Berry Plastics 10Q 2006 Q4 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2006

[ ] 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 33-75706

BERRY PLASTICS HOLDING CORPORATION

(formerly known as BPC Holding Corporation)

(Exact name of registrant as specified in its charter)

Delaware	35-1814673
(State or other jurisdiction of incorporation or organization)	(IRS employer identification number)

Registrant’s telephone number, including area code: (812) 424-2904

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. [X]Yes [ ]No

Indicate by check mark whether the registrant are large accelerated filers, accelerated filers or non-accelerated filers. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of November 6, 2006, all of the outstanding 100 shares of the Common Stock, $.01 par value, of Berry Plastics Holding Corporation were held by Berry Plastics Group, Inc. The financial presentation presented in the Berry Plastics Holding Corporation financial statements reflects the consolidated operations and financial position including the results and equity structure of Berry Plastics Group, Inc.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q includes "forward-looking statements," within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events. The forward-looking statements include, in particular, statements about our plans, strategies and prospects under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations". You can identify certain forward-looking statements by our use of forward-looking terminology such as, but not limited to, "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "likely," "will," "would," "could" and similar expressions that identify forward-looking statements. All forward-looking statements involve risks and uncertainties. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our operations. The occurrence of the events described and the achievement of the expected results depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from the forward-looking statements contained in this Form 10-Q. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices on a timely basis;

catastrophic loss of one of our key manufacturing facilities;

risks related to our acquisition strategy and integration of acquired businesses;

risks associated with our substantial indebtedness and debt service;

performance of our business and future operating results;

risks of competition, including foreign competition, in our existing and future markets;

general business and economic conditions, particularly an economic downturn;

increases in the cost of compliance with laws and regulations, including environmental laws and regulations; and

the factors discussed in our Form 10-K for the fiscal year ended December 31, 2005 in the section titled “Risk Factors.”

Readers should carefully review the factors discussed in our Form 10-K for the fiscal year ended December 31, 2005 in the section titled “Risk Factors” and other risk factors identified from time to time in our periodic filings with the Securities and Exchange Commission and should not place undue reliance on our forward-looking statements. We undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

AVAILABLE INFORMATION

We make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments, if any, to those reports through our Internet website as soon as practicable after they have been electronically filed with or furnished to the Securities and Exchange Commission. Our internet address is www.berryplastics.com. The information contained on our website is not being incorporated herein. We are currently in the process of finalizing our code of ethics.

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Berry Plastics Holding Corporation

Form 10-Q Index

For Quarterly Period Ended September 30, 2006

Part I. Financial Information		Page No.

	Item 1. Financial Statements:
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	6
	Consolidated Statements of Changes in Stockholders’ Equity	7
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9

	Item 2. Management’s Discussion and Analysis of
	Financial Condition and Results of Operations	23

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	32
	Item 4. Controls and Procedures	33

Part II. Other Information

	Item 1. Legal Proceedings	34
	Item 1A. Risk Factors	34
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
	Item 3. Defaults Upon Senior Securities	34
	Item 4. Submission of Matters to a Vote of Security Holders	34
	Item 5. Other Information	34
	Item 6. Exhibits	34
Signature		35

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Part 1. Financial Information

Item 1. Financial Statements

Berry Plastics Holding Corporation

Consolidated Balance Sheets

(In Thousands of Dollars, except share information)

	Company		Predecessor
	September 30, 2006		December 31, 2005
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	16,285	$	24,756
Accounts receivable (less allowance for doubtful accounts of $6,347 at September 30, 2006 and $5,766 at December 31, 2005)		161,410		140,443
Inventories:
Finished goods		109,357		101,632
Raw materials and supplies		54,672		50,716
		164,029		152,348
Deferred income taxes		—		22,905
Prepaid expenses and other current assets		28,570		39,037
Total current assets		370,294		379,489

Property and equipment:
Land		12,334		12,292
Buildings and improvements		82,024		92,810
Equipment and construction in progress		359,444		497,364
		453,802		602,466
Less accumulated depreciation		2,430		179,022
		451,372		423,444

Intangible assets		1,789,164		844,897
Total assets	$	2,610,830	$	1,647,830

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Berry Plastics Holding Corporation

Consolidated Balance Sheets (continued)

(In Thousands of Dollars, except share information)

	Company			Predecessor
	September 30, 2006			December 31, 2005
	(Unaudited)
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	98,689		$	64,970
Accrued interest		4,990			20,165
Employee compensation, payroll and other taxes		55,964			43,915
Accrued expenses and other current liabilities		34,983			34,730
Current portion of long-term debt		13,037			13,928
Total current liabilities		207,663			177,708

Long-term debt, less current portion		1,882,350			1,146,692
Deferred income taxes		94,464			94,934
Other long-term liabilities		23,959			25,108
Total liabilities		2,208,436			1,444,442
Stockholders' equity:
Common Stock; $.01 par value: 200,000,000 shares authorized; 4,931,011 shares issued and outstanding at September 30, 2006		49			—
Additional paid-in capital		493,052			346,943
Adjustment of the carryover basis of continuing stockholders		(69,738	)		(196,603	)
Notes receivable - common stock		(9,805	)		(14,273	)
Common stock (Predecessor)		—			34
Treasury stock (Predecessor)		—			(3,547	)
Retained earnings (deficit)		(11,266	)		58,969
Accumulated other comprehensive income		102			11,865
Total stockholders’ equity		402,394			203,388
Total liabilities and stockholders’ equity	$	2,610,830		$	1,647,830

See notes to consolidated financial statements.

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Berry Plastics Holding Corporation

Consolidated Statements of Operations

(In Thousands of Dollars)

	Company			Predecessor						Company			Predecessor
	Period from 9/20/06- 9/30/06			Period from 7/02/06- 9/19/06			13 Weeks Ended 10/01/05			Period from 9/20/06- 9/30/06			Period from 1/01/06- 9/19/06			39 Weeks Ended 10/01/05
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net sales	$	46,407		$	317,398		$	342,305		$	46,407		$	1,048,476		$	850,486
Cost of goods sold		42,248			255,488			273,129			42,248			839,429			690,622
Gross profit		4,159			61,910			69,176			4,159			209,047			159,864

Operating Expenses:
Selling		1,319			8,112			9,693			1,319			28,255			24,588
General and administrative		2,477			12,091			13,429			2,477			43,885			31,854
Research and development		277			1,580			1,994			277			5,455			4,450
Amortization of intangibles		859			4,438			4,674			859			15,127			8,432
Merger expenses		—			70,122			—			—			70,122			—
Other expenses		105			963			2,107			105			4,744			2,800
Operating income (loss)		(878	)		(35,396	)		37,279			(878	)		41,459			87,740

Other expenses (income):
Unrealized loss (gain) on investment in Southern Packaging		—			—			(384	)		—			(299	)		1,185
Gain on disposal of equipment		—			—			(41	)		—			—			(41	)
Income (loss) before interest and taxes		(878	)		(35,396	)		37,704			(878	)		41,758			86,596
Interest:
Expense		4,593			19,592			21,416			4,593			64,710			51,951
Loss on extinguished debt		5,875			34,041			—			5,875			34,041			7,045
Income		(90	)		(289	)		(261	)		(90	)		(901	)		(673	)
Income (loss) before income taxes		(11,256	)		(88,740	)		16,549			(11,256	)		(56,092	)		28,273
Income taxes (benefit)		10			(13,720	)		7,464			10			1,011			13,638
Net income (loss)	$	(11,266	)	$	(75,020	)	$	9,085		$	(11,266	)	$	(57,103	)	$	14,635

See notes to consolidated financial statements.

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Berry Plastics Holding Corporation

Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

(In Thousands of Dollars)

	Common Stock		Additional Paid-In Capital			Adjustment of the carryover basis of continuing stockholders			Notes receivable - common stock			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Losses)			Total
Predecessor:
Balance at December 31, 2005	$	34	$	346,943		$	(196,603	)	$	(14,273	)	$	(3,547	)	$	58,969		$	11,865		$	203,388
Collection on notes receivable		—		—			—			3,234			—			—			—			3,234
Purchase of treasury stock		—		(204	)		—			—			(827	)		—			—			(1,031	)
Sale of treasury stock		—		—			—			—			873			—			—			873
Interest on notes receivable		—		—			—			(488	)		—			—			—			(488	)
Stock-based compensation		—		2,856			—			—			—			—			—			2,856
Translation gains		—		—			—			—			—			—			2,145			2,145
Other comprehensive losses		—		—			—			—			—			—			(274	)		(274	)
Net loss		—		—			—			—			—			(57,103	)		—			(11,266	)
Balance at September 19, 2006	$	34	$	349,595		$	(196,603	)	$	(11,527	)	$	(3,501	)	$	1,866		$	13,736		$	153,600
Company:
Balance at September 20, 2006	$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Fair value adjustment on rolled stock		—		—			(69,738	)		—			—			—			—			(69,738	)
Issuance of common stock		49		493,052			—			(9,805	)		—			—			—			483,296
Translation gains		—		—			—			—			—			—			128			128
Other comprehensive losses		—		—			—			—			—			—			(26	)		(26	)
Net loss		—		—			—			—			—			(11,266	)		—			(11,266	)
Balance at September 30, 2006	$	49	$	493,052		$	(69,738	)	$	(9,805	)	$	—		$	(11,266	)	$	102		$	402,394

See notes to consolidated financial statements.

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Berry Plastics Holding Corporation

Consolidated Statements of Cash Flows

(In Thousands of Dollars)

	Company			Predecessor
	Period from 9/20/06- 9/30/06					Period from 1/01/06- 9/19/06			39 Weeks Ended 10/01/05
	(Unaudited)					(Unaudited)			(Unaudited)
Operating activities
Net income (loss)	$	(11,266	)		$	(57,103	)	$	14,635
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation		2,467				62,044			51,353
Non-cash interest expense		176				1,369			1,372
Loss on extinguished debt		5,875				34,041			7,045
Amortization of intangibles		859				15,127			8,432
Gain on disposal of equipment		—				—			(41	)
Non-cash compensation		—				2,856			—
Unrealized (gain) loss on investment		—				(299	)		1,185
Deferred income taxes		—				—			12,994
Merger expenses		2,893				70,122			—
Changes in operating assets and liabilities:
Accounts receivable, net		(5,878	)			(14,582	)		(28,166	)
Inventories		2,719				(14,214	)		7,989
Prepaid expenses and other assets		(3,930	)			3,697			(1,727	)
Accrued interest		(4,875	)			(10,300	)		(7,725	)
Payables and accrued expenses		4,176				40,694			14,539
Net cash provided by (used for) operating activities		(6,784	)			133,452			81,885
Investing activities
Additions to property and equipment		(11,137	)			(77,060	)		(48,866	)
Proceeds from disposal of property and equipment		—				71			1,719
Merger costs		(118,150	)			—			—
Acquisitions of businesses		—				—			(459,996	)
Net cash used for investing activities		(129,287	)			(76,989	)		(507,143	)
Financing activities
Proceeds from long-term borrowings		1,870,000				—			466,479
Payments on long-term borrowings		(1,046,539	)			(84,845	)		(9,108	)
Proceeds from notes receivable		—				3,234			1,361
Issuance of common stock		483,296				—			—
Purchase of treasury stock		—				(1,031	)		(5,405	)
Redemption of predecessor stock		(1,112,337	)			—			—
Sale of treasury stock		—				873			3,441
Debt financing costs		(41,818	)			—			(8,137	)
Net cash provided by (used for) financing activities		152,602				(81,769	)		448,631
Effect of exchange rate changes on cash		(246	)			550			(366	)
Net increase (decrease) in cash and cash equivalents		16,285				(24,756	)		23,007
Cash and cash equivalents at beginning of period		—				24,756			264
Cash and cash equivalents at end of period	$	16,285			$	—		$	23,271

See notes to consolidated financial statements.

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Berry Plastics Holding Corporation

Notes to Consolidated Financial Statements

(In thousands of dollars, except as otherwise noted)

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements of Berry Plastics Holding Corporation, formerly BPC Holding Corporation, have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying financial statements include the results of Berry Plastics Holding Corporation (“Holding” or the “Company”) and its wholly-owned subsidiary, Berry Plastics Corporation (“Berry”), and Berry’s wholly-owned subsidiaries. Holding is a wholly-owned subsidiary of Berry Plastics Group, Inc. (“Group”). The financial presentation presented in the Holding financial statements reflects the consolidated operations and financial position including the results of Group. For further information, refer to the consolidated financial statements and footnotes thereto included in Holding’s and Berry’s Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005. Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

2.	The Merger

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

The total amount of funds required to consummate the Merger and to pay fees related to the Merger was $2.4 billion. The Merger was primarily funded with (1) the issuance of $750.0 million aggregate principal amount of second priority senior secured notes, (2) new borrowings of $675.0 million in Term B loans, (3) the issuance of $425.0 million aggregate principal amount of senior subordinated notes, and (4) contributed equity. The seller used the proceeds received from the Merger to repay the outstanding indebtedness and accrued interest of $726.9 million under the term loans from the old senior secured credit facility and $335.0 million plus accrued interest and tender fees to repurchase all of the outstanding 10 ¾% senior subordinated notes payable due 2012. The Buyer and its affiliates own 72% of the common stock of Group. The remaining common stock is primarily held by an affiliate of Graham Partners II, L.P., which owns 10% and members of Berry’s management which own 16%. Group loaned $9.8 million to non-executive management in order to purchase a portion of the common equity.

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The Merger has been accounted for under the purchase method of accounting, and accordingly, the purchase price has been allocated to the identifiable assets and liabilities based on estimated fair values at the acquisition date. The allocation is preliminary and is subject to change. The Company has engaged an independent valuation specialist to perform the purchase price allocation in accordance with FAS 141, Business Combinations, which will include the appraisal of fixed assets and identifying the definite and indefinite lived intangible assets. The Company has not made any adjustments to fixed assets or intangible assets for this valuation as it has not been completed. An increase or decrease of $5.0 million to fixed assets would result in an increase or decrease in depreciation expense of $1.0 million per year. An increase in definite lived intangible assets of $10.0 million will result in additional amortization of $0.5 million per year. The impact of writing up inventory to net realizable value resulted in a charge to cost of goods sold for the period from September 20 to September 30, 2006 of $2.9 million. The Company has applied the provisions of Emerging Issues Task Force 88-16, whereby, the carryover equity interests of certain management shareholders from the Predecessor to the Successor were recorded at their Predecessor basis. The application of these provisions has preliminarily reduced stockholders’ equity and intangibles by $69.7 million. In connection with the Merger, the Predecessor incurred Merger related expenses of $70.1 million, consisting primarily of investment banking fees, bonuses to management, non-cash acceleration and modification of stock option awards, and legal costs. In addition, as a result of extinguishing the debt in connection with the Merger, the Predecessor recognized a loss on debt extinguishment of $34.0 million in the quarter primarily consisting of tender premiums paid in connection with redeeming the 10 ¾% senior subordinated notes payable, write-off of deferred financing fees associated with the senior subordinated notes payable and the old senior secured credit facility, and the termination of interest rate swaps. The Company recorded an expense of $5.9 million related to the write-off of deferred financing fees for bridge financing that was arranged to fund the Merger but was not utilized. As part of the Merger, the Company paid $18.1 million and $2.3 million to entities affiliated with the Buyer and Graham, respectively. The Predecessor also paid investment banking fees of $13.4 million and $6.3 million to companies affiliated with Goldman Sachs & Co. and JP Morgan.

Purchase price	$	2,248,930
Estimated buyer transaction costs		100,871
Net tangible assets acquired		(490,899	)
Adjustment for carryover basis of continuing stockholders		(69,738	)
Preliminarily allocated to intangibles	$	1,789,164

3.	Recent Acquisitions

On April 11, 2005, a subsidiary of Berry, Berry Plastics de México, S. de R.L. de C.V., acquired all of the injection molding closure assets from Euromex Plastics, S.A. de C.V. (“Euromex”), an injection molding manufacturer located in Toluca, Mexico (“the Mexico Acquisition”), for aggregate consideration of $8.2 million. The purchase was financed through borrowings under the Company’s prior revolving line of credit and cash on hand. The operations from the Mexico Acquisition are included in Berry’s operations since the acquisition date.

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price was financed through additional term loan borrowings under an amendment to Berry’s prior senior secured credit facility and cash on hand.

In accordance with the criteria stated in Emerging Issues Task Force (“EITF”) Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination” (“EITF 95-3”), the Company established opening balance sheet reserves related to plant shutdown and severance costs. The opening balances and current year activity is presented in the following table.

	Established at Opening Balance Sheet		January 1, 2006	Payments	September 30, 2006
EITF 95-3 reserves	$2,700		$2,221	$(790)	$1,431

The pro forma financial results presented below are unaudited and assume that the Kerr Acquisition and the Merger occurred at the beginning of the respective period. Pro forma results have not been adjusted to reflect the Mexico Acquisition as they do not differ materially from the pro forma results presented below.

	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	September 30, 2006			October 1, 2005			September 30, 2006			October 1, 2005
Pro forma net sales	$	363,805		$	342,305		$	1,094,883		$	1,018,801
Pro forma net loss		(3,336	)		(2,797	)		(8,067	)		(22,149	)

The information presented is for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the Kerr Acquisition or the Merger been consummated at the beginning of the respective period, nor are they necessarily indicative of future operating results. Further, the information reflects only pro forma adjustments for additional amortization associated with the Kerr Acquisition, additional interest expense, elimination of Berry’s write off of deferred financing fees and Merger related expenses, net of the applicable income tax effects.

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4. Long-Term Debt

Long-term debt consists of the following:

	Company		Predecessor
	September 30, 2006		December 31, 2005
Term loans	$	675,000	$	791,025
Revolving line of credit		20,000		—
Second Priority Senior Secured Fixed Rate Notes		525,000		—
Second Priority Senior Secured Floating Rate Notes		225,000		—
Senior Subordinated Notes		425,000		—
Capital leases		25,387		26,896
Berry 10 ¾% Senior Subordinated Notes		—		335,000
Debt premium on 10 ¾% Notes, net		—		7,699
		1,895,387		1,160,620
Less current portion of long-term debt		13,037		13,928
	$	1,882,350	$	1,146,692

The current portion of long-term debt consists of $6.8 million of quarterly installments on the term loans and $6.2 million of principal payments related to capital lease obligations.

Senior Secured Credit Facility

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

The Credit Facility requires a prepayment on outstanding term loans, subject to certain exceptions, with (1) beginning with the first full fiscal year after the closing, 50% (which percentage can be as low as 0% upon the achievement of certain leverage ratios) of excess cash flow less the amount of certain voluntary prepayments, (2) so long as our total net first lien leverage ratio is above a certain threshold, 100% of the net cash proceeds of any incurrence of debt other than excluded debt issuances, and (3) so long as the total net first lien leverage ratio is above a certain threshold, 100% of the net cash proceeds of all non-ordinary course asset sales and casualty and condemnation events, if the Company does not reinvest or commit to reinvest those proceeds in assets to be used in our business or to make certain other permitted investments within 15 months. The Company may

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voluntarily repay outstanding loans under the Credit Facility at any time without premium or penalty.

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

The Credit Facility contains customary covenants that, among other things, restrict, subject to certain exceptions, the ability, and the ability of subsidiaries, to incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations and make dividend and other restricted payments. In addition, the Credit Facility requires the Company to maintain the total net first lien leverage ratio below a certain ratio and also contains certain customary affirmative covenants and events of default. The Company was in compliance with all the financial and operating covenants at September 30, 2006.

At September 30, 2006, $20.0 million of borrowings were outstanding on the revolving credit facility. The revolving credit facility allows up to $50.0 million of letters of credit to be issued instead of borrowings under the revolving credit facility. At September 30, 2006 and December 31, 2005, the Company had $14.9 million under the Credit Facility and $14.7 million under the prior credit facility, respectively, in letters of credit outstanding. At September 30, 2006, the Company had unused borrowing capacity of $165.1 million under the revolving line of credit. Although the $165.1 million was available at September 30, 2006, the covenants under the Credit Facility may limit our ability to much such borrowings in the future.

Second Priority Senior Secured Notes

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

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Priority Notes contain customary covenants that, among other things, restrict, subject to certain exceptions, our ability, and the ability of subsidiaries, to incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations and make dividend and other restricted payments.

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

Senior Subordinated Notes

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

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

5. Stock-Based Compensation

The Company previously applied the intrinsic value method prescribed in Accounting Principles Board Opinion 25, “Accounting for Stock Issued to Employees.” In December 2004, the FASB issued SFAS No. 123 (Revised 2004,) Share-Based Payment (“SFAS 123R”), which requires that the compensation cost relating to share-based payment transactions be recognized in financial statements based on alternative fair value models. The share-based compensation cost will be measured based on the fair value of the equity or liability instruments issued. The Company adopted SFAS 123R on January 1, 2006 using the modified prospective method and recorded $2.9 million for the period January 1, 2006 through September 19, 2006 of non-cash charges for stock compensation related to amortization of the fair value of unvested stock options. Under this method, the Company will recognize compensation cost, on a prospective basis, for the portion of outstanding awards for which the requisite service has not yet been rendered as of January 1, 2006. In addition, the Company will recognize compensation cost on any new grants based upon the grant date fair value of those awards calculated under SFAS 123. Accordingly, we have not restated prior period amounts. The following table illustrates the pro forma effect on net income for periods prior to adoption of SFAS 123R as if we had applied the fair value recognition provisions of SFAS 123 during such periods.

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	Thirteen Weeks Ended			Thirty-nine Weeks Ended
	October 1, 2005			October 1, 2005
Reported net income	$	9,085		$	14,635
Total stock-based employee compensation expense determined under fair value based method, for all awards, net of tax		(502	)		(1,645	)
Pro forma net income	$	8,583		$	12,990

Effective with the Merger, the Predecessor accelerated the vesting of a portion of unvested stock option awards. Certain of the awards were accelerated pursuant to provisions in the option agreements, while other awards were modified to accelerate the vesting. The Predecessor recognized $9.8 million in compensation expense related to this acceleration, which is included in merger expenses in the accompanying consolidated statement of operations. The vested awards were then settled in cash at the transaction date, based upon the per share consideration received in the transaction. All remaining outstanding options of the Predecessor were cancelled upon consummation of the Merger. Group granted stock options and stock appreciation rights under an equity incentive plan. The Company has not yet finalized the calculation of the option expense and has not recorded any expense for the period from September 20 to September 30, 2006.

6. Comprehensive Income (Loss)

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

	Company			Predecessor					Company			Predecessor
	Period from 9/20/06- 9/30/06			Period from 7/02/06- 9/19/06			13 Weeks Ended 10/01/05		Period from 9/20/06- 9/30/06			Period from 1/01/06- 9/19/06			39 Weeks Ended 10/01/05
Net income (loss)	$	(11,266	)	$	(75,020	)	$	9,085	$	(11,266	)	$	(57,103	)	$	14,635
Other comprehensive income (losses)		(26	)		(207	)		6,765		(26	)		(274	)		3,277
Currency translation income (losses)		128			387			100		128			2,145			(2,804	)
Comprehensive income (losses)	$	(11,164	)	$	(74,840	)	$	15,950	$	(11,164	)	$	(55,232	)	$	15,108

7. Income Taxes

A reconciliation of income tax expense (benefit), computed at the federal statutory rate, to income tax expense, as provided for in the financial statements, is as follows:

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	Company			Predecessor					Company			Predecessor
	Period from 9/20/06- 9/30/06			Period from 7/02/06- 9/19/06			13 Weeks Ended 10/01/05		Period from 9/20/06- 9/30/06			Period from 1/01/06- 9/30/06			39 Weeks Ended 10/01/05
Income tax expense (benefit) computed at statutory rate	$	(3,940	)	$	(29,113	)	$	5,793	$	(3,940	)	$	(17,688	)	$	9,896
State income tax expense (benefit), net of federal taxes		(535	)		(3,952	)		1,026		(535	)		(2,401	)		1,753
Expenses not deductible for income tax purposes		124			197			119		124			556			360
Change in valuation allowance		4,475			18,158			475		4,475			19,776			1,680
Other		(114	)		990			51		(114	)		768			(51	)
Income tax expense	$	10		$	(13,720	)	$	7,464	$	10		$	1,011		$	13,638

8. Employee Retirement Plans

In connection with the Kerr Acquisition, the Company acquired two defined benefit pension plans which cover substantially all former employees and former union employees at Kerr’s former Lancaster facility. The Company also acquired a retiree health plan from Kerr, which covers certain healthcare and life insurance benefits for certain retired employees and their spouses. The Company also maintains a defined benefit pension plan covering the Poly-Seal employees under a collective bargaining agreement. The Company’s defined benefit and retiree health benefit plans have an accrued pension liability of $18.2 million at September 30, 2006 and $19.9 million at December 31, 2005, respectively, which are recorded as other liabilities in the consolidated balance sheets. Net pension and retiree health benefit expense included the following components:

	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	Company/ Predecessor			Predecessor			Company/ Predecessor			Predecessor
	September 30, 2006			October 1, 2005			September 30, 2006			October 1, 2005
Components of net period benefit cost:
Defined Benefit Pension Plans
Service cost	$	64		$	70		$	192		$	210
Interest cost		562			747			1,686			1,164
Expected return on plan assets		(634	)		(632	)		(1,902	)		(1,026	)
Amortization of prior service cost		23			28			69			84
Recognized actuarial loss		4			2			12			6
Net periodic benefit cost	$	19		$	215		$	57		$	438

Retiree Health Benefit Plan
Service cost	$	4		$	6		$	12		$	8
Interest cost		97			151			291			201
Recognized actuarial loss		(23	)		—			(69	)		—
Net periodic benefit cost	$	78		$	157		$	234		$	209

The Company expects to contribute approximately $2.2 million during fiscal 2006, of which $0.6 million and $0.8 million was made in the thirteen weeks and thirty-nine weeks ended September 30, 2006, respectively, to the defined benefit pension plans and the retiree health benefit plan.

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9. Operating Segments

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

	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	Company/ Predecessor			Predecessor			Company/ Predecessor			Predecessor
	September 30, 2006			October 1, 2005			September 30, 2006			October 1, 2005
Net sales:
Open Top	$	214,048		$	200,315		$	643,114		$	588,693
Closed Top		149,757			141,990			451,769			261,793
Total net sales		363,805			342,305			1,094,883			850,486
Bank Compliance EBITDA:
Open Top		40,849			41,711			129,648			115,107
Closed Top		28,983			28,736			91,718			81,932
Total Bank Compliance EBITDA		69,832			70,447			221,366			197,039
Total assets:
Open Top		1,945,139			841,442			1,945,139			841,442
Closed Top		665,691			725,353			665,691			725,353
Total assets		2,610,830			1,566,795			2,610,830			1,566,795
Reconciliation of Bank Compliance EBITDA to net income (loss):
Bank Compliance EBITDA for reportable segments	$	69,832		$	70,447		$	221,366		$	197,039
Net interest expense		(63,722	)		(21,155	)		(108,233	)		(58,323	)
Depreciation		(21,204	)		(20,962	)		(64,511	)		(51,353	)
Amortization		(5,297	)		(4,674	)		(15,986	)		(8,432	)
Income tax benefit (expense)		13,710			(7,464	)		(1,021	)		(13,638	)
Gain on disposal of equipment		—			41			—			41
Unrealized gain (loss) on investment in Southern Packaging		—			384			299			(1,185	)
Merger expense		(73,015	)		—			(73,015	)		—
Business optimization expense		(1,460	)		(3,282	)		(9,662	)		(4,678	)
Non-cash compensation		(880	)		—			(2,856	)		—
Kerr pro forma historical		—			—			—			(26,086	)
Pro forma synergies		(4,250	)		(4,250	)		(14,750	)		(18,750	)
Net income (loss)	$	(86,286	)	$	9,085		$	(68,369	)	$	14,635

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10. Condensed Consolidating Financial Information

Holding conducts its business through its wholly owned subsidiary, Berry. Certain of Berry’s domestic subsidiaries fully, jointly, severally, and unconditionally guarantee on a second priority basis the $750.0 million aggregate principal amount of Holding’s Second Priority Notes due 2014. Each of Holding’s subsidiaries is 100% owned, directly or indirectly, by Holding. Separate narrative information or financial statements of guarantor subsidiaries have not been included as management believes they would not be material to investors. Presented below is condensed consolidating financial information for Group, Holding, and its subsidiaries at September 30, 2006 (Company) and December 31, 2005 (Predecessor) and for the thirteen and thirty-nine week periods ended September 30, 2006 (Combined Company and Predecessor) and October 1, 2005 (Predecessor). The equity method has been used with respect to investments in subsidiaries.

	September 30, 2006 (Company)
	Combined Guarantor Subsidiaries		Combined Non-guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Consolidating Balance Sheet
Current assets	$	346,187	$	24,107	$	—		$	370,294
Net property and equipment		429,639		21,733		—			451,372
Other noncurrent assets		1,933,060		14		(143,910	)		1,789,164
Total assets	$	2,708,886	$	45,854	$	(143,910	)	$	2,610,830

Current liabilities	$	198,061	$	9,602	$	—		$	207,663
Noncurrent liabilities		1,998,390		18,080		(15,697	)		2,000,773
Equity (deficit)		512,435		18,172		(128,213	)		402,394
Total liabilities and equity (deficit)	$	2,708,886	$	45,854	$	(143,910	)	$	2,610,830

	December 31, 2005 (Predecessor)
	Combined Guarantor Subsidiaries		Combined Non-guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Consolidating Balance Sheet
Current assets	$	356,663	$	22,826	$	—		$	379,489
Net property and equipment		403,480		19,964		—			423,444
Other noncurrent assets		1,995,815		13,214		(1,164,132	)		844,897
Total assets	$	2,755,958	$	56,004	$	(1,164,132	)	$	1,647,830

Current liabilities	$	168,618	$	9,090	$	—		$	177,708
Noncurrent liabilities		2,565,526		40,783		(1,339,575	)		1,266,734
Equity (deficit)		21,814		6,131		175,443			203,388
Total liabilities and equity (deficit)	$	2,755,958	$	56,004	$	(1,164,132	)	$	1,647,830

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	Thirteen Weeks Ended September 30, 2006 (Combined Company and Predecessor)
	Combined Guarantor Subsidiaries			Combined Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Consolidating Statement of Operations
Net sales	$	355,985		$	7,820		$	—		$	363,805
Cost of goods sold		289,814			7,922			—			297,736
Gross profit		66,171			(102	)		—			66,069
Operating expenses		101,588			755			—			102,343
Operating income (loss)		(35,417	)		(857	)		—			(36,274	)
Other income		—			—			—			—
Loss on extinguished debt		39,916			—			—			39,916
Interest expense (income) , net		23,096			710			—			23,806
Income taxes		(13,756	)		46			—			(13,710	)
Equity in net (income) loss from subsidiary		1,613			—			(1,613	)		—
Net income (loss)	$	(86,286	)	$	(1,613	)	$	1,613		$	(86,286	)

	Thirteen Weeks Ended October 1, 2005 (Predecessor)
	Combined Guarantor Subsidiaries		Combined Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Consolidating Statement of Operations
Net sales	$	335,131	$	7,174		$	—		$	342,305
Cost of goods sold		265,538		7,591			—			273,129
Gross profit		69,593		(417	)		—			69,176
Operating expenses		30,473		1,424			—			31,897
Operating income (loss)		39,120		(1,841	)		—			37,279
Other expenses		—		(425	)		—			(425	)
Interest expense (income), net		21,166		(11	)		—			21,155
Income taxes		7,400		64			—			7,464
Equity in net (income) loss from subsidiary		1,469		—			(1,469	)		—
Net income (loss)	$	9,085	$	(1,469	)	$	1,469		$	9,085

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	Thirty-nine Weeks Ended September 30, 2006 (Combined Company and Predecessor)
	,Combined Guarantor Subsidiaries			Combined Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Consolidating Statement of Operations
Net sales	$	1,070,509		$	24,374		$	—		$	1,094,883
Cost of goods sold		856,447			25,230			—			881,677
Gross profit		214,062			(856	)		—			213,206
Operating expenses		169,577			3,048			—			172,625
Operating income (loss)		44,485			(3,904	)		—			40,581
Other income		—			(299	)		—			(299	)
Loss on extinguished debt		39,916			—			—			39,916
Interest expense (income), net		66,050			2,262			—			68,312
Income taxes		834			187			—			1,021
Equity in net (income) loss from subsidiary		6,054			—			(6,054	)		—
Net income (loss)	$	(68,369	)	$	(6,054	)	$	6,054		$	(68,369	)

Consolidating Statement of Cash Flows
Net income (loss)	$	(68,369	)	$	(6,054	)		6,054		$	(68,369	)
Non-cash expenses		194,570			2,960			—			197,530
Equity in net (income) loss from subsidiary		6,054			—			(6,054	)		—
Changes in working capital		(2,335	)		(158	)		—			(2,493	)
Net cash provided by (used for) operating activities		129,920			(3,252	)		—			126,668
Net cash used for investing activities		(230,625	)		24,349			—			(206,276	)
Net cash provided by (used for) financing activities		92,445			(21,612	)		—			70,833
Effect of exchange rate changes on cash		—			306			—			306
Net increase (decrease) in cash and cash equivalents		(8,260	)		(209	)		—			(8,469	)
Cash and cash equivalents at beginning of period		23,127			1,629			—			24,756
Cash and cash equivalents at end of period	$	14,867		$	1,420		$	¾		$	16,287

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	Thirty-nine Weeks Ended October 1, 2005
	Combined Guarantor Subsidiaries		Combined Non-guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Consolidating Statement of Operations
Net sales	$	829,613	$	20,873		$	—		$	850,486
Cost of goods sold		669,263		21,359			—			690,622
Gross profit		160,350		(486	)		—			159,864
Operating expenses		68,978		3,146			—			72,124
Operating income (loss)		91,372		(3,632	)		—			87,740
Other expenses		—		1,144			—			1,144
Interest expense (income), net		57,841		482			—			58,323
Income taxes		13,478		160			—			13,638
Equity in net (income) loss from subsidiary		5,418		—			(5,418	)		—
Net income (loss)	$	14,635	$	(5,418	)	$	5,418		$	14,635

Consolidating Statement of Cash Flows
Net income (loss)	$	14,635		$	(5,418	)	$	5,418		$	14,635
Non-cash expenses		77,979			4,361			—			82,340
Equity in net (income) loss from subsidiary		5,418			—			(5,418	)		—
Changes in working capital		(11,433	)		(3,657	)		—			(15,090	)
Net cash provided by (used for) operating activities		86,599			(4,714	)		—			81,885
Net cash used for investing activities		(490,260	)		(16,883	)		—			(507,143	)
Net cash provided by (used for) financing activities		426,114			22,517			—			448,631
Effect of exchange rate changes on cash		—			(366	)		—			(366	)
Net increase (decrease) in cash and cash equivalents		22,453			554			—			23,007
Cash and cash equivalents at beginning of period		127			137			—			264
Cash and cash equivalents at end of period	$	22,580		$	691		$	¾		$	23,271

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11. Contingencies

The Company is party to various legal proceedings involving routine claims which are incidental to the business. Although the legal and financial liability with respect to such proceedings cannot be estimated with certainty, the Company believes that any ultimate liability would not be material to the Company’s financial condition or results of operations.

12. Recent Financial Accounting Standards

In June 2006, the FASB issued Interpretation No. 48, Accounting for “Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on description, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 becomes effective on January 1, 2007, and the Company is currently evaluating the impact of adoption.

In September 2006, the FASB issued FASB No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 is definitional and disclosure oriented and addresses how companies should approach measuring fair value when required by GAAP; it does not create or modify any current GAAP requirements to apply fair value accounting. The standard provides a single definition for fair value that is to be applied consistently for all accounting applications, and also generally describes and prioritizes according to reliability the methods and inputs used in valuations. FAS 157 prescribes various disclosures about financial statement categories and amounts which are measured at fair value, if such disclosures are not already specified elsewhere in GAAP. The new measurement and disclosure requirements of FAS 157 are effective for the Company in the first quarter of 2008. We do not expect the adoption of FAS 157 to have a significant impact on the Company’s results of operations or financial position.

In September 2006, the FASB issued Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R) (“FAS 158”). FAS 158 requires the recognition of the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position, the measurement of a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year, and the recognition of changes in that funded status in the year in which the changes occur through comprehensive income. Additional footnote disclosures will also be required. SFAS 158 is effective for us as of the end of fiscal 2007 and is required to be adopted prospectively. The Company is currently evaluating the impact of adoption.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

Unless the context requires otherwise, references in this Management's Discussion and Analysis of Financial Condition and Results of Operations to “Berry Plastics Holding” or “Holding” refer to Berry Plastics Holding Corporation, references to “we,” “our” or “us” refer to Berry Plastics Holding Corporation together with its consolidated subsidiaries, and references to “Berry Plastics” or the “Company” refer to Berry Plastics Corporation, a wholly owned subsidiary of Holding. For analysis purposes, the results under the Holding’s prior ownership (“Predecessor”) have been combined with results subsequent to the merger on September 20, 2006 described below. You should read the following discussion in conjunction with the consolidated financial statements of Holding and its subsidiaries and the accompanying notes thereto, which information is included elsewhere herein. Holding is a wholly-owned subsidiary of Berry Plastics Group, Inc. (“Group”). This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in our Form 10-K for the fiscal year ended December 31, 2005 (the “2005 10-K”) in the section titled “Risk Factors” and other risk factors identified from time to time in our periodic filings with the Securities and Exchange Commission. Our actual results may differ materially from those contained in any forward-looking statements. You should read the explanation of the qualifications and limitations on these forward-looking statements on page 2 of this report.

Critical Accounting Policies

We disclose those accounting policies that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position, results of operations and cash flows in the second note to our consolidated financial statements in our 2005 10-K. Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with these principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results are likely to differ from these estimates, but management does not believe such differences will materially affect our financial position or results of operations, although no assurance can be given as to such affect. We believe

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that the following accounting policies are the most critical because they have the greatest impact on the presentation of our financial condition and results of operations.

Allowance for doubtful accounts. We evaluate our allowance for doubtful accounts on a quarterly basis and review any significant customers with delinquent balances to determine future collectibility. We base our determinations on legal issues (such as bankruptcy status), past history, current financial and credit agency reports, and the experience of our credit representatives. We reserve accounts that we deem to be uncollectible in the quarter in which we make the determination. We maintain additional reserves based on our historical bad debt experience. We believe that, based on past history and our credit policies, the net accounts receivable are of good quality. A ten percent increase or decrease in our bad debt experience would not have a material impact on our results of operations. Our allowance for doubtful accounts was $6.3 million and $5.8 million as of September 30, 2006 and December 31, 2005, respectively.

Inventory obsolescence. We evaluate our reserve for inventory obsolescence on a quarterly basis and review inventory on-hand to determine future salability. We base our determinations on the age of the inventory and the experience of our personnel. We reserve inventory that we deem to be not salable in the quarter in which we make the determination. We believe, based on past history and our policies and procedures, that our net inventory is salable. A ten percent increase or decrease in our inventory obsolescence experience would not have a material impact on our results of operations. Our reserve for inventory obsolescence was $9.4 million and $8.5 million as of September 30, 2006 and December 31, 2005, respectively.

Medical insurance. We offer our employees medical insurance that is primarily self-insured by us. As a result, we accrue a liability for known claims as well as the estimated amount of expected claims incurred but not reported. We evaluate our medical claims liability on a quarterly basis and obtain an independent actuarial analysis on an annual basis. Based on our analysis, we believe that our recorded medical claims liability should be sufficient. A ten percent increase or decrease in our medical claims experience would not have a material impact on our results of operations. Our accrued liability for medical claims was $4.5 million and $5.1 million, including reserves for expected medical claims incurred but not reported, as of September 30, 2006 and December 31, 2005, respectively.

Workers’ compensation insurance. Starting in fiscal 2000, we converted the majority of our facilities to a large deductible program for workers’ compensation insurance. On a quarterly basis, we evaluate our liability based on third-party adjusters’ independent analyses by claim. Based on our analysis, we believe that our recorded workers’ compensation liability should be sufficient. A ten percent increase or decrease in our workers’ compensation claims experience would not have a material impact on our results of operations. Our accrued liability for workers’ compensation claims was $4.8 million and $4.7 million as of September 30, 2006 and December 31, 2005, respectively.

Revenue recognition. Revenue from sales of products is recognized at the time product is shipped to the customer at which time title and risk of ownership transfer to the purchaser.

Impairments of Long-Lived Assets. In accordance with the methodology described in FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying

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amount of such assets may not be recoverable. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. No impairments were recorded in the financial statements included in this Form 10-Q.

Goodwill and Other Indefinite Lived Intangible Assets. In accordance with the methodology described in SFAS No. 142, “Goodwill and Other Intangible Assets,” we review our goodwill and other indefinite lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Impairment losses are recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. In addition, we annually review our goodwill and other indefinite lived intangible assets for impairment. No impairments were recorded in the financial statements included in this Form 10-Q.

Deferred Taxes and Effective Tax Rates. We estimate the effective tax rates and associated liabilities or assets for each legal entity in accordance with FAS 109. We use tax-planning to minimize or defer tax liabilities to future periods. In recording effective tax rates and related liabilities and assets, we rely upon estimates, which are based upon our interpretation of United States and local tax laws as they apply to our legal entities and our overall tax structure. Audits by local tax jurisdictions, including the United States Government, could yield different interpretations from our own and cause the Company to owe more taxes than originally recorded. For interim periods, we accrue our tax provision at the effective tax rate that we expect for the full year. As the actual results from our various businesses vary from our estimates earlier in the year, we adjust the succeeding interim periods’ effective tax rates to reflect our best estimate for the year-to-date results and for the full year. As part of the effective tax rate, if we determine that a deferred tax asset arising from temporary differences is not likely to be utilized, we will establish a valuation allowance against that asset to record it at its expected realizable value.

Pension. Pension benefit costs include assumptions for the discount rate, retirement age, and expected return on plan assets. Retiree medical plan costs include assumptions for the discount rate, retirement age, and health-care-cost trend rates. These assumptions have a significant effect on the amounts reported. In addition to the analysis below, see our 2005 10-K for additional information regarding our retirement benefits. Periodically, we evaluate the discount rate and the expected return on plan assets in our defined benefit pension and retiree health benefit plans. In evaluating these assumptions, we consider many factors, including an evaluation of the discount rates, expected return on plan assets and the health-care-cost trend rates of other companies; our historical assumptions compared with actual results; an analysis of current market conditions and asset allocations; and the views of advisers. In evaluating our expected retirement age assumption, we consider the retirement ages of our past employees eligible for pension and medical benefits together with our expectations of future retirement ages. We believe our pension and retiree medical plan assumptions are appropriate based upon the above factors. A one percent increase or decrease in our health-care-cost trend rates would not have a material impact on the results of operations of the Company. Also, a one quarter percentage point change in our discount rate or expected return on plan assets would not have a material impact on the results of operations of the Company.

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Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our consolidated financial statements provide a meaningful and fair perspective of Holding and its consolidated subsidiaries. This is not to suggest that other risk factors such as changes in economic conditions, changes in material costs and others could not adversely impact our consolidated financial position, results of operations and cash flows in future periods.

Acquisitions

We maintain a selective and disciplined acquisition strategy, which is focused on improving our financial performance in the long-term, enhancing our market positions and expanding our product lines or, in some cases, providing us with a new or complementary product line. Most businesses we have historically acquired had profit margins that are lower than that of our existing business, which resulted in a temporary decrease in our margins. We have historically achieved significant reductions in manufacturing and overhead costs of acquired companies by introducing advanced manufacturing processes, exiting low-margin businesses or product lines, reducing headcount, rationalizing facilities and machinery, applying best practices and capitalizing on economies of scale. In connection with our acquisitions, we have in the past and may in the future incur charges related to these reductions and rationalizations.

On April 11, 2005, a subsidiary of Berry, Berry Plastics de México, S. de R.L. de C.V., acquired all of the injection molding closure assets from Euromex Plastics, S.A. de C.V. (“Euromex”), an injection molding manufacturer located in Toluca, Mexico (“the Mexico Acquisition”), for aggregate consideration of $8.2 million. The purchase was financed through borrowings under the Company’s revolving line of credit and cash on hand. The operations from the Mexico Acquisition are included in Berry’s operations since the acquisition date.

On June 3, 2005, Berry acquired Kerr Group, Inc. (“Kerr”) for aggregate consideration of $454.8 million (the “Kerr Acquisition”), including direct costs associated with the acquisition. The operations from the Kerr Acquisition are included in Berry’s operations since the acquisition date. The purchase price was financed through additional term loan borrowings under an amendment to Berry’s prior senior secured credit facility and cash on hand.

Results of Operations

Comparison of the 13 Weeks Ended September 30, 2006 (the “Quarter”) and the 13 Weeks Ended October 1, 2005 (the “Prior Quarter”)

Net Sales. Net sales increased 6% to $363.8 million for the Quarter from $342.3 million for the Prior Quarter. This $21.5 million increase included approximately $18.0 million or 5% due to the pass through of higher resin costs to our customers, and increased base business volume of approximately $3.5 million or 1%. Our resin pounds sold and units sold increased by 1% and 3%, respectively, in the Quarter over the Prior Quarter. The following discussion in this section provides a comparison of net sales by business segment. Open top net sales increased $13.7 million from the Prior Quarter to $214.0 million for the Quarter. The increase in open top net sales was primarily a result of increased selling prices and 34% base business price adjusted volume growth in the thermoformed polypropylene drink cup line. Closed top net sales increased $7.8 million from the Prior Quarter to $149.8 million for the Quarter. The increase in closed top net sales can be

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primarily attributed to increased selling prices and base business price adjusted volume growth in the closure, bottle, and prescription vial product categories partially offset by a decline in the extruded tube business.

Gross Profit. Gross profit decreased by $3.1 million to $66.1 million (18% of net sales) for the Quarter from $69.2 million (20% of net sales) for the Prior Quarter. This decrease of $3.1 million can be primarily attributed to the non-recurring write-up of finished goods associated with the Merger of $2.9 million and the timing effect of higher resin costs partially offset by the 5% increase in net selling prices due to higher resin costs passed through to our customers. The combined impact of the additional sales volume noted above, productivity improvement initiatives, and our financial and mechanical resin hedging programs also partially offset the write-up to finished goods and cyclical impact of higher resin costs. Significant productivity improvements were made since the Prior Quarter, including the installation of state-of-the-art equipment at several of our facilities. These productivity improvements were partially offset by increased costs from inflation such as higher energy prices.

Operating Expenses. Selling expenses decreased by $0.3 million to $9.4 million for the Quarter from $9.7 million for the Prior Quarter principally as a result of cost reduction efforts. General and administrative expenses increased by $1.1 million from $13.4 million for the Prior Quarter to $14.5 million for the Quarter primarily as a result of $0.9 million of stock option expense recorded in the Quarter. Research and development expenses remained relatively flat with a decrease of $0.1 million from the Prior Quarter. In connection with the Merger, the Company recorded $70.1 million of expense consisting primarily of investment banking fees, bonuses to management, non-cash acceleration and modification of stock option awards, and legal costs. Amortization of intangibles increased $0.6 million from the Prior Quarter to $5.3 million in the Quarter primarily due to the amortization of intangible assets from the Kerr Acquisition. Transition expenses related to integrating acquired businesses were $1.1 million and $2.1 million in the Quarter and Prior Quarter, respectively. This decrease of $1.0 million is primarily due to costs associated with the Kerr Acquisition in the Prior Quarter.

Interest Expense, Net. Net interest expense increased $42.5 million to $63.7 million for the Quarter compared to $21.2 million for the Prior Quarter primarily due to $39.9 million of losses on extinguished debt in the Quarter, primarily consisting of tender premiums paid in connection with redeeming the 10 ¾% senior subordinated notes payable, write-off of deferred financing fees associated with the 10 ¾% senior subordinated notes payable and the old senior secured credit facility, and the termination of interest rate swaps.

Income Taxes. For the Quarter, we recorded an income tax benefit of $13.7 million or an effective tax rate of 15%. The effective tax rate is lower than the statutory rate primarily as a result of losses in the Quarter for which no benefit was currently provided. The decrease of $21.2 million from $7.5 million in the Prior Quarter was primarily attributed to the decrease in income before income taxes as a result of losses incurred in connection with the Merger.

Net Income (Loss). Net loss was $86.3 million for the Quarter compared to net income $9.1 million for the Prior Quarter for the reasons discussed above.

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39 Weeks Ended September 30, 2006 (“YTD”)

Compared to 39 Weeks Ended October 1, 2005 (“Prior YTD”)

Net Sales. Net sales increased $244.4 million, or 29%, to $1,094.9 million for the YTD from $850.5 million for the Prior YTD with an approximate 6% increase in net selling price due to higher resin costs passed through to our customers. Our base business volume, excluding selling price changes and acquired business, increased by approximately $7.1 million or 1% in the YTD over the Prior YTD. Our resin pounds sold, excluding acquired businesses, increased by 1% in the YTD over the Prior YTD. The following discussion in this section provides a comparison by business segment. Open top net sales increased $54.4 million from the Prior YTD to $643.1 million for the YTD. The increase in open top net sales was primarily a result of increased selling prices and base business volume growth in several of the division’s product lines with 28% price adjusted volume growth in the thermoformed polypropylene drink cup line. Closed top net sales increased $190.0 million from the Prior YTD to $451.8 million for the YTD. The increase in closed top net sales can be primarily attributed to net sales in the YTD from the Kerr Acquisition and Mexico Acquisition of $181.9 million and $1.8 million, respectively, increased selling prices, and base business price adjusted volume growth in the closure, bottle, and prescription vial product categories partially offset by a decline in the extruded tube business. The Kerr business experienced strong growth in the first five months of the YTD with $181.9 million of sales noted above as compared to $168.3 million for the same period a year ago under prior ownership.

Gross Profit. Gross profit increased by $53.3 million to $213.2 million (19% of net sales) for the YTD from $159.9 million (19% of net sales) for the Prior YTD. This 33% dollar increase was primarily attributed to the increased sales volume noted above and the 6% increase in net selling prices due to higher resin costs passed through to our customers partially offset by increased raw material costs as well as improvements in the margins of acquired businesses. In addition, in the Prior YTD, an expense of $0.7 million was charged to cost of goods sold related to the write-up and subsequent sale of Kerr’s finished goods inventory to fair market value in accordance with purchase accounting. In the YTD, a similar non-recurring charge of $2.9 million was charged to cost of goods sold related to the write-up of finished goods associated with the Merger. Significant productivity improvements were made since the Prior YTD, including the installation of state-of-the-art equipment at several of our facilities. These productivity improvements were partially offset by increased costs from inflation such as higher energy prices.

Operating Expenses. Selling expenses increased by $5.0 million to $29.6 million for the YTD from $24.6 million for the Prior YTD principally as a result of increased selling expenses associated with higher sales partially offset by cost reduction efforts. General and administrative expenses increased $14.5 million from $31.9 million for the Prior YTD to $46.4 million for the YTD primarily as a result of general and administrative expenses from the Kerr Acquisition and $2.9 million of stock option expense recorded in the YTD. Research and development expenses increased by $1.3 million over the Prior YTD primarily due to the Kerr Acquisition and increased development efforts. In connection with the Merger, the Company recorded $70.1 million of expense consisting primarily of investment banking fees, bonuses to management, non-cash acceleration and modification of stock option awards, and legal costs. The increase in amortization of intangibles of $7.6 million for the YTD from the Prior YTD is primarily due to the amortization of intangible assets from the Kerr Acquisition. Transition expenses related to integrating acquired businesses were $4.8 million and $2.8 million in the YTD and Prior YTD, respectively. This increase of $2.0 million is primarily due to costs associated with the Kerr Acquisition.

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Interest Expense, Net. Net interest expense increased $49.9 million to $108.2 million for the YTD compared to $58.3 million for the Prior YTD primarily due to increased rates of interest on borrowings, increased borrowings to finance the Kerr Acquisition, and $39.9 million of losses on extinguished debt in the YTD, primarily consisting of tender premiums paid in connection with redeeming the 10 ¾% senior subordinated notes payable, write-off of deferred financing fees associated with the 10 ¾% senior subordinated notes payable and the old senior secured credit facility, and the termination of interest rate swaps partially offset by a write off of unamortized deferred financing fees of $7.0 million as a result of an amendment to our prior senior credit facility in the Prior YTD.

Income Taxes. For the YTD, we recorded income tax expense of $1.0 million. The effective tax rate is lower than the statutory rate primarily as a result of losses in the YTD for which no benefit was currently provided. The decrease of $12.6 million from $13.6 million in the Prior YTD was primarily attributed to the decrease in income before income taxes as a result of losses incurred in connection with the Merger.

Net Income (Loss). Net loss was $68.4 million for the YTD compared to net income of $14.6 million for the Prior YTD for the reasons discussed above.

Liquidity and Capital Resources

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

The term loans amortize each year in an amount equal to 1% per annum in equal quarterly installments for the first six years and nine months, with the remaining amount payable on

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September 20, 2013. Principal amounts outstanding under the revolving credit facility will be due and payable in full on September 20, 2012. All obligations under the Credit Facility are unconditionally guaranteed by Group and, subject to certain exceptions, each existing and future direct and indirect domestic subsidiary. All obligations under the Credit Facility and the guarantees of those obligations are secured by substantially all assets of the Company and each subsidiary guarantor subject to certain exceptions: (1) a first priority pledge of all equity interests of Holdings held by the Company, a pledge of 100% of the equity interests of all guarantors and a first priority pledge of 65% of the voting equity interests of certain foreign subsidiaries; and (2) a first priority security interest in substantially all tangible and intangible assets of the Company and each subsidiary guarantor.

At September 30, 2006, $20.0 million of borrowings were outstanding on the revolving credit facility. The revolving credit facility allows up to $50.0 million of letters of credit to be issued instead of borrowings under the revolving credit facility. At September 30, 2006 and December 31, 2005, the Company had $14.9 million under the Credit Facility and $14.7 million under the prior credit facility, respectively, in letters of credit outstanding. At September 30, 2006, the Company had unused borrowing capacity of $165.1 million under the revolving line of credit. Although the $165.1 million was available at September 30, 2006, the covenants under our Credit Facility may limit our ability to much such borrowings in the future. A key financial metric utilized in the calculation of the first lien leverage ratio is bank compliance EBITDA. The following table reconciles our bank compliance EBITDA of $287.3 million for the twelve month period ended September 30, 2006 to net loss.

	12 months ended September 30, 2006

Bank compliance EBITDA	$	287,264
Net interest expense		(130,229	)
Depreciation		(86,304	)
Amortization		(23,128	)
Income taxes		(1,708	)
Gain on investment in Southern Packaging		130
Merger expense		(73,015	)
Business optimization expense		(12,715	)
Non-cash compensation		(5,008	)
Pro forma synergies		(18,500	)
Net loss	$	(63,213	)

While the determination of appropriate adjustments in the calculation of bank compliance EBITDA is subject to interpretation under the terms of the Credit Facility, management believes the adjustments

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

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

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

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

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governing the Second Priority Notes. The Senior Subordinated Notes contain additional affirmative covenants and certain customary representations, warranties and conditions.

Net cash provided by operating activities was $126.7 million for the YTD compared to $81.9 million for the Prior YTD. The increase of $44.8 million is primarily the result of improved operations as operating income before depreciation and amortization (excluding Merger costs) increased $43.7 million over the Prior YTD.

Net cash used for investing activities decreased from $507.1 million for the Prior YTD to $206.3 million for the YTD primarily as a result of the Kerr Acquisition in the Prior YTD. Capital spending of $88.2 million in the YTD included $10.9 million for buildings and systems, $22.7 million for molds, $39.0 million for molding and decorating machines, and $15.6 million for accessory equipment and systems. Capital expenditures for 2006 are expected to be approximately $90.0 million.

Net cash provided by financing activities was $70.8 million for the YTD compared to $448.6 million in the Prior YTD. This decrease of $377.8 million can be primarily attributed to the financing obtained in connection with the Kerr Acquisition in the Prior YTD.

Increased working capital needs occur whenever we experience strong incremental demand or a significant rise in the cost of raw material, particularly plastic resin. However, we anticipate that our cash interest, working capital and capital expenditure requirements for 2006 will be satisfied through a combination of funds generated from operating activities and cash on hand, together with funds available under the Credit Facility. We base such belief on historical experience and the funds available under the Credit Facility. However, we cannot predict our future results of operations and our ability to meet our obligations involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of our 2005 10-K. In particular, increases in the cost of resin which we are unable to pass through to our customers on a timely basis or significant acquisitions could severely impact our liquidity. At September 30, 2006, our cash balance was $16.3 million, and we had unused borrowing capacity under the Credit Facility’s borrowing base of $165.1 million. Although the $165.1 million was available at September 30, 2006, the covenants under our Credit Facility may limit our ability to make such borrowings in the future.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

We are exposed to market risk from changes in interest rates primarily through our Credit Facility and the $225.0 million of Second Priority Senior Secured Floating Rate Notes. The Credit Facility is comprised of (1) a $675.0 million term loan and (2) a $200.0 million revolving credit facility. At September 30, 2006, there was $20.0 million outstanding on the revolving credit facility, and the net outstanding balance of the term loan at September 30, 2006 was $675.0 million. At September 30, 2006, the Eurodollar rate applicable to the term loan and the Second Priority Senior Secured Floating Rate Notes was 5.33% and 5.39%, respectively. If the Eurodollar rate increases 0.25% and 0.5%, we estimate an annual increase in our interest expense of approximately $2.8 million and $5.5 million, respectively.

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Plastic Resin Cost Risk

We are exposed to market risk from changes in plastic resin prices that could impact our results of operations and financial condition. We manage our exposure to these market risks through our normal operations with purchasing negotiation, mechanical hedging, switching between certain resin products and, when deemed appropriate, by using derivative financial instruments in accordance with established policies and procedures. The derivative financial instruments generally used are forward contracts. The derivative financial instruments utilized by the Company in its hedging activities are considered risk management tools and are not used for trading purposes.

As part of our risk management strategy, in the fourth quarter of 2004, we entered into resin forward hedging transactions constituting approximately 15% of our estimated 2005 resin needs and 10% of our 2006 estimated resin needs based on 2004 volumes prior to the Kerr Acquisition. These contracts obligate the Company to make or receive a monthly payment equal to the difference in the unit cost of resin per the contract and an industry index times the contracted pounds of plastic resin. Such contracts are designated as hedges of a portion of the Company's forecasted purchases through 2006 and are effective in hedging the Company's exposure to changes in resin prices during this period.

Item 4. Controls and Procedures

(a) Disclosure controls and procedures.

As required by new Rule 13a-15 under the Exchange Act, the Company’s management carried out an evaluation with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as of the end of the last fiscal quarter. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. In connection with the new rules, we currently are in process of further reviewing and documenting our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

(b) Changes in internal control over financial reporting.

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

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Part II. Other Information

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

You should carefully consider the risks described in our Annual Report on Form 10-K for the year ended December 31, 2005, including those under the heading “Risk Factors” appearing in Item 1A of Part I of the Form 10-K and other information contained in this Quarterly Report before investing in our securities. Realization of any of these risks could have a material adverse effect on our business, financial condition, cash flows and results of operations. There were no material changes in the Company’s risk factors in the first three quarters of 2006.

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

Not Applicable

Item 3. Defaults Upon Senior Securities

Not Applicable

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

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits

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

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

32.1 Section 1350 Certification of the Chief Executive Officer

32.2 Section 1350 Certification of the Chief Financial Officer

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SIGNATURE

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

Berry Plastics Holding Corporation

November 14, 2006

By: /s/ James M. Kratochvil

James M. Kratochvil

Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)

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Positive
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Uncertain
Constraining
Legalese
Litigous
Readability	H.S. freshman Avg

Berry Plastics 10-Q2006 Q4 Quarterly report

Content analysis