##### Table of Contents

 

 

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

 

**OR**

 

**For the fiscal year ended December 31, 2011**

**OR**

 

**OR**

 

**COMMISSION FILE NUMBER: 333-175137**

 

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

 

**(Jurisdiction of incorporation or organization)**

 

**(Address of principal executive offices)**

**Contact details of Company Contact Person:**

 

 

**
 
**

Securities registered or to be registered pursuant to Section 12(b) of the Act: 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act 

**None.**

Securities forwhich there is a reporting obligation pursuant to Section 15(d) of the Act 

**9% Senior Secured Second Lien Notes**

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the periodcovered by the annual report: 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.  Yes  ̈  No x

If thisreport is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes ̈  No x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files):  Yes ̈  No  ̈

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): 

Large acceleratedfiler   ̈                 Acceleratedfiler   ̈                 Non-accelerated filer  x

Indicate by a check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

If “Other” has been checked in response to the previous question, indicate by check mark which financialstatement item the Registrant has elected to follow:    Item 17   ̈  Item  18   ̈

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct).  Yes  ̈  No x

 

 

 

Table of Contents
**Pinafore Holdings B.V.**

 

 
**ANNUAL REPORT**

**TABLE OF CONTENTS**

 
      Page *Financial and other information*  * **i**  **Special note regarding forward-looking statements*  * **i**  ***PART I**    Item 1.  
Identity of directors, senior management and advisers
   1  Item 2.  
Offer statistics and expected timetable
   1  Item 3.  
Key information
   2  Item 4.  
Information on the Company
   16  Item 4A.  
Unresolved Staff Comments
   27  Item 5.  
Operating and financial review and prospects
   28    
*Operating results*
   28    
*Unaudited pro forma financial information*
   49    
*Liquidity and capital resources*
   55    
*Critical accounting estimates & judgments*
   59    
*Accounting pronouncements not yet adopted*
   61    
*Non-GAAP measures*
   62  Item 6.  
Directors, senior management and employees
   72  Item 7.  
Major shareholders and related party transactions
   79  Item 8.  
Financial information
   80  Item 9.  
The offer and listing
   81  Item 10.  
Additional information
   81  Item 11.  
Quantitative and qualitative disclosures about market risk
   91  Item 12.  
Description of securities other than equity securities
   91  **PART II**    Item 13.  
Defaults, dividend arrearages and delinquencies
   92  Item 14.  
Material modifications to the rights of security holders and use of proceeds
   92  Item 15.  
Controls and procedures
   92  Item 16A.  
Audit Committee Financial Expert
   92  Item 16B.  
Code of ethics
   93  Item 16C.  
Principal accountant fees and services
   93  Item 16D.  
Exemptions from the listing standards for audit committees
   93  Item 16E.  
Purchases of equity securities by the issuer and affiliated purchasers
   93  **PART III**    Item 17.  
Financial statements
   94  Item 18.  
Financial statements
   94  **EXHIBITS**    Item 19.  
Exhibit index
   95  
**GLOSSARY OF TERMS**
  
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**Pinafore Holdings B.V.**

 

 
**Financial and Other Information**

On July 27, 2010, the independent directors of Tomkins plc and the board of directors of Tomkins Acquisitions Limited (formerly Pinafore AcquisitionsLimited) announced that they had reached an agreement on the terms of a recommended cash acquisition (the ‘**Acquisition**’) for the entire share capital of Tomkins plc, including the Tomkins plc shares underlying the Tomkins AmericanDepository Receipts (‘**ADRs**’) and certain employee equity awards, implemented by way of a scheme of arrangement under Part 26 of the UK’s Companies Act 2006 (the ‘**Scheme**’). On the Acquisition date, Tomkins plcwas re-registered as a private company and its name was changed to Tomkins Limited. 

The direct parent of Tomkins Acquisitions Limited isPinafore Holdings B.V. (the **‘Company**’ or the ‘**Registrant**’), whose immediate and ultimate parent entity is Pinafore Coöperatief U.A. (the **‘Co-operative**’). The Co-operative is owned by aconsortium representing the interests of Onex Corporation (‘**Onex**’), a Canadian private equity investor, Onex Partners III and various syndication participants, and the Canada Pension Plan Investment Board (‘**CPPIB**’),collectively the ‘**Sponsors**’. 

Results of Tomkins plc and its subsidiaries (‘**Tomkins**’) for periods prior tothe Acquisition on September 24, 2010 (‘**Predecessor**’) have been presented separately from those of the Company and its subsidiaries for the periods subsequent to the Acquisition (‘**Successor**’). 

Prior to the Acquisition, Tomkins plc drew up its annual financial statements to the Saturday nearest December 31. Accordingly, Predecessorconsolidated financial statements are presented for the 52-week period from January 4, 2009 to January 2, 2010 (‘**Fiscal 2009**’), and the 38-week period from January 3, 2010 to September 24, 2010 (‘**9M2010**’). The Predecessor financial statements do not reflect the effects of the accounting for, or the financing of, the Acquisition. The Company draws up its annual financial statements to December 31. Although the Company wasincorporated on September 1, 2010, it had no assets or liabilities (other than the proceeds of the shares issued on incorporation) and no operations prior to the Acquisition. Accordingly, this annual report (the ‘**AnnualReport**’), which has been prepared in a format consistent with that of an annual report on Form 20-F, contains Successor consolidated financial statements that present the results of the Successor’s operations for the 52-week periodfrom January 1, 2011 to December 31, 2011 (‘**Fiscal 2011**’) and the 14-week period from September 25, 2010 to December 31, 2010 (‘**Q4 2010**’). 

The Company’s consolidated financial statements do not contain results for the year ended December 31, 2010 (‘**Fiscal 2010**’).As the Company had and has no interest in any operations other than those of Tomkins, comparison of the results of the Successor with those of the Predecessor is hindered only by the effects of the accounting for, and the financing of, theAcquisition. For the purposes of facilitating the discussion of Fiscal 2011 compared with Fiscal 2010 and Fiscal 2010 compared with Fiscal 2009, we therefore refer in **Item 5**‘*Operating and financial review and prospects*’to our unaudited pro forma condensed consolidated income statement for Fiscal 2010 that is presented in ‘*Unaudited pro forma financial information*’. The unaudited pro forma financial information has been prepared in accordancewith Securities and Exchange Commission (‘**SEC**’) Regulation S-X Article 11, as discussed further under ‘*Unaudited pro forma financial information*’. The unaudited pro forma financial information for Fiscal 2010 doesnot comply with International Financial Reporting Standards (‘**IFRS**’) or accounting principles generally accepted in the United States of America (‘**US GAAP**’) and does not purport either to represent actualresults or to be indicative of results we might achieve in future periods. 

In this Annual Report, all references to the‘**Group**’, ‘we’, ‘us’, ‘our’ refer, except as otherwise indicated or as the context otherwise indicates, in the periods prior to the Acquisition means Tomkins and, in the period subsequent to theAcquisition, means the Company and its subsidiaries. References to ‘**US dollars**’, ‘**$**’ and ‘**cents**’ are to United States currency, references to ‘**pounds sterling**’,‘**£**’, ‘**pence**’ and ‘**p**’ are to British currency, references to ‘**Canadian dollars**’ are to Canadian currency, and ‘**Euros**’ or ‘**€**’ are to thecurrency of certain member states of the European Union. These and certain other terms and acronyms used in this document are defined in the glossary to this document. 

The consolidated financial statements of the Group appearing in this Annual Report are presented in US dollars and are prepared in accordance with IFRS as issued by the International Accounting StandardsBoard (‘**IASB**’), which differs in certain respects from US GAAP. 

We assess the performance of our businesses using avariety of measures. Certain of these measures are not explicitly defined under IFRS and are therefore termed ‘**non-GAAP measures**’. Under the heading ‘*Non-GAAP measures*’ in **Item 5**‘*Operating andfinancial review and prospects*’ we identify and explain the relevance of each of the non-GAAP measures referenced herein, show how they are calculated and present a reconciliation to the most directly comparable measure defined under IFRS.We do not regard these non-GAAP measures as a substitute for, or superior to, the equivalent measures defined under IFRS. The non-GAAP measures that we use may not be directly comparable with similarly-titled measures used by other companies.

**Special note regarding forward-looking statements**

This Annual Report and oral statements made in connection with this document contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E ofthe Securities Exchange Act of 1934 (the ‘**Exchange Act**’), including assumptions, anticipations, expectations and forecasts concerning the Company’s future business strategy, products, services, financial results, performance,future events and information relevant to our business, industries and operating environments. When used in this document, the words “may”, “will”, “intend”, “plan”, “foresee”,“anticipate”, “believe”, “expect”, “estimate”, “assume”, “could”, “should”, “continue” and similar expressions, as they relate to the Company, its end markets or itsmanagement, are intended to identify forward-looking statements. 

Such statements reflect the current views of management with respect tofuture events and are subject to certain risks, uncertainties and assumptions. The forward-looking statements contained herein represent a good-faith assessment of our future performance for which we believe there is a reasonable basis. Importantfactors that could cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements are disclosedunder **Item 3D**‘*Risk factors*’. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include: 

 
• 
global and general economic conditions, including those specific to our end markets; 

 
• 
significant global operations and global expansion; 

 
• 
the impact of natural disasters and terrorist attacks; 

 
• 
regulations applicable to our global operations; 

 
• 
our ability to compete successfully with other companies in our industry; 

 
i 

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**Pinafore Holdings B.V.**

 

 • 
the cost and availability of raw materials; 

 
• 
the cyclical nature of the non-residential construction industry; 

 
• 
the downturn in the residential construction industry; 

 
• 
the potential loss of key personnel; 

 
• 
product liability claims against us; 

 
• 
the sufficiency of our insurance policies to cover losses, including liabilities arising from litigation; 

 
• 
failure to develop and maintain intellectual property rights; 

 
• 
the demand for our products by automakers; 

 
• 
our ability to integrate acquired companies into our business and the success of our acquisition strategy; 

 
• 
environmental, health and safety laws and regulations; 

 
• 
currency fluctuations from our international sales; 

 
• 
labor shortages, labor costs and collective bargaining agreements; 

 
• 
equipment failures, explosions and adverse weather; 

 
• 
potential inability to obtain necessary capital; 

 
• 
the few principal stockholders who control us; 

 
• 
risks related to the Second Lien Notes, to the collateral and to high yield securities generally; 

 
• 
our significant indebtedness; 

 
• 
the dependence on the subsidiaries of the Company for cash to meet our debt obligations; and 

 
• 
other risks and uncertainties, including those listed under **Item 3D**‘*Risk factors’*. 

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially fromthose described herein. Other unpredictable factors could also cause actual results to differ materially from those in the forward-looking statements. Therefore investors should not place undue reliance on such statements as a prediction of actualresults. 

These forward-looking statements represent our view only as of the date they are made, and we disclaim any obligation to updateforward-looking statements contained herein, except as may be otherwise required by law. 

**Market and industry data**

In this Annual Report we have cited information compiled by certain industry sources and third parties including: 

 
• 
Automotive Aftermarket Industry Association (‘**AAIA**’) 

 
• 
US Department of Transport 

 
• 
IHS Global Insight Inc. (‘**IHS**’) 

 
• 
Polk 

 
• 
European Automobile Manufacturers Association (‘**ACEA**’) 

 
• 
National Association of Home Builders (‘**NAHB**’) 

 
• 
McGraw-Hill Companies (‘**McGraw-Hill**’) 

 
• 
McGraw-Hill Companies, ‘Dodge Construction Potential Bulletin’ (‘**Dodge**’) 

 
• 
US Census Bureau 

 
• 
US Federal Reserve 

 
• 
National Bureau of Statistics of China 

 
• 
CB Richard Ellis 

 
• 
Architects Industry Association (‘**AIA’**) 

 
• 
S&P/Case Shiller 

 
ii 

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**Pinafore Holdings B.V.**

**Item 1**

 

 
**PART I**

 
**Item 1.****Identity of Directors, Senior Management and Advisers**
Not applicable. 

 
**Item 2.****Offer Statistics and Expected Timetable**
Not applicable. 

 
1 

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**Pinafore Holdings B.V.**

**Item 3A**

 

 **Item 3.****Key Information**
**A. Selected financialdata**

The selected financial data set out below as at December 31, 2011 and December 31, 2010 and for Fiscal 2011, Q4 2010, 9M2010 and Fiscal 2009 has been derived from the Group’s consolidated financial statements prepared in accordance with IFRS and included in this Annual Report. 

The historical financial information as at January 2, 2010 and January 3, 2009 and for the fiscal years ended January 3, 2009 (‘**Fiscal 2008**’) and December 29, 2007(‘**Fiscal 2007**’) have also been prepared in accordance with IFRS and have been derived from audited consolidated financial statements not separately presented herein and after re-presentation for the classification of theSensors & Valves operating segment as a discontinued operation (see note 15 to the Group’s consolidated financial statements). 

The selected financial data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, such consolidatedfinancial statements and notes thereto and **Item 5**‘*Operating and financial review and prospects*’. 

**Consolidated income statement data**

 
**$ million, unless otherwise stated**  **SUCCESSOR**      PREDECESSOR    **Fiscal 2011**   Q4 2010      9M 2010   Fiscal 2009  Fiscal 2008  Fiscal 2007 
Sales
  ** ****4,590.7****  **   1,181.3      3,270.4    3,866.5    5,094.9    5,472.6  
Operating profit/(loss)
  ** ****272.9****  **   (204.3)      313.2    88.2    39.2   554.2  
Profit/(loss) for the period from continuing operations
  ** ****19.6****  **   (269.4)      224.6    18.8    (66.0)   375.0  
Profit/(loss) for the period from discontinued operations
  ** ****37.6****  **   (0.8)      19.0    (12.8)   19.5   (56.5)  
Profit/(loss) for the period
  ** ****57.2****  **   (270.2)      243.6    6.0    (46.5)   318.5  
Profit/(loss) for the period attributable to equity shareholders
  ** ****27.9****  **   (271.1)      217.4    (15.6)   (64.6)   293.5  
Dividend per share paid or proposed during the period:
            
– Interim (cents per share)
  ** ****—  ****  **   —         —       3.50 c    11.02 c   11.02 c 
– Final (cents per share)
  ** ****—  ****  **   —         —       6.50 c    2.00 c   16.66 c   
 

 
   
 

 
     
 

 
   
 

 
  
 

 
  
 

 
   ** ****—  ****  **   —         —       10.00 c    13.02 c   27.68 c   
 

 
   
 

 
     
 

 
   
 

 
  
 

 
  
 

 
 
**Consolidated balance sheet data**

 

**$ million**
  **SUCCESSOR**       PREDECESSOR    **As at****December 31,****2011**   As atDecember 31,2010       As atJanuary 2,2010   As atJanuary 3,2009   As atDecember 29,2007  
Total assets
  ** ****6,705.2****  **   7,552.3        3,673.6     3,770.7     4,472.9  
Net assets
  ** ****2,343.6****  **   2,339.8        1,678.0     1,739.3     2,254.8  
Share capital
  ** ****—  ****  **   —          79.6     79.6     65.5  
Share premium account
  ** ****2,143.3****  **   2,124.7        799.2     799.1     679.4  
Shareholders’ equity
  ** ****2,074.9****  **   2,028.3        1,536.6     1,610.8     2,137.8  
**Acquisitions and disposals**

Acquisitions and disposals during the three most recent fiscal years are detailed in ‘*Principal acquisitions and disposals*’ under **Item 4A**‘*History and development ofthe Company*’. 

**B. Capitalization and indebtedness**

Not applicable. 

**C. Reasons for the offer and use of proceeds**

Not applicable. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
**D. Risk factors**

Tomkins operates globally in a variety of markets and is affected by a number of risks inherent in its activities. Business risk can be considered either as downside risk (the risk that something can gowrong and result in a financial loss or exposure) or volatility risk (the risk associated with uncertainty, meaning there may be an opportunity for financial gain as well as the potential for loss). 

We outline below the risks and uncertainties that the Company’s management board (the ‘**Board**’) believes have the potential toaffect the Group’s results or financial position. We have not listed these risks in any order of priority. Details of the Group’s risk management procedures are set out under the heading ‘Internal control’ under **Item 15**‘*Controls and procedures*’. 

Additional risks that we currently do not regard as significant, could also have a materialadverse effect on our results or financial position. Our analysis of our principal risks and uncertainties should, therefore, be read in conjunction with the cautionary statement regarding forward-looking statements set out on page i. 

When applying the Group’s accounting policies, management must make assumptions and estimates about the future that may differ from actual outcomes.We discuss the key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amount of the Group’s assets and liabilities in note 4 to the Group’s consolidated financial statements.

**Risks associated with our strategy and the competitiveness of our operations**

***Our strategy to expand our geographical reach may be impacted by economic, political and other risks associated with international operations, and this could adversely affect our business.***

One of our key strategies is to expand our geographic reach, and as a result, a substantial portion of our operations are conductedand located outside the US. In Fiscal 2011, approximately 49% of sales from continuing operations originated from outside of the US. We have manufacturing, sales and service facilities spanning four continents and sell to customers in over 150countries. Moreover, a significant amount of our manufacturing functions and sources of our raw materials and components are from Asia, principally China. Accordingly, our business and results of operations, as well as the business and results ofoperations of our vendors, suppliers and customers, are subject to risks associated with doing business internationally, including: 

 
• 
changes in foreign currency exchange rates; 

 
• 
trade protection measures, such as tariff increases, and import and export licensing and control requirements; 

 
• 
the complexities of operating within multiple tax jurisdictions, including potentially negative consequences from changes in tax laws or from taxexaminations, which may, in addition, require an extended period of time to resolve; 

 
• 
instability in a specific country’s or region’s political, economic or social conditions, particularly in emerging markets and the MiddleEast; 

 
• 
difficulty in staffing and managing widespread operations; 

 
• 
difficulty of enforcing agreements and collecting receivables through some foreign legal systems; 

 
• 
differing and, in some cases, more stringent labor regulations; 

 
• 
partial or total expropriation; 

 
• 
differing protection of intellectual property; 

 
• 
unexpected changes in regulatory requirements and required compliance with a variety of foreign laws, including environmental regulations and laws;

 
• 
the burden of complying with multiple and possibly conflicting laws and any unexpected changes in regulatory requirements;

 
• 
differing local product preferences and product requirements; 

 
• 
strong competition from companies that are already established in the markets we seek to enter; 

 
• 
inability to repatriate income or capital; and 

 
• 
difficulty in administering and enforcing corporate policies, which may be different than the normal business practices of local cultures.

***Dependence on the continued operation of our manufacturing facilities.***

While we are not heavily dependent on any single manufacturing facility, major disruptions at a number of our manufacturing facilities, due to laborunrest, natural disasters, terrorist attacks, significant mechanical failure of our facilities, or other catastrophic event, could result in significant interruption of our business and a potential loss of customers and sales or could significantlyincrease our operating costs. 

***We are subject to anti-corruption laws in various jurisdictions, as well as other laws governing ourinternational operations; if we fail to comply with these laws we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, financial condition and results of operations.***

Our international operations are subject to one or more anti-corruption laws in various jurisdictions, such as the US Foreign CorruptPractices Act of 1977, as amended (‘**FCPA**’), the UK Bribery Act of 2010 and other anticorruption laws. The FCPA and these other laws generally prohibit employees and intermediaries from bribing or making other prohibited payments toforeign officials or other persons to obtain or retain business or gain some other business advantage. We operate in a number of jurisdictions that pose a high risk of potential FCPA violations, and we participate in joint ventures and relationshipswith third parties whose actions could potentially subject us to liability under the FCPA. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or themanner in which existing laws might be administered or interpreted. 

 
3 

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**Pinafore Holdings B.V.**

**Item 3D**

 

 
We are also subject to other laws and regulations governing our international operations, includingregulations administered by the US Department of Commerce’s Bureau of Industry and Security, the US Department of Treasury’s Office of Foreign Asset Control, and various non-US government entities, including applicable export controlregulations, economic sanctions on countries and persons, customs requirements, currency exchange regulations, and transfer pricing regulations (collectively, ‘**Trade Control laws**’). 

We have instituted policies, procedures and ongoing training of certain employees with regard to business ethics, designed to ensure that we and ouremployees comply with the FCPA, other anticorruption laws and Trade Control laws. However, there is no assurance that our efforts have been and will be completely effective in ensuring our compliance with all applicable anti-corruption laws,including the FCPA, or other legal requirements. If we are not in compliance with the FCPA, other anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures,and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of the FCPA or other anti-corruption laws by US or foreignauthorities could also have an adverse impact on our business, financial condition and results of operations. 

***We face competition inall areas of our business and may not be able to successfully compete with our competitors, which could lead to lower levels of profits and reduce the amount of cash we generate.***

We are subject to competition from other producers of products that are similar to ours. Our customers often demand delivery of our products on a tight time schedule and in a number of geographic markets.If our quality of service declines or we cannot meet the demands of our customers, they may utilize the services of our competitors. Our competitors include manufacturers that may be better capitalized, may have a more extensive low-cost sourcingstrategy and presence in low-cost regions or may receive significant governmental support and as a result, may be able to offer more aggressive pricing. If we are unable to continue to provide technologically superior or better quality products orto price our products competitively, our ability to compete could be harmed and we could lose customers or market share. 

***We are subjectto risks from litigation that may materially impact our operations.***

We face an inherent business risk of exposure to various types ofclaims and lawsuits. We are involved in various intellectual property, product liability, product warranty, environmental claims and lawsuits, and other legal proceedings arising in the ordinary course of our business. Although it is not possible topredict with certainty the outcome of every claim and lawsuit and the range of probable loss, we believe these lawsuits and claims will not individually or in the aggregate have a material impact on our results. However, we could in the future besubject to various lawsuits, including, amongst others, intellectual property, product liability, product warranty, environmental claims and antitrust claims, and we may incur judgments or enter into settlements of lawsuits and claims that couldhave a material adverse effect on our results of operations in any particular period. 

***Our insurance may not fully cover all futurelosses we may incur.***

Manufacturers of products such as ours are subject to inherent risks. We maintain an amount of insuranceprotection that we consider adequate, but we cannot provide any assurance that our insurance will be sufficient or provide effective coverage under all circumstances and against all hazards or liabilities to which we may be subject. Specifically,our insurance may not be sufficient to replace facilities or equipment that are damaged in part or in full. Damages or third party claims for which we are not fully insured could hurt our financial results and materially harm our financialcondition. Further, due to rising insurance costs and changes in the insurance markets, insurance coverage may not continue to be available at all or at rates or on terms similar to those presently available. Additionally, our insurance may subjectus to significant deductibles, self-insured retentions, retrospectively rated premiums or similar costs. Any losses not covered by insurance could have a material adverse effect on us. We typically purchase business interruption insurance for ourfacilities. However, if we have a stoppage, our insurance policies may not cover every contingency and may not be sufficient to cover all of our lost revenues. In the future, we may be unable to purchase sufficient business interruption insurance atdesirable costs. 

We supply products to industries that are subject to inherent risks, including equipment defects, malfunctions and failuresand natural disasters, which could result in unforeseen and damaging events. These risks may expose us, as an equipment operator and supplier, to liability for personal injury, wrongful death, property damage, and pollution and other environmentaldamage. The insurance we carry against many of these risks may not be adequate to cover our claims or losses. Further, insurance covering the risks we expect to face or in the amounts we desire may not be available in the future or, if available,the premiums may not be commercially justifiable. If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur liability at a time when we were not able to obtainliability insurance, our business, results of operations, cash flows and financial condition could be negatively impacted. If our clients suffer damages as a result of the occurrence of such events, they may reduce their business with us.

***Failure to develop, obtain and protect intellectual property rights could adversely affect our competitive position.***

Our success depends on our ability to develop technologies and inventions used in our products and to brand such products, to obtainintellectual property rights in such technologies, inventions, and brands, and to protect and enforce such intellectual property rights. In this regard, we rely on US and foreign trademark, patent, copyright, and trade secret laws, as well aslicense agreements, nondisclosure agreements, and confidentiality and other contractual provisions. Nevertheless, the technologies and inventions developed by our engineers in the future may not prove to be as valuable as those of competitors, orcompetitors may develop similar or identical technologies and inventions independently of us and before we do. 

We may not be able to obtainpatents or other intellectual property rights in our new technologies and inventions or, if we do, the scope of such rights may not be sufficiently broad to afford us any significant commercial advantage over our competitors. Owners of intellectualproperty rights that we need to conduct our business as it evolves may be unwilling to license such intellectual property rights to us on terms we consider reasonable. Competitors and others may successfully challenge the ownership, validity, and/orenforceability of our intellectual property rights. In the past, pirates have counterfeited certain of our products and sold them under our trademarks, which has led to loss of sales. It is difficult to police such counterfeiting, particularly on aworldwide basis, and the efforts we take to stop such counterfeiting may not be effective. 

 
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**Item 3D**

 

 
Our other efforts to enforce our intellectual property rights against infringers may not provesuccessful and will likely be time consuming and expensive and may divert management’s attention from the day-to-day operation of our business. Adequate remedies may not be available in the event of an unauthorized use or disclosure of ourtrade secrets and manufacturing expertise. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could harm our business, financial condition, results of operations and cash flows. Weoperate in industries with respect to which there are many patents, and it is not possible for us to ascertain that none of our products infringes any patents. If we were found to infringe any patent rights or other intellectual property rights ofothers, we could be required to pay substantial damages or we could be enjoined from offering certain products and services. 

***Ourinformation technology systems suffer from certain deficiencies, which we are in the process of remedying.***

Through acquisitions ofother companies, we have inherited multiple stand-alone Enterprise Resource Planning (‘**ERP**’) systems, and in general our information technology systems are decentralized. This decentralization leads to security risks and makesaccess to common applications cumbersome. We are in the midst of several large-scale information technology projects, including with respect to ERP systems and consolidation of applications and servers. The costs of such projects may exceed theamounts we have budgeted for them, and any material failures in the execution of such projects may hinder our day-to-day operations. 

***Pricing pressures from our customers may adversely affect our business.***

We face the greatest pricing pressure from our customers in the automotive Original Equipment (‘**OE**’) end market. Virtually all vehicle manufacturers seek price reductions in both theinitial bidding process and during the term of the award. We are also, from time to time, subject to pricing pressures from customers in our other end markets. If we are not able to offset price reductions through improved operating efficiencies andreduced expenditures or new product introduction, those price reductions may have a material adverse effect on our results of operations. 

***We may in the future dispose of non-core businesses or acquire related businesses, which we may not be able to successfully integrate, and we maybe unable to recoup our investment in these businesses.***

From time to time we may make strategic acquisitions of complementarybusinesses to expand our product portfolio and geographic presence and may dispose of non-core businesses. Acquisitions and disposals, particularly investments in emerging markets, involve legal, economic and political risks. We also encounter risksin the selection of appropriate investment and disposal targets, execution of the transactions and integration of acquired businesses. 

Whilewe believe we have successfully integrated the operations we have acquired, we may not be able to effectively integrate future acquisitions or successfully implement appropriate operational, financial and management systems and controls to achievethe benefits expected to result from these acquisitions. As a result, we may not be able to recoup our investment in those acquisitions or achieve the economic benefits that we anticipate from these acquisitions. Our efforts to integrate thesebusinesses could be affected by a number of factors beyond our control, such as general economic conditions and increased competition. In addition, the process of integrating these businesses could cause the interruption of, or loss of momentum in,the activities of our existing business and the diversion of management’s attention. These impacts and any delays or difficulties encountered in connection with the integration of these businesses could negatively impact our business andresults of operations. 

***Environmental compliance costs and liabilities and responses to concerns regarding climate change could affectour financial condition, results of operations and cash flows adversely.***

Our operations and properties are subject to stringent USand foreign, federal, state, local and provincial laws and regulations relating to environmental protection, including laws and regulations governing the investigation and clean up of contaminated properties as well as air emissions, waterdischarges, waste management and disposal and workplace health and safety. Such laws and regulations affect all of our operations, are continually changing, are generally different in every jurisdiction and can impose substantial fines and sanctionsfor violations. Further, they may require substantial clean-up costs for our properties (many of which are sites of long-standing manufacturing operations) and the installation of costly pollution control equipment or operational changes to limitpollution emissions and/or decrease the likelihood of accidental releases of regulated materials. We must conform our operations and properties to these laws and adapt to regulatory requirements in all jurisdictions as these requirements change.

***Terrorist acts, conflicts and wars may materially adversely affect our business, financial condition and results of operations.***

As a Group with a large international footprint, we are subject to increased risk of damage or disruption to us, our employees,facilities, partners, suppliers, distributors, resellers or customers due to terrorist acts, conflicts and wars, wherever located around the world. The potential for future attacks, the national and international responses to attacks or perceivedthreats to national security, and other actual or potential conflicts or wars have created many economic and political uncertainties. Although it is impossible to predict the occurrences or consequences of any such events, they could result in adecrease in demand for our products, make it difficult or impossible to deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain and result in the need to impose employeetravel restrictions, and thereby adversely affect our business, financial condition, results of operations and cash flows. 

***We havetaken, and continue to take, cost-reduction actions, which may expose us to additional production risk and we may not be able to maintain the level of cost reductions that we have achieved.***

We have been reducing costs in all of our businesses and have discontinued product lines, exited businesses, consolidated manufacturing operations andreduced our employee population. The impact of these cost-reduction actions on our sales and profitability may be influenced by many factors and we may not be able to maintain the level of cost savings that we have achieved depending on our abilityto successfully complete these efforts. In connection with the implementation and maintenance of our cost reduction measures, we may face delays in implementation of anticipated workforce reductions, a decline in employee morale and a potentialinability to meet operational targets due to an inability to retain or recruit key employees. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
***We are exposed to exchange rate fluctuations in the international markets in which we operate.***

We conduct operations in many areas of the world involving transactions denominated in a variety of functional currencies. We aresubject to currency exchange rate risk to the extent that our costs may be denominated in currencies other than those in which we earn and report revenues and vice versa. In addition, a decrease in the value of any of these currencies relative tothe US dollar could reduce our profits from non-US operations and the translated value of the net assets of our non-US operations when reported in US dollars in our financial statements. This could have a negative impact on our business, financialcondition or results of operations as reported in US dollars. Fluctuations in currencies may also make it more difficult to perform period-to-period comparisons of our reported results of operations. 

We anticipate that there will be instances in which costs and revenues will not be exactly matched with respect to currency denomination. As a result, tothe extent we expand geographically, we expect that increasing portions of our revenues, costs, assets and liabilities will be subject to fluctuations in foreign currency valuations. We may experience economic loss and a negative impact on earningsor net assets solely as a result of foreign currency exchange rate fluctuations. Further, the markets in which we operate could restrict the removal or conversion of the local or foreign currency, resulting in our inability to hedge against theserisks. 

We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may limit our abilityto convert foreign currencies into US dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a diminished value of fundsdenominated in the currency of the country instituting the devaluation. Actions of this nature, if they occur or continue for significant periods of time, could have an adverse effect on our results of operations and financial condition in any givenperiod. 

**Risks associated with our markets**

***Conditions in the global economy and the major end markets we serve may materially and adversely affect the business and results of operations of our businesses should they deteriorate.***

The business and operating results of our Industrial & Automotive (‘**I&A**’) and Building Productsbusiness groups have been, and will continue to be, affected by worldwide economic conditions, including conditions in the general industrial, automotive, non-residential and residential construction end markets we serve. As a result of continuingeffects from the slowdown in global economic growth, the credit market crisis, declining consumer and business confidence, increased unemployment, reduced levels of capital expenditures, fluctuating commodity prices, bankruptcies and otherchallenges affecting the global economy, some of our customers may experience the deterioration of their businesses, cash flow shortages or difficulty obtaining financing. As a result, existing or potential customers may delay or cancel plans topurchase our products and services and may not be able to fulfill their obligations to us in a timely fashion. 

Further, our vendors may beexperiencing similar conditions, which may impact their ability to fulfill their obligations to us. If the global economic slowdown continues for a significant period or there is significant further deterioration in the global economy, our resultsof operations, financial position and cash flows could be materially adversely affected. 

***The non-residential construction end market iscyclical and affects market conditions for our products and services.***

The non-residential construction end market is cyclical, andthe downturn in this end market has caused a decline in the demand for our products. Certain of our products are primarily used in the non-residential construction end market and therefore our sales and earnings are strongly influenced by decreasednon-residential construction activity. Non-residential construction activity can decline because of many other factors that we cannot control, such as a decline in general economic activity or the availability of credit, a decrease in infrastructurespending, an increase in raw material and overall construction costs and interest rate increases. 

***A portion of our business relies onhome improvement and new home construction activity levels, both of which are inherently cyclical and recently experienced a significant downturn.***

A portion of our business relies on the residential new construction and repair and refurbishment end markets. The residential new construction market, which is cyclical in nature, has undergone asignificant downturn marked by declines in the demand for new homes, an oversupply of new and existing homes on the market and a reduction in the availability of financing for homebuyers. The oversupply of existing homes held for sale has beenexacerbated by a growing number of home mortgage foreclosures, which has contributed to the downward pressure on home prices. Low levels of consumer confidence, high levels of unemployment and the downward pressure on home prices have made it moredifficult for some homeowners to make additional investments in their homes, such as remodeling projects. Further, disruptions in the credit markets have limited the ability of consumers to finance home improvements. In addition, the economicturmoil has caused certain shifts in consumer preferences and purchasing practices and has resulted in changes in the business models and strategies of our customers. Such shifts, which may or may not be long-term, have altered the nature and pricesof products demanded by the end consumer and our customers. If we do not timely and effectively respond to these changing consumer preferences, our relationships with our customers could be adversely affected, the demand for our products could bereduced and our market share could be negatively affected. 

***Longer product lives of automotive parts are adversely affecting aftermarketdemand for some of our products.***

The average useful life of automotive parts has steadily increased in recent years due toinnovations in products, technologies and manufacturing processes. The longer product lives allow vehicle owners to replace parts of their vehicles less often. As a result, a portion of sales in the aftermarket has been displaced. This has adverselyimpacted, and could continue to adversely impact, our aftermarket sales. Also, any additional increases in the average useful lives of automotive parts would further adversely affect the demand for our aftermarket products. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
***We may not be able to accurately forecast demand or meet significant increases in demand for ourproducts.***

Certain of our businesses operate with short lead times and we order raw materials and supplies and plan production basedon discussions with our customers and internal forecasts of demand. If we are unable to accurately forecast demand for our products, in terms of both volume and specific products, or react appropriately to abrupt changes in demand, we may experiencedelayed product shipments and customer dissatisfaction. Additionally, if demand increases significantly from the current, historically low levels, both we and our suppliers may have difficulty meeting such demand, particularly if such demandincreases occur rapidly. Failure to accurately forecast demand or meet significant increases in demand could have an adverse impact on our business, financial condition and operating results. 

**Risks associated with our products**

***If we are unable to obtain raw materials atfavorable prices in sufficient quantities, or at the time we require them, our operating margins and results of operations may be adversely affected.***

We purchase our energy, steel, aluminum, rubber and rubber-based materials, and other key manufacturing inputs from outside sources. We do not traditionally have long-term pricing contracts with rawmaterial suppliers. The costs of these raw materials have been volatile historically and are influenced by factors that are outside our control. In recent years, the prices for energy, metal alloys, polymers and certain other of our raw materialshave been extremely volatile. While we strive to avoid this risk through the use of price escalation mechanisms with respect to our raw materials in our customer contracts and we seek to offset our increased costs with gains achieved throughoperational efficiencies, if we are unable to pass increases in the costs of our raw materials on to our customers, our operating margins and results of operations may be adversely affected if operational efficiencies are not achieved. 

Additionally, our businesses compete globally for key production inputs. The availability of qualified suppliers and of certain raw materials, energy orother key inputs may be disrupted by any number of geopolitical factors, including political unrest and significant weather events. Such disruptions may require additional capital or operating expenditure by us or force reductions in our productionvolumes. 

***We may be subject to recalls, product liability claims or may incur costs related to product warranties that may materiallyand adversely affect our business.***

Meeting or exceeding many government-mandated safety standards is costly and requiresmanufacturers to remedy defects related to product safety through recall campaigns if the products do not comply with safety standards. If we, customers or government regulators determine that a product is defective or does not comply with safetystandards prior to the start of production, the launch of a product could be delayed until such defect is remedied. The costs associated with any protracted delay of a product launch or a recall campaign to remedy defects in products that have beensold could be substantial. 

We face an inherent risk of product liability claims if product failure results in any claim for injury or loss.Litigation is inherently unpredictable and these claims, regardless of their outcome, may be costly, divert management attention and adversely affect our reputation. Supplier consolidation and the increase in low-cost country sourcing may increasethe likelihood of receiving defective materials, thereby increasing the risk of product failure and resulting liability claims. In addition, even if we are successful in defending against a claim relating to our products, claims of this nature couldcause our customers to lose confidence in our products and us. 

From time to time, we receive product warranty claims from our customers,pursuant to which we may be required to bear costs of repair or replacement of certain of our products. Vehicle manufacturers are increasingly requiring their outside suppliers to participate in the warranty of their products and to be responsiblefor the operation of these component products in new vehicles sold to consumers. Warranty claims may range from individual customer claims to full recalls of all products in the field. It cannot be assured that costs associated with providingproduct warranties will not be material. 

***We are dependent on market acceptance of new product introductions and product innovations forcontinued revenue growth.***

The markets in which we operate are subject to technological change. Our long-term operating results dependsubstantially upon our ability to continually develop, introduce, and market new and innovative products, to modify existing products, to respond to technological change, and to customize certain products to meet customer requirements and evolvingindustry standards. There are numerous risks inherent in this process, including the risks that we will be unable to anticipate the direction of technological change or that we will be unable to develop and market new products and applications in atimely fashion to satisfy customer demands. 

**Risks relating to our people**

***If we lose our senior management or key personnel, our business may be materially and adversely affected.***

The success of our business is largely dependent on our senior management team, as well as on our ability to attract and retain other qualified key personnel. In addition, there is significant demand inour industry for skilled workers. It cannot be assured that we will be able to retain all of our current senior management personnel and to attract and retain other necessary personnel, including skilled workers, necessary for the development of ourbusiness. The loss of the services of senior management and other key personnel or the failure to attract additional personnel as required could have a material adverse effect on our business, financial condition and results of operations.

***We may be adversely impacted by work stoppages and other labor matters.***

As of December 31, 2011, we had approximately 24,700 employees worldwide. Certain of our employees are represented by various unions undercollective bargaining agreements. While we have no reason to believe that we will be impacted by work stoppages and other labor matters, we cannot assure that future issues with our labor unions will be resolved favorably or that we will notencounter future strikes, work stoppages, or other types of conflicts with labor unions or our employees. Any of these factors may have an adverse effect on us or may limit our flexibility in dealing with our workforce. In addition, many of ourcustomers have unionized work forces. If one or more of our customers experience a material work stoppage, it could similarly have a material adverse effect on our business, results of operations and financial condition. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
**Risks relating to our funding**

***We are dependent upon lenders for financing to execute our business strategy and meet our liquidity needs and the lack of adequate financing could negatively impact our business.***

The Group may require capital to expand its business, implement its strategic initiatives and remain competitive. In the current volatile credit market,exacerbated by Eurozone sovereign debt concerns, there is risk that any lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing creditcommitments, including but not limited to: extending credit up to the maximum permitted by a credit facility, allowing access to additional credit features and otherwise accessing capital and/or honoring loan commitments. If our lenders failed tohonor their legal commitments under our senior secured revolving credit facility, it could be difficult in this environment to replace our senior secured revolving credit facility on similar terms. 

Failure to obtain sufficient funding to meet our liquidity requirements may result in our losing business opportunities or in the curtailment of capitalspending, research and development and other important strategic programs. 

Restrictions on the availability of credit may cause some of ourcustomers to be slower in settling the amounts that they owe to us, thereby reducing our own liquidity or, indeed, may cause them to be unable to pay the amounts that they owe to us. Restrictions on the availability of credit also increase the riskthat some of our suppliers may fail, which could cause disruption in the supply of critical inputs to our manufacturing processes. If there were any interruption in the supply of our products to any of our customers, we may lose sales to thosecustomers and there would be the risk that some of them would migrate to other suppliers. 

If management’s plans or assumptions regardingthe funding requirements change, the Group may need to seek other sources of financing, such as additional lines of credit with commercial banks or vendors or public financing, or to renegotiate existing bank facilities. It is possible thatadditional funding may not be available on commercially acceptable terms or at all. 

***We have substantial indebtedness, the size andterms of which could affect our ability to meet our debt obligations and may otherwise restrict our activities***

As ofDecember 31, 2011, we had total principal debt outstanding of $2,819.9 million. We are permitted by the terms of our debt instruments to incur substantial additional indebtedness, subject to the restrictions therein. Our inability to generatesufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have a material adverse effect on our business, financial condition and results of operations. 

Our substantial indebtedness could have important consequences, for example, it could: 

 
• 
make it more difficult for us to satisfy our obligations under our indebtedness; 

 
• 
limit our ability to borrow money for our working capital, capital expenditures, debt service requirements or other corporate purposes;

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

 
• 
increase our vulnerability to general adverse economic and industry conditions; 

 
• 
limit our ability to respond to business opportunities; and 

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

In addition, our existing debt obligations contain, and any futureindebtedness of ours would likely contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including, amongst others, restrictions on our ability to incur or guarantee additional debt, makecertain investments and engage in sales of assets and subsidiary stock. 

A failure to comply with the covenants contained in our debtagreements could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. In the event of any default, the lenders: 

 
• 
will not be required to lend any additional amounts to us; 

 
• 
could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable;

 
• 
may have the ability to require us to apply all of our available cash to repay these borrowings; or 

 
• 
may prevent us from making debt service payments under our other agreements. 

Such actions by lenders could cause cross defaults under our other indebtedness. 

We have pledged and will pledge substantially all of our assets as collateral under our senior secured credit facilities and the indenture governing the senior secured second lien notes due in 2018(‘**Second Lien Notes’**) subject to certain exceptions. If any of the holders of our indebtedness accelerate the repayment of such indebtedness, there can be no assurance that we will have sufficient assets to repay our indebtedness.If we were unable to repay those amounts, the holders of our secured indebtedness could proceed against the collateral granted to them to secure that indebtedness. 

***We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not besuccessful.***

Our ability to satisfy our debt obligations will depend upon, among other things: 

 
• 
our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and otherfactors, many of which are beyond our control; and 

 
• 
the future availability of borrowings under our senior secured credit facilities, which depends on, among other things, our complying with thecovenants in those facilities. 

It cannot be assured that our business will generate sufficient cash flow from operations,or that future borrowings will be available to us under our senior secured credit facilities or otherwise, in an amount sufficient to fund our liquidity needs. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
If our cash flows and capital resources are insufficient to service our indebtedness, we may be forcedto reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including the Second Lien Notes. These alternative measures may not be successful and may not permit us to meet our scheduleddebt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require usto comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of existing or future debt agreements, may restrict us from adopting some of these alternatives. In the absence of such operatingresults and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair marketvalue or at all, and any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due. 

***If we are required to make unexpected payments to any pension plans applicable to our employees, our financial condition may be adversely affected.***

Some of our employees participate in defined benefit pension plans, the majority of which are in the UK and US. In aggregate, the defined benefit planswere in deficit by $1.7 million as at December 31, 2011. Tomkins has guaranteed the obligations of Gates UK Limited to its pension plan, and the obligations of Tomkins’ subsidiary that is the “principal employer” of the onesection of the 2008 pension plan that is not directly sponsored by Tomkins. Various factors, such as changes in actuarial estimates and assumptions (including in relation to life expectancy and rate of return on assets) as well as actual return onassets, can increase the net expenses and net liabilities of the defined benefit pension plans. The assets and liabilities of the plans must be valued from time to time under applicable funding rules and as a result we may be required to increasethe cash payments we make under these defined benefit pension plans. For a further description of the pension deficit see note 35 to the Group’s consolidated financial statements. 

We could also be required at any time to make accelerated payments up to the full buy-out deficit in our defined benefit pension plans, which would likely be far higher than the normal ongoing fundingcost of the plans, if we receive a “Contribution Notice” or a “Financial Support Direction” from the Pensions Regulator or if we are required to terminate one or more of the US defined benefit pension plans by the US PensionBenefit Guarantee Corporation (‘**PBGC**’). A Contribution Notice typically can be issued where there has been an act or omission which is materially detrimental to the pension plan or has as one of its main purposes the prevention ofthe recovery of a debt due to the plan or the compromise or settlement of such a debt. A Financial Support Direction can be issued at any time where the employer in the plan is either a services company or insufficiently resourced (meaning that itsnet assets are less than fifty percent of its share of the buy-out deficit in the relevant plan, and there are other group companies who have sufficient assets to make up the difference). The PBGC may institute proceedings to terminate a US definedbenefit pension plan for a number of reasons, including if it determines that a plan will be unable to pay benefits when due or if the possible long-run loss of the PBGC with respect to a plan may reasonably be expected to increase unreasonably ifthe plan is not terminated. 

Our reported results of operations and financial condition may be adversely affected to the extent that we arerequired to make any additional payments to any relevant defined benefit pension plans in excess of the amounts assumed in our current plans or that we must report higher pension plan expenses under IAS19 ‘*Employee Benefits*’.

**Risks relating to the Second Lien Notes**

In addition to the above risks, holders of the Second Lien Notes should be aware of the following risks related specifically to the Second Lien Notes: 

***The entities that issued the Second Lien Notes, Tomkins, Inc. and Tomkins, LLC (the ‘Issuers’), are wholly owned financing subsidiariesof the Company with no operations of their own and they are dependent upon payments under the intercompany loans from other subsidiaries of the Company to meet their obligations under the Second Lien Notes.***

The Issuers have limited assets and no business operations other than operations related to issuing and servicing the Second Lien Notes and engaging inrelated transactions. Upon the consummation of the initial offering of the Second Lien Notes, the Issuers on-lent the proceeds from the issuance of those notes to other subsidiaries of the Company through intercompany loans. The Issuers’ability to make payments on the Second Lien Notes is dependent directly on payments to the Issuers under these intercompany loans. The ability of the obligors to make payments to the Issuers under these intercompany loans will depend on a number offactors, some of which may be beyond our control. 

***The Second Lien Notes are structurally subordinated to all liabilities of thenon-guarantor subsidiaries of the Company.***

The Second Lien Notes are structurally subordinated to the indebtedness and otherliabilities of the current and future subsidiaries of the Company that do not guarantee the Second Lien Notes. The non-guarantor subsidiaries and any future non-guarantor subsidiaries are separate and distinct legal entities and have no obligation,contingent or otherwise, to pay any amounts due pursuant to the Second Lien Notes, or to make any funds available therefore, whether by dividends, loans, distribution or other payments. The non-guarantor subsidiaries accounted for the followingproportion of our ongoing operations: (i) 42% of sales in Fiscal 2011; (ii) 47% of adjusted EBITDA in Fiscal 2011; (iii) 41% of total assets at the end of Fiscal 2011; and (iv) 13% of total liabilities at the end of Fiscal 2011.Both (i) and (ii) are calculated excluding corporate center entities. In the event that Rule 3-10 of Regulation S-X under the Securities Act would require separate financial statements of any subsidiary that is a guarantor to be filed withthe SEC solely because such subsidiary’s guarantee is not a full and unconditional guarantee as reasonably determined by the Company such guarantee will be automatically discharged and release. In the case of such discharge and release, theSecond Lien Notes would no longer be guaranteed by such entity even though the guarantee by such entity of our senior secured credit facilities would continue. Substantially all, but not all, of our foreign entities that guarantee the senior securedcredit facilities are expected to guarantee the Second Lien Notes. Any right that we or the guarantors have to receive any assets of the non-guarantor subsidiaries and any future non-guarantor subsidiaries upon the liquidation or reorganization ofthose subsidiaries, and the consequent rights of holders of Second Lien Notes to realize proceeds from the sale of any of those subsidiaries’ assets, will be structurally subordinated to the claims of those subsidiaries’ creditors.

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
***The terms of our debt agreements may restrict our current and future operations, particularly ourability to respond to changes in our business or to take certain actions.***

The credit agreement governing our senior secured creditfacilities and the indenture governing the Second Lien Notes contain, and any future indebtedness of ours would likely contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, includingrestrictions on our ability to, among other things: 

 
• 
incur or guarantee additional debt; 

 
• 
issue qualified stock and preferred stock; 

 
• 
pay dividends and make other restricted payments; 

 
• 
create or incur certain liens; 

 
• 
make certain investments; 

 
• 
engage in sales of assets and subsidiary stock; 

 
• 
enter into transactions with affiliates; 

 
• 
transfer all or substantially all of our assets or enter into merger or consolidation transactions; and 

 
• 
make capital expenditures. 

In addition, our senior secured credit facilities require us to maintain certain financial ratios. As a result of these covenants, we will be limited inthe manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs. Our ability to meet those financial ratios can be affected by events beyond our control, andthere can be no assurance that we will meet those ratios. An adverse development affecting our business could require us to seek waivers or amendments of covenants, alternative or additional sources of financing or reductions in expenditures. Suchwaivers, amendments or alternative or additional financings might not be on terms acceptable to us. 

A failure to comply with the covenantscontained in our senior secured credit facilities or the indenture governing the Second Lien Notes could result in an event of default under our debt agreements, which, if not cured or waived, could have a material adverse effect on our business,financial condition and results of operations. 

We have pledged and will pledge substantially all of our assets as collateral under our seniorsecured credit facilities and the indenture governing the Second Lien Notes subject to certain exceptions. If any of the holders of our indebtedness accelerate the repayment of such indebtedness, there can be no assurance that we will havesufficient assets to repay our indebtedness. If we were unable to repay those amounts, the holders of our secured indebtedness could proceed against the collateral granted to them to secure that indebtedness. 

***The collateral securing our obligations under the Second Lien Notes and the guarantees is shared with other creditors. If there is a default, thevalue of the collateral may not be sufficient to repay the first priority lien creditors and the holders of the notes and guarantees. The collateral securing the Second Lien Notes may be divided under certain circumstances.***

Our obligations under the Second Lien Notes and the guarantees related thereto will be secured by a second priority lien on all of the collateralsecuring our obligations under our senior secured credit facilities (subject to certain exceptions) and excluding certain assets on a second priority basis. The relative priority of the liens on the collateral will be governed by an intercreditoragreement. Accordingly, any proceeds received upon a realization of the collateral securing our senior secured credit facilities on a first priority basis will first be applied to the costs and expenses incurred with such realization and second toobligations (including expenses and other amounts) under our senior secured credit facilities, before any amounts will be available to pay the holders of Second Lien Notes (the ‘**Noteholders**’). The value of the collateral and theamount to be received upon a sale of such collateral will depend upon many factors including, among others, the ability to sell the collateral in an orderly sale, the condition of the economies in which our operations are located, the availabilityof buyers and other factors. The book value of the collateral should not be relied on as a measure of realizable value for such assets. Portions of the collateral may be illiquid and may have no readily ascertainable market value. The collateral islocated in a number of countries, and the multi-jurisdictional nature of any foreclosure on the collateral may limit the realizable value of the collateral. To the extent that holders of other secured debt or third parties enjoy liens (includingstatutory liens), whether or not permitted by the indenture, such holders or third parties may have rights and remedies with respect to the collateral securing the Second Lien Notes and the guarantees that, if exercised, could reduce the proceedsavailable to satisfy the obligations under the Second Lien Notes and the guarantees. As a result, if there is a default, the value of the collateral may not be sufficient to repay our senior secured credit facilities and the Noteholders. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
***The value of the collateral securing the Second Lien Notes may not be sufficient to securepost-petition interest. Should our obligations under the Second Lien Notes equal or exceed the fair market value of the collateral securing those notes, the Noteholders may be deemed to have an unsecured claim.***

In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against the Issuers or the guarantors, Noteholders will beentitled to post-petition interest under the US Bankruptcy Code only if the value of their security interest in the collateral is greater than their pre-bankruptcy claim. Noteholders may be deemed to have an unsecured claim if the Issuers’obligation under the Second Lien Notes equals or exceeds the fair market value of the collateral securing those notes. Noteholders that have a security interest in the collateral with a value equal to or less than their pre-bankruptcy claim will notbe entitled to postpetition interest under the US Bankruptcy Code. The bankruptcy trustee, the debtor-in-possession or competing creditors could possibly assert that the fair market value of the collateral with respect to the Second Lien Notes onthe date of the bankruptcy filing was less than the then-current principal amount of those notes. Upon a finding by a bankruptcy court that the Second Lien Notes are under-collateralized, the claims in the bankruptcy proceeding with respect to theSecond Lien Notes would be bifurcated between a secured claim and an unsecured claim, and the unsecured claim would not be entitled to the benefits of security in the collateral. Other consequences of a finding of undercollateralization would be,among other things, a lack of entitlement on the part of holders of the Second Lien Notes to receive post-petition interest and a lack of entitlement on the part of the unsecured portion of the Second Lien Notes to receive other “adequateprotection” under US federal bankruptcy laws. In addition, if any payments of post-petition interest were made at the time of such a finding of undercollateralization, such payments could be re-characterized by the bankruptcy court as areduction of the principal amount of the secured claim with respect to Second Lien Notes. No appraisal of the fair market value of the collateral securing the Second Lien Notes has been prepared in connection with the offering of those notes and,therefore, the value of the collateral trustees’ interests in the collateral may not equal or exceed the principal amount of the Second Lien Notes. We cannot assure the Noteholders that there will be sufficient collateral to satisfy our and theguarantors’ obligations under the Second Lien Notes. 

***The right of holders of Second Lien Notes to exercise remedies with respectto the collateral is extremely limited, even during an event of default under the indenture governing the Second Lien Notes.***

Therights of the holders of Second Lien Notes with respect to the collateral are extremely limited, even during an event of default under the indenture governing the Second Lien Notes. If first priority obligations are outstanding, any actions that maybe taken in respect of any of the collateral securing the Second Lien Notes, including the ability to cause the commencement of enforcement proceedings against the collateral and to control the conduct of such proceedings, are controlled anddirected by holders of our first lien debt. In those circumstances, the Second Lien Notes collateral agent, on behalf of the itself, the trustee and the Noteholders, will not have the ability to control or direct such actions, even if an event ofdefault under the indenture governing the Second Lien Notes has occurred or if the rights of the trustee, the Second Lien Notes collateral agent and the Noteholders are or may be adversely affected. The administrative agent and the lenders under oursenior secured credit facilities are under no obligation to take into account the interests of the trustee under the indenture governing the Second Lien Notes, the collateral agent and the Noteholders when determining whether and how to exercisetheir rights with respect to the collateral securing our senior secured credit facilities on a first priority basis, subject to the applicable intercreditor agreements, and their interests and rights may be significantly different from or adverse tothose of the holders of the Second Lien Notes. To the extent that collateral is released from the first priority liens, subject to certain conditions the second priority liens securing the Second Lien Notes and the guarantees related thereto willalso automatically be released without any Noteholder consent or notice to the collateral agent, except that such release of liens does not apply with respect to the release of collateral in connection with the full payment of our obligations underour senior secured credit facilities or a refinancing of our obligations thereunder. 

***In the event of our bankruptcy, the ability of theNoteholders to realize upon the collateral will be subject to certain bankruptcy law limitations.***

The ability of the Noteholders torealize upon the collateral will be subject to certain bankruptcy law limitations in the event of our bankruptcy. Under federal bankruptcy law, secured creditors are prohibited from repossessing their security from a debtor in a bankruptcy case, orfrom disposing of security repossessed from such a debtor, without bankruptcy court approval, which may not be given. Moreover, applicable federal bankruptcy laws generally permit the debtor to continue to use and expend collateral, including cashcollateral, and to provide liens senior to the collateral trustees for the Second Lien Notes’ liens to secure indebtedness incurred after the commencement of a bankruptcy case, provided that the secured creditor either consents or is given“adequate protection”. “Adequate protection” could include cash payments or the granting of additional security, if and at such times as the presiding court in its discretion determines, for any diminution in the value of thecollateral as a result of the stay of repossession or disposition of the collateral during the pendency of the bankruptcy case, the use of collateral (including cash collateral) and the incurrence of such senior indebtedness. In view of the broaddiscretionary powers of a bankruptcy court, it is impossible to predict how long payments under the Second Lien Notes could be delayed following commencement of a bankruptcy case, whether or when the collateral trustees would repossess or dispose ofthe collateral, or whether or to what extent holders of the Second Lien Notes would be compensated for any delay in payment of loss of value of the collateral through the requirements of “adequate protection”. Furthermore, in the event thebankruptcy court determines that the value of the collateral is not sufficient to repay all amounts due on the Second Lien Notes, our senior secured credit facilities and any other first lien or pari passu debt secured by the common collateral, theindebtedness under the Second Lien Notes would be “undersecured” and the Noteholders would have unsecured claims as to the difference. Federal bankruptcy laws do not permit the payment or accrual of interest, costs, and attorneys’fees on undersecured indebtedness during the debtor’s bankruptcy case. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
***Noteholders’ rights in the collateral may be adversely affected by the failure to perfectsecurity interests in collateral.***

Applicable law provides that a security interest in certain tangible and intangible assets can onlybe properly perfected and its priority retained through certain actions undertaken by the secured party. The liens in the collateral securing the Second Lien Notes may not be perfected with respect to the claims of the Second Lien Notes if thecollateral agent relating to such notes is not able to take the actions necessary to perfect any of these liens on or about the date of the indenture governing such notes. In addition, applicable law provides that certain property and rightsacquired after the grant of a general security interest, such as real property, equipment subject to a certificate of title and certain proceeds, can only be perfected at or after the time such property and rights are acquired and identified. We andour guarantors have limited obligations to perfect the Noteholders’ security interest in specified collateral. There can be no assurance that the collateral agent for the Second Lien Notes will monitor, or that we will inform the trustee of,the future acquisition of property and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. The collateral agent for the Second Lien Notes have noobligation to monitor the acquisition of additional property or rights that constitute collateral or the perfection of any security interest. Such failure may result in the loss of the security interest in the collateral or the priority of thesecurity interest in favor of the Second Lien Notes against third parties. 

***The capital stock securing the Second Lien Notes will incertain circumstances be released automatically from the respective liens and no longer be deemed to be collateral to the extent the pledge of such capital stock would require the filing of separate financial statements for any of our subsidiarieswith the SEC.***

The indenture governing the Second Lien Notes and the security documents provide that, in the event that Rule 3-16 ofRegulation S-X under the Securities Act (or any successor regulation) requires the filing with the SEC of separate financial statements of any of our subsidiaries the capital stock of which is pledged as collateral securing the Second Lien Notes,the portion (or, if necessary, all) of such capital stock necessary to eliminate such filing requirement will automatically be deemed released and not to have been part of the collateral securing the Second Lien Notes. In such event, we and thetrustee will amend or modify the security documents without the consent of any holder of the Second Lien Notes to the extent necessary to evidence such release. As a result, Noteholders could lose all or a portion of their security interest in thecapital stock. The capital stock pledged as collateral under the senior secured credit facilities is not subject to a similar provision and any capital stock pledged as collateral under any of our future indebtedness may not be subject to a similarprovision. 

The Rule 3-16 requirement to file with the SEC separate financial statements of a subsidiary is triggered if the aggregateprincipal amount, par value, or book value of the capital stock as carried by the registrant, or the market value of such capital stock, whichever is greatest, equals 20 percent or more of the principal amount of the Second Lien Notes. Any pledge ofthe capital stock of any of our subsidiaries is automatically released to the extent the value of the capital stock of any individual subsidiary subject to the pledge is in excess of 20 percent of the principal amount of the applicable Second LienNotes. Any increase in value of the capital stock of our subsidiaries may lead to further releases of capital stock from the collateral securing the Second Lien Notes. Moreover, the realizable value of the capital stock in the event of a foreclosuremay be significantly less than the management estimates of market value. 

***Corporate benefit, capital maintenance laws and otherlimitations on the guarantees and the security interests may adversely affect the validity and enforceability of the guarantees of the Second Lien Notes and the security interests.***

The laws of certain of the jurisdictions in which the guarantors are organized limit the ability of these subsidiaries to guarantee debt of a related company or grant security on account of a relatedcompany’s debts. These limitations arise under various provisions or principles of corporate law which include rules governing capital maintenance, under which, among others, the risks associated with a guarantee or grant of security on accountof a parent company’s debt need to be reasonable and economically and operationally justified from the guarantor’s or grantor’s perspective, as well as thin capitalization and fraudulent transfer principles. If these limitations werenot observed, the guarantees and the grant of security interests by these guarantors could be subject to legal challenge. In these jurisdictions, the guarantees will contain language limiting the amount of debt guaranteed so that applicable locallaw restrictions will not be violated. Certain of the security documents will contain similar limitations. Accordingly if Noteholders were to enforce the guarantees by a guarantor in one of these jurisdictions or seek to enforce a security interestin collateral granted by a guarantor in one of these jurisdictions, their claims are likely to be limited. In some cases, where the amount that can be guaranteed or secured is limited by reference to the net assets and legal capital of the guarantoror by reference to the outstanding debt owed by the relevant guarantor to an Issuer under intercompany loans that amount might have reached zero or close to zero at the time of any insolvency or enforcement. Furthermore, although we believe that theguarantees by these guarantors and the security interests granted by these guarantors will be validly given in accordance with local law restrictions, there can be no assurance that a third party creditor would not challenge these guarantees andsecurity interests and prevail in court. 

***The securityinterests over the collateral is granted to the collateral agent rather than directly to the Noteholders. The ability of the collateral agent to enforce the collateral may be restricted by local law.***

In certain jurisdictions, including Germany and The Netherlands, the security over the collateral that (if and when granted) will constitute security forthe obligations of the Issuers under the Second Lien Notes and the indenture governing the Second Lien Notes will not be granted directly to the Noteholders but only in favor of the collateral agent, as beneficiary of parallel debt or analogousobligations (the ‘**Parallel Debt**’). This Parallel Debt is created to satisfy a requirement under the applicable laws that the collateral agent, as grantee of certain types of collateral, be a creditor of the relevant securityprovider. The Parallel Debt is in the same amount and payable at the same time as the obligations of the Issuers under the indenture governing the Second Lien Notes and the Second Lien Notes (the ‘**Principal Obligations**’). Anypayment in respect of the Principal Obligations shall discharge the corresponding Parallel Debt and any payment in respect of the Parallel Debt shall discharge the corresponding Principal Obligations. Although the collateral agent will have,pursuant to the Parallel Debt, a claim against the Issuers for the full principal amount of the Second Lien Notes, Noteholders bear some risks associated with a possible insolvency or bankruptcy of the collateral agent. The Parallel Debt obligationsreferred to above are contained in the indenture governing the Second Lien Notes, which are governed by New York law. There is no assurance that such a structure will be effective before applicable courts as there is no judicial or other guidance asto its efficacy, and therefore the ability of the collateral agent to enforce the collateral may be restricted. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
***The granting of the security interests in the collateral in connection with the issuance of theSecond Lien Notes may create hardening periods for such security interests in accordance with the law applicable in certain jurisdictions.***

The granting of new security interests in the collateral in connection with the Second Lien Notes may create hardening periods for such security interests in certain jurisdictions. The applicablehardening period for these new security interests will run as from the moment each new security interest has been granted or perfected. At each time, if the security interest granted or recreated were to be enforced before the end of the respectivehardening period applicable in such jurisdiction, it may be declared void and/or it may not be possible to enforce it. 

***Federal andstate statutes allow courts, under specific circumstances, to void Second Lien Notes and guarantees and require Noteholders to return payments received.***

If we or any guarantor becomes a debtor in a case under the US Bankruptcy Code or encounter other financial difficulty, under federal or state fraudulent transfer law, a court may void, subordinate orotherwise decline to enforce the Second Lien Notes or the guarantees. A court might do so if it found that when we issued the Second Lien Notes or the guarantor entered into its guarantee, or in some states when payments became due under the SecondLien Notes or the guarantees, we or the guarantor received less than reasonably equivalent value or fair consideration and either: 

 
• 
was insolvent or rendered insolvent by reason of such incurrence; or 

 
• 
was left with inadequate capital to conduct its business; or 

 
• 
believed or reasonably should have believed that it would incur debts beyond its ability to pay. 

The court might also void an issuance of Second Lien Notes or a guarantee without regard to the above factors, if the court found that we issued theSecond Lien Notes or the applicable guarantor entered into its guarantee with actual intent to hinder, delay or defraud its creditors. 

Acourt would likely find that we or a guarantor did not receive reasonably equivalent value or fair consideration for the Second Lien Notes or its guarantee, if we or a guarantor did not substantially benefit directly or indirectly from the issuanceof the Second Lien Notes. If a court were to void the issuance of the Second Lien Notes or guarantees, the Noteholders would no longer have any claim against us or the applicable guarantor. Sufficient funds to repay the Second Lien Notes may not beavailable from other sources, including the remaining obligors, if any. In addition, the court might direct the Noteholders to repay any amounts that they have already received from us or a guarantor. 

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whethera fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if: 

 
• 
the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; or 

 
• 
if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts,including contingent liabilities, as they become absolute and mature; or 

 
• 
it could not pay its debts as they become due. 

On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee of the Second Lien Notes, will not beinsolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. We cannot assure the Noteholders, however, as to what standard a courtwould apply in making these determinations or that a court would agree with our conclusions in this regard. 

***Local insolvency laws maynot be as favorable to the Noteholders as US bankruptcy laws or those of another jurisdiction with which the Noteholders are familiar.***

Certain of the guarantors are incorporated in one of the United Kingdom, Australia, Belgium, Brazil, the British Virgin Islands, Canada, Germany,Luxembourg, Mexico, The Netherlands, Northern Ireland, Mauritius, Russia, Turkey or the United Arab Emirates. The insolvency laws of these jurisdictions may not be as favorable to interests of the Noteholders as the laws of the United States orother jurisdictions with which the Noteholders are familiar. In the event that any one or more of the Company, the guarantors or any other of the Company’s subsidiaries experienced financial difficulty, it is not possible to predict withcertainty in which jurisdiction or jurisdictions insolvency or similar proceedings would be commenced, or the outcome of such proceedings. 

***Insolvency laws and other limitations on the guarantees and the security interests, including fraudulent conveyance statutes, may adversely affecttheir validity and enforceability and enforcing the rights of the Noteholders or under the guarantees across multiple jurisdictions may prove difficult.***

Our obligations under the Second Lien Notes will be guaranteed by the guarantors and secured by security interests over the collateral. The guarantors are organized under the laws of the United States,the United Kingdom, Australia, Belgium, Brazil, The British Virgin Islands, Canada, Germany, Luxembourg, Mexico, The Netherlands, Northern Ireland, Mauritius, Russia, Turkey or the United Arab Emirates. Although laws differ among thesejurisdictions, in general, applicable fraudulent transfer and conveyance and equitable principles, insolvency laws and, in the case of the guarantees and the security interests, limitations on the enforceability of judgments obtained in courts insuch jurisdictions could limit the enforceability of the guarantee against a guarantor and the enforceability of the security interests. The court may also in certain circumstances avoid the security interest or the guarantee where the company isclose to or in the vicinity of insolvency. 

The following discussion of fraudulent transfer, conveyance and insolvency law, although anoverview, describes generally applicable terms and principles, which are defined under the relevant jurisdiction’s fraudulent transfer and insolvency statutes. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
In an insolvency proceeding, it is possible that creditors of the guarantors or the appointed insolvencyadministrator may challenge the guarantees and the security interests, and intercompany obligations generally, as fraudulent transfers or conveyances, preferences or transactions at an undervalue or on other grounds. If so, such laws may permit acourt, if it makes certain findings, to: 

 
• 
avoid or invalidate all or a portion of a guarantor’s obligations under its guarantee or the security interests; 

 
• 
direct that holders of the notes return any amounts paid under a guarantee or any security to the relevant guarantor or to a fund for the benefit ofthe guarantor’s creditors; and 

 
• 
take other action that is detrimental to the Noteholders. 

If we cannot satisfy our obligations under the notes and any guarantee or security interest is found to be a fraudulent transfer or conveyance or is otherwise set aside, it cannot be assured that we canever repay in full any amounts outstanding under the Second Lien Note. In addition, the liability of each guarantor under its guarantee or the security interests will be limited to the amount that will result in such guarantee or security interestsnot constituting a fraudulent conveyance or improper corporate distribution or otherwise being set aside. The amount recoverable from the guarantors under the security documents will also be limited. However, there can be no assurance as to whatstandard a court would apply in making a determination of the maximum liability of each. Also, there is a possibility that the entire guarantee or security interests may be set aside, in which case, the entire liability may be extinguished.

In order to initiate any of these actions under fraudulent transfer or other applicable principles, courts would need to find that, at thetime the guarantees were issued or the security interests created, the guarantor: 

 
• 
issued such guarantee or created such security interest with the intent of hindering, delaying or defrauding current or future creditors or with adesire to prefer some creditors over others, or created such security after its insolvency; 

 
• 
issued such guarantee or created such security interest in a situation where a prudent businessman as a shareholder of such guarantor would havecontributed equity to such guarantor; 

 
• 
did not issue such guarantee or create such security interest in good faith or in the best interests of such guarantor; or

 
• 
received less than reasonably equivalent value for incurring the debt represented by the guarantee or security interest on the basis that the guaranteeor security interest were incurred for our benefit, and only indirectly the guarantor’s benefit, or some other basis and (1) was insolvent or rendered insolvent by reason of the issuance of the guarantee or the creation of the securityinterest, or subsequently became insolvent for other reasons; (2) was engaged, or about to engage, in a business transaction for which the guarantor’s assets were unreasonably small; or (3) intended to incur, or believed it wouldincur, debts beyond its ability to make required payments as and when they would become due. 

Different jurisdictionsevaluate insolvency on various criteria, but a guarantor generally may, in different jurisdictions, be considered insolvent at the time it issued a guarantee or created any security interest if: 

 
• 
its liabilities exceed the fair market value of its assets; 

 
• 
it cannot pay its debts as and when they become due; and/or 

 
• 
the present saleable value of its assets is less than the amount required to pay its total existing debts and liabilities, including contingent andprospective liabilities, as they mature or become absolute. 

Although we believe that we are solvent, there can be noassurance which standard a court would apply in determining whether a guarantor was “insolvent” as of the date the guarantees were issued or the security interests were created or that, regardless of the method of valuation, a court wouldnot determine that a guarantor was insolvent on that date, or that a court would not determine, regardless of whether or not a guarantor was insolvent on the date its guarantee was issued or security interests were created, that payments to holdersof the notes constituted fraudulent transfers on other grounds. 

***Certain collateral is subject to potential environmental liabilitiesand the collateral agent may determine not to foreclose on it.***

The Second Lien Notes will be secured in part by liens on realproperty that may be subject to both known and unforeseen environmental risks, and these risks may reduce or eliminate the value of the real property pledged as collateral for the Second Lien Notes. Moreover, the trustee and the collateral agent mayneed to evaluate the impact of potential environmental liabilities before determining to foreclose on the collateral consisting of real property because secured lenders that hold or enforce a security interest in real property may, under certaincircumstances, be held liable under environmental laws for the costs of remediating or preventing the release or threatened release of regulated materials at or from such real property. Consequently, the collateral agent may decline to foreclose onsuch collateral or exercise remedies available in respect thereof if it does not receive indemnification to its satisfaction from the Noteholders. 

***If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Second Lien Notes.***

Any default under the agreements governing our indebtedness that is not waived by the required holders of such indebtedness, could leave us unable to pay principal, premium, if any, or interest on theSecond Lien Notes and could substantially decrease the market value of those notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, orinterest on such indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness we could be in default under the terms of the agreementsgoverning such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with any accrued and unpaid interest, the lenders under our seniorsecured credit facilities could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against the assets securing such facilities and we could be forced into bankruptcy or liquidation. If ouroperating performance declines, we may in the future need to seek waivers from the required lenders under our senior secured credit facilities to avoid being in default. If we breach our covenants under our senior secured credit facilities and seekwaivers, we may not be able to obtain waivers from the required lenders thereunder. 

 
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**Pinafore Holdings B.V.**

**Item 3D**

 

 
***We may not be able to repurchase the Second Lien Notes upon a change of control.***

Upon a change of control as defined in the indenture governing the Second Lien Notes, we will be required to make an offer torepurchase all outstanding Second Lien Notes at 101% of their principal amount plus accrued and unpaid interest, unless we have previously given notice of our intention to exercise our right to redeem the Second Lien Notes or unless such obligationis suspended. We may not have sufficient financial resources to purchase all of the Second Lien Notes that are tendered upon a change of control offer or, if then permitted under the indenture governing the Second Lien Notes, to redeem those notes.A failure to make the applicable change of control offer or to pay the applicable change of control purchase price when due would result in a default under the indenture. The occurrence of a change of control would also constitute an event ofdefault under our senior secured credit facilities and may constitute an event of default under the terms of our other indebtedness. The terms of the credit agreement governing our senior secured credit facilities and the indenture governing theSecond Lien Notes limit our right to purchase or redeem certain indebtedness. In the event any purchase or redemption is prohibited, we may seek to obtain waivers from the required lenders under our senior secured credit facilities or holders of theSecond Lien Notes to permit the required repurchase or redemption, but the required holders of such indebtedness have no obligation to grant, and may refuse to grant such a waiver. A change of control is defined in the indenture governing the SecondLien Notes. 

***Certain private equity investment funds affiliated with the Sponsors own a significant majority of our equity and theirinterests may not be aligned with those of the Noteholders.***

The Sponsors and certain of their affiliates and co-investors own 100% ofthe economic interests of the Co-operative, the direct parent of the Company, and, therefore, will have the power to control all of our affairs and policies. The Sponsors will also control the election of directors, the appointment of management,the entering into mergers, sales of substantially all of our assets and other extraordinary transactions. The directors so elected will have authority, subject to the terms of our debt, to issue additional stock, implement stock repurchase programs,declare dividends and make other decisions. The interests of the Sponsors could conflict with the interests of the Noteholders. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of theSponsors, as equity holders, might conflict with the interests of the Noteholders. The Sponsors may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equityinvestments, even though such transactions might involve risks to the Noteholders. Additionally, the Sponsors are in the business of making investments in companies, and may from time to time in the future acquire interests in businesses thatdirectly or indirectly compete with certain portions of our business or are suppliers or customers of ours. 

 
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**Pinafore Holdings B.V.**

**Item 4A**

 

 
**Item 4. Information on the Company**

**A. History and development of the Company**

**The Company**

Pinafore Holdings B.V. is aprivate company with limited liability (*besloten vennootschap met beperkte aansprakelijkheid*) incorporated on September 1, 2010 in and under the laws of The Netherlands. 

The Company’s immediate and ultimate parent entity is Pinafore Coöperatief U.A., which also operates in and under the laws of The Netherlands. The Co-operative is owned by a consortiumrepresenting the interests of Onex Corporation, a Canadian private equity investor, Onex Partners III and various syndication participants, and the Canada Pension Plan Investment Board. The Company’s registered address is: Fred. Roeskestraat123, 1076 EE, Amsterdam, The Netherlands (Telephone: +31 20577 1177) and its website is www.tomkins.co.uk. 

Prior to the Acquisition, theCompany had no assets or liabilities (other than the proceeds of the shares issued on incorporation) and no operations. 

**The Acquisition**

On July 27, 2010, the independent directors of Tomkins plc and the board of directors of Tomkins Acquisitions Limited (formerlyPinafore Acquisitions Limited) announced that they had reached an agreement on the terms of a recommended cash acquisition for the entire share capital of Tomkins, including the Tomkins shares underlying the Tomkins ADRs and certain employee equityawards, for approximately £2.9 billion, to be implemented by way of a scheme of arrangement under Part 26 of the UK’s Companies Act 2006. Tomkins Acquisitions Limited was a newly incorporated company formed for the purpose of implementingthe Acquisition at the direction of the Sponsors. Tomkins, LLC and Tomkins, Inc. are indirect wholly owned subsidiaries of Tomkins Acquisitions Limited. On August 31, 2010, the requisite majorities of Tomkins’ shareholders voted to approvethe Acquisition. On September 21, 2010, the High Court of Justice in England and Wales (the ‘**Court**’) sanctioned the Scheme and a Court hearing to confirm the corresponding reduction in share capital of Tomkins plc occurred onSeptember 23, 2010. The Court issued orders pursuant to the Court hearings were registered and became effective on September 24, 2010. 

On this date, each ordinary share in the capital of Tomkins plc (except those shares held by shareholders who validly elected to receive loan notes in respect of some or all of their shares) wereautomatically cancelled and shareholders received 325 pence for each ordinary share held prior to cancellation. Also on this date, Tomkins plc was re-registered as a private company and its name was changed to Tomkins Limited. 

**Group overview**

We are now a diversifiedglobal engineering and manufacturing group with a portfolio of market-leading businesses. Our products are highly engineered and used in the industrial, automotive and construction end markets. We have a broad collection of premier brands that areamong the most globally recognized in their respective end markets. The significant majority of our products, including those useful for the reduction of energy consumption and for safety improvement, are positioned in the premium end of theirrespective end markets, and as a result, allow for associated premium pricing. 

We attribute our end market leadership positions to acombination of our brand strength, product quality and breadth and customer service and support. We are led by an experienced management team that has successfully streamlined our portfolio to focus on our core businesses, and implementedwide-ranging, significant cost-saving restructuring initiatives. 

Our revenue and earnings base is highly diversified by product, geography,end market and customer. Our product portfolio consists of tens of thousands of stock keeping units (‘**SKUs**’), and we believe it comprises the broadest range of power transmission belts, fluid power hoses and air distributionproducts in the end markets in which we operate. We derive revenues from nearly every developed country across the globe and are well-positioned in most emerging markets with our industrial and automotive component products. We maintainlong-standing customer relationships and have served our top 20 customers for an average of over 35 years, while some of our largest customer relationships span over 50 years. We also have developed strong relationships with industry-leadingcustomers in emerging markets including Chery, Tata, Mahindra & Mahindra, Sany, Lui Gong and Zoomlion. 

**Our history**

We were founded in 1925 as F.H. Tomkins Buckle Company, a small Britishmanufacturer of buckles and fasteners. In the 1980’s and 1990’s we embarked on a succession of acquisitions, which rapidly grew our sales, product range and global reach. Major acquisitions included the US-based Gates Corporation in 1996,which signalled a move into the industrial and automotive markets and the Stant and Schrader businesses that further bolstered this division. We also expanded our businesses into the North American residential and non-residential constructionmarkets and several other end markets through additional acquisitions. Recognizing the need to strengthen and build upon our market leadership positions in core engineering markets, we began a process of streamlining our activities by disposing of anumber of businesses during the period from 1998 to 2001. 

Jim Nicol joined us as Group CEO in 2002 and implemented a strategy of divestingunder-performing and lower margin businesses, while also acquiring businesses with higher growth and margin potential such as A.E. Hydraulic and Fleximak, in order to create a globally diversified portfolio of market-leading industrial businesses.In our Air Distribution group there have been a number of strategic acquisitions that have provided strong product, manufacturing and customer synergies, and, in the case of Trion, have allowed for an important manufacturing capability in Asia.Today, our businesses are focused on lean manufacturing, sharing best practices, product innovation and geographic expansion. 

 
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**Pinafore Holdings B.V.**

**Item 4A**

 

 
**Principal acquisitions and disposals**

This section should be read in conjunction with **Item 5**‘*Operating and financial review and prospects*’ and with notes 41 and 42 to the Group’s consolidated financialstatements. 

***Fiscal 2011***

On October 31, 2011, the Group finalized the acquisition of the assets of **Du-Tex, Inc.**, a Texas-based distributor of products and services to the oil and gas industry. The assets werepurchased for a cash consideration of $26.1 million. 

On October 27, 2011, the Group finalized the sale of **Ideal**, a leadingmanufacturer of gear clamps primarily for the automotive aftermarket, selling principally in the US, Mexico and China under a variety of brands. The business was sold for a cash consideration of $158.7 million. 

**Dexter Chassis**, a manufacturer of chassis components for the recreational vehicle and industrial and utility end markets in the US, was sold onAugust 22, 2011 for a cash consideration of $14.3 million. 

On August 2, 2011, the Group finalized the sale of its **Stackpole**business, which specializes in powder metal and engineered powertrain components and operates predominantly in North America and Europe. The business was sold to an affiliated investment fund of the Sterling Group, a Houston based private equityinvestment firm, for a cash consideration of $289.0 million. 

**Plews Inc.**, a wholly-owned manufacturer of automotive lubricationproducts and repair tools, was sold on April 20, 2011, to a consortium of investors in the US led by the private equity firm, Eigen Capital LLC for a cash consideration of $25.0 million. 

***9M 2010***

On April 13, 2010, the Group acquired a 100% interest in **TransHoseCorporation**, a hydraulic hose supplier to the mining industry in Australia, for A$3.0 million in cash plus up to A$2.0 million in cash over three years contingent on the sales and profitability of the acquired business. 

On February 26, 2010, the Group acquired a 100% interest in **Koch Filter Corporation**, a leading manufacturer of air filters for thenon-residential filtration market in the US for $35.5 million in cash. 

No businesses were sold in Fiscal 2010. 

***Fiscal 2009***

On July 7,2009, the Group acquired a 100% interest in **Hydrolink**, a fluid engineering services provider to the oil and gas and marine sectors in the Middle East. 

Also on July 7, 2009, the Group acquired the remaining 40% non-controlling interest in **Rolastar Pvt Ltd**, a duct manufacturer based in India. 

No businesses were sold in Fiscal 2009. 

**Capital expenditure**

Due to the diversenature of the business, there is no individual item of capital expenditure that has had a material impact on the position of the Company and no individually significant capital expenditure project that is currently in progress. 

**B. Business overview**

**Segmentanalysis**

The Group is organized for management reporting purposes into two business groups: Industrial & Automotive and BuildingProducts. Within these two business groups, management distinguishes between those of the Group’s operating segments that are ‘**ongoing**’ and those that have been exited but do not meet the conditions to be classified asdiscontinued operations under IFRS (‘**Exited**’). 

During Fiscal 2011, the Group refocused its operations around the Gates brandand commenced the disposal of those businesses that are no longer a strategic fit for the Group. The internal reports presented to the Board reflect this re-focus on the performance of the Group’s ongoing businesses and, as a consequence,certain changes have been made to the Group’s reporting segments. Comparative information for Q4 2010, 9M 2010 and Fiscal 2009 has been re-presented to reflect these changes. Details of the changes, as well as additional segmental information,are provided in note 5 to the Group’s consolidated financial statements. 

Industrial & Automotive, which accounted for 78% ofour Fiscal 2011 sales, manufactures a wide range of systems and components for the industrial equipment, car and truck manufacturing markets, and industrial and automotive aftermarkets throughout the world. Industrial & Automotive iscomprised of five ongoing operating segments: 

 
• 
Gates North America (‘**Gates NA**’); 

 
• 
Gates Europe, Middle East & Africa (‘**Gates EMEA**’); 

 
• 
Gates Asia and the Pacific Regions (‘**Gates APAC**’); 

 
• 
Gates South America (‘**Gates SA**’); and 

 
• 
Dexter. 

Two additionaloperating segments, Powertrain and Other I&A, are included in continuing operations, but are classified as exited segments following the disposal during Fiscal 2011 of the businesses comprising those segments. The final operating segment,Sensors & Valves, is in the process of being sold and is classified as a discontinued operation. 

Building Products, which accountedfor 22% of our Fiscal 2011 sales, is comprised of two ongoing operating segments: 

 
• 
Air Distribution; and 

 
• 
Bathware. 

 
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Table of Contents
**Pinafore Holdings B.V.**

**Item 4B**

 

 
Air Distribution supplies the industrial and residential heating, ventilation and air conditioning(‘**HVAC**’) market, mainly in North America. Bathware manufactures baths and whirlpools for the residential, and hotel and resort development markets, also predominantly in North America. A further operating segment, Doors &Windows, comprising a business that was closed during Fiscal 2009, is classified as exited. 

Unless otherwise stated, all references to salesin this section are to total Group operations, including discontinued operations. 

***Analysis of sales and adjusted EBITDA by operatingsegment***

 
**$ million**  **Sales**   **Adjusted EBITDA**    **SUCCESSOR**       PREDECESSOR   **SUCCESSOR**      PREDECESSOR    **Fiscal**