**SECURITIES** **AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-Q**





(Mark
      One)





[X]  **Quarterly
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934**





For
      the
      quarterly period ended March 31, 2007


or


[
      ]  **Transition
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934**





For
      the
      transition period from___________________to__________________





Commission
      File Number 333-138380


**BERRY
      PLASTICS HOLDING CORPORATION**


**(formerly
      known as BPC Holding 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)





*SEE
      TABLE OF ADDITIONAL REGISTRANT GUARANTORS*





Registrant’s
      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 [ ] No [X]





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 [X]
      No [
      ]





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 [X] No [ ]





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 large accelerated filers, accelerated
      filers, or non-accelerated filers. See definition of “accelerated filer and
      large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large
      accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ X
      ]





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





As
      of May 14,
      2007,
      all of the outstanding 100 shares of the Common Stock, $.01 par value, of Berry
      Plastics Holding Corporation were held by Berry Plastics Group, Inc. The
      financial presentation presented in the Berry Plastics Holding Corporation
      financial statements reflects the consolidated operations and financial position
      including the results and equity structure of Berry Plastics Group, Inc.


1




**Table
      of Additional Registrant Guarantors**




**Exact
                Name**
            **Jurisdiction
                of********Organization**
            **Primary
                Standard Industrial Classification Code Number**
            **I.R.S.
                Employer Identification No.**
            **Name,
                Address and Telephone Number of Principal Executive
                Offices**Berry
                Plastics Corporation
            Delaware
            3089
            35-1813706
            (a)Aerocon,
                Inc.
            Delaware
            3089
            35-1948748
            (a)Berry
                Iowa Corporation
            Delaware
            3089
            42-1382173
            (a)Berry
                Plastics Design Corporation
            Delaware
            3089
            62-1689708
            (a)Berry
                Plastics Technical Services, Inc.
            Delaware
            3089
            57-1029638
            (a)Berry
                Sterling Corporation
            Delaware
            3089
            54-1749681
            (a)CPI
                Holding Corporation
            Delaware
            3089
            34-1820303
            (a)Knight
                Plastics, Inc.
            Delaware
            3089
            35-2056610
            (a)Packerware
                Corporation
            Delaware
            3089
            48-0759852
            (a)Pescor,
                Inc.
            Delaware
            3089
            74-3002028
            (a)Poly-Seal
                Corporation
            Delaware
            3089
            52-0892112
            (a)Venture
                Packaging, Inc.
            Delaware
            3089
            51-0368479
            (a)Venture
                Packaging Midwest, Inc.
            Delaware
            3089
            34-1809003
            (a)Berry
                Plastics Acquisition Corporation III
            Delaware
            3089
            37-1445502
            (a)Berry
                Plastics Acquisition Corporation V
            Delaware
            3089
            36-4509933
            (a)Berry
                Plastics Acquisition Corporation VII
            Delaware
            3089
            30-0120989
            (a)Berry
                Plastics Acquisition Corporation VIII
            Delaware
            3089
            32-0036809
            (a)Berry
                Plastics Acquisition Corporation IX
            Delaware
            3089
            35-2184302
            (a)Berry
                Plastics Acquisition Corporation X
            Delaware
            3089
            35-2184301
            (a)Berry
                Plastics Acquisition Corporation XI
            Delaware
            3089
            35-2184300
            (a)Berry
                Plastics Acquisition Corporation XII
            Delaware
            3089
            35-2184299
            (a)Berry
                Plastics Acquisition Corporation XIII
            Delaware
            3089
            35-2184298
            (a)Berry
                Plastics Acquisition Corporation XV, LLC
            Delaware
            3089
            35-2184293
            (a)Kerr
                Group, Inc.
            Delaware
            3089
            95-0898810
            (a)Saffron
                Acquisition Corporation
            Delaware
            3089
            94-3293114
            (a)Setco,
                LLC
            Delaware
            3089
            56-2374074
            (a)Sun
                Coast Industries, Inc.
            Delaware
            3089
            59-1952968
            (a)Tubed
                Products, LLC
            Delaware
            3089
            56-2374082
            (a)Cardinal
                Packaging, Inc.
            Ohio
            3089
            34-1396561
            (a)Landis
                Plastics, Inc.
            Illinois
            3089
            36-2471333
            (a)Covalence
                Specialty Adhesives LLC
            Delaware
            2672
            20-4104683
            (a)Covalence
                Specialty Coatings LLC
            Delaware
            2672
            20-4104683
            (a)Rollpack
                Acquisition Corporation
            Indiana
            3089
            03-0512845
            (a)Rollpack
                Corporation
            Indiana
            3089
            35-1582626
            (a)


(a)
      101
      Oakley Street, Evansville, IN 47710


2


CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS





This
      Form
      10-Q 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. The
      forward-looking statements include, in particular, statements about our plans,
      strategies and prospects under the heading "Management’s Discussion and Analysis
      of Financial Condition and Results of Operations". 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-Q. 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 our Form 10-K for the fiscal year ended December
                30,
                2006 in the section titled “Risk
                Factors.”





Readers
      should carefully review the factors discussed in our Form 10- K
      for the
      fiscal year ended December 30, 2006 in the section titled “Risk Factors” 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.





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 Securities and Exchange
      Commission. 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.


3


**Berry
      Plastics Holding Corporation**





**Form
      10-Q Index**





**For
      Quarterly Period Ended** **March
      31, 2007**


**Part
                  I.**
              **Financial
                  Information**
              
              Page
                No.Item
                  1.
              Financial
                  Statements:Consolidated
                  Balance Sheets
              5Consolidated
                  Statements of Operations
              7Consolidated
                  Statement of Changes in Stockholders’ Equity
              8Consolidated
                  Statements of Cash Flows
              9Notes
                  to Consolidated Financial Statements
              10Item
                  2.
              Management’s
                  Discussion and Analysis ofFinancial
                  Condition and Results of Operations
              23Item
                  3.
              Quantitative
                  and Qualitative Disclosures about Market Risk
              32Item
                  4.
              Controls
                  and Procedures
              33**Part
                  II.**
              **Other
                  Information**Item
                  1.
              Legal
                  Proceedings
              34Item
                  1A.
              Risk
                  Factors
              34Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              34Item
                  3.
              Defaults
                  Upon Senior Securities
              34Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              34Item
                  5.
              Other
                  Information
              34Item
                  6.
              Exhibits
              34**Signature**
              35




4


**Part
      1. Financial Information**


Item
      1.
      Financial Statements





**Berry
      Plastics Holding Corporation**


**Consolidated
      Balance Sheets**


(In
      Thousands of Dollars, except share information)




**Company**
              
              **Company****March
                  31,**
                **2007**
              
              **December
                  30,**
                **2006****(Unaudited)****Assets**Current
                  assets*:*Cash
                  and cash equivalents
              
              **$**
              **12,347**
              
              $
              19,549Accounts
                  receivable (less allowance for doubtful accounts of $5,256 at March
                  31,
                  2007 and $5,369 at December 30, 2006)
              
              
              **170,974**
              
              
              145,387Inventories:Finished
                  goods
              
              
              **116,031**
              
              
              111,635Raw
                  materials and supplies
              
              
              **46,838**
              
              
              48,885**162,869**
              
              
              160,520Deferred
                  income taxes
              
              
              **21,030**
              
              
              21,531Prepaid
                  expenses and other current assets
              
              
              **18,053**
              
              
              24,416Total
                  current assets
              
              
              **385,273**
              
              
              371,403Property
                  and equipment:Land
              
              
              **15,506**
              
              
              15,504Buildings
                  and improvements
              
              
              **83,324**
              
              
              83,329Equipment
                  and construction in progress
              
              
              **412,911**
              
              
              390,018**511,741**
              
              
              488,851Less
                  accumulated depreciation
              
              
              **46,923**
              
              
              24,874**464,818**
              
              
              463,977Intangible
                  assets:Deferred
                  financing fees, net
              
              
              **40,381**
              
              
              41,763Customer
                  relationships, net
              
              
              **498,264**
              
              
              504,663Goodwill
              
              
              **989,240**
              
              
              989,181Trademarks,
                  net
              
              
              **182,200**
              
              
              182,200Other
                  intangibles, net
              
              
              **15,301**
              
              
              15,469**1,725,386**
              
              
              1,733,276Total
                  assets
              
              **$**
              **2,575,477**
              
              $
              2,568,656




5





**Berry
      Plastics Holding Corporation**


**Consolidated
      Balance Sheets (continued)**


(In
      Thousands of Dollars, except share information)


**Company**
              
              **Company****March
                  31,**
                **2007**
              
              **December
                  30,**
                **2006****(Unaudited)****Liabilities
                  and stockholders' equity**Current
                  liabilities:Accounts
                  payable
              
              **$**
              **104,541**
              
              $
              89,030Accrued
                  interest
              
              
              **14,832**
              
              
              26,010Employee
                  compensation, payroll and other taxes
              
              
              **42,173**
              
              
              37,113Accrued
                  expenses and other current liabilities
              
              
              **28,157**
              
              
              31,297Current
                  portion of long-term debt
              
              
              **12,250**
              
              
              12,400Total
                  current liabilities
              
              
              **201,953**
              
              
              195,850Long-term
                  debt, less current portion
              
              
              **1,860,898**
              
              
              1,860,474Deferred
                  income taxes
              
              
              **197,806**
              
              
              197,801Other
                  long-term liabilities
              
              
              **20,081**
              
              
              20,344Total
                  liabilities
              
              
              **2,280,738**
              
              
              2,274,469Stockholders'
                  equity:Common
                  stock; $.01 par value: 200,000,000 shares authorized; 4,937,196
                  shares
                  issued and outstanding at March 31, 2007
              
              
              **49**
              
              
              49Additional
                  paid-in capital
              
              
              **494,450**
              
              
              493,581Adjustment
                  of the carryover basis of continuing stockholders
              
              
              **(173,422**
              **)**
              
              (173,422
              )Notes
                  receivable - common stock
              
              
              **(10,207**
              **)**
              
              (9,935
              )Treasury
                  stock
              
              
              —
              
              
              (63
              )Accumulated
                  deficit
              
              
              **(18,151**
              **)**
              
              (18,065
              )Accumulated
                  other comprehensive income
              
              
              **2,020**
              
              
              2,042Total
                  stockholders’ equity
              
              
              **294,739**
              
              
              294,187Total
                  liabilities and stockholders’ equity
              
              **$**
              **2,575,477**
              
              $
              2,568,656








*See
      notes to consolidated financial statements.*


6





**Berry
      Plastics Holding Corporation**


**Consolidated
      Statements of Operations**


(In
      Thousands of Dollars)


**Thirteen
                  Weeks Ended****Company**
              
              **Predecessor****March
                  31, 2007**
              
              **April
                  1, 2006**(Unaudited)
              
              (Unaudited)Net
                  sales
              
              **$**
              **364,584**
              
              $
              355,964Cost
                  of goods sold
              
              
              **282,929**
              
              
              284,621Gross
                  profit
              
              
              **81,655**
              
              
              71,343Operating
                  Expenses:Selling
              
              
              **10,186**
              
              
              10,420General
                  and administrative
              
              
              **16,454**
              
              
              14,803Research
                  and development
              
              
              **1,904**
              
              
              1,976Amortization
                  of intangibles
              
              
              **6,678**
              
              
              5,364Other
                  expenses
              
              
              **3,282**
              
              
              1,057Operating
                  income
              
              
              **43,151**
              
              
              37,723Other
                  expenses:Unrealized
                  loss on investment in Southern Packaging
              
              
              —
              
              
              216Income
                  before interest and taxes
              
              
              **43,151**
              
              
              37,507Interest:Expense
              
              
              **42,861**
              
              
              22,402Income
              
              
              **(282**
              **)**
              
              (394
              )Income
                  before income taxes
              
              
              **572**
              
              
              15,499Income
                  taxes
              
              
              **658**
              
              
              7,319Net
                  income (loss)
              
              **$**
              **(86**
              **)**
              $
              8,180








*See
      notes to consolidated financial statements* *.*





7


**B** **erry
      Plastics Holding Corporation**


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


(Unaudited)


(In
      Thousands of Dollars)


**Common**
                **Stock**
              
              **Additional**
                **Paid-In**
                **Capital**
              
              **Adjustment
                  of the carryover basis of continuing stockholders**
              
              **Notes
                  receivable - common stock**
              
              **Treasury
                  Stock**
              
              **Accumulated**
                **Deficit**
              
              **Accumulated
                  Other Comprehensive**
                **Income**
                **(Losses)**
              
              **Total**Balance
                  at December 30, 2006
              
              $
              49
              
              $
              493,581
              
              $
              (173,422
              )
              $
              (9,935
              )
              $
              (63
              )
              $
              (18,065
              )
              $
              2,042
              
              $
              294,187Sale
                  of stock to management
              
              
              —
              
              
              619
              
              
              —
              
              
              (122
              )
              
              63
              
              
              —
              
              
              —
              
              
              560Interest
                  on notes receivable
              
              
              —
              
              
              —
              
              
              —
              
              
              (150
              )
              
              —
              
              
              —
              
              
              —
              
              
              (150
              )Stock-based
                  compensation
              
              
              —
              
              
              250
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              250Translation
                  losses
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (123
              )
              
              (123
              )Other
                  comprehensive gains
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              101
              
              
              101Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (86
              )
              
              —
              
              
              (86
              )Balance
                  at March 31, 2007
              
              $
              49
              
              $
              494,450
              
              $
              (173,422
              )
              $
              (10,207
              )
              $
              —
              
              $
              (18,151
              )
              $
              2,020
              
              $
              294,739








*See
      notes to consolidated financial statements.*





8


**B** **erry
      Plastics Holding Corporation**


**Consolidated
      Statements of Cash Flows**


(In
      Thousands of Dollars)


**Thirteen
                  Weeks Ended****Company**
              
              **Predecessor****March
                  31, 2007**
              
              **April
                  1, 2006**(Unaudited)
              
              (Unaudited)**Operating
                  activities**Net
                  income (loss)
              
              **$**
              **(86**
              **)**
              $
              8,180Adjustments
                  to reconcile net income (loss) to net cash provided by operating
                  activities:Depreciation
              
              
              **22,034**
              
              
              21,085Non-cash
                  interest expense
              
              
              **1,400**
              
              
              477Amortization
                  of intangibles
              
              
              **6,678**
              
              
              5,364Non-cash
                  compensation
              
              
              **250**
              
              
              988Unrealized
                  loss on investment
              
              
              **—**
              
              
              216Deferred
                  income taxes
              
              
              **501**
              
              
              6,712Changes
                  in operating assets and liabilities:Accounts
                  receivable, net
              
              
              **(25,550**
              **)**
              
              (25,230
              )Inventories
              
              
              **(2,355**
              **)**
              
              (8,745
              )Prepaid
                  expenses and other assets
              
              
              **6,291**
              
              
              9,280Accrued
                  interest
              
              
              **(11,178**
              **)**
              
              (9,014
              )Payables
                  and accrued expenses
              
              
              **17,002**
              
              
              39,697Net
                  cash provided by operating activities
              
              
              **14,987**
              
              
              49,010**Investing
                  activities**Additions
                  to property and equipment
              
              
              **(19,233**
              **)**
              
              (31,899
              )Proceeds
                  from disposal of property and equipment
              
              
              **—**
              
              
              73Net
                  cash used for investing activities
              
              
              **(19,233**
              **)**
              
              (31,826
              )**Financing
                  activities**Proceeds
                  from long-term borrowings
              
              
              **115**
              
              
              529Payments
                  on long-term borrowings
              
              
              **(3,532**
              **)**
              
              (3,840
              )Sale
                  of stock to management
              
              
              **560**
              
              
              1Debt
                  financing costs
              
              
              **(19**
              **)**
              
              —Net
                  cash used for financing activities
              
              
              **(2,876**
              **)**
              
              (3,310
              )Effect
                  of exchange rate changes on cash
              
              
              **(80**
              **)**
              
              (32
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              **(7,202**
              **)**
              
              13,842Cash
                  and cash equivalents at beginning of period
              
              
              **19,549**
              
              
              24,756Cash
                  and cash equivalents at end of period
              
              **$**
              **12,347**
              
              $
              38,598








*See
      notes to consolidated financial statements.*


9


Berry
      Plastics Holding Corporation


Notes
      to
      Consolidated Financial Statements


(In
      thousands of dollars, except as otherwise noted)


(Unaudited)





**1.**
            **Basis
                of Presentation**





The
      accompanying unaudited consolidated financial statements of Berry Plastics
      Holding Corporation, formerly BPC Holding Corporation (“Predecessor”), have been
      prepared in accordance with accounting principles generally accepted in the
      United States (“GAAP”) for interim financial information and with the
      instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
      do not include all of the information and footnotes required by GAAP for
      complete financial statements. In the opinion of management, all adjustments
      (consisting of normal recurring adjustments) considered necessary for a fair
      presentation have been included. Operating results for the periods presented
      are
      not necessarily indicative of the results that may be expected for the full
      fiscal year. The accompanying financial statements include the results of Berry
      Plastics Holding Corporation (“Holding” or the “Company”) and its wholly-owned
      subsidiary, Berry Plastics Corporation (“Berry”), and Berry’s wholly-owned
      subsidiaries. Holding is a wholly-owned subsidiary of Berry Plastics Group,
      Inc.
      (“Group”). The
      financial presentation presented in the Holding financial statements reflects
      the consolidated operations and financial position including the results of
      Group. For
      further information, refer to the consolidated financial statements and
      footnotes thereto included in Holding’s Form 10-K filed with the Securities and
      Exchange Commission for the year ended December 30, 2006. Certain amounts in
      the
      prior year financial statements have been reclassified to conform to the current
      year presentation.





**2.**
            **The
                Merger**





On
      September 20, 2006, BPC Acquisition Corp. merged with and into BPC Holding
      Corporation pursuant to an agreement and plan of merger (the “Merger”), dated
      June 28, 2006, with BPC Holding Corporation continuing as the surviving
      corporation. Following the consummation of the Merger, BPC Holding Corporation
      changed its name to Berry Plastics Holding Corporation. Pursuant to the Merger,
      Holding is a wholly-owned subsidiary of Group, the principal stockholders of
      which are Apollo Investment Fund VI, L.P., AP Berry Holdings, LLC, an affiliate
      of Graham Partners II, L.P., and management. Apollo Investment Fund VI, L.P.
      and
      AP Berry Holdings, LLC are affiliates of Apollo Management, L.P. (the “Buyer”),
      which is a private investment firm. Graham Partners II, L.P. is an affiliate
      of
      Graham Partners, Inc. (“Graham”), a private equity firm.





The
      total
      amount of funds required to consummate the Merger and to pay fees related to
      the
      Merger was $2.4 billion. The Merger was primarily funded with (1) the issuance
      of $750.0 million aggregate principal amount of second priority senior secured
      notes, (2) new borrowings of $675.0 million in Term B loans, (3) the
      issuance of $425.0 million aggregate principal amount of senior subordinated
      notes, and (4) contributed equity. The seller used the proceeds received from
      the Merger to repay the outstanding indebtedness and accrued interest of $726.9
      million under the term loans from the old senior secured credit facility and
      $335.0 million plus accrued interest and tender fees to repurchase all of the
      outstanding 10 3⁄4% senior subordinated notes payable due 2012.







10




The
      Merger has been accounted for under the purchase method of accounting, and
      accordingly, the purchase price has been allocated to the identifiable assets
      and liabilities based on estimated fair values at the acquisition date. The
      allocation is preliminary and is subject to change. The Company is amortizing
      its definite lived intangible assets over a weighted-average life of 20 years.
      The Company has applied the provisions of Emerging Issues Task Force 88-16,
      whereby, the carryover equity interests of certain management shareholders
      from
      the Predecessor to the Successor were recorded at their Predecessor basis.
      The
      application of these provisions has preliminarily reduced stockholders’ equity
      and intangibles by $173.4 million. 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.





September
                20,
              2006Current
                assets
            $
                389,318Property
                and equipment
            473,160Goodwill
            989,181Customer
                relationships
            511,900Trademarks
            182,200Other
                intangibles
            59,045Total
                assets
            2,604,804Current
                liabilities
            197,449Long-term
                liabilities
            2,103,357Total
                liabilities
            2,300,806Net
                assets acquired
            $
                303,998





The
      $304.0 million of net assets acquired consists of Apollo, Graham and
      management’s $428.8 million cash contribution and $31.8 million of carryover
      basis in rollover stock, net of the $5.9 million charge to loss on extinguished
      debt for bridge financing fees arranged to fund the Merger but not utilized
      and
      a $150.7 million deemed cash dividend to the selling shareholders that was
      required to be recognized by Emerging Issues Task Force Issue No. 88-16, Basis
      in Leveraged Buyout Transactions.





The
      following pro forma financial results are unaudited and assume that the Merger
      occurred at the beginning of the respective period. Pro forma net sales for
      the
      thirteen weeks ended April 1, 2006 were $355,964 and net loss was $5,286. The
      financial results for the thirteen weeks ended March 31, 2007 have not been
      adjusted as the Merger was reflected in the results for the entire period.
      The
      information presented is for informational purposes only and is not necessarily
      indicative of the operating results that would have occurred had the Merger
      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 amortization expense of definite lived
      intangible assets, additional interest expense, and management fees, net of
      the
      applicable income tax effects.





**3.**
            **Recent
                Acquisitions**





On
      June
      3, 2005, Berry acquired Kerr Group, Inc. (“Kerr”) for aggregate consideration of
      $454.8 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




11




through
      additional term loan borrowings under an amendment to Berry’s prior senior
      secured credit facility and cash on hand. In accordance with the criteria stated
      in Emerging Issues Task Force (“EITF”) Issue No. 95-3, “Recognition of
      Liabilities in Connection with a Purchase Business Combination” (“EITF 95-3”),
      the Company established opening balance sheet reserves of $2.7 million related
      to plant shutdown and severance costs, of which $1.2 million was accrued as
      of
      March 31, 2007. The remaining reserve relates to the shutdown of the Company’s
      Oxnard, California facility. This was communicated to employees on April 26,
      2007. The Company plans to shut down the facility beginning in the second
      quarter of 2007 and expect to have the equipment and production relocated to
      other Berry facilities by the end of calendar 2007.





**4.**  **Long-Term
      Debt**




Long-term
      debt consists of the following:


**Company**
              
              **Company****March
                  31,**
                **2007**
              
              **December
                  30,**
                **2006**Term
                  loans
              
              **$**
              **671,625**
              
              $
              673,313Italian
                  revolving line of credit
              
              
              **1,004**
              
              
              874Second
                  Priority Senior Secured Fixed Rate Notes
              
              
              **525,000**
              
              
              525,000Second
                  Priority Senior Secured Floating Rate Notes
              
              
              **225,000**
              
              
              225,000Senior
                  Subordinated Notes
              
              
              **425,000**
              
              
              425,000Capital
                  leases
              
              
              **25,519**
              
              
              23,687**1,873,148**
              
              
              1,872,874Less
                  current portion of long-term debt
              
              
              **12,250**
              
              
              12,400**$**
              **1,860,898**
              
              $
              1,860,474







The
      current portion of long-term debt consists of $6.8 million of quarterly
      installments on the term loans and $5.5 million of principal payments related
      to
      capital lease obligations.





*Senior
      Secured Credit Facility*





On
      September 20, 2006, the Company entered into a credit agreement and a related
      guarantee and collateral agreement with a syndicate of lenders. This senior
      secured credit facility (the “Credit Facility”) provides financing of up to
      $875.0 million, consisting of (1) $675.0 million in term loans and (2) a $200.0
      million revolving credit facility. The interest rates per annum applicable
      to
      loans under the Credit Facility are, at the Company’s option, equal to either an
      alternate base rate or an adjusted LIBOR rate for a one-, two-, three- or
      six-month interest period, or a nine- or twelve-month period, if available
      from
      all relevant lenders, in each case, plus an applicable margin. The alternate
      base rate means the greater of (1) Credit Suisse’s prime rate and
      (2) one-half of 1.0% over the weighted average of rates on overnight
      Federal Funds. The Company also pays a customary commitment fee to the lenders
      under the revolving credit facility in respect of the unutilized commitments
      thereunder at a rate equal to 0.5% per annum (subject to reduction upon
      attainment of certain leverage ratios) and letter of credit and agency fees.




12




The
      Credit Facility requires a prepayment on outstanding term loans, subject to
      certain exceptions, with (1) beginning with the first full fiscal year after
      the
      closing, 50% (which percentage can be as low as 0% upon the achievement of
      certain leverage ratios) of excess cash flow less the amount of certain
      voluntary prepayments, (2) so long as our total net first lien leverage ratio
      is
      above a certain threshold, 100% of the net cash proceeds of any incurrence
      of
      debt other than excluded debt issuances, and (3) so long as the total net first
      lien leverage ratio is above a certain threshold, 100% of the net cash proceeds
      of all non-ordinary course asset sales and casualty and condemnation events,
      if
      the Company does not reinvest or commit to reinvest those proceeds in assets
      to
      be used in our business or to make certain other permitted investments within
      15
      months. The Company may voluntarily repay outstanding loans under the Credit
      Facility at any time without premium or penalty.




The
      term
      loans amortize each year in an amount equal to 1% per annum in equal
      quarterly installments for the first six years and nine months, with the
      remaining amount payable on September 20, 2013. Principal amounts outstanding
      under the revolving credit facility will be due and payable in full on September
      20, 2012. All obligations under the Credit Facility are unconditionally
      guaranteed by Group and, subject to certain exceptions, each existing and future
      direct and indirect domestic subsidiary. All obligations under the Credit
      Facility and the guarantees of those obligations are secured by substantially
      all assets of the Company and each subsidiary guarantor subject to certain
      exceptions: (1) a first priority pledge of all equity interests of Holdings
      held
      by the Company, a pledge of 100% of the equity interests of all guarantors
      and a
      first priority pledge of 65% of the voting equity interests of certain foreign
      subsidiaries; and (2) a first priority security interest in substantially all
      tangible and intangible assets as of the Company and each subsidiary guarantor.




The
      Credit Facility contains customary covenants that, among other things, restrict,
      subject to certain exceptions, the ability, and the ability of subsidiaries,
      to
      incur indebtedness, sell assets, make investments, engage in acquisitions,
      mergers or consolidations and make dividend and other restricted payments.
      In
      addition, the Credit Facility requires the Company to maintain the
      total
      net first lien leverage ratio below a certain ratio and also
      contains certain customary affirmative covenants and events of default. The
      Company was in compliance with all the financial and operating covenants at
      March 31, 2007.




At March
      31,
      2007, there were no borrowings outstanding on the revolving credit facility.
      The
      revolving credit facility allows up to $50.0 million of letters of credit to
      be
      issued instead of borrowings under the revolving credit facility. At March
      31,
      2007 and December 30, 2006, the Company had $14.8 million under the
      Credit Facility in letters of credit outstanding. At March 31, 2007, the Company
      had unused borrowing capacity of $185.2 million under the revolving line of
      credit. Although the $185.2 million was available at March 31, 2007, the
      covenants under the Credit Facility may limit our ability to make such
      borrowings in the future.





*Second
      Priority Senior Secured Notes*





On
      September 20, 2006, Holding issued $750.0 million of second priority senior
      secured notes (“Second Priority Notes”) comprised of (1) $525.0 million
      aggregate principal amount of 8 7/8% second
      priority fixed rate notes (“Fixed Rate Notes”) and (2) $225.0 million aggregate
      principal amount of second priority senior secured floating rate notes
      (“Floating Rate Notes”). The Second Priority Notes mature on September 15, 2014.
      Interest on the Fixed Rate Notes is due semi-annually on March 15 and September
      15. The Floating Rate Notes bear interest at a rate of LIBOR plus 3.875% per
      annum, which resets quarterly. Interest on the Floating Rate Notes is payable
      quarterly on March 15, June 15, September 15 and December 15
      of each year.




13




The
      Second Priority Notes are secured by a second priority security interest in
      the
      collateral granted to the collateral agent under the Credit Facility for the
      benefit of the holders and other future parity lien debt that may be issued
      pursuant to the terms of the indenture. These liens will be junior in priority
      to the liens on the same collateral securing the Credit Facility and to all
      other permitted prior liens. The Second Priority Notes are guaranteed, jointly
      and severally, on a second priority senior secured basis, by each domestic
      subsidiary that guarantees the Credit Facility. The Second Priority Notes
      contain customary covenants that, among other things, restrict, subject to
      certain exceptions, our ability, and the ability of subsidiaries, to incur
      indebtedness, sell assets, make investments, engage in acquisitions, mergers
      or
      consolidations and make dividend and other restricted payments.




On
      or
      after September 15, 2010 and 2008, the Company may redeem some or all of the
      Fixed Rate Notes and Floating Rate Notes, respectively, at specified redemption
      prices. Additionally, on or prior to September 15, 2009 and 2008, we may redeem
      up to 35% of the aggregate principal amount of the Fixed Rate Notes and Floating
      Rate Notes, respectively, with the net proceeds of specified equity offerings
      at
      specified redemption prices. If a change of control occurs, the Company must
      give holders of the Second Priority Notes an opportunity to sell their notes
      at
      a purchase price of 101% of the principal amount plus accrued and unpaid
      interest. The Company was in compliance with all covenants at March 31,
      2007.




*Senior
      S* *ubordinated
      Notes*





On
      September 20, 2006, the Company issued $425.0 million in aggregate
      principal amount of senior subordinated notes (“Senior Subordinated Notes”) to
      Goldman, Sachs and Co. in a private placement that is exempt from registration
      under the Securities Act. The Senior Subordinated Notes are unsecured, senior
      subordinated obligations and are guaranteed on an unsecured, senior subordinated
      basis by each of our subsidiaries that guarantee the Credit Facility and the
      Second Priority Notes. The Senior Subordinated Notes mature in 2016 and bear
      interest at a rate of 11% per annum. Such interest is payable quarterly in
      cash;
      provided, however, that on any quarterly interest payment date on or prior
      to
      the third anniversary of the issuance, the Company can satisfy up to 3% of
      the
      interest payable on such date by capitalizing such interest and adding it to
      the
      outstanding principal amount of the Senior Subordinated Notes.




The
      Senior Subordinated Notes may be redeemed at the Company’s option under
      circumstances and at redemption prices set forth in the indenture. Upon the
      occurrence of a change of control, the Company is required to offer to
      repurchase all of the Senior Subordinated Notes. The indenture sets forth
      covenants and events of default that are substantially similar to those set
      forth in the indenture governing the Second Priority Notes. The Senior
      Subordinated Notes contain additional affirmative covenants and certain
      customary representations, warranties and conditions. The Company was in
      compliance with all covenants at March 31, 2007.




**5** **.**  **Stock-Based
      Compensation**





The
      Company previously applied the intrinsic value method prescribed in Accounting
      Principles Board Opinion 25, “Accounting for Stock Issued to Employees.” In
      December 2004, the FASB issued SFAS
      No.
      123 (Revised 2004,) Share-Based Payment (“SFAS 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 is measured based on the fair value of the equity or liability
      instruments issued. The Company adopted SFAS 123R on January 1, 2006 using
      the
      modified prospective method. The Company recorded $250 and $988 in non-cash
      charges for stock compensation related to amortization of the fair value of
      unvested stock options for the thirteen weeks ended March 31, 2007, and April
      1,
      2006, respectively. Under this method, the Company recognized compensation
      cost,
      on a prospective basis, for the portion of outstanding awards for which the
      requisite service had not yet been rendered as of January 1, 2006. In addition,
      the Company will recognize compensation cost on any new grants based upon the
      grant date fair value of those awards calculated under SFAS 123. Accordingly,
      we
      have not restated prior period amounts.





14




**6.**  **Comprehensive
      Income (Loss)**





Comprehensive
      income (loss) is comprised of net income (loss), other comprehensive income
      (losses), and gains or losses resulting from currency translations of foreign
      investments. Other comprehensive income (losses) includes unrealized gains
      or
      losses on derivative financial instruments and available for sale securities
      and
      minimum pension liability adjustments. The details of comprehensive income
      (losses) are as follows:





**Thirteen
                Weeks Ended****Company**
            
            **Predecessor****March
                31,**
              **2007**
            
            **April
                1,**
              **2006**Net
                income (loss)
            
            **$**
            **(86**
            **)**
            $
            8,180Other
                comprehensive income (losses)
            
            
            **101**
            
            
            (742
            )Currency
                translation income (losses)
            
            
            **(123**
            **)**
            
            336Comprehensive
                income (losses)
            
            **$**
            **(108**
            **)**
            $
            7,774





**7.**  **Income
      Taxes**





Our
      effective tax rate was 115% and 47% for the three months ended March 31, 2007
      and April 1, 2006, respectively. This
      rate
      differs from the federal statutory rate of 35% primarily due to state and
      foreign income taxes and losses in foreign jurisdictions for which no benefit
      has been recognized.  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:


**Thirteen
                Weeks Ended****Company**
            
            **Predecessor****March
                31,**
              **2007**
            
            **April
                1,**
              **2006**Income
                tax expense computed at statutory rate
            
            **$**
            **200**
            
            $
            5,425State
                income tax expense, net of federal taxes
            
            
            **31**
            
            
            736Expenses
                not deductible for income tax purposes
            
            
            **90**
            
            
            170Change
                in valuation allowance
            
            
            **291**
            
            
            808Other
            
            
            **46**
            
            
            180Income
                tax expense
            
            **$**
            **658**
            
            $
            7,319





We
      adopted the provisions of Financial Accounting Standards Board (“FASB”)
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an
      interpretation of FASB Statement No. 109” (“FIN 48”), at the beginning of fiscal
      2007. At the adoption date and as of March 31, 2007, we had no material
      unrecognized tax benefits and no adjustments to liabilities or the statement
      of
      operations were required. We recognize interest and penalties related to
      uncertain tax positions in income tax expense which were zero for the three
      months ended March 31, 2007. Tax years 2004 through 2006 and 2003 through 2006
      are subject to examination by the federal and state taxing authorities,
      respectively. There are no material income tax examinations currently in
      process.





15




**8.**  **Employee
      Retirement Plans**





In
      connection with the Kerr Acquisition, the Company assumed
      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
      Company also maintains a defined benefit pension plan covering the Poly-Seal
      employees under a collective bargaining agreement. The Company’s defined benefit
      and retiree health benefit plans have an accrued pension liability of $13.6
      million at March 31, 2007, and $14.3 million at December 30, 2006, respectively,
      which are recorded as other long-term liabilities in the consolidated balance
      sheets. Net pension and retiree health benefit expense included the following
      components:


**Thirteen
                  Weeks Ended****Company**
              
              **Predecessor****March
                  31,**
                **2007**
              
              **April
                  1,**
                **2006**Components
                  of net period benefit cost:Defined
                  Benefit Pension PlansService
                  cost
              
              **$**
              **65**
              
              $
              64Interest
                  cost
              
              
              **558**
              
              
              562Expected
                  return on plan assets
              
              
              **(638**
              **)**
              
              (634
              )Amortization
                  of prior service cost
              
              
              **1**
              
              
              23Recognized
                  actuarial loss
              
              
              —
              
              
              4Net
                  periodic benefit cost
              
              **$**
              **(14**
              **)**
              $
              19Retiree
                  Health Benefit PlanService
                  cost
              
              **$**
              **4**
              
              $
              4Interest
                  cost
              
              
              **84**
              
              
              97Recognized
                  actuarial loss
              
              
              —
              
              
              (23
              )Net
                  periodic benefit cost
              
              **$**
              **88**
              
              $
              78





The
      Company e xpects
      to
      contribute approximately $3.0 million during fiscal 2007, of which $1.6 million
      and $0.1 million was made in the thirteen weeks ended March 31, 2007, and April
      1, 2006, respectively, to the defined benefit pension plans and the retiree
      health benefit plan.





16




**9.**  **Operating
      Segments**





Berry organizes its operations into two reportable segments: open top and closed
      top.
      The Company evaluates performance and allocates resources to segments based
      on
      operating income before depreciation and amortization of intangibles adjusted
      to
      exclude (1) Merger expense, (2) business optimization expense, and (3) non-cash
      compensation (collectively, “Bank Compliance EBITDA”). The accounting policies
      of the reportable segments are the same as those described in the summary of
      significant accounting policies.





**Thirteen
                Weeks Ended****Company**
            
            **Predecessor****March
                31, 2007**
            
            **April
                1,**
              **2006**Net
                sales:Open
                Top
            
            **$**
            **209,389**
            
            $
            206,231Closed
                Top
            
            
            **155,195**
            
            
            149,733Total
                net sales
            
            
            **364,584**
            
            
            355,964Bank
                Compliance EBITDA:Open
                Top
            
            
            **44,398**
            
            
            39,048Closed
                Top
            
            
            **30,991**
            
            
            27,171Total
                Bank Compliance EBITDA
            
            
            **75,389**
            
            
            66,219Total
                assets:Open
                Top
            
            
            **1,482,970**
            
            
            893,157Closed
                Top
            
            
            **1,092,507**
            
            
            793,363Total
                assets
            
            
            **2,575,477**
            
            
            1,686,520Reconciliation
                ofBank
                Compliance EBITDA to net income (loss):Bank
                Compliance EBITDA for reportable segments
            
            **$**
            **75,389**
            
            $
            66,219Net
                interest expense
            
            
            **(42,579**
            **)**
            
            (22,008
            )Depreciation
            
            
            **(22,034**
            **)**
            
            (21,085
            )Amortization
            
            
            **(6,678**
            **)**
            
            (5,364
            )Income
                taxes
            
            
            **(658**
            **)**
            
            (7,319
            )Unrealized
                loss on investment in Southern Packaging
            
            
            —
            
            
            (216
            )Business
                optimization expense
            
            
            **(2,444**
            **)**
            
            (1,059
            )Non-cash
                compensation
            
            
            **(250**
            **)**
            
            (988
            )Management
                fees
            
            
            **(832**
            **)**
            
            —Net
                income (loss)
            
            **$**
            **(86**
            **)**
            $
            8,180


17


**10.**  **Condensed
      Consolidating Financial Information**





Holding
      conducts its business through its wholly owned subsidiary, Berry. Certain of
      Berry’s domestic subsidiaries fully, jointly, severally, and unconditionally
      guarantee on a second priority basis the $750.0
      million aggregate principal amount of Holding’s Second Priority Notes due
      2014 .
      Each of
      Holding’s subsidiaries is 100% owned, directly or indirectly, 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
      Group, Holding, and its subsidiaries at March 31, 2007 (Company) and December
      30, 2006 (Company) and for the thirteen week periods ended March 31, 2007
      (Company) and April 1, 2006 (Predecessor). The equity method has been used
      with
      respect to investments in subsidiaries.


**March
                  31, 2007**Combined
                  GuarantorSubsidiaries
              
              Combined
                Non-guarantorSubsidiaries
              
              ConsolidatingAdjustments
              
              Consolidated**Consolidating
                  Balance Sheet**Current
                  assets
              
              $
              359,974
              
              $
              25,299
              
              $
              —
              
              $
              385,273Net
                  property and equipment
              
              
              438,341
              
              
              26,477
              
              
              —
              
              
              464,818Other
                  noncurrent assets
              
              
              1,740,438
              
              
              8,316
              
              
              (23,368
              )
              
              1,725,386Total
                  assets
              
              $
              2,538,753
              
              $
              60,092
              
              $
              (23,368
              )
              $
              2,575,477Current
                  liabilities
              
              $
              192,122
              
              $
              9,831
              
              $
              —
              
              $
              201,953Noncurrent
                  liabilities
              
              
              2,050,999
              
              
              27,786
              
              
              —
              
              
              2,078,785Equity
                  (deficit)
              
              
              295,632
              
              
              22,475
              
              
              (23,368
              )
              
              294,739Total
                  liabilities and equity (deficit)
              
              $
              2,538,753
              
              $
              60,092
              
              $
              (23,368
              )
              $
              2,575,477


**December
                  30, 2006**Combined
                  GuarantorSubsidiaries
              
              Combined
                Non-guarantorSubsidiaries
              
              ConsolidatingAdjustments
              
              Consolidated**Consolidating
                  Balance Sheet**Current
                  assets
              
              $
              347,762
              
              $
              23,641
              
              $
              —
              
              $
              371,403Net
                  property and equipment
              
              
              437,859
              
              
              26,118
              
              
              —
              
              
              463,977Other
                  noncurrent assets
              
              
              1,757,348
              
              
              24
              
              
              (24,096
              )
              
              1,733,276Total
                  assets
              
              $
              2,542,969
              
              $
              49,783
              
              $
              (
                  24,096
              )
              $
              2,568,656Current
                  liabilities
              
              $
              187,691
              
              $
              8,159
              
              $
              —
              
              $
              195,850Noncurrent
                  liabilities
              
              
              2,060,219
              
              
              18,400
              
              
              —
              
              
              2,078,619Equity
                  (deficit)
              
              
              295,059
              
              
              23,224
              
              
              (24,096
              )
              
              294,187Total
                  liabilities and equity (deficit)
              
              $
              2,542,969
              
              $
              49,783
              
              $
              (24,096
              )
              $
              2,568,656








18


**Thirteen
                  Weeks Ended March 31, 2007 (Company)**Combined
                  GuarantorSubsidiaries
              
              Combined
                Non-guarantorSubsidiaries
              
              ConsolidatingAdjustments
              
              Consolidated**Consolidating
                  Statement of Operations**Net
                  sales
              
              $
              352,895
              
              $
              11,689
              
              $
              —
              
              $
              364,584Cost
                  of goods sold
              
              
              272,042
              
              
              10,887
              
              
              —
              
              
              282,929Gross
                  profit
              
              
              80,853
              
              
              802
              
              
              —
              
              
              81,655Operating
                  expenses
              
              
              37,458
              
              
              1,046
              
              
              —
              
              
              38,504Operating
                  income (loss)
              
              
              43,395
              
              
              (244
              )
              
              —
              
              
              43,151Interest
                  expense, net
              
              
              42,142
              
              
              437
              
              
              —
              
              
              42,579Income
                  taxes
              
              
              611
              
              
              47
              
              
              —
              
              
              658Equity
                  in net (income) loss from subsidiary
              
              
              728
              
              
              —
              
              
              (728
              )
              
              —Net
                  income (loss)
              
              $
              (86
              )
              $
              (728
              )
              $
              728
              
              $
              (86
              )


**Consolidating
                  Statement of Cash Flows**Net
                  income (loss)
              
              $
              (86
              )
              $
              (728
              )
              
              728
              
              $
              (86
              )Non-cash
                  expenses
              
              
              29,851
              
              
              1.012
              
              
              —
              
              
              30,863Equity
                  in net (income) loss from subsidiary
              
              
              728
              
              
              —
              
              
              (728
              )
              
              —Changes
                  in working capital
              
              
              (15,853
              )
              
              63
              
              
              —
              
              
              (15,790
              )Net
                  cash provided by operating activities
              
              
              14,640
              
              
              347
              
              
              —
              
              
              14,987Net
                  cash used for investing activities
              
              
              (17,840
              )
              
              (1,393
              )
              
              —
              
              
              (19,233
              )Net
                  cash provided by (used for) financing activities
              
              
              (3,752
              )
              
              876
              
              
              —
              
              
              (2,876
              )Effect
                  of exchange rate changes on cash
              
              
              —
              
              
              (80
              )
              
              —
              
              
              (80
              )Net
                  decrease in cash and cash equivalents
              
              
              (6,952
              )
              
              (250
              )
              
              —
              
              
              (7,202
              )Cash
                  and cash equivalents at beginning of period
              
              
              18,606
              
              
              943
              
              
              —
              
              
              19,549Cash
                  and cash equivalents at end of period
              
              $
              11,654
              
              $
              693
              
              $
              3⁄4
              
              $
              12,347








19


**Thirteen
                  Weeks Ended April 1, 2006 (Predecessor)**Combined
                  GuarantorSubsidiaries
              
              Combined
                Non-guarantorSubsidiaries
              
              ConsolidatingAdjustments
              
              Consolidated**Consolidating
                  Statement of Operations**Net
                  sales
              
              $
              347,890
              
              $
              8,074
              
              $
              —
              
              $
              355,964Cost
                  of goods sold
              
              
              276,100
              
              
              8,521
              
              
              —
              
              
              284,621Gross
                  profit
              
              
              71,790
              
              
              (447
              )
              
              —
              
              
              71,343Operating
                  expenses
              
              
              32,275
              
              
              1,345
              
              
              —
              
              
              33,620Operating
                  income (loss)
              
              
              39,515
              
              
              (1,792
              )
              
              —
              
              
              37,723Other
                  expense
              
              
              —
              
              
              216
              
              
              —
              
              
              216Interest
                  expense, net
              
              
              21,349
              
              
              659
              
              
              —
              
              
              22,008Income
                  taxes
              
              
              7,304
              
              
              15
              
              
              —
              
              
              7,319Equity
                  in net (income) loss from subsidiary
              
              
              2,682
              
              
              —
              
              
              (2,682
              )
              
              —Net
                  income (loss)
              
              $
              8,180
              
              $
              (2,682
              )
              $
              2,682
              
              $
              8,180
 **Consolidating
                  Statement of Cash Flows**Net
                  income (loss)
              
              $
              8,180
              
              $
              (2,682
              )
              
              2,682
              
              $
              8,180Non-cash
                  expenses
              
              
              33,386
              
              
              1,456
              
              
              —
              
              
              34,842Equity
                  in net (income) loss from subsidiary
              
              
              2,682
              
              
              —
              
              
              (2,682
              )
              
              —Changes
                  in working capital
              
              
              10,041
              
              
              (4,053
              )
              
              —
              
              
              5,988Net
                  cash provided by (used for) operating activities
              
              
              54,289
              
              
              (5,279
              )
              
              —
              
              
              49,010Net
                  cash used for investing activities
              
              
              (31,398
              )
              
              (428
              )
              
              —
              
              
              (31,826
              )Net
                  cash provided by (used for) financing activities
              
              
              (9,107
              )
              
              5,797
              
              
              —
              
              
              (3,310
              )Effect
                  of exchange rate changes on cash
              
              
              —
              
              
              (32
              )
              
              —
              
              
              (32
              )Net
                  increase (decrease) in cash and cash equivalents
              
              
              13,784
              
              
              58
              
              
              —
              
              
              13,842Cash
                  and cash equivalents at beginning of period
              
              
              23,128
              
              
              1,628
              
              
              —
              
              
              24,756Cash
                  and cash equivalents at end of period
              
              $
              36,912
              
              $
              1,686
              
              $
              3⁄4
              
              $
              38,598





**11.**  **Contingencies**





The
      Company is party to various legal proceedings involving routine claims which
      are
      incidental to the business. Although the 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 the Company’s
      financial condition or results of operations.





20




**12.**  **Recent
      Financial Accounting Standards**





In
      September 2006, the FASB issued FASB No. 157, “Fair Value
      Measurements” (“FAS 157”). FAS 157 is definitional and disclosure oriented
      and addresses how companies should approach measuring fair value when required
      by GAAP; it does not create or modify any current GAAP requirements to apply
      fair value accounting. The standard provides a single definition for fair value
      that is to be applied consistently for all accounting applications, and also
      generally describes and prioritizes according to reliability the methods and
      inputs used in valuations. FAS 157 prescribes various disclosures about
      financial statement categories and amounts which are measured at fair value,
      if
      such disclosures are not already specified elsewhere in GAAP. The new
      measurement and disclosure requirements of FAS 157 are effective for fiscal
      years beginning after November 15, 2007. We do not expect the adoption of FAS
      157 to have a significant impact on the Company’s results of operations or
      financial position.





In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities," ("SFAS No. 159"), which permits
      companies to choose to measure certain financial instruments and other items
      at
      fair value that are not currently required to be measured at fair value. SFAS
      No. 159 is effective for fiscal years beginning after November 15, 2007. We
      have
      not determined the effect that the adoption of SFAS No. 159 will have on our
      consolidated financial statements.


13.Subsequent
        Events


*Covalence
      Merger*




On
      April
      3, 2007, Berry Plastics Group, Inc. completed its stock-for-stock merger (the
      “Covalence Merger”) with Covalence Specialty Materials Holding Corp. ,
      another
      Apollo controlled entity. The resulting company retained the name Berry Plastics
      Group, Inc. Immediately following the Covalence Merger, Berry Plastics Holding
      Corporation and Covalence Specialty Materials Corp. were combined as a direct
      subsidiary of Berry Plastics Group, Inc. The resulting company retained the
      name
      Berry Plastics Holding Corporation. The Covalence Merger was accounted for
      as a
      merger of entities under common control. In
      connection with the closing of the Covalence Merger, Berry Plastics Holding
      Corporation adopted the fiscal year-end of the accounting acquirer (Covalence
      Specialty Materials Corp.). The Company has adopted the September year-end
      and
      commencing with periodic reports after the consummation of the merger on April
      3, 2007, will begin filing its periodic reports on a consolidated
      basis.




In
      connection with the Covalence Merger, Holding also entered into new senior
      secured credit facilities (the “New Berry Credit Facility”) and replaced and
      repaid the existing Credit Facility and Covalence Specialty Materials Corp.’s
      credit facilities. The $1.6 billion senior secured credit facility has a $400
      million asset based revolving credit facility including a $100 million letter
      of
      credit sublimit, and $1.2 billion term loan facility. Repayment of 1% of the
      term loan per annum must be made quarterly with the balance payable upon the
      final maturity date. Interest on the term and revolving loan facilities is
      LIBOR
      plus 2.0% and LIBOR plus 1.25%, respectively. The Company used available cash
      to
      fund the Covalence Merger and there were no amounts outstanding at closing
      on
      the revolving credit facility.







21




*Sale
      of UK Operations*




On
      April
      10, 2007, the
      Company sold its wholly owned subsidiary, Berry Plastics UK Ltd., to Plasticum
      Group N.V. for approximately $10.0 million. This business represented
      annual net sales of less than $9.0 million.




*Acquisition
      of Rollpak*




On
      April
      11, 2007, the Company completed its acquisition of 100% of the outstanding
      common stock of Rollpak Acquisition Corporation, which is the sole stockholder
      of Rollpak Corporation. Rollpak Corporation is a flexible film manufacturer
      located in Goshen, Indiana. The purchase price was funded utilizing cash on
      hand.




*Shut-down
      of Oxnard, California Facility (see Note 3)*




On
      April
      26, 2007, the Company announced its intention to shut down its manufacturing
      facility located in Oxnard, California. The Company intends to complete this
      shutdown prior to December 31, 2007. The business from this facility is
      being moved to other existing facilities. The Company does not expect the costs
      associated with this shutdown to be material.




22


Item
      2.


*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 “Berry Plastics
      Holding” or “Holding” refer to Berry Plastics Holding Corporation, references to
“we,” “our” or “us” refer to Berry Plastics 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
      Holding. For analysis purposes, the results under Holding’s prior ownership
      (“Predecessor”) have been combined with results subsequent to the merger on
      September 20, 2006 described below. 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. Holding
      is a wholly-owned subsidiary of Berry Plastics Group, Inc. (“Group”). This
      discussion contains forward-looking statements and involves numerous risks
      and
      uncertainties, including, but not limited to, those described in our Form 10-K
      for the fiscal year ended December 30, 2006 (the “2006 10-K”) in the section
      titled “Risk Factors” and other risk factors identified from time to time in our
      periodic filings with the Securities and Exchange Commission. Our actual results
      may differ materially from those contained in any forward-looking statements.
      You should read the explanation of the qualifications and limitations on these
      forward-looking statements on page 3 of this report.





On
      September 20, 2006, BPC Acquisition Corp. merged with and into BPC Holding
      Corporation pursuant to an agreement and plan of merger (the “Merger”), dated
      June 28, 2006, with BPC Holding Corporation continuing as the surviving
      corporation. Following the consummation of the Merger, BPC Holding Corporation
      changed its name to Berry Plastics Holding Corporation. Pursuant to the Merger,
      Holding is a wholly-owned subsidiary of Group, the principal stockholders of
      which are Apollo Investment Fund VI, L.P., AP Berry Holdings, LLC and an
      affiliate of Graham Partners II, L.P. Apollo Investment Fund VI, L.P. and AP
      Berry Holdings, LLC are affiliates of Apollo Management, L.P. (the “Buyer”),
      which is a private investment firm. Graham Partners II, L.P. is an affiliate
      of
      Graham Partners, Inc. (“Graham”), a private equity firm. The total amount of
      funds required to consummate the Merger and to pay fees related to the Merger
      was $2.4 billion.





**Critical
      Accounting Policies**





We
      disclosed 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 in our 2006 10-K. 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, although
      no
      assurance can be given as to such affect. 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.





23




*Allowance
      for doubtful accounts* .
      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. 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 $5.3 million and $5.4 million as of
      March 31, 2007 and December 30, 2006, 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 $7.0 million and $8.0 million as of March 31, 2007
      and December 30, 2006, 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 $3.7 million and $4.0 million, including reserves for
      expected medical claims incurred but not reported, as of March 31, 2007 and
      December 30, 2006, respectively.





*Workers’
      compensation insuranc* e.
      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 $5.1 million and $5.0 million as of March 31, 2007
      and
      December 30, 2006, respectively.





*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. Shipping and handling costs are included in cost of sales.





24




*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-Q.





*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-Q.





*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 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 $9.2 million and $8.9
      million as of March 31, 2007 and December 30, 2006, 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.





25




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
      and others could not adversely impact our consolidated financial position,
      results of operations and cash flows in future periods.





**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 historically acquired
      had profit margins that are lower than that of our existing business, which
      resulted 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.





**Recent
      Developments**





*Covalence
      Merger*




On
      April
      3, 2007, Berry Plastics Group, Inc. completed its stock-for-stock merger (the
      “Covalence Merger”) with Covalence Specialty Materials Holding Corp. ,
      another
      Apollo controlled entity. The resulting company retained the name Berry Plastics
      Group, Inc. Immediately following the Covalence Merger, Berry Plastics Holding
      Corporation and Covalence Specialty Materials Corp. were combined as a direct
      subsidiary of Berry Plastics Group, Inc. The resulting company retained the
      name
      Berry Plastics Holding Corporation. The Covalence Merger was accounted for
      as a
      merger of entities under common control. In
      connection with the closing of the Covalence Merger, Berry Plastics Holding
      Corporation adopted the fiscal year-end of the accounting acquirer (Covalence
      Specialty Materials Corp.). The Company has adopted the September year-end
      and
      commencing with periodic reports after the consummation of the merger on April
      3, 2007, will begin filing its periodic reports on a consolidated
      basis.




In
      connection with the Covalence Merger, Holding also entered into new senior
      secured credit facilities (the “New Berry Credit Facility”) and replaced and
      repaid the existing Credit Facility and Covalence Specialty Materials Corp.’s
      credit facilities. The $1.6 billion senior secured credit facility has a $400
      million asset based revolving credit facility including a $100 million letter
      of
      credit sublimit, and $1.2 billion term loan facility. Repayment of 1% of the
      term loan per annum must be made quarterly with the balance payable upon the
      final maturity date. Interest on the term and revolving loan facilities is
      LIBOR
      plus 2.0% and LIBOR plus 1.25%, respectively. The Company used available cash
      to
      fund the Covalence Merger and there were no amounts outstanding at closing
      on
      the revolving credit facility.





26




*Sale
      of UK Operations*




On
      April
      10, 2007, the
      Company sold its wholly owned subsidiary, Berry Plastics UK Ltd., to Plasticum
      Group N.V. for approximately $10.0 million. This business represented
      annual net sales of less than $9.0 million.




*Acquisition
      of Rollpak*




On
      April
      11, 2007, the Company completed its acquisition of 100% of the outstanding
      common stock of Rollpak Acquisition Corporation, which is the sole stockholder
      of Rollpak Corporation. Rollpak Corporation is a flexible film manufacturer
      located in Goshen, Indiana. The purchase price was funded utilizing cash on
      hand.




*Shut-down
      of Oxnard, California Facility (see Note 3)*




On
      April
      26, 2007, the Company announced its intention to shut down its manufacturing
      facility located in Oxnard, California. The Company intends to complete this
      shutdown prior to December 31, 2007. The business from this facility is
      being moved to other existing facilities. The Company does not expect the costs
      associated with this shutdown to be material.





***Results
      of Operations***





**Comparison
      of the 13 Weeks Ended March 31, 2007 (the “Quarter”) and the 13 Weeks Ended
      April 1, 2006 (the “Prior Quarter”)**





*Net
      Sales* .
      Net
      sales increased 2% to $364.6 million for the Quarter from $356.0 million for
      the
      Prior Quarter. This $8.6 million increase included a decrease of approximately
      $6.6 million or 2% in selling prices, offset by increased base business volume
      of approximately $15.2 million or 4%. Our resin pounds sold increased by 4%
      in
      the Quarter over the Prior Quarter. The following discussion in this section
      provides a comparison of net sales by business segment. Open top net sales
      increased $3.2 million from the Prior Quarter to $209.4 million for the Quarter.
      The increase in open top net sales was primarily a result of volume growth
      in
      the container business and 26% base business price adjusted volume growth in
      the
      thermoformed polypropylene drink cup line partially offset by lower selling
      prices as noted above. Closed top net sales increased $5.4 million from the
      Prior Quarter to $155.2 million for the Quarter. The increase in closed top
      net
      sales can be primarily attributed to base business price adjusted volume growth
      in the prescription vial, closure, and tube product categories partially offset
      by lower selling prices as noted above.





27




*G* *ross
      Profit* .
      Gross
      profit increased by $10.4 million to $81.7 million (22% of net sales) for the
      Quarter from $71.3 million (20% of net sales) for the Prior Quarter. This
      increase of $10.4 million or 15% can be primarily attributed to the combined
      impact of the additional sales volume driven by the organic growth noted above,
      the timing effect of reduced resin costs versus selling prices, and productivity
      improvement initiatives that have been implemented since the Prior Quarter.
      Significant productivity improvements were made since the Prior Quarter,
      including the installation of state-of-the-art equipment at several of our
      facilities. These productivity improvements were partially offset by increased
      costs from inflation such as higher energy prices.





*Operating
      Expenses* .
      Selling
      expenses decreased by $0.2 million even with 4% organic growth to $10.2 million
      for the Quarter from $10.4 million for the Prior Quarter principally as a result
      of cost reduction efforts. General and administrative expenses increased by
      $1.7
      million from $14.8 million for the Prior Quarter to $16.5 million for the
      Quarter primarily as a result of higher bonus expense in the Quarter partially
      offset by savings from cost reduction efforts. Research and development expenses
      remained relatively flat with a decrease of $0.1 million from the Prior Quarter.
      Amortization of intangibles increased $1.3 million from the Prior Quarter to
      $6.7 million in the Quarter primarily due to the amortization of intangible
      assets from the acquisition by Apollo. Other expenses increased from $1.1
      million in the Prior Quarter to $3.3 million for the Quarter primarily due
      to
      startup costs associated with the new thermoforming lines in Lawrence, Kansas
      and management fees to our sponsors.





*Interest
      Expense, Net* .
      Net
      interest expense increased $20.6 million to $42.6 million for the Quarter
      compared to $22.0 million for the Prior Quarter primarily due to an increase
      in
      debt as a result of the acquisition by Apollo.





*Income
      Taxes.* For
      the
      Quarter, we recorded an income tax expense of $0.7 million or an effective
      tax
      rate of 115%. The effective tax rate is higher than the statutory rate primarily
      as a result of foreign losses in the Quarter for which no benefit was provided
      as the Company is recording a valuation allowance against the net operating
      loss
      in these foreign locations. The
      decrease of $6.6 million from $7.3 million in the Prior Quarter was primarily
      attributed to the decrease in income before income taxes for the reasons
      discussed above.





*Net
      Income (Loss)* .
      Net
      loss was $0.1 million for the Quarter compared to net income of $8.2 million
      for
      the Prior Quarter for the reasons discussed above.





***Liquidity
      and Capital Resources***





On
      September 20, 2006, the Company entered into a credit agreement and a related
      guarantee and collateral agreement with a syndicate of lenders. This senior
      secured credit facility (the “Credit Facility”) provides financing of up to
      $875.0 million, consisting of (1) $675.0 million in term loans and (2) a $200.0
      million revolving credit facility. The interest rates per annum applicable
      to
      loans under the Credit Facility are, at the Company’s option, equal to either an
      alternate base rate or an adjusted LIBOR rate for a one-, two-, three- or
      six-month interest period, or a nine- or twelve-month period, if available
      from
      all relevant lenders, in each case, plus an applicable margin. The alternate
      base rate means the greater of (1) Credit Suisse’s prime rate and
      (2) one-half of 1.0% over the weighted average of rates on overnight
      Federal Funds. The Company also pays a customary commitment fee to the lenders
      under the revolving credit facility in respect of the unutilized commitments
      thereunder at a rate equal to 0.5% per annum (subject to reduction upon
      attainment of certain leverage ratios) and letter of credit and agency fees.




28




The
      Credit Facility requires a prepayment on outstanding term loans, subject to
      certain exceptions, with (1) beginning with the first full fiscal year after
      the
      closing, 50% (which percentage can be as low as 0% upon the achievement of
      certain leverage ratios) of excess cash flow less the amount of certain
      voluntary prepayments, (2) so long as our total net first lien leverage ratio
      is
      above a certain threshold, 100% of the net cash proceeds of any incurrence
      of
      debt other than excluded debt issuances, and (3) so long as the total net first
      lien leverage ratio is above a certain threshold, 100% of the net cash proceeds
      of all non-ordinary course asset sales and casualty and condemnation events,
      if
      the Company does not reinvest or commit to reinvest those proceeds in assets
      to
      be used in our business or to make certain other permitted investments within
      15
      months. The Company may voluntarily repay outstanding loans under the Credit
      Facility at any time without premium or penalty.




The
      term
      loans amortize each year in an amount equal to 1% per annum in equal
      quarterly installments for the first six years and nine months, with the
      remaining amount payable on September 20, 2013. Principal amounts outstanding
      under the revolving credit facility will be due and payable in full on September
      20, 2012. All obligations under the Credit Facility are unconditionally
      guaranteed by Group and, subject to certain exceptions, each existing and future
      direct and indirect domestic subsidiary. All obligations under the Credit
      Facility and the guarantees of those obligations are secured by substantially
      all assets of the Company and each subsidiary guarantor subject to certain
      exceptions: (1) a first priority pledge of all equity interests of Holdings
      held
      by the Company, a pledge of 100% of the equity interests of all guarantors
      and a
      first priority pledge of 65% of the voting equity interests of certain foreign
      subsidiaries; and (2) a first priority security interest in substantially all
      tangible and intangible assets as of the Company and each subsidiary guarantor.




The
      Credit Facility contains customary covenants that, among other things, restrict,
      subject to certain exceptions, the ability, and the ability of subsidiaries,
      to
      incur indebtedness, sell assets, make investments, engage in acquisitions,
      mergers or consolidations and make dividend and other restricted payments.
      In
      addition, the Credit Facility requires the Company to maintain the total net
      first lien leverage ratio below a certain ratio and also contains certain
      customary affirmative covenants and events of default. The Company was in
      compliance with all the financial and operating covenants at March 31,
      2007.




At March
      31,
      2007, there were no borrowings outstanding on the revolving credit facility.
      The
      revolving credit facility allows up to $50.0 million of letters of credit to
      be
      issued instead of borrowings under the revolving credit facility. At March
      31,
      2007 and December 30, 2006, the Company had $14.8 million under the
      Credit Facility in letters of credit outstanding. At March 31, 2007, the Company
      had unused borrowing capacity of $185.2 million under the revolving line of
      credit. Although the $185.2 million was available at March 31, 2007, the
      covenants under the Credit Facility may limit our ability to make such
      borrowings in the future. A key financial metric utilized in the calculation
      of
      the first lien leverage ratio is bank compliance EBITDA. The following table
      reconciles our bank compliance EBITDA of $291.4 million for the twelve month
      period ended March 31, 2007 to net loss.




29




**12****months ended**
              **March
                31,**
              **2007**Bank
                compliance EBITDA
            
            $
            291,435Net
                interest expense
            
            
            (131,851
            )Depreciation
            
            
            (87,627
            )Amortization
            
            
            (23,995
            )Income
                tax benefit
            
            
            16,456Gain
                on investment in Southern Packaging
            
            
            515Loss
                on extinguished debt
            
            
            (39,916
            )Merger
                expense
            
            
            (81,309
            )Business
                optimization expense
            
            
            (13,455
            )Non-cash
                compensation
            
            
            (2,647
            )Management
                fees
            
            
            (1,732
            )Pro
                forma synergies
            
            
            (9,308
            )Net
                loss
            
            $
            (83,434
            )





While
      the
      determination of appropriate adjustments in the calculation of bank compliance
      EBITDA is subject to interpretation under the terms of the Credit Facility,
      management believes the adjustments described above are in accordance with
      the
      covenants in the Credit Facility. Bank compliance EBITDA should not be
      considered in isolation or construed as an alternative to our net income or
      other measures as determined in accordance with GAAP. In addition, other
      companies in our industry or across different industries may calculate bank
      covenants and related definitions differently than we do, limiting the
      usefulness of our calculation of bank compliance EBITDA as a comparative
      measure.





*Second
      Priority Senior Secured Notes*





On
      September 20, 2006, Holding issued $750.0 million of second priority senior
      secured notes (“Second Priority Notes”) comprised of (1) $525.0 million
      aggregate principal amount of 8 7/8% second
      priority fixed rate notes (“Fixed Rate Notes”) and (2) $225.0 million aggregate
      principal amount of second priority senior secured floating rate notes
      (“Floating Rate Notes”). The Second Priority Notes mature on September 15, 2014.
      Interest on the Fixed Rate Notes is due semi-annually on March 15 and September
      15. The Floating Rate Notes bear interest at a rate of LIBOR plus 3.875% per
      annum, which resets quarterly. Interest on the Floating Rate Notes is payable
      quarterly on March 15, June 15, September 15 and December 15
      of each year.




The
      Second Priority Notes are secured by a second priority security interest in
      the
      collateral granted to the collateral agent under the Credit Facility for the
      benefit of the holders and other future parity lien debt that may be issued
      pursuant to the terms of the indenture. These liens will be junior in priority
      to the liens on the same collateral securing the Credit Facility and to all
      other permitted prior liens. The Second Priority Notes are guaranteed, jointly
      and severally, on a second priority senior secured basis, by each domestic
      subsidiary that guarantees the Credit Facility. The Second Priority Notes
      contain customary covenants that, among other things, restrict, subject to
      certain exceptions, our ability, and the ability of subsidiaries, to incur
      indebtedness, sell assets, make investments, engage in acquisitions, mergers
      or
      consolidations and make dividend and other restricted payments.




30




On
      or
      after September 15, 2010 and 2008, the Company may redeem some or all of the
      Fixed Rate Notes and Floating Rate Notes, respectively, at specified redemption
      prices. Additionally, on or prior to September 15, 2009 and 2008, we may redeem
      up to 35% of the aggregate principal amount of the Fixed Rate Notes and Floating
      Rate Notes, respectively, with the net proceeds of specified equity offerings
      at
      specified redemption prices. If a change of control occurs, the Company must
      give holders of the Second Priority Notes an opportunity to sell their notes
      at
      a purchase price of 101% of the principal amount plus accrued and unpaid
      interest.




*Senior
      S* *ubordinated
      Notes*





On
      September 20, 2006, the Company issued $425.0 million in aggregate
      principal amount of senior subordinated notes (“Senior Subordinated Notes”) to
      Goldman, Sachs and Co. in a private placement that is exempt from registration
      under the Securities Act. The Senior Subordinated Notes are unsecured, senior
      subordinated obligations and are guaranteed on an unsecured, senior subordinated
      basis by each of our subsidiaries that guarantee the Credit Facility and the
      Second Priority Notes. The Senior Subordinated Notes mature in 2016 and bear
      interest at a rate of 11% per annum. Such interest is payable quarterly in
      cash;
      provided, however, that on any quarterly interest payment date on or prior
      to
      the third anniversary of the issuance, the Company can satisfy up to 3% of
      the
      interest payable on such date by capitalizing such interest and adding it to
      the
      outstanding principal amount of the Senior Subordinated Notes.




The
      Senior Subordinated Notes may be redeemed at the Company’s option
      under circumstances and at redemption prices set forth in the indenture. Upon
      the occurrence of a change of control, the Company is required to offer to
      repurchase all of the Senior Subordinated Notes. The indenture sets forth
      covenants and events of default that are substantially similar to those set
      forth in the indenture governing the Second Priority Notes. The Senior
      Subordinated Notes contain additional affirmative covenants and certain
      customary representations, warranties and conditions.





*Cash
      Flows*





Net
      cash
      provided by operating activities was $15.0 million for the Quarter compared
      to
      $49.0 million for the Prior Quarter. The decrease of $34.0 million is primarily
      the result of lower net income in the Quarter due in part to an increase in
      interest expense partially offset by improved operations as operating income
      before depreciation and amortization increased $7.7 million over the Prior
      Quarter.





Net
      cash
      used for investing activities decreased from $31.8 million for the Prior Quarter
      to $19.2 million for the Quarter primarily as a result of decreased levels
      of
      capital spending in the Quarter as the Prior Quarter included capital spending
      for the thermoforming expansion. Capital spending of $19.2 million in the
      Quarter included $1.7 million for buildings and systems, $7.6 million for molds,
      $4.8 million for molding and decorating machines, and $5.1 million for accessory
      equipment and systems.





Net
      cash
      used in financing activities was $2.9 million for the Quarter compared to $3.3
      million in the Prior Quarter. This decrease of $0.4 million can be primarily
      attributed to proceeds received from the sale of stock to management in the
      Quarter.





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, b ased
      on
      our current level of operations, we believe that cash flow from operations
      and
      available cash, together with available borrowings under our senior secured
      credit facilities, will be adequate to meet our short-term liquidity
      needs .
      We base
      such belief on historical experience and the funds available under the 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 of
      our 2006 10-K. In particular, increases in the cost of resin which we are unable
      to pass through to our customers on a timely basis or significant acquisitions
      could severely impact our liquidity. At March 31, 2007, our cash balance was
      $12.3 million, and we had unused borrowing capacity under the Credit Facility’s
      borrowing base of $182.5 million. Although the $185.2 million was available
      at
      March 31, 2007, the covenants under our Credit Facility may limit our ability
      to
      make such borrowings in the future.





31




*Item
      3.*  *Quantitative
      and Qualitative Disclosures about Market Risk*





*Interest
      Rate Risk*





We
      are
      exposed to market risk from changes in interest rates primarily through our
      Credit Facility and the $225.0 million of Second Priority Senior Secured
      Floating Rate Notes. The Credit Facility is comprised of (1) a $675.0 million
      term loan and (2) a $200.0 million revolving credit facility. At March 31,
      2007,
      there were no borrowings on the revolving credit facility, and the net
      outstanding balance of the term loan at March 31, 2007 was $671.6 million.
      At
      March 31, 2007, the Eurodollar rate applicable to the term loan and the Second
      Priority Senior Secured Floating Rate Notes was 5.36%. If the Eurodollar rate
      increases 0.25% and 0.5%, we estimate an annual increase in our interest expense
      of approximately $2.2 million and $4.5 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.





32


*Item
      4.*  *Controls
      and Procedures*





(a)
      Disclosure controls and procedures.





As
      required by Rule 13a-15 under the Exchange Act, the Company’s management carried
      out an evaluation with the participation of our Chief Executive Officer and
      Chief Financial Officer, of the effectiveness of our disclosure controls and
      procedures, as of the end of the last fiscal quarter. 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 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 control over financial reporting.





There
      were no changes in our internal control over financial reporting identified
      in
      connection with our evaluation of our disclosure controls and procedures that
      occurred during our last fiscal quarter that has materially affected, or is
      reasonably likely to materially affect, our internal control over financial
      reporting.





33


**Part
      II. Other Information**





**Item
      1.**  **Legal
      Proceedings**





There
      have been no material changes in legal proceedings from the items disclosed
      in
      the Company’s Annual Report on Form 10-K filed with the Securities and Exchange
      Commission.





**Item
      1A.**  **Risk
      Factors**





You
      should carefully consider the risks described in our Annual Report on Form
      10-K
      for the year ended December 3 0,
      2006,
      including those under the heading “Risk Factors” appearing in Item 1A of Part I
      of the Form 10-K and other information contained in this Quarterly Report before
      investing in our securities. Realization of any of these risks could have a
      material adverse effect on our business, financial condition, cash flows and
      results of operations. There were no material changes in the Company’s risk
      factors in the first quarter of 2007.





**Item** **2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





Not
      Applicable





**Item** **3.**  **Defaults
      Upon Senior Securities**





Not
      Applicable





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





Not
      Applicable





**Item** **5.**  **Other
      Information**





Not
      Applicable





**Item
      6.**  **Exhibits**





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





34





**SIGNATURE**





Pursuant
      to the requirements 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.





Berry
      Plastics Holding Corporation


May
      15,
      2007








By: /s/
      James M. Kratochvil


James
      M.
      Kratochvil




Executive
      Vice President, Chief Financial Officer,


Treasurer
      and Secretary (Principal Financial


and
      Accounting Officer)









35