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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d)                   
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)                   
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from           to
 Commission file number 0-27818
 Doane Pet Care Company
  Delaware
    
    43-1350515(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. employer
identification no.)
 210 Westwood Place South,
Suite 400
Brentwood, TN 37027
 (615) 373-7774
 Securities registered pursuant to Section 12(b) of the Act
 Securities registered pursuant to Section 12(g) of the Act
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ




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TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    9Item 1B.
    
    Unresolved Staff Comments
    
    
    20Item 2.
    
    Properties
    
    
    20Item 3.
    
    Legal Proceedings
    
    
    21Item 4.
    
    Submissions of Matters to a Vote of Security Holders
    
    
    21PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    21Item 6.
    
    Selected Financial Data
    
    
    22Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 8.
    
    Financial Statements and Supplementary Data
    
    
    38Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    38Item 9A.
    
    Controls and Procedures
    
    
    38Item 9B.
    
    Other Information
    
    
    39PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    39Item 11.
    
    Executive Compensation
    
    
    41Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    47Item 13.
    
    Certain Relationships and Related Transactions
    
    
    50Item 14.
    
    Principal Accountant Fees and Services
    
    
    51PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    52Signatures
    
    
    55Index to Financial Statements
    
    
    F-1BylawsSupplemental Executive Retirement PlanList of SubsidiariesConsent of KPMG LLPCertification of CEO pursuant to Rule 13a-14(a)/15(d)-14(a)Certification of CFO pursuant to Rule 13a-14(a)/15(d)-14(a)Certification of CEO pursuant to 18 U.S.C. 1350Certification of CFO pursuant to 18 U.S.C. 1350




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Explanatory Note




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PART I
 
 ITEM 1  Business
 General
   
    
    Store brands (82.0% of our fiscal 2005 (combined) net sales). Store brands,
also known as private label, are brands owned or licensed by retailers that typically
provide a lower cost alternative to nationally branded products while providing comparable
quality. We believe store brand programs are continuing to increase in strategic importance
to global retailers, with the pet food category emerging as a leader in this trend. We
believe pet food is a destination purchase item, and therefore the pet food consumer is
valuable to retailers. A strong store brand program provides our retail customers with the
opportunity to create customer loyalty by providing better value for their consumers. In
addition, we believe store brands typically provide higher profit margin percentages for
retailers than nationally advertised brands. Our store brand customer base is broad and
includes leading mass merchandisers, grocery chains, farm and fleet companies and pet
specialty stores. Globally, we manufacture approximately 200 store brands.
    
    Co-manufacturing (15.1% of our fiscal 2005 (combined) net sales). As
nationally advertised brand pet food companies continue to consolidate and focus on the
marketing of their branded products, we believe they will continue to outsource a portion
of their pet food manufacturing to us and choose our global network to help service their
growing needs. Our co-manufacturing customers include the five largest global brand pet
food companies by revenue for whom we produce, package and ship a portion of their pet food
products.
    
    Regional brands that we own (2.9% of our fiscal 2005 (combined) net sales). We
produce and market regional brands that provide our customers with the opportunity to
broaden their pet food product offering. We primarily sell our regional brands to grocery
chains and farm and fleet companies. Globally, we manufacture approximately 30 regional
brands.
    1




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Recent Developments
 The Acquisition
  The Financing Transactions
  
    
    the termination and full settlement of our old $230.0 million senior credit
facility and the closing of a new $210.0 million senior credit facility;
    
    the closing of the private placement of $152.0 million aggregate principal
amount of 10
5/8%
senior subordinated notes due 2015 at an original issue discount of
99.2% and the subsequent exchange of these
private placement notes for $152.0 million of 10 5/8% senior subordinated notes due 2015 that
have been registered with the Securities and Exchange Commission;
    
    the redemption of our 9 3/4% senior subordinated notes due 2007 at a price of
100% of the aggregate principal amount of $150.0 million plus accrued and unpaid interest
to, but not including, the redemption date of November 22, 2005, which resulted
in a total redemption amount of $157.7 million;
    
    the redemption of our 14.25% senior preferred stock due 2007 at a purchase
price equal to 101% of the liquidation value thereof, which included a 1% change of control
premium, plus accrued and unpaid dividends to, but not including, the redemption date of
November 22, 2005 and resulted in a total redemption amount of $125.2 million; and
    
    the repurchase of $2.8 million aggregate principal amount of our 7.25% Ottawa
County Finance Authority industrial development revenue bonds at a purchase price equal to
101% of the principal amount thereof, which included a 1% change of control premium, plus
accrued and unpaid interest to, but not including, the purchase date of December 22, 2005.
 Cost Savings Initiatives
   2




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Products and Services
  
    
    product development services;
    
    packaging design services; and
    
    pricing and marketing strategy services in connection with our customers store brand programs.
    
    
    Dry pet food (71.3% of our fiscal 2005 (combined) net sales).We are the
second largest manufacturer of dry pet food in the United States. We produce, market and
distribute a wide selection of high quality dry pet food products, predominately for dogs
and cats. Our dry pet food product lines include high protein, premium-blended, puppy food,
gravy style, soft-dry and super premium meat inclusion products for dogs, and include
regular and blended products for cats.
    
    Wet and all other pet food (21.3% of our fiscal 2005 (combined) net sales).
These products are distinguishable from dry pet food based on their higher moisture level
content, the technology used to manufacture such products and their higher packaging costs.
Europe has a much stronger market for wet products than the United States. We manufacture
and sell wet pet food throughout Europe, including chunks and gravy, pâté and loaf, in a
variety of multi-serve and single-serve packaging, such as cans, alucups and pouches.
    
    Biscuits and treats (7.4% of our fiscal 2005 (combined) net sales).We are a
leading global manufacturer of dog biscuits and a manufacturer of soft treats. The
manufacturing process for dog biscuits primarily involves baking, whereas, manufacturing of
dry pet food involves extrusion.
  3




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Seasonality
  Marketing
  Sales and Distribution
     Customers
  4




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Competition
   Raw Materials and Packaging
     5




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Research and Development
  Quality Assurance
  Environmental and Safety Matters
    6




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7




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Trademarks
  Employees
  Foreign Operations
  Forward-Looking Statements
  8




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
    
    reliance on a few customers for a large portion of our sales and our ability to
maintain our relationships with these customers;
    
    our exposure to, and our ability to manage, our market risk relating to
commodity, oil and natural gas prices, interest rates and foreign currency exchange rates;
    
    changes in demand for our products;
    
    future capital expenditures and our ability to finance these capital expenditures;
    
    our ability to make required interest or principal payments on our senior
credit facility and our other indebtedness and to comply with the financial covenants under
our debt agreements;
    
    our business strategies and other plans and objectives for future operations;
    
    general economic and business conditions and changes in market trends;
    
    business opportunities that may be presented to and pursued by us from time to time;
    
    risks related to our international operations;
    
    risks related to product liability claims and product recalls;
    
    the outcome of any legal proceedings to which we or any of our subsidiaries may be a party; and
    
    the impact of existing or new accounting pronouncements.
  
 ITEM 1A  Risk Factors
 Risks Relating to Our Indebtedness
 Our level of indebtedness could negatively impact our financial condition, results of
operations and business prospects and prevent us from fulfilling our debt service obligations.
  
    
    making it more difficult for us to satisfy our debt service obligations which,
if we fail to comply with the requirements of any of our debt agreements, could result in
an event of default;
    
    requiring us to dedicate a substantial portion of our cash flows from
operations to make payments on our indebtedness, thereby reducing the availability of our
cash flow for capital expenditures, working capital, acquisitions and other general
business activities;
 9




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
    
    limiting our ability to obtain additional financing in the future for capital
expenditures, working capital, acquisitions and other general business activities;
    
    limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
    
    making us vulnerable to fluctuations in interest rates because indebtedness
under our senior credit facility is subject to variable interest rates;
    
    detracting from our ability to successfully withstand a downturn in our
business or the general economy; and
    
    placing us at a competitive disadvantage against other less leveraged pet food
companies.
 Despite current indebtedness levels, we and our subsidiaries may still be able to incur
substantially more debt, which could further exacerbate the risks associated with our substantial
indebtedness.
  We may not be able to generate sufficient cash flow to service our indebtedness.
     Our debt agreements limit certain business activities and could materially affect our operations.
  
    
    incurring additional indebtedness or issuing certain types of capital stock;
 10




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
    
    incurring liens;
    
    paying dividends or making other restricted payments;
    
    entering into transactions with affiliates;
    
    merging or consolidating with another entity;
    
    selling or disposing of our assets;
    
    making certain investments; or
    
    entering into certain lines of business.
    Our senior notes and the related guarantees are effectively subordinated to all of our secured
debt, including the debt under our senior credit facility, and if a default occurs, we may not have
sufficient funds to fulfill our obligations under our senior notes.
  11




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Our senior subordinated notes and the related guarantees are effectively subordinated to all of
our secured debt as a result of liens granted by us, including the debt under our senior credit
facility, and if a default occurs, we may not have sufficient funds to fulfill our obligations
under our senior subordinated notes.
   Our senior notes and senior subordinated notes are structurally subordinated to all indebtedness of
our subsidiaries that are not guarantors of these notes.
  12




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The right of holders of our senior subordinated notes to receive payments on these notes is junior
to the borrowings under our senior credit facility, senior notes and all future senior
indebtedness. Further, the guarantees of our senior subordinated notes are junior to our
guarantors senior indebtedness.
     Even if a transaction constitutes a change of control that would obligate us to offer to repurchase
certain of our indebtedness, we may not be permitted or have the ability to satisfy our obligation
to repurchase this indebtedness.
  13




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A guarantee of our senior notes or senior subordinated notes could be voided or subordinated
because of federal bankruptcy law or comparable state law provisions.
  
    
    was insolvent or rendered insolvent by reason of such incurrence;
    
    was engaged in a business or transaction for which the guarantors remaining
assets constituted unreasonably small capital;
    
    intended to incur, or believed that it would incur, indebtedness beyond its
ability to pay such debts as they mature; or
    
    was a defendant in an action for monetary damages, or had a judgment for
monetary damages against it if, in either case, after final judgment, the judgment is
unsatisfied.
   
    
    the sum of its debts, including contingent liabilities, was greater than the
fair saleable value of all of its assets;
    
    the present fair saleable value of its assets was less than the amount that
would be required to pay its probable liability on existing debts, including contingent
liabilities, as they become absolute and mature;
    
    the guarantor was a defendant in an action for monetary damages, or had a
judgment for monetary damages docketed against it if, in either case, after final judgment,
the judgment is unsatisfied; or
    
    it could not pay its debts as they become due.
  Risks Relating to Our Business Operations
 One of our customers accounts for a substantial portion of our revenue and the loss of this
customer, or a significant decrease or change in business with this customer, would have a material
adverse effect on our results of operations and reduce our ability to service our debt obligations.
 14




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We rely on a small number of customers, certain of which are able to make greater demands of us.
  Increases in raw materials, packaging, oil and natural gas costs and volatility in the commodity
markets has in the past and may in the future adversely affect our results of operations.
    The use of commodity derivative instruments may expose us to increased risk of market fluctuations
in commodity prices and may reduce our flexibility in managing fluctuations in the costs of our raw
materials, which may adversely affect our results of operations.
   15




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Restrictions imposed in reaction to outbreaks of mad cow disease, bird flu, foot-and-mouth
disease or other animal diseases could adversely impact the cost and availability of our raw
materials.
     Our acquisition activities, including integration, operation and management of these businesses,
may not be successful or may subject us to losses.
  16




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
    
    the expected operating efficiencies from the acquisitions do not materialize;
    
    we fail to successfully integrate the acquisitions into our existing operations; or
    
    the cost of integrating the acquired entity exceeds expectations.
 The amount of goodwill and other intangible assets we have recorded from the Acquisition may not be
realized, which could have a material adverse effect on our results of operations.
  We face significant competition from national, regional and store brand manufacturers, many of whom
are larger than we are and have significantly greater resources than we do.
  A significant portion of our revenues is derived from our international operations, which subject
us to additional business, economic and political risks and could limit our ability to successfully
execute our business strategy.
   17




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
    
    import and export license requirements;
    
    trade restrictions;
    
    foreign tax laws, tariffs, and other foreign laws and regulations;
    
    limitations on repatriating earnings back to the United States;
    
    difficulties in staffing and managing our international operations, including potential labor interruptions;
    
    nationalization;
    
    expropriation;
    
    restrictive actions by local governments;
    
    acts of terrorism;
    
    war and civil disturbance; and
    
    disruptions or delays in shipments.
  If we lose certain key employees or are unable to hire additional qualified employees, we may not
be successful.
  We are subject to extensive environmental regulation and our compliance with existing or future
laws and regulations or making any product recalls pursuant thereto could cause us to incur
substantial expenditures.
   18




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If we or our customers are the subject of product liability claims, we may incur significant and
unexpected costs and our business reputation could be adversely affected.
  If we experience product recalls, we may incur significant and unexpected costs and our business
reputation could be adversely affected.
  The board of directors of Doane Enterprises, our parent corporation, and our board of directors are
controlled by certain stockholders and their interests may be different than those of our
noteholders.
  We may be subject to work stoppages at our facilities or those of our principal customers or
transportation companies with whom we do business, which could have a material adverse effect on
the profitability of our business.
  19




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If the investments in our pension plans do not perform as expected, we may have to contribute
additional amounts to the plans.
  
 ITEM 1B  Unresolved Staff Comments
  
 ITEM 2  Properties
   Location
    
    Principal products
    
    Square footageU.S. manufacturing and distribution facilities:Allentown, PA
    
    Dry dog/cat food
    
    
    70,000Birmingham, AL
    
    Dry dog/cat food
    
    
    115,000Butler, MO
    
    Dry dog/cat food
    
    
    57,000Clinton, OK
    
    Dry dog/cat food
    
    
    197,000Dexter, MO
    
    Dry dog/cat food
    
    
    70,000Everson, PA
    
    Dry dog/cat food
    
    
    74,000Joplin, MO
    
    Dry dog/cat food; dog biscuits
    
    
    308,000LeSueur, MN
    
    Dry dog/cat food; dog biscuits
    
    
    160,000Manassas, VA
    
    Dry dog/cat food
    
    
    80,000McKenzie, TN
    
    Dry dog/cat food
    
    
    90,000Miami, OK
    
    Dog and cat treats
    
    
    76,000Muscatine, IA
    
    Dry dog/cat food
    
    
    100,000Orangeburg, SC
    
    Dry dog/cat food
    
    
    139,000Portland, IN
    
    Dog biscuits
    
    
    120,000Pueblo, CO
    
    Dry dog/cat food
    
    
    125,000San Bernardino, CA
    
    Dry dog/cat food
    
    
    169,000Temple, TX
    
    Dry dog/cat food
    
    
    110,000Tomah, WI
    
    Dry dog/cat food
    
    
    98,000Tracy, CA
    
    Dry dog/cat food
    
    
    110,000Washington Courthouse, OH
    
    Dry dog/cat food; dog biscuits
    
    
    190,000U.S. distribution warehouses:Johnstown, NY(1)
    
    N/A
    
    
    41,000Ocala, FL
    
    N/A
    
    
    76,000European manufacturing and distribution facilities:Carat, Austria (1)
    
    Wet dog/cat food
    
    
    38,000Esbjerg, Denmark
    
    Wet dog/cat food; treats
    
    
    487,000Norwich, England (1)
    
    Dry dog/cat food
    
    
    81,000Valladolid, Spain
    
    Dry dog/cat food
    
    
    112,000Vejen, Denmark
    
    Dry dog/cat food; treats
    
    
    151,000Joint venture facility:Milano, Italy
    
    Dry dog/cat food
    
    
    67,000
 
 (1)
    
    These facilities are leased. All other facilities are owned by us other than the joint
venture facility. 20




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ITEM 3  Legal Proceedings
  
 ITEM 4  Submissions of Matters to a Vote of Security Holders
  
 PART II
 
 ITEM 5  Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Market Information
   21




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Sales of Unregistered Equity Securities
  Dividends
   Equity Compensation Plan Information
  
 ITEM 6  Selected Financial Data
  22




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Predecessor
    
    
    
    SuccessorPeriod
    
    
    
    PeriodJanuary 2
    
    
    
    October 24through
    
    
    
    through
    
    
    
    CombinedOctober 23,
    
    
    
    December 31,
    
    
    
    basis2001 (1)(2)
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    
    2005
    
    
    
    2005Statement of income data:Net sales
    
    $
    895,830
    
    
    $
    887,333
    
    
    $
    1,013,865
    
    
    $
    1,051,241
    
    
    $
    795,476
    


    
    $
    196,134
    
    
    
    $
    991,610Cost of goods sold
    
    
    749,092
    
    
    
    701,418
    
    
    
    851,578
    
    
    
    896,191
    
    
    
    654,312
    


    
    
    162,208
    
    
    
    
    816,520Gross profit
    
    
    146,738
    
    
    
    185,915
    
    
    
    162,287
    
    
    
    155,050
    
    
    
    141,164
    


    
    
    33,926
    
    
    
    
    175,090Operating expenses:Promotion and distribution
    
    
    58,241
    
    
    
    52,445
    
    
    
    57,616
    
    
    
    56,805
    
    
    
    46,230
    


    
    
    11,441
    
    
    
    
    57,671Selling, general and administrative
    
    
    47,945
    
    
    
    48,712
    
    
    
    52,015
    
    
    
    51,861
    
    
    
    41,479
    


    
    
    9,702
    
    
    
    
    51,181Amortization (3)
    
    
    13,743
    
    
    
    4,583
    
    
    
    4,989
    
    
    
    4,313
    
    
    
    3,419
    


    
    
    2,348
    
    
    
    
    5,767Transaction costs (4)
    
    
    
    
    
    
    1,447
    
    
    
    
    
    
    
    333
    
    
    
    23,370
    


    
    
    
    
    
    
    
    23,370Other
operating expenses (income), net (5)
    
    
    8,655
    
    
    
    
    
    
    
    7,227
    
    
    
    6,645
    
    
    
    5,326
    


    
    
    (624
    )
    
    
    
    4,702Income from operations
    
    
    18,154
    
    
    
    78,728
    
    
    
    40,440
    
    
    
    35,093
    
    
    
    21,340
    


    
    
    11,059
    
    
    
    
    32,399Interest expense, net
    
    
    57,020
    
    
    
    62,395
    
    
    
    57,494
    
    
    
    72,841
    
    
    
    61,936
    


    
    
    11,137
    
    
    
    
    73,073Debt extinguishments (6)
    
    
    
    
    
    
    
    
    
    
    4,438
    
    
    
    4,137
    
    
    
    
    


    
    
    
    
    
    
    
    Other income, net
    
    
    (757
    )
    
    
    (724
    )
    
    
    (1,156
    )
    
    
    (1,417
    )
    
    
    (752
    )


    
    
    (408
    )
    
    
    
    (1,160
    )Income (loss) before income taxes
    
    
    (38,109
    )
    
    
    17,057
    
    
    
    (20,336
    )
    
    
    (40,468
    )
    
    
    (39,844
    )


    
    
    330
    
    
    
    
    (39,514
    )Income tax expense (benefit)
    
    
    (16,171
    )
    
    
    1,786
    
    
    
    25,039
    
    
    
    5,124
    
    
    
    4,094
    


    
    
    1,114
    
    
    
    
    5,208Net income (loss)
    
    $
    (21,938
    )
    
    $
    15,271
    
    
    $
    (45,375
    )
    
    $
    (45,592
    )
    
    $
    (43,938
    )


    
    $
    (784
    )
    
    
    $
    (44,722
    )
 Predecessor
    


    
    SuccessorPeriod


    
    PeriodJanuary 2


    
    October 24through
    
    
    through
    
    
    CombinedOctober 23,
    
    
    December 31,
    
    
    basis2001 (1)(2)
    
    2002
    
    2003
    
    2004
    
    2005
    
    
    2005
    
    
    2005Other data:Cash flows provided by (used in) operating activities
    
    $
    (23,936
    )
    
    $
    78,773
    
    
    $
    55,663
    
    
    $
    21,287
    
    
    $
    30,410
    

    $
    6,478
    
    
    
    
    $
    36,888Cash flows provided by (used in) investing activities
    
    
    1,466
    
    
    
    (25,902
    )
    
    
    (30,185
    )
    
    
    (20,054
    )
    
    
    (18,516
    )

    
    (8,981
    )
    
    
    
    
    (27,497
    )Cash flows provided by (used in) financing activities
    
    
    25,433
    
    
    
    (51,731
    )
    
    
    (4,572
    )
    
    
    (1,829
    )
    
    
    (4,504
    )

    
    (24,904
    )
    
    
    
    
    (29,408
    )Depreciation and amortization
    
    
    41,430
    
    
    
    32,164
    
    
    
    37,161
    
    
    
    40,356
    
    
    
    32,018
    

    
    9,884
    
    
    
    
    
    41,902Capital expenditures (7)
    
    
    17,316
    
    
    
    24,348
    
    
    
    28,062
    
    
    
    18,856
    
    
    
    17,227
    

    
    8,878
    
    
    
    
    
    26,105Volume of pet food manufactured and sold
(thousands of U.S tons):North America
    
    
    1,626
    
    
    
    1,656
    
    
    
    1,781
    
    
    
    1,588
    
    
    
    1,222
    

    
    324
    
    
    
    
    
    1,546Europe
    
    
    282
    
    
    
    258
    
    
    
    276
    
    
    
    289
    
    
    
    236
    

    
    63
    
    
    
    
    
    299
 Predecessor end ofSuccessorend of2001 (1)(2)
    
    2002
    
    2003
    
    2004


    
    2005Balance sheet data:Working capital (8)
    
    $
    46,995
    
    
    $
    59,215
    
    
    $
    41,704
    
    
    $
    28,830
    


    
    $
    47,651Total assets
    
    
    836,545
    
    
    
    870,667
    
    
    
    885,914
    
    
    
    901,906
    


    
    
    1,109,338Total debt (9)
    
    
    587,823
    
    
    
    554,020
    
    
    
    574,046
    
    
    
    690,184
    


    
    
    564,276Senior Preferred Stock (Redeemable) (9)
    
    
    65,672
    
    
    
    77,550
    
    
    
    91,052
    
    
    
    
    


    
    
    Stockholders equity
    
    
    37,926
    
    
    
    58,503
    
    
    
    32,549
    
    
    
    7,126
    


    
    
    301,283
 
 (1)
    
    Results for fiscal 2001 include the results of two divestitures until the dates of sale.
We sold our Perham, Minnesota facility, including the Tuffys Brand on April 27, 2001, and our
Deep Run domestic wet pet food business May 3, 2001.(2)
    
    Results for fiscal 2001 include $16.9 million of expenses associated with strategic
initiatives that commenced in fiscal 2001 and consist of $6.7 million of other operating
expenses related to the divestitures and $10.2 million of expenses associated with cost
reduction initiatives. The expenses were classified as follows: (1) $0.3 million as a
reduction in net sales; (2) $6.6 million as cost of goods sold; (3) $0.9 million as promotion
and distribution expenses; (4) $0.4 million as selling, general and administrative expenses;
and (5) $2.0 million as other operating expenses.(3)
    
    As of the beginning of fiscal 2002, we adopted SFAS No. 142, Goodwill and Other Intangible
Assets, or SFAS 142, and 23




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##### Table of Contents



ceased amortization of goodwill and other intangible assets
with indefinite lives. Net loss for fiscal 2001, as
adjusted to give effect to the adoption of SFAS 142 as of the beginning of fiscal year, would
have been $14.3 million.(4)
    
    Transaction costs of $1.4 million in fiscal 2002 consist of $0.8 million related to our
postponed senior note offering and $0.6 million for an abandoned strategic initiative.Transaction costs of $0.3 million in fiscal 2004 relate to an unconsummated strategic
initiative.Transaction costs of $23.4 million in fiscal 2005
(combined) primarily relate to the Acquisition and
consist of transaction fees and expenses of $3.4 million incurred by us and compensation
expenses of $20.0 million associated with the payment of transaction bonuses and the
settlement of all outstanding stock options in cash.(5)
    
    Other operating expenses, net, of $8.7 million in fiscal 2001 include a $4.7 million net loss
from the divestitures described above, $1.0 million of asset impairments associated with cost
reduction initiatives and a U.S. plant closure and $3.0 million of severance for the
elimination of corporate positions due to the divestitures and cost reduction initiatives.Other operating expenses, net, of $7.2 million in fiscal 2003 primarily consist of asset
impairments of $5.3 million related to the building and certain equipment of our Vrä, Denmark
manufacturing facility in connection with our European restructuring plan and $2.4 million
related to the divestiture of our 51% interest in Crona.Other operating expenses, net, of $6.6 million in fiscal 2004 primarily related to our
European restructuring plan and include $3.2 million of severance, $2.5 million of equipment
installation costs and $1.3 million for manufacturing inefficiencies. In addition, we had
litigation settlements of $0.6 million in fiscal 2004 consisting of $0.6 million of proceeds
from an arbitration award and $0.7 million of proceeds from a lawsuit settlement, partially
offset by $0.7 million paid by us to a former vendor as settlement costs.Other operating expenses, net, of $4.7 million in fiscal 2005 (combined) include $6.1 million
of asset impairments and $2.7 million of severance costs primarily related to our 2005 cost
savings initiatives. In addition, we had favorable litigation settlements of $5.1 million.(6)
    
    Debt extinguishments of $4.4 million in fiscal 2003 consist of $4.1 million related to our
February 2003 refinancing transactions and $0.3 million related to the write-off of a pro-rata
portion of unamortized debt issuance costs for an optional prepayment we made on a previous
senior credit facility.Debt extinguishment of $4.1 million in fiscal 2004 relates to the write-off of unamortized
debt issuance costs in connection with the November 2004 refinancing of our senior credit
facility.(7)
    
    Capital expenditures exclude payments for acquisitions.(8)
    
    Working capital has been calculated as current assets less current liabilities, excluding
cash and cash equivalents and current maturities of long-term debt.(9)
    
    Senior Preferred Stock (Redeemable) was reclassified to long-term debt as of the beginning of
fiscal 2004 upon adoption of SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity. 
 ITEM 7  Managements Discussion and Analysis of Financial Condition and Results of Operations
   24




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##### Table of Contents



Business Overview
    
    
    Dry pet food has grown more rapidly than wet pet food.From 2001 to 2005, dry
pet food grew at a compound annual growth rate of 4.7% compared to 2.9% for wet pet food.
    
    Store brand dry pet food has grown more rapidly than nationally advertised
brand dry pet food.From 2001 to 2005, store brand dry pet food grew at a compound annual
growth rate of 8.8% compared to 3.7% for nationally advertised brand dry pet food.
    
    Sales through mass merchandisers have grown more rapidly than sales through the
grocery channel.From 2001 to 2005, pet food sales through mass merchandisers grew at a
compound annual growth rate of 9.2%, compared to a decline of 1.3% for the grocery channel.
In fiscal 2005, 30% of pet food sales through mass merchandisers were store brands
compared to 12% for the grocery channel.
    
    Consolidation.Over the past several years, consolidation occurred among pet
food producers, including Nestlé S.A.s 2001 acquisition of Ralston Purina Company in the
United States and Mars, Inc.s 2002 acquisition of Royal Canin S.A. in Europe. On March 2,
2006, Del Monte Foods Company announced that it had entered into an agreement to acquire
The Meow Mix Company for $705 million. The Meow Mix business had been sold to private
investors in connection with Nestle S.A.s acquisition of Ralston Purina Company. On March
16, 2006, Del Monte Foods Company announced that it had entered into an agreement to
acquire from Kraft Foods Global, Inc. certain pet food assets, including the Milk Bone
brand, for $580 million.
   25




---



##### Table of Contents



Fiscal 2005 Year in Review
  The Acquisition
  The Financing Transactions
  
    
    the termination and full settlement of our old $230.0 million senior credit
facility and the closing of a new $210.0 million senior credit facility;
    
    the closing of the private placement of $152.0 million in aggregate principal
amount of 10

5/8% senior subordinated notes due 2015 at an original issue discount of 99.2%
and the subsequent exchange of these private placement notes for
$152.0 million of 10 5/8%
senior subordinated notes due 2015 that have been registered with the Securities and
Exchange Commission;
    
    the redemption of our 9 3/4% senior subordinated notes due 2007 at a price of
100% of the aggregate principal amount of $150.0 million plus accrued and unpaid interest
to, but not including, the redemption date of November 22, 2005, which resulted in a total
redemption amount of $157.7 million;
 26




---



##### Table of Contents




    
    the redemption of our 14.25% senior preferred stock due 2007 at a purchase
price equal to 101% of the liquidation value thereof, which included a 1% change of control
premium, plus accrued and unpaid interest to, but not including, the redemption date of
November 22, 2005 and resulted in a total redemption amount of $125.2 million; and
    
    the repurchase of $2.8 million aggregate principal amount of our 7.25% Ottawa
County Finance Authority industrial development revenue bonds at a purchase price equal to
101% of the principal amount thereof, which includes a 1% change of control premium, plus
accrued and unpaid interest to, but not including, the repurchase date of December 22,
2005.
  Cost Savings Initiatives
    Results of Operations
   27




---



##### Table of Contents



Statement of operations data
 Predecessor period
    
    
    
    Successor periodJanuary 2 through October
    
    
    
    October 24 through December23, 2005
    
    
    
    31, 2005
    



    
    Combined basis 2005Net sales
    
    $
    795,476
    
    
    
    100.0
    %
    
    
    $
    196,134
    
    
    
    100.0
    %



    
    $
    991,610
    
    
    
    100.0
    %Cost of goods sold:Commodities
    
    
    370,271
    
    
    
    46.5
    
    
    
    
    87,934
    
    
    
    44.8
    



    
    
    458,205
    
    
    
    46.2Other
    
    
    284,041
    
    
    
    35.7
    
    
    
    
    74,274
    
    
    
    37.9
    



    
    
    358,315
    
    
    
    36.1Total cost of goods sold
    
    
    654,312
    
    
    
    82.2
    
    
    
    
    162,208
    
    
    
    82.7
    



    
    
    816,520
    
    
    
    82.3Gross profit
    
    
    141,164
    
    
    
    17.8
    
    
    
    
    33,926
    
    
    
    17.3
    



    
    
    175,090
    
    
    
    17.7Operating expenses:Promotion and distribution
    
    
    46,230
    
    
    
    5.8
    
    
    
    
    11,441
    
    
    
    5.8
    



    
    
    57,671
    
    
    
    5.8Selling, general and administrative
    
    
    41,479
    
    
    
    5.2
    
    
    
    
    9,702
    
    
    
    4.9
    



    
    
    51,181
    
    
    
    5.2Amortization
    
    
    3,419
    
    
    
    0.4
    
    
    
    
    2,348
    
    
    
    1.2
    



    
    
    5,767
    
    
    
    0.6Transaction costs
    
    
    23,370
    
    
    
    2.9
    
    
    
    
    
    
    
    
    
    



    
    
    23,370
    
    
    
    2.3Other operating expenses (income), net
    
    
    5,326
    
    
    
    0.7
    
    
    
    
    (624
    )
    
    
    (0.3
    )



    
    
    4,702
    
    
    
    0.5Income from operations
    
    
    21,340
    
    
    
    2.8
    
    
    
    
    11,059
    
    
    
    5.7
    



    
    
    32,399
    
    
    
    3.3Interest expense, net
    
    
    61,936
    
    
    
    7.8
    
    
    
    
    11,137
    
    
    
    5.7
    



    
    
    73,073
    
    
    
    7.4Other income, net
    
    
    (752
    )
    
    
    (0.1
    )
    
    
    
    (408
    )
    
    
    (0.2
    )



    
    
    (1,160
    )
    
    
    (0.1
    )Income (loss) before income taxes
    
    
    (39,844
    )
    
    
    (4.9
    )
    
    
    
    330
    
    
    
    (0.2
    )



    
    
    (39,514
    )
    
    
    (4.0
    )Income tax expense
    
    
    4,094
    
    
    
    0.5
    
    
    
    
    1,114
    
    
    
    0.6
    



    
    
    5,208
    
    
    
    0.5Net loss
    
    $
    (43,938
    )
    
    
    (5.4
    )%
    
    
    $
    (784
    )
    
    
    (0.4)
    %



    
    $
    (44,722
    )
    
    
    (4.5
    )%
 2003
    
    
    2004
    
    
    Combined basis 2005Net sales
    
    $
    1,013,865
    
    
    
    100.0
    %
    
    $
    1,051,241
    
    
    
    100.0
    %
    
    $
    991,610
    
    
    
    100.0
    %Cost of goods sold:Commodities
    
    
    494,302
    
    
    
    48.8
    
    
    
    531,980
    
    
    
    50.6
    
    
    
    458,205
    
    
    
    46.2Other
    
    
    357,276
    
    
    
    35.2
    
    
    
    364,211
    
    
    
    34.7
    
    
    
    358,315
    
    
    
    36.1Total cost of goods sold
    
    
    851,578
    
    
    
    84.0
    
    
    
    896,191
    
    
    
    85.3
    
    
    
    816,520
    
    
    
    82.3Gross profit
    
    
    162,287
    
    
    
    16.0
    
    
    
    155,050
    
    
    
    14.7
    
    
    
    175,090
    
    
    
    17.7Operating expenses:Promotion and distribution
    
    
    57,616
    
    
    
    5.7
    
    
    
    56,805
    
    
    
    5.4
    
    
    
    57,671
    
    
    
    5.8Selling, general and administrative
    
    
    52,015
    
    
    
    5.1
    
    
    
    51,861
    
    
    
    4.9
    
    
    
    51,181
    
    
    
    5.2Amortization
    
    
    4,989
    
    
    
    0.5
    
    
    
    4,313
    
    
    
    0.4
    
    
    
    5,767
    
    
    
    0.6Transaction costs
    
    
    
    
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    23,370
    
    
    
    2.3Other operating expenses, net
    
    
    7,227
    
    
    
    0.7
    
    
    
    6,645
    
    
    
    0.7
    
    
    
    4,702
    
    
    
    0.5Income from operations
    
    
    40,440
    
    
    
    4.0
    
    
    
    35,093
    
    
    
    3.3
    
    
    
    32,399
    
    
    
    3.3Interest expense, net
    
    
    57,494
    
    
    
    5.7
    
    
    
    72,841
    
    
    
    6.8
    
    
    
    73,073
    
    
    
    7.4Debt extinguishments
    
    
    4,438
    
    
    
    0.4
    
    
    
    4,137
    
    
    
    0.4
    
    
    
    
    
    
    
    Other income, net
    
    
    (1,156
    )
    
    
    (0.1
    )
    
    
    (1,417
    )
    
    
    (0.1
    )
    
    
    (1,160
    )
    
    
    (0.1
    )Loss before income taxes
    
    
    (20,336
    )
    
    
    (2.0
    )
    
    
    (40,468
    )
    
    
    (3.8
    )
    
    
    (39,514
    )
    
    
    (4.0
    )Income tax expense
    
    
    25,039
    
    
    
    2.5
    
    
    
    5,124
    
    
    
    0.5
    
    
    
    5,208
    
    
    
    0.5Net loss
    
    $
    (45,375
    )
    
    
    (4.5
    )%
    
    $
    (45,592
    )
    
    
    (4.3
    )%
    
    $
    (44,722
    )
    
    
    (4.5
    )%
 28




---



##### Table of Contents



Fiscal 2005 (Combined) Compared to Fiscal 2004
 Net sales.
 Gross profit.
 Promotion and distribution
 Selling, general and administrative expenses
 Transaction
costs.
 Other
operating expenses, net.
 Interest expense, net. 5 8 3 4
 Debt
extinguishments
 29




---



##### Table of Contents



Income tax expense.
 Fiscal 2004 Compared to Fiscal 2003
 Net sales.
 Gross profit
 Promotion and distribution
 Selling, general and administrative. rd
 Other operating expenses.
 Interest expense, net . rd
 Debt extinguishments
 Income tax expense.
 30




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##### Table of Contents



Liquidity and Capital Resources
 General
  Financial Covenant Compliance
   Cash Flows
     31




---



##### Table of Contents



5 8
 Liquidity
   5 8
    Debt
  32




---



##### Table of Contents



Predecessor
    
    
    Successorend of 2004
    
    
    end of 2005Revolving credit facility
    
    $
    
    
    
    $
    U.S. dollar term loan facility
    
    
    
    
    
    
    104,737Euro term facility
    
    
    
    
    
    
    54,481Old term loan facility
    
    
    194,513
    
    
    
    10 3/4% senior notes
    
    
    211,144
    
    
    
    231,49310 5/8% senior subordinated notes
    
    
    
    
    
    
    150,8439 3/4% senior subordinated notes
    
    
    149,147
    
    
    
    Industrial development revenue bonds
    
    
    14,493
    
    
    
    11,754Debt of foreign subsidiaries
    
    
    14,466
    
    
    
    10,968583,763
    
    
    
    564,276Less: Current maturities
    
    
    (3,673
    )
    
    
    (3,158
    )580,090
    
    
    
    561,118Senior preferred stock
    
    
    106,421
    
    
    
    Total
    
    $
    686,511
    
    
    $
    561,118
 New Senior Credit Facility
   The facilities
 Interest.
 Maturities
 Prepayments
  33




---



##### Table of Contents



Guarantees; collateral
 Covenants
 10 5/8% Senior Subordinated Notes
 5 8 5 8
 5 8
 Use of Proceeds From the Transactions
 5 8 3 4 5 8
 Long-Term Debt Maturities
  34




---



##### Table of Contents



Maturities by year2006
    
    $
    3,1582007
    
    
    3,3602008
    
    
    3,5042009
    
    
    3,6232010
    
    
    235,2092011 and thereafter
    
    
    315,422Total
    
    $
    564,276
 Contractual Obligations
  Payments due by period2011 and2006
    
    
    2007-2008
    
    
    2009-2010
    
    
    thereafter
    
    
    TotalContractual obligations:Long-term debt
    
    $
    3,158
    
    
    $
    6,864
    
    
    $
    238,832
    
    
    $
    315,422
    
    
    $
    564,276Operating leases
    
    
    3,770
    
    
    
    6,264
    
    
    
    2,631
    
    
    
    2,706
    
    
    
    15,371Total
    
    $
    6,928
    
    
    $
    13,128
    
    
    $
    241,463
    
    
    $
    318,128
    
    
    $
    579,647
 Payments due by period2011 and2006
    
    
    2007-2008
    
    
    2009-2010
    
    
    thereafter
    
    
    TotalOther commerical obligations:Standby letters of credit
    
    $
    4,521
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,521
 Commitments and Contingencies
  Off-Balance Sheet Arrangements
  Inflation and Changes in Prices
  35




---



##### Table of Contents



Critical Accounting Policies
 Accounts receivable allowances.
 Inventories allowances
 Deferred tax assets
  Goodwill and intangible assets
  36




---



##### Table of Contents



Recently Issued Accounting Pronouncements
  
 ITEM 7A  Quantitative and Qualitative Disclosures About Market Risk
  Commodity price risk
    Interest rate risk
 37




---



##### Table of Contents



Foreign currency exchange risk
  
 ITEM 8  Financial Statements and Supplementary Data
  
 ITEM 9  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 ITEM 9A  Controls and Procedures
 Evaluation of disclosure controls and procedures.
  38




---



##### Table of Contents



Changes in internal controls over financial reporting.
 
 ITEM 9B  Other Information
 Supplemental
Executive Retirement Plan.
  Annual
Target Bonuses for Executive Officers.
 
 PART III
 
 ITEM 10  Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    PositionDouglas J. Cahill (1)
    
    46
    
    Chief Executive Officer, President and DirectorPhilip K. Woodlief (1)
    
    52
    
    Vice President, Finance and Chief Financial OfficerDavid L. Horton
    
    45
    
    Vice President and General Manager, North American OperationsJoseph J. Meyers
    
    44
    
    Vice President, Supply Chain,
Quality and Chief Information OfficerRichard A. Hannasch
    
    52
    
    Vice President, Co-Manufacturing and SpecialtyKenneth H. Koch
    
    50
    
    Vice President, Doane EuropeDean G. Metcalf
    
    50
    
    Chairman of the BoardTerry R. Peets
    
    61
    
    DirectorGlen Silvestri
    
    34
    
    Director
 
 (1)
    
    These executive officers hold the same positions at Doane and Doane Enterprises 39




---



##### Table of Contents



Douglas J. Cahill
 Philip K. Woodlief
 David L. Horton
 Joseph J. Meyers
 Richard A. Hannasch
 Kenneth H. Koch
 Dean
G. Metcalf
 Terry R. Peets
 40




---



##### Table of Contents



Glen Silvestri
 Board Committees
  Code of Ethics
  
 ITEM 11  Executive Compensation
 Summary Compensation Table
  41




---



##### Table of Contents



Long-termcompensationawards ofsecuritiesAnnual compensation (1)
    
    underlyingName and principal
    
    Fiscal
    
    
    
    
    
    
    
    
    
    Other annual
    
    options/SARSposition at Doane
    
    year
    
    Salary
    
    Bonus(2)
    
    compensation
    
    (#)
    
    All other compensationDouglas J. Cahill
    
    
    2005
    
    
    
    450,000
    
    
    
    742,500
    
    
    $
    
    
    
    
    71,415
    
    
    
    7,097,235
    (3)(4)(5)(6)(7)(8)President and Chief
    
    
    2004
    
    
    
    437,500
    
    
    
    742,500
    
    
    
    
    
    
    
    
    
    
    
    347,255
    (4)(5)(6)(7)(8)Executive Officer
    
    
    2003
    
    
    
    400,000
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    206,350
    (4)(5)(6)(7)(8)Philip K. Woodlief
    
    
    2005
    
    
    
    275,000
    
    
    
    226,875
    
    
    
    
    
    
    
    37,939
    
    
    
    2,614,906
    (3)(4)(5)(6)(7)(8)Vice President, Finance and
    
    
    2004
    
    
    
    268,750
    
    
    
    226,875
    
    
    
    
    
    
    
    
    
    
    
    114,649
    (4)(5)(6)(7)(8)Chief Financial Officer
    
    
    2003
    
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    70,000
    
    
    
    66,112
    (4)(5)(6)(7)(8)David L. Horton
    
    
    2005
    
    
    
    275,000
    
    
    
    226,875
    
    
    
    
    
    
    
    37,939
    
    
    
    2,112,413
    (3)(4)(5)(6)(7)(8)Vice President and General
    
    
    2004
    
    
    
    268,750
    
    
    
    226,875
    
    
    
    
    
    
    
    
    
    
    
    112,657
    (4)(5)(6)(7(8)Manager, North American
    
    
    2003
    
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    70,000
    
    
    
    61,569
    (4)(5)(6)(7)(8)OperationsJoseph J. Meyers
    
    
    2005
    
    
    
    250,000
    
    
    
    170,000
    
    
    
    
    
    
    
    37,939
    
    
    
    2,071,951
    (3)(4)(5)(6)(7)(8)Vice President, Supply Chain,
    
    
    2004
    
    
    
    242,500
    
    
    
    137,500
    
    
    
    
    
    
    
    20,000
    
    
    
    70,450
    (4)(5)(6)(7)Quality and Chief
    
    
    2003
    
    
    
    220,000
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    54,251
    (4)(5)(6)(7)Information OfficerKenneth H. Koch (9)
    
    
    2005
    
    
    
    250,000
    
    
    
    137,500
    
    
    
    74,996
    (10)
    
    
    37,939
    
    
    
    1,507,414
    (3)(4)(5)(6)(7)Vice President, Doane Europe
    
    
    2004
    
    
    
    250,000
    
    
    
    137,500
    
    
    
    102,510
    (10)
    
    
    100,000
    
    
    
    1,349
    (6)(7)2003
    
    
    
    24,000
    
    
    
    
    
    
    
    4,723
    (10)
    
    
    
    
    
    
    
 
 (1)
    
    Amounts exclude perquisites and other personal benefits that did not exceed the lesser
of either $50,000 or 10% of the total annual salary and bonus reported for each Named
Executive Officer.(2)
    
    The annual bonus for the Executive Officers for 2003 and 2005 was, and for 2006 will
be, calculated by multiplying their respective target bonus amounts times a factor that is
determined according to the achievement of a company performance incentive target. For
2004, the annual bonus also included individual performance incentive targets. For such
year, the company performance target and the individual performance targets were weighted
60% and 40%, respectively. Actual company performance and individual performance can
result in the actual bonus being less than or greater than the target bonus. The target
bonus for Mr. Cahill is 150% of his annual base salary amount, which is currently $450,000,
and the target bonuses for each of Messrs. Woodlief and Horton are 75% of their annual base
salary amounts, which are $275,000, each. The target bonus for each of Messrs. Meyers and
Koch was 50% for each of the years 2003 through 2005, and for 2006 will be 75% of their
annual base salary amounts, which are $250,000 each. In addition,
Mr. Meyers annual bonus was increased by $32,500 in 2006 for extraordinary performance. Bonus payments for
fiscal 2005 and 2004 were each 110% of the incentive target. The bonus payments for fiscal
2005 were paid contemporaneously with the filing of this Form 10-K. No annual bonus
payments were made in 2003.(3)
    
    Amounts include transaction bonuses paid in connection with the Acquisition in cash and
contractual rights to receive shares of Class A common stock of Doane Enterprises in fiscal
2005 as follows: Mr. Cahill  $6,750,000; Mr. Woodlief  $2,500,000; Mr. Horton and Mr.
Meyers  $2,000,000; and Mr. Koch  $1,500,000. See Management Investment and
Transaction Bonuses for a description of these contractual rights to receive shares and
for the amount of these transaction bonuses that were paid in cash.(4)
    
    Amounts include retention bonuses paid as follows: Mr. Cahill  $200,000 in 2003,
$337,500 in 2004 and $337,500 in 2005; Mr. Woodlief  $56,250 in 2003, $103,125 in 2004 and
$103,125 in 2005; Mr. Horton  $56,250 in 2003, $103,125 in 2004 and $103,125 in 2005; and
Mr. Meyers  $50,000 in 2003, $62,500 in 2004 and $62,500 in 2005.(5)
    
    Amounts include a company match under the Doane Pet Care Retirement Savings Plan as
follows: Mr. Cahill $2,769 in 2003, $6,150 in 2004 and $6,500 in 2005; Mr. Woodlief 
$6,000 in 2003, $7,650 in 2004 and $8,273 in 2005; Mr. Horton  $1,950 in 2003, $6,150 in
2004 and $6,273 in 2005; Mr. Meyers $2,331 in 2003, $6,016 in 2004 and $6,447 in 2005;
and Mr. Koch  $865 in 2004 and $5,846 in 2005.(6)
    
    Amounts include term life insurance premiums as follows: Mr. Cahill  $192 in 2003,
$216 in 2004 and $207 in 2005; Mr. Woodlief $120 in 2003, $132 in 2004 and $127 in 2005;
Mr. Horton $120 in 2003, $132 in 2004 and $127 in 2005; Mr. Meyers $106 in 2003, $120 in
2004 and $115 in 2005; and Mr. Koch  $30 in 2004 and $115 in 2005.(7)
    
    Amounts include disability insurance premiums in 2003 and 2004 of $1,814 except for Mr.
Koch which includes $454 in 2004 and premiums in 2005 of $1,453. 42




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##### Table of Contents



(8)
    
    Amounts include supplemental long-term disability premiums as follows: Mr. Cahill 
$1,575 in 2003, 2004 and 2005; Mr. Woodlief  $1,928 in 2003, 2004 and 2005; Mr. Horton 
$1,435 in 2003, 2004 and 2005; and Mr. Meyers  $1,436 in 2005.(9)
    
    Mr. Koch was hired in November 2003 as Vice President, Doane Europe, and in July 2004,
was made an executive officer.(10)
    
    Amounts include reimbursement for the payment of taxes of $58,517 in 2004 and $4,723 in
2003, a housing allowance of $33,356 in 2004 and $57,857 in 2005, and a car allowance of
$10,687 in 2004 and $17,139 in 2005. Employment and Retirement Agreements
   Compensation of Directors
  43




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##### Table of Contents



Transaction Bonuses
  Stock Option Plans
   Stock Option Grants
  44




---



##### Table of Contents



Potential
    
    Potentialrealizable
    
    realizablevalue at
    
    value atIndividual grants
    
    assumed 5%
    
    assumed 10%Number of
    
    % of total
    
    
    
    
    
    
    
    
    
    annual rate
    
    annual ratesecurities
    
    options
    
    
    
    
    
    
    
    
    
    of stock price
    
    of stock priceunderlying
    
    granted to
    
    Exercise
    
    
    
    
    
    appreciation
    
    appreciationoptions
    
    employees in
    
    price per
    
    Expiration
    
    for option
    
    for optionName
    
    granted
    
    fiscal 2005
    
    share
    
    date
    
    term
    
    termDouglas J. Cahill
    
    
    71,415
    
    
    
    26.2
    %
    
    $
    100.00
    
    
    
    2015
    
    
    $
    4,491
    
    
    $
    11,382Philip K. Woodlief
    
    
    37,939
    
    
    
    13.9
    
    
    
    100.00
    
    
    
    2015
    
    
    
    2,386
    
    
    
    6,047David L. Horton
    
    
    37,939
    
    
    
    13.9
    
    
    
    100.00
    
    
    
    2015
    
    
    
    2,386
    
    
    
    6,047Joseph J. Meyers
    
    
    37,939
    
    
    
    13.9
    
    
    
    100.00
    
    
    
    2015
    
    
    
    2,386
    
    
    
    6,047Kenneth H. Koch
    
    
    37,939
    
    
    
    13.9
    
    
    
    100.00
    
    
    
    2015
    
    
    
    2,386
    
    
    
    6,047
 Stock Option Exercises
  Number ofshares
    
    
    
    
    
    Number of shares underlying
    
    Value of shares underlying in-the-acquired on
    
    
    
    
    
    unexercised options
    
    money unexercised optionsName
    
    exercise
    
    Value realized
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableDouglas J. Cahill
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    71,415
    
    
    $
    
    
    
    $
    Philip K. Woodlief
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,939
    
    
    
    
    
    
    
    David L. Horton
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,939
    
    
    
    
    
    
    
    Joseph J. Meyers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,939
    
    
    
    
    
    
    
    Kenneth H. Koch
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,939
    
    
    
    
    
    
    
    
  Compensation Committee Interlocks and Insider Participation
  Other Compensatory Arrangements
 4 01(k) plans.
 45




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##### Table of Contents



Supplemental
Executive Retirement Plan.
     Management Investment
  46




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##### Table of Contents



ITEM 12  Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
 Description of Doane Enterprises Capital Stock
  
    
    Class A common stock, par value $0.01 per share, of which approximately 98.5%
is beneficially owned by OTPP and of which approximately 1.5% is beneficially owned by
members of our senior management, which ownership percentage includes senior managements
contractual rights to acquire additional shares of Class A common stock pursuant to certain
deferred stock agreements; and
    
    Class B common stock, par value $0.01 per share, of which approximately 29.9%
has been issued to OTPP and of which approximately 70.1% has been issued to an entity that
is wholly-owned by Law Debenture Corporation p.l.c., a provider of trustee services
organized under the laws of the United Kingdom, which entity we refer to as the Jersey
Entity.
  Voting.
 Dividends.
 Board of directors.
 Description of Our Capital Stock
 Capitalization.
 
    
    Class A common stock, par value $0.01 per share, all of which is owned by Doane
Enterprises; and
    
    Class B common stock, par value $0.01 per share, of which 29.9% is owned by
Doane Enterprises and of which 70.1% is owned by the Jersey Entity.
 47




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##### Table of Contents



Voting.
 Dividends.
 Board of directors.
 Beneficial Ownership
  
    
    each person or entity known to us to own 5% or more of any class of Doane Enterprises common stock;
    
    each member of Doane Enterprises board of directors;
    
    each of our Named Executive Officers;
    
    all members of Doane Enterprises board of directors and our executive officers as a group.
  48




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##### Table of Contents



Common StockPercentage of Class A
    
    Percentage of Class BCommon Stock
    
    Common StockName of beneficial owner(1)
    
    Beneficially Owned(1)
    

Beneficially Owned(2)OTPP (3)
    
    
    98.5
    %
    
    
    100.0
    %Jersey Entity(4)
    
    
    
    
    
    
    70.1
    %Douglas J. Cahill
    
    
    *
    
    
    
    Philip K. Woodlief
    
    
    *
    
    
    
    David L. Horton
    
    
    *
    
    
    
    Joseph J. Meyers
    
    
    *
    
    
    
    Kenneth H. Koch
    
    
    *
    
    
    
    Dean G. Metcalf (3)(5)(6)
    
    
    
    
    
    
    Glen Silvestri (3)(5)(6)
    
    
    
    
    
    
    All directors and management members as a group (7 persons) (5)
    
    
    1.5
    %
    
    
    
 
 *
    
    Represents less than one percent.(1)
    
    Messrs. Cahill, Woodlief, Horton, Meyers and Koch do not have voting or investment
power over the deferred shares they acquired, which deferred shares represent the
contractual right to acquire the corresponding number of shares of Class A common stock.
Such individuals are deemed to beneficially own the shares of Class A common stock subject
to these deferred shares because in certain circumstances they may acquire the shares of
Class A common stock subject to the deferred shares within 60 days of the date hereof.(2)
    
    By virtue of the irrevocable proxy granted to OTPP by the Jersey Entity, OTPP and the
Jersey Entity have shared voting power over shares of the Class B common stock held by the
Jersey Entity.(3)
    
    The address of OTPP and Messrs. Metcalf and Silvestri is c/o Ontario Teachers Pension
Plan Board, 5650 Yonge Street, Toronto, Ontario M2M 4H5.(4)
    
    In connection with the Acquisition, Doane Enterprises, OTPP, the Jersey Entity and Mr.
Cahill entered into a stockholders agreement and we, Doane Enterprises and the Jersey
Entity entered into a voting agreement pursuant to which the Jersey Entity will vote in
favor of the board designees of OTPP and for the Chief Executive Officer of Doane
Enterprises and in favor of the board designees of Doane Enterprises and our Chief
Executive Officer, respectively. In connection with these agreements, the Jersey Entity
granted to OTPP and Doane Enterprises, respectively, an irrevocable proxy in furtherance of
these obligations.(5)
    
    Does not include the shares of Doane Enterprises common stock held by OTPP with respect
to which Messrs. Metcalf and Silvestri may be deemed to have the power to dispose of the
shares as described in footnote (6) below.(6)
    
    Messrs. Metcalf and Silvestri may be deemed to have the power to dispose of the shares
held by OTPP due to a delegation of authority from the board of directors of OTPP, and each
expressly disclaims beneficial ownership of such shares. Equity Compensation Plans
  49




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##### Table of Contents



ITEM 13  Certain Relationships and Related Transactions
 Stockholders Agreement
    Registration Rights Agreement
  Voting Agreement
  50




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##### Table of Contents



ITEM 14  Principal Accountant Fees and Services
  Predecessor
    
    
    Combinedyear ended
    
    
    basis2004
    
    
    2005Audit fees
    
    $
    744,000
    
    
    $
    1,314,000Audit related fees (1)
    
    
    38,000
    
    
    
    94,000Tax fees (2)
    
    
    241,500
    
    
    
    582,000Total fees (3)
    
    $
    1,023,500
    
    
    $
    1,990,000
 
 (1)
    
    Audit related fees consisted principally of fees for audits of financial statements of
certain employee benefit plans, due diligence services and consultation on accounting matters.(2)
    
    Tax fees consisted of fees for tax consultation and tax compliance services.(3)
    
    Total fees include some amounts in foreign currencies that have been translated to U.S.
dollars as of the date such fees were approved. 51




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##### Table of Contents



PART IV
 
 ITEM 15  Exhibits, Financial Statements Schedules
  (1)
    
    Consolidated Financial StatementsThe following financial statements and the Report of Independent Registered Public
Accounting Firm thereon are included beginning at page F-1 of this Annual Report on Form
10-K:
 
    
    Report of Independent Registered Public Accounting Firm
    
    Consolidated Balance Sheets as of the end of fiscal 2004 (Predecessor) and 2005 (Successor)
    
    Consolidated Statements of Operations for fiscal 2003, 2004 and the period January
2 through October 23, 2005 (Predecessor) and the period October 24 through December
31, 2005 (Successor)
    
    Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)
for fiscal 2003, 2004 and the period January 2 through October 23, 2005 (Predecessor)
and the period October 24 through December 31, 2005 (Successor)
    
    Consolidated Statements of Cash Flows for fiscal 2003, 2004 and the period January
2 through October 23, 2005 (Predecessor) and the period October 24 through December
31, 2005 (Successor)
    
    Notes to Consolidated Financial Statements
 (2)
    
    Consolidated Financial Statement Schedules.All schedules are omitted because they are not applicable or not required, or because the
required information is included in the consolidated financial statements or notes thereto
in this Annual Report on Form 10-K.(3)
    
    Exhibits
  Exhibitnumber
    
    Description3.1
    
    Second Amended and Restated Certificate of
Incorporation of Doane Pet Care Company
(incorporated by reference to Exhibit 3.1 to the
Companys Registration Statement on Form S-4
(Reg No. 333-130739) filed on December 28,
2005)3.2*
    
    Bylaws of Doane Pet Care Company4.1
    
    Indenture for the 10
5/8% Senior Subordinated
Notes Due 2015, dated as of October 24, 2005,
among Doane Pet Care Company, Doane Management
Corp., DPC Investment Corp. and Doane/Windy Hill
Joint Venture L.L.C., as guarantors, and
Wilmington Trust Company, as trustee
(incorporated by reference to Exhibit 4.1 to the
Companys Current Report on Form 8-K filed on
October 27, 2005)
 52




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##### Table of Contents



Exhibitnumber
    
    Description4.3
    
    Indenture dated February 28, 2003 between Doane
Pet Care Company and Wilmington, Trust Company
(incorporated by reference to Exhibit 4.3 to
Doane Pet Care Companys Annual Report on Form
10-K for the year ended December 28, 2002)10.1
    
    Amended and Restated Employment Agreement, dated
as of October 24, 2005, among Douglas J. Cahill,
Doane Pet Care Enterprises, Inc. and Doane Pet
Care Company (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.2
    
    Amended and Restated Employment Agreement, dated
as of October 24, 2005, among Philip K.
Woodlief, Doane Pet Care Enterprises, Inc. and
Doane Pet Care Company (incorporated by
reference to Exhibit 10.2 to the Companys
Current Report on Form 8-K filed on October 27,
2005)10.3
    
    Amended and Restated Employment Agreement, dated
as of October 24, 2005, among David L. Horton,
Doane Pet Care Enterprises, Inc. and Doane Pet
Care Company (incorporated by reference to
Exhibit 10.3 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.4
    
    Amended and Restated Employment Agreement, dated
as of October 24, 2005, among Joseph J. Meyers,
Doane Pet Care Enterprises, Inc. and Doane Pet
Care Company (incorporated by reference to
Exhibit 10.4 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.5
    
    Amended and Restated Employment Agreement, dated
as of October 24, 2005, among Kenneth H. Koch,
Doane Pet Care Enterprises, Inc. and Doane Pet
Care Company (incorporated by reference to
Exhibit 10.5 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.6
    
    Doane Pet Care Enterprises, Inc. Stock Incentive
Plan (incorporated by reference to Exhibit 10.6
to the Companys Current Report on Form 8-K
filed on October 27, 2005)10.7*
    
    Supplemental Executive Retirement
Plan dated as of March 27, 200610.8
    
    Deferred Shares Agreement (incorporated by
reference to Exhibit 10.8 to the Companys
Current Report on Form 8-K filed on October 27,
2005)10.9
    
    Stockholders Agreement, dated as of October 24,
2005, among Doane Pet Care Enterprises, Inc.,
Ontario Teachers Pension Plan Board, Wilchester
Investments Limited, Douglas J. Cahill and the
other signatories thereto (incorporated by
reference to Exhibit 10.9 to the Companys
Current Report on Form 8-K filed on October 27,
2005)10.10
    
    Registration Rights Agreement, dated as of
October 24, 2005, among Doane Pet Care
Enterprises, Inc., Ontario Teachers Pension
Plan Board, Wilchester Investments Limited,
Douglas J. Cahill and the other signatories
thereto (incorporated by reference to Exhibit
10.10 to the Companys Current Report on Form
8-K filed on October 27, 2005)10.11
    
    Voting Agreement, dated as of October 24, 2005,
among Doane Pet Care Enterprises, Inc.,
 53




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##### Table of Contents



Exhibitnumber
    
    DescriptionDoane
Pet Care Company and Wilchester Investments
Limited, (incorporated by reference to Exhibit
10.11 to the Companys Current Report on Form
8-K filed on October 27, 2005)21.1*
    
    List of Subsidiaries of Doane Pet Care Company23.1*
    
    Consent of KPMG LLP31.1*
    
    Certification of Chief Executive Officer
pursuant to Rule 13a-14(a) / 15(d)-14(a) of the
Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2*
    
    Certification of Chief Financial Officer
pursuant to Rule 13a-14(a) / 15(d)-14(a) of the
Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1**
    
    Certification of Chief Executive Officer
pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
200232.2**
    
    Certification of Chief Financial Officer
pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002
 
 *
    
    Filed herewith.**
    
    Not considered to be filed for the purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section.
    
    Management contracts or compensatory plans or arrangements. 54




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##### Table of Contents



SIGNATURES
  DOANE PET CARE COMPANYBy:       /s/ PHILIP K. WOODLIEF

                 Philip K. WoodliefVice President, Finance and Chief Financial OfficerBy:       /s/ STEPHEN P. HAVALAStephen P. HavalaCorporate Controller and Principal Accounting Officer
   Signature
    
    Title
    
    Date/s/ DEAN METCALF

Dean Metcalf
    
    Chairman of the Board and Director
    
    March 30, 2006/s/ DOUGLAS J. CAHILL

Douglas J. Cahill
    
    Chief Executive Officer, President and 
  Director (Principal Executive Officer)
    
    March 30, 2006/s/ PHILIP K. WOODLIEF

Philip K. Woodlief
    
    Vice President, Finance and Chief Financial Officer
   (Principal Financial Officer)
    
    March 30, 2006/s/ STEPHEN P. HAVALA

Stephen P. Havala
    
    Corporate Controller (Principal Accounting Officer)
    
    March 30, 2006/s/ TERRY R. PEETS

Terry R. Peets
    
    Director
    
    March 30, 2006/s/ GLEN SILVESTRI

Glen Silvestri
    
    Director
    
    March 30, 2006
 55




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##### Table of Contents



Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the
Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act.
  56




---



##### Table of Contents



DOANE PET CARE COMPANY AND SUBSIDIARIES
 FINANCIAL INFORMATION
 
 INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of the end of fiscal 2004 (Predecessor) and 2005 (Successor)
    
    
    F-3Consolidated Statements of Operations for fiscal 2003, 2004 and the period January 2
through October 23, 2005 (Predecessor) and the period October 24 through
December 31, 2005 (Successor)
    
    
    F-4Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss) for fiscal
2003, 2004 and the period January 2 through October 23, 2005 (Predecessor)
and the period October 24 through December 31, 2005 (Successor)
    
    
    F-5Consolidated Statements of Cash Flows for fiscal 2003, 2004 and the period January 2
through October 23, 2005 (Predecessor) and the period October 24 through
December 31, 2005 (Successor)
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      /s/ KPMG LLP 
 F-2




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##### Table of Contents



DOANE PET CARE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 Predecessor
    
    
    
    Successorend of 2004
    
    
    
    end of 2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    28,847
    
    
    
    $
    8,221Accounts receivable, net
    
    
    112,445
    
    
    
    
    105,069Inventories
    
    
    68,321
    
    
    
    
    65,169Deferred tax assets
    
    
    2,414
    
    
    
    
    5,394Prepaid expenses and other current assets
    
    
    7,038
    
    
    
    
    8,774Total current assets
    
    
    219,065
    
    
    
    
    192,627Property, plant and equipment, net
    
    
    258,070
    
    
    
    
    284,988Intangible assets
    
    
    77,892
    
    
    
    
    287,373Goodwill
    
    
    327,954
    
    
    
    
    321,115Other assets
    
    
    18,925
    
    
    
    
    23,235Total assets
    
    $
    901,906
    
    
    
    $
    1,109,338LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current maturities of long-term debt
    
    $
    3,673
    
    
    
    $
    3,158Accounts payable
    
    
    102,149
    
    
    
    
    79,984Accrued liabilities
    
    
    59,239
    
    
    
    
    56,771Total current liabilities
    
    
    165,061
    
    
    
    
    139,913Long-term debt:Long term debt, excluding current maturities
    
    
    580,090
    
    
    
    
    561,118Senior Preferred Stock (Redeemable), 3,000,000 shares
authorized 1,200,000 shares issued and outstanding at end of 2004
    
    
    106,421
    
    
    
    
    Total long-term debt
    
    
    686,511
    
    
    
    
    561,118Deferred tax liabilities
    
    
    33,641
    
    
    
    
    98,760Other long-term liabilities
    
    
    9,567
    
    
    
    
    8,264Total liabilities
    
    
    894,780
    
    
    
    
    808,055Commitments and contingenciesStockholders equity:Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at end of 2004
    
    
    
    
    
    
    
    Class A common stock, $0.01 par value; 2,000 shares authorized;
1,001 shares issued and outstanding at end of 2005
    
    
    
    
    
    
    
    Class B common stock, $0.01 par value; 100 shares authorized;
71.32 shares issued and outstanding at end of 2005
    
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    115,674
    
    
    
    
    303,059Accumulated other comprehensive income (loss)
    
    
    62,650
    
    
    
    
    (992
    )Accumulated deficit
    
    
    (171,198
    )
    
    
    
    (784
    )Total stockholders equity
    
    
    7,126
    
    
    
    
    301,283Total liabilities and stockholders equity
    
    $
    901,906
    
    
    
    $
    1,109,338
  F-3




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##### Table of Contents



DOANE PET CARE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
 Predecessor
    
    
    
    SuccessorPeriod January
    
    
    
    Period October2 through
    
    
    
    24 throughOctober 23,
    
    
    
    December 31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005Net sales
    
    $
    1,013,865
    
    
    $
    1,051,241
    
    
    $
    795,476
    
    
    
    $
    196,134Cost of goods sold
    
    
    851,578
    
    
    
    896,191
    
    
    
    654,312
    
    
    
    
    162,208Gross profit
    
    
    162,287
    
    
    
    155,050
    
    
    
    141,164
    
    
    
    
    33,926Operating expenses:Promotion and distribution
    
    
    57,616
    
    
    
    56,805
    
    
    
    46,230
    
    
    
    
    11,441Selling, general and administrative
    
    
    52,015
    
    
    
    51,861
    
    
    
    41,479
    
    
    
    
    9,702Amortization
    
    
    4,989
    
    
    
    4,313
    
    
    
    3,419
    
    
    
    
    2,348Transaction costs
    
    
    
    
    
    
    333
    
    
    
    23,370
    
    
    
    
    Other operating expenses (income), net
    
    
    7,227
    
    
    
    6,645
    
    
    
    5,326
    
    
    
    
    (624
    )Income from operations
    
    
    40,440
    
    
    
    35,093
    
    
    
    21,340
    
    
    
    
    11,059Interest expense, net
    
    
    57,494
    
    
    
    72,841
    
    
    
    61,936
    
    
    
    
    11,137Debt extinguishments
    
    
    4,438
    
    
    
    4,137
    
    
    
    
    
    
    
    
    Other income, net
    
    
    (1,156
    )
    
    
    (1,417
    )
    
    
    (752
    )
    
    
    
    (408
    )Income (loss) before income taxes
    
    
    (20,336
    )
    
    
    (40,468
    )
    
    
    (39,844
    )
    
    
    
    330Income tax expense
    
    
    25,039
    
    
    
    5,124
    
    
    
    4,094
    
    
    
    
    1,114Net loss
    
    
    (45,375
    )
    
    
    (45,592
    )
    
    
    (43,938
    )
    
    
    
    (784
    )Senior preferred stock dividends and accretion
    
    
    (13,502
    )
    
    
    
    
    
    
    
    
    
    
    
    Net loss available to common shares
    
    $
    (58,877
    )
    
    $
    (45,592
    )
    
    $
    (43,938
    )
    
    
    $
    (784
    )
 F-4
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND
COMPREHENSIVE INCOME (LOSS)
(In thousands, except share amounts)
 AccumulatedClass A
    
    
    Class B
    
    
    Additional
    
    
    otherCommon stock
    
    
    common stock
    
    
    common stock
    
    
    paid-in
    
    
    comprehensive
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    income (loss)
    
    
    deficit
    
    
    TotalPredecessor balances at the end of 2002
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    115,674
    
    
    $
    9,558
    
    
    $
    (66,729
    )
    
    $
    58,503Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,375
    )
    
    
    (45,375
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,021
    
    
    
    
    
    
    
    31,021Reclassification of realized loss, net of
deferred tax benefit of $849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,333
    
    
    
    
    
    
    
    1,333Decrease in minimum pension liability,
net of deferred tax expense of $362
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    569
    
    
    
    
    
    
    
    569Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,452
    )Senior preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,425
    )
    
    
    (12,425
    )Senior preferred stock accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,077
    )
    
    
    (1,077
    )Predecessor balances at the end of 2003
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,674
    
    
    
    42,481
    
    
    
    (125,606
    )
    
    
    32,549Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,592
    )
    
    
    (45,592
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,243
    
    
    
    
    
    
    
    20,243Increase in minimum pension liability,
net of deferred tax benefit of $45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74
    )
    
    
    
    
    
    
    (74
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,423
    )Predecessor balances at the end of 2004
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,674
    
    
    
    62,650
    
    
    
    (171,198
    )
    
    
    7,126Comprehensive loss for period January 2
through October 23, 2005:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,938
    )
    
    
    (43,938
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,615
    )
    
    
    
    
    
    
    (32,615
    )Increase in
minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (698
    )
    
    
    
    
    
    
    (698
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,251
    )Predecessor balances at October 23, 2005
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,674
    
    
    
    29,337
    
    
    
    (215,136
    )
    
    
    (70,125
    )Elimination of Predecessors equity in
connection with the Acquisition
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (115,674
    )
    
    
    (29,337
    )
    
    
    215,136
    
    
    
    70,125Issuance of common stock
in connection with the Acquisition
    
    
    
    
    
    
    
    
    
    
    1,001
    
    
    
    
    
    
    
    71.32
    
    
    
    
    
    
    
    303,059
    
    
    
    
    
    
    
    
    
    
    
    303,059Comprehensive
loss for period
October 24 through December 31, 2005:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (784
    )
    
    
    (784
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (992
    )
    
    
    
    
    
    
    (992
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,776
    )Successor balances at the end of 2005
    
    
    
    
    
    $
    
    
    
    
    1,001
    
    
    $
    
    
    
    
    71.32
    
    
    $
    
    
    
    $
    303,059
    
    
    $
    (992
    )
    
    $
    (784
    )
    
    $
    301,283
  F-5
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Predecessor
    
    
    
    SuccessorPeriod
    
    
    
    PeriodJanuary 2
    
    
    
    October 24through
    
    
    
    throughOctober 23,
    
    
    
    December 31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (45,375
    )
    
    $
    (45,592
    )
    
    $
    (43,938
    )
    
    
    $
    (784
    )Items not requiring (providing) cash:Depreciation
    
    
    31,178
    
    
    
    35,049
    
    
    
    28,531
    
    
    
    
    7,536Amortization
    
    
    5,983
    
    
    
    5,307
    
    
    
    3,487
    
    
    
    
    2,348Deferred tax expense
    
    
    23,644
    
    
    
    4,415
    
    
    
    3,494
    
    
    
    
    228Equity in joint ventures
    
    
    (616
    )
    
    
    (969
    )
    
    
    (373
    )
    
    
    
    (300
    )Non-cash interest expense
    
    
    4,906
    
    
    
    20,229
    
    
    
    18,353
    
    
    
    
    867Debt extinguishments
    
    
    4,438
    
    
    
    4,137
    
    
    
    
    
    
    
    
    Asset impairments
    
    
    7,727
    
    
    
    215
    
    
    
    6,129
    
    
    
    
    Transaction
costs
    
    
    
    
    
    
    
    
    
    
    22,411
    
    
    
    
    Other non-cash charges (income), net
    
    
    (372
    )
    
    
    447
    
    
    
    1,110
    
    
    
    
    1,559Changes in current assets and liabilities:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts receivable, net
    
    
    45,653
    
    
    
    (15,632
    )
    
    
    10,809
    
    
    
    
    (11,035
    )Inventories
    
    
    (1,323
    )
    
    
    2,790
    
    
    
    (46
    )
    
    
    
    234Prepaid expenses and other current assets
    
    
    (5,310
    )
    
    
    5,675
    
    
    
    (1,919
    )
    
    
    
    (666
    )Accounts payable
    
    
    (1,462
    )
    
    
    (2,342
    )
    
    
    (22,260
    )
    
    
    
    5,676Accrued liabilities
    
    
    (13,408
    )
    
    
    7,558
    
    
    
    4,622
    
    
    
    
    815Net cash provided by operating activities
    
    
    55,663
    
    
    
    21,287
    
    
    
    30,410
    
    
    
    
    6,478Cash flows from investing activities:Capital expenditures
    
    
    (28,062
    )
    
    
    (18,856
    )
    
    
    (17,227
    )
    
    
    
    (8,878
    )Proceeds from sale of assets
    
    
    1,378
    
    
    
    865
    
    
    
    143
    
    
    
    
    340Other, net
    
    
    (3,501
    )
    
    
    (2,063
    )
    
    
    (1,432
    )
    
    
    
    (443
    )Net cash used in investing activities
    
    
    (30,185
    )
    
    
    (20,054
    )
    
    
    (18,516
    )
    
    
    
    (8,981
    )Cash flows from financing activities:Net borrowings (repayments) under
revolving credit facility
    
    
    1,000
    
    
    
    (16,000
    )
    
    
    
    
    
    
    
    Proceeds
from issuance of senior credit facilities
    
    
    
    
    
    
    195,000
    
    
    
    
    
    
    
    
    160,000Proceeds from issuance of 10 5/8% senior subordinated notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,824Other proceeds from issuance of long-term debt
    
    
    210,444
    
    
    
    13,078
    
    
    
    
    
    
    
    
    Repayments on long-term debt related to Transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (471,007
    )Other
repayments on long-term debt
    
    
    (208,255
    )
    
    
    (185,526
    )
    
    
    (2,647
    )
    
    
    
    (942
    )Payments for debt issuance costs
    
    
    (7,761
    )
    
    
    (8,381
    )
    
    
    (1,857
    )
    
    
    
    (9,127
    )Proceeds from issuance of common stock
related to the Acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298,339Distribution to equity holders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127,215
    )Payments of Transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,776
    )Net cash used in financing activities
    
    
    (4,572
    )
    
    
    (1,829
    )
    
    
    (4,504
    )
    
    
    
    (24,904
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    791
    
    
    
    150
    
    
    
    (531
    )
    
    
    
    (78
    )Increase (decrease) in cash and cash equivalents
    
    
    21,697
    
    
    
    (446
    )
    
    
    6,859
    
    
    
    
    (27,485
    )Cash and cash equivalents, beginning of period
    
    
    7,596
    
    
    
    29,293
    
    
    
    28,847
    
    
    
    
    35,706Cash and cash equivalents, end of period
    
    $
    29,293
    
    
    $
    28,847
    
    
    $
    35,706
    
    
    
    $
    8,221
  F-6
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1) The Acquisition
   Fair value of assets acquired:Current assets
    
    $
    173,597Property, plant and equipment
    
    
    288,528Intangible assets
    
    
    286,000Goodwill
    
    
    321,205Other assets
    
    
    26,232Gross assets acquired
    
    
    1,095,562Liabilities assumed
    
    
    (153,803
    )Deferred tax liabilities, net
    
    
    (93,089
    )Purchase price of net assets acquired
    
    $
    848,670
  New senior credit facility
    
    $
    160,000New 10 5/8% senior subordinated notes
    
    
    150,824Assumption of 10 3/4% senior notes
    
    
    211,433Assumption of other long-term debt
    
    
    23,354Equity investment
    
    
    303,059Purchase price of net assets acquired
    
    $
    848,670
  F-7
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   2004
    
    2005Net sales
    
    $
    1,051,241
    
    
    $
    991,610Income from
operations
    
    
    24,145
    
    
    
    44,503Net loss
    
    
    (33,964
    )
    
    
    (8,326
    )
 (2) Summary of Significant Accounting Policies
 Nature of Business
  Principles of Consolidation
   52-53 Week Fiscal Year
  F-8
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Reclassifications
  Use of Estimates
  Cash and Cash Equivalents
  Accounts Receivable
  Inventories
  Property, Plant and Equipment
  Goodwill and Intangible Assets
   F-9
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Other Assets
  Impairment
   Income Taxes
  Revenue Recognition
  Cost of Goods Sold
  F-10
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Promotion and Distribution
  Comprehensive Income (Loss)
   Foreign Currency Translation and Transactions
   Financial Instruments
  Commodity Derivative Instruments
  F-11
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Foreign Currency Derivative Instruments
   Stock-Based Employee Compensation
   F-12
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Predecessor
    
    
    
    SuccessorPeriod
    
    
    
    PeriodJanuary 2
    
    
    
    October 24through
    
    
    
    throughOctober 23,
    
    
    
    December 31,2003 restated
    
    
    2004
    
    
    2005
    
    
    
    2005Net loss, as reported
    
    $
    (45,375
    )
    
    $
    (45,592
    )
    
    $
    (43,938
    )
    
    
    $
    (784
    )Less: Stock-based employee compensation
expense determined based on the fair value
method for all awards, net of income tax benefit
    
    
    (8
    )
    
    
    (6
    )
    
    
    (5
    )
    
    
    
    (350
    )Pro forma net loss
    
    $
    (45,383
    )
    
    $
    (45,598
    )
    
    $
    (43,943
    )
    
    
    $
    (1,134
    )Net loss available to common
shares, as reported
    
    $
    (58,877
    )
    
    $
    (45,592
    )
    
    $
    (43,938
    )
    
    
    $
    (784
    )Pro forma net loss available to
common shares
    
    $
    (58,885
    )
    
    $
    (45,598
    )
    
    $
    (43,943
    )
    
    
    $
    (1,134
    )
  Recently Issued Accounting Pronouncements
     F-13
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (3) Change in Accounting Principle
  (4) Inventories
  Predecessor
    
    
    
    Successorend of
    
    
    
    end of2004
    
    
    
    2005Raw materials
    
    $
    16,041
    
    
    
    $
    16,098Packaging materials
    
    
    20,564
    
    
    
    
    20,172Finished goods
    
    
    34,573
    
    
    
    
    31,28071,178
    
    
    
    
    67,550Less: Allowances
    
    
    (2,857
    )
    
    
    
    (2,381
    )Total
    
    $
    68,321
    
    
    
    $
    65,169
 (5) Property, Plant and Equipment
  Predecessor
    
    
    
    Successorend of
    
    
    
    end of2004
    
    
    
    2005Land
    
    $
    11,601
    
    
    
    $
    14,013Buildings and improvements
    
    
    104,778
    
    
    
    
    84,089Machinery and equipment
    
    
    320,097
    
    
    
    
    178,511Construction-in-progress
    
    
    6,727
    
    
    
    
    10,131443,203
    
    
    
    
    286,744Less: Accumulated depreciation
    
    
    (185,133
    )
    
    
    
    (1,756
    )Total
    
    $
    258,070
    
    
    
    $
    284,988
 (6) Intangible Assets
  F-14
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Predecessor
    
    
    
    Successorend of
    
    
    
    end of2004
    
    
    
    2005Intangible assets with indefinite lives:Customer relationship
    
    $
    
    
    
    
    $
    137,000Trademarks
    
    
    62,517
    
    
    
    
    62,517
    
    
    
    
    137,000Intangible assets with estimable lives:Customer relationships
    
    
    
    
    
    
    
    146,509Plate development costs
    
    
    4,450
    
    
    
    
    3,609Software
    
    
    761
    
    
    
    
    255Customer lists
    
    
    3,804
    
    
    
    
    Non-compete agreements and other contracts
    
    
    6,344
    
    
    
    
    Other
    
    
    16
    
    
    
    
    15,375
    
    
    
    
    150,373Total
    
    $
    77,892
    
    
    
    $
    287,373
  Predecessor
    
    
    
    Successorend of 2004
    
    
    
    end of 2005Gross
    
    
    
    
    
    
    
    Grosscarrying
    
    
    Accumulated
    
    
    
    carrying
    
    
    Accumulatedvalue
    
    
    amortization
    
    
    
    value
    
    
    amortizationCustomer relationships
    
    $
    
    
    
    $
    
    
    
    
    $
    148,413
    
    
    $
    (1,904
    )Plate development costs
    
    
    18,535
    
    
    
    (14,085
    )
    
    
    
    4,005
    
    
    
    (396
    )Software
    
    
    9,733
    
    
    
    (8,972
    )
    
    
    
    300
    
    
    
    (45
    )Customer lists
    
    
    4,505
    
    
    
    (701
    )
    
    
    
    
    
    
    
    Non-compete agreements and other contracts
    
    
    9,432
    
    
    
    (3,088
    )
    
    
    
    
    
    
    
    Other
    
    
    150
    
    
    
    (134
    )
    
    
    
    
    
    
    
    Total
    
    $
    42,355
    
    
    $
    (26,980
    )
    
    
    $
    152,718
    
    
    $
    (2,345
    )
  ExpectedYears ending
    
    amortization2006
    
    $
    11,8912007
    
    
    11,0922008
    
    
    10,3712009
    
    
    10,0342010
    
    
    9,944
 F-15
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (7) Other Assets
  Predecessor
    
    
    
    Successorend of
    
    
    
    end of2004
    
    
    
    2005Debt issuance costs
    
    $
    12,394
    
    
    
    $
    10,373Investments in joint ventures
    
    
    4,649
    
    
    
    
    8,837Assets held for sale
    
    
    
    
    
    
    
    2,976Other
    
    
    1,882
    
    
    
    
    1,049Total
    
    $
    18,925
    
    
    
    $
    23,235
 5 8
   (8) Accrued Liabilities
  Predecessor
    
    
    
    Successorend of
    
    
    
    end of2004
    
    
    
    2005Rebates and promotions
    
    $
    20,838
    
    
    
    $
    17,443Compensation
    
    
    17,407
    
    
    
    
    15,945Interest
    
    
    11,237
    
    
    
    
    11,964Other
    
    
    9,757
    
    
    
    
    11,419Total
    
    $
    59,239
    
    
    
    $
    56,771
 (9) Long-Term Debt and Liquidity
  F-16
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Predecessor
    
    
    
    Successorend of
    
    
    
    end of2004
    
    
    
    2005Revolving credit facility
    
    $
    
    
    
    
    $
    U.S. dollar term loan facility
    
    
    
    
    
    
    
    104,737Euro term loan facility
    
    
    
    
    
    
    
    54,481Old term loan facility
    
    
    194,513
    
    
    
    
    10 3/4% senior notes
    
    
    211,144
    
    
    
    
    231,49310 5/8% senior subordinated notes
    
    
    
    
    
    
    
    150,8439 3/4% senior subordinated notes
    
    
    149,147
    
    
    
    
    Industrial development revenue bonds
    
    
    14,493
    
    
    
    
    11,754Debt of foreign subsidiaries
    
    
    14,466
    
    
    
    
    10,968583,763
    
    
    
    
    564,276Less: Current maturities
    
    
    (3,673
    )
    
    
    
    (3,158
    )580,090
    
    
    
    
    561,118Senior preferred stock
    
    
    106,421
    
    
    
    
    Total
    
    $
    686,511
    
    
    
    $
    561,118
 Financing Transactions
  
    
    The termination and full settlement of the Companys old $230.0 million senior
credit facility and the closing of a new $210.0 million senior credit facility;
    
    the closing of the private placement of $152.0 million in aggregate principal
amount of 10 5/8% senior subordinated notes due 2015 at an original issue discount of 99.2%
and the subsequent exchange of these private placement notes for
$152.0 million of 10 5/8%
senior subordinated notes due 2015 that have been registered with the Securities and
Exchange Commission;
    
    the redemption of the Companys 9 3/4% senior subordinated notes due 2007 at a
price of 100% of the aggregate principal amount of $150.0 million, plus accrued
and unpaid interest to, but not including, the redemption date of November 22, 2005 and
resulted in a total redemption amount of $157.7 million;
    
    the redemption of the Companys 14.25% senior preferred stock at a purchase
price equal to 101% of the liquidation value thereof, which included a 1% change of control
premium, plus accrued and unpaid dividends to, but not including, the redemption date of
November 22, 2005 and resulted in a total redemption amount of $125.2 million; and
    
    the repurchase of $2.8 million aggregate principal amount of the Companys
7.25% Ottawa County Finance Authority Industrial Development Revenue Bonds at a purchase
price equal to 101% of the principal amount thereof, which included a 1% change of control
premium, plus accrued and unpaid interest to, but not including, the repurchase date of
December 22, 2005.
 New Senior Credit Facility
  F-17
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     New 10  5/8% Senior Subordinated Notes
 5 8 5 8
  F-18
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Years beginningNovember 15,
    
    Percentage2010
    
    
    105.313
    %2011
    
    
    103.542
    %2012
    
    
    101.771
    %2013 and thereafter
    
    
    100.000
    %
 10 3/4% Senior Notes
 3 4
  Years beginningMarch 1,
    
    Percentage2007
    
    
    105.375
    %2008
    
    
    102.688
    %2009 and thereafter
    
    
    100.000
    %
  F-19
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Industrial Development Revenue Bonds
   Debt of Foreign Subsidiaries
  Old Senior Credit Facilities
   F-20
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3 4
 Old 9 3/4% Senior Subordinated Notes
 3 4
 Senior Preferred Stock (Redeemable)
  Annual Maturities of Long-Term Debt
  Maturities by year2006
    
    $
    3,1582007
    
    
    3,3602008
    
    
    3,5042009
    
    
    3,6232010
    
    
    235,2092011 and thereafter
    
    
    315,422Total
    
    $
    564,276
 (10) Fair Value of Financial Instruments
  F-21
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Predecessor end of 2004
    
    
    
    Successor end of 2005Estimated
    
    
    
    
    
    
    
    EstimatedBook value
    
    
    fair value
    
    
    
    Book value
    
    
    fair valueLong-term debt:U.S. dollar term loan facility
    
    $
    
    
    
    $
    
    
    
    
    $
    104,737
    
    
    $
    106,047Euro term loan facility
    
    
    
    
    
    
    
    
    
    
    
    54,481
    
    
    
    55,025Old term loan facility
    
    
    194,513
    
    
    
    197,431
    
    
    
    
    
    
    
    
    10 3/4% senior notes
    
    
    211,144
    
    
    
    225,924
    
    
    
    
    231,493
    
    
    
    231,37110 5/8% senior subordinated notes
    
    
    
    
    
    
    
    
    
    
    
    150,843
    
    
    
    158,6509 3/4% senior subordinated notes
    
    
    149,147
    
    
    
    146,910
    
    
    
    
    
    
    
    
    Senior preferred stock
    
    
    106,421
    
    
    
    106,421
    
    
    
    
    
    
    
    
    Other
    
    
    28,959
    
    
    
    28,959
    
    
    
    
    22,722
    
    
    
    22,722$
    690,184
    
    
    $
    705,645
    
    
    
    $
    564,276
    
    
    $
    573,815Derivative instruments:Commodity
    
    $
    232
    
    
    $
    232
    
    
    
    $
    1,810
    
    
    $
    1,810Foreign currency
    
    
    
    
    
    
    
    
    
    
    
    471
    
    
    
    471
  (11) Common Stock and Warrants of Parent
    F-22
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (12) Stock Option Plan of Parent
   Weighted-Number of
    
    average exerciseoptions
    
    priceOutstanding at end of fiscal 2002 (predecessor)
    
    
    3,804,000
    
    
    $
    2.50Granted
    
    
    725,000
    
    
    
    2.57Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (333,650
    )
    
    
    2.50Outstanding at end of fiscal 2003 (predecessor)
    
    
    4,195,350
    
    
    
    2.51Granted
    
    
    135,000
    
    
    
    2.57Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (591,200
    )
    
    
    2.51Outstanding at end of fiscal 2004 (predecessor)
    
    
    3,739,150
    
    
    
    2.51Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (74,502
    )
    
    
    2.52Settlement
    
    
    (3,664,648
    )
    
    
    2.51Outstanding at October 23, 2005 (predecessor)
    
    
    
    
    
    
    Granted
    
    
    272,668
    
    
    
    100.00Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at end of fiscal 2005 (successor)
    
    
    272,668
    
    
    
    100.00
  F-23
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   (13) Accumulated Other Comprehensive Income (Loss)
  AccumulatedForeign
    
    
    Minimum
    
    
    Unrealized and
    
    
    othercurrency
    
    
    pension liability,
    
    
    realized gains
    
    
    comprehensivetranslation
    
    
    net
    
    
    (losses), net
    
    
    income (loss)Predecessor balances at the end of 2002
    
    $
    16,475
    
    
    $
    (5,584
    )
    
    $
    (1,333
    )
    
    $
    9,558Other comprehensive income
    
    
    31,021
    
    
    
    569
    
    
    
    1,333
    
    
    
    32,923Predecessor balances at the end of
2003
    
    
    47,496
    
    
    
    (5,015
    )
    
    
    
    
    
    
    42,481Other comprehensive income (loss)
    
    
    20,243
    
    
    
    (74
    )
    
    
    
    
    
    
    20,169Predecessor balances at the end of 2004
    
    
    67,739
    
    
    
    (5,089
    )
    
    
    
    
    
    
    62,650Other comprehensive loss
    
    
    (32,615
    )
    
    
    (698
    )
    
    
    
    
    
    
    (33,313
    )Predecessor balances at October 23, 2005
    
    
    35,124
    
    
    
    (5,787
    )
    
    
    
    
    
    
    29,337Elimination
of predecessor balances
in connection with the Acquisition
    
    
    (35,124
    )
    
    
    5,787
    
    
    
    
    
    
    
    (29,337
    )Successor balances at October 24, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive loss
    
    
    (992
    )
    
    
    
    
    
    
    
    
    
    
    (992
    )Successor balances at the end of 2005
    
    $
    (992
    )
    
    $
    
    
    
    $
    
    
    
    $
    (992
    )
 F-24
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (14) Operating Leases
  MinimumYears ending
    
    annual payments2006
    
    $
    3,7702007
    
    
    3,1982008
    
    
    3,0662009
    
    
    2,0132010
    
    
    6182011 and thereafter
    
    
    2,706$
    15,371
  (15) Other Operating Expenses (Income)
  F-25
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Predecessor
    
    
    
    SuccessorJanuary 2
    
    
    
    October 24through
    
    
    
    throughOctober 23,
    
    
    
    December 31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005Transaction costs
    
    $
    
    
    
    $
    333
    
    
    $
    23,370
    
    
    
    $
    Litigation settlements
    
    
    
    
    
    
    (612
    )
    
    
    (3,189
    )
    
    
    
    (1,890
    )Other miscellaneous costs
    
    
    
    
    
    
    
    
    
    
    327
    
    
    
    
    665Restructuring costs:Plant closure costs
    
    
    
    
    
    
    3,820
    
    
    
    171
    
    
    
    
    258Severance
    
    
    
    
    
    
    3,157
    
    
    
    2,387
    
    
    
    
    343Asset impairments
    
    
    7,727
    
    
    
    215
    
    
    
    6,129
    
    
    
    
    Revision to estimates
    
    
    (500
    )
    
    
    65
    
    
    
    (499
    )
    
    
    
    Total restructuring costs
    
    
    7,227
    
    
    
    7,257
    
    
    
    8,188
    
    
    
    
    601Total other
operating expenses (income)
    
    $
    7,227
    
    
    $
    6,978
    
    
    $
    28,696
    
    
    
    $
    (624
    )
 Transaction Costs
  Litigation Settlements
   Restructuring Costs
  F-26
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Predecessor balance at end of 2002
    
    $
    2,752Revisions to estimates
    
    
    (500
    )Cash payments and other
    
    
    (1,098
    )Predecessor balance at end of 2003
    
    
    1,154Plant closure costs
    
    
    3,820Severance
    
    
    3,157Revisions to estimates
    
    
    65Cash payments and other
    
    
    (7,474
    )Predecessor balance at end of 2004
    
    
    722Plant closure costs
    
    
    171Severance
    
    
    2,387Revision to estimates
    
    
    (311
    )Cash payments and other
    
    
    (945
    )Predecessor balance at October 23, 2005
    
    
    2,024Plant closure costs
    
    
    258Severance
    
    
    343Cash payments and other
    
    
    (918
    )Successor balance at the end of 2005
    
    $
    1,707
  F-27
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Fiscal years ending2006
    
    $
    1,3802007
    
    
    327Total
    
    $
    1,707
 (16) Income Taxes
  Predecessor
    
    
    
    SuccessorJanuary 2
    
    
    
    October 24through
    
    
    
    throughOctober 23,
    
    
    
    December 31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    $
    State and local
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    1,395
    
    
    
    709
    
    
    
    600
    
    
    
    
    886Net current tax expense
    
    
    1,395
    
    
    
    709
    
    
    
    600
    
    
    
    
    886Deferred:Federal
    
    
    19,740
    
    
    
    3,453
    
    
    
    3,050
    
    
    
    
    726State and local
    
    
    3,600
    
    
    
    630
    
    
    
    339
    
    
    
    
    81Foreign
    
    
    304
    
    
    
    332
    
    
    
    105
    
    
    
    
    (579
    )Net deferred tax expense
    
    
    23,644
    
    
    
    4,415
    
    
    
    3,494
    
    
    
    
    228Total income tax expense
    
    $
    25,039
    
    
    $
    5,124
    
    
    $
    4,094
    
    
    
    $
    1,114
  Predecessor
    
    
    
    SuccessorJanuary 2
    
    
    
    October 24through
    
    
    
    throughOctober 23,
    
    
    
    December 31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005Domestic
    
    $
    (2,211
    )
    
    $
    (19,095
    )
    
    $
    (24,408
    )
    
    
    $
    206Foreign
    
    
    (18,125
    )
    
    
    (21,373
    )
    
    
    (15,436
    )
    
    
    
    124Total
    
    $
    (20,336
    )
    
    $
    (40,468
    )
    
    $
    (39,844
    )
    
    
    $
    330
  F-28
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Predecessor
    
    
    
    SuccessorJanuary 2
    
    
    
    October 24through
    
    
    
    throughOctober 23,
    
    
    
    December 31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005Computed expected U.S. federal tax
expense (benefit)
    
    $
    (7,118
    )
    
    $
    (14,164
    )
    
    $
    (13,963
    )
    
    
    $
    116State and local tax expense
    
    
    2,340
    
    
    
    409
    
    
    
    (398
    )
    
    
    
    62Foreign tax expense (benefit)
    
    
    1,271
    
    
    
    382
    
    
    
    1,978
    
    
    
    
    (419
    )Senior preferred stock
    
    
    
    
    
    
    5,379
    
    
    
    4,910
    
    
    
    
    477Meals and entertainment, and other
    
    
    84
    
    
    
    59
    
    
    
    63
    
    
    
    
    12Change in valuation allowance
    
    
    28,462
    
    
    
    13,059
    
    
    
    11,504
    
    
    
    
    866Total
    
    $
    25,039
    
    
    $
    5,124
    
    
    $
    4,094
    
    
    
    $
    1,114
  Predecessor
    
    
    
    Successorend of
    
    
    
    end of2004
    
    
    
    2005Current deferred tax assets (liabilities):Accounts receivable
    
    $
    652
    
    
    
    $
    731Inventories
    
    
    1,795
    
    
    
    
    547Accrued liabilities and other allowances
    
    
    5,203
    
    
    
    
    5,362Valuation allowance
    
    
    (5,236
    )
    
    
    
    (1,246
    )Net current deferred tax assets
    
    $
    2,414
    
    
    
    $
    5,394Noncurrent deferred tax assets (liabilities):Net operating loss carryforwards
    
    $
    55,653
    
    
    
    $
    70,713Property, plant and equipment
    
    
    (22,721
    )
    
    
    
    (40,580
    )Goodwill and other assets
    
    
    (26,634
    )
    
    
    
    (116,918
    )Long-term debt
    
    
    
    
    
    
    
    7,776Accumulated other comprehensive income
    
    
    3,240
    
    
    
    
    Foreign assets
    
    
    11,761
    
    
    
    
    22,670Foreign liabilities
    
    
    (5,400
    )
    
    
    
    (29,564
    )Other
    
    
    662
    
    
    
    
    2,673Valuation allowance
    
    
    (50,202
    )
    
    
    
    (15,530
    )Net noncurrent deferred tax liabilities
    
    
    (33,641
    )
    
    
    
    (98,760
    )Total net deferred tax liabilities
    
    $
    (31,227
    )
    
    
    $
    (93,366
    )
  F-29
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    (17) Employee Benefit Plans
 Pension and Other Postretirement Plans
   F-30
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Pension benefits
    
    
    Other postretirement benefitsPredecessor
    
    
    
    Successor
    
    
    Predecessor
    
    
    
    SuccessorOctober 24
    
    
    
    
    
    
    
    
    
    
    
    October 24January 2
    
    
    
    through
    
    
    
    
    
    
    January 2
    
    
    
    throughthrough
    
    
    
    December
    
    
    
    
    
    
    through
    
    
    
    DecemberOctober 23,
    
    
    
    31,
    
    
    
    
    
    
    October 23,
    
    
    
    31,2004
    
    
    2005
    
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    
    2005Change in benefit obligation:Benefit obligation, beginning
of period
    
    $
    17,262
    
    
    $
    18,206
    
    
    
    $
    18,028
    
    
    $
    5,014
    
    
    $
    4,017
    
    
    
    $
    2,031Service cost
    
    
    34
    
    
    
    32
    
    
    
    
    30
    
    
    
    11
    
    
    
    14
    
    
    
    
    2Interest cost
    
    
    1,049
    
    
    
    820
    
    
    
    
    230
    
    
    
    259
    
    
    
    171
    
    
    
    
    19Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182
    
    
    
    150
    
    
    
    
    30Benefits paid
    
    
    (1,247
    )
    
    
    (961
    )
    
    
    
    (341
    )
    
    
    (424
    )
    
    
    (381
    )
    
    
    
    (72
    )Actuarial (gain) loss
    
    
    1,078
    
    
    
    (69
    )
    
    
    
    42
    
    
    
    385
    
    
    
    (1,940
    )
    
    
    
    Salary continuation and deferred
compensation agreements
    
    
    
    
    
    
    
    
    
    
    
    3,873
    
    
    
    
    
    
    
    
    
    
    
    
    Plan amendments
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    (1,410
    )
    
    
    
    
    
    
    
    Benefit obligation, end of period
    
    
    18,206
    
    
    
    18,028
    
    
    
    
    21,862
    
    
    
    4,017
    
    
    
    2,031
    
    
    
    
    2,010Change in plan assets:Fair value of plan assets,
beginning of period
    
    
    16,562
    
    
    
    17,023
    
    
    
    
    15,960
    
    
    
    
    
    
    
    
    
    
    
    
    Employer contributions
    
    
    83
    
    
    
    81
    
    
    
    
    62
    
    
    
    242
    
    
    
    231
    
    
    
    
    42Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182
    
    
    
    150
    
    
    
    
    30Actual return on plan assets
    
    
    1,625
    
    
    
    (183
    )
    
    
    
    792
    
    
    
    
    
    
    
    
    
    
    
    
    Benefits paid
    
    
    (1,247
    )
    
    
    (961
    )
    
    
    
    (341
    )
    
    
    (424
    )
    
    
    (381
    )
    
    
    
    (72
    )Fair value of plan assets, end of period
    
    
    17,023
    
    
    
    15,960
    
    
    
    
    16,473
    
    
    
    
    
    
    
    
    
    
    
    
    Funded status
    
    
    (1,183
    )
    
    
    (2,068
    )
    
    
    
    (5,389
    )
    
    
    (4,017
    )
    
    
    (2,031
    )
    
    
    
    (2,010
    )Unrecognized net (gain) loss
    
    
    8,328
    
    
    
    9,026
    
    
    
    
    (511
    )
    
    
    1,905
    
    
    
    
    
    
    
    
    Unrecognized prior service cost
    
    
    192
    
    
    
    183
    
    
    
    
    
    
    
    
    (1,605
    )
    
    
    
    
    
    
    
    Unrecognized transition obligation
    
    
    49
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net amount recognized
    
    $
    7,386
    
    
    $
    (7,187
    )
    
    
    $
    (5,900
    )
    
    $
    (3,717
    )
    
    $
    (2,031
    )
    
    
    $
    (2,010
    )
   F-31
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Pension benefits
    
    
    Other postretirement benefitsPredecessor
    
    
    
    Successor
    
    
    Predecessor
    
    
    
    Successorend of
    
    
    
    end of
    
    
    end of
    
    
    
    end of2004
    
    
    
    2005
    
    
    2004
    
    
    
    2005Accrued benefit costs
    
    $
    (1,183
    )
    
    
    $
    5,900
    
    
    $
    (3,717
    )
    
    
    $
    (2,010
    )Intangible asset
    
    
    241
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    8,328
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net amount recognized
    
    $
    7,386
    
    
    
    $
    5,900
    
    
    $
    (3,717
    )
    
    
    $
    (2,010
    )
  Pension benefitsPredecessor
    
    
    Successorend of
    
    
    end of2004
    
    
    2005Projected benefit obligation
    
    $
    18,206
    
    
    
    $
    21,862Accumulated benefit obligation
    
    
    18,206
    
    
    
    
    21,015Fair value of plan assets
    
    
    17,023
    
    
    
    
    16,473
  Pension benefits
    
    Other postretirement benefitsPredecessor
    
    
    Successor
    
    Predecessor
    
    
    Successorend of
    
    
    end of
    
    end of
    
    
    end of2004
    
    
    2005
    
    2004
    
    
    2005Discount rate
    
    
    5.75
    %
    
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    
    5.75
    %Rate of compensation increase
    
    
    N/A
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    
    N/A
  Pension benefits
    
    
    Other postretirement benefitsPredecessor
    
    
    
    Successor
    
    
    Predecessor
    
    
    
    SuccessorOctober
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OctoberJanuary 2
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    January 2
    
    
    
    24through
    
    
    
    through
    
    
    
    
    
    
    
    
    
    
    through
    
    
    
    throughOctober
    
    
    
    December
    
    
    
    
    
    
    
    
    
    
    October
    
    
    
    December23,
    
    
    
    31,
    
    
    
    
    
    
    
    
    
    
    23,
    
    
    
    31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    
    2005Service cost
    
    $
    29
    
    
    $
    34
    
    
    $
    32
    
    
    
    $
    30
    
    
    $
    19
    
    
    $
    11
    
    
    $
    14
    
    
    
    $
    2Interest cost
    
    
    1,072
    
    
    
    1,049
    
    
    
    820
    
    
    
    
    230
    
    
    
    313
    
    
    
    259
    
    
    
    171
    
    
    
    
    19Expected return on plan assets
    
    
    (1,246
    )
    
    
    (1,336
    )
    
    
    (1,128
    )
    
    
    
    (241
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Recognition of actuarial loss
    
    
    736
    
    
    
    670
    
    
    
    544
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization
    
    
    13
    
    
    
    15
    
    
    
    12
    
    
    
    
    
    
    
    
    26
    
    
    
    (46
    )
    
    
    (99
    )
    
    
    
    Net periodic cost
    
    $
    604
    
    
    $
    432
    
    
    $
    280
    
    
    
    $
    19
    
    
    $
    358
    
    
    $
    224
    
    
    $
    87
    
    
    
    $
    21Increase (decrease) in minimum
pension liability included in
other comprehensive loss
    
    $
    (931
    )
    
    $
    119
    
    
    $
    698
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    
    N/A
 F-32
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Pension benefits
    
    Other postretirement benefitsPredecessor
    
    
    Successor
    
    Predecessor
    
    
    SuccessorOctober
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OctoberJanuary 2
    
    
    24
    
    
    
    
    
    
    
    
    
    January 2
    
    
    24through
    
    
    through
    
    
    
    
    
    
    
    
    
    through
    
    
    throughOctober
    
    
    December
    
    
    
    
    
    
    
    
    
    October
    
    
    December23,
    
    
    31,
    
    
    
    
    
    
    
    
    
    23,
    
    
    31,2003
    
    2004
    
    2005
    
    
    2005
    
    2003
    
    2004
    
    2005
    
    
    2005Discount rate
    
    
    6.75
    %
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    
    5.75
    %
    
    
    6.75
    %
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    
    5.75
    %Expected long-term rate of
return on plan assets
    
    
    8.42
    %
    
    
    8.41
    %
    
    
    8.50
    %
    
    
    
    8.50
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    
    N/ARate of compensation increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    
    N/A
   Percentage of plan assetsPredecessor
    
    
    
    SuccessorTarget asset
    
    
    end of
    
    
    
    end ofallocation
    
    
    2004
    
    
    
    2005Asset categories:Equity securities
    
    
    40-70
    %
    
    
    69
    %
    
    
    
    70
    %Debt securities
    
    
    25-40
    %
    
    
    30
    %
    
    
    
    30
    %Other
    
    
    0-5
    %
    
    
    1
    %
    
    
    
    
    %Total
    
    
    
    
    
    
    100
    %
    
    
    
    100
    %
   F-33
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Predecessor
    
    
    Successorend of
    
    
    end of2004
    
    
    2005Healthcare cost trend rate assumed for next year
    
    
    8.50
    %
    
    
    
    10.00
    %Rate to which the cost trend rate is assumed to decline
(the ultimate trend rate)
    
    
    4.50
    %
    
    
    
    4.50
    %Year that the rate reaches the ultimate trend rate
    
    
    2008
    
    
    
    
    2017
  Predecessor
    
    
    SuccessorJanuary 2 through
    
    
    October 24 through2003
    
    2004
    
    October 23, 2005
    
    
    December 31, 2005One percentage point
    
    One percentage point
    
    One percentage point
    
    
    One percentage pointIncrease
    
    Decrease
    
    Increase
    
    Decrease
    
    Increase
    
    Decrease
    
    
    Increase
    
    DecreaseImpact on service and
interest costs
    
    $
    36
    
    
    $
    (30
    )
    
    $
    23
    
    
    $
    (20
    )
    
    $
    18
    
    
    $
    (15)
    
    
    
    $
    3
    
    
    $
    (3
    )Impact on postretirement
benefit obligation
    
    
    530
    
    
    
    (443
    )
    
    
    364
    
    
    
    (317
    )
    
    
    183
    
    
    
    (160)
    
    
    
    
    181
    
    
    
    (158
    )
   Pension
    
    OtherpostretirementYears ending
    
    benefits
    
    benefits2006
    
    $
    1,543
    
    
    $
    1492007
    
    
    1,499
    
    
    
    1632008
    
    
    1,466
    
    
    
    1782009
    
    
    1,269
    
    
    
    1942010
    
    
    1,295
    
    
    
    1922011 - 2015
    
    
    5,940
    
    
    
    911
 Defined Contribution Plans
  F-34
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   (18) Segment Data
  Predecessor
    
    
    Successorend of
    
    
    end of2004
    
    
    2005Long-lived assets:North America:United States
    
    $
    434,937
    
    
    $
    612,971Europe:Denmark
    
    
    202,634
    
    
    
    263,225Spain
    
    
    38,465
    
    
    
    27,771United Kingdom
    
    
    6,805
    
    
    
    12,744Total Europe
    
    
    247,904
    
    
    
    303,740Total long-lived assets
    
    $
    682,841
    
    
    $
    916,711
 Predecessor
    
    
    
    SuccessorJanuary 2
    
    
    
    October 24through
    
    
    
    throughOctober 23,
    
    
    
    December 31,2003
    
    
    2004
    
    
    2005
    
    
    
    2005Net sales:North America:United States
    
    $
    758,459
    
    
    $
    763,226
    
    
    $
    562,043
    
    
    
    $
    139,191Europe:Denmark
    
    
    201,827
    
    
    
    207,946
    
    
    
    184,370
    
    
    
    
    43,734Spain
    
    
    38,897
    
    
    
    61,593
    
    
    
    34,252
    
    
    
    
    9,825United Kingdom
    
    
    14,682
    
    
    
    18,476
    
    
    
    14,811
    
    
    
    
    3,384Total Europe
    
    
    255,406
    
    
    
    288,015
    
    
    
    233,433
    
    
    
    
    56,943Total net sales
    
    $
    1,013,865
    
    
    $
    1,051,241
    
    
    $
    795,476
    
    
    
    $
    196,134
  F-35
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (19) Major Customer
  (20) Supplemental Cash Flow Information
  Predecessor
    
    
    SuccessorJanuary 2
    
    
    October 24through
    
    
    throughOctober 23,
    
    
    December 31,2003
    
    2004
    
    2005
    
    
    2005Cash paid during the year:Interest
    
    $
    55,584
    
    
    $
    52,630
    
    
    $
    42,284
    
    
    
    $
    11,380Income taxes
    
    
    1,447
    
    
    
    985
    
    
    
    291
    
    
    
    
    358
 (21) Related Party Transactions
   3 4
 F-36
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 3 4 3 4
 (22) Commitments and Contingencies
  (23) Quarterly Financial Data (Unaudited)
  Fiscal 2004First
    
    Second
    
    Third
    
    Fourthquarter
    
    quarter
    
    quarter
    
    quarterNet sales
    
    $
    270,880
    
    
    $
    258,338
    
    
    $
    250,977
    
    
    $
    271,046Gross profit
    
    
    40,818
    
    
    
    33,137
    
    
    
    32,812
    
    
    
    48,283Net loss
    
    
    (7,807
    )
    
    
    (17,737
    )
    
    
    (15,225
    )
    
    
    (4,823
    )
 Fiscal 2005Predecessor
    
    
    SuccessorOctober 2
    
    
    October 24through
    
    
    throughFirst
    
    Second
    
    Third
    
    October 23,
    
    
    December 31,quarter
    
    quarter
    
    quarter
    
    2005
    
    
    2005Net sales
    
    $
    267,136
    
    
    $
    243,872
    
    
    $
    231,388
    
    
    $
    53,080
    
    
    
    $
    196,134Gross profit
    
    
    52,103
    
    
    
    42,721
    
    
    
    37,106
    
    
    
    9,234
    
    
    
    
    33,926Net income (loss)
    
    
    7,176
    
    
    
    (7,547
    )
    
    
    (19,053
    )
    
    
    (24,514
    )
    
    
    
    (784
    )
 (24) Other Supplemental Information
  Beginning
    
    
    
    
    
    
    
    
    
    EndingFiscal
    
    balances
    
    Provisions
    
    Write-offs
    
    balances2003
    
    $
    4,025
    
    
    $
    3,655
    
    
    $
    (5,642
    )
    
    $
    2,0382004
    
    
    2,038
    
    
    
    3,033
    
    
    
    (2,329
    )
    
    
    2,742Predecessor period from January 2 through
October 23, 2005
    
    
    2,742
    
    
    
    1,210
    
    
    
    (2,140
    )
    
    
    1,812Successor period from October 24 through
December 31, 2005
    
    
    1,812
    
    
    
    398
    
    
    
    (398
    )
    
    
    1,812
 F-37
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (25) Financial Information Related to Guarantor Subsidiaries
 3 4 5 8
  F-38
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED CONSOLIDATED BALANCE SHEET
 Predecessor end of 2004Non-
    
    
    IntercompanyGuarantor
    
    
    guarantor
    
    
    eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,963
    
    
    $
    3,884
    
    
    $
    
    
    
    $
    28,847Accounts receivable, net
    
    
    48,660
    
    
    
    63,785
    
    
    
    
    
    
    
    112,445Inventories
    
    
    39,406
    
    
    
    28,915
    
    
    
    
    
    
    
    68,321Deferred tax assets
    
    
    2,414
    
    
    
    
    
    
    
    
    
    
    
    2,414Prepaid expenses and other current assets
    
    
    6,128
    
    
    
    910
    
    
    
    
    
    
    
    7,038Total current assets
    
    
    121,571
    
    
    
    97,494
    
    
    
    
    
    
    
    219,065Property, plant and equipment, net
    
    
    147,293
    
    
    
    110,777
    
    
    
    
    
    
    
    258,070Intangible assets
    
    
    58,459
    
    
    
    19,433
    
    
    
    
    
    
    
    77,892Goodwill
    
    
    214,437
    
    
    
    113,517
    
    
    
    
    
    
    
    327,954Other assets
    
    
    262,108
    
    
    
    4,177
    
    
    
    (247,360
    )
    
    
    18,925Total assets
    
    $
    803,868
    
    
    $
    345,398
    
    
    $
    (247,360
    )
    
    $
    901,906LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Current maturities of long-term debt
    
    $
    1,950
    
    
    $
    1,723
    
    
    $
    
    
    
    $
    3,673Accounts payable
    
    
    52,131
    
    
    
    50,018
    
    
    
    
    
    
    
    102,149Accrued liabilities
    
    
    46,623
    
    
    
    12,616
    
    
    
    
    
    
    
    59,239Total current liabilities
    
    
    100,704
    
    
    
    64,357
    
    
    
    
    
    
    
    165,061Long-term debt, excluding current maturities
    
    
    567,347
    
    
    
    165,574
    
    
    
    (152,831
    )
    
    
    580,090Senior Preferred Stock (Redeemable), 3,000,000
shares authorized, 1,200,000 shares issued and
outstanding
    
    
    106,421
    
    
    
    
    
    
    
    
    
    
    
    106,421Total long-term debt
    
    
    673,768
    
    
    
    165,574
    
    
    
    (152,831
    )
    
    
    686,511Deferred tax liabilities
    
    
    30,714
    
    
    
    2,927
    
    
    
    
    
    
    
    33,641Other long-term liabilities
    
    
    9,567
    
    
    
    
    
    
    
    
    
    
    
    9,567Total liabilities
    
    
    814,753
    
    
    
    232,858
    
    
    
    (152,831
    )
    
    
    894,780Commitments and contingenciesStockholders equity (deficit):Common stock, $0.01 par value; 1,000 shares
authorized, issued and outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    115,674
    
    
    
    95,861
    
    
    
    (95,861
    )
    
    
    115,674Accumulated other comprehensive income (loss)
    
    
    (24,555
    )
    
    
    85,873
    
    
    
    1,332
    
    
    
    62,650Accumulated deficit
    
    
    (102,004
    )
    
    
    (69,194
    )
    
    
    
    
    
    
    (171,198
    )Total stockholders equity (deficit)
    
    
    (10,885
    )
    
    
    112,540
    
    
    
    (94,529
    )
    
    
    7,126Total liabilities and stockholders equity (deficit)
    
    $
    803,868
    
    
    $
    345,398
    
    
    $
    (247,360
    )
    
    $
    901,906
 F-39
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED CONSOLIDATED BALANCE SHEET
 Successor end of 2005IntercompanyGuarantor
    
    
    Non-guarantor
    
    
    eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    479
    
    
    $
    7,742
    
    
    $
    
    
    
    $
    8,221Accounts receivable, net
    
    
    48,238
    
    
    
    56,831
    
    
    
    
    
    
    
    105,069Inventories
    
    
    36,913
    
    
    
    28,256
    
    
    
    
    
    
    
    65,169Deferred tax assets
    
    
    5,394
    
    
    
    
    
    
    
    
    
    
    
    5,394Prepaid expenses and other current assets
    
    
    7,586
    
    
    
    1,188
    
    
    
    
    
    
    
    8,774Total current assets
    
    
    98,610
    
    
    
    94,017
    
    
    
    
    
    
    
    192,627Property, plant and equipment, net
    
    
    187,048
    
    
    
    97,940
    
    
    
    
    
    
    
    284,988Intangible assets
    
    
    221,812
    
    
    
    65,561
    
    
    
    
    
    
    
    287,373Goodwill
    
    
    188,817
    
    
    
    132,298
    
    
    
    
    
    
    
    321,115Other assets
    
    
    345,064
    
    
    
    7,941
    
    
    
    (329,770
    )
    
    
    23,235Total assets
    
    $
    1,041,351
    
    
    $
    397,757
    
    
    $
    (329,770
    )
    
    $
    1,109,338LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current maturities of long-term debt
    
    $
    1,596
    
    
    $
    1,562
    
    
    $
    
    
    
    $
    3,158Accounts payable
    
    
    41,139
    
    
    
    38,845
    
    
    
    
    
    
    
    79,984Accrued liabilities
    
    
    44,844
    
    
    
    11,927
    
    
    
    
    
    
    
    56,771Total current liabilities
    
    
    87,579
    
    
    
    52,334
    
    
    
    
    
    
    
    139,913Long-term debt, excluding current maturities
    
    
    551,712
    
    
    
    243,464
    
    
    
    (234,058
    )
    
    
    561,118Deferred tax liabilities
    
    
    90,956
    
    
    
    7,804
    
    
    
    
    
    
    
    98,760Other long-term liabilities
    
    
    8,264
    
    
    
    
    
    
    
    
    
    
    
    8,264Total liabilities
    
    
    738,511
    
    
    
    303,602
    
    
    
    (234,058
    )
    
    
    808,055Commitments and contingenciesStockholders equity:Class A
common stock, $0.01 par value; 2,000 shares
authorized; 1,001 shares issued and outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Class B
common stock, $0.01 par value; 100 shares
authorized; 71.32 shares issued and outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    303,059
    
    
    
    95,712
    
    
    
    (95,712
    )
    
    
    303,059Accumulated other comprehensive income (loss)
    
    
    382
    
    
    
    (1,374
    )
    
    
    
    
    
    
    (992
    )Accumulated deficit
    
    
    (601
    )
    
    
    (183
    )
    
    
    
    
    
    
    (784
    )Total stockholders equity
    
    
    302,840
    
    
    
    94,155
    
    
    
    (95,712
    )
    
    
    301,283Total liabilities and stockholders equity
    
    $
    1,041,351
    
    
    $
    397,757
    
    
    $
    (329,770
    )
    
    $
    1,109,338
 F-40
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 Predecessor 2003Guarantor
    
    
    Non-guarantor
    
    
    ConsolidatedNet sales
    
    $
    758,459
    
    
    $
    255,406
    
    
    $
    1,013,865Cost of goods sold
    
    
    653,367
    
    
    
    198,211
    
    
    
    851,578Gross profit
    
    
    105,092
    
    
    
    57,195
    
    
    
    162,287Operating expenses:Promotion and distribution
    
    
    29,642
    
    
    
    27,974
    
    
    
    57,616Selling, general and administrative
    
    
    35,074
    
    
    
    16,941
    
    
    
    52,015Amortization
    
    
    4,229
    
    
    
    760
    
    
    
    4,989Other operating expenses (income), net
    
    
    (500
    )
    
    
    7,727
    
    
    
    7,227Income from operations
    
    
    36,647
    
    
    
    3,793
    
    
    
    40,440Interest expense, net
    
    
    35,748
    
    
    
    21,746
    
    
    
    57,494Debt extinguishments
    
    
    4,438
    
    
    
    
    
    
    
    4,438Other expense (income), net
    
    
    (1,328
    )
    
    
    172
    
    
    
    (1,156
    )Loss before income taxes
    
    
    (2,211
    )
    
    
    (18,125
    )
    
    
    (20,336
    )Income tax expense
    
    
    23,340
    
    
    
    1,699
    
    
    
    25,039Net loss
    
    
    (25,551
    )
    
    
    (19,824
    )
    
    
    (45,375
    )Senior preferred stock dividends and accretion
    
    
    (13,502
    )
    
    
    
    
    
    
    (13,502
    )Net loss available to common shares
    
    $
    (39,053
    )
    
    $
    (19,824
    )
    
    $
    (58,877
    )
 Predecessor 2004Guarantor
    
    
    Non-guarantor
    
    
    ConsolidatedNet sales
    
    $
    763,226
    
    
    $
    288,015
    
    
    $
    1,051,241Cost of goods sold
    
    
    667,231
    
    
    
    228,960
    
    
    
    896,191Gross profit
    
    
    95,995
    
    
    
    59,055
    
    
    
    155,050Operating expenses:Promotion and distribution
    
    
    25,878
    
    
    
    30,927
    
    
    
    56,805Selling, general and administrative
    
    
    35,839
    
    
    
    16,022
    
    
    
    51,861Amortization
    
    
    3,487
    
    
    
    826
    
    
    
    4,313Other operating expenses, net
    
    
    17
    
    
    
    6,961
    
    
    
    6,978Income from operations
    
    
    30,774
    
    
    
    4,319
    
    
    
    35,093Interest expense, net
    
    
    47,830
    
    
    
    25,011
    
    
    
    72,841Debt extinguishment
    
    
    4,137
    
    
    
    
    
    
    
    4,137Other expense (income), net
    
    
    (2,098
    )
    
    
    681
    
    
    
    (1,417
    )Loss before income taxes
    
    
    (19,095
    )
    
    
    (21,373
    )
    
    
    (40,468
    )Income tax expense
    
    
    4,083
    
    
    
    1,041
    
    
    
    5,124Net loss
    
    $
    (23,178
    )
    
    $
    (22,414
    )
    
    $
    (45,592
    )
 F-41
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
 PredecessorPeriod January 2 through October 23, 2005Guarantor
    
    
    Non-guarantor
    
    
    ConsolidatedNet sales
    
    $
    562,043
    
    
    $
    233,433
    
    
    $
    795,476Cost of goods sold
    
    
    469,339
    
    
    
    184,973
    
    
    
    654,312Gross profit
    
    
    92,704
    
    
    
    48,460
    
    
    
    141,164Operating expenses:Promotion and distribution
    
    
    19,927
    
    
    
    26,303
    
    
    
    46,230Selling, general and administrative
    
    
    28,281
    
    
    
    13,198
    
    
    
    41,479Amortization
    
    
    2,744
    
    
    
    675
    
    
    
    3,419Other operating expenses, net
    
    
    26,573
    
    
    
    2,123
    
    
    
    28,696Income from operations
    
    
    15,179
    
    
    
    6,161
    
    
    
    21,340Interest expense, net
    
    
    40,948
    
    
    
    20,988
    
    
    
    61,936Other expense (income), net
    
    
    (1,361
    )
    
    
    609
    
    
    
    (752
    )Loss before income taxes
    
    
    (24,408
    )
    
    
    (15,436
    )
    
    
    (39,844
    )Income tax expense
    
    
    3,392
    
    
    
    702
    
    
    
    4,094Net loss
    
    $
    (27,800
    )
    
    $
    (16,138
    )
    
    $
    (43,938
    )
 SuccessorPeriod October 24 through December 31, 2005Guarantor
    
    
    Non-guarantor
    
    
    ConsolidatedNet sales
    
    $
    139,191
    
    
    $
    56,943
    
    
    $
    196,134Cost of goods sold
    
    
    116,993
    
    
    
    45,215
    
    
    
    162,208Gross profit
    
    
    22,198
    
    
    
    11,728
    
    
    
    33,926Operating expenses:Promotion and distribution
    
    
    5,407
    
    
    
    6,034
    
    
    
    11,441Selling, general and administrative
    
    
    7,484
    
    
    
    2,218
    
    
    
    9,702Amortization
    
    
    1,496
    
    
    
    852
    
    
    
    2,348Other operating expenses (income), net
    
    
    (1,350
    )
    
    
    726
    
    
    
    (624
    )Income from operations
    
    
    9,161
    
    
    
    1,898
    
    
    
    11,059Interest expense, net
    
    
    9,147
    
    
    
    1,990
    
    
    
    11,137Other income, net
    
    
    (192
    )
    
    
    (216
    )
    
    
    (408
    )Income before income taxes
    
    
    206
    
    
    
    124
    
    
    
    330Income tax expense
    
    
    807
    
    
    
    307
    
    
    
    1,114Net loss
    
    $
    (601
    )
    
    $
    (183
    )
    
    $
    (784
    )
 F-42
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 Predecessor 2003Non-Guarantor
    
    
    guarantor
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (25,551
    )
    
    $
    (19,824
    )
    
    $
    (45,375
    )Items not requiring (providing) cash:Depreciation and amortization
    
    
    22,607
    
    
    
    14,554
    
    
    
    37,161Deferred tax expense
    
    
    23,340
    
    
    
    304
    
    
    
    23,644Debt extinguishments
    
    
    4,438
    
    
    
    
    
    
    
    4,438Asset impairments
    
    
    
    
    
    
    7,727
    
    
    
    7,727Other non-cash charges (income), net
    
    
    4,633
    
    
    
    (715
    )
    
    
    3,918Changes in current assets and liabilities
    
    
    8,244
    
    
    
    15,906
    
    
    
    24,150Net cash provided by operating activities
    
    
    37,711
    
    
    
    17,952
    
    
    
    55,663Cash flows from investing activities:Capital expenditures
    
    
    (15,653
    )
    
    
    (12,409
    )
    
    
    (28,062
    )Proceeds from sale of assets
    
    
    1,150
    
    
    
    228
    
    
    
    1,378Other, net
    
    
    3,083
    
    
    
    (6,584
    )
    
    
    (3,501
    )Net cash used in investing activities
    
    
    (11,420
    )
    
    
    (18,765
    )
    
    
    (30,185
    )Cash flows from financing activities:Net borrowings under revolving credit agreement
    
    
    1,000
    
    
    
    
    
    
    
    1,000Proceeds from issuance of long-term debt
    
    
    210,444
    
    
    
    
    
    
    
    210,444Repayments on long-term debt
    
    
    (204,092
    )
    
    
    (4,163
    )
    
    
    (208,255
    )Payments for debt issuance costs
    
    
    (7,761
    )
    
    
    
    
    
    
    (7,761
    )Net cash used in financing activities
    
    
    (409
    )
    
    
    (4,163
    )
    
    
    (4,572
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    791
    
    
    
    791Increase (decrease) in cash and cash equivalents
    
    
    25,882
    
    
    
    (4,185
    )
    
    
    21,697Cash and cash equivalents, beginning of year
    
    
    57
    
    
    
    7,539
    
    
    
    7,596Cash and cash equivalents, end of year
    
    $
    25,939
    
    
    $
    3,354
    
    
    $
    29,293
 F-43
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 Predecessor 2004Non-Guarantor
    
    
    guarantor
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (23,178
    )
    
    $
    (22,414
    )
    
    $
    (45,592
    )Items not requiring (providing) cash:Depreciation and amortization
    
    
    23,422
    
    
    
    16,934
    
    
    
    40,356Deferred tax expense
    
    
    4,083
    
    
    
    332
    
    
    
    4,415Debt
extinguishments
    
    
    4,137
    
    
    
    
    
    
    
    4,137Asset impairments
    
    
    215
    
    
    
    
    
    
    
    215Other non-cash charges (income), net
    
    
    20,427
    
    
    
    (720
    )
    
    
    19,707Changes in current assets and liabilities
    
    
    (20,226
    )
    
    
    18,275
    
    
    
    (1,951
    )Net cash provided by operating activities
    
    
    8,880
    
    
    
    12,407
    
    
    
    21,287Cash flows from investing activities:Capital expenditures
    
    
    (10,181
    )
    
    
    (8,675
    )
    
    
    (18,856
    )Proceeds from sale of assets
    
    
    457
    
    
    
    408
    
    
    
    865Other, net
    
    
    273
    
    
    
    (2,336
    )
    
    
    (2,063
    )Net cash used in investing activities
    
    
    (9,451
    )
    
    
    (10,603
    )
    
    
    (20,054
    )Cash flows from financing activities:Net
repayments under revolving credit facility
    
    
    (16,000
    )
    
    
    
    
    
    
    (16,000
    )Proceeds from issuance of long-term debt
    
    
    195,000
    
    
    
    13,078
    
    
    
    208,078Repayments on long-term debt
    
    
    (171,024
    )
    
    
    (14,502
    )
    
    
    (185,526
    )Payments for debt issuance costs
    
    
    (8,381
    )
    
    
    
    
    
    
    (8,381
    )Net cash used in financing activities
    
    
    (405
    )
    
    
    (1,424
    )
    
    
    (1,829
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    150
    
    
    
    150Increase (decrease) in cash and cash equivalents
    
    
    (976
    )
    
    
    530
    
    
    
    (446
    )Cash and cash equivalents, beginning of year
    
    
    25,939
    
    
    
    3,354
    
    
    
    29,293Cash and cash equivalents, end of year
    
    $
    24,963
    
    
    $
    3,884
    
    
    $
    28,847
 F-44
    Table of Contents  DOANE
PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 PredecessorPeriod January 2 through October 23, 2005Non-Guarantor
    
    
    guarantor
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (27,800
    )
    
    $
    (16,138
    )
    
    $
    (43,938
    )Items not requiring (providing) cash:Depreciation and amortization
    
    
    18,237
    
    
    
    13,781
    
    
    
    32,018Deferred tax expense
    
    
    3,392
    
    
    
    102
    
    
    
    3,494Asset impairments
    
    
    6,129
    
    
    
    
    
    
    
    6,129Other non-cash charges (income), net
    
    
    18,888
    
    
    
    22,613
    
    
    
    41,501Changes in current assets and liabilities
    
    
    (4,927
    )
    
    
    (3,867
    )
    
    
    (8,794
    )Net cash provided by operating activities
    
    
    13,919
    
    
    
    16,491
    
    
    
    30,410Cash flows from investing activities:Capital expenditures
    
    
    (11,791
    )
    
    
    (5,436
    )
    
    
    (17,227
    )Proceeds from sale of assets
    
    
    44
    
    
    
    99
    
    
    
    143Other, net
    
    
    2,568
    
    
    
    (4,000
    )
    
    
    (1,432
    )Net cash used in investing activities
    
    
    (9,179
    )
    
    
    (9,337
    )
    
    
    (18,516
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    (1,463
    )
    
    
    (1,184
    )
    
    
    (2,647
    )Payments for debt issuance costs
    
    
    (1,857
    )
    
    
    
    
    
    
    (1,857
    )Net cash used in financing activities
    
    
    (3,320
    )
    
    
    (1,184
    )
    
    
    (4,504
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    (531
    )
    
    
    (531
    )Increase in cash and cash equivalents
    
    
    1,420
    
    
    
    5,439
    
    
    
    6,859Cash and cash equivalents, beginning of period
    
    
    24,963
    
    
    
    3,884
    
    
    
    28,847Cash and cash equivalents, end of period
    
    $
    26,383
    
    
    $
    9,323
    
    
    $
    35,706
 F-45
    Table of Contents  DOANE PET CARE COMPANY AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 SuccessorPeriod October 24 through December 31, 2005Non-Guarantor
    
    
    guarantor
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (601
    )
    
    $
    (183
    )
    
    $
    (784
    )Items not requiring (providing) cash:Depreciation and amortization
    
    
    6,656
    
    
    
    3,228
    
    
    
    9,884Deferred tax expense
    
    
    807
    
    
    
    (579
    )
    
    
    228Other non-cash charges (income), net
    
    
    (73
    )
    
    
    2,199
    
    
    
    2,126Changes in current assets and liabilities
    
    
    (1,115
    )
    
    
    (3,861
    )
    
    
    (4,976
    )Net cash provided by (used in)
operating activities
    
    
    5,674
    
    
    
    804
    
    
    
    6,478Cash flows from investing activities:Capital expenditures
    
    
    (6,780
    )
    
    
    (2,098
    )
    
    
    (8,878
    )Proceeds from sale of assets
    
    
    8
    
    
    
    332
    
    
    
    340Other, net
    
    
    (443
    )
    
    
    
    
    
    
    (443
    )Net cash used in investing activities
    
    
    (7,215
    )
    
    
    (1,766
    )
    
    
    (8,981
    )Cash flows from financing activities:Proceeds from issuance of long-term debt
    
    
    310,824
    
    
    
    
    
    
    
    310,824Repayments on long-term debt
    
    
    (471,408
    )
    
    
    (541
    )
    
    
    (471,949
    )Payments for debt issuance costs
    
    
    (9,127
    )
    
    
    
    
    
    
    (9,127
    )Proceeds from issuance of common stock
related to the Acquisition
    
    
    298,339
    
    
    
    
    
    
    
    298,339Distribution to equity holders
    
    
    (127,215
    )
    
    
    
    
    
    
    (127,215
    )Payments of Transaction costs
    
    
    (25,776
    )
    
    
    
    
    
    
    (25,776
    )Net cash used in financing activities
    
    
    (24,363
    )
    
    
    (541
    )
    
    
    (24,904
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    (78
    )
    
    
    (78
    )Decrease in cash and cash equivalents
    
    
    (25,904
    )
    
    
    (1,581
    )
    
    
    (27,485
    )Cash and cash equivalents, beginning of period
    
    
    26,383
    
    
    
    9,323
    
    
    
    35,706Cash and cash equivalents, end of period
    
    $
    479
    
    
    $
    7,742
    
    
    $
    8,221
 F-46
    Table of Contents  INDEX TO EXHIBITS
 Exhibitnumber
    
    Description3.1
    
    Second Amended and Restated Certificate of
Incorporation of Doane Pet Care Company (incorporated by reference to
Exhibit 3.1 to the Companys Registration Statement on
Form S-4 (Reg No. 333-130739) filed on December 28, 2005)3.2*
    
    Bylaws of Doane Pet Care Company4.1
    
    Indenture for the 10
5/8% Senior Subordinated
Notes Due 2015, dated as of October 24, 2005,
among Doane Pet Care Company, Doane Management
Corp., DPC Investment Corp. and Doane/Windy Hill
Joint Venture L.L.C., as guarantors, and
Wilmington Trust Company, as trustee (incorporated
by reference to Exhibit 4.1 to the Companys
Current Report on Form 8-K filed on October 27,
2005)4.3
    
    Indenture dated February 28, 2003 between
Doane Pet Care Company and Wilmington, Trust
Company (incorporated by reference to Exhibit 4.3
to Doane Pet Care Companys Annual Report on Form
10-K for the year ended December 28, 2002).10.1
    
    Amended and Restated Employment Agreement,
dated as of October 24, 2005, among Douglas J.
Cahill, Doane Pet Care Enterprises, Inc. and Doane
Pet Care Company (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.2
    
    Amended and Restated Employment Agreement,
dated as of October 24, 2005, among Philip K.
Woodlief, Doane Pet Care Enterprises, Inc. and
Doane Pet Care Company (incorporated by reference
to Exhibit 10.2 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.3
    
    Amended and Restated Employment Agreement,
dated as of October 24, 2005, among David L.
Horton, Doane Pet Care Enterprises, Inc. and Doane
Pet Care Company (incorporated by reference to
Exhibit 10.3 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.4
    
    Amended and Restated Employment Agreement,
dated as of October 24, 2005, among Joseph J.
Meyers, Doane Pet Care Enterprises, Inc. and Doane
Pet Care Company (incorporated by reference to
Exhibit 10.4 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.5
    
    Amended and Restated Employment Agreement,
dated as of October 24, 2005, among Kenneth H.
Koch, Doane Pet Care Enterprises, Inc. and Doane
Pet Care Company (incorporated by reference to
Exhibit 10.5 to the Companys Current Report on
Form 8-K filed on October 27, 2005)10.6
    
    Doane Pet Care Enterprises, Inc. Stock
Incentive Plan (incorporated by reference to
Exhibit 10.6 to the Companys Current Report on
Form 8-K filed on October 27, 2005)
    Table of Contents  Exhibitnumber
    
    Description10.7*
    
    Supplemental Executive Retirement
Plan dated as of March 27, 200610.8
    
    Deferred Shares Agreement (incorporated by
reference to Exhibit 10.8 to the Companys Current
Report on Form 8-K filed on October 27, 2005)10.9
    
    Stockholders Agreement, dated as of October
24, 2005, among Doane Pet Care Enterprises, Inc.,
Ontario Teachers Pension Plan Board, Wilchester
Investments Limited, Douglas J. Cahill and the
other signatories thereto (incorporated by
reference to Exhibit 10.9 to the Companys Current
Report on Form 8-K filed on October 27, 2005)10.10
    
    Registration Rights Agreement, dated as of
October 24, 2005, among Doane Pet Care
Enterprises, Inc., Ontario Teachers Pension Plan
Board, Wilchester Investments Limited, Douglas J.
Cahill and the other signatories thereto
(incorporated by reference to Exhibit 10.10 to the
Companys Current Report on Form 8-K filed on
October 27, 2005)10.11
    
    Voting Agreement, dated as of October 24, 2005,
among Doane Pet Care Enterprises, Inc., Doane Pet
Care Company and Wilchester Investments Limited,
(incorporated by reference to Exhibit 10.11 to the
Companys Current Report on Form 8-K filed on
October 27, 2005)21.1*
    
    List of Subsidiaries of Doane Pet Care Company23.1*
    
    Consent of KPMG LLP31.1*
    
    Certification of Chief Executive Officer pursuant
to Rule 13a-14(a) / 15(d)-14(a) of the Securities
Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2*
    
    Certification of Chief Financial Officer pursuant
to Rule 13a-14(a) / 15(d)-14(a) of the Securities
Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.32.1**
    
    Certification of Chief Executive Officer pursuant
to 18 U.S.C. 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of Chief Financial Officer pursuant
to 18 U.S.C. 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.**
    
    Not considered to be filed for the purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section.
    
    Management contracts or compensatory plans or arrangements