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**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

 

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**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 June 30, 2008** |
| ** **                                             | ** **                                                                                               |
| **OR**                                                 |
| ** **                                             | ** **                                                                                               |
| **o**                                                  | **TRANSITION REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934** |

 

**For the transition period from             to              **

 

**Commission File Number: 333-114105**

 

**MerisantCompany**

(Exact Name of Registrant as Specified in its Charter)

 

| **Delaware**                                                    | ** ** | **52-2218321**                           |
|-----------------------------------------------------------------|------------|------------------------------------------|
| (State or Other  Jurisdiction of Incorporation or Organization) |       | (I.R.S. Employer  Identification Number) |
|                                                            |       |                                     |
| **33  North Dearborn   Chicago, Illinois**                      | ** ** | **60602**                                |
| (Address of  Principal Executive Offices)                       |       | (Zip Code)                               |

 

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

 

Former name, former address and former fiscal year, if changed sincelast report:

**Not applicable.**

 

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

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or a smallerreporting company. See definitions of “large accelerated filer,” “acceleratedfiler,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.(Check one):

 
| Large accelerated filer o                      |   | Accelerated  filer o         |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated  filer x                       |   | Smaller  reporting company o |
| (Do  not check if a smaller reporting company) |   |                              |

 

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

 

Indicatethe number of shares outstanding of each of the issuer’s classes of commonstock, as of the latest practicable date.

 

Asof August 13, 2008, the registrant had 100 shares of common stock, parvalue $0.01 per share, outstanding, all of which were owned by MerisantWorldwide, Inc.

 

ThisQuarterly Report is being filed pursuant to a requirement contained in theindenture governing Merisant Company’s 91/2% Senior Subordinated Notesdue 2013. 

 

 

 

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**MERISANT COMPANY**

 

**INDEX TO REPORT**

 

**FOR THE QUARTER ENDED JUNE 30, 2008**

 
|                                            | ** **                                                                                                                                       | ** ** | **Page** |
|--------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|
| **PART I—FINANCIAL INFORMATION** |                                                                                                                                             | 3          |
|                                       |                                                                                                                                             |       |     |
| Item  1.                                   | Financial  Statements of Merisant Company                                                                                                        |       | 3        |
|                                       |                                                                                                                                             |       |     |
|                                       | Unaudited Consolidated Balance Sheets at December 31,  2007 and June 30, 2008                                                          |       | 3        |
|                                       |                                                                                                                                             |       |     |
|                                       | Unaudited Consolidated Statements of Operations and  Comprehensive Income (Loss) for the Three Months and Six Ended June 30,  2007 and 2008 |       | 4        |
|                                       |                                                                                                                                             |       |     |
|                                       | Unaudited Consolidated Statement of Stockholder’s  Deficit for the Six Months Ended June 30, 2008                                      |       | 5        |
|                                       |                                                                                                                                             |       |     |
|                                       | Unaudited Consolidated Statements of Cash Flows for  the Six Months Ended June 30, 2007 and 2008                                            |       | 6        |
|                                       |                                                                                                                                             |       |     |
|                                       | Notes to Unaudited Consolidated Financial Statements                                                                                             |       | 7        |
|                                       |                                                                                                                                             |       |     |
| Item 2.                                    | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                      |       | 21       |
|                                       |                                                                                                                                             |       |     |
| Item 3.                                    | Quantitative  and Qualitative Disclosures About Market Risk                                                                                      |       | 38       |
|                                       |                                                                                                                                             |       |     |
| Item 4T.                                   | Controls and  Procedures                                                                                                                         |       | 38       |
|                                       |                                                                                                                                             |       |     |
| PART II—OTHER  INFORMATION       |                                                                                                                                             | 39         |
|                                       |                                                                                                                                             |       |
| Item 1.                                    | Legal Proceedings                                                                                                                                |       | 39       |
|                                       |                                                                                                                                             |       |     |
| Item 1A.                                   | Risk Factors                                                                                                                                     |       | 39       |
|                                       |                                                                                                                                             |       |     |
| Item 4.                                    | Submission  of Matters to a Vote of Security Holders                                                                                             |       | 39       |
|                                       |                                                                                                                                             |       |     |
| Item  6.                                   | Exhibits                                                                                                                                         |       | 39       |
|                                            |                                                                                                                                                  |            |          |  |

 

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**PART I**—**FINANCIAL INFORMATION**

 

**Item1. Financial Statements of Merisant Company**

 

**MERISANT COMPANYUnaudited Consolidated Balance Sheets(Dollars In Thousands, Except Per Share Amount)**

 
| ** **                                                                                                                   | ** ** | **At December 31,   2007** | ** ** | **At June 30,   2008** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------------|------------|
| **ASSETS**                                                                                                                   | ** ** | ** **                                | ** ** | ** **                            | ** ** |
| Cash and cash equivalents                                                                                                    |       | $                                         | 51,040     |                                  | $          | 12,737 |   |
| Trade accounts receivable, net of allowances of $854 and  $803, respectively                                            |       | 74,410                                    |       | 66,421                                |       |
| Other receivables                                                                                                            |       | 9,128                                     |       | 12,672                                |       |
| Inventories                                                                                                                  |       | 13,540                                    |       | 26,523                                |       |
| Prepaid expenses and other assets                                                                                            |       | 6,206                                     |       | 5,529                                 |       |
| Current portion of note receivable from director                                                                             |       | 970                                       |       | 1,970                                 |       |
| Deferred income tax assets                                                                                                   |       | 1,620                                     |       | 1,721                                 |       |
| Total current assets                                                                                                         |       | 156,914                                   |       | 127,573                               |       |
| Property and equipment, net                                                                                                  |       | 23,509                                    |       | 28,622                                |       |
| Trademarks and other intangible assets, less accumulated amortization  and impairment of $164,022 and $174,550, respectively |       | 160,697                                   |       | 153,205                               |       |
| Goodwill                                                                                                                     |       | 107,209                                   |       | 107,209                               |       |
| Deferred financing costs, less accumulated amortization of $10,052  and $11,726, respectively                                |       | 9,586                                     |       | 8,011                                 |       |
| Non-current portion of note receivable from director                                                                         |       | 1,822                                     |       | 881                                   |       |
| Investment in equity affiliate                                                                                               |       | 264                                       |       | 373                                   |       |
| Other non-current assets                                                                                                     |       | 880                                       |       | 1,354                                 |       |
| Total assets                                                                                                                 |       | $                                         | 460,881    |                                  | $          | 427,228 |   |
| **LIABILITIES AND STOCKHOLDER’S DEFICIT**                                                                               | ** ** | ** **                                | ** ** | ** **                            | ** ** |
| Accounts payable                                                                                                             |       | $                                         | 22,618     |                                  | $          | 18,768 |   |
| Income taxes payable                                                                                                         |       | 1,031                                     |       | 817                                   |       |
| Accrued interest expense                                                                                                     |       | 12,727                                    |       | 11,809                                |       |
| Accrued trade marketing and consumer promotions                                                                              |       | 14,353                                    |       | 17,379                                |       |
| Accrued incentives                                                                                                           |       | 8,024                                     |       | 3,230                                 |       |
| Accrued expenses and other liabilities                                                                                       |       | 11,056                                    |       | 12,259                                |       |
| Current maturities of long-term obligations                                                                                  |       | 12,178                                    |       | 13,943                                |       |
| Total current liabilities                                                                                                    |       | 81,987                                    |       | 78,205                                |       |
| Long-term obligations, net of current maturities                                                                             |       | 416,838                                   |       | 397,738                               |       |
| Deferred income tax liabilities                                                                                              |       | 23,701                                    |       | 26,060                                |       |
| Other liabilities                                                                                                            |       | 6,954                                     |       | 8,206                                 |       |
| Total liabilities                                                                                                            |       | 529,480                                   |       | 510,209                               |       |
| 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.                                                                  |       | (107                                      | )          | (64                                   | )          |
| Retained deficit                                                                                                             |       | (65,454                                   | )          | (82,535                               | )          |
| Accumulated other comprehensive loss                                                                                         |       | (3,038                                    | )          | (382                                  | )          |
| Total stockholder’s deficit                                                                                             |       | (68,599                                   | )          | (82,981                               | )          |
| Total liabilities and stockholder’s deficit                                                                             |       | $                                         | 460,881    |                                  | $          | 427,228 |   |

 

The accompanying notes are an integral part of these unauditedconsolidated financial statements.

 

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**MERISANT COMPANY****Unaudited Consolidated Statements of Operationsand**

**Comprehensive Income (Loss)****(Dollars In Thousands)**

 
| ** **                        | ** ** | **Three Months Ended   June 30,** | ** ** | **Six Months Ended   June 30,** | ** ** |
|-----------------------------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                        | ** ** | **2007**                                              | ** ** | **2008**                                            | ** ** | **2007** | ** ** | **2008** | ** ** |
| Net sales                         |       | $                                                     | 71,090     |                                                | $          | 67,046 |   | $ | 140,403 |   | $ | 135,966 |   |
| Cost of sales                     |       | 31,860                                                |       | 32,904                                              |       | 62,602 |   | 65,829 |   |
| Gross profit                      |       | 39,230                                                |       | 34,142                                              |       | 77,801 |   | 70,137 |   |
| Operating expenses:               |       |                                                  |       |                                                |       |   |   |   |   |
| Marketing and selling expenses    |       | 17,034                                                |       | 19,431                                              |       | 32,281 |   | 33,816 |   |
| Administration expenses           |       | 13,419                                                |       | 8,742                                               |       | 25,294 |   | 18,743 |   |
| Amortization of intangible assets |       | 5,727                                                 |       | 5,264                                               |       | 11,454 |   | 10,528 |   |
| Restructuring expenses            |       | 314                                                   |       | 993                                                 |       | 874 |   | 1,108 |   |
| Total operating expenses          |       | 36,494                                                |       | 34,430                                              |       | 69,903 |   | 64,195 |   |
| Income (loss) from operations     |       | 2,736                                                 |       | (288                                                | )          | 7,898 |   | 5,942 |   |
| Other expense (income):           |       |                                                  |       |                                                |       |   |   |   |   |
| Interest income                   |       | (160                                                  | )          | (154                                                | )          | (365 | ) | (458 | ) |
| Interest expense                  |       | 11,448                                                |       | 9,504                                               |       | 23,447 |   | 19,615 |   |
| Costs of refinancing              |       | 5,791                                                 |       | —                                              |       | 5,791 |   | — |   |
| Other expense (income), net       |       | (30,218                                               | )          | (167                                                | )          | (30,079 | ) | 634 |   |
| Total other expense (income)      |       | (13,139                                               | )          | 9,183                                               |       | (1,206 | ) | 19,791 |   |
| Income (loss) before income taxes |       | 15,875                                                |       | (9,471                                              | )          | 9,104 |   | (13,849 | ) |
| Provision for income taxes        |       | 1,854                                                 |       | 994                                                 |       | 3,700 |   | 3,082 |   |
| Net income (loss)                 |       | $                                                     | 14,021     |                                                | $          | (10,465 | ) | $ | 5,404 |   | $ | (16,931 | ) |
|                              |       |                                                  |       |                                                |       |   |   |   |   |
| Net income (loss) from above      |       | $                                                     | 14,021     |                                                | $          | (10,465 | ) | $ | 5,404 |   | $ | (16,931 | ) |
| Other comprehensive income        |       | 408                                                   |       | 680                                                 |       | 711 |   | 2,656 |   |
| Total comprehensive income (loss) |       | $                                                     | 14,429     |                                                | $          | (9,785 | ) | $ | 6,115 |   | $ | (14,275 | ) |

 

The accompanying notes arean integral part of these unaudited consolidated financial statements.

 

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**MERISANTCOMPANY****Unaudited Consolidated Statement of Stockholder’sDeficit****(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, 2007                                            |       | $                       | —     |                                                                                                     | $          | (107                        | )          | $                                                       | (65,454    | )         | $          | (3,038 | ) | $ | (68,599 | ) |
| Foreign currency translation adjustment                                      |       | —                  |       | —                                                                                                   |       | —                      |       | 2,656                                                   |       | 2,656     |       |
| Distribution to Merisant Worldwide, Inc.                                |       | —                  |       | —                                                                                                   |       | (150                        | )          | —                                                  |       | (150      | )          |
| Settlement of loans for purchase of shares in Merisant  Worldwide, Inc. |       | —                  |       | 43                                                                                                       |       | —                      |       | —                                                  |       | 43        |       |
| Net loss                                                                     |       | —                  |       | —                                                                                                   |       | (16,931                     | )          | —                                                  |       | (16,931   | )          |
| Balance at June 30, 2008                                                |       | $                       | —     |                                                                                                     | $          | (64                         | )          | $                                                       | (82,535    | )         | $          | (382 | ) | $ | (82,981 | ) |

 

The accompanying notes arean integral part of these unaudited consolidated financial statements.

 

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**MERISANTCOMPANYUnaudited Consolidated Statements of Cash Flows(Dollars In Thousands)**

 
| ** **                                                                                          | ** ** | **Six Months Ended   June 30,** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                                          | ** ** | **2007**                                            | ** ** | **2008** | ** ** |
| **Operating Activities**                                                                            |       |                                                |       |   |   |
| Net income (loss)                                                                                   |       | $                                                   | 5,404      |   | $ | (16,931 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by  (used in) operating activities: |       |                                                |       |   |   |
| Depreciation                                                                                        |       | 3,329                                               |       | 2,275 |   |
| Amortization of intangible assets                                                                   |       | 11,454                                              |       | 10,528 |   |
| Amortization of deferred financing costs                                                            |       | 1,686                                               |       | 1,675 |   |
| Write off of deferred financing costs                                                               |       | 3,241                                               |       | — |   |
| Euro-denominated loan foreign exchange loss                                                         |       | 503                                                 |       | 992 |   |
| Equity in income of affiliate                                                                       |       | (88                                                 | )          | (108 | ) |
| Deferred income tax provision                                                                       |       | 2,318                                               |       | 2,297 |   |
| Changes in operating assets and liabilities, (net of business  acquisition):                        |       |                                                |       |   |   |
| Trade accounts receivable                                                                           |       | 5,454                                               |       | 9,773 |   |
| Other receivables                                                                                   |       | (1,575                                              | )          | (3,175 | ) |
| Inventories                                                                                         |       | (996                                                | )          | (11,643 | ) |
| Prepaid expenses and other assets                                                                   |       | (332                                                | )          | 260 |   |
| Accounts payable                                                                                    |       | 7,945                                               |       | (4,528 | ) |
| Accrued expenses and other                                                                          |       | (4,397                                              | )          | (2,721 | ) |
| Net cash provided by (used in) operating activities                                                 |       | 33,946                                              |       | (11,306 | ) |
| **Investing Activities**                                                                            |       |                                                |       |   |   |
| Proceeds from sale of property and equipment                                                        |       | 183                                                 |       | 28 |   |
| Purchase of business                                                                                |       | —                                              |       | (3,400 | ) |
| Purchases of property and equipment                                                                 |       | (859                                                | )          | (5,692 | ) |
| Net cash used in investing activities                                                               |       | (676                                                | )          | (9,064 | ) |
| **Financing Activities**                                                                            |       |                                                |       |   |   |
| Net borrowings under revolving credit facility                                                      |       | —                                              |       | 2,000 |   |
| Borrowings under long-term obligations                                                              |       | 85,000                                              |       | 11 |   |
| Principal payments on long-term obligations                                                         |       | (89,284                                             | )          | (20,317 | ) |
| Payment of deferred financing costs                                                                 |       | (2,539                                              | )          | (100 | ) |
| Distributions to stockholder                                                                        |       | (100                                                | )          | (150 | ) |
| Settlement of loans for purchase of shares in Merisant  Worldwide, Inc.                        |       | 449                                                 |       | 43 |   |
| Net cash used in financing activities                                                               |       | (6,474                                              | )          | (18,513 | ) |
| Effect of exchange rate on cash and cash equivalents                                                |       | 383                                                 |       | 580 |   |
| Net increase (decrease) in cash and cash equivalents                                                |       | 27,179                                              |       | (38,303 | ) |
| Cash and cash equivalents at beginning of period                                                    |       | 23,730                                              |       | 51,040 |   |
| Cash and cash equivalents at end of period                                                          |       | $                                                   | 50,909     |   | $ | 12,737 |   |

 

The accompanying notes arean integral part of these unaudited consolidated financial statements.

 

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** **

**MERISANT COMPANY****Notes to Unaudited Consolidated FinancialStatements****(Dollars In Thousands)**

 

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

 

The consolidated financial statements and notes do notcontain certain information included in the annual consolidated financialstatements and notes of Merisant Company and subsidiaries.  Unless otherwise indicated or unless thecontext otherwise requires, all references to the “Company” mean MerisantCompany and its consolidated subsidiaries. The consolidated balance sheet at December 31, 2007 was derivedfrom the Company’s audited consolidated financial statements, but does notinclude all disclosures required by generally accepted accounting principles inthe United States of America (“GAAP”). The remaining consolidated financialstatements are unaudited. In the opinion of management, all normal, recurringadjustments necessary for a fair presentation of such unaudited financialstatements have been included therein. For interim reporting purposes, certainmarketing and advertising expenses are charged to results of operations as apercentage of sales. Interim results may not be indicative of results for afull year. These unaudited consolidated financial statements and notes shouldbe read in conjunction with the Company’s annual consolidated financialstatements.

 

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**

 

The Company manufactures and markets primarilylow-calorie tabletop sweeteners globally. Therefore, the Company’s reportablesegments are organized and managed principally by geographic region:  North America; Europe/Africa/Middle East,referred to as EAME; Latin America; and Asia/Pacific. The Company’s managementreviews Operating EBITDA to evaluate segment performance and allocateresources. Operating EBITDA consists of segment earnings before interestexpense, income tax expense, depreciation and amortization as well as itemssuch as expenses related to restructuring charges, certain significant chargesrelated to new product development and launch costs, certain litigation costsand certain other non-cash or excludable charges or losses. Other expense(income), net, as reported in the unaudited consolidated financial statements,is included in Operating EBITDA of the respective reportable segments, except forthe portion of other expense (income), net that relates to the foreign currencytransaction gains or losses associated with the Company’s euro-denominated debt(see Note 5) and unrealized gains or losses on derivative instruments.Corporate expenses include corporate staff and related amounts. Corporateexpenses, interest and other expenses and the provision for income taxes arecentrally managed and, accordingly, such items are not presented by segmentsince they are excluded from the measure of segment performance reviewed bymanagement. The Company launched a new product line in North America in thefirst quarter of 2006 which management evaluates and manages separately fromits other North American operations. As such, this item is also excluded from themeasure of segment performance reviewed by management. The Company’s definitionof Operating EBITDA is largely driven by similar definitions of Bank EBITDAunder its primary credit facilities.  Thedefinition of Bank EBITDA was adjusted in the May 2007 amendment of thosefacilities and that change is reflected prospectively in the Company’scomputation of Operating EBITDA.  TheCompany’s assets, which are principally in the United States and Europe, arealso managed geographically. A summary of the Company’s results of operationsby reportable segment for the three and six months ended June 30, 2007 and2008 is as follows:

 

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**For the Three Months Ended June 30, 2007**

 
| ** **                                                                      | ** ** | **North   America** | ** ** | **EAME** | ** ** | **Latin   America** | ** ** | **Asia/   Pacific** | ** ** | **Consolidated** | ** ** |
|---------------------------------------------------------------------------------|------------|--------------------------|------------|----------|------------|--------------------------|------------|--------------------------|------------|------------------|------------|
| Total net sales for reportable segments                                         |       | $                        | 27,591     |     | $          | 30,081                   |       | $                        | 8,050      |             | $          | 5,375 |   | $ | 71,097 |   |
| Plus: Net sales related to new product launch                                   |       |                     |       |     |       |                     |       |                     |       | (7               | )          |
| Total consolidated net sales                                                    |       |                     |       |     |       |                     |       |                     |       | $                | 71,090     |   |
|                                                                            |       |                     |       |     |       |                     |       |                     |       |             |       |
| Operating EBITDA                                                                |       | $                        | 10,123     |     | $          | 8,730                    |       | $                        | 1,906      |             | $          | 1,366 |   | $ | 22,125 |   |
| Less (plus):                                                                    |       |                     |       |     |       |                     |       |                     |       |             |       |
| Corporate expenses                                                              |       |                     |       |     |       |                     |       |                     |       | 7,593            |       |
| Restructuring expense                                                           |       |                     |       |     |       |                     |       |                     |       | 314              |       |
| Depreciation expense                                                            |       |                     |       |     |       |                     |       |                     |       | 1,771            |       |
| Amortization expense                                                            |       |                     |       |     |       |                     |       |                     |       | 5,727            |       |
| Currency loss on euro debt                                                      |       |                     |       |     |       |                     |       |                     |       | 202              |       |
| Loss related to new product launch                                              |       |                     |       |     |       |                     |       |                     |       | 995              |       |
| Litigation costs and lease termination charge excludable from  Operating EBITDA |       |                     |       |     |       |                     |       |                     |       | 2,542            |       |
| Gain from receipt of one-time payment excludable from Operating  EBITDA         |       |                     |       |     |       |                     |       |                     |       | (30,000          | )          |
| Other non-cash expense                                                          |       |                     |       |     |       |                     |       |                     |       | 27               |       |
| Other income, net                                                               |       |                     |       |     |       |                     |       |                     |       | 30,218           |       |
| Income from operations                                                          |       |                     |       |     |       |                     |       |                     |       | 2,736            |       |
| Interest expense, net                                                           |       |                     |       |     |       |                     |       |                     |       | 11,288           |       |
| Costs of refinancing                                                            |       |                     |       |     |       |                     |       |                     |       | 5,791            |       |
| Other income, net                                                               |       |                     |       |     |       |                     |       |                     |       | (30,218          | )          |
| Income before income taxes                                                      |       |                     |       |     |       |                     |       |                     |       | $                | 15,875     |   |

 

**For the Three Months Ended June 30, 2008**

 
| ** **                                                           | ** ** | **North   America** | ** ** | **EAME** | ** ** | **Latin   America** | ** ** | **Asia/   Pacific** | ** ** | **Consolidated** | ** ** |
|----------------------------------------------------------------------|------------|--------------------------|------------|----------|------------|--------------------------|------------|--------------------------|------------|------------------|------------|
| Total net sales for reportable segments                              |       | $                        | 23,808     |     | $          | 30,296                   |       | $                        | 9,068      |             | $          | 3,902 |   | $ | 67,074 |   |
| Plus: Net sales related to new product launch                        |       |                     |       |     |       |                     |       |                     |       | (28              | )          |
| Total consolidated net sales                                         |       |                     |       |     |       |                     |       |                     |       | $                | 67,046     |   |
|                                                                 |       |                     |       |     |       |                     |       |                     |       |             |       |
| Operating EBITDA                                                     |       | $                        | 8,722      |     | $          | 5,962                    |       | $                        | 981        |             | $          | (122 | ) | $ | 15,543 |   |
| Less (plus):                                                         |       |                     |       |     |       |                     |       |                     |       |             |       |
| Corporate expenses                                                   |       |                     |       |     |       |                     |       |                     |       | 5,326            |       |
| Restructuring and specified project implementation costs        |       |                     |       |     |       |                     |       |                     |       | 2,268            |       |
| Depreciation expense                                                 |       |                     |       |     |       |                     |       |                     |       | 1,049            |       |
| Amortization expense                                                 |       |                     |       |     |       |                     |       |                     |       | 5,264            |       |
| Currency loss on euro debt                                           |       |                     |       |     |       |                     |       |                     |       | 31               |       |
| Loss related to new product launch                                   |       |                     |       |     |       |                     |       |                     |       | 1,722            |       |
| Expenses (income) related to credit agreement amendments and waivers |       |                     |       |     |       |                     |       |                     |       | (31              | )          |
| Other non-cash expense                                               |       |                     |       |     |       |                     |       |                     |       | 35               |       |
| Other expense, net                                                   |       |                     |       |     |       |                     |       |                     |       | 167              |       |
| Income from operations                                               |       |                     |       |     |       |                     |       |                     |       | (288             | )          |
| Interest expense, net                                                |       |                     |       |     |       |                     |       |                     |       | 9,350            |       |
| Other expense, net                                                   |       |                     |       |     |       |                     |       |                     |       | (167             | )          |
| Loss before income taxes                                             |       |                     |       |     |       |                     |       |                     |       | $                | (9,471     | ) |

 

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** **

**For the Six Months Ended June 30, 2007**

 
| ** **                                                              | ** ** | **North   America** | ** ** | **EAME** | ** ** | **Latin   America** | ** ** | **Asia/   Pacific** | ** ** | **Consolidated** | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------|------------|----------|------------|--------------------------|------------|--------------------------|------------|------------------|------------|
| Total net sales for reportable segments                                 |       | $                        | 56,528     |     | $          | 56,657                   |       | $                        | 13,347     |             | $          | 13,903 |   | $ | 140,435 |   |
| Plus: Net sales related to new product launch                           |       |                     |       |     |       |                     |       |                     |       | (32              | )          |
| Total consolidated net sales                                            |       |                     |       |     |       |                     |       |                     |       | $                | 140,403    |   |
|                                                                    |       |                     |       |     |       |                     |       |                     |       |             |       |
| Operating EBITDA                                                        |       | $                        | 20,405     |     | $          | 15,707                   |       | $                        | 3,000      |             | $          | 5,457 |   | $ | 44,569 |   |
| Less (plus):                                                            |       |                     |       |     |       |                     |       |                     |       |             |       |
| Corporate expenses                                                      |       |                     |       |     |       |                     |       |                     |       | 13,974           |       |
| Restructuring expense                                                   |       |                     |       |     |       |                     |       |                     |       | 874              |       |
| Depreciation expense                                                    |       |                     |       |     |       |                     |       |                     |       | 3,329            |       |
| Amortization expense                                                    |       |                     |       |     |       |                     |       |                     |       | 11,454           |       |
| Currency loss on euro debt                                              |       |                     |       |     |       |                     |       |                     |       | 503              |       |
| Loss related to new product launch                                      |       |                     |       |     |       |                     |       |                     |       | 1,538            |       |
| Other non-cash charge and net gain excludable from Operating EBITDA     |       |                     |       |     |       |                     |       |                     |       | 4,869            |       |
| Gain from receipt of one-time payment excludable from Operating  EBITDA |       |                     |       |     |       |                     |       |                     |       | (30,000          | )          |
| Other non-cash expense                                                  |       |                     |       |     |       |                     |       |                     |       | 51               |       |
| Other income, net                                                       |       |                     |       |     |       |                     |       |                     |       | 30,079           |       |
| Income from operations                                                  |       |                     |       |     |       |                     |       |                     |       | 7,898            |       |
| Interest expense, net                                                   |       |                     |       |     |       |                     |       |                     |       | 23,082           |       |
| Costs of refinancing                                                    |       |                     |       |     |       |                     |       |                     |       | 5,791            |       |
| Other income, net                                                       |       |                     |       |     |       |                     |       |                     |       | (30,079          | )          |
| Income before income taxes                                              |       |                     |       |     |       |                     |       |                     |       | $                | 9,104      |   |

 

**For the Six Months Ended June 30, 2008**

 
| ** **                                                    | ** ** | **North   America** | ** ** | **EAME** | ** ** | **Latin   America** | ** ** | **Asia/   Pacific** | ** ** | **Consolidated** | ** ** |
|---------------------------------------------------------------|------------|--------------------------|------------|----------|------------|--------------------------|------------|--------------------------|------------|------------------|------------|
| Total net sales for reportable segments                       |       | $                        | 47,002     |     | $          | 62,478                   |       | $                        | 16,703     |             | $          | 9,796 |   | $ | 135,979 |   |
| Plus: Net sales related to new product launch                 |       |                     |       |     |       |                     |       |                     |       | (13              | )          |
| Total consolidated net sales                                  |       |                     |       |     |       |                     |       |                     |       | $                | 135,966    |   |
|                                                          |       |                     |       |     |       |                     |       |                     |       |             |       |
| Operating EBITDA                                              |       | $                        | 14,937     |     | $          | 16,542                   |       | $                        | 3,182      |             | $          | 2,378 |   | $ | 37,039 |   |
| Less (plus):                                                  |       |                     |       |     |       |                     |       |                     |       |             |       |
| Corporate expenses                                            |       |                     |       |     |       |                     |       |                     |       | 11,529           |       |
| Restructuring and specified project implementation costs |       |                     |       |     |       |                     |       |                     |       | 2,879            |       |
| Depreciation expense                                          |       |                     |       |     |       |                     |       |                     |       | 2,275            |       |
| Amortization expense                                          |       |                     |       |     |       |                     |       |                     |       | 10,528           |       |
| Currency loss on euro debt                                    |       |                     |       |     |       |                     |       |                     |       | 992              |       |
| Loss related to new product launch                            |       |                     |       |     |       |                     |       |                     |       | 3,028            |       |
| Expenses related to credit agreement amendments and waivers   |       |                     |       |     |       |                     |       |                     |       | 435              |       |
| Other non-cash expense                                        |       |                     |       |     |       |                     |       |                     |       | 65               |       |
| Other expense, net                                            |       |                     |       |     |       |                     |       |                     |       | (634             | )          |
| Income from operations                                        |       |                     |       |     |       |                     |       |                     |       | 5,942            |       |
| Interest expense, net                                         |       |                     |       |     |       |                     |       |                     |       | 19,157           |       |
| Other expense, net                                            |       |                     |       |     |       |                     |       |                     |       | 634              |       |
| Loss before income taxes                                      |       |                     |       |     |       |                     |       |                     |       | $                | (13,849    | ) |

 

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

** **

During the six months ended June 30,2008, the Company continued to evaluate opportunities to increase efficiencyand reduce costs. This review resulted in the continuation of workforce reductionsand planned changes in the Company’s global business model. These actions aredesigned to improve both financial results and the long-term value of thebusiness. Restructuring expenses for workforce reductions of $314 and $993 wererecorded for the three months ended June 30, 2007 and June 30, 2008,respectively, and $874 and $1,108 were recorded for the six months ended June 30,2007 and 2008, respectively.  The 2008charges principally related to planned termination costs for employeesincluding charges related to 7 additional personnel that were notified of theirtermination during the six months ended June 30, 2008.   Severance payments and benefits arescheduled to be made over the next six months.

 

Reconciliation of the restructuring liability at June 30,2008 is as follows:

 
| Restructuring liability at December 31, 2007                  |   | $     | 182    |   |
|--------------------------------------------------------------------|--------|-------|--------|--------|
| Restructuring expenses for the six months ended June 30, 2008 |   | 1,108 |   |
| Cash payments for the six months ended June 30, 2008          |   | (920  | )      |
| Restructuring liability at June 30, 2008                      |   | $     | 370    |   |

 

Therestructuring liability at December 31, 2007 and June 30, 2008 isincluded in the line item “Accrued expenses and other liabilities” in theaccompanying consolidated balance sheets.

 

Thefollowing table represents restructuring expenses included in each segment andcorporate expenses for the three and six months ended June 30, 2007 and2008:

 
| ** **    | ** ** | **Three Months Ended   June 30,** | ** ** | **Six Months Ended   June 30,** | ** ** |
|---------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **    | ** ** | **2007**                                              | ** ** | **2008**                                            | ** ** | **2007** | ** ** | **2008** | ** ** |
| North America |       | $                                                     | —     |                                                | $          | — |   | $ | — |   | $ | — |   |
| EAME          |       | 180                                                   |       | 822                                                 |       | 298 |   | 822 |   |
| Latin America |       | 22                                                    |       | 8                                                   |       | 86 |   | 8 |   |
| Asia/Pacific  |       | 112                                                   |       | 16                                                  |       | 330 |   | 131 |   |
| Corporate     |       | —                                                |       | 147                                                 |       | 160 |   | 147 |   |
| Total         |       | $                                                     | 314        |                                                | $          | 993 |   | $ | 874 |   | $ | 1,108 |   |

 

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

 

Inventories consisted of the following at December 31,2007 and June 30, 2008:

 
| ** **                      | ** ** | **December 31, 2007** | ** ** | **June 30, 2008** | ** ** |
|---------------------------------|------------|---------------------------------|------------|-----------------------------|------------|
| Raw materials and supplies      |       | $                               | 5,767      |                        | $          | 5,977 |   |
| Work in process                 |       | 383                             |       | 1,058                       |       |
| Finished goods                  |       | 7,924                           |       | 20,324                      |       |
| Inventory obsolescence reserves |       | (534                            | )          | (836                        | )          |
| Total                           |       | $                               | 13,540     |                        | $          | 26,523 |   |

 

Theincrease in finished goods is due to planned build up of contingency stockrelated to upcoming changes in our foreign manufacturing operations asdescribed further in Note 7.

 

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

 

The Company and itsparent, Merisant Worldwide, Inc. (“Merisant Worldwide”), are highly leveraged.At June 30, 2008, Merisant Worldwide and its subsidiaries, including theCompany, had $542,756 of long-term debt outstanding, consisting of $131,179aggregate principal amount of Merisant Worldwide’s 12 1⁄4% senior subordinateddiscount notes due 2014 (the “Discount Notes”), $225,000 aggregate principalamount of the Company’s 9 1⁄2% senior subordinated notes due 2013 (the “Notes”),$186,577 aggregate principal amount outstanding under the Company’s seniorcredit agreement (the “Senior Credit Agreement”), excluding capital leaseobligations of $104 and unused commitments on the revolving portion of theSenior Credit Agreement of $31,000.

 

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At June 30, 2008,borrowings under the Senior Credit Agreement included $10,131 (“Term A”)aggregate principal amount of term loans bearing annual interest of 8.35%,$174,446 (“Term B”) aggregate principal amount of term loans bearing annualinterest of 6.40% and $2,000 aggregate principal amount in revolvercommitments. The Term A loans are euro-denominated and are translated into U.S.dollars at the spot rate as of June 30, 2008.

 

TheTerm A loans and the revolver commitment are scheduled to terminate in January 2009and all amounts there under are scheduled to be repaid.  Most of the Term B loans ($171,803) are dueat its final maturity in January 2010. Additionally, interest on MerisantWorldwide’s Discount Notes will become payable in cash commencing on May 15,2009.  Semiannual interest payments of$8.6 million are required.  The indenturegoverning the Notes limits the Company’s ability to pay dividends or loan cashto Merisant Worldwide, which has no operations of its own.

 

On June 23, 2006, theCompany entered into an $85,000 senior secured term loan agreement (the “SecondLien Credit Agreement”), the borrowings under which were secured by a secondlien on all the assets that secured loans outstanding under the then existingSenior Credit Agreement.  The Second LienCredit Agreement consisted of an aggregate of $85,000 principal amount of termloans, the net proceeds of which were used to prepay $9,540 of euro-denominatedTerm A loans, prepay $53,320 of Term B loans and to repay $15,000 of revolvingloans, in each case, outstanding under the Senior Credit Agreement.

 

On May 9, 2007, the Company, MerisantWorldwide and certain of the Company’s subsidiaries entered into the Amendedand Restated Credit Agreement, which, among other things, increased by $85,000the principal amount of Term B loans that may be borrowed by the Company underthe Senior Credit Agreement.  The Companypaid $2,505 in fees and expenses related to this amendment and restatementwhich it deferred and is amortizing over the term of the related debt. Uponclosing, the Company borrowed the full $85,000 of additional Term B loansavailable under the Amended and Restated Credit Agreement and used the proceedsplus cash on hand to prepay the principal of all loans outstanding under theSecond Lien Credit Agreement totaling $85,000, plus all outstanding interest of$1,438 and a premium of $2,550, or $88,988. The Second Lien Credit Agreement was terminated as a result of thetransaction and there was no increase in the Company’s long-term debt as aresult of this transaction.  In additionto the incurrence of fees, this transaction also resulted in a write-off ofexisting deferred financing fees relating to the extinguishment of previouslyoutstanding debt under the Second Lien Credit Agreement of $3,241.

 

Upon closing of the above transaction and executionof the related amendment, the interest rate on all term loans and revolvingloans outstanding under the Amended and Restated Credit Agreement increasedfrom euro-LIBOR and LIBOR plus 325 basis points per annum to euro-LIBOR andLIBOR plus 350 basis points per annum. As a result of the termination of the Second Lien Credit Agreement, theCompany’s effective interest rate on variable interest rate debt decreased from10.63% per annum prior to the closing of this transaction to 8.73% per annumsubsequent to this transaction.

 

The Company paid interest on borrowings under theSenior Credit Agreement, the Second Lien Credit Agreement, and on the Notestotaling $20,618 and $18,798 for the six months ended June 30, 2007 and2008, respectively.

 

TheAmended and Restated Credit Agreement preserves prior amendments, amends futurefinancial covenant ratios and levels and contains a number of additionalamendments, including to the definition of Bank EBITDA, that give the Companymore flexibility to operate its business and de-leverage its balance sheet.

 

The Amended and Restated Credit Agreement containscovenants, including financial covenants that must be met on a quarterly basis.“Bank EBITDA” is the measure by which the financial covenants contained in theAmended and Restated Credit Agreement are measured. However, Bank EBITDA is nota measure of liquidity under GAAP. Accordingly, while providing usefulinformation with respect to an assessment of liquidity as measured inaccordance with the covenants in the Company’s primary debt obligations, thismeasure should not be considered in isolation from, or as a substitute for,consolidated statement of cash flow data prepared in accordance with GAAP as anindication of liquidity. In addition, the Bank EBITDA measure presented maydiffer from, and may not be comparable to, similarly titled measures used byother companies.

 

The Company was in compliance with its covenantsunder the Amended and Restated Credit Agreement as of June 30, 2008.

 

The Company was required to prepay $15,226 of theprincipal amount of term loans outstanding under the Amended and RestatedCredit Agreement five business days after filing the annual financialstatements with excess cash as required and calculated under the terms of theAmended and Restated Credit Agreement. The prepayment was 

 

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completed on April 4, 2008.

 

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

 

The Company has a deferred compensation payable to Arnold Donald, itsformer Chairman and a current director, and a note receivable in the sameamount from Mr. Donald. The Company recorded $43 and $30 of interestincome on the note receivable for the three months ended June 30, 2007 and2008, respectively, and $86 and $59 of interest income on the note receivablefor the six months ended June 30, 2007 and 2008, respectively, and anequal amount of interest expense in the respective periods.

 

The Company is party to an agreement with Brand ArchitectureInternational (“Brand Architecture”) pursuant to which Brand Architecture hasagreed to provide consulting services relating to the development of brandarchitecture for the Company’s brands. The Company paid approximately $224 and$138 to Brand Architecture for the three months ended June 30, 2007 and2008, respectively, and approximately $300 and $197 for the six months ended June 30,2007 and 2008, respectively, including the reimbursement to Brand Architecturefor expenses relating to its work. Adam Stagliano, a member of the Company’sboard of directors, is a founding director and the President and Chief StrategicOfficer of Brand Architecture.

 

Duringthe six months ended June 30, 2007 and 2008, the Company madedistributions of $100 and $150, respectively, to its sole stockholder, MerisantWorldwide.

 

**7.**                         Commitments and Contingencies

** **

The Company has an investment in an affiliate located in thePhilippines that is accounted for using the equity method. The affiliate, a50/50 joint venture, distributes sugar substitute sweeteners for theinternational consumer food markets, primarily under the *Equal®* brand. In addition to itsinvestment in the joint venture, the Company is committed to a 50% share in anynew borrowings of the joint venture. As of December 31, 2007 and June 30,2008, there were no additional joint venture borrowings.

 

OnJanuary 29, 2008, the Company delivered notice to ACH Food Companies, Inc.(“ACH”) that the distribution agreement between Merisant US, Inc. and ACHwould terminate on July 27, 2008 with respect only to the retail grocerychannel.  The Company partiallyterminated the distribution agreement so that it can pursue a directdistribution model for retail customers in the United States.  The Company will handle order processing,warehousing and trade marketing internally and through a third-party broker andlogistics providers for retail grocery and drug customers in the United Stateswhich the Company anticipate will reduce our operating costs,  improve the efficiency of its inventorymanagement and distribution capabilities, and provide more transparency incustomer relations.  On March 4,2008, the Company and ACH agreed that the Company will pay $300 to ACH and thatcommissions will not increase in connection with the partial termination of thedistribution agreement.  This expense isincluded in operating expenses for the six months ended June 30, 2008.

 

TheCompany is pursuing a multi-site manufacturing strategy for EAME.  In connection with this strategy, the Companyformed CzechPak Manufacturing s.r.o. to operate a new manufacturing facilitylocated in the Czech Republic.  The Companyintends to shift a portion of its current production and equipment to this newfacility from Krüger GmbH & Co. KG, its current contract manufacturerlocated in Germany.  In connection withthis transition, the Company is engaged in discussions with Krüger to amend theparties’ manufacturing agreement.  Thereis no assurance that the Company will be able to negotiate amendments to theagreement favorable to the Company or in a timely manner, and the parties maybe required to arbitrate any disagreements between them.  The Company believes it has sufficientinventory of finished products to meet anticipated market demand over the nextthree to six months, and management has established a number of contingencyplans in the event of any disruptions in production.  Nevertheless, any prolonged negotiation orarbitration with Krüger could cause disruptions in production or increase theamount of its projected capital expenditures.

 

The Company is subject to various other claims, pending and possiblelegal actions for product liability and other damages, and other mattersarising out of the conduct of the Company’s business, including taxuncertainties arising from doing business in various European and LatinAmerican 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.

 

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**8.**                        Income Taxes

** **

In June 2006, the Financial Accounting StandardsBoard (“FASB”) issued Interpretation No. 48, Accounting for Uncertainty inIncome Taxes - an interpretation of FASB Statement No. 109 (“FIN 48”),that clarifies the accounting and recognition for income tax positions taken orexpected to be taken in the Company’s tax returns. The Company adopted FIN 48on January 1, 2007, and recorded the cumulative effect of a change inaccounting principle by recording a decrease in the liability for uncertain taxpositions of $5,757, that was accounted for as a credit to opening retainedearnings. At December 31, 2007 and June 30, 2008, the totalliability, including interest and penalties of $715 and $854, respectively foruncertain tax positions recorded in the Company’s balance sheet in non-currentOther liabilities was $2,815 and $3,185, respectively. No uncertain taxposition reserves were reversed or settled during the six months ended June 30,2008.  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.  Absent new experience indefending these uncertain tax positions in the various jurisdictions to whichthey relate, the Company cannot currently estimate a range of possible changeof the June 30, 2008 liability over the next twelve months.

 

The Company files a consolidated U.S. income taxreturn and tax returns in various state and local jurisdictions. The Company’ssubsidiaries also file tax returns in various foreign jurisdictions. Inaddition to the U.S., the Company’s major taxing jurisdictions includeSwitzerland, France, the United Kingdom, Belgium, Australia, Argentina andMexico. In the U.S., all tax years from inception in 2000 through the presentare open.  The Company’s Switzerlandsubsidiary operates under a tax holiday, resulting in no uncertain taxpositions for that entity for any tax year. Local audits of the tax returns for the Company’s France subsidiary havebeen completed through 2004.  In theUnited Kingdom, the Company assumes that tax years through 2005 are closed dueto local practice.  In Belgium andAustralia, tax years through 2003 and 2001, respectively, are closed due to thelocal statute of limitations.  InArgentina and Mexico only 2000 and 2001 are considered closed tax years due tothe local statute of limitations.

 

Interest and penalties related to tax positions takenin the Company’s tax returns are recorded in income tax expense in theconsolidated statements of operations.

 

**9.**                        Expansion ofOperations

** **

On April 9, 2008, Nativia Guarani, S.A., theCompany’s indirect, wholly-owned subsidiary (“Nativia Guarani”), purchased astevia processing facility and business located in Paraguay and relatedtangible and intangible assets from Imperio Guarani, S.A. (“Imperio Guarani”)in an asset purchase transaction. The purchase price was $5.0 million, $0.6million of which was paid in 2007 and $3.4 million of which was paid upon theclosing of the acquisition on April 9, 2008. The remaining $1.0 million ofthe purchase price may be paid to Imperio Guarani over the next 30 months ifImperio Guarani continues to perform under related long-term contracts duringthat period.  This remaining purchaseprice liability is classified as current payables and other noncurrentliabilities as appropriate.  Inconjunction with the transaction, the Company paid $0.5 million in value addedtax which is classified as other non-current assets.  The Company is currently analyzing the recoveryperiod.  None of the working capital ofthe business was acquired, so the total cost of the acquisition was allocatedto long-lived fixed and intangible assets acquired based on their respectivefair values (as decreased due to resulting “negative goodwill”) in accordancewith FASB No. 141- Business Combinations. The preliminary allocation, pending third quarter finalization ofvaluation analyses, resulted in $2.1 million of fixed assets (predominatelymachinery and equipment), $2.2 million of internally-developed technology and $0.7million of tradenames and customer relationships.  Depreciation andamortization of these allocated balances will be deductible for income taxpurposes over expected lives of two to ten years.   These assets will be tested for impairmentas required under FASB No. 144, Accounting for the Impairment or Disposalof Long-Lived Assets.   The preliminaryvalues assigned to the intangible assets were based upon future discounted cashflows related to the existing products revenue streams.

 

The acquisition was accounted for by the purchasemethod and the results of operations of the acquired business have beenincluded in our Consolidated Statement of Operations since the date ofacquisition and are not yet material. Pro forma financial information is not presented as the effect of thisacquisition is not material to the Company’s results of operations andfinancial position.

 

Upon the consummation of the acquisition, Whole Earthand Nativia Guarani entered into long-term contracts with Imperio Guarani and aconsulting agreement with Sergio Chase, the principal of Imperio Guarani.  Imperio Guarani will exclusively supply driedstevia leaves to Nativia Guarani and collaborate on research and developmentprojects. Management believes that the Nativia Guarani business and agreementswith Imperio Guarani and Mr. Chase will assist the Company in severalways.  Whole Earth will directlyparticipate in the production of its products from the farm to the ultimateconsumer.  A number of larger and bettercapitalized companies will be competing for stevia leaves and extracts, and 

 

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vertical integration provides Whole Earth with morecontrol over its supply of this natural ingredient although the Company willcontinue to source high purity Reb A from other suppliers.  In addition, the Company believes thatNativia Guarani and our strategic relationship with Imperio Guarani will permitWhole Earth to promote sustainable farming practices and develop improvedagricultural and processing methods and technologies that may offer competitiveadvantages.

 

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**10.**       Consolidating Guarantor and Non-GuarantorFinancial Information

** **

Thefollowing tables set forth the consolidating statements of operations for thethree and six months ended June 30, 2007 and June 30, 2008, theconsolidating balance sheets at December 31, 2007 and June 30, 2008and the statements of cash flow for the six months ended June 30, 2007 and2008. The following information is included herein as a result of the guaranteeby certain of the Company’s wholly owned U.S. subsidiaries (“GuarantorCompanies”) of the Notes. None of the Company’s other subsidiaries guaranteethe Notes. Each of the guarantees is joint and several and full andunconditional.

 

**Unaudited Consolidating Statement of OperationsFor the Three Months Ended June 30, 2007**

** **
| ** **                                                                 | ** ** | **Merisant   Company** | ** ** | **Guarantor   Companies** | ** ** | **Non-  Guarantor   Companies** | ** ** | **Consolidating   Eliminations** | ** ** | **Consolidated** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------------|------------|--------------------------------|------------|--------------------------------------|------------|---------------------------------------|------------|------------------|------------|
|                                                                       |       |                        |       |                           |       |                                 |       |                                  |       |             |       |
| Net sales                                                                  |       | $                           | —     |                           | $          | 29,796                               |       | $                                     | 42,570     |             | $          | (1,276 | ) | $ | 71,090 |   |
| Cost of sales                                                              |       | —                      |       | 14,504                         |       | 18,632                               |       | (1,276                                | )          | 31,860           |       |
| Gross profit                                                               |       | —                      |       | 15,292                         |       | 23,938                               |       | —                                |       | 39,230           |       |
| Operating expenses:                                                        |       |                        |       |                           |       |                                 |       |                                  |       |             |       |
| Marketing and selling expenses                                             |       | —                      |       | 6,837                          |       | 10,197                               |       | —                                |       | 17,034           |       |
| Administration expenses                                                    |       | 137                         |       | 10,564                         |       | 2,718                                |       | —                                |       | 13,419           |       |
| Amortization of intangible assets                                          |       | 2,428                       |       | —                         |       | 3,299                                |       | —                                |       | 5,727            |       |
| Restructuring expenses                                                     |       | —                      |       | —                         |       | 314                                  |       | —                                |       | 314              |       |
| Total operating expenses                                                   |       | 2,565                       |       | 17,401                         |       | 16,528                               |       | —                                |       | 36,494           |       |
| Income (loss) from operations                                              |       | (2,565                      | )          | (2,109                         | )          | 7,410                                |       | —                                |       | 2,736            |       |
| Other expense (income):                                                    |       |                        |       |                           |       |                                 |       |                                  |       |             |       |
| Interest income                                                            |       | (48                         | )          | —                         |       | (856                                 | )          | 744                                   |       | (160             | )          |
| Interest expense                                                           |       | 12,143                      |       | —                         |       | 49                                   |       | (744                                  | )          | 11,448           |       |
| Costs of refinancing                                                       |       | 5,791                       |       | —                         |       | —                               |       | —                                |       | 5,791            |       |
| Other expense (income), net                                                |       | (29,799                     | )          | (95                            | )          | (324                                 | )          | —                                |       | (30,218          | )          |
| Total other expense (income)                                               |       | (11,913                     | )          | (95                            | )          | (1,131                               | )          | —                                |       | (13,139          | )          |
| Income (loss) before income taxes and equity in consolidated  subsidiaries |       | 9,348                       |       | (2,014                         | )          | 8,541                                |       | —                                |       | 15,875           |       |
| Provision for income taxes                                                 |       | 304                         |       | 771                            |       | 779                                  |       | —                                |       | 1,854            |       |
| Equity in consolidated subsidiaries                                        |       | 4,977                       |       | 7,762                          |       | —                               |       | (12,739                               | )          | —           |       |
| Net income (loss)                                                          |       | $                           | 14,021     |                           | $          | 4,977                                |       | $                                     | 7,762      |             | $          | (12,739 | ) | $ | 14,021 |   |

 

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**Unaudited Consolidating Statement of OperationsFor the Three Months Ended June 30, 2008**

 
| ** **                                                                  | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-  Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|--------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                                        |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Net sales                                                                   |       | $                     | —     |                     | $          | 25,974                         |       | $                               | 42,390     |             | $          | (1,318 | ) | $ | 67,046 |   |
| Cost of sales                                                               |       | —                |       | 12,703                   |       | 21,519                         |       | (1,318                          | )          | 32,904           |       |
| Gross profit                                                                |       | —                |       | 13,271                   |       | 20,871                         |       | —                          |       | 34,142           |       |
| Operating expenses:                                                         |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Marketing and selling expenses                                              |       | —                |       | 6,004                    |       | 13,427                         |       | —                          |       | 19,431           |       |
| Administration expenses                                                     |       | 377                   |       | 5,451                    |       | 2,914                          |       | —                          |       | 8,742            |       |
| Amortization of intangible assets                                           |       | 2,020                 |       | —                   |       | 3,244                          |       | —                          |       | 5,264            |       |
| Restructuring expenses                                                      |       | —                |       | 147                      |       | 846                            |       | —                          |       | 993              |       |
| Total operating expenses                                                    |       | 2,397                 |       | 11,602                   |       | 20,431                         |       | —                          |       | 34,430           |       |
| Income (loss)  from operations                                              |       | (2,397                | )          | 1,669                    |       | 440                            |       | —                          |       | (288             | )          |
| Other expense (income):                                                     |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Interest income                                                             |       | (32                   | )          | —                   |       | (763                           | )          | 641                             |       | (154             | )          |
| Interest expense                                                            |       | 10,138                |       | —                   |       | 7                              |       | (641                            | )          | 9,504            |       |
| Other expense (income), net                                                 |       | 30                    |       | 56                       |       | (253                           | )          | —                          |       | (167             | )          |
| Total other expense (income)                                                |       | 10,136                |       | 56                       |       | (1,009                         | )          | —                          |       | 9,183            |       |
| Income (loss)  before income taxes and equity  in consolidated subsidiaries |       | (12,533               | )          | 1,613                    |       | 1,449                          |       | —                          |       | (9,471           | )          |
| Provision for  income taxes                                                 |       | 139                   |       | 736                      |       | 119                            |       | —                          |       | 994              |       |
| Equity in  consolidated subsidiaries                                        |       | 2,207                 |       | 1,330                    |       | —                         |       | (3,537                          | )          | —           |       |
| Net income (loss)                                                           |       | $                     | (10,465    | )                        | $          | 2,207                          |       | $                               | 1,330      |             | $          | (3,537 | ) | $ | (10,465 | ) |

 

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**Unaudited Consolidating Statement of OperationsFor the Six Months Ended June 30, 2007**

 
| ** **                                                                 | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-  Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|--------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                                       |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Net sales                                                                  |       | $                     | —     |                     | $          | 60,801                         |       | $                               | 81,927     |             | $          | (2,325 | ) | $ | 140,403 |   |
| Cost of sales                                                              |       | —                |       | 29,469                   |       | 35,458                         |       | (2,325                          | )          | 62,602           |       |
| Gross profit                                                               |       | —                |       | 31,332                   |       | 46,469                         |       | —                          |       | 77,801           |       |
| Operating expenses:                                                        |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Marketing and selling expenses                                             |       | —                |       | 13,270                   |       | 19,011                         |       | —                          |       | 32,281           |       |
| Administration expenses                                                    |       | 239                   |       | 19,620                   |       | 5,435                          |       | —                          |       | 25,294           |       |
| Amortization of intangible assets                                          |       | 4,856                 |       | —                   |       | 6,598                          |       | —                          |       | 11,454           |       |
| Restructuring expenses                                                     |       | —                |       | 160                      |       | 714                            |       | —                          |       | 874              |       |
| Total operating expenses                                                   |       | 5,095                 |       | 33,050                   |       | 31,758                         |       | —                          |       | 69,903           |       |
| Income (loss) from operations                                              |       | (5,095                | )          | (1,718                   | )          | 14,711                         |       | —                          |       | 7,898            |       |
| Other expense (income):                                                    |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Interest income                                                            |       | (99                   | )          | (4                       | )          | (1,558                         | )          | 1,296                           |       | (365             | )          |
| Interest expense                                                           |       | 24,692                |       | —                   |       | 51                             |       | (1,296                          | )          | 23,447           |       |
| Costs of refinancing                                                       |       | 5,791                 |       | —                   |       | —                         |       | —                          |       | 5,791            |       |
| Other expense (income), net                                                |       | (29,493               | )          | (90                      | )          | (496                           | )          | —                          |       | (30,079          | )          |
| Total other expense (income)                                               |       | 891                   |       | (94                      | )          | (2,003                         | )          | —                          |       | (1,206           | )          |
| Income (loss) before income taxes and equity in consolidated  subsidiaries |       | (5,986                | )          | (1,624                   | )          | 16,714                         |       | —                          |       | 9,104            |       |
| Provision for income taxes                                                 |       | 682                   |       | 1,505                    |       | 1,513                          |       | —                          |       | 3,700            |       |
| Equity in consolidated subsidiaries                                        |       | 12,072                |       | 15,201                   |       | —                         |       | (27,273                         | )          | —           |       |
| Net income (loss)                                                          |       | $                     | 5,404      |                     | $          | 12,072                         |       | $                               | 15,201     |             | $          | (27,273 | ) | $ | 5,404 |   |

 

**Unaudited Consolidating Statement of OperationsFor the Six Months Ended June 30, 2008**

 
| ** **                                                                 | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-  Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|--------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                                       |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Net sales                                                                  |       | $                     | —     |                     | $          | 50,950                         |       | $                               | 87,463     |             | $          | (2,447 | ) | $ | 135,966 |   |
| Cost of sales                                                              |       | —                |       | 26,327                   |       | 41,949                         |       | (2,447                          | )          | 65,829           |       |
| Gross profit                                                               |       | —                |       | 24,623                   |       | 45,514                         |       | —                          |       | 70,137           |       |
| Operating expenses:                                                        |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Marketing and selling expenses                                             |       | —                |       | 12,287                   |       | 21,529                         |       | —                          |       | 33,816           |       |
| Administration expenses                                                    |       | 933                   |       | 12,267                   |       | 5,543                          |       | —                          |       | 18,743           |       |
| Amortization of intangible assets                                          |       | 4,040                 |       | —                   |       | 6,488                          |       | —                          |       | 10,528           |       |
| Restructuring expenses                                                     |       | —                |       | 147                      |       | 961                            |       | —                          |       | 1,108            |       |
| Total operating expenses                                                   |       | 4,973                 |       | 24,701                   |       | 34,521                         |       | —                          |       | 64,195           |       |
| Income (loss) from operations                                              |       | (4,973                | )          | (78                      | )          | 10,993                         |       | —                          |       | 5,942            |       |
| Other expense (income):                                                    |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Interest income                                                            |       | (86                   | )          | —                   |       | (1,672                         | )          | 1,300                           |       | (458             | )          |
| Interest expense                                                           |       | 20,908                |       | —                   |       | 7                              |       | (1,300                          | )          | 19,615           |       |
| Other expense (income), net                                                |       | 993                   |       | 128                      |       | (487                           | )          | —                          |       | 634              |       |
| Total other expense (income)                                               |       | 21,815                |       | 128                      |       | (2,152                         | )          | —                          |       | 19,791           |       |
| Income (loss) before income taxes and equity in consolidated  subsidiaries |       | (26,788               | )          | (206                     | )          | 13,145                         |       | —                          |       | (13,849          | )          |
| Provision for income taxes                                                 |       | 1,003                 |       | 1,480                    |       | 599                            |       | —                          |       | 3,082            |       |
| Equity in consolidated subsidiaries                                        |       | 10,860                |       | 12,546                   |       | —                         |       | (23,406                         | )          | —           |       |
| Net income (loss)                                                          |       | $                     | (16,931    | )                        | $          | 10,860                         |       | $                               | 12,546     |             | $          | (23,406 | ) | $ | (16,931 | ) |

 

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**Unaudited Condensed Consolidating Balance Sheet**

**At December 31,2007**

 
| ** **                                                            | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-  Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|--------------------------------|------------|---------------------------------|------------|------------------|------------|
| **Assets**                                                            | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Cash and cash equivalents                                             |       | $                     | 12,351     |                     | $          | 3,305                          |       | $                               | 35,384     |             | $          | — |   | $ | 51,040 |   |
| Trade accounts receivable, net of allowance for doubtful accounts     |       | —                |       | 18,259                   |       | 56,151                         |       | —                          |       | 74,410           |       |
| Other receivables and intercompany receivables                        |       | 40                    |       | 5,387                    |       | 9,060                          |       | (5,359                          | )          | 9,128            |       |
| Inventories                                                           |       | —                |       | 6,038                    |       | 7,502                          |       | —                          |       | 13,540           |       |
| Other current assets                                                  |       | 1,315                 |       | 4,734                    |       | 2,747                          |       | —                          |       | 8,796            |       |
| Total current assets                                                  |       | 13,706                |       | 37,723                   |       | 110,844                        |       | (5,359                          | )          | 156,914          |       |
| Property and equipment, net                                           |       | 600                   |       | 16,535                   |       | 6,374                          |       | —                          |       | 23,509           |       |
| Trademarks and other intangible assets, less accumulated amortization |       | 58,242                |       | —                   |       | 102,455                        |       | —                          |       | 160,697          |       |
| Goodwill, less accumulated amortization                               |       | —                |       | 107,209                  |       | —                         |       | —                          |       | 107,209          |       |
| Deferred financing costs, less accumulated amortization               |       | 9,586                 |       | —                   |       | —                         |       | —                          |       | 9,586            |       |
| Other non-current assets                                              |       | 1,822                 |       | 579                      |       | 301                            |       | —                          |       | 2,702            |       |
| Investment in subsidiary and intercompany debt                        |       | 368,271               |       | 264,388                  |       | 264                            |       | (632,659                        | )          | 264              |       |
| Total assets                                                          |       | $                     | 452,227    |                     | $          | 426,434                        |       | $                               | 220,238    |             | $          | (638,018 | ) | $ | 460,881 |   |
| **Liabilities**                                                       | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Accounts payable and intercompany payables                            |       | $                     | 73,743     |                     | $          | 11,752                         |       | $                               | 13,544     |             | $          | (76,421 | ) | $ | 22,618 |   |
| Income taxes payable                                                  |       | —                |       | 2                        |       | 1,029                          |       | —                          |       | 1,031            |       |
| Accrued expenses and other liabilities                                |       | 12,818                |       | 13,474                   |       | 19,868                         |       | —                          |       | 46,160           |       |
| Current maturities of long-term obligations                           |       | 12,119                |       | 59                       |       | —                         |       | —                          |       | 12,178           |       |
| Total current liabilities                                             |       | 98,680                |       | 25,287                   |       | 34,441                         |       | (76,421                         | )          | 81,987           |       |
| Long-term obligations and intercompany debt                           |       | 416,773               |       | 166,144                  |       | —                         |       | (166,079                        | )          | 416,838          |       |
| Other liabilities                                                     |       | 5,373                 |       | 22,202                   |       | 3,080                          |       | —                          |       | 30,655           |       |
| Total liabilities                                                     |       | 520,826               |       | 213,633                  |       | 37,521                         |       | (242,500                        | )          | 529,480          |       |
| **Stockholder’s Equity (Deficit)**                               | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Total stockholder’s equity (deficit)                             |       | (68,599               | )          | 212,801                  |       | 182,717                        |       | (395,518                        | )          | (68,599          | )          |
| Total liabilities and stockholder’s equity (deficit)             |       | $                     | 452,227    |                     | $          | 426,434                        |       | $                               | 220,238    |             | $          | (638,018 | ) | $ | 460,881 |   |

 

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**Unaudited Condensed Consolidating Balance Sheetat June 30, 2008**

 
| ** **                                                | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-  Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|--------------------------------|------------|---------------------------------|------------|------------------|------------|
| **Assets**                                                | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Cash and cash equivalents                                 |       | $                     | 1,056      |                     | $          | 1,803                          |       | $                               | 9,878      |             | $          | — |   | $ | 12,737 |   |
| Trade accounts receivable, net of allowances              |       | —                |       | 10,710                   |       | 55,711                         |       | —                          |       | 66,421           |       |
| Other receivables and intercompany receivables            |       | 1,423                 |       | 5,023                    |       | 12,600                         |       | (6,374                          | )          | 12,672           |       |
| Inventories                                               |       | —                |       | 7,681                    |       | 18,842                         |       | —                          |       | 26,523           |       |
| Other current assets                                      |       | 2,415                 |       | 4,442                    |       | 2,363                          |       | —                          |       | 9,220            |       |
| Total current assets                                      |       | 4,894                 |       | 29,659                   |       | 99,394                         |       | (6,374                          | )          | 127,573          |       |
| Property and equipment, net                               |       | —                |       | 17,022                   |       | 11,600                         |       | —                          |       | 28,622           |       |
| Trademarks and other intangible assets, net               |       | 54,202                |       | —                   |       | 99,003                         |       | —                          |       | 153,205          |       |
| Goodwill                                                  |       | —                |       | 107,209                  |       | —                         |       | —                          |       | 107,209          |       |
| Deferred financing costs, net                             |       | 8,011                 |       | —                   |       | —                         |       | —                          |       | 8,011            |       |
| Other non-current assets                                  |       | 881                   |       | 519                      |       | 835                            |       | —                          |       | 2,235            |       |
| Investment in subsidiary and intercompany debt            |       | 383,935               |       | 288,590                  |       | 373                            |       | (672,525                        | )          | 373              |       |
| Total assets                                              |       | $                     | 451,923    |                     | $          | 442,999                        |       | $                               | 211,205    |             | $          | (678,899 | ) | $ | 427,228 |   |
| **Liabilities**                                           | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Accounts payable and intercompany payable                 |       | $                     | 105,579    |                     | $          | 9,788                          |       | $                               | 11,286     |             | $          | (107,885 | ) | $ | 18,768 |   |
| Income taxes payable                                      |       |                  |       | —                   |       | 817                            |       | —                          |       | 817              |       |
| Accrued expenses and other liabilities                    |       | 11,812                |       | 9,104                    |       | 23,761                         |       | —                          |       | 44,677           |       |
| Current maturities of long-term obligations               |       | 13,893                |       | 50                       |       | —                         |       | —                          |       | 13,943           |       |
| Total current liabilities                                 |       | 131,284               |       | 18,942                   |       | 35,864                         |       | (107,885                        | )          | 78,205           |       |
| Long-term obligations and intercompany debt               |       | 397,684               |       | 163,780                  |       | —                         |       | (163,726                        | )          | 397,738          |       |
| Other liabilities                                         |       | 5,936                 |       | 24,960                   |       | 3,370                          |       | —                          |       | 34,266           |       |
| Total liabilities                                         |       | 534,904               |       | 207,682                  |       | 39,234                         |       | (271,611                        | )          | 510,209          |       |
| **Stockholder’s Equity (Deficit)**                   | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Total stockholder’s equity (deficit)                 |       | (82,981               | )          | 235,317                  |       | 171,971                        |       | (407,288                        | )          | (82,981          | )          |
| Total liabilities and stockholder’s equity (deficit) |       | $                     | 451,923    |                     | $          | 442,999                        |       | $                               | 211,205    |             | $          | (678,899 | ) | $ | 427,228 |   |

 

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**Unaudited Consolidating Statement of Cash Flows For the Six Months Ended June 30, 2007**

 
| ** **                                                                        | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-  Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|--------------------------------|------------|---------------------------------|------------|------------------|------------|
| **Operating activities**                                                          |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Net cash provided by (used in) operating activities                               |       | $                     | 5,282      |                     | $          | 6,188                          |       | $                               | 49,749     |             | $          | (27,273 | ) | $ | 33,946 |   |
| **Investing activities**                                                          |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Proceeds from sale of property and equipment                                      |       | —                |       | —                   |       | 183                            |       | —                          |       | 183              |       |
| Purchases from sale of property and equipment                                     |       | —                |       | (654                     | )          | (205                           | )          | —                          |       | (859             | )          |
| Net cash used in investing activities                                             |       | —                |       | (654                     | )          | (22                            | )          | —                          |       | (676             | )          |
| **Financing activities**                                                          |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Borrowings under long-term obligations                                            |       | 85,000                |       | —                   |       | —                         |       | —                          |       | 85,000           |       |
| Principal payments on long-term obligations, excluding revolving  credit facility |       | (89,264               | )          | (20                      | )          | —                         |       | —                          |       | (89,284          | )          |
| Payment of deferred financing costs                                               |       | (2,539                | )          | —                   |       | —                         |       | —                          |       | (2,539           | )          |
| Settlement of loans for purchase of shares in Merisant  Worldwide, Inc.      |       | 249                   |       | 200                      |       | —                         |       | —                          |       | 449              |       |
| Receivable/payable, parent company                                                |       | 27,852                |       | (6,499                   | )          | (48,626                        | )          | 27,273                          |       | —           |       |
| Distribution to stockholder                                                       |       | (100                  | )          | —                   |       | —                         |       | —                          |       | (100             | )          |
| Net cash provided by (used in) financing activities                               |       | 21,198                |       | (6,319                   | )          | (48,626                        | )          | 27,273                          |       | (6,474           | )          |
|                                                                              |       |                  |       |                     |       |                           |       |                            |       |             |       |
| Effect of exchange rate on cash                                                   |       | —                |       | —                   |       | 383                            |       | —                          |       | 383              |       |
| Net increase in cash and cash equivalents                                         |       | 26,480                |       | (785                     | )          | 1,484                          |       | —                          |       | 27,179           |       |
| Cash and cash equivalents at beginning of period                                  |       | 782                   |       | 3,088                    |       | 19,860                         |       | —                          |       | 23,730           |       |
| Cash and cash equivalents at end of period                                        |       | $                     | 27,262     |                     | $          | 2,303                          |       | $                               | 21,344     |             | $          | — |   | $ | 50,909 |   |

 

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**Unaudited Consolidating Statement of CashFlows For the Six Months Ended June 30, 2008**

 
| ** **                                                                        | ** ** | **Merisant  Company** | ** ** | **Guarantor  Companies** | ** ** | **Non-  Guarantor  Companies** | ** ** | **Consolidating  Eliminations** | ** ** | **Consolidated** | ** ** |
|-----------------------------------------------------------------------------------|------------|-----------------------|------------|--------------------------|------------|--------------------------------|------------|---------------------------------|------------|------------------|------------|
|                                                                              |       |                  |       |                     |       |                           |       |                            |       |             |       |
| **Operating activities**                                                          | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Net cash provided by (used in) operating  activities                              |       | $                     | (22,212    | )                        | $          | 2,519                          |       | $                               | 31,793     |             | $          | (23,406 | ) | $ | (11,306 | ) |
| **Investing activities**                                                          | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Proceeds from sale of property and  equipment                                     |       | —                |       | —                   |       | 28                             |       | —                          |       | 28               |       |
| Purchase of business                                                              |       | —                |       | —                   |       | (3,400                         | )          | —                          |       | (3,400           | )     |
| Purchases of property and equipment                                               |       | —                |       | (1,763                   | )          | (3,929                         | )          | —                          |       | (5,692           | )          |
| Net cash used in investing activities                                             |       | —                |       | (1,763                   | )          | (7,301                         | )          | —                          |       | (9,064           | )          |
| **Financing activities**                                                          | ** ** | ** **            | ** ** | ** **               | ** ** | ** **                     | ** ** | ** **                      | ** ** | ** **       | ** ** |
| Borrowings under revolving credit facility                                        |       | 2,000                 |       | —                   |       | —                         |       | —                          |       | 2,000            |       |
| Borrowings under long term obligations                                            |       | —                |       | 11                       |       | —                         |       | —                          |       | 11               |       |
| Principal payments on long-term  obligations, excluding revolving credit facility |       | (20,286               | )          | (31                      | )          | —                         |       | —                          |       | (20,317          | )          |
|                                                                              |       | (100                  | )          | —                   |       | —                         |       | —                          |       | (100             | )          |
| Receivable/payable, parent company                                                |       | 29,411                |       | (2,238                   | )          | (50,579                        | )          | 23,406                          |       | —           |       |
| Distribution to shareholder                                                       |       | (150                  | )          | —                   |       | —                         |       | —                          |       | (150             | )          |
| Settlement of loans for purchase of shares  in Merisant Worldwide, Inc.      |       | 43                    |       | —                   |       | —                         |       | —                          |       | 43               |       |
| Net cash provided by (used in) financing  activities                              |       | 10,918                |       | (2,258                   | )          | (50,579                        | )          | 23,406                          |       | (18,513          | )          |
| Effect of exchange rate on cash                                                   |       | —                |       | —                   |       | 580                            |       | —                          |       | 580              |       |
| Net decrease in cash and cash equivalents                                         |       | (11,294               | )          | (1,502                   | )          | (25,507                        | )          | —                          |       | (38,303          | )          |
| Cash and cash equivalents at beginning of  period                                 |       | 12,351                |       | 3,305                    |       | 35,384                         |       | —                          |       | 51,040           |       |
| Cash and cash equivalents at end of period                                        |       | $                     | 1,057      |                     | $          | 1,803                          |       | $                               | 9,877      |             | $          | — |   | $ | 12,737 |   |

 

**Item 2. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

 

*The following discussion should be read inconjunction with our unaudited consolidated financial statements andaccompanying notes included elsewhere in this document. Our discussion ofresults by reportable segment should be read in conjunction with Note 2 tothe unaudited consolidated financial statements included elsewhere in thisdocument, which illustrates the reconciliation of Operating EBITDA to income(loss) before income taxes. Unless otherwise indicated or unless the contextrequires otherwise, all references in this discussion to “Merisant”, “us”, “our”or “our company” mean Merisant Company and its consolidated subsidiaries.*

 

**Overview**

 

Our company is a worldwide leader in themarketing of low-calorie tabletop sweeteners, with an estimated 22% dollarshare as of December 31, 2007 of a stable global retail market, which weestimate at $1.6 billion.  We believethat our company has the leading dollar market share as of December 31,2007 in almost half of what we estimate as the top twenty geographic marketsfor low-calorie tabletop sweetener sales. Our premium-priced brands, *Equal*®and *Canderel*®, are 

 

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amongthe most recognized low-calorie tabletop sweetener products in the world, withaided brand awareness estimated at between 90% and 95% in our four topmarkets.  In addition to *Equal*® and *Canderel*®, we market our products under 18 other regionalbrands that enjoy significant brand recognition in their target markets.  We sell our brands in over 90 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.

 

Ourworldwide headquarters is located in Chicago, Illinois, and we have principalregional offices in Mexico City, Mexico, Neuchâtel, Switzerland, and Paris,France.  We own and operate manufacturingfacilities in Manteno, Illinois, and Zarate, Argentina and own processing linesthat are operated exclusively for us at plants located in Bergisch and Stendal,Germany and Bankrason, Thailand.  Wehave formed a new wholly-owned subsidiary, CzechPak Manufacturing s.r.o., tomanufacture products at a facility located in the Czech Republic which willcommence production in August 2008. The CzechPak facility initially will produce *Canderel*®branded products for EAME region.  As of August 13,2008, we had 20 direct and indirect active subsidiaries, including foursubsidiaries in the United States, seven subsidiaries in Europe, sixsubsidiaries in Mexico, Central America and South America, and threesubsidiaries in the Asia Pacific region, including Australia and India.  In addition, our Swiss subsidiary holds a 50%interest in a joint venture in the Philippines.

 

Our core business continues to be productssweetened with aspartame, and the *Equal*®and *Canderel*® tabletop sweetenerproducts accounted for approximately 85% of our net sales in 2007.  The majority of our 18 other regional brandsaround the world are also sweetened with aspartame.

 

***Market Trends and Strategy***

** **

Our company’s premium-priced brands hadenjoyed a strong market position among low-calorie sweeteners in many of ourkey markets.  In recent years, however,we have faced significant competition from McNeil Nutritionals LLC, asubsidiary of Johnson & Johnson (“McNeil”), which markets anddistributes the artificial sweetener*Splenda*®.  *Splenda*®is sweetened with sucralose, which is produced by Tate & Lyle PLCthrough a complex chemical process that converts sucrose molecules into asynthetic compound. From December 2002 to December 2007, *Splenda*®’s dollar share of the UnitedStates retail grocery market has grown from approximately 15% to 61% and hassurpassed that of *Equal*® tobecome the number one premium low-calorie sweetener in the United States.  While we believe that the introduction of *Splenda*® has increased the size of themarket for low-calorie sweeteners in general, our net sales have declinedduring this period, particularly in North America which had accounted for 46%and 40% of our net sales in 2003 and 2007, respectively.  As a result of declining net sales, we haveexperienced significant declines in our Bank EBITDA from $110.2 million in 2003to a low of $67.2 million in 2006, before increasing to $69.9 million in2007.  For a description of Bank EBITDAand a reconciliation of Bank EBITDA to cash flow from operating activities, see“Management’s Discussion and Analysis of Financial Condition and Results ofOperations—Liquidity and Capital Resources”.

 

A new management team launched efforts to revitalize our company’sbusiness.  Paul Block was appointed ChiefExecutive Officer in November 2004 and has led an initiative to strengthenour company’s core brands, improve the efficiency of our operations, reducecosts 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 to stabilize and then grow revenues through thefollowing five strategic initiatives:

 

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

 

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·                  Increase thepace of product innovation to bring new products and brand extensions to themarket, including products sweetened with high intensity sweeteners other thanaspartame.

 

·                  Develop and testproducts that have the potential to transform our company’s brand portfolio,including by building a platform for all natural, low-calorie sweeteners andsweetened foods.

 

·                  Dedicatesignificant resources to improving the efficiency of operations by, among otherthings, implementing programs to streamline manufacturing capabilities andimproving 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.

 

·                  Offer privatelabel low-calorie sweeteners to retail and food service customers and leveragesupply chain expertise globally.

 

We believe that these strategies taken together have positioned ourcompany to pursue opportunities for future growth in the low-calorie tabletopsweetener and sweetened food category. Many of our major markets are increasingly competitive as more brandedand private label tabletop sweeteners compete for limited space on retailgrocery shelves and in restaurant caddies. Although our premium brands *Equal*® and *Canderel*® are among the most recognized brands in the world,our company must offer more than these quality products in order to remainrelevant to our customers and to consumers. Our strategies allow us to offer our retail grocery and food servicecustomers a suite of branded and private label low-calorie tabletop sweetenersthat contain a range of synthetic and natural sweeteners.  We seek to offer our retail grocery and food servicecustomers a range of quality products and the benefits of our manufacturingcapabilities.

 

***Recent Developments***

 

*Launch of PureViaTM Brand and RelatedAgreements*

 

On July 31, 2008, Whole Earth Sweetener Company LLC, awholly-owned subsidiary of Merisant Company (“Whole Earth”), announced thatPepsiCo, Inc. (“PepsiCo”) and Whole Earth had formed an unprecedentedpartnership to jointly own the *PureVia*TMtrademark and market the *PureVia*TM brandglobally.  Whole Earth owns the *PureVia* trademark for tabletop sweeteners, and PepsiCo ownsthe trademark for beverages and certain other food categories.  Whole Earth anticipates that it will launch a*PureVia*TM all-natural, zero calorietabletop sweetener in the United States in the fall of 2008.

 

*PureVia*TM brandedproducts will be sweetened with high purity Reb A, an all-natural, purifiedextract of the stevia plant that is approximately 200 times sweeter thansugar.  PepsiCo and Whole Earth haveentered into an ingredient branding agreement with PureCircle Limited, asupplier of high purity Reb A (“PureCircle”). Among other things, the parties will collaborate on marketing highpurity Reb A under the *PureVia*TMbrand.  PureCircle will be permitted tolicense the trademark on an exclusive and royalty-free basis from eitherPepsiCo or Whole Earth in order to identify the branded ingredient in productcategories to be agreed to by the parties. PureCircle will be permitted to sublicense the trademark to customersapproved by PepsiCo and Whole Earth for the purpose of identifying theingredient in the agreed upon product categories.

 

Whole Earth has entered into a non-exclusive supply agreement withPureCircle pursuant to which PureCircle will supply high purity Reb A to WholeEarth.  The supply agreement has aninitial term of five-years.

 

The active sweetening ingredient in *PureVia*TMtabletop sweetener is high purity Reb A. This ingredient differs from most stevia products sold as dietarysupplements in the United States because it is a highly pure form of only oneof several steviol glycosides found in the stevia plant and because of itspurity the ingredient contains little or no residual plant material.

 

Whole Earth believes that it has demonstrated that high purity Reb A isgenerally recognized as safe (referred to as “GRAS”) and that the ingredientmay therefore be sold as a food in the United States.  In general, the Food, Drug, and Cosmetic Actprovides that any substance that is added to food must be pre-approved by U.S.Food and Drug Administration, unless the substance is generally recognized,among qualified experts, as having been adequately shown to be safe under theconditions of its intended use. Management believes that Whole Earth has demonstrated the GRAS status ofhigh purity Reb A through scientific procedures in accordance with FDAregulations.  These procedures requirethe same quantity and quality of scientific evidence as is required to obtainapproval of the substance as a food additive and ordinarily is based uponpublished studies.  Companies may electto use GRAS ingredients on a self-affirmed basis or they may submit anotification and supporting documentation to the FDA for review.  In May 2008, Whole Earth submitted anotification and supporting 

 

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scientific data to the FDA that high purity Reb A is GRAS for use inbeverages, foods and tabletop sweeteners. The FDA could ask questions and seek additional information from WholeEarth or it may provide a letter indicating that it has no objections.  It is anticipated that the FDA could delivera no objection letter in the fall of 2008.

 

Cargill submitted a GRAS notification to the FDA for high purity Reb Aafter Whole Earth’s submission, and the global ingredient company is currentlyselling a tabletop sweetener in the United States that is sweetened with highpurity Reb A without first receiving a no objection letter from the FDA, as ispermitted under applicable regulations.

 

*Vertical Integration of Stevia Supply*

 

On April 9, 2008, Whole Earth acquired a stevia processing businessand related assets in Paraguay through its indirect, wholly-owned subsidiary,Nativia Guarani, S.A.  In connection withthis acquisition, Whole Earth and Nativia Guarani entered into long-termagricultural supply, research and development, purchase option and consultingagreements with its local partner Imperio Guarani, S.A. and Sergio Chase, theprincipal owner of Imperio Guarani. Imperio Guarani has developed a network of small, independent farmersfrom whom the company acquires stevia leaves, and Imperio Guarani will selldried stevia leaves exclusively to Nativia Guarani.  Among other things, Imperio Guarani and WholeEarth will collaborate on further extending this network of farmers, improvingstevia varieties as well as developing improved stevia growing, harvesting andprocessing technologies.  Imperio Guaranihas granted Whole Earth an exclusive option to acquire its business and theland currently leased by Nativia Guarani from affiliates of Imperio Guarani.

 

The Nativia Guarani facility currently mills dried stevia leaves andproduces a stevia extract that has not yet been purified into high purity RebA.  Pending the results of its currentresearch and development efforts and the commercialization of thosetechnologies, Whole Earth may use this stevia extract for its own productswhere steviol glycosides may be used, offer the extract for sale as aningredient or further purify the extract into high purity Reb A.

 

Management believes that the Nativia Guarani business and agreementswith Imperio Guarani and Mr. Chase will assist the company in severalways.  Whole Earth will directlyparticipate in the production of its products from the farm to the ultimateconsumer.  A number of larger and bettercapitalized companies will be competing for stevia leaves and extracts, andvertical integration provides Whole Earth with more control over its supply ofthis natural ingredient although, Whole Earth will continue to source highpurity Reb A from PureCircle and other suppliers.  In addition, management believes that theformation of Nativia Guarani and our company’s strategic relationship withImperio Guarani will permit Whole Earth to promote sustainable farmingpractices and develop improved agricultural and processing methods andtechnologies that may offer competitive advantages.

 

*CzechPak Manufacturing Facility*

 

We have built a new manufacturing facility in the Czech Republic whichwill be operated by our newly formed subsidiary CzechPak Manufacturings.r.o.  The CzechPak facility initiallywill employ approximately 90 people and produce *Canderel*®branded products for EAME region.  Weexpect that the facility will commenceproduction in August 2008. We anticipate that the CzechPak facility will reduce our manufacturingcosts, allow us to introduce new products more rapidly, test new products on alimited basis and improve both operational efficiency and working capital byreducing lead times and the amount of inventory held by our distributors.

 

*North America Distribution Model*

 

We have commenced our direct distribution model for the retail grocerychannel in the United States.  Effective July 28,2008, our retail grocery customers now place orders through our national brokerAdvantage Sales & Marketing LLC which processes the order and we shipproducts through a third-party warehouse, logistics and shippingproviders.  We believe that this directdistribution model in the United States will give us more access to ourcustomers, improve demand forecasting and planning and reduce costs.  We have experienced some anticipateddisruptions resulting from this transition, but these have been relativelyminor.  ACH Food Companies (“ACH”), Inc.will continue to serve as our exclusive distributor in the United States foodservice channel.

 

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**CapitalConstraints and Need to Refinance or Restructure**

 

We believe that the development andintroduction of new products under our *Equal*® and *Canderel*® brands may help to stabilize our core businesswhile*PureVia*TM and other innovative,all-natural sweeteners and sweetened food products from Whole Earth presentgrowth opportunities for us. However, we may be constrained in our ability torealize fully the value of these new products as a result of our currentcapital structure. The successful launch of new products and marketing of ourcore brands requires capital, and we must use a significant portion of our cashflows from operations to service our outstanding debt. We had an aggregate of$411.7 million of long-term debt outstanding at June 30, 2008, includingcapital lease obligations and borrowings from our revolving creditfacility.  We paid $18.8 million ininterest costs for the six months ended June 30, 2008, $10.7 million ofwhich represented interest payments on our 9 1⁄2% senior subordinated notes due2013 (the “Notes”). If we cannot generate cash flows from operationssignificantly in excess of our debt obligations, we may not have the resourcesrequired to fully realize the value of our strategic initiatives.

 

In order to maximize value, management isfocused on refinancing or restructuring all or part of our debt obligations.  On January 11, 2009, approximately $4.1million principal amount of the Term A loans and any revolving loansoutstanding under our senior credit facility will become due and payable, andwe will no longer be able to draw revolving loans or issue letters of creditunder our senior credit facility.  Inaddition, interest on the 12 1⁄4% senior subordinated discount notes due 2014(the “Discount Notes”) of Merisant Worldwide, Inc. (“Merisant Worldwide”),our parent company, will become payable in cash commencing on May 15,2009.  The indenture governing the Noteslimits our company’s ability to pay dividends or loan cash to MerisantWorldwide, which has no operations of its own.

 

On March 17, 2008, we launched effortsto arrange a new $245 million senior secured credit facility, comprised of $210million of term loans and a $35 million revolving loan facility (the “NewCredit Facility”).    On April 2,2008, we ceased these particular refinancing efforts due to adverse marketconditions that prevented us from obtaining favorable terms.  We may engage in discussions from time totime with our noteholders on ways to restructure all or part of our other debtobligations.

 

**Results of Operations**

 

For each of the periods discussed below, the information set forthunder the caption “Consolidated Results” represents an overview of our company’sresults of operations on a consolidated basis. Additional detail regarding theresults of operations can be found under the caption “Segment Results” for eachperiod discussed below.

 

***Three Months Ended June 30, 2008 Compared to Three Months Ended June 30,2007***

 

The following table sets forth certain of ourcompany’s financial data for the three month periods ended June 30, 2007and 2008 (totals may not foot due to rounding).

 
| ** **                        | ** ** | **Three Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,** | ** ** |
|-----------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                        | ** ** | **2007**                                        | ** ** | **2008**                                        | ** ** | **2007** | ** ** | **2008** | ** ** | **Better/(Worse)  than Prior Year** | ** ** |
| ** **                        | ** ** | **(in millions)**                          | ** ** | **As % of Net Sales**       | ** ** | **Dollars** | ** ** | **%** | ** ** |
| Net sales                         |       | $                                               | 71.1       |                                            | $          | 67.0 |   | 100 | % | 100 | % | $ | (4.0 | ) | (6 | )% |
| Cost of sales                     |       | 31.9                                            |       | 32.9                                            |       | 45 | % | 49 | % | (1.0 | ) | (3 | )% |
| Gross profit                      |       | 39.2                                            |       | 34.1                                            |       | 55 | % | 51 | % | (5.1 | ) | (13 | )% |
| Operating expenses:               |       |                                            |       |                                            |       |   |   |   |   |   |   |   |   |
| Marketing and selling expenses    |       | 17.0                                            |       | 19.4                                            |       | 24 | % | 29 | % | (2.4 | ) | (14 | )% |
| Administration expenses           |       | 13.1                                            |       | 8.0                                             |       | 18 | % | 12 | % | 5.1 |   | 39 | % |
| Research and development costs    |       | 0.4                                             |       | 0.7                                             |       | 1 | % | 1 | % | (0.4 | ) | (104 | )% |
| Amortization of intangible assets |       | 5.7                                             |       | 5.3                                             |       | 8 | % | 8 | % | 0.5 |   | 8 | % |
| Restructuring expenses            |       | 0.3                                             |       | 1.0                                             |       | 0 | % | 1 | % | (0.7 | ) | (216 | )% |
| Total operating expenses          |       | 36.5                                            |       | 34.4                                            |       | 51 | % | 51 | % | 2.1 |   | 6 | % |
| Income (loss) from operations     |       | 2.7                                             |       | (0.3                                            | )          | 4 | % | 0 | % | (3.0 | ) | (111 | )% |
| Other expenses (income):          |       |                                            |       |                                            |       |   |   |   |   |   |   |   |   |
| Interest income                   |       | (0.2                                            | )          | (0.2                                            | )          | (0 | )% | (0 | )% | 0.0 |   | (4 | )% |
| Interest expense                  |       | 11.4                                            |       | 9.5                                             |       | 16 | % | 14 | % | 1.9 |   | 17 | % |
| Cost of refinancing               |       | 5.8                                             |       | —                                          |       | 8 | % | — |   | 5.8 |   | 100 | % |
| Other expense (income), net       |       | (30.2                                           | )          | (0.1                                            | )          | (43 | )% | (0 | )% | (30.1 | ) | (100 | )% |
| Total other expenses              |       | (13.1                                           | )          | 9.2                                             |       | (18 | )% | 14 | % | (22.4 | ) | (171 | )% |
| Income (loss) before income taxes |       | 15.9                                            |       | (9.5                                            | )          | 22 | % | (14 | )% | (25.4 | ) | (160 | )% |
| Provision for income taxes        |       | 1.9                                             |       | 1.0                                             |       | 3 | % | 2 | % | 0.9 |   | 46 | % |
| Net income (loss)                 |       | $                                               | 14.0       |                                            | $          | (10.5 | ) | 20 | % | (16 | )% | $ | (24.5 | ) | (175 | )% |
|                                   |            |                                                 |            |                                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

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**Consolidated Results**

 

*Net sales.*Overall,net sales declined in the second quarter of 2008 compared to the second quarterof 2007.  The decline was related tolower sales in North America and Asia/Pacific partially offset by higher salesin EAME and Latin America.  In NorthAmerica, net sales declined as a result of a decline in consumer consumptionand a decline in inventory levels maintained by our distributor in the retailchannel.  These negative impacts on netsales were slightly offset by decreased trade marketing spending.  In Asia/Pacific, we are implementing a changein our supply chain that decreased shipments to our distributor inAustralia.  Offsetting these declinesslightly was improved performance in the EAME and Latin America regions alongwith the consolidated sales impact of the devaluation of the U.S. dollar andthe resulting currency translation which accounted for approximately $3.1million of incremental net sales in the second quarter of 2008.  In the EAME region, the UK sales continuedthe momentum achieved in the second half of 2007 as the impact of the late 2006diversion has subsided.  In LatinAmerica, Argentina implemented a price increase which positively impacted thenet sales compared to the same quarter in 2007.   In Mexico, we continue to maintain high brandawareness, though our competitor, *Splenda*®,has invested heavily in advertising over the past eighteen months.  This has resulted in a decrease in consumerdemand for our products along with pricing pressure particularly in the clubchannel.

* *

*Cost of sales.* Costof sales increased, despite the slight decline in sales, due to one-time startup costs related to our manufacturing plant in the Czech Republic, salesincreases in lower margin products, the impact of purchasing product in eurofor sales in countries with weaker currencies and unfavorable raw materialpurchase prices.  Overall, gross profitas a percentage of net sales declined from 55% for the three months ended June 30,2007 to 51% for the three months ended June 30, 2008 due to the increasesin costs discussed above as well as increased trade marketing in France.

 

*Operating expenses.*Marketingand selling expenses increased due to higher brand support in EAME and LatinAmerica and unfavorable currency impacts, and increased costs related to ournew product launch.  These unfavorablevariances were partially offset by lower brand support and lower commissions inNorth America.  Administration expensesdecreased mainly due to lower litigation and facility related costs.

 

During the second quarter of 2008, wecontinued our restructuring initiatives to improve both financial results andthe long-term value of the business. As a result of these actions, we recordedrestructuring charges for workforce reductions of $1.0 million in the secondquarter of 2008 as compared to $0.3 million in the second quarter of 2007. Therestructuring charges incurred in the second quarter of 2008 relate primarily tonew employee termination costs and are expected to be substantially paidby December 31, 2008. Additional information regarding restructuringcharges and the related liability can be found in Note 3 to the unauditedconsolidated financial statements located elsewhere in this document.

 

*Costs of refinancing. *Costs of refinancingfor the three months ended June 30, 2007 related to the extinguishment ofdebt under the Second Lien Credit Agreement. As a result of this transaction, a premium of $2.6 million was incurredto pay all debt and interest outstanding under the Second Lien Credit Agreementand $3.2 million of existing deferred financing fees was written off.

 

*Interest.*Ourinterest expense decreased as a net result of lower interest bearing loansunder our Amended and Restated Credit Agreement compared to the higher interestbearing loans under our Second Lien Credit Agreement, as well as overalldecreases in interest rates on variable interest debt instruments.  Our borrowings under the Senior CreditAgreement and Second Lien Credit Agreement had a weighted average interest rateof approximately 10.3% per annum upon the closing of the Second Lien CreditAgreement.  In May 2007, werefinanced and therefore terminated the Second Lien Credit Agreement asdescribed below.

 

*Other expense, net*.In the second quarter of 2007, we experienced an unusually high level of otherincome as compared to the more typical other expenses realized in 2008.  The other income in the second quarter of2007 was primarily the result of a one-time cash payment received pursuant toan agreement with a third party.  Thisevent did not repeat in 2008.  Also in the second quarter of 2008, a lessthan $0.1 million currency loss on the euro-denominated debt was more thanoffset by favorable balance sheet remeasurement impacts.  In the second quarter of 2007, we recorded aloss on the euro-denominated debt of $0.2 million.

 

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*Taxes.*For the threemonths ended June 30, 2008, we recorded a $1.0 million tax provision on aloss before income taxes of $9.5 million. The unusual relationship of our taxprovision to the pre-tax loss in the second quarter of 2008 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 2008 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 $4.3 million in the second quarterof 2008 to a total of $74.4 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.  The similar unusual relationship in 2007 isdue to the same factors.

 

**Segment Results**

 

The following table presents net sales andOperating EBITDA expressed in millions of dollars for each reportablesegment (totals may not foot due to rounding):

 
| ** **              | ** ** | **Net Sales**                          | ** ** | **Operating EBITDA (1)**            | ** ** |
|-------------------------|------------|---------------------------------------------|------------|-----------------------------------------------|------------|
| ** **              | ** ** | **Three Months  Ended  June 30,** | ** ** | **Better/(Worse)  than Prior Year** | ** ** | **Three Months  Ended  June 30,** | ** ** | **Better/(Worse)  than Prior Year** | ** ** |
| ** **              | ** ** | **2007**                                    | ** ** | **2008**                                      | ** ** | **$** | ** ** | **%** | ** ** | **2007** | ** ** | **2008** | ** ** | **$** | ** ** | **%** | ** ** |
| ** **              | ** ** | ** **                                  | ** ** | **(in millions)**                        | ** ** | ** ** | ** ** | ** ** | ** ** | **(in millions)** | ** ** | ** ** | ** ** |
| ** **              | ** ** | ** **                                  | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| North America (2)       |       | $                                           | 27.6       |                                          | 23.8       |   | $ | (3.8 | ) | (14 | )% | $ | 10.1 |   | 8.7 |   | $ | (1.4 | ) | (14 | )% |
| Operating EBITDA Margin |       |                                        |       |                                          |       |   |   |   |   | 37 | % | 37 | % | (0 | )% |   |   |
| EAME                    |       | 30.1                                        |       | 30.3                                          |       | 0.2 |   | 1 | % | 8.7 |   | 6.0 |   | (2.7 | ) | (31 | )% |
| Operating EBITDA Margin |       |                                        |       |                                          |       |   |   |   |   | 29 | % | 20 | % | (9 | )% |   |   |
| Latin America           |       | 8.1                                         |       | 9.1                                           |       | 1.0 |   | 13 | % | 1.9 |   | 1.0 |   | (0.9 | ) | (49 | )% |
| Operating EBITDA Margin |       |                                        |       |                                          |       |   |   |   |   | 24 | % | 11 | % | (13 | )% |   |   |
| Asia/Pacific            |       | 5.4                                         |       | 3.9                                           |       | (1.5 | ) | (27 | )% | 1.4 |   | (0.1 | ) | (1.5 | ) | (109 | )% |
| Operating EBITDA Margin |       |                                        |       |                                          |       |   |   |   |   | 25 | % | (3 | )% | (29 | )% |   |   |
|                         |            |                                             |            |                                               |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(1)          “Operating EBITDA” as used with respectto our operating segments is a measure upon which we assess the financialperformance of these segments. Operating EBITDA excludes interest expense,income tax expense and depreciation and amortization, as well as items such asrestructuring expenses, certain significant charges related to new productdevelopment and launch costs, certain litigation costs, costs related to thetransition to a new exclusive distributor in the United States and certainother non-cash items. Our definition of Operating EBITDA largely mirrors thedefinition of Bank EBITDA under our Senior Credit Facility.  That definition changed in the May 2007amendment of those credit facilities, and that change is reflectedprospectively in our computation of Operating EBITDA for the 2007 period.  See Note 2 to the unaudited consolidatedfinancial statements for a description of Operating EBITDA and a reconciliationof Operating EBITDA to income (loss) before income taxes. Operating EBITDAmargin represents Operating EBITDA as a percentage of net sales.

 

(2)          NorthAmerica segment results exclude immaterial sales and $1.7 million of negativeOperating EBITDA related to a new product launch which management evaluatesseparately from this geographical segment for the three month period ended June 30,2008.

 

***North America***

 

*Net sales.*  In North America, the net sales decline wasdriven by a significant decrease in shipments to our distributor as planned toprepare for our transition to a direct sales distribution model.  Our distributor inventory levels at June 30,2008 were at the lowest levels they have been since we began doing businesswith ACH.  Also contributing to thedecline was decreased sales volume in the food service and discount channel anda decrease in consumer consumption in the 

 

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retail and food service channels.  These negative variances were partially offset by decreased tradespending in the food service and retail channels.

 

*Operating EBITDA.*Thedecrease in Operating EBITDA was primarily related to the margin impact oflower net sales and unfavorable sales mix. These unfavorable impacts were partially offset by lower overall brandsupport and lower sales and marketing administration costs.  Operating EBITDA margin was stable.

 

***EAME***

 

*Net sales.*In theEAME region, the slight increase in net sales was driven primarily by the UKalong with the positive currency translation impact which offset sales declinesin France and in contract manufacturing sales. In the first quarter of 2007, asa result of diversion of product into the retail channel, we discontinued salesto certain UK distributors in an effort to stop the diversion.  In the second quarter of 2008, sales in theUK continued to perform at levels realized in the second half of 2007 afterstopping the diversion of product and we have experienced a strong market.  Continued softness in consumer demand as wellas increased trade spending reduced sales in France.  The devaluation of the U.S. dollar and theresulting currency translation effect on our financial statements accounted forapproximately $2.8 million of the net sales increase in the EAME region.

 

*Operating EBITDA.* Operating EBITDA and Operating EBITDA margindecreases are mainly due to higher brand support in France and the UK, alongwith an unfavorable sales mix and the unfavorable currency impacts related tocost of goods sold.  These negativeimpacts were slightly offset by reduced general administrative costs due mainlyto savings from restructuring actions and facility related changes in France.

 

Our CzechPak facility will commence production in August 2008 andwill manufacture *Canderel*® products for the EAMEregion.  We anticipate that the CzechPakfacility will reduce our manufacturing costs, allow us to introduce newproducts more rapidly, test new products on a more limited basis and improveboth operational efficiency and working capital by reducing lead times and theamount of inventory held by our distributors in the region.

 

Until the start-up of the CzechPak facility, most of our *Canderel*® products for the EAME region had been manufacturedby Krüger GmbH & Co. KG under a long-term contract manufacturingagreement.  We intend to shift a portionof the production currently handled by Krüger to the CzechPak facility.  We are seeking to negotiate amendments to ourcontract manufacturing agreement with Krüger that will facilitate theimplementation of our manufacturing strategy. There is no assurance that we will be able to negotiate amendments onterms favorable to us or in a timely manner, and the parties may be required toarbitrate any disagreements between them. We believe that we have sufficient inventory of finished products tomeet anticipated market demand over the next three to six months, andmanagement has established a number of contingency plans in the event of anydisruptions in production.  Nevertheless,any prolonged negotiation or arbitration with Krüger could cause disruptions inproduction or increase the amount of our projected capital expenditures.

 

***Latin America***

 

*Net sales.* Improved sales in the second quarter of 2008relates primarily to a price increase implemented in Argentina.  In addition, Peru sales volume increased dueto strong performance from a new distributor selling both locally and exportingwithin the region.

 

*Operating EBITDA.*OperatingEBITDA and Operating EBITDA margin decreased despite the increase in net salesdue to higher raw material costs and brand support.

 

***Asia/Pacific***

 

*Net sales.*Net salesin the Asia/Pacific region decreased due to lower shipments to our distributorin Australia related to a change in manufacturing locations.  We will commence manufacturing operations ata local facility in the third quarter and have decreased inventory levels atour distributor in preparation for the transition.

 

*Operating EBITDA.*OperatingEBITDA and Operating EBITDA margin decreased primarily due to the decreasedsales coupled with higher cost of goods sold and slightly lower brand supportagainst significantly lower sales.

 

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**Corporate Expenses**

 

Corporate expenses decreased from $7.6million in the second quarter of 2007 to $5.3 million in the second quarter of2008, primarily due to lower litigation costs relating to our lawsuit againstMcNeil along with lower employee related costs.

 

***Six Months Ended June 30, 2008 Compared to SixMonths Ended June 30, 2007***

 

Thefollowing table sets forth certain of our company’s financial data for the sixmonth periods ended June 30, 2007 and 2008 (totals may not foot due torounding).

 
| ** **                        | ** ** | **Six Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-----------------------------------|------------|-----------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                        | ** ** | ** **                                    | ** ** | ** **                                    | ** ** | ** ** | ** ** | **Better/(Worse)** | ** ** |
| ** **                        | ** ** | **2007**                                      | ** ** | **2008**                                      | ** ** | **2007** | ** ** | **2008** | ** ** | **than Prior Year** | ** ** |
| ** **                        | ** ** | **(in millions)**                        | ** ** | **As% of Net Sales**           | ** ** | **Dollars** | ** ** | **%** | ** ** |
| Net sales                         |       | $                                             | 140.4      |                                          | 136.0      |   | 100 | % | 100 | % | (4.4 | ) | (3 | )% |
| Cost of sales                     |       | 62.6                                          |       | 65.8                                          |       | 45 | % | 48 | % | (3.2 | ) | (5 | )% |
| Gross profit                      |       | 77.8                                          |       | 70.1                                          |       | 55 | % | 52 | % | (7.7 | ) | (10 | )% |
| Operating expenses:               |       |                                          |       |                                          |       |   |   |   |   |   |   |   |   |
| Marketing and selling expenses    |       | 32.3                                          |       | 33.8                                          |       | 23 | % | 25 | % | (1.5 | ) | (5 | )% |
| Administration expenses           |       | 24.6                                          |       | 17.5                                          |       | 18 | % | 13 | % | 7.1 |   | 29 | % |
| Research and development expenses |       | 0.7                                           |       | 1.3                                           |       | 1 | % | 1 | % | (0.6 | ) | (79 | )% |
| Amortization of intangible assets |       | 11.5                                          |       | 10.5                                          |       | 8 | % | 8 | % | 0.9 |   | 8 | % |
| Restructuring expenses            |       | 0.9                                           |       | 1.1                                           |       | 1 | % | 1 | % | (0.2 | ) | (27 | )% |
| Total operating expenses          |       | 69.9                                          |       | 64.2                                          |       | 50 | % | 47 | % | 5.7 |   | 8 | % |
| Income from operations            |       | 7.9                                           |       | 5.9                                           |       | 6 | % | 4 | % | (2.0 | ) | (25 | )% |
| Other expenses (income):          |       |                                          |       |                                          |       |   |   |   |   |   |   |   |   |
| Interest income                   |       | (0.4                                          | )          | (0.5                                          | )          | (0 | )% | (0 | )% | 0.1 |   | 25 | % |
| Interest expense                  |       | 23.4                                          |       | 19.6                                          |       | 17 | % | 14 | % | 3.8 |   | 16 | % |
| Costs of refinancing              |       | 5.8                                           |       | 0.0                                           |       | 4 | % | 0 | % | 5.8 |   | 100 | % |
| Other expense (income), net       |       | (30.1                                         | )          | 0.6                                           |       | (21 | )% | 0 | % | (30.7 | ) | (102 | )% |
| Total other expense (income)      |       | (1.2                                          | )          | 19.8                                          |       | (1 | )% | 15 | % | (21.0 | ) | (1741 | )% |
| Income (loss) before income taxes |       | 9.1                                           |       | (13.8                                         | )          | 6 | % | (10 | )% | 23.0 |   | (252 | )% |
| Provision for income taxes        |       | 3.7                                           |       | 3.1                                           |       | 3 | % | 2 | % | 0.6 |   | 17 | % |
| Net income (loss)                 |       | $                                             | 5.4        |                                          | (16.9      | ) | 4 | % | (12 | )% | (22.3 | ) | (413 | )% |

 

**Consolidated Results**

 

*Net sales.*Overall,net sales declined in the first half of 2008 compared to the first half of2007.  The decline was related to lowersales in North America and Asia/Pacific offset by higher sales in EAME andLatin America.  In North America, netsales declined as a result of a decline in consumer consumption and a declinein inventory levels maintained by our distributor in the food service andretail channels.  These negative impactson net sales were slightly offset by decreased trade marketing spending.  In Asia/Pacific, we had high net sales in thefirst quarter of 2007 related to shipments to new distributors to establishbeginning inventory levels which did not repeat in 2008.  Offsetting these declines were improvedperformance in the EAME and Latin America regions along with the consolidatedsales impact of the devaluation of the U.S. dollar and the resulting currencytranslation impact which accounted for approximately $6.8 million ofincremental net sales.  In the EAMEregion, the UK sales continued the momentum achieved in the second half of 2007as the impact of the late 2006 diversion has subsided.  Additionally, Belgium sales increasedpartially as a result of strong consumer market trends.  In Latin America, though Mexico reported anincrease in net sales for the first half of 2008 versus the same period of2007, overall trends in Mexico indicate a decrease in consumer demand for ourproduct as our competitor, *Splenda*®,experiences positive results from its heavy consumer and trade promotionspending.  Unusually low sales werereported in Mexico in the first half of 2007 as we converted to directdistribution model for the grocery channel.

 

*Cost of sales.* Costof sales increased, despite the slight decline in sales, due to sales increasesin lower margin products, such as contract manufacturing, one time costsrelated to the start up of new manufacturing operations, the impact ofpurchasing 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 55% forthe six months ended June 30, 2007 to 52% for the six months ended June 30,2008 due to the increases in costs discussed above, and to a lesser extentincreased trade marketing in France.

 

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*Operating expenses.*Marketingand selling expenses increased due to higher brand support in Latin America,unfavorable currency impacts, and increased costs related to our new productlaunch. These unfavorable impacts were partially offset by lower brand supportin North America, EAME and Asia/Pacific along with lower commissions and lowerperformance based incentives in North America. Administration expenses decreased mainly due to lower litigation andfacility costs.

 

During the six months ended June 30,2008, we continued our restructuring initiatives to improve both financialresults and the long-term value of the business. As a result of these actions,we recorded restructuring charges for workforce reductions of $1.1 million inthe first half of 2008 as compared to $0.9 million in the first half of 2007.The restructuring charges incurred in 2008 relate primarily to new employeetermination costs and are expected to be substantially paid by December 31,2008. Additional information regarding restructuring charges and the relatedliability can be found in Note 3 to the unaudited consolidated financialstatements located elsewhere in this document.

 

*Interest.*Ourinterest expense decreased as a net result of lower interest bearing loansunder our Amended and Restated Credit Agreement compared to the higher interestbearing loans under our Second Lien Credit Agreement in 2007, as well asoverall decreases in interest rates on variable interest debt instruments.  Our borrowings under the Senior CreditAgreement and Second Lien Credit Agreement had a weighted average interest rateof approximately 10.3% per annum upon the closing of the Second Lien CreditAgreement.  In May 2007, werefinanced and therefore terminated the Second Lien Credit Agreement asdescribed below.

 

*Costs of refinancing. *Costs of refinancingfor the six months ended June 30, 2007 related to the extinguishment ofdebt under the Second Lien Credit Agreement. As a result of this transaction, a premium of $2.6 million was incurredto pay all debt and interest outstanding under the Second Lien Credit Agreementand $3.2 million of existing deferred financing fees was written off.

 

*Other expense, net*.In the second quarter of 2007, we experienced an unusually high level of otherincome as compared to the more typical other expenses realized in 2008.  The other income in the second quarter of2007 was primarily the result of a one-time cash payment received pursuant toan agreement with a third party. In the first half of 2008 we recorded a $1.0 million currency loss on theeuro-denominated debt compared to a loss of $0.5 million incurred in 2007.  Both losses were partially offset byfavorable balance sheet remeasurement impacts in the respective years.

 

*Taxes.*For the threemonths ended June 30, 2008, we recorded a $3.1 million tax provision on aloss before income taxes of $13.8 million. The unusual relationship of our taxprovision to the pre-tax loss in the first half of 2008 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 2008 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 $4.8 million in the first six monthsof 2008 to a total of $74.4 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 thefuture.  The similar unusual relationshipin 2007 is due to the same factors.

 

**Segment Results**

 

The following table presents net sales andOperating EBITDA expressed in millions of dollars for each reportablesegment (totals may not foot due to rounding):

 
| ** **              | ** ** | **Net Sales**                        | ** ** | **Operating EBITDA (1)**            | ** ** |
|-------------------------|------------|-------------------------------------------|------------|-----------------------------------------------|------------|
| ** **              | ** ** | **Six Months  Ended  June 30,** | ** ** | **Better/(Worse)  than Prior Year** | ** ** | **Six Months  Ended  June 30,** | ** ** | **Better/(Worse)  than Prior Year** | ** ** |
| ** **              | ** ** | **2007**                                  | ** ** | **2008**                                      | ** ** | **$** | ** ** | **%** | ** ** | **2007** | ** ** | **2008** | ** ** | **$** | ** ** | **%** | ** ** |
| ** **              | ** ** | **(in millions)**                    | ** ** | **(in millions)**                        | ** ** |
| ** **              | ** ** | ** **                                | ** ** | ** **                                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| North America (2)       |       | $                                         | 56.5       |                                          | 47.0       |   | (9.5 | ) | (17 | )% | $ | 20.4 |   | 14.9 |   | (5.5 | ) | (27 | )% |
| Operating EBITDA Margin |       |                                      |       |                                          |       |   |   |   |   | 36 | % | 32 | % | (4 | )% |   |   |
| EAME                    |       | 56.7                                      |       | 62.5                                          |       | 5.8 |   | 10 | % | 15.7 |   | 16.5 |   | 0.8 |   | 5 | % |
| Operating EBITDA Margin |       |                                      |       |                                          |       |   |   |   |   | 28 | % | 26 | % | (1 | )% |   |   |
| Latin America           |       | 13.3                                      |       | 16.7                                          |       | 3.4 |   | 25 | % | 3.0 |   | 3.2 |   | 0.2 |   | 6 | % |
| Operating EBITDA Margin |       |                                      |       |                                          |       |   |   |   |   | 22 | % | 19 | % | (3 | )% |   |   |
| Asia/Pacific            |       | 13.9                                      |       | 9.8                                           |       | (4.1 | ) | (30 | )% | 5.5 |   | 2.4 |   | (3.1 | ) | (56 | )% |
| Operating EBITDA Margin |       |                                      |       |                                          |       |   |   |   |   | 39 | % | 24 | % | (15 | )% |   |   |
|                         |            |                                           |            |                                               |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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| (1)    | “Operating  EBITDA” as used with respect to our operating segments is a measure upon  which we assess the financial performance of these segments. Operating EBITDA  excludes interest expense, income tax expense and depreciation and  amortization, as well as items such as restructuring expenses, certain significant  charges related to new product development and launch costs, certain  litigation costs, costs related to the transition to a new exclusive  distributor in the United States and certain other non-cash items. Our  definition of Operating EBITDA largely mirrors the definition of Bank EBITDA  under our Senior Credit Facility. That definition changed in the  May 2007 amendment of those credit facilities, and that change is  reflected prospectively in our computation of Operating EBITDA for the 2007  period. See Note 2 to the unaudited consolidated financial statements for a  description of Operating EBITDA and a reconciliation of Operating EBITDA to  income (loss) before income taxes. Operating EBITDA margin represents  Operating EBITDA as a percentage of net sales. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (2)    | North America segment  results exclude immaterial sales and $3.0 million of negative Operating  EBITDA related to a new product launch which management evaluates separately  from this geographical segment for the six month period ended June 30,  2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

 

***North America***

 

*Net sales.*  In North America, net sales declined due to asignificant decrease in shipments to our retail distributor as we prepared forour transition to a direct sales distribution model.  In addition, our distributor inventory levelswere higher than usual at December 31, 2007 in the food service channelwhich resulted in a decrease in shipments during the first half of 2008compared to the first half of 2007.  To alesser extent, we also experienced decreased consumer consumption in the food serviceand retail channels slightly offset by decreased trade marketing spending.   In the club channel, though the timing ofour promotional activities varied when comparing the first six months of 2007to the first six months of 2008, we have experienced decreases in consumptionand sales volume.

 

On January 29, 2008, we delivered noticeto ACH that the distribution agreement between Merisant US, Inc. and ACHwould terminate on July 27, 2008 with respect only to the retail grocerychannel.  We have partially terminatedthe distribution agreement so that we can pursue a direct distribution modelfor retail customers in the United States. We will handle order processing, warehousing and trade marketing internallyand through a third-party broker and logistics providers for retail grocery anddrug customers in the United States which we anticipate will reduce ouroperating costs,  improve the efficiencyof our inventory management and distribution capabilities, and provide moretransparency in customer relations.  On March 4,2008, Merisant and ACH agreed that Merisant will pay $0.3 million to ACH andthat commissions will not increase in connection with the partial terminationof the distribution agreement.  Thisexpense is included in operating expenses for the six months ended June 30,2008.

 

*Operating EBITDA.*Thedecrease in Operating EBITDA and Operating EBITDA margin were primarily relatedto the margin impact of lower net sales. This unfavorable impact was partially offset by lower overall brandsupport, commissions and lower sales and marketing administration costs.

 

***EAME***

 

*Net sales.*In theEAME region, the increase in net sales was driven primarily by the UK andBelgium along with the positive currency translation impact. In the firstquarter of 2007, as a result of diversion of product into the retail channel,we discontinued sales to certain UK distributors in an effort to stop thediversion.  In the first half of 2008,sales in the UK continued to perform at levels realized in the second half of2007 after stopping the diversion of product and we have experienced a strongmarket demand. In Belgium, our distributor carried higher inventories thanexpected at December 31, 2006, negatively impacting sales in the firstquarter of 2007 and thus reflecting a favorable period to period comparisonalong with recent market strengthening.  Continued softness in consumer demand as well as increased tradespending reduced sales 

 

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in France. The devaluation of the U.S. dollar and the resultingcurrency translation effect on our financial statements accounted forapproximately $5.7 million of the net sales increase in the EAME region.

 

*Operating EBITDA.* Operating EBITDA increased slightly due tohigher net sales along with reduced brand support and general administrativecosts due mainly to savings from restructuring actions and facility relatedchanges in France.  The slight decreasein Operating EBITDA margin was primarily due to higher sales of lower marginproducts in the first half of 2008 compared to the first half of 2007.

 

***Latin America***

 

*Net sales.* Net sales improvement relates primarily to ourtransition in Mexico from a distributor model to a direct model in the firstquarter of 2007 which resulted in lower sales, in part because of delayedshipments.  In addition, Argentina salesincreased due to a price increase implemented in the second quarter of 2008along with positive promotional program performance.

 

*Operating EBITDA.*OperatingEBITDA increased due to the positive impact of higher net sales.  However, Operating EBITDA margin decreasedslightly due to the impact of increased cost of goods sold for certain rawmaterials and increased brand support in Mexico.

 

***Asia/Pacific***

 

*Net sales.*Net salesin the Asia/Pacific region decreased primarily due to unusually high sales inthe first quarter of 2007 related to shipments to new distributors in Australiaand India to establish beginning inventory levels which did not repeat in 2008along with a decrease in inventory levels at our Asia/Pacific distributorsrelated to the start-up of our local production as we shorten lead times

 

*Operating EBITDA.*OperatingEBITDA and Operating EBITDA margin decreased primarily due to the decreasedsales coupled with higher cost of goods sold and lower brand support againstsignificantly lower sales.

 

**Corporate Expenses**

 

Corporate expenses decreased from $14.0million in the six months ended June 30, 2007 to $11.5 million in the sixmonths ended June 30, 2008, primarily due to lower litigation costsrelating to our lawsuit against McNeil incurred in 2007 and lower consultingexpenses.

 

**Liquidity and Capital Resources**

 

Our liquidity needs are primarily met through internally generated cashflow supplemented in 2007 by a one-time payment received pursuant to an agreement with a third party. As needed,we also borrow money under the revolving credit facility of the Amended and RestatedCredit Agreement.  Our primary uses ofcash are cost of sales, operating expenses, debt service, capital expendituresand distributions to our stockholder and, in 2008, the acquisition of NativiaGuarani. Foreign subsidiaries generated approximately 59% of consolidated netsales during the year ended December 31, 2007, and our U.S. operationshave relied upon the repatriation of cash from our foreign subsidiaries tosatisfy many of our domestic cash requirements. Historically, our U.S.operations had received a vast majority of funds from foreign subsidiariesthrough our Swiss subsidiary in the form of payments pursuant to a promissorynote. This promissory 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 theterm of the revolver note, and we expect to repatriate cash to the UnitedStates through borrowings under this revolver note. The principal balancerelating to this revolving note as of June 30, 2008 was $96 million.

 

We had $12.7million of cash and cash equivalents as of June 30, 2008 compared to $51.0million of cash and cash equivalents at December 31, 2007.  The decrease is related to debt and interestpayments along with first half operating cash expenditures that included thepurchase of Nativia Guarani and higher than usual capital expenditures.  We were also required to prepay $15.2 millionof the principal amount of term loans outstanding under our Amended andRestated Credit Agreement five business days after filing our Annual Reportwith excess cash as required and calculated under the terms of our Amended andRestated Credit Agreement.  This prepaymentwas made on April 4, 2008 and decreased our cash balance accordingly.  The decrease was offset with $2.0 million inborrowings from our revolving credit facility. Our net cash outflows in the second half of 2008 are expected to be lessthan in the first half of 2008 as several one-time outflows are not expected torepeat.  These items include a three tosix month inventory build in the EAME, the purchase of the Nativia Guarani business,and the 

 

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prepayment of debt principal.

 

Accounts receivable levels, time to payment and inventory levels impactthe amount of internally generated cash flow. The following table showsinformation with respect to accounts receivable and inventory as of December 31,2007 and June 30, 2008.  Accountsreceivable decreased in the six months ended June 30, 2008 primarily dueto higher sales in the fourth quarter of 2007 compared to the second quarter of2008.  Inventory levels increased in thesix months ended June 30, 2008 as compared to December 31, 2007,primarily due to planned increases in finished goods quantities on hand in ourforeign subsidiaries related to supply chain synchronization efforts todecrease lead times and to prepare for the commencement of operations at ourmanufacturing plant in the Czech Republic.

 

| ** **                        | ** ** | **December 31, 2007** | ** ** | **June 30, 2008** | ** ** |
|-----------------------------------|------------|---------------------------------|------------|-----------------------------|------------|
|                              |       |                            |       |                        |       |
| Accounts receivable (in millions) |       | $                               | 74.4       |                        | $          | 66.4 |   |
| Days sales outstanding            |       | 92                              |       | 84                          |       |
| Inventory (in millions)           |       | $                               | 13.5       |                        | $          | 26.5 |   |
| Days sales in inventory           |       | 38                              |       | 71                          |       |

 

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***Six Months Ended June 30, 2008 Comparedto Six Months Ended June 30, 2007***

 

For the six months ended June 30, 2008, net cash used by operatingactivities was $11.3 million compared to cash provided of $33.9 million for thesix months ended June 30, 2007. Operating cash flows decreased $45.3million versus the six months ended June 30, 2007, due to a decrease inthe contribution from working capital of $18.1 million and increased net incomeafter adjusting for non-cash items of $27.1 million primarily due to the gainrelated to a one-time payment received in 2007 pursuant to an agreement with athird party.

 

Net cash used in investing activities totaled $9.1 million for the sixmonths ended June 30, 2008 compared to $0.7 million for the six monthsended June 30, 2007 due to increased spending on capital expenditures,primarily related to our new manufacturing operations in the Czech Republic anda business acquisition in 2008.

 

For the sixmonths ended June 30, 2008, financing activities used $18.5 million incash as compared to using $6.5 million in cash for the six months ended June 30,2007.  For the six months ended June 30,2008, we used cash to pay our scheduled and additional required principalpayments under the Amended and Restated Credit Agreement and borrowed $2.0million under our revolving credit facility.  In the six months ended June 30, 2007, we used cash to pay ourscheduled principal payments under the Amended and Restated CreditAgreement.  In addition, distributions of$0.2 million were made to our sole stockholder in the first quarter of 2008 forthe purpose of paying administrative expenses. Borrowings under our revolving credit facility were $0 at December 31,2007 and $2.0 million at June 30, 2008.

 

***Capital Expenditures***

 

Capital expenditures in 2008 are expected to be in the range of$16 million to $19 million, relating to forecasted purchases ofequipment and capital improvements necessary to further optimize ourmanufacturing operations.  The majorityof the 2008 capital expenditures related to the establishment of our newmanufacturing operations in the Czech Republic. We believe that internally generated cash flow, together with borrowingavailable under the Amended and Restated Credit Agreement, will be sufficientto fund capital expenditures during the remainder of 2008. We anticipate thatwe will seek to refinance our existing Amended and Restated Credit Agreementprior to the scheduled maturity of our revolver credit facility in January 2009.If we are unable to obtain a new revolver credit facility or extend thematurity of our current credit facility we may be required to reduce ourplanned capital expenditures for 2009.

 

***Financing***

 

On July 11, 2003, we issued $225.0 millionprincipal amount of the Notes and refinanced our credit facility with theSenior Credit Agreement.  A portion ofthe proceeds of the Notes and the Senior Credit Agreement were used to pay adividend to our sole stockholder. The Notes are unsecured obligations and aresubordinated in right of payment to all existing and future senior indebtednessof our company. The Notes mature on July 15, 2013. The stated rate ofinterest for the Notes is 91/2% perannum. Interest is payable semi-annually in arrears on January 15th and July 15th.

 

The Senior Credit Agreement, as of June 30,2008, provides for aggregate commitments of up to $310.0 million, consisting ofa revolving loan facility of $35.0 million, of which a portion is available atour option in euro or dollars or in the form of letters of credit denominatedin dollars or euro, as well as term loan facilities of $275.0 million,consisting of a euro Term A loan of an original amount of $50.0 million, and aTerm B loan of an original amount of $225.0 million, denominated in dollars.The euro Term A loan and the revolving loan facility mature in 2009 while the TermB loan matures in 2010. 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 a first-priority securityinterest in substantially all of our assets and the assets of the guarantors.

 

On June 23,2006, we entered into the Second Lien Credit Agreement, the borrowings underwhich were substantially used to pay down amounts outstanding under the SeniorCredit Agreement.  The Second Lien CreditAgreement increased the aggregate principal amount of our indebtedness by $7.2million and increased our interest expense. Our loans outstanding under the Senior Credit Agreement had a weightedaverage interest rate of approximately 9.0% per annum prior to the closing ofthe Second 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.

 

On May 9, 2007, we amended and restatedour Senior Credit Agreement (the “Amended and Restated Credit Agreement”),which, among other things, increased by $85.0 million the principal amount ofTranche B Term Loans that could be borrowed by us under the facility.  We paid $2.5 million in fees and expensesrelated to this amendment and 

 

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restatement which were deferred and are being amortized over the termof the related debt. Upon closing, we borrowed the full $85.0 million ofadditional Tranche B Term Loans and used the proceeds plus cash on hand toprepay the principal of all loans outstanding under the Second Lien CreditAgreement totaling $85.0 million, plus all outstanding interest of $1.4 millionand a premium of $2.6 million, or $89.0 million.  The Second Lien Credit Agreement has beenterminated as a result of the transaction and there was no increase in our longterm debt.  In addition to the incurrenceof fees, this transaction resulted in a write-off of existing deferredfinancing fees relating to the extinguishment of previously outstanding debt inthe amount of $3.2 million.

 

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.  As of June 30, 2008, we had $184.6million in borrowings outstanding under the Amended and Restated CreditAgreement with an effective interest rate of 7.37%.  As a result of the $15.2 million prepaymentof term loans under the Amended and Restated Credit Agreement and a reductionof the LIBOR, we anticipate that our cash interest expense will decrease byapproximately $4 million for the year ending December 31, 2008 compared tothe year ended December 31, 2007.

 

**BankEBITDA**.  TheAmended and Restated Credit Agreement requires us to maintain compliance with aconsolidated first-lien leverage ratio covenant, a consolidated leverage ratiocovenant and a consolidated interest coverage ratio covenant. These ratios aremeasured on the basis of Bank EBITDA for the four fiscal quarters ending atleast 45 days prior to the payment date. Bank EBITDA is discussed here because it is the measure upon which thecovenants contained in the Amended and Restated Credit Agreement aremeasured.  However, Bank EBITDA is not ameasure of liquidity under GAAP. Accordingly, while providing usefulinformation with respect to assessing compliance with covenants under ourprimary debt obligations, this measure should not be considered in isolationfrom, or as a substitute for, consolidated statement of cash flow data preparedin accordance with GAAP as an indication of liquidity. In addition, the BankEBITDA measure presented may differ from, and may not be comparable to,similarly titled measures used by other companies.

 

On March 17, 2008, we launched effortsto arrange a new $245 million senior secured credit facility, comprised of $210million of term loans and a $35 million revolving loan facility (the “NewCredit Facility”).  Under the termscontemplated, we anticipated that we would have had more flexibility under itscovenants to further stabilize our core business, pursue our growth initiativesand address the challenges of our current capital structure.  On April 2, 2008, we ceased refinancingefforts due to adverse market conditions that prevented us from obtainingfavorable terms.  We may engage indiscussions from time to time with our noteholders on ways to restructure allor part of our other debt obligations.

 

Bank EBITDA asdefined under the Amended and Restated Credit Agreement excludes interestexpense, income tax and gross receipts tax expense, depreciation andamortization as well as 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;

 

·                                          anycash expenses incurred in connection with any waiver of a Default or Event ofDefault and any amendment to the Amended and Restated Credit Agreement;

 

·                                          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) if such period begins on or after January 1, 2006, (x) $11,000,000with respect to any such non-recurring cash losses or expenses arising from theimplementation of our plan known as “Project Arrow” and related restructuring, (y) $4,000,000with respect 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 

 

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connectionwith (i) any waiver of a default or event of default and any amendment tothe Senior Credit Agreement including the fees and expenses of any attorneysand financial advisers retained by the administrative agent pursuant theretowith respect to any such waiver or amendment and (ii) the negotiation,execution and closing of the Second Lien Credit Agreement and any waiver of adefault or event of default and any amendment to the Second Lien CreditAgreement including the fees and expenses of any attorneys and financialadvisers retained by the administrative agent with respect to any such waiveror amendment;

 

·                                          expensesincurred by us or any subsidiary prior to January 1, 2007 in connectionwith the development and commercialization of our all-natural, zero-caloriesweetener to be marketed under the *Sweet Simplicity®*trademark in an amount not to exceed in the aggregate $3,000,000 and prior to January 1,2009 in an amount not to exceed in the aggregate $15,000,000; and

 

·                                          expensesincurred between January 1, 2007 and December 31, 2007 in connectionwith our litigation against McNeil and McNeil-PPC, Inc. in an amount notto exceed $4,000,000.

 

Bank EBITDAfor the six months ended June 30, 2008 under the Amended and RestatedCredit Agreement was $25.5 million as compared to $30.6 million for the sixmonths ended June 30, 2007, adjusted to reflect litigation costs and *Sweet Simplicity®* product launch costs on a comparable basiswith the current definition of Bank EBITDA. We were in compliance with the covenants under the Amended andRestricted Credit Agreement at June 30, 2008.

 

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

 

| ** **                                                                   | ** ** | **Six Months  Ended  June 30, 2008** | ** ** |
|------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                   | ** ** | **(in millions)**                              | ** ** |
| Net cash used by operating activities                                        |       | $                                                   | (11.3      | ) |
| Provision for income taxes, net of deferred  income tax provision            |       | 0.8                                                 |       |
| Interest expense, net of non-cash interest  expense                          |       | 17.5                                                |       |
| Restructuring expenses (a)                                                   |       | 2.9                                                 |       |
| Other non-cash items                                                         |       | 3.5                                                 |       |
| Equity in (income) loss of affiliates                                        |       | 0.1                                                 |       |
| Net change in operating assets and  liabilities, net of business acquisition |       | 12.0                                                |       |
| Bank EBITDA                                                                  |       | $                                                   | 25.5       |   |

 

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(a)                                  Thecharges principally relate to planned employee termination costs that have been announced in the periodpresented and specified project implementation costs.

 

***Forward Looking Statements***

 

Certain information included or incorporatedin this report may be deemed to be “forward-looking statements” within themeaning of Section 27A of the Securities Act of 1933 and Section 21Eof the Securities Exchange Act of 1934. All statements, other than statementsof historical facts, included or incorporated in this report, are forward-lookingstatements. In particular, statements made under the heading “Management’sDiscussion and Analysis of Financial Condition and Results of Operations,”relating to overall volume trends, pricing trends and industry forces,anticipated results, expectations for funding capital expenditures andoperations and increased market share and the sufficiency of capital to meetworking capital, capital expenditures requirements and strategies areforward-looking statements. When used in this document, the words “anticipate,”“estimate,” “project” and similar expressions are intended to identifyforward-looking statements.

 

These statements are based on assumptions and assessments made bymanagement in light of their experience and their perception of historical trends,current conditions, expected future developments and other factors they believeto be appropriate. Any forward-looking statements are not guarantees of futureperformance and are subject to risks and uncertainties that could cause actualresults, developments and business decisions to differ materially from thosecontemplated by such forward-looking statements. We disclaim any duty to updateany forward-looking statements, except as required by law. Some of the factorsthat may cause actual results, developments and business decisions to differmaterially from those contemplated by such forward-looking statements includethe following:  changes in consumerpreferences and 

 

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nutritional and health-related concerns; increased competition; changesin the terms on which we may obtain aspartame; damaged consumer confidence inour products as a result of health-related allegations; product liabilityclaims; fluctuations in exchange rates and other currency risks; disruptions inour business as a result of strikes or work stoppages; changes in ourrelationship with our largest distributor; and changes in economic and politicalconditions in the countries in which we market and produce our products.

 

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**Item3.  Quantitative and QualitativeDisclosures About Market Risk**

 

***ForeignOperations***

 

With approximately 61% and 65% of consolidated total net salesgenerated by subsidiaries outside of the United States in the six months ended June 30,2007 and June 30, 2008, respectively, our ability to obtain fundsnecessary to meet our domestic obligations is subject to applicable laws,foreign taxes and intercompany pricing laws, including those relating to theflow of funds between our foreign affiliates pursuant to, for example, purchaseagreements, licensing agreements or other arrangements.  Historically, our US operations have receiveda vast majority of funds from foreign affiliates through our Swiss subsidiaryin the 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. Our US operations may borrow up to $200 million fromour Swiss subsidiary during the term of the revolver note.  We are repatriating cash to the United Statesthrough borrowings under this revolver note, which total $96 million as of June 30,2008. Regulators in the United States and other foreign countries where weoperate may closely monitor our corporate structure and how it affects intercompanyfund transfers.

 

In addition, as of June 30,2008, foreign affiliates comprised approximately 49% of our consolidated totalassets. Accordingly, we have experienced and will continue to be exposed toforeign 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 Amended andRestated Credit Agreement, a portion of our financing was obtained ineuro.  This euro-denominated loandecreases our transactional exposure to euro exchange fluctuations until theeuro principal and interest are repaid. Decreases in sales and earnings from euro denominated countries thatresult from the euro weakening against the U.S. dollar are offset by thedecrease in the euro denominated debt obligations (i.e., foreign currencytransaction gain) and interest expense that also results from such a decreasein exchange rate.  Likewise, any increasein sales and earnings from the euro denominated countries that results from astrengthening euro against the U.S. dollar offsets the increase in the eurodenominated debt obligations (i.e., foreign currency transaction loss) andinterest expense that results from such an exchange rate increase.

 

A significant portion of ourdebt bears interest at a fixed rate. Interest rate exposure results from our floating rate borrowings. Forthe six months ended June 30, 2008, a 1.0% per annum increase or decreasein interest rates would have resulted in an increase or decrease in cashinterest costs for our variable rate term loans of approximately $2.0 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, throughthe use of derivative financial instruments. We use derivatives only where there is an underlying exposure and do notuse them for trading or speculative purposes. The counter parties to thehedging activities would be highly rated financial institutions. We did nothave any foreign currency forward exchange contracts or interest ratederivatives outstanding at June 30, 2008.

 

***InflationRisk***

 

We anticipate that inflationwill increase our costs and inflation may also reduce consumption as moreconsumers reduce their discretionary spending. In prior periods, we generally have been able to offset the impact ofinflation through a combination of cost-cutting measures and price increases,but as the global economy weakens it will likely become increasingly difficultto mitigate the impact of rising costs.

 

**Item 4T.  Controls and Procedures**

 

# *Evaluationof Disclosure Controls and Procedures*

#  

We conducted an evaluation, under the supervision of the ChiefExecutive Officer and Vice President, Finance, Controller (Principal FinancialOfficer), of the effectiveness as of June 30, 2008 of our disclosurecontrols and procedures (as defined in Exchange Act Rule 15d-15(e)). Basedon this evaluation, the Chief Executive Officer and Principal Financial Officerconcluded that, as of June 30, 2008, our disclosure controls andprocedures were effective.

 

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***Changes inInternal Control Over Financial Reporting***

 

There have been no changes in our internalcontrol over financial reporting during the most recently completed fiscalquarter that have materially affected, or are reasonably likely to materiallyaffect, our internal control over financial reporting.

 

**PART II**—**OTHER INFORMATION**

 

**Item 1. Legal Proceedings**

 

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

 

Our company is subject to various otherclaims, pending and possible legal actions for product liability and otherdamages, and other matters arising out of the conduct of our business,including tax uncertainties arising from doing business in various European andLatin American jurisdictions. We believe, based on current knowledge and consultationwith counsel, that the outcome of such claims and actions will not have amaterial adverse effect on our consolidated financial position or results ofoperations.

 

**Item1A.  Risks Related to Our Business**

 

The most significant risk factors applicableto our company are described in Part I, Item 1A “Risk Factors” of ourAnnual Report on Form 10-K for the year ended December 31, 2007.

 

***We may experience production disruptions andcosts that are higher than projected in connection with our CzechPakmanufacturing facility if we cannot negotiate amendments to our currentmanufacturing agreement with Krüger GmbH & Co. KG on a timely basis oron terms favorable to our company***.  We intend to shift a portion of our currentproduction and equipment to this new facility located in the Czech Republicfrom Krüger, our current contract manufacturer located in Germany.  In connection with this transition, we areengaged in discussions with Krüger to amend our current contract manufacturingagreement.  There is no assurance that wewill be able to negotiate amendments to the current agreement on termsfavorable to our company or on a timely basis, and the parties may be requiredto arbitrate any disagreements between them. Any prolonged negotiation or arbitration with Krüger could causedisruptions in production or increase the amount of our projected capitalexpenditures.

 

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

 

The annual meeting of the stockholders of Merisant Worldwide was heldon June 24, 2008 at which the stockholders elected directors and ratifiedthe appointment of BDO Seidman, LLP as Merisant Worldwide’s independentauditor.  The stockholders elected PaulBlock, Robert Albus, Arnold Donald, Gregory Horn, David House, Alec Machielsand Adam Stagliano as directors of Merisant Worldwide for an additionalone-year term by a vote of 8,465,955 shares in favor and no sharesopposed.  All stockholders voting on theissue of the appointment of BDO Seidman, LLP as independent auditor voted infavor of that resolution.

 

On June 24, 2008, Merisant Worldwide, in its capacity as the solestockholder of Merisant, elected Mr. Block, Mr. Albus, Mr. Horn,Mr. House, Mr. Donald, Mr. Machiels and Mr. Stagliano asthe directors of Merisant Company for an additional one-year term.

 

**Item 6. Exhibits**

 
| **Exhibit  No.** | ** ** | **Description**                                                                                     |
|------------------|------------|-----------------------------------------------------------------------------------------------------|
| 31.1             |       | Certificate  of Paul Block pursuant to Rule 15d-14 under the Securities Exchange Act  of 1934. |
|             |       |                                                                                                |
| 31.2             |       | Certificate  of Julie Wool 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 Julie Wool pursuant to 18 U.S.C. Section 1350.                                 |

 

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SIGNATURES

 

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

 
|                       | MERISANT COMPANY |
|----------------------------|------------------|
|                       |             |   |
|                       |             |   |
| Date: August 13, 2008 | By:              | /s/ Julie Wool |
|                       |             | Julie Wool |
|                       |             | Vice President, Finance, Controller |
|                       |             | (on behalf of the Company and in capacity |
|                       |             | of principal financial officer) |

 

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