**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-K**





(Mark
      One)


þ
            Annual
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934 for the fiscal year ended


December
      31, 2005


or


o
            Transition
                report pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934 for the transition period from


to





Commission
      File Number 33-75706


**BPC
      HOLDING CORPORATION**


( *Exact
      name of registrant as specified in its charter* )


Delaware
            35-1813706(State
                or other jurisdiction
              of
                incorporation or organization)
            (IRS
                employer
              identification
                number)





**BERRY
      PLASTICS CORPORATION**


( *Exact
      name of registrant as specified in its charter* )


Delaware
            35-1814673(State
                or other jurisdiction
              of
                incorporation or organization)
            (IRS
                employer
              identification
                number)101
                Oakley Street
              Evansville,
                Indiana
            47710(Address
                of principal executive offices)
            (Zip
                code)








Registrants'
      telephone number, including area code: (812) 424-2904





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





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





Indicate
      by check mark if the registrants are well-known seasoned issuers, as defined
      in
      Rule 405 of the Securities Act. Yes o No þ





Indicate
      by check mark if the registrants are not required to file reports pursuant
      to
      Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
      Yes þ No o





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





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





Indicate
      by check mark whether the registrants are accelerated filers (as defined by
      Rule
      12b-2 of Securities Exchange Act of 1934).


Yes o
      No þ





Indicate
      by check mark whether the registrants are shell companies (as defined in Rule
      12b-2 of the Securities Exchange Act of 1934). Yes o No þ





All of the
      voting stock of the registrants is held by an affiliate of such registrant
      except for 12,064 common shares of BPC Holding Corporation as of March 18,
      2006.
      There is no public trading market for any class of voting stock of BPC Holding
      Corporation or Berry Plastics Corporation.





As
      of
      March 18, 2006, there were outstanding 3,374,351 shares of the Common Stock,
      $.01 par value, of BPC Holding Corporation. As of March 18, 2006, there were
      outstanding 100 shares of the Common Stock, $.01 par value, of Berry Plastics
      Corporation.





**DOCUMENTS
      INCORPORATED BY REFERENCE**


None





-1-





CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS





This
      Form
      10-K includes "forward-looking statements," within the meaning of Section 27A
      of
      the Securities Act and Section 21E of the Securities Exchange Act of 1934,
      as
      amended (the "Exchange Act"), with respect to our financial condition, results
      of operations and business and our expectations or beliefs concerning future
      events. Such statements include, in particular, statements about our plans,
      strategies and prospects under the headings "Management’s Discussion and
      Analysis of Financial Condition and Results of Operations" and "Business."
      You
      can identify certain forward-looking statements by our use of forward-looking
      terminology such as, but not limited to, "believes," "expects," "anticipates,"
      "estimates," "intends," "plans," "targets," "likely," "will," "would," "could"
      and similar expressions that identify forward-looking statements. All
      forward-looking statements involve risks and uncertainties. Many risks and
      uncertainties are inherent in our industry and markets. Others are more specific
      to our operations. The occurrence of the events described and the achievement
      of
      the expected results depend on many events, some or all of which are not
      predictable or within our control. Actual results may differ materially from
      the
      forward-looking statements contained in this Form 10-K. Factors that could
      cause
      actual results to differ materially from those expressed or implied by the
      forward-looking statements include:





·
            changes
                in prices and availability of resin and other raw materials and our
                ability to pass on changes in raw material prices on a timely
                basis;


·
            catastrophic
                loss of one of our key manufacturing
                facilities;


·
            risks
                related to our acquisition strategy and integration of acquired
                businesses;


·
            risks
                associated with our substantial indebtedness and debt
                service;


·
            performance
                of our business and future operating
                results;


·
            risks
                of competition, including foreign competition, in our existing and
                future
                markets;


·
            general
                business and economic conditions, particularly an economic
                downturn;


·
            increases
                in the cost of compliance with laws and regulations, including
                environmental laws and regulations;
                and


·
            the
                factors discussed in the section of this Form 10-K titled “Risk
                Factors.”





Readers
      should carefully review the factors discussed in the section titled “Risk
      Factors” in this Form 10-K and other risk factors identified from time to time
      in our periodic filings with the Securities and Exchange Commission and should
      not place undue reliance on our forward-looking statements. We undertake no
      obligation to update any forward-looking statements to reflect changes in
      underlying assumptions or factors, new information, future events or other
      changes.








-2-





**TABLE
      OF CONTENTS**





**BPC
      HOLDING CORPORATION**


**BERRY
      PLASTICS CORPORATION**





**FORM
      10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005**





PART
                I
            **Page**Item
                1.
            Business
            4Item
                1A.
            Risk
                Factors
            11Item
                1B.
            Unresolved
                Staff Comments
            15Item
                2.
            Properties
            16Item
                3.
            Legal
                Proceedings
            17Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            17PART
                IIItem
                5.
            Market
                for Registrants' Common Equity and Related Stockholder
                Matters
            17Item
                6.
            Selected
                Financial Data
            18Item
                7.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            19Item
                7A.
            Quantitative
                and Qualitative Disclosures About Market Risk
            27Item
                8.
            Financial
                Statements and Supplementary Data
            28Item
                9.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            29Item
                9A.
            Controls
                and Procedures
            29Item
                9B.
            Other
                Information
            29PART
                IIIItem
                10.
            Directors
                and Executive Officers of the Registrants
            30Item
                11.
            Executive
                Compensation
            33Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholders Matters
            35Item
                13.
            Certain
                Relationships and Related Transactions
            37Item
                14.
            Principal
                Accountant Fees and Services
            39PART
                IVItem
                15.
            Exhibits,
                Financial Statement Schedules and Reports on Form 8-K
            40








-3-





**PART
      I**





**Item
      1.** **BUSINESS**





Unless
      the context requires otherwise, references in this Form 10-K to “BPC Holding” or
“Holding” refer to BPC Holding Corporation, references to “we,” “our” or “us”
refer to BPC Holding Corporation together with its consolidated subsidiaries,
      and references to “Berry Plastics” or the “Company” refer to Berry Plastics
      Corporation, a wholly owned subsidiary of BPC Holding Corporation.





**General**





We
      are
      one of the world’s leading manufacturers and suppliers of a diverse mix of rigid
      plastic packaging products. We sell a broad product line to over 12,000
      customers. We concentrate on manufacturing higher quality, value-added products
      sold to image-conscious marketers of institutional and consumer products. We
      believe that our large operating scale, low-cost manufacturing capabilities,
      purchasing leverage, proprietary thermoforming technology and extensive
      collection of over 1,500 active proprietary molds provide us with a competitive
      advantage in the marketplace. We have been able to leverage our broad product
      offering, value-added manufacturing capabilities and long-standing customer
      relationships into leading positions across a number of products. O ur
      top 10
      customers represented
      approximately 30% of our fiscal 2005 net sales with no customer accounting
      for
      more than 7% of our fiscal 2005 net sales. T he
      average length of our relationship with these customers was over 20 years. Our
      products are primarily sold to customers in industries that exhibit relatively
      stable demand characteristics and are considered less sensitive to overall
      economic conditions, such as pharmaceuticals, food, dairy, personal care, and
      health and beauty. Additionally, we operate 25 high-volume manufacturing
      facilities and have extensive distribution capabilities.





In
      2005,
      we reorganized our operations into two reportable segments: rigid open top
      and
      rigid closed top. The realignment occurred in an effort to integrate the
      operations of acquired businesses, better service the Company’s customers, and
      provide a more efficient organization. Prior periods have been restated to
      be
      aligned with the new reporting structure in order to provide comparable results.
      The following table displays our net sales by division for each of the past
      five
      fiscal years. Additional financial information about our business segments
      is
      provided in “Management's Discussion and Analysis of Financial Condition and
      Results of Operations” and the “Notes to Consolidated Financial Statements,”
which are included elsewhere in this Form 10-K.





($
                in millions)
            
            
            **2001**
            
            
            **2002**
            
            
            **2003**
            
            
            **2004**
            
            
            **2005**Rigid
                Open Top
            
            $
            329.3
            
            $
            360.4
            
            $
            404.6
            
            $
            659.2
            
            $
            775.7Rigid
                Closed Top
            
            
            132.4
            
            
            133.9
            
            
            147.3
            
            
            155.0
            
            
            394.0Total
                net sales
            
            $
            461.7
            
            $
            494.3
            
            $
            551.9
            
            $
            814.2
            
            $
            1,169.7





**History**





Imperial
      Plastics was established in 1967 in Evansville, Indiana. Berry Plastics, Inc.
      (“Old Berry”) was formed in 1983 to purchase substantially all of the assets of
      Imperial Plastics. In 1988, Old Berry acquired Gilbert Plastics of New
      Brunswick, New Jersey, a leading manufacturer of aerosol overcaps, and
      subsequently relocated Gilbert Plastics’ production to Old Berry’s Evansville,
      Indiana facility. In 1990, the Company and Holding, the holder of 100% of the
      outstanding capital stock of the Company, were formed to purchase the assets
      of
      Old Berry.





We
      have
      continued to grow both organically and through acquisition by acquiring
      companies that we believed would improve our financial performance in the
      long-term, expand our product lines, or in some cases, provide us with a new
      or
      complementary product line. In 1992, we acquired the assets of the Mammoth
      Containers division of Genpak Corporation. In 1995, we acquired substantially
      all of the assets of Sterling Products, Inc., a producer of injection-molded
      plastic drink cups and lids, and Tri-Plas, Inc., a manufacturer of
      injection-molded containers. In 1997, we acquired (1) certain assets of
      Container Industries, Inc., a manufacturer and marketer of injection-molded
      industrial and pry-off containers, (2) PackerWare Corporation (“PackerWare”), a
      manufacturer and marketer of plastic containers, drink cups, housewares, and
      lawn and garden products, (3) substantially all of the assets of Virginia Design
      Packaging Corp., a manufacturer and marketer of injection-molded containers
      used
      primarily for food packaging, and (4) Venture Packaging, Inc., a manufacturer
      and marketer of injection-molded containers used in the food, dairy and various
      other markets. In 1998, we acquired all of the capital stock of Norwich
      Injection Moulders Limited (now known as Berry Plastics UK Limited) and
      substantially all of the assets of the





-4-





Knight
      Engineering and Plastics Division of Courtaulds Packaging Inc., a manufacturer
      of aerosol overcaps. In 1999, we acquired all
      of
      the outstanding capital stock of CPI Holding Corporation, the parent company
      of
      Cardinal Packaging, Inc., a manufacturer and marketer of open-top
      containers .
      In
      2000, we acquired all of the outstanding capital stock of (1) Poly-Seal
      Corporation (“Poly-Seal”), a manufacturer and marketer of closures and (2)
      Capsol S.p.a. (now known as Capsol Berry Plastics S.p.a.), a manufacturer and
      marketer of aerosol overcaps and closures. In 2001, we acquired all of the
      outstanding capital stock of Pescor Plastics, Inc., a manufacturer and marketer
      of drink cups, and in 2002, we acquired the Alcoa Flexible Packaging injection
      molding assets from Mount Vernon Plastics Corporation. In 2003, we acquired
      (1)
      the 400 series continuous threaded injection molded closure assets from CCL
      Plastic Packaging, (2) the injection molded overcap lid assets from APM Inc.,
      and (3) all of the outstanding capital stock of Landis Plastics, Inc. (the
      “Landis Acquisition”), a manufacturer and marketer of open-top
      containers.





On
      April
      11, 2005, a subsidiary of Berry, Berry Plastics de México, S. de R.L. de C.V.,
      acquired all of the injection molding aerosol overcap and closure assets from
      Euromex Plastics, S.A. de C.V. (“Euromex”), an injection molding manufacturer
      located in Toluca, Mexico (the “Mexico Acquisition”), for aggregate
      consideration of approximately $8.2 million. The purchase was financed through
      borrowings under the Company’s revolving line of credit and cash on hand. The
      operations from the Mexico Acquisition are included in Berry’s operations since
      the acquisition date.





On
      June
      3, 2005, Berry acquired Kerr Group, Inc. (“Kerr”), a manufacturer and marketer
      of closures, bottles, vials, and tubes, for aggregate consideration of
      approximately $455.8 million (the “Kerr Acquisition”), including direct costs
      associated with the acquisition. The operations from the Kerr Acquisition are
      included in Berry’s operations since the acquisition date. The purchase price
      was financed through additional term loan borrowings under an amendment to
      Berry’s senior secured credit facility and cash on hand.





**Merger**





On
      July
      22, 2002, GS Berry Acquisition Corp., (the “Buyer”) a newly formed entity
      controlled by various private equity funds affiliated with Goldman, Sachs &
Co., merged (the "Merger") with and into Holding, pursuant to an agreement
      and
      plan of merger, dated as of May 25, 2002. At the effective time of the Merger,
      (1) each share of common stock of Holding issued and outstanding immediately
      prior to the effective time of the Merger was converted into the right to
      receive cash pursuant to the terms of the merger agreement, and (2) each share
      of common stock of the Buyer issued and outstanding immediately prior to the
      effective time of the Merger was converted into one share of common stock of
      Holding. Additionally, in connection with the Merger, we retired all of
      Holding’s senior secured notes and Berry Plastics’ senior subordinated notes,
      repaid all amounts owed under our credit facilities, redeemed all of the
      outstanding preferred stock of Holding, entered into a new credit facility
      and
      completed an offering of new senior subordinated notes of Berry Plastics.
      Immediately following the Merger, private equity funds affiliated with Goldman
      Sachs owned approximately 63% of the outstanding common stock of Holding,
      private equity funds affiliated with J.P. Morgan Chase & Co. owned
      approximately 29% and members of our management owned the remaining
      8%.





**Product
      Overview**





We
      organize our business into two operating divisions: rigid open top and rigid
      closed top.





*Rigid
      Open Top*





Our
      rigid
      open top division is comprised of several product categories including
      containers, drink cups, and housewares. We classify our containers into five
      product lines: thinwall/polypropylene, pry-off, dairy, industrial and specialty.
      The largest end-uses for our containers are food products, building products,
      chemicals and dairy products. We
      believe that we offer the broadest product line among U.S.-based
      injection-molded plastic container manufacturers as well as numerous
      thermoformed container offerings. Our container capacities range from 4 ounces
      to 5 gallons and are offered in various styles with accompanying lids, bails
      and
      handles, some of which we produce, as well as a wide array of decorating
      options. In addition to a complete product line, we have sophisticated printing
      capabilities, in-house graphic arts and tooling departments, low-cost
      manufacturing capability with plants strategically located throughout the United
      States and a dedication to high-quality products and customer service. Our
      product engineers work with customers to design and commercialize new
      containers. In addition, as part of our dedication to customer service, on
      occasion, we provide filling machine equipment to some of our customers,
      primarily in the dairy market, and we also provide the services necessary to
      operate such equipment. We believe providing such equipment and services
      increases customer retention by increasing the customer’s production efficiency.
      The cost of, and revenue from, such equipment and services is not material.





-5-








We
      service several large food and dairy customers and their branded products.
      Additionally, we seek to develop niche container products and new applications
      by taking advantage of our state-of-the-art decorating and graphic arts
      capabilities and dedication to service and quality. We believe that these
      capabilities have given us a significant competitive advantage in certain
      high-margin niche container applications for specialized products. In order
      to
      identify new applications for existing products, we rely extensively on our
      national sales force. Once these opportunities are identified, our sales force
      works with our product design engineers to satisfy customers’ needs.





We
      also
      believe that we are the largest provider of injection-molded plastic drink
      cups
      in the United States. We produce injection-molded plastic cups that range in
      size from 12 to 64 ounces. Additionally, we launched our thermoformed drink
      cup
      line in fiscal 2001. Since then, we have become the largest supplier of
      32 ounce or larger thermoformed polypropylene drink cups. Our thermoformed
      drink cup product line offers sizes ranging from 12 to 44 ounces. Our thermoform
      process uses polypropylene instead of more expensive polystyrene in producing
      deep draw drink cups. This offers a material competitive advantage versus
      thermoformed polystyrene drink cups. Primary markets for our plastic drink
      cups
      are quick service and family dining restaurants, convenience stores, stadiums
      and retail stores. Many of our cups are decorated, often as promotional items,
      and we believe we have a reputation in the industry for innovative,
      state-of-the-art graphics capability.





Our
      participation in the housewares market is primarily focused on producing
      semi-disposable plastic housewares and plastic garden products. Examples of
      our
      products include plates, bowls, pitchers, tumblers and outdoor flowerpots.
      We
      sell virtually all of our products in this market through major national retail
      marketers and national chain stores, such as Wal-Mart. PackerWare is our
      recognized brand name in these markets and PackerWare branded products are
      often
      co-branded by our customers. Our strategy in this market has been to provide
      high value to consumers at a relatively modest price, consistent with the key
      price points of the retail marketers. We believe outstanding service and the
      ability to deliver products with timely combination of color and design further
      enhance our position in this market. This focus allowed PackerWare to be named
      Wal-Mart’s category manager for its seasonal housewares department.





We
      have a
      diverse customer base for our rigid open top products, and no single rigid
      open
      top customer exceeded 7% of our total net sales in fiscal 2005. Our primary
      competitors include Airlite,
      Polytainers, Letica,
      Huhtamaki, Solo,
      and Radnor
      Holdings .
      These
      competitors individually only compete on certain of our rigid open top products.





*Rigid
      Closed Top*





Our
      rigid
      closed top division is comprised of several product categories including aerosol
      overcaps, closures, bottles, vials, and tubes. We believe that this line of
      products gives us a competitive advantage in being able to provide a complete
      package (bottle with closure or tube with closure) to our customers. Our design
      center and product development engineers combined with our world class
      manufacturing facilities, gives us the ability to take any project from concept
      to end product. We utilize the latest in manufacturing technology, from mold
      design to vision systems, to meet our high quality standards
      consistently.





We
      believe that we are the worldwide leading producer of injection-molded aerosol
      overcaps. Our aerosol overcaps are used in a wide variety of consumer goods
      including spray paints, household and personal care products, insecticides
      and
      numerous other commercial and consumer products. Most U.S. manufacturers of
      aerosol products, and companies that fill aerosol products on a contractual
      basis, are our customers for some portion of their needs. We believe that,
      over
      the years, we have developed several significant competitive advantages in
      this
      market, including (1) a reputation for outstanding quality, (2) short lead-time
      requirements to fill customer orders, (3) long-standing relationships with
      major
      customers, (4) the ability to accurately reproduce colors, (5) proprietary
      packing technology that minimizes freight cost and warehouse space, (6)
      high-speed, low-cost molding and decorating capability and (7) a broad product
      line of proprietary molds. We continue to develop new products in the overcap
      market with special decoration and functional features.





We
      believe our combined product line offerings to the closures market establish
      us
      as a leading provider of injection and compression molded closures. Our product
      line offerings include continuous thread, dispensing, tamper evident and child
      resistant closures. We currently sell our closures into many end markets,
      including (1) pharmaceutical, (2) vitamin and nutritional, (3), prescription,
      (4) hot fill beverages, (5) distilled spirits, (6) spices, (7) dressings /
      sauces, (8) dairy, and (9) personal care. In addition to traditional closures,
      we are a leading provider of (1) fitments and plugs for medical applications,
      (2) cups and spouts for liquid laundry detergent, (3) dropper bulb assemblies
      for medical and personal care applications, (4) jiggers for mouthwash products,
      and (5) custom packaging. We are a major provider of closures to many of the
      leading companies in these markets. We believe our technical capabilities and
      expertise provide competitive





-6-





advantages,
      including the latest in single and bi-injection technology, molding of
      thermoplastic and thermoset resins, and compression molding of thermoplastic
      resins. In addition, we also utilize state of the art lining, assembly, and
      decorating equipment in secondary operations. We have a strong reputation for
      quality and have received numerous “Supplier Quality Achievement Awards” from
      customers in different markets.





Our
      bottle business targets similar markets as our closure business. We believe
      we
      are the leading supplier of spice containers in the United States. We also
      have
      a leadership position in various vitamin and nutritional markets, as well as
      selling bottles into prescription and pharmaceutical applications. We also
      offer
      a variety of personal care packages, and see the personal care market as a
      strong opportunity to grow our business. While offering a set of stock bottles
      in the vitamin and nutritional markets, we also work with key customers on
      customized bottle designs to provide differentiation from traditional packages.
      We believe our bottle segment should see continued growth in the healthcare
      product line, as the patented Tab II® product offering gains popularity. Our
      strong product offerings in continuous threaded, child-resistant, and
      tamper-evident closures, make “one-stop” shopping available to many key
      customers. Our bottles are manufactured in high density polyethylene (“HDPE”)
      and polyethylene terephthalate (“PET”), and utilize injection blow-molding,
      stretch blow-molding, and extrusion blow-molding technology. We offer our
      customers decorated bottles with hot stamping, silk screening and labeling.





Additionally,
      w e
      are a
      leading supplier in the prescription vial market. We believe our variety of
      product offerings and designs put us in a strong position to compete in this
      steadily growing market segment. We supply a complete line of amber plastic
      vials and offer customers both one-piece and two-piece child resistant caps.
      Our
      design capabilities, along with internal engineering strength also give us
      the
      ability to compete on customized prescription designs. As a result, regardless
      of the desires of any major pharmacy, stock package or custom package, we have
      the ability to supply. Our customer base includes some of the largest pharmacy
      chains in the United States and Canada, as well as servicing local pharmacies,
      primarily through distributors.





We
      also
      believe that we are the largest supplier of plastic squeeze tubes in the United
      States. We offer a complete line of tubes from 1⁄2” to 2 3/16” in diameter. Our
      focus has been to insure that we are able to meet the increasing trend towards
      large diameter tubes with high end decoration. The majority of our tubes are
      sold in the personal care market, focusing on products like facial/cold creams,
      shampoos, conditioners, bath/shower gels, lotions, sun care, hair gels, and
      anti
      aging creams. We also sell our tubes into the pharmaceutical and household
      chemical markets. We believe that our ability to provide creative package
      designs, with state of the art decorating, combined with a complementary line
      of
      dispensing closures, makes us a preferred supplier for many customers in our
      target markets.





We
      have a
      diverse customer base for our rigid closed top products, and no single rigid
      closed top customer exceeded 2% of our total net sales in fiscal 2005. Our
      primary competitors include Owens-Illinois, Rexam, Alcoa, Silgan, Phoenix,
      Seaquist, Cebal, Graham Packaging, and Grafco .
      These
      competitors individually only compete on certain of our rigid closed top
      products





**Marketing
      and Sales**





We
      reach
      our large and diversified base of customers primarily through our direct field
      sales force of over 100 dedicated professionals. Our field sales, production
      and
      support staff meet with customers to understand their needs and improve our
      product offerings and services. While certain of these field sales
      representatives are focused on individual product lines, our entire team is
      encouraged to sell all of our products to serve the needs of our customers.
      We
      believe that a direct field sales force is able to better focus on target
      markets and customers, with the added benefit of permitting us to control
      pricing decisions centrally. We also utilize the services of third party
      manufacturing representatives to assist our direct sales force. Highly skilled
      customer service representatives are strategically located throughout our
      facilities to support the national field sales force. In addition, telemarketing
      representatives, marketing managers and sales/marketing executives oversee
      the
      marketing and sales efforts. Manufacturing and engineering personnel work
      closely with field sales personnel to satisfy customers’ needs through the
      production of high-quality, value-added products and on-time
      deliveries.





Our
      sales
      force is also supported by technical specialists and our in-house graphics
      and
      design personnel. Our graphic arts department includes computer-assisted graphic
      design capabilities and in-house production of photopolymer printing plates.
      We
      also have a centralized color matching and materials blending department that
      utilizes a computerized spectrophotometer to insure that colors match those
      requested by customers.





-7-





**Manufacturing**





We
      manufacture our products utilizing several primary molding methods including:
      injection, thermoforming, compression, tube extrusion, and blow molding. These
      processes begin with raw plastic pellets which are then converted into finished
      products. In the injection process, the raw pellets are melted to a liquid
      state
      and injected into a multi-cavity steel mold where the resin is allowed to
      solidify to take the final shape of the part. In the thermoform process, the
      raw
      resin is softened to the point where sheets of material are drawn into
      multi-cavity molds and formed over the molds to form the desired shape.
      Compression molding is a high speed process that begins with a continuously
      extruded plastic melt stream that is cut while remaining at molding temperature
      and carried to the mold cavity. Independent mold cavities close around the
      molten plastic, compressing it to form the part which is cooled and ejected.
      The
      parts are then transferred to slitters, folders and lining equipment. In the
      tube extrusion process, we extrude resin that is solidified in the shape of
      a
      tube and then cut to length. The tube then has the head added by using another
      extruder that extrudes molten resin into a steel die where the cut tube is
      inserted into the steel die. In blow molding we use three blow molding systems:
      injection, extrusion, and stretch blow. Injection blow molding involves
      injecting molten resin into a multiple cavity steel die and allowing it to
      solidify into a preform. The parts are then indexed to a blow station where
      high
      pressure air is used to form the preform into the bottle. In extrusion blow
      molding, we extrude molten plastic into a long tube and then aluminum dies
      clamp
      around the tube and high pressure air is used to form the bottle. In stretch
      blow molding, we inject molten plastic into a multi-cavity steel mold where
      the
      parts are allowed to cool in the mold until they are solidified. The parts
      are
      then brought to a stretch blow molding machine where they are reheated and
      then
      placed in aluminum dies where high pressure air is used to form the
      bottle.





The
      final
      cured parts are transferred from the primary molding process to corrugated
      containers for shipment to customers or for post-molding secondary operations
      (offset printing, labeling, lining, silkscreening, handle applications, etc.).
      We believe that our molding, handling, and post-molding capabilities are among
      the best in the industry. Our overall manufacturing philosophy is to be a
      low-cost producer by using (1) high-speed molding machines, (2) modern
      multi-cavity hot runner, cold runner and insulated runner molds, (3) extensive
      material handling automation and (4) sophisticated post-molding technology.
      We
      utilize state-of-the-art robotic packaging processes for large volume products,
      which enable us to reduce breakage while lowering warehousing and shipping
      costs. Each plant has maintenance capability to support molding and post-molding
      operations. We have historically made, and intend to continue to make,
      significant capital investments in plant and equipment because of our objectives
      to improve productivity, maintain competitive advantages and foster continued
      growth. Over the past five fiscal years, our capital expenditures in plant
      and
      equipment, exclusive of acquisitions, were $201.9 million in
      aggregate.





**Product
      Development and Design**





We
      believe our technology base and research and development support are among
      the
      best in the rigid plastics packaging industry. Using three-dimensional computer
      aided design technology, our full time product designers develop innovative
      product designs and models for the packaging market. We can simulate the molding
      environment by running unit-cavity prototype molds in small injection-molding
      machines for research and development of new products. Production molds are
      then
      designed and outsourced for production by various companies with which we have
      extensive experience and established relationships or built by one of our two
      in-house tooling divisions located in Evansville and Chicago. Our engineers
      oversee the mold-building process from start to finish. Many of our customers
      work in partnership with our technical representatives to develop new, more
      competitive products. We have enhanced our relationships with these customers
      by
      providing the technical service needed to develop products combined with our
      internal graphic arts support.





Additionally,
      at our technical center in Lancaster, Pennsylvania, we prototype new ideas,
      conduct research and development of new products and processes, and qualify
      production molding systems that go directly to our facilities and into
      production. We also have a complete product testing and quality laboratory
      at
      our technical center. With this combination of manufacturing simulation and
      quality systems support we are able to improve time to market and reduce
      cost. We spent
      $6.1 million, $3.8 million and $3.5 million on research and development in
      2005,
      2004, and 2003 respectively.





We
      also
      utilize our in-house graphic design department to develop color and styles
      for
      new products. Our design professionals work directly with our customers to
      develop new styles and use computer-generated graphics to enable our customers
      to visualize the finished product.





-8-





**Quality
      Assurance**





Each
      plant extensively utilizes Total Quality Management philosophies, including
      the
      use of statistical process control and extensive involvement of employee teams
      to increase productivity. This teamwork approach to problem-solving increases
      employee participation and provides necessary training at all levels. Our teams
      also utilize the Six Sigma methodology to improve internal processes and provide
      a systematic approach to problem solving resulting in improved customer service.
      The drive for team work and continuous improvement is an ongoing quality focus.
      All of our facilities are ISO9001/2000 certified or are working toward such
      certification. Certification requires a demonstrated compliance by a company
      with a set of shipping, trading and technology standards promulgated by the
      International Organization for Standardization ("ISO"). Extensive testing of
      parts for size, color, strength and material quality using statistical process
      control techniques and sophisticated technology is also an ongoing part of
      our
      quality assurance activities.





**Systems** ****





All
      of
      our facilities are on the same integrated accounting and control system that
      allows for consistency in reporting and efficient consolidation. This system
      produces complete financial and operational reports and is expandable to add
      new
      features and/or locations as we grow. This system also contains fully integrated
      computer software systems for manufacturing applications. All of our facilities,
      excluding the Milan facility and five of the Kerr facilities, utilize the
      manufacturing applications of the system. The five remaining Kerr facilities
      are
      scheduled to be converted to the manufacturing applications of the system by
      the
      end of fiscal 2006. We also utilize many other applications to support business
      processes.





**Sources
      and Availability of Raw Materials**





The
      most
      important raw material purchased by us is plastic resin. We purchased
      approximately $385.0 million of resin in fiscal 2005 with approximately 23%
      of
      our resin pounds, on a pro forma basis, being HDPE, 11% low density
      polyethylene, 62% polypropylene (“PP”), 3% PET and 1% other. We have contractual
      price escalators and de-escalators tied to the price of resin with customers
      representing approximately 60% of net sales that result in price
      increases/decreases to these customers in a relatively short period of time,
      typically quarterly. In addition, we have historically had success in passing
      through price increases and decreases in the price of resin to customers without
      indexed price agreements. For example, in fiscal 2005, our net sales increased
      by $355.5 million over fiscal 2004, of which approximately $89.5 million was
      attributable to increased selling prices. This occurred in an environment of
      rapidly escalating resin prices. Less than 10% of our net sales are generated
      from fixed-price arrangements, and we have at times and may continue to enter
      into negotiated purchase agreements with resin suppliers related to these fixed
      price arrangements. Due to the volatility in the resin markets, in the fourth
      quarter of 2004 we entered into resin forward hedging transactions with respect
      to approximately 15% of our estimated 2005 resin needs and 10% of our 2006
      estimated resin needs based on 2004 volumes prior to the Kerr Acquisition.
      We
      can further seek to mitigate the effect of resin price movements through our
      ability to accommodate raw material switching for certain products between
      HDPE
      and PP as prices fluctuate and reducing the quantity of resin in certain of
      our
      products. Based on information from Plastics News, an industry publication,
      prices of HDPE and PP on December 31, 2005 were $0.765 per pound and $0.875
      per
      pound, respectively, reflecting increases of $0.11 per pound, or 17%, and $0.235
      per pound, or 37%, over the respective prices from January 1, 2005.





Our
      plastic resin purchasing strategy is to deal with only high-quality, dependable
      suppliers, such as Dow, Basell,
      Nova, Total, Lyondell, Chevron,
      ExxonMobil, Sunoco, and Huntsman .
      Although we do not have any supply requirements contracts with our key
      suppliers, we believe that we have maintained strong relationships with these
      key suppliers and expect that such relationships will continue into the
      foreseeable future. Based on our experience, we believe that adequate quantities
      of plastic resins will be available at market prices, but we can give you no
      assurances as to such availability or the prices thereof.





**Employees**





At
      the
      end of fiscal 2005, we had approximately 6,800 employees. Poly-Seal Corporation,
      a wholly owned subsidiary, and the United Steelworkers of America are parties
      to
      a collective bargaining agreement which expires in April 2009. At the end of
      fiscal 2005, approximately 300 employees of Poly-Seal Corporation, all of which
      are located in our Baltimore facility, were covered by this agreement. None
      of
      our other domestic employees are covered by collective bargaining agreements.
      We
      believe our relations with our employees are good.





-9-





**Patents
      and Trademarks**





We
      rely
      on a combination of patents, trade secrets, unpatented know-how, trademarks,
      copyrights and other intellectual property rights, nondisclosure agreements
      and
      other protective measures to protect our proprietary rights. We do not believe
      that any individual item of our intellectual property portfolio is material
      to
      our current business. We employ various methods, including confidentiality
      and
      non-disclosure agreements with third parties, employees and consultants, to
      protect our trade secrets and know-how. We have licensed, and may license in
      the
      future, patents, trademarks, trade secrets, and similar proprietary rights
      to
      and from third parties.





**Environmental
      Matters and Government Regulation**





Our
      past
      and present operations and our past and present ownership and operations of
      real
      property are subject to extensive and changing federal, state, local and foreign
      environmental laws and regulations pertaining to the discharge of materials
      into
      the environment, the handling and disposition of wastes or otherwise relating
      to
      the protection of the environment. We believe that we are in substantial
      compliance with applicable environmental laws and regulations. However, we
      cannot predict with any certainty that we will not in the future incur liability
      under environmental statutes and regulations with respect to non-compliance
      with
      environmental laws, contamination of sites formerly or currently owned or
      operated by us (including contamination caused by prior owners and operators
      of
      such sites) or the off-site disposal of hazardous substances.





Like
      any
      manufacturer, we are subject to the possibility that we may receive notices
      of
      potential liability in connection with materials that were sent to third-party
      recycling, treatment, and/or disposal facilities under the Comprehensive
      Environmental Response, Compensation and Liability Act (“CERCLA”), and
      comparable state statutes, which impose liability for investigation and
      remediation of contamination without regard to fault or the legality of the
      conduct that contributed to the contamination. Liability under CERCLA is
      retroactive, and liability for the entire cost of a cleanup can be imposed
      on
      any responsible party. No such notices are currently pending.





The
      Food
      and Drug Administration (“FDA”) regulates the material content of direct-contact
      food and drug packages, including certain packages we manufacture pursuant
      to
      the Federal Food, Drug and Cosmetics Act. Certain of our products are also
      regulated by the Consumer Product Safety Commission ("CPSC") pursuant to various
      federal laws, including the Consumer Product Safety Act and the Poison
      Prevention Packaging Act. Both the FDA and the CPSC can require the manufacturer
      of defective products to repurchase or recall such products and may also impose
      fines or penalties on the manufacturer. Similar laws exist in some states,
      cities and other countries in which we sell our products. In addition, laws
      exist in certain states restricting the sale of packaging with certain levels
      of
      heavy metals, imposing fines and penalties for non-compliance. Although we
      use
      FDA approved resins and pigments in our products that directly contact food
      and
      drug products and believe they are in material compliance with all such
      applicable FDA regulations, and we believe our products are in material
      compliance with all applicable requirements, we remain subject to the risk
      that
      our products could be found not to be in compliance with such
      requirements.





The
      plastics industry, including us, is subject to existing and potential federal,
      state, local and foreign legislation designed to reduce solid wastes by
      requiring, among other things, plastics to be degradable in landfills, minimum
      levels of recycled content, various recycling requirements, disposal fees and
      limits on the use of plastic products. In particular, certain states have
      enacted legislation requiring products packaged in rigid plastic containers
      to
      comply with standards intended to encourage recycling and increased use of
      recycled materials. In addition, various consumer and special interest groups
      have lobbied from time to time for the implementation of these and other similar
      measures. We believe that the legislation promulgated to date and such
      initiatives to date have not had a material adverse effect on us. There can
      be
      no assurance that any such future legislative or regulatory efforts or future
      initiatives would not have a material adverse effect on us.





**Available
      Information**





We
      make
      available, free of charge, our annual reports on Form 10-K, quarterly reports
      on
      Form 10-Q, current reports on Form 8-K and amendments, if any, to those reports
      through our Internet website as soon as practicable after they have been
      electronically filed with or furnished to the SEC. Our internet address is
      www.berryplastics.com. The information contained on our website is not being
      incorporated herein. We
      are
      currently in the process of finalizing our Code of Ethics.





-10-





**Item
      1A.**  **RISK
      FACTORS**





*We
      have substantial debt and we may incur substantially more debt, which could
      affect our ability to meet our debt obligations and may otherwise restrict
      our
      activities.*





We
      have
      substantial debt, and we may incur substantial additional debt in the future.
      As
      of December 31, 2005, we had total indebtedness of approximately $1,160.6
      million, excluding $14.7 million in letters of credit under our revolving credit
      facility and, subject to certain conditions to borrowing, $135.3 million
      available for future borrowings under our revolving credit facility.





Our
      substantial debt could have important consequences to you. For example, it
      could:





·
            require
                us to dedicate a substantial portion of our cash flow to payments
                on our
                indebtedness, which would reduce the amount of cash flow available
                to fund
                working capital, capital expenditures, product development and other
                corporate requirements;


·
            increase
                our vulnerability to general adverse economic and industry conditions,
                including changes in raw material
                costs;


·
            limit
                our ability to respond to business
                opportunities;


·
            limit
                our ability to borrow additional funds, which may be necessary;
                or


·
            subject
                us to financial and other restrictive covenants, which, if we fail
                to
                comply with these covenants and our failure is not waived or cured,
                could
                result in an event of default under our
                debt.





*To
      service our debt, we will require a significant amount of cash. Our ability
      to
      generate cash depends on many factors beyond our control.*





Our
      ability to make payments on our debt, and to fund planned capital expenditures
      and research and development efforts will depend on our ability to generate
      cash
      in the future. This, to an extent, is subject to general economic, financial,
      competitive, legislative, regulatory and other factors, including those
      described in this section, that are beyond our control. We cannot assure you
      that our business will generate sufficient cash flow from operations or that
      future borrowings will be available to us under our new senior secured credit
      facilities in an amount sufficient to enable us to pay our debt, or to fund
      our
      other liquidity needs. We may need to refinance all or a portion of our
      indebtedness, on or before maturity. We cannot assure you that we will be able
      to refinance any of our debt, including our new senior secured credit
      facilities, on commercially reasonable terms or at all.





*The
      agreements governing our debt impose restrictions on our
      business.*





The Indenture
      dated as of July 22, 2002, as supplemented (the “Indenture”), among the Company,
      Holding, all of its direct and indirect domestic subsidiaries, and U.S. Bank
      Trust National Association, as Trustee (“U.S. Bank”) and
      the Third
      Amendment to the Second Amended and Restated Credit Agreement (the “New Credit
      Facility”) contain
      a
      number of covenants imposing significant restrictions on our business. These
      restrictions may affect our ability to operate our business and may limit our
      ability to take advantage of potential business opportunities as they arise.
      The
      restrictions these covenants place on us and our restricted subsidiaries include
      limitations on our ability and the ability of our restricted subsidiaries
      to:





·
            incur
                indebtedness or issue preferred
                shares;


·
            pay
                dividends or make distributions in respect of our capital stock or
                to make
                certain other restricted payments;


·
            create
                liens;


·
            agree
                to payment restrictions affecting our restricted
                subsidiaries;


·
            make
                acquisitions;


·
            consolidate,
                merge, sell or lease all or substantially all of our
                assets;


·
            enter
                into transactions with our affiliates;
                or


·
            designate
                our subsidiaries as unrestricted
                subsidiaries.





Our
      New
      Credit Facility also requires us to meet a number of financial ratios. Our
      ability to comply with covenants and financial ratios under these debt
      agreements may be affected by events beyond our control, including prevailing
      economic, financial and industry conditions and are subject to the risks in
      this
      "Risk Factors" section. The breach of any





-11-





of
      these
      covenants or restrictions could result in a default under the Indenture or
      the
      New Credit Facility. An event of default under our debt agreements would permit
      some of our lenders to declare all amounts borrowed from them to be immediately
      due and payable. If we were unable to repay debt to our lenders, these lenders
      could proceed against the collateral securing that debt.





*We
      do
      not have guaranteed supply or fixed-price contracts with plastic resin
      suppliers.*





We
      source
      plastic resin primarily from major industry suppliers such as Dow, Basell,
      Nova, Total, Lyondell, Chevron,
      ExxonMobil, Sunoco, and Huntsman .
      We have
      long-standing relationships with certain of these suppliers but have not entered
      into a firm supply contract with any of our resin vendors. We may not be able
      to
      arrange for other sources of resin in the event of an industry-wide general
      shortage of resins used by us, or a shortage or discontinuation of certain
      types
      of grades of resin purchased from one or more of our suppliers. Any such
      shortage may materially negatively impact our competitive position versus
      companies that are able to better or more cheaply source resin. Additionally,
      we
      may be subject to significant increases in prices that may materially impact
      our
      financial condition. Over the past several years, we have at times experienced
      rapidly increasing resin prices primarily due to the increased cost of oil
      and
      natural gas. Due to the extent and rapid nature of these increases, we cannot
      reasonably estimate the extent to which we will be able to successfully recover
      these cost increases in the short-term. If rapidly increasing resin prices
      occur, our revenue and/or profitability may be materially and adversely
      affected, both in the short-term as we attempt to pass through changes in the
      costs of resin to customers under current agreements and in the longer term
      as
      we negotiate new agreements or if our customers seek product
      substitution.





*If
      market conditions do not permit us to pass on the cost of plastic resins to
      our
      customers on a timely basis, or at all, our financial condition and results
      of
      operations could suffer materially.*





To
      produce our products we use large quantities of plastic resins, which in fiscal
      2005 cost us approximately $385.0 million, or 41% of our total cost of goods
      sold. Plastic resins are subject to cyclical price fluctuations, including
      those
      arising from supply shortages and changes in the prices of natural gas, crude
      oil and other petrochemical intermediates from which resins are produced. The
      instability in the world markets for oil and natural gas could materially
      adversely affect the prices and general availability of raw materials quickly. Based
      on
      information from Plastics News, an industry publication, prices of HDPE and
      PP
      on December 31, 2005 were $0.765 per pound and $0.875 per pound, respectively,
      reflecting increases of $0.11 per pound, or 17%, and $0.235 per pound, or 37%,
      over the respective prices from January 1, 2005. Historically, we have generally been able to pass on a significant portion
      of
      the increases in resin prices to our customers over a period of time, but even
      in such cases there have been negative short-term impacts to our financial
      performance. Certain of our customers (currently fewer than 10% of our net
      sales) purchase our products pursuant to fixed-price arrangements in respect
      of
      which we have at times and may continue to enter into hedging or similar
      arrangements. In the future, we may not be able to pass on substantially all
      of
      the increases in resin prices to our customers on a timely basis, if at all,
      which may have a material adverse effect on our competitive position and
      financial performance.





*We
      may not be able to compete successfully and our customers may not continue
      to
      purchase our products.*





We
      face
      intense competition in the sale of our products. We compete with multiple
      companies in each of our product lines, including divisions or subsidiaries
      of
      larger companies and foreign competitors with lower cost structures. We compete
      on the basis of a number of considerations, including price, service, quality,
      product characteristics and the ability to supply products to customers in
      a
      timely manner. Our products also compete with metal and glass, paper and other
      packaging materials as well as plastic packaging materials made through
      different manufacturing processes. Many of our product lines also compete with
      plastic products in other lines and segments. Some of these competitive products
      are not subject to the impact of changes in resin prices which may significantly
      negatively impact our competitive position versus substitute products. Our
      competitors may have financial and other resources that are substantially
      greater than ours and may be better able than us to withstand price competition.
      In addition, some of our customers do and could in the future choose to
      manufacture the products they require for themselves. Each of our product lines
      faces a different competitive landscape. We may not be able to compete
      successfully with respect to any of the foregoing factors. Competition could
      result in our products losing market share or our having to reduce our prices,
      either of which would have a material adverse effect on our business and results
      of operations and financial condition. In addition, since we do not have
      long-term arrangements with many of our customers, these competitive factors
      could cause our customers to shift suppliers and/or packaging material
      quickly.





-12-








*In
      the event of a catastrophic loss of one of our key manufacturing facilities,
      our
      business would be adversely affected.*





While
      we
      maintain insurance covering our facilities, including business interruption
      insurance, a catastrophic loss of the use of all or a portion of one of our
      key
      manufacturing facilities due to accident, labor issues, weather conditions,
      other natural disaster or otherwise, whether short or long-term, could have
      a
      material adverse effect on us.





*Our
      acquisition strategy may be unsuccessful.*





As
      part
      of our growth strategy, we plan to pursue the acquisition of other companies,
      assets and product lines that either complement or expand our existing business.
      We cannot assure you that we will be able to consummate any such transactions
      at
      all or that any future acquisitions will be able to be consummated at acceptable
      prices and terms. We continually evaluate potential acquisition opportunities
      in
      the ordinary course of business, including those that could be material in
      size
      and scope. Acquisitions involve a number of special risks and factors,
      including:





·
            the
                focus of management’s attention to the assimilation of the acquired
                companies and their employees and on the management of expanding
                operations;


·
            the
                incorporation of acquired products into our product
                line;


·
            the
                increasing demands on our operational
                systems;


·
            adverse
                effects on our reported operating results;
                and


·
            the
                loss of key employees and the difficulty of presenting a unified
                corporate
                image.





We
      may be
      unable to make appropriate acquisitions because of competition for the specific
      acquisition. In pursuing acquisitions, we compete against other plastic product
      manufacturers, some of which are larger than we are and have greater financial
      and other resources than we have. We compete for potential acquisitions based
      on
      a number of factors, including price, terms and conditions, size and ability
      to
      offer cash, stock or other forms of consideration. Increased competition for
      acquisition candidates could result in fewer acquisition opportunities for
      us
      and higher acquisition prices. As a company without public equity, we may not
      be
      able to offer attractive equity to potential sellers. Additionally, our
      acquisition strategy may result in significant increases in our outstanding
      indebtedness and debt service requirements. In addition, the negotiation of
      potential acquisitions may require members of management to divert their time
      and resources away from our operations.





We
      may
      become responsible for unexpected liabilities that we failed or were unable
      to
      discover in the course of performing due diligence in connection with historical
      acquisitions and any future acquisitions. We have typically required the selling
      stockholders to indemnify us against certain undisclosed liabilities. However,
      we cannot assure you that the indemnification, even if obtained, will be
      enforceable, collectible or sufficient in amount, scope or duration to fully
      offset the possible liabilities associated with the business or property
      acquired. Any of these liabilities, individually or in the aggregate, could
      have
      a material adverse effect on our business, financial condition and results
      of
      operations.





*The
      integration of acquired businesses may result in substantial costs, delays
      or
      other problems.*





We
      may
      not be able to successfully integrate future acquisitions without substantial
      costs, delays or other problems. We will have to continue to expend substantial
      managerial, operating, financial and other resources to integrate our
      businesses. The costs of such integration could have a material adverse effect
      on our operating results and financial condition. Such costs include
      non-recurring acquisition costs including accounting and legal fees, investment
      banking fees, recognition of transaction-related obligations, plant closing
      and
      similar costs and various other acquisition-related costs. In addition, although
      we conduct what we believe to be a prudent level of investigation regarding
      the
      businesses we purchase, in light of the circumstances of each transaction,
      an
      unavoidable level of risk remains regarding the actual condition of these
      businesses. Until we actually assume operating control of such business assets
      and their operations, we may not be able to ascertain the actual value or
      understand the potential liabilities of the acquired entities and their
      operations. Once we acquire a business, we are faced with risks,
      including:





·
            the
                possibility that it will be difficult to integrate the operations
                into our
                other operations;


·
            the
                possibility that we have acquired substantial undisclosed
                liabilities;


·
            the
                risks of entering markets or offering services for which we have
                no prior
                experience; and


·
            the
                potential loss of customers as a result of changes in management;
                and the
                possibility we may be unable to recruit additional managers with
                the
                necessary skills to supplement the incumbent management of the acquired
                business.





-13-








We
      may
      not be successful in overcoming these risks.





An
      acquisition may be significantly larger than any of our previous acquisitions.
      The significant expansion of our business and operations resulting from the
      acquisition may strain our administrative, operational and financial resources.
      The integration may require substantial time, effort, attention, and dedication
      of management resources and may distract our management in unpredictable ways
      from our existing business. The integration process could create a number of
      adverse consequences for us, including the possible unexpected loss of key
      employees, customers or suppliers, a possible loss of sales or an increase
      in
      operating or other costs. The foregoing could have a material adverse effect
      on
      our business, financial condition and results of operations. We may not be
      able
      to manage the combined operations and assets effectively or realize all or
      any
      of the anticipated benefits of the acquisition.





*We
      rely on unpatented proprietary know-how and trade secrets.*





In
      addition to relying on patent and trademark rights, we rely on unpatented
      proprietary know-how and trade secrets, and employ various methods, including
      confidentiality agreements with employees and consultants, to protect our
      know-how and trade secrets. However, these methods and our patents and
      trademarks may not afford complete protection and there can be no assurance
      that
      others will not independently develop the know-how and trade secrets or develop
      better production methods than us. Further, we may not be able to deter current
      and former employees, contractors and other parties from breaching
      confidentiality agreements and misappropriating proprietary information and
      it
      is possible that third parties may copy or otherwise obtain and use our
      information and proprietary technology without authorization or otherwise
      infringe on our intellectual property rights. Additionally, we have licensed,
      and may license in the future, patents, trademarks, trade secrets, and similar
      proprietary rights to and from third parties. While we attempt to ensure that
      our intellectual property and similar proprietary rights are protected and
      that
      the third party rights we need are licensed to us when entering into business
      relationships, third parties may take actions that could materially and
      adversely affect our rights or the value of our intellectual property, similar
      proprietary rights or reputation. Furthermore, no assurance can be given that
      claims or litigation asserting infringement of intellectual property rights
      will
      not be initiated by third parties seeking damages, the payment of royalties
      or
      licensing fees and/or an injunction against the sale of our products or that
      we
      would prevail in any litigation or be successful in preventing such judgment.
      In
      the future, we may also rely on litigation to enforce our intellectual property
      rights and contractual rights, and, if not successful, we may not be able to
      protect the value of our intellectual property. Any litigation could be
      protracted and costly and could have a material adverse effect on our business
      and results of operations regardless of its outcome. Although we believe that
      our intellectual property rights are sufficient to allow us to conduct our
      business without incurring liability to third parties, our products may infringe
      on the intellectual property rights of third parties and our intellectual
      property rights may not have the value we believe them to have.





*A
      significant amount of our net worth represents goodwill and other intangibles,
      and a write-off could result in lower reported net income and a reduction of
      our
      net worth.*





As
      of
      December 31, 2005, the net value of our goodwill and other intangibles was
      approximately $844.9 million. In July 2001, the Financial Accounting Standards
      Board issued Statements of Financial Accounting Standards No. 142, "Goodwill
      and
      Other Intangible Assets." Under the new standard, we are no longer required
      or
      permitted to amortize goodwill reflected on our balance sheet. We are, however,
      required to evaluate goodwill reflected on our balance sheet when circumstances
      indicate a potential impairment, or at least annually, under the new impairment
      testing guidelines outlined in the standard. Future changes in the cost of
      capital, expected cash flows, or other factors may cause our goodwill to be
      impaired, resulting in a noncash charge against results of operations to
      write-off goodwill for the amount of impairment. If a significant write-off
      is
      required, the charge would have a material adverse effect on our reported
      results of operations and net worth in the period of any such
      write-off.





*Current
      and future environmental and other governmental requirements could adversely
      affect our financial condition and our ability to conduct our
      business.*





Our
      operations are subject to federal, state, local and foreign environmental laws
      and regulations that impose limitations on the discharge of pollutants into
      the
      air and water and establish standards for the treatment, storage and disposal
      of
      solid and hazardous wastes. While we have not been required historically to
      make
      significant capital expenditures in order to comply with applicable
      environmental laws and regulations, we cannot predict with any certainty our
      future capital expenditure requirements because of continually changing
      compliance standards and environmental technology. Furthermore, violations
      or
      contaminated sites that we do not know about (including contamination caused
      by





-14-





prior
      owners and operators of such sites) could result in additional compliance or
      remediation costs or other liabilities. We have limited insurance coverage
      for
      environmental liabilities and we do not anticipate increasing such coverage
      in
      the future. We may also assume significant environmental liabilities in
      acquisitions. In addition, federal, state and local governments could enact
      laws
      or regulations concerning environmental matters that increase the cost of
      producing, or otherwise adversely affect the demand for, plastic products.
      Legislation that would prohibit, tax or restrict the sale or use of certain
      types of plastic and other containers, and would require diversion of solid
      wastes such as packaging materials from disposal in landfills, has been or
      may
      be introduced in the U.S. Congress, in state legislatures and other legislative
      bodies. While container legislation has been adopted in a few jurisdictions,
      similar legislation has been defeated in public referenda in several states,
      local elections and many state and local legislative sessions. Although we
      believe that the laws promulgated to date have not had a material adverse effect
      on us, there can be no assurance that future legislation or regulation would
      not
      have a material adverse effect on us. Furthermore, a decline in consumer
      preference for plastic products due to environmental considerations could have
      a
      negative effect on our business.





The
      FDA
      regulates the material content of direct-contact food and drug packages we
      manufacture pursuant to the Federal Food, Drug and Cosmetic Act. Furthermore,
      some of our products are regulated by the Consumer Product Safety Commission
      ("CPSC") pursuant to various federal laws, including the Consumer Product Safety
      Act and the Poison Prevention Packaging Act. Both the FDA and the CPSC can
      require the manufacturer of defective products to repurchase or recall these
      products and may also impose fines or penalties on the manufacturer. Similar
      laws exist in some states, cities and other countries in which we sell products.
      In addition, laws exist in certain states restricting the sale of packaging
      with
      certain levels of heavy metals and imposing fines and penalties for
      noncompliance. Although we use FDA-approved resins and pigments in our products
      that directly contact food and drug products and we believe our products are
      in
      material compliance with all applicable requirements, we remain subject to
      the
      risk that our products could be found to be not in compliance with these and
      other requirements. A recall of any of our products or any fines and penalties
      imposed in connection with non-compliance could have a materially adverse effect
      on us. See "Business -- Environmental matters and government
      regulation."





*Our
      operations outside of the United States are subject to additional currency
      exchange, political, investment and other risks.*





We
      currently operate three facilities outside the United States which combined
      for
      approximately 2% of our 2005 net sales. This amount may change in the future
      particularly if we make a significant foreign acquisition. As such we are
      subject to the risks associated with selling and operating in foreign countries,
      including devaluations and fluctuations in foreign currencies, unstable
      political conditions, imposition of limitations on conversion of foreign
      currencies into U.S. dollars and remittance of dividends and payments by foreign
      subsidiaries. The imposition of taxes and imposition or increase of investment
      and other restrictions, tariffs or quotas may also have a negative effect on
      our
      business and profitability. Our sales outside the United States from our
      domestic plants, which represented approximately 3% of our 2005 net sales,
      are
      subject to similar risks.





*We
      are controlled by affiliates of Goldman, Sachs & Co. and J.P. Morgan
      Securities Inc., and their interests as equity holders may conflict with your
      interests.*





As
      a
      result of the Merger, certain private equity funds affiliated with Goldman,
      Sachs & Co. and J.P. Morgan Securities Inc. own a substantial majority of
      our common stock. The interests of Goldman, Sachs & Co. and J.P. Morgan
      Securities Inc. and their respective affiliates may not in all cases be aligned
      with your interests. Goldman, Sachs & Co. and J.P. Morgan Securities Inc.
      and their respective affiliates, control the power to elect our directors,
      to
      appoint members of management and to approve all actions requiring the approval
      of the holders of our common stock, including adopting amendments to our
      certificate of incorporation and approving mergers, certain acquisitions or
      sales of all or substantially all of our assets. For example, Goldman, Sachs
      & Co. and J.P. Morgan Securities Inc. and their respective affiliates could
      pursue acquisitions, divestitures or other transactions that, in their judgment,
      could enhance their equity investment, even though such transactions might
      involve significant risks.





**Item
      1B.**  **UNRESOLVED
      STAFF COMMENTS**





None





-15-





**Item
      2.** **PROPERTIES**





We
      believe that our
      property and equipment is well-maintained, in good operating condition and
      adequate for our present needs. The following table sets forth our principal
      manufacturing facilities as of December 31, 2005:


**Location**
                  **Square
                      Footage**
                  
                  **Use**
                  **Owned/Leased**Evansville,
                      IN
                  552,000
                  
                  Headquarters
                      and manufacturing
                  OwnedEvansville,
                      IN
                  223,000
                  
                  Manufacturing
                  LeasedHenderson,
                      NV
                  175,000
                  
                  Manufacturing
                  OwnedIowa
                      Falls, IA
                  100,000
                  
                  Manufacturing
                  OwnedCharlotte,
                      NC
                  150,000
                  
                  Manufacturing
                  OwnedLawrence,
                      KS
                  424,000
                  
                  Manufacturing
                  OwnedSuffolk,
                      VA
                  110,000
                  
                  Manufacturing
                  OwnedMonroeville,
                      OH
                  350,000
                  
                  Manufacturing
                  OwnedNorwich,
                      England
                  88,000
                  
                  Manufacturing
                  OwnedWoodstock,
                      IL
                  170,000
                  
                  Manufacturing
                  OwnedStreetsboro,
                      OH
                  140,000
                  
                  Manufacturing
                  OwnedBaltimore,
                      MD
                  244,000
                  
                  Manufacturing
                  OwnedMilan,
                      Italy
                  125,000
                  
                  Manufacturing
                  LeasedChicago,
                      IL
                  472,000
                  
                  Manufacturing
                  LeasedRichmond,
                      IN
                  160,000
                  
                  Manufacturing
                  OwnedSyracuse,
                      NY
                  215,000
                  
                  Manufacturing
                  LeasedPhoenix,
                      AZ
                  266,000
                  
                  Manufacturing
                  LeasedAhoskie,
                      NC
                  150,000
                  
                  Manufacturing
                  OwnedBowling
                      Green, KY
                  168,000
                  
                  Manufacturing
                  LeasedSarasota,
                      FL
                  74,000
                  
                  Manufacturing
                  OwnedJackson,
                      TN
                  211,000
                  
                  Manufacturing
                  LeasedAnaheim,
                      CA
                  248,000
                  
                  Manufacturing
                  LeasedCranbury,
                      NJ
                  204,000
                  
                  Manufacturing
                  LeasedEasthampton,
                      MA
                  210,000
                  
                  Manufacturing
                  LeasedOxnard,
                      CA
                  110,000
                  
                  Manufacturing
                  LeasedToluca,
                      Mexico
                  172,000
                  
                  Manufacturing
                  Leased5,511,000








-16-





**Item
      3.** **LEGAL
      PROCEEDINGS**





We
      are
      party to various legal proceedings involving routine claims which are incidental
      to our business. Although our legal and financial liability with respect to
      such
      proceedings cannot be estimated with certainty, we believe that any ultimate
      liability would not be material to our financial condition.





**Item
      4.** **SUBMISSION
      OF MATTERS TO A VOTE
      OF SECURITY HOLDERS**





By
      written consent in lieu of a meeting of the stockholders of BPC Holding
      Corporation dated August 10, 2005, stockholders that hold a majority of the
      stock entitled to vote approved an amendment to the BPC Holding Corporation
      2002
      Stock Option Plan to increase the number of Fixed Priced Options available
      under
      such plan from 307,545 to 365,720.





By
      written consent in lieu of a meeting of the stockholders of BPC Holding
      Corporation dated December 14, 2005, stockholders that hold a majority of the
      stock entitled to vote approved an amendment to the BPC Holding Corporation
      2002
      Stock Option Plan to increase the number of Fixed Priced Options available
      under
      such plan from 365,720 to 415,720.





**PART
      II**





**Item
      5.**  **MARKET
      FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER**


**MATTERS**





There
      is
      no established public trading market for any class of common stock of Holding
      or
      the Company. With respect to the capital stock of Holding, as of March 18,
      2006,
      there were 170 holders of the common stock. All of the issued and outstanding
      common stock of the Company is held by Holding.





**Dividend
      Policy**





Holding
      has not paid cash dividends on its capital stock since the Merger. As a holding
      company with no independent operations, the ability of Holding to pay cash
      dividends will be dependent on the receipt of dividends or other payments from
      the Company. Under the terms of the Indenture, the Company has restrictions
      regarding the payment of dividends on its common stock. In addition, the
      Company’s second amended and restated senior secured credit facility, as
      amended, contains covenants that, among other things, restrict the payment
      of
      dividends by the Company. In addition, Delaware law limits Holding's ability
      to
      pay dividends from current or historical earnings or profits or capital surplus.
      Any determination to pay cash dividends on common stock of the Company or
      Holding in the future will be at the discretion of the Board of Directors of
      the
      Company and Holding, respectively.





**Equity
      Compensation Plan Information**





See
      Item
      12 of this Form 10-K entitled “Security Ownership of Certain Beneficial Owners
      and Management and Related Stockholder Matters”.








-17-




**Item
      6.**  **SELECTED
      FINANCIAL DATA**





The
      following selected financial data are derived from our consolidated financial
      statements. The data should be read in connection with the consolidated
      financial statements, related notes and other financial information included
      herein. Our fiscal year is a 52/53 week period ending generally on the Saturday
      closest to December 31. All references herein to “2005,” “2004,” “2003,” “2002,”
and “2001” relate to the fiscal years ended December 31, 2005, January 1, 2005,
      December 27, 2003, December 28, 2002, and December 29, 2001, respectively.
      For
      analysis purposes, the results under Holding’s prior ownership (“Predecessor”)
      have been combined with results subsequent to the Merger on July 22, 2002.
      Our
      historical consolidated financial information may not be comparable to or
      indicative of our future performance. For a discussion of certain factors that
      materially affect the comparability of the consolidated financial data or cause
      the data reflected herein not to be indicative of our future financial condition
      or results of operations, see “Risk Factors.”


**BPC
                  Holding Corporation****Fiscal****Company**
              
              **Company**
              
              **Company**
              
              **Combined
                  Company & Predecessor**
              
              **Predecessor****2005**
              
              **2004**
              
              **2003**
              
              **2002**
              
              **2001****(in
                  thousands of dollars)**Statement
                  of Income Data:Net
                  sales
              
              $
              1,169,704
              
              $
              814,213
              
              $
              551,876
              
              $
              494,303
              
              $
              461,659Cost
                  of goods sold
              
              
              943,370
              
              
              639,329
              
              
              420,750
              
              
              371,273
              
              
              338,000Gross
                  profit
              
              
              226,334
              
              
              174,884
              
              
              131,126
              
              
              123,030
              
              
              123,659Operating
                  expenses (a)
              
              
              110,545
              
              
              81,008
              
              
              59,936
              
              
              77,467
              
              
              70,192Operating
                  income
              
              
              115,789
              
              
              93,876
              
              
              71,190
              
              
              45,563
              
              
              53,467Other
                  expenses (income) (b)
              
              
              1,354
              
              
              —
              
              
              (7
              )
              
              299
              
              
              473Loss
                  on extinguished debt (c)
              
              
              7,045
              
              
              —
              
              
              250
              
              
              25,328
              
              
              —Interest
                  expense, net (d)
              
              
              73,274
              
              
              53,185
              
              
              45,413
              
              
              49,254
              
              
              54,355Income
                  (loss) before income taxes
              
              
              34,116
              
              
              40,691
              
              
              25,534
              
              
              (29,318
              )
              
              (1,361
              )Income
                  taxes
              
              
              14,325
              
              
              17,740
              
              
              12,486
              
              
              3,298
              
              
              734Net
                  income (loss)
              
              
              19,791
              
              
              22,951
              
              
              13,048
              
              
              (32,616
              )
              
              (2,095
              )Preferred
                  stock dividends
              
              
              —
              
              
              —
              
              
              —
              
              
              6,468
              
              
              9,790Amortization
                  of preferred stock discount
              
              
              —
              
              
              —
              
              
              —
              
              
              574
              
              
              1,024Net
                  income (loss) attributable to common stockholders
              
              $
              19,791
              
              $
              22,951
              
              $
              13,048
              
              $
              (39,658
              )
              $
              (12,909
              )Balance
                  Sheet Data (at end of year):Working
                  capital
              
              $
              201,781
              
              $
              90,094
              
              $
              87,571
              
              $
              64,201
              
              $
              19,327Fixed
                  assets
              
              
              423,444
              
              
              281,972
              
              
              282,977
              
              
              193,132
              
              
              203,217Total
                  assets
              
              
              1,647,830
              
              
              1,005,144
              
              
              1,015,806
              
              
              760,576
              
              
              446,876Total
                  debt
              
              
              1,160,620
              
              
              697,558
              
              
              751,605
              
              
              609,943
              
              
              485,881Stockholders'
                  equity (deficit)
              
              
              203,388
              
              
              183,891
              
              
              152,591
              
              
              75,163
              
              
              (139,601
              )Other
                  Data:Depreciation
                  and amortization (e)
              
              
              88,720
              
              
              60,816
              
              
              44,078
              
              
              41,965
              
              
              50,907Capital
                  expenditures
              
              
              57,829
              
              
              52,624
              
              
              29,949
              
              
              28,683
              
              
              32,834


(a)
      Operating expenses include $20,987 related to the Merger during fiscal
      2002.





(b)
      Other
      expenses (income) consist of net losses (gains) on disposal of property and
      equipment and unrealized loss on investment in Southern Packaging for the
      respective years.





(c)
      In
      2005, the loss on extinguished debt represents unamortized deferred financing
      costs on the term loan expensed as a result of an amendment to the senior credit
      facility. The loss on extinguished debt in 2003 represents the legal costs
      associated with amending the senior credit facility in connection with the
      Landis Acquisition. As a result of the r etirement
      all of Holding’s senior secured notes and Berry Plastics’ senior subordinated
      notes and the repayment of all amounts owed under our credit
      facilities in
      connection with the Merger, $6.6 million of existing deferred financing fees
      and
      $18.7 million of pr epayment
      fees and related charges were charged to expense in 2002 as a loss on
      extinguished debt.





(d)
      Includes non-cash interest expense of $1,945, $1,862, $2,318, $2,476, and
      $11,268, in fiscal 2005, 2004, 2003, 2002, and 2001, respectively.





(e)
      Depreciation and amortization excludes non-cash amortization of deferred
      financing fees and debt premium/discount amortization which are included in
      interest expense.





-18-





**Item
      7.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





Unless
      the context requires otherwise, references in this Management's Discussion
      and
      Analysis of Financial Condition and Results of Operations to “BPC Holding” or
“Holding” refer to BPC Holding Corporation, references to “we,” “our” or “us”
refer to BPC Holding Corporation together with its consolidated subsidiaries,
      and references to “Berry Plastics” or the “Company” refer to Berry Plastics
      Corporation, a wholly owned subsidiary of BPC Holding Corporation. You should
      read the following discussion in conjunction with the consolidated financial
      statements of Holding and its subsidiaries and the accompanying notes thereto,
      which information is included elsewhere herein. This discussion contains
      forward-looking statements and involves numerous risks and uncertainties,
      including, but not limited to, those described in the “Risk Factors” section.
      Our actual results may differ materially from those contained in any
      forward-looking statements.





On
      July
      22, 2002, GS Berry Acquisition Corp., (the “Buyer”) a newly formed entity
      controlled by various private equity funds affiliated with Goldman, Sachs &
Co., merged (the "Merger") with and into Holding, pursuant to an agreement
      and
      plan of merger, dated as of May 25, 2002. At the effective time of the Merger,
      (1) each share of common stock of Holding issued and outstanding immediately
      prior to the effective time of the Merger was converted into the right to
      receive cash pursuant to the terms of the merger agreement, and (2) each share
      of common stock of the Buyer issued and outstanding immediately prior to the
      effective time of the Merger was converted into one share of common stock of
      Holding. Additionally, in connection with the Merger, we retired all of
      Holding’s senior secured notes and Berry Plastics’ senior subordinated notes,
      repaid all amounts owed under our credit facilities, redeemed all of the
      outstanding preferred stock of Holding, entered into a new credit facility
      and
      completed an offering of new senior subordinated notes of Berry Plastics.
      Immediately following the Merger, private equity funds affiliated with Goldman
      Sachs owned approximately 63% of the outstanding common stock of Holding,
      private equity funds affiliated with J.P. Morgan Chase & Co. owned
      approximately 29% and members of our management owned the remaining
      8%.





**Overview**





We
      are
      one of the world’s leading manufacturers and suppliers of a diverse mix of rigid
      plastic packaging products. We sell a broad product line to over 12,000
      customers. We concentrate on manufacturing higher quality, value-added products
      sold to image-conscious marketers of institutional and consumer products. We
      believe that our large operating scale, low-cost manufacturing capabilities,
      purchasing leverage, proprietary thermoforming technology and extensive
      collection of over 1,500 active proprietary molds provide us with a competitive
      advantage in the marketplace. We have been able to leverage our broad product
      offering, value-added manufacturing capabilities and long-standing customer
      relationships into leading positions across a number of products. O ur
      top 10
      customers represented
      approximately 30% of our fiscal 2005 net sales with no customer accounting
      for
      more than 7% of our fiscal 2005 net sales. T he
      average length of our relationship with these customers was over 20 years. Our
      products are primarily sold to customers in industries that exhibit relatively
      stable demand characteristics and are considered less sensitive to overall
      economic conditions, such as pharmaceuticals, food, dairy, personal care, and
      health and beauty. Additionally, we operate 25 high-volume manufacturing
      facilities and have extensive distribution capabilities. We organize our
      business into two operating divisions: rigid open top and rigid closed top.
      At
      the end of fiscal 2005, we had approximately 6,800 employees.





**Critical
      Accounting Policies and Estimates**





We
      disclose those accounting policies that we consider to be significant in
      determining the amounts to be utilized for communicating our consolidated
      financial position, results of operations and cash flows in the second note
      to
      our consolidated financial statements included elsewhere herein. Our discussion
      and analysis of our financial condition and results of operations are based
      on
      our consolidated financial statements, which have been prepared in accordance
      with accounting principles generally accepted in the United States. The
      preparation of financial statements in conformity with these principles requires
      management to make estimates and assumptions that affect amounts reported in
      the
      financial statements and accompanying notes. Actual results are likely to differ
      from these estimates, but management does not believe such differences will
      materially affect our financial position or results of operations. We believe
      that the following accounting policies are the most critical because they have
      the greatest impact on the presentation of our financial condition and results
      of operations.





*Accounts
      receivable.* We
      evaluate our allowance for doubtful accounts on a quarterly basis and review
      any
      significant customers with delinquent balances to determine future
      collectibility. We base our determinations on legal issues (such as bankruptcy
      status), past history, current financial and credit agency reports, and the
      experience of our credit representatives. We reserve accounts that we deem
      to be
      uncollectible in the quarter in which we make the determination.





-19-





We
      maintain additional reserves based on our historical bad debt experience.
      Additionally, our allowance for doubtful accounts includes a reserve for cash
      discounts that are offered to some of our customers for prompt payment. We
      believe, based on past history and our credit policies, that our net accounts
      receivable are of good quality. A ten percent increase or decrease in our bad
      debt experience would not have a material impact on the results of operations
      of
      the Company. Our allowance for doubtful accounts was $5.8 million and $3.2
      million as of December 31, 2005 and January 1, 2005, respectively.





*Inventory
      obsolescence* .
      We
      evaluate our reserve for inventory obsolescence on a quarterly basis and review
      inventory on-hand to determine future salability. We base our determinations
      on
      the age of the inventory and the experience of our personnel. We reserve
      inventory that we deem to be not salable in the quarter in which we make the
      determination. We believe, based on past history and our policies and
      procedures, that our net inventory is salable. A ten percent increase or
      decrease in our inventory obsolescence experience would not have a material
      impact on the results of operations of the Company. Our reserve for inventory
      obsolescence was $8.5 million and $4.1 million as of December 31, 2005 and
      January 1, 2005, respectively.





*Medical
      insurance.* We
      offer
      our employees medical insurance that is primarily self-insured by us. As a
      result, we accrue a liability for known claims as well as the estimated amount
      of expected claims incurred but not reported. We evaluate our medical claims
      liability on a quarterly basis, obtain an independent actuarial analysis on
      an
      annual basis and perform payment lag analysis. Based on our analysis, we believe
      that our recorded medical claims liability should be sufficient. A ten percent
      increase or decrease in our medical claims experience would not have a material
      impact on the results of operations of the Company. Our accrued liability for
      medical claims was $5.1 million and $2.0 million, including reserves for
      expected medical claims incurred but not reported, as of December 31, 2005
      and
      January 1, 2005, respectively.





*Workers’
      compensation insurance.* Starting
      in fiscal 2000, we converted the majority of our facilities to a large
      deductible program for workers’ compensation insurance. On a quarterly basis, we
      evaluate our liability based on third-party adjusters’ independent analyses by
      claim. Based on our analysis, we believe that our recorded workers’ compensation
      liability should be sufficient. A ten percent increase or decrease in our
      workers’ compensations claims experience would not have a material impact on the
      results of operations of the Company. Our accrued liability for workers’
compensation claims was $4.7 million and $3.5 million as of December 31, 2005
      and January 1, 2005, respectively.





*Revenue
      recognition* .
      Revenue
      from sales of products is recognized at the time product is shipped to the
      customer at which time title and risk of ownership transfer to the
      purchaser.





*Impairments
      of Long-Lived Assets* .
      In
      accordance with the methodology described in Statement of Financial Accounting
      Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of
      Long-Lived Assets, we review long-lived assets for impairment whenever events
      or
      changes in circumstances indicate the carrying amount of such assets may not
      be
      recoverable. Impairment losses are recorded on long-lived assets used in
      operations when indicators of impairment are present and the undiscounted cash
      flows estimated to be generated by those assets are less than the assets’
carrying amounts. The impairment loss is measured by comparing the fair value
      of
      the asset to its carrying amount. No impairments were recorded in the financial
      statements included in this Form 10-K.





*Goodwill
      and Other Indefinite Lived Intangible Assets* .
      In
      accordance with the methodology described in SFAS No. 142, Goodwill and Other
      Intangible Assets, we review our goodwill and other indefinite lived intangible
      assets for impairment whenever events or changes in circumstances indicate
      the
      carrying amount of such assets may not be recoverable. Impairment losses are
      recorded when indicators of impairment are present and the undiscounted cash
      flows estimated to be generated by those assets are less than the assets’
carrying amounts. The impairment loss is measured by comparing the fair value
      of
      the asset to its carrying amount. In addition, we annually review our goodwill
      and other indefinite lived intangible assets for impairment. No impairments
      were
      recorded in the financial statements included in this Form 10-K.





*Deferred
      Taxes and Effective Tax Rates.* We
      estimate the effective tax rates and associated liabilities or assets for each
      legal entity of ours in accordance with SFAS No. 109. We use tax-planning to
      minimize or defer tax liabilities to future periods. In recording effective
      tax
      rates and related liabilities and assets, we rely upon estimates, which are
      based upon our interpretation of United States and local tax laws as they apply
      to our legal entities and our overall tax structure. Audits by local tax
      jurisdictions, including the United States Government, could yield different
      interpretations from our own and cause the Company to owe more taxes than
      originally recorded. For interim periods, we accrue our tax provision at the
      effective tax rate that we expect for the full year. As the actual results
      from
      our various businesses vary from our estimates earlier in the year, we adjust
      the succeeding interim periods effective tax rates to reflect our best estimate
      for the





-20-





year-to-date
      results and for the full year. As part of the effective tax rate, if we
      determine that a deferred tax asset arising from temporary differences is not
      likely to be utilized, we will establish a valuation allowance against that
      asset to record it at its expected realizable value. Our valuation allowance
      against deferred tax assets was $6.7 million and $6.2 million as of December
      31,
      2005 and January 1, 2005, respectively.





*Pension.* Pension
      benefit costs include assumptions for the discount rate, retirement age, and
      expected return on plan assets. Retiree medical plan costs include assumptions
      for the discount rate, retirement age, and health-care-cost trend rates. These
      assumptions have a significant effect on the amounts reported. In addition
      to
      the analysis below, see the notes to the consolidated financial statements
      for
      additional information regarding our retirement benefits. Periodically, we
      evaluate the discount rate and the expected return on plan assets in our defined
      benefit pension and retiree health benefit plans. In evaluating these
      assumptions, we consider many factors, including an evaluation of the discount
      rates, expected return on plan assets and the health-care-cost trend rates
      of
      other companies; our historical assumptions compared with actual results; an
      analysis of current market conditions and asset allocations; and the views
      of
      advisers. In evaluating our expected retirement age assumption, we consider
      the
      retirement ages of our past employees eligible for pension and medical benefits
      together with our expectations of future retirement ages. We believe our pension
      and retiree medical plan assumptions are appropriate based upon the above
      factors. A one percent increase or decrease in our health-care-cost trend rates
      would not have a material impact on the results of operations of the Company.
      Also, a one quarter percentage point change in our discount rate or expected
      return on plan assets would not have a material impact on the results of
      operations of the Company.





Based
      on
      a critical assessment of our accounting policies and the underlying judgments
      and uncertainties affecting the application of those policies, we believe that
      our consolidated financial statements provide a meaningful and fair perspective
      of Holding and its consolidated subsidiaries. This is not to suggest that other
      risk factors such as changes in economic conditions, changes in material costs,
      our ability to pass through changes in material costs, and others could not
      materially adversely impact our consolidated financial position, results of
      operations and cash flows in future periods.





**Recently
      Issued Accounting Standards**





In
      November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment
      of
      ARB No. 43, Chapter 4 (“SFAS 151”). SFAS 151 requires the exclusion of certain
      costs from inventories and the allocation of fixed production overheads to
      inventories to be based on normal capacity of the production facilities. The
      provisions of SFAS 151 are effective for costs incurred during fiscal years
      beginning after June 15, 2005. Earlier adoption is permitted for inventory
      costs
      incurred during fiscal years beginning after the issuance date of SFAS 151.
      We
      do not expect the adoption of this new standard to have a material affect on
      our
      financial position or results of operations.





In
      December 2004, the FASB issued SFAS No. 123R (Revised 2004), Share-Based Payment
      (“SFAS No. 123R”), which requires that the compensation cost relating to
      share-based payment transactions be recognized in financial statements based
      on
      alternative fair value models. The share-based compensation cost will be
      measured based on the fair value of the equity or liability instruments issued.
      We currently disclose pro forma compensation expense quarterly and annually
      by
      calculating the stock option grants’ fair value using the Black-Scholes model
      and disclose the impact on net income in a Note to the Consolidated Financial
      Statements. Upon adoption, pro forma disclosure will no longer be an
      alternative. For nonpublic companies, as defined, the effective date of SFAS
      No.
      123R is the beginning of the first annual reporting period that begins after
      December 15, 2005, although early adoption is allowed. We will adopt SFAS No.
      123R in the first quarter of 2006. Based upon outstanding options as of
      December 31, 2005, after-tax expense, as calculated using the
      Black-Scholes model would be approximately $2.3 million in 2006.





In
      2005,
      the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset
      Retirement Obligations, an interpretation of FASB Statement No. 143, Asset
      Retirement Obligations (“FIN 47”). FIN 47 provides clarification of the term
“conditional asset retirement obligation” as used in SFAS 143, defined as a
      legal obligation to perform an asset retirement activity in which the timing
      or
      method of settlement are conditional on a future event that may or may not
      be
      within the control of the Company. Under this standard, a company must record
      a
      liability for a conditional asset retirement obligation if the fair value of
      the
      obligation can be reasonably estimated. FIN 47 became effective for the
      Company’s year ended December 31, 2005. The adoption of FIN 47 did not have a
      material effect on our financial
      position or results of operations .





-21-




**Acquisitions**





We
      maintain a selective and disciplined acquisition strategy, which is focused
      on
      improving our financial performance in the long-term, enhancing our market
      positions and expanding our product lines or, in some cases, providing us with
      a
      new or complementary product line. Most businesses we have acquired had profit
      margins that are lower than that of our existing business, which results in
      a
      temporary decrease in our margins. We have historically achieved significant
      reductions in manufacturing and overhead costs of acquired companies by
      introducing advanced manufacturing processes, exiting low-margin businesses
      or
      product lines, reducing headcount, rationalizing facilities and machinery,
      applying best practices and capitalizing on economies of scale. In connection
      with our acquisitions, we have in the past and may in the future incur charges
      related to these reductions and rationalizations.





On
      November 20, 2003, Berry Plastics acquired Landis Plastics, Inc. for aggregate
      consideration of approximately $229.7 million, pursuant to which Berry’s
      wholly-owned subsidiary, Berry Plastics Acquisition Corporation IV, merged
      with
      and into Landis, and Landis became our wholly-owned subsidiary (the “Landis
      Acquisition”). The Landis Acquisition was funded through (1) the issuance by
      Berry Plastics of $85.0 million aggregate principal amount of 10.75%
      senior subordinated notes due 2012 to various institutional buyers ,
      which
      resulted in gross proceeds of $95.2 million, (2) aggregate net borrowings of
      $54.1 million under our amended and restated senior secured credit facility
      from
      our new term loans, after giving effect to the refinancing of our prior term
      loan, (3) an aggregate common equity contribution of $62.0 million, consisting
      of contributions of $35.4 million by GS Capital Partners 2000, L.P. and its
      affiliates, $16.1 million by J.P. Morgan Partners Global Investors, L.P. and
      its
      affiliates, and an aggregate of $10.5 million from existing Landis shareholders
      and (4) cash on hand. Berry also agreed to acquire, for $32.0 million, four
      facilities that Landis leased from certain of its affiliates. Prior to the
      closing of the Landis Acquisition, we assigned our rights and obligations to
      purchase the four facilities owned by affiliates of Landis to an affiliate
      of
      W.P. Carey & Co., L.L.C. and then leased those four facilities from them.





On
      April
      11, 2005, a subsidiary of Berry, Berry Plastics de México, S. de R.L. de C.V.,
      acquired all of the injection molding aerosol overcap and closure assets from
      Euromex Plastics, S.A. de C.V. (“Euromex”), an injection molding manufacturer
      located in Toluca, Mexico (the “Mexico Acquisition”), for aggregate
      consideration of approximately $8.2 million. The purchase was financed through
      borrowings under the Company’s revolving line of credit and cash on hand. The
      operations from the Mexico Acquisition are included in Berry’s operations since
      the acquisition date.





On
      June
      3, 2005, Berry acquired Kerr Group, Inc. (“Kerr”), a manufacturer and marketer
      of closures, bottles, vials, and tubes, for aggregate consideration of
      approximately $455.8 million (the “Kerr Acquisition”), including direct costs
      associated with the acquisition. The operations from the Kerr Acquisition are
      included in Berry’s operations since the acquisition date. The purchase price
      was financed through additional term loan borrowings under an amendment to
      Berry’s senior secured credit facility and cash on hand.





**Year
      Ended December 31, 2005**


**Compared
      to Year Ended January 1, 2005**





*Net
      Sales* .
      Net
      sales increased 44% to $1,169.7 million in 2005 from $814.2 million in 2004.
      This $355.5 million increase included approximately $89.5 million or 11% due to the pass through of higher resin
      costs
      to our customers, increased base business volume of approximately $32.7 million
      or 4%, and acquisition volume of $233.3 million or 29%.  In
      2005,
      we reorganized our operations into two reportable segments: rigid open top
      and
      rigid closed top. The realignment occurred in an effort to integrate the
      operations of acquired businesses, better service the Company’s customers, and
      provide a more efficient organization. Prior periods have been restated to
      be
      aligned with the new reporting structure in order to provide comparable results. Rigid
      open top net sales increased $116.4 million in 2005 primarily due to the higher
      selling prices noted above and strong base business volume growth. The rigid
      open top division recorded base business volume growth in several product
      categories with the thermoformed drink cup product line volume increasing over
      40% in 2005. Rigid closed top net sales increased $239.0 million with the Kerr
      Acquisition and Euromex Acquisition providing rigid closed top net sales of
      approximately $229.1 million and $4.2 million, respectively in 2005. The
      increase in rigid closed top net sales was primarily a result of the Kerr
      Acquisition and Euromex Acquisition and increased selling prices on base
      business.




*Gross
      Profit* .
      Gross
      profit increased $51.4 million from $174.9 million (21% of net sales) in 2004
      to
      $226.3 million (19% of net sales) in 2005. This increase of 29% includes the combined
      impact of the additional sales volume, productivity improvement initiatives,
      our
      financial and mechanical resin hedging programs, and the timing effect of the
      11% increase in net selling prices due to higher resin costs passed through
      to
      our customers. This was partially offset by increased raw material costs and
      increased manufacturing costs primarily due to cost inflation. The decline
      in
      gross profit percentage from 21% in 2004 to 19% in 2005 can be attributed in
      part to the mathematical effect of the 11% increase in net selling





-22-





prices
      due to higher resin costs passed through to our customers. Also, the historical
      margin percentage of the business acquired in the Kerr Acquisition was
      significantly less than the Company’s historical gross margin percentage, which
      reduced our consolidated margin percentage. In addition, an expense of $0.7
      million was charged to cost of goods sold in 2005 related to the write-up and
      subsequent sale of Kerr’s finished good inventory to fair market value in
      accordance with purchase accounting. We have continued to consolidate products
      and business of recent acquisitions to the most efficient tooling and plant
      location, providing customers with improved products and customer service.





*Operating
      Expenses* .
      Selling
      expenses increased by $7.7 million to $34.1 million for 2005 from $26.4 million
      principally as
      a
      result of increased selling expenses associated with higher sales partially
      offset by cost reduction efforts .
      General
      and administrative expenses increased from $38.5 million to $49.5 million in
      2005. This increase of $11.0 million can be primarily attributed to general
      and
      administrative expenses from the Kerr Acquisition and increased accrued bonus
      expenses. Research and development costs increased $2.3 million to $6.1 million
      in 2005 primarily as a result of the Kerr Acquisition and increased development
      efforts. Intangible asset amortization increased from $6.5 million in 2004
      to
      $15.6 million for 2005, primarily as a result of additional
      intangible assets resulting from the Kerr Acquisition .
      Other
      expenses were $5.2 million for 2005 compared to $5.8 million for 2004. Other
      expenses in 2005 primarily relate to transition expenses as a result of the
      Kerr
      Acquisition and Euromex Acquisition. Other expenses in 2004 include transition
      expenses of $4.0 million related to the Landis Acquisition and $1.8 million
      related to the shutdown and reorganization of facilities.





*Interest
      Expense, Net* .
      Net
      interest expense, including amortization of deferred financing costs and debt
      premium, for 2005 was $80.3 million (7% of net sales) compared to $53.2 million
      (7% of net sales) in 2004, an increase of $27.1 million. This increase is
      primarily attributed to a write
      off of unamortized deferred financing fees of $7.0 million as a result of an
      amendment to our senior credit facility, additional indebtedness utilized to
      finance the Kerr Acquisition, and increased rates of interest on
      borrowings .





*Income
      Taxes* .
      In
      2005, we recorded income tax expense of $14.3 million, or an effective tax
      rate
      of 42%, compared to $17.7 million, or an effective tax rate of 44%, in 2004. The
      decrease of $3.4 million can be attributed to a decrease in net income before
      income taxes for the reasons stated above. The
      effective tax rate is greater than the statutory rate due to the impact of
      state
      taxes and foreign location losses.





*Net
      Income* .
      We
      recorded net income of $19.8 million in 2005 compared to $23.0 million in 2004
      for the reasons stated above.





**Year
      Ended January 1, 2005**


**Compared
      to Year Ended December 27, 2003**





*Net
      Sales* .
      Net
      sales increased 48% to $814.2 million in 2004 from $551.9 million in 2003.
      This
      $262.3 million increase included approximately $23.5 million or 4% due to the pass through of higher resin costs
      to our customers, increased base business volume of approximately $29.5 million
      or 6%, and acquisition volume of $209.3 million or 38%.  In
      2005,
      we reorganized our operations into two reportable segments: rigid open top
      and
      rigid closed top. The realignment occurred in an effort to integrate the
      operations of acquired businesses, better service the Company’s customers, and
      provide a more efficient organization. Prior periods have been restated to
      be
      aligned with the new reporting structure in order to provide comparable results. Rigid
      open top net sales increased $254.6 million in 2004 primarily due to the higher
      selling prices noted above, acquisition volume, and strong base business volume
      growth. The Landis Acquisition provided rigid open top net sales of
      approximately $227.9 million in 2004 versus $20.1 million in 2003. Due
      to
      the movement of business between the acquired Landis facilities and our
      pre-existing facilities, the amount of sales related to the Landis Acquisition
      is estimated. The
      rigid
      open top division recorded base business volume growth in several product
      categories with the thermoformed drink cup product line volume increasing over
      93% in 2004. Rigid closed top net sales increased $7.7 million primarily due
      to
      the higher selling prices noted above and increased volume in the United States
      closure product line .





*Gross
      Profit* .
      Gross
      profit increased $43.8 million from $131.1 million (24% of net sales) in 2003
      to
      $174.9 million (21% of net sales) in 2004. This increase of 33% includes the combined
      impact of the additional sales volume, productivity improvement initiatives,
      and
      the timing effect of the 4% increase in net selling prices due to higher resin
      costs passed through to our customers partially offset by increased raw material
      costs. The historical margin percentage of the business acquired in the Landis
      Acquisition was significantly less than the Company’s historical gross margin
      percentage, which reduced our consolidated margin percentage. We have continued
      to consolidate products and business of recent acquisitions to the most
      efficient tooling, providing customers with improved products and customer
      service. As part of the Landis integration, in the fourth quarter of 2003,
      we
      closed our Monticello, Indiana facility, which was acquired in the Landis
      Acquisition. The business from this location was distributed throughout our
      facilities. In addition, we completed





-23-





the
      integration of the Landis facilities in 2004 to our integrated computer software
      system. Also, significant productivity improvements were made on the base
      business in 2004, including the addition of state-of-the-art injection molding,
      thermoforming and post molding equipment at several of our
      facilities.





*Operating
      Expenses* .
      Selling
      expenses increased by $2.5 million to $26.4 million for 2004 from $23.9 million
      principally as
      a
      result of increased selling expenses associated with higher sales partially
      offset by cost reduction efforts .
      General
      and administrative expenses increased from $25.7 million to $38.5 million in
      2004. This increase of $12.8 million can be primarily attributed to the Landis
      Acquisition and increased accrued bonus expenses. Research and development
      costs
      increased $0.3 million to $3.8 million in 2004 primarily as a result of the
      Landis Acquisition. Intangible asset amortization increased from $3.3 million
      in
      2003 to $6.5 million for 2004, primarily as a result of additional
      intangible assets resulting from the Landis Acquisition .
      Other
      expenses were $5.8 million for 2004 compared to $3.6 million for 2003. Other
      expenses in 2004 include transition expenses of $4.0 million related to the
      Landis Acquisition and $1.8 million related to the shutdown and reorganization
      of facilities. Other expenses in 2003 include transition expenses of $1.5
      million related to recently acquired businesses, $1.1 million related to the
      shutdown and reorganization of facilities, and $1.0 million related to an
      acquisition that was not completed.





*Interest
      Expense, Net* .
      Net
      interest expense, including amortization of deferred financing costs and debt
      premium, for 2004 was $53.2 million (7% of net sales) compared to $45.7 million
      (8% of net sales) in 2003, an increase of $7.5 million. This increase is
      primarily attributed to additional indebtedness utilized to finance the Landis Acquisition partially
      offset by decreased rates of interest on borrowings and debt principal
      reductions .





*Income
      Taxes* .
      In
      2004, we recorded income tax expense of $17.7 million for income taxes, or
      an
      effective tax rate of 44%, compared to $12.5 million, or an effective tax rate
      of 49%, for fiscal 2003. The
      effective tax rate is greater than the statutory rate due to the impact of
      state
      taxes and foreign location losses
      for which no benefit was currently provided. The
      increase of $5.2 million over 2003 can be primarily attributed to improved
      operating performance.





*Net
      Income* .
      We
      recorded net income of $23.0 million in 2004 compared to $13.0 million in 2003
      for the reasons stated above.





**Income
      Tax Matters**





As
      of
      December 31, 2005, Holding has unused operating loss carryforwards of $65.9
      million for federal income tax purposes which begin to expire in 2012.
      Alternative minimum tax credit carryforwards of approximately $6.4 million
      are
      available to Holding indefinitely to reduce future years’ federal income taxes.
      As a result of the Merger and Kerr Acquisition, the unused operating loss
      carryforward is subject to an annual limitation. We are in the process of
      finalizing the computation to determine the limitation due to the Kerr
      Acquisition and have preliminarily estimated the aggregate limit as a result
      of
      the Merger and Kerr Acquisition to be approximately $29.6 million per year.
      As
      part of the effective tax rate calculation, if we determine that a deferred
      tax
      asset arising from temporary differences is not likely to be utilized, we will
      establish a valuation allowance against that asset to record it at its expected
      realizable value. Our valuation allowance against deferred tax assets was $6.7
      million and $6.2 million as of December 31, 2005 and January 1, 2005,
      respectively.





**Liquidity
      and Capital Resources**





*Capital
      Structure*





On
      July
      22, 2002, we entered into a credit and guaranty agreement and a related pledge
      security agreement with a syndicate of lenders led by Goldman Sachs Credit
      Partners L.P., as administrative agent (the “Credit Facility”). On November 10,
      2003, in connection with the Landis Acquisition, the Credit Facility was amended
      and restated (the “Amended and Restated Credit Facility”). On August 9, 2004,
      the Amended and Restated Credit Facility was amended and restated (the “Second
      Amended and Restated Credit Facility”). On January 1, 2005, a First Amendment to
      the Second Amended and Restated Credit Facility was entered into to permit
      Fifth
      Third Bank to assume the role of Administrative Agent and for Goldman Sachs
      Credit Partners, L.P. to resign as Administrative Agent. On June 3, 2005, we
      entered into a Second Amendment to the Second Amended and Restated Credit
      Agreement with Deutsche Bank Trust Company Americas assuming the role of
      Administrative Agent. As a result of the second amendment to the Second Amended
      and Restated Credit Agreement, we expensed $7.0 million of unamortized deferred
      financing costs and increased our term loan borrowings by $465.1 million in
      connection with the financing of the Kerr Acquisition. On October 26, 2005,
      the
      Company entered into a Third Amendment to the Second Amended and Restated Credit
      Agreement (the “New Credit Facility”) that reduced the applicable margin on the
      term loan.





-24-











The
      New
      Credit Facility provides (1) a $795.0 million term loan and (2) a $150.0 million
      revolving credit facility. The New Credit Facility permits the Company to borrow
      up to an additional $150.0 million of incremental senior term indebtedness
      from
      lenders willing to provide such loans subject to certain restrictions. The
      terms
      of the additional indebtedness will be determined by the market conditions
      at
      the time of borrowing. The maturity date of the term loan is December 2, 2011,
      and the maturity date of the revolving credit facility is March 31, 2010. The
      indebtedness under the New Credit Facility is guaranteed by Holding and all
      of
      its domestic subsidiaries. The obligations of Berry Plastics under the New
      Credit Facility and the guarantees thereof are secured by substantially all
      of
      the assets of such entities. At December 31, 2005 and January 1, 2005, there
      were no borrowings outstanding on this revolving credit facility. The revolving
      credit facility allows up to $35.0 million of letters of credit to be issued
      instead of borrowings under the revolving credit facility. At December 31,
      2005
      and January 1, 2005, the Company had $14.7 million and $8.5 million,
      respectively, in letters of credit outstanding under the revolving credit
      facility. The term loan amortizes quarterly as follows: $1,987,500 each quarter
      which began September 30, 2005 and ends September 30, 2010 and $188,315,625
      each quarter beginning December 31, 2010 and ending
      September 30, 2011.





The
      New
      Credit Facility contains significant financial and operating covenants,
      including prohibitions on the ability to incur certain additional indebtedness
      or to pay dividends, and restrictions on the ability to make capital
      expenditures. The New Credit Facility also contains borrowing conditions and
      customary events of default, including nonpayment of principal or interest,
      violation of covenants, inaccuracy of representations and warranties,
      cross-defaults to other indebtedness, bankruptcy and other insolvency events
      (other than in the case of certain foreign subsidiaries). The New Credit
      Facility contains (1) a minimum interest coverage ratio as of the last day
      of
      any quarter of 2.10:1.00 per quarter for the quarters ending December 2005
      through March 2006, 2.15:1.00 per quarter for the quarters ending June 2006
      through September 2006, 2.20:1.00 per quarter for the quarters ending December
      2006 through September 2007, 2.35:1.00 per quarter for the quarters ending
      December 2007 through September 2008, 2.45:1.00 per quarter for the quarters
      ending December 2008 through September 2009, and 2.50:1.00 per quarter
      thereafter, (2) a maximum amount of capital expenditures (subject to the
      rollover of certain unexpended amounts from the prior year and increases due
      to
      acquisitions) of $85.0 million for the year ending 2005, $110.0 million for
      the
      year ending 2006, $115.0 million for the year ending 2007, and $120.0 million
      for each year thereafter, and (3) a maximum total leverage ratio as of the
      last
      day of any quarter of 6.40:1.00 per quarter for the quarters ending December
      2005 through June 2006, 6.00:1.00 for the quarter ending September 2006,
      5.90:1.00 per quarter for the quarters ending December 2006 through September
      2007, 5.50:1.00 per quarter for the quarters ending December 2007 through
      September 2008, 5.10:1.00 per quarter for the quarters ending December 2008
      through September 2009, and 4.80:1.00 per quarter thereafter. The occurrence
      of
      a default, an event of default or a material adverse effect on Berry Plastics
      would result in our inability to obtain further borrowings under our revolving
      credit facility and could also result in the acceleration of our obligations
      under any or all of our debt agreements, each of which could materially and
      adversely affect our business. The Company was in compliance with all the
      financial and operating covenants at December 31, 2005. A key financial metric
      utilized in the calculation in certain of the financial covenants noted above
      is
      bank compliance EBITDA. The following table reconciles our bank compliance
      EBITDA of $238.7 million for fiscal 2005 to net income.





**Year
                Ended**
              **December
                31,**
              **2005**Bank
                Compliance EBITDA
            
            
            238,672Net
                interest expense
            
            
            (73,274
            )Depreciation
            
            
            (73,146
            )Amortization
            
            
            (15,574
            )Income
                taxes
            
            
            (14,325
            )Loss
                on investment in Southern Packaging
            
            
            (1,354
            )Loss
                on extinguished debt
            
            
            (7,045
            )Acquisition
                integration expense
            
            
            (5,925
            )Non-cash
                compensation
            
            
            (2,152
            )Kerr
                pro forma for January 1, 2005 to June 3, 2005
            
            
            (26,086
            )Net
                income
            
            $
            19,791





Borrowings
      under the New Credit Facility bear interest, at the Company’s option, at either
      (i) a base rate (equal to the greater of the prime rate and the federal funds
      rate plus 0.5%) plus the applicable margin (the ‘‘Base Rate Loans’’) or (ii)





-25-





an
      adjusted eurodollar LIBOR (adjusted for reserves) plus the applicable margin
      (the ‘‘Eurodollar Rate Loans’’). With respect to the term loan, the ‘‘applicable
      margin’’ is (i) with respect to Base Rate Loans, 1.00% per annum and (ii) with
      respect to Eurodollar Rate Loans, 2.00% per annum (6.45% at December 31, 2005).
      In addition, the applicable margins with respect to the term loan can be further
      reduced by an additional .25% per annum subject to the Company meeting a
      leverage ratio target, which was not met based on the results through December
      31, 2005. With respect to the revolving credit facility, the ‘‘applicable
      margin’’ is subject to a pricing grid which ranges from 2.75% per annum to 2.00%
      per annum, depending on the leverage ratio (2.75% based on our leverage ratio
      of
      4.76:1.00 based on our results through December 31, 2005). The ‘‘applicable
      margin’’ with respect to Base Rate Loans will always be 1.00% per annum less
      than the ‘‘applicable margin’’ for Eurodollar Rate Loans. The interest rate
      applicable to overdue payments and to outstanding amounts following an event
      of
      default under the New Credit Facility is equal to the interest rate at the
      time
      of an event of default plus 2.00%. We also must pay commitment fees ranging
      from
      0.375% per annum to 0.50% per annum on the average daily unused portion of
      the
      revolving credit facility. Pursuant to a requirement in the Credit Facility,
      we
      entered into an interest rate collar arrangement in October 2002 to protect
      $50.0 million of the outstanding variable rate term loan debt from future
      interest rate volatility. Under the interest rate collar agreement, the
      Eurodollar rate with respect to the $50.0 million of outstanding variable rate
      term loan debt will not exceed 6.75% or drop below 1.97%. The agreement was
      effective January 15, 2003 and terminates on July 15, 2006. In June 2005, Berry
      entered into three separate interest rate swap transactions to protect in total,
      $300.0 million of the outstanding variable rate term loan debt from future
      interest rate volatility. The agreements were effective June 3, 2005 and expire
      on June 3, 2008. The agreements swap three month variable LIBOR contracts for
      a
      fixed rate three year rate of 3.897%. At December 31, 2005, the Company had
      unused borrowing capacity under the New Credit Facility’s revolving line of
      credit of $135.3 million.





On
      July
      22, 2002, we completed an offering of $250.0 million aggregate principal amount
      of 10 3⁄4% Senior Subordinated Notes due 2012 (the "2002 Notes"). The net proceeds
      to us from the sale of the 2002 Notes, after expenses, were $239.4 million.
      The
      proceeds from the 2002 Notes were used in the financing of the Merger. The
      2002
      Notes mature on July 15, 2012, and interest is payable semi-annually on January
      15 and July 15 of each year beginning January 15, 2003. Holding and all of
      our
      domestic subsidiaries fully, jointly, severally, and unconditionally guarantee
      the 2002 Notes.





On
      November 20, 2003, we completed an offering of $85.0 million aggregate principal
      amount of additional 2002 Notes (the “Add-on Notes” and together with the 2002
      Notes, the “Notes”). The net proceeds to us from the sale of the Add-on Notes,
      after expenses, were $91.8 million as the Add-on Notes were sold at a premium
      of
      12% over the face amount. The proceeds from the Add-on Notes were used in the
      financing of the Landis Acquisition. The Add-on Notes constitute a single class
      with the 2002 Notes. Holding and all of our domestic subsidiaries fully,
      jointly, severally, and unconditionally guarantee the Add-on Notes.





We
      are
      not required to make mandatory redemption or sinking fund payments with respect
      to the Notes. On or subsequent to July 15, 2007, the Notes may be redeemed
      at
      our option, in whole or in part, at redemption prices ranging from 105.375%
      in
      2007 to 100% in 2010 and thereafter. Upon a change in control, as defined in
      the
      indenture under which the Notes were issued (the “Indenture”), each holder of
      Notes will have the right to require us to repurchase all or any part of such
      holder's Notes at a repurchase price in cash equal to 101% of the aggregate
      principal amount thereof plus accrued interest. The Indenture restricts our
      ability to incur additional debt and contains other provisions which could
      limit
      our liquidity.





*Contractual
      Obligations and Off Balance Sheet Transactions*





Our
      contractual cash obligations as of December 31, 2005 are summarized in the
      following table.


**Payments
                  Due by Period at December 31, 2005****Total**
              
              **<
                  1 year**
              
              **1-3
                  years**
              
              **4-5
                  years**
              
              **>
                  5 years**Long-term
                  debt, excluding capital leases
              
              $
              1,126,025
              
              $
              7,950
              
              $
              15,900
              
              $
              202,228
              
              $
              899,947Capital
                  leases
              
              
              31,048
              
              
              6,925
              
              
              9,743
              
              
              6,351
              
              
              8,029Fixed
                  interest rate payments
              
              
              263,889
              
              
              47,704
              
              
              88,809
              
              
              72,025
              
              
              55,351Operating
                  leases
              
              
              187,804
              
              
              25,015
              
              
              40,797
              
              
              33,157
              
              
              88,835Purchase
                  obligations (1)
              
              
              61,504
              
              
              61,504
              
              
              —
              
              
              —
              
              
              —Total
                  contractual cash obligations
              
              $
              1,670,117
              
              $
              149,098
              
              $
              155,249
              
              $
              313,612
              
              $
              1,052,158


(1)Represents
      open purchase commitments for purchases of resin and capital expenditures in
      the
      normal course of operations.





-26-








As
      of
      December 31, 2005, we have operating leases with future minimum lease
      payments of $187.8 million, as disclosed in the preceding table. This
      represents an increase of $78.8 million over the prior year primarily due to
      leases acquired in the connection with the Kerr Acquisition of $70.1 million
      and
      operating leases entered into in 2005 totaling $23.9 million partially offset
      by
      terminated operating leases.





*Cash
      Flow*





Net
      cash
      provided by operating activities was $101.5 million in 2005 as compared to
      $75.2
      million in 2004. This increase of $26.3 million can be primarily attributed
      to
      improved operating performance partially offset by increased working capital
      needs due to revenue growth and increased resin costs. Net cash provided by
      operating activities was $75.2 million in 2004 as compared to $79.8 million
      in
      2003. This decrease of $4.6 million can be primarily attributed to increased
      working capital needs due to revenue growth, increased resin costs, and
      increased quantities of resin as a result of mechanical hedging partially offset
      by improved operating performance.





Net
      cash
      used for investing activities increased from $45.5 million in 2004 to $520.0
      million in 2005 primarily as a result of the Kerr Acquisition and Euromex
      Acquisition in 2005. Our capital expenditure budget for 2006 is expected to
      be
      approximately $90.0 million. Net cash used for investing activities decreased
      from $265.7 million in 2003 to $45.5 million in 2004 primarily as a result
      of
      the Landis Acquisition in 2003 and the receipt of $7.4 million in 2004 related
      to the working capital adjustment from the Landis Acquisition. In addition,
      Berry Plastics U.K. Limited, a foreign subsidiary of Berry, sold the
      manufacturing equipment, inventory, and accounts receivable of its U.K. milk
      cap
      business to Portola Packaging U.K. Limited. The transaction valued at
      approximately $4.0 million closed in April 2004. The U.K. milk cap business
      represented less than $3.0 million of our annual consolidated net sales. Capital
      expenditures in 2005 were $57.8 million, an increase of $5.2 million from $52.6
      million in 2004. Capital expenditures in 2005 included investments of $9.0
      million for facility additions and renovations, production systems and offices
      necessary to support production operating levels throughout the company, $19.7
      million for molds, $10.4 million for molding and decorating equipment, and
      $18.7
      million for accessory equipment and systems.





Net
      cash
      provided by financing activities was $443.2 million in 2005 as compared to
      cash
      used for financing activities of $55.7 million in 2004. The change can be
      primarily attributed to the financing of the Kerr Acquisition and Euromex
      Acquisition in 2005. Net cash used for financing activities was $55.7 million
      in
      2004 as compared to cash provided by financing activities of $196.8 million
      in
      2003. The change can be primarily attributed to the Landis Acquisition financing
      in 2003 and the voluntary prepayment of $45.0 million of the senior term loans
      in 2004.





Increased
      working capital needs occur whenever we experience strong incremental demand
      or
      a significant rise in the cost of raw material, particularly plastic resin.
      However, we anticipate that our cash interest, working capital and capital
      expenditure requirements for 2006 will be satisfied through a combination of
      funds generated from operating activities and cash on hand, together with funds
      available under the New Credit Facility. We base such belief on historical
      experience and the substantial funds available under the New Credit Facility.
      However, we cannot predict our future results of operations and our ability
      to
      meet our obligations involves
      numerous risks and uncertainties, including, but not limited to, those described
      in the “Risk Factors” section. In
      particular, increases in the cost of resin which we are unable to pass through
      to our customers or significant acquisitions could severely impact our
      liquidity. At December 31, 2005, our cash balance was $24.8 million, and we
      had
      unused borrowing capacity under the New Credit Facility’s borrowing base of
      $135.3 million. Although the $135.3 million was available at December 31, 2005,
      the covenants under our New Credit Facility may limit our ability to make such
      borrowings in the future.





**Item
      7A.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





*Interest
      Rate Risk*





We
      are
      exposed to market risk from changes in interest rates primarily through our
      New
      Credit Facility. The New Credit Facility is comprised of (1) a $795.0 million
      term loan and (2) a $150.0 million revolving credit facility. At December 31,
      2005, there were no borrowings outstanding on the revolving credit facility.
      The
      net outstanding balance of the term loan at December 31, 2005 was $791.0
      million. The term loan bears interest at the Eurodollar rate plus the applicable
      margin. Future borrowings under the New Credit Facility bear interest, at our
      option, at either (1) the base rate, which is a rate per annum equal to the
      greater of the prime rate and the federal funds effective rate in effect on
      the
      date of determination plus 0.5% plus the applicable margin or (2) an adjusted
      Eurodollar Rate which is equal to the rate for Eurodollar deposits plus the
      applicable margin. We utilize interest rate instruments to reduce the impact
      of
      either increases or decreases in interest rates on its floating rate debt.
      Pursuant to a requirement in the Credit Facility, we entered into an interest
      rate collar arrangement in October 2002





-27-





to
      protect $50.0 million of the outstanding variable rate term loan debt from
      future interest rate volatility. Under the interest rate collar agreement,
      the
      Eurodollar rate with respect to the $50.0 million of outstanding variable rate
      term loan debt will not exceed 6.75% or drop below 1.97%. The
      agreement was effective January 15, 2003 and terminates on July 15, 2006. In
      June
      2005, Berry entered into three separate interest rate swap transactions to
      protect $300.0 million of the outstanding variable rate term loan debt from
      future interest rate volatility. The agreements were effective June 3, 2005
      and
      expire on June 3, 2008. The agreements swap three month variable LIBOR
      contracts for a fixed rate three year rate of 3.897%. At December 31, 2005,
      the Eurodollar rate applicable to the term loan was 4.45%. If the Eurodollar
      rate increases 0.25% and 0.5%, we estimate an annual increase in our interest
      expense of approximately $1.2 million and $2.5 million,
      respectively.





*Plastic
      Resin Cost Risk*





We
      are
      exposed to market risk from changes in plastic resin prices that could impact
      our results of operations and financial condition. We manage our exposure to
      these market risks through our normal operations with purchasing negotiation,
      mechanical hedging, switching between certain resin products and, when deemed
      appropriate, by using derivative financial instruments in accordance with
      established policies and procedures. The derivative financial instruments
      generally used are forward contracts. The derivative financial instruments
      utilized by the Company in its hedging activities are considered risk management
      tools and are not used for trading purposes.





As
      part
      of our risk management strategy, in the fourth quarter of 2004, we entered
      into
      resin forward hedging transactions constituting approximately 15% of our
      estimated 2005 resin needs and 10% of our 2006 estimated resin needs based
      on
      2004 volumes prior to the Kerr Acquisition. These contracts obligate the Company
      to make or receive a monthly payment equal to the difference in the unit cost
      of
      resin per the contract and an industry index times the contracted pounds of
      plastic resin. Such contracts are designated as hedges of a portion of the
      Company's forecasted purchases through 2006 and are effective in hedging the
      Company's exposure to changes in resin prices during this period.





The
      contracts qualify as cash flow hedges under SFAS No. 133 and accordingly are
      marked to market with unrealized gains and losses deferred through other
      comprehensive income and recognized in earnings when realized as an adjustment
      to cost of goods sold. The fair value of these contracts at December 31, 2005
      and January 1, 2005 was an unrealized gain, after income taxes, of $3.7 million
      and $5.2 million, respectively.





**Item
      8.**    **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**


**Index
                    to Financial Statements**Report
                    of Independent Registered Public Accounting Firm
                F-
                    1Consolidated
                    Balance Sheets at December 31, 2005 and January 1, 2005
                F-
                    2Consolidated
                    Statements of Incomefor
                    the periods ended December 31, 2005, January 1, 2005, and December
                    27,
                    2003
                F-
                    4Consolidated
                    Statements of Changes in Stockholders' Equity for the periods
                    ended
                    December 31, 2005, January 1, 2005, and December 27, 2003
                F-
                    5Consolidated
                    Statements of Cash Flows for the periods ended December 31, 2005,
                    January
                    1, 2005, and December 27, 2003
                F-
                    6Notes
                    to Consolidated Financial Statements
                F-
                    7**Index
                    to Financial Statement Schedules**All
                    schedules have been omitted because they are not applicable or
                    not
                    required or because the required information is included in the
                    consolidated financial statements or notes thereto.




-28-








**Item
      9.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





Not
      applicable.





**Item
      9A.**  **CONTROLS
      AND PROCEDURES**





(a)
            Evaluation
                of disclosure controls and
                procedures.





Our
      management team is responsible for the preparation and integrity of the
      consolidated financial statements appearing in this Form 10-K. We have
      established disclosure controls and procedures to ensure that material
      information relating to Holding and the Company, including consolidated
      subsidiaries, is made known to members of senior management and the Board of
      Directors.





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934, within the
      90
      days prior to the date of this report, we carried out an evaluation under the
      supervision and with the participation of our management team, including our
      Chief Executive Officer and Chief Financial Officer, of the effectiveness of
      the
      design and operation of our disclosure controls and procedures. Based upon
      that
      evaluation, the Chief Executive Officer and Chief Financial Officer concluded
      that our disclosure controls and procedures are effective to ensure that
      information required to be disclosed by us in the reports we file or submit
      under the Exchange Act is recorded, processed, summarized and reported, within
      the time periods specified in the Securities and Exchange Commission’s rules and
      forms. In connection with the new rules, we currently are in the process of
      further reviewing and documenting our disclosure controls and procedures,
      including our internal controls and procedures for financial reporting, and
      may
      from time to time make changes aimed at enhancing their effectiveness and to
      ensure that our systems evolve with our business.





(b)  Changes
      in internal controls.




None





**Item
      9B.**  **OTHER
      INFORMATION**





None





-29-








**PART
      III**





**Item
      10.** ****  **DIRECTORS
      AND EXECUTIVE OFFICERS OF THE REGISTRANT**





The
      following table sets forth certain information with respect to the executive
      officers, directors and certain key personnel of Holding:


**Name**
              **Age**
              **Title**Joseph
                  H. Gleberman(1)................................................
              48
              Chairman
                  and DirectorIra
                  G.
                  Boots(1)................................................................
              52
              President,
                  Chief Executive Officer and DirectorR.
                  Brent
                  Beeler................................................................
              53
              Executive
                  Vice President and Chief Operating OfficerJames
                  M. Kratochvil......................................................
              49
              Executive
                  Vice President, Chief Financial Officer, Treasurer and
                  SecretaryRandall
                  J. Hobson..........................................................
              40
              Vice
                  PresidentG.
                  Adam Unfried............................................................
              35
              Vice
                  PresidentGregory
                  J. Landis...........................................................
              55
              DirectorChristopher
                  C. Behrens(1)............................................
              45
              DirectorTerry
                  R. Peets(2)............................................................
              61
              DirectorStephen
                  S. Trevor(1)(2).................................................
              42
              DirectorMathew
                  J. Lori(2)...........................................................
              42
              Director




(1)
            Member
                of the Equity Compensation
                Committee.


(2)
            Member
                of the Audit Committee.





The
      following table sets forth certain information with respect to the executive
      officers, directors and certain key personnel of Berry Plastics:


**Name**
                **Age**
                **Title**Joseph
                    H. Gleberman(1)(3)(4).......................................
                48
                Chairman
                    and DirectorIra
                    G. Boots(1)(4)............................................................
                52
                President,
                    Chief Executive Officer and DirectorR.
                    Brent
                    Beeler................................................................
                53
                Executive
                    Vice President and Chief Operating OfficerJames
                    M. Kratochvil......................................................
                49
                Executive
                    Vice President, Chief Financial Officer, Treasurer and
                    SecretaryRandall
                    J. Hobson..........................................................
                40
                President
                    - Rigid Closed Top DivisionG.
                    Adam Unfried............................................................
                35
                President
                    - Rigid Open Top DivisionGregory
                    J. Landis...........................................................
                55
                DirectorChristopher
                    C. Behrens(1)(3).......................................
                45
                DirectorTerry
                    R. Peets(2)............................................................
                61
                DirectorStephen
                    S. Trevor(1)(2)(4)............................................
                42
                DirectorMathew
                    J. Lori(2)(4)......................................................
                42
                Director


(1)
            Member
                of the Compensation Committee.


(2)
            Member
                of the Audit Committee.


(3)
            Member
                of the Finance Committee.


(4)
            Member
                of the Corporate Development
                Committee.





**Joseph
      H. Gleberman** has been
      chairman of the board of directors of Holding and Berry Plastics since the
      closing of the Merger and has been a Managing Director at Goldman, Sachs &
Co. since 1996. He serves on the Board of Directors of aaiPharma, IPC
      Acquisition Corp., and MCG Capital Corporation, as well as a number of private
      companies. Mr. Gleberman received his M.B.A in 1982 from Stanford University
      Graduate School of Business and a M.A./B.A. from Yale University in
      1980.





**Ira
      G. Boots** has been
      President and Chief Executive Officer of Holding and Berry Plastics since June
      2001, and a Director of Holding and Berry Plastics since April 1992. Prior
      to
      that, Mr. Boots served as Chief Operating Officer of Berry Plastics since August
      2000 and Vice President of Operations, Engineering and Product Development
      of
      the Company since April 1992. Mr. Boots was employed by Old Berry from 1984
      to
      December 1990 as Vice President, Operations.





-30-





**R.
      Brent Beeler** was
      named Executive Vice President and Chief Operating Officer of Holding and Berry
      Plastics in May 2005. He formerly served as President - Containers and Consumer
      Products of Berry Plastics since October 2003 and has been an Executive Vice
      President of Holding since July 2002. He had been Executive Vice President
      and
      General Manager - Containers and Consumer Products of the Company since October
      2002 and was Executive Vice President and General Manager - Containers since
      August 2000. Prior to that, Mr. Beeler was Executive Vice President, Sales
      and
      Marketing of the Company since February 1996 and Vice President, Sales and
      Marketing of the Company since December 1990. Mr. Beeler was employed by Old
      Berry from October 1988 to December 1990 as Vice President, Sales and
      Marketing.





**James
      M. Kratochvil** has been
      Executive Vice President, Chief Financial Officer, Secretary and Treasurer
      of
      Holding and Berry since December 1997. He formerly served as Vice President,
      Chief Financial Officer and Secretary of the Company since 1991, and as
      Treasurer of the Company since May 1996. He formerly served as Vice President,
      Chief Financial Officer and Secretary of Holding since 1991. Mr. Kratochvil
      was
      employed by Old Berry from 1985 to 1991 as Controller.





**Randall
      J. Hobson** has been
      President - Rigid Closed Top Division since June 2005. He formerly served as
      Vice President Sales - Closures since 1999. Prior to that, Mr. Hobson was
      Container Market Manager from 1997 to 1998, Region Sales Manager from 1991
      to
      1997, and Sales Representative from 1988 to 1991.





**G.
      Adam Unfried** has
      been
      President - Rigid Open Top Division since June 2005. He formerly served as
      Vice
      President Sales & Marketing - Containers since April 2001. Mr. Unfried was
      Midwest Regional Sales Manager since August 1998 and, prior to that, was a
      Sales
      Representative since July 1993.





**Gregory
      J. Landis** has
      been
      a Director of Holding and Berry Plastics since the Landis Acquisition. Effective
      May 31, 2005, Mr. Landis retired from his position as President - Container
      Division of Berry Plastics, which he assumed upon the closing of the Landis
      Acquisition. Mr. Landis had been President of Landis Plastics, Inc. since
      1991.





**Christopher
      C. Behrens** has been
      a Director of Holding and Berry Plastics since the closing of the Merger and
      has
      been a Partner of J.P. Morgan Partners, LLC and its predecessor, Chase Capital
      Partners, since 1999. Prior to joining Chase Capital Partners, Mr. Behrens
      served as Vice President in Chase’s Merchant Banking Group. Mr. Behrens serves
      on the Board of Directors of Brand Services Inc., Chromalox, Noble Environmental
      Power and Madisonville Gas Processing. Mr. Behrens received a B.A. from the
      University of California at Berkeley and an M.A. from Columbia
      University.





**Terry
      R. Peets** has been
      a Director of Holding and Berry Plastics since July 2004. Mr. Peets is an
      independent board member. Over the past 30 years, Mr. Peets has served as
      Chairman of Bruno's Supermarkets, Inc., Executive Vice President of Vons Grocery
      Company, Executive Vice President of Ralphs Grocery Company, and President
      and
      CEO of PIA Merchandising, Inc. Mr. Peets is the Chairman of the Board and
      Director of World Kitchens, Inc., Vice Chairman and Director of City of Hope
      National Cancer Center and the Beckman Research Institute, and a Director of
      Doane Pet Care Inc., Pinnacle Foods Corp., and Ruiz Foods Inc. Mr. Peets holds
      an M.B.A. with distinction from Pepperdine University **.**





**Stephen
      S. Trevor** has been
      a Director of Holding and Berry Plastics since August 2004 and has been a
      Managing Director at Goldman, Sachs & Co. since 1999. Mr. Trevor also serves
      on the Board of Directors of Cobalt International Energy.





**Mathew
      J. Lori** has been
      a Director of Holding since the closing of the Merger. Mr. Lori has been a
      Partner with J.P. Morgan Partners, LLC since January 2005. Mr. Lori was
      previously a Principal with J.P. Morgan Partners, LLC and its predecessor,
      Chase
      Capital Partners, since January 1998, and prior to that, Mr. Lori had been
      an
      Associate. Mr. Lori has been on the board of Berry Plastics since 1996, and
      is
      also a director of Ascend Media and Hanley Wood, and a number of private
      companies. Mr. Lori received an M.B.A. from Kellogg Graduate School of
      Management at Northwestern University in 1993.





-31-





In
      connection with the Merger, Holding entered into a stockholders agreement with
      GSCP 2000 and other private equity funds affiliated with Goldman, Sachs &
Co. that, in the aggregate, own a majority of our common stock and J.P. Morgan
      Partners Global Investors, L.P. and other private equity funds affiliated with
      J.P. Morgan Chase & Co. that, in the aggregate, own approximately 28% of our
      common stock. In connection with the Landis Acquisition, the agreement was
      amended such that under the current terms of this agreement, the parties have
      agreed to elect up to seven individuals designated by the Goldman Sachs funds,
      one of which must be a member of our management, and two individuals designated
      by the J.P. Morgan funds to Holding’s and Berry Plastics’ boards of directors.
      This agreement regarding the election of directors will continue in force until
      the occurrence of a qualified initial public offering of Holding’s common stock.
      Of the current members of the boards of directors of Holding and Berry Plastics,
      Messrs. Gleberman, Boots, Trevor, Landis and Peets have been designated by
      the
      Goldman Sachs funds and Messrs. Behrens and Lori have been designated by the
      J.P. Morgan funds. The Goldman Sachs funds have the right to designate two
      additional individuals to be elected to Holding’s and Berry’s board of
      directors.





**Board
      Committees**





The
      Board
      of Directors of Holding has an Audit Committee and an Equity Compensation
      Committee. The Audit Committee consists of Messrs. Peets, Trevor, and Lori.
      The
      Audit Committee recommends the annual appointment of auditors with whom the
      audit committee reviews the scope of audit and non-audit assignments and related
      fees, accounting principles we use in financial reporting, internal auditing
      procedures and the adequacy of our internal control procedures. The Equity
      Compensation Committee, consisting of Messrs. Gleberman, Boots, Behrens and
      Trevor, establishes and approves equity compensation grants for our employees
      and consultants and administers the 2002 Stock Option Plan and the Key Employee
      Equity Investment Plan.





The
      Board
      of Directors of the Company has a Compensation Committee, an Audit Committee,
      a
      Finance Committee and a Corporate Development Committee. The Compensation
      Committee, consisting of Messrs. Gleberman, Boots, Behrens and Trevor makes
      recommendations concerning salaries and incentive compensation for our employees
      and consultants. The Audit Committee recommends the annual appointment of
      auditors with whom the audit committee reviews the scope of audit and non-audit
      assignments and related fees, accounting principles we use in financial
      reporting, internal auditing procedures and the adequacy of our internal control
      procedures. The Finance Committee, consisting of Messrs. Gleberman and Behrens
      oversees our capital structure and reviews and approves significant financing
      decisions. The Corporate Development Committee, consisting of Messrs. Gleberman,
      Boots, Trevor and Lori, oversees our business strategy and, in particular,
      reviews and recommends potential acquisition candidates.





-32-








**Item
      11.** **EXECUTIVE COMPENSATION**





The
      following table sets forth a summary of the compensation paid by us to our
      Chief
      Executive Officer and our four other most highly compensated executive officers
      (collectively, the “Named Executive Officers”) for services rendered in all
      capacities to us during fiscal 2005, 2004 and 2003.





**Summary
      Compensation Table**


**Annual
                  Compensation**
              **Long
                  Term**
                **Compensation****Name
                  and Principal Position**
              **Fiscal**
                **Year**
              **Salary**
              **Bonus**
              **Securities**
                **Underlying**
                **Options
                  (#)**
              **Other**
                **Compensation
                  (1)**Ira
                  G. Boots
                President
                  and Chief Executive Officer
              2005
                2004
                2003
              $
                  455,749
                442,226
                432,836
              $
                  299,323
                214,200
                150,231
              —
                —
                2,383
              $
                  15,494
                14,476
                12,343James
                  M. Kratochvil
                Executive
                  Vice President, Chief Financial Officer, Treasurer and
                  Secretary
              2005
                2004
                2003
              $
                  293,373
                284,909
                278,867
              $
                  192,422
                137,700
                96,577
              —
                —
                1,356
              $
                  11,685
                11,576
                10,151R.
                  Brent Beeler
                Executive
                  Vice President and Chief Operating Officer
              2005
                2004
                2003
              $
                  382,828
                345,995
                313,761
              $
                  236,325
                156,503
                111,476
              3,000
                —
                1,356
              $
                  5,034
                4,028
                3,105Randall
                  J. Hobson
                President
                  - Rigid Closed Top Division
              2005
                2004
                2003
              $
                  177,805
                140,374
                133,662
              $
                  95,900
                66,634
                46,734
              1,256
                —
                432
              $
                  3,021
                2,774
                2,733G.
                  Adam Unfried
                President
                  - Rigid Open Top Division
              2005
                2004
                2003
              $
                  183,447
                132,556
                107,436
              $
                  90,420
                53,550
                35,471
              1,256
                —
                432
              $
                  3,262
                3,244
                2,660Gregory
                  J. Landis (2)
                Resigned
                  effective May 31, 2005
              2005
                2004
                2003
              $
                  148,063
                349,866
                49,500
              $
                  236,325
                —
                —
              —
                11,410
                —
              $
                  1,347
                3,4942,688William
                  J. Herdrich
                Resigned
                  effective July 22, 2005
              2005
                2004
                2003
              $
                  177,435
                280,093
                274,180
              $
                  190,818
                136,553
                117,772
              —
                —
                1,356
              $
                  4,591
                5,521
                5,109


(1)  Amounts
      shown reflect contributions by the Company under the Company’s 401(k) plan and
      the personal use of a company vehicle.


(2)  Amounts
      shown reflect only the activity since the closing of the Landis
      Acquisition.





**Option
      Grants in Last Fiscal Year**





Individual
                Grants
            
            
            Potential
                Realizable Value
              At
                Assumed Rates Of StockName
            Number
                Of Securities Underlying OptionsGranted
                (#)
            %
                Of Total Options Granted To Employees InFiscal
                Year
            ExercisePrice
                ($)
            Expiration
              Date
            Price
                Appreciation For
              Option
                Term5%
                ($)
            10%
                ($)R.
                Brent Beeler
            2,000
                (1)
            2.1
            145
            7/1/15
            182,379
            462,185R.
                Brent Beeler
            1,000
                (2)
            1.0
            145
            7/1/15
            91,190
            231,093Randall
                J. Hobson
            288
                (1)
            0.3
            145
            7/1/15
            26,263
            66,555Randall
                J. Hobson
            144
                (2)
            0.1
            145
            7/1/15
            13,131
            33,277G.
                Adam Unfried
            288
                (1)
            0.3
            145
            7/1/15
            26,263
            66,555G.
                Adam Unfried
            144
                (2)
            0.1
            145
            7/1/15
            13,131
            33,277




(1)
              Represents
                  options granted on July 1, 2005, which (i) have an exercise price
                  fixed at
                  $145 per share, which was the fair market value of a share of Holding
                  Common Stock on the date of grant, and (ii) vest and become exercisable
                  over a five year period, beginning the last day of 2005 based on
                  continued
                  service with the Company.
 (2)
              Represents
                  options granted on July 1, 2005, which (i) have an exercise price
                  fixed at
                  $145 per share, which was the fair market value of a share of Holding
                  Common Stock on the date of grant, and (ii) vest and become exercisable
                  based on the achievement by Holding of certain financial
                  targets.






-33-





**Fiscal
      Year-End Option Holdings**





The
      following table provides information on the number of exercisable and
      unexercisable management stock options held by the Named Executive Officers
      at
      December 31, 2005.


**Name**
              **Shares**
                **Acquired
                  on****Exercise**
              **Value****Realized**
              **Number
                  of Unexercised**
                **Options
                  at**
                **Fiscal
                  Year-End**
                **Exercisable/Unexercisable**
                **(#)(2)**
              **Value
                  of Unexercised**
                **In-the-Money
                  Options**
                **at
                  Fiscal Year-End**
                **Exercisable/Unexercisable**
                **(1)(2)**Ira
                  G. Boots
              —
              —
              57,722/22,753
              $3,574,201/$914,747James
                  M. Kratochvil
              —
              —
              33,663/12,907
              2,160,373/519,984R.
                  Brent Beeler
              —
              —
              34,096/15,663
              2,184,105/578,861Randall
                  J. Hobson
              —
              —
              8,610/4,585
              575,727/237,423G.
                  Adam Unfried
              —
              —
              5,569/3,862
              372,271/178,083Gregory
                  J. Landis
              2,282
              $57,050
              —/—
              —/—William
                  J. Herdrich
              25,308
              905,497
              —/—
              —/—




(1)
            None
                of Holding's capital stock is currently publicly traded. The values
                reflect management’s estimate of the fair market value of the Common Stock
                at December 31, 2005.


(2)
            All
                options granted to management are exercisable for shares of Common
                Stock,
                par value $.01 per share, of
                Holding.





**Director
      Compensation**





The
      Company has agreed to compensate Mr. Peets annual compensation of $30,000,
      paid
      quarterly, for his services plus reimbursement of out-of-pocket expenses. In
      addition, Holding issued stock appreciation rights in 2004 to Mr. Peets for
      834
      shares at the then fair market value that vest over four years as long as Mr.
      Peets continues to serve as a board member. The Company entered into a
      consulting agreement with Mr. Landis for the period of June 1, 2005 through
      June
      30, 2007. The agreement entitles Mr. Landis to receive (1) seven monthly
      payments of $29,613, which began on June 15, 2005 and ends on December
      31, 2005, (2) twelve monthly payments of $16,667, commencing on
      January 15, 2006 and ending on December 31, 2006, and (3) six monthly
      payments of $8,334, commencing on January 15, 2007 and ending on June 30, 2007.
      No other Directors receive cash consideration for serving on the Board of
      Directors of Holding or the Company, but directors are reimbursed for
      out-of-pocket expenses incurred in connection with their duties as
      directors.





**Employment
      Agreements**





The
      Company has employment agreements with each of Messrs. Boots, Kratochvil,
      Beeler, Hobson and Unfried (each, an “Employment Agreement” and, collectively,
      the “Employment Agreements”). The agreements for Boots, Kratochvil and Beeler
      expire on January 1, 2007. Mr. Hobson’s agreement expires on June 30, 2006, and
      Mr. Unfried’s agreement expires on December 31, 2009. The Employment Agreements
      provided for fiscal 2005 base compensation as disclosed in the “Summary
      Compensation Table” above. Salaries are subject in each case to annual
      adjustment at the discretion of the Compensation Committee of the Board of
      Directors of the Company. The Employment Agreements entitle each executive
      to
      participate in all other incentive compensation plans established for executive
      officers of the Company. The Company may terminate each Employment Agreement
      for
“cause” or a “disability” (as such terms are defined in the Employment
      Agreements). Specifically, if any of Messrs. Boots, Kratochvil, Beeler, Hobson,
      and Unfried is terminated by Berry Plastics without ‘‘cause’’ or resigns for
‘‘good reason’’ (as such terms are defined in the Employment Agreements), that
      individual is entitled to: (1) the greater of (a) base salary until the later
      of
      one year after termination or (b) 1/12 of 1 year’s base salary for each year of
      employment up to 30 years with Berry Plastics or a predecessor in interest
      (excluding Messrs. Hobson and Unfried which would be entitled to (a) only)
      and
      (2) the pro rata portion of his annual bonus. Each Employment Agreement also
      includes customary noncompetition, nondisclosure and nonsolicitation
      provisions.





**Compensation
      Committee Interlocks and Insider Participation**





The
      Company has a Compensation Committee comprised of Messrs. Gleberman, Boots,
      Behrens, and Trevor. The annual salary and bonus paid to Messrs. Boots,
      Kratochvil, Beeler, Hobson, Unfried, Landis, and Herdrich for fiscal 2005 were
      determined by the Compensation Committee in accordance with their respective
      employment agreements. All other compensation decisions with respect to officers
      of the Company are made by Mr. Boots pursuant to policies established in
      consultation with the Compensation Committee.





-34-





Messrs.
      Gleberman and Trevor are Managing Directors of Goldman, Sachs & Co. Goldman,
      Sachs & Co. provided advisory and other services to us in connection with
      the Merger, the Landis Acquisition, and the Kerr Acquisition and acted as an
      initial purchaser in the offering of the 2002 Notes and Add-on Notes. Goldman,
      Sachs Credit Partners, L.P. participated in and acted as joint lead arranger,
      joint bookrunner and administrative agent for our Credit Facility, our Amended
      and Restated Credit Facility, and our Second Amended and Restated Credit
      Facility. In addition, the Company entered into four resin forward contracts
      in
      the fourth quarter of 2004 with J. Aron & Company, a division of Goldman,
      Sachs & Co., and enters into foreign currency transactions through its
      normal course of business with Goldman, Sachs & Co. In
      June
      2005, Berry entered into an interest rate swap transaction with an
      affiliate of Goldman Sachs to
      protect $100.0 million of the outstanding variable rate term loan debt from
      future interest rate volatility. Messrs.
      Behrens and Lori are Partners of J.P. Morgan Partners, LLC, which is the private
      equity investment arm of J.P. Morgan Chase & Co. Various affiliates of J.P.
      Morgan provided advisory and other services to us in connection with the Merger
      and the Landis Acquisition and acted as a dealer-manager in connection with
      the
      related debt tender offers, acted as an initial purchaser in the offering of
      the
      2002 Notes and Add-on Notes and participated in and acted as joint lead
      arranger, joint bookrunner and a syndication agent for our Credit Facility,
      our
      Amended and Restated Credit Facility, and our Second Amended and Restated Credit
      Facility. In
      June
      2005, Berry entered into an interest rate swap transaction with an
      affiliate of J.P. Morgan to
      protect $100.0 million of the outstanding variable rate term loan debt from
      future interest rate volatility. In addition, affiliates of Goldman Sachs &
Co. and J.P. Morgan have invested in a portion of our credit facilities in
      its
      normal course of business. See
      the
      section of this Form 10-K titled “Certain Relationships and Related
      Transactions” for a description of these transactions between us and various
      affiliates of Goldman Sachs and J.P. Morgan.





**Item
                12.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS**





**Stock
      Ownership**





All
      of
      the outstanding capital stock of the Company is owned by Holding. The following
      table sets forth certain information regarding the beneficial ownership of
      the
      capital stock of Holding as of March 18, 2006 with respect to (1) each person
      known by Holding to own beneficially more than 5% of the outstanding shares
      of
      any class of its voting capital stock, (2) each of Holding's directors, (3)
      the
      Named Executive Officers and (4) all directors and executive officers of Holding
      as a group. Except as otherwise indicated, each of the stockholders has sole
      voting and investment power with respect to the shares beneficially owned.
      Unless otherwise indicated, the address for each stockholder is c/o Berry
      Plastics Corporation, 101 Oakley Street, Evansville, Indiana 47710.


**Name
                  and Address of**
                **Beneficial Owner**
              **Common
                  Stock**
              **Percentage
                  of**
                **Common
                  Stock**
                **Outstanding***GS
                  Capital Partners 2000, L.P. (2)
              1,155,042
              32.8%GS
                  Capital Partners 2000 Offshore, L.P. (2)
              419,697
              11.9GS
                  Capital Partners 2000 GmbH & Co. Beteiligungs KG (2)
              48,278
              1.4GS
                  Capital Partners 2000 Employee Fund, L.P. (2)
              366,766
              10.4Stone
                  Street 2000, L.P. (2)
              36,069
              1.0Bridge
                  Street Special Opportunities Fund 2000, L.P. (2)
              18,034
              —Goldman
                  Sachs Direct Investment Fund 2000, L.P. (2)
              60,114
              1.7J.P.
                  Morgan Partners Global Investors, L.P. (3)
              120,820
              3.4J.P.
                  Morgan Partners Global Investors (Cayman), L.P. (3)
              61,203
              1.7J.P.
                  Morgan Partners Global Investors (Cayman) II, L.P. (3)
              6,825
              —J.P.
                  Morgan Partners Global Investors A, L.P. (3)
              16,848
              —J.P.
                  Morgan Partners (BHCA), L.P. (3)
              704,262
              20.0J.P.
                  Morgan Partners Global Investors (Selldown), L.P. (3)
              44,594
              1.3Joseph
                  H. Gleberman (4)
              2,104,000
              59.8Christopher
                  C. Behrens (5)
              954,552
              27.1Stephen
                  S. Trevor (6)
              2,104,000
              59.8Terry
                  R. Peets
              418
                  (7)
              —Mathew
                  J. Lori(8)
              954,552
              27.1Ira
                  G. Boots
              98,440
                  (9)
              2.8James
                  M. Kratochvil
              57,191
                  (10)
              1.6R.
                  Brent Beeler
              58,145
                  (11)
              1.7Randall
                  J. Hobson
              13,400
                  (12)
              —G.
                  Adam Unfried
              7,983
                  (13)
              —Gregory
                  J. Landis
              95,282
              2.7William
                  J. Herdrich
              7,064
              —All
                  executive officers and directors as a group (12 persons)
              3,396,475
                  (14)
              96.5




-35-





*
              The
                  number of shares outstanding used in calculating the percentage
                  for each
                  person, group or entity listed includes the number of shares underlying
                  options held by such person or group that were exercisable or convertible
                  within 60 days from March 18, 2006, but excludes shares of stock
                  underlying options held by any other
                  person.
 —
              Less
                  than one percent.
 (1)
              The
                  authorized capital stock of Holding consists of 5,500,000 shares
                  of
                  capital stock, including 5,000,000 shares of Common Stock, $.01
                  par value
                  (the “Holding Common Stock”), and 500,000 shares of Preferred Stock, $.01
                  par value (the “Preferred Stock”).
 (2)
              Address
                  is c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York,
                  10004.
 (3)
              Address
                  is c/o J.P. Morgan Partners, LLC, 1221 Avenue of the Americas,
                  New York,
                  New York 10020.
 (4)
              Address
                  is c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York,
                  10004. Represents shares owned by equity funds affiliated with
                  Goldman,
                  Sachs & Co. Mr. Gleberman is a Managing Director of Goldman, Sachs
                  & Co. Mr. Gleberman disclaims any beneficial ownership of the shares
                  of Holding Common Stock held by equity funds affiliated with Goldman,
                  Sachs & Co.
 (5)
              Address
                  is c/o J.P. Morgan Partners, LLC, 1221 Avenue of the Americas,
                  New York,
                  New York 10020. Represents shares owned by equity funds affiliated
                  with
                  J.P. Morgan Chase & Co. Mr. Behrens is a Partner of J.P. Morgan
                  Partners, which is the private equity investment arm of J.P. Morgan
                  Chase
                  & Co. Mr. Behrens disclaims any beneficial ownership of the shares
                  of
                  Holding Common Stock held by equity funds affiliated with J.P.
                  Morgan
                  Chase & Co.
 (6)
              Address
                  is c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York,
                  10004. Represents shares owned by equity funds affiliated with
                  Goldman,
                  Sachs & Co. Mr. Trevor is a Managing Director of Goldman, Sachs &
                  Co. Mr. Trevor disclaims any beneficial ownership of the shares
                  of Holding
                  Common Stock held by equity funds affiliated with Goldman, Sachs
&
                  Co.
 (7)
              Includes
                  stock appreciation rights to purchase 418 shares of Holding Common
                  Stock
                  granted to Mr. Peets, exercisable within 60 days of March 18,
                  2006.
 (8)
              Address
                  is c/o J.P. Morgan Partners, LLC, 1221 Avenue of the Americas,
                  New York,
                  New York 10020. Represents shares owned by equity funds affiliated
                  with
                  J.P. Morgan Chase & Co. Mr. Lori is a Partner of J.P. Morgan Partners,
                  which is the private equity investment arm of J.P. Morgan Chase
& Co.
                  Mr. Lori disclaims any beneficial ownership of the shares of Holding
                  Common Stock held by equity funds affiliated with J.P. Morgan Chase
&
                  Co.
 (9)
              Includes
                  options to purchase 60,495 shares of Holding Common Stock granted
                  to Mr.
                  Boots, exercisable within 60 days of March 18,
                  2006.
 (10)
              Includes
                  options to purchase 35,234 shares of Holding Common Stock granted
                  to Mr.
                  Kratochvil, exercisable within 60 days of March 18,
                  2006.
 (11)
              Includes
                  options to purchase 35,777 shares of Holding Common Stock granted
                  to Mr.
                  Beeler, exercisable within 60 days of March 18,
                  2006.
 (12)
              Includes
                  options to purchase 9,043 shares of Holding Common Stock granted
                  to Mr.
                  Hobson, exercisable within 60 days of March 18,
                  2006.
 (13)
              Includes
                  options to purchase 5,882 shares of Holding Common Stock granted
                  to Mr.
                  Unfried, exercisable within 60 days of March 18,
                  2006.
 (14)
              Includes
                  options to purchase 146,431 shares of Holding Common Stock granted
                  to
                  Executive Officers, exercisable within 60 days of March 18,
                  2006.





**Equity
      Compensation Plan Information**





The
      following table provides information as of December 31, 2005 regarding shares
      of
      common stock of Holding that may be issued under our existing equity
      compensation plans, including the BPC Holding Corporation 2002 Stock Option
      Plan
      (the “2002 Stock Option Plan”) and the BPC Holding Corporation Key Employee
      Equity Investment Plan (the “Employee Stock Purchase Plan”).





Plan
                category
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants and rights
            Weighted
                Average exercise price of outstanding options, warrants and
                rights
            Number
                of securities remaining available for future issuance under equity
                compensation plan (excluding securities referenced in column
                (a))(a)
            (b)
            (c)Equity
                compensation plans approved
              by
                security holders (1)
            —
            —
            —Equity
                compensation plans not
              approved
                by security holders (2)
            498,509
                (3)
            129
            54,216Total
            498,509
            129
            54,216





(1)  Does
      not
      include outstanding options to acquire 126,700 shares, at a weighted-average
      exercise price of $48.73 per share, that were assumed in connection with the
      Merger under the BPC Holding Corporation 1996 Stock Option Plan (the “1996
      Plan”), as amended. No future options may be granted under the 1996 Plan.


(2)  Consists
      of the 2002 Stock Option Plan and the Employee Stock Purchase Plan. Our Board
      adopted the 2002 Stock Option Plan and the Employee Stock Purchase Plan in
      August of 2002.


(3)  Does
      not
      include shares of Holding Common Stock already purchased under the Employee
      Stock Purchase Plan as such shares are already reflected in the Company’s
      outstanding shares.





**1996
      Stock Option Plan**





Holding
      currently maintains the BPC Holding Corporation 1996 Stock Option Plan (‘‘1996
      Option Plan’’), as amended, pursuant to which nonqualified options to purchase
      126,700 shares are outstanding. All outstanding options under the 1996 Option
      Plan are scheduled to expire on or before July 22, 2012 and no additional
      options will be granted under it. Option agreements issued pursuant to the
      1996
      Option Plan generally provide that options become vested and exercisable at
      a
      rate of 10% per year based on continued service. Additional options also vest
      in
      years during which certain financial targets are





-36-





attained.
      Notwithstanding the vesting provisions in the option agreements, all options
      that were scheduled to vest prior to December 31, 2002 accelerated and became
      vested immediately before the Merger.





**2002
      Stock Option Plan**





Holding
      has adopted an employee stock option plan (‘‘2002 Stock Option Plan’’), as
      amended, pursuant to which options to acquire up to 603,248 shares of Holding’s
      common stock may be granted to its employees, directors and consultants. At
      December 31, 2005, 498,509 options were outstanding under this plan. Options
      granted under the 2002 Stock Option Plan have an exercise price per share that
      either (1) is fixed at the fair market value of a share of common stock on
      the
      date of grant or (2) commences at the fair market value of a share of common
      stock on the date of grant and increases at the rate of 15% per year during
      the
      term. Generally, options have a ten-year term, subject to earlier expiration
      upon the termination of the option holder’s employment and other events. Some
      options granted under the plan become vested and exercisable over a five-year
      period based on continued service with Holding. Other options become vested
      and
      exercisable based on the achievement by Holding of certain financial targets,
      or
      if such targets are not achieved, based on continued service with Holding.
      Upon
      a change in control of Holding, the vesting schedule with respect to certain
      options accelerate for a portion of the shares subject to such
      options.





**Employee
      Stock Purchase Plan**





Holding
      has adopted an employee stock purchase program pursuant to which a number of
      employees had the opportunity to invest in Holding on a leveraged basis (certain
      senior employees also purchased shares of Holding common stock in connection
      with the Merger - see Item 13. “Certain Relationships and Related Transactions -
      Loans to Executive Officers”). Each eligible employee was permitted to purchase
      shares of Holding common stock having an aggregate value of up to the greater
      of
      (1) 150% of the value attributable to shares of Holding held by such employee
      immediately prior to the Merger or (2) $60,000. Employees participating in
      this
      program were permitted to finance two-thirds of their purchases of shares of
      Holding common stock under the program with a promissory note. In the event
      that
      an employee defaults on a promissory note used to purchase such shares,
      Holding’s only recourse is to the shares of Holding securing the note. In this
      manner, the remaining management acquired 41,628 shares in the
      aggregate.





**Item
      13.** **CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





**Stockholders
      Agreement with Major Stockholders**





In
      connection with the Merger, Holding entered into a stockholders’ agreement with
      GSCP 2000 and other private equity funds affiliated with Goldman, Sachs &
Co. that, in the aggregate, own a majority of our common stock and J.P. Morgan
      Partners (BHCA), L.P. and other private equity funds affiliated with J.P. Morgan
      Chase & Co. that, in the aggregate, own approximately 28% of our common
      stock. Under the terms of this agreement, among other things: (1) the parties
      hav e
      agreed
      to elect individuals designated by the Goldman Sachs and J.P. Morgan funds
      to
      Holding’s and Berry Plastics’ boards of directors; (2) the Goldman Sachs and
      J.P. Morgan funds have the right to subscribe for a proportional share of future
      equity issuances by Holding; (3) after July 29, 2009, the J.P. Morgan funds
      have
      the right to demand that Holding cause the initial public offering of its common
      stock, if such an offering or other sale of Holding has not occurred by such
      time; and (4) Holding has agreed not to take specified actions, including,
      making certain amendments to either the certificate of incorporation or the
      by-laws of Holding, changing independent accountants, or entering into certain
      affiliate transactions, without the approval of a majority of its board of
      directors, including at least one director designated by the J.P. Morgan funds.
      The stockholders agreement also contains provisions regarding transfer
      restrictions, rights of first offer, tag-along rights and drag-along rights
      related to the shares of Holding common stock owned by the Goldman Sachs and
      J.P. Morgan funds.





**Stockholders
      Agreement with Management**





In
      connection with the Merger, Holding also entered into a stockholders agreement
      with certain members of Holding’s management that owned Holding common stock.
      The stockholders agreement grants certain rights to, and imposes certain
      obligations on, the management stockholders who are party to the agreement,
      including: (1) restrictions on transfer of Holding’s common stock; (2)
      obligations to consent to a merger or consolidation of Holding or a sale of
      Holding’s assets or common stock; (3) obligations to sell their shares of
      Holding common stock back to Holding in specified circumstances in connection
      with the termination of their employment with Holding; (4) rights of first
      offer, (5) tag-along rights, (6) drag-along rights, (7) preemptive rights and
      (8) registration rights.





-37-








**Loans
      to Executive Officers**





In
      connection with the Merger, Messrs. Boots, Kratochvil, Beeler, Hobson, and
      Unfried together with certain other senior employees acquired shares of Holding
      common stock pursuant to an employee stock purchase program. These employees
      paid for these shares with any combination of (1) shares of Holding common
      stock
      that they held prior to the Merger; (2) their cash transaction bonus, if any;
      and (3) a promissory note. In this manner, the senior employees acquired 182,699
      shares in the aggregate. Messrs. Boots, Kratochvil, Beeler, Hobson, and Unfried
      purchased 37,785, 21,957, 22,208, 4,357, and 2,001 shares of Holding common
      stock, respectively, pursuant to this program. In connection with these
      purchases, Messrs. Boots, Kratochvil, Beeler, Hobson, and Unfried delivered
      ten-year promissory notes to Holding in the principal amounts of $2,518,500,
      $1,302,900, $1,313,400, $237,500, and $133,400 respectively. The promissory
      notes are secured by the shares purchased and such notes accrue interest which
      compounds semi-annually at the rate of 5.50% per year, the applicable federal
      rate for the notes in effect on July 16, 2002. Principal and all accrued
      interest is due and payable on the earlier to occur of (i) the end of the
      ten-year term, (ii) the ninetieth day following such executive’s termination of
      employment due to death, “disability”, “redundancy” (as such terms are defined
      in the 2002 Stock Option Plan) or retirement, or (iii) the thirtieth day
      following such executive’s termination of employment for any other reason. As of
      March 18, 2006, a total of $3,072,619, $1,589,563, $1,602,373, $289,755, and
      $162,751 including principal and accrued interest, was outstanding under the
      promissory notes for each of Messrs. Boots, Kratochvil, Beeler, Hobson, and
      Unfried, respectively.





**The
      Kerr Acquisition**





Berry
      Plastics paid Goldman, Sachs & Co. and its affiliates a total of $2.7
      million and J.P. Morgan and its affiliates a total of $1.3 million for advisory
      and other services related to the Kerr Acquisition. In addition, Goldman Sachs
      Credit Partners, L.P., and affiliates of Goldman, Sachs & Co., and J.P.
      Morgan Securities Inc., an affiliate of J.P. Morgan Chase & Co., acted as
      co-syndication agents, joint lead arrangers and joint bookrunners under the
      Second Amendment to the Second Amended and Restated Credit Facility and received
      fees of $2.7 million and $2.4 million, respectively, in June 2005 for services
      provided.





**Other
      Transactions**





Goldman
      Sachs Credit Partners, L.P., an affiliate of Goldman Sachs, acted as the
      administrative agent, joint lead arranger and joint bookrunner for the Second
      Amended and Restated Credit Facility without separate compensation. JP Morgan
      Chase Bank, an affiliate of J.P. Morgan, acted as the joint lead arranger and
      joint bookrunner for the Second Amended and Restated Credit Facility for
      consideration of approximately $0.4 million. Goldman Sachs Credit Partners,
      L.P., an affiliate of Goldman Sachs, acted as the co- syndication
      agent, joint
      lead arranger, and joint bookrunner for the Third Amendment to the Second
      Amended and Restated Credit Facility without separate compensation. JP Morgan
      Chase Bank, an affiliate of J.P. Morgan, acted as the co- syndication
      agent, joint
      lead arranger and joint bookrunner for the Third Amendment to the Second Amended
      and Restated Credit Facility for consideration of approximately $0.5 million. In
      addition, the Company entered into four resin forward contracts in the fourth
      quarter of 2004 ranging from 6.0 million to 33.6 million annual pounds of resin
      with J. Aron & Company, a division of Goldman, Sachs & Co., and enters
      into foreign currency transactions through its normal course of business with
      Goldman, Sachs & Co. In
      June
      2005, Berry entered into two separate interest rate swap transactions for $100.0
      million each with an
      affiliate of Goldman Sachs and an affiliate of J.P. Morgan to
      protect a portion of the outstanding variable rate term loan debt from future
      interest rate volatility. Also, affiliates of Goldman Sachs & Co. and J.P.
      Morgan have invested in a portion of our credit facilities in its normal course
      of business.





**Future
      Relationships with Goldman Sachs and J.P. Morgan**





In
      the
      future, Holding or Berry Plastics may engage in commercial banking, investment
      banking or other financial advisory transactions with Goldman Sachs and its
      affiliates or J.P. Morgan and its affiliates. In addition, Goldman Sachs and
      its
      affiliates or J.P. Morgan and its affiliates may purchase goods and services
      from us from time to time in the future.





**Tax
      Sharing Agreement**





For
      federal income tax purposes, Berry Plastics and its domestic subsidiaries are
      included in the affiliated group of which Holding is the common parent and
      as a
      result, the federal taxable income and loss of Berry Plastics and its
      subsidiaries is included in the group consolidated tax return filed by Holding.
      In April 1994, Holding, Berry Plastics and certain of its subsidiaries entered
      into a tax sharing agreement, which was amended and restated in March 2001
      (the
      "Tax Sharing Agreement"). Under the Tax Sharing Agreement, for fiscal 1994
      and
      all taxable years thereafter for which the





-38-





Tax
      Sharing Agreement remains in effect, Berry Plastics and its subsidiaries as
      a
      consolidated group are required to pay at the request of Holding an amount
      equal
      to the taxes (plus any accrued interest) that they would otherwise have to
      pay
      if they were to file separate federal, state or local income tax returns
      (including any amounts determined to be due as a result of a redetermination
      arising from an audit or otherwise of a tax liability which is attributable
      to
      them). If Berry Plastics and its subsidiaries would have been entitled to a
      tax
      refund for taxes paid previously on the basis computed as if they were to file
      separate returns, then under the Tax Sharing Agreement, Holding is required
      to
      pay at the request of Berry Plastics and its subsidiaries an amount equal to
      such tax refund. If, however, Berry Plastics and its subsidiaries would have
      reported a tax loss if they were to file separate returns, then Holding intends,
      but is not obligated under the Tax Sharing Agreement, to pay to Berry Plastics
      and its subsidiaries an amount equal to the tax benefit that is realized by
      Holding as a result of such separate loss. Under the Tax Sharing Agreement
      any
      such payments to be made by Holding to Berry Plastics or any of its subsidiaries
      on account of a tax loss are within the sole discretion of Holding.





**Item
      14.** **PRINCIPAL ACCOUNTANT FEES AND SERVICES**





*Audit
      Fees* .
      The
      aggregate fees for professional services rendered by Ernst & Young LLP for
      the audit of the Company’s annual financial statements for 2005, 2004 and 2003,
      the review of the financial statements included in the Company’s Forms 10-Q for
      2005, 2004 and 2003 and statutory audits of foreign subsidiaries totaled
      $799,000, $422,000 and $682,000, respectively.





*Audit-Related
      Fees* .
      The
      aggregate fees for assurance and related services by Ernst & Young LLP that
      are related to the performance of the audit or review of the Company’s financial
      statements, for 2005, 2004 and 2003, and are not disclosed in the paragraph
      caption “Audit Fees” above, were $202,000, $207,000 and $546,000, respectively.
      The services performed by Ernst & Young LLP in connection with these fees
      consisted of employee benefit plan audits, internal controls consultation,
      and
      due diligence on businesses being considered for purchase.





*Tax
      Fees.* The
      aggregate fees for professional services rendered by Ernst & Young LLP for
      tax compliance, for the years ended 2005, 2004 and 2003 were $120,000, $65,000
      and $71,000, respectively. The aggregate fees billed by Ernst & Young LLP
      for professional services rendered for tax advice and tax planning, for 2005,
      2004 and 2003, were $146,000, $93,000 and $98,000, respectively. The services
      performed by Ernst & Young LLP in connection with these advisory and
      planning fees consisted of consultation regarding various tax
      issues.





*All
      Other Fees* .
      There
      were no fees for products and services by Ernst & Young LLP, other than the
      services described in the paragraphs captioned “Audit Fees”, “Audit-Related
      Fees”, and “Tax Fees” above for 2005, 2004 and 2003.





The
      Audit
      Committee has established its pre-approval policies and procedures, pursuant
      to
      which the Audit Committee approved the foregoing audit and permissible non-audit
      services provided by Ernst & Young LLP in 2005, 2004, and 2003. Consistent
      with the Audit Committee’s responsibility for engaging our independent auditors,
      all audit and permitted non-audit services require pre-approval by the Audit
      Committee. All requests or applications for services to be provided by the
      independent auditor that do not require specific approval by the Audit Committee
      will be submitted to the Chief Financial Officer and must include a detailed
      description of the services to be rendered. The Chief Financial Officer will
      determine whether such services are included within the services that have
      received pre-approval of the Audit Committee. The Audit Committee will be
      informed on a timely basis of any such services rendered by the independent
      auditor. Request or applications to provide services
      that require specific approval by the Audit Committee will be submitted to
      the
      Audit Committee by both the independent auditor and the Chief Financial Officer.
      The Chief Financial Officer and management will immediately report to the Audit
      Committee any breach of this policy that comes to the attention of the Chief
      Financial Officer or any member of management. Pursuant to these procedures
      the
      Audit Committee approved the audit and permissible non-audit services provided
      by Ernst & Young LLP in 2005, 2004, and 2003.








-39-





**PART
      IV**





**Item
      15.**  **EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K**





(a)
            Documents
                Filed as Part of the Report





1.  Financial
      Statements




The financial statements listed under Item 8 are filed as part of this
      report.





2.  Financial
      Statement Schedules




Schedules have been omitted because they are either not applicable or the
      required information has been disclosed in the financial
      statements or notes thereto.





3.  Exhibits




The exhibits listed on the accompanying Exhibit Index are filed as part of
      this
      report.





(b)
            Reports
                on Form 8-K




None





-40-





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








The
      Stockholders and Board of Directors


BPC
      Holding Corporation





We
      have
      audited the accompanying consolidated balance sheets of BPC Holding Corporation
      as of December 31, 2005 and January 1, 2005, and the related consolidated
      statements of income, shareholders' equity, and cash flows for each of the
      years
      ended December 31, 2005, January 1, 2005 and December 27, 2003. These financial
      statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. We were not engaged to perform
      an
      audit of the Company's internal control over financial reporting. Our audits
      included consideration of internal control over financial reporting as a basis
      for designing audit procedures that are appropriate in the circumstances, but
      not for the purpose of expressing an opinion on the effectiveness of the
      Company's internal control over financial reporting. Accordingly, we express
      no
      such opinion. An audit also includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the financial statements, assessing
      the accounting principles used and significant estimates made by management,
      and
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of BPC Holding
      Corporation at December 31, 2005 and January 1, 2005, and the consolidated
      results of its operations and its cash flows for each of the years ended
      December 31, 2005, January 1, 2005 and December 27, 2003, in conformity with
      U.S. generally accepted accounting principles.














**/s/
      ERNST & YOUNG LLP**











Indianapolis,
      Indiana


February
      17, 2006





F-1








**BPC
      Holding Corporation**


**Consolidated
      Balance Sheets**


**(In
      Thousands of Dollars, except per share information)**


**December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005****Assets**Current
                  assets*:*Cash
                  and cash equivalents
              
              **$**
              **24,756**
              
              $
              264Accounts
                  receivable (less allowance for doubtful accounts of $5,766 at December
                  31,
                  2005 and $3,207 at January 1, 2005)
              
              
              **140,443**
              
              
              83,162Inventories:Finished
                  goods
              
              
              **101,632**
              
              
              70,371Raw
                  materials and supplies
              
              
              **50,716**
              
              
              38,663**152,348**
              
              
              109,034Deferred
                  income taxes
              
              
              **22,905**
              
              
              —Prepaid
                  expenses and other current assets
              
              
              **39,037**
              
              
              27,339Total
                  current assets
              
              
              **379,489**
              
              
              219,799Property
                  and equipment:Land
              
              
              **12,292**
              
              
              10,016Buildings
                  and improvements
              
              
              **92,810**
              
              
              64,758Equipment
                  and construction in progress
              
              
              **497,364**
              
              
              317,784**602,466**
              
              
              392,558Less
                  accumulated depreciation
              
              
              **179,022**
              
              
              110,586**423,444**
              
              
              281,972Intangible
                  assets:Deferred
                  financing fees, net
              
              
              **18,333**
              
              
              19,883Customer
                  relationships, net
              
              
              **255,981**
              
              
              84,959Goodwill
              
              
              **495,258**
              
              
              358,883Trademarks,
                  net
              
              
              **47,065**
              
              
              33,448Other
                  intangibles, net
              
              
              **28,260**
              
              
              6,106**844,897**
              
              
              503,279Other
              
              
              **—**
              
              
              94Total
                  assets
              
              **$**
              **1,647,830**
              
              $
              1,005,144







F-2


**Consolidated
      Balance Sheets (continued)**





**December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005****Liabilities
                  and stockholders' equity**Current
                  liabilities:Accounts
                  payable
              
              **$**
              **64,970**
              
              $
              55,671Accrued
                  interest
              
              
              **20,165**
              
              
              18,816Employee
                  compensation, payroll and other taxes
              
              
              **43,915**
              
              
              28,190Accrued
                  expenses and other current liabilities
              
              
              **34,730**
              
              
              16,693Current
                  portion of long-term debt
              
              
              **13,928**
              
              
              10,335Total
                  current liabilities
              
              
              **177,708**
              
              
              129,705Long-term
                  debt, less current portion
              
              
              **1,146,692**
              
              
              687,223Deferred
                  income taxes
              
              
              **94,934**
              
              
              1,030Other
                  long-term liabilities
              
              
              **25,108**
              
              
              3,295Total
                  liabilities
              
              
              **1,444,442**
              
              
              821,253Stockholders'
                  equity:Preferred
                  stock; $.01 par value: 500,000 shares authorized; 0 shares issued
                  and
                  outstanding at December 31, 2005 and January 1, 2005
              
              
              **—**
              
              
              —Common
                  stock; $.01 par value: 5,000,000 shares authorized; 3,398,807 shares
                  issued and 3,374,348 shares outstanding at December 31, 2005; and
                  3,398,807 shares issued and 3,377,923 shares outstanding at January
                  1,
                  2005
              
              
              **34**
              
              
              34Additional
                  paid-in capital
              
              
              **346,943**
              
              
              345,001Adjustment
                  of the carryover basis of continuing stockholders
              
              
              **(196,603**
              **)**
              
              (196,603
              )Notes
                  receivable - common stock
              
              
              **(14,273**
              **)**
              
              (14,856
              )Treasury
                  stock: 24,459 shares and 20,502 shares of common stock at
                  December 31, 2005 and January 1, 2005, respectively
              
              
              **(3,547**
              **)**
              
              (2,049
              )Retained
                  earnings
              
              
              **58,969**
              
              
              39,178Accumulated
                  other comprehensive income
              
              
              **11,865**
              
              
              13,186Total
                  stockholders’ equity
              
              
              **203,388**
              
              
              183,891Total
                  liabilities and stockholders' equity
              
              **$**
              **1,647,830**
              
              $
              1,005,144


*See
      notes to consolidated financial statements.*





F-3




**BPC
      Holding Corporation**


**Consolidated
        Statements of Income**
 **(In
        Thousands of Dollars)**


**Year
                  Ended****December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**
              
              **December
                  27,**
                **2003**Net
                  sales
              
              **$**
              **1,169,704**
              
              $
              814,213
              
              $
              551,876Cost
                  of goods sold
              
              
              **943,370**
              
              
              639,329
              
              
              420,750Gross
                  profit
              
              
              **226,334**
              
              
              174,884
              
              
              131,126Operating
                  expenses:Selling
              
              
              **34,145**
              
              
              26,361
              
              
              23,883General
                  and administrative
              
              
              **49,477**
              
              
              38,518
              
              
              25,699Research
                  and development
              
              
              **6,131**
              
              
              3,825
              
              
              3,459Amortization
                  of intangibles
              
              
              **15,574**
              
              
              6,513
              
              
              3,326Other
                  expenses
              
              
              **5,218**
              
              
              5,791
              
              
              3,569Operating
                  income
              
              
              **115,789**
              
              
              93,876
              
              
              71,190Other
                  expense (income):Gain
                  on disposal of property and equipment
              
              
              **—**
              
              
              —
              
              
              (7
              )Unrealized
                  loss on investment in Southern Packaging
              
              
              **1,354**
              
              
              —
              
              
              —Income
                  before interest and taxes
              
              
              **114,435**
              
              
              93,876
              
              
              71,197Interest:Expense
              
              
              **74,445**
              
              
              54,076
              
              
              46,251Loss
                  on extinguished debt
              
              
              **7,045**
              
              
              —
              
              
              250Income
              
              
              **(1,171**
              **)**
              
              (891
              )
              
              (838
              )Income
                  before income taxes
              
              
              **34,116**
              
              
              40,691
              
              
              25,534Income
                  taxes
              
              
              **14,325**
              
              
              17,740
              
              
              12,486Net
                  income
              
              **$**
              **19,791**
              
              $
              22,951
              
              $
              13,048





*See
      notes to consolidated financial statements.*





F-4




BPC
      Holding Corporation


**Consolidated
      Statements of Changes in Stockholders' Equity**


**(In
      Thousands of Dollars)**


**Common**
                **Stock**
              **Additional**
                **Paid-In**
                **Capital**
              **Adjustment**
                **of
                  the**
                **carryover**
                **basis
                  of**
                **continuing**
                **stockholders**
              **Notes**
                **receivable**
                **-
                  common**
                **stock**
              **Treasury**
                **Stock**
              **Retained**
                **Earnings**
              **Accumulated
                  Other Comprehensive Income**
              **Total**
              **Comprehensive
                  Income**Balance
                  at December 28, 2002
              $
                  28
              $
                  281,816
              $(196,603)
              $(14,399)
              $
                  —
              $
                  3,179
              $
                  1,142
              $75,163
              $
                  4,321Issuance
                  of common stock
              6
              62,547
              —
              —
              —
              —
              —
              62,553
              —Purchase
                  of treasury stock
              —
              —
              —
              999
              (1,972)
              —
              —
              (973)
              —Interest
                  on notes receivable
              —
              —
              —
              (757)
              —
              —
              —
              (757)
              —Translation
                  gain
              —
              —
              —
              —
              —
              —
              3,645
              3,645
              3,645Other
                  comprehensive losses
              —
              —
              —
              —
              —
              —
              (88)
              (88)
              (88)Net
                  income
              —
              —
              —
              —
              —
              13,048
              —
              13,048
              13,048Balance
                  at December 27, 2003
              34
              344,363
              (196,603)
              (14,157)
              (1,972)
              16,227
              4,699
              152,591
              16,605Issuance
                  of common stock
              —
              53
              —
              —
              —
              —
              —
              53
              —Collection
                  on notes receivable
              —
              —
              —
              73
              —
              —
              —
              73
              —Purchase
                  of treasury stock
              —
              —
              —
              —
              (192)
              —
              —
              (192)
              —Sale
                  of treasury stock
              —
              —
              —
              —
              115
              —
              —
              115
              —Interest
                  on notesreceivable
              —
              —
              —
              (772)
              —
              —
              —
              (772)
              —Stock-based
                  compensation
              —
              585
              —
              —
              —
              —
              —
              585
              —Translation
                  gain
              —
              —
              —
              —
              —
              —
              2,743
              2,743
              2,743Other
                  comprehensive gains
              —
              —
              —
              —
              —
              —
              5,744
              5,744
              5,744Net
                  income
              —
              —
              —
              —
              —
              22,951
              —
              22,951
              22,951Balance
                  at January 1, 2005
              34
              345,001
              (196,603)
              (14,856)
              (2,049)
              39,178
              13,186
              183,891
              31,438Collection
                  on notesreceivable
              **—**
              **—**
              **—**
              **1,361**
              **—**
              **—**
              **—**
              **1,361**
              **—**Purchase
                  oftreasury
                  stock
              **—**
              **(15)**
              **—**
              **—**
              **(5,498)**
              **—**
              **—**
              **(5,513)**
              **—**Sale
                  of treasurystock
              **—**
              **(195)**
              **—**
              **—**
              **4,000**
              **—**
              **—**
              **3,805**
              **—**Interest
                  on notesreceivable
              **—**
              **—**
              **—**
              **(778)**
              **—**
              **—**
              **—**
              **(778)**
              **—**Stock-basedcompensation
              **—**
              **2,152**
              **—**
              **—**
              **—**
              **—**
              **—**
              **2,152**
              **—**Translation
                  losses
              **—**
              **—**
              **—**
              **—**
              **—**
              **—**
              **(3,225)**
              **(3,225)**
              **(3,225)**Othercomprehensivegains
              **—**
              **—**
              **—**
              **—**
              **—**
              **—**
              **1,904**
              **1,904**
              **1,904**Net
                  income
              **—**
              **—**
              **—**
              **—**
              **—**
              **19,791**
              **—**
              **19,791**
              **19,791**Balance
                  atDecember
                  31, 2005
              **$
                  34**
              **$
                  346,943**
              **$(196,603)**
              **$
                  (14,273)**
              **$
                  (3,547)**
              **$
                  58,969**
              **$
                  11,865**
              **$203,388**
              **$
                  18,470**
 *See
        notes to consolidated financial statements.*





F-5





BPC
      Holding Corporation


Consolidated
        Statements of Cash Flows
 (In
        Thousands of Dollars)


**Year
                  Ended****December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**
              
              **December
                  27,**
                **2003****Operating
                  activities**Net
                  income
              
              **$**
              **19,791**
              
              $
              22,951
              
              $
              13,048Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Depreciation
              
              
              **73,146**
              
              
              54,303
              
              
              40,752Non-cash
                  interest expense
              
              
              **1,945**
              
              
              1,862
              
              
              2,318Write
                  off of deferred financing fees
              
              
              **7,045**
              
              
              —
              
              
              —Amortization
                  of intangibles
              
              
              **15,574**
              
              
              6,513
              
              
              3,326Non-cash
                  compensation
              
              
              **2,152**
              
              
              585
              
              
              —Unrealized
                  loss on investment in Southern Packaging
              
              
              **1,354**
              
              
              —
              
              
              —Gain
                  on sale of property and equipment
              
              
              **—**
              
              
              —
              
              
              (7
              )Deferred
                  income taxes
              
              
              **12,769**
              
              
              16,772
              
              
              11,791Changes
                  in operating assets and liabilities:Accounts
                  receivable, net
              
              
              **(13,004**
              **)**
              
              (7,216
              )
              
              (598
              )Inventories
              
              
              **(8,720**
              **)**
              
              (27,200
              )
              
              5,600Prepaid
                  expenses and other assets
              
              
              **309**
              
              
              (7,022
              )
              
              (2,550
              )Accrued
                  interest
              
              
              **1,349**
              
              
              683
              
              
              3,894Payables
                  and accrued expenses
              
              
              **(12,164**
              **)**
              
              13,002
              
              
              2,199Net
                  cash provided by operating activities
              
              
              **101,546**
              
              
              75,233
              
              
              79,773**Investing
                  activities**Additions
                  to property and equipment
              
              
              **(57,829**
              **)**
              
              (52,624
              )
              
              (29,949
              )Proceeds
                  from disposal of property and equipment
              
              
              **2,223**
              
              
              2,986
              
              
              7Proceeds
                  from working capital settlement on business acquisition
              
              
              **—**
              
              
              7,397
              
              
              —Investment
                  in Southern Packaging
              
              
              **—**
              
              
              (3,236
              )
              
              —Acquisitions
                  of businesses
              
              
              **(464,392**
              **)**
              
              —
              
              
              (235,710
              )Net
                  cash used for investing activities
              
              
              **(519,998**
              **)**
              
              (45,477
              )
              
              (265,652
              )**Financing
                  activities**Proceeds
                  from long-term borrowings
              
              
              **465,052**
              
              
              880
              
              
              149,944Payments
                  on long-term borrowings
              
              
              **(12,882**
              **)**
              
              (55,996
              )
              
              (10,111
              )Issuance
                  of common stock
              
              
              **—**
              
              
              53
              
              
              62,553Purchase
                  of treasury stock
              
              
              **(5,513**
              **)**
              
              (192
              )
              
              (973
              )Proceeds
                  from notes receivable
              
              
              **1,361**
              
              
              73
              
              
              —Sale
                  of treasury stock
              
              
              **3,805**
              
              
              115
              
              
              —Debt
                  financing costs
              
              
              **(8,637**
              **)**
              
              (641
              )
              
              (4,592
              )Net
                  cash provided by (used for) financing activities
              
              
              **443,186**
              
              
              (55,708
              )
              
              196,821Effect
                  of exchange rate changes on cash
              
              
              **(242**
              **)**
              
              24
              
              
              (363
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              **24,492**
              
              
              (25,928
              )
              
              10,579Cash
                  and cash equivalents at beginning of year
              
              
              **264**
              
              
              26,192
              
              
              15,613Cash
                  and cash equivalents at end of year
              
              **$**
              **24,756**
              
              $
              264
              
              $
              26,192


*See
      notes to consolidated financial statements.*





F-6





**BPC
      Holding Corporation**


**Notes
      to Consolidated Financial Statements**


**(In
      thousands of dollars, except as otherwise noted)**





**Note
      1. Organization**





BPC
      Holding Corporation (“Holding”), through its subsidiary Berry Plastics
      Corporation (“Berry” or the “Company”) and its subsidiaries, manufactures and
      markets rigid plastic packaging products through its facilities located in
      Evansville, Indiana; Henderson, Nevada; Iowa Falls, Iowa; Charlotte, North
      Carolina; Suffolk, Virginia; Lawrence, Kansas; Monroeville, Ohio; Norwich,
      England; Woodstock, Illinois; Streetsboro, Ohio; Baltimore, Maryland; Milan,
      Italy; Chicago, Illinois; Richmond, Indiana; Syracuse, New York; Phoenix,
      Arizona; Ahoskie, North Carolina; Bowling Green, Kentucky; Sarasota, Florida;
      Jackson, Tennessee; Anaheim, California; Cranbury, New Jersey; Easthampton,
      Massachusetts; Oxnard, California; and Toluca, Mexico.





Holding’s
      fiscal year is a 52/53 week period ending generally on the Saturday closest
      to
      December 31. All references herein to “2005”, “2004,” and “2003,” relate to the
      fiscal years ended December 31, 2005, January 1, 2005, and December 27, 2003,
      respectively.





**Note
      2. Summary of Significant Accounting Policies**





*Consolidation
      and Business*





The
      consolidated financial statements include the accounts of Holding and its
      subsidiaries, all of which are wholly owned. Intercompany accounts and
      transactions have been eliminated in consolidation. Holding, through its wholly
      owned subsidiaries, operates in two primary segments: rigid open top and rigid
      closed top. The Company's customers are located principally throughout the
      United States, without significant concentration in any one region or with
      any
      one customer. The Company performs periodic credit evaluations of its customers'
      financial condition and generally does not require collateral.





Purchases
      of various densities of plastic resin used in the manufacture of the Company’s
      products aggregated approximately $385.0 million and $283.0 million in 2005
      and
      2004, respectively. Dow Chemical Corporation was the largest supplier of the
      Company’s total resin material requirements, representing approximately 29% and
      32% of such resin requirements in 2005 and 2004, respectively. The Company
      also
      uses other suppliers such as  Basell,
      Nova, Total, Lyondell, Chevron,
      ExxonMobil, Sunoco, and Huntsman to meet
      its resin requirements.





*Cash
      and Cash Equivalents*





All
      highly liquid investments with maturity of three months or less at the date
      of
      purchase are considered to be cash equivalents.





*Accounts
      Receivable*





The
      allowance for doubtful accounts is analyzed in detail on a quarterly basis
      and
      all significant customers with delinquent balances are reviewed to determine
      future collectibility. The determinations are based on legal issues (such as
      bankruptcy status), past history, current financial and credit agency reports,
      and the experience of the credit representatives. Reserves are established
      in
      the quarter in which the Company makes the determination that the account is
      deemed uncollectible. The Company maintains additional reserves based on its
      historical bad debt experience. Additionally, the allowance for doubtful
      accounts includes a reserve for cash discounts that are offered to some
      customers for prompt payment. The following table summarizes the activity by
      period for the allowance for doubtful accounts, excluding the activity related
      to cash discounts due to its volume.





F-7





**Year
                  Ended****December
                  31, 2005**
              
              **January
                  1,**
                **2005**
              
              **December
                  27, 2003**Balance
                  at beginning of period
              
              **$**
              **3,207**
              
              $
              2,717
              
              $
              1,990Charged
                  to costs and expenses
              
              
              **592**
              
              
              323
              
              
              150Charged
                  to other accounts (1)
              
              
              **1,851**
              
              
              —
              
              
              545Deductions
                  and currency translation (2)
              
              
              **116**
              
              
              167
              
              
              32Balance
                  at end of period
              
              **$**
              **5,766**
              
              $
              3,207
              
              $
              2,717




(1)
            Primarily
                relates to purchase of accounts receivable and related allowance
                through
                acquisitions.


(2)
            Uncollectible
                accounts written off, net of recoveries, and currency translation
                on
                foreign operations.





*Inventories*





Inventories
      are valued at the lower of cost (first in, first out method) or
      market.





*Property
      and Equipment*





Property
      and equipment are stated at cost. Depreciation is computed primarily by the
      straight-line method over the estimated useful lives of the assets ranging
      from
      15 to 25 years for buildings and improvements and two to 10 years for machinery,
      equipment, and tooling. Leasehold improvements are depreciated over the shorter
      of the useful life of the improvement and the lease life. Repairs and
      maintenance costs are charged to expense as incurred.





*Intangible
      Assets*





Deferred
      financing fees are being amortized using the straight-line method over the
      lives
      of the respective debt agreements.





Customer
      relationships are being
      amortized using the straight-line method over the estimated life of the
      relationships ranging from three to 20 years .





The
      goodwill acquired represents the excess purchase price over the fair value
      of
      the net assets acquired in the Merger (see Note 3 below) and businesses acquired
      since the Merger. These costs are reviewed
      annually for impairment pursuant to Statement of Financial Accounting Standards
      (“SFAS”) No. 142, Goodwill and Other Intangible Assets .





Trademarks
      that are expected to remain in use, which are indefinite lived intangible
      assets, are reviewed
      for impairment annually pursuant to SFAS No. 142 ,
      and
      those trademarks that are expected to be phased out are being amortized using
      the straight-line method over the estimated life of five years.





Other
      intangibles, which include covenants not to compete and technology-based
      intangibles, are being amortized using the straight-line method over the
      respective lives of the agreements or estimated life of the technology ranging
      from one to twenty years.





*Long-lived
      Assets*





Long-lived
      assets are reviewed for impairment in accordance with SFAS No. 144 whenever
      facts and circumstances indicate that the carrying amount may not be
      recoverable. Specifically, this process involves comparing an asset's carrying
      value to the estimated undiscounted future cash flows the asset is expected
      to
      generate over its remaining life. If this process were to result in the
      conclusion that the carrying value of a long-lived asset would not be
      recoverable, a write-down of the asset to fair value would be recorded through
      a
      charge to operations. Fair value is determined based upon discounted cash flows
      or appraisals as appropriate. Long-lived assets that are held for sale are
      reported at the lower of the assets’ carrying amount or fair value less costs
      related to the assets’ disposition. No impairments were recorded in these
      financial statements.





*Derivative
      Financial Instruments*





The
      Company uses interest rate hedge instruments to manage a portion of its interest
      rate exposures. In 2004, the Company also entered into resin forward contracts,
      which became effective in 2005, to manage certain resin price exposures. These
      instruments are entered into to manage market risk
      exposures and are not used for trading purposes.





F-8





Derivatives
      used for hedging purposes must be designated as, and effective as, a hedge
      of
      the identified risk exposure at the designation of the contract. Accordingly,
      changes in the market value of the derivative contract must be highly correlated
      with changes in the market value of the underlying hedged item at inception
      of
      the hedge and over the life of the hedge contract. Any derivative instrument
      terminated, designated but no longer effective as a hedge, or initially not
      effective as a hedge would be recorded at market value and the related gains
      and
      losses would be recognized in earnings. Derivatives not designated as hedges
      are
      adjusted to fair value through the consolidated statement of income. Management
      routinely reviews the effectiveness of the use of derivative
      instruments.





Gains
      and
      losses from hedges of anticipated transactions are classified in the statement
      of income consistent with the accounting treatment of the items being hedged.
      The Company has recognized the interest rate hedge instruments and resin forward
      contracts at fair value in the consolidated balance sheets.





*Foreign
      Currency Translation*





Assets
      and liabilities of most foreign subsidiaries are translated at exchange rates
      in
      effect at the balance sheet date, and the statements of income are translated
      at
      the average monthly exchange rates for the period. Translation gains and losses
      are recorded as a component of accumulated other comprehensive income in
      stockholders’ equity. Foreign currency transaction gains and losses are included
      in net income.





*Revenue
      Recognition*





The
      Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
      No.
      101, “Revenue Recognition in Financial Statements” (“SAB 101”) and SEC Staff
      Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”). Revenue is
      recognized when the title and risk of loss have passed to the customer, there
      is
      persuasive evidence of an arrangement, delivery has occurred or services have
      been rendered, the sales price is fixed or determinable, and collectibility
      is
      reasonably assured.





*Stock-Based
      Compensation*





SFAS
      No.
      123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148,
“Accounting for Stock-Based Compensation - Transition and Disclosure,”
established accounting and disclosure requirements using a fair-value-based
      method of accounting for stock-based employee compensation plans. As provided
      for under SFAS 123, the Company accounts for stock-based compensation using
      the
      intrinsic value method prescribed in Accounting Principles Board Opinion 25,
      “Accounting for Stock Issued to Employees.” Compensation cost for stock options,
      if any, is measured as the excess of the fair value of the Company’s stock at
      the date of grant over the amount an employee must pay to acquire the stock. ** The
      fair
      value for options granted by Holding have been estimated at the date of grant
      using a Black Scholes option pricing model with the following weighted average
      assumptions:


**Year
                  Ended****December
                  31, 2005**
              
              **January
                  1,**
                **2005**
              
              **December
                  27, 2003**Risk-free
                  interest rate
              
              
              **4.5**
              **%**
              
              3.1
              %
              
              3.0
              %Dividend
                  yield
              
              
              **0.0**
              **%**
              
              0.0
              %
              
              0.0
              %Volatility
                  factor
              
              
              **.25**
              
              
              .25
              
              
              .25Expected
                  option life
              
              
              **5.0
                  years**
              
              
              5.0
                  years
              
              
              5.0
                  years


For
      purposes of the pro forma disclosures, the estimated fair value of the stock
      options are amortized to expense over the related vesting period. Because
      compensation expense is recognized over the vesting period, the initial impact
      on pro forma net income may not be representative of compensation expense in
      future years, when the effect of amortization of multiple awards would be
      reflected in the Consolidated Statement of Income. The
      following is a reconciliation of reported net income to net income as if the
      Company used the fair value method of accounting for stock-based
      compensation.





F-9











**Year
                Ended****December
                31, 2005**
            
            **January
                1,**
              **2005**
            
            **December
                27, 2003**Reported
                net income
            **$**
            **19,791**
            
            $
            22,951
            
            $
            13,048Stock-based
                employee compensation expense included in reported income, net of
                tax
            
            **1,291**
            
            
            351
            
            
            —Total
                stock-based employee compensation expense determined under fair value
                based method, for all awards, net of tax
            
            **(2,508**
            **)**
            
            (2,294
            )
            
            (2,044Pro
                forma net income
            **$**
            **18,574**
            
            $
            21,008
            
            $
            11,004





*Income
      Taxes*





The
      Company accounts for income taxes under the asset and liability approach, which
      requires the recognition of deferred tax assets and liabilities for the expected
      future tax consequence of events that have been recognized in the Company's
      financial statements or income tax returns. Income taxes are recognized during
      the year in which the underlying transactions are reflected in the Consolidated
      Statements of Income. Deferred taxes are provided for temporary differences
      between amounts of assets and liabilities as recorded for financial reporting
      purposes and such amounts as measured by tax laws. If the
      Company determines that a deferred tax asset arising from temporary differences
      is not likely to be utilized, the Company will establish a valuation allowance
      against that asset to record it at its expected realizable value.





*Comprehensive
      Income*





Comprehensive
      income is comprised of net income and other comprehensive income. Other
      comprehensive income includes unrealized gains or losses on derivative financial
      instruments, unrealized gains or losses resulting from currency translations
      of
      foreign investments, and adjustments to record the minimum pension
      liability.





*Pension*





Pension
      benefit costs include assumptions for the discount rate, retirement age, and
      expected return on plan assets. Retiree medical plan costs include assumptions
      for the discount rate, retirement age, and health-care-cost trend rates.
      Periodically, the Company evaluates the discount rate and the expected return
      on
      plan assets in its defined benefit pension and retiree health benefit plans.
      In
      evaluating these assumptions, the Company considers many factors, including
      an
      evaluation of the discount rates, expected return on plan assets and the
      health-care-cost trend rates of other companies; historical assumptions compared
      with actual results; an analysis of current market conditions and asset
      allocations; and the views of advisers.





*Use
      of Estimates*





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities,
      disclosure of any contingent assets and liabilities at the financial statement
      date and reported amounts of revenue and expenses during the reporting period.
      On an on-going basis, the Company reviews its estimates and assumptions. The
      Company’s estimates were based on its historical experience and various other
      assumptions that the Company believes to be reasonable under the circumstances.
      Actual results are likely to differ from those estimates under different
      assumptions or conditions, but management does not believe such differences
      will
      materially affect the Company's financial position or results of
      operations.





*Reclassifications*





Certain
      amounts in the prior year financial statements and related notes have been
      reclassified to conform to the current year presentation.





*Impact
      of Recently Issued Accounting Standards*





In
      November 2004, the FASB issued Statement of Financial Accounting Standards
      No.
      151, Inventory Costs, an amendment of ARB No. 43, Chapter 4 (“SFAS 151”). SFAS
      151 requires the exclusion of certain costs from inventories and the





F-10





allocation
      of fixed production overheads to inventories to be based on normal capacity
      of
      the production facilities. The provisions of SFAS 151 are effective for costs
      incurred during fiscal years beginning after June 15, 2005. Earlier adoption
      is
      permitted for inventory costs incurred during fiscal years beginning after
      the
      issuance date of SFAS 151. The Company does not expect the adoption of this
      new
      standard to have a material effect on the Company’s financial position or
      results of operations.





In
      December 2004, the FASB issued Statement of Financial Accounting Standards
      No.
      123R (Revised 2004,) Share-Based Payment (“SFAS No. 123R”), which requires that
      the compensation cost relating to share-based payment transactions be recognized
      in financial statements based on alternative fair value models. The share-based
      compensation cost will be measured based on the fair value of the equity or
      liability instruments issued. The Company currently discloses pro forma
      compensation expense quarterly and annually by calculating the stock option
      grants’ fair value using the Black-Scholes model and disclosing the impact on
      net income in a Note to the Consolidated Financial Statements. Upon adoption,
      pro forma disclosure will no longer be an alternative. For nonpublic companies,
      as defined, the effective date of SFAS No. 123R is the beginning of the first
      annual reporting period that begins after December 15, 2005, although
      early adoption is allowed. The Company will adopt SFAS No. 123R in the first
      quarter of 2006. Based upon outstanding options as of December 31, 2005,
      after-tax expense, as calculated using the Black-Scholes model would be
      approximately $2.3 million in 2006.





In
      2005,
      the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset
      Retirement Obligations, an interpretation of FASB Statement No. 143, Asset
      Retirement Obligations (“FIN 47”). FIN 47 provides clarification of the term
“conditional asset retirement obligation” as used in SFAS 143, defined as a
      legal obligation to perform an asset retirement activity in which the timing
      or
      method of settlement are conditional on a future event that may or may not
      be
      within the control of the Company. Under this standard, a company must record
      a
      liability for a conditional asset retirement obligation if the fair value of
      the
      obligation can be reasonably estimated. FIN 47 became effective for the
      Company’s year ended December 31, 2005. The adoption of FIN 47 did not have a
      material effect on our financial
      position or results of operations .





**Note
      3. The Merger**





On
      July
      22, 2002, GS Berry Acquisition Corp., (the “Buyer”) a newly formed entity
      controlled by various private equity funds affiliated with Goldman, Sachs &
Co., merged (the “Merger”) with and into Holding, pursuant to an agreement and
      plan of merger, dated as of May 25, 2002. At the effective time of the Merger,
      (i) each share of common stock of Holding Corporation issued and outstanding
      immediately prior to the effective time of the Merger was converted into the
      right to receive cash pursuant to the terms of the merger agreement, and (ii)
      each share of common stock of the Buyer issued and outstanding immediately
      prior
      to the effective time of the Merger was converted into one share of common
      stock
      of Holding.


Immediately
      following the Merger, the Buyer and its affiliates owned approximately 63%
      of
      the common stock of Holding. The remaining common stock of Holding is held
      by
      J.P. Morgan Partners Global Investors, L.P. and other private equity funds
      affiliated with J.P. Morgan Partners, LLC, the private equity investment arm
      of
      J.P. Morgan Chase & Co., which own approximately 29% of Holding’s common
      stock and by members of Berry’s management, which own the remaining
      8%.





The
      Merger has been accounted for under the purchase method of accounting, and
      accordingly, the purchase price was allocated to the identifiable assets and
      liabilities based on estimated fair values at the acquisition date. The Company
      applied the provisions of Emerging Issues Task Force 88-16, Basis in Leveraged
      Buyout Transactions, whereby, the carryover equity interests of certain
      shareholders from the Predecessor to the Company were recorded at their Company
      basis. The application of these provisions reduced stockholder’s equity and
      intangibles by $196.6 million.





**Note
      4. Recent Acquisitions, Investment, and Disposal**





On
      February 25, 2003, Berry acquired the 400 series continuous threaded injection
      molded closure assets from CCL Plastic Packaging located in Los Angeles,
      California (“CCL Acquisition”) for aggregate consideration of approximately $4.6
      million. The purchase price was allocated to fixed assets ($2.7 million),
      inventory ($1.1 million), customer relationships ($0.5 million), goodwill ($0.2
      million), and other intangibles ($0.1 million). The purchase was financed
      through borrowings under the Company’s revolving line of credit. The operations
      from the CCL Acquisition are included in Berry’s operations since the
      acquisition date.





On
      May
      30, 2003, Berry acquired the injection molded overcap lid assets from APM Inc.
      located in Benicia, California (“APM Acquisition”) for aggregate consideration
      of approximately $0.6 million. The purchase price was allocated to fixed





F-11





assets
      ($0.3 million), inventory ($0.1 million), goodwill ($0.1 million) and other
      intangibles ($0.1 million). The purchase was financed through cash provided
      by
      operations. The operations from the APM Acquisition are included in Berry’s
      operations since the acquisition date.





On
      November 20, 2003, Berry acquired Landis Plastics, Inc. (the “Landis
      Acquisition”) for aggregate consideration of approximately $229.7 million,
      including deferred financing fees. The operations from the Landis Acquisition
      are included in Berry’s operations since the acquisition date using the purchase
      method of accounting. The purchase was financed through the issuance by Berry
      of
      $85.0 million aggregate principal amount of 10 3/4% senior subordinated notes
      to
      various institutional buyers, which resulted in gross proceeds of $95.2 million,
      aggregate net borrowings of $54.1 million under Berry’s amended and restated
      senior secured credit facility from new term loans after giving effect to the
      refinancing of the prior term loan, an aggregate common equity contribution
      of
      $62.0 million, and cash on hand. Berry also agreed to acquire, for $32.0
      million, four facilities that Landis leased from certain of its affiliates.
      Prior to the closing of the Landis Acquisition, the rights and obligations
      to
      purchase the four facilities owned by affiliates of Landis were assigned to
      an
      affiliate of W.P. Carey & Co., L.L.C., which affiliate subsequently entered
      into a lease with Landis for the four facilities. In accordance with EITF 95-3,
      the Company established opening balance sheet reserves of $3.2 million related
      to plant shutdown, severance and unfavorable lease arrangement costs. The
      balance of these reserves at January 1, 2005 was $1.3 million and was reduced
      to
      $0.4 million at December 31, 2005 as a result of $0.5 million of payments in
      fiscal 2005 and a reduction in the estimate of $0.4 million in fiscal
      2005.





On
      November 1, 2004, the Company entered into a series of agreements with Southern
      Packaging Group Ltd. (“Southern Packaging”), and its principal shareholder, Mr.
      Pan Shun Ming, to jointly expand participation in the plastic packaging business
      in China and the surrounding region. In connection therewith, Berry acquired
      a
      10% stake in Southern Packaging, which has been recorded as an other current
      asset as a trading security at its fair market value of $1.8 million and $3.2
      million as of December 31, 2005 and January, 1, 2005, respectively, representing
      an unrealized loss of $1.4 million as of December 31, 2005 and consistent
      with the cost basis at January 1, 2005.





Berry
      Plastics U.K. Limited, a foreign subsidiary of Berry, sold the manufacturing
      equipment, inventory, and accounts receivable of its U.K. milk cap business
      to
      Portola Packaging U.K. Limited. The transaction valued at approximately $4.0
      million closed in April 2004. The U.K. milk cap business represented less than
      $3.0 million of annual consolidated net sales.





On
      April
      11, 2005, a subsidiary of Berry, Berry Plastics de México, S. de R.L. de C.V.,
      acquired all of the injection molding closure assets from Euromex Plastics,
      S.A.
      de C.V. (“Euromex”), an injection molding manufacturer located in Toluca, Mexico
      (the “Mexico Acquisition”), for aggregate consideration of approximately $8.2
      million. The purchase price was allocated to fixed assets ($4.1 million),
      inventory ($1.6 million), goodwill ($0.7 million), and other intangibles ($1.8
      million). The allocation of purchase price is preliminary and subject to change
      based on actual expenses and adjustments of estimates. The purchase was financed
      through borrowings under the Company’s revolving line of credit and cash on
      hand. The operations from the Mexico Acquisition are included in Berry’s
      operations since the acquisition date.





F-12





On
      June
      3, 2005, Berry acquired Kerr Group, Inc. (“Kerr”) for aggregate consideration of
      approximately $455.8 million (the “Kerr Acquisition”), including direct costs
      associated with the acquisition. The operations from the Kerr Acquisition are
      included in Berry’s operations since the acquisition date. The purchase price
      was financed through additional term loan borrowings under an amendment to
      Berry’s senior secured credit facility and cash on hand. In accordance with EITF
      95-3, the Company established opening balance sheet reserves of $2.7 million
      related to plant shutdown and severance costs, of which payments totaling $0.5
      million were made in 2005. The following table summarizes the allocation of
      purchase price and the estimated fair values of the assets acquired and
      liabilities assumed at the date of the acquisition. The allocation is
      preliminary and subject to change based on actual expenses and adjustments
      to
      estimated receivables and reserves.


**June
                  3,**
                **2005**Current
                  assets
              
              $
              85,088Property
                  and equipment
              
              
              145,690Goodwill
              
              
              134,280Customer
                  relationships
              
              
              182,094Trademarks
              
              
              16,140Other
                  intangibles
              
              
              22,291Total
                  assets
              
              
              585,583Current
                  liabilities
              
              
              55,802Long-term
                  liabilities
              
              
              73,942Total
                  liabilities
              
              
              129,744Net
                  assets acquired
              
              $
              455,839




The
      pro
      forma financial results presented below are unaudited and assume that the Landis
      Acquisition and Kerr Acquisition occurred at the beginning of the respective
      period. Pro forma results have not been adjusted to reflect the CCL Acquisition,
      APM Acquisition, or Mexico Acquisition as they do not differ materially from
      the
      pro forma results presented below. The information presented is for
      informational purposes only and is not necessarily indicative of the operating
      results that would have occurred had the Kerr Acquisition been consummated
      at
      the beginning of the respective period, nor are they necessarily indicative
      of
      future operating results. Further, the information reflects only pro forma
      adjustments for additional interest expense, elimination of Berry’s write off of
      deferred financing fees, and elimination of Kerr’s closing expenses, net of the
      applicable income tax effects.


**Year
                  Ended****December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**
              
              **December
                  27,**
                **2003**Pro
                  forma net sales
              
              **$**
              **1,338,019**
              
              $
              1,189,059
              
              $
              1,094,920Pro
                  forma net income (loss)
              
              
              **21,468**
              
              
              16,448
              
              
              (4,267
              )
  F-13


**Note
      5. Intangible Assets and Deferred Costs**





Intangible
      assets and deferred costs consist of the following:


**December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**Deferred
                  financing fees
              
              **$**
              **24,402**
              
              $
              26,681Customer
                  relationships
              
              
              **275,614**
              
              
              93,641Goodwill
              
              
              **495,258**
              
              
              358,883Trademarks
              
              
              **49,588**
              
              
              33,448Technology-based
              
              
              **27,206**
              
              
              5,115Covenants
                  not to compete and other
              
              
              **4,613**
              
              
              2,622Accumulated
                  amortization
              
              
              **(31,784**
              **)**
              
              (17,111
              )**$**
              **844,897**
              
              $
              503,279


The
      increase in the intangible assets is primarily the result of intangible assets
      acquired in connection with the Kerr Acquisition .
      Also,
      a s
      a
      result of the Second Amendment to the Second Amended and Restated Credit
      Facility, the Company expensed $7.0 million of unamortized deferred financing
      costs.  The
      remaining changes in intangible assets are primarily the result of the
      amortization of definite lived intangibles.





Future
      amortization expense for definite lived intangibles at December 31, 2005 for
      the
      next five fiscal years is approximately $23.1 million, $23.0 million, $22.8
      million, $22.6 million, and $20.2 million for fiscal 2006, 2007, 2008, 2009,
      and
      2010, respectively.





**Note
      6. Long-Term Debt**





Long-term
      debt consists of the following:


**December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**Berry
                  10 3⁄4% Senior Subordinated Notes
              
              **$**
              **335,000**
              
              $
              335,000Debt
                  premium on 10 3⁄4% Notes, net
              
              
              **7,699**
              
              
              8,876Term
                  loans
              
              
              **791,025**
              
              
              330,780Revolving
                  lines of credit
              
              
              **—**
              
              
              480Nevada
                  Industrial Revenue Bonds
              
              
              **—**
              
              
              1,500Capital
                  leases
              
              
              **26,896**
              
              
              20,922**1,160,620**
              
              
              697,558Less
                  current portion of long-term debt
              
              
              **13,928**
              
              
              10,335**$**
              **1,146,692**
              
              $
              687,223





*Berry
      10 3⁄4% Senior Subordinated Notes*





On
      July
      22, 2002, Berry completed an offering of $250.0 million aggregate principal
      amount of 10 3⁄4% Senior Subordinated Notes due 2012 (the "2002 Notes"). The net
      proceeds to Berry from the sale of the 2002 Notes, after expenses, were $239.4
      million. The proceeds from the 2002 Notes were used in the financing of the
      Merger. On November 20, 2003, Berry completed an offering of $85.0 million
      aggregate principal amount of 10 3⁄4% Senior Subordinated Notes due 2012 (the
      "Add-on Notes"). The net proceeds to Berry from the sale of the Add-on Notes,
      after expenses, were $91.8 million. The proceeds from the Add-on Notes were
      used
      in the financing of the Landis Acquisition. The 2002 Notes and Add-on Notes
      mature on July 15, 2012. Interest is payable semi-annually on January 15 and
      July 15 of each year, which commenced on January 15, 2003 with respect to the
      2002 Notes and commenced on January 15, 2004 with respect to the Add-on Notes.
      Holding and all of Berry’s domestic subsidiaries fully, jointly, severally, and
      unconditionally guarantee on a senior subordinated basis the 2002 Notes and
      Add-on Notes. The 2002 Notes and Add-on Notes are not guaranteed by the
      Company’s foreign subsidiaries.





Berry
      is
      not required to make mandatory redemption or sinking fund payments with respect
      to the 2002 Notes and Add-on Notes. On or subsequent to July 15, 2007, the
      2002
      Notes and Add-on Notes may be redeemed at the option of Berry, in





F-14





whole
      or
      in part, at redemption prices ranging from 105.375% in 2007 to 100% in 2010
      and
      thereafter. Upon a change in control, as defined in the indenture under which
      the 2002 Notes and Add-on Notes were issued (the “Indenture”), each holder of
      notes will have the right to require Berry to repurchase all or any part of
      such
      holder's notes at a repurchase price in cash equal to 101% of the aggregate
      principal amount thereof plus accrued interest. The 2002 Notes and Add-on Notes
      are treated as a single class under the Indenture.





*New
      Credit Facility*





In
      connection with the Merger in 2002, the Company entered into a credit and
      guaranty agreement and a related pledge security agreement with a syndicate
      of
      lenders led by Goldman Sachs Credit Partners L.P., as administrative agent
      (the
“Credit Facility”). On November 10, 2003, in connection with the Landis
      Acquisition, the Credit Facility was amended and restated (the “Amended and
      Restated Credit Facility”). On August 9, 2004, the Amended and Restated Credit
      Facility was amended and restated (the “Second Amended and Restated Credit
      Facility”). On January 1, 2005, a First Amendment to the Second Amended and
      Restated Credit Facility was entered into to permit Fifth Third Bank to assume
      the role of Administrative Agent and for Goldman Sachs Credit Partners, L.P.
      to
      resign as Administrative Agent. On June 3, 2005, the Company entered into a
      Second Amendment to the Second Amended and Restated Credit Agreement with
      Deutsche Bank Trust Company Americas assuming the role of Administrative Agent.
      As a result of the Second Amendment to the Second Amended and Restated Credit
      Agreement, the Company expensed $7.0 million of unamortized deferred financing
      and increased our term loan borrowings by $465.1 million in connection with
      the
      financing of the Kerr Acquisition. On October 26, 2005, the Company entered
      into
      a Third Amendment to the Second Amended and Restated Credit Agreement (the
“New
      Credit Facility”) that reduced the applicable margin on the term loan.





The
      New
      Credit Facility provides (1) a $795.0 million term loan and (2) a $150.0 million
      revolving credit facility. The proceeds from the new term loan were used to
      repay the outstanding balance of the term loans from the Second Amendment to
      the
      Second Amended and Restated Credit Facility and fund the Kerr Acquisition.
      The
      New Credit Facility permits the Company to borrow up to an additional $150.0
      million of incremental senior term indebtedness from lenders willing to provide
      such loans subject to certain restrictions. The terms of the additional
      indebtedness will be determined by the market conditions at the time of
      borrowing. The maturity date of the term loan is December 2, 2011, and the
      maturity date of the revolving credit facility is March 31, 2010. The
      indebtedness under the New Credit Facility is guaranteed by Holding and all
      of
      its domestic subsidiaries. The obligations of Berry Plastics under the New
      Credit Facility and the guarantees thereof are secured by substantially all
      of
      the assets of such entities. At December 31, 2005 and January 1, 2005, there
      were no borrowings outstanding on the revolving credit facility. The revolving
      credit facility allows up to $35.0 million of letters of credit to be issued
      instead of borrowings under the revolving credit facility and up to $10.0
      million of swingline loans. At December 31, 2005 and January 1, 2005, the
      Company had $14.7 million and $8.5 million, respectively, in letters of credit
      outstanding under the revolving credit facility.





The
      New
      Credit Facility contains significant financial and operating covenants,
      including prohibitions on the ability to incur certain additional indebtedness
      or to pay dividends, and restrictions on the ability to make capital
      expenditures. The New Credit Facility also contains borrowing conditions and
      customary events of default, including nonpayment of principal or interest,
      violation of covenants, inaccuracy of representations and warranties,
      cross-defaults to other indebtedness, bankruptcy and other insolvency events
      (other than in the case of certain foreign subsidiaries). The Company was in
      compliance with all the financial and operating covenants at December 31, 2005. The
      term
      loan amortizes quarterly as follows: $1,987,500 each quarter which began
      September 30, 2005 and ends September 30, 2010 and $188,315,625 each
      quarter beginning December 31, 2010 and ending
      September 30, 2011.





F-15











Borrowings
      under the New Credit Facility bear interest, at the Company’s option, at either
      (i) a base rate (equal to the greater of the prime rate and the federal funds
      rate plus 0.5%) plus the applicable margin (the ‘‘Base Rate Loans’’) or (ii) an
      adjusted eurodollar LIBOR (adjusted for reserves) plus the applicable margin
      (the ‘‘Eurodollar Rate Loans’’). With respect to the term loan, the ‘‘applicable
      margin’’ is (i) with respect to Base Rate Loans, 1.25% per annum and (ii) with
      respect to Eurodollar Rate Loans, 2.00% per annum (6.45% at December 31, 2005
      and 4.22% at January 1, 2005). In addition, the applicable margins with respect
      to the term loan can be further reduced by an additional .25% per annum subject
      to the Company meeting a leverage ratio target, which was met based on the
      results through December 31, 2005. With respect to the revolving credit
      facility, the ‘‘applicable margin’’ is subject to a pricing grid which ranges
      from 2.75% per annum to 2.00% per annum, depending on the leverage ratio (2.75%
      based on results through December 31, 2005). The ‘‘applicable margin’’ with
      respect to Base Rate Loans will always be 1.00% per annum less than the
‘‘applicable margin’’ for Eurodollar Rate Loans. In October 2002, Berry entered
      into an interest rate collar arrangement to protect $50.0 million of the
      outstanding variable rate term loan debt from future interest rate volatility.
      The collar floor is set at 1.97% LIBOR (London Interbank Offering Rate) and
      capped at 6.75% LIBOR. The agreement was effective January 15, 2003 and expires
      on July 15, 2006. In June 2005, Berry entered into three separate interest
      rate
      swap transactions to protect $300.0 million of the outstanding variable rate
      term loan debt from future interest rate volatility. The agreements were
      effective June 3, 2005 and expire on June 3, 2008. The agreements swap three
      month variable LIBOR contracts for a fixed rate three year rate of 3.897%.
      At
      December 31, 2005 and January 1, 2005, shareholders’ equity has been increased
      (reduced) by $3,548 and ($4), respectively, to adjust the interest rate collar
      and swap agreements to fair market value. At December 31, 2005, the Company
      had
      unused borrowing capacity under the New Credit Facility’s revolving line of
      credit of $135.3 million.





Future
      maturities of long-term debt at December 31, 2005 are as follows:


2006
              
              **$**
              **13,928**2007
              
              
              **12,216**2008
              
              
              **14,193**2009
              
              
              **10,384**2010
              
              
              **194,369**Thereafter
              
              
              **907,831****$**
              **1,152,921**


Interest
      paid was $71,151, $53,393, and $40,040, for 2005, 2004, and 2003, respectively.
      Interest capitalized was $1,230, $1,120, and $860, for 2005, 2004, and 2003,
      respectively.





**Note
      7. Lease and Other Commitments**





Certain
      property and equipment are leased using capital and operating leases. In 2005
      and 2004, Berry Plastics entered into various capital lease obligations with
      no
      immediate cash flow effect resulting in capitalized property and equipment
      of
      $11,482 and $2,101, respectively. Total capitalized lease property consists
      of a
      building and manufacturing equipment with a cost of $39,113 and $35,148 and
      related accumulated amortization of $11,132 and $14,353 at December
      31, 2005 and January
      1, 2005 ,
      respectively. Capital lease amortization is included in depreciation expense.
      Total rental expense from operating leases was approximately $23,210, $14,879,
      and $11,216 for 2005, 2004, and 2003, respectively.





F-16





Future
      minimum lease payments for capital leases and noncancellable operating leases
      with initial terms in excess of one year are as follows:


**At
                  December 31, 2005****Capital
                  Leases**
              
              **Operating
                  Leases**2006
              
              **$**
              **6,925**
              
              **$**
              **25,015**2007
              
              
              **4,842**
              
              
              **21,628**2008
              
              
              **4,901**
              
              
              **19,169**2009
              
              
              **5,658**
              
              
              **17,305**2010
              
              
              **693**
              
              
              **15,852**Thereafter
              
              
              **8,029**
              
              
              **88,835****31,048**
              
              **$**
              **187,804**Less:
                  amount representing interest
              
              
              **(4,152**
              **)**Present
                  value of net minimum lease payments
              
              **$**
              **26,896**


The
      Company is party to various legal proceedings involving routine claims which
      are
      incidental to its business. Although the Company’s legal and financial liability
      with respect to such proceedings cannot be estimated with certainty, the Company
      believes that any ultimate liability would not be material to its financial
      position or results of operations.





The
      Company has various purchase commitments for raw materials, supplies and
      property and equipment incidental to the ordinary conduct of business. At
      December 31, 2005, the Company had committed approximately $52.7 million for
      resin on order that had not yet been received and $8.8 million to complete
      capital projects.





**Note
      8. Income Taxes**





For
      financial reporting purposes, income (loss) before income taxes, by tax
      jurisdiction, is comprised of the following:


**Year
                      Ended****December
                      31,**
                    **2005**
                  
                  **January
                      1,**
                    **2005**
                  
                  **December
                      27,**
                    **2003**Domestic
                  
                  **$**
                  **43,519**
                  
                  $
                  44,841
                  
                  $
                  29,556Foreign
                  
                  
                  **(9,403**
                  **)**
                  
                  (4,150
                  )
                  
                  (4,022
                  )**$**
                  **34,116**
                  
                  $
                  40,691
                  
                  $
                  25,534


F-17





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes. Significant components of deferred
      tax
      assets and liabilities are as follows:


**December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**Deferred
                  tax assets:Allowance
                  for doubtful accounts
              
              **$**
              **1,877**
              
              $
              804Inventory
              
              
              **1,918**
              
              
              1,409Compensation
                  and benefit accruals
              
              
              **17,114**
              
              
              4,032Insurance
                  reserves
              
              
              **1,557**
              
              
              363Net
                  operating loss carryforwards
              
              
              **32,843**
              
              
              29,318Alternative
                  minimum tax (AMT) credit carryforwards
              
              
              **6,398**
              
              
              3,821Other
              
              
              **96**
              
              
              —Total
                  deferred tax assets
              
              
              **61,803**
              
              
              39,747Valuation
                  allowance
              
              
              **(6,741**
              **)**
              
              (6,184
              )Deferred
                  tax assets, net of valuation allowance
              
              
              **55,062**
              
              
              33,563Deferred
                  tax liabilities:Intangibles
              
              
              **88,837**
              
              
              14,793Property
                  and equipment
              
              
              **35,888**
              
              
              19,418Other
              
              
              **2,366**
              
              
              382Total
                  deferred tax liabilities
              
              
              **127,091**
              
              
              34,593Net
                  deferred tax liability
              
              **$**
              **(72,029**
              **)**
              $
              (1,030
              )


Income
      tax expense consists of the following:





**Year
                Ended****December
                31,**
              **2005**
            
            **January
                1,**
              **2005**
            
            **December
                27,**
              **2003**Current:Federal
            
            **$**
            **735**
            
            $
            363
            
            $
            402Foreign
            
            
            **189**
            
            
            133
            
            
            61State
            
            
            **632**
            
            
            472
            
            
            232Total
                current
            
            
            **1,556**
            
            
            968
            
            
            695Deferred:Federal
            
            
            **11,779**
            
            
            13,543
            
            
            8,608Foreign
            
            
            **—**
            
            
            (173
            )
            
            —State
            
            
            **990**
            
            
            3,402
            
            
            3,183Total
                deferred
            
            
            **12,769**
            
            
            16,772
            
            
            11,791Income
                tax expense
            
            **$**
            **14,325**
            
            $
            17,740
            
            $
            12,486





Holding
      has unused operating loss carryforwards of approximately $65.9 million
      for federal and state income tax purposes which begin to expire in 2012. AMT
      credit carryforwards are available to Holding indefinitely to reduce future
      years' federal income taxes. As a result of the Merger and Kerr Acquisition,
      the
      unused operating loss carryforward is subject to an annual limitation. The
      Company is in the process of finalizing the computation to determine the
      limitation due to the Kerr Acquisition and have preliminarily estimated the
      aggregate limit as a result of the Merger and Kerr Acquisition to be
      approximately $29.6 million per year.





Income
      taxes paid during 2005, 2004, and 2003 approximated $1,152, $764, and $484,
      respectively.





F-18





A
      reconciliation of income tax expense, computed at the federal statutory rate,
      to
      income tax expense, as provided for in the financial statements, is as
      follows:


**Year
                  Ended****December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**
              
              **December
                  27,**
                **2003**Income
                  tax expense computed at statutory rate
              
              **$**
              **11,941**
              
              $
              14,244
              
              $
              8,721State
                  income tax expense, net of federal taxes
              
              
              **1,622**
              
              
              2,518
              
              
              2,220Expenses
                  not deductible for income tax purposes
              
              
              **375**
              
              
              394
              
              
              160Change
                  in valuation allowance
              
              
              **557**
              
              
              1,288
              
              
              1,285Other
              
              
              **(170**
              **)**
              
              (704
              )
              
              100Income
                  tax expense
              
              **$**
              **14,325**
              
              $
              17,740
              
              $
              12,486




**Note
      9. Employee Retirement Plans**





In
      connection with the Kerr Acquisition, the Company acquired two defined benefit
      pension plans which cover substantially all former employees and former union
      employees at Kerr’s former Lancaster facility. The Company also acquired a
      retiree health plan from Kerr, which covers certain healthcare and life
      insurance benefits for certain retired employees and their spouses. The two
      defined benefit plans of Kerr and the retiree health plan are all inactive
      plans
      and are included in the beginning of year totals in the table below for the
      year
      ended December 31, 2005 as a result of the Kerr Acquisition on June 3, 2005.
      The
      Company also maintains a defined benefit pension plan covering the Poly-Seal
      employees under a collective bargaining agreement. The Company uses December
      31
      as a measurement date for the retirement plans.


**Defined
                    Benefit**
                  **Pension
                    Plans**
                
                **Retiree**
                  **Health
                    Plan****Year
                    Ended****December
                    31,**
                  **2005**
                
                **January
                    1,**
                  **2005**
                
                **December
                    31,**
                  **2005**Change
                    in benefit obligation:Benefit
                    obligation at beginning of year
                
                **$**
                **44,026**
                
                $
                5,639
                
                **$**
                **9,338**Service
                    cost
                
                
                **257**
                
                
                269
                
                
                **11**Interest
                    cost
                
                
                **1,457**
                
                
                352
                
                
                **268**Actuarial
                    loss (gain)
                
                
                **(1,186**
                **)**
                
                42
                
                
                **(1,589**
                **)**Benefits
                    paid
                
                
                **(2,269**
                **)**
                
                (198
                )
                
                **(364**
                **)**Benefit
                    obligation at end of year
                
                
                **42,285**
                
                
                6,104
                
                
                **7,664**Change
                    in plan assets:Fair
                    value of plan assets at beginning of year
                
                
                **33,558**
                
                
                4,775
                
                
                **—**Actual
                    return on plan assets
                
                
                **1,898**
                
                
                190
                
                
                **—**Employer
                    contribution
                
                
                **494**
                
                
                415
                
                
                **364**Benefits
                    paid
                
                
                **(2,269**
                **)**
                
                (198
                )
                
                **(364**
                **)**Fair
                    value of plan assets at end of year
                
                
                **33,681**
                
                
                5,182
                
                
                **—**Funded
                    status
                
                
                **(8,604**
                **)**
                
                (922
                )
                
                **(7,664**
                **)**Unrecognized
                    net actuarial loss (gain)
                
                
                **(645**
                **)**
                
                765
                
                
                **(1,589**
                **)**Unrecognized
                    prior service cost
                
                
                **597**
                
                
                686
                
                
                **—**Net
                    amount recognized
                
                **$**
                **(8,652**
                **)**
                $
                529
                
                **$**
                **(9,253**
                **)**Amounts
                    recognized in the consolidated balance sheet consisted of:Prepaid
                    pension
                
                
                **413**
                
                
                529
                
                
                **—**Accrued
                    benefit liability
                
                
                **(10,624**
                **)**
                
                (1,456
                )
                
                **(9,253**
                **)**Intangible
                    assets
                
                
                **597**
                
                
                685
                
                
                **—**Accumulated
                    other comprehensive losses before income taxes
                
                
                **962**
                
                
                771
                
                
                **—**Net
                    amount recognized
                
                **$**
                **(8,652**
                **)**
                $
                529
                
                **$**
                **(9,253**
                **)**


F-19





**Defined
                  Benefit**
                **Pension
                  Plans**
              
              **Retiree
                  Health Plan****Year
                  Ended**(Percents)
              
              
              **December
                  31,**
                **2005**
              
              
              **January
                  1,**
                **2005**
              
              
              **December
                  31, 2005**Weighted-average
                  assumptionsDiscount
                  rate for benefit obligation
              
              
              **5.5**
              
              
              6.3
              
              
              **5.5**Discount
                  rate for net benefit cost
              
              
              **5.3**
              
              
              6.3
              
              
              **5.0**Expected
                  return on plan assets for net benefit costs
              
              
              **8.0**
              
              
              8.0
              
              
              **—**
  In
        evaluating the expected return on plan assets, the Company considered its
        historical assumptions compared with actual results, an analysis of current
        market conditions, asset allocations, and the views of advisers.
        Health-care-cost trend rates were assumed to increase at an annual rate of
        9.0
        percent in 2006 trending down to 4.5 percent in 2011 and
        thereafter.





The
      following benefit payments, which reflect expected future service, as
      appropriate, are expected to be paid as follows:


**Defined
                  Benefit Pension Plans**
              
              **Retiree**
                **Health
                  Plan**2006
              
              **$**
              **3,482**
              
              **$**
              **1,277**2007
              
              
              **3,412**
              
              
              **1,173**2008
              
              
              **3,353**
              
              
              **1,005**2009
              
              
              **3,311**
              
              
              **819**2010
              
              
              **3,247**
              
              
              **684**2011-2015
              
              
              **16,253**
              
              
              **2,485**


In
      2006,
      the Company expects to contribute approximately $2.2 million to its
      retirement plans to satisfy minimum funding requirements for the
      year.





Net
      pension and retiree health benefit expense included the following
      components:





**Year
                Ended****December
                31,**
              **2005**
            
            **January
                1,**
              **2005**
            
            **December
                27,**
              **2003**Components
                of net period benefit cost:Defined
                Benefit Pension PlansService
                cost
            
            **$**
            **257**
            
            $
            269
            
            $
            223Interest
                cost
            
            
            **1,457**
            
            
            352
            
            
            320Expected
                return on plan assets
            
            
            **(1,692**
            **)**
            
            (399
            )
            
            (345
            )Amortization
                of prior service cost
            
            
            **91**
            
            
            94
            
            
            83Recognized
                actuarial loss
            
            
            **60**
            
            
            36
            
            
            12Net
                periodic benefit cost
            
            **$**
            **173**
            
            $
            352
            
            $
            293Retiree
                Health Benefit PlanService
                cost
            
            **$**
            **11**
            
            $
            —
            
            $
            —Interest
                cost
            
            
            **268**
            
            
            —
            
            
            —Net
                periodic benefit cost
            
            **$**
            **279**
            
            $
            —
            
            $
            —








F-20








Our
      defined benefit pension plan asset allocations are as follows:


**Year
                  Ended****December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**Asset
                  CategoryEquity
                  securities and equity-like instruments
              
              
              **51**
              **%**
              
              60
              %Debt
                  securities
              
              
              **47**
              
              
              34Other
              
              
              **2**
              
              
              6Total
              
              
              **100**
              **%**
              
              100
              %
  The
        Company’s retirement plan assets are invested with the objective of providing
        the plans the ability to fund current and future benefit payment requirements
        while minimizing annual Company contributions. The plans’ asset allocation
        strategy reflects a long-term growth strategy with approximately 51% allocated
        to growth investments and 47% allocated to fixed income investments. The
        Company
        re-addresses the allocation of its investments on an annual
        basis.





Berry
      Plastics also sponsors two defined contribution 401(k) retirement plans covering
      substantially all employees. Contributions are based upon a fixed dollar amount
      for employees who participate and percentages of employee contributions at
      specified thresholds. Contribution expense for these plans were approximately
      $2,801, $2,020, and $1,408 for 2005, 2004, and 2003, respectively.





**Note
      10. Stockholders' Equity**





*Common
      and Preferred Stock*





On
      July
      22, 2002, GS Berry Acquisition Corp., (the “Buyer”) a newly formed entity
      controlled by various private equity funds affiliated with Goldman, Sachs &
Co., merged (the "Merger") with and into Holding, pursuant to an agreement
      and
      plan of merger, dated as of May 25, 2002. At the effective time of the Merger,
      (i) each share of common stock of BPC Holding Corporation issued and outstanding
      immediately prior to the effective time of the Merger was converted into the
      right to receive cash pursuant to the terms of the merger agreement, and (ii)
      each share of common stock of the Buyer issued and outstanding immediately
      prior
      to the effective time of the Merger was converted into one share of common
      stock
      of Holding.





*Notes
      Receivable from Management*





In
      connection with the Merger, certain senior employees of Holding acquired shares
      of Holding Common Stock pursuant to an employee stock purchase program. Such
      employees paid for these shares with any combination of (i) shares of Holding
      common stock that they held prior to the Merger; (ii) their cash transaction
      bonus, if any; and (iii) a promissory note. In addition, Holding adopted an
      employee stock purchase program pursuant to which a number of employees had
      the
      opportunity to invest in Holding on a leveraged basis. Employees participating
      in this program were permitted to finance two-thirds of their purchases of
      shares of Holding common stock under the program with a promissory note. The
      promissory notes are secured by the shares purchased and such notes accrue
      interest which compounds semi-annually at rates ranging from 4.97% to 5.50%
      per
      year. Principal and all accrued interest is due and payable on the earlier
      to
      occur of (i) the end of the ten-year term, (ii) the ninetieth day following
      such
      employee’s termination of employment due to death, “disability”, “redundancy”
(as such terms are defined in the 2002 Option Plan) or retirement, or (iii)
      the
      thirtieth day following such employee’s termination of employment for any other
      reason. As of December 31, 2005 and January 1, 2005, the Company had $14,273
      and
      $14,856, respectively, in outstanding notes receivable (principal and interest),
      which has been classified as a reduction to stockholders’ equity in the
      consolidated balance sheet, due from employees under this program.





*Stock
      Option Plans*





Holding
      maintains the BPC Holding Corporation 1996 Stock Option Plan (‘‘1996 Option
      Plan’’), as amended, pursuant to which nonqualified options to purchase 126,700
      shares are outstanding. All outstanding options under the 1996 Option Plan
      are
      scheduled to expire on July 22, 2012 and no additional options will be granted
      under it. Option agreements issued pursuant to the 1996 Option Plan generally
      provide that options become vested and exercisable at a rate of 10% per year
      based on continued service. Additional options also vest in years during which
      certain financial targets are attained. Notwithstanding the vesting provisions
      in the option agreements, all options that were scheduled to vest prior to
      December 31, 2002 accelerated





F-21





and
      became vested immediately prior to the Merger.





Holding
      has adopted an employee stock option plan (‘‘2002 Option Plan’’), as amended,
      pursuant to which options to acquire up to 603,248 shares
      of
      Holding’s common stock may be granted to its employees, directors and
      consultants. Options granted under the 2002 Option Plan have an exercise price
      per share that either (1) is fixed at the fair market value of a share of common
      stock on the date of grant or (2) commences at the fair market value of a share
      of common stock on the date of grant and increases at the rate of 15% per year
      during the term. Generally, options have a ten-year term, subject to earlier
      expiration upon the termination of the option holder’s employment and other
      events. Some options granted under the plan become vested and exercisable over
      a
      five-year period based on continued service with Holding. Other options become
      vested and exercisable based on the achievement by Holding of certain financial
      targets, or if such targets are not achieved, based on continued service with
      Holding. Upon a change in control of Holding, the vesting schedule with respect
      to certain options accelerate for a portion of the shares subject to such
      options.





Financial
      Accounting Standards Board Statement 123, *Accounting
      for Stock-Based Compensation* (“Statement 123”), prescribes accounting and reporting standards for all
      stock-based compensation plans. Statement 123 provides that companies may elect
      to continue using existing accounting requirements for stock-based awards or
      may
      adopt a new fair value method to determine their intrinsic value. Holding has
      elected to continue following Accounting Principles Board Opinion No. 25, *Accounting
      For Stock Issued to Employees* (“APB
      25”) to account for its employee stock options. Under APB 25, because the
      exercise price of Holding’s employee stock options equals the market price of
      the underlying stock on the date of grant, no compensation expense is recognized
      at the grant date.





Information
      related to the 1996 Option Plan and 2002 Option Plan is as follows:


**December
                  31, 2005**
              
              **January
                  1, 2005**
              
              **December
                  27, 2003**Number
                Of
                Shares
              
              Weighted
                Average
                Exercise
                Price
              
              Number
                Of
                Shares
              
              Weighted
                Average
                Exercise
                Price
              
              Number
                Of
                Shares
              
              Weighted
                Average
                Exercise
                PriceOptions
                  outstanding, beginning of period
              
              
              **590,156**
              
              **$**
              **102**
              
              
              530,662
              
              $
              94
              
              
              545,684
              
              $
              86Options
                  granted
              
              
              **96,051**
              
              
              **145**
              
              
              65,465
              
              
              120
              
              
              38,713
              
              
              100Options
                  exercised
              
              
              **(31,652**
              **)**
              
              **105**
              
              
              (1,640
              )
              
              53
              
              
              (9,757
              )
              
              57Options
                  forfeited
              
              
              **(29,346**
              **)**
              
              **117**
              
              
              (4,331
              )
              
              93
              
              
              (43,978
              )
              
              101Options
                  outstanding, end of period
              
              
              **625,209**
              
              
              **113**
              
              
              590,156
              
              
              102
              
              
              530,662
              
              
              94Option
                  price range at end of period
              
              **$32
                  - $163**
              $32
                  - $142
              $32
                  - $124Options
                  exercisable at end of period
              
              **365,265**
              291,879
              203,326Options
                  available for grant at period end
              
              **4,216**
              43,489
              22,588Weighted
                  average fair value of options granted during period
              
              **$45**
              $34
              $28


The
      following table summarizes information about the options outstanding at December
      31, 2005:





Range
                  of
                Exercise
                Prices
              Number
                  Outstanding
                At
                  December 31, 2005
              Weighted
                  Average
                Remaining
                  Contractual
                Life
              Weighted
                Average
                Exercise
                Price
              Number
                Exercisable
                  at
                December
                  31, 2005$32
                  - $72
              **126,700**
              **7
                  years**
              **$49**
              **118,586**$100
              **209,297**
              **7
                  years**
              **$100**
              **111,722**$120
              **45,526**
              **8
                  years**
              **$120**
              **18,210**$145
              **92,946**
              **9
                  years**
              **$145**
              **11,233**$163
              **150,740**
              **7
                  years**
              **$163**
              **105,514****625,209**
              
              
              **365,265**




*Stockholders
      Agreements*





In
      connection with the Merger, Holding entered into a stockholders’ agreement with
      GSCP 2000 and other private equity funds affiliated with Goldman, Sachs &
Co., which in the aggregate own a majority of the common stock, and J.P. Morgan
      Partners Global Investors, L.P. and other private equity funds affiliated with
      J.P. Morgan Securities Inc., which own





F-22





approximately
      28% of the common stock. GSCP 2000 and other private equity funds affiliated
      with Goldman, Sachs & Co., have the right to designate seven members of the
      board of directors, one of which shall be a member of management, and J.P.
      Morgan Partners Global Investors, L.P. and other private equity funds affiliated
      with J.P. Morgan Securities Inc. have the right to designate two members of
      the
      board of directors. The stockholders’ agreement contains customary terms
      including terms regarding transfer restrictions, rights of first offer, tag
      along rights, drag along rights, preemptive rights and veto rights.





**Note
      11. Related Party Transactions**





In
      connection with the Landis Acquisition, the Company paid $1.7 million to
      entities affiliated with Goldman, Sachs & Co. and $0.8 million to J.P.
      Morgan Securities Inc., an affiliate of J.P. Morgan Chase & Co., for
      advisory and other services .
      Goldman
      Sachs and J.P. Morgan acted as j oint
      book-running managers in the issuance of the Add-on Notes and received fees
      of
      approximately $1.0 million and $1.0 million, respectively, for services
      performed .
      Goldman
      Sachs Credit Partners, L.P., an affiliate of Goldman Sachs, acted as the
      administrative agent, joint lead arranger and joint bookrunner for the Amended
      and Restated Credit Facility and received fees of $0.5 million for services
      provided. JP Morgan Chase Bank, an affiliate of J.P. Morgan, acted as the joint
      lead arranger and joint bookrunner for the Amended and Restated Credit Facility
      for consideration of $0.5 million.





Goldman
      Sachs Credit Partners, L.P., an affiliate of Goldman Sachs, acted as the
      administrative agent, joint lead arranger and joint bookrunner for the Second
      Amended and Restated Credit Facility without separate compensation. JP Morgan
      Chase Bank, an affiliate of J.P. Morgan, acted as the joint lead arranger and
      joint bookrunner for the Second Amended and Restated Credit Facility for
      consideration of approximately $0.4 million. In addition, the Company entered
      into four resin forward contracts in the fourth quarter of 2004 ranging from
      6.0
      million to 33.6 million annual pounds of resin with J. Aron & Company, a
      division of Goldman, Sachs & Co., and enters into foreign currency
      transactions through its normal course of business with Goldman, Sachs & Co. In
      June
      2005, Berry entered into two separate interest rate swap transactions for $100.0
      million each with an
      affiliate of Goldman Sachs and an affiliate of J.P. Morgan to
      protect a portion of the outstanding variable rate term loan debt from future
      interest rate volatility.





In
      connection with the Kerr Acquisition, the Company paid $2.7 million to entities
      affiliated with Goldman, Sachs & Co. and $1.3 million to entities affiliated
      with J.P. Morgan Chase & Co., for advisory and other services. Goldman Sachs
      and J.P. Morgan Chase Bank, an affiliate of J.P. Morgan, acted as co-syndication
      agents, joint lead arrangers, and joint bookrunners for the Second Amendment
      to
      the Second Amended and Restated Credit Facility for consideration of $2.7
      million and $2.4 million, respectively. Goldman Sachs Credit Partners, L.P.,
      an
      affiliate of Goldman Sachs, acted as the co-syndication agent, joint lead
      arranger and joint bookrunner for the Third Amendment to the Second Amended
      and
      Restated Credit Facility without separate compensation. JP Morgan Chase Bank,
      an
      affiliate of J.P. Morgan, acted as the co-syndication agent, joint lead
      arranger, and joint bookrunner for the Third Amendment to the Second Amended
      and
      Restated Credit Facility for consideration of $0.5 million. Also,
      affiliates of Goldman Sachs & Co. and J.P. Morgan invest in a portion of the
      Company’s credit facilities in its normal course of business.





**Note
      12. Financial Instruments**





Holding’s
      and the Company's financial instruments generally consist of cash and cash
      equivalents, the investment in Southern Packaging, interest rate hedge
      contracts, resin hedge contracts, and long-term debt. The carrying amounts
      of
      Holding’s and the Company's financial instruments approximate fair value at
      December 31, 2005 except for the 2002 Notes and Add-on Notes for which the
      fair
      value exceeded the carrying value by $25.1 million.





F-23








In
      October 2002, Berry entered into an interest rate collar arrangement to protect
      $50.0 million of the outstanding variable rate term loan debt from future
      interest rate volatility. In June 2005, Berry entered into three separate
      interest rate swap transactions to protect $300.0 million of the outstanding
      variable rate term loan debt from future interest rate volatility. The collar
      and interest rate swaps are accounted for as fair value hedges and the gains
      and
      losses arising from the instruments are recorded concurrently with gains and
      losses arising from the underlying transactions.





The
      Company consumes plastic resin during the normal course of production. The
      fluctuations in the cost of plastic resin can vary the costs of production.
      As
      part of its risk management strategy, the Company entered into resin forward
      hedging transactions constituting approximately 15% of its estimated 2005 resin
      needs and 10% of its 2006 estimated resin needs based on 2004 volumes prior
      to
      the Kerr Acquisition .
      These
      contracts obligate the Company to make or receive a monthly payment equal to
      the
      difference in the unit cost of resin per the contract and an industry index
      times the contracted pounds of plastic resin. Such contracts are designated
      as
      hedges of a portion of the Company's forecasted purchases through 2006 and
      are
      effective in hedging the Company's exposure to changes in resin prices during
      this period.  The
      contracts qualify as cash flow hedges under SFAS No. 133 and accordingly are
      marked to market with unrealized gains and losses deferred through other
      comprehensive income and recognized in earnings when realized as an adjustment
      to cost of goods sold. The fair values of these contracts at December 31, 2005
      and January 1, 2005 was an unrealized gain, after taxes, of $3.7 million and
      $5.2 million, respectively.





**Note
      13. Accumulated Other Comprehensive Income**





The
      accumulated balances related to each component of the other comprehensive income
      consist of the following:


**December
                  31,**
                **2005**
              
              **January
                  1,**
                **2005**Currency
                  translation
              
              **$**
              **5,214**
              
              $
              8,479Minimum
                  pension liability adjustment
              
              
              **(577**
              **)**
              
              (462
              )Unrealized
                  loss on interest rate collar
              
              
              **—**
              
              
              (4
              )Unrealized
                  gain on interest rate hedges
              
              
              **3,548**
              
              
              —Unrealized
                  gain on resin hedge contracts
              
              
              **3,680**
              
              
              5,173**$**
              **11,865**
              
              $
              13,186




F-24








**Note
      14. Operating Segments**





In
      connection with the Kerr Acquisition, Berry reorganized its operations into
      two
      reportable segments: rigid open top and rigid closed top. The realignment
      occurred in an effort to integrate the operations of Kerr, better service the
      Company’s customers, and provide a more efficient organization. Prior periods
      have been restated to be aligned with the new reporting structure in order
      to
      provide comparable results. The Company evaluates performance and allocates
      resources to segments based on operating income before depreciation and
      amortization of intangibles adjusted to exclude (1) uncompleted acquisition
      expense, (2) acquisition integration expense, (3) plant shutdown expense, and
      (4) non-cash compensation. The accounting policies of the reportable segments
      are the same as those described in the summary of significant accounting
      policies.





**Year
                Ended****December
                31,**
              **2005**
            
            **January
                1,**
              **2005**
            
            **December
                27,**
              **2003**Net
                sales:Rigid
                Closed Top
            
            **$**
            **394,027**
            
            $
            154,956
            
            $
            147,297Rigid
                Open Top
            
            
            **775,677**
            
            
            659,257
            
            
            404,579Total
                net sales
            
            
            **1,169,704**
            
            
            814,213
            
            
            551,876Adjusted
                EBITDA:Rigid
                Closed Top
            
            
            **71,154**
            
            
            29,880
            
            
            30,228Rigid
                Open Top
            
            
            **141,432**
            
            
            131,188
            
            
            88,609Total
                adjusted EBITDA
            
            
            **212,586**
            
            
            161,068
            
            
            118,837Total
                assets:Rigid
                Closed Top
            
            
            **789,275**
            
            
            215,552
            
            
            237,848Rigid
                Open Top
            
            
            **858,555**
            
            
            789,592
            
            
            777,958Total
                assets
            
            
            **1,647,830**
            
            
            1,005,144
            
            
            1,015,806Goodwill,
                net:Rigid
                Closed Top
            
            
            **210,614**
            
            
            78,375
            
            
            85,756Rigid
                Open Top
            
            
            **284,644**
            
            
            280,508
            
            
            291,013Total
                goodwill, net
            
            
            **495,258**
            
            
            358,883
            
            
            376,769Reconciliation
                of Adjusted EBITDA to net income:Adjusted
                EBITDA for reportable segments
            
            **$**
            **212,586**
            
            $
            161,068
            
            $
            118,837Net
                interest expense
            
            
            **(73,274**
            **)**
            
            (53,185
            )
            
            (45,413
            )Depreciation
            
            
            **(73,146**
            **)**
            
            (54,303
            )
            
            (40,752
            )Amortization
            
            
            **(15,574**
            **)**
            
            (6,513
            )
            
            (3,326
            )Income
                taxes
            
            
            **(14,325**
            **)**
            
            (17,740
            )
            
            (12,486
            )Gain
                on disposal of property and equipment
            
            
            **—**
            
            
            —
            
            
            7Loss
                on investment in Southern Packaging
            
            
            **(1,354**
            **)**
            
            —
            
            
            —Loss
                on extinguished debt
            
            
            **(7,045**
            **)**
            
            —
            
            
            (250
            )Uncompleted
                acquisition expense
            
            
            **—**
            
            
            —
            
            
            (1,041
            )Acquisition
                integration expense
            
            
            **(5,925**
            **)**
            
            (3,969
            )
            
            (1,424
            )Plant
                shutdown expense
            
            
            **—**
            
            
            (1,822
            )
            
            (1,104
            )Non-cash
                compensation
            
            
            **(2,152**
            **)**
            
            (585
            )
            
            —Net
                income
            
            **$**
            **19,791**
            
            $
            22,951
            
            $
            13,048





F-25





**Note
      15. Condensed Consolidating Financial Information**





Holding
      conducts its business through its wholly owned subsidiary, Berry. Holding and
      all of Berry’s domestic subsidiaries fully, jointly, severally, and
      unconditionally guarantee on a senior subordinated basis the 2002 Notes and
      Add-on Notes issued by Berry. Berry and all of Berry’s subsidiaries are 100%
      directly or indirectly owned by Holding. Separate narrative information or
      financial statements of guarantor subsidiaries have not been included as
      management believes they would not be material to investors. Presented below
      is
      condensed consolidating financial information for Holding, Berry, and its
      subsidiaries at December 31, 2005 and January 1, 2005 and for the fiscal years
      ended December 31, 2005, January 1, 2005, and December 27, 2003. The equity
      method has been used with respect to investments in subsidiaries.


**December
                        31, 2005**BPC
                        Holding Corporation(Parent)
                    
                    Berry
                        Plastics Corporation(Issuer)
                    
                    Combined
                        Guarantor
                      Subsidiaries
                    
                    Combined
                      Non-guarantor
                      Subsidiaries
                    
                    Consolidating
                      Adjustments
                    
                    Consolidated**Consolidating
                        Balance Sheets**Current
                        assets
                    
                    **$**
                    **—**
                    
                    **$**
                    **132,192**
                    
                    **$**
                    **224,471**
                    
                    **$**
                    **22,826**
                    
                    **$**
                    **—**
                    
                    **$**
                    **379,489**Net
                        property and equipment
                    
                    
                    **—**
                    
                    
                    **91,831**
                    
                    
                    **311,649**
                    
                    
                    **19,964**
                    
                    
                    **—**
                    
                    
                    **423,444**Other
                        noncurrent assets
                    
                    
                    **203,388**
                    
                    
                    **1,292,315**
                    
                    
                    **703,500**
                    
                    
                    **13,214**
                    
                    
                    **(1,367,520**
                    **)**
                    
                    **844,897**Total
                        assets
                    
                    **$**
                    **203,388**
                    
                    **$**
                    **1,516,338**
                    
                    **$**
                    **1,239,620**
                    
                    **$**
                    **56,004**
                    
                    **$**
                    **(1,367,520**
                    **)**
                    **$**
                    **1,647,830**Current
                        liabilities
                    
                    **$**
                    **—**
                    
                    **$**
                    **81,349**
                    
                    **$**
                    **87,269**
                    
                    **$**
                    **9,090**
                    
                    **$**
                    **—**
                    
                    **$**
                    **177,708**Noncurrent
                        liabilities
                    
                    
                    **—**
                    
                    
                    **1,231,601**
                    
                    
                    **1,333,925**
                    
                    
                    **40,783**
                    
                    
                    **(1,339,575**
                    **)**
                    
                    **1,266,734**Equity
                        (deficit)
                    
                    
                    **203,388**
                    
                    
                    **203,388**
                    
                    
                    **(181,574**
                    **)**
                    
                    **6,131**
                    
                    
                    **(27,945**
                    **)**
                    
                    **203,388**Total
                        liabilities and equity (deficit)
                    
                    **$**
                    **203,388**
                    
                    **$**
                    **1,516,338**
                    
                    **$**
                    **1,239,620**
                    
                    **$**
                    **56,004**
                    
                    **$**
                    **(1,367,520**
                    **)**
                    **$**
                    **1,647,830**
 **January
                      1, 2005**BPC
                      Holding Corporation(Parent)
                  
                  Berry
                      Plastics Corporation(Issuer)
                  
                  Combined
                      Guarantor
                    Subsidiaries
                  
                  Combined
                    Non-guarantor
                    Subsidiaries
                  
                  Consolidating
                    Adjustments
                  
                  Consolidated**Consolidating
                      Balance Sheets**Current
                      assets
                  
                  $
                  —
                  
                  $
                  68,449
                  
                  $
                  139,338
                  
                  $
                  12,012
                  
                  $
                  —
                  
                  $
                  219,799Net
                      property and equipment
                  
                  
                  —
                  
                  
                  76,555
                  
                  
                  188,841
                  
                  
                  16,576
                  
                  
                  —
                  
                  
                  281,972Other
                      noncurrent assets
                  
                  
                  183,891
                  
                  
                  770,971
                  
                  
                  363,091
                  
                  
                  12,328
                  
                  
                  (826,908
                  )
                  
                  503,373Total
                      assets
                  
                  $
                  183,891
                  
                  $
                  915,975
                  
                  $
                  691,270
                  
                  $
                  40,916
                  
                  $
                  (826,908
                  )
                  $
                  1,005,144Current
                      liabilities
                  
                  $
                  —
                  
                  $
                  81,053
                  
                  $
                  42,004
                  
                  $
                  6,648
                  
                  $
                  —
                  
                  $
                  129,705Noncurrent
                      liabilities
                  
                  
                  —
                  
                  
                  651,031
                  
                  
                  747,720
                  
                  
                  27,258
                  
                  
                  (734,461
                  )
                  
                  691,548Equity
                      (deficit)
                  
                  
                  183,891
                  
                  
                  183,891
                  
                  
                  (98,454
                  )
                  
                  7,010
                  
                  
                  (92,447
                  )
                  
                  183,891Total
                      liabilities and equity (deficit)
                  
                  $
                  183,891
                  
                  $
                  915,975
                  
                  $
                  691,270
                  
                  $
                  40,916
                  
                  $
                  (826,908
                  )
                  $
                  1,005,144


F-26


**Year
                  Ended****December
                  31, 2005**BPC
                  Holding
                Corporation
                (Parent)
              
              Berry
                  Plastics
                Corporation
                (Issuer)
              
              Combined
                Guarantor
                Subsidiaries
              
              Combined
                Non-guarantor
                Subsidiaries
              
              Consolidating
                Adjustments
              
              Consolidated**Consolidating
                  Statements of Income**Net
                  sales
              
              **$**
              **—**
              
              **$**
              **283,261**
              
              **$**
              **859,192**
              
              **$**
              **27,251**
              
              **$**
              **—**
              
              **$**
              **1,169,704**Cost
                  of goods sold
              
              
              **—**
              
              
              **202,631**
              
              
              **712,325**
              
              
              **28,414**
              
              
              **—**
              
              
              **943,370**Gross
                  profit
              
              
              **—**
              
              
              **80,630**
              
              
              **146,867**
              
              
              **(1,163**
              **)**
              
              **—**
              
              
              **226,334**Operating
                  expenses
              
              
              **(55,315**
              **)**
              
              **41,578**
              
              
              **119,540**
              
              
              **4,742**
              
              
              **—**
              
              
              **110,545**Operating
                  income (loss)
              
              
              **55,315**
              
              
              **39,052**
              
              
              **27,327**
              
              
              **(5,905**
              **)**
              
              **—**
              
              
              **115,789**Other
                  expense
              
              
              **—**
              
              
              **—**
              
              
              **—**
              
              
              **1,354**
              
              
              **—**
              
              
              **1,354**Interest
                  expense (income), net
              
              
              **(778**
              **)**
              
              **(26,219**
              **)**
              
              **98,127**
              
              
              **2,144**
              
              
              **—**
              
              
              **73,274**Loss
                  on extinguished debt
              
              
              **—**
              
              
              **7,045**
              
              
              **—**
              
              
              **—**
              
              
              **—**
              
              
              **7,045**Income
                  taxes
              
              
              **35**
              
              
              **13,835**
              
              
              **266**
              
              
              **189**
              
              
              **—**
              
              
              **14,325**Equity
                  in net (income) loss from subsidiary
              
              
              **36,267**
              
              
              **80,658**
              
              
              **9,592**
              
              
              **—**
              
              
              **(126,517**
              **)**
              
              **—**Net
                  income (loss)
              
              **$**
              **19,791**
              
              **$**
              **(36,267**
              **)**
              **$**
              **(80,658**
              **)**
              **$**
              **(9,592**
              **)**
              **$**
              **126,517**
              
              **$**
              **19,791****Consolidating
                  Statements of Cash Flows**Net
                  income (loss)
              
              **$**
              **19,791**
              
              **$**
              **(36,267**
              **)**
              **$**
              **(80,658**
              **)**
              **$**
              **(9,592**
              **)**
              **$**
              **126,517**
              
              **$**
              **19,791**Non-cash
                  expenses
              
              
              **2,152**
              
              
              **36,861**
              
              
              **69,302**
              
              
              **5,670**
              
              
              **—**
              
              
              **113,985**Equity
                  in net (income) loss from subsidiary
              
              
              **36,267**
              
              
              **80,658**
              
              
              **9,592**
              
              
              **—**
              
              
              **(126,517**
              **)**
              
              **—**Changes
                  in working capital
              
              
              **(776**
              **)**
              
              **(17,902**
              **)**
              
              **(10,141**
              **)**
              
              **(3,411**
              **)**
              
              **—**
              
              
              **(32,230**
              **)**Net
                  cash provided by (used for) operating activities
              
              
              **57,434**
              
              
              **63,350**
              
              
              **(11,905**
              **)**
              
              **(7,333**
              **)**
              
              **—**
              
              
              **101,546**Net
                  cash used for investing activities
              
              
              **—**
              
              
              **(478,962**
              **)**
              
              **(24,219**
              **)**
              
              **(16,817**
              **)**
              
              **—**
              
              
              **(519,998**
              **)**Net
                  cash provided by (used for) financing activities
              
              
              **(57,434**
              **)**
              
              **438,341**
              
              
              **36,395**
              
              
              **25,884**
              
              
              **—**
              
              
              **443,186**Effect
                  on exchange rate changes on cash
              
              
              **—**
              
              
              **—**
              
              
              **—**
              
              
              **(242**
              **)**
              
              **—**
              
              
              **(242**
              **)**Net
                  increase in cash and cash equivalents
              
              
              **—**
              
              
              **22,729**
              
              
              **271**
              
              
              **1,492**
              
              
              **—**
              
              
              **24,492**Cash
                  and cash equivalents at beginning of year
              
              
              **—**
              
              
              **85**
              
              
              **42**
              
              
              **137**
              
              
              **—**
              
              
              **264**Cash
                  and cash equivalents at end of year
              
              **$**
              **—**
              
              **$**
              **22,814**
              
              **$**
              **313**
              
              **$**
              **1,629**
              
              **$**
              **—**
              
              **$**
              **24,756**
  **Year
                    Ended January 1, 2005**BPC
                    Holding
                  Corporation
                  (Parent)
                
                Berry
                    Plastics
                  Corporation
                  (Issuer)
                
                Combined
                  Guarantor
                  Subsidiaries
                
                Combined
                  Non-guarantor
                  Subsidiaries
                
                Consolidating
                  Adjustments
                
                Consolidated**Consolidating
                    Statements of Income**Net
                    sales
                
                $
                —
                
                $
                236,448
                
                $
                554,107
                
                $
                23,658
                
                $
                —
                
                $
                814,213Cost
                    of goods sold
                
                
                —
                
                
                166,248
                
                
                449,760
                
                
                23,321
                
                
                —
                
                
                639,329Gross
                    profit
                
                
                —
                
                
                70,200
                
                
                104,347
                
                
                337
                
                
                —
                
                
                174,884Operating
                    expenses
                
                
                (39,306
                )
                
                37,072
                
                
                79,493
                
                
                3,749
                
                
                —
                
                
                81,008Operating
                    income (loss)
                
                
                39,306
                
                
                33,128
                
                
                24,854
                
                
                (3,412
                )
                
                —
                
                
                93,876Interest
                    expense (income), net
                
                
                (772
                )
                
                (15,007
                )
                
                68,226
                
                
                738
                
                
                —
                
                
                53,185Income
                    taxes (benefit)
                
                
                42
                
                
                17,458
                
                
                281
                
                
                (41
                )
                
                —
                
                
                17,740Equity
                    in net (income) loss from subsidiary
                
                
                17,085
                
                
                47,762
                
                
                4,109
                
                
                —
                
                
                (68,956
                )
                
                —Net
                    income (loss)
                
                $
                22,951
                
                $
                (17,085
                )
                $
                (47,762
                )
                $
                (4,109
                )
                $
                68,956
                
                $
                22,951**Consolidating
                    Statements of Cash Flows**Net
                    income (loss)
                
                $
                22,951
                
                $
                (17,085
                )
                $
                (47,762
                )
                $
                (4,109
                )
                $
                68,956
                
                $
                22,951Non-cash
                    expenses
                
                
                585
                
                
                33,596
                
                
                42,565
                
                
                3,485
                
                
                —
                
                
                80,231Equity
                    in net (income) loss from subsidiary
                
                
                17,085
                
                
                47,762
                
                
                4,109
                
                
                —
                
                
                (68,956
                )
                
                —Changes
                    in working capital
                
                
                (775
                )
                
                10,520
                
                
                (36,689
                )
                
                (1,005
                )
                
                —
                
                
                (27,949
                )Net
                    cash provided by (used for) operating activities
                
                
                39,846
                
                
                74,793
                
                
                (37,777
                )
                
                (1,629
                )
                
                —
                
                
                75,233Net
                    cash provided by (used for) investing activities
                
                
                —
                
                
                (21,125
                )
                
                (26,426
                )
                
                2,074
                
                
                —
                
                
                (45,477
                )Net
                    cash provided by (used for) financing activities
                
                
                (39,846
                )
                
                (77,869
                )
                
                62,575
                
                
                (568
                )
                
                —
                
                
                (55,708
                )Effect
                    on exchange rate changes on cash
                
                
                —
                
                
                —
                
                
                —
                
                
                24
                
                
                —
                
                
                24Net
                    increase (decrease) in cash and cash equivalents
                
                
                —
                
                
                (24,201
                )
                
                (1,628
                )
                
                (99
                )
                
                —
                
                
                (25,928
                )Cash
                    and cash equivalents at beginning of year
                
                
                —
                
                
                24,286
                
                
                1,670
                
                
                236
                
                
                —
                
                
                26,192Cash
                    and cash equivalents at end of year
                
                $
                —
                
                $
                85
                
                $
                42
                
                $
                137
                
                $
                —
                
                $
                264




F-27





**Year
                  Ended December 27, 2003**BPC
                  Holding
                Corporation(Parent)
              
              Berry
                  Plastics
                Corporation(Issuer)
              
              Combined
                  GuarantorSubsidiaries
              
              Combined
                Non-Guarantor
                Subsidiaries
              
              Consolidating
                Adjustments
              
              Consolidated**Consolidating
                  Statements of Income**Net
                  sales
              
              $
              —
              
              $
              200,886
              
              $
              328,984
              
              $
              22,006
              
              $
              —
              
              $
              551,876Cost
                  of goods sold
              
              
              —
              
              
              140,139
              
              
              259,720
              
              
              20,891
              
              
              —
              
              
              420,750Gross
                  profit
              
              
              —
              
              
              60,747
              
              
              69,264
              
              
              1,115
              
              
              —
              
              
              131,126Operating
                  expenses
              
              
              (25,840
              )
              
              34,536
              
              
              47,545
              
              
              3,695
              
              
              —
              
              
              59,936Operating
                  income (loss)
              
              
              25,840
              
              
              26,211
              
              
              21,719
              
              
              (2,580
              )
              
              —
              
              
              71,190Other
                  income
              
              
              —
              
              
              —
              
              
              (7
              )
              
              —
              
              
              —
              
              
              (7
              )Interest
                  expense, net
              
              
              (763
              )
              
              (592
              )
              
              45,326
              
              
              1,442
              
              
              —
              
              
              45,413Loss
                  on extinguished debt
              
              
              —
              
              
              250
              
              
              —
              
              
              —
              
              
              —
              
              
              250Income
                  taxes
              
              
              27
              
              
              12,388
              
              
              10
              
              
              61
              
              
              —
              
              
              12,486Equity
                  in net (income) loss from subsidiary
              
              
              13,528
              
              
              27,693
              
              
              4,083
              
              
              —
              
              
              (45,304
              )
              
              —Net
                  income (loss)
              
              $
              13,048
              
              $
              (13,528
              )
              $
              (27,693
              )
              $
              (4,083
              )
              $
              45,304
              
              $
              13,048**Consolidating
                  Statements of Cash Flows**Net
                  income (loss)
              
              $
              13,048
              
              $
              (13,528
              )
              $
              (27,693
              )
              $
              (4,083
              )
              $
              45,304
              
              $
              13,048Non-cash
                  expenses
              
              
              —
              
              
              26,817
              
              
              28,136
              
              
              3,227
              
              
              —
              
              
              58,180Equity
                  in net (income) loss from subsidiary
              
              
              13,528
              
              
              27,693
              
              
              4,083
              
              
              —
              
              
              (45,304
              )
              
              —Changes
                  in working capital
              
              
              (758
              )
              
              1,159
              
              
              7,463
              
              
              681
              
              
              —
              
              
              8,545Net
                  cash provided by (used for) operating activities
              
              
              25,818
              
              
              42,141
              
              
              11,989
              
              
              (175
              )
              
              —
              
              
              79,773Net
                  cash used for investing activities
              
              
              —
              
              
              (244,511
              )
              
              (16,474
              )
              
              (4,667
              )
              
              —
              
              
              (265,652
              )Net
                  cash provided by (used for) financing activities
              
              
              (25,819
              )
              
              211,499
              
              
              5,891
              
              
              5,250
              
              
              —
              
              
              196,821Effect
                  on exchange rate changes on cash
              
              
              —
              
              
              —
              
              
              —
              
              
              (363
              )
              
              —
              
              
              (363
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              (1
              )
              
              9,129
              
              
              1,406
              
              
              45
              
              
              —
              
              
              10,579Cash
                  and cash equivalents at beginning of year
              
              
              1
              
              
              15,157
              
              
              264
              
              
              191
              
              
              —
              
              
              15,613Cash
                  and cash equivalents at end of year
              
              $
              —
              
              $
              24,286
              
              $
              1,670
              
              $
              236
              
              $
              —
              
              $
              26,192




**Note
      16. Quarterly Financial Data (Unaudited)**





The
      following table contains selected unaudited quarterly financial data for fiscal
      years 2005 and 2004.





**2005**
            
            **2004****First**
            
            **Second**
            
            **Third**
            
            **Fourth**
            
            **First**
            
            **Second**
            
            **Third**
            
            **Fourth**Net
                sales
            
            **$**
            **225,310**
            
            **$**
            **282,871**
            
            **$**
            **342,305**
            
            **$**
            **319,218**
            
            $
            191,726
            
            $
            211,041
            
            $
            204,803
            
            $
            206,643Cost
                of sales
            
            
            **184,016**
            
            
            **233,477**
            
            
            **273,129**
            
            
            **252,748**
            
            
            148,615
            
            
            164,565
            
            
            160,824
            
            
            165,325Gross
                profit
            
            **$**
            **41,294**
            
            **$**
            **49,394**
            
            **$**
            **69,176**
            
            **$**
            **66,470**
            
            $
            43,111
            
            $
            46,476
            
            $
            43,979
            
            $
            41,318Net
                income
            
            **$**
            **3,799**
            
            **$**
            **1,751**
            
            **$**
            **9,085**
            
            **$**
            **5,156**
            
            $
            4,822
            
            $
            7,391
            
            $
            6,641
            
            $
            4,097











F-28








**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized, on the 22nd day of March,
      2006.





**BPC
      HOLDING CORPORATION**











By /s/
      Ira G. Boots


Ira
      G.
      Boots


President
      and Chief Executive Officer








Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated:





**Signature**
            **Title**
            **Date**/s/
                Joseph H. Gleberman
            Chairman
                of the Board of Directors
            March
                22, 2006Joseph
                H. Gleberman/s/
                Ira G. Boots
            President,
                Chief Executive Officer and Director (Principal Executive
                Officer)
            March
                22, 2006Ira
                G. Boots/s/
                James M. Kratochvil
            Executive
                Vice President, Chief Financial Officer, Treasurer and Secretary
                (Principal Financial and Accounting Officer)
            March
                22, 2006James
                M. Kratochvil/s/
                Gregory J. Landis
            Director
            March
                22, 2006Gregory
                J. Landis/s/
                Christopher C. Behrens
            Director
            March
                22, 2006Christopher
                C. Behrens/s/
                Terry R. Peets
            Director
            March
                22, 2006Terry
                R. Peets/s/
                Stephen S. Trevor
            Director
            March
                22, 2006Stephen
                S. Trevor/s/
                Mathew J. Lori
            Director
            March
                22, 2006Mathew
                J. Lori





S-1





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized, on the 22nd day of March,
      2006.





**BERRY
      PLASTICS CORPORATION**





By /s/
      Ira G. Boots


Ira
      G.
      Boots


President
      and Chief Executive Officer





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated:





**Signature**
            **Title**
            **Date**/s/
                Joseph H. Gleberman
            Chairman
                of the Board of Directors
            March
                22, 2006Joseph
                H. Gleberman/s/
                Ira G. Boots
            President,
                Chief Executive Officer and Director (Principal Executive
                Officer)
            March
                22, 2006Ira
                G. Boots/s/
                James M. Kratochvil
            Executive
                Vice President, Chief Financial Officer, Treasurer and Secretary
                (Principal Financial and Accounting Officer)
            March
                22, 2006James
                M. Kratochvil/s/
                Gregory J. Landis
            Director
            March
                22, 2006Gregory
                J. Landis/s/
                Christopher C. Behrens
            Director
            March
                22, 2006Christopher
                C. Behrens/s/
                Terry R. Peets
            Director
            March
                22, 2006Terry
                R. Peets/s/
                Stephen S. Trevor
            Director
            March
                22, 2006Stephen
                S. Trevor/s/
                Mathew J. Lori
            Director
            March
                22, 2006Mathew
                J. Lori





S-2





**** **Supplemental
      Information To Be Furnished With Reports Filed Pursuant To Section 15(d) Of
      The
      Act By Registrant Which Has Not Registered Securities Pursuant To Section 12
      Of
      The Act**








The
      Registrants have not sent any annual report or proxy material to security
      holders.











S-3





INDEX





EXHIBIT


NO.    DESCRIPTION
      OF EXHIBIT


2.1
              Agreement
                  and Plan of Merger, dated as of May 25, 2002, among GS Berry Acquisition
                  Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000
                  Offshore,
                  L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge
                  Street Special Opportunities Fund 2000, L.P., GS Capital Partners
                  2000
                  Employee Fund, L.P., Stone Street Fund 2000, Holding, the Company,
                  the
                  Stockholders listed on Schedule 1 attached thereto, Atlantic Equity
                  Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC,
                  BPC
                  Equity, LLC and Ira G. Boots (filed as Exhibit 2.1 to the Current
                  Report
                  on Form 8-K filed on July 31, 2002 (the "Form 8-K") and incorporated
                  herein by reference)
 
 2.2
              First
                  Amendment dated as of July 17, 2002 among GS Berry Acquisition
                  Corp., GS
                  Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore,
                  L.P., GS
                  Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street
                  Special Opportunities Fund 2000, L.P., GS Capital Partners 2000
                  Employee
                  Fund, L.P., Stone Street Fund 2000, Holding, the Company, the Stockholders
                  listed on Schedule 1 attached thereto, Atlantic Equity Partners
                  International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity,
                  LLC
                  and Ira G. Boots to the Agreement and Plan of Merger, dated as
                  of May 25,
                  2002 (filed as Exhibit 2.2 to the Form 8-K and incorporated herein
                  by
                  reference)
 
 2.3
              Second
                  Amendment dated as of July 22, 2002 among GS Berry Acquisition
                  Corp., GS
                  Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore,
                  L.P., GS
                  Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street
                  Special Opportunities Fund 2000, L.P., GS Capital Partners 2000
                  Employee
                  Fund, L.P., Stone Street Fund 2000, Holding, the Company, the Stockholders
                  listed on Schedule 1 attached thereto, Atlantic Equity Partners
                  International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity,
                  LLC
                  and Ira G. Boots to the Agreement and Plan of Merger, dated as
                  of May 25,
                  2002 (filed as Exhibit 2.3 to the Form 8-K and incorporated herein
                  by
                  reference)
 
 2.4
              The
                  Agreement and Plan of Merger dated as of October 15, 2003, by and
                  among
                  the Company, Berry Plastics Acquisition Corporation IV, Landis,
                  all the
                  shareholders of Landis, the Real Estate Sellers (as defined therein)
                  and
                  Gregory J. Landis, as the Shareholder Representative (as defined
                  therein)
                  (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on
                  December
                  5, 2003 (the “Landis Form 8-K”) and incorporated herein by
                  reference)
 
 2.5
              Amended
                  and Restated Agreement and Plan of Merger, dated as of May 31,
                  2005, by
                  and among the Company, Berry Plastics Acquisition Corporation VI,
                  Kerr,
                  the sellers listed on the Signature Pages thereto and Freemont
                  Acquisition
                  Company, L.L.C. as Sellers’ Representative(filed
                  asExhibit
                  99.1 to the Current Report on Form 8-K filed on June 8, 2005 (the
“Kerr
                  Form 8-K”) and incorporated herein by
                  reference)
  3.1
              Certificate
                  of Incorporation of the Company (filed as Exhibit 3.3 to the Registration
                  Statement on Form S-1 filed on February 24, 1994 (the “Form S-1”) and
                  incorporated herein by reference)
 
 3.2
              Bylaws
                  of the Company (filed as Exhibit 3.4 to the Form S-1 and incorporated
                  herein by reference)
 
 3.3
              Amended
                  and Restated Certificate of Incorporation of BPC Holding Corporation
                  (“Holding”) (filed as Exhibit 4.1 to the Form S-8 filed on August 6, 2002
                  (the “Form S-8”) and incorporated herein by reference)
 
 3.4
              Amended
                  and Restated Bylaws of Holding (filed as Exhibit 4.2 to the Form
                  S-8 and
                  incorporated herein by reference)
 
 4.1
              The
                  Indenture, dated as of July 22, 2002, among Holding, the Company,
                  the
                  other guarantors listed on the signature page thereof, and U.S.
                  Bank Trust
                  National Association, as trustee relating to the 10 3/4% Senior
                  Subordinated Notes due 2012 (filed as Exhibit 4.1 to the Form-S-4
                  filed on
                  August 16, 2002 “2002 Form S-4” and incorporated herein by
                  reference)
 
 4.2
              The
                  Registration Rights Agreement, dated November 20, 2003, among the
                  Company,
                  Holding, the other guarantors listed on the signature page thereof,
                  and
                  J.P. Morgan Securities Inc., Goldman Sachs & Co., as Initial
                  Purchasers relating to the 103⁄4% Senior Subordinated Notes due 2012 (filed
                  as Exhibit 4.2 to the Form S-4 filed on January 9 2004 “2004 Form S-4” and
                  incorporated herein by reference)
 
 4.3
              Supplemental
                  Indenture, dated as of August 6, 2002, among the Company, Holding,
                  Berry
                  Iowa Corporation, Packerware Corporation, Knight Plastics, Inc.,
                  Berry
                  Sterling Corporation, Berry Plastic Design Corporation, Poly-Seal
                  Corporation, Berry Plastics Acquisitions Corporation III, Venture
                  Packaging, Inc., Venture Packaging Midwest, Inc., Berry Plastics
                  Technical
                  Services, Inc., CPI Holding Corporation, Aerocon, Inc., Pescor,
                  Inc.,
                  Berry Tri-Plas Corporation and Cardinal Packaging, Inc., the new
                  guarantors listed on the signature page thereof, and U.S. Bank
                  Trust
                  National Association, as trustee (filed as Exhibit 4.3 to the 2002
                  Form-S-4 and incorporated herein by
                  reference)
  
  
 4.4
              Second
                  Supplemental Indenture, dated as of November 20, 2003, among Landis
                  Plastics, Inc., the Company, Holding, Berry Iowa Corporation, Packerware
                  Corporation, Knight Plastics, Inc., Berry Sterling Corporation,
                  Berry
                  Plastic Design Corporation, Poly-Seal Corporation, Berry Plastics
                  Acquisitions Corporation III, Venture Packaging, Inc., Venture
                  Packaging
                  Midwest, Inc., Berry Plastics Technical Services, Inc., CPI Holding
                  Corporation, Aerocon, Inc., Pescor, Inc., Berry Tri-Plas Corporation,
                  Cardinal Packaging, Inc., Berry Plastics Acquisition Corporation
                  IV, Berry
                  Plastics Acquisition Corporation V, Berry Plastics Acquisition
                  Corporation
                  VI, Berry Plastics Acquisition Corporation VII, Berry Plastics
                  Acquisition
                  Corporation VIII, Berry Plastics Acquisition Corporation IX, Berry
                  Plastics Acquisition Corporation X, Berry Plastics Acquisition
                  Corporation
                  XI, Berry Plastics Acquisition Corporation XII, Berry Plastics
                  Acquisition
                  Corporation XIII, Berry Plastics Acquisition Corporation XIV, LLC,
                  Berry
                  Plastics Acquisition Corporation XV, LLC, and U.S. Bank Trust National
                  Association, as trustee(filed
                  as Exhibit 4.4 to the 2004 Form-S-4 and incorporated herein by
                  reference)
 
 10.1
              Stockholders
                  Agreement dated as of July 22, 2002, among Holding, GS Capital
                  Partners
                  2000, L.P., GS Capital Partners Offshore, L.P., GS Capital Partners
                  2000
                  GmbH & Co. Beteiligungs KG, GS Capital Partners 2000 Employee Fund,
                  L.P., Stone Street Fund 2000, L.P., Bridge Street Special Opportunities
                  Fund 2000, L.P., Goldman Sachs Direct Investment Fund 2000, L.P.,
                  J.P.
                  Morgan Partners (BHCA), L.P., J.P. Morgan Partners Global Investors,
                  L.P.,
                  J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan
                  Partners
                  Global Investors (Cayman) II, L.P. and J.P. Morgan Partners Global
                  Investors A, L.P. (filed as Exhibit 10.1 to the 2002 Form-S-4 and
                  incorporated herein by reference)
 
 10.2
              Stockholders
                  Agreement dated as of July 22, 2002, among Holding, and those stockholders
                  listed on Schedule A attached thereto (filed as Exhibit 4.6 to
                  the Form
                  S-8 and incorporated herein by reference)
 
 10.3
              SecondAmended
                  and Restated Credit and Guaranty Agreement, dated as of November
                  10, 2003,
                  by and among the Company, Holding, certain subsidiaries of the
                  Company,
                  the lenders named therein (the “Lenders”), Goldman Sachs Credit Partners
                  L.P., as Administrative Agent (the “Administrative Agent”), JPMorgan Chase
                  Bank, as Syndication Agent (the “Syndication Agent”), Fleet National Bank,
                  as Collateral Agent, Issuing Bank and Swing Line Lender (the “Collateral
                  Agent”) and The Royal Bank of Scotland and General Electric Capital
                  Corporation, as Co-Documentation Agents (the “Co-Documentation Agents”)
                  (filed as Exhibit 10.3 to the Annual report on Form 10-K filed
                  on March
                  22, 2005 (the “2004 Form 10-K”) and incorporated herein by
                  reference)
 
 10.4
              FirstAmendment
                  to theSecondAmended
                  and Restated Credit and Guaranty Agreement dated as of December
                  31, 2005
                  (filed as Exhibit 10.4 to the 2004 Form 10-K and incorporated herein
                  by
                  reference)
 
 10.5
              SecondAmendment
                  to theSecondAmended
                  and Restated Credit and Guaranty Agreement among the Company, Holding,
                  certain subsidiaries of the Company as Guarantors, the lenders
                  party
                  thereto (the “Lenders”), Goldman Sachs Credit Partners L.P. and JPMorgan
                  Chase Bank, as joint lead arrangers, joint book runners and co-syndication
                  agents, Deustche Bank Trust Company Americas, as Administrative
                  Agent,
                  Collateral Agent, an Issuing Bank and Swing Line Lender, Bank of
                  America,
                  N.A. as Issuing Bank and predecessor Swing Line Lender, The Royal
                  Bank of
                  Scotland and General Electric Capital Corporation, as Co-Documentation
                  Agents (filed asExhibit
                  10.1 to the Kerr Form 8-K and incorporated herein by
                  reference)
 
 10.6*
              ThirdAmendment
                  to theSecondAmended
                  and Restated Credit and Guaranty Agreement dated as of October 26,
                  2005
 
 10.7
              Counterpart
                  Agreement dated as of November 20, 2003, by and among the Company,
                  Holding, certain subsidiaries of the Company (including Landis),
                  the
                  Lenders, the Administrative Agent, the Syndication Agent, the Collateral
                  Agent and the Co-Documentation Agents(filed
                  as Exhibit 10.4 to the 2004 Form-S-4 and incorporated herein by
                  reference)
 
 10.8
              Pledge
                  Supplement, dated as of November 20, 2003, among the Company, the
                  other
                  Grantors named therein, and Fleet National Bank, as the Collateral
                  Agent.(filed
                  as Exhibit 10.5 to the 2004 Form-S-4 and incorporated herein by
                  reference)
  
  
 10.9
              Employment
                  Agreement dated December 24, 1990, as amended, between the Company
                  and R.
                  Brent Beeler ("Beeler") (filed as Exhibit 10.10 to the Form S-1
                  and
                  incorporated herein by reference)
 
 10.10
              Amendment
                  to Beeler Employment Agreement dated November 30, 1995(filed
                  as Exhibit 10.8 to the Annual report on Form 10-K filed on March
                  28, 1996
                  (the “1995 Form 10-K”) and incorporated herein by
                  reference)
 
 10.11
              Amendment
                  to Beeler Employment Agreement dated June 30, 1996 (filed as Exhibit
                  10.7
                  to the Registration Statement on Form S-4 filed on July 17, 1996
                  (the
                  "1996 Form S-4") and incorporated herein by reference)
 
 10.12
              Amendment
                  to Beeler Employment Agreement dated as of June 30, 2001 (filed
                  as Exhibit
                  10.19 to the 2002 Form S-4 and incorporated herein by
                  reference)
 
 10.13
              Employment
                  Agreement dated December 24, 1990 as amended, between the Company
                  and
                  James M. Kratochvil ("Kratochvil") (filed as Exhibit 10.12 to the
                  Form S-1
                  and incorporated herein by reference)
 
 10.14
              Amendment
                  to Kratochvil Employment Agreement dated November 30, 1995 (filed
                  as
                  Exhibit 10.12 to the 1995 Form 10-K and incorporated herein by
                  reference)
 
 10.15
              Amendment
                  to Kratochvil Employment Agreement dated June 30, 1996 (filed as
                  Exhibit
                  10.13 to the 1996 Form S-4 and incorporated herein by reference)
 
 10.16
              Amendment
                  to Kratochvil Employment Agreement dated June 30, 2001 (filed as
                  Exhibit
                  10.21 to the 2002 Form S-4 and incorporated herein by
                  reference)
 
 10.17
              Employment
                  Agreement dated as of January 1, 1993, between the Company and
                  Ira G.
                  Boots ("Boots") (filed as Exhibit 10.13 to the Form S-1 and incorporated
                  herein by reference)
 
 10.18
              Amendment
                  to Boots Employment Agreement dated November 30, 1995 (filed as
                  Exhibit
                  10.14 to the 1995 Form 10-K and incorporated herein by
                  reference)
 
 10.19
              Amendment
                  to Boots Employment Agreement dated June 30, 1996 (filed as Exhibit
                  10.16
                  to the 1996 Form S-4 and incorporated herein by reference)
 
 10.20
              Amendment
                  to Boots Employment Agreement dated June 30, 2001 (filed as Exhibit
                  10.20
                  to the 2002 Form S-4 and incorporated herein by
                  reference)
 
 10.21*
              Employment
                  Agreement dated as of October 4, 1996, between the Company and
                  Randall J.
                  Hobson
 
 10.22*
              Amendment
                  to Hobson Employment Agreement dated June 30, 2001
 
 10.23*
              Employment
                  Agreement dated as of November 22, 1999, between the Company and
                  G. Adam
                  Unfried
 
 10.24*
              Amendment
                  to Unfried Employment Agreement dated November 23,
                  2004
 
 10.25*
              Amendment
                  to Unfried Employment Agreement dated March 10,
                  2006
 
 10.26
              Amended
                  and Restated Holding 2002 Stock Option Plan dated March 3, 2004
                  (filed as
                  Exhibit 10.21 to the 2004 Form S-1 and incorporated herein by
                  reference)
 
 10.27
              Amendment
                  to Amended and Restated Holding 2002 Stock Option Plan (filed as
                  Exhibit
                  10.24 to the 2004 Form 10-K)
 
 10.28*
              Additional
                  Amendment to Amended and Restated Holding 2002 Stock Option
                  Plan
 
 10.29
              Holding
                  Key Employee Equity Investment Program dated August 5, 2002 (filed
                  as
                  Exhibit 4.6 to the Form S-8 and incorporated herein by reference)
 
 12.1*
              Ratio
                  of earnings to fixed charges
  
  
 21.1* List
        of
        subsidiaries
 
 31.1*  Rule
        13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
 
 31.2*  Rule
        13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
 
 32.1* Section
        1350 Certification of the Chief Executive Officer
 
 32.2* Section
        1350 Certification of the Chief Financial Officer
 
  *  Filed
        herewith.