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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended
September 25, 2005
    
    Commission File Number
333-118390
 Pinnacle Foods Group Inc.
 Delaware
State of Incorporation
    
    94-3303521
I.R.S. Employer Identification No.
 6 Executive Campus, Suite 100
Cherry Hill, New Jersey 08002
Principal Executive Offices
 Telephone Number: (856) 969-7100
 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
 Yes þ No o .
 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b
- 2 of the Securities Exchange Act of 1934).
 Yes o No þ .
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b - 2
of the Securities Exchange Act of 1934).
 Yes o No þ .
 As of November 8, 2005, there were outstanding 100 shares of common stock, par value $0.01 per
share, of the Registrant.




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TABLE OF CONTENTS
FORM 10-Q
 PageNo.PART I  FINANCIAL INFORMATION
    
    
    3ITEM 1:
    
    FINANCIAL STATEMENTS
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Balance Sheets
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Consolidated Statements of Shareholders Equity
    
    
    7Notes to Consolidated Financial Statements
    
    
    81.
    
    Summary of Business Activities
    
    
    82.
    
    Interim Financial Statements
    
    
    83.
    
    Acquisitions
    
    
    84.
    
    Restructuring and Impairment Charges
    
    
    115.
    
    Stock Options
    
    
    146.
    
    Other Expense (Income), net
    
    
    147.
    
    Inventories
    
    
    158.
    
    Goodwill and Other Assets
    
    
    159.
    
    Debt and Interest Expense
    
    
    1610.
    
    Pension and Retirement Plans
    
    
    1911.
    
    Financial Instruments
    
    
    2012.
    
    Commitments and Contingencies
    
    
    2213.
    
    Related Party Transactions
    
    
    2514.
    
    Segments
    
    
    2615.
    
    Recently Issued Accounting Pronouncements
    
    
    2716.
    
    Guarantor and Nonguarantor Statements
    
    
    28ITEM 2:
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    37Overview
    
    
    37Results of operations
    
    
    41Liquidity and capital resources
    
    
    47Inflation
    
    
    51Recently Issued Accounting Pronouncements
    
    
    51ITEM 3:
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
    
    51ITEM 4:
    
    CONTROLS AND PROCEDURES
    
    
    54PART II  OTHER INFORMATION
    
    
    55ITEM 1:
    
    LEGAL PROCEEDINGS
    
    
    55ITEM 2:
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    58ITEM 3:
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    58ITEM 4:
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    58ITEM 5:
    
    OTHER INFORMATION
    
    
    58ITEM 6:
    
    EXHIBITS
    
    
    58EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1: FINANCIAL STATEMENTS
 Unaudited consolidated financial statements begin on the following page
 3




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES





CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)


(in thousands)


SuccessorThree months ended
    
    
    Nine months endedSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    294,257
    
    
    $
    274,691
    
    
    $
    908,708
    
    
    $
    708,403Costs and expensesCost of products sold
    
    
    225,862
    
    
    
    233,148
    
    
    
    733,849
    
    
    
    609,847Marketing and selling expenses
    
    
    21,826
    
    
    
    29,605
    
    
    
    74,788
    
    
    
    71,296Administrative expenses
    
    
    9,875
    
    
    
    11,593
    
    
    
    32,341
    
    
    
    36,109Research and development expenses
    
    
    908
    
    
    
    1,006
    
    
    
    2,874
    
    
    
    2,786Goodwill impairment charge
    
    
    
    
    
    
    1,835
    
    
    
    
    
    
    
    1,835Other expense (income), net
    
    
    4,550
    
    
    
    7,353
    
    
    
    9,474
    
    
    
    27,275Total costs and expenses
    
    
    263,021
    
    
    
    284,540
    
    
    
    853,326
    
    
    
    749,148Earnings (loss) before interest and taxes
    
    
    31,236
    
    
    
    (9,849
    )
    
    
    55,382
    
    
    
    (40,745
    )Interest expense
    
    
    17,489
    
    
    
    17,156
    
    
    
    52,624
    
    
    
    35,054Interest income
    
    
    180
    
    
    
    158
    
    
    
    403
    
    
    
    334Earnings (loss) before income taxes
    
    
    13,927
    
    
    
    (26,847
    )
    
    
    3,161
    
    
    
    (75,465
    )Provision for income taxes
    
    
    9,214
    
    
    
    4,084
    
    
    
    23,050
    
    
    
    4,192Net earnings (loss)
    
    $
    4,713
    
    
    $
    (30,931
    )
    
    $
    (19,889
    )
    
    $
    (79,657
    )


See accompanying Notes to Unaudited Consolidated Financial Statements


4



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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
 
 CONSOLIDATED
BALANCE SHEETS (unaudited)
 (in thousands)
 SuccessorSeptember 25,
    
    
    December 26,2005
    
    
    2004Current assets:Cash and cash equivalents
    
    $
    594
    
    
    $
    2,235Accounts receivable, net
    
    
    84,903
    
    
    
    74,365Inventories, net
    
    
    175,899
    
    
    
    205,510Other current assets
    
    
    6,571
    
    
    
    3,991Deferred income taxes
    
    
    23
    
    
    
    22Total current assets
    
    
    267,990
    
    
    
    286,123Plant assets, net
    
    
    217,946
    
    
    
    223,740Tradenames
    
    
    780,544
    
    
    
    780,544Other assets, net
    
    
    48,211
    
    
    
    57,670Goodwill
    
    
    415,112
    
    
    
    416,863Total assets
    
    $
    1,729,803
    
    
    $
    1,764,940Current liabilities:Current portion of long-term obligations
    
    $
    130
    
    
    $
    5,574Notes payable
    
    
    912
    
    
    
    Accounts payable
    
    
    72,625
    
    
    
    87,921Accrued trade marketing expense
    
    
    36,869
    
    
    
    46,014Accrued liabilities
    
    
    87,914
    
    
    
    77,735Accrued income taxes
    
    
    2,817
    
    
    
    1,477Total current liabilities
    
    
    201,267
    
    
    
    218,721Long-term debt
    
    
    918,379
    
    
    
    937,506Postretirement benefits
    
    
    2,754
    
    
    
    2,940Deferred income taxes
    
    
    233,605
    
    
    
    212,406Total liabilities
    
    
    1,356,005
    
    
    
    1,371,573Commitments and contingencies (Note 12)Shareholders equity:Pinnacle Common stock: Par value $.01 per share,
100 shares authorized, issued 100
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    519,433
    
    
    
    519,433Accumulated other comprehensive income
    
    
    211
    
    
    
    48Carryover of Predecessor basis of net assets
    
    
    (17,338
    )
    
    
    (17,495
    )Accumulated deficit
    
    
    (128,508
    )
    
    
    (108,619
    )Total shareholders equity
    
    
    373,798
    
    
    
    393,367Total liabilities and shareholders equity
    
    $
    1,729,803
    
    
    $
    1,764,940
 See accompanying Notes to Unaudited Consolidated Financial Statements
 5




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
 (in thousands)
 SuccessorNine months endedSeptember 25,
    
    
    September 26,2005
    
    
    2004Cash flows from operating activitiesNet loss from operations
    
    $
    (19,889
    )
    
    $
    (79,657
    )Non-cash charges (credits) to net lossDepreciation and amortization
    
    
    29,782
    
    
    
    28,873Restructuring and impairment charges
    
    
    1,502
    
    
    
    16,312Amortization of debt acquisition costs
    
    
    4,398
    
    
    
    3,146Amortization of bond premium
    
    
    (391
    )
    
    
    (400
    )Change in value of financial instruments
    
    
    (2,058
    )
    
    
    (1,499
    )Equity related compensation charge
    
    
    
    
    
    
    7,400Postretirement healthcare benefits
    
    
    (186
    )
    
    
    (975
    )Pension expense
    
    
    446
    
    
    
    790Deferred income taxes
    
    
    21,199
    
    
    
    4,715Changes in working capitalAccounts receivable
    
    
    (10,311
    )
    
    
    (15,413
    )Inventories
    
    
    29,774
    
    
    
    (30,681
    )Accrued trade marketing expense
    
    
    (9,261
    )
    
    
    6,344Accounts payable
    
    
    (24,835
    )
    
    
    31,582Other current assets and liabilities
    
    
    11,694
    
    
    
    (5,174
    )Net cash provided by (used in) operating activities
    
    
    31,864
    
    
    
    (34,637
    )Cash flows from investing activitiesCapital expenditures
    
    
    (21,800
    )
    
    
    (11,947
    )Pinnacle merger consideration
    
    
    1,595
    
    
    
    Pinnacle merger costs
    
    
    
    
    
    
    (426
    )Aurora merger consideration
    
    
    
    
    
    
    (663,759
    )Aurora merger costs
    
    
    
    
    
    
    (17,006
    )Sale of plant assets
    
    
    561
    
    
    
    Acquisition of license
    
    
    
    
    
    
    (1,919
    )Net cash used in investing activities
    
    
    (19,644
    )
    
    
    (695,057
    )Cash flows from financing activitiesChange in bank overdrafts
    
    
    9,458
    
    
    
    5,598Repayment of capital lease obligations
    
    
    (93
    )
    
    
    (4
    )Equity contribution to Successor
    
    
    
    
    
    
    95,276Successors debt acquisition costs
    
    
    (51
    )
    
    
    (16,853
    )Proceeds from Successors bond offerings
    
    
    
    
    
    
    200,976Proceeds from Successors bank term loan
    
    
    
    
    
    
    425,000Proceeds from Successors notes payable borrowing
    
    
    31,626
    
    
    
    30,000Repayments of Successors notes payable
    
    
    (30,714
    )
    
    
    (14,000
    )Repayments of Successors long term obligations
    
    
    (24,087
    )
    
    
    (1,363
    )Net cash (used in) provided by financing activities
    
    
    (13,861
    )
    
    
    724,630Effect of exchange rate changes on cash
    
    
    
    
    
    
    18Net change in cash and cash equivalents
    
    
    (1,641
    )
    
    
    (5,046
    )Cash and cash equivalents  beginning of period
    
    
    2,235
    
    
    
    5,254Cash and cash equivalents  end of period
    
    $
    594
    
    
    $
    208Supplemental disclosures of cash flow information:Interest paid
    
    $
    39,435
    
    
    $
    28,344Interest received
    
    
    403
    
    
    
    324Income taxes refunded (paid)
    
    
    408
    
    
    
    862
 See accompanying Notes to Unaudited Consolidated Financial Statements
 6




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (unaudited)
 (in thousands)
 Carryover of
    
    
    AccumulatedAdditional
    
    
    
    
    
    
    Predecessor
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Paid In
    
    
    Accumulated
    
    
    Basis of
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Net Assets
    
    
    Income
    
    
    EquitySuccessorBalance at December 28, 2003
    
    
    100
    
    
    $
    
    
    
    $
    191,637
    
    
    $
    (16,299
    )
    
    $
    (17,495
    )
    
    $
    
    
    
    $
    157,843Equity contributions:Cash
    
    
    
    
    
    
    
    
    
    
    95,276
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,276Noncash
    
    
    
    
    
    
    
    
    
    
    225,120
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,120Equity related compensation
    
    
    
    
    
    
    
    
    
    
    7,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,400Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,657
    )
    
    
    
    
    
    
    
    
    
    
    (79,657
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    19Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,638
    )Balance at September 26, 2004
    
    
    100
    
    
    $
    
    
    
    $
    519,433
    
    
    $
    (95,956
    )
    
    $
    (17,495
    )
    
    $
    19
    
    
    $
    406,001SuccessorBalance at December 26, 2004
    
    
    100
    
    
    $
    
    
    
    $
    519,433
    
    
    $
    (108,619
    )
    
    $
    (17,495
    )
    
    $
    48
    
    
    $
    393,367Impact of additional
purchase accounting
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    157Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,889
    )
    
    
    
    
    
    
    
    
    
    
    (19,889
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163
    
    
    
    163Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,726
    )Balance at September 25, 2005
    
    
    100
    
    
    $
    
    
    
    $
    519,433
    
    
    $
    (128,508
    )
    
    $
    (17,338
    )
    
    $
    211
    
    
    $
    373,798
 See accompanying Notes to Unaudited Consolidated Financial Statements
 7




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
 1. Summary of Business Activities
 Business Overview
    
 2. Interim Financial Statements
 Form 10-K
 
 3. Acquisitions
 Aurora Transaction
  8




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
       Total paid to Auroras creditors
    
    $
    709,327Less: Amount paid with Aurora cash
    
    
    (20,764
    )Subtotal
    
    
    688,563Fair value of equity interests in LLC exchanged for Aurora
senior subordinated notes
    
    
    225,120Acquisition costs
    
    
    21,608Total cost of acquisition
    
    $
    935,291
 9




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  Assets recorded:Plant assets
    
    $
    107,528Inventories
    
    
    68,116Accounts receivable
    
    
    52,730Cash
    
    
    24,804Other current assets
    
    
    4,428Goodwill
    
    
    278,240Recipes and formulas
    
    
    20,600Tradenames
    
    
    675,700Other assets
    
    
    690Fair value of assets acquired
    
    
    1,232,836Liabilities assumed
    
    
    114,053Deferred income taxes
    
    
    183,492Purchase price
    
    $
    935,291
   Pro forma Information
   Nine months endedSeptember 25,
    
    September 26,2005
    
    2004(Actual)
    
    (Pro Forma)Net sales
    
    $
    908,708
    
    
    $
    865,867Earnings before interest and taxes
    
    $
    55,382
    
    
    $
    165,279Net (loss) earnings
    
    $
    (19,889
    )
    
    $
    108,259
 10




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
   Nine MonthsEndedPinnacle Historical Financial Statements
    
    September 26, 2004Flow through of fair value of Pinnacle inventories over
manufactured cost as of November 25, 2003
    
    $
    18,126Flow through of fair value of Aurora inventories over
manufactured cost as of March 19, 2004
    
    
    13,185Aurora acquisitions costs
    
    
    4,978Pinnacle acquisition costs
    
    
    1,420Equity related compensation
    
    
    7,400Impact on earnings before interest and taxes
    
    $
    45,109
 Nine MonthsEndedAurora Historical Financial Statements
    
    September 26, 2004Write off of obsolete inventory
    
    $
    725Administrative restructuring and retention costs
    
    
    548Financial restructuring and divestiture costs
    
    
    5,023Reorganization (primarily consists of debt forgiveness)
    
    
    (187,971
    )Miscellaneous non-cash charges
    
    
    207Impact on earnings before interest and taxes
    
    $
    (181,468
    )
 
 4. Restructuring and Impairment Charges
 Frozen Food Segment
 Erie, Pennsylvania Production Facility
  Estimated
    
    
    Change in
    
    
    Incurred
    
    
    EstimatedTotal
    
    
    Estimated
    
    
    Through
    
    
    RemainingDescription
    
    Charges
    
    
    Charges
    
    
    September 25, 2005
    
    
    ChargesEmployee
severance
    
    $
    590
    
    
    $
    249
    
    
    $
    839
    
    
    $
    Other costs
    
    
    3,650
    
    
    
    463
    
    
    
    3,058
    
    
    
    1,055Total
    
    $
    4,240
    
    
    $
    712
    
    
    $
    3,897
    
    
    $
    1,055
 11




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
     Mattoon, Illinois Production Facility
  Omaha, Nebraska Production Facility
  IncurredOriginal
    
    
    Change in
    
    
    
    
    
    
    Through
    
    
    Nine Months
    
    
    EstimatedEstimated
    
    
    Estimated
    
    
    
    
    
    
    December 26,
    
    
    Ended
    
    
    RemainingDescription
    
    Charges
    
    
    Charges
    
    
    Transfers
    
    
    2004
    
    
    September 25, 2005
    
    
    ChargesAsset impairment charges
    
    $
    7,400
    
    
    $
    2,649
    
    
    
    
    
    
    $
    10,049
    
    
    $
    
    
    
    $
    Employee severance
    
    
    2,506
    
    
    
    
    
    
    
    59
    
    
    
    2,506
    
    
    
    59
    
    
    
    Other costs
    
    
    4,984
    
    
    
    (464
    )
    
    
    (59
    )
    
    
    3,078
    
    
    
    1,266
    
    
    
    117Total
    
    $
    14,890
    
    
    $
    2,185
    
    
    $
    
    
    
    $
    15,633
    
    
    $
    1,325
    
    
    $
    117
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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
       Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atDecember 26,
    
    
    
    
    
    
    Noncash
    
    
    Cash
    
    
    
    
    
    
    September 25,Description
    
    2004
    
    
    Additions
    
    
    Reductions
    
    
    Reductions
    
    
    Transfers
    
    
    2005Other asset impairment charges
    
    $
    
    
    
    $
    862
    
    
    $
    (862
    )
    
    $
    
    
    
    
    
    
    
    $
    Employee severance
    
    
    3,695
    
    
    
    843
    
    
    
    
    
    
    
    (2,801
    )
    
    
    59
    
    
    
    1,796Other costs
    
    
    305
    
    
    
    4,382
    
    
    
    
    
    
    
    (4,354
    )
    
    
    (59
    )
    
    
    274Total
    
    $
    4,000
    
    
    $
    6,087
    
    
    $
    (862
    )
    
    $
    (7,155
    )
    
    $
    
    
    
    $
    2,070
 13




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 
 5. Stock Options
   Three Months Ended
    
    
    Nine Months EndedSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004Net earnings (loss), as reported
    
    $
    4,713
    
    
    $
    (30,931
    )
    
    $
    (19,889
    )
    
    $
    (79,657
    )Deduct: Total stock-based employee compensation
expense determined under fair value method
for all stock option awards, net of related tax effects
    
    
    (306
    )
    
    
    (158
    )
    
    
    (876
    )
    
    
    (474
    )Pro forma net earnings (loss)
    
    $
    4,407
    
    
    $
    (31,089
    )
    
    $
    (20,765
    )
    
    $
    (80,131
    )
 
 6. Other Expense (Income), net
 Three Months Ended
    
    
    Nine Months EndedSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004Other expense (income), net consists of:Restructuring and impairment charges
    
    $
    3,480
    
    
    $
    6,444
    
    
    $
    6,084
    
    
    $
    16,469Merger related costs
    
    
    
    
    
    
    
    
    
    
    (101
    )
    
    
    8,820Amortization of intangibles/other assets
    
    
    1,203
    
    
    
    1,100
    
    
    
    3,610
    
    
    
    2,248Royalty expense (income), net
    
    
    (132
    )
    
    
    (155
    )
    
    
    (87
    )
    
    
    (269
    )Other
    
    
    (1
    )
    
    
    (36
    )
    
    
    (32
    )
    
    
    7Total other expense
    
    $
    4,550
    
    
    $
    7,353
    
    
    $
    9,474
    
    
    $
    27,275
 Restructuring charges.
 Merger related costs.
   14




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 
 7. Inventories
 September 25,
    
    
    December 26,2005
    
    
    2004Raw materials, containers and supplies
    
    $
    33,062
    
    
    $
    34,489Finished product
    
    
    151,597
    
    
    
    187,645184,659
    
    
    
    222,134Reserves
    
    
    (8,760
    )
    
    
    (16,624
    )Total
    
    $
    175,899
    
    
    $
    205,510
   
 8. Goodwill and Other Assets
 Goodwill
 PurchaseDecember 26,
    
    
    Price
    
    
    September 25,2004
    
    
    Adjustment
    
    
    2005Frozen Foods
    
    $
    122,858
    
    
    $
    
    
    
    $
    122,858Dry Foods
    
    
    294,005
    
    
    
    (1,751
    )
    
    
    292,254Total
    
    $
    416,863
    
    
    $
    (1,751
    )
    
    $
    415,112
   Other Assets
 September 25,
    
    
    December 26,2005
    
    
    2004Amortizable intangibles, net of accumulated
amortization of $7,064 and $3,454, respectively
    
    $
    13,967
    
    
    $
    17,577Deferred financing costs, net of accumulated
amortization of $9,045 and $4,647, respectively
    
    
    31,592
    
    
    
    35,940Interest rate swap fair value (Note 11)
    
    
    2,058
    
    
    
    3,533Other
    
    
    594
    
    
    
    620Total
    
    $
    48,211
    
    
    $
    57,670
 15




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
   
 9. Debt and Interest Expense
 September 25,
    
    
    December 26,2005
    
    
    2004Long-term debtSuccessor- Senior secured credit facility  term loan
    
    $
    518,188
    
    
    $
    542,275- 8 1/4% Senior subordinated notes
    
    
    394,000
    
    
    
    394,000- Plus: unamortized premium on senior subordinated notes
    
    
    6,061
    
    
    
    6,452- Capital lease obligations
    
    
    260
    
    
    
    353Total Debt
    
    
    918,509
    
    
    
    943,080Less: current portion of long-term obligations
    
    
    130
    
    
    
    5,574Total long-term debt
    
    $
    918,379
    
    
    $
    937,506
 Three months ended
    
    
    Nine months endedInterest expense
    
    September 25, 2005
    
    
    September 26, 2004
    
    
    September 25, 2005
    
    
    September 26, 2004Third party interest expense
    
    $
    19,260
    
    
    $
    15,261
    
    
    $
    55,682
    
    
    $
    39,889Related party interest expense
    
    
    101
    
    
    
    106
    
    
    
    254
    
    
    
    182Interest rate swap (gains) / losses (Note 11)
    
    
    (1,872
    )
    
    
    1,789
    
    
    
    (3,312
    )
    
    
    (5,017
    )$
    17,489
    
    
    $
    17,156
    
    
    $
    52,624
    
    
    $
    35,054
   16




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
   
    
    In the case of base rate loans: 1.75% for the term loan and 1.75% for the revolving credit facility.
    
    In the case of Eurodollar loans: 2.75% for the term loan and 2.75% for the revolving credit facility.
  
    
    In the case of base rate loans: 1.25% to 1.75%.
    
    In the case of Eurodollar loans: 2.25% to 2.75%.
     1 4 1 4
 17




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
   Year
    
    Percentage2008
    
    
    104.125
    %2009
    
    
    102.750
    %2010
    
    
    101.375
    %2011 and thereafter
    
    
    100.000
    %
     18




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Senior Credit Agreement Amendment
   
    
    delivery of July 31, 2004 fiscal year end financial statements on or prior to the effective date of the amendment;
    
    a 50 basis point increase to the applicable rate, as defined, with respect to borrowings under the credit agreement;
    
    a change in the definition of consolidated cash interest expense to exclude non-cash
gains or losses arising from marking interest rate swap agreements to market;
    
    the addition of a Senior Covenant Leverage Ratio, as defined, which ranges from a ratio
of 3.75 to 1.00 to a ratio of 5.75 to 1.00 through December 2005;
    
    amendment of the interest expense coverage ratio (ranging from a ratio of 1.50 to 1.00
to a ratio of 2.10 to 1.00 through December 2005) and suspends the maximum total leverage
ratio until March 2006;
    
    elimination of limitation on revolving credit exposures;
    
    and the following limitations, restrictions and additional reporting requirements during
the amendment period which ends on the second business day following the date on which the
Company delivers to the Administrative Agent financial statements for the fiscal quarter
ending March 2006:
 o
    
    prohibit incremental extensions of credit, as defined;o
    
    additional limitations on indebtedness;o
    
    limitations on acquisitions and investments;o
    
    additional limitations on restricted payments;o
    
    suspension of payments for management fees;o
    
    continuation of the anti-cash hoarding provision;o
    
    monthly financial reporting requirements, and;o
    
    a Company election to early terminate the amendment period.
   
 10. Pension and Retirement Plans
   19




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
   Pension Benefits
    
    
    Other Postretirement BenefitsThree months ended
    
    
    Three months endedSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    372
    
    
    $
    368
    
    
    $
    3
    
    
    $
    7Interest cost
    
    
    828
    
    
    
    697
    
    
    
    17
    
    
    
    19Expected return on assets
    
    
    (1,052
    )
    
    
    (872
    )
    
    
    
    
    
    
    Recognized net actuarial loss/(gain)
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    12Amortization of:Unrecognized prior service cost (credit)
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    (101
    )Curtailment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (651
    )Total amount recognized
    
    $
    148
    
    
    $
    193
    
    
    $
    (62
    )
    
    $
    (714
    )
 Pension Benefits
    
    
    Other Postretirement BenefitsNine months ended
    
    
    Nine months endedSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    1,116
    
    
    $
    1,383
    
    
    $
    9
    
    
    $
    75Interest cost
    
    
    2,486
    
    
    
    2,260
    
    
    
    51
    
    
    
    122Expected return on assets
    
    
    (3,156
    )
    
    
    (2,853
    )
    
    
    
    
    
    
    Recognized net actuarial loss/(gain)
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    161Amortization of:Unrecognized prior service cost (credit)
    
    
    
    
    
    
    
    
    
    
    (252
    )
    
    
    (682
    )Curtailment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (651
    )Net periodic benefit cost (benefit)
    
    
    446
    
    
    
    790
    
    
    
    (186
    )
    
    
    (975
    )Liability assumed in business acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    806Total amount recognized
    
    $
    446
    
    
    $
    790
    
    
    $
    (186
    )
    
    $
    (169
    )
  
 11. Financial Instruments
  20




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
       21




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
    1 4
 
 12. Commitments and Contingencies
 General
  Litigation
 Pinnacles Fleming Bankruptcy Claim
  22




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Auroras Fleming Bankruptcy Claim
  Employee Litigation  Indemnification of US Cold Storage
   R2 Appeal in Aurora Bankruptcy
  State of Illinois v. City of St. Elmo and Aurora Foods Inc.
  23




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
   Underweight Products
  American Cold Storage  North America, L.P. v. P.F. Distribution, LLC and Pinnacle Foods Group Inc.
  Other Matters
 Bankruptcy filing of Winn-Dixie
  24




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 
 13. Related Party Transactions
 Management fees
 1 2
 1 2
 Leases and Aircraft
   Debt and Interest Expense
  Financial Instruments
  25




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Loan to Member of Management
  
 14. Segments
  Three months ended
    
    
    Nine months endedSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004SEGMENT INFORMATIONNet salesFrozen foods
    
    $
    156,306
    
    
    $
    156,781
    
    
    $
    492,754
    
    
    $
    396,006Dry foods
    
    
    137,951
    
    
    
    117,910
    
    
    
    415,954
    
    
    
    312,397Total
    
    $
    294,257
    
    
    $
    274,691
    
    
    $
    908,708
    
    
    $
    708,403Earnings (loss) before interest and taxesFrozen foods
    
    $
    4,971
    
    
    $
    (17,776
    )
    
    $
    5,616
    
    
    $
    (37,293
    )Dry foods
    
    
    30,311
    
    
    
    12,612
    
    
    
    62,508
    
    
    
    17,312Unallocated corporate expenses
    
    
    (4,046
    )
    
    
    (4,685
    )
    
    
    (12,742
    )
    
    
    (20,764
    )Total
    
    $
    31,236
    
    
    $
    (9,849
    )
    
    $
    55,382
    
    
    $
    (40,745
    )Depreciation and amortizationFrozen foods
    
    $
    4,933
    
    
    $
    7,472
    
    
    $
    19,454
    
    
    $
    19,510Dry foods
    
    
    3,520
    
    
    
    3,009
    
    
    
    10,328
    
    
    
    9,363Total
    
    $
    8,453
    
    
    $
    10,481
    
    
    $
    29,782
    
    
    $
    28,873Capital expendituresFrozen foods
    
    $
    8,256
    
    
    $
    3,690
    
    
    $
    18,417
    
    
    $
    8,185Dry foods
    
    
    1,275
    
    
    
    882
    
    
    
    3,383
    
    
    
    3,762Total
    
    $
    9,531
    
    
    $
    4,572
    
    
    $
    21,800
    
    
    $
    11,947GEOGRAPHIC INFORMATIONNet salesUnited States
    
    $
    280,182
    
    
    $
    266,427
    
    
    $
    869,981
    
    
    $
    683,470Canada
    
    
    14,075
    
    
    
    8,264
    
    
    
    38,727
    
    
    
    24,933Total
    
    $
    294,257
    
    
    $
    274,691
    
    
    $
    908,708
    
    
    $
    708,403
 26




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 September 25,
    
    
    December 26,2005
    
    
    2004SEGMENT INFORMATION:Total AssetsFrozen foods
    
    $
    640,347
    
    
    $
    671,860Dry foods
    
    
    1,089,433
    
    
    
    1,092,196Corporate
    
    
    23
    
    
    
    884Total
    
    $
    1,729,803
    
    
    $
    1,764,940GEOGRAPHIC INFORMATIONLong-lived assetsUnited States
    
    $
    217,920
    
    
    $
    223,719Canada
    
    
    26
    
    
    
    21Total
    
    $
    217,946
    
    
    $
    223,740
 
 15. Recently Issued Accounting Pronouncements
     27




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 
 16. Guarantor and Nonguarantor Statements
 1 4
  (1)
    
    Consolidating (a) balance sheets as of September 25, 2005 and December 26, 2004
and (b) the related statements of operations and cash flows for the three and nine
months ended September 25, 2005 and September 26, 2004.(2)
    
    Elimination entries necessary to consolidate the Successor, with its guarantor
subsidiaries and nonguarantor subsidiary.
  28




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Balance Sheet  Successor
September 25, 2005
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalCurrent assets:Cash and cash equivalents
    
    $
    59
    
    
    $
    299
    
    
    $
    236
    
    
    $
    
    
    
    $
    594Accounts receivable, net
    
    
    46,707
    
    
    
    30,763
    
    
    
    7,433
    
    
    
    
    
    
    
    84,903Intercompany accounts
receivable
    
    
    
    
    
    
    28,820
    
    
    
    
    
    
    
    (28,820
    )
    
    
    Inventories, net
    
    
    53,820
    
    
    
    118,522
    
    
    
    3,557
    
    
    
    
    
    
    
    175,899Other current assets
    
    
    3,551
    
    
    
    2,967
    
    
    
    53
    
    
    
    
    
    
    
    6,571Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23Total current assets
    
    
    104,137
    
    
    
    181,371
    
    
    
    11,302
    
    
    
    (28,820
    )
    
    
    267,990Plant assets, net
    
    
    99,498
    
    
    
    118,422
    
    
    
    26
    
    
    
    
    
    
    
    217,946Investment in subsidiaries
    
    
    270,870
    
    
    
    3,780
    
    
    
    
    
    
    
    (274,650
    )
    
    
    Intercompany note receivable
    
    
    187,492
    
    
    
    
    
    
    
    
    
    
    
    (187,492
    )
    
    
    Tradenames
    
    
    674,388
    
    
    
    106,156
    
    
    
    
    
    
    
    
    
    
    
    780,544Other assets, net
    
    
    48,064
    
    
    
    147
    
    
    
    
    
    
    
    
    
    
    
    48,211Goodwill
    
    
    272,618
    
    
    
    142,494
    
    
    
    
    
    
    
    
    
    
    
    415,112Total assets
    
    $
    1,657,067
    
    
    $
    552,370
    
    
    $
    11,328
    
    
    $
    (490,962
    )
    
    $
    1,729,803Current liabilities:Current portion of long-term
obligations
    
    $
    10
    
    
    $
    120
    
    
    $
    
    
    
    $
    
    
    
    $
    130Notes payable
    
    
    
    
    
    
    912
    
    
    
    
    
    
    
    
    
    
    
    912Accounts payable
    
    
    31,642
    
    
    
    38,941
    
    
    
    2,042
    
    
    
    
    
    
    
    72,625Intercompany accounts payable
    
    
    26,953
    
    
    
    
    
    
    
    1,867
    
    
    
    (28,820
    )
    
    
    Accrued trade marketing
expense
    
    
    22,712
    
    
    
    12,153
    
    
    
    2,004
    
    
    
    
    
    
    
    36,869Accrued liabilities
    
    
    65,193
    
    
    
    22,496
    
    
    
    225
    
    
    
    
    
    
    
    87,914Accrued income taxes
    
    
    252
    
    
    
    1,156
    
    
    
    1,409
    
    
    
    
    
    
    
    2,817Total current liabilities
    
    
    146,762
    
    
    
    75,778
    
    
    
    7,547
    
    
    
    (28,820
    )
    
    
    201,267Long-term debt
    
    
    918,263
    
    
    
    116
    
    
    
    
    
    
    
    
    
    
    
    918,379Intercompany note payable
    
    
    
    
    
    
    187,492
    
    
    
    
    
    
    
    (187,492
    )
    
    
    Postretirement benefits
    
    
    845
    
    
    
    1,909
    
    
    
    
    
    
    
    
    
    
    
    2,754Deferred income taxes
    
    
    217,399
    
    
    
    16,205
    
    
    
    1
    
    
    
    
    
    
    
    233,605Total liabilities
    
    
    1,283,269
    
    
    
    281,500
    
    
    
    7,548
    
    
    
    (216,312
    )
    
    
    1,356,005Commitments and contingencies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shareholders equity:Pinnacle Common Stock, $.01
par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    519,433
    
    
    
    287,710
    
    
    
    935
    
    
    
    (288,645
    )
    
    
    519,433Accumulated other
comprehensive income (loss)
    
    
    211
    
    
    
    211
    
    
    
    211
    
    
    
    (422
    )
    
    
    211Carryover of Predecessor
basis of net assets
    
    
    (17,338
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,338
    )Retained earnings
(accumulated deficit)
    
    
    (128,508
    )
    
    
    (17,051
    )
    
    
    2,634
    
    
    
    14,417
    
    
    
    (128,508
    )Total shareholders equity
    
    
    373,798
    
    
    
    270,870
    
    
    
    3,780
    
    
    
    (274,650
    )
    
    
    373,798Total liabilities and
shareholders equity
    
    $
    1,657,067
    
    
    $
    552,370
    
    
    $
    11,328
    
    
    $
    (490,962
    )
    
    $
    1,729,803
 29




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PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Balance Sheet  Successor
December 26, 2004
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalCurrent assets:Cash and cash equivalents
    
    $
    490
    
    
    $
    1,745
    
    
    
    
    
    
    $
    
    
    
    $
    2,235Accounts receivable, net
    
    
    40,488
    
    
    
    29,308
    
    
    
    4,569
    
    
    
    
    
    
    
    74,365Intercompany accounts
receivable
    
    
    4,439
    
    
    
    
    
    
    
    
    
    
    
    (4,439
    )
    
    
    Inventories, net
    
    
    70,443
    
    
    
    131,788
    
    
    
    3,279
    
    
    
    
    
    
    
    205,510Other current assets
    
    
    940
    
    
    
    2,968
    
    
    
    83
    
    
    
    
    
    
    
    3,991Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Total current assets
    
    
    116,800
    
    
    
    165,809
    
    
    
    7,953
    
    
    
    (4,439
    )
    
    
    286,123Plant assets, net
    
    
    101,774
    
    
    
    121,945
    
    
    
    21
    
    
    
    
    
    
    
    223,740Investment in subsidiaries
    
    
    263,384
    
    
    
    1,183
    
    
    
    
    
    
    
    (264,567
    )
    
    
    Intercompany note receivable
    
    
    182,054
    
    
    
    543
    
    
    
    
    
    
    
    (182,597
    )
    
    
    Tradenames
    
    
    674,388
    
    
    
    106,156
    
    
    
    
    
    
    
    
    
    
    
    780,544Other assets, net
    
    
    57,493
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    57,670Goodwill
    
    
    272,618
    
    
    
    144,245
    
    
    
    
    
    
    
    
    
    
    
    416,863Total assets
    
    $
    1,668,511
    
    
    $
    540,058
    
    
    $
    7,974
    
    
    $
    (451,603
    )
    
    $
    1,764,940Current liabilities:Current portion of long-term
obligations
    
    $
    5,460
    
    
    $
    114
    
    
    $
    
    
    
    $
    
    
    
    $
    5,574Accounts payable
    
    
    51,815
    
    
    
    33,894
    
    
    
    2,212
    
    
    
    
    
    
    
    87,921Intercompany accounts payable
    
    
    
    
    
    
    3,001
    
    
    
    1,438
    
    
    
    (4,439
    )
    
    
    Accrued trade marketing
expense
    
    
    30,864
    
    
    
    12,813
    
    
    
    2,337
    
    
    
    
    
    
    
    46,014Accrued liabilities
    
    
    50,796
    
    
    
    26,817
    
    
    
    122
    
    
    
    
    
    
    
    77,735Accrued income taxes
    
    
    99
    
    
    
    1,240
    
    
    
    138
    
    
    
    
    
    
    
    1,477Total current liabilities
    
    
    139,034
    
    
    
    77,879
    
    
    
    6,247
    
    
    
    (4,439
    )
    
    
    218,721Long-term debt
    
    
    937,300
    
    
    
    206
    
    
    
    
    
    
    
    
    
    
    
    937,506Intercompany note payable
    
    
    
    
    
    
    182,054
    
    
    
    543
    
    
    
    (182,597
    )
    
    
    Postretirement benefits
    
    
    825
    
    
    
    2,115
    
    
    
    
    
    
    
    
    
    
    
    2,940Deferred income taxes
    
    
    197,985
    
    
    
    14,420
    
    
    
    1
    
    
    
    
    
    
    
    212,406Total liabilities
    
    
    1,275,144
    
    
    
    276,674
    
    
    
    6,791
    
    
    
    (187,036
    )
    
    
    1,371,573Commitments and contingencies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shareholders equity:Pinnacle Common Stock, $.01
par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    519,433
    
    
    
    287,710
    
    
    
    935
    
    
    
    (288,645
    )
    
    
    519,433Accumulated other
comprehensive income (loss)
    
    
    48
    
    
    
    48
    
    
    
    48
    
    
    
    (96
    )
    
    
    48Carryover of Predecessor
basis of net assets
    
    
    (17,495
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,495
    )Retained earnings
(accumulated deficit)
    
    
    (108,619
    )
    
    
    (24,374
    )
    
    
    200
    
    
    
    24,174
    
    
    
    (108,619
    )Total shareholders equity
    
    
    393,367
    
    
    
    263,384
    
    
    
    1,183
    
    
    
    (264,567
    )
    
    
    393,367Total liabilities and
shareholders equity
    
    $
    1,668,511
    
    
    $
    540,058
    
    
    $
    7,974
    
    
    $
    (451,603
    )
    
    $
    1,764,940
 30




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##### Table of Contents



PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Statement of Operations  Successor
For the three months ended September 25, 2005
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    163,821
    
    
    $
    124,855
    
    
    $
    14,096
    
    
    $
    (8,515
    )
    
    $
    294,257Costs and expensesCost of products sold
    
    
    117,966
    
    
    
    105,099
    
    
    
    11,108
    
    
    
    (8,311
    )
    
    
    225,862Marketing and selling expenses
    
    
    10,466
    
    
    
    9,732
    
    
    
    1,628
    
    
    
    
    
    
    
    21,826Administrative expenses
    
    
    5,472
    
    
    
    4,049
    
    
    
    354
    
    
    
    
    
    
    
    9,875Research and development expenses
    
    
    529
    
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    908Intercompany royalties
    
    
    
    
    
    
    
    
    
    
    79
    
    
    
    (79
    )
    
    
    Intercompany technical service fees
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    (125
    )
    
    
    Other expense (income), net
    
    
    4,417
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    4,550Equity in (earnings) loss of investees
    
    
    (2,141
    )
    
    
    (533
    )
    
    
    
    
    
    
    2,674
    
    
    
    Total costs and expenses
    
    
    136,709
    
    
    
    118,859
    
    
    
    13,294
    
    
    
    (5,841
    )
    
    
    263,021Earnings (loss) before interest and taxes
    
    
    27,112
    
    
    
    5,996
    
    
    
    802
    
    
    
    (2,674
    )
    
    
    31,236Intercompany interest (income) expense
    
    
    (3,264
    )
    
    
    3,264
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    17,466
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    17,489Interest income
    
    
    
    
    
    
    174
    
    
    
    6
    
    
    
    
    
    
    
    180Earnings (loss) before income taxes
    
    
    12,910
    
    
    
    2,883
    
    
    
    808
    
    
    
    (2,674
    )
    
    
    13,927Provision for income taxes
    
    
    8,197
    
    
    
    742
    
    
    
    275
    
    
    
    
    
    
    
    9,214Net earnings (loss)
    
    $
    4,713
    
    
    $
    2,141
    
    
    $
    533
    
    
    $
    (2,674
    )
    
    $
    4,713
 31




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##### Table of Contents



PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Statement of Operations  Successor
For the three months ended September 26, 2004
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    148,743
    
    
    $
    123,008
    
    
    $
    8,264
    
    
    $
    (5,324
    )
    
    $
    274,691Costs and expensesCost of products sold
    
    
    122,552
    
    
    
    107,881
    
    
    
    7,914
    
    
    
    (5,199
    )
    
    
    233,148Marketing and selling expenses
    
    
    17,481
    
    
    
    11,337
    
    
    
    787
    
    
    
    
    
    
    
    29,605Administrative expenses
    
    
    6,631
    
    
    
    4,742
    
    
    
    220
    
    
    
    
    
    
    
    11,593Research and development expenses
    
    
    584
    
    
    
    422
    
    
    
    
    
    
    
    
    
    
    
    1,006Goodwill impairment charge
    
    
    1,835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,835Intercompany royalties
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    (76
    )
    
    
    Intercompany technical service fees
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    (49
    )
    
    
    Other expense (income), net
    
    
    6,094
    
    
    
    1,259
    
    
    
    
    
    
    
    
    
    
    
    7,353Equity in (earnings) loss of investees
    
    
    6,265
    
    
    
    379
    
    
    
    
    
    
    
    (6,644
    )
    
    
    Total costs and expenses
    
    
    161,442
    
    
    
    126,020
    
    
    
    9,046
    
    
    
    (11,968
    )
    
    
    284,540Earnings (loss) before interest and taxes
    
    
    (12,699
    )
    
    
    (3,012
    )
    
    
    (782
    )
    
    
    6,644
    
    
    
    (9,849
    )Intercompany interest (income) expense
    
    
    (2,800
    )
    
    
    2,793
    
    
    
    7
    
    
    
    
    
    
    
    Interest expense
    
    
    16,550
    
    
    
    606
    
    
    
    
    
    
    
    
    
    
    
    17,156Interest income
    
    
    
    
    
    
    155
    
    
    
    3
    
    
    
    
    
    
    
    158Earnings (loss) before income taxes
    
    
    (26,449
    )
    
    
    (6,256
    )
    
    
    (786
    )
    
    
    6,644
    
    
    
    (26,847
    )Provision (benefit) for income taxes
    
    
    4,482
    
    
    
    9
    
    
    
    (407
    )
    
    
    
    
    
    
    4,084Net earnings (loss)
    
    $
    (30,931
    )
    
    $
    (6,265
    )
    
    $
    (379
    )
    
    $
    6,644
    
    
    $
    (30,931
    )
 32




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##### Table of Contents



PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Statement of Operations  Successor
For the nine months ended September 25, 2005
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    491,874
    
    
    $
    398,431
    
    
    $
    38,748
    
    
    $
    (20,345
    )
    
    $
    908,708Costs and expensesCost of products sold
    
    
    385,375
    
    
    
    338,341
    
    
    
    29,840
    
    
    
    (19,707
    )
    
    
    733,849Marketing and selling expenses
    
    
    43,060
    
    
    
    28,171
    
    
    
    3,557
    
    
    
    
    
    
    
    74,788Administrative expenses
    
    
    17,931
    
    
    
    13,500
    
    
    
    910
    
    
    
    
    
    
    
    32,341Research and development expenses
    
    
    1,640
    
    
    
    1,234
    
    
    
    
    
    
    
    
    
    
    
    2,874Goodwill impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intercompany royalties
    
    
    
    
    
    
    
    
    
    
    224
    
    
    
    (224
    )
    
    
    Intercompany technical service fees
    
    
    
    
    
    
    
    
    
    
    414
    
    
    
    (414
    )
    
    
    Other expense (income), net
    
    
    8,352
    
    
    
    1,122
    
    
    
    
    
    
    
    
    
    
    
    9,474Equity in (earnings) loss of investees
    
    
    (7,323
    )
    
    
    (2,434
    )
    
    
    
    
    
    
    9,757
    
    
    
    Total costs and expenses
    
    
    449,035
    
    
    
    379,934
    
    
    
    34,945
    
    
    
    (10,588
    )
    
    
    853,326Earnings (loss) before interest and taxes
    
    
    42,839
    
    
    
    18,497
    
    
    
    3,803
    
    
    
    (9,757
    )
    
    
    55,382Intercompany interest (income) expense
    
    
    (9,471
    )
    
    
    9,469
    
    
    
    2
    
    
    
    
    
    
    
    Interest expense
    
    
    52,584
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    52,624Interest income
    
    
    
    
    
    
    387
    
    
    
    16
    
    
    
    
    
    
    
    403Earnings (loss) before income taxes
    
    
    (274
    )
    
    
    9,375
    
    
    
    3,817
    
    
    
    (9,757
    )
    
    
    3,161Provision for income taxes
    
    
    19,615
    
    
    
    2,052
    
    
    
    1,383
    
    
    
    
    
    
    
    23,050Net earnings (loss)
    
    $
    (19,889
    )
    
    $
    7,323
    
    
    $
    2,434
    
    
    $
    (9,757
    )
    
    $
    (19,889
    )
 33




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##### Table of Contents



PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Statement of Operations  Successor
For the nine months ended September 26, 2004
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalNet sales
    
    $
    287,140
    
    
    $
    409,016
    
    
    $
    24,933
    
    
    $
    (12,686
    )
    
    $
    708,403Costs and expensesCost of products sold
    
    
    246,369
    
    
    
    354,475
    
    
    
    21,058
    
    
    
    (12,055
    )
    
    
    609,847Marketing and selling expenses
    
    
    31,833
    
    
    
    36,809
    
    
    
    2,654
    
    
    
    
    
    
    
    71,296Administrative expenses
    
    
    14,020
    
    
    
    21,273
    
    
    
    816
    
    
    
    
    
    
    
    36,109Research and development expenses
    
    
    1,107
    
    
    
    1,679
    
    
    
    
    
    
    
    
    
    
    
    2,786Goodwill impairment charge
    
    
    1,835
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,835Intercompany royalties
    
    
    
    
    
    
    
    
    
    
    233
    
    
    
    (233
    )
    
    
    Intercompany technical service fees
    
    
    
    
    
    
    
    
    
    
    398
    
    
    
    (398
    )
    
    
    Other expense (income), net
    
    
    14,557
    
    
    
    12,718
    
    
    
    
    
    
    
    
    
    
    
    27,275Equity in (earnings) loss of investees
    
    
    20,342
    
    
    
    24
    
    
    
    
    
    
    
    (20,366
    )
    
    
    Total costs and expenses
    
    
    330,063
    
    
    
    426,978
    
    
    
    25,159
    
    
    
    (33,052
    )
    
    
    749,148Earnings (loss) before interest and taxes
    
    
    (42,923
    )
    
    
    (17,962
    )
    
    
    (226
    )
    
    
    20,366
    
    
    
    (40,745
    )Intercompany interest (income) expense
    
    
    (6,549
    )
    
    
    6,529
    
    
    
    20
    
    
    
    
    
    
    
    Interest expense
    
    
    35,053
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    35,054Interest income
    
    
    88
    
    
    
    235
    
    
    
    11
    
    
    
    
    
    
    
    334Earnings (loss) before income taxes
    
    
    (71,339
    )
    
    
    (24,257
    )
    
    
    (235
    )
    
    
    20,366
    
    
    
    (75,465
    )Provision for income taxes
    
    
    8,318
    
    
    
    (3,915
    )
    
    
    (211
    )
    
    
    
    
    
    
    4,192Net earnings (loss)
    
    $
    (79,657
    )
    
    $
    (20,342
    )
    
    $
    (24
    )
    
    $
    20,366
    
    
    $
    (79,657
    )
 34




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##### Table of Contents



PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Statement of Cash Flows  Successor
For the nine months ended September 25, 2005
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalCash flows from operating activitiesNet earnings (loss) from operations
    
    $
    (19,889
    )
    
    $
    7,323
    
    
    $
    2,434
    
    
    $
    (9,757
    )
    
    $
    (19,889
    )Non-cash charges (credits) to net earnings (loss)Depreciation and amortization
    
    
    17,314
    
    
    
    12,463
    
    
    
    5
    
    
    
    
    
    
    
    29,782Restructuring and impairment charges
    
    
    1,502
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,502Amortization of debt acquisition costs
    
    
    4,398
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,398Amortization of bond premium
    
    
    (391
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (391
    )Change in value of financial instruments
    
    
    (2,058
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,058
    )Equity in loss (earnings) of investees
    
    
    (7,323
    )
    
    
    (2,434
    )
    
    
    
    
    
    
    9,757
    
    
    
    Postretirement healthcare benefits
    
    
    20
    
    
    
    (206
    )
    
    
    
    
    
    
    
    
    
    
    (186
    )Pension expense
    
    
    
    
    
    
    446
    
    
    
    
    
    
    
    
    
    
    
    446Deferred income taxes
    
    
    19,414
    
    
    
    1,785
    
    
    
    
    
    
    
    
    
    
    
    21,199Changes in working capitalAccounts receivable
    
    
    (6,219
    )
    
    
    (1,454
    )
    
    
    (2,638
    )
    
    
    
    
    
    
    (10,311
    )Intercompany accounts receivable/payable
    
    
    31,967
    
    
    
    (32,325
    )
    
    
    358
    
    
    
    
    
    
    
    Inventories
    
    
    16,623
    
    
    
    13,267
    
    
    
    (116
    )
    
    
    
    
    
    
    29,774Accrued trade marketing expense
    
    
    (8,152
    )
    
    
    (661
    )
    
    
    (448
    )
    
    
    
    
    
    
    (9,261
    )Accounts payable
    
    
    (20,173
    )
    
    
    (4,383
    )
    
    
    (279
    )
    
    
    
    
    
    
    (24,835
    )Other current assets and liabilities
    
    
    6,492
    
    
    
    3,965
    
    
    
    1,237
    
    
    
    
    
    
    
    11,694Net cash provided by (used in) operating activities
    
    
    33,525
    
    
    
    (2,214
    )
    
    
    553
    
    
    
    
    
    
    
    31,864Cash flows from investing activitiesCapital expenditures
    
    
    (12,317
    )
    
    
    (9,474
    )
    
    
    (9
    )
    
    
    
    
    
    
    (21,800
    )Pinnacle merger consideration
    
    
    1,595
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,595Sale of plant assets
    
    
    
    
    
    
    561
    
    
    
    
    
    
    
    
    
    
    
    561Net cash used in investing activities
    
    
    (10,722
    )
    
    
    (8,913
    )
    
    
    (9
    )
    
    
    
    
    
    
    (19,644
    )Cash flows from financing activitiesChange in bank overdrafts
    
    
    
    
    
    
    9,766
    
    
    
    (308
    )
    
    
    
    
    
    
    9,458Repayment of capital lease obligations
    
    
    (8
    )
    
    
    (85
    )
    
    
    
    
    
    
    
    
    
    
    (93
    )Successors debt acquisition costs
    
    
    (51
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51
    )Proceeds from Successors notes payable borrowing
    
    
    31,626
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,626Repayments of Successors notes payable
    
    
    (30,714
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30,714
    )Repayments of Successors long term obligations
    
    
    (24,087
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,087
    )Net cash (used in) provided by financing activities
    
    
    (23,234
    )
    
    
    9,681
    
    
    
    (308
    )
    
    
    
    
    
    
    (13,861
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net change in cash and cash equivalents
    
    
    (431
    )
    
    
    (1,446
    )
    
    
    236
    
    
    
    
    
    
    
    (1,641
    )Cash and cash equivalents  beginning of period
    
    
    490
    
    
    
    1,745
    
    
    
    
    
    
    
    
    
    
    
    2,235Cash and cash equivalents  end of period
    
    $
    59
    
    
    $
    299
    
    
    $
    236
    
    
    $
    
    
    
    $
    594Supplemental disclosures of cash flow information:Interest paid
    
    $
    39,435
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    39,435Interest received
    
    
    
    
    
    
    387
    
    
    
    16
    
    
    
    
    
    
    
    403Income taxes refunded (paid)
    
    
    
    
    
    
    611
    
    
    
    (203
    )
    
    
    
    
    
    
    408
 35




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##### Table of Contents



PINNACLE FOODS GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 Pinnacle Foods Group Inc.
Consolidated Statement of Cash Flows  Successor
For the nine months ended September 26, 2004
 PinnacleFoods
    
    
    Guarantor
    
    
    Nonguarantor
    
    
    
    
    
    
    ConsolidatedGroup Inc.
    
    
    Subsidiaries
    
    
    Subsidiary
    
    
    Eliminations
    
    
    TotalCash flows from operating activitiesNet earnings (loss) from operations
    
    $
    (79,657
    )
    
    $
    (20,342
    )
    
    $
    (24
    )
    
    $
    20,366
    
    
    $
    (79,657
    )Non-cash charges (credits) to net earnings (loss)Depreciation and amortization
    
    
    10,336
    
    
    
    18,532
    
    
    
    5
    
    
    
    
    
    
    
    28,873Restructuring and impairment charges
    
    
    6,101
    
    
    
    10,211
    
    
    
    
    
    
    
    
    
    
    
    16,312Amortization of debt acquisition costs
    
    
    3,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,146Amortization of bond premium
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (400
    )Change in value of financial instruments
    
    
    (1,499
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,499
    )Equity in loss (earnings) of investees
    
    
    20,342
    
    
    
    24
    
    
    
    
    
    
    
    (20,366
    )
    
    
    Equity related compensation charge
    
    
    7,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,400Postretirement healthcare benefits
    
    
    12
    
    
    
    (987
    )
    
    
    
    
    
    
    
    
    
    
    (975
    )Pension expense
    
    
    
    
    
    
    790
    
    
    
    
    
    
    
    
    
    
    
    790Deferred income taxes
    
    
    8,295
    
    
    
    (3,550
    )
    
    
    (30
    )
    
    
    
    
    
    
    4,715Changes in working capitalAccounts receivable
    
    
    (73,784
    )
    
    
    60,552
    
    
    
    (2,181
    )
    
    
    
    
    
    
    (15,413
    )Intercompany accounts receivable/payable
    
    
    (5,121
    )
    
    
    3,310
    
    
    
    1,811
    
    
    
    
    
    
    
    Inventories
    
    
    (77,171
    )
    
    
    48,398
    
    
    
    (1,908
    )
    
    
    
    
    
    
    (30,681
    )Accrued trade marketing expense
    
    
    29,427
    
    
    
    (24,559
    )
    
    
    1,476
    
    
    
    
    
    
    
    6,344Accounts payable
    
    
    42,070
    
    
    
    (10,403
    )
    
    
    (85
    )
    
    
    
    
    
    
    31,582Other current assets and liabilities
    
    
    78,880
    
    
    
    (84,454
    )
    
    
    400
    
    
    
    
    
    
    
    (5,174
    )Net cash provided by (used in) operating activities
    
    
    (31,623
    )
    
    
    (2,478
    )
    
    
    (536
    )
    
    
    
    
    
    
    (34,637
    )Cash flows from investing activitiesCapital expenditures
    
    
    (3,726
    )
    
    
    (8,219
    )
    
    
    (2
    )
    
    
    
    
    
    
    (11,947
    )Pinnacle merger costs
    
    
    (426
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (426
    )Aurora merger consideration
    
    
    (663,759
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (663,759
    )Aurora merger costs
    
    
    (17,006
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,006
    )Acquisition of license
    
    
    (1,919
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,919
    )Net cash used in investing activities
    
    
    (686,836
    )
    
    
    (8,219
    )
    
    
    (2
    )
    
    
    
    
    
    
    (695,057
    )Cash flows from financing activitiesChange in bank overdrafts
    
    
    
    
    
    
    5,598
    
    
    
    
    
    
    
    
    
    
    
    5,598Repayment of capital lease obligations
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Equity contribution to Successor
    
    
    95,276
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,276Successors debt acquisition costs
    
    
    (16,853
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,853
    )Proceeds from Successors bond offerings
    
    
    200,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,976Proceeds from Successors bank term loan
    
    
    425,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    425,000Proceeds from Successors notes payable borrowing
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000Repayments of Successors notes payable
    
    
    (14,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,000
    )Repayments of Successors long term obligations
    
    
    (1,363
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,363
    )Net cash (used in) provided by financing activities
    
    
    719,032
    
    
    
    5,598
    
    
    
    
    
    
    
    
    
    
    
    724,630Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    18Net change in cash and cash equivalents
    
    
    573
    
    
    
    (5,099
    )
    
    
    (520
    )
    
    
    
    
    
    
    (5,046
    )Cash and cash equivalents  beginning of period
    
    
    
    
    
    
    4,751
    
    
    
    503
    
    
    
    
    
    
    
    5,254Cash and cash equivalents  end of period
    
    $
    573
    
    
    $
    (348
    )
    
    $
    (17
    )
    
    $
    
    
    
    $
    208Supplemental disclosures of cash flow information:Interest paid
    
    $
    28,344
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    28,344Interest received
    
    
    88
    
    
    
    225
    
    
    
    11
    
    
    
    
    
    
    
    324Income taxes refunded (paid)
    
    
    
    
    
    
    862
    
    
    
    
    
    
    
    
    
    
    
    862
 36




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##### Table of Contents



ITEM 2:
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
   
 Overview
      37




---



##### Table of Contents




    
    capitalize on our diversified product portfolio;
    
    leverage our brand names for share leadership;
    
    expand the foodservice and private label businesses;
    
    expand the Vlasic and Duncan Hines brands in Canada;
    
    continue to achieve significant productivity improvements; and
    
    complete the integration and execute on our synergy opportunities.
   38




---



##### Table of Contents



Consolidated
    
    
    Frozen Foods
    
    
    Dry FoodsSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Shipments
    
    $
    394.2
    
    
    $
    395.3
    
    
    $
    214.0
    
    
    $
    219.3
    
    
    $
    180.2
    
    
    $
    176.0Less: Aggregate trade marketing and
consumer coupon redemption expenses
    
    
    97.0
    
    
    
    109.5
    
    
    
    55.7
    
    
    
    57.7
    
    
    
    41.3
    
    
    
    51.8Less: Slotting expense
    
    
    3.0
    
    
    
    11.1
    
    
    
    2.0
    
    
    
    4.8
    
    
    
    1.0
    
    
    
    6.3Net sales
    
    $
    294.2
    
    
    $
    274.7
    
    
    $
    156.3
    
    
    $
    156.8
    
    
    $
    137.9
    
    
    $
    117.9
  Consolidated
    
    
    Frozen Foods
    
    
    Dry FoodsSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Shipments
    
    $
    1,288.7
    
    
    $
    989.6
    
    
    $
    699.3
    
    
    $
    544.1
    
    
    $
    589.4
    
    
    $
    445.5Less: Aggregate trade marketing and
consumer coupon redemption expenses
    
    
    341.5
    
    
    
    263.2
    
    
    
    189.6
    
    
    
    139.4
    
    
    
    151.9
    
    
    
    123.8Less: Slotting expense
    
    
    38.5
    
    
    
    18.0
    
    
    
    16.9
    
    
    
    8.7
    
    
    
    21.6
    
    
    
    9.3Net sales
    
    $
    908.7
    
    
    $
    708.4
    
    
    $
    492.8
    
    
    $
    396.0
    
    
    $
    415.9
    
    
    $
    312.4
 Plant Consolidations
 Omaha, Nebraska Production Facility
    39




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##### Table of Contents



Erie, Pennsylvania Production Facility
     Mattoon, Illinois Production Facility
  40




---



##### Table of Contents



Results of operations
 Consolidated statements of operations
  Three months ended
    
    
    Nine months endedSeptember 25, 2005
    
    
    September 26, 2004
    
    
    September 25, 2005
    
    
    September 26, 2004Net sales
    
    $
    294.2
    
    
    
    100.0
    %
    
    $
    274.7
    
    
    
    100.0
    %
    
    $
    908.7
    
    
    
    100.0
    %
    
    $
    708.4
    
    
    
    100.0
    %Costs and expensesCost of products sold
    
    
    225.8
    
    
    
    76.8
    %
    
    
    233.1
    
    
    
    84.9
    %
    
    
    733.8
    
    
    
    80.8
    %
    
    
    609.8
    
    
    
    86.1
    %Marketing and selling expenses
    
    
    21.8
    
    
    
    7.4
    %
    
    
    29.6
    
    
    
    10.8
    %
    
    
    74.8
    
    
    
    8.2
    %
    
    
    71.3
    
    
    
    10.1
    %Administrative expenses
    
    
    9.8
    
    
    
    3.3
    %
    
    
    11.6
    
    
    
    4.2
    %
    
    
    32.3
    
    
    
    3.6
    %
    
    
    36.1
    
    
    
    5.1
    %Research and development expenses
    
    
    0.9
    
    
    
    0.3
    %
    
    
    1.0
    
    
    
    0.4
    %
    
    
    2.9
    
    
    
    0.3
    %
    
    
    2.8
    
    
    
    0.4
    %Goodwill impairment charge
    
    
    
    
    
    
    0.0
    %
    
    
    1.8
    
    
    
    0.7
    %
    
    
    
    
    
    
    0.0
    %
    
    
    1.8
    
    
    
    0.3
    %Other expense (income), net
    
    
    4.6
    
    
    
    1.6
    %
    
    
    7.4
    
    
    
    2.7
    %
    
    
    9.5
    
    
    
    1.0
    %
    
    
    27.3
    
    
    
    3.9
    %Total costs and expenses
    
    
    262.9
    
    
    
    89.4
    %
    
    
    284.5
    
    
    
    103.6
    %
    
    
    853.3
    
    
    
    93.9
    %
    
    
    749.1
    
    
    
    105.7
    %Earnings (loss) before interest and taxes
    
    $
    31.3
    
    
    
    10.6
    %
    
    $
    (9.8
    )
    
    
    -3.6
    %
    
    $
    55.4
    
    
    
    6.1
    %
    
    $
    (40.7
    )
    
    
    -5.7
    %
 Three months ended
    
    
    Nine months endedSeptember 25,
    
    
    September 26,
    
    
    September 25,
    
    
    September 26,2005
    
    
    2004
    
    
    2005
    
    
    2004Net salesFrozen foods
    
    $
    156.3
    
    
    $
    156.8
    
    
    $
    492.8
    
    
    $
    396.0Dry foods
    
    
    137.9
    
    
    
    117.9
    
    
    
    415.9
    
    
    
    312.4Total
    
    $
    294.2
    
    
    $
    274.7
    
    
    $
    908.7
    
    
    $
    708.4Earnings (loss) before interest and taxesFrozen foods
    
    $
    5.0
    
    
    $
    (17.7
    )
    
    $
    5.6
    
    
    $
    (37.2
    )Dry foods
    
    
    30.3
    
    
    
    12.6
    
    
    
    62.5
    
    
    
    17.3Unallocated corporate expenses
    
    
    (4.0
    )
    
    
    (4.7
    )
    
    
    (12.7
    )
    
    
    (20.8
    )Total
    
    $
    31.3
    
    
    $
    (9.8
    )
    
    $
    55.4
    
    
    $
    (40.7
    )Depreciation and amortizationFrozen foods
    
    $
    5.0
    
    
    $
    7.5
    
    
    $
    19.5
    
    
    $
    19.5Dry foods
    
    
    3.5
    
    
    
    3.0
    
    
    
    10.3
    
    
    
    9.4Total
    
    $
    8.5
    
    
    $
    10.5
    
    
    $
    29.8
    
    
    $
    28.9
 41




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##### Table of Contents



Three months ended September 25, 2005 compared to three months ended September 26, 2004
 Net sales
 Frozen foods:
 Dry foods:
 Cost of products sold
 Marketing and selling expenses
 Administrative expenses
 42




---



##### Table of Contents



Research and development expenses
 Goodwill impairment charge.
 Other expense (income), net
 Earnings (loss) before interest and taxes
 Frozen foods:
 Dry foods:
 43




---



##### Table of Contents



Interest expense, net
 Provision for income taxes.
  Nine months ended September 25, 2005 compared to nine months ended September 26, 2004
 Net sales
 Frozen foods:
 Dry foods:
 Cost of products sold
 44




---



##### Table of Contents



Marketing and selling expenses
 Administrative expenses
 Research and development expenses
 Goodwill impairment charge.
 Other expense (income), net
 Earnings (loss) before interest and taxes
 45




---



##### Table of Contents



Frozen foods:
 Dry foods:
 Interest expense, net
 Provision for income taxes.
 46




---



##### Table of Contents



Seasonality
  
 Liquidity and capital resources
 Historical
   Statements of cash flows for the nine months ended September 25, 2005
     47




---



##### Table of Contents



Debt
     
    
    In the case of base rate loans: 1.75% for the term loan and 1.75% for the revolving credit facility.
    
    In the case of Eurodollar loans: 2.75% for the term loan and 2.75% for the revolving credit facility.
  
    
    In the case of base rate loans: 1.25% to 1.75%.
    
    In the case of Eurodollar loans: 2.25% to 2.75%.
    48




---



##### Table of Contents



1 4 1 4
  Year
    
    Percentage2008
    
    
    104.125
    %2009
    
    
    102.750
    %2010
    
    
    101.375
    %2011 and thereafter
    
    
    100.000
    %
    49




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##### Table of Contents



Senior Credit Agreement Amendment
   
    
    delivery of July 31, 2004 fiscal year end financial statements on or prior to the
effective date of the amendment;
    
    a 50 basis point increase to the applicable rate, as defined, with respect to
borrowings under the credit agreement;
    
    a change in the definition of consolidated cash interest expense to exclude non-cash
gains or losses arising from marking interest rate swap agreements to market;
    
    the addition of a senior covenant leverage ratio, as defined, which ranges from a
ratio of 3.75 to 1.00 to a ratio of 5.75 to 1.00 through December 2005;
    
    amendment of the interest expense coverage ratio (ranging from a ratio of 1.50 to
1.00 to a ratio of 2.10 to 1.00 through December 2005) and suspends the maximum total
leverage ratio until March 2006;
    
    elimination of limitation on revolving credit exposures;
    
    and the following limitations, restrictions and additional reporting requirements
during the amendment period which ends on the second business day following the date on
which the Company delivers to the Administrative Agent financial statements for the
fiscal quarter ending March 2006:
 °
    
    prohibit incremental extensions of credit, as defined;°
    
    additional limitations on indebtedness;°
    
    limitations on acquisitions and investments;°
    
    additional limitations on restricted payments;°
    
    suspension of payments for management fees;°
    
    continuation of the anti-cash hoarding provision;°
    
    monthly financial reporting requirements, and;°
    
    a Company election to early terminate the amendment period.
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Inflation
  
 Recently Issued Accounting Pronouncements
     
 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 Financial Instruments
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Raw materials, ingredients, packaging and production costs
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ITEM 4: CONTROLS AND PROCEDURES
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PART II  OTHER INFORMATION
 
 ITEM 1: LEGAL PROCEEDINGS
 PFGIs Fleming bankruptcy claim
  Auroras Fleming bankruptcy claim
  Employee litigationindemnification of US Cold Storage
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R2 appeal in Aurora bankruptcy
  State of Illinois v. City of St. Elmo and Aurora Foods Inc.
    Underweight Products
 
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American Cold Storage  North America, L.P. v. P.F. Distribution, LLC and Pinnacle Foods Group
Inc.
  57




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ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3: DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5: OTHER INFORMATION
  
 ITEM 6: EXHIBITS
  ExhibitNumber
    
    Description of exhibit31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (A)32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (A)
 
 (A)
    
    Pursuant to Commission Release No. 33-8212, this certification will be treated
as accompanying this Form 10-Q and not filed as part of such report for purposes of
Section 18 of Exchange Act, or otherwise subject to the liability of Section 18 of the
Exchange Act and this certification will not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the registrant specifically incorporates it by reference. 58




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SIGNATURES
  Pinnacle Foods Group Inc.
 By:
    
    /s/ N. MICHAEL DIONName:
    
    N. Michael DionTitle:
    
    Executive Vice President and Chief Financial Officer,(acting in both his capacity as authorized signatory on
behalf of the registrant and as principal financial officer)Date:
    
    November 8, 2005
 59