Pinnacle Foods Finance 10-Q 2011 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

_____________________

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

For the quarterly period ended September 25, 2011

OR

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

For the transition period from ____________to _____________.

Commission File Number 333-148297

___________________________________

Pinnacle Foods Finance LLC

(Exact name of registrant as specified in its charter)

___________________________________

Delaware	20-8720036
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
399 Jefferson Road Parsippany, New Jersey	07054
(Address of Principal Executive Offices)	(Zip Code)

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

___________________________________

_________________

(Former name or former address, if changed since last report)

Former address:

1 Bloomfield Avenue

Mt. Lakes, New Jersey 07046

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  ý

(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 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  ý    No  ¨

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	ý	Smaller Reporting Company	¨

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

Yes  ¨    No  ý

As of November 9, 2011, 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 STATEMENTSOF 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 Activites	6
2.	Interim Financial Statements	6
3.	Fair Value Measurements	7
4.	Other Expense (Income), net	9
5.	Balance Sheet Information	10
6.	Goodwill and Other Assets	11
7.	Restructuring Charges	14
8.	Debt and Interest Expense	16
9.	Pension and Retirement Plans	21
10.	Financial Instruments	23
11.	Commitments and Contingencies	29
12.	Related Party Transactions	30
13.	Segments	31
14.	Income Taxes	33
15.	Recently Issued Accounting Pronouncements	34
16.	Guarantor and Nonguarantor Statements	35
ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	46
ITEM 3:	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	69
ITEM 4:	CONTROLS AND PROCEDURES	75
PART II – OTHER INFORMATION		75
ITEM 1:	LEGAL PROCEEDINGS	75
ITEM 1A:	RISK FACTORS	75
ITEM 2:	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	75
ITEM 3:	DEFAULTS UPON SENIOR SECURITIES	75
ITEM 4:	REMOVED AND RESERVED	75
ITEM 5:	OTHER INFORMATION	75
ITEM 6:	EXHIBITS	76
SIGNATURES		80

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Unaudited consolidated financial statements begin on the following page

1

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(thousands of dollars)

	Three months ended					Nine months ended
	September 25, 2011		September 26, 2010			September 25, 2011		September 26, 2010
Net sales	$	574,746	$	541,729		$	1,783,081	$	1,774,245
Cost of products sold	440,496		418,256			1,353,759		1,353,104
Gross profit	134,250		123,473			429,322		421,141
Operating expenses
Marketing and selling expenses	43,306		39,766			131,764		131,093
Administrative expenses	19,510		23,449			62,640		83,941
Research and development expenses	2,282		1,912			6,343		6,460
Other expense (income), net	3,858		4,111			19,573		12,920
Total operating expenses	68,956		69,238			220,320		234,414
Earnings before interest and taxes	65,294		54,235			209,002		186,727
Interest expense	52,241		74,064			155,624		182,778
Interest income	97		85			239		242
Earnings (loss) before income taxes	13,150		(19,744		)	53,617		4,191
Provision (benefit) for income taxes	373		(7,577		)	13,007		(1,746		)
Net earnings (loss)	$	12,777	$	(12,167	)	$	40,610	$	5,937

See accompanying Notes to Unaudited Consolidated Financial Statements

2

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

(thousands of dollars)

	September 25, 2011			December 26, 2010
Current assets:
Cash and cash equivalents	$	99,377		$	115,286
Accounts receivable, net of allowance of $5,741 and $5,131, respectively	178,049			145,258
Inventories, net	406,928			329,635
Other current assets	9,340			21,507
Deferred tax assets	34,715			38,288
Total current assets	728,409			649,974
Plant assets, net of accumulated depreciation of $205,505 and $145,390, respectively	484,703			447,068
Tradenames	1,629,813			1,629,812
Other assets, net	181,161			200,367
Goodwill	1,564,395			1,564,395
Total assets	$	4,588,481		$	4,491,616
Current liabilities:
Short-term borrowings	$	434		$	1,591
Current portion of long-term obligations	14,165			4,648
Accounts payable	166,430			115,369
Accrued trade marketing expense	39,590			47,274
Accrued liabilities	165,551			142,746
Accrued income taxes	340			193
Total current liabilities	386,510			311,821
Long-term debt (includes $127,698 and $125,698 owed to related parties, respectively)	2,788,197			2,797,307
Pension and other postretirement benefits	65,711			78,606
Other long-term liabilities	20,945			43,010
Deferred tax liabilities	380,621			365,787
Total liabilities	3,641,984			3,596,531
Commitments and contingencies (note 11)
Shareholder’s equity:
Common stock	—			—
Additional paid-in-capital	697,101			697,267
Retained earnings	287,960			247,350
Accumulated other comprehensive loss	(38,564		)	(49,532		)
Total shareholder’s equity	946,497			895,085
Total liabilities and shareholder’s equity	$	4,588,481		$	4,491,616

See accompanying Notes to Unaudited Consolidated Financial Statements

3

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(thousands of dollars)

	Nine months ended
	September 25, 2011			September 26, 2010
Cash flows from operating activities
Net earnings	$	40,610		$	5,937
Non-cash charges (credits) to net earnings				0
Depreciation and amortization	65,065			58,212
Amortization of discount on term loan	904			1,856
Amortization of debt acquisition costs	7,812			9,424
Write off debt issue and refinancing cost	—			17,281
Amortization of deferred mark-to-market adjustment on terminated swap	1,684			2,565
Plant asset impairment charges	1,286			—
Change in value of financial instruments	3,984			1,212
Stock-based compensation charge	900			614
Postretirement healthcare benefits	84			(57		)
Pension expense, net of contributions	(11,313		)	(2,473		)
Other long-term liabilities	(1,375		)	1,528
Other long-term assets	170			50
Deferred income taxes	10,797			(3,801		)
Changes in working capital
Accounts receivable	(32,925		)	(5,320		)
Inventories	(76,919		)	1,306
Accrued trade marketing expense	(7,607		)	(3,966		)
Accounts payable	51,533			34,691
Accrued liabilities	9,386			23,732
Other current assets	4,892			2,692
Accrued income taxes	151			—
Net cash provided by operating activities	69,119			145,483
Cash flows from investing activities
Capital expenditures	(90,832		)	(52,397		)
Sale of plant assets held for sale	7,900			—
Net cash used in investing activities	(82,932		)	(52,397		)
Cash flows from financing activities
Proceeds from bond offerings	—			400,000
Proceeds from bank term loan	—			442,300
Repayments of long-term obligations	—			(872,452		)
Proceeds from short-term borrowings	845			1,412
Repayments of short-term borrowings	(2,002		)	(2,178		)
Repayment of capital lease obligations	(1,997		)	(2,164		)
Change in bank overdrafts	—			(14,304		)
Equity contributions	558			561
Repurchases of equity	(1,624		)	(954		)
Repayment of notes receivable from officers	—			565
Debt acquisition costs	(546		)	(13,025		)
Other financing	2,730			—
Net cash used in financing activities	(2,036		)	(60,239		)
Effect of exchange rate changes on cash	(60		)	178
Net change in cash and cash equivalents	(15,909		)	33,025
Cash and cash equivalents - beginning of period	115,286			73,874
Cash and cash equivalents - end of period	$	99,377		$	106,899
Supplemental disclosures of cash flow information:
Interest paid	$	133,770		$	122,380
Interest received	193			242
Income taxes (refunded) paid	(2,365		)	6,262
Non-cash investing and financing activities:
New capital leases	1,500			12,222

See accompanying Notes to Unaudited Consolidated Financial Statements

4

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			Notes Receivable From Officers			Retained earnings		Accumulated Other Comprehensive Loss			Total Shareholder’s Equity
	Shares	Amount
Balance at December 27, 2009	100	$	—	$	693,196		$	(565	)	$	225,313	$	(43,591	)	$	874,353
Equity contribution:
Cash				561											561
Repurchases of equity				(954		)									(954		)
Equity related compensation				614											614
Collection of notes receivable from officers							565								565
Comprehensive income:
Net earnings										5,937					5,937
Swap mark to market adjustments, net of tax benefit of $3,387												(4,927		)	(4,927		)
Amortization of deferred mark-to-market adjustment on terminated swaps, net of tax provision of $2,749												(184		)	(184		)
Foreign currency translation, net of tax benefit of $194												497			497
Net gain on Pension and OPEB actuarial assumptions, net of tax provision of $3,769												5			$	5
Total comprehensive income															1,328
Balance, September 26, 2010	100	$	—	$	693,417		$	—		$	231,250	$	(48,200	)	$	876,467
Balance at December 26, 2010	100	$	—	$	697,267		$	—		$	247,350	$	(49,532	)	$	895,085
Equity contribution:
Cash				$	558										558
Repurchases of equity				(1,624		)									(1,624		)
Equity related compensation				900											900
Comprehensive income:
Net earnings										40,610					40,610
Swap mark to market adjustments, net of tax provision of $5,276												8,800			8,800
Amortization of deferred mark-to-market adjustment on terminated swaps, net of tax provision of $662												1,022			1,022
Foreign currency translation, net of tax provision of $104												160			160
Net loss on pension and OPEB actuarial assumptions, net of tax provision of $681												986			986
Total comprehensive income															51,578
Balance, September 25, 2011	100	$	—	$	697,101		$	—		$	287,960	$	(38,564	)	$	946,497

For the three months ended September 25, 2011 and September 26, 2010, total comprehensive income was $18,787 and $(11,783)

See accompanying Notes to Unaudited Consolidated Financial Statements

5

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 three operating segments: (i) Birds Eye Frozen, (ii) Duncan Hines Grocery and (iii) Specialty Foods. Our United States retail frozen vegetables (Birds Eye^®), multi-serve frozen dinners and entrées (Birds Eye Voila!^®), single-serve frozen dinners and entrées (Hungry-Man^®, Swanson^®), frozen seafood (Van de Kamp’s^®, Mrs. Paul’s^®), frozen breakfast (Aunt Jemima^®), bagels (Lender’s^®), and frozen pizza (Celeste^®) are reported in the Birds Eye Frozen Division. Our baking mixes and frostings (Duncan Hines^®), shelf-stable pickles, peppers and relish (Vlasic^®), barbeque sauces (Open Pit^®), pie fillings (Comstock^®, Wilderness^®), syrups (Mrs. Butterworth’s^®, Log Cabin^®), salad dressing (Bernstein’s^®), canned meat (Armour^®, Nalley^®, Brooks^®) and all Canadian Operations are reported in the Duncan Hines Grocery Division. The Specialty Foods Division consists of snack products (Tim’s Cascade^®, Snyder of Berlin^®) and our food service and private label businesses.

History and Current Ownership

Since 2001, the Company and its predecessors have been involved in several business combinations to acquire certain assets and liabilities related to the brands discussed above.

Effective April 2, 2007, PFF became a direct wholly-owned subsidiary of Peak Finance Holdings LLC (“Peak”). Peak is a direct wholly-owned subsidiary of Crunch Holding Corp. (“Crunch”) and Crunch is 100% owned by Peak Holdings LLC (“Peak Holdings”) and certain members of the Company’s senior management. Peak Holdings is an entity controlled by affiliates of The Blackstone Group (“Blackstone”), a global private investment and advisory firm.

On December 23, 2009, the Company’s subsidiary, Pinnacle Foods Group LLC (“PFG”), purchased all of the common stock of Birds Eye Foods, Inc. (the “Birds Eye Foods Acquisition”).

New Market Tax Credit:

During the third quarter, the Company entered into a transaction with U.S. Bancorp Community Development Corporation and Iowa Community Development LC in connection with our participation in the federal government's New Markets Tax Credit Program. Under the terms of the transaction, the Company received proceeds of $2.7 million, which will be used to expand the Ft. Madison, Iowa manufacturing facility. The Company must maintain its status as a qualified entity for a period of seven years from the closing date in order to earn the $2.7 million benefit received. The assets acquired with the proceeds of the transaction, as well as certain other assets of the Company are pledged to secure the Company's continued qualification under the New Markets Tax Credit Program. The $2.7 million is recorded in other long-term liabilities on the consolidated balance sheet.

The transaction resulted in the creation of two new entities ICD XIII LLC and Pinnacle Foods Investment Fund LLC. Since the primary purpose of this transaction is to facilitate benefits for the Company under the New Markets Tax Credit Program and the Company provides a guaranty of its status as a qualified entity, the consolidation analysis determined that the Company is the primary beneficiary and the two new entities should be, and are, consolidated in our consolidated financial statements.

2. 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 25, 2011, the results of operations for the three and nine months ended September 25, 2011 and September 26, 2010, and the cash flows for the nine months ended September 25, 2011 and September 26, 2010. 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 26, 2010.

6

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

3. Fair Value Measurements

The authoritative 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 financial assets and liabilities subject to recurring fair value measurements and the required disclosures are as follows:

	Fair Value as of September 25, 2011		Fair Value Measurements Using Fair Value Hierarchy						Fair Value as of December 26, 2010		Fair Value Measurements Using Fair Value Hierarchy
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets
Foreign currency derivatives	$	1,402	$	—	$	1,402	$	—	$	—	$	—	$	—	$	—
Diesel fuel derivatives	—		—		—		—		380		—		380		—
Natural gas derivatives	—		—		—		—		28		—		28		—
Total assets at fair value	$	1,402	$	—	$	1,402	$	—	$	408	$	—	$	408	$	—
Liabilities
Interest rate derivatives	$	14,732	$	—	$	14,732	$	—	$	26,646	$	—	$	26,646	$	—
Foreign currency derivatives	—		—		—		—		1,100		—		1,100		—
Natural gas derivatives	193		—		193		—		—		—		—		—
Diesel fuel derivatives	1,207		—		1,207		—		—		—		—		—
Soybean oil derivatives	537		—		537		—		—		—		—		—
Corn derivatives	177		—		177		—		—		—		—		—
Wheat derivatives	1,803		—		1,803		—		—		—		—		—
Total liabilities at fair value	$	18,649	$	—	$	18,649	$	—	$	27,746	$	—	$	27,746	$	—

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.

7

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

Below are descriptions of the techniques used to estimate the fair value of financial instruments on the Company’s financial statements as of September 25, 2011.

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, commodity, and foreign exchange forward 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 fair value disclosure, 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 25, 2011 or December 26, 2010.

8

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

4. Other Expense (Income), net

	Three months ended						Nine months ended
	September 25, 2011			September 26, 2010			September 25, 2011			September 26, 2010
Other expense (income), net consists of:
Amortization of intangibles/other assets	$	4,047		$	4,295		$	12,129		$	12,880
Lehman Brothers Specialty Financing settlement	—			—			8,500			—
Gain on sale of the Watsonville, CA facility	—			—			(391		)	—
Royalty income, net and other	(189		)	(184		)	(665		)	40
Total other expense (income), net	$	3,858		$	4,111		$	19,573		$	12,920

Lehman Brothers Specialty Financing settlement. On June 4, 2010, Lehman Brothers Special Financing (LBSF) initiated a claim against the Company in LBSF’s bankruptcy proceeding for an additional payment from the Company of $19.7 million, related to certain derivative contracts which the Company had earlier terminated due to LBSF’s default as a result of its bankruptcy filing in 2008. On May 31, 2011, the Company and LBSF agreed in principle to a settlement of LBSF’s June 4, 2010 claim. Under the terms of the settlement, the Company made a payment of $8.5 million during the third quarter in return for LBSF’s full release of its claim.

Sale of the Watsonville, CA facility. On June 24, 2011, the Company completed the sale of our Watsonville, CA facility which had been recorded as an asset held for sale. The proceeds of the sale were $7.9 million and resulted in a $0.4 million gain recorded in Other Expense (Income), net in the nine months ended September 25, 2011.

9

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

5. Balance Sheet Information

Inventories. Inventories are as follows:

	September 25, 2011		December 26, 2010
Raw materials, containers and supplies	$	58,971	$	39,528
Finished product	347,957		290,107
Total	$	406,928	$	329,635

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.

In the fourth quarter of 2009, in connection with the Birds Eye Foods Acquisition, inventories were required to be valued at fair value, which was $37.6 million higher than historical manufacturing cost. Cost of products sold for the three and nine months ended September 26, 2010 included pre-tax charges of $9.7 million and $36.7 million, respectively, related to the finished products at December 23, 2009, which were subsequently sold.

Accrued Liabilities. Accrued liabilities are as follows:

	September 25, 2011		December 26, 2010
Employee compensation and benefits	$	61,827	$	59,877
Consumer coupons	5,056		4,708
Interest payable	50,408		39,914
Accrued restructuring charges	4,960		6,816
Other	43,300		31,431
Total	$	165,551	$	142,746

10

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

6. Goodwill and Other Assets

Goodwill

Goodwill by segment is as follows:

	Birds Eye Frozen		Duncan Hines Grocery		Specialty Foods		Total
Balance, December 26, 2010	$	578,769	$	740,465	$	245,161	$	1,564,395
Balance, September 25, 2011	$	578,769	$	740,465	$	245,161	$	1,564,395

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 provides that goodwill should not be amortized, but will be tested for impairment on an annual basis or more often when events indicate. There have been no events during the current quarter, which indicated that an impairment test was necessary. The Company completed its annual testing as of December 26, 2010. No goodwill impairments were identified.

Other Assets

	September 25, 2011
	Weighted Avg Life	Gross Carrying Amount		Accumulated Amortization			Net
Amortizable intangibles
Recipes	10	$	52,810	$	(23,765	)	$	29,045
Customer relationships - Distributors	36	125,746		(21,395		)	104,351
Customer relationships - Food Service	7	36,143		(27,620		)	8,523
Customer relationships - Private Label	7	9,214		(7,853		)	1,361
License	7	4,875		(1,313		)	3,562
Total amortizable intangibles		$	228,788	$	(81,946	)	$	146,842
Deferred financing costs		76,937		(42,978		)	33,959
Financial instruments (see note 10)		360		—			360
Total other assets, net							$	181,161
	Amortizable intangibles by segment
	Birds Eye Frozen						$	77,728
	Duncan Hines Grocery						55,262
	Specialty Foods						13,852
							$	146,842

11

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

	December 26, 2010
	Weighted Avg Life	Gross Carrying Amount		Accumulated Amortization			Net
Amortizable intangibles
Recipes	10	$	52,810	$	(19,804	)	$	33,006
Customer relationships - Distributors	36	125,489		(16,755		)	108,734
Customer relationships - Food Service	7	36,143		(25,063		)	11,080
Customer relationships - Private Label	7	9,214		(7,445		)	1,769
License	7	4,875		(750		)	4,125
Total amortizable intangibles		$	228,531	$	(69,817	)	$	158,714
Deferred financing costs		76,391		(35,166		)	41,225
Notes receivable		428		—			428
Total other assets, net							$	200,367
	Amortizable intangibles by segment
	Birds Eye Frozen						$	82,749
	Duncan Hines Grocery						59,205
	Specialty Foods						16,760
							$	158,714

Amortization of intangibles during the three and nine months ended September 25, 2011 was $4,047 and $12,129, respectively. Amortization during the three and nine months ended September 26, 2010 was $4,295 and $12,880, respectively. Estimated amortization expense for each of the next five years and thereafter is as follows: remainder of 2011 - $4,041, 2012 - $15,828, 2013 - $15,489, 2014 - $12,205, 2015 - $10,916 and thereafter - $88,364.

Deferred Financing Costs

As discussed in Note 8, the Company refinanced its existing Tranche C Term Loans on August 17, 2010 by issuing $400.0 million 8.25% Senior Notes due 2017 (the “8.25% Senior Notes”) and entering into an amendment to the Senior Secured Credit Facility pursuant to which the Company borrowed incremental term loans (the “Tranche D Term Loans”) in an aggregate principal amount of $442.3 million. In accordance with the authoritative guidance for debt extinguishments and modifications, the lending relationship between the Company and each bank in the original lending syndicate was examined and determined to be either a modification or an extinguishment. As a result of this analysis, the Company recorded interest expense in the Consolidated Statement of Operations during the three and nine months ended September 26, 2010 for the write-off of $11,633 of deferred financing costs and $5,648 of original issue discount related to extinguished lending relationships from the Tranche C Term Loans. In addition, the Company incurred approximately $3,880 of legal, consulting and placement fees in connection with the Tranche D Term Loans. Of the fees incurred, $3,221 were costs of modifying existing lending relationships and thus the Company charged to interest expense in the Consolidated Statement of Operations during the third quarter of 2010. The remaining $660 of fees related to obtaining new lending relationships and thus was deferred. The Company also incurred approximately $8,790 of legal, consulting, audit and placement fees in connection with the execution of the 8.25% Senior Notes, all of which were deferred. All costs deferred in connection with the above transactions were recorded in Other Assets, net on the consolidated balance sheet.

All deferred financing costs, which relate to the Senior Secured Credit Facility, Senior Notes and Senior Subordinated Notes are amortized into interest expense over the life of the related debt facility using the effective interest method. Amortization of the deferred financing costs during the three and nine months ended September 25, 2011 was $2,620 and $7,812, respectively. Amortization of the deferred financing costs during the three and nine months September 26, 2010 was $2,766 and $9,424, respectively.

12

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

The following summarizes deferred financing cost activity in 2011:

	Gross Carrying Amount		Accumulated Amortization			Net
Balance, December 26, 2010	$	76,391	$	(35,166	)	$	41,225
2011 - Additions	546		—			546
- Amortization	—		(7,812		)	(7,812		)
Balance, September 25, 2011	$	76,937	$	(42,978	)	$	33,959

13

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

7. Restructuring Charges

Rochester, NY Office

The Rochester, NY office was the former headquarters of Birds Eye Foods, Inc., which was acquired by PFG on December 23, 2009. In connection with the consolidation of activities into PFG’s New Jersey offices, the Rochester office was closed in December 2010. Notification letters under the Worker Adjustment and Retraining Notification (WARN) Act of 1988 were issued in the first quarter of 2010. Activities related to the closure of the Rochester office began in the second quarter of 2010 and resulted in the elimination of approximately 200 positions. In addition, the Company recognized lease termination costs in 2010 due to the discontinuation of use of the Birds Eye Foods’ Corporate headquarters.

The following table summarizes restructuring charges related to the Rochester, NY office which were recorded in Administrative expenses on the Consolidated Statement of Operations during the three and nine months ended September 25, 2011 and September 26, 2010 and includes employee termination and lease termination costs.

	Three months ended				Nine months ended
	September 25, 2011		September 26, 2010		September 25, 2011			September 26, 2010
Birds Eye Frozen	$	15	$	625	$	(7	)	$	8,039
Duncan Hines Grocery	60		161		(25		)	2,072
Specialty Foods	9		98		(4		)	1,263
	$	84	$	884	$	(36	)	$	11,374

Tacoma, WA Plant

On December 3, 2010, in an effort to improve our supply chain operations, the Company announced the closure of the Tacoma plant and the consolidation of production in our Ft. Madison, IA plant and recorded employee termination benefits of $1,533. The Tacoma plant ceased production in June 2011 and the closure will result in the termination of approximately 160 employees. In addition to termination benefits, the Company recorded asset retirement obligations of $1,026 at Tacoma which were capitalized and depreciated over the remaining useful life of the plant. The Company recorded accelerated depreciation costs of $0 and $4,782 in the three and nine months ended September 25, 2011, respectively. In addition, the Company recorded asset impairment charges of $0 and $1,286 in the three and nine months ended September 25, 2011, respectively, upon ceasing use of the facility at the end of the second quarter. All restructuring charges related to the closure of the Tacoma, WA plant are recorded in the Duncan Hines Grocery segment and in the Cost of products sold line on the Consolidated Statement of Operations.

Fulton, NY Plant

On April 15, 2011, the Company announced plans to consolidate the Birds Eye^® brand’s Fulton, NY plant operations into the Darien, WI and Waseca, MN facilities in order to locate vegetable processing closer to the crop growing region and thus reduce the related freight costs. The Fulton facility is currently expected to close at the end of 2011 and will result in the termination of approximately 270 employees. The Company recorded termination costs of $0 and $1,850 in the three and nine months ended September 25, 2011, respectively. In addition, the Company recorded accelerated depreciation costs of $2,555 and $5,190 in the three and nine months ended September 25, 2011, respectively. All restructuring charges related to the closure of the Fulton, NY plant are recorded in the Birds Eye Frozen segment and in the Cost of products sold line on the Consolidated Statement of Operations.

14

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

The following table summarizes restructuring charges accrued as of September 25, 2011.

Description	Balance, December 26, 2010		Expense			Payments			Balance, September 25, 2011
Facility shutdowns	$	1,851	$	(36	)	$	(805	)	$	1,010
Employee severance	6,096		1,715			(3,861		)	3,950
Total	$	7,947	$	1,679		$	(4,666	)	$	4,960

Accrued restructuring charges are $4,960 as of September 25, 2011 and are recorded on the Consolidated Balance Sheet in Accrued liabilities.

15

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 25, 2011			December 26, 2010
Short-term borrowings
- Notes payable	$	434		$	1,591
Total short-term borrowings	$	434		$	1,591
Long-term debt
- Senior Secured Credit Facility - Tranche B Term Loans due 2014	$	1,199,422		$	1,199,422
- Senior Secured Credit Facility - Tranche D Term Loans due 2014	368,194			368,194
- 9.25% Senior Notes due 2015	625,000			625,000
- 8.25% Senior Notes due 2017	400,000			400,000
- 10.625% Senior Subordinated Notes due 2017	199,000			199,000
- Unamortized discount on long term debt	(3,012		)	(3,917		)
- Capital lease obligations	13,758			14,256
	2,802,362			2,801,955
Less: current portion of long-term obligations	14,165			4,648
Total long-term debt	$	2,788,197		$	2,797,307

Interest expense	Three months ended				Nine months ended
	September 25, 2011		September 26, 2010		September 25, 2011		September 26, 2010
Third party interest expense	$	41,520	$	45,893	$	124,601	$	136,098
Related party interest expense	1,406		2,624		4,199		4,023
Amortization of debt acquisition costs (Note 6)	2,620		2,766		7,812		9,424
Write off of debt issue costs (Note 6)	—		11,633		—		11,633
Write off of discount on term loan	—		5,648		—		5,648
Amortization of deferred mark-to-market adjustment on terminated swap (Note 10)	473		736		1,684		2,565
Interest rate swap losses (Note 10)	6,222		4,764		17,328		13,387
Total interest expense	$	52,241	$	74,064	$	155,624	$	182,778

The Senior Secured Credit Agreement (the “Senior Secured Credit Facility”) consists of (i) term loans in an initial aggregate amount of $1,250.0 million (the “Tranche B Term Loans”); (ii) term loans issued on August 17, 2010 in an initial aggregate principal amount of $442.3 million (the “Tranche D Term Loans”) and (iii) revolving credit commitments in the aggregate amount of $150.0 million (the “Revolving Credit Facility”). The Tranche B and Tranche D Term Loans mature April 2, 2014. The Revolving Credit Facility matures April 2, 2013.

16

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

On August 17, 2010 the Company entered into an amendment to the Senior Secured Credit Facility, which provided for incremental term loans in the amount of $442.3 million (the “Tranche D Term Loans). The proceeds from the Tranche D Term Loans, along with the proceeds from the 8.25% Senior Notes described below were used to repay the outstanding Tranche C Term Loans. In accordance with the authoritative guidance for debt extinguishments and modifications, the lending relationship between the Company and each bank in the original lending syndicate was examined and determined to be either a modification or an extinguishment. As a result of this analysis, the Company recorded interest expense in the Consolidated Statement of Operations for the write-off of $11,633 of deferred financing costs and $5,648 of original issue discount related to extinguished lending relationships from the Tranche C Term Loans. In addition, the Company incurred approximately $3,880 of legal, consulting and placement fees in connection with the Tranche D Term Loans. Of the fees incurred, $3,221 were costs of modifying existing lending relationships and thus the Company charged interest expense in the Consolidated Statement of Operations during the third quarter of 2010. The remaining $660 of fees related to obtaining new lending relationships and thus was deferred. The Company also incurred approximately $8,790 of legal, consulting, audit and placement fees in connection with the execution of the 8.25% Senior Notes, all of which were deferred. All costs deferred in connection with the above transactions were recorded in Other Assets, net on the consolidated balance sheet.

There were no borrowings outstanding under the Revolving Credit Facility as of September 25, 2011 and December 26, 2010. There have been no borrowings under the revolver at any time in 2010 or 2011.

The total combined amount of the Tranche B Term Loans and Tranche D Term Loans that were owed to affiliates of The Blackstone Group as of September 25, 2011 and December 26, 2010, was $127,698 and $125,698, respectively.

The Company’s borrowings under the Senior Secured Credit Facility, as amended, bear interest at a floating rate and are maintained as base rate loans or as Eurocurrency rate 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%. Eurocurrency rate loans bear interest at the adjusted Eurocurrency rate, as described in the Senior Secured Credit Facility, plus the applicable Eurocurrency rate margin. Solely with respect to Tranche D Term Loans, the Eurocurrency rate shall be no less than 1.75% per annum. Solely with respect to Tranche D Term Loans, the base rate shall be no less than 2.75% per annum.

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)

Revolving Credit Facility and Letters of Credit			Tranche B Term Loans		Tranche D Term Loans
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	Eurocurrency Rate for Term Loan D	Base Rate for Term Loan D
2.50%	1.50%	0.50%	2.50%	1.50%	4.25%	3.25%

The obligations under the Senior Secured Credit Facility are unconditionally and irrevocably guaranteed by each of the Company’s direct or indirect domestic subsidiaries (collectively, the “Guarantors”). In addition, the Senior Secured Credit Facility 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 subsidiaries 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).

17

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

A commitment fee of 0.50% per annum is applied to the unused portion of the Revolving Credit Facility. For the three and nine months ended September 25, 2011, the weighted average interest rate on the term loan was 3.47% and 3.49%, respectively. For the three and nine ended September 26, 2010, the weighted average interest rate on the term loan was 4.26% and 4.66%, respectively. As of September 25, 2011 and December 26, 2010, the interest rate on the revolving credit facility was 2.74% and 2.76%, respectively, however, no borrowings were made during 2010 or 2011. As of September 25, 2011 and December 26, 2010 the Eurocurrency interest rate on the term loan facility was 3.49% and 3.52%, respectively.

The Company pays a fee for all outstanding letters of credit drawn against the 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 cannot exceed $50,000. As of September 25, 2011 and December 26, 2010, the Company had utilized $35,358 and $34,187, respectively of the Revolving Credit Facility for letters of credit. As of September 25, 2011 and December 26, 2010, there were no borrowings under the Revolving Credit Facility. As of September 25, 2011 and December 26, 2010, respectively, there was $114,642 and $115,813 of borrowing capacity under the Revolving Credit Facility, of which $14,642 and $15,813 was available to be used for letters of credit.

Under the terms of the Senior Secured Credit Facility, the Company is required to use 50% of its “Excess Cash Flow”, to prepay the Tranche B Term Loans and the Tranche D Term Loans. Excess Cash Flow is determined by taking consolidated net income (as defined) and adjusting it for certain items, including (1) all non cash charges and credits included in arriving at consolidated net income, (2) changes in working capital, (3) capital expenditures (to the extent they were not financed with debt), (4) the aggregate amount of principle payments of indebtedness and (5) certain other items defined in the Senior Secured Credit Facility. In December 2010, the Company made a voluntary prepayment of $73.0 million to the Tranche D Term Loans. As a result of this prepayment, no payment was due under the Excess Cash Flow requirements of Senior Secured Credit Facility for the 2010 reporting year. In March 2010, in accordance with the Excess Cash Flow requirements of the Senior Secured Credit Facility, the Company made a mandatory prepayment of the term loans of $27.0 million for the 2009 reporting year.

The Tranche B Term Loans mature 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 25, 2011 are $2.5 million in 2011, $12.5 million in 2012, $12.5 million in 2013 and $1,171.9 million in 2014. The aggregate maturities of the Tranche D Term Loans outstanding as of September 25, 2011 are no payments due in 2011, 2012 and 2013, with a lump sum payment of $368.2 million due in 2014.

On April 2, 2007, 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. On December 23, 2009, as part of the Birds Eye Foods Acquisition, the Company issued an additional $300 million of 9.25% Senior Notes due in 2015 (the “Additional Senior Notes”). The Senior Notes and the Additional Senior Notes are collectively referred to herein as the 9.25% Senior Notes. On August 17, 2010, the Company issued $400.0 million of 8.25% Senior Notes due 2017 (the “8.25% Senior Notes”) and utilized the proceeds to repay the Tranche C Term Loans.

The 9.25% Senior Notes and the 8.25% 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 to the Consolidated Financial Statements for Guarantor and Nonguarantor Financial Statements.

18

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 may redeem some or all of the 8.25% Senior Notes at any time prior to September 1, 2013, 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 8.25% Senior Note at September 1, 2013 or such Senior Subordinated Note at April 1, 2012, plus (ii) all required interest payments due on such 8.25% Senior Note through September 1, 2013 or such 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 currently may redeem the 9.25% Senior Notes, and in the future may redeem the 8.25% 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 (for the 9.25% Senior Notes and Senior Subordinated Notes ) or September 1^st ( for the 8.25% Senior Notes) of each of the years indicated below:

9.25% Senior Notes		8.25% Senior Notes
Year	Percentage	Year	Percentage
2011	104.625%	2013	106.188%
2012	102.313%	2014	104.125%
2013 and thereafter	100.000%	2015	102.063%
		2016 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 September 1, 2013, the Company is able to redeem up to 35% of the aggregate principal amount of the 8.25% Senior 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 8.25% Senior 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 the 8.25% Senior 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 the 8.25% Senior 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.

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.

19

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 25, 2011, is as follows:

	September 25, 2011
Issue	Face Value		Fair Value
Senior Secured Credit Facility - Tranche B Term Loans	$	1,199,422	$	1,136,453
Senior Secured Credit Facility - Tranche D Term Loans	368,194		367,274
9.25% Senior Notes	625,000		629,688
8.25% Senior Notes	400,000		400,000
10.625% Senior Subordinated Notes	199,000		203,975
	$	2,791,616	$	2,737,390

The estimated fair value of the Company’s long-term debt, including the current portion, as of December 26, 2010, is as follows:

	December 26, 2010
Issue	Face Value		Fair Value
Senior Secured Credit Facility - Tranche B Term Loans	$	1,199,422	$	1,171,308
Senior Secured Credit Facility - Tranche D Term Loans	368,194		372,031
9.25% Senior Notes	625,000		648,438
8.25% Senior Notes	400,000		409,000
10.625% Senior Subordinated Notes	199,000		213,925
	$	2,791,616	$	2,814,702

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.

20

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

9. Pension and Retirement Plans

The Company accounts for pension and retirement plans in accordance with the authoritative guidance for retirement benefit compensation. This guidance requires recognition of the funded status of a benefit plan in the statement of financial position. The guidance also requires recognition in accumulated other comprehensive income of certain gains and losses that arise during the period but are deferred under pension accounting rules.

The Company uses a measurement date for the pension and postretirement benefit plans that coincides with its year end.

Pinnacle Foods Pension Plan

The Company maintains a non-contributory defined benefit pension plan (“Pinnacle Foods Pension Plan”) that covers eligible union employees and provides benefits generally based on years of service and employees’ compensation. The Pinnacle Foods Pension Plan is funded in conformity with the funding requirements of applicable government regulations. Plan assets consist principally of cash equivalent, equity and fixed income common collective trusts. Plan assets do not include any of the Company’s own equity or debt securities.

In fiscal 2011, the Company expects to make contributions of $6.8 million to the Pinnacle Foods Pension Plan, of which $0.9 million and $5.9 million, was made in the three and nine months ended September 25, 2011, respectively. The Company made contributions to the pension plan totaling $8.9 million in fiscal 2010, of which $2.2 million and $4.8 million was made in three and nine months ended September 26, 2010, respectively.

As a result of the negotiations for a new collective bargaining agreement with the union at our Imlay City location, effective May

11, 2010 pension benefits were frozen for certain participants. This resulted in a curtailment loss of $992 that was recorded in the second quarter of 2010.

The following represents the components of net periodic benefit cost:

Pension Benefits	Pinnacle Foods Pension Plan
	Three months ended						Nine months ended
	September 25, 2011			September 26, 2010			September 25, 2011			September 26, 2010
Service cost	$	159		$	265		$	670		$	963
Interest cost	757			985			3,197			3,574
Expected return on assets	(754		)	(780		)	(3,183		)	(2,831		)
Amortization of:
prior service cost	8			17			32			61
actuarial loss	129			177			543			641
Curtailment loss	—			—			—			992
Net periodic cost	$	299		$	664		$	1,259		$	3,400

Birds Eye Foods Pension Plan

The Company’s Birds Eye Foods Pension Plan (“Birds Eye Foods Pension Plan”) consists of hourly and salaried employees and has primarily non-contributory defined-benefit schedules. Benefits for the salaried employees have been frozen since the plan was acquired. In 2010, the pension plan benefits for certain locations were frozen. The curtailment gain recorded in earnings during the three and nine months ended September 26, 2010 was $0 and $588, respectively. In connection with our supply chain improvement project, we terminated approximately 134 participants from our Tacoma, WA location during the third quarter. The reduction in planned future service resulted in a plan curtailment, which decreased Pension and other postretirement benefits and Accumulated other comprehensive income by $1,666.

The Company acquired an Excess Benefit Retirement Plan from Birds Eye Foods, which serves to provide employees with the same retirement benefit they would have received from Birds Eye’s retirement plan under the career average base pay formula. Benefits for this plan are frozen.

21

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 maintains a non-qualified Supplemental Executive Retirement Plan (“SERP”) which provides additional retirement benefits to two prior executives of Birds Eye Foods who retired prior to November 4, 1994.

The benefits for these plan is based primarily on years of service and employees’ pay near retirement. The Company’s funding policy is consistent with the funding requirements of Federal laws and regulations. Plan assets consist principally of common stocks, corporate bonds and U.S. government obligations. Plan assets do not include any of the Company’s own equity or debt securities.

In fiscal 2011, the Company expects to make contributions of $9.0 million to the Birds Eye Foods Pension Plan, of which $4.4 million and $7.3 million was made in the three and nine months ended September 25, 2011, respectively. The Company made contributions to the pension plan totaling $4.3 million in fiscal 2010. Contributions of $0.9 million and $1.7 million were made for the pension plan in the three and nine months ended September 26, 2010.

The following represents the components of net periodic benefit cost:

Pension Benefits	Birds Eye Pension Plan
	Three months ended						Nine months ended
	September 25, 2011			September 26, 2010			September 25, 2011			September 26, 2010
Service cost	$	64		$	501		$	459		$	1,551
Interest cost	2,692			2,055			6,211			6,166
Expected return on assets	(2,486		)	(2,051		)	(5,721		)	(6,154		)
Curtailment gain	—			—			—			(588		)
Net periodic cost	$	270		$	505		$	949		$	975

22

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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 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.

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted. One intent of this law is to establish a regulatory structure for the derivatives market and to increase the transparency of financial reporting related to derivatives. To this date, the law has not had a material impact on our consolidated financial position or results of operations, nor do we expect it to in the future.

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. Interest rate swaps designated as cash flow hedges 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. During the three and nine months ended September 25, 2011 and September 26, 2010, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

As of September 25, 2011, the Company had the following interest rate swaps 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	8	$	1,071,628	0.58% - 3.33%	USD-LIBOR-BBA	Feb 2009 - Aug 2011	Jan 2012 - Apr 2014

23

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. 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. During the next twelve months, the Company estimates that an additional $14,914 will be reclassified as an increase to Interest expense.

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 definition of effective hedge under 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.

Cash Flow Hedges of Foreign Exchange Risk

The Company’s operations in Canada expose the Company to changes in the U.S. 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 its 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.

As of September 25, 2011, 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 in (CAD)		Notional Purchased in Aggregate in (USD)		USD to CAD Exchange Rates	Trade Date	Maturity Dates
CAD Forward	20	$	64,060	$	63,425	0.956-1.051	March 2010 - Apr 2011	Oct 2011 - Dec 2012

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 portions 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 Statements of Operations.

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 commodity forward contracts to fix the price of natural gas, diesel fuel, corn, wheat and soybean oil purchases and other commodities 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 Statements of Operations.

24

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 25, 2011, the Company had the following derivative instruments that were not designated in qualifying hedging relationships:

Product	Number of Instruments	Notional Amount	Price/Index	Trade Dates	Maturity Dates
Natural Gas Swap	4	420,000 MMBTU’s	$4.26 - $4.57 per MMBTU	Feb 2011 - Apr 2011	Dec 2011
Diesel Fuel Swap	6	8,400,391 Gallons	$3.75 - $4.01 per Gallon	May 2011 - Sep 2011	Dec 2011 - Dec 2012
Soybean Oil Options	1	4,400,000 Pounds	$0.56 - $0.61 per Pound	Apr 2011	Dec 2011
Corn Swap	1	625,000 Bushels	$5.47 - $6.41 per Bushel	Mar 2011	Mar 2012
Wheat Swaps	4	955,000 Bushels	$7.39 - $9.40 per Bushel	Mar 2011	Feb 2012 - Mar 2012

25

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 25, 2011 and December 26, 2010.

	Tabular Disclosure of Fair Values of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value as of September 25, 2011		Balance Sheet Location	Fair Value as of September 25, 2011
Derivatives designated as hedging instruments
Interest Rate Contracts		$	—	Accrued liabilities	$	13,917
		—		Other long-term liabilities	815
Foreign Exchange Contracts	Other current assets	$	1,042		—
	Other assets, net	360			—
Total derivatives designated as hedging instruments		$	1,402		$	14,732
Derivatives not designated as hedging instruments
Natural Gas Contracts		$	—	Accrued liabilities	$	193
Diesel Fuel Contracts		—		Accrued liabilities	1,207
Soybean Oil Contracts		—		Accrued liabilities	537
Corn Contracts		—		Accrued liabilities	177
Wheat Contracts		—		Accrued liabilities	1,803
Total derivatives not designated as hedging instruments		$	—		$	3,917
	Balance Sheet Location	Fair Value as of December 26, 2010		Balance Sheet Location	Fair Value as of December 26, 2010
Derivatives designated as hedging instruments
Interest Rate Contracts		$	—	Accrued liabilities	$	3,300
		—		Other long-term liabilities	23,346
Foreign Exchange Contracts		—		Accrued liabilities	1,100
Total derivatives designated as hedging instruments		$	—		$	27,746
Derivatives not designated as hedging instruments
Diesel Fuel Contracts	Other current assets	$	380		$	—
Natural Gas Contracts	Other current assets	28			—
Total derivatives not designated as hedging instruments		$	408		$	—

26

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 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 25, 2011 and September 26, 2010.

Tabular Disclosure of the Effect of Derivative Instruments

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 recognized in Earnings in:	Recognized in Earnings on Derivative (Ineffective Portion)
Interest Rate Contracts	$	(1,594	)	Interest expense	$	(6,695	)	Interest expense	$	(1	)
Foreign Exchange Contracts	2,371			Cost of products sold	(353		)	Cost of products sold	93
Three months ended September 25, 2011	$	777			$	(7,048	)		$	92
Interest Rate Contracts	$	(5,534	)	Interest expense	$	(19,012	)	Interest expense	$	(10	)
Foreign Exchange Contracts	624			Cost of products sold	(1,658		)	Cost of products sold	220
Nine months ended September 25, 2011	$	(4,910	)		$	(20,670	)		$	210
Interest Rate Contracts	$	(6,623	)	Interest expense	$	(4,931	)	Interest expense	$	(568	)
Foreign Exchange Contracts	(276		)	Cost of products sold	(731		)	Cost of products sold	(253		)
Three months ended September 26, 2010	$	(6,899	)		$	(5,662	)		$	(821	)
Interest Rate Contracts	$	(23,262	)	Interest expense	$	(15,385	)	Interest expense	$	(568	)
Foreign Exchange Contracts	(753		)	Cost of products sold	(2,096		)	Cost of products sold	(218		)
Nine months ended September 26, 2010	$	(24,015	)		$	(17,481	)		$	(786	)
Derivatives Not Designated as Hedging Instruments				Recognized in Earnings in:	Recognized in Earnings on Derivative
Natural Gas Contracts				Cost of products sold	$	(229	)
Diesel Contracts				Cost of products sold	(1,428		)
Soybean Oil Contracts				Cost of products sold	(250		)
Corn Contracts				Cost of products sold	(211		)
Wheat Contracts				Cost of products sold	(78		)
Three months ended September 25, 2011					$	(2,196	)
Natural Gas Contracts				Cost of products sold	$	(238	)
Diesel Contracts				Cost of products sold	163
Soybean Oil Contracts				Cost of products sold	(667		)
Corn Contracts				Cost of products sold	(177		)
Wheat Contracts				Cost of products sold	(1,803		)
Nine months ended September 25, 2011					$	(2,722	)
Natural Gas Contracts				Cost of products sold	$	(130	)
Diesel Contracts				Cost of products sold	413
Three months ended September 26, 2010					$	283
Natural Gas Contracts				Cost of products sold	$	(510	)
Diesel Contracts				Cost of products sold	(633		)
Nine months ended September 26, 2010					$	(1,143	)

27

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 agreements with certain counterparties that contain 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 25, 2011, the Company has not posted any collateral related to these agreements. If the Company had breached this provision at September 25, 2011, it could have been required to settle its obligations under the agreements at their termination value, which differs from the recorded fair value. The table below summarizes the aggregate fair values of those derivatives that contain credit risk contingent features as of September 25, 2011 and December 26, 2010.

September 25, 2011

Asset/(Liability)
Counterparty	Contract Type	Termination Value			Performance Risk Adjustment		Accrued Interest			Fair Value (excluding interest)
Barclays	Interest Rate Contracts	$	(14,758	)	$	296	$	(1,657	)	$	(12,805	)
	Foreign Exchange Contracts	1,007			4					1,011
	Diesel Fuel Contracts	(1,207		)	—					(1,207		)
	Natural Gas Contracts	(193		)	—					(193		)
	Corn Contracts	(177		)	—					(177		)
	Wheat Contracts	(1,803		)	—					(1,803		)
	Soybean Oil Contracts	(537		)	—					(537		)
Credit Suisse	Interest Rate Contracts	(2,479		)	151		(401		)	(1,927		)
	Foreign Exchange Contracts	390			2					392
Total		$	(19,757	)	$	453	$	(2,058	)	$	(17,246	)

December 26, 2010

Asset/(Liability)
Counterparty	Contract Type	Termination Value			Performance Risk Adjustment		Accrued Interest			Fair Value (excluding interest)
Barclays	Interest Rate Contracts	$	(26,519	)	$	614	$	(1,178	)	$	(24,727	)
	Foreign Exchange Contracts	(678		)	18					(660		)
	Diesel Fuel Contracts	380			—					380
	Natural Gas Contracts	28			—					28
Credit Suisse	Interest Rate Contracts	(1,980		)	61		—			(1,919		)
	Foreign Exchange Contracts	(457		)	17					(440		)
Total		$	(29,226	)	$	710	$	(1,178	)	$	(27,338	)

28

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.

Commitment of $6.2 Million Capital Expenditure

In working to resolve an environmental wastewater investigation by the State of Michigan Department of Natural Resources and Environment (MDNRE) at the Company’s Birds Eye Foods Fennville, MI production facility, on July 20, 2010, the Company and the MDNRE reached an agreement (“Administrative Consent Order” or “ACO”). Under the terms of the ACO, Birds Eye Foods will construct a new wastewater treatment system at the facility currently estimated at $6.2 million and contribute a minimum of $70 thousand to the hookup of the City’s water supply extension to affected residents.

Lehman Brothers Special Financing

On June 4, 2010 Lehman Brothers Special Financing (LBSF) initiated a claim against the Company in LBSF’s bankruptcy proceeding for an additional payment from the Company of $19.7 million, related to certain derivative contracts which the Company had earlier terminated due to LBSF’s default as a result of its bankruptcy filing in 2008. On May 31, 2011, the Company and LBSF agreed in principle to a settlement of LBSF’s June 4, 2010 claim. Under the terms of the settlement, the Company made payment of $8.5 million during the third quarter of 2011 in return for LBSF’s release of its claim.

29

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

12. Related Party Transactions

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 provides certain monitoring, advisory and consulting services to the Company for an aggregate annual management fee equal to 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). Affiliates of Blackstone also receive reimbursement for out-of-pocket expenses. Expenses relating to the management fee were $1,150 and $3,450 in the three and nine months ended September 25, 2011, respectively. Expenses relating to the management fee were $1,125 and $3,375 in the three and nine months ended September 26, 2010, respectively. The Company reimbursed the Blackstone group out-of-pocket expenses totaling $0 and $55 in the three and nine months ended September 26, 2010, respectively. There were no out-of-pocket expenses reimbursed to The Blackstone Group in the three and nine months ended September 25, 2011.

Supplier Costs

Graham Packaging, which is controlled by affiliates of The Blackstone Group, supplies packaging for some of the Company’s products. Purchases from Graham Packaging were $3,320 and $8,264 for the three and nine months ended September 25, 2011, respectively. Purchases from Graham Packaging were $1,695 and $5,255 for the three and nine months ended September 26, 2010, respectively. On September 8, 2011, Graham Packaging announced the completion of its acquisition by Reynolds Group Holdings Limited, and thus ceased to be a related party.

Customer Purchases

Performance Food Group, which is controlled by affiliates of The Blackstone Group, is a food service supplier that purchases products from the Company. Sales to Performance Food Group were $1,214 and $3,614 in the three and nine months ended September 25, 2011, respectively. Sales to Performance Food Group were $1,559 and $4,646 in the three and nine months ended September 26, 2010, respectively.

Interest Expense

For the three and nine months ended September 25, 2011, fees and interest expense recognized in the Consolidated Statement of Operations for debt to the related party Blackstone Advisors L.P. totaled $1,406 and $4,199, respectively. For the three and nine months ended September 26, 2010, fees and interest expense recognized in the Consolidated Statement of Operations for debt to the related party Blackstone Advisors L.P. totaled $2,624 and $4,023, respectively.

Notes receivable from officers

In connection with the capital contributions at the time of the Birds Eye Foods Acquisition on December 23, 2009, certain members of the Board of Directors and management purchased ownership units of our ultimate parent, Peak Holdings LLC. To fund these purchases, certain members of management signed 30 day notes receivable at a market interest rate. The total of the notes receivable were $565 and were fully paid in January 2010.

30

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 is organized into three operating segments: Birds Eye Frozen, Duncan Hines Grocery and Specialty Foods. Our United States retail frozen vegetables (Birds Eye^®), multi-serve frozen dinners and entrées (Birds Eye Voila!^®), single-serve frozen dinners and entrées (Hungry-Man^®, Swanson^®), frozen seafood (Van de Kamp’s^®, Mrs. Paul’s^®), frozen breakfast (Aunt Jemima^®), bagels (Lender’s^®), and frozen pizza (Celeste^®) are reported in the Birds Eye Frozen segment. Our baking mixes and frostings (Duncan Hines^®), shelf-stable pickles, peppers and relish (Vlasic^®), barbeque sauces (Open Pit^®), pie fillings (Comstock^®, Wilderness^®), syrups (Mrs. Butterworth’s^®, Log Cabin^®), salad dressing (Bernstein’s^®), canned meat (Armour^®, Nalley^®, Brooks^®) and all Canadian Operations are reported in the Duncan Hines Grocery segment. The Specialty Foods segment consists of snack products (Tim’s Cascade^®, Snyder of Berlin^®) and our food service and private label businesses. 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 which are identified with the operations in each segment or geographic region. Corporate assets consist of prepaid and deferred tax assets and assets held for sale. Unallocated corporate expenses consist of corporate overhead such as executive management, finance and legal functions, the costs to integrate the Birds Eye Foods Acquisition and a onetime charge of $8.5 million related to our settlement with LBSF. For further information on the LBSF settlement, see Note 11 to the Consolidated Financial Statements for Commitments and Contingencies.

	Three months ended						Nine months ended
SEGMENT INFORMATION	September 25, 2011			September 26, 2010			September 25, 2011			September 26, 2010
Net sales
Birds Eye Frozen	$	248,010		$	223,077		$	796,401		$	778,124
Duncan Hines Grocery	221,603			214,098			686,937			684,663
Specialty Foods	105,133			104,554			299,743			311,458
Total	$	574,746		$	541,729		$	1,783,081		$	1,774,245
Earnings before interest and taxes
Birds Eye Frozen	$	32,590		$	28,539		$	112,199		$	93,573
Duncan Hines Grocery	30,975			27,505			99,884			99,574
Specialty Foods	7,636			7,058			22,394			19,931
Unallocated corporate expenses	(5,907		)	(8,866		)	(25,475		)	(26,350		)
Total	$	65,294		$	54,236		$	209,002		$	186,728
Depreciation and amortization
Birds Eye Frozen	$	11,519		$	8,327		$	29,809		$	25,573
Duncan Hines Grocery	6,297			6,134			22,781			17,855
Specialty Foods	4,343			5,074			12,475			14,784
Total	$	22,159		$	19,535		$	65,065		$	58,212
Capital expenditures*
Birds Eye Frozen	$	25,814		$	8,823		$	59,501		$	31,046
Duncan Hines Grocery	8,978			13,750			21,318			26,214
Specialty Foods	5,429			2,514			11,513			7,359
Total	$	40,221		$	25,087		$	92,332		$	64,619
GEOGRAPHIC INFORMATION
Net sales
United States	$	568,634		$	536,622		$	1,763,734		$	1,755,358
Canada	20,763			19,811			62,566			58,597
Intercompany	(14,651		)	(14,704		)	(43,219		)	(39,710		)
Total	$	574,746		$	541,729		$	1,783,081		$	1,774,245

 *    Includes new capital leases.

31

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

SEGMENT INFORMATION	September 25, 2011		December 26, 2010
Total assets
Birds Eye Frozen	$	2,088,429	$	2,004,956
Duncan Hines Grocery	2,009,185		1,963,939
Specialty Foods	455,443		440,693
Corporate	35,424		82,028
Total	$	4,588,481	$	4,491,616
GEOGRAPHIC INFORMATION
Long-lived assets
United States	$	484,662	$	447,014
Canada	41		54
Total	$	484,703	$	447,068

32

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 provision (benefit) for income taxes and related effective tax rates for the three months and nine months ended September 25, 2011 and September 26, 2010 were as follows:

	Three months ended						Nine months ended
	September 25, 2011			September 26, 2010			September 25, 2011			September 26, 2010
Provision (benefit) for income taxes - current	$	1,170		$	(7,731	)	$	2,210		$	2,055
Provision (benefit) for income taxes - deferred	(797		)	154			10,797			(3,801		)
Provision (benefit) for income taxes	$	373		$	(7,577	)	$	13,007		$	(1,746	)
Effective rate	2.8		%	38.4		%	24.3		%	(41.6		)%

Income taxes are accounted for in accordance with the authoritative guidance for accounting for income taxes under which deferred tax assets and liabilities are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. 

During the three and nine months ended September 25, 2011, various jurisdictions enacted legislative changes which effected the amounts at which our deferred tax assets and liabilities will reverse.  While such rate changes resulted in no additional benefit to the provision for income taxes during the three months ended September 25, 2011, a net benefit of $2,777 related to rate changes was recorded in the tax provision for the nine months ended September 25, 2011.  Additionally, during the three and nine months ended September 25, 2011, new information effecting the measurement of uncertain tax benefits and the settlement of a tax examination resulted in a benefit to the provision for income taxes of $4,733.   

As previously reported, during the nine months ended September 26, 2010, the Company recorded an out of period adjustment to correct an error in the tax effects of Accumulated Other Comprehensive Loss. This adjustment reduced the provision for income taxes by $3,700. Accordingly, Accumulated Other Comprehensive Loss was increased by the related effect of this adjustment. This adjustment was not material to any of the affected periods.

The Company regularly evaluates its deferred tax assets for future realization.  A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized.  Changes in valuation allowances from period to period are included in the Company's provision for income taxes in the period of change.

As of September 25, 2011 and September 26, 2010, we maintained a valuation allowance for certain state net operating loss carryovers, state tax credit carryovers and foreign loss carryovers. For the three months ended September 25, 2011, no charge related to change in valuation allowance was recognized to the provision for income taxes. For the nine months ended September 25, 2011, a charge of $443 was recognized in the provision for income taxes, principally related to certain state credit carryovers and changes due to the aforementioned tax laws.

The Company's liability for unrecognized tax benefits as of September 25, 2011 is $9,660. The amount, if recognized, that would impact the effective tax rate as of September 25, 2011 was $2,456. The amount of unrecognized tax benefit classified as a long-term liability on the Consolidated Balance Sheet was $721. From time to time, various taxing authorities may audit the Company's tax returns. It is reasonably possible that a decrease in the unrecognized tax benefit of up to $1,735 may occur within the next twelve months due to the lapse of certain statute of limitations or resolution of uncertainties.

33

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

15. Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”). ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in equity. ASU 2011-05 requires that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance is to be applied retrospectively and becomes effective in the first quarter of 2012. The Company anticipates that the adoption of this standard will change the presentation of its consolidated financial statements but will have no impact on the determination of net earnings.

In September 2011, the FASB amended the authoritative guidance regarding the testing for goodwill impairment. Under the amendments, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value reporting of a reporting unit is less than the carrying amount, then performing the two-step impairment test is unnecessary. The changes are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, however, early adoption is permitted. The Company is currently evaluating whether it will elect to early adopt this guidance during the fourth quarter.

In September 2011, the FASB amended the authoritative guidance regarding multi-employer pension plans. The revised guidance requires additional disclosures regarding multi-employer plans and is effective for fiscal years ending after December 15, 2011. The Company does not expect this guidance to have a material impact on the consolidated financial statements upon adoption.

34

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

The 9.25% Senior Notes and the 8.25% Senior Notes are general senior 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 10.625% Senior Subordinated Notes are general unsecured obligations of the Company, subordinated in right of payment to all existing and future 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 25, 2011 and December 26, 2010.

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

i. Three and nine months ended September 25, 2011; and

ii. Three and nine months ended September 26, 2010.

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

i. Nine months endedSeptember 25, 2011; and

ii. Nine months endedSeptember 26, 2010.

(2) Elimination entries necessary to consolidate the Company with its guarantor subsidiaries and non-guarantor subsidiaries.

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 and include a reclassification entry of net non-current deferred tax assets to non-current deferred tax liabilities.

35

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 25, 2011
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations and Reclassifications			Consolidated Total
Current assets:
Cash and cash equivalents	$	—		$	98,196		$	1,181	$	—		$	99,377
Accounts receivable, net	—			170,248			7,801		—			178,049
Intercompany accounts receivable	141,420			—			302		(141,722		)	—
Inventories, net	—			399,530			7,398		—			406,928
Other current assets	2,192			6,897			251		—			9,340
Deferred tax assets	—			35,083			—		(368		)	34,715
Total current assets	143,612			709,954			16,933		(142,090		)	728,409
Plant assets, net	—			484,662			41		—			484,703
Investment in subsidiaries	1,816,494			10,262			—		(1,826,756		)	—
Intercompany note receivable	1,621,090			7,270			9,800		(1,638,160		)	—
Tradenames	—			1,629,813			—		—			1,629,813
Other assets, net	33,855			147,111			195		—			181,161
Deferred tax assets	189,226			—			—		(189,226		)	—
Goodwill	—			1,564,395			—		—			1,564,395
Total assets	$	3,804,277		$	4,553,467		$	26,969	$	(3,796,232	)	$	4,588,481
Current liabilities:
Short-term borrowings	$	—		$	434		$	—	$	—		$	434
Current portion of long-term obligations	11,922			2,243			—		—			14,165
Accounts payable	—			165,241			1,189		—			166,430
Intercompany accounts payable	—			141,722			—		(141,722		)	—
Accrued trade marketing expense	—			35,133			4,457		—			39,590
Accrued liabilities	68,173			96,719			659		—			165,551
Accrued income taxes	—			340			—		—			340
Deferred tax liabilities	189			—			179		(368		)	—
Total current liabilities	80,284			441,832			6,484		(142,090		)	386,510
Long-term debt	2,776,681			11,516			—		—			2,788,197
Intercompany note payable	—			1,630,890			7,270		(1,638,160		)	—
Pension and other postretirement benefits	—			65,711			—		—			65,711
Other long-term liabilities	815			17,400			2,730		—			20,945
Deferred tax liabilities	—			569,624			223		(189,226		)	380,621
Total liabilities	2,857,780			2,736,973			16,707		(1,969,476		)	3,641,984
Commitments and contingencies (note 11)
Shareholder’s equity:
Common stock and other equity	$	—		$	—		$	—	$	—		—
Additional paid-in-capital	697,101			1,284,155			2,324		(1,286,479		)	697,101
Retained earnings	287,960			555,172			7,469		(562,641		)	287,960
Accumulated other comprehensive loss	(38,564		)	(22,833		)	469		22,364			(38,564		)
Total shareholder’s equity	946,497			1,816,494			10,262		(1,826,756		)	946,497
Total liabilities and shareholder’s equity	$	3,804,277		$	4,553,467		$	26,969	$	(3,796,232	)	$	4,588,481

36

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 26, 2010
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations and Reclassifications			Consolidated Total
Current assets:
Cash and cash equivalents	$	—		$	109,324		$	5,962		$	—		$	115,286
Accounts receivable, net	—			138,607			6,651			—			145,258
Intercompany accounts receivable	—			127,271			—			(127,271		)	—
Inventories, net	—			323,750			5,885			—			329,635
Other current assets	—			21,396			111			—			21,507
Deferred tax assets	—			37,976			312			—			38,288
Total current assets	—			758,324			18,921			(127,271		)	649,974
Plant assets, net	—			447,014			54			—			447,068
Investment in subsidiaries	1,731,592			7,774			—			(1,739,366		)	—
Intercompany note receivable	1,936,073			—			—			(1,936,073		)	—
Tradenames	—			1,629,812			—			—			1,629,812
Other assets, net	41,225			159,142			—			—			200,367
Deferred tax assets	166,231			—			—			(166,231		)	—
Goodwill	—			1,564,395			—			—			1,564,395
Total assets	$	3,875,121		$	4,566,461		$	18,975		$	(3,968,941	)	$	4,491,616
Current liabilities:
Short-term borrowings	$	—		$	1,591		$	—		$	—		$	1,591
Current portion of long-term obligations	2,547			2,101			—			—			4,648
Accounts payable	—			113,652			1,717			—			115,369
Intercompany accounts payable	122,459			—			4,812			(127,271		)	—
Accrued trade marketing expense	—			43,473			3,801			—			47,274
Accrued liabilities	46,532			95,603			611			—			142,746
Accrued income taxes	—			—			193			—			193
Total current liabilities	171,538			256,420			11,134			(127,271		)	311,821
Long-term debt	2,785,152			12,155			—			—			2,797,307
Intercompany note payable	—			1,936,073			—			(1,936,073		)	—
Pension and other postretirement benefits	—			78,606			—			—			78,606
Other long-term liabilities	23,346			19,664			—			—			43,010
Deferred tax liabilities	—			531,951			67			(166,231		)	365,787
Total liabilities	2,980,036			2,834,869			11,201			(2,229,575		)	3,596,531
Commitments and contingencies (note 11)
Shareholder’s equity:
Common stock and other equity	$	—		$	—		$	—		$	—		—
Additional paid-in-capital	697,267			1,284,155			2,324			(1,286,479		)	697,267
Retained earnings	247,350			471,255			6,784			(478,039		)	247,350
Accumulated other comprehensive loss	(49,532		)	(23,818		)	(1,334		)	25,152			(49,532		)
Total shareholder’s equity	895,085			1,731,592			7,774			(1,739,366		)	895,085
Total liabilities and shareholder’s equity	$	3,875,121		$	4,566,461		$	18,975		$	(3,968,941	)	$	4,491,616

37

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 Consolidated Statement of Operations For the three months ended September 25, 2011
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	—		$	568,634		$	20,763	$	(14,651	)	$	574,746
Cost of products sold	(53		)	438,355			16,570		(14,376		)	440,496
Gross profit	53			130,279			4,193		(275		)	134,250
Operating expenses
Marketing and selling expenses	121			41,911			1,274		—			43,306
Administrative expenses	1,237			17,359			914		—			19,510
Research and development expenses	9			2,273			—		—			2,282
Intercompany royalties	—			—			17		(17		)	—
Intercompany technical service fees	—			—			258		(258		)	—
Other expense (income), net	—			3,858			—		—			3,858
Equity in (earnings) loss of investees	(27,641		)	(1,149		)	—		28,790			—
Total operating expenses	(26,274		)	64,252			2,463		28,515			68,956
Earnings before interest and taxes	26,327			66,027			1,730		(28,790		)	65,294
Intercompany interest (income) expense	(28,601		)	28,584			17		—			—
Interest expense	51,792			444			5		—			52,241
Interest income	—			97			—		—			97
Earnings before income taxes	3,136			37,096			1,708		(28,790		)	13,150
Provision (benefit) for income taxes	(9,641		)	9,455			559		—			373
Net earnings	$	12,777		$	27,641		$	1,149	$	(28,790	)	$	12,777

38

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 Consolidated Statement of Operations For the three months ended September 26, 2010
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	—		$	536,622		$	19,811	$	(14,704	)	$	541,729
Cost of products sold	270			415,792			16,768		(14,574		)	418,256
Gross profit	(270		)	120,830			3,043		(130		)	123,473
Operating expenses
Marketing and selling expenses	84			38,077			1,605		—			39,766
Administrative expenses	1,237			21,466			746		—			23,449
Research and development expenses	9			1,903			—		—			1,912
Intercompany royalties	—			—			20		(20		)	—
Intercompany technical service fees	—			—			110		(110		)	—
Other expense (income), net	—			4,111			—		—			4,111
Equity in (earnings) loss of investees	(13,357		)	(397		)	—		13,754			—
Total operating expenses	(12,027		)	65,160			2,481		13,624			69,238
Earnings before interest and taxes	11,757			55,670			562		(13,754		)	54,235
Intercompany interest (income) expense	(30,010		)	30,010			—		—			—
Interest expense	73,576			488			—		—			74,064
Interest income	—			85			—		—			85
Earnings (loss) before income taxes	(31,809		)	25,257			562		(13,754		)	(19,744		)
Provision (benefit) for income taxes	(19,642		)	11,900			165		—			(7,577		)
Net earnings (loss)	$	(12,167	)	$	13,357		$	397	$	(13,754	)	$	(12,167	)

39

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 Consolidated Statement of Operations For the nine months ended September 25, 2011
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	—		$	1,763,734		$	62,566	$	(43,219	)	$	1,783,081
Cost of products sold	(128		)	1,343,039			53,368		(42,520		)	1,353,759
Gross profit	128			420,695			9,198		(699		)	429,322
Operating expenses
Marketing and selling expenses	362			126,561			4,841		—			131,764
Administrative expenses	3,884			56,094			2,662		—			62,640
Research and development expenses	27			6,316			—		—			6,343
Intercompany royalties	—			—			55		(55		)	—
Intercompany technical service fees	—			—			644		(644		)	—
Other expense (income), net	—			19,573			—		—			19,573
Equity in (earnings) loss of investees	(83,917		)	(685		)	—		84,602			—
Total operating expenses	(79,644		)	207,859			8,202		83,903			220,320
Earnings before interest and taxes	79,772			212,836			996		(84,602		)	209,002
Intercompany interest (income) expense	(87,030		)	87,013			17		—			—
Interest expense	154,294			1,325			5		—			155,624
Interest income	—			238			1		—			239
Earnings before income taxes	12,508			124,736			975		(84,602		)	53,617
Provision (benefit) for income taxes	(28,102		)	40,819			290		—			13,007
Net earnings	$	40,610		$	83,917		$	685	$	(84,602	)	$	40,610

40

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 Consolidated Statement of Operations For the nine months ended September 26, 2010
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries		Eliminations			Consolidated Total
Net sales	$	—		$	1,755,358		$	58,597	$	(39,710	)	$	1,774,245
Cost of products sold	270			1,341,837			50,238		(39,241		)	1,353,104
Gross profit	(270		)	413,521			8,359		(469		)	421,141
Operating expenses
Marketing and selling expenses	252			126,268			4,573		—			131,093
Administrative expenses	3,782			78,188			1,971		—			83,941
Research and development expenses	27			6,433			—		—			6,460
Intercompany royalties	—			—			66		(66		)	—
Intercompany technical service fees	—			—			403		(403		)	—
Other expense (income), net	—			12,920			—		—			12,920
Equity in (earnings) loss of investees	(59,513		)	(895		)	—		60,408			—
Total operating expenses	(55,452		)	222,914			7,013		59,939			234,414
Earnings before interest and taxes	55,182			190,607			1,346		(60,408		)	186,727
Intercompany interest (income) expense	(91,612		)	91,612			—		—			—
Interest expense	181,895			883			—		—			182,778
Interest income	20			222			—		—			242
Earnings (loss) before income taxes	(35,081		)	98,334			1,346		(60,408		)	4,191
Provision (benefit) for income taxes	(41,018		)	38,821			451		—			(1,746		)
Net earnings (loss)	$	5,937		$	59,513		$	895	$	(60,408	)	$	5,937

41

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 25, 2011
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations and Reclassifications			Consolidated Total
Cash flows from operating activities
Net earnings from operations	$	40,610		$	83,917		$	685		$	(84,602	)	$	40,610
Non-cash charges (credits) to net earnings
Depreciation and amortization	—			65,053			12			—			65,065
Amortization of discount on term loan	904			—			—			—			904
Amortization of debt acquisition costs	7,797			10			5			—			7,812
Amortization of deferred mark-to-market adjustment on terminated swap	1,684			—			—			—			1,684
Plant asset impairment charges	—			1,286			—			—			1,286
Change in value of financial instruments	(210		)	4,194			—			—			3,984
Equity in loss (earnings) of investees	(83,917		)	(685		)	—			84,602			—
Stock-based compensation charges	—			900			—			—			900
Postretirement healthcare benefits	—			84			—			—			84
Pension expense, net of contributions	—			(11,313		)	—			—			(11,313		)
Other long-term liabilities	—			(1,375		)	—			—			(1,375		)
Other long-term assets	(3,466		)	3,636			—			—			170
Deferred income taxes	(28,102		)	38,898			1			—			10,797
Changes in working capital, net of acquisitions
Accounts receivable	—			(31,641		)	(1,284		)	—			(32,925		)
Intercompany accounts receivable/payable	—			2,477			(2,477		)	—			—
Inventories	—			(75,287		)	(1,632		)	—			(76,919		)
Accrued trade marketing expense	—			(8,340		)	733			—			(7,607		)
Accounts payable	—			52,026			(493		)	—			51,533
Accrued liabilities	11,341			(2,015		)	60			—			9,386
Other current assets	(2,639		)	7,673			(142		)	—			4,892
Accrued income taxes	—			340			(189		)				151
Net cash provided by (used in) operating activities	(55,998		)	129,838			(4,721		)	—			69,119
Cash flows from investing activities
Intercompany accounts receivable/payable	(295,700		)	—			—			295,700			—
Intercompany loans	—			(7,270		)	(9,800		)	17,070			—
Repayments of intercompany loans	353,111			—						(353,111		)	—
Capital expenditures	—			(90,832		)	—			—			(90,832		)
Sale of plant assets	—			7,900			—			—			7,900
Net cash (used in) provided by investing activities	57,411			(90,202		)	(9,800		)	(40,341		)	(82,932		)
Cash flows from financing activities
Proceeds from short-term borrowing	—			845			—			—			845
Repayments of short-term borrowing	—			(2,002		)	—			—			(2,002		)
Intercompany accounts receivable/payable	—			295,700						(295,700		)	—
Proceeds from intercompany loans	—			9,800			7,270			(17,070		)	—
Repayments of intercompany loans	—			(353,111		)	—			353,111			—
Repayment of capital lease obligations	—			(1,997		)	—			—			(1,997		)
Debt acquisition costs	(346		)	—			(200		)	—			(546		)
Equity contributions	557			1			—			—			558
Reduction of equity contributions	(1,624		)	—			—			—			(1,624		)

42

PINNACLE FOODS FINANCE LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

Other Financing	—			—			2,730			—		2,730
Net cash (used in) provided by financing activities	(1,413		)	(50,764		)	9,800			40,341		(2,036		)
Effect of exchange rate changes on cash	—			—			(60		)	—		(60		)
Net change in cash and cash equivalents	—			(11,128		)	(4,781		)	—		(15,909		)
Cash and cash equivalents - beginning of period	—			109,324			5,962			—		115,286
Cash and cash equivalents - end of period	$	—		$	98,196		$	1,181		$	—	$	99,377
Supplemental disclosures of cash flow information:
Interest paid	$	132,502		$	1,268		$	—		$	—	$	133,770
Interest received	(1		)	193			1			—		193
Income taxes paid (refunded)	—			(3,030		)	665			—		(2,365		)
Non-cash investing and financing activities:
New capital leases	—			1,500			—			—		1,500

43

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 26, 2010
	Pinnacle Foods Finance LLC			Guarantor Subsidiaries			Nonguarantor Subsidiaries			Eliminations and Reclassifications			Consolidated Total
Cash flows from operating activities
Net earnings from operations	$	5,937		$	59,513		$	895		$	(60,408	)	$	5,937
Non-cash charges (credits) to net earnings
Depreciation and amortization	—			58,203			9			—			58,212
Amortization of discount on term loan	1,856			—			—			—			1,856
Amortization of debt acquisition costs	9,424			—			—			—			9,424
Write off of debt acquisition costs	17,281			—			—			—			17,281
Amortization of deferred mark-to-market adjustment on terminated swap	2,565			—			—			—			2,565
Change in value of financial instruments	(395		)	1,607			—			—			1,212
Equity in loss (earnings) of investees	(59,513		)	(895		)	—			60,408			—
Stock-based compensation charges	—			614			—			—			614
Postretirement healthcare benefits	—			(57		)	—			—			(57		)
Pension expense, net of contributions	—			(2,473		)	—			—			(2,473		)
Other long-term liabilities	—			1,528			—			—			1,528
Other long-term assets	—			50			—			—			50
Deferred income taxes	(45,306		)	41,420			85			—			(3,801		)
Changes in working capital, net of acquisitions
Accounts receivable	—			1,223			(6,543		)	—			(5,320		)
Intercompany accounts receivable/payable	—			448			(448		)	—			—
Inventories	—			2,083			(777		)	—			1,306
Accrued trade marketing expense	—			(6,466		)	2,500			—			(3,966		)
Accounts payable	—			33,973			718			—			34,691
Accrued liabilities	26,952			(3,332		)	112			—			23,732
Other current assets	8,706			(6,597		)	583			—			2,692
Net cash provided by (used in) operating activities	(32,493		)	180,842			(2,866		)	—			145,483
Cash flows from investing activities
Intercompany accounts receivable/payable	(59,428		)	—			—			59,428			—
Repayments of intercompany loans	134,926			—			—			(134,926		)	—
Capital expenditures	—			(52,397		)	—			—			(52,397		)
Net cash (used in) provided by investing activities	75,498			(52,397		)	—			(75,498		)	(52,397		)
Cash flows from financing activities
Proceeds from bond offering	400,000			—			—			—			400,000
Proceeds from bank term loan	442,300			—			—			—			442,300
Repayments of long-term obligations	(872,452		)	—			—			—			(872,452		)
Proceeds from short-term borrowing	—			1,412			—			—			1,412
Repayments of short-term borrowing	—			(2,178		)	—			—			(2,178		)
Intercompany accounts receivable/payable	—			59,428			—			(59,428		)	—
Repayments of intercompany loans	—			(134,926		)	—			134,926			—
Repayment of capital lease obligations	—			(2,164		)	—			—			(2,164		)
Change in bank overdrafts	—			(14,304		)	—			—			(14,304		)
Debt acquisition costs	(13,025		)	—			—			—			(13,025		)

44

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 26, 2010
Equity contributions	561			—			—			—		561
Reduction of equity contributions	(954		)	—			—			—		(954		)
Repayments of notes receivable from officers	565			—			—			—		565
Net cash (used in) provided by financing activities	(43,005		)	(92,732		)	—			75,498		(60,239		)
Effect of exchange rate changes on cash	—			—			178			—		178
Net change in cash and cash equivalents	—			35,713			(2,688		)	—		33,025
Cash and cash equivalents - beginning of period	—			68,249			5,625			—		73,874
Cash and cash equivalents - end of period	$	—		$	103,962		$	2,937		$	—	$	106,899
Supplemental disclosures of cash flow information:
Interest paid	$	121,427		$	953		$	—		$	—	$	122,380
Interest received	20			222			—			—		242
Income taxes paid	—			6,254			8			—		6,262
Non-cash investing and financing activities:
New capital leases	—			12,222			—			—		12,222

45

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 26, 2010. 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 26, 2010. 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. We manage the business in three operating segments: Birds Eye Frozen, Duncan Hines Grocery and Specialty Foods. Our United States frozen vegetables (Birds Eye^®), multi-serve frozen dinners and entrées (Birds Eye Voila!^®), single-serve frozen dinners and entrées (Hungry-Man^®, Swanson^®), frozen seafood (Van de Kamp’s^®, Mrs. Paul’s^®), frozen breakfast (Aunt Jemima^®), bagels (Lender’s^®), and frozen pizza (Celeste^®) are reported in the Birds Eye Frozen Division. Our baking mixes and frostings (Duncan Hines^®), shelf-stable pickles, peppers and relish (Vlasic^®), barbeque sauces (Open Pit^®), pie fillings (Comstock^®, Wilderness^®), syrups (Mrs. Butterworth’s^®, Log Cabin^®), salad dressing (Bernstein’s^®), canned meat (Armour^®, Nalley^®, Brooks^®) and all Canadian Operations are reported in the Duncan Hines Grocery Division. The Specialty Foods Division consists of snack products (Tim’s Cascade^®, Snyder of Berlin^®) and our food service and private label businesses. We refer to the sum of our Birds Eye Frozen segment and our Duncan Hines Grocery segment as our North American retail businesses. 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 and assets held for sale. Unallocated corporate expenses consist of corporate overhead such as executive management, and finance and legal functions and the costs to integrate the Birds Eye Foods Acquisition and a onetime charge of $8.5 million related to our settlement with Lehman Brothers Specialty Financing (LBSF). For further information on the LBSF settlement see Note 11 to the Consolidated Financial Statements for Commitments and Contingencies. Product contribution is defined as gross profit less direct to consumer advertising and marketing expenses, selling commissions and direct brand marketing overhead expenses.

On December 23, 2009, we acquired all of the common stock of Birds Eye Foods, Inc. (“Birds Eye Foods”) (the “Birds Eye Foods Acquisition”). Birds Eye Foods’ product offering includes an expanding platform of healthy, high-quality frozen vegetables and frozen meals and a portfolio of primarily branded specialty foods which are highly-complimentary to our previously existing product offerings.

46

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 product selling price increases and changes in consumption between out-of-home and in-home eating. 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 identify and take advantage of changes in 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, the long-term trend for food consumption at home is flat. The slow economic recovery has negatively impacted consumer spending and increased price sensitivity among consumers.. As a result, consumers are looking for value alternatives, which has caused an increase in the percentage of products sold on promotion and a shift 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:

• Gross sales, which change as a function of changes in volume and list price; and

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

◦ Cash discounts, returns and other allowances.

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

◦ New product distribution (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.

Cost Factors

Our important costs include the following:

• Raw materials, such as sugar, cucumbers, broccoli, corn, peas, green beans, carrots, flour (wheat), poultry, seafood, vegetable oils, shortening, meat and corn syrup, 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.

• 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.

47

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 acquisition of the Company by Blackstone (the Blackstone Transaction) and the Birds Eye Foods Acquisition, 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 resulted in minimal federal and state cash taxes in recent years. We expect to continue to realize significant reductions in federal and state cash taxes in the future attributable to amortization of intangible assets and realization of net operating losses.

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

• Impairment of Goodwill, Tradenames 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. The value of goodwill and intangibles from the allocation of purchase price from the Blackstone Transaction and the Birds Eye Foods Acquisition is derived from our business operating plans at that time and is therefore susceptible to an adverse change that could require an impairment charge. During the fourth quarter of 2010, we recognized an impairment of $29.0 million in our Hungry-Man^®trade name as a result of reduced long-term sales growth forecasts for the brand.

Seasonality

Our sales and cash flows are affected by seasonal cyclicality. Sales of frozen foods, including frozen vegetables and frozen complete bagged meals tend to be marginally higher during the winter months. Seafood sales peak during Lent, in advance of the Easter holiday. Sales of pickles, relishes, barbecue sauces, potato chips and salad dressings tend to be higher in the spring and summer months, and demand for Duncan Hines products, Birds Eye vegetables and our fruit fillings tend to be higher around the Easter, Thanksgiving, and Christmas holidays. 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. Since many of the raw materials we process under the Birds Eye brand are agricultural crops, production of these products is predominantly seasonal, occurring during and immediately following the purchase of such crops. As a result, our inventory levels tend to be higher during August, September, and October, and thus we require more working capital during these months. We are a seasonal net user of cash in the third quarter of the calendar year.

Restructuring Charges

Rochester, NY Office

The Rochester, NY office was the former headquarters of Birds Eye Foods, Inc., which was acquired by PFG on December 23, 2009. In connection with the consolidation of activities into PFG’s New Jersey offices, the Rochester office was closed in December 2010. Notification letters under the Worker Adjustment and Retraining Notification (WARN) Act of 1988 were issued in the first quarter of 2010. Activities related to the closure of the Rochester office began in the second quarter of 2010 and resulted in the elimination of approximately 200 positions. In addition, we recognized lease termination costs in 2010 due to the discontinuation of use of the Birds Eye Foods’ Corporate headquarters.

48

The following table summarizes restructuring charges related to the Rochester, NY office which were recorded during the three and nine months ended September 25, 2011 and September 26, 2010 and includes employee termination and lease termination costs.

	Three months ended				Nine months ended
	September 25, 2011		September 26, 2010		September 25, 2011		September 26, 2010
Birds Eye Frozen	$	—	$	0.6	$	—	$	8.0
Duncan Hines Grocery	0.1		0.2		—		2.1
Specialty Foods	—		0.1		—		1.3
	$	0.1	$	0.9	$	—	$	11.4

Tacoma, WA Plant

On December 3, 2010, in an effort to improve our supply chain operations, we announced the closure of our Tacoma plant and the consolidation of production in our Ft. Madison, IA plant and recorded employee termination benefits of $1.5 million. The Tacoma plant ceased production in June 2011 and the closure will result in the termination of approximately 160 employees. In addition to termination benefits, we recorded asset retirement obligations of $1.0 million at Tacoma which were capitalized and depreciated over the remaining useful life of the plant. We recorded accelerated depreciation costs of $0.0 million and $4.7 million in the three and nine months ended September 25, 2011, respectively. In addition, we recorded asset impairment charges of $0.0 million and $1.3 million in the three and nine months ended September 25, 2011, respectively, upon ceasing use of the facility at the end of the second quarter. All restructuring charges related to the closure of the Tacoma, WA plant are recorded in the Duncan Hines Grocery segment.

Fulton, NY Plant

On April 15, 2011, we announced plans to consolidate the Birds Eye^® brand’s Fulton, NY plant operations into the Darien, WI and Waseca, MN facilities in order to locate vegetable processing closer to the crop growing region and thus reduce the related freight costs. The Fulton facility is currently expected to close at the end of 2011 and will result in the termination of approximately 270 employees. We recorded termination costs of $0.0 million and $1.9 million in the three and nine months ended September 25, 2011, respectively. In addition, we recorded accelerated depreciation costs of $2.6 million and $5.2 million in the three and nine months ended September 25, 2011, respectively. All restructuring charges related to the closure of the Fulton, NY plant are recorded in the Birds Eye Frozen segment.

49

Results of Operations:

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 25, 2011				September 26, 2010				September 25, 2011				September 26, 2010
Net sales	$	574.7	100.0	%	$	541.7	100.0	%	$	1,783.1	100.0	%	$	1,774.2	100.0	%
Cost of products sold	440.5		76.6	%	418.3		77.2	%	1,353.8		75.9	%	1,353.1		76.3	%
Gross profit	134.2		23.4	%	123.4		22.8	%	429.3		24.1	%	421.1		23.7	%
Operating expenses:
Marketing and selling expenses	$	43.3	7.5	%	$	39.8	7.3	%	$	131.8	7.4	%	$	131.1	7.4	%
Administrative expenses	19.5		3.4	%	23.4		4.3	%	62.6		3.5	%	83.9		4.7	%
Research and development expenses	2.3		0.4	%	1.9		0.4	%	6.3		0.4	%	6.5		0.4	%
Other expense (income), net	3.9		0.7	%	4.1		0.8	%	19.6		1.1	%	12.9		0.7	%
Total operating expenses	$	69.0	12.0	%	$	69.2	12.8	%	$	220.3	12.4	%	$	234.4	13.2	%
Earnings before interest and taxes	$	65.3	11.4	%	$	54.2	10.0	%	$	209.0	11.7	%	$	186.7	10.5	%

	Three months ended						Nine months ended
	September 25, 2011			September 26, 2010			September 25, 2011				September 26, 2010
Net sales
Birds Eye Frozen	$	248.0		$	223.1		$	796.4			$	778.1
Duncan Hines Grocery	221.6			214.1			686.9				684.7
Specialty Foods	105.1			104.6			299.7				311.5
Total	$	574.7		$	541.8		$	1,783.0			$	1,774.3
Earnings before interest and taxes
Birds Eye Frozen	$	32.6		$	28.5		$	112.2			$	93.6
Duncan Hines Grocery	31.0			27.5			99.9				99.6
Specialty Foods	7.6			7.1			22.4				19.9
Unallocated corporate expenses	(5.9		)	(8.9		)	(25.5		)		(26.4		)
Total	$	65.3		$	54.2		$	209.0			$	186.7
Depreciation and amortization
Birds Eye Frozen	$	11.5		$	8.3		$	29.8			$	25.6
Duncan Hines Grocery	6.3			6.1			22.8				17.9
Specialty Foods	4.3			5.1			12.5				14.8
Total	$	22.1		$	19.5		$	65.1		—	$	58.3

50

Three months ended September 25, 2011 compared to three months ended September 26, 2010

Net sales

Net sales were $574.7 million for the three months ended September 25, 2011 compared to $541.8 million in the comparable prior year period, a 6.1% increase. Net sales in our North American retail businesses were up 7.4%, excluding the impact of the exited Birds Eye^® Steamfresh^® meals and U. S. Swanson^® meals businesses. The increase in sales was primarily attributable to both our Birds Eye Frozen segment and our Duncan Hines Grocery segment. Sales were also impacted by lower new product distribution expenses during the quarter as we accelerated our new product launches to the first quarter of 2011 compared to 2010, when the majority of our new products were launched during the third quarter. During the third quarter of 2011, we introduced several new innovative new products, including new Birds Eye^® Steamfresh^® Chef's Favorites^® restaurant-style vegetable blends, Vlasic^® Farmers Garden^® refrigerated pickles and Log Cabin^® all natural pancake mix.

In the quarter, sales of our Birds Eye Voila!^® complete bagged meals, Birds Eye^® Steamfresh^® vegetables, Hungry Man^® frozen dinners and Armour^® canned meats increased significantly from the prior year. We grew or held market share in brands representing approximately half of our product contribution. We have increased our published selling prices across our portfolio in order to help offset inflation and have experienced sequential improvement in realization throughout the first nine months and expect greater improvement in the remainder of the year.

Birds Eye Frozen Segment:

Net sales in the three months ended September 25, 2011 were $248.0 million, an increase of $24.9 million or 11.2% from the prior year. The increase is primarily attributable to higher sales in our Birds Eye^® Voila!^® brand, driven by expanded distribution and a significant increase in consumer demand caused by our new product offerings. Birds Eye^® Steamfresh^® vegetable sales also increased significantly, driven by our new product offerings. Hungry Man^® frozen dinner sales were also significantly higher during the quarter. These increases are partially offset by lower sales in our Aunt Jemima^® frozen breakfast products as a result of increased competition in 2011 compared to 2010 when a competitor’s supply disruption caused a product shortage for the category. Lower new product distribution expenses also positively impacted sales for the quarter.

Duncan Hines Grocery Segment:

Net sales in the three months ended September 25, 2011 were $221.6 million, an increase of $7.5 million or 3.5% from the prior year. The increase is primarily attributable to higher sales of our Armour^® brand and our Duncan Hines^® brand driven by our consumer marketing efforts. Lower new product distribution expenses also positively impacted sales for the quarter.

Specialty Foods Segment:

Net sales in the three months ended September 25, 2011 were $105.1 million, an increase of $0.6 million or 0.6% from the prior year. The increase is primarily attributable to increased sales in our snacks business, partially offset by lower sales in our food service business driven by our decision to emphasize higher margin products.

Gross profit.

Gross profit for the three months ended September 25, 2011 was $134.2 million or 23.4% of net sales, compared to $123.4 million or 22.8% of net sales during the comparable prior year period. The primary driver of the increase was a favorable variance resulting from $9.7 million of non-recurring expense recorded during the third quarter of 2010 related to the sale of inventory that was recorded at fair value during the Birds Eye acquisition. Partially offsetting this charge were non-recurring charges of $3.3 million and $1.3 million, respectively, recorded during the third quarter of 2011 related to the planned closures of our Fulton, NY and Tacoma, WA facilities. Excluding these charges, gross profit was 24.2% and 24.6% of net sales, in the third quarter of 2011 and 2010, respectively. This slight decrease is a function of higher commodity costs, which were largely offset by increased sales prices.

51

Marketing and selling expenses.

Marketing and selling expenses were $43.3 million or 7.5% of net sales for the three months ended September 25, 2011, compared to $39.8 million or 7.3% of sales during the comparable prior year period. The increase is driven primarily by our strategy to build consumer demand for our brands through increased advertising investment. In the third quarter, we increased advertising on our Birds Eye^® frozen vegetable brands behind both our new product launches and our existing products and our Duncan Hines^® brand, where we continued our comprehensive consumer marketing campaign that was launched during the prior quarter.

Administrative expenses

Administrative expenses were $19.5 million or 3.4% of net sales for the three months ended September 25, 2011, compared to $23.4 million or 4.3% of net sales during the comparable prior year period. The 2011 period is a lower percentage of net sales due to the realization of synergies from the Birds Eye acquisition and also because the third quarter of 2010 included $2.1 million of integration expenses related to the Birds Eye acquisition.

Research and development expenses.

Research and development expenses were $2.3 million, or 0.4% of net sales, for the three months ended September 25, 2011 compared with $1.9 million, or 0.4% of net sales, in the comparable prior year period.

Other expense (income), net.

Other expense (income), net consists of the following:

	Three months ended
	September 25, 2011			September 26, 2010
Other expense (income), net consists of:
Amortization of intangibles/other assets	$	4.0		$	4.3
Royalty income, net and other	(0.2		)	(0.2		)
Total other expense (income), net	$	3.9		$	4.1

Earnings before interest and taxes.

Earnings before interest and taxes were $65.3 million for the three months ended September 25, 2011, an increase of $11.1 million, or 20.4%, from the comparable prior year period. The increase was driven by higher gross profit primarily attributable to the net favorable charges of $5.1 million described above related to the Birds Eye acquisition in 2010 and plant consolidation projects in 2011 and lower administrative expenses driven by synergies from the Birds Eye acquisition and the absence of non recurring integration expenses, which were $2.1 million during 2010. Excluding these items, earnings before interest and taxes increased by $3.9 million, which is primarily driven by increased net sales and lower new product distribution expenses, partially offset by higher commodity costs.

Birds Eye Frozen Segment:

Earnings before interest and taxes were $32.6 million for the three months ended September 25, 2011, an increase of $4.1 million, or 14.2%, from the comparable prior year period. This increase was primarily driven by strong sales in the current quarter. Partially offsetting the sales increases, were higher advertising expense driven by our new advertising campaign and higher commodity costs. Earnings before interest and taxes were also impacted by net favorable charges of $0.2 million related to the Birds Eye acquisition in 2010 and the Fulton, NY plant consolidation project in 2011.

52

Duncan Hines Grocery Segment:

Earnings before interest and taxes were $31.0 million for the three months ended September 25, 2011, an increase of $3.5 million, or 12.6%, from the comparable prior year period. This increase was primarily driven by a favorable variance of $4.0 million related to the sale of inventory that was recorded at fair value during the Birds Eye acquisition and sold during the prior year. Offsetting the increase was lower gross profit as selling price increases did not fully offset commodity costs increases. In addition, we incurred $1.3 million of costs related to the planned closure of our Tacoma, WA manufacturing facility.

Specialty Foods Segment:

Earnings before interest and taxes were $7.6 million for the three months ended September 25, 2011, an increase of $0.5 million, or 8.2%, from the comparable prior year period. This increase was primarily driven by $2.2 million of non-recurring expense recorded during the third quarter of 2010 related to the sale of inventory that was recorded at fair value during the Birds Eye acquisition. Excluding this item, earnings before interest and taxes decreased by $1.7 million, which is primarily a function of higher commodity costs, partially offset by higher selling prices.

Interest expense, net.

Interest expense, net was $52.1 million in the three months ended September 25, 2011, compared to $74.0 million in the three months ended September 26, 2010.

The comparison of interest expense to the prior year period was impacted by our August 2010 refinancing, which resulted in charges of $20.9 million related to the write off of debt issue costs and discounts, loan modification fees and hedge ineffectiveness.

Included in interest expense, net, was $0.4 million and $0.7 million for the three months ended September 25, 2011 and the three months ended September 26, 2010, respectively, for the 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-designated 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 25, 2011, the remaining unamortized balance is $0.9 million.

Excluding the impact of the items in the previous paragraphs, the decrease in interest expense, net, was $0.6 million, of which $1.4 million was due to lower term loan debt levels due to payments made in 2010, $1.0 million due to lower interest rates as a result of our 2010 refinancing, $0.4 million due to lower interest rates on our tranche B term loans, $0.2 million due to lower amortization of debt issue costs, offset by increased losses on interest rate swap agreements of $2.0 million and $0.3 million of higher capital lease interest expenses.

Included in the interest expense, net, amount was $6.2 million and $4.2 million for the three months ended September 25, 2011 and the three months ended September 26, 2010, respectively, recorded from losses on interest rate swap agreements, a net change of $2.0 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, excluding the Accumulated other comprehensive (loss) income (“AOCI”) portion, are recorded as an adjustment to interest expense.

Provision (benefit) for income taxes.

The effective tax rate was 2.8% for the three months ended September 25, 2011, compared to 38.4% for the three months September 26, 2010.  The effective rate difference was principally due to the benefit created by evaluation of new information effecting the measurement of certain unrecognized tax benefits and the settlement of a tax examination. For the three months ended September 25, 2011 and September 26, 2010 we maintained a valuation allowance against certain state net operating carryovers, state tax credits carryovers and foreign loss carryovers. Refer to Note 14 of the Consolidated Financial Statements.

Under Internal Revenue Code (“the Code”) Section 382, the Company is a loss corporation. Section 382 of the Code places limitations on our ability to use certain net operating loss carry-forwards to offset income. The annual net operating loss limitation is approximately $14 to $18 million subject to other rules and restrictions. A substantial portion of our net operating loss carry-forwards and certain other tax attributes may not be utilized to offset Birds Eye income from recognized built in gains pursuant to Section 384 of the Code.

53

Nine months endedSeptember 25, 2011 compared to nine months ended September 26, 2010

Net sales

Net sales were $1,783.1 million for the nine months ended September 25, 2011 compared to $1,774.2 million in the comparable prior year period, a 0.5% increase. Net sales in our North American retail businesses were up 2.0%, excluding the impact of the exited Birds Eye^® Steamfresh^® meals and U. S. Swanson^® meals businesses. We introduced several new products during the first nine months of 2011, in addition to the third quarter introductions discussed above, including new varieties of Birds Eye^® Steamfresh^® vegetables, Birds Eye^® Voila! ^® complete bagged meals, Mrs. Paul’s^® and Van de Kamp’s^® seafood products, and Hungry-Man^® frozen dinners in the United States, as well as Swanson^® Skillet complete bagged meals in Canada. We have increased our published selling prices across our portfolio in order to help offset inflation and have experienced sequential improvement in realization throughout the first nine months and expect greater improvement in the remainder of the year.

In the nine months ended September 25, 2011, Birds Eye^® Voila!^® and Birds Eye^® Steamfresh^® experienced significant sales increases driven by our new product introductions and advertising campaign. Mrs. Paul’s^® and Van de Kamp’s^® also increased as a result of strong sales during Lent. Duncan Hines^® gained significant momentum during the second and third quarters driven by our new advertising campaign, but is down from 2010 on a year-to-date basis. We grew or held market share in brands representing approximately 67% of our product contribution.

Birds Eye Frozen Segment:

Net sales in the nine months ended September 25, 2011 were $796.4 million, an increase of $18.3 million, or 2.3%, from the prior year. Sales for the period were impacted by this year’s significant investment in new product launches, which has led to strong gains in sales of our Birds Eye^® Steamfresh^® vegetables and Birds Eye^® Voila!^® complete bagged meals. Sales of Mrs. Paul’s^®, Van de Kamp’s^® ,and Celeste^® also increased substantially during the period. The increases were offset, primarily by lower sales in our Aunt Jemima^® frozen breakfast products as a result of increased competition in 2011 compared to 2010 when a competitor supply disruption caused a product shortage for the category.

Duncan Hines Grocery Segment:

Net sales in the nine months ended September 25, 2011 were $686.9 million, an increase of $2.3 million, or 0.3%, from the prior year. During the period, we realized strong sales in our Canadian business, where we introduced Swanson Skillet meals during the first quarter. In addition, sales of our Armour^® canned meat, Nalley’s^® chili and Log Cabin^® syrup brands increased significantly from the prior year. Offsetting these increases were lower sales in our Duncan Hines^® and Vlasic^® brands. Although sales are down from the prior year on a year-to-date basis, Duncan Hines^® gained considerable momentum during the second and third quarters on the heels of our new advertising campaign as we launched an extensive television, internet and social media based campaign during the second quarter.

Specialty Foods Segment:

Net sales in the nine months ended September 25, 2011 were $299.7 million, a decrease of $11.7 million, or 3.8%, from the prior year. The decrease is primarily attributable to lower sales in our food service business driven by our strategy to emphasize higher margin branded products, offset by higher selling prices and increases in our snacks business.

Gross profit.

Gross profit for the nine months ended September 25, 2011 was $429.3 million or 24.1% of net sales, compared to $421.1 million, or 23.7%, of net sales during the comparable prior year period. The comparison of gross profit as a percentage of net sales was impacted during the period by a favorable variance resulting from $36.7 million of non-recurring expense recorded during the nine months of 2010 related to the sale of inventory that was recorded at fair value during the Birds Eye acquisition. Offsetting this favorable variance were charges of $9.0 million and $8.1 million, respectively, related to the planned closures of our Fulton, NY and Tacoma, WA facilities. The Tacoma plant ceased manufacturing at the end of the second quarter and the execution of the transfer to the Fort Madison, IA plant has exceeded our internal expectations. Higher commodity costs were also a challenge in the period and were partially offset by improved pricing. We have increased our published selling prices across our portfolio in order to help offset inflation and have experienced sequential improvement in realization throughout the first nine months and expect greater improvement in the remainder of the year. Manufacturing plant conversion costs improved during the period as our productivity programs continue to yield benefits. Excluding the restructuring and acquisition charges, gross profit was 25.0% and 25.8% of net sales, respectively, for the first nine months of 2011 and 2010.

54

Marketing and selling expenses.

Marketing and selling expenses were $131.8 million or 7.4% of net sales for the nine months ended September 25, 2011, compared to $131.1 million or 7.4% of sales during the comparable prior year period. This was a function of higher advertising expenses in our Birds Eye^® Steamfresh^® and Birds Eye^® Voila! ^® brands, as part of our enhanced brand building efforts and in support of our new product launches during the period, which were largely offset by the overhead synergies achieved from the Birds Eye acquisition.

Administrative expenses

Administrative expenses were $62.6 million or 3.5% of net sales for the nine months ended September 25, 2011, compared to $83.9 million or 4.7% of net sales during the comparable prior year period. The decrease in administrative expenses as a percentage of net sales is due to synergies from the Birds Eye acquisition and charges of $12.2 million in the 2010 period for the termination benefits related to the closure of the Rochester, NY office and $4.9 million of integration related expenses. Excluding these charges and expenses, administrative expenses were 3.8% of net sales in the nine months of 2010.

Research and development expenses.

Research and development expenses were $6.3 million, or 0.4% of net sales, for the nine months ended September 25, 2011, compared with $6.5 million, or 0.4% of net sales, in the comparable prior year period.

Other expense (income), net.

Other expense (income), net consists of the following:

	Nine months ended
	September 25, 2011			September 26, 2010
Other expense (income), net consists of:
Amortization of intangibles/other assets	$	12.1		$	12.9
Lehman Brothers Specialty Financing settlement	8.5			—
Gain on sale of the Watsonville, CA facility	(0.4		)	—
Royalty income, net and other	(0.7		)	—
Total other expense (income), net	$	19.6		$	12.9

During the second quarter of 2010 LBSF initiated a claim against the Company in LBSF’s bankruptcy proceeding for an additional payment from the Company of $19.7 million, related to certain derivative contracts which the Company had earlier terminated due to LBSF’s default as a result of its bankruptcy filing in 2008. During the second quarter of 2011, the Company and LBSF agreed in principle to a settlement of LBSF’s second quarter, 2010 claim. Under the terms of the settlement, the Company made a payment of $8.5 million in return for LBSF’s full release of its claim.

On June 24, 2011, the Company completed the sale of our Watsonville, CA facility which had been recorded as an asset held for sale. The proceeds of the sale were $7.9 million and resulted in a $0.4 million gain.

Earnings before interest and taxes.

Earnings before interest and taxes were $209.0 million for the nine months ended September 25, 2011, an increase of $22.3 million, or 11.9%, from the comparable prior year period. The increase was driven by higher gross profit as a result of the favorable charges of $19.7 million described above related to the Birds Eye acquisition and plant consolidation projects and a $17.1 million decrease in administrative expenses as a result of non-recurring costs related to the Birds Eye integration during the prior year. Offsetting the increase was the $8.5 million settlement of LBSF’s outstanding claim against us. Excluding these items, earnings before interest and taxes decreased by $6.0 million, which is primarily driven by higher commodity costs, partially offset by improved pricing.

55

Birds Eye Frozen Segment:

Earnings before interest and taxes were $112.2 million for the nine months ended September 25, 2011, an increase of $18.6 million or 19.9% from the comparable prior year period. The primary driver of the increase was a favorable variance resulting from $17.5 million of non-recurring expense recorded during the first half of 2010 related to the sale of inventory that was recorded at fair value during the Birds Eye acquisition. In addition, administrative expenses were lower as a result of non-recurring integration costs that were incurred during the prior year related to the Birds Eye Acquisition. These decreases were offset by $9.0 million of costs related to the planned closure of our Fulton, NY manufacturing facility. Higher commodity costs in 2011, partially offset by increased selling prices and improved manufacturing performance also impacted earnings before interest and taxes for the period.

Duncan Hines Grocery Segment:

Earnings before interest and taxes were $99.9 million for the nine months ended September 25, 2011, an increase of $0.3 million or 0.3% from the comparable prior year period. The primary drivers of the increase were improved pricing and manufacturing performance and a favorable variance resulting from $12.0 million of non-recurring expense recorded during the first half of 2010 related to the sale of inventory that was recorded at fair value during the Birds Eye acquisition. These favorable variances were offset by $8.1 million of costs related to the planned closure of our Tacoma, WA manufacturing facility. Higher commodity costs in 2011, along with higher advertising expenses resulting from our new Duncan Hines^® advertising campaign also impacted earnings before interest and taxes during the period.

Specialty Foods Segment:

Earnings before interest and taxes were $22.4 million for the nine months ended September 25, 2011, an increase of $2.5 million or 12.4% from the comparable prior year period. The primary driver of the increase was a favorable variance resulting from $7.3 million of non-recurring expense recorded during the first nine months of 2010 related to the sale of inventory that was recorded at fair value during the Birds Eye acquisition. This favorable variance was offset by lower net sales, combined with higher commodity costs.

Interest expense, net.

Interest expense, net was $155.4 million in the nine months ended September 25, 2011, compared to $182.5 million in the nine months ended September 26, 2010.

The comparison of interest expense to the prior year period was impacted by our August 2010 refinancing, which resulted in charges of $20.9 million related to the write off of debt issue costs and discounts, loan modification fees and hedge ineffectiveness.

Included in interest expense, net, was $1.7 million and $2.6 million for the nine months ended September 25, 2011 and the nine months ended September 26, 2010, respectively, for the 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 25, 2011, the remaining unamortized balance is $0.9 million.

Excluding the impact of the items in the previous paragraphs, the decrease in interest expense, net, was $5.3 million, of which $4.3 million was due to lower term loan debt levels due to payments made in 2010, $2.2 million impact of lower interest rates from the August 2010 refinancing, $1.6 million due to lower amortization of debt issue costs, $1.6 million due to lower interest rates on the tranche B term loans, and other decreases of $0.2 million, offset by increased losses on interest rate swap agreements of $4.6 million.

Included in the interest expense, net, amount was $17.4 million and $12.8 million for the nine months ended September 25, 2011 and the nine months ended September 26, 2010, respectively, recorded from losses on interest rate swap agreements, a net change of $4.6 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, excluding the Accumulated other comprehensive (loss) income (“AOCI”) portion, are recorded as an adjustment to interest expense.

56

Provision (benefit) for income taxes.

The effective tax rate was 24.3% for the nine months ended September 25, 2011, compared to (41.6%) for the nine months ended September 26, 2010.  The effective rate difference was principally due to the benefit created by evaluation of new information effecting the measurement of certain unrecognized tax benefits and the settlement of a tax examination as well as changes in our effective state tax rate due to legislative changes during the current period. Additionally, the prior year rate was effected due to the adjustment to the deferred tax assets related to Accumulated Other Comprehensive Loss in the nine months ended September 26, 2010. For the nine months ended September 25, 2011 and September 26, 2010 we maintained a valuation allowance against certain state net operating carryovers, state tax credits carryovers and foreign loss carryovers. Refer to Note 14 of the Consolidated Financial Statements.

Under Internal Revenue Code (“the Code”) Section 382, the Company is a loss corporation. Section 382 of the Code places limitations on our ability to use certain net operating loss carry-forwards to offset income. The annual net operating loss limitation is approximately $14 to $18 million subject to other rules and restrictions. A substantial portion of our net operating loss carry-forwards and certain other tax attributes may not be utilized to offset Birds Eye income from recognized built in gains pursuant to Section 384 of the Code.

57

LIQUIDITYANDCAPITALRESOURCES

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 $120- $130 million in 2011, which consists of normal capital expenditures of $87-$92 million and $33-$38 million related to our two separately announced restructuring projects. We have historically satisfied our liquidity requirements with internally generated cash flows and availability under our Revolving Credit Facility (as defined below).

Statements of cash flows for the nine months ended September 25, 2011 compared to the nine months ended September 26, 2010

Net cash provided by operating activities was $69.1 million for the nine months ended September 25, 2011 and was the result of net earnings, excluding non-cash charges and credits, of $120.6 million and an increase in working capital of $51.5 million. The increase in working capital was primarily the result of a $76.9 million increase in inventory caused by seasonal purchases during the harvest period and a $32.9 million increase in accounts receivable driven by the timing of sales as well as higher selling prices. The aging profile of accounts receivable has not changed significantly from December 2010. These were offset by a $51.5 million increase in accounts payable driven by our inventory purchases and a $9.4 million increase in accrued liabilities driven by higher interest accruals. All other working capital accounts generated a net $2.6 million cash outflow. Cash provided by operating activities was $145.5 million for the nine months ended September 26, 2010 and was the result of net earnings excluding non-cash charges and credits of $92.4 million and a decrease in working capital of $53.1 million. The decrease in working capital was primarily the result of a $34.7 million increase in accounts payable primarily driven by seasonal inventory purchases made during the third quarter and a $23.7 million increase in accrued liabilities primarily driven by accrued interest. Also contributing to the decrease was a $2.7 million decrease in other current assets. These cash inflows were offset by a seasonal $4.0 million decrease in accrued trade marketing, and a $5.3 million increase in accounts receivable due to the timing of sales within the month. Cash from operating activities was also impacted during the year by our payment of $8.5 million in settlement of the LBSF lawsuit.

Net cash used in investing activities was $82.9 million for the nine months ended September 25, 2011 and consisted of $90.8 million of capital expenditures, offset by $7.9 million of proceeds received for the sale of our Watsonville, CA facility, which had been recorded as an asset held for sale. Net cash used in investing activities was $52.4 million for the nine months ended September 26, 2010 and was related exclusively to capital expenditures.

Net cash used by financing activities for the nine months ended September 25, 2011 was $2.0 million and consisted of $1.2 million in net note payable repayments, $2.0 million of payments on capital leases, $1.6 million of share repurchases, and $0.5 million of debt acquisition costs. These outflows were partially offset by proceeds from new share issuances of $0.6 million and other financing activities of $2.7 million. Net cash used by financing activities was $60.2 million during the nine months ended September 26, 2010. The usage primarily related to a $27.0 million prepayment of our term loans in accordance with the “Excess Cash Flow” requirements of our Senior Secured Credit Facility and $3.1 million of normally scheduled repayments of the term loans, $14.3 million in repayments of bank overdrafts, $13.0 million of refinancing costs in connection with the refinancing of the Tranche C Term Loan, $4.4 million in repayments of our notes payable and capital lease obligations, partially offset by $1.6 million of other activities, net. In August, we refinanced our Tranche C Term Loan by issuing $400 million of 8.25% notes and executing a new Tranche D Term Loan in the amount of $442.3 million. Except for the refinancing costs referred to above, this refinancing did not impact the net cash used in financing activities

The net of all activities resulted in a decrease in cash of $15.9 million for the nine months ended September 25, 2011, compared to an increase in cash of $33.0 million or the nine months ended September 26, 2010.

58

Debt

The Senior Secured Credit Agreement (the “Senior Secured Credit Facility”) consists of (i) term loans in an initial aggregate amount of $1,250.0 million (the “Tranche B Term Loans”); (ii) term loans issued on August 17, 2010 in an initial aggregate principal amount of $442.3 million (the “Tranche D Term Loans”) and (iii) revolving credit commitments in the aggregate amount of $150.0 million (the “Revolving Credit Facility”). The Tranche B Term Loans and Tranche D Term Loans mature April 2, 2014. The Revolving Credit Facility matures April 2, 2013.

On August 17, 2010 we entered into an amendment to the Senior Secured Credit Facility, which provided for incremental term loans in the amount of $442.3 million (the “Tranche D Term Loans). The proceeds from the Tranche D Term Loans, along with the proceeds from the 8.25% Senior Notes described below were used to repay the outstanding Tranche C Term Loans. In accordance with the authoritative guidance for debt extinguishments and modifications, the lending relationship between us and each bank in the original lending syndicate was examined and determined to be either a modification or an extinguishment. As a result of this analysis, we recorded interest expense for the write-off of $11.6 million of deferred financing costs and $5.6 million of original issue discount related to extinguished lending relationships from the Tranche C Term Loans. In addition, we incurred approximately $3.9 million of legal, consulting and placement fees in connection with the Tranche D Term Loans. Of the fees incurred, $3.2 million were costs of modifying existing lending relationships and thus we recorded interest expense during the third quarter of 2010. The remaining $0.7 million of fees related to obtaining new lending relationships and thus was deferred. We also incurred approximately $8.8 million of legal, consulting, audit and placement fees in connection with the execution of the 8.25% Senior Notes, all of which were deferred.

There were no borrowings outstanding under the Revolving Credit Facility as of September 25, 2011 and December 26, 2010. There have been no borrowings under the revolver at any time in 2010 or 2011.

The total combined amount of the Tranche B Term Loans and Tranche D Term Loans that were owed to affiliates of The Blackstone Group as of September 25, 2011 and December 26, 2010, was $127.7 million and $125.7 million, respectively.

Our borrowings under the Senior Secured Credit Facility, as amended, bear interest at a floating rate and are maintained as base rate loans or as Eurocurrency rate 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%. Eurocurrency rate loans bear interest at the adjusted Eurocurrency rate, as described in the Senior Secured Credit Facility, plus the applicable Eurocurrency rate margin. Solely with respect to Tranche D Term Loans, the Eurocurrency rate shall be no less than 1.75% per annum. Solely with respect to Tranche D Term Loans, the base rate shall be no less than 2.75% per annum.

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 Margin (per annum)

Revolving Credit Facility and Letters of Credit			Tranche B Term Loans		Tranche D Term Loans
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	Eurocurrency Rate for Term Loan D	Base Rate for Term Loan D
2.50%	1.50%	0.50%	2.50%	1.50%	4.25%	3.25%

The obligations under the Senior Secured Credit Facility are unconditionally and irrevocably guaranteed by each of our direct or indirect domestic subsidiaries (collectively, the “Guarantors”). In addition, the Senior Secured Credit Facility 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, each of our direct foreign subsidiaries, 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).

59

A commitment fee of 0.50% per annum is applied to the unused portion of the Revolving Credit Facility. For the three and nine months ended September 25, 2011, the weighted average interest rate on the term loan was 3.47% and 3.49%, respectively. For the three and nine ended September 26, 2010, the weighted average interest rate on the term loan was 4.26% and 4.66%, respectively. As of September 25, 2011 and December 26, 2010, the interest rate on the revolving credit facility was 2.74% and 2.76%, respectively, however, no borrowings were made during 2010 or 2011. As of September 25, 2011 and December 26, 2010 the Eurocurrency interest rate on the term loan facility was 3.49% and 3.52%, respectively.

We pay a fee for all outstanding letters of credit drawn against the 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 cannot exceed $50.0 million. As of September 25, 2011 and December 26, 2010, the Company had utilized $35.4 million and $34.2 million, respectively of the Revolving Credit Facility for letters of credit. As of September 25, 2011 and December 26, 2010, there were no borrowings under the Revolving Credit Facility. As of September 25, 2011 and December 26, 2010, respectively, there was $114.6 million and $115.8 million of borrowing capacity under the Revolving Credit Facility, of which $14.6 million and $15.8 million was available to be used for letters of credit.

Under the terms of the Senior Secured Credit Facility we are required to use 50% of our “Excess Cash Flow”, to prepay the Tranche B Term Loans and the Tranche D Term Loans. Excess Cash Flow is determined by taking consolidated net income (as defined) and adjusting it for certain items, including (1) all non cash charges and credits included in arriving at consolidated net income, (2) changes in working capital, (3) capital expenditures (to the extent they were not financed with debt), (4) the aggregate amount of principle payments of indebtedness and (5) certain other items defined in the Senior Secured Credit Facility. In December 2010, we made a voluntary prepayment of $73.0 million to the Tranche D Term Loans. As a result of this prepayment, no payment was due under the Excess Cash Flow requirements of Senior Secured Credit Facility for the 2010 reporting year. In March 2010, in accordance with the Excess Cash Flow requirements of the Senior Secured Credit Facility, we made a mandatory prepayment of the term loans of $27.0 million for the 2009 reporting year.

The Tranche B Term Loans mature 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 25, 2011 are $2.5 million in 2011, $12.5 million in 2012, $12.5 million in 2013 and $1,171.9 million in 2014. The aggregate maturities of the Tranche D Term Loans outstanding as of September 25, 2011 are no payments due in 2011, 2012 and 2013, with a lump sum payment of $368.2 million due in 2014.

On April 2, 2007, 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. On December 23, 2009, as part of the Birds Eye Foods Acquisition, we issued an additional $300 million of 9.25% Senior Notes due in 2015 (the “Additional Senior Notes”). The Senior Notes and the Additional Senior Notes are collectively referred to herein as the 9.25% Senior Notes. On August 17, 2010, we issued $400.0 million of 8.25% Senior Notes due 2017 (the “8.25% Senior Notes”) and utilized the proceeds to repay the Tranche C Term Loans.

The 9.25% Senior Notes and the 8.25% Senior Notes are general unsecured obligations of ours, effectively subordinated in right of payment to all existing and our 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 our general unsecured obligations, subordinated in right of payment to all existing and our 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 to the Consolidated Financial Statements for Guarantor and Nonguarantor Financial Statements.

We may redeem some or all of the 8.25% Senior Notes at any time prior to September 1, 2013, 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 8.25% Senior Note at September 1, 2013 or such Senior Subordinated Note at April 1, 2012, plus (ii) all required interest payments due on such 8.25% Senior Note through September 1, 2013 or such 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.

60

We currently may redeem the 9.25% Senior Notes, and in the future may redeem the 8.25% 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 (for the 9.25% Senior Notes and Senior Subordinated Notes ) or September 1^st ( for the 8.25% Senior Notes) of each of the years indicated below:

9.25% Senior Notes		8.25% Senior Notes
Year	Percentage	Year	Percentage
2011	104.625%	2013	106.188%
2012	102.313%	2014	104.125%
2013 and thereafter	100.000%	2015	102.063%
		2016 and thereafter	100.000%

Senior Subordinated Notes
Year	Percentage
2012	105	%
2013	104	%
2014	102	%
2015 and thereafter	100	%

In addition, until September 1, 2013, we are able to redeem up to 35% of the aggregate principal amount of the 8.25% Senior 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 8.25% Senior 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 the 8.25% Senior 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 the 8.25% Senior 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.

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 25, 2011, is as follows:

(million $)	September 25, 2011
Issue	Face Value		Fair Value
Senior Secured Credit Facility - Tranche B Term Loans	$	1,199.4	$	1,136.5
Senior Secured Credit Facility - Tranche D Term Loans	368.2		367.3
9.25% Senior Notes	625.0		629.7
8.25% Senior Notes	400.0		400.0
10.625% Senior Subordinated Notes	199.0		204.0
	$	2,791.6	$	2,737.5

61

The estimated fair value of our long-term debt, including the current portion, as of December 26, 2010, is as follows:

(million $)	December 26, 2010
Issue	Face Value		Fair Value
Senior Secured Credit Facility - Tranche B Term Loans	$	1,199.4	$	1,171.3
Senior Secured Credit Facility - Tranche D Term Loans	368.2		372.0
9.25% Senior Notes	625.0		648.4
8.25% Senior Notes	400.0		409.0
10.625% Senior Subordinated Notes	199.0		213.9
	$	2,791.6	$	2,814.6

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.

62

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.

8.25% Senior Notes, 9.25% Senior Notes and Senior Subordinated Notes

Additionally, on April 2, 2007, we issued the 9.25% Senior Notes and the 10.625% Senior Subordinated Notes. On December 23, 2009, we issued additional 9.25% Senior Notes. On August 17, 2010, we issued the 8.25% Senior Notes. The Senior Notes are general senior 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 our other indebtedness. 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 our other indebtedness.

The indentures governing the 8.25% Senior Notes, 9.25% 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.

63

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 of 4.00:1. Consolidated total senior secured debt is defined under the Senior Secured Credit Facility as aggregate consolidated secured indebtedness of the Company 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, 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 U.S.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 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 to EBITDA and Consolidated EBITDA for the three and nine month periods ended September 25, 2011 and September 26, 2010 and the fiscal year ended December 26, 2010. The terms and related calculations are defined in the Senior Secured Credit Facility and the indentures governing the 8.25% Senior Notes, 9.25% Senior Notes and Senior Subordinated Notes.

(thousands of dollars)	Three months ended					Nine months ended					Fiscal Year  Ended
	September 25, 2011		September 26, 2010			September 25, 2011		September 26, 2010			December 26, 2010
Net earnings (loss)	$	12,777	$	(12,167	)	$	40,610	$	5,937		$	22,037
Interest expense, net	52,144		73,978			155,385		182,536			235,716
Income tax expense (benefit)	373		(7,577		)	13,007		(1,746		)	7,399
Depreciation and amortization expense	22,163		19,536			65,065		58,213			78,049
EBITDA (unaudited)	$	87,457	$	73,770		$	274,067	$	244,940		$	343,201
Non-cash items (a)	2,409		9,969			6,291		38,256			71,500
Non-recurring items (b)	2,478		3,526			17,130		23,656			27,489
Other adjustment items (c)	1,092		579			3,146		6,268			7,580
Subtotal	93,436		87,844			300,634		313,120			449,770
Net cost savings projected to be realized as a result of initiatives taken, including acquisition synergies (d)	—		2,012			—		20,114			25,000
Consolidated EBITDA (unaudited)	$	93,436	$	89,856		$	300,634	$	333,234		$	474,770
Last twelve months Consolidated EBITDA (unaudited)						$	442,170

64

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

(thousands of dollars)	Three months ended				Nine months ended				Fiscal Year  Ended
	September 25, 2011		September 26, 2010		September 25, 2011		September 26, 2010		December 26, 2010
Non-cash compensation charges (1)	$	300	$	204	$	900	$	612	$	4,727
Unrealized losses resulting from hedging activities (2)	2,109		37		4,105		868		697
Impairment charges (3)	—		—		1,286		—		29,000
Effects of adjustments related to the application of purchase accounting (4)	—		9,728		—		36,776		37,076
Total non-cash items	$	2,409	$	9,969	$	6,291	$	38,256	$	71,500

 _________________

(1) For the three and nine months ended September 25, 2011 and September 26, 2010 and fiscal 2010, represents non-cash compensation charges related to the granting of equity awards.

(2) For the three and nine months ended September 25, 2011 and September 26, 2010 and fiscal 2010, represents non-cash gains and losses resulting from mark-to-market adjustments of obligations under foreign exchange and commodity derivative contracts.

(3) For fiscal 2010 represents an impairment for the Hungry-Man^® tradename. For the nine months ended September 25, 2011 represents a plant asset impairment on the previously announced closure of the Tacoma, WA facility.

(4) For the three and nine months ended September 26, 2010 and fiscal 2010, represents expense related to the write-up to fair market value of inventories acquired as a result of the Birds Eye Foods Acquisition.

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

(thousands of dollars)	Three months ended				Nine months ended				Fiscal Year  Ended
	September 25, 2011		September 26, 2010		September 25, 2011		September 26, 2010		December 26, 2010
Expenses in connection with an acquisition or other non-recurring merger costs (1)	$	2	$	195	$	9,039	$	437	$	923
Restructuring charges, integration costs and other business optimization expenses (2)	2,115		3,331		7,119		22,125		25,472
Employee severance and recruiting (3)	361		—		972		1,094		1,094
Total other adjustments	$	2,478	$	3,526	$	17,130	$	23,656	$	27,489

_________________

(1) For the nine months ended September 25, 2011 represents other expenses related to financing of our acquisition by The Blackstone Group L.P., and includes an $8.5 million legal settlement related to the Lehman Brothers Special Financing claim which is described in more detail under Item I in Note 11 to the Consolidated Financial Statements. For the three and nine months ended September 26, 2010 and fiscal 2010, primarily represents costs related to the Birds Eye Foods Acquisition as well as other expenses related to due diligence investigations.

(2) For the three and nine months ended September 25, 2011 primarily represents consulting and business optimization expenses related to the closings of the Tacoma, WA and Fulton, NY facilities. For the three and nine months ended September 26, 2010 and fiscal 2010, primarily represents employee termination benefits and lease termination costs related to the closing of the Rochester, NY office and integration costs related to the Birds Eye Foods Acquisition.

(3) For the three and nine months ended September 25, 2011 and September 26, 2010 and fiscal 2010, represents severance costs paid, or to be paid, to terminated employees.

65

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

(thousands of dollars)	Three months ended					Nine months ended					Fiscal Year  Ended
	September 25, 2011		September 26, 2010			September 25, 2011			September 26, 2010		December 26, 2010
Management, monitoring, consulting and advisory fees (1)	$	1,082	$	1,125		$	3,422		$	3,430	$	4,555
Variable product contribution on Birds Eye Steamfresh complete bagged meals no longer being offered for sale (2)	—		(546		)	—			2,838		2,837
Other (3)	10		—			(276		)	—		188
Total other adjustments	$	1,092	$	579		$	3,146		$	6,268	$	7,580

_________________

(1) For the three and nine months ended September 25, 2011 and September 26, 2010 and fiscal 2010, represents management/advisory fees and expenses paid to the Blackstone Group.

(2) For the three and nine months ended September 26, 2010 and fiscal 2010, represents the variable contribution loss principally from Steamfresh frozen complete bagged meals and others which will no longer be offered by Pinnacle management following the Birds Eye Foods Acquisition and the variable contribution loss applicable to a discontinued contract in the Birds Eye Foods Industrial-Other segment.

(3) For the nine months ended September 25, 2011, primarily represents gain on the sale of the Watsonville, California property. For fiscal 2010 represents miscellaneous other costs.

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

(thousands of dollars)	Three months ended				Nine months ended				Fiscal Year  Ended
	September 25, 2011		September 26, 2010		September 25, 2011		September 26, 2010		December 26, 2010
Estimated net cost savings associated with the Birds Eye Foods Acquisition (1)	$	—	$	2,012	$	—	$	20,114	$	25,000
Total net cost savings projected to be realized as a result of initiatives taken	$	—	$	2,012	$	—	$	20,114	$	25,000

_________________

(1) For three and nine months ended September 26, 2010 and fiscal 2010, represents the estimated reduction in operating costs that we anticipated would result from the combination of Pinnacle and Birds Eye Foods as a result of eliminating duplicate overhead functions and overlapping operating expenses, leveraging supplier relationships and combined purchasing power to obtain procurement savings on raw materials and packaging, and optimizing and rationalizing overlapping warehouse and distribution networks less what has been realized.

66

Our covenant requirements and actual ratios for the twelve months ended September 25, 2011 are as follows:

	Covenant Requirement	Actual Ratio
Senior Secured Credit Facility
Senior Secured Leverage Ratio (1)	4.00:1	3.32
Total Leverage Ratio (2)	Not applicable	6.12
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	2.28

 _________________

(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 2007 and stepping down over time to 4.00:1 in March 2011 and thereafter. 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 2.0:1.

(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, as well as increasing selling prices during periods of higher inflation. Beginning 2005 and continuing into 2008, we experienced higher energy and commodity costs in production and higher fuel surcharges for product delivery. Inflation was less pronounced in 2009 and in 2010, but is more pronounced in 2011. To the extent possible, we combat inflation with productivity programs. However, price increases will be necessary in order to preserve our margins and returns. Although we have no such expectation, severe increases in inflation could have an adverse impact on our business, financial condition and results of operations.

ACCOUNTING POLICIES AND PRONOUNCEMENTS

Critical Accounting Policies and Estimates

We have disclosed in "Item 7 - Management Discussion and Analysis of Financial Condition and Results of Operations" included in our annual report for the fiscal year ended December 26, 2010 on Form 10-K, those accounting policies that we consider to be significant in determining our results of operations and financial condition. There have been no material changes to those policies that we consider to be significant since the filing of our annual report for the fiscal year ended December 26, 2010 on Form 10-K. We believe that the accounting principles utilized in preparing our unaudited consolidated financial statements conform in all material respects to GAAP.

Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”). ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in equity. ASU 2011-05 requires that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance is to be applied retrospectively and becomes effective in the first quarter of 2012. The Company anticipates that the adoption of this standard will change the presentation of its consolidated financial statements but will have no impact on the determination of net earnings.

67

In September 2011, the FASB amended the authoritative guidance regarding the testing for goodwill impairment. Under the amendments, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value reporting of a reporting unit is less than the carrying amount, then performing the two-step impairment test is unnecessary. The changes are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, however, early adoption is permitted. The Company will early adopt the new authoritative guidance in the fourth quarter of 2011 in connection with its annual impairment test.

68

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 exposures 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.

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.

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted. One intent of this law is to establish a regulatory structure for the derivatives market and to increase the transparency of financial reporting related to derivatives. We anticipate that the law will not have a material impact on our consolidated financial position or results of operations.

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. Interest rate swaps designated as cash flow hedges 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. During the three and nine months ended September 25, 2011 and September 26, 2010, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

As of September 25, 2011, we had the following interest rate swaps that were designated as cash flow hedges of interest rate risk:

(million $)
Product	Number of Instruments	Notional Amount		Fixed Rate Range	Index	Trade Dates	Maturity Dates
Interest Rate Swaps	8	$	1,071.6	0.58% - 3.33%	USD-LIBOR-BBA	Feb 2009 - Aug 2011	Jan 2012 - Apr 2014

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. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in AOCI related to derivatives will be reclassified to Interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $14.9 million will be reclassified as an increase to Interest expense.

69

Due to the counterparty bank declaring bankruptcy in October 2008, we discontinued prospectively the hedge accounting on our interest rate derivatives with Lehman Brothers Specialty Financing on the bankruptcy date as those hedging relationships no longer met the definition of effective hedge under 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.

Cash Flow Hedges of Foreign Exchange Risk

Our operations in Canada expose us to changes in the U.S. 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 our functional currency. The subsidiary sells that inventory in Canadian dollars. The 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 25, 2011, we had the following foreign currency exchange contracts (in aggregate) that were designated as cash flow hedges of foreign exchange risk:

(million $)
Product	Number of Instruments	Notional Sold in Aggregate in (CAD)		Notional Purchased in Aggregate in (USD)		USD to CAD Exchange Rates	Trade Date	Maturity Dates
CAD Forward	20	$	64.1	$	63.4	0.956-1.051	March 2010 - Apr 2011	Oct 2011 - Dec 2012

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 portions 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 Statements of Operations.

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 commodity forward contracts to fix the price of natural gas, diesel fuel, corn, wheat and soybean oil purchases and other commodities 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 Statements of Operations.

70

As of September 25, 2011, we had the following derivative instruments that were not designated in qualifying hedging relationships:

Product	Number of Instruments	Notional Amount	Price/Index	Trade Dates	Maturity Dates
Natural Gas Swap	4	420,000 MMBTU’s	$4.26 - $4.57 per MMBTU	Feb 2011 - Apr 2011	Dec 2011
Diesel Fuel Swap	6	8,400,391 Gallons	$3.75 - $4.01 per Gallon	May 2011 - Sep 2011	Dec 2011 - Dec 2012
Soybean Oil Options	1	4,400,000 Pounds	$0.56 - $0.61 per Pound	Apr 2011	Dec 2011
Corn Swap	1	625,000 Bushels	$5.47 - $6.41 per Bushel	Mar 2011	Mar 2012
Wheat Swaps	4	955,000 Bushels	$7.39 - $9.40 per Bushel	Mar 2011	Feb 2012 - Mar 2012

71

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 25, 2011 and December 26, 2010.

(million $)	Tabular Disclosure of Fair Values of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value as of September 25, 2011		Balance Sheet Location	Fair Value as of September 25, 2011
Derivatives designated as hedging instruments
Interest Rate Contracts		$	—	Accrued liabilities	$	13.9
		—		Other long-term liabilities	815
Foreign Exchange Contracts	Other current assets	$	1.0		$	—
	Other assets, net	0.4			—
Total derivatives designated as hedging instruments		$	1.4		$	14.7
Derivatives not designated as hedging instruments
Natural Gas Contracts		$	—	Accrued liabilities	$	0.2
Diesel Fuel Contracts		—		Accrued liabilities	1.2
Soybean Oil Contracts		—		Accrued liabilities	0.5
Corn Contracts		—		Accrued liabilities	0.2
Wheat Contracts		—		Accrued liabilities	1.8
Total derivatives not designated as hedging instruments		$	—		$	3.9
	Balance Sheet Location	Fair Value as of December 26, 2010		Balance Sheet Location	Fair Value as of December 26, 2010
Derivatives designated as hedging instruments
Interest Rate Contracts		$	—	Accrued liabilities	$	3.3
		—		Other long-term liabilities	23.3
Foreign Exchange Contracts		—		Accrued liabilities	1.1
Total derivatives designated as hedging instruments		$	—		$	27.7
Derivatives not designated as hedging instruments
Diesel Fuel Contracts	Other current assets	$	0.4		$	—
Total derivatives not designated as hedging instruments		$	0.4		$	—

72

The table below presents the effect of our derivative financial instruments on the Consolidated Statements of Operations and Accumulated other comprehensive (loss) income for the three months ended September 25, 2011 and December 26, 2010.

Tabular Disclosure of the Effect of Derivative Instruments

(million $) 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 recognized in Earnings in:	Recognized in Earnings on Derivative (Ineffective Portion)
Interest Rate Contracts	$	(1.6	)	Interest expense	$	(6.7	)	Interest expense	$	—
Foreign Exchange Contracts	2.4			Cost of products sold	(0.4		)	Cost of products sold	0.1
Three months ended September 25, 2011	$	0.8			$	(7.1	)		$	0.1
Interest Rate Contracts	$	(5.5	)	Interest expense	$	(19.0	)	Interest expense	$	—
Foreign Exchange Contracts	0.6			Cost of products sold	(1.7		)	Cost of products sold	0.2
Nine months ended September 25, 2011	$	(4.9	)		$	(20.7	)		$	0.2
Interest Rate Contracts	$	(6.6	)	Interest expense	$	(4.9	)	Interest expense	$	(0.6	)
Foreign Exchange Contracts	(0.3		)	Cost of products sold	(0.7		)	Cost of products sold	(0.3		)
Three months ended September 26, 2010	$	(6.9	)		$	(5.6	)		$	(0.9	)
Interest Rate Contracts	$	(23.3	)	Interest expense	$	(15.4	)	Interest expense	$	(0.6	)
Foreign Exchange Contracts	(0.8		)	Cost of products sold	(2.1		)	Cost of products sold	(0.2		)
Nine months ended September 26, 2010	$	(24.1	)		$	(17.5	)		$	(0.8	)
Derivatives Not Designated as Hedging Instruments				Recognized in Earnings in:	Recognized in Earnings on Derivative
Natural Gas Contracts				Cost of products sold	$	(0.2	)
Diesel Contracts				Cost of products sold	(1.4		)
Soybean Oil Contracts				Cost of products sold	(0.3		)
Corn Contracts				Cost of products sold	(0.2		)
Wheat Contracts				Cost of products sold	(0.1		)
Three months ended September 25, 2011					$	(2.2	)
Natural Gas Contracts				Cost of products sold	$	(0.2	)
Diesel Contracts				Cost of products sold	0.2
Soybean Oil Contracts				Cost of products sold	(0.7		)
Corn Contracts				Cost of products sold	(0.2		)
Wheat Contracts				Cost of products sold	(1.8		)
Nine months ended September 25, 2011					$	(2.7	)
Natural Gas Contracts				Cost of products sold	$	(0.1	)
Diesel Contracts				Cost of products sold	0.4
Three months ended September 26, 2010					$	0.3
Natural Gas Contracts				Cost of products sold	$	(0.5	)
Diesel Contracts				Cost of products sold	(0.6		)
Nine months ended September 26, 2010					$	(1.1	)

73

Credit-risk-related Contingent Features

We have agreements with certain counterparties that contain a provision whereby 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 25, 2011, we have not posted any collateral related to these agreements. If we had breached this provision at September 25, 2011 , we could have been required to settle our obligations under the agreements at their termination value, which differs from the recorded fair value. The table below summarizes the aggregate fair values of those derivatives that contain credit risk contingent features as of September 25, 2011 and December 26, 2010.

September 25, 2011

(million $) Asset/(Liability)
Counterparty	Contract Type	Termination Value			Performance Risk Adjustment		Accrued Interest			Fair Value (excluding interest)
Barclays	Interest Rate Contracts	$	(14.8	)	$	0.3	$	(1.7	)	$	(12.8	)
	Foreign Exchange Contracts	1.0			—					1.0
	Diesel Fuel Contracts	(1.2		)	—					(1.2		)
	Natural Gas Contracts	(0.2		)	—					(0.2		)
	Corn Contracts	(0.2		)	—					(0.2		)
	Wheat Contracts	(1.8		)	—					(1.8		)
	Soybean Oil Contracts	(0.5		)	—					(0.5		)
Credit Suisse	Interest Rate Contracts	(2.5		)	0.2		(0.4		)	(1.9		)
	Foreign Exchange Contracts	0.4			—					0.4
Total		$	(19.8	)	$	0.5	$	(2.1	)	$	(17.2	)

December 26, 2010

(million $) Asset/(Liability)
Counterparty	Contract Type	Termination Value			Performance Risk Adjustment		Accrued Interest			Fair Value (excluding interest)
Barclays	Interest Rate Contracts	$	(26.5	)	$	0.6	$	(1.2	)	$	(24.7	)
	Foreign Exchange Contracts	(0.7		)	—					(0.7		)
	Diesel Fuel Contracts	0.4			—					0.4
	Natural Gas Contracts	—			—					—
Credit Suisse	Interest Rate Contracts	(2.0		)	0.1		—			(1.9		)
	Foreign Exchange Contracts	(0.5		)	—					(0.5		)
Total		$	(29.3	)	$	0.7	$	(1.2	)	$	(27.4	)

74

ITEM 4: CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, with the participation of our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

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 25, 2011. 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 at a level of reasonable assurance.

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 25, 2011 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

Commitment of $6.2 Million Capital Expenditure

In working to resolve an environmental wastewater investigation by the State of Michigan Department of Natural Resources and Environment (MDNRE) at the Company’s Birds Eye Foods Fennville, MI production facility, on July 20, 2010, the Company and the MDNRE reached an agreement (“Administrative Consent Order” or “ACO”). Under the terms of the ACO, Birds Eye Foods will construct a new wastewater treatment system at the facility currently estimated at $6.2 million and contribute a minimum of $70 thousand to the hookup of the City’s water supply extension to affected residents.

Lehman Brothers Special Financing

On June 4, 2010 Lehman Brothers Special Financing (LBSF) initiated a claim against the Company in LBSF’s bankruptcy proceeding for an additional payment from the Company of $19.7 million, related to certain derivative contracts which the Company had earlier terminated due to LBSF’s default as a result of its bankruptcy filing in 2008. On May 31, 2011, the Company and LBSF agreed in principle to a settlement of LBSF’s June 4, 2010 claim. Under the terms of the settlement, the Company made a payment of $8.5 million in August, 2011, in return for LBSF’s release of its claim.

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 26, 2010.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4: REMOVED AND RESERVED

ITEM 5: OTHER INFORMATION

None

75

ITEM 6: EXHIBITS

Exhibit Number	Description of exhibit
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).
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	Supplemental Senior Notes Indenture, dated as of November 18, 2009, by and among Birds Eye Holdings, Inc., Birds Eye Group, Inc., Kennedy Endeavors Incorporated, Seasonal Employers, Inc., BEMSA Holding, Inc., GLK Holdings, Inc., GLK, LLC, Rochester Holdco, LLC and Wilmington Trust Company, (previously filed as Exhibit 4.1 to the Current Report on Form 8-K of Pinnacle Foods Finance LLC filed with the SEC on December 24, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).
4.4	Senior Notes Indenture, dated as of August 17, 2010, among the Issuers, the Guarantors and the Trustee. (previously filed as Exhibit 4.2 to the Registration Statement on Form S-4 filed with the SEC on October 5, 2010 (Commission File Number: 333-148297), and incorporated herein by reference).
10.1	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).
10.2	Second Amendment to the Credit Agreement, dated December 23, 2009, by and among Pinnacle Foods Finance LLC, Peak Finance Holdings LLC, Barclays Bank PLC, the Revolving Commitment Increase Lenders, the Tranche C Term Lenders and the Guarantors. (previously filed as Exhibit 10.2 to the Current Report on Form 8-K of Pinnacle Foods Finance LLC filed with the SEC on December 24, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).
10.3	Fourth Amendment to the Credit Agreement, dated August 17, 2010, by and among Pinnacle Foods Finance LLC, Peak Finance Holdings LLC, Barclays Bank PLC, the Tranche D Term Lenders and the Guarantors (previously filed as Exhibit 10.40 to the Registration Statement on Form S-4 filed with the SEC on October 5, 2010 (Commission File Number: 333-148297), and incorporated herein by reference).
10.4	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).
10.5	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).

76

Exhibit Number	Description of exhibit
10.6	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).
10.7	Amended and Restated Transaction and Advisory Fee Agreement, dated as of November 18, 2009, between Peak Finance LLC and Blackstone Management Partners V L.L.C. (previously filed as Exhibit 10.1 to the Current Report on Form 8-K of Pinnacle Foods Finance LLC filed with the SEC on December 24, 2009 (Commission File Number: 333-148297), and incorporated herein by reference).
10.8	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).
10.9	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).
10.10	Tax Sharing Agreement, dated as of November 25, 2003 and amended as of December 23, 2009 and March 25, 2011, 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, Pinnacle Foods Fort Madison LLC and Pinnacle Foods Group LLC, BEMSA Holding, Inc., Birds Eye Foods, Inc., Birds Eye Holdings, Inc., Birds Eye Group, Inc., GLK Holdings, Inc., Kennedy Endeavors, Incorporated, Rochester Holdco LLC, and Seasonal Employers, Inc. (previously filed as Exhibit 10.10 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on May 11, 2011 (Commission File Number: 333-148297), and incorporated herein by reference)
10.11	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).
10.12	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).
10.13	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).
10.14	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).
10.15	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).
10.16 +	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).

77

Exhibit Number	Description of exhibit
10.32 +	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).
10.33 +	Employment offer letter dated October 28, 2008 (Sara Genster Robling) (previously filed as Exhibit 10.39 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 23, 2010 (Commission File Number: 333-148297), and incorporated herein by reference).
10.34 +	Employment offer letter dated June 3, 2010 (Mark L. Schiller) (previously filed as Exhibit 10.41 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on August 9, 2010 (Commission File Number: 333-148297), and incorporated herein by reference).
10.35 +	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).
10.36	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).
10.37	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).
10.38	Lease, dated April 15, 2010, between Woodcrest Road Associates, L.P. and Pinnacle Foods Group LLC (Cherry Hill, New Jersey) (previously filed as Exhibit 10.40 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on August 9, 2010 (Commission File Number: 333-148297), and incorporated herein by reference).
10.39+	Terms of Employment letter dated February 7, 2011. (Antonio F. Fernandez) (previously filed as Exhibit 10.43 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 10, 2011 (Commission File Number: 333-148297), and incorporated herein by reference).
10.40+	Amendment to Employment Agreement. (Robert J. Gamgort) (previously filed as Exhibit 10.44 to the Annual Report on Form 10-K of Pinnacle Foods Finance LLC filed with the SEC on March 10, 2011 (Commission File Number: 333-148297), and incorporated herein by reference).
10.41	Lease, dated December 14, 2010 between Jeffroad Green, LLC and Pinnacle Foods Group LLC (Parsippany, New Jersey) (previously filed as Exhibit 10.41 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on May 11, 2011 (Commission File Number: 333-148297), and incorporated herein by reference) .
21.1	List of Subsidiaries (previously filed as Exhibit 21.1 to the Quarterly Report on Form 10-Q of Pinnacle Foods Finance LLC filed with the SEC on May 11, 2011 (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)
101.1*	The following materials are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Shareholder’s Equity, (v) Notes to Consolidated Financial Statements, tagged as blocks of text, and (vi) document and entity information.

78

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

*    Identifies exhibits that are filed as attachments to this document.

(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.

(B) Pursuant to Rule 406T of Regulation S-T, the Interactive Data files on Exhibit 101.1 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 133, as amended, are deemed not file for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

79

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 9, 2011

80