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

**WASHINGTON,DC 20549**

----

**FORM 10-Q**

 
| **x**                                              | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|----------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|
| ** **                                         | ** ** | ** **                                                                                              |
| **For the  quarterly period ended March 31, 2007** |
| ** **                                         | ** ** | ** **                                                                                              |
| **OR**                                             |
| ** **                                         | ** ** | ** **                                                                                              |
| **o**                                              | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For thetransition period from             to**

**CommissionFile Number:  333-114105**

**Merisant Company**

(Exact Name ofRegistrant as Specified in its Charter)

 

| **Delaware**                                                     |   | **52-2218321**                           |
|------------------------------------------------------------------|--------|------------------------------------------|
| (State or Other  Jurisdiction of  Incorporation or Organization) |   | (I.R.S. Employer  Identification Number) |
|                                                             |   |                                     |
| **10  South Riverside Plaza, Suite 850  Chicago, Illinois** |   | **60606**                                |
| (Address of  Principal Executive Offices)                        |   | (Zip Code)                               |

 

Registrant’stelephone number, including area code: **(312) 840-6000**

Former name, formeraddress and former fiscal year, if changed since last report:

**Notapplicable.**

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filing requirementsfor the past 90 days.   Yes  o    No  x

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the ExchangeAct.
| Large accelerated filer  o |   | Accelerated filer  o |   | Non-accelerated filer  x |
|--------------------------------------|--------|--------------------------------|--------|------------------------------------|

 

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

Indicate thenumber of shares outstanding of each of the issuer’s classes of common stock,as of the latest practicable date.

As of May 15, 2007, theregistrant had 100 shares of common stock, par value $0.01 per share,outstanding, all of which were owned by Merisant Worldwide, Inc.

 

----

**MERISANTCOMPANY**

**INDEX TOREPORT**

**FOR THEQUARTER ENDED MARCH 31, 2007**
| **PART I—FINANCIAL  INFORMATION** | ** ** | ** **                                                                                                                 |
|---------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------|
|                                        |       |                                                                                                                       |
| Item 1.                                     |       | Financial Statements of Merisant Company                                                                                   |
|                                        |       |                                                                                                                       |
|                                        |       | Unaudited Consolidated Balance Sheets at  December 31, 2006 and March 31, 2007                                        |
|                                        |       |                                                                                                                       |
|                                        |       | Unaudited Consolidated Statements of Operations and  Comprehensive Loss for the Three Months Ended March 31, 2006 and 2007 |
|                                        |       |                                                                                                                       |
|                                        |       | Unaudited  Consolidated Statement of Stockholder’s Deficit for the Three Months Ended  March 31, 2007                 |
|                                        |       |                                                                                                                       |
|                                        |       | Unaudited  Consolidated Statements of Cash Flows for the Three Months Ended March 31,  2006 and 2007                       |
|                                        |       |                                                                                                                       |
|                                        |       | Notes to  Unaudited Consolidated Financial Statements                                                                      |
|                                        |       |                                                                                                                       |
| Item 2.                                     |       | Management’s Discussion and Analysis of Financial  Condition and Results of Operations                                |
|                                        |       |                                                                                                                       |
| Item 3.                                     |       | Quantitative and Qualitative Disclosures About Market  Risk                                                                |
|                                        |       |                                                                                                                       |
| Item 4.                                     |       | Controls and Procedures                                                                                                    |
|                                        |       |                                                                                                                       |
| PART II—OTHER  INFORMATION        |       |                                                                                                                       |
|                                        |       |                                                                                                                       |
| Item  1.                                    |       | Legal  Proceedings                                                                                                         |
|                                        |       |                                                                                                                       |
| Item 1A.                                    |       | Risk Factors                                                                                                               |
|                                        |       |                                                                                                                       |
| Item  5.                                    |       | Other  Information                                                                                                         |
|                                        |       |                                                                                                                       |
| Item 6.                                     |       | Exhibits                                                                                                                   |
|                                             |            |                                                                                                                            |  |  |  |

 

2

----

**PART I**—**FINANCIAL INFORMATION**

**Item1. Financial Statements of Merisant Company**

**MERISANT COMPANYUnaudited Consolidated Balance Sheets(Dollars In Thousands,Except Per Share Amounts)**
| ** **                                                                                                                    | ** ** | **At December 31,  2006** | ** ** | **At March 31,  2007** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|----------------------------------|------------|
| **ASSETS**                                                                                                                    | ** ** | ** **                          | ** ** | ** **                       | ** ** |
| Cash and cash equivalents                                                                                                     |       | $                                   | 23,730     |                             | $          | 22,297 |   |
| Trade accounts  receivable, net of allowances of $534 and $474, respectively                                             |       | 68,006                              |       | 62,938                           |       |
| Other receivables                                                                                                             |       | 5,689                               |       | 6,638                            |       |
| Inventories                                                                                                                   |       | 13,792                              |       | 13,591                           |       |
| Prepaid expenses and  other assets                                                                                            |       | 5,365                               |       | 4,349                            |       |
| Current portion of note  receivable from director                                                                             |       | 970                                 |       | 970                              |       |
| Deferred income tax  assets                                                                                                   |       | 1,534                               |       | 1,354                            |       |
| Total current  assets                                                                                                         |       | 119,086                             |       | 112,137                          |       |
| Property and equipment,  net                                                                                                  |       | 23,341                              |       | 21,949                           |       |
| Trademarks and other  intangible assets, less accumulated amortization and impairment of $159,340  and $165,067, respectively |       | 182,679                             |       | 176,952                          |       |
| Goodwill                                                                                                                      |       | 107,209                             |       | 107,209                          |       |
| Deferred financing  costs, less accumulated amortization of $7,570 and $8,433, respectively                                   |       | 13,621                              |       | 12,758                           |       |
| Non-current portion of  note receivable from director                                                                         |       | 2,651                               |       | 1,694                            |       |
| Investment in equity  affiliate                                                                                               |       | 269                                 |       | 307                              |       |
| Other non-current  assets                                                                                                     |       | 967                                 |       | 974                              |       |
| Total assets                                                                                                                  |       | $                                   | 449,823    |                             | $          | 433,980 |   |
| **LIABILITIES AND STOCKHOLDER’S  DEFICIT**                                                                               | ** ** | ** **                          | ** ** | ** **                       | ** ** |
| Accounts payable                                                                                                              |       | $                                   | 16,234     |                             | $          | 18,106 |   |
| Income taxes payable                                                                                                          |       | 1,578                               |       | 1,879                            |       |
| Accrued interest  expense                                                                                                     |       | 11,793                              |       | 6,352                            |       |
| Accrued trademarketing  and consumer promotions                                                                               |       | 12,200                              |       | 14,753                           |       |
| Accrued incentives                                                                                                            |       | 8,017                               |       | 1,815                            |       |
| Accrued expenses and  other liabilities                                                                                       |       | 11,757                              |       | 12,644                           |       |
| Current maturities of  long-term obligations                                                                                  |       | 8,468                               |       | 8,546                            |       |
| Total current  liabilities                                                                                                    |       | 70,047                              |       | 64,095                           |       |
| Long-term obligations,  net of current maturities                                                                             |       | 427,813                             |       | 425,885                          |       |
| Deferred income tax  liabilities                                                                                              |       | 19,439                              |       | 20,549                           |       |
| Other liabilities                                                                                                             |       | 11,452                              |       | 4,757                            |       |
| Total  liabilities                                                                                                            |       | 528,751                             |       | 515,286                          |       |
| Commitments and contingencies  (Note 7)                                                                                       |       |                                |       |                             |       |
| Stockholder’s Deficit:                                                                                                   |       |                                |       |                             |       |
| Common stock, $0.01 par  value, 100 shares authorized, issued and outstanding                                                 |       | —                              |       | —                           |       |
| Due for purchase of  shares in Merisant Worldwide, Inc.                                                                  |       | (707                                | )          | (528                             | )          |
| Retained deficit                                                                                                              |       | (72,595                             | )          | (75,455                          | )          |
| Accumulated other  comprehensive loss                                                                                         |       | (5,626                              | )          | (5,323                           | )          |
| Total  stockholder’s deficit                                                                                             |       | (78,928                             | )          | (81,306                          | )          |
| Total liabilities and  stockholder’s deficit                                                                             |       | $                                   | 449,823    |                             | $          | 433,980 |   |

 

The accompanying notes are an integral part ofthese unaudited consolidated financial statements.

3

----

**MERISANT COMPANY****Unaudited Consolidated Statementsof Operations and****Comprehensive Loss****(Dollars In Thousands)**
| ** **                        | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------|------------|--------------------------------------------------|------------|
| ** **                        | ** ** | **2006**                                         | ** ** | **2007** | ** ** |
| Net sales                         |       | $                                                | 69,667     |   | $ | 69,313 |   |
| Cost of sales                     |       | 29,015                                           |       | 30,742 |   |
| Gross profit                      |       | 40,652                                           |       | 38,571 |   |
| Operating  expenses:              |       |                                             |       |   |   |
| Marketing and selling expenses    |       | 16,908                                           |       | 15,247 |   |
| Administration expenses           |       | 11,699                                           |       | 11,875 |   |
| Amortization of intangible assets |       | 5,554                                            |       | 5,727 |   |
| Restructuring expenses            |       | 2,291                                            |       | 560 |   |
| Total operating expenses          |       | 36,452                                           |       | 33,409 |   |
| Income from  operations           |       | 4,200                                            |       | 5,162 |   |
| Other expense  (income):          |       |                                             |       |   |   |
| Interest income                   |       | (148                                             | )          | (205 | ) |
| Interest expense                  |       | 10,912                                           |       | 11,999 |   |
| Other expense (income), net       |       | 209                                              |       | 139 |   |
| Total other expense               |       | 10,973                                           |       | 11,933 |   |
| Loss before  income taxes         |       | (6,773                                           | )          | (6,771 | ) |
| Provision for  income taxes       |       | 253                                              |       | 1,846 |   |
| Net loss                          |       | $                                                | (7,026     | ) | $ | (8,617 | ) |
|                              |       |                                             |       |   |   |
| Net loss from  above              |       | $                                                | (7,026     | ) | $ | (8,617 | ) |
| Other  comprehensive income       |       | 198                                              |       | 303 |   |
| Total comprehensive  loss         |       | $                                                | (6,828     | ) | $ | (8,314 | ) |

 

The accompanying notes are anintegral part of these unaudited consolidated financial statements.

4

----

**MERISANT COMPANY****Unaudited Consolidated Statementof Stockholder’s Deficit****(Dollars In Thousands)**
| ** **                                                              | ** ** | **Common  Stock** | ** ** | **Due for Purchase  of Shares in  Merisant  Worldwide, Inc.** | ** ** | **Retained  Deficit** | ** ** | **Accumulated  Other  Comprehensive  Loss** | ** ** | **Total** | ** ** |
|-------------------------------------------------------------------------|------------|-------------------|------------|----------------------------------------------------------------------------------------|------------|-----------------------|------------|---------------------------------------------|------------|-----------|------------|
| Balance at  December 31, 2006                                      |       | $                 | —     |                                                                                   | $          | (707                  | )          | $                                           | (72,595    | )         | $          | (5,626 | ) | $ | (78,928 | ) |
| Foreign currency  translation adjustment                                |       | —            |       | —                                                                                 |       | —                |       | 303                                         |       | 303       |       |
| Settlement of  loans for purchase of shares in Merisant Worldwide, Inc. |       | —            |       | 179                                                                                    |       | —                |       | —                                      |       | 179       |       |
| Cumulative  effect of FIN 48 implementation                             |       | —            |       | —                                                                                 |       | 5,757                 |       | —                                      |       | 5,757     |       |
| Net loss                                                                |       | —            |       | —                                                                                 |       | (8,617                | )          | —                                      |       | (8,617    | )          |
| Balance at March 31,  2007                                              |       | $                 | —     |                                                                                   | $          | (528                  | )          | $                                           | (75,455    | )         | $          | (5,323 | ) | $ | (81,306 | ) |

 

The accompanying notes are anintegral part of these unaudited consolidated financial statements.

5

----

**MERISANT COMPANYUnaudited Consolidated Statements of Cash Flows(Dollars In Thousands)**
| ** **                                                                       | ** ** | **Three Months Ended  March 31,** | ** ** |
|----------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                       | ** ** | **2006**                                         | ** ** | **2007** | ** ** |
| **Operating  Activities**                                                        |       |                                             |       |   |   |
| Net loss                                                                         |       | $                                                | (7,026     | ) | $ | (8,617 | ) |
| Adjustments to reconcile net loss to net cash  provided by operating activities: |       |                                             |       |   |   |
| Depreciation                                                                     |       | 2,228                                            |       | 1,558 |   |
| Amortization of intangible assets                                                |       | 5,554                                            |       | 5,727 |   |
| Amortization of deferred financing costs                                         |       | 666                                              |       | 863 |   |
| Euro-denominated loan foreign exchange loss                                      |       | 583                                              |       | 301 |   |
| Net realized gains on derivative instruments                                     |       | (694                                             | )          | — |   |
| Equity in income of affiliate                                                    |       | (7                                               | )          | (38 | ) |
| Deferred income tax provision                                                    |       | 375                                              |       | 1,288 |   |
| Changes in operating assets and liabilities:                                     |       |                                             |       |   |   |
| Trade accounts receivable                                                        |       | 3,232                                            |       | 5,290 |   |
| Other receivables                                                                |       | 1,314                                            |       | (11 | ) |
| Inventories                                                                      |       | 3,418                                            |       | 273 |   |
| Prepaid expenses and other assets                                                |       | (72                                              | )          | 1,015 |   |
| Accounts payable                                                                 |       | (952                                             | )          | 1,876 |   |
| Accrued expenses and other                                                       |       | (6,888                                           | )          | (8,898 | ) |
| Net cash provided by operating activities                                        |       | 1,731                                            |       | 627 |   |
| **Investing  Activities**                                                        |       |                                             |       |   |   |
| Purchases of property and equipment                                              |       | (473                                             | )          | (209 | ) |
| Net cash used in investing activities                                            |       | (473                                             | )          | (209 | ) |
| **Financing  Activities**                                                        |       |                                             |       |   |   |
| Net borrowings under revolving credit facility                                   |       | 11,000                                           |       | — |   |
| Principal payments on long-term obligations                                      |       | (2,302                                           | )          | (2,148 | ) |
| Payment of deferred financing costs                                              |       | (1,588                                           | )          | — |   |
| Distributions to stockholder                                                     |       | (500                                             | )          | — |   |
| Settlement of loans for purchase of shares in  Merisant Worldwide, Inc.          |       | —                                           |       | 179 |   |
| Net cash provided by (used in) financing activities                              |       | 6,610                                            |       | (1,969 | ) |
| Effect of  exchange rate on cash and cash equivalents                            |       | (155                                             | )          | 118 |   |
| Net increase  (decrease) in cash and cash equivalents                            |       | 7,713                                            |       | (1,433 | ) |
| Cash and cash  equivalents at beginning of period                                |       | 18,064                                           |       | 23,730 |   |
| Cash and cash  equivalents at end of period                                      |       | $                                                | 25,777     |   | $ | 22,297 |   |

 

The accompanying notes are anintegral part of these unaudited consolidated financial statements.

6

----

**MERISANTCOMPANY****Notes to Unaudited ConsolidatedFinancial Statements****(Dollars In Thousands)**

**1.****                       ****Principles of Consolidation**

Theconsolidated financial statements and notes do not contain certain informationincluded in the annual consolidated financial statements and notes of MerisantCompany and subsidiaries.  Unlessotherwise indicated or unless the context otherwise requires, all references tothe “Company” mean Merisant Company and its consolidated subsidiaries.  The consolidated balance sheet at December 31,2006 was derived from the Company’s audited consolidated financial statements,but does not include all disclosures required by generally accepted accountingprinciples in the United States of America (“GAAP”). The remaining consolidatedfinancial statements are unaudited. In the opinion of management, all normal,recurring adjustments necessary for a fair presentation of such unauditedfinancial statements have been included therein. For interim reportingpurposes, certain marketing and advertising expenses are charged to results ofoperations as a percentage of sales. Interim results may not be indicative ofresults for a full year. These unaudited consolidated financial statements andnotes should be read in conjunction with the Company’s annual consolidatedfinancial statements.

The preparation of consolidated financial statements in conformity withgenerally accepted accounting principles requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities,disclosure of contingent assets and liabilities at the date of the consolidatedfinancial statements and the reported amounts of revenues and expenses duringthe reporting period. Actual results could differ from those estimates.

**2.****                       ****Segment Information**

TheCompany manufactures and markets primarily low-calorie tabletop sweetenersglobally. Therefore, the Company’s reportable segments are organized andmanaged principally by geographic region: North America; Europe/Africa/Middle East, referred to as EAME; LatinAmerica; and Asia/Pacific. The Company’s management reviews Operating EBITDA toevaluate segment performance and allocate resources. Operating EBITDA consistsof segment earnings before interest expense, income tax expense, depreciationand amortization as well as items such as expenses related to restructuringcharges, certain significant charges related to new product development andlaunch costs, costs related to the transition to a new exclusive distributor inthe United States, certain litigation costs and certain other non-cash orexcludable charges or losses. Other expense (income), net, as reported in theunaudited consolidated financial statements, is included in Operating EBITDA ofthe respective reportable segments, except for the portion of other expense(income), net that relates to the foreign currency transaction gains or lossesassociated with the Company’s euro-denominated debt (see Note 5) and unrealizedgains or losses on derivative instruments. Corporate expenses include corporatestaff and related amounts. Corporate expenses, interest and other expenses andthe provision for income taxes are centrally managed and, accordingly, suchitems are not presented by segment since they are excluded from the measure ofsegment performance reviewed by management. The Company launched a new productline in North America in the first quarter of 2006 which management evaluatesand manages separately from its other North American operations. As such, thisitem is also excluded from the measure of segment performance reviewed bymanagement. The Company’s definition of Operating EBITDA is largely driven bysimilar definitions of Bank EBITDA under its primary credit facilities.  The definition of Bank EBITDA was adjusted inthe May 2007 amendment of those facilities and that change will be reflectedprospectively in the Company’s computation of Operating EBITDA.  The Company’s assets, which are principallyin the United States and Europe, are also managed geographically. A summary ofthe Company’s results of operations by reportable segment for the three monthsended March 31, 2006 and 2007 is as follows:

7

----

**For the Three Months EndedMarch 31, 2006**
| ** **                                                | ** ** | **North  America** | ** ** | **EAME** | ** ** | **Latin  America** | ** ** | **Asia/  Pacific** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------|------------|--------------------|------------|----------|------------|--------------------|------------|--------------------|------------|------------------|------------|
| Total net sales for  reportable segments                  |       | $                  | 29,892     |     | $          | 28,797             |       | $                  | 6,415      |             | $          | 4,545 |   | $ | 69,649 |   |
| Plus: Net sales related  to new product launch            |       |               |       |     |       |               |       |               |       | 18               |       |
| Total consolidated net  sales                             |       |               |       |     |       |               |       |               |       | $                | 69,667     |   |
|                                                      |       |               |       |     |       |               |       |               |       |             |       |
| Operating EBITDA                                          |       | $                  | 10,585     |     | $          | 9,365              |       | $                  | 1,124      |             | $          | 1,526 |   | $ | 22,600 |   |
| Less (plus):                                              |       |               |       |     |       |               |       |               |       |             |       |
| Corporate expenses                                        |       |               |       |     |       |               |       |               |       | 7,391            |       |
| Restructuring expense                                     |       |               |       |     |       |               |       |               |       | 2,291            |       |
| Depreciation expense                                      |       |               |       |     |       |               |       |               |       | 2,204            |       |
| Amortization expense                                      |       |               |       |     |       |               |       |               |       | 5,554            |       |
| Currency loss on euro  debt                               |       |               |       |     |       |               |       |               |       | 583              |       |
| Realized gain on  derivative instruments                  |       |               |       |     |       |               |       |               |       | (694             | )          |
| Loss on liquidation or  sale of subsidiary                |       |               |       |     |       |               |       |               |       | 144              |       |
| Loss related to new  product launch                       |       |               |       |     |       |               |       |               |       | 540              |       |
| Transition costs to new  distributor in the United States |       |               |       |     |       |               |       |               |       | 592              |       |
| Other non-cash expense                                    |       |               |       |     |       |               |       |               |       | 4                |       |
| Other expense, net                                        |       |               |       |     |       |               |       |               |       | (209             | )          |
| Income from operations                                    |       |               |       |     |       |               |       |               |       | 4,200            |       |
| Interest expense, net                                     |       |               |       |     |       |               |       |               |       | 10,764           |       |
| Other expense, net                                        |       |               |       |     |       |               |       |               |       | 209              |       |
| Loss before income  taxes                                 |       |               |       |     |       |               |       |               |       | $                | (6,773     | ) |

 

**For the Three Months Ended March31, 2007**
| ** **                                     | ** ** | **North  America** | ** ** | **EAME** | ** ** | **Latin  America** | ** ** | **Asia/  Pacific** | ** ** | **Consolidated** | ** ** |
|------------------------------------------------|------------|--------------------|------------|----------|------------|--------------------|------------|--------------------|------------|------------------|------------|
| Total net sales for  reportable segments       |       | $                  | 28,937     |     | $          | 26,576             |       | $                  | 5,297      |             | $          | 8,528 |   | $ | 69,338 |   |
| Plus: Net sales related  to new product launch |       |               |       |     |       |               |       |               |       | (25              | )          |
| Total consolidated net  sales                  |       |               |       |     |       |               |       |               |       | $                | 69,313     |   |
|                                           |       |               |       |     |       |               |       |               |       |             |       |
| Operating EBITDA                               |       | $                  | 10,282     |     | $          | 6,977              |       | $                  | 1,094      |             | $          | 4,091 |   | $ | 22,444 |   |
| Less (plus):                                   |       |               |       |     |       |               |       |               |       |             |       |
| Corporate expenses                             |       |               |       |     |       |               |       |               |       | 9,251            |       |
| Restructuring expense                          |       |               |       |     |       |               |       |               |       | 560              |       |
| Depreciation expense                           |       |               |       |     |       |               |       |               |       | 1,558            |       |
| Amortization expense                           |       |               |       |     |       |               |       |               |       | 5,727            |       |
| Currency loss on euro  debt                    |       |               |       |     |       |               |       |               |       | 301              |       |
| Other non-cash expense                         |       |               |       |     |       |               |       |               |       | 24               |       |
| Other expense, net                             |       |               |       |     |       |               |       |               |       | (139             | )          |
| Income from operations                         |       |               |       |     |       |               |       |               |       | 5,162            |       |
| Interest expense, net                          |       |               |       |     |       |               |       |               |       | 11,794           |       |
| Other expense, net                             |       |               |       |     |       |               |       |               |       | 139              |       |
| Loss before income  taxes                      |       |               |       |     |       |               |       |               |       | $                | (6,771     | ) |

 

8

----

**3.****                       ****Restructuring Expenses**

During the threemonths ended March 31, 2007, the Company continued to evaluate opportunities toincrease efficiency and reduce costs. This review resulted in the continuationof workforce reductions and planned changes in the Company’s global businessmodel. These actions are designed to improve both financial results and thelong-term value of the business. Restructuring expenses for workforcereductions of $2,291 and $560 were recorded for the three months ended March31, 2006 and March 31, 2007, respectively. The 2007 charges principally relatedto planned termination costs for employees, including charges related to 13additional personnel that were notified of their termination during the threemonths ended March 31, 2007 and to continuing provisions for previouslynotified employees being recorded over their stay periods. Severance paymentsand benefits are scheduled to be made over the next nine months.

Reconciliationof the restructuring liability at March 31, 2007 is as follows: 

| Restructuring liability at  December 31, 2006                |   | $    | 444    |   |
|-------------------------------------------------------------------|--------|------|--------|--------|
| Restructuring  expenses for the three months ended March 31, 2007 |   | 560  |   |
| Cash payments  for the three months ended March 31, 2007          |   | (636 | )      |
| Restructuring liability  at March 31, 2007                        |   | $    | 368    |   |

 

The restructuring liability atDecember 31, 2006 and March 31, 2007 is included in the line item “Accruedexpenses and other liabilities” in the accompanying consolidated balancesheets.

The following table representsrestructuring expenses included in each segment and corporate expenses for thethree months ended March 31, 2006 and 2007:

|               | ** ** | **Three Months Ended  March 31,** | ** ** |
|---------------|------------|--------------------------------------------------|------------|
| ** **    | ** ** | **2006**                                         | ** ** | **2007** | ** ** |
| North America |       | $                                                | 64         |   | $ | — |   |
| EAME          |       | 1,233                                            |       | 118 |   |
| Latin America |       | 588                                              |       | 64 |   |
| Asia/Pacific  |       | 452                                              |       | 218 |   |
| Corporate     |       | (46                                              | )          | 160 |   |
| Total         |       | $                                                | 2,291      |   | $ | 560 |   |

 

**4.****                       ****Inventories**

Inventoriesconsisted of the following at December 31, 2006 and March 31, 2007:

|                                  | ** ** | **December 31, 2006** | ** ** | **March 31, 2007** | ** ** |
|----------------------------------|------------|---------------------------------|------------|------------------------------|------------|
| Raw materials  and supplies      |       | $                               | 7,309      |                         | $          | 5,369 |   |
| Work in process                  |       | 592                             |       | 621                          |       |
| Finished goods                   |       | 6,869                           |       | 8,700                        |       |
| Inventory  obsolescence reserves |       | (978                            | )          | (1,099                       | )          |
| Total                            |       | $                               | 13,792     |                         | $          | 13,591 |   |

 

**5.****                       ****Debt**

The Company and its parent, Merisant Worldwide, Inc. (“MerisantWorldwide”), are highly leveraged. At March 31, 2007, Merisant Worldwide andits subsidiaries, including the Company, had $547,404 of long-term debtoutstanding, consisting of $113,062 aggregate principal amount of MerisantWorldwide’s 12 1⁄4% senior subordinated discount notes due 2014, $225,000aggregate principal amount of the Company’s 9 1⁄2% senior subordinated notes due2013 (the “Notes”), $124,342 aggregate principal amount outstanding under theCompany’s senior credit agreement (the “Senior Credit Agreement”) and $85,000aggregate principal amount outstanding under the Company’s second lien creditagreement (the “Second Lien Credit Agreement”), excluding capital leaseobligations of $89 and unused commitments on the revolving portion of theSenior Credit Agreement of $28,327.

9

----

At March 31, 2007, borrowings under the Senior Credit Agreementincluded $18,522 (“Term A”) aggregate principal amount of term loans bearingannual interest of 7.03% and $105,820 (“Term B”) aggregate principal amount ofterm loans bearing annual interest of 8.61%. The Term A loans areeuro-denominated and are translated into U.S. dollars at the spot rate as ofMarch 31, 2007.

At March31, 2007, borrowings under the Second Lien Credit Agreement included $85,000aggregate principal amount of term loans bearing annual interest of 13.87%.

TheCompany paid interest on borrowings under the Senior Credit Agreement, theSecond Lien Credit Agreement and on the Notes totaling $16,176 and $16,496 forthe three months ended March 31, 2006 and 2007, respectively.

On March 29, 2006, the lenders holding a majority of the aggregateprincipal amount of outstanding loans and revolver commitments under the SeniorCredit Agreement agreed to amend the terms of the Senior Credit Agreement (the “FourthAmendment”) and waived a technical default related to the use of proceeds fromthe repayment of the inter-company loan between the Company and its Swisssubsidiary. Among other things, the Fourth Amendment amended the financialcovenants as of December 31, 2005, adjusted the financial covenantsthrough the maturity date of loans outstanding under the Senior CreditAgreement, incorporated new financial covenants, adjusted the interest rate onborrowings under the Senior Credit Agreement, amended the definition of BankEBITDA to provide additional “add backs” related to the Company’s restructuringand new product development efforts, and amended certain other covenants. TheFourth Amendment also required the Company to refinance a portion of the loansoutstanding with the proceeds of a borrowing secured by a second lien on all ofthe assets securing the Company’s obligations under the Senior Credit Agreementor, in the alternative, refinance the Senior Credit Agreement in its entiretyby January 2, 2007. The Fourth Amendment increased the interest rates of allterm loans and revolver loans under the Senior Credit Agreement to euro-LIBORor LIBOR plus 425 basis points commencing on the date of the Fourth Amendment.

On June 23, 2006, theCompany entered into the Second Lien Credit Agreement.  The Second Lien Credit Agreement consisted ofan aggregate of $85,000 principal amount of term loans, the net proceeds ofwhich were used to prepay $9,540 of euro-denominated Term A loans, prepay$53,320 of Term B loans and to repay $15,000 of revolving loans, in each case,outstanding under the Senior Credit Agreement. The maturity date of the term loans outstanding under the Second LienCredit Agreement is June 11, 2010. The Second Lien Credit Agreement satisfiedthe Company’s refinancing obligation under the Fourth Amendment and theinterest rate on loans under the Senior Credit Agreement reverted to euro-LIBORor LIBOR plus 325 basis points upon the completion of the Second Lien CreditAgreement.  In conjunction with theSecond Lien Credit Agreement, the Company incurred fees of approximately$7,451, of which $4,151 are being amortized over the term of the loan and$3,300 were recorded as transaction fees. Depending on the type of borrowing by the Company, the applicableinterest rate under the Second Lien Credit Agreement is calculated as a perannum rate equal to (a) LIBOR plus 850 basis points or (b) (i) the greater of(x) the prime rate or (y) the federal funds effective rate plus 0.5% plus (ii)750 basis points.

The Second LienCredit Agreement contains provisions for mandatory prepayments of outstandingloans with 100% of the net cash proceeds of asset sales, recovery events anddebt issuances and 50% of the net cash proceeds of equity issuances, subject tocertain exceptions. The Company may prepay the term loans under the Second LienCredit Agreement in whole or in part at any time. If the Company makes any suchprepayments during the first three years of the credit facility, it must pay apremium of 3%, 2% and 1% of the aggregate principal amount of term loansprepaid in the first, second and third years of the Second Lien CreditAgreement, respectively, except that these prepayment premiums will be reducedto 1.5%, 1% and 0.5%, respectively on the first $25.5 million aggregateprincipal amount of the term loans prepaid with the net cash proceeds from anequity issuance by Merisant Worldwide.

On June 23, 2006, the Company entered into a fifth amendment to theSenior Credit Agreement (the “Fifth Amendment”) to accommodate the Second LienCredit Agreement and to effect certain other amendments that are intended tofacilitate transactions aimed at de-leveraging the Company’s capitalstructure.  No assurances can be madethat any such transactions will be initiated by the Company or, if initiated,will be successful in de-leveraging the Company.

The Senior Credit Agreement and the Second Lien Credit Agreementcontain covenants, including financial covenants that must be met on aquarterly basis. “Bank EBITDA” is the measure by which the financial covenantscontained in the Senior Credit Agreement and the Second Lien Credit Agreementare measured. However, Bank EBITDA is not a measure of liquidity under GAAP.Accordingly, while providing useful information with respect to an assessmentof liquidity as measured in accordance with the covenants in the Company’sprimary debt obligations, this measure should not be considered in isolationfrom, or as a substitute for, consolidated statement of cash flow data preparedin 

10

----

accordance with GAAP as an indication of liquidity. In addition, theBank EBITDA measure presented may differ from, and may not be comparable to,similarly titled measures used by other companies. The Company was incompliance with its covenants under the Senior Credit Agreement, as amended,and the Second Lien Credit Agreement as of March 31, 2007.

On May 9, 2007, the Company, Merisant Worldwide andcertain of the Company’s subsidiaries entered into an amended and restatedsenior secured credit agreement (the “Amended and Restated Credit Agreement”),which, among other things, increased by $85,000 the principal amount of Term Bloans that may be borrowed by the Company under the facility.  Upon closing, the Company borrowed the full$85,000 of additional Term B loans available under the Amended and RestatedCredit Agreement and used the proceeds plus cash on hand to prepay allprincipal of, and premium and interest on, all loans outstanding under theSecond Lien Credit Agreement, or $88,988. The Company also paid $2,397 in fees and expenses, excluding fees forthe Company’s legal counsel. The Second Lien Credit Agreement was terminated asa result of the transaction and there was no increase in the Company’s longterm debt as a result of this transaction. In addition to the incurrence of fees, this transaction will also resultin a write-off of existing deferred financing fees relating to theextinguishment of previously outstanding debt.

Upon closing of the above transaction and execution ofthe related amendment, the interest rate on all term loans and revolving loansoutstanding under the Amended and Restated Credit Agreement increased fromeuro-LIBOR and LIBOR plus 325 basis points per annum to euro-LIBOR and LIBORplus 350 basis points per annum.  As aresult of the termination of the Second Lien Credit Facility, the Company’seffective interest rate on variable interest rate debt decreased from 10.63%per annum prior to the closing of this transaction to 8.73% per annumsubsequent to this transaction.

The Amended and Restated Credit Agreement preserves prior amendments,amends future financial covenant  ratiosand levels and contains a number of additional amendments, including to thedefinition of Bank EBITDA, that give the Company more flexibility to operateits business and de-leverage its balance sheet.

**6.****                       ****Transactions with Related Parties**

The Company has adeferred compensation payable to Arnold Donald, its former Chairman and acurrent director, and a note receivable in the same amount fromMr. Donald. The Company recorded $55 and $43 of interest income on the notereceivable for the three months ended March 31, 2006 and 2007, respectively,and an equal amount of interest expense in the respective periods.

The Company had been a party to a sublease agreement with The DigitalHome/Digital Office, LLC (“Digital Home”), pursuant to which the Companysubleased office space located at One North Brentwood Boulevard in Clayton,Missouri to Digital Home for a term that expired on March 31, 2006 at arate of $9 per month. At the end of the term of the sublease agreement, DigitalHome acquired the office furniture and equipment at no cost. The underlyinglease expired on March 31, 2006 and the Company had leased the officespace for $15 per month. The acquisition value of the furniture and equipmentwas $225 and the net book value of these assets was zero, subsequent to apreviously recorded impairment charge of $143. Digital Home is controlled byMr. Donald.

The Company is party toan agreement with Brand Architecture International (“Brand Architecture”)pursuant to which Brand Architecture has agreed to provide consulting servicesrelating to the development of brand architecture for the Company’s brands. Ascompensation, the Company paid approximately $407 and $76 to Brand Architecturefor the three months ended March 31, 2006 and 2007, respectively, including thereimbursement to Brand Architecture for expenses relating to its work.Adam Stagliano, a member of the Company’s board of directors, is afounding director and the President and Chief Strategic Officer of Brand Architecture.

On March 28, 2006, the Companyacquired from Pegasus Partners II, L.P., which controls the principalstockholder of Merisant Worldwide, all of the issued and outstanding limitedliability interests of Whole Earth Sweetener Company LLC for $1. At the time ofthe acquisition, the only assets of Whole Earth Sweetener Company LLC weretrademark applications for the **Sweet Simplicity®** trademark.

During the three months ended March 31, 2006 and 2007,the Company made distributions of $500 and $0, respectively, to its solestockholder, Merisant Worldwide.

11

----

**7.        Commitments and Contingencies**

The Company anticipatesthat its cash balance at June 30, 2007 will be 100% to 140% greater than itscash balance at March 31, 2007 as a result of a one-time cash payment to be receivedpursuant to an agreement with a third party. The actual amount of cash and cashequivalents will vary depending on a number of factors, including the use ofcash in operating and financing activities and the results of operations forthe three-month period then ended.

The Company has an investmentin an affiliate located in the Philippines that is accounted for using theequity method. The affiliate, a 50/50 joint venture, distributes sugarsubstitute sweeteners for the international consumer food markets, primarilyunder the *Equal®* brand. Inaddition to its investment in the joint venture, the Company is committed to a50% share in any new borrowings of the joint venture. As of December 31,2006 and March 31, 2007, there were no additional joint venture borrowings.

Merisant Europe B.V.B.A., the Company’s Belgium subsidiary, enteredinto a co-branding agreement with Galleria Srl, a company through which theItalian designer Elio Fiorucci operates. Under this co-branding arrangement,Merisant Europe produced a line of *Canderel*®tablet dispensers that featured designs and trademarks from Mr. Fiorucci’s“Love Therapy by Elio Fiorucci” collection. The co-branding arrangementcontains a representation and warranty that Galleria owns all rights in thename “Love Therapy by Elio Fiorucci” and associated designs and furtherprovides that Galleria will indemnify and hold Merisant Europe and itsaffiliates harmless against damages resulting from or related to their use ofthe name and designs pursuant to the agreement. Beginning in 2005, MerisantEurope sold tablet dispensers with the “Love Therapy by Elio Fiorucci” designsin Italy. Edwin & Co. Ltd. has claimed that it owns all rights inMr. Fiorucci’s name and in the designs used by the Company and has filedsuit against Merisant Europe in Milan, Italy. On or about March 17, 2006,the court in Milan enjoined Merisant Europe from producing or selling thetablet dispensers after the date of the court order. The Company no longerproduces the dispensers and stopped selling dispensers to its distributor inItaly. Merisant Europe has filed an appeal and will vigorously oppose the court’sorder. Merisant Europe will also enforce its indemnification rights under itsco-branding arrangement with Galleria Srl.

In October 2004, the Company requested that the National AdvertisingDivision of the Council of Better Business Bureaus, referred to as the NAD,review advertising and other claims made by McNeil in connection with its *Splenda*® brand sweetener. The Company believed and continuesto believe McNeil’s *Splenda*® advertisingto be false and misleading. Despite McNeil’s previous use of the NAD for suchdisputes and the NAD’s industry-wide, self-regulatory nature, McNeil refused toallow their advertising claims to be judged by the advertising experts at theNAD and instead sought to have the issue considered in the United StatesDistrict Court for the District of Puerto Rico. Under NAD rules, McNeil’sfiling in Puerto Rico precluded the NAD from reviewing the matter further. Inorder to have McNeil’s advertising addressed by a jury and court in thecontinental United States familiar with McNeil’s claims, on November 26, 2004,the Company filed a federal and state false advertising complaint againstMcNeil in the United States District Court for the Eastern District of Pennsylvania.That suit continues today and seeks to have McNeil’s *Splenda*®advertising campaign stopped and significant damages recovered.  On March 2, 2007, the U.S. District Courtdenied the following three motions made by McNeil: that the Company’s case againstthem should be dismissed for failure to bring the lawsuit sooner; that McNeil’s“made from sugar” and “taste like sugar” claims are not impliedly false as amatter of law; and that the Company should not be permitted to seekdisgorgement of all of McNeil’s profit from falsely advertising *Splenda*® in the United States, an amount the Company assertsis at least $183,000.  The court alsoruled that McNeil may not assert an “unclean hands” defense purporting to arguethat the Company engaged in similar activity. The trial commenced on April 9, 2007 before a Philadelphia jury and theparties entered into a confidential settlement agreement on May 11, 2007.

The Company is subject to variousother claims, pending and possible legal actions for product liability andother damages, and other matters arising out of the conduct of the Company’sbusiness, including tax uncertainties arising from doing business in variousEuropean jurisdictions. The Company believes, based on current knowledge andconsultation with counsel, that the outcome of such claims and actions will nothave a material adverse effect on the Company’s consolidated financial positionor results of operations.

**8.        Income Taxes**

In June2006, the Financial Accounting Standards Board (“FASB”) issued InterpretationNo. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASBStatement No. 109 (“FIN 48”), that clarifies the accounting and recognition forincome tax positions taken or expected to be taken in the Company’s taxreturns. The Company adopted FIN 48 on January 1, 2007, and recorded thecumulative effect of a change in accounting principle by recording a decreasein the liability for uncertain tax positions of $5,757, that was accounted foras a credit to opening retained earnings. At January 1, 2007, the totalliability for uncertain tax positions recorded in the Company’s balance sheetin non-current Other Liabilities was $2,145. The entire amount of thisconsolidated worldwide liability for uncertain tax positions would affect theCompany’s effective tax rate upon favorable resolution of the uncertain taxpositions. There were no significant changes to this amount during the firstquarter of 2007. Absent new experience in 

12

----

defendingthese uncertain tax positions in the various jurisdictions to which theyrelate, the Company cannot currently estimate a range of possible change of theMarch 31, 2007 liability over the next twelve months.

TheCompany files a consolidated U.S. income tax return and tax returns in variousstate and local jurisdictions. The Company’s subsidiaries also file tax returnsin various foreign jurisdictions. In addition to the U.S., the Company’s majortaxing jurisdictions include Switzerland, France, the United Kingdom, Belgium,Australia, Argentina and Mexico. In the U.S., all tax years from inception in2000 through the present are open.  TheCompany’s Switzerland subsidiary operates under a tax holiday, resulting in nouncertain tax positions for that entity for any tax year.  Local audits of the tax returns for theCompany’s France subsidiary have been completed through 2004.  In the United Kingdom, the Company assumesthat tax years through 2004 are closed due to local practice.  In Belgium and Australia, tax years through2003 and 2001, respectively, are closed due to the local statute oflimitations.  In Argentina and Mexicoonly the year of inception, 2000, is considered a closed tax year due to thelocal statute of limitations.

**Interest and penalties related to tax positions taken inthe Company’s tax returns are recorded in income tax expense in theconsolidated statements of operations. At January 1, 2007, the combined amountof accrued interest and penalties related to tax positions taken on the Company’stax returns and recorded in non-current Other Liabilities was $429. There wasno significant change to this amount during the first quarter of 2007.**

**9.        Consolidating Guarantor andNon-Guarantor Financial Information**

The following tables set forth the consolidating statements ofoperations for the three months ended March 31, 2006 and March 31, 2007, theconsolidating balance sheets at December 31, 2006 and March 31, 2007 and thestatements of cash flow for the three months ended March 31, 2006 and 2007. Thefollowing information is included herein as a result of the guarantee bycertain of the Company’s wholly owned U.S. subsidiaries (“Guarantor Companies”)of the Notes. None of the Company’s other subsidiaries guarantee the Notes.Each of the guarantees is joint and several and full and unconditional.

13

----

**MERISANT COMPANY****Notes to Unaudited ConsolidatedFinancial Statements (Continued)****(Dollars In Thousands)**

**UnauditedConsolidating Statement of OperationsFor the Three Months Ended March 31, 2006**
| ** **                                                                 | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                                       |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Net sales                                                                  |       | $                     | —     |                     | $          | 31,674                       |       | $                               | 38,973     |             | $          | (980 | ) | $ | 69,667 |   |
| Cost of sales                                                              |       | —                |       | 14,155                   |       | 15,840                       |       | (980                            | )          | 29,015           |       |
| Gross profit                                                               |       | —                |       | 17,519                   |       | 23,133                       |       | —                          |       | 40,652           |       |
| Operating expenses:                                                        |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Marketing and  selling expenses                                            |       | —                |       | 7,866                    |       | 9,042                        |       | —                          |       | 16,908           |       |
| Administration  expenses                                                   |       | 20                    |       | 8,362                    |       | 3,317                        |       | —                          |       | 11,699           |       |
| Amortization of  intangible assets                                         |       | 2,164                 |       | —                   |       | 3,390                        |       | —                          |       | 5,554            |       |
| Restructuring  expenses                                                    |       | —                |       | 18                       |       | 2,273                        |       | —                          |       | 2,291            |       |
| Total operating  expenses                                                  |       | 2,184                 |       | 16,246                   |       | 18,022                       |       | —                          |       | 36,452           |       |
| Income (loss) from  operations                                             |       | (2,184                | )          | 1,273                    |       | 5,111                        |       | —                          |       | 4,200            |       |
| Other expense (income):                                                    |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Interest income                                                            |       | (66                   | )          | (15                      | )          | (67                          | )          | —                          |       | (148             | )          |
| Interest expense                                                           |       | 10,910                |       | (2                       | )          | 4                            |       | —                          |       | 10,912           |       |
| Other expense  (income), net                                               |       | (92                   | )          | 404                      |       | (103                         | )          | —                          |       | 209              |       |
| Total other  expense (income)                                              |       | 10,752                |       | 387                      |       | (166                         | )          | —                          |       | 10,973           |       |
| Income (loss) before  income taxes and equity in consolidated subsidiaries |       | (12,936               | )          | 886                      |       | 5,277                        |       | —                          |       | (6,773           | )          |
| Provision for income  taxes                                                |       | —                |       | 39                       |       | 214                          |       | —                          |       | 253              |       |
| Equity in consolidated  subsidiaries                                       |       | 5,910                 |       | 5,063                    |       | —                       |       | (10,973                         | )          | —           |       |
| Net income (loss)                                                          |       | $                     | (7,026     | )                        | $          | 5,910                        |       | $                               | 5,063      |             | $          | (10,973 | ) | $ | (7,026 | ) |

 

14

----

**MERISANT COMPANY****Notes to Unaudited ConsolidatedFinancial Statements (Continued)****(Dollars In Thousands)**

**UnauditedConsolidating Statement of OperationsFor the Three Months Ended March 31, 2007**
| ** **                                                                 | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                                       |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Net sales                                                                  |       | $                     | —     |                     | $          | 31,005                       |       | $                               | 39,357     |             | $          | (1,049 | ) | $ | 69,313 |   |
| Cost of sales                                                              |       | —                |       | 14,965                   |       | 16,826                       |       | (1,049                          | )          | 30,742           |       |
| Gross profit                                                               |       | —                |       | 16,040                   |       | 22,531                       |       | —                          |       | 38,571           |       |
| Operating  expenses:                                                       |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Marketing and selling expenses                                             |       | —                |       | 6,433                    |       | 8,814                        |       | —                          |       | 15,247           |       |
| Administration expenses                                                    |       | 102                   |       | 9,056                    |       | 2,717                        |       | —                          |       | 11,875           |       |
| Amortization of intangible assets                                          |       | 2,428                 |       | —                   |       | 3,299                        |       | —                          |       | 5,727            |       |
| Restructuring expenses                                                     |       | —                |       | 160                      |       | 400                          |       | —                          |       | 560              |       |
| Total operating expenses                                                   |       | 2,530                 |       | 15,649                   |       | 15,230                       |       | —                          |       | 33,409           |       |
| Income (loss)  from operations                                             |       | (2,530                | )          | 391                      |       | 7,301                        |       | —                          |       | 5,162            |       |
| Other expense  (income):                                                   |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Interest income                                                            |       | (51                   | )          | (4                       | )          | (702                         | )          | 552                             |       | (205             | )          |
| Interest expense                                                           |       | 12,549                |       | —                   |       | 2                            |       | (552                            | )          | 11,999           |       |
| Other expense (income), net                                                |       | 306                   |       | 5                        |       | (172                         | )          | —                          |       | 139              |       |
| Total other expense (income)                                               |       | 12,804                |       | 1                        |       | (872                         | )          | —                          |       | 11,933           |       |
| Income (loss)  before income taxes and equity in consolidated subsidiaries |       | (15,334               | )          | 390                      |       | 8,173                        |       | —                          |       | (6,771           | )          |
| Provision for  income taxes                                                |       | 378                   |       | 734                      |       | 734                          |       | —                          |       | 1,846            |       |
| Equity in  consolidated subsidiaries                                       |       | 7,095                 |       | 7,439                    |       | —                       |       | (14,534                         | )          | —           |       |
| Net income (loss)                                                          |       | $                     | (8,617     | )                        | $          | 7,095                        |       | $                               | 7,439      |             | $          | (14,534 | ) | $ | (8,617 | ) |

 

15

----

**MERISANT COMPANY****Notes to Unaudited ConsolidatedFinancial Statements (Continued)****(Dollars In Thousands)**

**Unaudited Condensed Consolidating Balance Sheetat December 31, 2006**
| ** **                                                         | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|--------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|------------------------------|------------|---------------------------------|------------|------------------|------------|
| **Assets**                                                         | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Cash and cash equivalents                                          |       | $                     | 782        |                     | $          | 3,088                        |       | $                               | 19,860     |             | $          | — |   | $ | 23,730 |   |
| Trade accounts receivable, net of allowance for  doubtful accounts |       | —                |       | 16,185                   |       | 51,821                       |       | —                          |       | 68,006           |       |
| Other receivables and intercompany receivables                     |       | 138                   |       | 5,209                    |       | 5,434                        |       | (5,092                          | )          | 5,689            |       |
| Inventories                                                        |       | —                |       | 7,777                    |       | 6,015                        |       | —                          |       | 13,792           |       |
| Other current assets                                               |       | 1,171                 |       | 4,214                    |       | 2,484                        |       | —                          |       | 7,869            |       |
| Total current assets                                               |       | 2,091                 |       | 36,473                   |       | 85,614                       |       | (5,092                          | )          | 119,086          |       |
| Property and equipment, net                                        |       | —                |       | 17,053                   |       | 6,288                        |       | —                          |       | 23,341           |       |
| Trademarks and other intangible assets, net                        |       | 67,138                |       | —                   |       | 115,541                      |       | —                          |       | 182,679          |       |
| Goodwill                                                           |       | —                |       | 107,209                  |       | —                       |       | —                          |       | 107,209          |       |
| Deferred financing costs, net                                      |       | 13,621                |       | —                   |       | —                       |       | —                          |       | 13,621           |       |
| Other non-current assets                                           |       | 2,651                 |       | 527                      |       | 440                          |       | —                          |       | 3,618            |       |
| Investment in subsidiary and intercompany debt                     |       | 327,361               |       | 225,307                  |       | 269                          |       | (552,668                        | )          | 269              |       |
| Total assets                                                       |       | $                     | 412,862    |                     | $          | 386,569                      |       | $                               | 208,152    |             | $          | (557,760 | ) | $ | 449,823 |   |
| **Liabilities**                                                    |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Accounts payable and intercompany payables                         |       | $                     | 39,445     |                     | $          | 11,108                       |       | $                               | 8,120      |             | $          | (42,439 | ) | $ | 16,234 |   |
| Income taxes payable                                               |       | —                |       | —                   |       | 1,578                        |       | —                          |       | 1,578            |       |
| Accrued expenses and other liabilities                             |       | 11,826                |       | 13,754                   |       | 18,187                       |       | —                          |       | 43,767           |       |
| Current maturities of long-term obligations                        |       | 8,428                 |       | 40                       |       | —                       |       | —                          |       | 8,468            |       |
| Total current liabilities                                          |       | 59,699                |       | 24,902                   |       | 27,885                       |       | (42,439                         | )          | 70,047           |       |
| Long-term obligations andintercompany debt                         |       | 427,755               |       | 172,066                  |       | —                       |       | (172,008                        | )          | 427,813          |       |
| Other liabilities                                                  |       | 4,336                 |       | 25,780                   |       | 775                          |       | —                          |       | 30,891           |       |
| Total liabilities                                                  |       | 491,790               |       | 222,748                  |       | 28,660                       |       | (214,447                        | )          | 528,751          |       |
| **Stockholder’s  Equity (Deficit)**                           |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Total stockholder’s equity (deficit)                          |       | (78,928               | )          | 163,821                  |       | 179,492                      |       | (343,313                        | )          | (78,928          | )          |
| Total  liabilities and stockholder’s equity (deficit)         |       | $                     | 412,862    |                     | $          | 386,569                      |       | $                               | 208,152    |             | $          | (557,760 | ) | $ | 449,823 |   |

 

16

----

**MERISANT COMPANY****Notes to Unaudited ConsolidatedFinancial Statements (Continued)****(Dollars In Thousands)**

**Unaudited Condensed Consolidating Balance Sheetat March 31, 2007**
| ** **                                                 | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|------------------------------|------------|---------------------------------|------------|------------------|------------|
| **Assets**                                                 | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Cash and cash equivalents                                  |       | $                     | 518        |                     | $          | 3,053                        |       | $                               | 18,726     |             | $          | — |   | $ | 22,297 |   |
| Trade accounts receivable, net of allowances               |       | —                |       | 14,872                   |       | 48,066                       |       | —                          |       | 62,938           |       |
| Other receivables and intercompany receivables             |       | 85                    |       | 5,351                    |       | 6,454                        |       | (5,252                          | )          | 6,638            |       |
| Inventories                                                |       | —                |       | 6,636                    |       | 6,955                        |       | —                          |       | 13,591           |       |
| Other current assets                                       |       | 1,061                 |       | 3,243                    |       | 2,369                        |       | —                          |       | 6,673            |       |
| Total current assets                                       |       | 1,664                 |       | 33,155                   |       | 82,570                       |       | (5,252                          | )          | 112,137          |       |
| Property and equipment, net                                |       | —                |       | 16,105                   |       | 5,844                        |       | —                          |       | 21,949           |       |
| Trademarks and other intangible assets, net                |       | 64,710                |       | —                   |       | 112,242                      |       | —                          |       | 176,952          |       |
| Goodwill                                                   |       | —                |       | 107,209                  |       | —                       |       | —                          |       | 107,209          |       |
| Deferred financing costs, net                              |       | 12,758                |       | —                   |       | —                       |       | —                          |       | 12,758           |       |
| Other non-current assets                                   |       | 1,694                 |       | 536                      |       | 438                          |       | —                          |       | 2,668            |       |
| Investment in subsidiary and intercompany debt             |       | 338,332               |       | 233,049                  |       | 307                          |       | (571,381                        | )          | 307              |       |
| Total assets                                               |       | $                     | 419,158    |                     | $          | 390,054                      |       | $                               | 201,401    |             | $          | (576,633 | ) | $ | 433,980 |   |
| **Liabilities**                                            | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Accounts payable and intercompany payable                  |       | $                     | 56,006     |                     | $          | 10,660                       |       | $                               | 10,256     |             | $          | (58,816 | ) | $ | 18,106 |   |
| Income taxes payable                                       |       | —                |       | —                   |       | 1,879                        |       | —                          |       | 1,879            |       |
| Accrued expenses and other liabilities                     |       | 6,358                 |       | 11,415                   |       | 17,791                       |       | —                          |       | 35,564           |       |
| Current maturities of long-term obligations                |       | 8,506                 |       | 40                       |       | —                       |       | —                          |       | 8,546            |       |
| Total current liabilities                                  |       | 70,870                |       | 22,115                   |       | 29,926                       |       | (58,816                         | )          | 64,095           |       |
| Long-term obligations and intercompany debt                |       | 425,837               |       | 169,871                  |       | —                       |       | (169,823                        | )          | 425,885          |       |
| Other liabilities                                          |       | 3,757                 |       | 18,947                   |       | 2,602                        |       | —                          |       | 25,306           |       |
| Total liabilities                                          |       | 500,464               |       | 210,933                  |       | 32,528                       |       | (228,639                        | )          | 515,286          |       |
| **Stockholder’s  Equity (Deficit)**                   | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Total stockholder’s equity (deficit)                  |       | (81,306               | )          | 179,121                  |       | 168,873                      |       | (347,994                        | )          | (81,306          | )          |
| Total liabilities  and stockholder’s equity (deficit) |       | $                     | 419,158    |                     | $          | 390,054                      |       | $                               | 201,401    |             | $          | (576,633 | ) | $ | 433,980 |   |

 

17

----

**MERISANT COMPANY****Notes to Unaudited ConsolidatedFinancial Statements (Continued)****(Dollars In Thousands)**

**UnauditedConsolidating Statement of Cash Flows For the Three Months Ended March 31, 2006**
| ** **                                          | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                |       |                  |       |                     |       |                         |       |                            |       |             |       |
| **Operating  activities**                           |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Net cash provided by (used in) operating activities |       | $                     | (15,749    | )                        | $          | 3,541                        |       | $                               | 24,912     |             | $          | (10,973 | ) | $ | 1,731 |   |
| **Investing  activities**                           |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Purchases of property and equipment                 |       | —                |       | (434                     | )          | (39                          | )          | —                          |       | (473             | )          |
| Net cash used in investing activities               |       | —                |       | (434                     | )          | (39                          | )          | —                          |       | (473             | )          |
| **Financing  activities**                           |       |                  |       |                     |       |                         |       |                            |       |             |       |
| Net borrowings under revolving credit agreement     |       | 11,000                |       | —                   |       | —                       |       | —                          |       | 11,000           |       |
| Principal payments on long-term obligations         |       | (2,233                | )          | (69                      | )          | —                       |       | —                          |       | (2,302           | )          |
| Payment of deferred financing costs                 |       | (1,588                | )          | —                   |       | —                       |       | —                          |       | (1,588           | )          |
| Receivable/payable, parent company                  |       | 11,838                |       | (39                      | )          | (22,772                      | )          | 10,973                          |       | —           |       |
| Distribution to stockholder                         |       | (500                  | )          | —                   |       | —                       |       | —                          |       | (500             | )          |
| Net cash provided by (used in) financing activities |       | 18,517                |       | (108                     | )          | (22,772                      | )          | 10,973                          |       | 6,610            |       |
| Effect of exchange rate on cash                     |       | —                |       | —                   |       | (155                         | )          | —                          |       | (155             | )          |
| Net increase in  cash and cash equivalents          |       | 2,768                 |       | 2,999                    |       | 1,946                        |       | —                          |       | 7,713            |       |
| Cash and cash  equivalents at beginning of period   |       | 98                    |       | 924                      |       | 17,042                       |       | —                          |       | 18,064           |       |
| Cash and cash  equivalents at end of period         |       | $                     | 2,866      |                     | $          | 3,923                        |       | $                               | 18,988     |             | $          | — |   | $ | 25,777 |   |

 

18

----

**MERISANT COMPANY****Notes to Unaudited ConsolidatedFinancial Statements (Continued)****(Dollars In Thousands)**

**UnauditedConsolidating Statement of Cash Flows For the Three months Ended March 31, 2007**
| ** **                                                                        | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                                              |       |                  |       |                     |       |                         |       |                            |       |             |       |
| **Operating  activities**                                                         | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Net cash provided by (used in) operating activities                               |       | $                     | (17,051    | )                        | $          | 2,662                        |       | $                               | 29,550     |             | $          | (14,534 | ) | $ | 627 |   |
| **Investing  activities**                                                         | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Purchases of property and equipment                                               |       | —                |       | (158                     | )          | (51                          | )          | —                          |       | (209             | )          |
| Net cash used in investing activities                                             |       | —                |       | (158                     | )          | (51                          | )          | —                          |       | (209             | )          |
| **Financing  activities**                                                         | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Principal payments on long-term obligations,  excluding revolving credit facility |       | (2,138                | )          | (10                      | )          | —                       |       | —                          |       | (2,148           | )          |
| Receivable/payable, parent company                                                |       | 18,746                |       | (2,529                   | )          | (30,751                      | )          | 14,534                          |       | —           |       |
| Settlement of loans for purchase of shares in  Merisant Worldwide, Inc.           |       | 179                   |       | —                   |       | —                       |       | —                          |       | 179              |       |
| Net cash provided by (used in) financing activities                               |       | 16,787                |       | (2,539                   | )          | (30,751                      | )          | 14,534                          |       | (1,969           | )          |
| Effect of exchange rate on cash                                                   |       | —                |       | —                   |       | 118                          |       | —                          |       | 118              |       |
| Net increase  (decrease) in cash and cash equivalents                             |       | (264                  | )          | (35                      | )          | (1,134                       | )          | —                          |       | (1,433           | )          |
| Cash and cash  equivalents at beginning of period                                 |       | 782                   |       | 3,088                    |       | 19,860                       |       | —                          |       | 23,730           |       |
| Cash and cash  equivalents at end of period                                       |       | $                     | 518        |                     | $          | 3,053                        |       | $                               | 18,726     |             | $          | — |   | $ | 22,297 |   |

 

 

19

----

**Item 2.Management’s Discussion and Analysis of Financial Condition and Results ofOperations**

*The following discussion should be read in conjunction with ourunaudited consolidated financial statements and accompanying notes includedelsewhere in this document. Our discussion of results by reportable segmentshould be read in conjunction with Note 2 to the  unaudited consolidated financial statementsincluded elsewhere in this document, which illustrates the reconciliation ofOperating EBITDA to loss before income taxes. Unless otherwise indicated orunless the context requires otherwise, all references in this discussion to “Merisant”,“us”, “our” or “our company” mean Merisant Company and its consolidatedsubsidiaries.*

**Overview**

Our company is a worldwide leader in themarketing of low-calorie tabletop sweeteners, with an estimated 23% dollarshare as of December 31, 2006 of a stable global retail market, which weestimate at $1.5 billion.  We believethat our company has the leading dollar market share as of December 31, 2006 inapproximately half of what we estimate as the top twenty markets forlow-calorie tabletop sweetener sales. Our premium-priced brands, *Equal*®and *Canderel*®, are among the mostrecognized low-calorie tabletop sweetener products in the world, with aidedbrand awareness estimated at between 85% and 95% in our four top markets.  In addition to *Equal*® and *Canderel*®,we market our products under eighteen other regional brands that enjoysignificant brand recognition in their target markets.  We sell our brands in over ninety countries.

Our business is the result of over 25years of history in the low-calorie tabletop sweetener industry, first as adivision of G.D. Searle & Co. (“Searle”) and later Monsanto Company (“Monsanto”).  Searle invented the key sweetening ingredientin many of our products, aspartame, in 1965. Aspartame was first approved for consumer use in France in 1979, whereSearle marketed the product under the *Canderel*®brand.  By the early 1980s, *Canderel*® was being marketed in much ofEurope.  In 1981, the U.S. Food and DrugAdministration approved the tabletop use of aspartame.  The following year, Searle launched *Equal*® in the United States.  Monsanto entered the sweetener market in 1985through its acquisition of Searle. Our company is a Delaware corporation thatwas formed in 2000 by an investor group led by an affiliate of Pegasus CapitalAdvisors, L.P. to acquire Monsanto Company’s tabletop sweetener business.

Our worldwide headquarters is located inChicago, Illinois, and we have principal regional offices in Mexico City,Mexico, Neuchâtel, Switzerland, Paris, France and Singapore.  We own and operate manufacturing facilitiesin Manteno, Illinois and Zarate, Argentina and own processing lines that areoperated exclusively for us at plants located in Bergisch and Stendal,Germany.  As of May 15, 2007, we hadtwenty-two direct and indirect subsidiaries, including three subsidiaries inthe United States, eight subsidiaries in Europe, six subsidiaries in Mexico,Central America and South America, and five subsidiaries in the Asia Pacificregion, including Australia and India. In addition, our Swiss subsidiary holds a 50% interest in a jointventure in the Philippines.

Our core business continues to be productssweetened with aspartame, and the *Equal*®and *Canderel*® tabletop sweetenerproducts accounted for approximately 87% of our net sales in 2006.   The majority of our eighteen other regionalbrands around the world are also sweetened with aspartame.

***Sales Trends and Strategy***

Ourcompany’s premium-priced brands had enjoyed a dominant market position amonglow-calorie sweeteners in many of our key markets.  In recent years, however, we have facedsignificant competition from McNeil Nutritionals LLC, a subsidiary of Johnson& Johnson (“McNeil”), which markets and distributes the artificialsweetener*Splenda*®.  *Splenda*®is sweetened with sucralose, which is produced by Tate & Lyle PLC through acomplex chemical process that converts sucrose molecules into a syntheticcompound. From December 2002 to December 2006, *Splenda*®’sdollar share of the United States retail grocery market has grown fromapproximately 15% to 62% and has surpassed that of *Equal*® to become the number one premium low-caloriesweetener in the United States.  While webelieve that the introduction of *Splenda*®has increased the size of the market for low-calorie sweeteners in general, ournet sales have declined during this period, particularly in North America whichhad accounted for 46% and 42% of our net sales in 2003 and 2006,respectively.  As a result of decliningnet sales, we have experienced significant declines in our Bank EBITDA from$110.2 million in 2003 to $67.2 million in 2006.  For a description of Bank EBITDA and areconciliation of Bank EBITDA to cash flow from operating activities, see “Management’sDiscussion and Analysis of Financial Condition and Results ofOperations—Liquidity and Capital Resources”.

We believe that there areopportunities for future growth in the low-calorie tabletop sweetener andsweetened food category and that our company is positioned to pursue theseopportunities.  Despite recent declinesin net sales, our premium brands *Equal*®and *Canderel*® are among the mostrecognized low-calorie tabletop sweetener products in the world, with aidedbrand awareness estimated between 85% and 95% in our top four markets.

20

----

Paul Block was appointedChief Executive Officer in November 2004 and has led an initiative tostrengthen our company’s core brands, improve the efficiency of our operations,reduce costs and transform our company into a sweetener and sweetened foodcompany.   Mr. Block has recruitedindividuals from outside our company and promoted individuals from within theorganization to form a new senior management team with the goal of developing aculture of innovation with a focus on the development and launch of newproducts designed to revitalize the existing customer base and attract newconsumers.

Our company seeks tostabilize and then grow revenues through the following five strategicinitiatives:

·                  Promotenew usage among existing consumers and expand the *Equal*®and *Canderel*® brand positioning to attractnew consumers through invasive marketing campaigns and improved salesexecution.

·                  Pursueproduct innovation to bring new aspartame sweetened products and brandextensions to the market.  We launchedseveral new products in 2006 and have additional products in the developmentpipeline.

·                  Developand test products that have the potential to transform our company’s brand portfolio.We have developed an all-natural, zero-calorie sweetener that is being marketedunder the *Sweet Simplicity*® brand for oursubsidiary, Whole Earth Sweetener Company LLC. Currently, this innovativeproduct has achieved national distribution at 137 Wild Oats or affiliatedstores, approximately 80 Whole Foods stores (of their 192 stores in total) andhas also been sold into approximately 100 independent organic retail outletsacross the United States.

·                  Dedicatesignificant resources to improving the efficiency of operations by, among otherthings, implementing supply chain-based programs to streamline manufacturingcapabilities and improving the efficiency of certain support services.   We have successfully reduced costs and madeour business more efficient, which has significantly contributed to the currentstabilization of Bank EBITDA over the past two years.

·                  Offerprivate label low-calorie sweeteners to retail and food service customers andleverage supply chain expertise globally.

Webelieve that the development and introduction of new products under our *Equal*® and *Canderel*®brands may help to stabilize our core business while innovative, all-naturalsweeteners and sweetened food products under our *SweetSimplicity®* brand for Whole Earth Sweetener Company present growthopportunities for us. However, we may be constrained in our ability to realizefully the value of these new products as a result of our current capitalstructure. The successful launch of new products and marketing of our corebrands requires capital, and we must use a significant portion of our cashflows from operations to service our outstanding debt. We had an aggregate of$434.3 million of long-term debt outstanding at March 31, 2007, excludingcapital lease obligations, and paid $44.3 million in interest costs for theyear ended December 31, 2006, $22.0 million of which represented interestpayments on our 9 1⁄2% senior subordinated notes due 2013 (the “Notes”). If wecannot generate cash flows from operations significantly in excess of ourshort-term debt obligations, we may not have the resources required to fullyrealize the value of our strategic initiatives. We may engage in discussions from time to time with our lenders andnoteholders on ways to optimize our capital structure.

**Results ofOperations**

For each of the periodsdiscussed below, the information set forth under the caption “ConsolidatedResults” represents an overview of our company’s results of operations on aconsolidated basis. Additional detail regarding the results of operations canbe found under the caption “Segment Results” for each period discussed below.

***Three Months Ended March31, 2007 Compared to Three Months Ended March 31, 2006***

The following table sets forth certain of our company’sfinancial data for the three month periods ended March 31, 2006 and 2007(totals may not foot due to rounding).

21

----

 
| ** **                        | ** ** | **Three Months Ended  March 31,** | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                        | ** ** | **2006**                                         | ** ** | **2007**                                         | ** ** | **2006** | ** ** | **2007** | ** ** | **Better/(Worse)  than Prior Year** | ** ** |
| ** **                        | ** ** | **(in millions)**                           | ** ** | **As% of Net Sales**              | ** ** | **Dollars** | ** ** | **%** | ** ** |
| Net sales                         |       | $                                                | 69.7       |                                             | $          | 69.3 |   | 100 | % | 100 | % | $ | (0.4 | ) | (1 | )% |
| Cost of sales                     |       | 29.0                                             |       | 30.7                                             |       | 42 | % | 44 | % | (1.7 | ) | (6 | )% |
| Gross profit                      |       | 40.7                                             |       | 38.6                                             |       | 58 | % | 56 | % | (2.1 | ) | (5 | )% |
| Operating  expenses:              |       |                                             |       |                                             |       |   |   |   |   |   |   |   |   |
| Marketing and selling expenses    |       | 16.9                                             |       | 15.2                                             |       | 24 | % | 22 | % | 1.7 |   | 10 | % |
| Administration expenses           |       | 11.7                                             |       | 11.9                                             |       | 17 | % | 17 | % | (0.2 | ) | (2 | )% |
| Amortization of intangible assets |       | 5.6                                              |       | 5.7                                              |       | 8 | % | 8 | % | (0.2 | ) | (3 | )% |
| Restructuring expenses            |       | 2.3                                              |       | 0.6                                              |       | 3 | % | 1 | % | 1.7 |   | 76 | % |
| Total operating expenses          |       | 36.5                                             |       | 33.4                                             |       | 52 | % | 48 | % | 3.0 |   | 8 | % |
| Income from  operations           |       | 4.2                                              |       | 5.2                                              |       | 6 | % | 7 | % | 1.0 |   | 23 | % |
| Other expenses  (income):         |       |                                             |       |                                             |       |   |   |   |   |   |   |   |   |
| Interest income                   |       | (0.1                                             | )          | (0.2                                             | )          | (0 | )% | (0 | )% | 0.1 |   | 39 | % |
| Interest expense                  |       | 10.9                                             |       | 12.0                                             |       | 16 | % | 17 | % | (1.1 | ) | (10 | )% |
| Other expense (income), net       |       | 0.2                                              |       | 0.1                                              |       | 0 | % | 0 | % | 0.1 |   | 34 | % |
| Total other expenses              |       | 11.0                                             |       | 11.9                                             |       | 16 | % | 17 | % | (1.0 | ) | (9 | )% |
| Loss before  income taxes         |       | (6.8                                             | )          | (6.8                                             | )          | (10 | )% | (10 | )% | (0.0 | ) | (0 | )% |
| Provision for  income taxes       |       | 0.3                                              |       | 1.8                                              |       | 0 | % | 3 | % | (1.6 | ) | (630 | )% |
| Net loss                          |       | $                                                | (7.0       | )                                                | $          | (8.6 | ) | (10 | )% | (12 | )% | $ | (1.6 | ) | (23 | )% |

 

**Consolidated Results**

*Net sales.*Overall,net sales declined slightly in the first quarter of 2007 compared to the firstquarter of 2006.  The decline was relatedto lower sales in EAME, Latin America and, to a lesser extent, in NorthAmerica.  In EAME, we experienced our greatestsales declines in the UK as a result of diversion of product into theretail channel and discontinued sales to certain distributors in an effort tostop the diversion.  Lower sales inFrance, Belgium and Hungary also contributed to the decline in the EAMEregion.   In Latin America, the sales decrease primarily related to a sales returnfrom our previous distributor in Mexico and a delay in shipping under our newbusiness model in Mexico.  In NorthAmerica, sales declined due primarily to a shift in retail, drug and foodservice sales from the first quarter of 2007 to December 2006 due to thescheduling of our annual physical inventory in early January as well as lowerpricing and additional promotional activity in the club channel.  These sales declines were partially offset byimproved sales in Asia Pacific due to shipments to new distributors inAustralia and India to establish beginning inventory levels, approximately $2.2million in favorable currency translation gains, improved consumer demand inthe North America club channel, increased sales in other EAME countries, mainlyPortugal and Ireland, and increased contract manufacturing activity.

*Cost of sales.*Cost of sales increased, despite the slight decline in sales, due to salesincreases in lower margin products, such as contract manufacturing, the impactof purchasing product in Euro for sales in countries with weaker currencies andunfavorable raw material purchase prices. Overall, gross profit as a percentage of net sales declined from 58% forthe three months ended March 31, 2006 to 56% for the three months ended March31, 2007 due to the increases in costs discussed above as well as discountedpricing in the UK and countries converted to distributor models.

*Operating expenses.*Marketingand selling expenses decreased due to lower brand support in North America,termination costs recorded in the three months ended March 31, 2006 related tothe transition to a new distributor in the United States that did not repeat inthe same period in 2007 and lower overall marketing and selling administrationcosts due to savings from restructuring actions. These favorable impacts werepartially offset by higher brand support in the EAME region, unfavorablecurrency impacts and increased commissions relating to the new distributor inthe United States.  Administrationexpenses increased mainly due to higher litigation and consulting costspartially offset by lower performance based incentives.

During the first quarter of 2007, we continued ourrestructuring initiatives to improve both financial results and the long-termvalue of the business. As a result of these actions, we recorded restructuringcharges for workforce reductions of $0.6 million in the first quarter of 2007as compared to $2.3 million in the first quarter of 2006. The restructuringcharges incurred in the first quarter of 2007 relate primarily to new employeetermination costs and are expected to be substantially paid by December 31,2007. Additional information regarding restructuring charges and the relatedliability can be found in Note 3 to the unaudited consolidated financialstatements located elsewhere in this document.

22

----

*Interest.*Our interest expense increased as a netresult of higher interest bearing loans under our Second Lien Credit Agreementand the use of proceeds from the Second Lien Credit Agreement to prepay lowerinterest bearing loans under our Senior Credit Agreement, as well as overallincreases in interest rates on variable interest debt instruments. Loansoutstanding under the Senior Credit Agreement had a weighted average interestrate of approximately 9.0% per annum prior to the June 2006 closing of theSecond Lien Credit Agreement.  Ourborrowings under the Senior Credit Agreement and Second Lien Credit Agreementhad a weighted average interest rate of approximately 10.3% per annum upon theclosing of the Second Lien Credit Agreement. In May 2007, we refinanced and therefore terminated the Second LienCredit Agreement as described below.

*Other income/expense, net*. Other income/expense, net for the first quarter of 2007 is essentiallyflat compared to the first quarter of 2006; however, there are significantoffsetting variances.  In the firstquarter of 2006, a $0.6 million currency loss on the euro-denominated debt andunfavorable balance sheet remeasurement impacts were partially offset by a $0.7million realized gain on interest rate derivatives that expired in March2006.  In the first quarter of 2007, werecorded a loss on the euro-denominated debt of $0.3 million in the firstquarter of 2007, partially offset by favorable balance sheet remeasurementimpacts.

*Taxes.*For thethree months ended March 31, 2007, we recorded a $1.8 million tax provision ona loss before income taxes of $6.8 million. The unusual relationship of our taxprovision to the pre-tax loss in the first quarter of 2007 relates to acombination of factors. These factors include increased tax loss carryforwards,primarily generated in the United States, for which we have not recorded a taxbenefit, as well as **provisions for future tax costs which may beincurred upon the potential repatriation of certain 2007 foreign earningsthat are not deemed to be permanently reinvested. **Withregard to the deferred income tax assets on the tax loss carryforwards, wedetermined that we have not satisfied the “more likely than not” test and weincreased our total valuation allowance by $3.9 million in the first quarter of2007 to a total of $71.4 million. We will continue to assess the valuationallowances, and, to the extent we determine that such allowances are no longerrequired, these deferred income tax assets will be recognized in the future.

**Segment Results**

Thefollowing table presents net sales and Operating EBITDA expressedin millions of dollars for each reportable segment (totals may not footdue to rounding):
| ** **               | ** ** | **Net Sales**                           | ** ** | **Operating EBITDA (1)**            | ** ** |
|--------------------------|------------|----------------------------------------------|------------|-----------------------------------------------|------------|
| ** **               | ** ** | **Three Months  Ended  March 31,** | ** ** | **Better/(Worse)  than Prior Year** | ** ** | **Three Months  Ended  March 31,** | ** ** | **Better/(Worse)  than Prior Year** | ** ** |
| ** **               | ** ** | **2006**                                     | ** ** | **2007**                                      | ** ** | **$** | ** ** | **%** | ** ** | **2006** | ** ** | **2007** | ** ** | **$** | ** ** | **%** | ** ** |
| ** **               | ** ** | **(in millions)**                       | ** ** | **(in millions)**                        | ** ** |
|                     |       |                                         |       |                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North America  (2)       |       | $                                            | 29.9       |                                          | $          | 28.9 |   | $ | (1.0 | ) | (3 | )% | $ | 10.6 |   | $ | 10.3 |   | $ | (0.3 | ) | (3 | )% |
| Operating EBITDA  Margin |       |                                         |       |                                          |       |   |   |   |   | 35 | % | 36 | % | (0 | )% |   |   |
| EAME                     |       | 28.8                                         |       | 26.6                                          |       | (2.2 | ) | (8 | )% | 9.4 |   | 7.0 |   | (2.4 | ) | (26 | )% |
| Operating EBITDA  Margin |       |                                         |       |                                          |       |   |   |   |   | 33 | % | 26 | % | (6 | )% |   |   |
| Latin America            |       | 6.4                                          |       | 5.3                                           |       | (1.1 | ) | (17 | )% | 1.1 |   | 1.1 |   | (0.0 | ) | (3 | )% |
| Operating EBITDA  Margin |       |                                         |       |                                          |       |   |   |   |   | 18 | % | 21 | % | 3 | % |   |   |
| Asia/Pacific             |       | 4.5                                          |       | 8.5                                           |       | 4.0 |   | 88 | % | 1.5 |   | 4.1 |   | 2.6 |   | 168 | % |
| Operating EBITDA Margin  |       |                                         |       |                                          |       |   |   |   |   | 34 | % | 48 | % | 14 | % |   |   |
|                          |            |                                              |            |                                               |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

(1)             “OperatingEBITDA” as used with respect to our operating segments is a measure upon whichwe assess the financial performance of these segments. Operating EBITDAexcludes interest expense, income tax expense and depreciation andamortization, as well as items such as restructuring expenses, certainsignificant charges related to new product development and launch costs,certain litigation costs, cost related to the transition to a new exclusivedistributor in the United States and certain other non-cash items. Ourdefinition of Operating EBITDA is largely driven by similar definitions of BankEBITDA under our primary credit facilities. That definition changed slightly in the May 2007 amendment of thosefacilities and that change will be reflected prospectively in our computationof Operating EBITDA. See Note 2 to the unaudited consolidated financialstatements for a description of Operating EBITDA and a reconciliation ofOperating EBITDA to loss before income taxes. Operating EBITDA margin representsOperating EBITDA as a percentage of net sales.

(2)             NorthAmerica segment results exclude immaterial sales and $0.5 million of negativeOperating EBITDA related to a new product launch which management evaluatesseparately from this geographical segment for each of the three month periodsended March 31, 2006 and 2007.

23

----

***North America***

*Net sales.*  In NorthAmerica, net sales declined due primarily to a shift in retail, drug and foodservice sales from the first quarter of 2007 to December 2006 due to thescheduling of our annual physical inventory in early January as well as lowerpricing and additional promotional activity in the club channel.  These sales declines were partially offset byimproved consumer demand in the club channel in response to promotionalactivities, improved sales in certain areas of the food service channel due todistribution gains and new product offerings and increased contractmanufacturing activity.

*Operating EBITDA.*The slight decrease in Operating EBITDA wasprimarily related to the margin impact of lower net sales, unfavorable salesmix and higher selling costs associated with the new distributor.  These unfavorable impacts were partiallyoffset by lower overall brand support, termination costs recorded in the threemonths ended March 31, 2006 related to the transition to a new distributor in theUS that did not repeat in the same period in 2007 and lower marketingadministration costs due to savings from restructuring actions.  Operating EBITDA margin was stable overall.

***EAME***

*Net sales.*In the EAME region, the decline in net sales wasdriven primarily by the UK, France, Belgium and Hungary.  We experienced our greatest sales declines inthe UK as a result of diversion of product into the retail channeland  discontinued sales to certaindistributors in an effort to stop the diversion.  A shift in timing of shipments as well ascontinued softness in consumer demand reduced sales in France.  In Belgium, our distributor carried higherinventories than expected at December 31, 2006, negatively impacting sales inthe first quarter of 2007.  In Hungary, lower net sales were due mainly to the shift to adistributor model after the sale of the entity in July 2006 to improveinfrastructure costs.  These unfavorableimpacts were partially offset by favorable currency translation ofapproximately $1.8 million and improved sales in several other countries,mainly Portugal and Ireland.  InPortugal, unusually high inventories at December 31, 2005 negatively impactedthe first quarter of 2006, resulting in an improvement in the year over yearcomparison in the first quarter of 2007.

*Operating EBITDA.* OperatingEBITDA decreased mainly due to lower net sales and higher brand support inFrance and the UK, partially offset by reduced marketing, selling and generaladministrative costs due mainly to savings from restructuring actions andchanges in business models in several markets. The decrease in Operating EBITDA margin was primarily due to a decreasein gross margin as a percent of sales, mainly related to changes in sales mix,discounted pricing in the UK and other countries converted to a distributormodel and increased pricing for certain raw materials.

***Latin America***

*Net sales.* The sales decrease primarily relates to a salesreturn from our previous distributor in Mexico and a delay in shipping underour new business model in Mexico.

*Operating EBITDA.*Operating EBITDA was flat as reductions in brandsupport and reduced general administrative costs due to savings fromrestructuring actions were offset by the margin impact of lower sales.    Operating EBITDA margin increased primarilydue to higher gross profit percentage and lower administrative expenses as apercentage of sales.

***Asia/Pacific***

*Net sales.*Net sales in the Asia/Pacific region increasedprimarily due to shipments to new distributors in Australia and India toestablish beginning inventory levels.

 *Operating EBITDA.*OperatingEBITDA and Operating EBITDA margin increased primarily due to the increasedsales coupled with a slightly higher brand support against significantly highersales.

**Corporate Expenses**

Corporate expenses increased from $7.4 million in thefirst quarter of 2006 to $9.3 million in the first quarter of 2007, primarilydue to higher litigation costs relating to our lawsuit against McNeil, costsrelating to our *Sweet Simplicity®* line that wereexcluded from corporate expenses in the first quarter of 2006 and higherconsulting and employee related costs partially offset by lower performancebased incentives.

24

----

**Liquidity and Capital Resources**

Our liquidityneeds are primarily met through internally generated cash flow. As needed, wealso borrow money under the revolving credit facility of the Senior CreditAgreement. We may engage in discussions from time to time with our lenders andnoteholders on ways to optimize our capital structure.  Our primary uses of cash are cost of sales,operating expenses, debt service, capital expenditures and distributions to ourstockholder. Foreign subsidiaries generatedapproximately 59% of consolidated net sales during the year ended December 31,2006, and we have relied upon the repatriation of cash from our foreignsubsidiaries to satisfy many of our domestic cash requirements. Historically,we had received a vast majority of funds from foreign subsidiaries through ourSwiss subsidiary in the form of payments pursuant to a promissory note. Thispromissory note was repaid in full in January 2006. On March 30,2006, we issued a revolver note to our Swiss subsidiary, which will mature in2011. We may borrow up to $200 million from our Swiss subsidiary during the termof the revolver note, and we expect to repatriate cash to the United Statesthrough borrowings under this revolver note. The balance relating to thisrevolving note as of March 31, 2007 was $52.5 million, consisting of $50.9million in outstanding borrowings and $1.6 million of accrued interest.

We had $22.3million of cash and cash equivalents as of March 31, 2007. We anticipate thatour cash balance at June 30, 2007 will be 100% to 140% greater than the cashbalance at March 31, 2007 as a result of a one-time cash payment to be receivedpursuant to an agreement with a third party. The actual amount of cash and cashequivalents at June 30, 2007 will vary depending on a number of factors,including our use of cash in operating and financing activities and our resultsof operations for the three-month period then ended.

Accountsreceivable levels, time to payment and inventory levels impact the amount ofinternally generated cash flow. The following table shows information withrespect to accounts receivable and inventory as of December 31, 2006 and March31, 2007.  Accounts receivable decreased in the three months ended March 31, 2007primarily due to higher sales in the fourth quarter of 2006 compared to thefirst quarter of 2007.  Inventory levelsremained relatively stable in the first quarter of 2007 as compared to December31, 2006.  

|                                    | ** ** | **December 31, 2006** | ** ** | **March 31, 2007** | ** ** |
|------------------------------------|------------|---------------------------------|------------|------------------------------|------------|
|                               |       |                            |       |                         |       |
| Accounts  receivable (in millions) |       | $                               | 68.0       |                         | $          | 63.0 |   |
| Days sales  outstanding            |       | 83                              |       | 77                           |       |
| Inventory (in millions)            |       | $                               | 13.8       |                         | $          | 13.6 |   |
| Days sales in inventory            |       | 40                              |       | 39                           |       |

 

***Three Months Ended March 31, 2007 Compared to ThreeMonths Ended March 31, 2006***

For the three months ended March 31, 2007, net cash provided byoperating activities was $0.6 million compared to $1.7 million for the threemonths ended March 31, 2006. Operating cash flows decreased $1.1 million versusthe three months ended March 31, 2006, due to decreased net income afteradjusting for non-cash items of $0.6 million and a decrease in the contributionfrom working capital of $0.5 million.

Net cash used in investing activities totaled $0.2 million for the threemonths ended March 31, 2007 compared to $0.5 million for the three months endedMarch 31, 2006 due to reduced spending on capital expenditures.

Forthe three months ended March 31, 2007, financing activities used $2.0 millionin cash as compared to providing $6.6 million in cash for the three monthsended March 31, 2006.  For the threemonths ended March 31, 2007, we used cash to pay our scheduled principalpayments under the Senior Credit Agreement.  In the three months ended March 31, 2006, cash was provided fromborrowings of $11.0 million under our revolving loan facility and we used cashmainly to pay scheduled principal payments under the Senior Credit Agreementand to pay fees related to amendments to the Senior Credit Agreement.  In addition, distributions of $0.5 millionwere made to our sole stockholder in the first quarter of 2006 for the purposeof paying financing fees and other administrative expenses.  Borrowings under our revolving loan facilitywere $0 at both December 31, 2006 and March 31, 2007.

***Capital Expenditures***

Capital expenditures in 2007 are expected to be in the range of$3.0 million to $5.0 million. We believe that internally generatedcash flow, together with borrowing available under the Senior Credit Agreement,will be sufficient to fund capital expenditures over the next 12 months.

***Corporate Headquarters’ Lease***

In April 2007, we entered into a new operating leasefor office space in Chicago and terminated our current lease and provided therequired one year notice period.  We planto move our corporate operations to the new space in the first half of 2008.  The new landlord has agreed to pay thecurrent lease termination fee of $0.9 million on our behalf.  The new lease terminates on April 30,2024.  Current leasehold improvements andother non-

25

----

transferable assets will be fully depreciated betweenApril 2007 and the estimated date we move into the new facility and movingcosts will be expensed as incurred in the first half of 2008.

***Financing***

On July 11, 2003, we issued $225.0 million principalamount of the Notes and refinanced our credit facility with the Senior CreditAgreement.  A portion of the proceeds ofthe Notes and the Senior Credit Agreement were used to pay a dividend to oursole stockholder. The Notes are unsecured obligations and are subordinated inright of payment to all existing and future senior indebtedness of our company.The Notes mature on July 15, 2013. The stated rate of interest for the Notesis 91¤2%per annum. Interest is payable semiannually in arrears on January 15th andJuly 15th, commencing on January 15, 2004.

The Senior Credit Agreement, as of March 31, 2007, provides foraggregate commitments of up to $310.0 million, consisting of a revolving loanfacility of $35.0 million, of which a portion is available at our option ineuro or dollars or in the form of letters of credit denominated in dollars oreuro, as well as term loan facilities of $275.0 million, consisting of a EuroTerm Loan A of $50.0 million, and a Term Loan B of $225.0 million, denominatedin dollars. The Euro Term Loan A and the revolving loan facility have amaturity of five and one-half years while the Term Loan B has a maturity of sixand one-half years. The Senior Credit Agreement is guaranteed by our solestockholder and each of our domestic subsidiaries. The Senior Credit Agreementand the guarantees of the guarantors are secured by afirst-priority security interest in substantially all of our assets and theassets of the guarantors.

We have sought and obtained amendments to the SeniorCredit Agreement from time to time. We faced a possible immediate default underthe Senior Credit Agreement in the first quarter of 2006 as a result ofcontinued declines in Bank EBITDA.  Wesuccessfully completed an amendment to the Senior Credit Agreement on March 29,2006, which amended the financial covenants as of December 31, 2005, adjustedthe financial covenants through the maturity date of loans outstanding underthe Senior Credit Agreement, incorporated new financial covenants, adjusted theinterest rate on borrowings under the Senior Credit Agreement, amended thedefinition of Bank EBITDA to provide additional “add backs” related torestructuring and new product development efforts, and amended certain othercovenants (the “Fourth Amendment”).  TheFourth Amendment also required us to raise approximately $85.0 million of newborrowings under the Senior Credit Agreement before January 2, 2007, includingpursuant to the Second Lien Credit Agreement which is secured by a second lienon all of the assets that secure loans outstanding under the Senior CreditAgreement.  We consummated the SecondLien Credit Agreement on June 23, 2006. The Second Lien Credit Agreement provides for an $85.0 million term loanfacility, which was drawn in a single draw at closing. The maturity date of theterm loan was scheduled for June 11, 2010.

Concurrent with the closing of the Second Lien CreditAgreement, we completed another amendment to the Senior Credit Agreement (the “FifthAmendment”).  The Fifth Amendment amendedthe Senior Credit Agreement to accommodate the Second Lien Credit Agreement andto effect certain other amendments that were intended to facilitate ade-leveraging of our capital structure. The amendments include exceptions to the restrictive covenants topermit, subject to certain limitations and subject to the restrictionscontained in the indentures governing the Notes and Merisant Worldwide’s 121⁄4%Senior Subordinated Discount Notes due 2014 (the “Discount Notes”):

·                                          theissuance of certain preferred stock by Merisant Worldwide;

·                                          theissuance of up to an aggregate of $100.0 million of payment-in-kind (“PIK”)notes and additional secured indebtedness;

·                                          additionalrestricted payments up to $10.0 million each fiscal year;

·                                          theexchange by Merisant Worldwide or our company of capital stock of MerisantWorldwide, PIK notes or additional secured PIK indebtedness for the DiscountNotes or the Notes or the repurchase of the Notes or Discount Notes with thenet cash proceeds from the issuance of such capital stock, PIK notes oradditional secured PIK indebtedness so long as the Notes and the Discount Notesare cancelled in connection with any such transaction; and

·                                          theacquisition by Merisant Worldwide and our company of the Notes or DiscountNotes in transactions permitted under the restricted payment covenant.

26

----

In addition, the beneficial owners of the Notes andthe Discount Notes may acquire the common stock of Merisant Worldwide withouttriggering a change of control event of default so long as the originalinvestors in Merisant Worldwide continue to control of record and beneficially,directly or indirectly, at least 51% of the outstanding common stock ofMerisant Worldwide.

Depending on the type of borrowing, the applicableinterest rate under the Second Lien Credit Agreement was calculated as a perannum rate equal to (a) LIBOR plus 850 basis points or (b) (i) the greater of(x) the prime rate or (y) the federal funds effective rate plus 0.5% plus (ii)750 basis points.  As of March 31, 2007,there were $85.0 million in term loans outstanding under the Second Lien CreditAgreement at an interest rate of 13.87%.

The Second Lien Credit Agreement increased theaggregate principal amount of our indebtedness by $7.2 million and increasedour interest expense.  Our loansoutstanding under the Senior Credit Agreement had a weighted average interestrate of approximately 9.0% per annum prior to the closing of the Second LienCredit Agreement.  Our borrowings underthe Senior Credit Agreement and Second Lien Credit Agreement had a weightedaverage interest rate of approximately 10.3% per annum upon the closing of theSecond Lien Credit Agreement.  Theinterest rates on loans outstanding under the Senior Credit Agreement revertedto euro-LIBOR plus 325 basis points on euro-denominated term A loans and LIBORplus 325 basis points on term B loans and revolving loans upon the closing ofthe Second Lien Credit Agreement.

As of March 31, 2007, unamortized deferred financingcost related to entering into the Senior Credit Agreement, the issuance of theNotes in July 2003, the 2005 registered exchange offer with respect to theNotes, the execution of any subsequent amendments to the Senior Credit Agreementand entering into the Second Lien Credit Agreement was approximately $12.8million and is being amortized in accordance with the terms of the respectivedebt instruments.

**Restrictive Covenants and Bank EBITDA**.  The indenture governing the Notes, the SeniorCredit Agreement and the Second Lien Credit Agreement contain certain covenantsthat limit or restrict the incurrence of liens, investments (includingacquisitions), sales of assets, indebtedness, restricted payments (includingdividends) and mergers and consolidations, subject to certain exceptions.  In addition, the Senior Credit Agreement andthe Second Lien Credit Agreement require us to maintain compliance with aconsolidated first-lien leverage ratio covenant, a consolidated senior leverageratio covenant, a consolidated leverage ratio covenant, a consolidated interestcoverage ratio covenant, and a consolidated fixed charge coverage ratiocovenant.

As noted above, the Senior Credit Agreement and theSecond Lien Credit Agreement contain financial covenants that require us tomaintain certain ratios. These ratios are measured on the basis of Bank EBITDAfor the four fiscal quarters ending at least 45 days prior to the paymentdate.  Bank EBITDA is discussed herebecause it is the measure upon which the covenants contained in the SeniorCredit Agreement are measured.  However,Bank EBITDA is not a measure of liquidity under GAAP. Accordingly, whileproviding useful information with respect to assessing compliance withcovenants under our primary debt obligations, this measure should not beconsidered in isolation from, or as a substitute for, consolidated statement ofcash flow data prepared in accordance with GAAP as an indication of liquidity.In addition, the Bank EBITDA measure presented may differ from, and may not becomparable to, similarly titled measures used by other companies.

Bank EBITDA as defined under the Senior CreditAgreement and the Second Lien Credit Agreement as of March 31, 2007 excludesinterest expense, income tax expense, depreciation and amortization as well asthe certain other expenses and non-cash items, including:

·                                          anyextraordinary, unusual or non-recurring non-cash expenses or losses (includingnon-cash losses on sales of assets outside of the ordinary course of business);

·                                          non-cashcontributions and other non-cash compensation expense;

·                                          non-cashlosses attributable to equity in non-consolidated subsidiaries;

·                                          transactioncosts associated with the 2003 recapitalization transaction which are expensedand not amortized;

·                                          anynon-cash foreign currency translation adjustments;

·                                          anyextraordinary or non-recurring cash losses or expenses arising fromrestructuring not to exceed in the aggregate (A) if such period ends prior to January 1, 2006, $14,600,000, or (B) ifsuch period begins on or 

27

----

after January 1, 2006, (x) $11,000,000 with respect to any suchnon-recurring cash losses or expenses arising from the implementation of ourplan known as “Project Arrow” and related restructuring, (y) $4,000,000 withrespect to any such non-recurring cash losses or expenses arising from thetransition from Heinz to ACH as our exclusive distributor in the United States;and (z) any cash expenses incurred in connection with (i) any waiver of adefault or event of default and any amendment to the Senior Credit Agreementincluding the fees and expenses of any attorneys and financial advisersretained by the administrative agent pursuant thereto with respect to any suchwaiver or amendment and (ii) the negotiation, execution and closing of theSecond Lien Credit Agreement and any waiver of a default or event of defaultand any amendment to the Second Lien Credit Agreement including the fees andexpenses of any attorneys and financial advisers retained by the administrativeagent with respect to any such waiver or amendment; and

·                                          expensesincurred by us or any subsidiary prior to January 1, 2007 in connection withthe development and commercialization of the all-natural, zero-caloriesweetener to be marketed under the *Sweet Simplicity®*trademark, in an amount not to exceed in the aggregate $3,000,000.

Bank EBITDA for the three monthsended March 31, 2007 under the Senior Credit Agreement and the Second LienCredit Agreement was $13.2 million.  Wewere in compliance with the covenants under the Senior Credit Agreement, asamended, and the Second Lien Credit Agreement at March 31, 2007.

The following table illustratesthe reconciliation of Bank EBITDA to cash flow from operating activities, whichmanagement believes is the most nearly equivalent GAAP measure:

|                                                                   | ** ** | **Three Months  Ended  March 31, 2007** | ** ** |
|-------------------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                                        | ** ** | **(in millions)**                                 | ** ** |
| Net cash  provided by operating activities                        |       | $                                                      | 0.6        |   |
| Provision for  income taxes, net of deferred income tax provision |       | 0.6                                                    |       |
| Interest  expense, net of non-cash interest expense               |       | 10.9                                                   |       |
| Restructuring  expenses (a)                                       |       | 0.6                                                    |       |
| Other non-cash  items                                             |       | 0.0                                                    |       |
| Equity in  (income) loss of affiliates                            |       | 0.0                                                    |       |
| Net change in  operating assets and liabilities                   |       | 0.5                                                    |       |
| Bank EBITDA                                                       |       | $                                                      | 13.2       |   |

 

(a)                                  The charges principally relate to planned employeetermination costs that have been announced in the period presented.  The restructuring liability as of the end ofeach period is included in Accrued expenses and other liabilities in theconsolidated balance sheets.

***NewFinancing***

On May 9, 2007, weamended and restated our Senior Credit Agreement (the “Amended and RestatedCredit Agreement”), which, among other things, increased by $85.0 million theprincipal amount of Tranche B Term Loans that could be borrowed by us under thefacility.  Upon closing, we borrowed thefull $85.0 million of additional Tranche B Term Loans and used the proceedsplus cash on hand to prepay all principal of, and premium and interest on, allloans outstanding under the Second Lien Credit Agreement, or $89.0million.  We also paid $2.4 million infees and expenses, excluding fees for our legal counsel. The Second Lien CreditAgreement has been terminated as a result of the transaction and there was noincrease in our long term debt as a result of this transaction.  In addition to the incurrence of fees, thistransaction will also result in a write-off of existing deferred financing feesrelating to the extinguishment of previously outstanding debt.

Upon closing ofthe above transaction and execution of the related amendment, the interest rateon all term loans and revolving loans outstanding under the Amended andRestated Credit Agreement increased from euro-LIBOR and LIBOR plus 325 basispoints per annum to euro-LIBOR and LIBOR plus 350 basis points per annum.  As a result of the termination of the SecondLien Credit Facility, our effective interest rate on variable interest ratedebt decreased from 10.63% per annum prior to the closing of this transactionto 8.73% per annum subsequent to this transaction.

**Amendments to Existing Financial Covenants**.  The Amended and Restated Credit Agreementrevised the ratio levels for the Consolidated Leverage Ratio, ConsolidatedInterest Coverage Ratio and Consolidated First Lien Leverage Ratio (as definedin the Amended and Restated Credit Agreement) and eliminated the ConsolidatedFixed Charge Ratio and Consolidated Senior Leverage Ratio.

28

----

Consolidated LeverageRatio.

*ConsolidatedLeverage Ratio*.  TheConsolidated Leverage Ratio as of the last day of any period of fourconsecutive fiscal quarters will not exceed the ratio set forth below oppositesuch fiscal quarter:
| ** ** | **Quarter-End Date**           | ** ** | **Consolidated  Leverage** | ** ** |
|------------|--------------------------------|------------|----------------------------|------------|
|       | June 30, 2007                  |       | 8.00x                      |       |
|       | September 30,  2007            |       | 8.00x                      |       |
|       | December 31,  2007             |       | 8.00x                      |       |
|       | March 31, 2008                 |       | 8.00x                      |       |
|       | June 30, 2008                  |       | 8.00x                      |       |
|       | September 30,  2008            |       | 8.00x                      |       |
|       | December 31,  2008             |       | 7.95x                      |       |
|       | March 31, 2009  and thereafter |       | 7.85x                      |       |

 

*ConsolidatedInterest Coverage Ratio*. The Consolidated Interest Coverage Ratio as of the last day of anyperiod of four consecutive fiscal quarters will not be less than the ratio setforth below opposite such fiscal quarter:
| ** ** | **Quarter-End Date**           | ** ** | **Consolidated  Interest Coverage** | ** ** |
|------------|--------------------------------|------------|-------------------------------------|------------|
|       | June 30, 2007                  |       | 1.25x                               |       |
|       | September 30,  2007            |       | 1.25x                               |       |
|       | December 31,  2007             |       | 1.30x                               |       |
|       | March 31, 2008                 |       | 1.30x                               |       |
|       | June 30, 2008                  |       | 1.35x                               |       |
|       | September 30,  2008            |       | 1.35x                               |       |
|       | December 31,  2008             |       | 1.35x                               |       |
|       | March 31, 2009  and thereafter |       | 1.35x                               |       |

 

*ConsolidatedFirst Lien Leverage Ratio*. The Consolidated First Lien Leverage Ratio as of the last day of anyperiod of four consecutive fiscal quarters will not exceed the ratio set forthbelow opposite such fiscal quarter:
| ** ** | **Quarter-End Date**           | ** ** | **Consolidated  First Lien Leverage** | ** ** |
|------------|--------------------------------|------------|---------------------------------------|------------|
|       | June 30, 2007                  |       | 3.80x                                 |       |
|       | September 30,  2007            |       | 3.80x                                 |       |
|       | December 31,  2007             |       | 3.80x                                 |       |
|       | March 31, 2008                 |       | 3.80x                                 |       |
|       | June 30, 2008                  |       | 3.80x                                 |       |
|       | September 30,  2008            |       | 3.75x                                 |       |
|       | December 31,  2008             |       | 3.70x                                 |       |
|       | March 31, 2009  and thereafter |       | 3.50x                                 |       |

 

**OtherAmendments.**  TheAmended and Restated Credit Agreement preserves prior amendments to the SeniorCredit Agreement and contains a number of additional amendments that may giveus more flexibility to operate our business and to de-leverage our balancesheet.  These amendments include:

·                                          ourcompany and our subsidiaries will be permitted to license our intellectualproperty in the ordinary course of business;

29

----

·                                          thedefinition of Bank EBITDA has been revised to a) expand the definition ofincome tax expense to include any expense associated with a gross receipts taxand b) to include the following additional amounts that may be added back: (i)up to $4.0 million for expenses incurred between January 1, 2007 and December31, 2007 in connection with our litigation against McNeil and McNeil-PPC, Inc.and (ii) up to $15.0 million in expenses incurred prior to January 1, 2009 inconnection with the development and commercialization of our all-natural, zerocalorie sweetener to be marketed under the *Sweet Simplicity®*trademark;

·                                          MerisantWorldwide and our company will be permitted to merge or consolidate if, amongother things, the consolidated coverage ratio (as defined and calculated inaccordance with the indentures governing the Discount Notes and the Notes) exceeds2.0 to 1.0 after giving effect to the transaction;

·                                          twiceduring any rolling four-quarter period, Merisant Worldwide may issue commonstock and contribute the proceeds to our company, and the amount of suchcapital contribution will be added to Bank EBITDA solely for the purpose ofmeeting the applicable financial maintenance covenants for the relevant period;

·                                          ourcompany or any of our subsidiaries will be permitted to form a joint venturethat is not a subsidiary and contribute intellectual property necessary for themanufacture, distribution and marketing of all-natural, zero or low caloriesweeteners or sweetened food products to be marketed under the *Sweet Simplicity®* trademark, and we will be permitted tomake other investments subject to certain limitations;

·                                          wewill be permitted to invest the lesser of the net amount of any cash recoveryreceived by us as a result of our litigation against McNeil and McNeil-PPC,Inc. and $30.0 million in connection with the acquisition of the assetscomprising all or substantially all of an operating unit of a business or abusiness or substantially all of the common stock of an entity;

·                                          anysubsidiary of our company may incur up to $25.0 million of non-recourseindebtedness in connection with the development and commercialization of anall-natural, zero-calorie sweetener, and such indebtedness may be secured by afirst priority lien on the assets of such subsidiary provided that such liensare evidenced and secured by documentation that is reasonably satisfactory tothe requisite lenders under the Amended and Restated Credit Agreement;

·                                          MerisantWorldwide or our company may incur up to an additional $85.0 million of seniorsecured indebtedness that may be in the form of cash interest paying loans orpay-in-kind notes in each case secured by junior priority liens on the assetsthat secure the loans outstanding under the Amended and Restated CreditAgreement pursuant to documentation satisfactory to the requisite lenders underthe Amended and Restated Credit Agreement and such indebtedness is incurred inexchange for, or in respect of the refinancing, refunding, repayment,satisfaction or defeasance of the Discount Notes and the Notes;

·                                          MerisantWorldwide or our company may issue pay-in-kind notes that may be secured onlyby junior priority pledge of the shares of our common stock pursuant todocumentation satisfactory to the requisite lenders under the Amended andRestated Credit Agreement;

·                                          upto $25.5 million of the net proceeds from the issuance of common stock byMerisant Worldwide will not be subject to the mandatory prepayment obligations;

·                                          wewill be permitted to dividend or make loans in an aggregate up to $750,000 peryear to Merisant Worldwide for the purpose of paying taxes and administrativeexpenses; and

·                                          wemay, by written notice delivered to the administrative agent from time to time,identify entities to which loans may not be transferred.

Bank EBITDA, asdefined by the Amended and Restated Credit Agreement, allows for the exclusionof costs related to our litigation with McNeil and costs related to thedevelopment and commercialization of our product marketed under the *Sweet Simplicity®* trademark retroactive to January 1,2007.  The following table reconcilesBank EBITDA for the three months ended March 31, 2007 as defined under theSenior Credit Agreement to Bank EBITDA for such period as defined under theAmended and Restated Credit Agreement (in millions):

30

----

 
| ** **                                                                                         | ** ** | **Bank**

**EBITDA** | ** ** |
|----------------------------------------------------------------------------------------------------|------------|----------------------|------------|
| As defined by  the Senior Credit Agreement                                                         |       | $                    | 13.2       |   |
| Litigation costs  excludable under the Amended and Restated Credit Agreement                       |       | 2.3                  |       |
| *Sweet  Simplicity**®* costs excludable under the Amended and  Restated Credit Agreement |       | 0.5                  |       |
| As defined by the  Amended and Restated Credit Agreement                                           |       | $                    | 16.0       |   |

 

The foregoing summary of the Amended and RestatedCredit Agreement should be read in conjunction with, and is qualified in itsentirety by, the copy of the Amended and Restated Credit Agreement and theAmended and Restated Security Agreement which have been filed as exhibits tothis Quarterly Report on Form 10-Q.

***ForwardLooking Statements***

Certain information included or incorporated in thisreport may be deemed to be “forward-looking statements” within the meaning ofSection 27A of the Securities Act and Section 21E of the ExchangeAct. All statements, other than statements of historical facts, included orincorporated in this report, are forward-looking statements. In particular,statements made under the heading “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations,” relating to overall volumetrends, pricing trends and industry forces, anticipated results, expectationsfor funding capital expenditures and operations and increased market share andthe sufficiency of capital to meet working capital, capital expendituresrequirements and strategies are forward-looking statements. When used in thisdocument, the words “anticipate,” “estimate,” “project” and similar expressionsare intended to identify forward-looking statements.

These statementsare based on assumptions and assessments made by management in light of theirexperience and their perception of historical trends, current conditions,expected future developments and other factors they believe to be appropriate.Any forward-looking statements are not guarantees of future performance and aresubject to risks and uncertainties that could cause actual results,developments and business decisions to differ materially from thosecontemplated by such forward-looking statements. We disclaim any duty to updateany forward-looking statements. Some of the factors that may cause actualresults, developments and business decisions to differ materially from thosecontemplated by such forward-looking statements include the following:  changes in consumer preferences andnutritional and health-related concerns; increased competition; changes in theterms on which we may obtain aspartame; damaged consumer confidence in ourproducts as a result of health-related allegations; product liability claims;fluctuations in exchange rates and other currency risks; disruptions in ourbusiness as a result of strikes or work stoppages; changes in our relationshipwith our largest distributor; and changes in economic and political conditionsin the countries in which we market and produce our products.

**Item 3.  Quantitative andQualitative Disclosures About Market Risk**

***ForeignOperations***

With approximately59% of consolidated total net sales generated by subsidiaries outside of theUnited States in both of the three months ended March 31, 2006 and March 31,2007, our ability to obtain funds necessary to meet our domestic obligations issubject to applicable laws, foreign taxes and intercompany pricing laws,including those relating to the flow of funds between our foreign affiliatespursuant to, for example, purchase agreements, licensing agreements or otherarrangements.  Historically, we receiveda vast majority of funds from foreign affiliates through our Swiss subsidiary inthe form of payments pursuant to a promissory note.  The note was repaid in full in January 2006.On March 30, 2006, we issued a revolver note to our Swiss subsidiary,which will mature in 2011. We may borrow up to $200 million from our Swisssubsidiary during the term of the revolver note.  We are repatriating cash to the United Statesthrough borrowings under this revolver note, which total $52.5 million,including $1.6 million of interest, as of March 31, 2007. Regulators in theUnited States and other foreign countries where we operate may closely monitorour corporate structure and how it effects intercompany fund transfers.

In addition, as of March 31,2007, foreign affiliates comprised approximately 46% of our consolidated totalassets.  Accordingly, we have experiencedand will continue to be exposed to foreign exchange risk.

***ForeignCurrency and Interest Rate Risks***

Inherent in our operationsare certain risks related to changes in foreign currency exchange rates andinterest rates. We bear foreign exchange risk because a majority of ourfinancing was obtained in U.S. dollars although a significant portion ofrevenues are earned in the various currencies of our foreign subsidiaries’operations.  Under the Senior CreditAgreement, 

31

----

aportion of our financing was obtained in euro. This euro-denominated loan decreases our transactional exposure to euroexchange fluctuations until the euro principal and interest are repaid.  Decreases in sales and earnings from eurodenominated countries that result from the euro weakening against the U.S. dollarare offset by the decrease in the euro denominated debt obligations (i.e.,foreign currency transaction gain) and interest expense that also results fromsuch a decrease in exchange rate. Likewise, any increase in sales and earnings from the euro denominatedcountries that results from a strengthening euro against the U.S. dollaroffsets the increase in the euro denominated debt obligations (i.e., foreigncurrency transaction loss) and interest expense that results from such anexchange rate increase.

A significant portion of ourdebt bears interest at a fixed rate. Interest rate exposure results from our floating rate borrowings. Forthe three months ended March 31, 2007, a 1.0% per annum increase or decrease ininterest rates would have resulted in an increase or decrease in cash interestcosts for our variable rate term loans of approximately $0.5 million.

In the normal course of business, we identifyrisks relating to foreign currency exchange rates and interest rates andmitigate their financial impact through corporate policies and, at times,through the use of derivative financial instruments.  We use derivatives only where there is anunderlying exposure and do not use them for trading or speculative purposes.The counter parties to the hedging activities would be highly rated financialinstitutions. We did not have any foreign currency forward exchange contractsor interest rate derivatives outstanding at March 31, 2007.

***InflationRisk***

Inflation is not expected tohave a material impact on our business, financial condition or results ofoperations.  In markets outside theUnited States in countries with higher inflation, we generally have been ableto offset the impact of inflation through a combination of cost-cuttingmeasures and price increases.

**Item 4.  Controls and Procedures**

# *Evaluationof Disclosure Controls and Procedures*

Weconducted an evaluation, under the supervision of the Chief Executive Officerand Interim Chief Financial Officer, of the effectiveness as ofDecember 31, 2006 of our disclosure controls and procedures (as defined inExchange Act Rule 15d-15(e)). Based on this evaluation, the ChiefExecutive Officer and Interim Chief Financial Officer had concluded that, as ofDecember 31, 2006, our disclosure controls and procedures neededimprovement and were not effective to provide reasonable assurance thatinformation required to be disclosed by us in reports that we file with the SECor submit under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules and forms.In making this conclusion, the Chief Executive Officer and Interim ChiefFinancial Officer considered the previously disclosed material weaknesses inour internal controls over financial reporting and the status of the correctiveactions to remedy those material weaknesses. Although the Chief ExecutiveOfficer and the Interim Chief Financial Officer noted certain incrementalimprovements during the year ended December 31, 2006, we had not formallydocumented and tested all of our potentially remediated controls toaffirmatively conclude that such controls were operating effectively. In ourreevaluation of our disclosure controls and procedures as of March 31, 2007,the Chief Executive Officer and the Chief Financial Officer noted that ourcompany had formally documented and tested all of our potentially remediatedcontrols and affirmatively concluded that such controls are operatingeffectively.

Thecertifications of the Chief Executive Officer and Interim Chief FinancialOfficer required in accordance with Section 302 of the Sarbanes-Oxley Actof 2002 appear as exhibits to this report. The disclosures set forth in thisItem 4 contain information concerning the evaluation of our disclosure controlsand procedures, and changes in internal controls over financial reporting,referred to in paragraphs 4(b) and (c) of the certifications. Thecertifications should be read in conjunction with this Item 4 for a morecomplete understanding of the topics presented.

32

----

***Changesin Internal Control Over Financial Reporting***

There have been no changes in our internal control overfinancial reporting during the most recently completed fiscal quarter that havematerially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.  As disclosed in our AnnualReport on Form 10-K for the year ended December 31, 2006, we have takennumerous corrective actions over the last three fiscal years with respect tocertain matters that our former auditor considered to be material weaknesses inconnection with its audits of our financial statements for the years endedDecember 31, 2003 and 2004.  In the second quarter of 2007, we completedan internal audit which concluded that those material weaknesses no longerexist.

33

----

**PART II**—**OTHER INFORMATION**

**Item 1.Legal Proceedings**

From time to time, our company is involved inlitigation concerning its business operations.

In October 2004,we requested that the National Advertising Division of the Council of BetterBusiness Bureaus, referred to as the NAD, review advertising and other claimsmade by McNeil in connection with its *Splenda*® brandsweetener. We believed and continue to believe McNeil’s *Splenda*®advertising to be false and misleading. Despite McNeil’s previous use of the NADfor such disputes and the NAD’s industry-wide, self-regulatory nature, McNeilrefused to allow their advertising claims to be judged by the advertisingexperts at the NAD and instead sought to have the issue considered in theUnited States District Court for the District of Puerto Rico. Under NAD rules,McNeil’s filing in Puerto Rico precluded the NAD from reviewing the matterfurther. In order to have McNeil’s advertising addressed by a jury and court inthe continental United States familiar with McNeil’s claims, on November 26,2004, we filed a federal and state false advertising complaint against McNeilin the United States District Court for the Eastern District of Pennsylvania.That suit continues today and seeks to have McNeil’s *Splenda*®advertising campaign stopped and significant damages recovered.  On March 2, 2007, the U.S. District Courtdenied the following three motions made by McNeil: that our case against themshould be dismissed for failure to bring the lawsuit sooner; that McNeil’s “madefrom sugar” and “taste like sugar” claims are not impliedly false as a matterof law; and that we should not be permitted to seek disgorgement of all ofMcNeil’s profit from falsely advertising *Splenda*® in theUnited States, an amount we assert is at least $183.0 million.  The court also ruled that McNeil may notassert an “unclean hands” defense purporting to argue that our company engagedin similar activity.  The trial commencedon April 9, 2007 before a Philadelphia jury and the parties entered into aconfidential settlement agreement on May 11, 2007.

On October 23, 2006, Merisant France SAS, our Frenchsubsidiary, commenced legal actions in the Commercial Court of Paris againstMcNeil and McNeil Nutritionals Ltd., McNeil’s French and UK subsidiariesrespectively, related to McNeil’s advertising campaign for *Splenda*® in France.  Specifically, we were seeking injunctiverelief and unspecified monetary damages for what we believe to be misleadingadvertising and violations of food labeling laws.  The Commercial Court heard oral arguments onthe merits of the case on March 22, 2007, and it rendered its decision on May10, 2007.  The Court ruled that McNeilhad violated French consumer protection laws and ordered McNeil to avoidwording that refers to both the sugar origin of the artificial sweetenersucralose and the sweet taste of *Splenda®* aswell as wording that may mislead consumers into believing that *Splenda®* belongs to an intermediate category between anatural food and a synthetic product.  Inaddition, the Court specifically ruled that McNeil must cease using theadvertising slogan “because it comes from sugar, sucralose tastes like sugar (*parce qu’il provient du sucre, le sucralose a un goût de sucre*)”and the slogan used on packaging “with sucralose: comes from sugar and tasteslike sugar (*au sucralose: provient du sucre et a un goût desucre*)”. McNeil must institute these changes within 30 days from theformal issuance of judgment and may not distribute products bearing thepackaging slogan after four months from the formal issuance of judgment.  The Court ordered McNeil to pay MerisantFrance one euro in damages and 40,000 euro to reimburse Merisant France forlegal expenses.  McNeil is entitled toappeal this decision and has indicated that it plans on doing so.

Merisant Europe B.V.B.A.,our Belgium subsidiary, entered into a co-branding agreement with Galleria Srl,a company through which the Italian designer Elio Fiorucci operates. Under thisco-branding arrangement, Merisant Europe produced a line of *Canderel*® tablet dispensers that featureddesigns and trademarks from Mr. Fiorucci’s “Love Therapy by Elio Fiorucci”collection. The co-branding arrangement contains a representation and warrantythat Galleria owns all rights in the name “Love Therapy by Elio Fiorucci” andassociated designs and further provides that Galleria will indemnify and holdMerisant Europe and its affiliates harmless against damages resulting from orrelated to our use of the name and designs pursuant to the agreement. Beginningin 2005, Merisant Europe sold tablet dispensers with the “Love Therapy by ElioFiorucci” designs in Italy. Edwin & Co. Ltd. has claimed that it ownsall rights in Mr. Fiorucci’s name and in the designs used by MerisantEurope and has filed suit against Merisant Europe in Milan, Italy. On or aboutMarch 17, 2006, the court in Milan enjoined Merisant Europe from producingor selling the tablet dispensers after the date of the court order. We nolonger produce and have stopped selling the dispensers. Merisant Europe hasfiled an appeal and will vigorously oppose the court’s order. Merisant Europewill also enforce its indemnification rights under its co-branding arrangementwith Galleria Srl.

Our company is subject tovarious other claims, pending and possible legal actions for product liabilityand other damages, and other matters arising out of the conduct of ourbusiness, including tax uncertainties arising from doing business in variousEuropean jurisdictions. We believe, based on current knowledge and consultation with counsel, that the outcomeof such claims and actions will not have a material adverse effect on ourconsolidated financial position or results of operations.

**Item 1A. Risks Related to Our Business**

The most significant risk factors applicable to ourcompany are described in Part I, Item 1A “Risk Factors” of our AnnualReport on Form 10-K for the year ended December 31, 2006. There have beenno material changes from the risk factors previously disclosed in our report onForm 10-K.

**Item 5.  Other Information**

On May 9, 2007, our company, Merisant Worldwide andcertain of our subsidiaries entered into the Amended and Restated CreditAgreement.  See “Management’s Discussionand Analysis of Financial Condition and Results of Operations—Liquidity andCapital Resources—New Financing” for a description of the Amended and RestatedCredit Agreement and exhibits 10.1 and 10.2 filed with this Quarterly Report onForm 10-Q.

34

----

**Item 6.    Exhibits**
| Exhibit   No. | ** ** | **Description**                                                                                                                                                                                                                              |
|---------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1          |       | Amended and Restated Credit Agreement, dated May 9,  2007, among Merisant Company, Merisant Worldwide, Inc., certain subsidiaries  of Merisant Company, as guarantors, the lenders thereunder and Credit Suisse  as administrative agent.    |
|          |       |                                                                                                                                                                                                                                         |
| 10.2          |       | Amended and Restated Security Agreement, dated May  9, 2007, among guarantors named on the signature page thereto, and Credit  Suisse as collateral agent.                                                                                   |
|          |       |                                                                                                                                                                                                                                         |
| 10.3          |       | Contract Completion Agreement and General Release  dated as of March 15, 2007 between Merisant Company and Anthony J. Nocchiero  (incorporated by reference to Exhibit 10.18 of Merisant Company’s Form 10-K  filed on March 23, 2007). |
|          |       |                                                                                                                                                                                                                                         |
| 31.1          |       | Certificate of Paul Block pursuant to Rule 15d-14  under the Securities Exchange Act of 1934.                                                                                                                                           |
|          |       |                                                                                                                                                                                                                                         |
| 31.2          |       | Certificate of Diana S. Ferguson pursuant to  Rule 15d-14 under the Securities Exchange Act of 1934.                                                                                                                                    |
|          |       |                                                                                                                                                                                                                                         |
| 32.1          |       | Certificate of Paul Block pursuant to 18 U.S.C.  Section 1350.                                                                                                                                                                          |
|          |       |                                                                                                                                                                                                                                         |
| 32.2          |       | Certificate of Diana S. Ferguson pursuant to 18  U.S.C. Section 1350.                                                                                                                                                                   |

 

35

----

SIGNATURES

Pursuant to therequirements of the Securities Exchange Act of 1934, the registranthas duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.
|                    | MERISANT COMPANY |
|--------------------|------------------|
|               |             |   |
|               |             |   |
| Date: May 15, 2007 | By:              | /s/ Diana S. Ferguson |
|               |             | Diana S. Ferguson |
|               |             | Chief Financial  Officer |
|               |             | (on behalf of the  Company and in capacity |
|               |             | of principal financial  officer) |

 

36

----