Pinnacle Foods Finance LLC - FORM 10-Q

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EX-32.1 - SECTION 906 CEO CERTIFICATION - Pinnacle Foods Finance LLC	dex321.htm
EX-32.2 - SECTION 906 CFO CERTIFICATION - Pinnacle Foods Finance LLC	dex322.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - Pinnacle Foods Finance LLC	dex312.htm
EX-31.1 - SECTION 302 CEO CERTIFICATION - Pinnacle Foods Finance LLC	dex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 27, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-148297

Pinnacle Foods Finance LLC

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		20-8720036 (I.R.S. Employer Identification No.)

1 Old Bloomfield Avenue Mt. Lakes, New Jersey (Address of Principal Executive Offices)		07046 (Zip Code)

Registrant’s telephone number, including area code: (973) 541-6620

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ¨ No þ

(The Registrant believes it is a voluntary filer and it has filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer þ Smaller Reporting Company ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).*

Yes ¨ No ¨

*	The registrant has not yet been phased into the interactive data requirements

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b - 2 of the Securities Exchange Act of 1934).

Yes ¨ No þ

As of November 10, 2009, there were outstanding 100 shares of common stock, par value $0.01 per share, of the Registrant.

TABLE OF CONTENTS

FORM 10-Q


			Page No.
PART I – FINANCIAL INFORMATION			1

ITEM 1:		FINANCIAL STATEMENTS	1
	CONSOLIDATED STATEMENTS OF OPERATIONS		2
	CONSOLIDATED BALANCE SHEETS		3
	CONSOLIDATED STATEMENTS OF CASH FLOWS		4
	CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY		5
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		6
	1.	Summary of Business Activities	6
	2.	Subsequent Events	6
	3.	Interim Financial Statements	6
	4.	Fair Value Measurements	7
	5.	Other Expense (Income), net	8
	6.	Inventories	8
	7.	Goodwill and Other Assets	9
	8.	Debt and Interest Expense	10
	9.	Pension and Retirement Plans	13
	10.	Financial Instruments	14
	11.	Commitments and Contingencies	19
	12.	Related Party Transactions	19
	13.	Segments	20
	14.	Income Taxes	21
	15.	Recently Issued Accounting Pronouncements	21
	16.	Guarantor and Nonguarantor Statements	24
ITEM 2:		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
	*Results of Operations*		35
	*Liquidity and Capital Resources*		43
	*Inflation*		51
	*Recently Issued Accounting Pronouncements*		51
ITEM 3:		QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
ITEM 4:		CONTROLS AND PROCEDURES	58

PART II – OTHER INFORMATION			59

ITEM 1:		LEGAL PROCEEDINGS	59
ITEM 1A:		RISK FACTORS	59
ITEM 2:		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	59
ITEM 3:		DEFAULTS UPON SENIOR SECURITIES	59
ITEM 4:		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	59
ITEM 5:		OTHER INFORMATION	59
ITEM 6:		EXHIBITS	59
SIGNATURES			65

PART I – FINANCIAL INFORMATION

ITEM 1:

FINANCIAL STATEMENTS

Unaudited consolidated financial statements begin on the following page

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(thousands of dollars)


	Three months ended				Nine months ended
	September 27, 2009		September 28, 2008		September 27, 2009		September 28, 2008
Net sales	$	394,185	$	389,228	$	1,230,415	$	1,141,530
Cost of products sold		298,606		303,986		956,751		893,798

Gross profit		95,579		85,242		273,664		247,732
Operating expenses
Marketing and selling expenses		26,052		22,284		91,009		88,160
Administrative expenses		17,535		12,411		47,038		36,781
Research and development expenses		1,158		778		3,275		2,577
Other expense (income), net		4,197		4,795		12,591		4,406

Total operating expenses		48,942		40,268		153,913		131,924

Earnings before interest and taxes		46,637		44,974		119,751		115,808
Interest expense		28,315		35,907		86,583		110,980
Interest income		21		60		34		253

Earnings before income taxes		18,343		9,127		33,202		5,081
Provision for income taxes		7,950		7,708		22,384		23,575

Net earnings (loss)	$	10,393	$	1,419	$	10,818	$	(18,494	)

See accompanying Notes to Unaudited Consolidated Financial Statements

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

(thousands of dollars)


	September 27, 2009			December 28, 2008
Current assets:
Cash and cash equivalents	$	2,583		$	4,261
Accounts receivable, net		110,060			92,171
Inventories, net		201,228			190,863
Other current assets		8,728			9,571
Deferred tax assets		4,919			3,644

Total current assets		327,518			300,510
Plant assets, net		267,308			260,798
Tradenames		910,112			910,112
Other assets, net		151,646			166,613
Goodwill		994,167			994,167

Total assets	$	2,650,751		$	2,632,200

Current liabilities:
Short-term borrowings	$	7,929		$	26,163
Current portion of long-term obligations		12,963			12,750
Accounts payable		68,001			66,951
Accrued trade marketing expense		23,300			33,293
Accrued liabilities		86,155			69,012
Accrued income taxes		—			20

Total current liabilities		198,348			208,189
Long-term debt (includes $34,325 and $34,587 owed to related parties)		1,737,818			1,746,439
Pension and other postretirement benefits		38,307			36,869
Other long-term liabilities		23,698			14,429
Deferred tax liabilities		342,260			318,701

Total liabilities		2,340,431			2,324,627
Commitments and contingencies
Shareholder’s equity:
Pinnacle Common stock: par value $.01 per share, 100 shares authorized, issued 100 shares		—			—
Additional paid-in-capital		430,058			427,323
Accumulated deficit		(66,472	)		(77,290	)
Accumulated other comprehensive (loss) income		(53,266	)		(42,460	)

Total shareholder’s equity		310,320			307,573

Total liabilities and shareholder’s equity	$	2,650,751		$	2,632,200

See accompanying Notes to Unaudited Consolidated Financial Statements

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(thousands of dollars)


	Nine months ended
	September 27, 2009			September 28, 2008
Cash flows from operating activities
Net earnings (loss) from operations	$	10,818		$	(18,494	)
Non-cash charges (credits) to net earnings (loss)
Depreciation and amortization		48,004			45,650
Gain on litigation settlement		—			(9,988	)
Amortization of debt acquisition costs		3,551			3,531
Amortization of deferred mark-to-market adjustment on terminated swaps		3,434			—
Change in value of financial instruments		(271	)		(1,104	)
Stock-based compensation charge		2,400			686
Postretirement healthcare benefits		(19	)		53
Pension expense		1,457			(914	)
Other long-term liabilities		1,060			(112	)
Other assets		(1,177	)		—
Deferred income taxes		22,619			21,429
Changes in working capital
Accounts receivable		(17,241	)		(5,414	)
Inventories		(11,307	)		(29,249	)
Accrued trade marketing expense		(10,492	)		941
Accounts payable		587			11,749
Accrued liabilities		16,474			(11,094	)
Other current assets		(3,596	)		2,060

Net cash provided by operating activities		66,301			9,730

Cash flows from investing activities
Capital expenditures		(40,716	)		(18,805	)

Net cash used in investing activities		(40,716	)		(18,805	)

Cash flows from financing activities
Repayment of capital lease obligations		(233	)		(177	)
Borrowings under revolving credit facility		39,864			71,000
Repayments of revolving credit facility		(58,208	)		(5,000	)
Equity contributions		1,785			124
Reductions of equity contributions		(1,450	)		(471	)
Debt acquisition costs		—			(704	)
Proceeds from notes payable borrowings		350			324
Repayments of notes payable		(240	)		(1,466	)
Repayments of long term obligations		(9,375	)		(6,250	)

Net cash (used in) provided by financing activities		(27,507	)		57,380

Effect of exchange rate changes on cash		244			(34	)
Net change in cash and cash equivalents		(1,678	)		48,271
Cash and cash equivalents - beginning of period		4,261			5,999

Cash and cash equivalents - end of period	$	2,583		$	54,270

Supplemental disclosures of cash flow information:
Interest paid	$	78,582		$	100,018
Interest received		34			253
Income taxes paid		581			3,334
Non-cash investing activity:
Capital lease activity		(1,200	)		—

See accompanying Notes to Unaudited Consolidated Financial Statements

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY (unaudited)

(thousands of dollars, except share amounts)


	Common Stock			Additional Paid In Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total Shareholder’s Equity
	Common Stock
	Shares	Amount
Balance at December 30, 2007	100	$	—	$	426,754		$	(48,709	)	$	(18,430	)	$	359,615
Equity contribution:
Cash					124									124
Reduction in equity contributions					(471	)								(471	)
Equity related compensation					686									686
Comprehensive income:
Net loss								(18,494	)					(18,494	)
Swap mark to market adjustment, net of income tax provision of $1,701											2,452			2,452
Foreign currency translation											(341	)		(341	)

Total comprehensive loss														(16,383	)

Balance at September 28, 2008	100	$	—	$	427,093		$	(67,203	)	$	(16,319	)	$	343,571

Balance at December 28, 2008	100	$	—	$	427,323		$	(77,290	)	$	(42,460	)	$	307,573
Equity contributions:
Cash					1,785									1,785
Reduction in equity contributions					(1,450	)								(1,450	)
Equity related compensation					2,400									2,400
Comprehensive income:
Net earnings								10,818						10,818
Swap mark to market adjustments, net of income tax benefit of $333											(13,226	)		(13,226	)
Amortization of deferred mark-to-market adjustment on terminated swaps											3,434			3,434
Foreign currency translation											(1,014	)		(1,014	)

Total comprehensive income														12

Balance at September 27, 2009	100	$	—	$	430,058		$	(66,472	)	$	(53,266	)	$	310,320

For the three months ended September 27, 2009 and September 28, 2008, total comprehensive income was $3,951 and $2,192, respectively.

See accompanying Notes to Unaudited Consolidated Financial Statements

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

1.	Summary of Business Activities

Business Overview

Pinnacle Foods Finance LLC (hereafter referred to as the “Company” or “PFF”) is a leading manufacturer, marketer and distributor of high quality, branded convenience food products, the products and operations of which are managed and reported in two operating segments: (i) dry foods and (ii) frozen foods. The Company’s dry foods segment consists primarily of Duncan Hines^® baking mixes and frostings, Vlasic^® pickles, peppers and relish products, Mrs. Butterworth’s^® and Log Cabin^® syrups and pancake mixes, Armour^® canned meats and Open Pit^® barbecue sauce, as well as food service and private label products. The Company’s frozen foods segment consists primarily of Hungry-Man^® and Swanson^® frozen foods products, Van de Kamp’s^® and Mrs. Paul’s^® frozen seafood, Aunt Jemima^® frozen breakfasts, Lender’s^® bagels and Celeste^® frozen pizza, as well as food service and private label products.

On February 10, 2007, Crunch Holding Corp. (“CHC”), the parent company of Pinnacle Foods Group Inc. (“PFGI”), entered into an Agreement and Plan of Merger with Peak Holdings LLC (“Peak Holdings”), a Delaware limited liability company controlled by affiliates of The Blackstone Group, Peak Acquisition Corp. (“Peak Acquisition”), a wholly owned subsidiary of Peak Holdings, and Peak Finance LLC (“Peak Finance”), an indirect wholly owned subsidiary of Peak Acquisition, providing for the acquisition of CHC. Under the terms of the Agreement and Plan of Merger, the purchase price for CHC was $2,160.2 million in cash less the amount of indebtedness (including capital lease obligations) of CHC and its subsidiaries outstanding immediately prior to the closing and certain transaction costs. Pursuant to the Agreement and Plan of Merger, immediately prior to the closing, CHC contributed all of the outstanding shares of capital stock of its wholly owned subsidiary, PFGI, to a newly-formed Delaware limited liability company, PFF. At the closing, Peak Acquisition merged with and into CHC, with CHC as the surviving corporation, and Peak Finance merged with and into PFF, with PFF as the surviving entity.

As a result of the Merger, CHC became a wholly-owned subsidiary of Peak Holdings. This transaction closed on April 2, 2007 (the “Blackstone Transaction”).

For purposes of identification and description, PFGI is referred to as the “Predecessor” for the period prior to the Blackstone Transaction occurring on April 2, 2007, and Pinnacle Foods Finance LLC is referred to as “PFF” or the “Company” for the period subsequent to the Blackstone Transaction.

2.	Subsequent Events

For the period ended September 27, 2009, the Company has evaluated subsequent events for potential recognition and disclosure through November 10, 2009, the date of issuance of the financial statements.

3.	Interim Financial Statements

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the Company’s financial position as of September 27, 2009, the results of operations for the three and nine months ended September 27, 2009 and September 28, 2008, and the cash flows for the nine months ended September 27, 2009 and September 28, 2008. The results of operations are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 28, 2008.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

4.	Fair Value Measurements

In the first quarter of 2009, the Company adopted the authoritative guidance for measuring fair value as it relates to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on at least an annual basis. The guidance for nonfinancial assets and nonfinancial liabilities defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this guidance apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions. The adoption of the authoritative guidance for measuring fair value, as it relates to nonfinancial assets and nonfinancial liabilities, had no impact on the Company’s consolidated financial statements. The provisions of the authoritative guidance for measuring fair value will be applied at such time a fair value measurement of a nonfinancial asset or nonfinancial liability is required, which may result in a fair value that is materially different than would have been calculated prior to the adoption of the guidance.

In the first quarter of 2008, the Company adopted the authoritative guidance for measuring fair value of financial assets and liabilities. The guidance for financial assets and liabilities discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:


Level 1:		Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:		Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:		Unobservable inputs that reflect the Company’s assumptions.

The Company’s population of financial assets and liabilities subject to recurring fair value measurements and the required disclosures are as follows:


	Fair Value As of September 27, 2009		Fair Value Measurements Using Fair Value Hierarchy						Fair Value As of December 28, 2008		Fair Value Measurements Using Fair Value Hierarchy
	Fair Value As of September 27, 2009		Level 1		Level 2		Level 3		Fair Value As of December 28, 2008		Level 1		Level 2		Level 3
Assets
Foreign currency derivatives	$	785	$	—	$	785	$	—	$	5,346	$	—	$	5,346	$	—
Heating oil derivatives		74		—		74		—		—		—		—		—

Total assets at fair value	$	859	$	—	$	859	$	—	$	5,346	$	—	$	5,346	$	—

Liabilities
Foreign currency derivatives	$	928	$	—	$	928	$	—	$	—	$	—	$	—	$	—
Interest rate derivatives		19,941		—		19,941		—		11,890		—		11,890		—
Natural gas derivatives		126		—		126		—		288		—		288		—

Total liabilities at fair value	$	20,995	$	—	$	20,995	$	—	$	12,178	$	—	$	12,178	$	—

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. The primary risks managed by using derivative instruments are interest rate risk, foreign currency exchange risk and commodity price risk. The valuations of these instruments are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash receipts (or payments) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of the authoritative guidance for measuring fair value, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. The Company had no fair value measurements based upon significant unobservable inputs (Level 3) as of September 27, 2009.

5.	Other Expense (Income), net


	Three months ended				Nine months ended
	September 27, 2009		September 28, 2008		September 27, 2009		September 28, 2008
Other expense (income), net consists of:
Amortization of intangibles/other assets	$	4,197	$	4,795	$	12,591	$	14,387
Gain on litigation settlement		—		—		—		(9,988	)
Other, net		—		—		—		7

Total other expense (income), net	$	4,197	$	4,795	$	12,591	$	4,406

Gain on litigation settlement – On April 17, 2008, the Company settled a lawsuit with R2 Top Hat, Ltd., relating to its claim against Aurora Foods Inc. (“Aurora”) which merged with the Company in March 2004. Under the settlement, the Company paid R2 Top Hat, Ltd. $10 million in full payment of its portion of the excess leverage fees related to the Aurora prepetition bank facility, all related interest and all other out-of-pocket costs. After this settlement, there are no remaining contingencies related to the excess leverage fees under the Aurora prepetition bank facility. Accordingly, the remaining $10.0 million accrued liability assumed in the merger with Aurora and fair valued at $20.1 million in the purchase price allocation for the Blackstone Transaction was reduced to $0 and the related credit, net of related expenses, was recorded in Other expense (income), net in the Consolidated Statement of Operations in the three months ended March 30, 2008.

6.	Inventories


	September 27, 2009			December 28, 2008
Raw materials, containers and supplies	$	31,038		$	52,368
Finished product		171,999			141,469

		203,037			193,837
Reserves		(1,809	)		(2,974	)

Total	$	201,228		$	190,863

Reserves represent amounts necessary to adjust the carrying value of inventories to the lower of cost or net realizable value, including any costs to sell or dispose.

The Company has various purchase commitments for raw materials, containers, supplies and certain finished products incident to the ordinary course of business. Such commitments are not at prices in excess of current market.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

7.	Goodwill and Other Assets

Goodwill by segment is as follows:


	Dry Foods		Frozen Foods		Total
Balance, December 28, 2008	$	650,939	$	343,228	$	994,167

Balance, September 27, 2009	$	650,939	$	343,228	$	994,167

The authoritative guidance for business combinations requires that all business combinations be accounted for at fair value under the acquisition method of accounting. The authoritative guidance for goodwill and other intangible assets provides that goodwill and other intangible assets with indefinite lives will not be amortized, but will be tested for impairment on an annual basis or more often when events indicate.

The Blackstone Transaction was accounted for in accordance with the authoritative guidance for business combinations and resulted in $996,546 in goodwill for PFF, as of April 2, 2007, of which $652,434 was allocated to Dry Foods and $344,112 was allocated to Frozen Foods.

Other Assets, net


	September 27, 2009		December 28, 2008
Amortizable intangibles, net of accumulated amortization of $48,415 and $35,824, respectively	$	127,057	$	139,647
Deferred financing costs, net of accumulated amortization of $17,152 and $13,601, respectively		23,415		26,966
Notes receivable - Roskam Baking		1,174		—

Total	$	151,646	$	166,613

In fiscal 2007, the Blackstone Transaction was accounted for in accordance with the authoritative guidance for business combinations and resulted in $175,471 in amortizable intangibles for PFF; $52,810 was allocated to recipes with a life of ten years and $122,661 was allocated to customer relationships with useful lives ranging between 7 and 40 years.

Amortization during the three and nine months ended September 27, 2009 was $4,197 and $12,591, respectively. Estimated amortization expense for each of the next five years and thereafter is as follows: remainder of 2009 - $4,199, 2010 - $13,209, 2011 - $12,424, 2012 - $12,264, 2013 - $12,113 and thereafter - $72,847. Amortization during the three and nine months ended September 28, 2008 was $4,795 and $14,387, respectively.

Deferred financing costs, which relate to the Senior Secured Credit Facility, Senior Notes and Senior Subordinated Notes entered into in connection with the Blackstone Transaction, amounted to $40,567. Amortization of the deferred financing costs during the three and nine months ended September 27, 2009 was $1,184 and $3,551, respectively. Amortization of the deferred financing costs during the three and nine months ended September 28, 2008 was $1,184 and $3,531, respectively.

In February 2009 the Company entered into an agreement with Roskam Baking, which began co-packing certain Duncan Hines products in April 2009. This agreement included a provision to loan Roskam $1,900. As of September 27, 2009 the balance of the notes receivable is $1,724, of which $550 is recorded on the Consolidated Balance Sheet in Other Current Assets and $1,174 is recorded in Other Assets, net. This loan is being paid back to the Company based on cases produced and will be paid back in no longer than 5 years.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

8.	Debt and Interest Expense


	September 27, 2009		December 28, 2008
Short-term borrowings
- Revolving Credit Facility	$	7,656	$	26,000
- Notes payable		273		163

Total short-term borrowings		7,929		26,163

Long-term debt
- Senior secured credit facility - term loan	$	1,225,000	$	1,234,375
- 9.25% Senior notes		325,000		325,000
- 10.625% Senior subordinated notes		199,000		199,000
- Capital lease obligations		1,781		814

		1,750,781		1,759,189
Less: current portion of long-term obligations		12,963		12,750

Total long-term debt	$	1,737,818	$	1,746,439

Interest expense


	Three months ended				Nine months ended
	September 27, 2009		September 28, 2008		September 27, 2009		September 28, 2008
Third party interest expense	$	22,236	$	29,699	$	67,891	$	94,998
Related party interest expense		268		456		1,186		2,587
Amortization of debt acquisition costs		1,184		1,184		3,551		3,531
Amortization of deferred mark-to-market adjustment on terminated swap (Note 10)		1,040		—		3,434		—
Interest rate swap (gains) losses (Note 10)		3,587		4,568		10,521		9,864

Total interest expense	$	28,315	$	35,907	$	86,583	$	110,980

As part of the Blackstone Transaction as described in Note 1, Peak Finance LLC entered into a $1,375.0 million credit agreement (the “Senior Secured Credit Facility”) in the form of (i) Term Loans in an initial aggregate amount of $1,250.0 million and (ii) Revolving Credit Commitments in the initial aggregate amount of $125.0 million (the “Revolving Credit Facility”). Peak Finance LLC merged with and into PFF on April 2, 2007 at the closing of the Blackstone Transaction. The term loan matures April 2, 2014. The Revolving Credit Facility matures April 2, 2013. Borrowings outstanding under the Revolving Credit Facility as of September 27, 2009 totaled $7.7 million. Borrowings outstanding under the Revolving Credit Facility as of December 28, 2008 totaled $26.0 million.

Lehman Commercial Paper Inc. (“LCPI”), a subsidiary of Lehman Brothers Holdings Inc., has a total commitment within the Revolving Credit Facility of $15.0 million and has not funded its portion on recent draws. The Company has no assurances that LCPI will participate in any future funding requests under the revolving credit facility. While the Company is exploring options to replace Lehman’s commitment within the facility, the Company cannot guarantee that it will be able to obtain such replacement loan commitments from other banks. However, based upon management’s projection of cash flows, the Company believes that it has sufficient liquidity to conduct its normal operations and does not believe that the potential reduction in available capacity under this revolving credit facility will have a material impact on its short-term or long-term liquidity.

The amount of the term loan that was owed to affiliates of the Blackstone Group as of September 27, 2009 and December 28, 2008, was $34,325 and $34,587, respectively.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

The Company’s borrowings under the Senior Secured Credit Facility bear interest at a floating rate and are maintained as base rate loans or as Eurodollar loans. Base rate loans bear interest at the base rate plus the applicable base rate margin, as defined in the Senior Secured Credit Facility. The base rate is defined as the higher of (i) the prime rate and (ii) the Federal Reserve reported overnight funds rate plus 1/2 of 1%. Eurodollar loans bear interest at the adjusted Eurodollar rate, as described in the Senior Secured Credit Facility, plus the applicable Eurodollar rate margin.

The applicable margins with respect to the Company’s Senior Secured Credit Facility vary from time to time in accordance with the terms thereof and agreed upon pricing grids based on the Company’s leverage ratio as defined in the credit agreement. The applicable margins with respect to the Senior Secured Credit Facility are currently:

Applicable Margin (per annum)


Eurocurrency Rate for Revolving Loans and Letter of Credit Fees	Base Rate for Revolving Loans	Commitment Fees Rate	Eurocurrency Rate for Term Loans	Base Rate for Term Loans
2.75%	1.75%	0.50%	2.75%	1.75%

The obligations under the credit agreement are unconditionally and irrevocably guaranteed by each of the Company’s direct or indirect domestic subsidiaries (collectively, the “Guarantors”). In addition, the credit agreement is collateralized by first priority or equivalent security interests in (i) all the capital stock of, or other equity interests in, each direct or indirect domestic subsidiary of the Company and 65% of the capital stock of, or other equity interests in, each direct foreign subsidiary of the Company, or any of its domestic subsidiaries and (ii) certain tangible and intangible assets of the Company and those of the Guarantors (subject to certain exceptions and qualifications).

A commitment fee of 0.50% per annum is applied to the unused portion of the Revolving Credit Facility. For the three months and nine months ended September 27, 2009, the weighted average interest rate on the term loan was 3.04% and 3.18%, respectively. For the three and nine months ended September 28, 2008, the weighted average interest rate on the term loan was 5.43% and 6.13%, respectively. For the three and nine months ended September 27, 2009, the weighted average interest rate on the Revolving Credit Facility was 3.08% and 3.26%, respectively. For the three and nine months ended September 28, 2008, the weighted average interest rate on the Revolving Credit Facility was 5.78% and 6.13%, respectively. As of September 27, 2009 and September 28, 2008, the Eurodollar interest rate on the term loan facility was 3.01% and 5.50%, respectively.

The Company pays a fee for all outstanding letters of credit drawn against its Revolving Credit Facility at an annual rate equivalent to the Applicable Margin then in effect with respect to Eurodollar loans under the Revolving Credit Facility, less the fronting fee payable in respect of the applicable letter of credit. The fronting fee is equal to 0.125% per annum of the daily maximum amount then available to be drawn under such letter of credit. The fronting fees are computed on a quarterly basis in arrears. Total letters of credit issued under the Revolving Credit Facility agreement cannot exceed $25,000. As of September 27, 2009 and December 28, 2008, the Company had utilized $12,251 and $15,181, respectively of the Revolving Credit Facility for letters of credit. As of September 27, 2009 there were borrowings of $7,656 under the Revolving Credit Facility, so of the $117,344 Revolving Credit Facility available, the Company had an unused balance of $105,093 available for future borrowing and letters of credit. As of December 28, 2008, borrowings under the Revolving Credit Facility totaled $26,000, so of the $99,000 Revolving Credit Facility available, the Company had an unused balance of $83,819 available for future borrowing and letters of credit. The remaining amount that can be used for letters of credit as of September 27, 2009 and December 28, 2008 was $12,749 and $9,819, respectively. If the Company is unsuccessful in replacing the commitment from LCPI, the amount available for future borrowings and letters of credit as of September 27, 2009 and December 28, 2008, would be $90,093 and $68,819, respectively.

The term loan matures in quarterly 0.25% installments from September 2007 to December 2013 with the remaining balance due in April 2014. The aggregate maturities of the term loan outstanding as of September 27, 2009 are $3.12 million in 2009, $12.5 million in 2010, $12.5 million in 2011, $12.5 million in 2012, $12.5 million in 2013 and $1,171.88 million, thereafter.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

On April 2, 2007, as part of the Blackstone Transaction described in Note 1, the Company issued $325.0 million of 9.25% Senior Notes (the “Senior Notes”) due 2015, and $250.0 million of 10.625% Senior Subordinated Notes (the “Senior Subordinated Notes”) due 2017. The Senior Notes are general unsecured obligations of the Company, effectively subordinated in right of payment to all existing and future senior secured indebtedness of the Company and guaranteed on a full, unconditional, joint and several basis by the Company’s wholly-owned domestic subsidiaries that guarantee other indebtedness of the Company. The Senior Subordinated Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company and guaranteed on a full, unconditional, joint and several basis by the Company’s wholly-owned domestic subsidiaries that guarantee other indebtedness of the Company. See Note 16 of the Consolidated Financial Statements for Guarantor and Nonguarantor Financial Statements.

The Company may redeem some or all of the Senior Notes at any time prior to April 1, 2011, and some or all of the Senior Subordinated Notes at any time prior to April 1, 2012, in each case at a price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date. The “Applicable Premium” is defined as the greater of (1) 1.0% of the principal amount of such note and (2) the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such Senior Note at April 1, 2011 or Senior Subordinated Note at April 1, 2012, plus (ii) all required interest payments due on such Senior Note through April 1, 2011 or Senior Subordinated Note through April 1, 2012 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 50 basis points over (b) the principal amount of such note.

The Company may redeem the Senior Notes or the Senior Subordinated Notes at the redemption prices listed below, if redeemed during the twelve-month period beginning on April 1^st of each of the years indicated below:

Senior Notes


Year	Percentage
2011	104.625	%
2012	102.313	%
2013 and thereafter	100.000	%

Senior Subordinated Notes


Year	Percentage
2012	105.313	%
2013	103.542	%
2014	101.771	%
2015 and thereafter	100.000	%

In addition, until April 1, 2010, the Company may redeem up to 35% of the aggregate principal amount of Senior Notes or Senior Subordinated Notes at a redemption price equal to 100% of the aggregate principal amount thereof, plus a premium equal to the rate per annum on the Senior Notes or Senior Subordinated Notes, as the case may be, plus accrued and unpaid interest and Additional Interest, if any, to the redemption date, subject to the right of holders of Senior Notes or Senior Subordinated Notes of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds received by the Company from one or more equity offerings; provided that (i) at least 50% of the aggregate principal amount of Senior Notes or Senior Subordinated Notes, as the case may be, originally issued under the applicable indenture remains outstanding immediately after the occurrence of each such redemption and (ii) each such redemption occurs within 90 days of the date of closing of each such equity offering.

In December 2007, the Company repurchased $51.0 million in aggregate principal amount of the 10.625% Senior Subordinated Notes at a discount price of $44.2 million. The Company currently has outstanding $199.0 million in aggregate principal amount of Senior Subordinated Notes.

As market conditions warrant, the Company and its subsidiaries, affiliates or significant shareholders (including The Blackstone Group L.P. and its affiliates) may from time to time, in their sole discretion, purchase, repay, redeem or retire any of the Company’s outstanding debt or equity securities (including any publicly issued debt or equity securities), in privately negotiated or open market transactions, by tender offer or otherwise.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

The estimated fair value of the Company’s long-term debt, including the current portion, as of September 27, 2009, is as follows:


	September 27, 2009
Issue	Recorded Amount		Fair Value
Senior secured credit facility - term loan	$	1,225,000	$	1,151,500
9.25% Senior notes		325,000		325,000
10.625% Senior subordinated notes		199,000		199,000

	$	1,749,000	$	1,675,500

The fair value is based on the quoted market price for such notes and borrowing rates currently available to the Company for loans with similar terms and maturities.

9.	Pension and Retirement Plans

As of September 27, 2009, the Company maintains a noncontributory defined benefit pension plan that covers eligible union employees at our Fayetteville, AR, Imlay City, MI, and Millsboro, DE facilities (approximately 40% of all employees) and provides benefits generally based on years of service and employees’ compensation. The Company’s pension plan is funded in conformity with the funding requirements of applicable government regulations. The Company made contributions to the pension plan totaling $2.5 million in fiscal 2008, of which $1.5 million and $2.1 million was paid in the three and nine months ending September 28, 2008, respectively. In fiscal 2009, the Company expects to make contributions of up to $2.8 million, of which $1.2 million and $2.2 million were made in the three and nine months ended September 27, 2009, respectively.

The Company maintains a postretirement benefits plan that provides health care and life insurance benefits to eligible retirees, covers certain U.S. employees and their dependents and is self-funded. Employees who have 10 years of service after the age of 45 and retire are eligible to participate in the postretirement benefit plan. Effective March 19, 2004 and in connection with the acquisition of Aurora, liabilities were assumed related to eight retired employees (“Aurora Retirees”). Upon amendments that became effective on May 23, 2004, the Company’s net out-of-pocket costs for postretirement health care benefits was substantially reduced as cost sharing for retired employees, excluding the Aurora Retirees, was increased to 100%.

Pension Benefits


	Three months ended						Nine months ended
	September 27, 2009			September 28, 2008			September 27, 2009			September 28, 2008
Service cost	$	459		$	420		$	1,362		$	1,260
Interest cost		1,105			1,066			3,327			3,198
Expected return on assets		(602	)		(1,130	)		(2,150	)		(3,299	)
Amortization of:
prior service cost		36			—			106			—
net actuarial loss		345			—			1,033			—

Net periodic benefit cost	$	1,343		$	356		$	3,678		$	1,159

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Other Postretirement Benefits


	Three months ended					Nine months ended
	September 27, 2009			September 28, 2008		September 27, 2009			September 28, 2008
Service cost	$	—		$	2	$	—		$	6
Interest cost		5			16		14			47
Amortization of:
Net actuarial gain		(11	)		—		(33	)		—

Net periodic benefit cost	$	(6	)	$	18	$	(19	)	$	53

10.

Financial Instruments

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. The primary risks managed by using derivative instruments are interest rate risk, foreign currency exchange risk and commodity price risk. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates, foreign exchange rates or commodity prices.

The Company manages interest rate risk based on the varying circumstances of anticipated borrowings and existing variable and fixed rate debt, including the Company’s revolving line of credit. Examples of interest rate management strategies include capping interest rates using targeted interest cost benchmarks, hedging portions of the total amount of debt, or hedging a period of months and not always hedging to maturity, and at other times locking in rates to fix interests costs.

Certain parts of the Company’s foreign operations in Canada expose the Company to fluctuations in foreign exchange rates. The Company’s goal is to reduce its exposure to such foreign exchange risks on its foreign currency cash flows and fair value fluctuations on recognized foreign currency denominated assets, liabilities and unrecognized firm commitments to acceptable levels primarily through the use of foreign exchange-related derivative financial instruments. The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency, the U.S. dollar.

The Company purchases raw materials in quantities expected to be used in a reasonable period of time in the normal course of business. The Company generally enters into agreements for either spot market delivery or forward delivery. The prices paid in the forward delivery contracts are generally fixed, but may also be variable within a capped or collared price range. Forward derivative contracts on certain commodities are entered into to manage the price risk associated with forecasted purchases of materials used in the Company’s manufacturing process.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges in accordance with the authoritative guidance for derivative and hedge accounting involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of September 27, 2009 the Company had the following interest rate swaps (in aggregate) that were designated as cash flow hedges of interest rate risk:

Product

Number of
Instruments

Notional
Amount

Fixed Rate Range

Index

Trade Dates

Maturity Dates

Interest Rate Swaps

$685,676

1.43% - 3.33%

USD-LIBOR-BBA

Oct 2008 - Mar 2009

Jan 2011 - July 2012

According to the authoritative guidance for derivative and hedge accounting, the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated other comprehensive (loss) income (“AOCI”) on the Consolidated Balance Sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three and nine months ended September 27, 2009, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly as Interest expense in the Consolidated Statement of Operations. There was no hedge ineffectiveness on interest rate cash flow hedges recognized in the three and nine months ended September 27, 2009.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Due to the counterparty bank declaring bankruptcy in October 2008, the Company discontinued prospectively the hedge accounting on its interest rate derivatives with Lehman Brothers Specialty Financing on the bankruptcy date as those hedging relationships no longer met the authoritative guidance for derivative and hedge accounting. The Company terminated these positions during the fourth quarter of 2008. The Company continues to report the net gain or loss related to the discontinued cash flow hedge in AOCI which is expected to be reclassified into earnings during the original contractual terms of the derivative agreements as the hedged interest payments are expected to occur as forecasted. For the three and nine months ended September 27, 2009, $1,040 and $3,434, respectively, was reclassified as an increase to interest expense relating to the terminated hedges. During the twelve months ending September 26, 2010, the Company estimates that an additional $17,272 will be reclassified as an increase to Interest expense relating to both active and terminated hedges.

Cash Flow Hedges of Foreign Exchange Risk

The Company’s operations in Canada have exposed the Company to changes in the US Dollar – Canadian Dollar (USD-CAD) foreign exchange rate. From time to time, the Company’s Canadian subsidiary purchases inventory denominated in US Dollars (USD), a currency other than their functional currency. The subsidiary sells that inventory in Canadian dollars. The subsidiary uses currency forward and collar agreements to manage its exposure to fluctuations in the USD-CAD exchange rate. Currency forward agreements involve fixing the USD-CAD exchange rate for delivery of a specified amount of foreign currency on a specified date. Currency collar agreements involve the sale of Canadian Dollar (CAD) currency in exchange for receiving US dollars if exchange rates rise above an agreed upon rate and sale of USD currency in exchange for receiving CAD dollars if exchange rates fall below an agreed upon rate at specified dates.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

As of September 27, 2009, the Company had the following foreign currency exchange contracts (in aggregate) that were designated as cash flow hedges of foreign exchange risk:

Product

Number of
Instruments

Notional Sold in
Aggregate

Notional Purchased
in Aggregate

USD to CAD
Exchange Rates

Trade Date

Maturity Dates

CAD Forward

$54,600 CAD

$49,863 USD

.971-1.21136

Oct 2007 - July 2009

Oct 2009 - Dec 2010

CAD Collar

$12,000 CAD

$10,619 USD

1.13

May 2009

Jan 2010 - Dec 2010

According to the authoritative guidance for derivative and hedge accounting, the effective portion of changes in the fair value of derivatives designated that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI on the Consolidated Balance Sheet and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative, as well as amounts excluded from the assessment of hedge effectiveness, are recognized directly in Cost of products sold in the Consolidated Statement of Operations. Hedge ineffectiveness on foreign exchange cash flow hedges amounted to a $14 loss and a $19 gain in the three and nine months ended September 27, 2009, respectively.

Non-designated Hedges of Commodity Risk

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to commodity price risk but do not meet the authoritative guidance for derivative and hedge accounting. From time to time, the Company enters into natural gas commodity forward contracts to fix the price of natural gas and heating oil purchases at a future delivery date. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in Cost of products sold in the Consolidated Statement of Operations.

As of September 27, 2009, the Company had the following natural gas swaps (in aggregate) and heating oil swaps (in aggregate) that were not designated in qualifying hedging relationships:


Product	Number of Instruments	Notional Amount	Price	Trade Dates	Maturity Dates
Natural Gas Swap	4	95,091 - 145,160 MMBTU’s	$5.27 - $6.23 per MMBTU	Dec 2008 - Mar 2009	Oct 2009 - June 2010
Heating Oil Swap	1	9,000 BBL’s	$45.15 per BBL	Mar 2009	Dec 2009

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of September 27, 2009.


	Tabular Disclosure of Fair Values of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest Rate Contracts		$	—	Other long-term liabilities	$	19,941
Foreign Exchange Contracts	Other current assets		785	Accrued liabilities		790
Foreign Exchange Contracts			—	Other long-term liabilities		138

Total derivatives designated as hedging instruments as of September 27, 2009		$	785		$	20,869

Derivatives not designated as hedging instruments
Natural Gas Contracts		$	—	Accrued liabilities	$	126
Heating Oil Contracts	Other current assets		74			—

Total derivatives not designated as hedging instruments as of September 27, 2009		$	74		$	126

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations and Accumulated other comprehensive (loss) income for the three and nine months ended September 27, 2009.

Tabular Disclosure of the Effect of Derivative Instruments for the Nine Months Ended September 27, 2009

Gain/(Loss)


Derivatives in Cash Flow Hedging Relationships	Recognized in AOCI on Derivative (Effective Portion)			Effective portion reclassified from AOCI to:	Reclassified from AOCI into Earnings (Effective Portion)			Ineffective portion reclassified from AOCI to:	Recognized in Earnings on Derivative (Ineffective Portion)
Interest Rate Contracts	$	(8,877	)	Interest expense	$	(4,627	)	Interest expense	$	—
Foreign Exchange Contracts		(2,042	)	Cost of products sold		158		Cost of products sold		(14	)

Three months ended September 27, 2009	$	(10,919	)		$	(4,469	)		$	(14	)

Interest Rate Swaps	$	(18,573	)	Interest expense	$	(13,955	)	Interest expense	$	—
Foreign Exchange Derivative Contracts		(3,252	)	Cost of products sold		2,256		Cost of products sold		19

Nine months ended September 27, 2009	$	(21,825	)		$	(11,699	)		$	19



Derivatives Not Designated as Hedging Instruments	Recognized in Earnings on:	Recognized in Earnings on Derivative
Natural Gas Contracts	Cost of products sold	$	(104	)
Heating Oil Contracts	Cost of products sold		8

Three months ended September 27, 2009		$	(96	)

Natural Gas Contracts	Cost of products sold	$	(1,287	)
Heating Oil Contracts	Cost of products sold		132

Nine months ended September 27, 2009		$	(1,155	)

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Credit-risk-related Contingent Features

The Company has an agreement with Barclays that contains a provision whereby the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. As of September 27, 2009, the fair value of interest rate swaps in a net liability position related to these agreements was $22,108, which includes accrued interest of $1,038 but excludes any adjustment for nonperformance risk of $1,129. For the same counterparty, the fair value of foreign exchange derivative contracts in a net liability position related to these agreements was $997, which excludes any adjustment for nonperformance risk of $69. For the same counterparty, the fair value of natural gas swaps in a net liability position related to these agreements was $126. If the Company breached any of these provisions, it could be required to settle its obligations under the agreements at their termination value of $23,231. As of September 27, 2009, the Company has not posted any collateral related to these agreements.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

11.

Commitments and Contingencies

General

From time to time, the Company and its operations are parties to, or targets of, lawsuits, claims, investigations, and proceedings, which are being handled and defended in the ordinary course of business. Although the outcome of such items cannot be determined with certainty, the Company’s general counsel and management are of the opinion that the final outcome of these matters should not have a material effect on the Company’s financial condition, results of operations or cash flows.

No single item individually is, nor are all of them in aggregate, material.

12.

Related Party Transactions

Advisory Agreement

At the closing of the Blackstone Transaction, the Company entered into an advisory agreement with an affiliate of The Blackstone Group pursuant to which such entity or its affiliates provide certain strategic and structuring advice and assistance to us. In addition, under this agreement, affiliates of The Blackstone Group provide certain monitoring, advisory and consulting services to the Company for an aggregate annual management fee equal to $2,500 for the year ended December 2007, and the greater of $2,500 or 1.0% of Consolidated EBITDA (as defined in the credit agreement governing the Company’s Senior Secured Credit Facility) for each year thereafter. Affiliates of Blackstone received reimbursement for out-of-pocket expenses incurred by them in connection with the Blackstone Transaction prior to the closing date and in connection with the provision of services pursuant to the agreement of merger. Expenses relating to the management fee were $625 and $1,875 in the three and nine months ended September 27, 2009, respectively. Expenses relating to the management fee were $625 and $1,875 for the three and nine months ended September 28, 2008, respectively. The Company reimbursed The Blackstone Group for out-of-pocket expenses in the amount of $24 and $44 in three and nine months ended September 27, 2009, respectively. The Company reimbursed The Blackstone Group for out-of-pocket expenses in the amount of $61 and $61 in three and nine months ended September 28, 2008, respectively.

Supplier Costs

Graham Packaging, which is owned by affiliates of The Blackstone Group, supplies packaging for some of the Company’s products. Purchases from Graham Packaging were $1,416 and $4,858 for the three and nine months ended September 27, 2009, respectively. Purchases from Graham Packaging were $2,645 and $9,276 for the three and nine months ended September 28, 2008, respectively.

Customer Purchases

Performance Food Group, which is owned by affiliates of The Blackstone Group, is a food service supplier that purchases products from the Company. Sales to Performance Food Group were $1,279 and $3,950 in the three and nine months ended September 27, 2009, respectively. Sales to Performance Food Group were $1,313 and $3,735 in the three and nine months ended September 28, 2008, respectively.

Debt and Interest Expense

For the three and nine months ended September 27, 2009, fees and interest expense recognized in the Consolidated Statement of Operations for debt to the related party Blackstone Advisors L.P. totaled $268 and $1,186, respectively. For the three and nine months ended September 28, 2008, fees and interest expense recognized in the Consolidated Statement of Operations for debt to the related party Blackstone Advisors L.P. totaled $456 and $2,587, respectively.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

13.

Segments

The Company’s products and operations are managed and reported in two operating segments. The dry foods segment consists of the following reporting units: baking (Duncan Hines^®), condiments (Vlasic^®, Open Pit^®), syrups (Mrs. Butterworth’s^® and Log Cabin^®) and canned meat (Armour^®). The frozen foods segment consists of the following reporting units: frozen dinners and entrees (Hungry-Man^®, Swanson^®), frozen seafood (Van de Kamp’s^®, Mrs. Paul’s^®), frozen breakfast (Aunt Jemima^®), bagels (Lender’s^®), and frozen pizza (Celeste^®). Segment performance is evaluated by the Company’s Chief Operating Decision Maker and is based on earnings before interest and taxes. Transfers between segments and geographic areas are recorded at cost plus markup or at market. Identifiable assets are those assets, including goodwill, which are identified with the operations in each segment or geographic region. Corporate assets consist of prepaid and deferred tax assets. Unallocated corporate expenses consist of corporate overhead such as executive management, finance and legal functions and, in 2008, the gain on litigation settlement.


	Three months ended						Nine months ended
	September 27, 2009			September 28, 2008			September 27, 2009			September 28, 2008
SEGMENT INFORMATION
Net sales
Dry foods	$	234,612		$	229,641		$	734,267		$	661,438
Frozen foods		159,573			159,587			496,148			480,092

Total	$	394,185		$	389,228		$	1,230,415		$	1,141,530

Earnings before interest and taxes
Dry foods	$	44,870		$	35,552		$	115,641		$	95,473
Frozen foods		7,408			12,755			19,394			20,367
Unallocated corporate expenses		(5,641	)		(3,333	)		(15,284	)		(32	)

Total	$	46,637		$	44,974		$	119,751		$	115,808

Depreciation and amortization
Dry foods	$	7,783		$	7,456		$	22,939		$	21,922
Frozen foods		7,749			8,668			25,065			23,728

Total	$	15,532		$	16,124		$	48,004		$	45,650

Capital expenditures
Dry foods	$	2,486		$	4,390		$	12,791		$	8,935
Frozen foods		7,058			3,695			29,125			9,870

Total	$	9,544		$	8,085		$	41,916		$	18,805

GEOGRAPHIC INFORMATION
Net sales
United States	$	392,359		$	384,401		$	1,221,737		$	1,114,089
Canada		20,187			19,699			54,101			58,713
Intercompany		(18,361	)		(14,872	)		(45,423	)		(31,272	)

Total	$	394,185		$	389,228		$	1,230,415		$	1,141,530


	September 27, 2009		December 28, 2008
SEGMENT INFORMATION
Total assets
Dry foods	$	1,751,833	$	1,733,148
Frozen foods		893,999		895,408
Corporate		4,919		3,644

Total	$	2,650,751	$	2,632,200

GEOGRAPHIC INFORMATION
Long-lived assets
United States	$	267,268	$	260,758
Canada		40		40

Total	$	267,308	$	260,798

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

14. Income Taxes

The Company’s liability for unrecognized tax benefits (“UTB”) as of September 27, 2009 is $449. The amount, if recognized, that would impact the effective tax rate as of September 27, 2009 was $449. The entire amount of the liability for UTB is recognized in other long-term liabilities on the Consolidated Balance Sheet. Certain statutes of limitation expired during the nine months ended September 27, 2009 which resulted in a decrease of $73 in the UTB liability and a benefit to the provision for income taxes.

The Company maintains a full valuation allowance against the federal and state net deferred tax assets excluding indefinite lived intangible assets, and the effective rate difference is primarily due to the change in the valuation allowance for the three month and nine month periods. Deferred tax liabilities are recognized for the differences between the book and tax bases of certain goodwill and indefinite lived intangible assets. The valuation allowance is maintained in accordance with the provisions of the authoritative guidance with respect to accounting for income taxes. Based on cumulative losses as of September 27, 2009, the Company has determined that a full valuation allowance amounting to $323.8 million is necessary.

In determining the need for a valuation allowance the Company must consider both positive and negative evidence including historical losses, current earnings, forecasted profitability, and tax-planning strategies, as well as the weight of the evidence. The valuation allowance is reviewed quarterly and is maintained until sufficient positive evidence exists to support a reversal. Based on current year earnings and future profitability, we believe it is reasonably possible that we will release a portion of the valuation allowance in the near feature, although the exact timing is subject to change based on the level of profitability that we are able to achieve for the remainder of fiscal year 2009 and our visibility into future period results. Any release of the valuation allowance will be recorded during the period of release as a tax benefit increasing net earnings. The valuation allowance will be maintained until the Company is able to conclude that it is more likely than not that we will be able to realize some or all of our deferred tax assets. We will continue to monitor the need for a valuation allowance on a quarterly basis considering all of the available evidence.

15.

Recently Issued Accounting Pronouncements

In December 2007, the FASB updated the authoritative guidance for business combinations. Under the December 2007 update, all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but the updated guidance changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. The updated guidance for business combinations is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. The authoritative guidance for business combinations amends the authoritative guidance for income tax accounting such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of updated guidance for business combinations (released in December 2007), would also apply the provisions of the updated guidance for business combinations. Early adoption is not permitted. The adoption of the updated authoritative guidance for business combinations will have an impact on the Company’s accounting for future business combinations on a prospective basis once adopted; however, the materiality of that impact cannot be determined.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

In April 2009, the FASB updated the authoritative guidance for business combinations. The April 2009 update amends and clarifies the authoritative guidance of business combinations to address application issues associated with initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. The updated authoritative guidance for business combinations is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The implementation of this standard will have an impact on the Company’s accounting for future business combinations on a prospective basis once adopted; however, the materiality of that impact cannot be determined.

In December 2007, the FASB issued the authoritative guidance for noncontrolling interests in consolidated financial statements. This guidance is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2008, with earlier adoption prohibited. This guidance requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net earnings attributable to the noncontrolling interest will be included in consolidated net earnings on the face of the statement of operations. It also amends consolidation procedures for consistency with the requirements of the authoritative guidance for business combinations. The guidance for noncontrolling interests in consolidated financial statements also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. This guidance has not had any impact on the reporting of the Company’s financial position or the results of operations.

In March 2008, the FASB revised the authoritative guidance for derivative and hedge accounting. The guidance requires enhanced disclosures about derivative and hedging activities. The guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company adopted this guidance in the first quarter of 2009 and has included enhanced disclosure in Note 10.

In April 2009, the FASB updated the authoritative guidance for measuring fair value. The April 2009 update provides additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. The guidance is effective for interim and annual periods ending after June 15, 2009. The Company adopted the guidance during the quarter ended September 27, 2009 and it did not have a material impact on the Company’s consolidated financial position or results of operations.

In November 2008, the FASB updated the authoritative guidance for intangible assets. The November 2008 update provides guidance for accounting for defensive intangible assets subsequent to their acquisition in accordance with the authoritative guidance for business combinations and the authoritative guidance for measuring fair value by including the estimated useful life that should be assigned to such assets. The updated authoritative guidance for intangible assets is effective for intangible assets acquired on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The implementation of this guidance did not have a material impact on the Company’s consolidated financial position or results of operations.

In December 2008, the FASB issued authoritative guidance on defined benefit plans. The release provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The guidance is effective for fiscal years ending after December 15, 2009. The implementation of this guidance will not have a material impact on the Company’s consolidated financial position or results of operations.

In April 2009, the FASB amended the authoritative guidance on financial instruments to require disclosure of the fair value of financial instruments in interim financial statements as well as annual financial statements. The adoption of this guidance will have no impact to the Company as it already provides these disclosures in its interim financial statements.

In April 2009, the FASB issued authoritative guidance on investment in debt securities. This guidance clarifies the interaction of the impairment factors that should be considered when applied prospectively beginning in the second quarter of 2009. Upon adoption during the quarter ended September 27, 2009, this guidance did not have a material impact to the Company’s consolidated financial position or results of operations.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

In May 2009, the FASB issued the authoritative guidance on subsequent events. The guidance is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This statement sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements. It also sets forth the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make for those events or transactions. The guidance is effective for fiscal years and interim periods ended after June 15, 2009 and will be applied prospectively. The Company adopted the new disclosure requirement in our June 28, 2009 Consolidated Financial Statements.

In June 2009, the FASB issued the authoritative guidance for variable interest entities. This guidance clarifies the characteristics that identify a variable interest entity (VIE) and changes how a reporting entity identifies a primary beneficiary that would consolidate the VIE from a quantitative risk and rewards calculation to a qualitative approach based on which variable interest holder has controlling financial interest and the ability to direct the most significant activities that impact the VIE’s economic performance. This guidance requires the primary beneficiary assessment to be performed on a continuous basis. It also requires additional disclosures about an entity’s involvement with VIE, restrictions on the VIE’s assets and liabilities that are included in the reporting entity’s consolidated balance sheet, significant risk exposures due to the entity’s involvement with the VIE, and how its involvement with a VIE impacts the reporting entity’s consolidated financial statements. The authoritative guidance for variable interest entities is effective for fiscal years beginning after November 15, 2009. The Company is currently evaluating this guidance and anticipates that it will not have a material impact on the Company’s consolidated financial position or results of operations.

In June 2009, the FASB updated guidance for generally accepted accounting principles (“GAAP”). The updated guidance establishes only two levels of U.S. GAAP, authoritative and nonauthoritative. The FASB Accounting Standards Codification (the “Codification”) will become the source of authoritative, nongovernmental GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. The June 2009 updated guidance is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company adopted this guidance in the third quarter of 2009.

In August 2009, the FASB updated the authoritative guidance for measuring the fair value of liabilities. The update provides guidance on the valuation techniques that are used in measuring the fair market value of a liability when quoted price in an active market is not available. The techniques include using the quoted price for identical or similar liabilities. Other techniques include the use of an income approach, such as present value techniques, or a market approach, such as a technique that is based on the amount at the measurement date that a reporting entity would pay to transfer the identical liability or pay to receive the identical liability. The guidance is effective for the first reporting period after issuance. The Company adopted this guidance in the third quarter of 2009 and it did not have a material impact on the Company’s consolidated financial position or results of operations.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

16.

Guarantor and Nonguarantor Statements

In connection with the Blackstone Transaction described in Note 1 and as a part of the related financings, the Company issued $325 million of 9.25% Senior Notes and $250 million ($199 million outstanding as of September 27, 2009) of 10.625% Senior Subordinated Notes in private placements pursuant to Rule 144A and Regulation S.

The Senior Notes are general unsecured obligations of the Company, effectively subordinated in right of payment to all existing and future senior secured indebtedness of the Company and guaranteed on a full, unconditional, joint and several basis by the Company’s wholly-owned domestic subsidiaries that guarantee other indebtedness of the Company.

The Senior Subordinated Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future senior indebtedness of the Company and guaranteed on a full, unconditional, joint and several basis by the Company’s wholly-owned domestic subsidiaries that guarantee other indebtedness of the Company.

The following consolidating financial information presents:

(1)

(a) Consolidating balance sheets as of September 27, 2009 and December 28, 2008.

(b) The related consolidating statements of operations for the Company, all guarantor subsidiaries and the non-guarantor subsidiary for the following:

Three months and nine months ended September 27, 2009.

ii.

Three months and nine months ended September 28, 2008.

(c) The related consolidating statements of cash flows for the Company, all guarantor subsidiaries and the non-guarantor subsidiary for the following:

Nine months ended September 27, 2009.

ii.

Nine months ended September 28, 2008.

(2)

Elimination entries necessary to consolidate the Company with its guarantor subsidiaries and non-guarantor subsidiary.

Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Balance Sheet

September 27, 2009


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary			Eliminations			Consolidated Total
Current assets:
Cash and cash equivalents	$	—		$	893		$	1,690		$	—		$	2,583
Accounts receivable, net		—			100,265			9,795			—			110,060
Intercompany accounts receivable		—			16,318			—			(16,318	)		—
Inventories, net		—			193,307			7,921			—			201,228
Other current assets		1,484			5,926			1,318			—			8,728
Deferred tax assets		—			4,586			333			—			4,919

Total current assets		1,484			321,295			21,057			(16,318	)		327,518
Plant assets, net		—			267,268			40			—			267,308
Investment in subsidiaries		1,424,738			4,448			—			(1,429,186	)		—
Intercompany note receivable		673,536			—			—			(673,536	)		—
Tradenames		—			910,112			—			—			910,112
Other assets, net		23,414			128,232			—			—			151,646
Goodwill		—			994,167			—			—			994,167

Total assets	$	2,123,172		$	2,625,522		$	21,097		$	(2,119,040	)	$	2,650,751

Current liabilities:
Short-term borrowings	$	7,656		$	273		$	—		$	—		$	7,929
Current portion of long-term obligations		12,500			463			—			—			12,963
Accounts payable		—			66,323			1,678			—			68,001
Intercompany accounts payable		6,003			—			10,315			(16,318	)		—
Accrued trade marketing expense		—			19,299			4,001			—			23,300
Accrued liabilities		30,113			55,387			655			—			86,155
Accrued income taxes		—			—			—			—			—

Total current liabilities		56,272			141,745			16,649			(16,318	)		198,348
Long-term debt		1,736,500			1,318			—			—			1,737,818
Intercompany note payable		—			673,536			—			(673,536	)		—
Pension and other postretirement benefits		—			38,307			—			—			38,307
Other long-term liabilities		20,080			3,618			—			—			23,698
Deferred tax liabilities		—			342,260			—			—			342,260

Total liabilities		1,812,852			1,200,784			16,649			(689,854	)		2,340,431
Commitments and contingencies		—			—			—			—			—
Shareholder’s equity:
Pinnacle Common Stock, $.01 par value		—			—			—			—			—
Additional paid-in-capital		430,058			1,284,155			2,324			(1,286,479	)		430,058
(Accumulated deficit) retained earnings		(66,472	)		167,224			4,255			(171,479	)		(66,472	)
Accumulated other comprehensive (loss) income		(53,266	)		(26,641	)		(2,131	)		28,772			(53,266	)

Total shareholder’s equity		310,320			1,424,738			4,448			(1,429,186	)		310,320

Total liabilities and shareholder’ equity	$	2,123,172		$	2,625,522		$	21,097		$	(2,119,040	)	$	2,650,751

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Balance Sheet

December 28, 2008


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary			Eliminations			Consolidated Total
Current assets:
Cash and cash equivalents	$	—		$	2,257		$	2,004		$	—		$	4,261
Accounts receivable, net		—			86,860			5,311			—			92,171
Intercompany accounts receivable		—			166,077			761			(166,838	)		—
Inventories, net		—			186,197			4,666			—			190,863
Other current assets		5,346			3,839			386			—			9,571
Deferred tax assets		—			3,644			—			—			3,644

Total current assets		5,346			448,874			13,128			(166,838	)		300,510
Plant assets, net		—			260,758			40			—			260,798
Investment in subsidiaries		1,342,914			6,788			—			(1,349,702	)		—
Intercompany note receivable		923,478			—			—			(923,478	)		—
Tradenames		—			910,112			—			—			910,112
Other assets, net		26,964			139,649			—			—			166,613
Goodwill		—			994,167			—			—			994,167

Total assets	$	2,298,702		$	2,760,348		$	13,168		$	(2,440,018	)	$	2,632,200

Current liabilities:
Short-term borrowings	$	26,000		$	163		$	—		$	—		$	26,163
Current portion of long-term obligations		12,500			250			—			—			12,750
Accounts payable		—			65,220			1,731			—			66,951
Intercompany accounts payable		166,456			—			382			(166,838	)		—
Accrued trade marketing expense		—			29,203			4,090			—			33,293
Accrued liabilities		28,408			40,427			177			—			69,012
Accrued income taxes		—			20			—			—			20

Total current liabilities		233,364			135,283			6,380			(166,838	)		208,189
Long-term debt		1,745,875			564			—			—			1,746,439
Intercompany note payable		—			923,478			—			(923,478	)		—
Pension and other postretirement benefits		—			36,869			—			—			36,869
Other long-term liabilities		11,890			2,539			—			—			14,429
Deferred tax liabilities		—			318,701			—			—			318,701

Total liabilities		1,991,129			1,417,434			6,380			(1,090,316	)		2,324,627
Commitments and contingencies		—			—			—			—			—
Shareholder’s equity:
Pinnacle Common Stock, $.01 par value		—			—			—			—			—
Additional paid-in-capital		427,323			1,284,155			2,324			(1,286,479	)		427,323
Accumulated deficit (retained earnings)		(77,290	)		84,386			4,967			(89,353	)		(77,290	)
Accumulated other comprehensive (loss) income		(42,460	)		(25,627	)		(503	)		26,130			(42,460	)

Total shareholder’s equity		307,573			1,342,914			6,788			(1,349,702	)		307,573

Total liabilities and shareholder’s equity	$	2,298,702		$	2,760,348		$	13,168		$	(2,440,018	)	$	2,632,200

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Statement of Operations

For the three months ended September 27, 2009


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary			Eliminations			Consolidated Total
Net sales	$	—		$	392,359		$	20,187		$	(18,361	)	$	394,185
Cost of products sold		313			299,031			17,420			(18,158	)		298,606

Gross profit		(313	)		93,328			2,767			(203	)		95,579
Operating expenses
Marketing and selling expenses		404			24,483			1,165			—			26,052
Administrative expenses		1,864			15,104			567			—			17,535
Research and development expenses		45			1,113			—			—			1,158
Intercompany royalties		—			—			16			(16	)		—
Intercompany technical service fees		—			—			187			(187	)		—
Other (income) expense, net		—			4,197			—			—			4,197
Equity in (earnings) loss of investees		(35,891	)		(553	)		—			36,444			—

Total operating expenses		(33,578	)		44,344			1,935			36,241			48,942

Earnings before interest and taxes		33,265			48,984			832			(36,444	)		46,637
Intercompany interest (income) expense		(5,407	)		5,407			—			—			—
Interest expense		28,279			37			(1	)		—			28,315
Interest income		—			20			1			—			21

Earnings before income taxes		10,393			43,560			834			(36,444	)		18,343
Provision for income taxes		—			7,669			281			—			7,950

Net earnings	$	10,393		$	35,891		$	553		$	(36,444	)	$	10,393

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Statement of Operations

For the three months ended September 28, 2008


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary		Eliminations			Consolidated Total
Net sales	$	—		$	384,401		$	19,699	$	(14,872	)	$	389,228
Cost of products sold		23			302,261			16,388		(14,686	)		303,986

Gross profit		(23	)		82,140			3,311		(186	)		85,242
Operating expenses
Marketing and selling expenses		31			20,643			1,610		—			22,284
Administrative expenses		796			11,231			384		—			12,411
Research and development expenses		3			775			—		—			778
Intercompany royalties		—			—			14		(14	)		—
Intercompany technical service fees		—			—			172		(172	)		—
Other (income) expense, net		—			4,795			—		—			4,795
Equity in (earnings) loss of investees		(25,252	)		(751	)		—		26,003			—

Total operating expenses		(24,422	)		36,693			2,180		25,817			40,268

Earnings before interest and taxes		24,399			45,447			1,131		(26,003	)		44,974
Intercompany interest (income) expense		(12,909	)		12,909			—		—			—
Interest expense		35,889			12			6		—			35,907
Interest income		—			51			9		—			60

Earnings before income taxes		1,419			32,577			1,134		(26,003	)		9,127
Provision for income taxes		—			7,325			383		—			7,708

Net earnings	$	1,419		$	25,252		$	751	$	(26,003	)	$	1,419

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Statement of Operations

For the nine months ended September 27, 2009


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary			Eliminations			Consolidated Total
Net sales	$	—		$	1,221,737		$	54,101		$	(45,423	)	$	1,230,415
Cost of products sold		350			952,752			48,522			(44,873	)		956,751

Gross profit		(350	)		268,985			5,579			(550	)		273,664
Operating expenses
Marketing and selling expenses		498			86,089			4,422			—			91,009
Administrative expenses		3,461			41,908			1,669			—			47,038
Research and development expenses		55			3,220			—			—			3,275
Intercompany royalties		—			—			46			(46	)		—
Intercompany technical service fees		—			—			504			(504	)		—
Other (income) expense, net		—			12,591			—			—			12,591
Equity in (earnings) loss of investees		(82,838	)		712			—			82,126			—

Total operating expenses		(78,824	)		144,520			6,641			81,576			153,913

Earnings (loss) before interest and taxes		78,474			124,465			(1,062	)		(82,126	)		119,751
Intercompany interest (income) expense		(18,978	)		18,978			—			—			—
Interest expense		86,634			(51	)		—			—			86,583
Interest income		—			30			4			—			34

Earnings (loss) before income taxes		10,818			105,568			(1,058	)		(82,126	)		33,202
Provision for income taxes		—			22,730			(346	)		—			22,384

Net earnings (loss)	$	10,818		$	82,838		$	(712	)	$	(82,126	)	$	10,818

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Statement of Operations

For the nine months ended September 28, 2008


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary		Eliminations			Consolidated Total
Net sales	$	—		$	1,114,089		$	58,713	$	(31,272	)	$	1,141,530
Cost of products sold		23			879,550			44,945		(30,720	)		893,798

Gross profit		(23	)		234,539			13,768		(552	)		247,732
Operating expenses
Marketing and selling expenses		31			82,558			5,571		—			88,160
Administrative expenses		2,150			32,927			1,704		—			36,781
Research and development expenses		3			2,574			—		—			2,577
Intercompany royalties		—			—			47		(47	)		—
Intercompany technical service fees		—			—			505		(505	)		—
Other (income) expense, net		—			4,406			—		—			4,406
Equity in (earnings) loss of investees		(51,235	)		(4,040	)		—		55,275			—

Total operating expenses		(49,051	)		118,425			7,827		54,723			131,924

Earnings before interest and taxes		49,028			116,114			5,941		(55,275	)		115,808
Intercompany interest (income) expense		(43,162	)		43,162			—		—			—
Interest expense		110,684			290			6		—			110,980
Interest income		—			209			44		—			253

Earnings (loss) before income taxes		(18,494	)		72,871			5,979		(55,275	)		5,081
Provision for income taxes		—			21,636			1,939		—			23,575

Net (loss) earnings	$	(18,494	)	$	51,235		$	4,040	$	(55,275	)	$	(18,494	)

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Statement of Cash Flows

For the nine months ended September 27, 2009


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary			Eliminations			Consolidated Total
Cash flows from operating activities
Net earnings (loss) from operations	$	10,818		$	82,838		$	(712	)	$	(82,126	)	$	10,818
Non-cash charges (credits) to net earnings (loss)
Depreciation and amortization		—			47,993			11			—			48,004
Amortization of debt acquisition costs		3,551			—			—			—			3,551
Amortization of deferred mark-to-market adjustment on terminated swap		3,434			—			—			—			3,434
Change in value of financial instruments		(19	)		(252	)		—			—			(271	)
Equity in (earnings) loss of investees		(82,838	)		712			—			82,126			—
Stock-based compensation charges		—			2,400			—			—			2,400
Postretirement healthcare benefits		—			(19	)		—			—			(19	)
Pension expense		—			1,457			—			—			1,457
Other long-term liabilities		—			1,060			—			—			1,060
Other assets		—			(1,177	)		—			—			(1,177	)
Deferred income taxes		—			22,619			—			—			22,619
Changes in working capital
Accounts receivable		—			(13,405	)		(3,836	)		—			(17,241	)
Intercompany accounts receivable/payable		(158,307	)		150,361			7,946			—			—
Inventories		—			(8,621	)		(2,686	)		—			(11,307	)
Accrued trade marketing expense		—			(9,904	)		(588	)		—			(10,492	)
Accounts payable		—			851			(264	)		—			587
Accrued liabilities		1,077			14,941			456			—			16,474
Other current assets		(624	)		(2,087	)		(885	)		—			(3,596	)

Net cash provided by (used in) operating activities		(222,908	)		289,767			(558	)		—			66,301

Cash flows from investing activities
Capital expenditures		—			(40,716	)		—			—			(40,716	)

Net cash used in investing activities		—			(40,716	)		—			—			(40,716	)

Cash flows from financing activities
Repayment of capital lease obligations		—			(233	)		—			—			(233	)
Borrowings under revolving credit facility		39,864			—			—			—			39,864
Repayments of revolving credit facility		(58,208	)		—			—			—			(58,208	)
Repayments of intercompany loans		249,942			(249,942	)		—			—			—
Equity contributions		1,785			—			—			—			1,785
Reductions of equity contributions		(1,450	)		—			—			—			(1,450	)
Proceeds from notes payable borrowings		350			—			—			—			350
Repayments of notes payable		—			(240	)		—			—			(240	)
Repayments of long term obligations		(9,375	)		—			—			—			(9,375	)

Net cash provided by (used in) financing activities		222,908			(250,415	)		—			—			(27,507	)

Effect of exchange rate changes on cash		—			—			244			—			244
														—
Net change in cash and cash equivalents		—			(1,364	)		(314	)		—			(1,678	)
Cash and cash equivalents - beginning of period		—			2,257			2,004			—			4,261

Cash and cash equivalents - end of period	$	—		$	893		$	1,690		$	—		$	2,583

Supplemental disclosures of cash flow information:
Interest paid	$	78,661		$	(79	)							$	78,582
Interest received					30			4						34
Income taxes paid					194			387						581
Non-cash investing activity:
Capital lease activity		—			(1,200	)		—			—			(1,200	)

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(thousands of dollars, except share amounts and where noted in millions)

Pinnacle Foods Finance LLC

Consolidating Statement of Cash Flows

For the nine months ended September 28, 2008


	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiary			Eliminations			Consolidated Total
Cash flows from operating activities
Net (loss) earnings from operations	$	(18,494	)	$	51,235		$	4,040		$	(55,275	)	$	(18,494	)
Non-cash charges (credits) to net (loss) earnings
Depreciation and amortization		—			45,639			11			—			45,650
Gain on litigation settlement		—			(9,988	)		—			—			(9,988	)
Amortization of debt acquisition costs		3,531			—			—			—			3,531
Change in value of financial instruments		—			(1,104	)		—			—			(1,104	)
Equity in (earnings) loss of investees		(51,235	)		(4,040	)		—			55,275			—
Stock-based compensation charges		—			686			—			—			686
Postretirement healthcare benefits		—			53			—			—			53
Pension expense		—			(914	)		—			—			(914	)
Other long-term liabilities		—			(112	)		—			—			(112	)
Deferred income taxes		—			21,429			—			—			21,429
Changes in working capital														—
Accounts receivable		654			(2,374	)		(3,694	)		—			(5,414	)
Intercompany accounts receivable/payable		(894	)		(114	)		1,008			—			—
Inventories		—			(29,667	)		418			—			(29,249	)
Other current assets		(386	)		2,234			212			—			2,060
Accounts payable		—			11,988			(239	)		—			11,749
Accrued trade marketing expense		—			40			901			—			941
Accrued liabilities		8,125			(17,593	)		(1,626	)		—			(11,094	)

Net cash provided by (used in) operating activities		(58,699	)		67,398			1,031			—			9,730

Cash flows from investing activities
Capital expenditures		—			(18,804	)		(1	)		—			(18,805	)

Net cash used in investing activities		—			(18,804	)		(1	)		—			(18,805	)

Cash flows from financing activities
Repayment of capital lease obligations		—			(177	)		—			—			(177	)
Equity contribution		124			—			—			—			124
Reduction of equity contributions		(471	)		—			—			—			(471	)
Debt acquisition costs		(704	)		—			—			—			(704	)
Proceeds from short-term borrowings		71,000			324			—			—			71,324
Repayments of short-term borrowings		(5,000	)		(1,466	)		—			—			(6,466	)
Repayments of long term obligations		(6,250	)		—			—			—			(6,250	)

Net cash provided by (used in) financing activities		58,699			(1,319	)		—			—			57,380

Effect of exchange rate changes on cash		—			—			(34	)		—			(34	)
Net change in cash and cash equivalents		—			47,275			996			—			48,271
Cash and cash equivalents - beginning of period		—			5,297			702			—			5,999

Cash and cash equivalents - end of period	$	—		$	52,572		$	1,698		$	—			54,270

Supplemental disclosures of cash flow information:
Interest paid	$	99,729		$	289		$	—		$	—		$	100,018
Interest received		—			217			36			—			253
Income taxes paid		—			273			3,061			—			3,334

ITEM 2:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(dollars in millions, except where noted)

You should read the following discussion of our results of operations and financial condition together with the “Selected Financial Data” and the audited consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 28, 2008. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Item 1A: Risk Factors” section of our annual report on Form 10-K for the year ended December 28, 2008. Actual results may differ materially from those contained in any forward-looking statements.

Overview

We are a leading producer, marketer and distributor of high quality, branded food products, the results of which are managed and reported in two operating segments: dry foods and frozen foods. The dry foods segment consists of the following product lines (brands): baking (Duncan Hines^®), condiments (Vlasic^®, Open Pit^®), syrup (Mrs. Butterworth’s^® and Log Cabin^®) and canned meat (Armour^®). The frozen foods segment consists of the following product lines (brands): frozen dinners (Hungry-Man^®, Swanson^®), frozen prepared seafood (Van de Kamp’s^® and Mrs. Paul’s^®), frozen breakfast (Aunt Jemima^®), bagels (Lender’s^®), and frozen pizza (Celeste^®).

As previously disclosed on a Form 8-K, on July 13, 2009, we issued a press release announcing that Jeffrey P. Ansell left his position as Chief Executive Officer and as a Director of the Company to pursue other interests, effective July 10, 2009. The press release also announced that Robert J. Gamgort has been appointed as Chief Executive Officer and a Director, commencing on July 13, 2009. As a result of the change, we recorded a provision for severance in the amount of $0 and $2.4 million in Administrative expenses in the Consolidated Statement of Operations for the three and nine months ended September 27, 2009, respectively.

We also announced that, effective July 13, 2009, Roger K. Deromedi, who served as our Executive Chairman of the Board of Directors, will become Non-Executive Chairman.

Business Drivers and Measures

In operating our business and monitoring its performance, we pay attention to trends in the food manufacturing industry and a number of performance measures and operational factors. This discussion includes forward-looking statements that are based on our current expectations.

Industry Factors

Our industry is characterized by the following general trends:

•

Industry Growth. Growth in our industry is driven primarily by population and modest product selling price increases; however, price increases which accelerated in 2008 were offset by increased commodity costs. Incremental growth is principally driven by product, packaging and process innovation.

•

Competition. The food products business is competitive. Numerous brands and products compete for shelf space and sales, with competition based primarily on product quality, convenience, price, trade promotion, consumer promotion, brand recognition and loyalty, customer service and the ability to identify and satisfy emerging consumer preferences. In order to maintain and grow our business, we must be able to react to these competitive pressures.

•

Consumer Tastes and Trends. Consumer trends, such as changing health trends and focus on convenience and products tailored for busy lifestyles, present both opportunities and challenges for our business. In order to maintain and grow our business, we must react to these trends by offering products that respond to evolving consumer needs. In the current economic climate, consumer behavior has shifted toward an increase in food consumption at home. Additionally, consumers are looking for value alternatives, which have caused a shifting from traditional retail grocery to mass merchandisers and the value channel.

•

Customer Consolidation. In recent years, our industry had been characterized by consolidation in the retail grocery and food service industries, with mass merchandisers gaining market share. This trend could increase customer concentration within the industry.

Revenue Factors

Our net sales are driven principally by the following factors:

•

Shipments, which change as a function of changes in volume and in price; and

•

the costs that we deduct from shipments to reach net sales, which consist of:

•

Trade marketing expenses, which include the cost of temporary price reductions (“on sale” prices), promotional displays and advertising space in store circulars.

•

Slotting expenses, which are the costs of having certain retailers stock a new product, including amounts retailers charge for updating their warehousing systems, allocating shelf space and in-store systems set-up, among other things.

•

Consumer coupon redemption expenses, which are costs from the redemption of coupons we circulate as part of our marketing efforts.

We give detailed information on these factors below under “—Results of Operations.”

Cost Factors

Our important costs include the following:

•

Raw materials, such as sugar, cucumbers, flour (wheat), corn, soybean oils, dairy products, poultry, beef, pork and seafood, among others, are available from numerous independent suppliers but are subject to price fluctuations due to a number of factors, including changes in crop size, federal and state agricultural programs, export demand, weather conditions and insects, among others. We experienced a significant increase in inflation in 2008, particularly in wheat, corn and edible oils.

•

Packaging costs. Our broad array of products entails significant costs for packaging and is subject to fluctuations in the price of aluminum, glass jars, plastic trays, corrugated fiberboard and plastic packaging materials.

•

Freight and distribution. We use a combination of common carriers and inter-modal rail to transport our products from our manufacturing facilities to distribution centers and to deliver products to retailers from both those centers and directly from our manufacturing plants. Our freight and distribution costs are influenced by fuel costs.

•

Advertising and other marketing expenses. We record expenses related to advertising and other consumer and trade-oriented marketing programs under “Marketing and selling expenses” in our consolidated financial statements. A key strategy is to continue to invest in marketing that builds our iconic brands, and in 2009 we expect increased marketing spending versus 2008.

We give detailed information on these factors below under “—Results of Operations.”

Working Capital

Our working capital is primarily driven by accounts receivable and inventories, which fluctuate throughout the year due to seasonality in both sales and production, as described below in “—Seasonality.” We will continue to focus on reducing our working capital requirements while simultaneously maintaining our customer service levels and production needs. We have historically relied on internally generated cash flows and temporary borrowings under our revolving credit facility to satisfy our working capital requirements.

Other Factors

Other factors that have influenced our results of operations and may do so in the future include:

•

Interest Expense. As a result of the Blackstone Transaction, we have significant indebtedness. Although we expect to reduce our leverage over time, we expect interest expense to continue to be a significant component of our expenses. See “Liquidity and Capital Resources.”

•

Cash Taxes. We have significant tax-deductible intangible asset amortization and federal and state net operating losses, which we believe will result in minimal federal and state cash taxes in the next several years. We expect to continue to record federal and state non-cash provisions for deferred income taxes in the future.

•

Acquisitions and Consolidations. We believe we have the expertise to identify and integrate value-enhancing acquisitions to further grow our business. In recent years we have successfully integrated acquisitions. We have, however, incurred significant costs in connection with integrating these businesses and streamlining our operations.

•

Impairment of Goodwill and Long-Lived Assets. We test our goodwill and intangible assets annually or more frequently (if necessary) for impairment and have recorded impairment charges in recent years as well as 2008. The value of goodwill and intangibles from the allocation of purchase price from the Blackstone Transaction is derived from our business operating plans at that time and is therefore susceptible to an adverse change that could require an impairment charge.

We give detailed information on these factors below under “—Results of Operations.”

Seasonality

We experience seasonality in our sales and cash flows. Sales of frozen foods, including seafood, tend to be marginally higher during the winter months. Sales of pickles, relishes and barbecue sauces tend to be higher in the spring and summer months, demand for Duncan Hines products tends to be higher around the Easter, Thanksgiving and Christmas holidays, and sales of our Armour products tend to fluctuate during the summer months due to hurricane activity. We pack the majority of our pickles during a season extending from May through September and also increase our Duncan Hines inventories at that time in advance of the selling season. As a result, our inventory levels are higher during August, September and October, and thus we require more working capital during those months. We are a seasonal net user of cash in the third quarter of the calendar year, which may require us to draw on the revolving credit commitments under our senior credit facilities.

RESULTS OF OPERATIONS

The discussion below for each of the comparative periods is based upon net sales. We determine net sales in accordance with generally accepted accounting principles, or “GAAP”. We calculate our net sales by deducting trade marketing, slotting and consumer coupon redemption expenses from shipments. “Shipments” means gross sales less cash discounts, returns and “non-marketing” allowances. We calculate gross sales by multiplying the published list price of each product by the number of units of that product sold.

Shipments is a non-GAAP financial measure. We include it in our management’s discussion and analysis because we believe that it is a relevant financial performance indicator for our company as it measures the increase or decrease in our revenues caused by shipping more or less physical case volume multiplied by our published list prices. Shipments also include the effect of changes in selling prices. It is also a measure used by our management to evaluate our revenue performance. This measure is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.

The following table reconciles shipments to net sales for the total company, the dry foods segment and the frozen foods segment for the three and nine months ended September 27, 2009 and the three and nine months ended September 28, 2008.


	Total				Dry Foods				Frozen Foods
	Three months Ended September 27, 2009		Three months Ended September 28, 2008		Three months Ended September 27, 2009		Three months Ended September 28, 2008		Three months Ended September 27, 2009		Three months Ended September 28, 2008
Shipments	$	502.5	$	495.7	$	289.5	$	285.4	$	213.0	$	210.3
Less: Aggregate trade marketing and consumer coupon redemption expenses		106.7		104.9		53.3		54.2		53.4		50.7
Less: Slotting expense		1.6		1.6		1.6		1.6		—		—

Net sales	$	394.2	$	389.2	$	234.6	$	229.6	$	159.6	$	159.6


	Total				Dry Foods				Frozen Foods
	Nine months Ended September 27, 2009		Nine months Ended September 28, 2008		Nine months Ended September 27, 2009		Nine months Ended September 28, 2008		Nine months Ended September 27, 2009		Nine months Ended September 28, 2008
Shipments	$	1,603.8	$	1,487.0	$	923.2	$	831.0	$	680.6	$	656.0
Less: Aggregate trade marketing and consumer coupon redemption expenses		363.3		335.2		182.5		166.6		180.8		168.6
Less: Slotting expense		10.1		10.3		6.4		3.0		3.7		7.3

Net sales	$	1,230.4	$	1,141.5	$	734.3	$	661.4	$	496.1	$	480.1

Consolidated statements of operations

The following tables set forth statement of operations data expressed in dollars and as a percentage of net sales.


	Three months ended								Nine months ended
	September 27, 2009				September 28, 2008				September 27, 2009				September 28, 2008
Net sales	$	394.2	100.0	%	$	389.2	100.0	%	$	1,230.4	100.0	%	$	1,141.5	100.0	%
Cost of products sold		298.6	75.8	%		304.0	78.1	%		956.7	77.8	%		893.8	78.3	%

Gross profit		95.6	24.2	%		85.2	21.9	%		273.7	22.2	%		247.7	21.7	%
Operating expenses:
Marketing and selling expenses		26.0	6.6	%		22.2	5.7	%		91.0	7.4	%		88.1	7.7	%
Administrative expenses		17.5	4.4	%		12.4	3.2	%		47.0	3.8	%		36.8	3.2	%
Research and development expenses		1.2	0.3	%		0.8	0.2	%		3.3	0.3	%		2.6	0.2	%
Other expense (income), net		4.2	1.1	%		4.8	1.2	%		12.6	1.0	%		4.4	0.4	%

Total operating expenses	$	48.9	12.4	%	$	40.2	10.3	%	$	153.9	12.5	%	$	131.9	11.6	%

Earnings before interest and taxes	$	46.7	11.8	%	$	45.0	11.6	%	$	119.8	9.7	%	$	115.8	10.1	%


	Three months ended						Nine months ended
	September 27, 2009			September 28, 2008			September 27, 2009			September 28, 2008
Net sales
Dry foods	$	234.6		$	229.6		$	734.3		$	661.4
Frozen foods		159.6			159.6			496.1			480.1

Total	$	394.2		$	389.2		$	1,230.4		$	1,141.5

Earnings before interest and taxes
Dry foods	$	44.9		$	35.6		$	115.6		$	95.5
Frozen foods		7.4			12.7			19.4			20.3
Unallocated corporate expenses		(5.6	)		(3.3	)		(15.2	)		—

Total	$	46.7		$	45.0		$	119.8		$	115.8

Depreciation and amortization
Dry foods	$	7.7		$	7.4		$	22.9		$	21.9
Frozen foods		7.8			8.7			25.1			23.8

Total	$	15.5		$	16.1		$	48.0		$	45.7

Three months ended September 27, 2009 compared to three months ended September 28, 2008

Net sales. Shipments in the three months ended September 27, 2009 were $502.5 million, an increase of $6.8 million, compared to shipments in the three months ended September 28, 2008 of $495.7 million. The $6.8 million increase in shipments includes a 3.3% weighted average selling price increase. Net sales in the three months ended September 27, 2009 were $394.2 million, an increase of $5.0 million or 1.3%, compared to net sales in the three months ended September 28, 2008 of $389.2 million. The increase in net sales was the result of an increase in shipments of $6.8 million less a $1.8 million increase in aggregate trade marketing and consumer coupon redemption expenses. The 3.3% weighted average selling price increase combined with the higher rate of trade marketing and consumer coupon redemption expenses as a percentage of shipments results in an effective 3.2% weighted average net selling price increase. The stronger U.S. dollar versus the Canadian dollar reduced net sales by 0.3%.

Dry foods: Shipments in the three months ended September 27, 2009 were $289.5 million, an increase of $4.1 million. The increase was due to increases in sales of our private label, Canadian, and Duncan Hines businesses. The $4.1 million increase in shipments includes a 5.1% weighted average selling price increase. Aggregate trade marketing and consumer coupon redemption expenses and slotting expenses decreased $0.9 million. As a result, dry foods net sales increased $5.0 million, or 2.2%, for the three months ended September 27, 2009. The 5.1% weighted average selling price increase combined with the lower rate of trade marketing and consumer coupon redemption expenses as a percentage of shipments results in an effective 5.8% weighted average net selling price increase. The stronger U.S. dollar reduced net sales by 0.1%.

Frozen foods: Shipments in the three months ended September 27, 2009 were $213.0 million, an increase of $2.7 million. The $2.7 million increase in shipments is inclusive of a 0.8% weighted average selling price increase. The change was mainly driven by an increase in sales of our Hungry-Man and Seafood businesses, partially offset by decreases in our Swanson dinner and private label businesses. Aggregate trade and consumer coupon redemption expenses and slotting expenses increased $2.7 million in the three months ended September 27, 2009. As a result, frozen foods net sales were even with last year’s sales of $159.6 million. The 0.8% weighted average selling price increase combined with the higher rate of trade marketing and consumer coupon redemption expenses as a percentage of shipments results in an effective -0.5% weighted average net selling price decrease. The stronger U.S. dollar reduced net sales by 0.5%.

Gross profit. Gross profit was $95.6 million, or 24.2% of net sales in the three months ended September 27, 2009, versus gross profit of $85.2 million, or 21.9% of net sales in the three months ended September 28, 2008. The principal driver of the increased gross profit as a percent of net sales was reduced freight and distribution expenses which accounted for a 2.0 percentage point improvement. Additionally, selling price increases in excess of higher costs, and, to a lesser extent, favorable mix increased gross margin by 0.4 percentage points. These increases were partially offset by an increased rate of aggregate trade marketing (including slotting) and consumer coupon redemption expenses that are classified as reductions to net sales. The change in these costs reduced the gross profit percentage in 2009 by 0.1 percentage points.

Marketing and selling expenses. Marketing and selling expenses were $26.0 million, or 6.6% of net sales, in the three months ended September 27, 2009 compared to $22.2 million, or 5.7% of net sales, in the three months ended September 28, 2008. The increase was principally due to higher advertising expense of $2.8 million, primarily in our Vlasic and Duncan Hines businesses, and by higher market research spending.

Administrative expenses. Administrative expenses were $17.5 million, or 4.4% of net sales, in the three months ended September 27, 2009 compared to $12.4 million, or 3.2% of net sales, in the three months ended September 28, 2008. The principal drivers of the change for the three months ending September 27, 2009 are higher management incentive and equity related compensation accruals, along with spending on additional capabilities, both in terms of headcount and outside services.

Research and development expenses. Research and development expenses were $1.2 million, or 0.3% of net sales, in the three months ended September 27, 2009 compared with $0.8 million, or 0.2% of net sales, in the three months ended September 28, 2008.

Other expense (income), net. The following table shows other expense (income), net:


	Three Months Ended
In Thousands	September 27, 2009		September 28, 2008
Other expense (income), net consists of:
Amortization of intangibles/other assets		4,197		4,795

Total other expense (income), net	$	4,197	$	4,795

Amortization was $4.2 million in the three months ended September 27, 2009 as compared to $4.8 million in the three months ended September 28, 2008.

Earnings before interest and taxes. Earnings before interest and taxes (EBIT) increased $1.7 million to $46.7 million in the three months ended September 27, 2009 from $45.0 million in EBIT in the three months ended September 28, 2008. This increase in EBIT resulted from a $9.3 million increase in dry foods EBIT, a $5.3 million decrease in frozen foods EBIT, and a $2.3 million increase in unallocated corporate expenses, principally driven by higher management bonus and equity related compensation accruals.

Dry foods: Dry foods EBIT increased $9.3 million in the three months ended September 27, 2009, to $44.9 million from $35.6 million in the three months ended September 28, 2008. The dry foods EBIT increase of $9.3 million was principally driven by a 2.2% increase in net sales, which includes a $14.2 million impact of selling price increases on some of our brands, and reduced freight and distribution expenses which contributed to the EBIT increase.

Frozen foods: Frozen foods EBIT decreased by $5.3 million in the three months ended September 27, 2009, to $7.4 million from $12.7 million in the three months ended September 28, 2008. The frozen foods EBIT decrease of $5.3 million was principally driven by flat net sales, which is net of a $0.6 million impact of selling price increases on some of our brands. Additionally, higher manufacturing conversion costs and increases in market research expense contributed to the EBIT decline. These declines were partially offset by reduced freight and distribution expenses.

Interest expense, net. Interest expense, net was $28.3 million in the three months ended September 27, 2009, compared to $35.9 million in the three months ended September 28, 2008.

Included in interest expense, net, for the three months ended September 27, 2009 is $1.0 million of amortization of the cumulative mark to market adjustment for an interest rate swap that was de-designated for swap accounting in the fourth quarter of 2008 and subsequently terminated. The counterparty to the interest rate swap was Lehman Brothers Special Financing (LBSF), a subsidiary of Lehman Brothers, and the hedge was de-designed for swap accounting at the time of LBSF’s bankruptcy filing. At that time of de-designation, the cumulative mark to market adjustment was $11.5 million. As of September 27, 2009, the remaining unamortized balance is $6.9 million.

Excluding the impact of the item in the previous paragraph, the decrease in interest expense, net, was $8.6 million, of which $8.3 million was attributable to lower interest rates on our bank borrowings and $0.2 million of the decline was attributed to lower average bank debt levels. Included in the interest expense, net, amount was $3.6 million and $4.6 million for the three months ended September 27, 2009 and the three months ended September 28, 2008 respectively, recorded from losses on interest rate swap agreements, a net change of $1.0 million. We utilize interest rate swap agreements to reduce the potential exposure to interest rate movements and to achieve a desired proportion of variable versus fixed rate debt. Any gains or losses realized on the interest rate swap agreements are recorded as an adjustment to interest expense.

Provision for income taxes. The effective tax rate was 43.3% in the three months ended September 27, 2009, compared to 84.5% in the three months ended September 28, 2008. Based on cumulative losses as of September 27, 2009, the Company maintains a full valuation allowance amounting to $323.8 million against the federal and state net deferred tax assets excluding indefinite lived intangible assets. See Note 14 of the Notes to Consolidated Financial Statements for a discussion of this valuation allowance. Based on current year earnings and future profitability, we believe it is reasonably possible that we will release a portion of the valuation allowance in the near feature, although the exact timing is subject to change based on the level of profitability that we are able to achieve for the remainder of fiscal year 2009 and our visibility into future period results. Any release of the valuation allowance will be recorded during the period of release as a tax benefit increasing net earnings. The valuation allowance will be maintained until the Company is able to conclude that it is more likely than not that we will be able to realize some or all of our deferred tax assets. We will continue to monitor the need for a valuation allowance on a quarterly basis considering all of the available evidence.

Under Internal Revenue Code Section 382, we are a loss corporation. Section 382 of the Code places limitations on our ability to use the Predecessor net operating loss carry-forward to offset our income. The annual net operating loss limitation is approximately $14 to $18 million subject to other rules and restrictions.

Nine months ended September 27, 2009 compared to nine months ended September 28, 2008

Net sales. Shipments in the nine months ended September 27, 2009 were $1,603.8 million, an increase of $116.8 million, compared to shipments in the nine months ended September 28, 2008 of $1,487.0 million. The $116.8 million increase in shipments includes a 5.8% weighted average selling price increase. Net sales in the nine months ended September 27, 2009 were $1,230.4 million, an increase of $88.9 million or 7.8%, compared to net sales in the nine months ended September 28, 2008 of $1,141.5 million. The increase in net sales was the result of an increase in shipments of $116.8 million less a $27.9 million increase in aggregate trade marketing and consumer coupon redemption expenses and slotting expenses. The 5.8% weighted average selling price increase combined with the higher rate of trade marketing and consumer coupon redemption expenses as a percentage of shipments results in an effective 5.5% weighted average net selling price increase. The stronger U.S. dollar versus the Canadian dollar reduced net sales by 0.7%.

Dry foods: Shipments in the nine months ended September 27, 2009 were $923.2 million, an increase of $92.2 million. The increase was due to increases in sales of our Duncan Hines, private label, and Vlasic businesses. The $92.2 million increase in shipments includes a 7.3% weighted average selling price increase. Aggregate trade marketing and consumer coupon redemption expenses and slotting expenses increased $19.3 million in the nine months ended September 27, 2009. As a result, dry foods net sales increased $72.9 million, or 11.0%, for the nine months ended September 27, 2009. The 7.3% weighted average selling price increase combined with the lower rate of trade marketing and consumer coupon redemption expenses as a percentage of shipments results in an effective 7.7% weighted average net selling price increase. The stronger U.S. dollar reduced net sales by 0.4%.

Frozen foods: Shipments in the nine months ended September 27, 2009 were $680.6 million, an increase of $24.6 million. The $24.6 million increase in shipments is inclusive of a 3.8% weighted average selling price increase. The change was mainly driven by an increase in sales in our Seafood business. Aggregate trade and consumer coupon redemption expenses and slotting expenses increased $8.6 million in the nine months ended September 27, 2009. As a result, frozen foods net sales increased $16.0 million, or 3.3%, for the nine months ended September 27, 2009. The 3.8% weighted average selling price increase combined with the higher rate of trade marketing and consumer coupon redemption expenses as a percentage of shipments results in an effective 2.4% weighted average net selling price increase. The stronger U.S. dollar reduced net sales by 1.2%.

Gross profit. Gross profit was $273.7 million, or 22.2% of net sales in the nine months ended September 27, 2009, versus gross profit of $247.7 million, or 21.7% of net sales in the nine months ended September 28, 2008. The principal driver of the increased gross profit as a percent of net sales rate was reduced freight and distribution expenses accounting for a 1.8 percentage point improvement. Somewhat offsetting this improvement was higher raw material commodity costs (principally wheat, corn, edible oils, and to a lesser extent, dairy) and higher conversion costs, in excess of selling price increases, which reduced gross margin by 1.2 percentage points. In addition, the impact of the higher rate of aggregate trade marketing (including slotting) and consumer coupon redemption expenses reduced the gross profit percentage in 2009 by 0.1 percentage points.

Marketing and selling expenses. Marketing and selling expenses were $91.0 million, or 7.4% of net sales, in the nine months ended September 27, 2009 compared to $88.1 million, or 7.7% of net sales, in the nine months ended September 28, 2008. The increase was principally due to higher management incentive and equity related compensation accruals and increased market research expense.

Administrative expenses. Administrative expenses were $47.0 million, or 3.8% of net sales, in the nine months ended September 27, 2009 compared to $36.8 million, or 3.2% of net sales, in the nine months ended September 28, 2008. The principal drivers of the change for the nine months ending September 27, 2009 are higher management incentive and equity related compensation accruals, higher severance and recruiting provisions, principally related to the change in the CEO, and spending on additional capabilities, both in terms of headcount and outside services.

Research and development expenses. Research and development expenses were $3.3 million, or 0.3% of net sales, in the nine months ended September 27, 2009 compared with $2.6 million, or 0.2% of net sales, in the nine months ended September 28, 2008.

Other expense (income), net. The following table shows other expense (income), net:


	Nine Months Ended
In Thousands	September 27, 2009		September 28, 2008
Other expense (income), net consists of:
Amortization of intangibles/other assets	$	12,591	$	14,387
Gain on litigation settlement		—		(9,988	)
Other, net		—		7

Total other expense (income), net	$	12,591	$	4,406

In the nine months ended September 28, 2008, we recorded the impact of the final settlement of litigation related to excess leverage fees incurred by Aurora under its credit agreement prior to its acquisition by us in 2004, resulting in a reduction of the accrued liability and a gain on litigation settlement of $10.0 million. Amortization was $12.6 million in the nine months ended September 27, 2009 as compared to $14.4 million in the nine months ended September 28, 2008.

Earnings before interest and taxes. Earnings before interest and taxes (EBIT) increased $4.0 million to $119.8 million in the nine months ended September 27, 2009 from $115.8 million in EBIT in the nine months ended September 28, 2008. This increase in EBIT resulted from a $20.1 million increase in dry foods EBIT, a $0.9 million decrease in frozen foods EBIT, and a $15.2 million increase in unallocated corporate expenses. Unallocated corporate expenses increased due to the $10.0 million gain on litigation settlement in the nine months ended September 28, 2008, higher severance and recruiting provisions, principally related to the change in the CEO, and higher management incentive and equity related compensation accruals in the nine months ended September 27, 2009.

Dry foods: Dry foods EBIT increased $20.1 million in the nine months ended September 27, 2009, to $115.6 million from $95.5 million in the nine months ended September 28, 2008. The dry foods EBIT increase of $20.1 million was principally driven by a 11.0% increase in net sales, which includes a $57.5 million impact of selling price increases on some of our brands. Additionally, reduced freight and distribution expenses and lower consumer promotion expense contributed to the EBIT increase. These improvements were partially offset by higher overhead expense, principally related to higher management incentive and equity related compensation accruals

Frozen foods: Frozen foods EBIT decreased by $0.9 million in the nine months ended September 27, 2009, to $19.4 million from $20.3 million in the nine months ended September 28, 2008. The frozen foods EBIT decrease of $0.9 million was principally driven by higher raw material commodity costs and conversion costs in excess of selling price increases, increased overhead expense related to higher management incentive and equity related compensation accruals, and by increased market research expense. These declines to EBIT were partially offset by a 3.3% increase in net sales, which includes a $16.2 million impact of selling price increases on some of our brands, and reduced freight and distribution expenses.

Interest expense, net. Interest expense, net was $86.6 million in the nine months ended September 27, 2009, compared to $111.0 million in the nine months ended September 28, 2008.

Included in interest expense, net, for the nine months ended September 27, 2009 is $3.4 million of amortization of the cumulative mark to market adjustment for an interest rate swap that was de-designated for swap accounting in the fourth quarter of 2008 and subsequently terminated. The counterparty to the interest rate swap was Lehman Brothers Special Financing (LBSF), a subsidiary of Lehman Brothers, and the hedge was de-designed for swap accounting at the time of LBSF’s bankruptcy filing. At that time of de-designation, the cumulative mark to market adjustment was $11.5 million. As of September 27, 2009, the remaining unamortized balance is $6.9 million.

Excluding the impact of the item in the previous paragraph, the decrease in interest expense, net, was $27.8 million, of which $26.5 million was attributable to lower interest rates on our bank borrowings, and $0.6 million of the decline was attributed to lower average bank debt levels. Included in the interest expense, net, amount was $10.5 million and $9.9 million for the nine months ended September 27, 2009 and the nine months ended September 28, 2008 respectively, recorded from losses on interest rate swap agreements, a net change of $0.6 million. We utilize interest rate swap agreements to reduce the potential exposure to interest rate movements and to achieve a desired proportion of variable versus fixed rate debt. Any gains or losses realized on the interest rate swap agreements are recorded as an adjustment to interest expense.

Provision for income taxes. The effective tax rate was 67.4% in the nine months ended September 27, 2009, compared to 464.0% in the nine months ended September 28, 2008. Based on cumulative losses as of September 27, 2009, the Company maintains a full valuation allowance amounting to $323.8 million against the federal and state net deferred tax assets excluding indefinite lived intangible assets. See Note 14 of the Notes to Consolidated Financial Statements for a discussion of this valuation allowance. Based on current year earnings and future profitability, we believe it is reasonably possible that we will release a portion of the valuation allowance in the near feature, although the exact timing is subject to change based on the level of profitability that we are able to achieve for the remainder of fiscal year 2009 and our visibility into future period results. Any release of the valuation allowance will be recorded during the period of release as a tax benefit increasing net earnings. The valuation allowance will be maintained until the Company is able to conclude that it is more likely than not that we will be able to realize some or all of our deferred tax assets. We will continue to monitor the need for a valuation allowance on a quarterly basis considering all of the available evidence.

LIQUIDITY AND CAPITAL RESOURCES

Historical

Overview. Our cash flows are very seasonal. Typically we are a net user of cash in the third quarter of the calendar year (i.e., the quarter ending in September) and a net generator of cash over the balance of the year.

Our principal liquidity requirements have been, and we expect will be, for working capital and general corporate purposes, including capital expenditures and debt service. Capital expenditures are expected to be approximately $55 million in 2009. We have historically satisfied our liquidity requirements with internally generated cash flows and availability under our Revolving Credit Facility.

Statements of cash flows for the nine months ended September 27, 2009 compared to nine months ended September 28, 2008

Net cash provided by operating activities was $66.3 million for the nine months ended September 27, 2009 and was the result of net earnings excluding non-cash charges and credits of $91.9 million less an increase in working capital of $25.6 million. The increase in working capital was primarily the result of a $17.2 million increase in accounts receivable, an $11.3 million increase in inventory and a $10.5 million decrease in accrued trade marketing expense, partially offset by a $16.5 million increase in accrued liabilities. The increase in accounts receivable relates to higher sales as well as the timing of when those sales occurred. The aging of accounts receivable has remained unchanged from December. The increase inventory is the result of the normal seasonal build during the third quarter, while the decrease in accrued trade marketing is a result of the timing of when the trade marketing payments were made. The increase in accrued liabilities was driven by higher accruals for management incentive bonuses, severance and coupons. Net cash provided by operating activities was $9.7 million for the nine months ended September 28, 2008, which was the result of net earnings excluding non-cash charges of $40.7 million less an increase in working capital of $31.0 million. The increase in working capital was primarily the result of a $29.2 million increase in inventories that was due to the seasonal build during the third quarter and a $11.0 million decline in accrued liabilities (a result of the legal settlement with R2 Top Hat, Ltd., the payment of the 2007 performance bonus and an increase in accrued interest), partially offset by a $11.7 million increase in accounts payable. All other working capital accounts used $2.5 million in cash.

Net cash used in investing activities was $40.7 and $18.8 million for the nine months ended September 27, 2009 and September 28, 2008, respectively, which related entirely to capital expenditures. The principal driver of the increase is improvements to the pizza production process at our Jackson, TN facility.

Net cash used by financing activities was $27.5 million during the nine months ended September 27, 2009. The usage primarily related to $18.3 million in net repayments of the Revolving Credit Facility and $9.4 million in repayments of the term loan. Net cash provided by financing activities was $57.4 million during the nine months ended September 28, 2008 and primarily related to $64.9 million of net short-term borrowings. Offsetting the short-term borrowings was $6.3 million in repayments of the term loan and $0.7 million in debt acquisition costs.

The net of all activities resulted in a decrease in cash of $1.7 million during the nine months ended September 27, 2009 and a $48.3 million increase in cash during the nine months ended September 28, 2008.

Debt

As part of the Blackstone Transaction as described in Note 1 to our Consolidated Financial Statements, we entered into a $1,375.0 million credit agreement (the “Senior Secured Credit Facility”) in the form of (i) Term Loans in an initial aggregate amount of $1,250.0 million and (ii) Revolving Credit Commitments in the initial aggregate amount of $125.0 million (the “Revolving Credit Facility”). The term loan matures April 2, 2014. The Revolving Credit Facility matures April 2, 2013. Borrowings outstanding under the Revolving Credit Facility as of September 27, 2009 totaled $7.7 million. Borrowings outstanding under the Revolving Credit Facility as of December 28, 2008 totaled $26.0 million.

Lehman Commercial Paper Inc. (“LCPI”), a subsidiary of Lehman Brothers Holdings, has a total commitment within the Revolving Credit facility of $15.0 million and has not funded its portion on recent draws. We have no assurances that LCPI will participate in any future funding requests under the revolving credit facility. While we are exploring options to replace Lehman’s commitment within the facility, we cannot guarantee that we will be able to obtain such replacement loan commitments from other banks. However, based upon our projection of cash flows, we believe that we have sufficient liquidity to conduct our normal operations and do not believe that the potential reduction in available capacity under this revolving credit facility will have a material impact on our short-term or long-term liquidity.

The amount of the term loan that was owed to affiliates of The Blackstone Group as of September 27, 2009 and December 28, 2008, was $34.3 million and $34.6 million, respectively.

Our borrowings under the Senior Secured Credit Facility bear interest at a floating rate and are maintained as base rate loans or as Eurodollar loans. Base rate loans bear interest at the base rate plus the applicable base rate margin, as defined in the Senior Secured Credit Facility. The base rate is defined as the higher of (i) the prime rate and (ii) the Federal Reserve reported overnight funds rate plus 1/2 of 1%. Eurodollar loans bear interest at the adjusted Eurodollar rate, as described in the Senior Secured Credit Facility, plus the applicable Eurodollar rate margin.

The applicable margins with respect to our Senior Secured Credit Facility vary from time to time in accordance with the terms thereof and agreed upon pricing grids based on our leverage ratio as defined in the credit agreement. The applicable margins with respect to the Senior Secured Credit Facility are currently:

Applicable Rate (per annum)

Eurocurrency

Rate for

Revolving Loans

and Letter of

Credit Fees

Base Rate for

Revolving Loans

Commitment

Fees Rate

Eurocurrency

Rate for Term

Loans

Base Rate for

Term Loans

2.75%

1.75%

0.50%

2.75%

1.75%

The obligations under the Credit Agreement are unconditionally and irrevocably guaranteed by each of our direct or indirect domestic subsidiaries (collectively, the “Guarantors”). In addition, the credit agreement is collateralized by first priority or equivalent security interests in (i) all the capital stock of, or other equity interests in, each of our direct or indirect domestic subsidiaries and 65% of the capital stock of, or other equity interests in, our direct foreign subsidiary, or any of its domestic subsidiaries and (ii) certain of our tangible and intangible assets and those of the Guarantors (subject to certain exceptions and qualifications).

A commitment fee of 0.50% per annum is applied to the unused portion of the Revolving Credit Facility. For the three months and nine months ended September 27, 2009, the weighted average interest rate on the term loan was 3.04% and 3.18%, respectively. For the three and nine months ended September 28, 2008, the weighted average interest rate on the term loan was 5.43% and 6.13% , respectively. For the three and nine months ended September 27, 2009, the weighted average interest rate on the Revolving Credit Facility was 3.08% and 3.26%, respectively. For the three and nine months ended September 28, 2008, the weighted average interest rate on the Revolving Credit Facility was 5.78% and 6.13%, respectively. As of September 27, 2009 and September 28, 2008, the Eurodollar interest rate on the term loan facility was 3.01% and 5.50%, respectively.

We pay a fee for all outstanding letters of credit drawn against our Revolving Credit Facility at an annual rate equivalent to the Applicable Rate then in effect with respect to Eurodollar loans under the Revolving Credit Facility, less the fronting fee payable in respect of the applicable letter of credit. The fronting fee is equal to 0.125% per annum of the daily maximum amount then available to be drawn under such letter of credit. The fronting fees are computed on a quarterly basis in arrears. Total letters of credit issued under the Revolving Credit Facility agreement cannot exceed $25.0 million. As of September 27, 2009 and December 28, 2008, we had utilized $12.3 million and $15.2 million, respectively of the Revolving Credit Facility for letters of credit. As of September 27, 2009 there were borrowings of $7.7 million under the Revolving Credit Facility, so of the $117.3 million Revolving Credit Facility available, we had an unused balance of $105.1 million available for future borrowing and letters of credit. As of December 28, 2008, borrowings under the Revolving Credit Facility totaled $26.0 million, so of the $99.0 million Revolving Credit Facility available, we had an unused balance of $83.8 million available for future borrowing and letters of credit. The remaining amount that can be used for letters of credit as of September 27, 2009 and December 28, 2008 was $12.7 million and $9.8 million, respectively. If we are unsuccessful in replacing the commitment from LCPI, the amount available for future borrowings and letters of credit as of September 27, 2009 and December 28, 2008 would be $90.1 million and $68.8 million, respectively.

On April 2, 2007, as part of the Blackstone Transaction, we issued $325.0 million of 9.25% Senior Notes (the “Senior Notes”) due 2015, and $250.0 million of 10.625% Senior Subordinated Notes (the “Senior Subordinated Notes”) due 2017. The Senior Notes are general unsecured obligations of ours, effectively subordinated in right of payment to all of our existing and future senior secured indebtedness and guaranteed on a full, unconditional, joint and several basis by our wholly-owned domestic subsidiaries that guarantee our other indebtedness. The Senior Subordinated Notes are general unsecured obligations of ours, subordinated in right of payment to all of our existing and future senior indebtedness and guaranteed on a full, unconditional, joint and several basis by our wholly-owned domestic subsidiaries that guarantee our other indebtedness. See Note 16 of the Consolidated Financial Statements for Guarantor and Nonguarantor Financial Statements.

We may redeem some or all of the Senior Notes at any time prior to April 1, 2011, and some or all of the Senior Subordinated Notes at any time prior to April 1, 2012, in each case at a price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest to, the redemption date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date. The “Applicable Premium” is defined as the greater of (1) 1.0% of the principal amount of such note and (2) the excess, if any, of (a) the present value at such redemption date of (i) the redemption price of such Senior Note at April 1, 2011 or Senior Subordinated Note at April 1, 2012, plus (ii) all required interest payments due on such Senior Note through April 1, 2011 or Senior Subordinated Note through April 1, 2012 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 50 basis points over (b) the principal amount of such note.

We may redeem the Senior Notes or the Senior Subordinated Notes at the redemption prices listed below, if redeemed during the twelve-month period beginning on April 1^st of each of the years indicated below:


Senior Notes
Year	Percentage
2011	104.625	%
2012	102.313	%
2013 and thereafter	100.000	%

Senior Subordinated Notes
Year	Percentage
2012	105.313	%
2013	103.542	%
2014	101.771	%
2015 and thereafter	100.000	%

In addition, until April 1, 2010, we may redeem up to 35% of the aggregate principal amount of Senior Notes or Senior Subordinated Notes at a redemption price equal to 100% of the aggregate principal amount thereof, plus a premium equal to the rate per annum on the Senior Notes or Senior Subordinated Notes, as the case may be, plus accrued and unpaid interest and Additional Interest, if any, to the redemption date, subject to the right of holders of Senior Notes or Senior Subordinated Notes of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds received by us from one or more equity offerings; provided that (i) at least 50% of the aggregate principal amount of Senior Notes or Senior Subordinated Notes, as the case may be, originally issued under the applicable indenture remains outstanding immediately after the occurrence of each such redemption and (ii) each such redemption occurs within 90 days of the date of closing of each such equity offering.

In December 2007, we repurchased $51.0 million in aggregate principal amount of the 10.625% Senior Subordinated Notes at a discount price of $44.2 million. We currently have outstanding $199.0 million in aggregate principal amount of Senior Subordinated Notes.

As market conditions warrant, we and our subsidiaries, affiliates or significant shareholders (including The Blackstone Group L.P. and its affiliates) may from time to time, in our or their sole discretion, purchase, repay, redeem or retire any of our outstanding debt or equity securities (including any publicly issued debt or equity securities), in privately negotiated or open market transactions, by tender offer or otherwise.

The estimated fair value of our long-term debt, including the current portion, as of September 27, 2009, is as follows:


	September 27, 2009
Issue	Recorded Amount		Fair Value
Senior secured credit facility - term loan	$	1,225.0	$	1,151.5
9.25% Senior notes		325.0		325.0
10.625% Senior subordinated notes		199.0		199.0

	$	1,749.0	$	1,675.5

The fair value is based on the quoted market price for such notes and borrowing rates currently available to us for loans with similar terms and maturities.

We believe that our cash, other liquid assets and operating cash flow, together with available borrowings, will be sufficient to meet our operating expenses and capital expenditures and service our debt requirements as they become due. However, our ongoing ability to meet our substantial debt service and other obligations will be dependent upon our future performance which will be subject to business, financial and other risk factors. We will not be able to control many of these factors, such as economic conditions in the markets where we operate and pressure from competitors. We cannot be certain that our future cash flow will be sufficient to allow us to pay principal and interest on our debt, support our operations and meet our other obligations. If we do not have enough money, we may be required to refinance all or part of our existing debt, sell assets or borrow more money. We cannot guarantee that we will be able to do so on terms acceptable to us, if at all. In addition, the terms of existing or future debt agreements may restrict us from pursuing any of these alternatives.

Covenant Compliance

The following is a discussion of the financial covenants contained in our debt agreements.

Senior Secured Credit Facility

Our Senior Secured Credit Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to:

•

incur additional indebtedness and make guarantees;

•

create liens on assets;

•

engage in mergers or consolidations;

•

sell assets;

•

pay dividends and distributions or repurchase our capital stock;

•

make investments, loans and advances, including acquisitions;

•

repay the Senior Subordinated Notes or enter into certain amendments thereof; and

•

engage in certain transactions with affiliates.

The Senior Secured Credit Facility also contains certain customary affirmative covenants and events of default.

Senior Notes and Senior Subordinated Notes

Additionally, on April 2, 2007, we issued the Senior Notes and the Senior Subordinated Notes. The Senior Notes are general unsecured obligations, effectively subordinated in right of payment to all of our existing and future senior secured indebtedness, and guaranteed on a full, unconditional, joint and several basis by our wholly-owned domestic subsidiaries that guarantee other indebtedness of the Company. The Senior Subordinated Notes are general unsecured obligations, subordinated in right of payment to all of our existing and future senior indebtedness, and guaranteed on a full, unconditional, joint and several basis by our wholly-owned domestic subsidiaries that guarantee other indebtedness of the Company.

The indentures governing the Senior Notes and Senior Subordinated Notes limit our (and most or all of our subsidiaries’) ability to, subject to certain exceptions:

•

incur additional debt or issue certain preferred shares;

•

pay dividends on or make other distributions in respect of our capital stock or make other restricted payments;

•

make certain investments;

•

sell certain assets;

•

create liens on certain assets to secure debt;

•

consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

•

enter into certain transactions with our affiliates; and

•

designate our subsidiaries as unrestricted subsidiaries.

Subject to certain exceptions, the indentures governing the notes permit us and our restricted subsidiaries to incur additional indebtedness, including secured indebtedness.

Consolidated EBITDA

Pursuant to the terms of the Senior Secured Credit Facility, if at any time there are borrowings outstanding under the revolving credit facility in an aggregate amount greater than $10.0 million, we are required to maintain a ratio of consolidated total senior secured debt to Consolidated EBITDA (defined below) for the most recently concluded four consecutive fiscal quarters (the “Senior Secured Leverage Ratio”) less than a ratio starting at a maximum of 7.00:1 at September 30, 2007 and stepping down over time to 4.00:1 on March 31, 2011. Consolidated total senior secured debt is defined under the Senior Secured Credit Facility as our aggregate consolidated secured indebtedness less the aggregate amount of all unrestricted cash and cash equivalents. In addition, under the Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied to the Senior Secured Leverage Ratio, in the case of the Senior Secured Credit Facility, or to the ratio of Consolidated EBITDA to fixed charges for the most recently concluded four consecutive fiscal quarters or the Senior Secured Leverage Ratio, in the case of the Senior Notes and the Senior Subordinated Notes.

Consolidated EBITDA is defined as earnings (loss) before interest expense, income taxes, depreciation and amortization (“EBITDA”), further adjusted to exclude non-cash items, non-recurring items and other adjustment items permitted in calculating covenant compliance under the Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes. We believe that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA is appropriate to provide additional information to investors to demonstrate compliance with our financial covenants.

EBITDA and Consolidated EBITDA do not represent net earnings or loss or cash flow from operations as those terms are defined by Generally Accepted Accounting Principles (“GAAP”) and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. In particular, the definitions of Consolidated EBITDA in the Senior Secured Credit Facility and the indentures allow us to add back certain non-cash, extraordinary, unusual or non-recurring cash charges that are deducted in calculating net earnings or loss. However, these are expenses that may recur, vary greatly and are difficult to predict. While EBITDA and Consolidated EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, they are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation.

Our ability to meet the covenants specified above in future periods will depend on events beyond our control, and we cannot assure you that we will meet those ratios. A breach of any of these covenants in the future could result in a default under, or an inability to undertake certain activities in compliance with, the Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes, at which time the lenders could elect to declare all amounts outstanding under the Senior Secured Credit Facility to be immediately due and payable. Any such acceleration would also result in a default under the indentures governing the Senior Notes and Senior Subordinated Notes.

The following table provides a reconciliation from our net earnings (loss) to EBITDA and Consolidated EBITDA for the nine month periods ended September 27, 2009 and September 28, 2008 and the year ended December 28, 2008. The terms and related calculations are defined in the Senior Secured Credit Facility and the indentures governing the Senior Notes and Senior Subordinated Notes.


	Nine Months Ended September 27, 2009		Nine Months Ended September 28, 2008			Year Ended December 28, 2008
			(in thousands)
Net earnings (loss)	$	10,818	$	(18,494	)	$	(28,581	)
Interest expense, net		86,549		110,727			152,961
Income tax expense		22,384		23,575			27,036
Depreciation and amortization expense		48,004		45,650			62,509

EBITDA (unaudited)	$	167,755	$	161,458		$	213,925

Non-cash items (a)		2,142		(10,413	)		3,776
Non-recurring items (b)		5,226		1,705			2,653
Other adjustment items (c)		1,916		1,933			2,606
Net cost savings projected to be realized as a result of initiatives taken (d)		13,232		8,571			9,002

Consolidated EBITDA (unaudited)	$	190,271	$	163,254		$	231,962

Last twelve months Consolidated EBITDA (unaudited)	$	258,979

(a)	Non-cash items are comprised of the following:


	Nine Months Ended September 27, 2009			Nine Months Ended September 28, 2008			Year Ended December 28, 2008
				(in thousands)
Non-cash compensation charges (1)	$	2,398		$	686		$	806
Unrealized losses or (gains) resulting from hedging activities (2)		(256	)		(1,111	)		(2,142	)
Impairment charges or asset write-offs (3)		—			—			15,100
Non-cash gain on litigation settlement (4)		—			(9,988	)		(9,988	)

Total non-cash items	$	2,142		$	(10,413	)	$	3,776

(1)	For fiscal 2008 and the nine months ended September 28, 2008 and September 27, 2009, represents non-cash compensation charges related to the granting of equity awards.

(2)	For fiscal 2008 and the nine months ended September 28, 2008 and September 27, 2009, represents non-cash gains and losses resulting from mark-to-market adjustments of obligations under natural gas, heating oil (2009) and foreign exchange swap contacts (2008).

(3)	For fiscal 2008, represents impairment charges for the Van de Kamp’s ($8.0 million), Mrs. Paul’s ($5.6 million), Lenders ($0.9 million) and Open Pit tradenames ($0.6 million).

(4)	For fiscal 2008 and the nine months ended September 28, 2008, represents the excess of the accrued liability established in purchase accounting over the amount of the cash payment in the litigation settlement described in Note 5 to our consolidated financial statements.

(b)	Non-recurring items are comprised of the following:


	Nine Months Ended September 27, 2009		Nine Months Ended September 28, 2008		Year Ended December 28, 2008
			(in thousands)
Expenses in connection with an acquisition or other non-recurring merger costs (1)	$	1,024	$	485	$	671
Restructuring charges, integration costs and other business optimization expenses (2)		899		540		1,015
Employee severance and recruiting (3)		3,303		680		967

Total non-recurring items	$	5,226	$	1,705	$	2,653

(1)	For fiscal 2008 and the nine months ended September 28, 2008 and September 27, 2009, represents additional costs related to the Blackstone Transaction, primarily legal fees, and other expenses related to due diligence investigations.

(2)

For the nine months ended September 28, 2008, represents expenses incurred to reconfigure the freezer space in our Mattoon warehouse. For the nine months ended September 27, 2009 represents consultant expense incurred to execute yield and labor savings in our plants. For fiscal 2008, represents both the configuration of freezer space in our Mattoon warehouse, as well as consultant expense incurred to execute labor and yield savings in our plants.

(3)	For the nine months ended September 27, 2009, principally represents severance and recruiting costs related to the change in the CEO.

(c)	Other adjustment items are comprised of the following:


	Nine Months Ended September 27, 2009		Nine Months Ended September 28, 2008		Year Ended December 28, 2008
			(in thousands)
Management, monitoring, consulting and advisory fees (1)	$	1,916	$	1,933	$	2,606

Total other adjustments	$	1,916	$	1,933	$	2,606

(1)	For fiscal 2008 and the nine months ended September 28, 2008 and September 27, 2009, represents management/advisory fees and expenses paid to Blackstone.

(d)	Net cost savings projected to be realized as a result of initiatives taken:


	Nine Months Ended September 27, 2009		Nine Months Ended September 28, 2008		Year Ended December 28, 2008
			(in thousands)
Productivity initiatives in our manufacturing facilities, freight and distribution systems and purchasing programs (1)	$	13,232	$	8,571	$	9,002

Total net cost savings projected to be realized as a result of initiatives taken	$	13,232	$	8,571	$	9,002

(1)

For fiscal 2008 and the nine months ended September 28, 2008 and September 27, 2009, represents net cost savings projected to be realized as a result of specified actions taken or initiated, net of the amount of actual benefits realized. Such savings primarily relate to productivity initiatives in our manufacturing facilities, our freight and distribution systems, and our purchasing programs.

Our covenant requirements and actual ratios for the twelve months ended September 27, 2009 are as follows:


	Covenant Requirement	Actual Ratio
Senior Secured Credit Facility
Senior Secured Leverage Ratio (1)	5.75:1	4.75
Total Leverage Ratio (2)	Not applicable	6.78

Senior Notes and Senior Subordinated Notes (3)
Minimum Consolidated EBITDA to fixed charges ratio required to incur additional debt pursuant to ratio provisions (4)	2.00:1	1.98

(1)

Pursuant to the terms of the Senior Secured Credit Facility, if at any time there are borrowings outstanding under the Revolving Credit Facility in an aggregate amount greater than $10.0 million, we are required to maintain a consolidated total senior secured debt to Consolidated EBITDA ratio for the most recently concluded four consecutive fiscal quarters (the “Senior Secured Leverage Ratio”) less than a ratio starting at a maximum of 7.00:1 at September 30, 2007 and stepping down over time to 4.00:1 on March 31, 2011. Consolidated total senior secured debt is defined as our aggregate consolidated secured indebtedness less the aggregate amount of all unrestricted cash and cash equivalents.

(2)

The Total Leverage Ratio is not a financial covenant but is used to determine the applicable rate under the Senior Secured Credit Facility. The Total Leverage Ratio is calculated by dividing consolidated total debt less the aggregate amount of all unrestricted cash and cash equivalents by Consolidated EBITDA.

(3)

Our ability to incur additional debt and make certain restricted payments under the indentures governing the Senior Notes and Senior Subordinated Notes, subject to specified exceptions, is tied to a Consolidated EBITDA to fixed charges ratio of at least 2.00:1, except that we may incur certain debt and make certain restricted payments and certain permitted investments without regard to the ratio, such as our ability to (i) incur up to $1,600.0 million under credit facilities (as of September 27, 2009, we had $1,225.0 million in outstanding term loans, $7.7 million in borrowings under the Revolving Credit Facility and an unused balance of $105.1 million under the revolving credit facility, not taking into account Lehman Commercial Paper Inc’s. commitment of $15.0 million for the revolving credit facility as a result of their bankruptcy), (ii) incur up to $150.0 million under the general exception to the debt covenant, (iii) make investments in similar businesses having an aggregate fair market value not to exceed 3.0% of our total assets, (iv) make additional investments having an aggregate fair market value not to exceed 4.0% of our total assets and (v) make other restricted payments in an aggregate amount not to exceed 2.0% of our total assets.

(4)

Fixed charges is defined in the indentures governing the Senior Notes and Senior Subordinated Notes as (i) consolidated interest expense (excluding specified items) plus consolidated capitalized interest less consolidated interest income, plus (ii) cash dividends and distributions paid on preferred stock or disqualified stock.

INFLATION

Prior to 2005, inflation did not have a significant effect on us as we have been successful in mitigating the effects of inflation with cost reduction and productivity programs. Beginning 2005 and continuing into 2008, we experienced higher energy and commodity costs in production and higher fuel surcharges for product delivery. Although we have no such expectation, severe increases in inflation could have an adverse impact on our business, financial condition and results of operations.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB updated the authoritative guidance for business combinations. Under the December 2007 update, all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but the updated guidance changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. The updated guidance for business combinations is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. The authoritative guidance for business combinations amends the authoritative guidance for income tax accounting such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of updated guidance for business combinations (released in December 2007), would also apply the provisions of the updated guidance for business combinations. Early adoption is not permitted. The adoption of the updated authoritative guidance for business combinations will have an impact on our accounting for future business combinations on a prospective basis once adopted; however, the materiality of that impact cannot be determined.

In April 2009, the FASB updated the authoritative guidance for business combinations. The April 2009 update amends and clarifies the authoritative guidance of business combinations to address application issues associated with initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. The updated authoritative guidance for business combinations is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The implementation of this standard will have an impact on our accounting for future business combinations on a prospective basis once adopted; however, the materiality of that impact cannot be determined.

In December 2007, the FASB issued the authoritative guidance for noncontrolling interests in consolidated financial statements. This guidance is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2008, with earlier adoption prohibited. This guidance requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net earnings attributable to the noncontrolling interest will be included in consolidated net earnings on the face of the statement of operations. It also amends consolidation procedures for consistency with the requirements of the authoritative guidance for business combinations. The guidance for noncontrolling interests in consolidated financial statements also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. This guidance has not had any impact on the reporting of our financial position or the results of operations.

In March 2008, the FASB revised the authoritative guidance for derivative and hedge accounting. The guidance requires enhanced disclosures about derivative and hedging activities. The guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We adopted this guidance in the first quarter of 2009 and have included enhanced disclosure in Note 10.

In April 2009, the FASB updated the authoritative guidance for measuring fair value. The April 2009 update provides additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. The guidance is effective for interim and annual periods ending after June 15, 2009. We adopted the guidance during the quarter ended September 27, 2009 and it did not have a material impact on our consolidated financial position or results of operations.

In November 2008, the FASB updated the authoritative guidance for intangible assets. The November 2008 update provides guidance for accounting for defensive intangible assets subsequent to their acquisition in accordance with the authoritative guidance for business combinations and the authoritative guidance for measuring fair value by including the estimated useful life that should be assigned to such assets. The updated authoritative guidance for intangible assets is effective for intangible assets acquired on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The implementation of this guidance did not have a material impact on our consolidated financial position or results of operations.

In December 2008, the FASB issued authoritative guidance on defined benefit plans. The release provides guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The guidance is effective for fiscal years ending after December 15, 2009. The implementation of this guidance will not have a material impact on our consolidated financial position or results of operations.

In April 2009, the FASB amended the authoritative guidance on financial instruments to require disclosure of the fair value of financial instruments in interim financial statements as well as annual financial statements. The adoption of this guidance will have no impact to us as we already provide these disclosures in our interim financial statements.

In April 2009, the FASB issued authoritative guidance on investment in debt securities. This guidance clarifies the interaction of the impairment factors that should be considered when applied prospectively beginning in the second quarter of 2009. Upon adoption during the quarter ended September 27, 2009, this guidance did not have a material impact on our consolidated financial position or results of operations.

In May 2009, the FASB issued the authoritative guidance on subsequent events. The guidance is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This statement sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements. It also sets forth the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make for those events or transactions. The guidance is effective for fiscal years and interim periods ended after June 15, 2009 and will be applied prospectively. We adopted the new disclosure requirement in our June 28, 2009 Consolidated Financial Statements.

In June 2009, the FASB issued the authoritative guidance for variable interest entities. This guidance clarifies the characteristics that identify a variable interest entity (VIE) and changes how a reporting entity identifies a primary beneficiary that would consolidate the VIE from a quantitative risk and rewards calculation to a qualitative approach based on which variable interest holder has controlling financial interest and the ability to direct the most significant activities that impact the VIE’s economic performance. This guidance requires the primary beneficiary assessment to be performed on a continuous basis. It also requires additional disclosures about an entity’s involvement with VIE, restrictions on the VIE’s assets and liabilities that are included in the reporting entity’s consolidated balance sheet, significant risk exposures due to the entity’s involvement with the VIE, and how its involvement with a VIE impacts the reporting entity’s consolidated financial statements. The authoritative guidance for variable interest entities is effective for fiscal years beginning after November 15, 2009. We are currently evaluating this guidance and anticipate that it will not have a material impact on our consolidated financial position or results of operations.

In June 2009, the FASB updated guidance for generally accepted accounting principles (“GAAP”). The updated guidance establishes only two levels of U.S. GAAP, authoritative and nonauthoritative. The FASB Accounting Standards Codification (the “Codification”) will become the source of authoritative, nongovernmental GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. The June 2009 updated guidance is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We adopted this guidance in the third quarter of 2009.

In August 2009, the FASB updated the authoritative guidance for measuring the fair value of liabilities. The update provides guidance on the valuation techniques that are used in measuring the fair market value of a liability when quoted price in an active market is not available. The techniques include using the quoted price for identical or similar liabilities. Other techniques include the use of an income approach, such as present value techniques, or a market approach, such as a technique that is based on the amount at the measurement date that a reporting entity would pay to transfer the identical liability or pay to receive the identical liability. The guidance is effective for the first reporting period after issuance. We adopted this guidance in the third quarter 2009 and it did not have a material impact on our consolidated financial position or results of operations.

ITEM 3:

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

FINANCIAL INSTRUMENTS

Risk Management Objective of Using Derivatives

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposure to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. The primary risks managed by using derivative instruments are interest rate risk, foreign currency exchange risk and commodity price risk. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates, foreign exchange rates or commodity prices.

We manage interest rate risk based on the varying circumstances of anticipated borrowings and existing variable and fixed rate debt, including our revolving line of credit. Examples of interest rate management strategies include capping interest rates using targeted interest cost benchmarks, hedging portions of the total amount of debt, or hedging a period of months and not always hedging to maturity, and at other times locking in rates to fix interests costs.

Certain parts of our foreign operations in Canada expose us to fluctuations in foreign exchange rates. Our goal is to reduce our exposure to such foreign exchange risks on our foreign currency cash flows and fair value fluctuations on recognized foreign currency denominated assets, liabilities and unrecognized firm commitments to acceptable levels primarily through the use of foreign exchange-related derivative financial instruments. We enter into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of our functional currency, the U.S. dollar.

We purchase raw materials in quantities expected to be used in a reasonable period of time in the normal course of business. We generally enter into agreements for either spot market delivery or forward delivery. The prices paid in the forward delivery contracts are generally fixed, but may also be variable within a capped or collared price range. Forward derivative contracts on certain commodities are entered into to manage the price risk associated with forecasted purchases of materials used in our manufacturing process.

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges in accordance with the authoritative guidance for derivative and hedge accounting involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of September 27, 2009 we had the following interest rate swaps (in aggregate) that were designated as cash flow hedges of interest rate risk:

Product

Number of
Instruments

Notational Amount

Fixed Rate Range

Index

Trade Dates

Maturity Dates

Interest Rate Swaps

$685.7 million

1.43% - 3.33%

USD-LIBOR-BBA

Oct 2008 - Mar

2009

Jan 2011 - July
2012

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. Due to the counterparty bank declaring bankruptcy in October 2008, we discontinued prospectively the hedge accounting on our interest rate derivatives with Lehman Brothers Speciality Financing on the bankruptcy date as those hedging relationships no longer met the authoritative guidance for derivative and hedge accounting. We terminated these positions during the fourth quarter of 2008. We continue to report the net gain or loss related to the discontinued cash flow hedge in AOCI which is expected to be reclassified into earnings during the original contractual terms of the derivative agreements as the hedged interest payments are expected to occur as forecasted. For the three and nine months ended September 27, 2009, $1.0 million and $3.4 million, respectively, was reclassified as an increase to interest expense relating to the terminated hedges. During the twelve months ending September 26, 2010, we estimate that an additional $17.2 million will be reclassified as an increase to Interest expense relating to both active and terminated hedges.

Cash Flow Hedges of Foreign Exchange Risk

Our operations in Canada have exposed us to changes in the US Dollar – Canadian Dollar (USD-CAD) foreign exchange rate. From time to time, our Canadian subsidiary purchases inventory denominated in US Dollars (USD), a currency other than their functional currency. Our subsidiary sells that inventory in Canadian dollars. Our subsidiary uses currency forward and collar agreements to manage our exposure to fluctuations in the USD-CAD exchange rate. Currency forward agreements involve fixing the USD-CAD exchange rate for delivery of a specified amount of foreign currency on a specified date. Currency collar agreements involve the sale of Canadian Dollar (CAD) currency in exchange for receiving US dollars if exchange rates rise above an agreed upon rate and sale of USD currency in exchange for receiving CAD dollars if exchange rates fall below an agreed upon rate at specified dates.

As of September 27, 2009, we had the following foreign currency exchange contracts (in aggregate) that were designated as cash flow hedges of interest rate risk:

Product

Number of
Instruments

Notational
Sold in Aggregate

Notational
Purchased in
Aggregate

USD to CAD
Exchange
Rates

Trade Date

Maturity Dates

CAD Forward

$54.6 million CAD

$49.9 million USD

.971-1.21136

Oct 2007 - May
2009

Oct 2009 - Dec
2010

CAD Collar

$12.0 million CAD

$10.6 million USD

1.13

May 2009

Jan 2010 - Dec
2010

According to the authoritative guidance for derivative and hedge accounting, the effective portion of changes in the fair value of derivatives designated that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI on the Consolidated Balance Sheet and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative, as well as amounts excluded from the assessment of hedge effectiveness, are recognized directly in Cost of products sold in the Consolidated Statement of Operations. Hedge ineffectiveness on foreign exchange cash flow hedges amounted to losses and gains, respectively of less than $0.1 million in the three and nine months ended September 27, 2009, respectively.

Non-designated Hedges of Commodity Risk

Derivatives not designated as hedges are not speculative and are used to manage our exposure to commodity price risk but do not meet the authoritative guidance for derivative and hedge accounting. From time to time, we enter into natural gas commodity forward contracts to fix the price of natural gas and heating oil purchases at a future delivery date. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in Cost of products sold in the Consolidated Statement of Operations.

As of September 27, 2009, we had the following natural gas swaps (in aggregate) and heating oil swaps (in aggregate) that were not designated in qualifying hedging relationships:


Product	Number of Instruments	Notational Amount	Price	Trade Dates	Maturity Dates
Natural Gas Swap	4	95,091 - 145,160 MMBTU’s	$5.27-$6.50 per MMBTU	Dec 2008 - Mar 2009	Oct 2009 - June 2010
Heating Oil Swap	1	9,000 BBL’s	$45.15 per BBL	Mar 2009	Dec 2009

The table below presents the fair value of our derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of September 27, 2009.


(in millions)	Tabular Disclosure of Fair Values of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest Rate Contracts		$	—	Other long-term liabilities	$	20.0
Foreign Exchange Contracts	Other current assets		0.8	Accrued liabilities		0.8
Foreign Exchange Contracts			—	Other long-term liabilities		0.1

Total derivatives designated as hedging instruments as of September 27, 2009		$	0.8		$	20.9

Derivatives not designated as hedging instruments
Natural Gas Contracts		$	—	Accrued liabilities	$	0.1
Heating Oil Contracts			0.1			—

Total derivatives not designated as hedging instruments as of September 27, 2009		$	0.1		$	0.1

The tables below present the effect of our derivative financial instruments on the Consolidated Statements of Operations and Accumulated other comprehensive (loss) income for the three and nine months ended September 27, 2009.

Tabular Disclosure of the Effect of Derivative Instruments for the Three and Nine Months Ended September 27, 2009

(in millions)

Gain/(Loss)


Derivatives in Cash Flow Hedging Relationships	Recognized in AOCI on Derivative (Effective Portion)			Effective portion reclassified from AOCI to:	Reclassified from AOCI into Earnings (Effective Portion)			Ineffective portion reclassified from AOCI to:	Recognized in Earnings on Derivative (Ineffective Portion)
Interest Rate Contracts	$	(8.9	)	Interest expense	$	(4.6	)	Interest expense	$	—
Foreign Exchange Contracts		(2.0	)	Cost of products sold		0.1		Cost of products sold		—

Three months ended September 27, 2009	$	(10.9	)		$	(4.5	)		$	—

Interest Rate Contracts	$	(18.6	)	Interest expense	$	(13.9	)	Interest expense	$	—
Foreign Exchange Contracts		(3.2	)	Cost of products sold		2.2		Cost of products sold		—

Nine months ended September 27, 2009	$	(21.8	)		$	(11.7	)		$	—


Derivatives Not Designated as Hedging Instruments	Recognized in Earnings on:	Recognized in Earnings on Derivative
Natural Gas Contracts	Cost of products sold	$	(0.1	)
Heating Oil Contracts	Cost of products sold		—

Three months ended September 27, 2009		$	(0.1	)

Natural Gas Contracts	Cost of products sold	$	(1.3	)
Heating Oil Contracts	Cost of products sold		0.1

Nine months ended September 27, 2009		$	(1.2	)

Credit-risk-related Contingent Features

We have an agreement with Barclays that contains a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of September 27, 2009, the fair value of interest rate swaps in a net liability position related to these agreements was $22.1 million, which includes accrued interest of $1.0 million but excludes any adjustment for nonperformance risk of $1.1 million. For the same counterparty, the fair value of foreign exchange derivative contracts in a net liability position related to these agreements was $1.0 million, which excludes any adjustment for nonperformance risk of $0.1 million. For the same counterparty, the fair value of natural gas swaps in a net liability position related to these agreements was $0.1 million. If we breached any of these provisions, we could be required to settle our obligations under the agreements at their termination value of $23.2 million. As of September 27, 2009, we have not posted any collateral related to these agreements.

ITEM 4:

CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act (as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 27, 2009. Based upon that evaluation and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are effective.

In addition, there was no change in our internal control over financial reporting (as defined in Rule 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended September 27, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1:

LEGAL PROCEEDINGS

There have been no material changes.

ITEM 1A:

RISK FACTORS

There have been no material changes from risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 28, 2008.

ITEM 2:

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3:

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4:

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5:

OTHER INFORMATION

None

ITEM 6:

EXHIBITS


Exhibit Number		Description of exhibit

2.1		Agreement and Plan of Merger, dated as of February 10, 2007, by and among Crunch Holding Corp., Peak Holdings LLC and Peak Acquisition Corp. (previously filed as Exhibit 2.1 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

2.2		Agreement and Plan of Reorganization and Merger, by and between Aurora Foods Inc. and Crunch Equity Holding, LLC, dated as of November 25, 2003 (previously filed as Exhibit 2.1 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. filed with the SEC on August 20, 2004 (Commission File Number: 333-118390), and incorporated herein by reference).

2.3		Amendment No. 1, dated January 8, 2004, to the Agreement and Plan of Reorganization and Merger, by and between Aurora Foods Inc. and Crunch Equity Holding, LLC, dated as of November 25, 2003 (previously filed as Exhibit 2.2 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. filed with the SEC on August 20, 2004 (Commission File Number: 333-118390), and incorporated herein by reference).

2.4		Agreement and Plan of Merger, dated March 19, 2004, by and between Aurora Foods, Inc. and Pinnacle Foods Holding Corporation (previously filed as Exhibit 2.3 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. filed with the SEC on August 20, 2004 (Commission File Number: 333-118390), and incorporated herein by reference).

2.5		Asset Purchase Agreement, dated March 1, 2006, by and between The Dial Corporation and Pinnacle Foods Groups Inc. (previously filed as Exhibit 10.1 to the Current Report on Form 8-K of Pinnacle Foods Group Inc. filed with the SEC on March 1, 2006 (Commission File Number: 333-118390), and incorporated herein by reference).

3.1		Pinnacle Foods Finance LLC Certificate of Formation (previously filed as Exhibit 3.1 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

3.2		Pinnacle Foods Finance LLC Amended and Restated Limited Liability Company Agreement, dated as of April 2, 2007 (previously filed as Exhibit 3.2 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).



3.3		Pinnacle Foods Finance Corp. Certificate of Incorporation (previously filed as Exhibit 3.3 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

3.4		Pinnacle Foods Finance Corp. Bylaws (previously filed as Exhibit 3.4 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

3.5		Pinnacle Foods Group LLC Certificate of Formation (previously filed as Exhibit 3.5 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

3.6		Pinnacle Foods Group LLC Limited Liability Company Agreement (previously filed as Exhibit 3.6 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

3.7		Pinnacle Foods International Corp. Certificate of Incorporation. (previously filed as Exhibit 3.7 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

3.8		Pinnacle Foods International Corp. Bylaws. (previously filed as Exhibit 3.8 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

3.9		State of Delaware Certificate of Conversion, dated September 25, 2007, converting Pinnacle Foods Group Inc. from a Corporation to a Limited Liability Company(previously filed as Exhibit 3.9 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.1		Senior Notes Indenture, dated as of April 2, 2007, among the Issuers, the Guarantors and the Trustee (previously filed as Exhibit 4.1 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.2		Senior Subordinated Notes Indenture, dated as of April 2, 2007, among the Issuers, the Guarantors and the Trustee (previously filed as Exhibit 4.2 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.3		Registrations Rights Agreement, dated as of April 2, 2007, among the Issuers, the Guarantors and Lehman Brothers Inc. and Goldman, Sachs & Co. (previously filed as Exhibit 4.3 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.4		Form of Rule 144A Global Note, 9.25% Senior Notes due 2015 (previously filed as Exhibit 4.4 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.5		Form of Regulation S Global Note, 9.25% Senior Notes due 2015 (previously filed as Exhibit 4.5 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.6		Form of Rule 144A Global Note, 10.625% Senior Subordinated Notes due 2017 (previously filed as Exhibit 4.6 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.7		Form of Regulation S Global Note, 10.625% Senior Subordinated Notes due 2017 (previously filed as Exhibit 4.7 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).



4.8		Credit Agreement, dated as of April 2, 2007, among Peak Finance LLC (to be merged with and into Pinnacle Foods Finance LLC), Peak Finance Holdings LLC, Lehman Commercial Paper Inc., Goldman Sachs Credit Partners L.P. and other lenders party hereto (previously filed as Exhibit 4.8 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.9		Security Agreement, dated as of April 2, 2007, among Peak Finance LLC (to be merged with and into Pinnacle Foods Finance LLC), Peak Finance Holdings LLC, Certain Subsidiaries of Borrower and Holdings identified herein and Lehman Commercial Paper Inc. (previously filed as Exhibit 4.9 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.10		Guaranty, dated as of April 2, 2007, among Peak Finance Holdings LLC, Certain Subsidiaries of Borrower and Holdings identified herein and Lehman Commercial Paper Inc. (previously filed as Exhibit 4.10 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

4.11		Intellectual Property Security Agreement, dated as of April 2, 2007, among Peak Finance LLC (to be merged with and into Pinnacle Foods Finance LLC), Peak Finance Holdings LLC, Certain Subsidiaries of Borrower and Holdings identified herein and Lehman Commercial Paper Inc. (previously filed as Exhibit 4.11 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.3+		Employment Agreement, dated April 2, 2007 (Jeffrey P. Ansell) (previously filed as Exhibit 10.3 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.4+		Employment Agreement, dated April 2, 2007 (Craig Steeneck) (previously filed as Exhibit 10.4 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.5+		Director Service Agreement, dated April 2, 2007 (Roger Deromedi) (previously filed as Exhibit 10.5 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.6		Transaction and Advisory Fee Agreement, dated as of April 2, 2007, between Peak Finance LLC and Blackstone Management Partners V L.L.C. (previously filed as Exhibit 10.6 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.7		Trademark License Agreement by and between The Dial Corporation and Conagra, Inc., dated July 1, 1995 (previously filed as Exhibit 10.33 to the Annual Report on Form 10-K of Pinnacle Foods Group Inc. for the fiscal year ended December 25, 2005 (Commission File Number: 333-118390), and incorporated herein by reference).

10.8		Tax Sharing Agreement, dated as of November 25, 2003, by and among Crunch Holding Corp., Pinnacle Foods Holding Corporation, Pinnacle Foods Corporation, Pinnacle Foods Management Corporation, Pinnacle Foods Brands Corporation, PF Sales (N. Central Region) Corp., PF Sales, LLC, PF Distribution, LLC, PF Standards Corporation, Pinnacle Foods International Corp., Peak Finance Holdings LLC, Pinnacle Foods Finance Corp., Pinnacle Foods Finance LLC and Pinnacle Foods Group LLC (previously filed as Exhibit 10.8 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.9		Lease, dated May 23, 2001, between Brandywine Operating Partnership, L.P. and Pinnacle Foods Corporation (Cherry Hill, New Jersey) (previously filed as Exhibit 10.25 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. filed with the SEC on August 20, 2004 (Commission File Number: 333-118390), and incorporated herein by reference).



10.10		Lease, dated August 10, 2001, between 485 Properties, LLC and Pinnacle Foods Corporation (Mountain Lakes, New Jersey); Amendment No. 1, dated November 23, 2001; Amendment No. 2, dated October 16, 2003 (previously filed as Exhibit 10.26 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. filed with the SEC on August 20, 2004 (Commission File Number: 333-118390), and incorporated herein by reference).

10.11		Swanson Trademark License Agreement (U.S.) by and between CSC Brands, Inc. and Vlasic International Brands Inc., dated as of March 24, 1998 (previously filed as Exhibit 10.27 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. filed with the SEC on August 20, 2004 (Commission File Number: 333-1183900), and incorporated herein by reference).

10.12		Swanson Trademark License Agreement (Non-U.S.) by and between Campbell Soup Company and Vlasic International Brands Inc., dated as of March 26, 1998 (previously filed as Exhibit 10.28 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. filed with the SEC on August 20, 2004 (Commission File Number: 333-118390), and incorporated herein by reference).

10.13		Technology Sharing Agreement by and between Campbell Soup Company and Vlasic Foods International Inc., dated as of March 26, 1998 (previously filed as Exhibit 10.29 to the Registration Statement on Form S-4 of Pinnacle Foods Group Inc. with the SEC on August 20, 2004 (Commission File Number: 333-118390), and incorporated herein by reference).

10.14		Amendment to Lease Agreement, dated February 10, 2007 (previously filed as Exhibit 10.1 to the Current Report on Form 8-K of Pinnacle Foods Group Inc. filed with the SEC on February 15, 2007 (Commission File Number: 333-118390), and incorporated herein by reference).

10.15		Securityholders Agreement, dated as of April 2, 2007, among Peak Holdings LLC and the other parties hereto (previously filed as Exhibit 10.15 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.16+		Peak Holdings LLC 2007 Unit Plan, effective as of April 2, 2007 (previously filed as Exhibit 10.16 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.17+		Peak Holdings LLC Form of Award Management Unit Subscription Agreement (previously filed as Exhibit 10.17 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.18		Securityholders Agreement, dated as of September 21, 2007 among Crunch Holding Corp. and the other parties hereto (previously filed as Exhibit 10.18 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.19+		Crunch Holding Corp. 2007 Stock Incentive Plan, effective as of August 8, 2007 (previously filed as Exhibit 10.19 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.20+		Crunch Holding Corp. 2007 Stock Incentive Plan Form of Nonqualified Stock Option Agreement (previously filed as Exhibit 10.20 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.21		Trademark License Agreement, dated as of July 9, 1996, by and between The Quaker Oats Company, The Quaker Oats Company of Canada Limited and Van de Kamp’s, Inc. (previously filed as Exhibit 10.21 to the Registration Statement on Form S-4 of Pinnacle Foods Finance LLC filed with the SEC on December 21, 2007 (Commission File Number: 333-148297), and incorporated herein by reference).

10.22+		Enhanced Target Annual Bonus letter, dated June 11, 2007 (Craig Steeneck) (previously filed as Exhibit 10.22 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).



10.23+		Supplemental Peak Holdings LLC Management Unit Subscription Agreement, dated June 11, 2007 (Craig Steeneck) (previously filed as Exhibit 10.23 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.24+		Modification of the Enhanced Target Annual Bonus letter, dated February 27, 2009 (Craig Steeneck) (previously filed as Exhibit 10.24 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.25+		Modification of the Supplemental Peak Holdings LLC Management Unit Subscription Agreement, dated February 27, 2009 (Craig Steeneck) (previously filed as Exhibit 10.25 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.26+		Modification of the Peak Holdings LLC Form of Award Management Unit Subscription Agreement (previously filed as Exhibit 10.26 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.27+		Modification of the Crunch Holding Corp. 2007 Stock Incentive Plan Form of Nonqualified Stock Option Agreement (previously filed as Exhibit 10.27 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.28+		Employment offer letter, dated December 11, 2003 (Chris Kiser) (previously filed as Exhibit 10.28 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.29+		Severance benefit letter, dated October 7, 2008 (Chris Kiser) (previously filed as Exhibit 10.29 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.30+		Employment offer letter dated May 25, 2001 (Lynne M. Misericordia) (previously filed as Exhibit 10.30 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.31+		Employment offer letter dated May 25, 2001 (M. Kelley Maggs) (previously filed as Exhibit 10.31 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.32+		Separation Agreement, dated July 31, 2009 (Jeffrey P. Ansell). Previously filed as Exhibit 10.32 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on August 12, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.33+		Employment Agreement, dated July 13, 2009 (Robert J. Gamgort). Previously filed as Exhibit 10.33 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on August 12, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.34+		Peak Holdings LLC Management Unit Subscription Agreement, dated July 13, 2009 (Robert J. Gamgort). Previously filed as Exhibit 10.34 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on August 12, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

10.35+		Amendment to Director Services Agreement, dated July 31, 2009 (Roger Deromedi). Previously filed as Exhibit 10.35 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on August 12, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

24.1		Power of Attorney (included in signature page) (previously filed as Exhibit 24.1 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 3, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.


32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (A)

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (A)

+	Identifies exhibits that consist of a management contract or compensatory plan or arrangement.

(A)

Pursuant to Commission Release No. 33-8212, this certification will be treated as “accompanying” this Form 10-Q and not “filed” as part of such report for purposes of Section 18 of Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

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


PINNACLE FOODS FINANCE LLC

By:		/s/ CRAIG STEENECK
Name:		Craig Steeneck
Title:		Executive Vice President and Chief Financial Officer (acting in both his capacity as authorized signatory on behalf of the registrant and as principal financial officer)
Date:		November 10, 2009

Pinnacle Foods Finance LLC - FORM 10-Q - November 10, 2009

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Pinnacle Foods Finance LLC Reports

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