Age |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|David M. Roderick Director                                                                                                                 |  | 82  |  | Mr. Roderick became one of our directors in May 2003. Mr. Roderick has served as chairman of the board of Earle M. Jorgensen Company since January 1998. He was chairman and chief executive
officer of USX Corporation from 1979 to 1989 and president from 1975 to 1979. Mr. Roderick is a member of the boards of the University of Pittsburgh Medical Center and Citation Corporation. He is past chairman of both the American Iron and Steel
Institute and the International Iron Institute. Mr. Roderick is past chairman of the International Environmental Bureau. He is a co-founder and currently is chairman emeritus of the U.S.-Korea Business Council and is a past chairman of the National
Alliance of Business. Mr. Roderick is a trustee and past chairman of the board of trustees of Carnegie Mellon University. He is a past member of the Business Roundtable and a member of the Business Council.                                                                                                                                                                   
|                                                                                                                                           |  |    
|Lawrence A. McVicker Director                                                                                                              |  | 66  |  | Mr. McVicker became one of our directors in October 2004. Mr. McVicker is currently the chief effective officer of MVOC, LLC. Mr. McVicker was chairman and chief executive officer of North
America Packaging Corporation (NAMPAC) from 2001 to July 2004 and was president and chief operating officer of Southcorp Packaging USA from 1999 to 2001. Mr. McVicker served as president and chief operating officer for Waldorf
Corporation from 1995 to 1997 and from 1964 to 1995 was employed by Packaging Corporation of America (Tenneco), most recently as the senior vice president of international operations from 1991 to 1995. Mr. McVicker is a trustee of the Miami
University Foundation. He has served as vice-chairman, executive committeerecycled paperboard and solid waste task force for the American Forest & Paper Association; served on the executive committee and board of directors of the
Paperboard Packaging Council; served on the board of trustees of the Recycled Paperboard Technical Association and of the Miami University Pulp & Paper Foundation.
|                                                                                                                                           |  |    
|Kenneth M. Roessler President and Chief Operating
Officer of the Company and President and Chief Operating OfficerBWAY Packaging Division |  | 44  |  | Mr. Roessler was appointed president and chief operating officer of the Company in March 2006. From October 2004 to February 2006, Mr. Roessler served as senior vice president of the Company.
Mr. Roessler continues to serve as the president and chief operating officer of our BWAY Packaging Division, which he has done since September 2004. From January 2003 through September 2004, Mr. Roessler served as our chief operating officer and
from March 2000 until January 2003, he served as our executive vice president of sales and marketing. From June 1993 to February 2000, Mr. Roessler served in various senior management positions with Southcorp Packaging USA, including vice president
of sales and marketing from 1998 to February 2000, vice president and general manager from 1995 to 1998 and vice president and chief financial officer from June 1993 through 1995. Prior to June 1993, Mr. Roessler held senior management positions
with Berwind Corporation.                                                                                               
|                                                                                                                                           |  |    
|Kevin C. Kern Chief Financial Officer
and Vice-President of Administration                                                                 |  | 47  |  | Mr. Kern has been our vice president of administration and chief financial officer since February 2001. From May 1995 until February 2001, Mr. Kern served as our vice president corporate
controller. From 1991 to May 1995, Mr. Kern was controller of McKechnie Plastics Components, Inc. From 1981 to 1991, Mr. Kern was employed by Ernst & Young, most recently as a senior audit manager from 1988 to 1991.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                           |  |    
|Jeffrey M. OConnell Vice-President,
Treasurer and Secretary                                                                               |  | 53  |  | Mr. OConnell has been our vice president and treasurer since May 1997 and has served as our secretary since May 2001. From June 1996 to May 1997, Mr. OConnell served as our
assistant treasurer. From June 1995 to June 1996, Mr. OConnell served as vice president of finance of Macmillan Bloedel Packaging Inc. From October 1994 to June 1995, Mr. OConnell served as our director of financial planning. Prior
thereto, Mr. OConnell served as vice president of administration of Mead Coated Board Division of The Mead Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



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##### Index to Financial Statements

|                                                                                                                |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--------------------------------------------------------------------------------------------------------------- |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                                                                                                            |  | Age |  | Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Thomas K. Linton Senior Vice-President of the Company and President and Chief Operating OfficerNAMPAC Division |  | 53  |  | Mr. Linton was named senior vice president of the Company in October 2004 and has served as president and chief operating officer of our NAMPAC Division since July 2004. Prior to our
acquisition of NAMPAC in July 2004, Mr. Linton was vice president and general manager of NAMPACs Western Division. From 1997 to 2001, Mr. Linton was the executive vice president and general manager of Field Container Company, where he had
responsibility for the consumer packaging business. Between 1991 and 1997, Mr. Linton served as vice president and general manager of the folding carton business at Tenneco Packaging, where he began his career as a sales representative in
1979.

Item 11. Executive Compensation

Our Boards Management Resources, Nominating and
Compensation Committee determines compensation for the Companys executive officers.

The following tables and notes present
information regarding compensation provided by the Company to our Chief Executive Officer and to each of the Companys four other most highly compensated executive officers (the Named Executive Officers) for services rendered to the
Company in all capacities during 2004, 2005 and 2006.

Summary Compensation Table



|                                                                       |  |            |  |                     |  |                                      |  |                              |                  |         |     |  |           |     |  |                           |    
|---------------------------------------------------------------------- |  | ---------- |  | ------------------- |  | ------------------------------------ |  | ---------------------------- | ---------------- | ------- | --- |  | --------- | --- |  | ------------------------- | ---
|                                                                       |  |            |  | Annual Compensation |  | Long-Term Compensation               |  |                              |                  |        
|                                                                       |  | FiscalYear |  | Salary ($)          |  | Bonus ($) (1)                        |  | Other AnnualCompensation ($) |                  | Awards  |     |  | Payouts   |     |  | All OtherCompensation ($) |    
|Name and Principal Position                                            |  |            |  |                     |  | SecuritiesUnderlyingOptions/SARs (#) |  |                              | LTIP Payouts ($) |         |    
|Jean-Pierre M. Ergas                                                   |  | 2006       |  | 681,667             |  | 1,227,000                            |  |                             |                  |        |     |  | 8,800,646 | (2) |  | 463,257                   | (3)
|Chairman and Chief Executive                                           |  | 2005       |  | 637,500             |  | 1,490,000                            |  |                             |                  |        |     |  |          |     |  | 699,517                   | (4)
|Officer                                                                |  | 2004       |  | 581,250             |  | 300,000                              |  |                             |                  |        |     |  |          |     |  | 446,099                   | (5)
|                                                                       |  |            |  |                     |  |                                      | 
|Kenneth M. Roessler (6)                                                |  | 2006       |  | 374,792             |  | 505,969                              |  |                             |                  |        |     |  |          |     |  | 8,800                     | (7)
|President and Chief Operating                                          |  | 2005       |  | 339,375             |  | 564,219                              |  |                             |                  |        |     |  |          |     |  | 5,600                     | (7)
|Officer; President and Chief Operating OfficerBWAY Packaging Division |  | 2004       |  | 318,750             |  | 100,000                              |  |                             |                  |        |     |  |          |     |  | 1,432                     | (7)
|                                                                       |  |            |  |                     |  |                                      | 
|Thomas K. Linton (8)                                                   |  | 2006       |  | 318,760             |  | 298,838                              |  |                             |                  |        |     |  |          |     |  | 6,300                     | (7)
|Senior Vice President; President                                       |  | 2005       |  | 307,500             |  | 217,188                              |  |                             |                  |        |     |  |          |     |  | 7,060                     | (7)
|and Chief Operating Officer NAMPAC Division                           |  | 2004       |  | 70,161              |  | 150,000                              |  |                             |                  | 120,000 | (9) |  |          |     |  | 1,811                     | (7)
|                                                                       |  |            |  |                     |  |                                      | 
|Kevin C. Kern                                                          |  | 2006       |  | 288,542             |  | 324,609                              |  |                             |                  |        |     |  |          |     |  | 3,333                     | (7)
|Chief Financial Officer;                                               |  | 2005       |  | 265,625             |  | 402,031                              |  |                             |                  |        |     |  |          |     |  | 3,083                     | (7)
|Vice-President of Administration                                       |  | 2004       |  | 246,250             |  | 175,000                              |  |                             |                  |        |     |  |          |     |  | 3,283                     | (7)
|                                                                       |  |            |  |                     |  |                                      | 
|Jeffrey M. OConnell                                                   |  | 2006       |  | 194,042             |  | 174,638                              |  |                             |                  |        |     |  |          |     |  | 6,681                     | (7)
|Vice President; Treasurer and                                          |  | 2005       |  | 180,625             |  | 230,625                              |  |                             |                  |        |     |  |          |     |  | 6,375                     | (7)
|Secretary                                                              |  | 2004       |  | 168,125             |  | 100,000                              |  |                             |                  |        |     |  |          |     |  | 5,075                     | (7)

---

|(1) | Bonus amounts were earned during the fiscal year indicated and paid in the subsequent fiscal year.
|--- | --------------------------------------------------------------------------------------------------

|(2) | Compensation related to the cash settlement upon the exercise of 386,221 Exchange Options.
|--- | ------------------------------------------------------------------------------------------

|(3) | The amount includes an accrual of $459,957 for supplemental executive retirement benefits pursuant to his employment agreement and $3,300 of Company paid 401(k) contributions under
the Savings Plan.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The amount includes an accrual of $696,517 for supplemental executive retirement benefits pursuant to his employment agreement and $3,000 of Company paid 401(k) contributions under
the Savings Plan.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The amount includes an accrual of $438,349 for supplemental executive retirement benefits pursuant to his employment agreement and $7,750 of Company matching 401(k) contributions
under the Savings Plan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Mr. Roessler served as our executive vice president of sales and marketing from March 2000 through December 2002 and as our chief operating officer from January 2003 through
June 2004. Mr. Roessler became the president and chief operating officer of our BWAY Packaging Division in September 2004 and was appointed president and chief operating officer of the Company in March 2006.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | The amount represents Company paid 401(k) contributions under the Savings Plan.
|--- | -------------------------------------------------------------------------------

|(8) | Mr. Linton became the president and chief operating officer of our NAMPAC Division following the NAMPAC Acquisition in July 2004. Prior to the acquisition, Mr. Linton was
an officer of NAMPAC.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Options were granted under the Holding Incentive Plan (as defined under BCO Holding Stock Incentive Plan below) and are exercisable for shares of BCO Holding common
stock. Forty percent of the BCO Holding options will generally become exercisable in three equal annual installments with the first installment exercisable on July 8, 2005. Ten percent of the BCO Holding options will generally become
exercisable in five equal annual installments if the Company achieves certain EBITDA objectives. The remaining 50% of the BCO Holding options are exit options that will generally become exercisable if certain targets have been achieved upon a change
in control.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There were no stock options granted to the Named Executive Officers during fiscal 2006. The following table
summarizes options held by the Named Executive Officers at the end of 2006.



24



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##### Table of Contents

##### Index to Financial Statements

Aggregated Option/SAR Exercises in Last Fiscal Year

and Fiscal Year-End Option/SAR Values

Under the Holding Incentive Plan



|                     |  |                                |  |                    |           |                                                                                                             |                   |                                                                                                        |                        
|-------------------- |  | ------------------------------ |  | ------------------ | --------- | ----------------------------------------------------------------------------------------------------------- | ----------------- | ------------------------------------------------------------------------------------------------------ | -----------------------
|                     |  | SharesAcquired on Exercise (#) |  | Value Realized ($) |           | Number of Securities Underlying Unexercised Options/SARs at Fiscal Year End (#) Exercisable / Unexercisable |                   | Value of Unexercised In-the- Money Options/SARs at Fiscal Year
End ($) (1) Exercisable / Unexercisable
|Jean-Pierre M. Ergas |  | 386,221                        |  | $                  | 8,800,646 |                                                                                                             | 727,731 / 417,454 |                                                                                                        | $16,952,811 / 8,845,850
|Kenneth M. Roessler  |  |                               |  |                    |          |                                                                                                             | 242,954 / 208,727 |                                                                                                        | 5,481,541 / 4,422,925  
|Thomas K. Linton     |  |                               |  |                    |          |                                                                                                             | 39,200 / 80,800   |                                                                                                        | 576,240 / 1,187,760    
|Kevin C. Kern        |  |                               |  |                    |          |                                                                                                             | 96,533 / 50,095   |                                                                                                        | 2,291,362 / 1,061,513  
|Jeffrey M. OConnell |  |                               |  |                    |          |                                                                                                             | 56,587 / 20,873   |                                                                                                        | 1,369,252 / 442,299    

---

|(1) | As of the end of the fiscal year, all of the exercisable, unexercised options held by the Named Executive Officers were in the money. The fair market value of the underlying
securities is based on the valuation of the underlying securities as of September 30, 2006 at $31.19 per share.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Long-Term Incentive
PlansAwards in Last Fiscal Year

We did not grant any long-term incentive plan awards to the Named Executive Officers in 2006.

Compensation of Directors

Directors
who serve on our Board and who are also employed by us or one of our subsidiaries, or who are employed by Kelso, are not entitled to receive a fee for serving as a director. Each non-employee director is entitled to receive a fee to be determined by
the Board. Mr. Hayford receives an annual retainer fee of $100,000 in accordance with his written agreement. Two non-employee directors receive annual retainer fees of $25,000.

Management Employment Agreements

Jean-Pierre M. Ergas. We entered into an amended and
restated employment agreement with Jean-Pierre M. Ergas dated as of February 7, 2003, whereby Mr. Ergas will continue to serve as our Chief Executive Officer or, with our consent, our Executive Chairman during the employment period (as
described below). Under this agreement, Mr. Ergas will receive an annual base salary, currently at $660,000, as determined by our board (but not less than $550,000), and is eligible to participate in all of our employee benefit plans for which
our senior executive employees are generally eligible. Mr. Ergas is eligible to receive an annual bonus of 80% of his base salary (the Target Bonus) if certain EBITDA targets are achieved for the applicable fiscal year. If these
EBITDA targets are exceeded, Mr. Ergas Target Bonus for such fiscal year will be increased to a maximum of 2.5 times his Target Bonus. The Management Resources, Nominating and Compensation Committee of our Board determines the applicable
fiscal year EBITDA targets related to the bonus. Under the employment agreement, Mr. Ergas received 802,796 options to purchase BCO Holding common stock pursuant to the BCO Holding Company Stock Incentive Plan. The employment period shall end
on December 31, 2007, unless terminated earlier by the resignation, death, or permanent disability or incapacity of Mr. Ergas or we terminate Mr. Ergas employment period with or without cause, as defined in the employment
agreement, or Mr. Ergas terminates the employment period with or without good reason, as defined in the employment agreement. Upon expiration of the employment period, Mr. Ergas will become non-executive chairman of the Company on such
terms and conditions as we shall agree at such time, provided that Mr. Ergas shall be entitled to participate and vest in, and be deemed to be an employee for purposes of, all of our employee benefit programs.

In the event we terminate Mr. Ergas employment without cause, or Mr. Ergas terminates his employment for good reason, in each case, prior
to December 31, 2007, we shall (i) pay his base salary until the second anniversary of the date of his termination, (ii) pay his target bonus in respect of the fiscal year in which his employment is terminated (or if his target
bonuses have not yet been set for either such fiscal year, an amount equal to 70% of his base salary at the date of termination in lieu of the target bonus for either such fiscal year), (iii) reimburse his COBRA premium under our group health
plan and dental plan (if any) on a monthly basis for the lesser of the period in which he is eligible to receive such continuation coverage or 18 months, which we define as the COBRA period, and, (iv) upon expiration of the COBRA period,
procure individual medical and dental insurance policies for him on substantially similar terms as the coverage we provided to him as of the date of termination. In addition, in the event the employment period is terminated as a result of
Mr. Ergas death or retirement upon or after reaching age 65, or the employment period expires, Mr. Ergas shall be entitled to receive a pro rata bonus for the year which includes the date of Mr. Ergas termination, based on
the Companys performance through such date, as determined by the Management Resources, Nominating and Compensation Committee of our Board.

If Mr. Ergas employment terminates for any reason other than for cause, Mr. Ergas will be entitled to a monthly supplemental retirement benefit until his death (and, following his death, until the death of his surviving
spouse). The monthly benefit will be equal to one-twelfth of his then-current base salary, multiplied by a percentage multiplier based on the age of Mr. Ergas on the retirement date



25



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##### Table of Contents

##### Index to Financial Statements

(10% if Mr. Ergas is 62 years of age on the retirement date and increasing by 5% each year for five years to a
maximum of 35%). Payments commence on the first day of the calendar month that begins coincident with or immediately after the later of (i) the date on which Mr. Ergas attains age 67, and (ii) Mr. Ergas termination date. If
we terminate the employment period without cause, because of Mr. Ergas permanent disability or incapacity or Mr. Ergas resigns for good reason or after a change of control following the merger, Mr. Ergas shall be entitled to the
maximum monthly retirement benefit (as if he were 67 years of age or older on such retirement date). Mr. Ergas has agreed not to compete with us during the term of his employment and so long as he is receiving salary and bonus under the
agreement as a result of his termination by us without cause or by him for good reason (but in no event for less than eighteen months after the termination of his employment).

Thomas K. Linton. We entered into a letter agreement with Thomas K. Linton in May 2004 that became effective upon the closing of the NAMPAC
Acquisition on July 7, 2004. Pursuant to the agreement, Mr. Linton became President and Chief Operating OfficerNAMPAC Division. Mr. Lintons base salary was initially set at $300,000 annually and is subject to annual merit
increases based on a performance review. Mr. Linton is eligible to participate in our cash incentive plan whereby Mr. Lintons target bonus would be initially set at 45% of his base salary pending the company achieving certain
performance goals as determined by our Board. Mr. Linton was guaranteed a minimum target bonus of $135,000 in fiscal 2004. Mr. Linton is eligible to participate in the Company Stock Incentive Plan and was awarded 120,000 options following
the closing of the acquisition.

In the event we terminate Mr. Lintons employment for reasons other than performance or cause,
he will be entitled to his base salary, health and dental benefits and executive outplacement services, each for twelve months following the date of his termination. Mr. Linton will also be entitled to any accrued and unpaid bonus through the
date of termination.

In the event of a change in control, as detailed in the agreement, if Mr. Linton is terminated for reasons other
than performance or cause within six months following the change in control, he is entitled to a lump sum payment of two times his annual base salary and one times his target incentive bonus, each as in effect at the time of the change in control.
Mr. Linton would also be entitled to twenty-four months of health and dental benefits and executive outplacement services. Any benefits under the change in control would be in lieu of any other severance benefits provided for in the agreement.

Change in Control Agreements

Each of
Messrs. Ergas, Roessler, Kern and OConnell is a party to a separate change in control agreement with the Company. Under the terms of each change in control agreement, if Company terminates the executive without cause at any time within 24
months following a change in control event, or if the executive leaves employment during that period for good reason (as defined in each change in control agreement), the executive will be entitled to:



| | (a) | A lump severance payment equal to (1) in the case of Mr. Ergas, the sum of three times his annual base salary at the time of the Transaction and one times his target
incentive bonus at the time of the Transaction, (2) in the case of Mr. Roessler, the sum of two times his annual base salary at the time of the Transaction and one times his target incentive bonus at the time of the Transaction,
(3) in the case of Mr. Kern, the sum of one and one half times his annual base salary at the time of the Transaction and one times his target incentive bonus at the time of the Transaction, and (4) in the case of
Mr. OConnell, the sum of one times his annual base salary at the time of the Transaction and one times his target incentive bonus at the time of the Transaction.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Payment of any executive perquisites that the executive is receiving as of his separation date until the later of six months (in the case of Mr. Roessler, nine months) from the
separation date or the end of the calendar year in which the separation occurs.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Reimbursement of COBRA premiums under the Companys group health and dental plan on a monthly basis for the period entitled to such continuation coverage.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Individual medical and dental insurance policies on substantially similar terms as provided by the Company as of the separation date for a period of six to 18 months following
expiration of the COBRA period (other than for Messrs. Kern and OConnell).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | Payment of premiums for individual life insurance coverage on substantially similar terms as provided by the Company as of the separation date for a period of one to three years
following the separation date.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | Full vesting of any retirement plans maintained by the Company in which the executive participates as of the separation date.
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (g) | In the case of the executives other than Mr. Ergas, outplacement services for a period of 12 months.
| | --- | ----------------------------------------------------------------------------------------------------

The change in control agreements provide that if any payments to the executive are considered excess parachute payments as defined in
Section 280G of the Internal Revenue Code, the amount of the separation payment to an executive described under the first bullet point above will be reduced by the minimum amount necessary to reduce the parachute payments to 299% of the
executives base amount as defined in Section 280G of the Internal Revenue Code. Following termination, each executive is subject to a customary one-year non-compete agreement, which, if breached, would require an executive to
repay (or, if unpaid, to forfeit) all the above specified payments and benefits.

The Transaction constituted a change in control pursuant
to the above agreements. However, the 24 month period in which the agreements would be applicable to the Transaction expired on February 6, 2005.

The change in control agreements survived the Transaction and are applicable to any future change in control per each respective agreement.



26



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##### Table of Contents

##### Index to Financial Statements

As discussed above under Management Employment Agreements, Mr. Lintons letter
agreement provides certain change in control benefits.

BCO Holding Stock Incentive Plan

In February 2000, the Predecessor adopted the Fourth Amendment and Restatement of the 1995 Long-Term Incentive Plan (the Predecessor Incentive
Plan). As a result of the Transaction, (which, as defined in the Predecessor Incentive Plan, was an event of a change in control), all outstanding options became immediately vested and exercisable. Certain members of management that held stock
options under the Predecessor Incentive Plan entered into Exchange Agreements with BCO Holding whereby their Predecessor Incentive Plan options to acquire shares in BWAY Corporation were exchanged 2-for-1 for new options under the Holding Incentive
Plan with an exercise price of $10.00 per share of BCO Holding common stock (Exchange Options). The Exchange Options were fully vested as of the closing of the Transaction and were issued with substantially the same terms and conditions
in effect immediately before the exchange.

Effective with the closing of the Transaction in February 2003, BCO Holding, our parent
company, assumed the Predecessor Incentive Plan, which was replaced in July 2004 with the Amended and Restated BCO Holding Stock Incentive Plan (the Holding Incentive Plan). The July 2004 amendment increased the number of available
shares of the common stock of BCO Holding subject to options from 2,006,989 to 2,395,103.

Three types of options may be granted under the
BCO Plan:

Service options. These options generally become exercisable in up to three equal annual installments commencing on the
first anniversary of the grant date.

Performance options. These options generally become exercisable in five equal annual
installments if the Company achieves certain specified EBITDA objectives.

Exit options. These options generally become exercisable
only if the Kelso affiliates are able to sell all or substantially all of their equity investment in BCO Holding at a price greater than or equal to four times their initial investment (taking into account all options) and achieve at least a 15%
internal rate of return, compounded annually, subject to certain exceptions. Exit options become exercisable ratably between two times the exit value and four times the exit value.

Under the BCO Plan, 40% of the options (approximately 958,000) will be service options, 10% (approximately 239,000) will be performance options and 50%
(approximately 1,198,000) will be exit options.

In the event that a participants employment with us terminates by reason of death,
disability or retirement, the participant (or the participants beneficiary) may exercise any vested options within one year following the termination or the normal date of the options, whichever period is shorter, and all unvested options are
canceled immediately upon such termination. If we terminate the participant for cause, all options, whether vested or unvested, are immediately canceled. In the event a participants employment terminates due to voluntary resignation or any
reason other than those described above, any options held by the participant that are exercisable at the date of such termination, shall remain exercisable for a period of sixty days following the termination.

Upon a change in control, each outstanding service option (regardless of whether such service options are at such time otherwise exercisable), each
performance option that is exercisable on or prior to the change in control and each exit option that is exercisable on or prior to the change in control shall be canceled in exchange for a payment in cash of an amount equal to the excess, if any,
of the change in control price over the option price. Alternatively, the Compensation Committee of the BCO Holding board of directors may determine that in the event of a change in control, such options shall be honored or assumed, or new rights
substituted therefore by the new employer on a substantially similar basis and in accordance with the terms and conditions of the BCO Plan. The BCO Plan also provides that if any payments to the participant are considered excess parachute
payments as defined in Section 280G of the Internal Revenue Code, the amount of the payment to a participant under the BCO Plan will be reduced by the minimum amount necessary to reduce the parachute payments to 299% of the
participants base amount as defined in Section 280G of the Internal Revenue Code.

The Compensation Committee of the
Board of Directors of BCO Holding administers the BCO Plan or, if there shall not be any committee serving, the board administers the plan. The committee has discretionary authority to determine the employees eligible to participate under the plan
and determines the number of shares of common stock subject to each option granted thereunder, the time and condition of exercise of such option and all other terms and conditions of such option, including the form of the option agreement setting
forth the terms and conditions of such option. The compensation committee determines the exercise price of each option under the incentive plan, provided that the exercise price cannot be less than the fair market value (as determined under the
incentive plan) of the BCO Holding common stock on the date of grant. It is anticipated that all options will be non-qualified stock options for federal income tax purposes. Options are not transferable other than by will or by the laws of descent
and distribution or, if permitted by the compensation committee, in connection with certain pledges and estate planning transfers. All of the shares acquired upon exercise of any option will be subject to the securityholder arrangements described
above.



27



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##### Table of Contents

##### Index to Financial Statements

Pension and Savings Plans

We maintain various savings plans (the Savings Plans) qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. Generally, all full-time employees, including executives and officers, are
eligible to participate in the Savings Plans upon their employment with us. With the exception of Mr. Linton, the named executive officers are eligible to participate under the BWAY Corporation Retirement Savings Plan, which provides for
company matching contributions of 100% of the first 4% of annual compensation contributed after completing one year of service. Mr. Linton is eligible to participate in the North America Packaging Corporation 401(k) Retirement Savings Plan,
which provides for contributions from the company of 3% of compensation.

Mr. Linton is a participant in the North America Packaging
Corporation Pension Plan, which was frozen in October 2004. Effective with the freeze, each active participants pension benefit will be determined based on the participants compensation and period of employment as of the freeze.

Compensation Committee Interlocks and Insider Participation

We do not have any items to report related to Management Resources, Nominating and Compensation Committee interlocks or insider participation relationships with the Company by its members.



28



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##### Table of Contents

##### Index to Financial Statements

Management Resources, Nominating and Compensation Committee Report on Executive Compensation

The Management Resources, Nominating and Compensation Committee of the Board of Directors (the Compensation Committee) offers this report
regarding the compensation policies for the Companys executive officers, including the Chief Executive Officer.

The Compensation
Committee reviews and makes recommendations to the Board regarding salaries, compensation and benefits of executive officers of the Company and develops and administers programs providing stock-based incentives. After consideration of the
Compensation Committees recommendations, the entire Board reviews and approves the salaries and bonuses and the stock and benefit programs for the Companys executive officers. This report documents the components of the Companys
executive officer compensation programs and describes the bases upon which compensation will be determined by the Compensation Committee with respect to the executive officers of the Company.

Compensation Philosophy

The compensation philosophy
of the Company is to link executive compensation to continuous improvements in corporate performance and increases in stockholder value. The goals of the Companys executive compensation programs are as follows:



| |  |  | To establish pay levels that are necessary to attract and retain highly qualified executives in light of the overall competitiveness of the market for high quality executive talent.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To recognize superior individual performance, new responsibilities and new positions within the Company.
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | To balance short-term and long-term compensation to complement the Companys annual and long-term business objectives and strategy and to encourage executive performance in
furtherance of the fulfillment of those objectives.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To provide variable compensation opportunities based on the Companys performance.
| | - |  | ----------------------------------------------------------------------------------



| |  |  | To align executive remuneration with the interests of the stockholder.
| | - |  | ----------------------------------------------------------------------

Compensation Program Components

The Compensation Committee regularly reviews the Companys compensation program to
ensure that pay levels and incentive opportunities are competitive with the market and reflect the performance of the Company. The particular elements of the compensation program for executive officers are further explained below.

Base Salary. The base pay level for Mr. Ergas is set forth in his employment agreement, as amended. (See Management Employment
Agreements above.) Mr. Ergas, as Chief Executive Officer, may change or modify the compensation of the other executive officers as he deems necessary for the proper operation of the Company.

Annual Incentives. All executive officers are eligible for annual incentives under the Companys Officer Incentive Plan with awards
determined annually by the Compensation Committee. The Company uses annual incentives to enhance managements contribution to stockholder returns by offering competitive levels of compensation for the attainment of the Companys financial
objectives. In particular, the Company utilizes annual incentives to focus corporate behavior on the achievement of goals for growth, financial performance and other items.

Stock Ownership. The Compensation Committee believes that it can align the interests of stockholders and executives by providing those persons who
have substantial responsibility over the management and growth of the Company with an opportunity to establish a meaningful ownership position in the Company. There were no stock options granted to the executive officers in fiscal 2006.

Following the buyout of the Company in February 2003, management rolled a substantial number of stock options into options to receive BCO Holding
common stock. As stockholders, we believe management will continue to act in the best interests of the Company and of the other stockholders.

Compensation for the Chief Executive Officer

The base pay level and annual incentive bonus compensation for Mr. Ergas,
who has served as the Companys Chief Executive Officer since January 2000, was initially determined pursuant to his amended employment agreement dated February 7, 2003. Pursuant to this employment agreement, Mr. Ergas base
salary was initially set at $550,000 per annum and bonus compensation pursuant to the Officer Incentive Program was set based on certain EBITDA targets as defined in the employment agreement. The Compensation Committee in its sole discretion based
on the achievement of goals and objectives determined by it and in accordance with Mr. Ergas employment agreement may change base pay and shall determine the Companys EBITDA objectives that, if achieved, will trigger
Mr. Ergas annual incentive bonus. In March 2006, Mr. Ergas base salary was set at $700,000 per annum and Mr. Ergas was awarded an annual bonus of $1,227,000 for fiscal 2006 based on the Company exceeding certain
performance objectives.



29



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##### Table of Contents

##### Index to Financial Statements

Summary

After reviewing the Companys existing programs, the Compensation Committee believes that the total compensation program for executives of the Company is focused on increasing value for stockholders and enhancing corporate performance,
that the compensation of executive officers is properly tied to stock appreciation through stock options or stock ownership, and that executive compensation levels at the Company are competitive with the compensation programs provided by other
corporations with which the Company competes.

THIS COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS FORM 10-K INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.

The following directors and members of the Companys Management Resources, Nominating and
Compensation Committee have provided the foregoing report:

Thomas R. Wall, IV, Chairman

Warren J. Hayford

David I. Wahrhaftig



30



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##### Table of Contents

##### Index to Financial Statements

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table provides certain information with respect to the beneficial ownership of the common stock of BCO Holding as of December 1, 2006, by (i) each stockholder known by us who owns beneficially 5 percent or more of
the outstanding shares of such common stock, (ii) each of our directors, (iii) each of our executive officers and (iv) all of our directors and executive officers as a group. BCO Holding owns 100% of the capital stock of BWAY, which
in turn owns 100% of the capital stock of NAMPAC. To our knowledge, each stockholder has sole voting and investment power with respect to the shares indicated as beneficially owned, unless otherwise indicated in a footnote to the following table.
Unless otherwise indicated in a footnote, the business address of each person is our corporate address.

On February 7, 2003, BCO
Holding entered into a securityholders agreement with the Kelso affiliates and certain stockholders who own shares and options of BCO Holding. This securityholders agreement covers, among other things, transferability of the stockholders
shares and the composition of the board of directors. See Certain Relationships and Related TransactionsSecurityholders Agreement. In addition, the securityholders agreement requires, and other future agreements may require, BCO
Holding to repurchase BCO Holdings common stock or options to purchase BCO Holdings common stock. We may fund all or a portion of such repurchases, subject to the provisions of the indenture governing the notes, provisions of our new
credit facility and other conditions.



|                                                             |  |                                    |      |  |                      |    
|------------------------------------------------------------ |  | ---------------------------------- | ---- |  | -------------------- | ---
|Beneficial Owner                                             |  | Number ofShares ofCommon Stock (1) |      |  | Percent of Class (2) |    
|Kelso Investment Associates VI, L.P. (3)                     |  | 9,430,983                          | (4)  |  | 86.0                 | %  
|KEP VI, LLC (3)                                              |  | 9,430,983                          | (4)  |  | 86.0                 | %  
|Frank T. Nickell (3)                                         |  |                                    | (5)  |  |                      | (5)
|Thomas R. Wall, IV (3)                                       |  |                                    | (5)  |  |                      | (5)
|George E. Matelich (3)                                       |  |                                    | (5)  |  |                      | (5)
|Michael B. Goldberg (3)                                      |  |                                    | (5)  |  |                      | (5)
|David I. Wahrhaftig (3)                                      |  |                                    | (5)  |  |                      | (5)
|Frank K. Bynum, Jr. (3)                                      |  |                                    | (5)  |  |                      | (5)
|Philip E. Berney (3)                                         |  |                                    | (5)  |  |                      | (5)
|Frank J. Loverro (3)                                         |  |                                    | (5)  |  |                      | (5)
|James J. Connors, II (3)                                     |  |                                    | (5)  |  |                      | (5)
|Jean-Pierre M. Ergas                                         |  | 727,731                            | (6)  |  | 6.2                  | %  
|Kenneth Roessler                                             |  | 242,954                            | (7)  |  | 2.2                  | %  
|Kevin C. Kern                                                |  | 101,081                            | (8)  |  | *                    |    
|Jeffrey OConnell                                            |  | 59,619                             | (9)  |  | *                    |    
|Warren J. Hayford                                            |  | 1,954,990                          | (10) |  | 16.8                 | %  
|Marylou Hayford                                              |  | 1,284,156                          | (11) |  | 11.7                 | %  
|Thomas K. Linton                                             |  | 39,200                             | (12) |  |                     |    
|David M. Roderick                                            |  |                                   |      |  |                     |    
|Lawrence A. McVicker                                         |  |                                   |      |  |                     |    
|                                                             |  |                                    |      |  |                      |    
|All Directors and Executive Officers as a Group (10 persons) |  | 3,125,575                          | (13) |  | 24.4                 | %  
|                                                             |  |                                    |      |  |                      |    

---

|* | Less than one percent.
|- | ----------------------



31



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##### Index to Financial Statements

|(1) | The number of shares includes shares of BCO Holding common stock subject to options exercisable within 60 days of December 1, 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(2) | As of December 1, 2006, 10,970,992 shares of BCO Holding common stock were issued and outstanding. Shares subject to options exercisable within 60 days of December 1, 2006
are considered outstanding for the purpose of determining the percent of the class held by the holder of such option, but not for the purpose of computing the percentage held by others.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The business address for these persons is c/o Kelso & Company, 320 Park Avenue, 24thFloor, New York, New York 10022.
|--- | --------------------------------------------------------------------------------------------------------------------

|(4) | The shares of common stock beneficially owned by Kelso Investment Associates VI, L.P. and KEP VI, LLC represents the combined share ownership of Kelso Investment Associates VI, L.P.
and KEP VI, LLC. Kelso Investment Associates VI, L.P. and KEP VI, LLC, due to their common control, could be deemed to beneficially own each of the others shares, but disclaim such beneficial ownership.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Messrs. Nickell, Wall, Matelich, Goldberg, Wahrhaftig, Bynum, Berney, Loverro and Connors may be deemed to share beneficial ownership of shares of common stock owned of record by
Kelso Investment Associates VI, L.P. and KEP VI, LLC, by virtue of their status as managing members of KEP VI, LLC and the general partner of Kelso Investment Associates VI, L.P. Messrs. Nickell, Wall, Matelich, Goldberg, Wahrhaftig, Bynum, Berney,
Loverro and Connors share investment and voting power with respect to the shares of common stock owned by Kelso Investment Associates VI, L.P. and KEP VI, LLC but disclaim beneficial ownership of such shares.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | The shares of common stock beneficially owned by Mr. Ergas include 727,731 shares subject to options exercisable within 60 days.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(7) | The shares of common stock beneficially owned by Mr. Roessler consist of 242,954 shares subject to options exercisable within 60 days. The shares of common stock beneficially
owned by Mr. Roessler exclude 34,237 shares and shares subject to option transferred to his wife in fiscal 2005 pursuant to a settlement agreement entered into in conjunction with a division of marital assets incident to their divorce.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | The shares of common stock beneficially owned by Mr. Kern consist of 96,533 shares subject to options exercisable within 60 days.
|--- | ---------------------------------------------------------------------------------------------------------------------------------

|(9) | The shares of common stock beneficially owned by Mr. OConnell consist of 56,587 shares subject to options exercisable within 60 days.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(10) | The shares of common stock beneficially owned by Mr. Hayford consist of 1,238,674 shares directly owned by his wife, Marylou Hayford, and 45,482 shares and 670,834 shares
subject to options directly owned by Mr. Hayford. Mr. Hayford disclaims beneficial ownership of the shares directly owned by his wife.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | The shares of common stock beneficially owned by Mrs. Hayford include 45,482 shares directly owned by her husband, Warren J. Hayford, but do not include 670,834 shares subject
to options owned directly by Mr. Hayford. Mrs. Hayford disclaims beneficial ownership of the shares directly owned by her husband.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | The shares of common stock beneficially owned by Mr. Linton consist of 39,200 shares subject to options exercisable within 60 days.
|---- | -----------------------------------------------------------------------------------------------------------------------------------

|(13) | The shares of common stock held by directors and executive officers as a group excludes shares held by Kelso Investment Associates VI, L.P. and KEP VI, LLC that may be deemed to be
beneficially owned by Mr. Wall and Mr. Wahrhaftig.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Equity Compensation Plan Information

The following table summarizes compensation plans (including individual compensation arrangements) under which the equity securities of BCO Holding are
authorized for issuance as of October 1, 2006. We are a wholly-owned subsidiary of BCO Holding.



|                                                                                            |  |                                                                                                 |  |                                                                                 |      |                                                                                                                                                 |        
|------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------- | -------
|Plan Category                                                                               |  | Number of securities to be issued upon exercise
of outstanding options, warrants and rights (a) |  | Weighted-average exercise price of outstanding options, warrants and rights (b) |      | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|Equity compensation plans approved by security holders under the BCO Holding Incentive Plan |  | 3,468,653                                                                                       |  | $                                                                               | 9.90 |                                                                                                                                                 | 144,049
|Equity compensation plans not approved by security holders                                  |  |                                                                                                |  |                                                                                 |     |                                                                                                                                                 |       
|                                                                                            |  |                                                                                                 |  |                                                                                 |      |                                                                                                                                                 |        
|Total                                                                                       |  | 3,486,653                                                                                       |  | $                                                                               | 9.90 |                                                                                                                                                 | 144,049
|                                                                                            |  |                                                                                                 |  |                                                                                 |      |                                                                                                                                                 |        

Item 13. Certain Relationships and Related Transactions

Securityholders Agreement

BWAY is a wholly-owned subsidiary of BCO Holding. On February 7, 2003, BCO Holding entered into a securityholders agreement with the Kelso
affiliates, which in the aggregate own a majority of BCO Holdings common stock, and certain other securityholders who own common stock and options to purchase common stock of BCO Holding and whom we refer to in this prospectus as the non-Kelso
securityholders. The securityholders agreement provides that Jean-Pierre M. Ergas or a family representative or, with Kelsos consent, other representative following his death or disability, will be a member of BCO Holdings board of
directors until the later of (a) Mr. Ergas no longer serving as either our chief executive officer or chairman or (b) he or his family or estate selling any of their equity in BCO Holding. The securityholders agreement also provides
that Warren J. Hayford or another person he and Mary Lou Hayford designate will be a member of BCO Holdings board of directors (or if BCO Holdings board of directors is composed of 11 or more persons, Mr. and Mrs. Hayford may
designate two of BCO Holdings directors). Consent of the Kelso affiliates is required for any Hayford designees who are not members of the Hayford family. The Kelso affiliates have the right to designate all of the other members of BCO
Holdings board of directors. Mr. Hayford or any Hayford family member board designee or the disinterested members of BCO Holdings board have the right to approve all affiliate transactions and certain other matters, subject to
certain specified exceptions. Mr. Ergas employment agreement has been



32



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##### Index to Financial Statements

amended to provide that Mr. Ergas will remain as either chief executive officer or executive chairman through
December 31, 2007.

The securityholders agreement generally restricts the transfer of shares of common stock owned by the non-Kelso
securityholders and any of our employees who will, at a later point, become parties to the agreement. Exceptions to this restriction include transfers for estate planning purposes or transfers in connection with certain pledges, so long as any
transferee agrees to be bound by the terms of the securityholders agreement. Warren J. Hayford and Mary Lou Hayford have the right to transfer their shares to third parties with the consent of the Kelso affiliates.

In addition, the non-Kelso securityholders have tag-along rights to sell their shares on a pro rata basis with the Kelso affiliates in
significant sales to third parties. Similarly, the Kelso affiliates have drag-along rights to cause the non-Kelso securityholders to sell their shares on a pro rata basis with the Kelso affiliates in significant sales to third parties.
Our employees who are parties to the securityholders agreement are subject to put and call rights which, subject to certain exceptions, entitle an employee stockholder to require BCO Holding to purchase their shares and which
entitle BCO Holding, subject to certain exceptions, to require the employee stockholder to sell their shares to BCO Holding, upon any termination of the stockholders employment with BCO Holding at differing prices, depending upon the
circumstances of the termination and further subject to a six-month and one day holding period following the date of acquisition of any shares through the exercise of stock options. The securityholders agreement also contains a provision that
requires BCO Holding to offer certain existing stockholders the right to purchase shares of BCO Holding upon a new issuance on a pro rata basis, subject to certain exceptions.

Registration Rights Agreement

On February 7, 2003, BCO Holding entered into a registration rights
agreement with the non-Kelso securityholders. Pursuant to this agreement, the Kelso affiliates have the right to make an unlimited number of requests that BCO Holding register their shares under the Securities Act, and, following the first
anniversary of an initial public offering, Mr. and Mrs. Hayford have the right to make up to two requests for such registration. In any demand registration, all of the parties to the registration rights agreement have the right to
participate on a pro rata basis, subject to certain conditions. In addition, if BCO Holding proposes to register any of its shares (other than registrations related to exchange offers, benefit plans and certain other exceptions), all of the holders
of registration rights under the registration rights agreement have the right to include their shares in the registration statement, subject to certain conditions.

Kelso Arrangements

In connection with the closing of the merger, we paid to Kelso a one-time fee of $4,950,000. In addition, we
entered into an agreement, which requires us to pay to Kelso annual financial advisory fees not to exceed $495,000, reimburse Kelso and certain of its affiliates for their expenses incurred in connection with the transactions and in connection with
any services to be provided by Kelso or any such affiliates to us on a going forward basis, and indemnify Kelso and certain of its affiliates with respect to the Transaction and any services to be provided by Kelso or any such affiliates to us on a
going-forward basis.

Exchange Agreements

BCO
Holding entered into separate exchange agreements, dated as of September 30, 2002, with each of Jean-Pierre M. Ergas, Warren J. Hayford, Mary Lou Hayford, Thomas N. Eagleson, Kevin C. Kern, Jeffrey M. OConnell and Kenneth M. Roessler.
Pursuant to these exchange agreements, immediately prior to the consummation of the merger of BCO Acquisition and BWAY, Mary Lou Hayford exchanged 596,596 shares of common stock of BWAY for 1,193,192 shares of common stock of BCO Holding, and
Jean-Pierre M. Ergas, Warren J. Hayford, Thomas N. Eagleson, Kevin C. Kern, Jeffrey M. OConnell and Kenneth M. Roessler exchanged, in the aggregate, options to acquire 812,910 shares of common stock of BWAY for new options to acquire, in the
aggregate, 1,625,820 shares of common stock of BCO Holding. As a result of the exchange agreements, these continuing investors hold, in the aggregate, shares of BCO Holdings common stock, which, together with options to purchase BCO
Holdings common stock, but without giving effect to the grant of new stock options under BCO Holdings new stock incentive plan, represent approximately 26.1% of the fully diluted equity of BCO Holding.



33



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##### Index to Financial Statements

Item 14. Principal Accounting Fees and Services

Fees paid to Deloitte & Touche LLP  Audit and
non-audit fees

The following table presents fees for professional audit services rendered by Deloitte & Touche LLP, the member
firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, Deloitte & Touche) for the audit of the Companys annual financial statements for the years ended October 1, 2006 and October 2,
2005 and fees billed for tax and other services rendered by Deloitte & Touche during those periods. All of the following fees were approved by the Audit Committee.



|                      |  |             |     |      |   |    
|--------------------- |  | ----------- | --- | ---- | - | ---
|                      |  | Fiscal Year
|(Dollars in millions) |  | 2006        |     | 2005
|Audit Fees            |  | $           | 0.7 |      | $ | 0.6
|Audit Related Fees(1) |  | $           | 0.1 |      | $ | 0.4
|Tax Fees(2)           |  | $           | 0.3 |      | $ | 0.2
|All Other Fees        |  |             |    |      |   |   
|                      |  |             |     |      |   |    
|Total                 |  | $           | 1.1 |      | $ | 1.2
|                      |  |             |     |      |   |    



---

|(1) | Audit Related Fees consist of the assurance and related services that are reasonably related to the performance of the audit or review of the Companys financial statements. We
have included in this category fees related to the performance of audits and attest services not required by statute or regulations, audits of the Companys benefit plans, due diligence related to mergers and acquisitions, review of filings
related to the registration of the Companys senior subordinated notes, review of filings related to mergers and acquisitions and accounting consultations regarding the application of GAAP to proposed transactions.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Tax Fees consist of the aggregate fees billed for professional services rendered by Deloitte & Touche for tax compliance, tax advice and tax planning.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditor

The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent auditor. The Audit Committee assists
the Board of Directors in its oversight of the quality and integrity of the accounting, auditing, and reporting practices of the Company. The Audit Committees role includes discussing with management the Companys processes to manage
business and financial risk, and for compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee is responsible for the appointment, replacement, compensation, and oversight of the independent auditor
engaged to prepare or issue audit reports on the financial statements of the Company. The Audit Committee relies on the expertise and knowledge of management, the internal auditors and the independent auditor in carrying out its oversight
responsibilities.

The audit committee approves all fees incurred by us from Deloitte & Touche LLP.

PART IV

Item 15. Exhibits, Financial Statement Schedules



| | (a) | The following documents are filed as a part of this report:
| | --- | -----------------------------------------------------------



| | (1) | The Consolidated Financial Statements included in Item 8 hereof and set forth on pages F-1 through F-34.
| | --- | --------------------------------------------------------------------------------------------------------



| | (2) | The Financial Statement Schedule listed in the Index to the Financial Statement Schedules on page S-1. Financial Statement Schedules not included in the Index are not applicable.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | The Exhibits listed in the Index to Exhibits at page 33.
| | --- | --------------------------------------------------------



| | (b) | Exhibits. The exhibits required by Item 601 of Regulation S-K are either filed as part of this Annual Report on Form 10-K or are incorporated by reference. See the Index to
Exhibits at page 33.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Financial Statements and Schedules Excluded from Annual Report to Shareholders: None
| | --- | ------------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements as encouraged by the Private
Securities Litigation Reform Act of 1995. All statements contained in this document, other than historical information, are forward-looking statements. These statements represent managements current judgment on what the future holds. A variety
of factors could cause business conditions and the Companys actual results to differ materially from those expected by the Company or expressed in the Companys forward-looking statements. These factors include, without limitation,
competitive risks from substitute products and other container manufacturers, termination of the Companys customer contracts, loss or reduction of business from key customers, dependence on key personnel, changes in steel, resin and other raw
material costs or availability, labor unrest, catastrophic loss of one of the Companys manufacturing facilities, environmental exposures, managements inability to identify or execute selective acquisitions, failures in the Companys
computer systems, unanticipated expenses, delays in implementing cost reduction initiatives, potential equipment malfunctions and the other factors discussed in the Companys filings with the Securities and Exchange Commission. The Company
takes no obligation to update or revise



34



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##### Index to Financial Statements

forward-looking statements to reflect changed assumptions, the occurrences of unanticipated events or changes to future
results of operations.



35



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##### Index to Financial Statements

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



BWAY CORPORATION(Registrant)By

/s/ Jean-Pierre M. ErgasJean-Pierre M. ErgasChairman and Chief Executive OfficerDate

December 28, 2006


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities indicated and on December 28, 2006.



|                         |  |                                                                                                                            
|------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------
|Signatures               |  | Title                                                                                                                      
|/s/ Jean-Pierre M. Ergas |  | Chairman, Chief Executive Officer and Director (Principal Executive Officer)                                               
|Jean-Pierre M. Ergas     | 
|                         | 
|/s/ Kevin C. Kern        |  | Vice-President of Administration and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|Kevin C. Kern            | 
|                         | 
|/s/ Warren J. Hayford    |  | Director                                                                                                                   
|Warren J. Hayford        | 
|                         | 
|/s/ David I. Wahrhaftig  |  | Director                                                                                                                   
|David I. Wahrhaftig      | 
|                         | 
|/s/ Thomas R. Wall, IV   |  | Director                                                                                                                   
|Thomas R. Wall, IV       | 
|                         | 
|/s/ David M. Roderick    |  | Director                                                                                                                   
|David M. Roderick        | 
|                         | 
|/s/ Lawrence A. McVicker |  | Director                                                                                                                   
|Lawrence A. McVicker     | 



36



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##### Index to Financial Statements

INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                                                      
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                          
|2.1           |  | Purchase Agreement, dated November 21, 2002, between BWAY Finance Corp. and Deutsche Bank Securities Inc.(17)                                                                                                                                                                                                                                        
|              | 
|2.2           |  | Agreement and Plan of Merger by and among BCO Holding Company, BCO Acquisition, Inc. and BWAY Corporation, dated as of September 30, 2002.(15)                                                                                                                                                                                                       
|              | 
|2.3           |  | Stock Purchase Agreement by and among BWAY Corporation, North America Packaging Corporation and MVOC LLC dated as of May 28, 2004.(20)                                                                                                                                                                                                               
|              | 
|2.4           |  | Agreement and Plan of Merger by and between BWAY Corporation and BWAY Manufacturing, Inc., dated as of April 13, 2004. (22)                                                                                                                                                                                                                          
|              | 
|3.1           |  | Amended and Restated Certificate of Incorporation of BWAY Corporation, as amended.(17)                                                                                                                                                                                                                                                               
|              | 
|3.2           |  | Form of Certificate of Designation, Preferences and Rights of Junior Participating Preferred Stock, Series A of BWAY Corporation (formerly known as Brockway Standard Holdings
Corporation).(17)                                                                                                                                                     
|              | 
|3.3           |  | Amended and Restated By-laws of BWAY Corporation.(17)                                                                                                                                                                                                                                                                                                
|              | 
|4.1           |  | Indenture, dated as of as of November 27, 2002, between BWAY Finance Corp. and The Bank of New York, as trustee, relating to the 10% Senior Subordinated Notes due 2010.(17)                                                                                                                                                                         
|              | 
|4.2           |  | First Supplemental Indenture, dated as of as of February 7, 2003, among BWAY Corporation, BWAY Finance Corp., BWAY Manufacturing, Inc. and The Bank of New York, as trustee, relating to the 10%
Senior Subordinated Notes due 2010.(17)                                                                                                             
|              | 
|4.3           |  | Assumption Agreement, dated as of as of February 7, 2003, among BWAY Corporation, BWAY Manufacturing, Inc. and BWAY Finance Corp.(17)                                                                                                                                                                                                                
|              | 
|4.4           |  | Form of 10% Senior Subordinated Note due 2010.(17)                                                                                                                                                                                                                                                                                                   
|              | 
|4.5           |  | Registration Rights Agreement, dated as of November 27, 2002, between BWAY Finance Corp. and Deutsche Bank Securities Inc.(17)                                                                                                                                                                                                                       
|              | 
|4.6           |  | Securityholders Agreement, dated as of February 7, 2003, among BCO Holding Company, Kelso Investment Associates VI, L.P., KEP VI, LLC, Magnetite Asset Investors III, L.L.C. and the individuals
named therein.(17)                                                                                                                                  
|              | 
|4.7           |  | Form of certificate representing shares of Common Stock of BWAY Corporation.(2)                                                                                                                                                                                                                                                                      
|              | 
|4.8           |  | Second Supplemental Indenture, dated as of as of July 7, 2004, among North America Packaging Corporation, North America Packaging of Puerto Rico, Inc., SC Plastics LLC, Armstrong Containers,
Inc., BWAY Corporation and The Bank of New York, as trustee, relating to the 10% Senior Subordinated Notes due 2010. (22)                             
|              | 
|4.9           |  | Credit Agreement, dated as of July 17, 2006, among BCO Holding Company, BWAY Corporation, ICL Industrial Containers ULC, various lenders and Deutsche Bank Trust Company Americas, as
administrative agent, LaSalle Bank, N.A., as documentation agent, Deutsche Bank Securities Inc. and J.P. Morgan Securities, Inc., as joint lead arrangers. (23)
|              | 
|4.10          |  | Subsidiaries Guaranty made by each of Armstrong Containers, Inc., SC Plastics LLC, North America Packaging Corporation and North America Packaging of Puerto Rico, Inc., dated as of July 17,
2006.                                                                                                                                                  
|              | 
|4.11          |  | U.S. Security Agreement among BCO Holding Company, BWAY Corporation, Armstrong Containers, Inc., SC Plastics, LLC, North America Packaging Corporation and North America Packaging of Puerto Rico,
Inc., and Deutsche Bank Trust Company Americas as Collateral Agent, dated as of July 17, 2006.                                                    
|              | 
|4.12          |  | Security Agreement dated as of July 17, 2006 made by ICL Industrial Containers ULC, to and in favor of Deutsche Bank Trust Company Americas as Collateral Agent.                                                                                                                                                                                     
|              | 
|4.13          |  | Pledge Agreement among BCO Holding Company, BWAY Corporation, Armstrong Containers, Inc., SC Plastics, LLC, North America Packaging Corporation and North America Packaging of Puerto Rico, Inc.,
and Deutsche Bank Trust Company Americas as Collateral Agent and Pledgee, dated as of July 17, 2006.                                               
|              | 
|              |  | The Registrant will furnish to the Commission, upon request, each instrument defining the rights of holders of long-term debt of the Registrant and its subsidiaries where the amount of such debt
does not exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis.                                    
|              | 
|10.1          |  | Employment Agreement between BWAY Corporation and Warren J. Hayford, dated as of June 1, 1995.#(1)                                                                                                                                                                                                                                                   



37



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##### Index to Financial Statements

|      |  |                                                                                                                                                                                                                      
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.2  |  | Employment Agreement between BWAY Corporation and John T. Stirrup, dated as of June 1, 1995.#(1)                                                                                                                     
|      | 
|10.3  |  | Lease dated February 24, 1995 between Tab Warehouse Fontana II and Brockway Standard, Inc.(1)                                                                                                                        
|      | 
|10.4  |  | Garland, Texas Industrial Net Lease dated January 14, 1985 between MRM Associates and Armstrong Containers, Inc.(1)                                                                                                  
|      | 
|10.5  |  | Lease dated February 11, 1991 between Curto Reynolds Oelerich Inc. and Armstrong Containers, Inc.(1)                                                                                                                 
|      | 
|10.6  |  | Lease Agreement dated November 16, 1996 between Shelby Distribution Park and Brockway Standard, Inc., as amended December 26, 1996.(8)                                                                               
|      | 
|10.7  |  | Lease dated August 9, 1991 between DK Containers, Inc. and Smith Barney Birtcher Institutional Fund-I Limited Partnership and the First Amendment thereto.(1)                                                        
|      | 
|10.8  |  | Employment Agreement between BWAY Corporation and James W. Milton, dated as of May 28, 1996.#(4)                                                                                                                     
|      | 
|10.9  |  | Brockway Standard (Ohio), Inc. Bargaining Unit Savings Plan.#(5)                                                                                                                                                     
|      | 
|10.10 |  | Employment Agreement between BWAY Corporation and John T. Stirrup Amendment No. 1.#(7)                                                                                                                               
|      | 
|10.11 |  | Employment Agreement between BWAY Corporation and John T. StirrupAmendment No. 2.#(9)                                                                                                                               
|      | 
|10.12 |  | Employment Agreement and Options Agreement between BWAY Corporation and Warren J. HayfordOmnibus Amendment.#(10)                                                                                                    
|      | 
|10.13 |  | Lease Agreement dated August 20, 1999 between CRICBW Anderson Trust and Milton Can Company.(10)                                                                                                                      
|      | 
|10.14 |  | BWAY Corporation Fourth Amended and Restated 1995 Long-Term Incentive Plan.#(11)                                                                                                                                     
|      | 
|10.15 |  | Change in Control Agreement, between BWAY Corporation and Kevin C. Kern, dated August 9, 2001.#(12)                                                                                                                  
|      | 
|10.16 |  | Change in Control Agreement, between BWAY Corporation and Kenneth Roessler, dated August 9, 2001.#(12)                                                                                                               
|      | 
|10.17 |  | Separation and Release Agreement between BWAY Corporation and James W. Milton, dated November 2, 2001.#(15)                                                                                                          
|      | 
|10.18 |  | Change in Control Agreement, between BWAY Corporation and Jean-Pierre Ergas, dated August 30, 2001.#(13)                                                                                                             
|      | 
|10.19 |  | Amendment No. 1 to Change in Control Agreement, between BWAY Corporation and Jean-Pierre Ergas effective January 1, 2002.#(13)                                                                                       
|      | 
|10.20 |  | Lease Amendment dated June 20, 2002 by and between Centerpoint Properties Trust (successor to Curto Reynolds Oelerick Inc) and BWAY Corporation (as successor to Armstrong Containers,
Inc.).(14)                    
|      | 
|10.21 |  | Change in Control Agreement, between BWAY Corporation and Jeffrey M. OConnell, dated August 9, 2001.#(16)                                                                                                           
|      | 
|10.22 |  | Amended and Restated Employment Agreement between BWAY Corporation and Jean-Pierre M. Ergas, dated February 7, 2003.#(17)                                                                                            
|      | 
|10.23 |  | Form of BCO Holding Company Nonqualified Stock Option Agreement.#(17)                                                                                                                                                
|      | 
|10.24 |  | Sublease dated December 5, 2003 between Buske Lines, Inc. and BWAY Manufacturing, Inc. (as sublessee). (19)                                                                                                          
|      | 
|10.25 |  | Amended and Restated BCO Holding Company Stock Incentive Plan.# (22)                                                                                                                                                 
|      | 
|10.26 |  | Lease between Southcorp Packaging USA, Inc. and North America Packaging Corporation dated as of June 28, 2001 for the property located in Cleveland, Ohio. (22)                                                      
|      | 
|10.27 |  | Lease between Firleigh Estates, Inc. and North America Packaging Corporation dated as of August 10, 2002 for the property located in Lithonia, Georgia. (22)                                                         
|      | 
|10.28 |  | Lease between Duke Realty Limited Partnership and Southcorp Packaging USA Inc. d/b/a North America Packaging Corporation, as amended, dated November 30, 1998 for the property located in
Indianapolis, Indiana. (22)
|      | 
|10.29 |  | Lease between Carlyle/FR Investors L.L.C. and Southcorp Packaging dated November 1, 1999 for the property located in Indianapolis, Indiana. (22)                                                                     



38



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##### Index to Financial Statements

|      |  |                                                                                                                                                                                                                      
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.30 |  | Lease between Southcorp Packaging USA, Inc. and North America Packaging Corporation dated as of June 28, 2001 for the property located in Valparaiso, Indiana. (22)                                                  
|      | 
|10.31 |  | Lease between Southcorp Packaging North America and North America Packaging Corporation dated as of June 28, 2001 for the property located in Toccoa, Georgia. (22)                                                  
|      | 
|10.32 |  | Lease between Southcorp Packaging USA, Inc. and North America Packaging Corporation dated as of June 28, 2001 for the property located in South Brunswick, New Jersey. (22)                                          
|      | 
|10.33 |  | Lease between Southcorp Puerto Rico, Inc. and North America Packaging Corporation dated as of June 28, 2001 for the property located in Cidra, Puerto Rico. (22)                                                     
|      | 
|10.34 |  | Lease between Southcorp Packaging USA, Inc. and North America Packaging Corporation dated as of June 28, 2001 for the property located in Bryan, Texas. (22)                                                         
|      | 
|10.35 |  | Letter agreement between BWAY Corporation and Thomas K. Linton dated May 28, 2004.# (22)                                                                                                                             
|      | 
|10.36 |  | Asset Purchase Agreement, dated as of June 16, 2006, by and among 3146598 Nova Scotia Company, BWAY Corporation, 6045995 Canada, Inc., 4095138 Canada, Inc., Industrial Containers Ltd. and
Arshinoff & Co. Ltd. (23)
|      | 
|10.37 |  | Lease between 80241 Canada Ltd. and ICL Industrial Containers ULC dated as of July 17, 2006 for the property located on North Queen Street in Toronto, Ontario.                                                      
|      | 
|10.38 |  | Lease between 80241 Canada Ltd. and ICL Industrial Containers ULC dated as of July 17, 2006 for the property located on Hansen Road South in Brampton, Ontario.                                                      
|      | 
|10.39 |  | Lease between 80241 Canada Ltd. and ICL Industrial Containers ULC dated as of July 17, 2006 for the property located on Walker Drive in Brampton, Ontario.                                                           
|      | 
|10.40 |  | Lease between 80241 Canada Ltd. and ICL Industrial Containers ULC dated as of July 17, 2006 for the property located on Calder Place in St. Albert, Alberta.                                                         
|      | 
|14.1  |  | BWAY Corporation Code of Ethics. (18)                                                                                                                                                                                
|      | 
|21.1  |  | Subsidiaries of BWAY Corporation.                                                                                                                                                                                    
|      | 
|31.1  |  | Certification of Chief Executive Officer required by Rule 13a-14(a) (17 C.F.R. 240.13a-14(a)).                                                                                                                       
|      | 
|31.2  |  | Certification of Chief Financial Officer required by Rule 13a-14(a) (17 C.F.R. 240.13a-14(a)).                                                                                                                       
|      | 
|32.1  |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                       

---

|# | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------

|(1) | Incorporated by reference to BWAY Corporations Registration Statement on Form S-1 (File No. 33-91114).
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended October 1, 1995 (File No. 0-26178).
|--- | -----------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended March 31, 1996 (File No. 0-26178).
|--- | -----------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended June 30, 1996 (File No. 0-26178).
|--- | ----------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to BWAY Corporations Registration Statement on Form S-8 filed on October 31, 1997 (File No. 333-39225).
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended September 29, 1996 (File No. 1-12415).
|--- | --------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended March 29, 1998 (File No. 1-12415).
|--- | -----------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended September 28, 1997 (File No. 1-12415).
|--- | --------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended July 4, 1999 (File No. 1-12415).
|--- | ---------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended October 3, 1999 (File No. 1-12415).
|---- | -----------------------------------------------------------------------------------------------------------------------



39



---

##### Table of Contents

##### Index to Financial Statements

|(11) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended April 2, 2000 (File No. 1-12415).
|---- | ----------------------------------------------------------------------------------------------------------------

|(12) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended July 1, 2001 (File No. 1-12415).
|---- | ---------------------------------------------------------------------------------------------------------------

|(13) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended September 30, 2001 (File No. 1-12415).
|---- | --------------------------------------------------------------------------------------------------------------------------

|(14) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended June 30, 2002 (File No. 1-12415).
|---- | ----------------------------------------------------------------------------------------------------------------

|(15) | Incorporated by reference to Exhibit 2.1 in BWAY Corporations Current Report on Form 8-K filed on October 3, 2002 (File No. 1-12415).
|---- | --------------------------------------------------------------------------------------------------------------------------------------

|(16) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended September 29, 2002 (File No. 1-12415).
|---- | --------------------------------------------------------------------------------------------------------------------------

|(17) | Incorporated by reference to BWAY Corporations Registration Statement on Form S-4 (File No. 333-104388).
|---- | ---------------------------------------------------------------------------------------------------------

|(18) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended September 28, 2003 (File No. 1-12415).
|---- | --------------------------------------------------------------------------------------------------------------------------

|(19) | Incorporated by reference to BWAY Corporations Form 10-Q for the period ended January 4, 2004 (File No. 1-12415).
|---- | ------------------------------------------------------------------------------------------------------------------

|(20) | Incorporated by reference to BWAY Corporations Form 8-K filed as of May 28, 2004 (File No. 1-12415).
|---- | -----------------------------------------------------------------------------------------------------

|(21) | Incorporated by reference to BWAY Corporations Form 8-K filed as of July 7, 2004 (File No. 1-12415).
|---- | -----------------------------------------------------------------------------------------------------

|(22) | Incorporated by reference to BWAY Corporations Form 10-K for the fiscal year ended October 3, 2004 (File No. 1-12415).
|---- | -----------------------------------------------------------------------------------------------------------------------

|(23) | Incorporated by reference to BWAY Corporations Form 8-K filed as of July 17, 2006 (File No. 1-12415).
|---- | ------------------------------------------------------------------------------------------------------



40



---

##### Table of Contents

##### Index to Financial Statements

INDEX TO FINANCIAL STATEMENTS



|                                                                                                                         |  |     
|------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                         |  | Page
|Report of Independent Registered Public Accounting Firm                                                                  |  | F-2 
|Consolidated Balance Sheets as of October 1, 2006 and October 2, 2005                                                    |  | F-3 
|Consolidated Statements of Operations for the years ended October 1, 2006, October 2, 2005 and October 3, 2004           |  | F-4 
|Consolidated Statements of Stockholders Equity for the years ended October 1, 2006, October 2, 2005 and October 3, 2004 |  | F-5 
|Consolidated Statements of Cash Flows for the years ended October 1, 2006, October 2, 2005 and October 3, 2004           |  | F-6 
|Notes to the Consolidated Financial Statements                                                                           |  | F-7 



F-1



---

##### Table of Contents

##### Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholder of BWAY Corporation (a
wholly owned

subsidiary of BCO Holding Company):

We have
audited the accompanying consolidated balance sheets of BWAY Corporation and subsidiaries (the Company) as of October 1, 2006 and October 2, 2005, and the related consolidated statements of operations, stockholders
equity, and cash flows for each of the three years in the period ended October 1, 2006. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule
are the responsibility of the Companys management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BWAY Corporation and subsidiaries at October 1, 2006 and October 2, 2005, and the
results of their operations and their cash flows for each of the three years in the period ended October 1, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Interpretation No. 47, Accounting
for Conditional Assets Retirement Obligations, an interpretation of FASB Statement No. 143, in the fourth quarter of fiscal year 2006.



|                         
|-------------------------
|/s/ Deloitte & Touche LLP
|                         
|Atlanta, Georgia         

December 28, 2006



F-2



---

##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED BALANCE SHEETS

BWAY Corporation and Subsidiaries



|                                                                                                |  |      |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|October 1, 2006 and October 2, 2005 (Dollars in thousands, except share data)                   |  | 2006 |         |   | 2005 |  
|Assets                                                                                          |  |      |         |   |      |   |         |  
|                                                                                                |  |     
|CURRENT ASSETS                                                                                  |  |      |         |   |      |   |         |  
|Cash and cash equivalents                                                                       |  | $    | 50,979  |   |      | $ | 51,889  |  
|Accounts receivable, net of allowance for doubtful accounts of $1,702 and $1,613                |  |      | 115,986 |   |      |   | 104,122 |  
|Inventories                                                                                     |  |      | 80,441  |   |      |   | 71,965  |  
|Income taxes receivable                                                                         |  |      | 7,291   |   |      |   |        |  
|Deferred tax assets                                                                             |  |      | 4,038   |   |      |   | 9,174   |  
|Other                                                                                           |  |      | 4,842   |   |      |   | 3,750   |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL CURRENT ASSETS                                                                            |  |      | 263,577 |   |      |   | 240,900 |  
|                                                                                                |  |      |         |   |      |   |         |  
|PROPERTY, PLANT AND EQUIPMENT, NET                                                              |  |      | 142,944 |   |      |   | 142,476 |  
|                                                                                                |  |      |         |   |      |   |         |  
|OTHER ASSETS                                                                                    |  |      |         |   |      |   |         |  
|Goodwill                                                                                        |  |      | 248,687 |   |      |   | 219,218 |  
|Other intangible assets, net                                                                    |  |      | 166,201 |   |      |   | 156,751 |  
|Deferred financing costs, net of accumulated amortization of $4,029 and $4,085                  |  |      | 10,952  |   |      |   | 10,589  |  
|Other                                                                                           |  |      | 1,384   |   |      |   | 2,060   |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL OTHER ASSETS                                                                              |  |      | 427,224 |   |      |   | 388,618 |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL ASSETS                                                                                    |  | $    | 833,745 |   |      | $ | 771,994 |  
|                                                                                                |  |      |         |   |      |   |         |  
|Liabilities and Stockholders Equity                                                            |  |      |         |   |      |   |         |  
|                                                                                                |  |     
|CURRENT LIABILITIES                                                                             |  |      |         |   |      |   |         |  
|Accounts payable                                                                                |  | $    | 118,939 |   |      | $ | 97,968  |  
|Accrued salaries and wages                                                                      |  |      | 13,856  |   |      |   | 13,786  |  
|Accrued interest                                                                                |  |      | 9,837   |   |      |   | 10,803  |  
|Accrued rebates                                                                                 |  |      | 11,091  |   |      |   | 10,104  |  
|Income taxes payable                                                                            |  |      |        |   |      |   | 7,993   |  
|Current portion of long-term debt                                                               |  |      | 20,506  |   |      |   | 30,000  |  
|Other                                                                                           |  |      | 18,360  |   |      |   | 16,537  |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL CURRENT LIABILITIES                                                                       |  |      | 192,589 |   |      |   | 187,191 |  
|                                                                                                |  |      |         |   |      |   |         |  
|LONG-TERM DEBT                                                                                  |  |      | 419,495 |   |      |   | 365,300 |  
|                                                                                                |  |      |         |   |      |   |         |  
|OTHER LIABILITIES                                                                               |  |      |         |   |      |   |         |  
|Deferred tax liabilities                                                                        |  |      | 71,292  |   |      |   | 76,119  |  
|Other                                                                                           |  |      | 22,886  |   |      |   | 19,948  |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL OTHER LIABILITIES                                                                         |  |      | 94,178  |   |      |   | 96,067  |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL LIABILITIES                                                                               |  |      | 706,262 |   |      |   | 648,558 |  
|                                                                                                |  |      |         |   |      |   |         |  
|COMMITMENTS AND CONTINGENCIES (NOTE 14)                                                         |  |      |         |   |      |   |         |  
|                                                                                                |  |     
|STOCKHOLDERS EQUITY                                                                            |  |      |         |   |      |   |         |  
|Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued                  |  |      |        |   |      |   |        |  
|Common stock, $.01 par value, 24,000,000 shares authorized; 1,000 shares issued and outstanding |  |      |        |   |      |   |        |  
|Additional paid-in capital                                                                      |  |      | 112,882 |   |      |   | 104,082 |  
|Retained earnings                                                                               |  |      | 15,098  |   |      |   | 19,701  |  
|Accumulated other comprehensive loss                                                            |  |      | (497    | ) |      |   | (347    | )
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                      |  |      | 127,483 |   |      |   | 123,436 |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                      |  | $    | 833,745 |   |      | $ | 771,994 |  
|                                                                                                |  |      |         |   |      |   |         |  

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.



F-3



---

##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED STATEMENTS OF OPERATIONS

BWAY
Corporation and Subsidiaries



|                                                                                               |  |      |         |   |      |   |         |      |  |   |        
|---------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | -------
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |  | 2006 |         |   | 2005 |   |         | 2004
|NET SALES                                                                                      |  | $    | 918,513 |   |      | $ | 829,109 |      |  | $ | 611,588
|                                                                                               |  |      |         |   |      |   |         |      |  |   |        
|COSTS AND EXPENSES                                                                             |  |      |         |   |      |   |         |      |  |   |        
|Cost of products sold (excluding depreciation and amortization)                                |  |      | 796,401 |   |      |   | 714,039 |      |  |   | 529,064
|Depreciation and amortization                                                                  |  |      | 41,615  |   |      |   | 43,215  |      |  |   | 31,724 
|Selling and administrative expense                                                             |  |      | 29,777  |   |      |   | 22,120  |      |  |   | 14,040 
|Restructuring and impairment charge                                                            |  |      | 1,511   |   |      |   | 5,265   |      |  |   | 352    
|Interest expense, net                                                                          |  |      | 34,660  |   |      |   | 32,165  |      |  |   | 26,889 
|Other expense (income), net                                                                    |  |      | 1,813   |   |      |   | (175    | )    |  |   | 178    
|                                                                                               |  |      |         |   |      |   |         |      |  |   |        
|TOTAL COSTS AND EXPENSES                                                                       |  |      | 905,777 |   |      |   | 816,629 |      |  |   | 602,247
|                                                                                               |  |      |         |   |      |   |         |      |  |   |        
|INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE             |  |      | 12,736  |   |      |   | 12,480  |      |  |   | 9,341  
|Provision for income taxes                                                                     |  |      | 6,941   |   |      |   | 4,351   |      |  |   | 3,634  
|INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                              |  |      | 5,795   |   |      |   | 8,129   |      |  |   | 5,707  
|Cumulative effect of change in accounting principle, net of income taxes of $246               |  |      | (398    | ) |      |   |        |      |  |   |       
|                                                                                               |  |      |         |   |      |   |         |      |  |   |        
|NET INCOME                                                                                     |  | $    | 5,397   |   |      | $ | 8,129   |      |  | $ | 5,707  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |        

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.



F-4



---

##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

BWAY Corporation and Subsidiaries



|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |  | 2006 |         |   | 2005 |   |         | 2004 | 
|COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL                                                    |  |      |         |   |      |   |         |      |  |   |         |  
|Balance, beginning of period                                                                   |  | $    | 104,082 |   |      | $ | 104,022 |      |  | $ | 73,622  |  
|Deferred shares of BCO Holding granted                                                         |  |      |        |   |      |   |        |      |  |   | 400     |  
|Exercise of stock options                                                                      |  |      | 8,800   |   |      |   | 60      |      |  |   |        |  
|Capital contribution of BCO Holding                                                            |  |      |        |   |      |   |        |      |  |   | 30,000  |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|Balance, end of period                                                                         |  |      | 112,882 |   |      |   | 104,082 |      |  |   | 104,022 |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|RETAINED EARNINGS                                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Balance, beginning of period                                                                   |  |      | 19,701  |   |      |   | 11,572  |      |  |   | 5,865   |  
|Net income                                                                                     |  |      | 5,397   |   |      |   | 8,129   |      |  |   | 5,707   |  
|Dividend to BCO Holding                                                                        |  |      | (10,000 | ) |      |   |        |      |  |   |        |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|Balance, end of period                                                                         |  |      | 15,098  |   |      |   | 19,701  |      |  |   | 11,572  |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|ACCUMULATED OTHER COMPREHENSIVE LOSS                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Balance, beginning of period                                                                   |  |      | (347    | ) |      |   | (589    | )    |  |   |        |  
|Minimum pension liability adjustment, net of tax                                               |  |      | (401    | ) |      |   | 242     |      |  |   | (589    | )
|Cumulative foreign currency translation adjustment                                             |  |      | 251     |   |      |   |        |      |  |   |        |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|Balance, end of period                                                                         |  |      | (497    | ) |      |   | (347    | )    |  |   | (589    | )
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                     |  | $    | 127,483 |   |      | $ | 123,436 |      |  | $ | 115,005 |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|COMPREHENSIVE INCOME                                                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Net income                                                                                     |  | $    | 5,397   |   |      | $ | 8,129   |      |  | $ | 5,707   |  
|Additional minimum pension liability, net of tax of $(280), $152 and $(369)                    |  |      | (401    | ) |      |   | 242     |      |  |   | (589    | )
|Cumulative foreign currency translation adjustment                                             |  |      | 251     |   |      |   |        |      |  |   |        |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|TOTAL COMPREHENSIVE INCOME                                                                     |  | $    | 5,247   |   |      | $ | 8,371   |      |  | $ | 5,118   |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  
|COMMON STOCK SHARES ISSUED AND OUTSTANDING                                                     |  |      | 1,000   |   |      |   | 1,000   |      |  |   | 1,000   |  
|                                                                                               |  |      |         |   |      |   |         |      |  |   |         |  

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.



F-5



---

##### Table of Contents

##### Index to Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWS

BWAY Corporation and Subsidiaries



|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|---------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |  | 2006 |          |   | 2005 |   |         | 2004 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                           |  |      |          |   |      |   |         |      |  |   |          |  
|Net income                                                                                     |  | $    | 5,397    |   |      | $ | 8,129   |      |  | $ | 5,707    |  
|Adjustments to reconcile net income to net cash provided by operating activities               |  |      |          |   |      |   |         |      |  |   |          |  
|Depreciation                                                                                   |  |      | 28,101   |   |      |   | 31,353  |      |  |   | 24,136   |  
|Amortization of other intangible assets                                                        |  |      | 13,514   |   |      |   | 11,862  |      |  |   | 7,588    |  
|Amortization of deferred financing costs                                                       |  |      | 2,156    |   |      |   | 2,120   |      |  |   | 1,970    |  
|Deferred financing costs expensed                                                              |  |      | 1,040    |   |      |   |        |      |  |   | 1,252    |  
|Cumulative effect of change in accounting principle, net of tax benefit                        |  |      | 398      |   |      |   |        |      |  |   |         |  
|(Provision for) recovery of doubtful accounts                                                  |  |      | (13      | ) |      |   | (41     | )    |  |   | 178      |  
|Impairment charge                                                                              |  |      |         |   |      |   | 1,000   |      |  |   |         |  
|Loss (gain) on disposition of property, plant and equipment and assets held for sale           |  |      | 98       |   |      |   | (754    | )    |  |   | (57      | )
|Utilization of acquired deferred tax asset                                                     |  |      | 1,659    |   |      |   |        |      |  |   |         |  
|Deferred income taxes                                                                          |  |      | 835      |   |      |   | (6,900  | )    |  |   | 3,334    |  
|Stock-based compensation expense                                                               |  |      | 10,155   |   |      |   | 1,852   |      |  |   | 1,110    |  
|Changes in assets and liabilities, net of effects of business acquisitions                     |  |      |          |   |      |   |         |      |  |   |          |  
|Accounts receivable                                                                            |  |      | (411     | ) |      |   | (23,042 | )    |  |   | (889     | )
|Inventories                                                                                    |  |      | (1,082   | ) |      |   | (12,690 | )    |  |   | 7,526    |  
|Other assets                                                                                   |  |      | (831     | ) |      |   | 639     |      |  |   | 239      |  
|Accounts payable                                                                               |  |      | 15,420   |   |      |   | 31,832  |      |  |   | (9,773   | )
|Accrued and other liabilities                                                                  |  |      | (219     | ) |      |   | 8,091   |      |  |   | 383      |  
|Income taxes, net                                                                              |  |      | (15,284  | ) |      |   | 10,873  |      |  |   | 2,394    |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                      |  |      | 60,933   |   |      |   | 64,324  |      |  |   | 45,098   |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                           |  |      |          |   |      |   |         |      |  |   |          |  
|Capital expenditures                                                                           |  |      | (25,041  | ) |      |   | (20,282 | )    |  |   | (19,066  | )
|Business acquisitions, net of cash acquired                                                    |  |      | (68,427  | ) |      |   | (262    | )    |  |   | (202,307 | )
|Proceeds from disposition of property, plant and equipment and assets held for sale            |  |      | 1,337    |   |      |   | 1,297   |      |  |   | 516      |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|NET CASH USED IN INVESTING ACTIVITIES                                                          |  |      | (92,131  | ) |      |   | (19,247 | )    |  |   | (220,857 | )
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                           |  |      |          |   |      |   |         |      |  |   |          |  
|Net repayments under revolving credit facility                                                 |  |      |         |   |      |   |        |      |  |   | (17,170  | )
|Proceeds from term loan                                                                        |  |      | 240,000  |   |      |   |        |      |  |   | 225,000  |  
|Repayments of term loan                                                                        |  |      | (195,927 | ) |      |   | (19,700 | )    |  |   | (10,000  | )
|Capital contribution from BCO Holding                                                          |  |      |         |   |      |   |        |      |  |   | 30,000   |  
|Dividend paid to BCO Holding                                                                   |  |      | (10,000  | ) |      |   |        |      |  |   |         |  
|Proceeds from stock option exercise                                                            |  |      |         |   |      |   | 40      |      |  |   |         |  
|Decrease in unpresented bank drafts in excess of cash available for offset                     |  |      |         |   |      |   | (621    | )    |  |   | (18,072  | )
|Principal repayments under capital leases                                                      |  |      | (241     | ) |      |   | (232    | )    |  |   | (117     | )
|Financing costs incurred                                                                       |  |      | (3,544   | ) |      |   |        |      |  |   | (6,805   | )
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                            |  |      | 30,288   |   |      |   | (20,513 | )    |  |   | 202,836  |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                           |  |      | (910     | ) |      |   | 24,564  |      |  |   | 27,077   |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                 |  |      | 51,889   |   |      |   | 27,325  |      |  |   | 248      |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                       |  | $    | 50,979   |   |      | $ | 51,889  |      |  | $ | 27,325   |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|SUPPLEMENTAL DISCLOSURES                                                                       |  |      |          |   |      |   |         |      |  |   |          |  
|Cash paid (refunded) during the period for:                                                    |  |      |          |   |      |   |         |      |  |   |          |  
|Interest                                                                                       |  | $    | 33,200   |   |      | $ | 29,866  |      |  | $ | 22,595   |  
|Income taxes                                                                                   |  |      | 19,833   |   |      |   | 378     |      |  |   | (2,493   | )
|Detail of business acquisitions                                                                |  |      |          |   |      |   |         |      |  |   |          |  
|Fair value of assets acquired                                                                  |  |      | 74,597   |   |      |   | 221     |      |  |   | 290,461  |  
|Liabilities (assumed ) adjusted                                                                |  |      | (6,170   | ) |      |   | 41      |      |  |   | (88,154  | )
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  
|Cash paid for business acquisitions, net                                                       |  |      | 68,427   |   |      |   | 262     |      |  |   | 202,307  |  
|Non-cash investing and financing activities                                                    |  |      |          |   |      |   |         |      |  |   |          |  
|Amounts owed for capital expenditures                                                          |  |      | 642      |   |      |   | 897     |      |  |   | 1,062    |  
|Assets acquired through capital leases                                                         |  |      |         |   |      |   | 81      |      |  |   | 560      |  
|Grant of deferred shares in conjunction with the NAMPAC Acquisition                            |  |      |         |   |      |   |        |      |  |   | 400      |  
|                                                                                               |  |      |          |   |      |   |         |      |  |   |          |  

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.



F-6



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BWAY Corporation and Subsidiaries

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Operations

BWAY Corporation
(BWAY, we, our or the Company) manufactures and distributes metal and rigid plastic containers that are used primarily by manufacturers of industrial and consumer products for packaging. We have
operations in the United States and Canada and primarily sell to customers located in these geographic markets.

We are a wholly owned
subsidiary of BCO Holding Company (BCO Holding), an affiliate of Kelso & Company, L.P., as a result of a leveraged buyout completed on February 7, 2003 (the Transaction). The Transaction was accounted for as a
purchase in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and Emerging Issues Task Force (EITF) Issue 88-16, Basis in Leveraged Buyout Transactions. As
such, the acquired assets and assumed liabilities were recorded at fair market value for the interests acquired and liabilities assumed by new investors and at carryover basis for continuing investors. The acquired assets and assumed liabilities
were assigned new book values in the same proportion as the residual interests of the continuing investors and the new interests acquired by the new investors. References herein to Predecessor refer to the Company prior to the
Transaction.

In the fourth quarter of 2006, we acquired substantially all of the assets of Industrial Containers Ltd, a Canadian
manufacturer of rigid plastic containers and steel pails. In the fourth quarter of 2004, we acquired all of the issued and outstanding common stock of North America Packaging Corporation (NAMPAC), a manufacturer of rigid plastic
containers. See Note 2 regarding these acquisitions.

Principles of Consolidation and Basis of Presentation

The Consolidated Financial Statements include the accounts of BWAY and its subsidiaries, each wholly owned. We have eliminated all significant
intercompany accounts and transactions. Results of operations related to acquisitions are included from the date of acquisition. Certain prior period amounts have been reclassified to conform to the current period for presentation purposes.

Our fiscal year ends on the Sunday closest to September 30. Fiscal years 2006, 2005 and 2004 ended October 1,
2006, October 2, 2005 and October 3, 2004, respectively. Fiscal years 2006 and 2005 consisted of 52 weeks and fiscal year 2004 consisted of 53 weeks. Our NAMPAC and ICL subsidiaries report their financial position and results of
operations on a calendar month basis with fiscal years ending on September 30 and have been consolidated as of September 30, 2006 and September 30, 2005 and for the years then ended and for the year ended September 30, 2004.
There were no significant or unusual transactions between the calendar month and fiscal month ending dates that should have been considered in the Consolidated Financial Statements.

Unless otherwise stated, references to years in these consolidated financial statements relate to fiscal years rather than to calendar years.

We have prepared the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America
(GAAP). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Our Consolidated Financial Statements include amounts that are based on managements best estimates and judgments. Actual
results could differ from those estimates and assumptions.

All references in these consolidated financial statements to U.S. based
subsidiaries or operations include the Commonwealth of Puerto Rico, unless otherwise indicated.

Stock-Based Compensation

We account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion 25,
Accounting for Stock Issued to Employees, and related interpretations (APB 25). Accordingly, we are not required to record compensation expense when the exercise price of stock options granted to employees or directors is equal to
or greater than the fair market value of the stock when the option is granted.

In December 2004, the Financial Accounting Standards Board
(the FASB) issued SFAS 123 (revised 2004), Share-Based Payment (SFAS 123R), which eliminates the ability to account for share based compensation transactions using APB 25 and generally requires that such transactions
be accounted for using a fair value-based method with the resulting compensation cost recognized over the period that the employee is required to provide service in order to receive their compensation. SFAS 123R also amends SFAS 95, Statement of
Cash Flows, requiring the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow rather than as an operating cash flow as currently required. For purposes of SFAS 123R, a nonpublic
entity as defined in the Statement includes entities that have only debt securities trading in a public market.

We adopted SFAS 123R
as of the required effective date for nonpublic entities, which, for us, was October 2, 2006, using the prospective transition method. Under the prospective transition method, compensation cost is recognized in the
financial statements beginning with the effective date for all new awards and to awards modified, repurchased or cancelled after the required



F-7



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

effective date. As such, the adoption of the Statement did not result in a cumulative effect of a change in accounting principle. However, SFAS 123R will have an impact on our consolidated financial statements
for new awards and for awards modified, repurchased or cancelled after the required effective date. Under SFAS 123R, we are no longer required to provide, after adoption of the Statement, pro forma disclosures for outstanding awards that we continue
to account for under the intrinsic value method previously allowed under APB 25.

In March 2005, the Securities and Exchange Commission
(the SEC) released SEC Staff Accounting Bulletin (SAB) 107, Share-Based Payment (SAB 107). SAB 107 provides the SEC staffs position regarding the implementation of SFAS 123R. SAB No. 107 contains
interpretive guidance related to the interaction between SFAS 123R and certain SEC rules and regulations, as well as provides the staffs views regarding the valuation of share-based payment transactions. The guidance of SAB 107 will be
followed in association with our adoption of SFAS 123R.

The following table illustrates the pro forma effect on net income if we had
determined stock-based compensation based on the fair value-based method of SFAS 123, Accounting for Stock-Based Compensation, using a minimum value methodology, which excludes the effects of volatility of our stock price on the
fair value of the option since our equity securities are not publicly traded.



|                                                                                             |  |      |       |   |      |   |        |      |  |   |        |  
|-------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004                      |  |      |       |   |      |   |        |      | 
|(Dollars in thousands)                                                                       |  | 2006 |       |   | 2005 |   |        | 2004 | 
|Net income                                                                                   |  | $    | 5,397 |   |      | $ | 8,129  |      |  | $ | 5,707  |  
|Add: Stock-based compensation included in reported net income, net of related tax effects(1) |  |      | 4,620 |   |      |   | 1,206  |      |  |   | 683    |  
|Less: Pro forma stock-based compensation under SFAS 123, net of related tax effects          |  |      | (950  | ) |      |   | (2,707 | )    |  |   | (2,463 | )
|                                                                                             |  |      |       |   |      |   |        |      |  |   |        |  
|PRO FORMA NET INCOME                                                                         |  | $    | 9,067 |   |      | $ | 6,628  |      |  | $ | 3,927  |  
|                                                                                             |  |      |       |   |      |   |        |      |  |   |        |  

---

|(1) | Stock-based compensation included in net income, net of related tax effects, recorded in 2005 and 2004 relates to stock options issued pursuant to the Holding Incentive Plan (see
Note 8). Of the stock-based compensation included in net income, net of related tax effects, recorded in 2006, approximately 0.6 million relates to stock options issued pursuant to the Holding Incentive Plan and approximately $4.0 million
relates to the cash settlement of Exchange Options exercised (see Note 7). Under SFAS 123, no additional compensation expense is recognized for cash settlements of outstanding awards, which is why pro forma stock-based compensation
expense for 2006 is less than stock-based compensation under APB 25.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The weighted-average grant date fair value of
each option granted during 2006, 2005 and 2004 was $9.68, $2.39 and $3.80, respectively.

In determining the pro forma disclosures above,
the fair value of options granted was estimated on the date of grant using the Black-Scholes option-pricing model and assumptions appropriate to the plan. The Black-Scholes model was developed to estimate the fair value of traded options, which have
different characteristics than the employee stock options we grant, and changes to the subjective assumptions used in the model can result in different fair value estimates. The weighted average grant date fair values for the options granted in
2006, 2005 and 2004 were based on the following assumptions:



|                                                                        |  |      |   |  |      |   |  |      |  
|----------------------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3,
2004 |  | 2006 |   |  | 2005 |   |  | 2004 |  
|Expected dividend yield                                                 |  | 0.0  | % |  | 0.0  | % |  | 0.0  | %
|Expected volatility                                                     |  | 0.0  | % |  | 0.0  | % |  | 0.0  | %
|Risk-free interest rate                                                 |  | 4.7  | % |  | 3.8  | % |  | 4.0  | %
|Expected life (in years)                                                |  | 10.0 |   |  | 3.5  |   |  | 4.0  |  

Cash and Cash Equivalents

We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded net of an allowance for
uncollectibility. The allowance for doubtful accounts is based on managements assessment of the collectibility of customer accounts. We regularly review the allowance by considering factors such as historical experience, credit quality, the
age of the accounts receivable balances and current economic conditions that may affect a customers ability to pay.

Inventories

Inventories are carried at the lower of cost or market. Generally, inventory is determined under the last-in, first-out (LIFO) method of inventory
valuation. However, inventory totaling approximately $7.1 million at our ICL subsidiary is determined under the first-in, first-out (FIFO) method of inventory valuation. We estimate reserves for inventory obsolescence and shrinkage based on
managements judgment of future realization. Projected inventory losses are recognized at the time the loss is probable rather than when the goods are ultimately sold.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets. Generally, estimated useful lives are 30 years for buildings and improvements, 5 to 15 years for machinery and equipment, 5 to 7
years for furniture and fixtures and 3 years for computer information systems.



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

We amortize leasehold improvements over the lesser of the estimated useful lives or the remaining underlying lease term. We depreciate equipment under
capital leases using the straight-line method over the lesser of the estimated useful life or the term of the lease. We periodically assess the appropriateness of and make revisions to the remaining estimated useful lives of property, plant and
equipment. For leasehold improvements acquired in a business combination or purchased subsequent to the inception of a lease after June 2005, we amortize these improvements over the lesser of the useful life of the assets or the term of the lease
including renewals that are reasonably assured at the date of the business combination or purchase.

We capitalize expenditures for major
renewals and replacements and charge against income expenditures for maintenance and repairs. When we retire or otherwise dispose of property, plant and equipment, we remove the asset balances from the related asset and accumulated depreciation
accounts, and we credit or charge to operations any resulting gain or loss, respectively.

We capitalize interest in connection with the
installation of major machinery and equipment. Capitalized interest is recorded as part of the cost of the related asset and is depreciated over the assets estimated useful life. Interest capitalized in 2006, 2005 and 2004 was immaterial.

We include assets under capital leases and the related amortization in property, plant and equipment and depreciation expense,
respectively.

Goodwill and Other Intangible Assets

Indefinite-lived identifiable intangibles and goodwill are not amortized, but tested for impairment at least annually. We perform an impairment test for our indefinite-lived intangible assets by comparing the fair
value of indefinite-lived intangible assets to their carrying value. The fair value of the assets is estimated based on discounted future cash flows. We recognize an impairment charge if the carrying value of the assets exceed their estimated fair
value. There were no impairments of indefinite-lived intangibles during 2006, 2005 or 2004.

Goodwill represents the excess of the purchase
price over the fair value of net assets acquired. We test goodwill for impairment annually or more frequently if an event occurs or circumstances change that more likely than not reduce the value of the reporting unit below its carrying value. For
purposes of goodwill impairment testing, we compare the fair value of each reporting unit with its carrying amount, including goodwill. Each of our two operating divisions is considered a reporting unit for goodwill impairment testing. The fair
value of each reporting unit is determined based on expected discounted future cash flows. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired. If goodwill is considered impaired, the impairment loss to
be recognized is measured by the amount by which the carrying amount of goodwill exceeds implied fair value of that goodwill. We performed our annual impairment test at the end of 2006. For purposes of our annual goodwill impairment test, we
obtained an independent valuation of our reporting units. Based on a comparison of the independent valuation to the carrying value of each reporting unit, we determined that goodwill was not impaired at the end of 2006. Our annual impairment tests
for 2005 and 2004 did not indicate an impairment of goodwill.

Our other intangible assets consist of finite-lived and indefinite-lived
identifiable intangibles. We amortize our acquired finite-lived, identifiable intangible assets over their remaining useful lives in proportion to the underlying cash flows that were used in determining the acquired value. A portion of these
intangibles represent basis carried over in the Transaction; these continue to be amortized on a straight-line basis. Our finite-lived intangibles are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount of any asset may not be recoverable based on estimates of future undiscounted cash flows. In the event of impairment, the asset would be written down to its fair market value as estimated by future discounted cash flows. Indefinite-lived
identifiable intangibles are tested in the same manner as goodwill, as discussed above. There were no impairments of other intangible assets recognized in 2006, 2005 or 2004.

Deferred Financing Costs

We amortize deferred financing costs to interest expense over the term of
the related financing agreement using the straight-line method for costs associated with financing having a single payoff date and using a declining balance method for costs associated with financing having scheduled payoffs, each of which
approximates the effective yield method.

Foreign Currency Translation

The financial statements of our non-U.S. subsidiary are translated into U.S. dollars for financial reporting purposes. The cumulative translation adjustments are reflected in stockholders equity. Assets and
liabilities are translated at the rate of exchange on the balance sheet date, while revenues and expenses are translated at average exchange rates during the year.

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, our products have been shipped
and title and risk of loss have passed, the sales amount is fixed or determinable and collectibility of the amount billed is probable. We record provisions for discounts, returns, allowances, customer rebates and other adjustments in the same period
as the related revenues are recorded. We do not engage in revenue arrangements with multiple deliverables.



F-9



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

Accrued Rebates

We provide volume rebates to our customers on certain products. We accrue a
provision for these rebates, which is recognized as a reduction of net sales, in the period that the goods are shipped. Accrued rebates may be settled in cash or as a credit against customer accounts receivable.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the
carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If these assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets.

Assets to be disposed of are recorded at the lower of net book value or fair market value
less cost to sell at the date management commits to a plan of disposal. Assets to be disposed of are reclassified to other current assets on the consolidated balance sheets. At the end of 2005, assets held for sale in other current assets was
approximately $0.6 million.

Fair Value of Financial Instruments

Due to variable interest rates that change on a relative short-term basis, we consider the historical carrying value of our Term Loan borrowings to be a reasonable estimate of their fair value. The fair value of our
publicly held Senior Notes is estimated based on the quoted bid price for these debt instruments and was approximately $210.0 and $211.0 million at the end of 2006 and 2005, respectively. The Term Loans and Senior Notes are further described in Note
6. In addition, we consider the carrying value of cash and cash equivalents, trade accounts receivable and trade accounts payable to approximate fair value. Our estimates of fair value involve judgment and are not necessarily indicative of the
amounts that could be realized or paid in a current market exchange.

Derivative Financial Instruments and Hedging Activities

We do not enter into or hold derivatives for trading or hedging purposes. We review our contracts for embedded derivatives that would require separate
reporting and disclosure.

Income Taxes

We account for income taxes in accordance with SFAS 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. In accordance with SFAS 109, deferred income tax
assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods
in which the differences are expected to affect taxable income.

Earnings per Share

We are not required to present earnings per share information because our common stock is not publicly traded.

Comprehensive Income

Comprehensive income includes
net income, adjustments to the minimum pension liability, net of tax, and foreign currency translation adjustments.

The components of
accumulated other comprehensive loss are as follows:



|                                                   |  |      |      |   |      |   |      |  
|-------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|October 1, 2006 and October 2, 2005                |  |      |      |   |      |  
|(Dollars in thousands)                             |  | 2006 |      |   | 2005 |  
|Minimum pension liability adjustment, net of tax   |  | $    | (748 | ) |      | $ | (347 | )
|Cumulative foreign currency translation adjustment |  |      | 251  |   |      |   |     |  
|                                                   |  |      |      |   |      |   |      |  
|TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS         |  | $    | (497 | ) |      | $ | (347 | )
|                                                   |  |      |      |   |      |   |      |  

Conditional Asset Retirement Obligations

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligationsan interpretation of FASB
Statement No. 143 (FIN 47). FIN 47 is an interpretation of SFAS 143,Accounting for Asset Retirement Obligations, which applies to all entities and addresses the legal obligations with the retirement of tangible
long-lived assets that result from the acquisition, construction, development or normal operation of a long-lived asset. The Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the



F-10



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

period in which it is incurred if a reasonable estimate of fair value can be made even though uncertainty exists about the timing and/or method of settlement. FIN 47 further clarifies the meaning of conditional
asset retirement obligation with respect to recording the asset retirement obligation discussed in SFAS 143. Upon adoption of FIN 47 in the fourth quarter of 2006, we recorded an increase in property, plant and equipment of $0.6 million and
recognized an asset retirement obligation of $1.2 million. This resulted in the recognition of a non-cash charge of $0.4 million, net of a $0.2 deferred tax benefit, for 2006 that was reported as a cumulative effect of an accounting change. Pursuant
to FIN 47, the financial statements for periods prior to October 1, 2006 have not been restated. If FIN 47 had been in effect in prior periods, we would have recorded asset retirement obligations of approximately $1.0 million and $0.9 million
at October 2, 2005 and October 3, 2004, respectively.

Recently Issued Accounting Standards

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error CorrectionsA Replacement of APB Opinion No. 20 and FASB
Statement No. 3 (SFAS No. 154). SFAS No. 154 requires retrospective application to prior periods financial statements for changes in accounting principle, unless it is impracticable to determine either the period
specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle,
such as a change in nondiscretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the accounting change. SFAS 154 also requires that a change in depreciation, amortization, or depletion method
for long-lived non-financial assets be accounted for as a change in accounting estimate affected by a change in accounting principle. SFAS 154 is effective for us beginning in 2007. However, the Statement does not change the transition provisions of
any of the existing accounting pronouncements. SFAS 154 is effective for accounting changes and errors in previously issued financial statements made in fiscal years beginning after December 15, 2005, which for us is the beginning of 2007. We
will follow the provisions of this Statement in the event of any future accounting changes.

In July 2006, the FASB issued FASB
Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109 (FIN 48). This interpretation clarifies the accounting for uncertainty in tax positions taken or expected
to be taken in a tax return and requires that we recognize in our financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. This
interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements for uncertain tax positions. The provisions of FIN 48 are effective for us at the beginning of
2008 (October 2007). We are currently evaluating the impact of FIN 48 on our consolidated financial statements.

In September 2006, the SEC
issued SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 states that registrants should use both a balance sheet approach and an
income statement approach when quantifying and evaluating the materiality of a misstatement. The interpretations in SAB 108 contain guidance on correcting errors under the dual approach as well as provide transition guidance for correcting errors.
This interpretation does not change the requirements within SFAS 154 for the correction of an error on financial statements. SAB 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006,
which, for us, is fiscal 2007 ending September 30, 2007. We are currently evaluating the impact of SAB 108 on our consolidated financial statements.

In September 2006, the FASB issued SFAS 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair
value measurements. SFAS 157 is effective for us at the beginning of 2009 (October 2008). We are currently evaluating the impact of SFAS 157 on our consolidated financial statements.

In September 2006, the FASB issued SFAS 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of
FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). This Statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or
liability on its statement of financial position. SFAS 158 also requires an employer to recognize changes in that funded status in the year in which the changes occur through comprehensive income. In addition, this statement requires an employer to
measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. Since we do not have publicly traded equity securities, SFAS 158 is effective for us at the end of the fiscal year ending
after June 15, 2007, which is fiscal 2007 ending September 30, 2007. We are currently evaluating the impact of SFAS 158 on our consolidated financial statements.

2. ACQUISITIONS

NAMPAC Acquisition

On July 7, 2004, we acquired all of the issued and outstanding shares of stock of NAMPAC, a manufacturer of rigid plastic containers for industrial
packaging markets, from MVOC, LLC, a Delaware limited liability company and sole owner of the common shares of NAMPAC (the NAMPAC Acquisition). As a result of the acquisition, NAMPAC became a wholly owned subsidiary of BWAY. We paid
approximately $202.8 million in cash, net of cash acquired, for the acquisition, which was funded by a $30.0 million equity contribution from Kelso and certain members of our senior management and from a portion of the proceeds from a $225.0 million
term loan facility. The term loan facility is further discussed in Note 6. The results of operations related to this acquisition are included in the consolidated financial statements from the date of acquisition. Included in the purchase price



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

is approximately $2.3 million in transaction costs associated with the acquisition. The purchase price was subject to a working capital adjustment, which was finalized and received in September 2004 and is reflected
in the purchase price.

The NAMPAC transaction enabled us to expand the scale of our plastic container offerings, which were first
established with the SST Industries asset acquisition in August 2003. We believe the rigid plastic container segment is important to our growth, and the acquisition enables us to serve our customers with a more diverse product offering.

The acquisition was accounted for as a purchase in accordance with SFAS 141, Business Combinations. As such, the assets and liabilities have
been recorded at fair market value. We allocated the purchase price based on our estimates and with the assistance of an independent appraiser. The purchase price allocation was adjusted in 2006 for a correction to a vacation liability and for the
utilization of an acquired deferred tax asset, net of contingency, that was not previously recorded (see Note 5).

The following is a
summary of the final allocation of fair values of the assets and liabilities, as adjusted, related to the acquisition:



|                                                  |  |   |        
|------------------------------------------------- |  | - | -------
|July 7, 2004                                      |  |  
|(Dollars in thousands)                            |  |  
|Current assets                                    |  | $ | 46,121 
|Property, plant and equipment                     |  |   | 42,289 
|Intangible assets subject to amortization         |  |   | 104,828
|Goodwill                                          |  |   | 98,894 
|Other assets                                      |  |   | 284    
|                                                  |  |   |        
|Total assets                                      |  |   | 292,416
|                                                  |  |   |        
|Current liabilities                               |  |   | 37,670 
|Other liabilities                                 |  |   | 51,989 
|                                                  |  |   |        
|Total liabilities                                 |  |   | 89,659 
|                                                  |  |   |        
|CASH PURCHASE PRICE, NET OF $11,351 CASH ACQUIRED |  | $ | 202,757
|                                                  |  |   |        

We allocated goodwill and intangible assets resulting from the acquisition to our plastics
packaging segment. The weighted-average life of the acquired intangible assets subject to amortization is approximately 17.5 years. Goodwill resulting from this acquisition is not deductible for income tax purposes.

ICL Acquisition

On July 17, 2006, we acquired
substantially all of the assets and assumed certain of the liabilities of Industrial Containers, Ltd., (ICL Ltd.) a Toronto based manufacturer of rigid plastic containers and steel pails for industrial packaging markets (the ICL
Acquisition). The net assets were acquired by ICL Industrial Containers ULC (ICL), a wholly owned subsidiary of BWAY created to effectuate the acquisition. We paid approximately $68.4 million in cash for the acquisition, which was
funded by $50.0 million in term loan borrowings by ICL and from a portion of the proceeds of additional term loan borrowings by BWAY. The term loans are further discussed in Note 6. The results of operations related to this acquisition are included
in the consolidated financial statements from the date of acquisition. Included in the purchase price is approximately $1.7 million in transaction costs associated with the acquisition. The purchase price also includes purchase price adjustments of
approximately $0.4 million, which will be paid in 2007.

The ICL Acquisition enables us to expand in the Canadian market. We believe
geographic expansion is important to our growth.

We recorded the assets acquired and liabilities assumed at fair market value in
accordance with SFAS No. 141. We allocated the purchase price based on our estimates and with the assistance of an independent appraiser. Although we believe the purchase price allocation is substantially complete, the finalization of certain
tax allocations or transaction costs, among other things, could result in an adjustment to the allocation.

The following is a summary of
the initial allocation of fair value of the assets acquired and liabilities assumed in the transaction:



|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|July 17, 2006                             |  |   |       
|(Dollars in thousands)                    |  |   |       
|Current assets                            |  | $ | 18,735 |  
|Property, plant and equipment             |  |   | 4,063  |  
|Intangible assets subject to amortization |  |   | 22,679 |  
|Goodwill                                  |  |   | 29,166 |  
|                                          |  |   |        |  
|Total assets                              |  |   | 74,643 |  
|                                          |  |   |        |  
|Less: Current liabilities                 |  |   | (6,216 | )
|                                          |  |   |        |  
|NET ASSETS ACQUIRED                       |  |   | 68,427 |  
|                                          |  |   |        |  

Goodwill and intangible assets resulting from the acquisition have been allocated to each of our
metal and plastics packaging segment based on estimated fair value. See Note 5. The weighted-average life of the acquired intangible assets subject to amortization is approximately 13 years. Goodwill resulting from this acquisition is not deductible
for U.S. income tax purposes.



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

3. INVENTORIES



|                                    |  |      |         |   |      |   |         |  
|----------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|October 1, 2006 and October 2, 2005 |  |      |         |   |      |  
|(Dollars in thousands)              |  | 2006 |         |   | 2005 |  
|Raw materials                       |  | $    | 26,212  |   |      | $ | 28,999  |  
|Work-in-progress                    |  |      | 39,181  |   |      |   | 29,737  |  
|Finished goods                      |  |      | 32,894  |   |      |   | 25,316  |  
|Inventories at FIFO cost            |  |      | 98,287  |   |      |   | 84,052  |  
|LIFO reserve                        |  |      | (17,846 | ) |      |   | (12,087 | )
|                                    |  |      |         |   |      |   |         |  
|INVENTORIES                         |  | $    | 80,441  |   |      | $ | 71,965  |  
|                                    |  |      |         |   |      |   |         |  

During 2006 and 2004, as a result of reduced inventory quantities, LIFO inventory quantities
carried at lower costs were liquidated which resulted in an increase in income before taxes and cumulative effect of change in accounting principle of approximately $3.0 million and $0.6 million, respectively. There was no LIFO liquidation in 2005.
The liquidation results in additional earnings due to LIFO inventories valued at costs prevailing in prior years that were lower than the costs of current purchases.

4. PROPERTY, PLANT AND EQUIPMENT



|                                                     |  |      |         |   |      |   |         |  
|---------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|October 1, 2006 and October 2, 2005                  |  |      |         |   |      |  
|(Dollars in thousands)                               |  | 2006 |         |   | 2005 |  
|Land                                                 |  | $    | 3,272   |   |      | $ | 3,063   |  
|Buildings and improvements                           |  |      | 13,740  |   |      |   | 12,609  |  
|Machinery and equipment                              |  |      | 203,168 |   |      |   | 181,031 |  
|Furniture, fixtures and computer information systems |  |      | 15,019  |   |      |   | 13,518  |  
|Construction-in-progress                             |  |      | 7,454   |   |      |   | 9,669   |  
|                                                     |  |      |         |   |      |   |         |  
|                                                     |  |      | 242,653 |   |      |   | 219,890 |  
|Accumulated depreciation                             |  |      | (99,709 | ) |      |   | (77,414 | )
|                                                     |  |      |         |   |      |   |         |  
|PROPERTY, PLANT AND EQUIPMENT, NET                   |  | $    | 142,944 |   |      | $ | 142,476 |  
|                                                     |  |      |         |   |      |   |         |  

5. GOODWILL AND OTHER INTANGIBLE ASSETS

The change in the net carrying amount of goodwill for 2006 and 2005 by reportable segment:



|                                                                  |  |                |         |                   |   |         |       |  |   |         |  
|----------------------------------------------------------------- |  | -------------- | ------- | ----------------- | - | ------- | ----- |  | - | ------- | -
|(Dollars in thousands)                                            |  | MetalPackaging |         | PlasticsPackaging |   |         | Total | 
|BALANCE, OCTOBER 3, 2004                                          |  | $              | 112,556 |                   | $ | 107,741 |       |  | $ | 220,297 |  
|Adjustments related to the NAMPAC Acquisition(1)                  |  |                |        |                   |   | (1,079  | )     |  |   | (1,079  | )
|                                                                  |  |                |         |                   |   |         |       |  |   |         |  
|BALANCE, OCTOBER 2, 2005                                          |  |                | 112,556 |                   |   | 106,662 |       |  |   | 219,218 |  
|Correction related to the NAMPAC Acquisition(2)                   |  |                |        |                   |   | 667     |       |  |   | 667     |  
|Utilization of acquired deferred tax asset, net of contingency(3) |  |                |        |                   |   | (731    | )     |  |   | (731    | )
|Additions related to the ICL Acquisition                          |  |                | 7,677   |                   |   | 21,489  |       |  |   | 29,166  |  
|Currency translation adjustment                                   |  |                | 95      |                   |   | 272     |       |  |   | 367     |  
|                                                                  |  |                |         |                   |   |         |       |  |   |         |  
|BALANCE, OCTOBER 1, 2006                                          |  | $              | 120,328 |                   | $ | 128,359 |       |  | $ | 248,687 |  
|                                                                  |  |                |         |                   |   |         |       |  |   |         |  

---

|(1) | Purchase accounting adjustments primarily related to net operating loss carryforwards, which resulted in an increase in deferred tax assets, net of a valuation
allowance, and a reduction in goodwill of approximately $0.9 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | During the implementation of an automated time keeping system in the first quarter of fiscal 2006 at facilities acquired in the NAMPAC Acquisition, we determined
that the accrued vacation liability recorded as part of the purchase price allocation for the NAMPAC Acquisition was understated by approximately $0.7 million due to differences between actual pay practices and documentation provided and used to
determine the purchase price allocation. We recorded an adjustment of $0.7 million to the accrued salaries and wages liability related to accrued vacation in the consolidated balance sheet as of January 1, 2006 with an offsetting increase to
goodwill. Based on the amount of this adjustment and the impact on previously reported financial statements, management determined that such previously issued financial statements were not materially misstated.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | In the third quarter of fiscal 2006, we reduced goodwill for approximately $1.7 million related to the utilization of a deferred tax asset associated with a net
operating loss carryforward acquired in the NAMPAC Acquisition. However, a portion of the net operating loss carryforward is currently under review by the Internal Revenue Service. As such, we have established a contingent liability for
approximately $1.0 million (and increased goodwill) based on our estimate of net operating loss carry forwards that are probable of disallowance by the Internal Revenue Service.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

Identifiable intangible assets by major asset class:



|                                                           |  |                     |         |                         |   |         |     |  |                     |         |                         |   |         |     |   |         |   |  |   |        
|---------------------------------------------------------- |  | ------------------- | ------- | ----------------------- | - | ------- | --- |  | ------------------- | ------- | ----------------------- | - | ------- | --- | - | ------- | - |  | - | -------
|                                                           |  | 2006                |         | 2005                   
|October 1, 2006 and October 2, 2005 (Dollars in thousands) |  | GrossCarryingAmount |         | AccumulatedAmortization |   |         | Net |  | GrossCarryingAmount |         | AccumulatedAmortization |   |         | Net
|AMORTIZABLE INTANGIBLES ASSETS                             |  |                     |         |                         |   |         |     |  |                     |         |                         |   |         |     |   |         |   |  |   |        
|Customer relationships                                     |  | $                   | 177,873 |                         | $ | (33,601 | )   |  | $                   | 144,272 |                         | $ | 158,060 |     | $ | (21,924 | ) |  | $ | 136,136
|Tradenames                                                 |  |                     | 25,984  |                         |   | (4,809  | )   |  |                     | 21,175  |                         |   | 22,833  |     |   | (3,150  | ) |  |   | 19,683 
|Noncompetition agreements                                  |  |                     | 401     |                         |   | (260    | )   |  |                     | 141     |                         |   | 401     |     |   | (82     | ) |  |   | 319    
|                                                           |  |                     |         |                         |   |         |     |  |                     |         |                         |   |         |     |   |         |   |  |   |        
|                                                           |  |                     | 204,258 |                         |   | (38,670 | )   |  |                     | 165,588 |                         |   | 181,294 |     |   | (25,156 | ) |  |   | 156,138
|                                                           |  |                     |         |                         |   |         |     |  |                     |         |                         |   |         |     |   |         |   |  |   |        
|UNAMORTIZABLE INTANGIBLES ASSETS                           |  |                     |         |                         |   |         |     |  |                     |         |                         |   |         |     |   |         |   |  |   |        
|Technology                                                 |  |                     | 613     |                         |   |        |     |  |                     | 613     |                         |   | 613     |     |   |        |   |  |   | 613    
|                                                           |  |                     |         |                         |   |         |     |  |                     |         |                         |   |         |     |   |         |   |  |   |        
|                                                           |  | $                   | 204,871 |                         | $ | (38,670 | )   |  | $                   | 166,201 |                         | $ | 181,907 |     | $ | (25,156 | ) |  | $ | 156,751
|                                                           |  |                     |         |                         |   |         |     |  |                     |         |                         |   |         |     |   |         |   |  |   |        

The useful lives of customer relationships, tradenames and noncompetition agreements range from 14
to 18 years, 10 to 15 years and 3 to 4 years, respectively.

Expected future amortization expense:



|                       |  |   |        
|---------------------- |  | - | -------
|(Dollars in thousands) |  |  
|FISCAL YEAR ENDING     |  |   |        
|2007                   |  | $ | 15,519 
|2008                   |  |   | 15,011 
|2009                   |  |   | 14,468 
|2010                   |  |   | 14,396 
|2011                   |  |   | 13,766 
|Thereafter             |  |   | 92,428 
|                       |  |   |        
|                       |  | $ | 165,588
|                       |  |   |        

6. LONG-TERM DEBT



|                                                           |  |      |         |   |      |   |         |  
|---------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|October 1, 2006 and October 2, 2005 (Dollars in thousands) |  | 2006 |         |   | 2005 |  
|LONG TERM DEBT                                             |  |      |         |   |      |   |         |  
|10% USD senior subordinated notes due October 2010         |  | $    | 200,000 |   |      | $ | 200,000 |  
|Variable rate USD term loan maturing July 2013             |  |      | 189,500 |   |      |   |        |  
|Variable rate CAD term loan maturing July 2013             |  |      | 50,501  |   |      |   |        |  
|Variable rate USD term loan(1)                             |  |      |        |   |      |   | 195,300 |  
|                                                           |  |      |         |   |      |   |         |  
|                                                           |  |      | 440,001 |   |      |   | 395,300 |  
|Less: Current portion                                      |  |      | (20,506 | ) |      |   | (30,000 | )
|                                                           |  |      |         |   |      |   |         |  
|LONG TERM DEBT, NET OF CURRENT PORTION                     |  | $    | 419,495 |   |      | $ | 365,300 |  
|                                                           |  |      |         |   |      |   |         |  

---

|(1) | Loan was refinanced with the variable rate USD term loan maturing July 2013 in conjunction with the ICL Acquisition (see Note 2).
|--- | ---------------------------------------------------------------------------------------------------------------------------------

The current portion of long-term debt for 2006 and 2005 reflects voluntary prepayments of the applicable USD term loan of $20.0 million and $30.0
million, respectively. The prepayments were made in the first quarter following the applicable year-end.

The weighted-average interest
rate on variable rate credit facility borrowings at the end of 2006 and 2005 was 7.0% and 6.0%, respectively.



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

Scheduled maturities on long-term debt reflecting any prepayments discussed above are as follows:



|                       |  |   |        
|---------------------- |  | - | -------
|(Dollars in thousands) |  |  
|FISCAL YEAR ENDING     |  |   |        
|2007                   |  | $ | 20,506 
|2008                   |  |   | 1,794  
|2009                   |  |   | 2,652  
|2010                   |  |   | 2,223  
|2011                   |  |   | 202,223
|Thereafter             |  |   | 210,603
|                       |  |   |        
|                       |  | $ | 440,001
|                       |  |   |        

Senior Subordinated Notes

The $200.0 million principal amount of 10% Senior Subordinated Notes due 2010 (the Senior Notes) are unsecured senior subordinated obligations of the Company and are effectively subordinated to all senior
debt obligations of the Company. Interest on the Senior Notes is payable semi-annually in arrears on April 15 and October 15. The interest rate is fixed at 10% per annum. All of our U.S. based subsidiaries have fully and
unconditionally guaranteed the Senior Notes.

The Senior Notes are governed by an Indenture dated as of November 27, 2002 between BWAY
Finance Corp. and The Bank of New York, as trustee, as assumed by BWAY Corporation on February 7, 2003 and as amended from time to time (the Indenture).

The Senior Notes are subject to covenants that, among other things, limit our ability (and the ability of some or all of our subsidiaries) to: incur additional debt, pay dividends or distributions on our capital stock
or to repurchase our capital stock, make certain investments, create liens on our assets to secure debt, engage in transactions with affiliates, merge or consolidate with another company and transfer and sell assets. These covenants are subject to a
number of important limitations and exceptions. At October 1, 2006, we were in compliance with all applicable covenants related to the Senior Notes.

We may redeem some or all of these notes at redemption prices specified in the Indenture (105% on October 15, 2006 declining annually to 100% on October 15, 2009). Upon the occurrence of a Change in Control,
as defined in the Indenture, the holders of the Senior Notes could require us to repurchase the notes at 101% of the principal amount.

We
incurred and have deferred approximately $8.0 million in financing costs related to the underwriting and registration of these notes. We are amortizing these deferred costs to interest expense over the term of the notes. At the end of 2006 and 2005,
approximately $4.2 million and $5.2 million, respectively, of the deferred costs remained to be amortized.

Credit Facility

New Credit Facility

On July 17, 2006, in
conjunction with the ICL Acquisition, we entered into a new credit facility with various lenders, Deutsche Bank Trust Company Americas, as administrative agent, LaSalle Bank, N.A., as documentation agent and Deutsche Bank Securities Inc. and J.P.
Morgan Securities Inc., as joint arrangers. The credit facility consists of a $190.0 million B Term Loan (the US Term Loan) and a $50.0 million revolving credit facility (the US Revolver) with BWAY Corporation as borrower and
a Cdn$56.41 million (US$50.0 million equivalent at the borrowing date) C Term Loan (the Canadian Term Loan) and a $5.0 million equivalent revolving credit facility (the Canadian Revolver) with ICL as borrower.

The term loans mature July 17, 2013 and the revolving loans mature July 17, 2012. In the event the Senior Notes are not refinanced prior to
April 15, 2010, the B Term Loan and the US and Canadian Revolvers mature April 15, 2010 and the C Term Loan matures July 18, 2011.

The US Term Loan is denominated in U.S. dollars and, at the option of the borrower, may consist of a Base Rate Loan or a Eurodollar Loan, each as defined in the Credit Agreement. Once repaid, the US Term Loan may not be reborrowed.
Scheduled quarterly repayments of approximately $0.5 million begin September 30, 2006 and continue to March 31, 2013. The remaining balance is due on the maturity date. Interest accrues on Base Rate Loans at a fixed margin of 0.75% plus
the greater of the federal funds rate plus .005% or the Prime Lending Rate and on Eurodollar Loans at a Eurodollar Rate (as defined in the Credit Agreement) plus a fixed margin of 1.75%. At the end of 2006, the effective interest rate on outstanding
US Term Loan borrowings was approximately 7.13%.

The US Revolver is denominated in U.S. dollars and, at the option of the borrower, may
consist of a Base Rate Loan or a Eurodollar Loan, each as defined in the Credit Agreement. Any outstanding borrowings are due at maturity. Interest accrues on Base Rate Loans at a variable margin ranging from 0.25% to 1.00% plus the greater of the
federal funds rate plus .005% or the administrative agents prime lending rate. Interest accrues on Eurodollar Loans at a Eurodollar Rate plus a variable margin ranging from 1.25% to 2.00%. The applicable margin for either the Base
Rate or Eurodollar loans is based on a Consolidated Total Leverage Ratio, as defined in the Credit Agreement.



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

The Canadian Term Loan is denominated in Canadian dollars and, at the option of the borrower, may consist of a Canadian Prime Rate Loan or a B/A Discount
Rate Loan, each as defined in the Credit Agreement. Once repaid, the Canadian Term Loan may not be reborrowed. Scheduled quarterly repayments of approximately Cdn$141 thousand (approximately $127 thousand US dollar equivalent at the end of 2006)
begin September 30, 2006 and continue to March 31, 2013. The remaining balance is due on the maturity date. Interest accrues on Canadian Prime Rate Loans at the greater of DB Canadas prime rate or CDOR plus 75 basis
points plus a fixed margin of 1.0% and on B/A Discount Rate Loans at CDOR plus a fixed margin of 2.0%. At the end of 2006, the effective interest rate on outstanding Canadian Term Loan borrowings was approximately 6.43%.

The Canadian Revolver is denominated in either U.S. or Canadian dollars, at the option of the borrower, and, at the option of the borrower, may consist
of a Base Rate Loan or a Eurodollar Loan for U.S. dollar denominated loans or Canadian Prime Rate Loan or a B/A Discount Rate Loan for Canadian dollar denominated loans, each as defined in the Credit Agreement. Any outstanding borrowings are due at
maturity. Interest accrues on Base Rate Loans or Canadian Prime Rate Loans at the applicable base (as discussed above) plus a variable margin ranging from 0.25% to 1.00%. Interest accrues on Eurodollar Loans or B/A Discount Rate Loans at the
applicable base (as discussed above) plus a variable margin ranging from 1.25% to 2.00%. The applicable margin for either the Base Rate or Eurodollar loans is based on a Consolidated Total Leverage Ratio, as defined in the Credit Agreement.

BCO Holding and each of our U.S. subsidiaries have guaranteed the B Term Loan and US Revolver, each of which is secured by substantially
all of our U.S. assets and the assets of BCO Holding and, subject to certain limitations, the outstanding stock of ICL. In addition, we have pledged as collateral all of the issued and outstanding stock of our U.S. subsidiaries, which are
wholly-owned by BWAY. ICL has guaranteed the Canadian Term Loan and Canadian Revolver, each of which is secured by all of the assets of ICL.

A portion of the initial net proceeds from the Term Loans were used to finance the ICL Acquisition.

At the end of 2006, we had
$8.0 million in standby letter of credit commitments that reduced our available borrowings under the US Revolver to $42.0 million. There were no outstanding US or Canadian Revolver borrowings at the end of 2006.

The credit agreement contains covenants that, among other things, limit our ability (and the ability of some or all of our subsidiaries) to: incur
additional debt, pay dividends or distributions on our capital stock or to repurchase our capital stock, make certain investments, create liens on our assets to secure debt, engage in transactions with affiliates, merge or consolidate with another
company and transfer and sell assets. We are also required to maintain a minimum Consolidated Interest Coverage Ratio and to not exceed a Maximum Consolidated Total Leverage Ratio (each as defined in the credit agreement). These covenants are
subject to a number of important limitations and exceptions. At the end of 2006, we were in compliance will all applicable covenants contained in the credit agreement.

Deferred Financing Costs

In connection with the refinancing of our credit facility, we followed the
guidance of EITF 98-14, Debtors Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements (EITF 98-14) related to the revolver and EITF 96-19 Debtors Accounting for Modification or Exchange of Debt
Instruments (EITF 96-19) related to the term loans. Pursuant to EITF 98-14, we carried forward approximately $0.4 million and expensed approximately $0.2 million of the unamortized financing costs related to the revolver at the date
refinanced, July 17, 2006. Pursuant to EITF 96-19, the refinancing was not considered a debt extinguishment and, as such, we expensed approximately $0.8 million in third-party expenses incurred in connection with refinancing the
term loan and carried forward $3.9 million in unamortized financing costs related to the term loan at July 17, 2006. We incurred and deferred approximately $1.5 million in new fees and costs associated with the US Revolver and US Term Loan and
approximately $1.2 million in fees and costs associated with the Canadian Revolver and Term Loan.

We are amortizing the resulting $5.9
million of these deferred costs related to the Term Loans to interest expense over the term of the loans in proportion to the outstanding principal, which approximates the effective yield method. We are amortizing the remaining $1.1 million related
to the Revolvers on a straight-line basis over the term of the Revolvers, which approximates the effective yield method. At the end of 2006, approximately $6.8 million of deferred costs associated with the New Credit Facility were unamortized. At
the end of 2005, approximately $5.4 million of deferred costs associated with the Old Credit Facility were unamortized.

In 2004, we
charged to interest expense approximately $1.3 million of unamortized deferred financing costs that were not carried forward under EITF 98-14 when we refinanced the credit facility in connection with the NAMPAC Acquisition.

Old Credit Facility

On July 7, 2004, in
connection with the NAMPAC Acquisition, we entered into a $255.0 million credit facility with various lenders and Deutsche Bank Trust Company Americas, as administrative agent. The credit facility consisted of (a) a $225.0 million term loan
facility which was scheduled to mature June 30, 2011 and (b) a $30.0 million revolving credit facility, which was scheduled to mature June 30, 2009. This credit facility was refinanced in conjunction with the ICL Acquisition, as
discussed above.



F-16



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

7. STOCKHOLDERS EQUITY

Dividend

In the fourth quarter of 2006, we declared a dividend of $10.0 million payable to BCO Holding. The dividend was used to purchase 45,482 shares of BCO
Holding common stock controlled by our chairman and chief executive officer and to cash settle the exercise of approximately 386,000 Exchange Options (as defined in Note 8). All of the Exchange Options were fully vested as of February 7, 2003
and the settlement price per option was based on the difference between the fair value per share of BCO Holding common stock at the exercise date and the weighted average option price. We recorded approximately $8.8 million in stock-based
compensation expense related to the exercise of these options and increased additional paid-in capital in the same amount.

NAMPAC Acquisition

In the fourth quarter of 2004, Kelso and the other BCO Holding stockholders, including certain members of our senior management, made
an additional capital contribution of $30.0 million through BCO Holding in association with the NAMPAC Acquisition. No additional shares were issued to BCO Holding in exchange for the capital contribution, which is recorded in additional paid-in
capital. Also in the fourth quarter of 2004, approximately $0.4 million was recorded to additional paid-in capital related to a deferred share agreement between BCO Holding and an officer of NAMPAC whereby approximately $0.4 million of the
officers compensation under a NAMPAC long-term incentive plan, which was terminated and paid out in conjunction with the NAMPAC Acquisition, was deferred in the form of deferred shares of BCO Holding common stock. The number of deferred shares
granted was fixed based on a value per share agreed upon by the parties to the deferred share agreement. The obligation under the deferred share agreement can only be settled through the issuance of BCO Holding common stock.

BCO Holding Securityholders Agreement

On
February 7, 2003, BCO Holding entered into a securityholders agreement with the Kelso affiliates, which in the aggregate own a majority of BCO Holdings common stock (the Kelso Affiliates), and certain other securityholders who
own common stock and options to purchase common stock of BCO Holding (the Non-Kelso Securityholders) (the Securityholders Agreement).

The Securityholders Agreement generally restricts the transfer of shares of common stock owned by the Non-Kelso Securityholders and any of the Companys employees who will, at a later point, become parties to the
agreement. Exceptions to this restriction include transfers for estate planning purposes or transfers in connection with certain pledges, so long as any transferee agrees to be bound by the terms of the Securityholders Agreement.

In addition, the Non-Kelso Securityholders have tag-along rights to sell their shares on a pro rata basis with the Kelso Affiliates in
significant sales to third parties. The Kelso Affiliates have drag-along rights to cause the Non-Kelso Securityholders to sell their shares on a pro rata basis with the Kelso Affiliates in significant sales to third parties.

Our employees who are a party to the Securityholders Agreement are subject to put and call rights, which, subject to certain
exceptions, entitle an employee stockholder to require BCO Holding to purchase their shares, and which entitle BCO Holding, subject to certain exceptions, to require the employee stockholder to sell their shares to BCO Holding, upon any termination
of the stockholders employment with BCO Holding, at differing prices, depending upon the circumstances of the termination and further subject to a six-month and one day holding period following the date of acquisition of any shares through the
exercise of stock options. The Securityholders Agreement also contains a provision that requires BCO Holding to offer certain existing stockholders the right to purchase shares of BCO Holding upon a new issuance on a pro rata basis, subject to
certain exceptions.

BCO Holding Registration Rights Agreement

On February 7, 2003, BCO Holding entered into a registration rights agreement with the Non-Kelso Securityholders (the Holding Registration Rights Agreement). Pursuant to this agreement, the Kelso
Affiliates have the right to make an unlimited number of requests that BCO Holding register their shares under the Securities Act following the first anniversary of an initial public offering. In any demand registration, all of the parties to the
Holding Registration Rights Agreement have the right to participate on a pro rata basis, subject to certain conditions. In addition, if BCO Holding proposes to register any of its shares (other than registrations related to exchange offers, benefit
plans and certain other exceptions), all of the holders of registration rights under the Holding Registration Rights Agreement have the right to include their shares in the registration statement, subject to certain conditions.

8. STOCK-BASED COMPENSATION

In February 2000,
Predecessor adopted the Fourth Amendment and Restatement of the 1995 Long-Term Incentive Plan (the Predecessor Incentive Plan). The Predecessor Incentive Plan authorized grants of stock options to participants from time to time as
determined by the Board. As a result of the Transaction, (which, as defined in the Predecessor Incentive Plan, was a change in control event), all outstanding options became immediately vested and exercisable. Certain members of management that held
stock options under the Predecessor Incentive Plan entered into Exchange Agreements with BCO Holding whereby their Predecessor Incentive Plan options to acquire shares in BWAY Corporation were exchanged 2-for-1 for new options to acquire BCO Holding
common stock with an exercise price of



F-17



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

$10.00 per share (Exchange Options). The Exchange Options were fully vested as of the closing of the Transaction and were issued with substantially the same terms and conditions in effect immediately
before the exchange.

Effective with the closing of the Transaction in February 2003, BCO Holding assumed the Predecessor Incentive Plan,
and we granted approximately 1.8 million options on February 8, 2003. The Predecessor Incentive Plan was replaced in July 2004 with the Amended and Restated BCO Holding Stock Incentive Plan (the Holding Incentive Plan), which
increased the number of available shares of common stock of BCO Holding subject to options from 2,006,989 to 2,395,103.

Three types of
options may be granted under the Holding Incentive Plan: (1) Service Options, which vest in three equal annual installments commencing on the first anniversary of the grant date based upon service; (2) Performance Options, which vest in
five equal annual installments if we achieve certain specified performance objectives; and (3) Exit Options, which vest upon a change in equity control (as defined and subject to certain limitations). Under the Holding Incentive Plan, 40% of
available options will be Service Options, 10% will be Performance Options and 50% will be Exit Options.

We account for Service Options as
fixed awards and determine compensation expense as the amount by which the fair value of BCO Holding common stock at the effective grant date exceeds the exercise price of the option granted. Compensation expense, if any, related to Service Options
is recognized ratably as the options vest. Because the number of options is contingent upon future events, we account for Performance Options as variable awards and record compensation expense for the number of options with known vesting during each
reporting period. The compensation expense recorded for the Performance Options is the change during the period in the amount by which the fair value of BCO Holding common stock at the end of the reporting period exceeds the exercise price on
unvested options. We also account for Exit Options as variable awards. However, since the contingent event upon which they are based is unknown, we have not recorded compensation expense related to these options.

The Holding Incentive Plan will terminate on February 7, 2013 unless terminated earlier by BCO Holding. Termination of the Holding Incentive Plan
will not affect grants made prior to the termination. Although the Holding Incentive Plan grants the right to acquire shares in BCO Holding, the Holding Incentive Plan is used to incentivize certain of our employees, including management, and
certain options available under the plan are tied to our performance. As such, the Holding Incentive Plan is accounted for as if it were a direct plan of the Company. BCO Holding is a holding company that owns 100% of our outstanding common stock
and does not have any other operations.

We recorded approximately $1.4 million, $1.9 million and $1.1 million in stock-based compensation
expense in 2006, 2005 and 2004, respectively, related to outstanding Service and Performance options. Because the underlying exit event cannot be reasonably estimated, we did not record compensation expense in any of those periods related to Exit
Options. In addition, we recorded stock-based compensation expense of approximately $8.8 million related to the exercise of certain exchange options as further described in Note 7.

The following table presents the status of the Holding Incentive Plan at the end of 2004, 2005 and 2006 and changes during the periods then ended:



|                                          |  |                    |   |  |                               |       |                    |           |                               |   |     
|----------------------------------------- |  | ------------------ | - |  | ----------------------------- | ----- | ------------------ | --------- | ----------------------------- | - | ----
|                                          |  | Shares UnderOption |   |  | Weighted-AverageExercisePrice |       | OptionsExercisable |           | Weighted-AverageExercisePrice
|EMPLOYEE STOCK OPTIONS                    |  |                    |   |  |                               |       |                    |           |                               |   |     
|Options outstanding at September 28, 2003 |  | 3,464,226          |   |  | $                             | 7.57  |                    | 1,625,820 |                               | $ | 4.82
|Options granted                           |  | 468,000            |   |  |                               | 16.49 |                    |           |                               |   |     
|Options forfeited                         |  | (72,252            | ) |  |                               | 10.00 |                    |           |                               |   |     
|                                          |  |                    |   |  |                               |       |                    |           |                               |   |     
|Options outstanding at October 3, 2004    |  | 3,859,974          |   |  |                               | 8.61  |                    | 1,898,236 |                               |   | 5.57
|Options granted                           |  | 121,692            |   |  |                               | 19.20 |                    |           |                               |   |     
|Options exercised                         |  | (4,000             | ) |  |                               | 10.00 |                    |           |                               |   |     
|Options forfeited                         |  | (102,166           | ) |  |                               | 11.14 |                    |           |                               |   |     
|                                          |  |                    |   |  |                               |       |                    |           |                               |   |     
|Options outstanding at October 2, 2005    |  | 3,875,500          |   |  |                               | 8.87  |                    | 2,251,684 |                               |   | 6.50
|Options granted                           |  | 139,618            |   |  |                               | 27.23 |                    |           |                               |   |     
|Options exercised                         |  | (386,221           | ) |  |                               | 3.58  |                    |           |                               |   |     
|Options forfeited                         |  | (142,244           | ) |  |                               | 16.06 |                    |           |                               |   |     
|                                          |  |                    |   |  |                               |       |                    |           |                               |   |     
|OPTIONS OUTSTANDING AT OCTOBER 1, 2006    |  | 3,486,653          |   |  | $                             | 9.90  |                    | 2,173,109 |                               | $ | 7.74
|                                          |  |                    |   |  |                               |       |                    |           |                               |   |     



F-18



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

The following table summarizes information about stock options outstanding and exercisable at October 1, 2006:



|                         |  |                   |  |                                |  |                                |       |                   |           |                                |   |      
|------------------------ |  | ----------------- |  | ------------------------------ |  | ------------------------------ | ----- | ----------------- | --------- | ------------------------------ | - | -----
|October 1, 2006          |  | NumberOutstanding |  | Weighted-AverageRemaining Term |  | Weighted- AverageExercisePrice |       | NumberExercisable |           | Weighted-AverageExercise Price
|RANGE OF EXERCISE PRICES |  |                   |  |                                |  |                                |       |                   |           |                                |   |      
|$2.22 to 5.53            |  | 1,239,599         |  | 5.2 years                      |  | $                              | 5.21  |                   | 1,239,599 |                                | $ | 5.21 
|$10.00                   |  | 1,665,818         |  | 6.4 years                      |  |                                | 10.00 |                   | 797,512   |                                |   | 10.00
|$16.49 to 22.00          |  | 401,898           |  | 7.9 years                      |  |                                | 16.73 |                   | 120,564   |                                |   | 16.63
|$26.37 to 31.19          |  | 179,338           |  | 9.3 years                      |  |                                | 26.07 |                   | 15,434    |                                |   | 24.42
|                         |  |                   |  |                                |  |                                |       |                   |           |                                |   |      
|                         |  | 3,486,653         |  | 6.3 years                      |  | $                              | 9.90  |                   | 2,173,109 |                                | $ | 7.74 
|                         |  |                   |  |                                |  |                                |       |                   |           |                                |   |      

At October 1, 2006, there were 144,049 options available for grant.

9. INCOME TAXES

Our provision for income taxes
consists of the following:



|                                                                                               |  |      |       |      |   |        |      |  |   |       |  
|---------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ------ | ---- |  | - | ----- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |  | 2006 |       | 2005 |   |        | 2004 | 
|CURRENT INCOME TAXES                                                                           |  |      |       |      |   |        |      |  |   |       |  
|Federal                                                                                        |  | $    | 3,703 |      | $ | 9,907  |      |  | $ | (546  | )
|Foreign                                                                                        |  |      | 1,161 |      |   |       |      |  |   |      |  
|State                                                                                          |  |      | 1,242 |      |   | 1,344  |      |  |   | 478   |  
|DEFERRED INCOME TAXES                                                                          |  |      | 835   |      |   | (6,900 | )    |  |   | 3,702 |  
|                                                                                               |  |      |       |      |   |        |      |  |   |       |  
|PROVISION FOR INCOME TAXES                                                                     |  | $    | 6,941 |      | $ | 4,351  |      |  | $ | 3,634 |  
|                                                                                               |  |      |       |      |   |        |      |  |   |       |  

The provision for income taxes is reconciled with the federal statutory rate as follows:



|                                                                                               |  |      |       |   |      |   |       |      |  |   |       |  
|---------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |  | 2006 |       |   | 2005 |   |       | 2004 | 
|Income tax expense at the federal statutory rate                                               |  | $    | 4,458 |   |      | $ | 4,368 |      |  | $ | 3,269 |  
|State income tax expense, net of federal income tax benefits                                   |  |      | 399   |   |      |   | 437   |      |  |   | 327   |  
|Foreign income taxed at rates other than the federal statutory rate                            |  |      | (947  | ) |      |   | (791  | )    |  |   | (296  | )
|Puerto Rican tax assessment                                                                    |  |      | 899   |   |      |   |      |      |  |   |      |  
|Adjustment to estimated effective state tax rates                                              |  |      | 1,034 |   |      |   |      |      |  |   |      |  
|Other items, net                                                                               |  |      | 1,098 |   |      |   | 337   |      |  |   | 334   |  
|                                                                                               |  |      |       |   |      |   |       |      |  |   |       |  
|PROVISION FOR INCOME TAXES                                                                     |  |      | 6,941 |   |      | $ | 4,351 |      |  | $ | 3,634 |  
|                                                                                               |  |      |       |   |      |   |       |      |  |   |       |  
|EFFECTIVE TAX RATE AS A PERCENTAGE OF PRETAX INCOME                                            |  |      | 54.5  | % |      |   | 34.9  | %    |  |   | 38.9  | %
|                                                                                               |  |      |       |   |      |   |       |      |  |   |       |  

The components of deferred tax assets and liabilities are as follows:



|                                                           |  |      |        |   |      |   |        |  
|---------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|October 1, 2006 and October 2, 2005 (Dollars in thousands) |  | 2006 |        |   | 2005 |  
|DEFERRED TAX LIABILITIES                                   |  |      |        |   |      |   |        |  
|Property, plant and equipment                              |  | $    | 27,221 |   |      | $ | 30,567 |  
|Intangible assets                                          |  |      | 54,087 |   |      |   | 56,407 |  
|Other                                                      |  |      | 1,664  |   |      |   | 842    |  
|                                                           |  |      |        |   |      |   |        |  
|TOTAL DEFERRED TAX LIABILITIES                             |  |      | 82,972 |   |      |   | 87,816 |  
|                                                           |  |      |        |   |      |   |        |  
|DEFERRED TAX ASSETS                                        |  |      |        |   |      |   |        |  
|Restructuring reserves                                     |  |      | 956    |   |      |   | 779    |  
|Employee benefits                                          |  |      | 11,260 |   |      |   | 11,815 |  
|Accounts receivable                                        |  |      | 1,460  |   |      |   | 1,409  |  
|Inventory                                                  |  |      | 102    |   |      |   | 3,990  |  
|Transaction costs                                          |  |      | 775    |   |      |   | 1,384  |  
|Net operating loss carryforwards                           |  |      |       |   |      |   | 727    |  
|Other                                                      |  |      | 1,165  |   |      |   | 1,494  |  
|                                                           |  |      |        |   |      |   |        |  
|Total deferred tax assets, gross                           |  |      | 15,718 |   |      |   | 21,598 |  
|Valuation allowance                                        |  |      |       |   |      |   | (727   | )
|                                                           |  |      |        |   |      |   |        |  
|TOTAL DEFERRED TAX ASSETS                                  |  |      | 15,718 |   |      |   | 20,871 |  
|                                                           |  |      |        |   |      |   |        |  
|DEFERRED TAX LIABILITY, NET                                |  | $    | 67,254 |   |      | $ | 66,945 |  
|                                                           |  |      |        |   |      |   |        |  
|Current deferred tax assets, net                           |  | $    | (4,038 | ) |      | $ | (9,174 | )
|Noncurrent deferred tax liability, net                     |  |      | 71,292 |   |      |   | 76,119 |  
|                                                           |  |      |        |   |      |   |        |  
|DEFERRED TAX LIABILITY, NET                                |  | $    | 67,254 |   |      | $ | 66,945 |  
|                                                           |  |      |        |   |      |   |        |  

In accordance with SFAS 109, Accounting for Income Taxes, and SFAS 5, Accounting for
Contingencies, we establish reserves for tax contingencies that reflect our best estimate of the deductions and credits that we may be unable to sustain, or that we could be willing to concede as part of a broader tax settlement. At the end of
2006 and 2005, we had recorded tax contingency reserves of approximately $1.3 million and $0.4 million, respectively. The increase in the tax contingency reserve relates to estimated amounts of utilized acquired net operating losses that are
probable of disallowance. Any future benefits of these net operating losses will result in an adjustment to goodwill. See Note 5.



F-19



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

10. LEASE COMMITMENTS

We lease manufacturing facilities, warehouses and office space under operating
leases, and we lease vehicles and equipment under operating and capitalized leases. We recorded lease expense of approximately $10.8 million, $11.1 million and $8.2 million in 2006, 2005 and 2004, respectively.

Future minimum lease payments under non-cancelable capitalized and operating leases, net of sublease income, at October 1, 2006:



|                                                    |  |                   |     |   |                 |   |       
|--------------------------------------------------- |  | ----------------- | --- | - | --------------- | - | ------
|(Dollars in thousands)                              |  | CapitalizedLeases |     |   | OperatingLeases
|Fiscal year ending                                  |  |                   |     |   |                 |   |       
|2007                                                |  | $                 | 228 |   |                 | $ | 9,812 
|2008                                                |  |                   | 148 |   |                 |   | 9,495 
|2009                                                |  |                   | 92  |   |                 |   | 7,776 
|2010                                                |  |                   |    |   |                 |   | 6,748 
|2011                                                |  |                   |    |   |                 |   | 6,475 
|2012 and thereafter                                 |  |                   |    |   |                 |   | 17,227
|                                                    |  |                   |     |   |                 |   |       
|Total minimum lease payments                        |  |                   | 468 |   |                 | $ | 57,533
|                                                    |  |                   |     |   |                 |   |       
|Less: imputed interest                              |  |                   | (25 | ) |                 |   |       
|                                                    |  |                   |     |   |                 |   |       
|Present value of minimum capitalized lease payments |  |                   | 443 |   |                 |   |       
|Current portion of capitalized lease obligations    |  |                   | 219 |   |                 |   |       
|                                                    |  |                   |     |   |                 |   |       
|Long-term capitalized lease obligations             |  | $                 | 224 |   |                 |   |       
|                                                    |  |                   |     |   |                 |   |       

11. EMPLOYEE BENEFIT PLANS

Pension and Postretirement Plans

Our defined benefit pension and other postretirement benefit costs
and obligations are dependent on assumptions used by actuaries in calculating such amounts. These assumptions, which we review annually, include the discount rate, long-term expected rate of return on plan assets, healthcare cost trend rate and
other economic and demographic factors. We determine the discount rate assumption for our defined benefit pension plan based on the estimated rate at which annuity contracts could be purchased to discharge the pension benefit obligation. In
estimating discount rates for the defined benefit pension plan and the other postretirement benefit plans, we evaluate the AA-rated corporate long-term bond yield rate in the United States at the end of our fiscal year as an estimate of the rate
that would generate matching cash flows to pay benefits under the plans if invested in a portfolio of high quality debt instruments. The long-term expected rate of return on plan assets is based on a combination of historical results of the
portfolio and our expectation of future returns that we expect to realize over the estimated remaining life of the plan liabilities that will be funded with the plan assets. The healthcare cost trend rate assumptions are based on historical cost and
payment data, the near-term outlook and an assessment of the likely long-term trends. Since the defined benefit pension plan was frozen, as discussed below, we did not make salary growth assumptions.

We have a defined benefit pension plan sponsored by NAMPAC that covers certain of its hourly and salaried employees. The plan was frozen effective
October 31, 2004 for salaried participants; the plan was frozen to hourly participants in 1998. Benefits are based on the participants compensation and period of employment as of the date the applicable portion of the plan was frozen.

We offer postretirement medical coverage to certain union employees at our Cincinnati, Ohio manufacturing facility in accordance with
certain of our collective bargaining agreements. We closed the plan to new participants in 1998.

The measurement dates used to determine
pension benefit obligations are September 30, 2006 and September 30, 2005 and the measurement dates used to determine other postretirement benefit obligations are October 1, 2006 and October 2, 2005.



F-20



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

The following table reflects the change in benefit obligation and plan assets and the components of net periodic benefits cost associated with these
benefits:



|                                                                                               |      |                                 |      |      |                              |   |      |   |  |      |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|---------------------------------------------------------------------------------------------- | ---- | ------------------------------- | ---- | ---- | ---------------------------- | - | ---- | - |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | - |  | - | ---- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |      | Defined Benefit PensionPlan (1) |      |      | Other PostretirementBenefits |  
|                                                                                               | 2006 |                                 |      | 2005 |                              |   | 2004 |   |  | 2006 |      |   | 2005 |   |      | 2004 | 
|COMPONENTS OF NET PERIODIC BENEFIT COST                                                        |      |                                 |      |      |                              |   |      |   |  |      |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|Service cost                                                                                   |      | $                               |     |      |                              | $ | 72   |   |  | $    | 204  |   |      | $ | 6    |      |  | $ | 5    |   |  | $ | 5    |  
|Interest cost                                                                                  |      |                                 | 599  |      |                              |   | 609  |   |  |      | 158  |   |      |   | 356  |      |  |   | 382  |   |  |   | 399  |  
|Expected return on plan assets                                                                 |      |                                 | (603 | )    |                              |   | (530 | ) |  |      | (159 | ) |      |   |     |      |  |   |     |   |  |   |     |  
|Recognized net actuarial loss                                                                  |      |                                 |     |      |                              |   |     |   |  |      |     |   |      |   | 53   |      |  |   | 52   |   |  |   | 59   |  
|                                                                                               |      |                                 |      |      |                              |   |      |   |  |      |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|NET PERIODIC BENEFIT COST                                                                      |      |                                 | (4   | )    |                              |   | 151  |   |  |      | 203  |   |      |   | 415  |      |  |   | 439  |   |  |   | 463  |  
|                                                                                               |      |                                 |      |      |                              |   |      |   |  |      |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|WEIGHTED AVERAGE ASSUMPTIONS                                                                   |      |                                 |      |      |                              |   |      |   |  |      |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|Discount rate                                                                                  |      |                                 | 5.54 | %    |                              |   | 5.75 | % |  |      | 6.10 | % |      |   | 5.50 | %    |  |   | 6.00 | % |  |   | 6.00 | %
|                                                                                               |      |                                 |      |      |                              |   |      |   |  |      |      |   |      |   |      |      |  |   |      |   |  |   |      |  
|Expected return on plan assets                                                                 |      |                                 | 8.00 | %    |                              |   | 8.00 | % |  |      | 8.75 | % |      |   | n/a  |      |  |   | n/a  |   |  |   | n/a  |  
|                                                                                               |      |                                 |      |      |                              |   |      |   |  |      |      |   |      |   |      |      |  |   |      |   |  |   |      |  

---

|(1) | Net periodic benefit cost for 2004 is for the period from July 7, 2004 when the plan was acquired in the NAMPAC Acquisition. We did not have defined benefit pension plans prior
to the NAMPAC Acquisition.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                               |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------------------------------- | ---- | -------------------------------- | ------ | ---- | ----------------------------- | - | ------ | - |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |      | Defined Benefit Pension Plan (1) |        |      | Other Postretirement Benefits |  
|                                                                                               | 2006 |                                  |        | 2005 |                               |   | 2004   |   |  | 2006 |        |   | 2005 |   |        | 2004 | 
|CHANGE IN FAIR VALUE OF PLAN ASSETS                                                            |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|Beginning of period                                                                            |      | $                                | 7,433  |      |                               | $ | 6,402  |   |  | $    | 7,353  |   |      | $ |       |      |  | $ |       |   |  | $ |       |  
|Actual return on plan assets                                                                   |      |                                  | 489    |      |                               |   | 706    |   |  |      | (73    | ) |      |   |       |      |  |   |       |   |  |   |       |  
|Company contributions                                                                          |      |                                  | 421    |      |                               |   | 547    |   |  |      |       |   |      |   | 433    |      |  |   | 326    |   |  |   | 532    |  
|Benefits paid                                                                                  |      |                                  | (237   | )    |                               |   | (222   | ) |  |      | (878   | ) |      |   | (433   | )    |  |   | (326   | ) |  |   | (532   | )
|                                                                                               |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|END OF PERIOD FAIR VALUE                                                                       |      |                                  | 8,106  |      |                               |   | 7,433  |   |  |      | 6,402  |   |      |   |       |      |  |   |       |   |  |   |       |  
|                                                                                               |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|CHANGE IN PROJECTED BENEFIT OBLIGATION                                                         |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|Beginning of period                                                                            |      | $                                | 10,908 |      |                               | $ | 10,666 |   |  | $    | 10,457 |   |      | $ | 6,700  |      |  | $ | 6,604  |   |  | $ | 6,882  |  
|Service cost                                                                                   |      |                                  |       |      |                               |   | 72     |   |  |      | 204    |   |      |   | 6      |      |  |   | 5      |   |  |   | 5      |  
|Interest cost                                                                                  |      |                                  | 599    |      |                               |   | 609    |   |  |      | 158    |   |      |   | 356    |      |  |   | 382    |   |  |   | 399    |  
|Actuarial loss (gain)                                                                          |      |                                  | 567    |      |                               |   | (217   | ) |  |      | 725    |   |      |   | 512    |      |  |   | 35     |   |  |   | (150   | )
|Benefits paid                                                                                  |      |                                  | (237   | )    |                               |   | (222   | ) |  |      | (878   | ) |      |   | (433   | )    |  |   | (326   | ) |  |   | (532   | )
|                                                                                               |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|END OF PERIOD PROJECTED BENEFIT OBLIGATION                                                     |      |                                  | 11,837 |      |                               |   | 10,908 |   |  |      | 10,666 |   |      |   | 7,141  |      |  |   | 6,700  |   |  |   | 6,604  |  
|                                                                                               |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|Unfunded status of the plan                                                                    |      |                                  | (3,731 | )    |                               |   | (3,475 | ) |  |      | (4,264 | ) |      |   | (7,141 | )    |  |   | (6,700 | ) |  |   | (6,604 | )
|Unrecognized net actuarial loss                                                                |      |                                  | 1,245  |      |                               |   | 564    |   |  |      | 958    |   |      |   | 2,135  |      |  |   | 1,676  |   |  |   | 1,692  |  
|Accrued benefit cost                                                                           |      |                                  | (2,486 | )    |                               |   | (2,911 | ) |  |      | (3,306 | ) |      |   | (5,006 | )    |  |   | (5,024 | ) |  |   | (4,912 | )
|Additional minimum liability                                                                   |      |                                  | (1,245 | )    |                               |   | (564   | ) |  |      | (958   | ) |      |   |       |      |  |   |       |   |  |   |       |  
|                                                                                               |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|NET AMOUNT RECOGNIZED                                                                          |      |                                  | (3,731 | )    |                               |   | (3,475 | ) |  |      | (4,264 | ) |      |   | (5,006 | )    |  |   | (5,024 | ) |  |   | (4,912 | )
|                                                                                               |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|WEIGHTED AVERAGE ASSUMPTIONS                                                                   |      |                                  |        |      |                               |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        |  
|Discount rate                                                                                  |      |                                  | 5.75   | %    |                               |   | 5.54   | % |  |      | 5.75   | % |      |   | 5.75   | %    |  |   | 5.50   | % |  |   | 6.00   | %
|Expected return on plan assets                                                                 |      |                                  | 8.00   | %    |                               |   | 8.00   | % |  |      | 8.00   | % |      |   | n/a    |      |  |   | n/a    |   |  |   | n/a    |  

---

|(1) | Net periodic benefit cost for 2004 is for the period from July 7, 2004 when the plan was acquired in the NAMPAC Acquisition. We did not have defined benefit pension plans prior
to the NAMPAC Acquisition.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accumulated benefit obligation for the defined benefit pension plan was $11.8 million and
$10.9 million at the end of 2006 and 2005 respectively. The accumulated benefit obligation for the other post-retirement benefit plans was $7.1 million and $6.7 million at the end of 2006 and 2005, respectively.



F-21



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

The following table presents plan assets as a percentage of total plan assets for our defined benefit pension plan at the date indicated:



|                          |  |      |   |  |      |   |  |      |  
|------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|September 30              |  |      |   |  |      |   |  |      |  
|(Dollars in thousands)    |  | 2006 |   |  | 2005 |   |  | 2004 |  
|ASSET CATEGORY            |  |      |   |  |      |   |  |      |  
|Equity mutual funds       |  | 60   | % |  | 61   | % |  | 61   | %
|Fixed income mutual funds |  | 40   | % |  | 39   | % |  | 39   | %
|                          |  |      |   |  |      |   |  |      |  
|                          |  | 100  | % |  | 100  | % |  | 100  | %
|                          |  |      |   |  |      |   |  |      |  

NAMPAC employs a total return investment approach whereby a mix of equities and fixed income
investments are used to maximize the long-term return of plan assets for a determined level of risk. Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial condition. The investment
portfolio contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across domestic and non-domestic stock, as well as growth, value and small and large capitalizations. Other assets such as
real estate, private equity and hedge funds may be used to enhance long-term returns while improving portfolio diversification. Derivatives may be used to gain market exposure; however, derivatives may not be used to leverage the portfolio beyond
the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements and periodic asset/liability studies.

Estimated future benefit payments under the defined benefit pension plan and other postretirement benefits by fiscal year are as follows:



|                       |  |                 |       |               |   |      
|---------------------- |  | --------------- | ----- | ------------- | - | -----
|(Dollars in thousands) |  | PensionBenefits |       | OtherBenefits
|FISCAL YEAR ENDING     |  |                 |       |               |   |      
|2007                   |  | $               | 292   |               | $ | 513  
|2008                   |  |                 | 320   |               |   | 514  
|2009                   |  |                 | 376   |               |   | 541  
|2010                   |  |                 | 404   |               |   | 571  
|2011                   |  |                 | 418   |               |   | 582  
|2012 through 2016      |  |                 | 2,727 |               |   | 2,467

In 2007, we expect to contribute approximately $1.0 million and $0.5 million to the pension plan
and the postretirement benefit plan, respectively.

For measurement purposes, annual rates of increase of 10.00% and 10.75% in the
post-65 per capita costs of covered health care benefits were assumed for each of 2006 and 2005, respectively, and a 9.00% and 9.75% annual rate of increase in the pre-65 per capita costs of covered health care benefits were assumed for
2006 and 2005, respectively. As of October 1, 2006, post-65 rates were assumed to decrease by 0.75% per year to 7.0% and then by 0.5% per year to 5.5% and remain at that level thereafter. Pre-65 rates were assumed to decrease by
0.75% per year to 7.5% and then by 0.5% per year to 5.5% and remain at that level thereafter.

In December 2003, the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Medicare Act) was signed into law. The Medicare Act introduced a Medicare prescription drug benefit that began in calendar 2006 as well as a federal subsidy to sponsors of
retirement health care plans that provide a benefit at least actuarially equivalent to the Medicare benefit. We evaluated the benefits of the subsidy and determined that the cost of applying for the subsidy was outweighed by the
estimated benefit to the Company. As such, plan obligations do not reflect the impact of this legislation.

Assumed healthcare cost trend
rates have a significant effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:



|                                                     |  |      |      |  
|---------------------------------------------------- |  | ---- | ---- | -
|(Dollars in thousands)                               |  | 2006 |     
|1% INCREASE IN ASSUMED HEALTH CARE COST TRENDS       |  |      |      |  
|Effect on total service and interest cost components |  | $    | 42   |  
|Effect on postretirement benefit obligation          |  |      | 708  |  
|                                                     | 
|1% DECREASE IN ASSUMED HEALTH CARE COST TRENDS       |  |      |      |  
|Effect on total service and interest cost components |  | $    | (36  | )
|Effect on postretirement benefit obligation          |  |      | (609 | )

Defined Contribution Plans

We offer qualified defined contribution plans that cover substantially all full-time employees. Under the plans, we match employee contributions up to a certain limit. One of our plans provides for a deferred profit
sharing component, which is funded at the discretion of our Board of Directors. Our net contributions to these plans were approximately $2.8 million, $2.5 million and $1.9 million in 2006, 2005 and 2004, respectively.

We contribute to certain union sponsored defined contribution plans that provide benefits to certain of our union employees under collective bargaining
agreements. Our contributions to these



F-22



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

plans were approximately $1.4 million, $1.3 million and $1.4 million in 2006, 2005 and 2004, respectively.

Supplemental
Executive Retirement Plans

We provide for retirement benefits to certain current and former executives of the Company or its
predecessors through supplemental executive retirement plans (SERPs). We recorded expenses of approximately $0.8 million, $0.9 million and $0.4 million in 2006, 2005 and 2004, respectively related to these plans. We paid SERP benefits of
approximately $0.4 million, $0.4 million and $0.2 million in 2006, 2005 and 2004, respectively. At October 1, 2006 and October 2, 2005, we had accrued SERP liabilities of $6.6 million and $5.8 million, respectively. The current and the
non-current portions of the SERP liability are recorded in other current liabilities and other noncurrent liabilities, respectively, in the consolidated balance sheets. The liabilities at the end of 2006 and 2005 were determined using a discount
rate of 5.74% and 5.43%, respectively. The SERPs are unfunded.

Estimated future benefit payments under the SERP agreements are as follows:



|                       |  |   |      
|---------------------- |  | - | -----
|(Dollars in thousands) |  |  
|FISCAL YEAR ENDING     |  |   |      
|2007                   |  | $ | 477  
|2008                   |  |   | 722  
|2009                   |  |   | 722  
|2010                   |  |   | 722  
|2011                   |  |   | 722  
|2012 through 2016      |  |   | 3,288

12. RELATED PARTY TRANSACTIONS

We pay an annual financial advisory fee to Kelso of approximately $0.5 million and reimburse them for related expenses. These expenses are included in
other expense (income), net.

13. RESTRUCTURING AND IMPAIRMENT



|                                                                        |  |      |       |      |   |       |  |   |    
|----------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | ---
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 |  |      |       |      |   |      
|(Dollars in thousands)                                                  |  | 2006 |       | 2005 |   | 2004 
|Restructuring charge                                                    |  | $    | 1,511 |      | $ | 4,265 |  | $ | 352
|Impairment charge                                                       |  |      |      |      |   | 1,000 |  |   |   
|                                                                        |  |      |       |      |   |       |  |   |    
|RESTRUCTURING AND IMPAIRMENT CHARGE                                     |  | $    | 1,511 |      |   | 5,265 |  |   | 352
|                                                                        |  |      |       |      |   |       |  |   |    

The following table set forth changes in the restructuring and exit liabilities, which are
included in other current liabilities in the consolidated balance sheets. The nature of the liabilities has not changed from that previously reported and restructuring charges are shown net of any adjustments.



|                                                     |  |                         |      |   |                           |   |      |              |  |   |                |   |  |                      |      |   |              |   |      |       |  |   |      |   |  |   |      |  
|---------------------------------------------------- |  | ----------------------- | ---- | - | ------------------------- | - | ---- | ------------ |  | - | -------------- | - |  | -------------------- | ---- | - | ------------ | - | ---- | ----- |  | - | ---- | - |  | - | ---- | -
|                                                     |  | Metal Packaging Segment |      |   | Plastic Packaging Segment |   |      |              | 
|(Dollars in millions)                                |  | SeveranceCosts          |      |   | FacilityClosureCosts      |   |      | SegmentTotal |  |   | SeveranceCosts |   |  | FacilityClosureCosts |      |   | SegmentTotal |   |      | Total | 
|Restructuring liability                              |  |                         |      |   |                           |   |      |              |  |   |                |   |  |                      |      |   |              |   |      |       |  |   |      |   |  |   |      |  
|Balance at September 29, 2003                        |  |                         | 0.3  |   |                           |   | 1.2  |              |  |   | 1.5            |   |  |                      |     |   |              |   |     |       |  |   |     |   |  |   | 1.5  |  
|Restructuring charge                                 |  |                         | 0.2  |   |                           |   | 0.1  |              |  |   | 0.3            |   |  |                      |     |   |              |   |     |       |  |   |     |   |  |   | 0.3  |  
|Expenditures                                         |  |                         | (0.5 | ) |                           |   | (1.2 | )            |  |   | (1.7           | ) |  |                      |     |   |              |   |     |       |  |   |     |   |  |   | (1.7 | )
|Balance at October 3, 2004                           |  |                         |     |   |                           |   | 0.1  |              |  |   | 0.1            |   |  |                      |     |   |              |   |     |       |  |   |     |   |  |   | 0.1  |  
|Restructuring charge                                 |  |                         |     |   |                           |   | 0.3  |              |  |   | 0.3            |   |  |                      | 1.0  |   |              |   | 3.1  |       |  |   | 4.1  |   |  |   | 4.4  |  
|Expenditures                                         |  |                         |     |   |                           |   | (0.4 | )            |  |   | (0.4           | ) |  |                      | (0.6 | ) |              |   | (1.6 | )     |  |   | (2.2 | ) |  |   | (2.6 | )
|Balance at October 2, 2005                           |  |                         |     |   |                           |   |     |              |  |   |               |   |  |                      | 0.4  |   |              |   | 1.5  |       |  |   | 1.9  |   |  |   | 1.9  |  
|Restructuring charge                                 |  |                         |     |   |                           |   |     |              |  |   |               |   |  |                      | 0.4  |   |              |   | 0.3  |       |  |   | 0.7  |   |  |   | 0.7  |  
|Adjustment related to change in sublease assumptions |  |                         |     |   |                           |   |     |              |  |   |               |   |  |                      |     |   |              |   | 0.8  |       |  |   |     |   |  |   | 0.8  |  
|Expenditures                                         |  |                         |     |   |                           |   |     |              |  |   |               |   |  |                      | (0.6 | ) |              |   | (1.2 | )     |  |   | (1.8 | ) |  |   | (1.8 | )
|                                                     |  |                         |      |   |                           |   |      |              |  |   |                |   |  |                      |      |   |              |   |      |       |  |   |      |   |  |   |      |  
|Balance at October 1, 2006                           |  | $                       |     |   |                           | $ |     |              |  | $ |               |   |  | $                    | 0.2  |   |              | $ | 1.4  |       |  | $ | 1.6  |   |  | $ | 1.6  |  
|                                                     |  |                         |      |   |                           |   |      |              |  |   |                |   |  |                      |      |   |              |   |      |       |  |   |      |   |  |   |      |  



F-23



---

##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries



|                              |  |                         |      |   |                           |   |       |              |  |   |                |   |                      |   |              |  |   |   |  |   |   |  |   |      |  
|----------------------------- |  | ----------------------- | ---- | - | ------------------------- | - | ----- | ------------ |  | - | -------------- | - | -------------------- | - | ------------ |  | - | - |  | - | - |  | - | ---- | -
|                              |  | Metal Packaging Segment |      |   | Plastic Packaging Segment |   | Total |             
|(Dollars in millions)         |  | SeveranceCosts          |      |   | FacilityClosureCosts      |   |       | SegmentTotal |  |   | SeveranceCosts |   | FacilityClosureCosts |   | SegmentTotal | 
|Exit Liability                |  |                         |      |   |                           |   |       |              |  |   |                |   |                      |   |              |  |   |   |  |   |   |  |   |      |  
|Balance at September 29, 2003 |  |                         | 0.2  |   |                           |   | 0.5   |              |  |   | 0.7            |   |                      |   |             |  |   |  |  |   |  |  |   | 0.7  |  
|Adjustments                   |  |                         | (0.2 | ) |                           |   | 0.2   |              |  |   |               |   |                      |   |             |  |   |  |  |   |  |  |   |     |  
|Expenditures                  |  |                         |     |   |                           |   | (0.5  | )            |  |   | (0.5           | ) |                      |   |             |  |   |  |  |   |  |  |   | (0.5 | )
|                              |  |                         |      |   |                           |   |       |              |  |   |                |   |                      |   |              |  |   |   |  |   |   |  |   |      |  
|Balance at October 3, 2004    |  |                         |     |   |                           |   | 0.2   |              |  |   | 0.2            |   |                      |   |             |  |   |  |  |   |  |  |   | 0.2  |  
|                              |  |                         |      |   |                           |   |       |              |  |   |                |   |                      |   |              |  |   |   |  |   |   |  |   |      |  
|Adjustments                   |  |                         |     |   |                           |   | (0.1  | )            |  |   | (0.1           | ) |                      |   |             |  |   |  |  |   |  |  |   | (0.1 | )
|Expenditures                  |  |                         |     |   |                           |   | (0.1  | )            |  |   | (0.1           | ) |                      |   |             |  |   |  |  |   |  |  |   | (0.1 | )
|                              |  |                         |      |   |                           |   |       |              |  |   |                |   |                      |   |              |  |   |   |  |   |   |  |   |      |  
|Balance at October 2, 2005    |  | $                       |     |   |                           | $ |      |              |  | $ |               |   |                      | $ |             |  | $ |  |  | $ |  |  | $ |     |  
|                              |  |                         |      |   |                           |   |       |              |  |   |                |   |                      |   |              |  |   |   |  |   |   |  |   |      |  

Restructuring Charge and Liability

2001 Rightsizing Plan. In 2001, we implemented a manufacturing and cost structure rightsizing plan whereby we recorded a restructuring charge of
approximately $5.3 million. The restructuring liability of $1.5 million remaining at the beginning of 2004 primarily related to future lease obligations at two of our closed manufacturing facilities. We recorded a reduction in the restructuring
liability of approximately $0.1 million (as an adjustment to restructuring expense) in 2005 as no further severance or facility closure costs were expected. At the end of 2005, there were no amounts remaining in the restructuring liability related
to this plan, and we do not anticipate any related future charges or adjustments.

2004 Picayune Facility Closure. In the fourth
quarter of 2003, we were notified by one of our large customers that it was converting its steel packaging requirements to an alternative packaging that we did not manufacture. The customer completed its conversion in the second quarter of 2004. As
a result of this conversion, we closed our Picayune, Mississippi manufacturing facility, whereby we relocated or terminated the workforce and disposed of, stored or transferred certain equipment to other of our manufacturing facilities. Upon notice
from the customer and in anticipation of the closure, we recorded a restructuring charge of approximately $0.3 million in 2003 (primarily related to severance and benefits) and recorded an aggregated restructuring charge of approximately $0.3
million in each of 2004 and 2005. The total restructuring charge consisted of severance and benefits, equipment disposition and other related costs associated with closure of the Picayune facility. We terminated approximately 80 employees related to
this facility closure.

In addition to the restructuring charge, we shortened the estimated remaining useful lives of certain long-lived
assets, primarily equipment, associated with the manufacture of the steel packaging supplied to the customer discussed above. The shortened useful lives resulted in approximately $1.8 million in additional depreciation expense in the fourth quarter
of 2003 and approximately $5.8 million in additional depreciation in 2004.

We returned the facility to the landlord in 2005, and, at the
end of 2005, there were no amounts remaining in the restructuring liability related to the closure of this facility. We do not anticipate any related future charges or adjustments.

2005 Plastics Manufacturing Restructuring Plan. In October 2004, the Board of Directors approved a broad plan to close certain plastics
manufacturing facilities and to eliminate certain positions that became redundant as a result of the NAMPAC Acquisition. We ceased operations at one of the facilities at the end of 2004, and the remaining facilities were closed in the third quarter
of 2005. Approximately 88 hourly and approximately 41 salaried employees were affected by the plan. The purpose of the plan was to lower overall manufacturing costs and improve manufacturing capacity through the consolidation of existing business
from these closed facilities into our NAMPAC facilities.

In 2005, we recorded a $4.1 million restructuring charge consisting of $3.1
million in costs associated with the shutdown of certain of our plastics manufacturing facilities and $1.0 million in severance and benefits costs associated with the facility closures and the elimination of redundant positions as a result of the
NAMPAC Acquisition. A portion of the $3.1 million restructuring charge related to shutdown costs includes the net present value of future lease payments, net of expected sublease proceeds, and other obligations associated with facilities that were
closed in the third quarter of 2005.

In addition to the restructuring charge, we recorded approximately $3.9 million of additional
depreciation in 2005 associated with the shortened useful lives of equipment subsequently taken out of service in association with the closure of the plastic manufacturing facilities.

During 2006, we incurred and expensed approximately $1.0 million in facility closure costs and approximately $0.3 million in severance costs related to
these facilities. Included in the $1.0 million in facility closure costs is an adjustment of approximately $0.8 million related to a change in our sublease assumptions on the remaining facility. We expect to incur future restructuring charges of
approximately $0.4 million related to facility shutdown and holding costs, which include the accretion of net lease liabilities recorded at present value, and to severance related costs.

In the fourth quarter of 2006, we closed a warehouse facility in Canada, which resulted in the termination of 3 employees. We recorded approximately $0.1
million in facility closure costs and approximately $0.1 million in severance and benefits costs. We do not anticipate any future charges related to this closure.



F-24



---

##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

Impairment Charge

As a result of the plastics manufacturing restructuring plan, as discussed above,
we took an initial $0.8 million impairment charge in the third quarter of 2005 to write certain assets down to their estimated fair value and reclassified them as assets held for sale in other current assets. We took an additional charge of $0.2
million in the fourth quarter of 2005 to further write the assets down to their estimated fair value.

At the end of 2005, the estimated
fair value less cost to sell of equipment held for sale associated with the closed facilities was approximately $0.6 million, and is included in other current assets. The assets were sold in 2006 for $0.6 million.

Exit Liability

At February 7, 2003, our senior
management committed to a plan to exit a manufacturing facility. In conjunction with this decision, we established an exit liability of $1.1 million for closing our Southwest manufacturing facility in Dallas, Texas. This liability included severance
and benefit costs of approximately $0.5 million and estimated facility closure costs of approximately $0.6 million. The facility was sold in fiscal 2005, and we do not anticipate any future charges or adjustments.

The facility was classified as an asset held for sale in other current assets at the end of 2004. We sold the facility for approximately $0.7 million in
December 2004 and recorded a gain on the sale of approximately $0.2 million.

14. CONTINGENCIES

Environmental

We are subject to a broad range of
federal, state, provincial and local environmental, health and safety laws, including those governing discharges to air, soil and water, the handling and disposal of hazardous substances and the investigation and remediation of contamination
resulting from the release of hazardous substances. We believe that we are currently in compliance with all applicable environmental, health and safety laws, though future expenditures may be necessary in order to maintain such compliance, including
compliance with air emission control requirements for volatile organic compounds. In addition, in the course of our operations we use, store and dispose of hazardous substances. Some of our current and former facilities are currently involved in
environmental investigations and remediation resulting from the release of hazardous substances or the presence of other contaminants. While we do not believe that any investigation or identified remediation obligations will have a material adverse
effect on our financial condition, results of operations or cash flows, there are no assurances that such obligations will not arise in the future. Many of our facilities have a history of industrial usage for which investigation and remediation
obligations could arise in the future and which could have a material adverse effect on our financial condition, results of operations or cash flows. However, except to the extent otherwise disclosed herein, we believe it is remote that any such
material losses could result from environmental remediation matters or environmental investigations relating to our current or former facilities.

We incurred approximately $1.1 million in capital expenditures in 2006 and approximately $0.6 million in 2007 to comply with federal Maximum Achievable Control Technology (MACT) regulations related to air emission control
requirements for Hazardous Air Pollutants (HAP) and volatile organic compounds. We expect to incur approximately $1.1 million in capital expenditures in 2007 to comply with certain environmental laws at a facility related to the ICL
Acquisition.

In the third quarter of 2005, we joined a potentially responsible party (PRP) group related to a waste disposal
site in Georgia. Our status as a PRP was based on documents indicating that waste materials were transported to the site from our Homerville, Georgia facility prior to our acquisition of the facility in 1989. We joined the PRP group in order to
reduce our exposure, which we estimate will approximate $0.1 million.

From time to time, we receive requests for information or are
identified as a PRP pursuant to the Federal Comprehensive Environmental Response, Compensation and Liability Act or analogous state laws with respect to off-site waste disposal sites utilized by its current or former facilities or its predecessors
in interest. We do not believe that any of these identified matters will have a material adverse effect on our financial condition, results of operations or cash flows.

We record reserves for environmental liabilities when environmental investigation and remediation obligations are probable and related costs are reasonably estimable. We had accrued liabilities of approximately $0.3
million at the end of each of 2006 and 2005; however, future expenditures may exceed the amounts accrued.

Self Insurance

We are self-insured with stop loss arrangements for the majority of our medical and workers compensation benefits. The self insurance liability
related to workers compensation is determined actuarially based on filed claims. The self-insurance liability related to medical claims is determined based on internal and external analysis of actual claims. The amounts related to these claims
are included in other current liabilities and were $7.0 million and $7.5 million at the end of 2006 and 2005, respectively.

Other

We are involved in legal proceedings from time to time in the ordinary course of business. We believe that the outcome of these proceedings will not have
a material effect on our financial condition, results of operations or cash flows. At the end of 2006 and 2005, we had accrued approximately $0.3 million and $0.5 million, respectively, related to pending litigation matters.

We have been named as a defendant in various complaints related to the sale of lead pigment for use in lead-based paint. The claims have been asserted
against our Armstrong Containers, Inc. subsidiary (Armstrong) based on allegations that Armstrong assumed certain liabilities of MacGregor Lead Company (MacGregor), an entity that was involved in the manufacture and sale of
lead pigment until 1973, when MacGregor sold its lead paint business to a third party. These cases



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

seek to recover unspecified monetary damages in excess of the statutory minimum for personal injuries due to alleged exposure to lead based paint. We have been advised by plaintiffs counsel that other cases are
likely to be filed that will name Armstrong as a defendant. We believe that we have valid defenses to these cases and plan to vigorously defend them. We have notified our general liability insurers, who are participating in the defense of the
claims. However, we can neither predict the outcome at this time due to uncertainties involved nor can we reasonably determine the scope or amount of potential costs and liabilities related to such litigation. At the end of 2006, we had accrued
approximately $0.5 million in legal fees and expenses related to this matter.

In the third quarter of 2006, one of our customers notified
us that it had initiated a voluntary product recall of certain of its products due to potential leaks in certain of the containers that we likely manufactured. At the end of 2006, we had approximately $1.2 million accrued related to this matter.

Letters of Credit

At October 1,
2006, a bank had issued standby letters of credit on our behalf in the aggregate amount of $8.0 million primarily in favor of our workers compensation insurers and purchasing card vendor.

Collective Bargaining Agreements

At the end of 2006,
approximately 23% of our hourly employees were subject to union collective bargaining agreements. Two of our collective bargaining agreements, representing approximately 47% of our union employees, will become amendable in 2007.

Commodity Risk

We are subject to various risks and
uncertainties related to changing commodity prices for and the availability of the raw materials used in the manufacture of our products, primarily steel and resin, as well as unfavorable changes in energy costs, primarily electricity and natural
gas.

15. BUSINESS SEGMENTS

Our
operations are organized and reviewed by management along our products lines in two reportable segments Metal Packaging and Plastics Packaging. We operate these reportable segments as separate divisions and differentiate the segments based on
the nature of the products and services they offer. The primary raw material and manufacturing process are unique for each segment. A further description of each business segment and of our Corporate services area follows:

Metal Packaging. Metal Packaging includes the metal packaging products and material center services that we have historically offered. Primarily
products in this segment include paint cans, aerosol containers, ammunition boxes and other general line containers made from steel. Metal Packaging is a separate division of the Company with management and production facilities and processes
distinct from our Plastics Packaging Division. Metal Packaging includes steel pails manufactured by ICL.

Plastics Packaging.
Plastics Packaging includes the plastics packaging products manufactured and distributed by NAMPAC and ICL. Principle products in this segment include open- and tight-head pails and drums and other multi-purpose rigid industrial plastic packaging.
Plastics Packaging is a separate division of the Company with management and production facilities and processes distinct from our Metal Packaging Division.

Corporate. Corporate includes accounting and finance, information technology, payroll and human resources and various other overhead charges, each to the extent not allocated to the divisions.

Segment asset disclosures include, among other things, inventories, property, plant and equipment, goodwill and other intangible assets. The accounting
policies of our segments are the same as those described in Note 1. There were no intersegment sales in the periods presented. Managements evaluation of segment performance is principally based on EBITDA.



F-26



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

The following sets forth certain financial information attributable to our business segments for 2006 and 2005.



|                                                                                                |  |      |         |   |      |   |         |  
|----------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|Fiscal years ended October 1, 2006 and October 2, 2005 (Dollars in thousands)                   |  | 2006 |         |   | 2005 |  
|NET SALES                                                                                       |  |      |         |   |      |   |         |  
|Metal packaging                                                                                 |  | $    | 552,968 |   |      | $ | 528,512 |  
|Plastics packaging                                                                              |  |      | 365,545 |   |      |   | 300,597 |  
|                                                                                                |  |      |         |   |      |   |         |  
|CONSOLIDATED NET SALES                                                                          |  |      | 918,513 |   |      |   | 829,109 |  
|                                                                                                |  |      |         |   |      |   |         |  
|INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE              |  |      |         |   |      |   |         |  
|Metal packaging                                                                                 |  |      | 87,193  |   |      |   | 81,831  |  
|Plastics packaging                                                                              |  |      | 26,354  |   |      |   | 22,185  |  
|                                                                                                |  |      |         |   |      |   |         |  
|Segment earnings excluding depreciation and amortization                                        |  |      | 113,547 |   |      |   | 104,016 |  
|Corporate undistributed expense                                                                 |  |      | (21,212 | ) |      |   | (11,561 | )
|Depreciation and amortization (see below)                                                       |  |      | (41,615 | ) |      |   | (43,215 | )
|Restructuring and impairment charge                                                             |  |      | (1,511  | ) |      |   | (5,265  | )
|Interest expense, net                                                                           |  |      | (34,660 | ) |      |   | (32,165 | )
|Other (expense) income, net                                                                     |  |      | (1,813  | ) |      |   | 670     |  
|                                                                                                |  |      |         |   |      |   |         |  
|CONSOLIDATED INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |  | $    | 12,736  |   |      | $ | 12,480  |  
|                                                                                                |  |      |         |   |      |   |         |  
|TOTAL ASSETS                                                                                    |  |      |         |   |      |   |         |  
|Metal packaging                                                                                 |  | $    | 318,699 |   |      | $ | 303,364 |  
|Plastics packaging                                                                              |  |      | 322,540 |   |      |   | 285,434 |  
|                                                                                                |  |      |         |   |      |   |         |  
|Segment assets                                                                                  |  |      | 641,239 |   |      |   | 588,798 |  
|Corporate assets                                                                                |  |      | 192,506 |   |      |   | 183,196 |  
|                                                                                                |  |      |         |   |      |   |         |  
|CONSOLIDATED TOTAL ASSETS                                                                       |  |      | 833,745 |   |      |   | 771,994 |  
|                                                                                                |  |      |         |   |      |   |         |  
|CAPITAL EXPENDITURES                                                                            |  |      |         |   |      |   |         |  
|Metal packaging                                                                                 |  |      | 8,543   |   |      |   | 8,143   |  
|Plastics packaging                                                                              |  |      | 15,632  |   |      |   | 11,337  |  
|                                                                                                |  |      |         |   |      |   |         |  
|Segment capital expenditures                                                                    |  |      | 24,175  |   |      |   | 19,480  |  
|Corporate capital expenditures                                                                  |  |      | 866     |   |      |   | 802     |  
|                                                                                                |  |      |         |   |      |   |         |  
|CONSOLIDATED CAPITAL EXPENDITURES                                                               |  |      | 25,041  |   |      |   | 20,282  |  
|                                                                                                |  |      |         |   |      |   |         |  
|DEPRECIATION AND AMORTIZATION                                                                   |  |      |         |   |      |   |         |  
|Metal packaging                                                                                 |  |      | 21,381  |   |      |   | 21,468  |  
|Plastics packaging                                                                              |  |      | 18,331  |   |      |   | 19,646  |  
|                                                                                                |  |      |         |   |      |   |         |  
|Segment depreciation and amortization                                                           |  |      | 39,712  |   |      |   | 41,114  |  
|Corporate depreciation and amortization                                                         |  |      | 1,903   |   |      |   | 2,101   |  
|                                                                                                |  |      |         |   |      |   |         |  
|CONSOLIDATED DEPRECIATION AND AMORTIZATION                                                      |  | $    | 41,615  |   |      | $ | 43,215  |  
|                                                                                                |  |      |         |   |      |   |         |  

The following sets forth business segment net sales by products and services for 2006, 2005 and
2004:



|                                                                                               |  |      |         |      |   |         |  |   |        
|---------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 (Dollars in thousands) |  | 2006 |         | 2005 |   | 2004   
|METAL PACKAGING                                                                                |  |      |         |      |   |         |  |   |        
|General line containers                                                                        |  | $    | 535,942 |      | $ | 502,318 |  | $ | 472,707
|Other                                                                                          |  |      | 17,026  |      |   | 26,194  |  |   | 45,951 
|                                                                                               |  |      |         |      |   |         |  |   |        
|TOTAL METAL PACKAGING SEGMENT NET SALES                                                        |  |      | 552,968 |      |   | 528,512 |  |   | 518,658
|                                                                                               |  |      |         |      |   |         |  |   |        
|PLASTICS PACKAGING SEGMENT NET SALES                                                           |  |      | 365,545 |      |   | 300,597 |  |   | 92,930 
|                                                                                               |  |      |         |      |   |         |  |   |        
|CONSOLIDATED NET SALES                                                                         |  | $    | 918,513 |      | $ | 829,109 |  | $ | 611,588
|                                                                                               |  |      |         |      |   |         |  |   |        

Customers

We sell our containers to a large number of customers in various industry sectors. To reduce credit risk, we set credit limits and perform ongoing credit evaluations. Although our exposure to credit risk associated
with nonpayment is affected by the industry conditions of our customers, our outstanding accounts receivable are substantially current and are materially within our established terms and limits.



|                                                                        |  |      |   |  |      |   |  |      |  
|----------------------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3,
2004 |  | 2006 |   |  | 2005 |   |  | 2004 |  
|PERCENTAGE OF SALES TO TOP TEN CUSTOMERS                                |  |      |   |  |      |   |  |      |  
|Metal packaging segment                                                 |  | 43   | % |  | 48   | % |  | 47   | %
|Plastics packaging segment                                              |  | 40   |   |  | 42   |   |  | 29   |  
|Total                                                                   |  | 35   |   |  | 40   |   |  | 42   |  



F-27



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries



|                                                                        |  |      |   |  |      |   |  |      |  
|----------------------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|Fiscal years ended October 1, 2006, October 2, 2005 and October 3, 2004 |  | 2006 |   |  | 2005 |   |  | 2004 |  
|PERCENTAGE OF SALES TO LARGEST CUSTOMER                                 |  |      |   |  |      |   |  |      |  
|Metal packaging segment                                                 |  | 13   | % |  | 16   | % |  | 16   | %
|Plastics packaging segment                                              |  | 18   |   |  | 22   |   |  | 16   |  
|                                                                        |  |      |   |  |      |   |  |      |  
|Total                                                                   |  | 15   |   |  | 18   |   |  | 16   |  
|                                                                        |  |      |   |  |      |   |  |      |  

We sell our products and services primarily in North America. In 2006, 2005 and 2004, sales to
customers located outside the United States were less than five percent of our total net sales.

16. SUPPLEMENTAL GUARANTOR SUBSIDIARIES INFORMATION

The Senior Notes are guaranteed on a full, unconditional joint and several basis by our U.S. based subsidiaries, each of which is
wholly owned. The following condensed, consolidating financial information presents the Consolidating Financial Statements of BWAY and its subsidiaries. We have not presented separate guarantor subsidiary financial statements because we do not
believe they would provide materially useful information to investors.



F-28



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating
Balance Sheet Information

October 1, 2006



|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|------------------------------------------ |  | --------------- | ------- | - | --------------------- | - | ------- | ----------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | ------- | -
|(Dollars in thousands)                     |  | BWAYCorporation |         |   | GuarantorSubsidiaries |   |         | OtherSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Assets                                     |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|                                           |  |                 |         |   |                      
|CURRENT ASSETS                             |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|Cash and cash equivalents                  |  | $               | 43,617  |   |                       | $ | 1,458   |                   |  | $ | 5,904        |   |  | $            |         |   |  | $ | 50,979  |  
|Accounts receivable, net                   |  |                 | 61,279  |   |                       |   | 44,520  |                   |  |   | 10,187       |   |  |              |         |   |  |   | 115,986 |  
|Inventories                                |  |                 | 53,426  |   |                       |   | 19,944  |                   |  |   | 7,071        |   |  |              |         |   |  |   | 80,441  |  
|Income taxes receivable                    |  |                 | 18,757  |   |                       |   | (11,201 | )                 |  |   | (265         | ) |  |              |         |   |  |   | 7,291   |  
|Deferred tax assets                        |  |                 | 451     |   |                       |   | 3,587   |                   |  |   |             |   |  |              |         |   |  |   | 4,038   |  
|Other                                      |  |                 | 3,420   |   |                       |   | 1,291   |                   |  |   | 131          |   |  |              |         |   |  |   | 4,842   |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL CURRENT ASSETS                       |  |                 | 180,950 |   |                       |   | 59,599  |                   |  |   | 23,028       |   |  |              |         |   |  |   | 263,577 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|PROPERTY, PLANT AND EQUIPMENT, NET         |  |                 | 83,955  |   |                       |   | 54,952  |                   |  |   | 4,037        |   |  |              |         |   |  |   | 142,944 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|OTHER ASSETS                               |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|Goodwill                                   |  |                 | 120,259 |   |                       |   | 98,895  |                   |  |   | 29,533       |   |  |              |         |   |  |   | 248,687 |  
|Other intangible assets, net               |  |                 | 51,483  |   |                       |   | 92,265  |                   |  |   | 22,453       |   |  |              |         |   |  |   | 166,201 |  
|Deferred financing costs, net              |  |                 | 9,774   |   |                       |   |        |                   |  |   | 1,178        |   |  |              |         |   |  |   | 10,952  |  
|Other                                      |  |                 | 1,026   |   |                       |   | 358     |                   |  |   |             |   |  |              |         |   |  |   | 1,384   |  
|Investment in subsidiaries                 |  |                 | 244,960 |   |                       |   | 19,557  |                   |  |   |             |   |  |              | (264,517 | ) |  |   |        |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL OTHER ASSETS                         |  |                 | 427,502 |   |                       |   | 211,075 |                   |  |   | 53,164       |   |  |              | (264,517 | ) |  |   | 427,224 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL ASSETS                               |  | $               | 692,407 |   |                       | $ | 325,626 |                   |  | $ | 80,229       |   |  | $            | (264,517 | ) |  | $ | 833,745 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|Liabilities and Stockholders Equity       |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|                                           |  |                 |         |   |                      
|CURRENT LIABILITIES                        |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|Accounts payable                           |  | $               | 56,027  |   |                       | $ | 54,805  |                   |  | $ | 8,107        |   |  | $            |         |   |  | $ | 118,939 |  
|Accrued salaries and wages                 |  |                 | 10,233  |   |                       |   | 3,096   |                   |  |   | 527          |   |  |              |         |   |  |   | 13,856  |  
|Accrued interest                           |  |                 | 9,748   |   |                       |   |        |                   |  |   | 89           |   |  |              |         |   |  |   | 9,837   |  
|Accrued rebates                            |  |                 | 9,453   |   |                       |   | 1,537   |                   |  |   | 101          |   |  |              |         |   |  |   | 11,091  |  
|Current portion of long-term debt          |  |                 | 20,000  |   |                       |   |        |                   |  |   | 506          |   |  |              |         |   |  |   | 20,506  |  
|Other                                      |  |                 | 16,616  |   |                       |   | 1,264   |                   |  |   | 480          |   |  |              |         |   |  |   | 18,360  |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL CURRENT LIABILITIES                  |  |                 | 122,077 |   |                       |   | 60,702  |                   |  |   | 9,810        |   |  |              |         |   |  |   | 192,589 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|LONG-TERM DEBT                             |  |                 | 369,500 |   |                       |   |        |                   |  |   | 49,995       |   |  |              |         |   |  |   | 419,495 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|OTHER LIABILITIES                          |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|Deferred tax liabilities                   |  |                 | 24,984  |   |                       |   | 46,308  |                   |  |   |             |   |  |              |         |   |  |   | 71,292  |  
|Intercompany                               |  |                 | 29,593  |   |                       |   | (29,658 | )                 |  |   | 65           |   |  |              |         |   |  |   |        |  
|Other                                      |  |                 | 18,770  |   |                       |   | 4,116   |                   |  |   |             |   |  |              |         |   |  |   | 22,886  |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL OTHER LIABILITIES                    |  |                 | 73,347  |   |                       |   | 20,766  |                   |  |   | 65           |   |  |              |         |   |  |   | 94,178  |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL LIABILITIES                          |  |                 | 564,924 |   |                       |   | 81,468  |                   |  |   | 59,870       |   |  |              |         |   |  |   | 706,262 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|COMMITMENTS AND CONTINGENCIES              |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|                                           |  |                 |         |   |                      
|STOCKHOLDERS EQUITY                       |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|Preferred stock                            |  |                 |        |   |                       |   |        |                   |  |   |             |   |  |              |         |   |  |   |        |  
|Common stock                               |  |                 |        |   |                       |   | 1       |                   |  |   |             |   |  |              | (1       | ) |  |   |        |  
|Additional paid-in capital                 |  |                 | 112,882 |   |                       |   | 233,190 |                   |  |   | 19,634       |   |  |              | (252,824 | ) |  |   | 112,882 |  
|Retained earnings                          |  |                 | 15,098  |   |                       |   | 11,715  |                   |  |   | 474          |   |  |              | (12,189  | ) |  |   | 15,098  |  
|Accumulated other comprehensive loss       |  |                 | (497    | ) |                       |   | (748    | )                 |  |   | 251          |   |  |              | 497      |   |  |   | (497    | )
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL STOCKHOLDERS EQUITY                 |  |                 | 127,483 |   |                       |   | 244,158 |                   |  |   | 20,359       |   |  |              | (264,517 | ) |  |   | 127,483 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |  | $               | 692,407 |   |                       | $ | 325,626 |                   |  | $ | 80,229       |   |  | $            | (264,517 | ) |  | $ | 833,745 |  
|                                           |  |                 |         |   |                       |   |         |                   |  |   |              |   |  |              |          |   |  |   |         |  



F-29



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##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating
Balance Sheet Information

October 2, 2005



|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|------------------------------------------ |  | --------------- | ------- | - | --------------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | -
|(Dollars in thousands)                     |  | BWAYCorporation |         |   | GuarantorSubsidiaries |   |         | Eliminations |  |   | Consolidated |  
|Assets                                     |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|                                           |  |                 |         |  
|CURRENT ASSETS                             |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|Cash and cash equivalents                  |  | $               | 50,161  |   |                       | $ | 1,728   |              |  | $ |             |   |  | $ | 51,889  |  
|Accounts receivable, net                   |  |                 | 61,900  |   |                       |   | 42,222  |              |  |   |             |   |  |   | 104,122 |  
|Inventories                                |  |                 | 41,776  |   |                       |   | 30,189  |              |  |   |             |   |  |   | 71,965  |  
|Deferred tax assets                        |  |                 | 8,226   |   |                       |   | 948     |              |  |   |             |   |  |   | 9,174   |  
|Other                                      |  |                 | 2,925   |   |                       |   | 825     |              |  |   |             |   |  |   | 3,750   |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL CURRENT ASSETS                       |  |                 | 164,988 |   |                       |   | 75,912  |              |  |   |             |   |  |   | 240,900 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|PROPERTY, PLANT AND EQUIPMENT, NET         |  |                 | 90,594  |   |                       |   | 51,882  |              |  |   |             |   |  |   | 142,476 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|OTHER ASSETS                               |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|Goodwill                                   |  |                 | 120,259 |   |                       |   | 98,959  |              |  |   |             |   |  |   | 219,218 |  
|Other intangible assets, net               |  |                 | 58,042  |   |                       |   | 98,709  |              |  |   |             |   |  |   | 156,751 |  
|Deferred financing costs, net              |  |                 | 10,589  |   |                       |   |        |              |  |   |             |   |  |   | 10,589  |  
|Other                                      |  |                 | 1,138   |   |                       |   | 922     |              |  |   |             |   |  |   | 2,060   |  
|Investment in subsidiaries                 |  |                 | 219,231 |   |                       |   |        |              |  |   | (219,231     | ) |  |   |        |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL OTHER ASSETS                         |  |                 | 409,259 |   |                       |   | 198,590 |              |  |   | (219,231     | ) |  |   | 388,618 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL ASSETS                               |  | $               | 664,841 |   |                       | $ | 326,384 |              |  | $ | (219,231     | ) |  | $ | 771,994 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|Liabilities and Stockholders Equity       |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|                                           |  |                 |         |  
|CURRENT LIABILITIES                        |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|Accounts payable                           |  | $               | 48,311  |   |                       | $ | 49,657  |              |  | $ |             |   |  | $ | 97,968  |  
|Accrued salaries and wages                 |  |                 | 12,233  |   |                       |   | 1,553   |              |  |   |             |   |  |   | 13,786  |  
|Accrued interest                           |  |                 | 10,803  |   |                       |   |        |              |  |   |             |   |  |   | 10,803  |  
|Accrued rebates                            |  |                 | 9,458   |   |                       |   | 646     |              |  |   |             |   |  |   | 10,104  |  
|Income taxes payable                       |  |                 | 4,117   |   |                       |   | 3,876   |              |  |   |             |   |  |   | 7,993   |  
|Current portion of long-term debt          |  |                 | 30,000  |   |                       |   |        |              |  |   |             |   |  |   | 30,000  |  
|Other                                      |  |                 | 15,292  |   |                       |   | 1,245   |              |  |   |             |   |  |   | 16,537  |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL CURRENT LIABILITIES                  |  |                 | 130,214 |   |                       |   | 56,977  |              |  |   |             |   |  |   | 187,191 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|LONG-TERM DEBT                             |  |                 | 365,300 |   |                       |   |        |              |  |   |             |   |  |   | 365,300 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|OTHER LIABILITIES                          |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|Deferred tax liabilities                   |  |                 | 28,388  |   |                       |   | 47,731  |              |  |   |             |   |  |   | 76,119  |  
|Intercompany                               |  |                 | 1,324   |   |                       |   | (1,324  | )            |  |   |             |   |  |   |        |  
|Other                                      |  |                 | 16,179  |   |                       |   | 3,769   |              |  |   |             |   |  |   | 19,948  |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL OTHER LIABILITIES                    |  |                 | 45,891  |   |                       |   | 50,176  |              |  |   |             |   |  |   | 96,067  |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL LIABILITIES                          |  |                 | 541,405 |   |                       |   | 107,153 |              |  |   |             |   |  |   | 648,558 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|COMMITMENTS AND CONTINGENCIES              |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|                                           |  |                 |         |  
|STOCKHOLDERS EQUITY                       |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|Preferred stock                            |  |                 |        |   |                       |   |        |              |  |   |             |   |  |   |        |  
|Common stock                               |  |                 |        |   |                       |   | 1       |              |  |   | (1           | ) |  |   |        |  
|Additional paid-in capital                 |  |                 | 104,082 |   |                       |   | 214,107 |              |  |   | (214,107     | ) |  |   | 104,082 |  
|Retained earnings                          |  |                 | 19,701  |   |                       |   | 5,470   |              |  |   | (5,470       | ) |  |   | 19,701  |  
|Accumulated other comprehensive loss       |  |                 | (347    | ) |                       |   | (347    | )            |  |   | 347          |   |  |   | (347    | )
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL STOCKHOLDERS EQUITY                 |  |                 | 123,436 |   |                       |   | 219,231 |              |  |   | (219,231     | ) |  |   | 123,436 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |  | $               | 664,841 |   |                       | $ | 326,384 |              |  | $ | (219,231     | ) |  | $ | 771,994 |  
|                                           |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  



F-30



---

##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating
Statement of Operations Information

For the year ended October 1, 2006



|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|---------------------------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------- | ----------------- |  | ------------ | ------ |  | ------------ | ------ | - |  | - | ------- | -
|(Dollars in thousands)                                                             |  | BWAYCorporation |         |   | GuarantorSubsidiaries |   |         | OtherSubsidiaries |  | Eliminations |        |  | Consolidated |       
|NET SALES                                                                          |  | $               | 548,823 |   |                       | $ | 354,928 |                   |  | $            | 14,762 |  | $            |       |   |  | $ | 918,513 |  
|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|COSTS AND EXPENSES                                                                 |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|Cost of products sold (excluding depreciation and amortization)                    |  |                 | 461,095 |   |                       |   | 323,676 |                   |  |              | 12,341 |  |              | (711   | ) |  |   | 796,401 |  
|Depreciation and amortization                                                      |  |                 | 22,522  |   |                       |   | 18,493  |                   |  |              | 600    |  |              |       |   |  |   | 41,615  |  
|Selling and administrative expense                                                 |  |                 | 25,708  |   |                       |   | 3,698   |                   |  |              | 371    |  |              |       |   |  |   | 29,777  |  
|Restructuring charge                                                               |  |                 | 1,511   |   |                       |   |        |                   |  |              |       |  |              |       |   |  |   | 1,511   |  
|Interest expense, net                                                              |  |                 | 34,082  |   |                       |   | (122    | )                 |  |              | 700    |  |              |       |   |  |   | 34,660  |  
|Other expense (income), net                                                        |  |                 | 1,534   |   |                       |   | (446    | )                 |  |              | 14     |  |              | 711    |   |  |   | 1,813   |  
|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|TOTAL COSTS AND EXPENSES                                                           |  |                 | 546,452 |   |                       |   | 345,299 |                   |  |              | 14,026 |  |              |       |   |  |   | 905,777 |  
|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE |  |                 | 2,371   |   |                       |   | 9,629   |                   |  |              | 736    |  |              |       |   |  |   | 12,736  |  
|Provision for income taxes                                                         |  |                 | 2,821   |   |                       |   | 3,858   |                   |  |              | 262    |  |              |       |   |  |   | 6,941   |  
|Equity in income of subsidiaries                                                   |  |                 | 6,245   |   |                       |   | 474     |                   |  |              |       |  |              | (6,719 | ) |  |   |        |  
|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE              |  |                 | 5,795   |   |                       |   | 6,245   |                   |  |              | 474    |  |              | (6,719 | ) |  |   | 5,795   |  
|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|Cumulative effect of change in accounting principle, net of tax benefit            |  |                 | (398    | ) |                       |   |        |                   |  |              |       |  |              |       |   |  |   | (398    | )
|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  
|NET INCOME                                                                         |  | $               | 5,397   |   |                       | $ | 6,245   |                   |  | $            | 474    |  | $            | (6,719 | ) |  | $ | 5,397   |  
|                                                                                   |  |                 |         |   |                       |   |         |                   |  |              |        |  |              |        |   |  |   |         |  

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating Statement of Operations Information

For
the year ended October 2, 2005



|                                                                |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|--------------------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------- | ------------ |  | - | ------------ | - |  | - | ------- | -
|(Dollars in thousands)                                          |  | BWAYCorporation |         |   | GuarantorSubsidiaries |   |         | Eliminations |  |   | Consolidated |  
|NET SALES                                                       |  | $               | 538,474 |   |                       | $ | 290,635 |              |  | $ |             |   |  | $ | 829,109 |  
|                                                                |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|COSTS AND EXPENSES                                              |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|Cost of products sold (excluding depreciation and amortization) |  |                 | 451,289 |   |                       |   | 263,461 |              |  |   | (711         | ) |  |   | 714,039 |  
|Depreciation and amortization                                   |  |                 | 28,134  |   |                       |   | 15,081  |              |  |   |             |   |  |   | 43,215  |  
|Selling and administrative expense                              |  |                 | 17,995  |   |                       |   | 4,125   |              |  |   |             |   |  |   | 22,120  |  
|Restructuring and impairment charge                             |  |                 | 5,265   |   |                       |   |        |              |  |   |             |   |  |   | 5,265   |  
|Interest expense, net                                           |  |                 | 32,172  |   |                       |   | (7      | )            |  |   |             |   |  |   | 32,165  |  
|Other income, net                                               |  |                 | (127    | ) |                       |   | (759    | )            |  |   | 711          |   |  |   | (175    | )
|                                                                |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|TOTAL COSTS AND EXPENSES                                        |  |                 | 534,728 |   |                       |   | 281,901 |              |  |   |             |   |  |   | 816,629 |  
|                                                                |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|INCOME BEFORE INCOME TAXES AND EQUITY EARNINGS                  |  |                 | 3,746   |   |                       |   | 8,734   |              |  |   |             |   |  |   | 12,480  |  
|Provision for income taxes                                      |  |                 | 1,307   |   |                       |   | 3,044   |              |  |   |             |   |  |   | 4,351   |  
|Equity in income of subsidiaries                                |  |                 | 5,690   |   |                       |   |        |              |  |   | (5,690       | ) |  |   |        |  
|                                                                |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  
|NET INCOME                                                      |  | $               | 8,129   |   |                       | $ | 5,690   |              |  | $ | (5,690       | ) |  | $ | 8,129   |  
|                                                                |  |                 |         |   |                       |   |         |              |  |   |              |   |  |   |         |  



F-31



---

##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating
Statement of Operations Information

For the year ended October 3, 2004



|                                                                |  |                 |         |                       |   |        |              |  |   |              |   |  |   |        
|--------------------------------------------------------------- |  | --------------- | ------- | --------------------- | - | ------ | ------------ |  | - | ------------ | - |  | - | -------
|(Dollars in thousands)                                          |  | BWAYCorporation |         | GuarantorSubsidiaries |   |        | Eliminations |  |   | Consolidated
|NET SALES                                                       |  | $               | 548,873 |                       | $ | 62,715 |              |  | $ |             |   |  | $ | 611,588
|                                                                |  |                 |         |                       |   |        |              |  |   |              |   |  |   |        
|COSTS AND EXPENSES                                              |  |                 |         |                       |   |        |              |  |   |              |   |  |   |        
|Cost of products sold (excluding depreciation and amortization) |  |                 | 474,401 |                       |   | 55,377 |              |  |   | (714         | ) |  |   | 529,064
|Depreciation and amortization                                   |  |                 | 28,070  |                       |   | 3,654  |              |  |   |             |   |  |   | 31,724 
|Selling and administrative expense                              |  |                 | 13,231  |                       |   | 809    |              |  |   |             |   |  |   | 14,040 
|Restructuring charge                                            |  |                 | 352     |                       |   |       |              |  |   |             |   |  |   | 352    
|Interest expense, net                                           |  |                 | 26,889  |                       |   |       |              |  |   |             |   |  |   | 26,889 
|Other expense (income), net                                     |  |                 | 377     |                       |   | (913   | )            |  |   | 714          |   |  |   | 178    
|                                                                |  |                 |         |                       |   |        |              |  |   |              |   |  |   |        
|TOTAL COSTS AND EXPENSES                                        |  |                 | 543,320 |                       |   | 58,927 |              |  |   |             |   |  |   | 602,247
|                                                                |  |                 |         |                       |   |        |              |  |   |              |   |  |   |        
|INCOME BEFORE INCOME TAXES AND EQUITY EARNINGS                  |  |                 | 5,553   |                       |   | 3,788  |              |  |   |             |   |  |   | 9,341  
|Provision for income taxes                                      |  |                 | 2,443   |                       |   | 1,191  |              |  |   |             |   |  |   | 3,634  
|Equity in income of subsidiaries                                |  |                 | 2,597   |                       |   |       |              |  |   | (2,597       | ) |  |   |       
|                                                                |  |                 |         |                       |   |        |              |  |   |              |   |  |   |        
|NET INCOME                                                      |  | $               | 5,707   |                       | $ | 2,597  |              |  | $ | (2,597       | ) |  | $ | 5,707  
|                                                                |  |                 |         |                       |   |        |              |  |   |              |   |  |   |        

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating Statement of Cash Flows Information

For
the year ended October 1, 2006



|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|---------------------------------------------- |  | --------------- | -------- | - | --------------------- | - | ------- | ----------------- |  | - | ------------ | - | ------------ | - | - |  | - | -------- | -
|(Dollars in thousands)                         |  | BWAYCorporation |          |   | GuarantorSubsidiaries |   |         | OtherSubsidiaries |  |   | Eliminations |   | Consolidated |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES      |  | $               | 39,540   |   |                       | $ | 15,362  |                   |  | $ | 6,031        |   |              | $ |  |  | $ | 60,933   |  
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES           |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|Capital expenditures                           |  |                 | (9,409   | ) |                       |   | (15,632 | )                 |  |   |             |   |              |   |  |  |   | (25,041  | )
|Business acquisitions                          |  |                 | (18,427  | ) |                       |   |        |                   |  |   | (50,000      | ) |              |   |  |  |   | (68,427  | )
|Other                                          |  |                 | 1,337    |   |                       |   |        |                   |  |   |             |   |              |   |  |  |   | 1,337    |  
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|NET CASH USED IN INVESTING ACTIVITIES          |  |                 | (26,499  | ) |                       |   | (15,632 | )                 |  |   | (50,000      | ) |              |   |  |  |   | (92,131  | )
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES           |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|Proceeds from term loan                        |  |                 | 190,000  |   |                       |   |        |                   |  |   | 50,000       |   |              |   |  |  |   | 240,000  |  
|Repayments of term loan                        |  |                 | (195,800 | ) |                       |   |        |                   |  |   | (127         | ) |              |   |  |  |   | (195,927 | )
|Dividend paid to BCO Holding                   |  |                 | (10,000  | ) |                       |   |        |                   |  |   |             |   |              |   |  |  |   | (10,000  | )
|Other                                          |  |                 | (3,785   | ) |                       |   |        |                   |  |   |             |   |              |   |  |  |   | (3,785   | )
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES      |  |                 | (19,585  | ) |                       |   |        |                   |  |   | 49,873       |   |              |   |  |  |   | 30,288   |  
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS      |  |                 | (6,544   | ) |                       |   | (270    | )                 |  |   | 5,904        |   |              |   |   |  |   | (910     | )
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |  |                 | 50,161   |   |                       |   | 1,728   |                   |  |   |             |   |              |   |  |  |   | 51,889   |  
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD       |  | $               | 43,617   |   |                       | $ | 1,458   |                   |  | $ | 5,904        |   |              | $ |  |  | $ | 50,979   |  
|                                               |  |                 |          |   |                       |   |         |                   |  |   |              |   |              |   |   |  |   |          |  



F-32



---

##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating
Statement of Cash Flows Information

For the year ended October 2, 2005



|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  
|---------------------------------------------------- |  | --------------- | ------- | - | --------------------- | - | ------- | ------------ |  | - | ------- | -
|(Dollars in thousands)                               |  | BWAYCorporation |         |   | GuarantorSubsidiaries |   |         | Consolidated | 
|Net cash provided by operating activities            |  | $               | 55,784  |   |                       | $ | 8,540   |              |  | $ | 64,324  |  
|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  
|Cash flows from investing activities                 |  |                 |         |   |                       |   |         |              |  |   |         |  
|Capital expenditures                                 |  |                 | (8,945  | ) |                       |   | (11,337 | )            |  |   | (20,282 | )
|Other                                                |  |                 | 1,035   |   |                       |   |        |              |  |   | 1,035   |  
|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  
|Net cash used in investing activities                |  |                 | (7,910  | ) |                       |   | (11,337 | )            |  |   | (19,247 | )
|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  
|Cash flows from financing activities                 |  |                 |         |   |                       |   |         |              |  |   |         |  
|Repayments of term loan                              |  |                 | (19,700 | ) |                       |   |        |              |  |   | (19,700 | )
|Other                                                |  |                 | (813    | ) |                       |   |        |              |  |   | (813    | )
|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  
|Net cash used in financing activities                |  |                 | (20,513 | ) |                       |   |        |              |  |   | (20,513 | )
|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  
|Net increase (decrease) in cash and cash equivalents |  |                 | 27,361  |   |                       |   | (2,797  | )            |  |   | 24,564  |  
|Cash and cash equivalents, beginning of period       |  |                 | 22,800  |   |                       |   | 4,525   |              |  |   | 27,325  |  
|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  
|Cash and cash equivalents, ending of period          |  | $               | 50,161  |   |                       | $ | 1,728   |              |  | $ | 51,889  |  
|                                                     |  |                 |         |   |                       |   |         |              |  |   |         |  

BWAY Corporation and Subsidiaries

Supplemental Condensed Consolidating Statement of Cash Flows Information

For
the year ended October 3, 2004



|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  
|-------------------------------------------------------------------------- |  | --------------- | -------- | - | --------------------- | - | ------ | ------------ |  | - | -------- | -
|(Dollars in thousands)                                                     |  | BWAYCorporation |          |   | GuarantorSubsidiaries |   |        | Consolidated | 
|Net cash provided by (used in) operating activities                        |  | $               | 49,790   |   |                       | $ | (4,692 | )            |  | $ | 45,098   |  
|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  
|Cash flows from investing activities                                       |  |                 |          |   |                       |   |        |              |  |   |          |  
|Capital expenditures                                                       |  |                 | (16,932  | ) |                       |   | (2,134 | )            |  |   | (19,066  | )
|Business acquisitions, net of cash acquired                                |  |                 | (213,658 | ) |                       |   | 11,351 |              |  |   | (202,307 | )
|Other                                                                      |  |                 | 516      |   |                       |   |       |              |  |   | 516      |  
|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  
|Net cash used in investing activities                                      |  |                 | (230,074 | ) |                       |   | 9,217  |              |  |   | (220,857 | )
|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  
|Cash flows from financing activities                                       |  |                 |          |   |                       |   |        |              |  |   |          |  
|Net borrowings under revolving credit facility                             |  |                 | (17,170  | ) |                       |   |       |              |  |   | (17,170  | )
|Proceeds from term loan                                                    |  |                 | 225,000  |   |                       |   |       |              |  |   | 225,000  |  
|Repayments of term loan                                                    |  |                 | (10,000  | ) |                       |   |       |              |  |   | (10,000  | )
|Capital contribution from BCO Holding                                      |  |                 | 30,000   |   |                       |   |       |              |  |   | 30,000   |  
|Decrease in unpresented bank drafts in excess of cash available for offset |  |                 | (18,072  | ) |                       |   |       |              |  |   | (18,072  | )
|Principal repayments under capital leases                                  |  |                 | (117     | ) |                       |   |       |              |  |   | (117     | )
|Financing costs incurred                                                   |  |                 | (6,805   | ) |                       |   |       |              |  |   | (6,805   | )
|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  
|Net cash provided by financing activities                                  |  |                 | 202,836  |   |                       |   |       |              |  |   | 202,836  |  
|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  
|Net increase in cash and cash equivalents                                  |  |                 | 22,552   |   |                       |   | 4,525  |              |  |   | 27,077   |  
|Cash and cash equivalents, beginning of period                             |  |                 | 248      |   |                       |   |       |              |  |   | 248      |  
|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  
|Cash and cash equivalents, ending of period                                |  | $               | 22,800   |   |                       | $ | 4,525  |              |  | $ | 27,325   |  
|                                                                           |  |                 |          |   |                       |   |        |              |  |   |          |  



F-33



---

##### Table of Contents

##### Index to Financial Statements

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

BWAY Corporation and Subsidiaries

17. QUARTERLY RESULTS OF OPERATIONS(UNAUDITED)



|                                                                                     |  |              |         |   |               |   |              |  |                  |         |  |          |         |   |  |   |        
|------------------------------------------------------------------------------------ |  | ------------ | ------- | - | ------------- | - | ------------ |  | ---------------- | ------- |  | -------- | ------- | - |  | - | -------
|(Dollars in thousands)                                                               |  | FirstQuarter |         |   | SecondQuarter |   | ThirdQuarter |  | FourthQuarter(1) |         |  | Total(1)
|FISCAL YEAR 2006                                                                     |  |              |         |   |               |   |              |  |                  |         |  |          |         |   |  |   |        
|Net sales                                                                            |  | $            | 201,373 |   |               | $ | 225,419      |  | $                | 242,675 |  | $        | 249,046 |   |  | $ | 918,513
|Gross profit (excluding depreciation and amortization)                               |  |              | 16,039  |   |               |   | 31,751       |  |                  | 37,786  |  |          | 36,536  |   |  |   | 122,112
|(Loss) income before cumulative effect of change in accounting principle, net of tax |  |              | (4,606  | ) |               |   | 4,917        |  |                  | 9,310   |  |          | (3,826  | ) |  |   | 5,795  
|                                                                                     |  |              |         |   |               |   |              |  |                  |         |  |          |         |   |  |   |        
|Net (loss) income                                                                    |  |              | (4,606  | ) |               |   | 4,917        |  |                  | 9,310   |  |          | (4,224  | ) |  |   | 5,397  
|                                                                                     |  |              |         |   |               |   |              |  |                  |         |  |          |         |   |  |   |        
|FISCAL YEAR 2005                                                                     |  |              |         |   |               |   |              |  |                  |         |  |          |         |   |  |   |        
|Net sales                                                                            |  | $            | 174,707 |   |               | $ | 206,830      |  | $                | 227,412 |  | $        | 220,160 |   |  | $ | 829,109
|Gross profit (excluding depreciation and amortization)                               |  |              | 18,769  |   |               |   | 29,962       |  |                  | 35,869  |  |          | 30,470  |   |  |   | 115,070
|                                                                                     |  |              |         |   |               |   |              |  |                  |         |  |          |         |   |  |   |        
|Net (loss) income                                                                    |  |              | (1,889  | ) |               |   | 1,420        |  |                  | 6,012   |  |          | 2,586   |   |  |   | 8,129  
|                                                                                     |  |              |         |   |               |   |              |  |                  |         |  |          |         |   |  |   |        

---

|(1) | The results of operations in the fourth quarter of fiscal 2006 include the following items:
|--- | -------------------------------------------------------------------------------------------



| |  |  | ICL Asset Purchase was completed on July 17, 2006 and the related results of operations are included from the date of acquisition. See Note 2.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We recorded an adjustment of approximately $0.8 million related to a change in our estimated sublease assumptions on a closed manufacturing facility, which resulted in additional
restructuring expense. See Note 13.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We expensed approximately $0.8 million in debt issuance costs that could not be capitalized related to the refinancing of the credit facility. The expense was recorded to other
expense, net. See Note 6.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We recorded approximately $8.8 million in stock based compensation related to the cash settlement of certain Exchange Options exercised. The expense was recorded in Selling and
Administrative Expense. See Notes 1, 7 and 8.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We adopted FIN 47 at the end of 2006, which resulted in a charge of $0.4 million, net of related tax effect, related to the cumulative effect of change in accounting principle.
See Note 1.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The provision for income taxes includes approximately $0.9 million related to a Puerto Rican tax assessment and to approximately $1.0 million related to adjustments to our
estimated effective state tax rate.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-34



---

##### Table of Contents

##### Index to Financial Statements

INDEX TO FINANCIAL STATEMENT SCHEDULES



|            |  |                                                                        |  |    
|----------- |  | ---------------------------------------------------------------------- |  | ---
|Schedule II |  | Valuation and Qualifying Accounts of BWAY Corporation and Subsidiaries |  | S-2



S-1



---

##### Table of Contents

##### Index to Financial Statements

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

BWAY CORPORATION AND SUBSIDIARIES

(Dollars in thousands)



|                                 |  |                                |       |                                      |   |                                      |  |   |               |     |                           |   |     |  |   |      
|-------------------------------- |  | ------------------------------ | ----- | ------------------------------------ | - | ------------------------------------ |  | - | ------------- | --- | ------------------------- | - | --- |  | - | -----
|Description                      |  | Balance,Beginning of thePeriod |       | AdditionsCharged toCosts andExpenses |   | AcquiredBalances(PurchaseAccounting) |  |   | Deductions(2) |     | Balance, End ofthe Period
|Allowance for Doubtful Accounts: |  |                                |       |                                      |   |                                      |  |   |               |     |                           |   |     |  |   |      
|Year ended October 3, 2004       |  | $                              | 961   |                                      | $ | 265                                  |  | $ | 515           | (1) |                           | $ | 87  |  | $ | 1,654
|Year ended October 2, 2005       |  |                                | 1,654 |                                      |   | 189                                  |  |   |              |     |                           |   | 230 |  |   | 1,613
|Year ended October 1, 2006       |  |                                | 1,613 |                                      |   | 95                                   |  |   | 102           | (3) |                           |   | 108 |  |   | 1,702

---

|(1) | Represents the opening balance established as part of purchase accounting associated with the NAMPAC Acquisition.
|--- | -----------------------------------------------------------------------------------------------------------------

|(2) | Deductions represent the net write-offs of uncollectible items.
|--- | ---------------------------------------------------------------

|(3) | Represents the opening balance established as part of purchase accounting associated with the ICL Acquisition.
|--- | --------------------------------------------------------------------------------------------------------------



S-2