10-Q 1 a38673.txt BIRDS EYE FOODS, INC. ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------- Form 10-Q Equivalent ---------- (Mark One) [ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 25, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ BIRDS EYE FOODS, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 16-0845824 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 90 Linden Oaks, PO Box 20670, Rochester, NY 14602-6070 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (585) 383-1850 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 [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). YES [ ] NO [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. As of November 5, 2004. Common Stock: 11,000 o This Form 10-Q Equivalent is only being filed pursuant to a requirement contained in the indenture governing Birds Eye Foods, Inc.'s 11 7/8 Percent Senior Subordinated Notes Due 2008. ================================================================================ Page 1 of 27 Pages PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Birds Eye Foods, Inc. Consolidated Statements of Operations, Accumulated Earnings, and Comprehensive (Loss)/Income (Dollars in Thousands) (Unaudited)

Three Months Ended ~~---------------------------------------------- Successor Successor Predecessor~~ Three Months Ended ~~August~~September 1925, ~~2002-~~2004 ~~June 30, 2002 -~~ September 27, 2003 ~~September 28, 2002 August 18, 2002~~ ------------------ ------------------- ~~------------------~~ Net sales $ ~~192~~177,~~491~~344 $~~102,439~~ ~~$ 99~~189,~~216~~667 Cost of sales (~~150~~142,~~719~~990) (78148,~~810~~413) ~~(76,255)~~ --------- -------- -~~--------~~ Gross profit 4134,~~772~~354 2341,~~629~~254 ~~22,961~~ Selling, administrative, and general expense (2628,~~518~~364) (1526,~~272~~342) ~~(15,156) Income from Great Lakes Kraut Company, LLC 0 263 277~~ --------- -------- -~~--------~~ Operating income 155,~~254~~990 814,~~620~~912 ~~8,082~~ Interest expense (~~10,460) (~~6,~~151~~356) (710,~~531~~243) --------- -------- -~~--------~~ Pretax (loss)/income from continuing operations (366) 4,~~794~~669 ~~2,469 551~~ Tax ~~provision~~ benefit/(~~1,918~~provision) 146 (1,~~012~~869) ~~(226)~~ --------- -------- -~~--------~~ (Loss)/Income before discontinued operations (220) 2,~~876~~800 ~~1,457 325~~ Discontinued operations, net of tax ~~(4)~~0 1872 ~~(240)~~ --------- -------- -~~--------~~ Net (loss)/income (220) 2,872 ~~1,475 85~~ Accumulated earnings~~/(deficit)~~ at beginning of period 52,623 20,756 ~~0 (126,623)~~ --------- -------- -~~--------~~ Accumulated earnings~~/(deficit)~~ at end of period $ 2352,~~628~~403 $ 123,~~475~~628 ~~$(126,538)~~ ========= ======== =~~========~~ Net (loss)/income $ ~~2,872~~(220) $ 12,~~475~~872 ~~$ 85~~ Other comprehensive income/(loss): Unrealized gain/(loss) on hedging activity, net of taxes 145 (521) ~~(236) 0~~ --------- -------- -~~--------~~ Comprehensive (loss)/income $ ~~2,351~~(75) $ 12,~~239~~351 ~~$ 85~~ ========= ======== =~~========~~ Accumulated other comprehensive loss at beginning of period $ (1011,~~909~~530) $ ~~0 $~~ (~~367~~10,909) Unrealized gain/(loss) on hedging activity, net of taxes 145 (521) ~~(236) 0~~ --------- -------- -~~--------~~ Accumulated other comprehensive loss at end of period $ (11,~~430~~385) $ (~~236~~11,430) ~~$ (367)~~ ========= ======== =~~========~~ The accompanying notes are an integral part of these consolidated financial statements.

2 Birds Eye Foods, Inc. Consolidated Balance Sheets (Dollars in Thousands) (Unaudited)

~~Successor Successor~~ September 2725, June 2826, ~~2003~~2004 ~~2003~~2004 ------------- --------- ASSETS Current assets: Cash and cash equivalents $~~100~~ 4,~~674~~177 $~~153~~ 72,~~756~~887 Accounts receivable trade, net of allowances for doubtful accounts 6369,~~884~~280 5863,~~230~~319 Accounts receivable, other 89,~~753~~238 12,~~841~~271 ~~Income taxes refundable 0 407~~ Inventories, net ~~281~~270,~~371~~409 ~~206~~181,~~584~~083 Current ~~net~~ investment in CoBank 1,~~643~~117 21,~~464~~477 Prepaid manufacturing expense 0 1211,~~053~~706 Prepaid expenses and other current assets 1110,~~134~~969 1211,~~239~~327 Assets held for sale 123,~~344~~064 136,~~501~~848 Current deferred tax asset 159,~~508~~047 159,~~508~~047 -------- -------- Total current assets ~~495~~377,~~311~~301 ~~476~~359,~~583~~965 Investment in CoBank 31,~~038~~003 31,~~038~~102 Property, plant and equipment, net ~~197~~201,~~041~~593 ~~195~~197,~~199~~845 Goodwill 3735,~~050~~586 3735,~~050~~586 ~~Intangible~~Trademarks and other intangible assets, net ~~167~~234,~~859~~567 ~~168~~164,~~321~~123 Other assets 2318,~~216~~912 2420,~~547~~266 Note receivable due from Pro-Fac Cooperative, Inc. 1,~~011~~006 ~~712 Non-current deferred tax asset 3~~1,~~933~~086 ~~3,933~~ -------- -------- Total assets $~~928~~869,~~459~~968 $~~909~~779,~~383~~973 ======== ======== LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities: Current portion of obligations under capital leases $ ~~704~~900 $ ~~704~~851 Current portion of long-term debt 62,~~200~~700 192,~~611~~700 Current portion of Termination and Transitional Services Agreements with Pro-Fac Cooperative, Inc. 9,~~407~~223 9,~~403~~220 Accounts payable 8375,~~666~~007 6776,~~150~~696 Income taxes payable 21,~~298~~390 01,241 Accrued interest 103,~~064~~385 41,~~106~~153 Accrued employee compensation 78,~~912~~223 10,~~225~~029 Other accrued ~~expenses~~liabilities 4350,~~812~~836 3938,~~979~~689 Growers payable due to Pro-Fac Cooperative, Inc. 1516,~~274~~656 87,~~504~~783 -------- -------- Total current liabilities ~~179~~168,~~337~~320 ~~159~~148,~~682~~362 Obligations under capital leases 12,~~707~~882 13,~~833~~028 Long-term debt ~~458~~375,~~941~~331 ~~459~~301,~~970~~592 Long-term portion of Termination and Transitional Services Agreements with Pro-Fac Cooperative, Inc. 2013,~~733~~395 2416,~~031~~830 Other non-current liabilities 5359,~~906~~897 5259,~~330~~943 Non-current deferred tax liability 6,371 6,371 -------- -------- Total liabilities ~~714~~626,~~624~~196 ~~697~~536,~~846~~126 -------- -------- Commitments and contingencies Shareholder's Equity: Common stock, par value $.01; 11,000 shares authorized, issued and outstanding 0 0 Additional paid-in capital ~~201~~202,~~637~~754 ~~201~~202,~~690~~754 Accumulated earnings 2352,~~628~~403 2052,~~756~~623 Accumulated other comprehensive income/(loss)~~/income~~: Unrealized ~~(loss)/~~gain on hedging activity ~~(173)~~362 ~~348~~217 Minimum pension liability adjustment (11,~~257~~747) (11,~~257~~747) -------- -------- Total shareholder's equity ~~213~~243,~~835~~772 ~~211~~243,~~537~~847 -------- -------- Total liabilities and shareholder's equity $~~928~~869,~~459~~968 $~~909~~779,~~383~~973 ======== ========

The accompanying notes are an integral part of these consolidated financial statements. 3 Birds Eye Foods, Inc. Consolidated Statements of Cash Flows (Dollars in Thousands) (Unaudited)

Three Months Ended -----------------------------~~------~~ ~~Successor~~September ~~Successor Predecessor Three Months Ended August 19~~25, ~~2002- June 30, 2002 -~~ September 27, 2004 2003 ~~September 28, 2002 August 18, 2002~~ -------------~~-----~~ -------------~~-----~~ ~~---------------~~ Cash Flows From Operating Activities: Net (loss)/income $ ~~2,872~~(220) $ 12,~~475~~872 ~~$ 85~~ Adjustments to reconcile net (loss)/income to net cash used in operating activities- ~~Depreciation 5,594 3,838 3,833~~ Amortization of certain intangible assets 445 462 ~~143~~Depreciation ~~144~~5,230 5,594 Amortization of debt issue costs, amendment costs, ~~debt discounts~~ and debt premiums, ~~and interest in-kind~~ 1,~~687~~801 1,~~168~~687 ~~1,201~~Gain ~~Equity~~on inSale ~~undistributed earnings~~ of ~~Great~~Assets ~~Lakes Kraut Company, LLC 0~~ (~~187~~69) ~~(277)~~0 Transitional Services Agreement with Pro-Fac Cooperative, Inc. (71) (131) ~~0 0~~ Change in assets and liabilities: Accounts receivable (129,~~566~~104) (912,~~074~~566) ~~1,818~~ Inventories and prepaid manufacturing expense (6374,~~453~~348) (2563,~~209~~453) ~~(33,170)~~ Income taxes refundable~~/(payable)~~ 15 3,092 ~~821 (75)~~ Accounts payable and other accrued ~~expenses~~liabilities 6,106 23,772 ~~33,654 (10,972)~~ Due to~~/(from)~~ Pro-Fac Cooperative, Inc., net 8,952 6,770 ~~(9,904) 8,649~~ Other assets and liabilities, net 663 2,178 ~~751 909~~ -------- --------- ~~--------~~ Net cash used in operating activities (2960,~~723~~600) (229,~~524~~723) ~~(27,855)~~ -------- --------- ~~--------~~ Cash Flows From Investing Activities: Purchase of property, plant and equipment (74,~~562~~877) (17,~~792~~562) ~~(2,187)~~ Proceeds from disposals 134 1,971 0Investment 0in ~~Advances~~California to& ~~Great~~Washington ~~Lakes Kraut~~ Company, ~~LLC, net 0~~ (173,~~117~~427) ~~(1,512)~~0 Proceeds from investment in CoBank 459 821 ~~0 1,115~~ Issuance of note receivable to Pro-Fac Cooperative, Inc., net 0 (300) ~~0 0~~ -------- --------- ~~--------~~ Net cash used in investing activities (577,~~070~~711) (25,~~909~~070) ~~(2,584)~~ -------- --------- ~~--------~~ Cash Flows From Financing Activities: ~~Proceeds from issuance of long-term debt 0 270,000 0~~ Net proceeds from ~~new~~Revolving ~~revolving~~Credit ~~credit~~Facility ~~facility 0 16~~74,~~400~~500 0 Birds Eye Holdings, Inc. (redemption~~)/contribution (51) 175~~,~~591~~ 0net ~~Net (payments)/proceeds on prior revolving credit facility~~ 0 (~~22,000~~51) ~~22,000~~ Payments on long-term debt (~~14,112~~675) (~~400~~14,~~800~~112) ~~(292)~~ Payments on Termination Agreement with Pro-Fac Cooperative, Inc. (4,000) (64,~~120~~000) 0 Payments on capital ~~lease~~leases (~~126~~224) (77126) ~~(38) Cash paid for debt issuance costs 0 (22,314) 0 Cash paid for transaction fees 0 (6,000) 0~~ -------- --------- ~~--------~~ Net cash provided by/(used in)~~/provided~~ by financing activities 69,601 (18,289) ~~4,680 21,670~~ -------- --------- ~~--------~~ Net change in cash and cash equivalents (5368,~~082~~710) (~~753) (8~~53,~~769~~082) Cash and cash equivalents at beginning of period 72,887 153,756 ~~5,917 14,686~~ -------- --------- ~~--------~~ Cash and cash equivalents at end of period $~~100,674~~ ~~$ 5~~4,~~164~~177 $ 5100,~~917~~674 ======== ========= ~~========~~ Supplemental ~~Schedule~~disclosure of ~~Non-Cash~~cash ~~Financing~~flow ~~Activities~~information: ~~Birds~~Acquisition ~~Eye~~of ~~Holdings,~~California ~~Inc.~~& ~~investment~~Washington $Company 0Accounts receivable $ 323,~~100~~822 $Inventories 03,230 ~~========~~Prepaid ~~=========~~expenses and other current assets 21 Trademarks and other intangible assets 70,889 Accounts payable (1,724) Accrued employee compensation (175) Other accrued liabilities (2,636) -------- $ 73,427 ========

The accompanying notes are an integral part of these consolidated financial statements. 4 BIRDS EYE FOODS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF CERTAIN SIGNIFICANT ACCOUNTING POLICIES The Company: Birds Eye Foods, Inc. (the "Company" or "Birds Eye Foods"), incorporated in 1961, is a producer and marketer of processed food products. The Company has three primary segments in which it markets its products, they include: branded frozen, branded dry, and non-branded products. The majority of each of the segments' net sales are within the United States. In addition, all of the Company's operating facilities, excluding one in Mexico, are within the United States. The Change in Control (the "Transaction"): On August 19, 2002 (the "Closing Date"), pursuant to the terms of the Unit Purchase Agreement dated as of June 20, 2002 (the "Unit Purchase Agreement"), by and among Pro-Fac Cooperative, Inc., a New York agricultural cooperative ("Pro-Fac"), Birds Eye Foods, at the time a New York corporation and a wholly-owned subsidiary of Pro-Fac, and Vestar/Agrilink Holdings LLC, a Delaware limited liability company ("Vestar/Agrilink Holdings"), Vestar/Agrilink Holdings and its affiliates indirectly acquired control of the Company. Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information required by GAAP for complete financial statement presentation. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations, and cash flows have been included. Operating results for the three months ended September 25, 2004 are not necessarily the results to be expected for future interim periods or the full year. These financial statements should be read in conjunction with the financial statements and accompanying notes contained in the Company's Form 10-K Equivalent for the fiscal year ended June 26, 2004. Consolidation: The consolidated financial statements include the Company and its wholly-owned subsidiaries after elimination of intercompany transactions and balances. Investments in affiliates owned more than 20 percent but not in excess of 50 percent are recorded under the equity method of accounting. Reclassification: Certain items for fiscal 2004 have been reclassified to conform with the current period presentation. New Accounting Pronouncements: In May 2004, the Financial Accounting Standards Board ("FASB") issued Staff Position No. 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" ("FSP 106-2"), which superseded FASB Staff Position No. 106-1. FSP 106-2 requires that until an employer is able to determine whether benefits provided by its plan are "actuarially equivalent" to Medicare Part D under the Act, it must disclose the existence of the Act and the fact that the amounts included in the financial statements related to the employer's postretirement benefit plans do not reflect the effects of the Act. The guidance in FSP 106-2 is effective for interim or annual financial statements beginning after June 15, 2004. See NOTE 8 to the "Notes to Consolidated Financial Statements". Trade Accounts Receivable: The Company accounts for trade receivables at outstanding billed amounts, net of allowances for doubtful accounts. The Company estimates its allowance for doubtful accounts as a percentage of receivables overdue. Also included in the allowance, in their entirety, are those accounts that have filed for bankruptcy, been sent to collections, and any other accounts management believes are not collectible based on historical losses. The Company periodically reviews the accounts included in the allowance to determine those to be written off. Generally, after a period of one year, or through legal counsel's advice, accounts are written off. It is not Company policy to accrue interest on past due accounts. The Company's allowance for doubtful accounts is approximately $1.3 million at September 25, 2004, and $1.0 million at June 26, 2004. NOTE 2. ACQUISITION OF CALIFORNIA & WASHINGTON COMPANY On September 23, 2004, Birds Eye Foods acquired the California & Washington Company ("C&W"), a San Francisco-based marketer of frozen vegetables and fruits, by acquiring all of the outstanding common stock of C&W (the "Acquisition"). C&W is the premier marketer of frozen vegetables and fruits in the Western United States, with number one market share positions in California, the Pacific Northwest, and Arizona. The Company believes the Acquisition strengthens its competitive position by expanding its presence in the Western United States. Annual net sales of C&W are approximately $40.0 million. 5 The Acquisition was accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations". Under purchase accounting, the Company will allocate the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The valuations and other studies which will provide the basis for such an allocation have not progressed to a stage where there is sufficient information to make a final allocation in the accompanying financial statements. Accordingly, the purchase accounting adjustments made in the accompanying financial statements are preliminary. The preliminary allocation of the purchase price is presented in the Consolidated Statement of Cash Flows as a supplemental disclosure. Once an allocation is determined, in accordance with GAAP, any remaining excess of purchase price over net assets acquired will be adjusted through goodwill. Due to insignificance, the results of operations for C&W for the period September 23, 2004 - September 25, 2004 have not been included in the Company's Consolidated Statement of Operations for the three months ended September 25, 2004. NOTE 3. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE Discontinued Operations: On May 1, 2004, the Company sold its Freshlike canned vegetable business to the Allen Canning Company. This sale did not impact frozen products carrying the Freshlike brand name. The Company recognized a gain of approximately $3.8 million (after-tax) within discontinued operations in the fourth quarter of fiscal 2004 from this transaction. The implementation of SFAS No. 144 resulted in the classification and separate financial presentation of the Freshlike canned vegetable business as a discontinued operation and its operations are, therefore, excluded from continuing operations. All prior period Statements of Operations have been reclassified to reflect the discontinuance of the Freshlike canned vegetable business. The operating results of businesses classified as discontinued operations in the Statement of Operations are summarized as follows: (Dollars in Thousands)

~~(Dollars~~Three inMonths ~~Millions)~~Ended ~~Contractual~~----------------------------- ~~Severance~~September ~~Penalties~~25, ~~and~~September ~~and~~27, ~~Other~~2004 ~~Costs~~2003 ~~Related Costs~~ ------------- ------------- ~~Initial~~Net ~~liability~~Sales $0 6.$2,885 $== ~~2.3~~====== ~~Utilization~~Income ~~(1.1)~~before (income taxes $0~~.9)~~ ~~Adjustments~~$ 118 Income tax provision 0.7 (~~0.5~~46) --~~---~~ ------ ~~Balance~~Discontinued atoperations, ~~September~~net ~~27,~~of ~~2003~~tax $0 ~~5.8~~ $ ~~0.9~~72 ==~~===~~ ======

Assets Held for Sale: Having met the criteria outlined in SFAS No. 144, properties in Barker, New York; Red Creek, New York; Enumclaw, Washington; Sodus, Michigan; and Cincinnati, Ohio are classified as assets held for sale on the Company's Consolidated Balance Sheet as of September 25, 2004. The Company is actively marketing these properties for sale. The major classes of assets included in the Consolidated Balance Sheet as assets held for sale at estimated fair value less costs to sell are as follows: (Dollars in Thousands)

~~Predecessor~~September ~~June 30~~25, ~~2002~~June ~~- August 18~~26, ~~2002~~2004 2004 ------------- -------- ~~Net~~Property, ~~Sales~~plant and equipment, net $3,064 99$6,~~216~~848 ~~Income~~------ ~~before~~------ ~~discontinued~~Total ~~operations~~$3,064 1$6,~~072~~848 ~~Net~~====== ~~Income 832~~======

On August 27, 2004, the Company sold its facility located in Alton, New York for $0.1 million. No significant gain or loss was recognized as a result of the disposition of this facility. This facility had previously been recorded as held for sale. In accordance with SFAS No. 144, and during the quarter ended September 25, 2004, the Company reclassified the Green Bay, Wisconsin manufacturing facility to assets held and used as disposition of the location within one year is no longer likely. 6 NOTE 4. AGREEMENTS WITH PRO-FAC In connection with the Transaction, Birds Eye Foods and Pro-Fac entered into several agreements effective as of the Closing Date, including the following: (i) Termination Agreement. Pro-Fac and Birds Eye Foods entered into a letter agreement dated as of the Closing Date (the "Termination Agreement"), pursuant to which, among other things, the marketing and facilitation agreement between Pro-Fac and Birds Eye Foods (the "Old Marketing and Facilitation Agreement") which, until the Closing Date, governed the crop supply and purchase relationship between Birds Eye Foods and Pro-Fac, was terminated. In consideration of such termination, Birds Eye Foods agreed to pay Pro-Fac a termination fee of $10.0 million per year for five years, provided that certain ongoing conditions are met, including maintaining grower membership levels sufficient to generate certain minimum crop supply. The $10.0 million payment is payable in quarterly installments as follows: $4.0 million on each July 1, and $2.0 million each on October 1, January 1, and April 1. The Termination Agreement outlined that the first payment in the amount of $4.0 million was to be paid on the Closing Date and the next payment to be made by October 1, 2002 and quarterly thereafter as outlined. The liability for the Termination Agreement has been reflected at fair value utilizing a discount rate of 11 1/2 percent. The amount of the obligation under the Termination Agreement was $22.6 million as of September 25, 2004 and $26.0 million as of June 26, 2004. (ii) Amended and Restated Marketing and Facilitation Agreement. Pro-Fac and Birds Eye Foods entered into an amended and restated marketing and facilitation agreement dated as of the Closing Date (the "Amended and Restated Marketing and Facilitation Agreement"). The Amended and Restated Marketing and Facilitation Agreement replaces the Old Marketing and Facilitation Agreement and provides that, among other things, Pro-Fac will be Birds Eye Foods' preferred supplier of crops. Birds Eye Foods will continue to pay the commercial market value ("CMV") of crops supplied by Pro-Fac, in installments corresponding to the dates of payment by Pro-Fac to its members for crops delivered. CMV is defined as the weighted average price paid by other commercial processors for similar crops sold under preseason contracts and in the open market in the same or competing market areas. The processes for determining CMV under the Amended and Restated Marketing and Facilitation Agreement are substantially the same as the processes used under the Old Marketing and Facilitation Agreement. Birds Eye Foods makes payments to Pro-Fac of an estimated CMV for a particular crop year, subject to adjustments to reflect the actual CMV following the end of such year. Commodity committees of Pro-Fac meet with Birds Eye Foods management to establish CMV guidelines, review calculations, and report to a joint CMV committee of Pro-Fac and Birds Eye Foods. Amounts paid by Birds Eye Foods to Pro-Fac for the CMV of crops supplied for the three months ended September 25, 2004 and September 27, 2003 were $35.0 million and $35.9 million, respectively. The Amended and Restated Marketing and Facilitation Agreement also provides that Birds Eye Foods will continue to provide to Pro-Fac services relating to planning, consulting, sourcing and harvesting crops from Pro-Fac members in a manner consistent with past practices. In addition, for a period of five years from the Closing Date, Birds Eye Foods may provide Pro-Fac with services related to the expansion of the market for the agricultural products of Pro-Fac members (at no cost to Pro-Fac other than reimbursement of Birds Eye Foods' incremental and out-of-pocket expenses related to providing such services as agreed to by Pro-Fac and Birds Eye Foods). Under the Amended and Restated Marketing and Facilitation Agreement, Birds Eye Foods determines the amount of crops which Birds Eye Foods will acquire from Pro-Fac for each crop year. If the amount to be purchased by Birds Eye Foods during a particular crop year does not meet (i) a defined crop amount or (ii) a defined target percentage of Birds Eye Foods' needs for each particular crop, then certain shortfall payments will be made by Birds Eye Foods to Pro-Fac. The defined crop amounts and targeted percentages were set based upon the needs of Birds Eye Foods in the 2002 crop year (fiscal 2003). The shortfall payment provisions of the agreement include a maximum shortfall payment, determined for each crop, that can be paid over the term of the Amended and Restated Marketing and Facilitation Agreement. The aggregate shortfall payment amounts for all crops covered under the agreement cannot exceed $20.0 million over the term of the agreement. Unless terminated earlier, the Amended and Restated Marketing and Facilitation Agreement will continue in effect until August 19, 2012. Birds Eye Foods may terminate the Amended and Restated Marketing and Facilitation Agreement prior to August 19, 2012 upon the occurrence of certain events, including in connection with a change in control transaction affecting Birds Eye Foods or Holdings Inc. However, in the event Birds Eye Foods terminates the Amended and Restated Marketing and Facilitation Agreement as a result of a change in control transaction within three years of the Closing Date, Birds Eye Foods must pay Pro-Fac a termination fee of $20.0 million (less the total amount of any shortfall payments previously paid to Pro-Fac under the Amended and Restated Marketing and Facilitation Agreement). Also, if, during the first three years after the Closing Date, Birds Eye Foods sells one or more portions of its business, and if the purchaser does not continue to purchase the crops previously purchased by Birds Eye Foods with respect to the transferred business, then such failure will be taken into consideration when determining if Birds Eye Foods is required to make any shortfall payments to Pro-Fac. After such three-year period, Birds Eye Foods may sell portions of its business and the volumes of crop purchases previously made by Birds Eye Foods with respect to such transferred business will be disregarded for purposes of determining shortfall payments. 7 (iii) Credit Agreement. Birds Eye Foods and Pro-Fac entered into a Credit Agreement, dated August 19, 2002 (the "Credit Agreement"), pursuant to which Birds Eye Foods agreed to make available to Pro-Fac loans in an aggregate principal amount of up to $5.0 million (the "Credit Facility"). Pro-Fac is permitted to draw up to $1.0 million per year under the Credit Facility, unless Birds Eye Foods is prohibited from making such advances under the terms of certain third party indebtedness of Birds Eye Foods. The amount of the Credit Facility will be reduced, on a dollar-for-dollar basis, to the extent of certain distributions made by Holdings LLC to Pro-Fac in respect of its ownership in Holdings LLC. Pro-Fac has pledged all of its Class B Common Units in Holdings LLC as security for advances under the Credit Facility. The Credit Facility bears interest at the rate of 10 percent per annum. Amounts borrowed and interest are required to be paid only upon sale of Pro-Fac's ownership interest in Holdings LLC or receipt of a distribution from Holdings LLC in connection with the sale or liquidation of all or substantially all of the assets of Holdings LLC or one or more of its subsidiaries. As of September 25, 2004, there was $1.0 million outstanding under this Credit Agreement. NOTE 5. INVENTORIES The major classes of inventories, net of reserves of $4.7 million and $4.1 million, as of September 25, 2004 and June 26, 2004, respectively, are as follows: (Dollars in Thousands)

~~Three~~September ~~Months~~25, ~~Ended~~June ~~Three~~26, ~~Months~~2004 ~~Ended~~2004 -------------~~-----~~ --------~~------------------------------~~ ~~Successor~~Finished ~~Successor~~goods ~~Predecessor September 27~~$243,067 ~~August 19~~$158,090 ~~2002~~Raw -materials ~~June~~and ~~30,~~supplies ~~2002 - 2003 September 28~~27,342 ~~2002 August 18~~22,993 ~~2002~~ --------~~----------~~ --------~~----------~~ ~~---------------~~Total ~~Net~~inventories ~~Sales~~ $~~61 $5~~270,~~789~~409 $4181,~~511~~083 === ====== ====== ~~(Loss)/income before income taxes $(7) $ 30 $ (407) Income tax benefit/(provision) 3 (12) 167 --- ------ ------ Discontinued operations, net of tax $(4) $ 18 $ (240)~~ ==~~= ====== ======~~

NOTE 6. ACCOUNTING FOR GOODWILL AND INTANGIBLE ASSETS Birds Eye Foods follows SFAS No. 142, "Goodwill and Other Intangible Assets", which requires that goodwill not be amortized, but instead be tested at least annually for impairment and expensed against earnings when its implied fair value is less than its carrying amount. As of September 25, 2004, trademarks were increased by approximately $70.9 million as a result of the acquisition of California & Washington Company. This amount assigned to trademarks is preliminary as the valuations and other studies that will provide the basis for the fair value of the trademarks have not been completed. Upon completion of the valuations and final purchase price allocation, any remaining excess of purchase price over net assets acquired, including the final fair value assigned to trademarks, will be adjusted through goodwill. See NOTE 2 to the "Notes to Consolidated Financial Statements". As outlined in SFAS No. 142, certain intangibles with a finite life are required to continue to be amortized. These intangibles are being amortized on a straight-line basis over approximately 4 to 14 years. The following schedule sets forth the major classes of intangible assets held by the Company: (Dollars in Thousands)

~~Successor Successor~~ September 2725, June 2826, ~~2003~~2004 ~~2003~~2004 ----------------------- ----------------------- ~~Inventories~~Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization -------- ------------ -------- ------------ Amortized intangible assets: Covenants not to compete $ 32588 $ 80(333) ~~Property~~$ 588 $ (298) Customer relationships 8,000 ~~plant~~(1,889) ~~and~~8,000 ~~equipment~~(1,667) ~~net~~Other 1210,~~312~~406 13(1,~~421~~594) 10,406 (1,406) -------- ------- -------- ------- Total $12 18,~~344~~994 $13(3,~~501~~816) $ 18,994 $(3,371) -------- ======= -------- ======= Unamortized intangible assets: Trademarks 219,389 148,500 -------- -------- Total $238,383 $167,494 ======== ========

8 The aggregate amortization expense associated with intangible assets for the three months ended September 25, 2004 and September 27, 2003 was $0.4 million and $0.5 million, respectively. The aggregate amortization expense for each of the five succeeding fiscal years is estimated as follows: (Dollars in Thousands)

~~Successor~~Aggregate ~~Successor~~Annual ~~September~~Fiscal ~~27,~~Amortization ~~June~~Year ~~28,~~Expense ~~2003 2003~~ ------~~---------~~ ------------ ~~Finished~~2006 ~~goods~~ $~~254~~1,~~346~~778 ~~$185~~2007 1,~~983~~650 ~~Raw~~2008 ~~materials and supplies 27~~1,~~025~~639 ~~20,601~~2009 ~~-------- -------- Total inventories $281~~1,~~371~~639 ~~$206,584~~2010 ~~======== ========~~1,639

NOTE 7. DEBT Summary of Long-Term Debt (Dollars in Thousands)

~~Successor Successor~~ September 2725, June 2826, ~~2003~~2004 ~~2003~~2004 -------------~~----------------~~ ---------~~-------------------~~ ~~Gross~~Term ~~Gross~~Loan ~~Carrying~~Facility ~~Accumulated Carrying Accumulated Amount Amortization Amount Amortization ------ ------------ ------ ------------ Amortized intangible assets: Covenants not to compete~~ $252,184 ~~588~~ $252,859 ~~(191)~~Senior $Subordinated ~~588~~Notes ~~$ (139) Customer relationships 8~~51,~~000~~347 (151,~~000)~~433 ~~8,000~~Revolving ~~(778)~~Credit ~~Other~~Facility 1074,~~406~~500 ~~(844)~~0 ~~10,406 (656)~~ -------- ------- -~~--------~~ ~~-------~~ Total $debt 18378,~~994~~031 $304,292 Less current portion (2,~~035~~700) ~~$ 18,994 $~~(12,~~573~~700) -------- ~~=======~~ --------- ~~=======~~Total ~~Unamortized intangible assets: Trademarks $150,900 $ 150,900~~ long-~~-------~~term ~~---------~~debt ~~Total~~ $~~169~~375,~~894~~331 $ ~~169~~301,~~894~~592 ======== =========

Bank Debt: In connection with the Transaction, Birds Eye Foods and certain of its subsidiaries entered into a senior secured credit facility (the "Senior Credit Facility") in the amount of $470.0 million with a syndicate of banks and other lenders arranged and managed by JPMorgan Chase Bank ("JPMorgan Chase Bank"), as administrative and collateral agent. The Senior Credit Facility is comprised of (i) a $200.0 million senior secured revolving credit facility (the "Revolving Credit Facility") and (ii) a $270.0 million senior secured B term loan (the "Term Loan Facility"). The Revolving Credit Facility matures in August 2007 and allows up to $40.0 million to be available in the form of letters of credit. There were borrowings of $74.5 million on the Revolving Credit Facility as of September 25, 2004. The Term Loan Facility requires payments in quarterly installments in the amount of $675,000 until September 30, 2007. Beginning December 31, 2007, the quarterly payments are $64,125,000. The Term Loan Facility matures in August 2008 upon which the balance will be due. The Term Loan Facility is also subject to mandatory prepayments under various scenarios as defined in the Senior Credit Agreement. Provisions of the Senior Credit Agreement require that annual payments, within 105 days after the end of each fiscal year, in the amount of "excess cash flow" be utilized to prepay the Term Loan Facility at an applicable percentage that corresponds to the Company's Consolidated Leverage Ratio. There was no "excess cash flow" for the year ended June 26, 2004 required to be paid under the Term Loan Facility. The amount of "excess cash flow" for the year ended June 28, 2003 was $13.1 million and was paid on September 26, 2003. As of September 25, 2004, the interest rate under the Revolving Credit Facility was approximately 3.84 percent on LIBOR loans, and the interest rate under the Term Loan Facility was approximately 4.42 percent on LIBOR loans. The Senior Credit Facility contains customary covenants and restrictions on the Company's activities, including but not limited to: (i) limitations on the incurrence of indebtedness; (ii) limitations on sale-leaseback transactions, liens, investments, loans, advances, guarantees, acquisitions, asset sales, and certain hedging agreements; and (iii) limitations on transactions with affiliates and other distributions. The Senior Credit Facility also contains financial covenants requiring the Company to maintain a maximum average debt to EBITDA ratio, a maximum average senior debt to EBITDA ratio, and a minimum EBITDA to interest expense ratio. The Company is in compliance with all covenants, restrictions, and requirements under the terms of the Senior Credit Facility. The Company's obligations under the Senior Credit Facility are guaranteed by Holdings, Inc. and certain of the Company's subsidiaries. See NOTE 10 to the "Notes to Consolidated Financial Statements". 9 Senior Subordinated Notes: Birds Eye Foods has outstanding $50.0 million of 11 7/8 percent Senior Subordinated Notes (the "Notes"), due 2008. In connection with the Transaction, the Company recorded the Notes at their estimated fair value, which resulted in recording a premium. As of September 25, 2004, the remaining premium was $1.4 million and is being amortized against interest expense over the remaining life of the outstanding Notes. NOTE 8. INTERIM DISCLOSURES FOR PENSIONS AND OTHER POSTRETIREMENT BENEFITS Components of Net Periodic Benefit Cost (Dollars in Thousands)

~~Aggregate~~Pension ~~Annual~~Benefits ~~Fiscal~~Three ~~Amortization~~Months ~~Year~~Ended ~~Expense~~----------------------------- September 25, September 27, 2004 2003 ------------- ------------- ~~2005~~Service cost $ 1,~~778~~114 ~~2006~~$ 1,~~778~~244 ~~2007~~Interest cost 1,~~650~~981 ~~2008~~1,962 Expected return on plan assets (1,~~639~~793) ~~2009~~(1,606) Amortization of prior service cost 1 2 Amortization of net loss 211 242 ------- ------- Net periodic cost - Company plans $ 1,~~639~~514 $ 1,844 Net periodic cost - union plans 102 91 ------- ------- Total periodic benefit cost $ 1,616 $ 1,935 ======= =======

~~Successor~~Postretirement ~~Successor~~Benefits ~~September~~Other ~~27,~~than ~~June~~Pensions ~~28,~~Three ~~2003~~Months ~~2003~~Ended --------------- ---------------------------- ~~Term~~September ~~Loan Facility $ 254~~25,~~884~~ $September ~~268~~27,~~650~~ ~~Senior~~2004 ~~Subordinated~~2003 ~~Notes 206,757 207,086 Other 3,500 3,845~~ ------------- ------------- ~~Total~~Service ~~debt~~cost ~~465,141~~$11 ~~479,581~~$12 ~~Less~~Interest ~~current~~cost ~~portion~~49 57 Amortization of prior service cost (~~6,200~~7) (~~19,611~~7) ---~~-------~~ ---~~-------~~ Total ~~long-term~~periodic ~~debt~~benefit cost $53 ~~458,941~~ $62 ~~459,970~~ ===~~=======~~ ===~~=======~~

The Company has been unable to conclude whether benefits provided by its postretirement benefit plans are considered "actuarially equivalent" to Medicare Part D under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). As such, the amounts presented above and included in the consolidated financial statements related to the employer's postretirement benefit plans do not reflect the effects of the Act. NOTE 9. OPERATING SEGMENTS The Company is organized by product line for management reporting. The Company has three primary segments in which it operates: branded frozen, branded dry, and non-branded. The Company's branded frozen family of products includes traditional frozen vegetables as well as value added products marketed under recognizable brand names such as Birds Eye, Birds Eye Voila!, Birds Eye Simply Grillin', Freshlike, McKenzie's and C&W. The Company's branded dry family of products includes a wide variety of product offerings, including fruit fillings and toppings (Comstock and Wilderness), chili and chili ingredients (Nalley and Brooks), salad dressings (Bernstein's and Nalley), and snacks (Tim's, Snyder of Berlin and Husman). Birds Eye Foods also produces many products for the non-branded markets which include store brand, food service and industrial markets. The Company's store brand products include frozen vegetables, chili products, fruit fillings and toppings, and other canned products. The Company's food service and industrial products include frozen vegetables, salad dressings, mayonnaise, fruit fillings and toppings, and chili products. Reclassifications have been made to the prior year segment presentation below to reflect the reallocation of certain fixed costs which were not eliminated in conjunction with the sale of the Company's Freshlike canned vegetable business in fiscal 2004. The Freshlike canned vegetable business has been reclassified to discontinued operations in accordance with SFAS No. 144. See NOTE 3 to the "Notes to Consolidated Financial Statements". 10 The following table illustrates the Company's operating segment information: (Dollars in Millions)

Three Months Ended ~~Three Months Ended~~ ------------------ -----------~~------------------------------~~ ~~Successor~~September ~~Successor~~25, ~~Predecessor~~ September 27, ~~August~~2004 ~~19, 2002 - June 30,2002 -~~ 2003 ~~September 28, 2002 August 18, 2002~~ ---- ---------~~---------~~ --------------- Net Sales: Branded frozen $ 6663.71 $ 3666.97 ~~$35.8~~ Branded dry 5145.76 2749.91 ~~23.6~~ Non-branded 7468.~~1 37.~~6 3973.9 ------ ------ ~~-----~~ Total continuing segments $~~192~~177.53 $~~102~~189.47 ~~$99.3~~ ====== ===== =~~====~~ Operating income: Branded frozen $ 104.~~6 $~~ 2.4 $ 410.76 Branded dry ~~9.2~~ 6.69 49.70 Non-branded (4.5~~) (0~~.41) (14.37) ------- ------ ~~-----~~ Continuing segment operating income 156.30 814.69 ~~8.1~~ Interest expense (106.54) (610.2) ~~(7.5)~~ ------ ------- ~~-----~~ Pretax (loss)/income from continuing operations $ 4(0.~~8 $ 2.~~4) $ 04.67 ====== ====== ~~=====~~

NOTE 10. GUARANTEES AND INDEMNIFICATIONS In certain instances when Birds Eye Foods sells businesses or assets, the Company may retain certain liabilities for known exposures and provide indemnification to the buyer with respect to future claims for certain unknown liabilities existing, or arising from events occurring, prior to the sale date, including liabilities for taxes, legal matters, environmental exposures, labor contingencies, product liability, and other obligations. The terms of the indemnifications vary in duration, from one to three years for certain types of indemnities, to terms for tax indemnifications that are generally aligned to the applicable statute of limitations for the jurisdiction in which the tax is imposed, and to terms for certain liabilities (i.e., warranties of title and environmental liabilities) that typically do not expire. The maximum potential future payments that the Company could be required to make under these indemnifications are either contractually limited to a specified amount or unlimited. The maximum potential future payments that the Company could be required to make under these indemnifications are not determinable at this time, as any future payments would be dependent on the type and extent of the related claims, and all relevant defenses, which are not estimable. Historically, costs incurred to resolve claims related to these indemnifications have not been material to the Company's financial position, results of operations or cash flows. The Company enters into agreements with indemnification provisions in the ordinary course of business with its customers, suppliers, service providers and business partners. In such instances, the Company usually indemnifies, holds harmless and agrees to reimburse the indemnified party for claims, actions, liabilities, losses and expenses in connection with any Birds Eye Foods infringement of third party intellectual property or proprietary rights, or when applicable, in connection with any personal injuries or property damage resulting from any Birds Eye Foods' products sold or services provided. Additionally, the Company may from time to time agree to indemnify and hold harmless its providers of services from claims, actions, liabilities, losses and expenses relating to their services to Birds Eye Foods, except to the extent finally determined to have resulted from the fault of the provider of services relating to such services. The level of conduct constituting fault of the service provider will vary from agreement to agreement and may include conduct which is defined in terms of negligence, gross negligence, willful misconduct, omissions or other culpable behavior. The terms of these indemnification provisions are generally not limited. The maximum potential future payments that the Company could be required to make under these indemnification provisions are unlimited. The maximum potential future payments that the Company could be required to make under these indemnification provisions are not determinable at this time, as any future payments would be dependent on the type and extent of the related claims, and all relevant defenses to the claims, which are not estimable. Historically, costs incurred to resolve claims related to these indemnification provisions have not been material to the Company's financial position, results of operations or cash flows. The Company has by-laws, policies, and agreements under which it indemnifies its directors and officers from liability for certain events or occurrences while the directors or officers are, or were, serving at Birds Eye Foods' request in such capacities. Furthermore, the Company is incorporated in the state of Delaware which requires corporations to indemnify their officers and directors under certain circumstances. The term of the indemnification period is for the director's or officer's lifetime. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited, but would be affected by all relevant defenses to the claims. 11 Subsidiary Guarantors: Kennedy Endeavors, Incorporated, Linden Oaks Corporation, GLK Holdings, Inc. (wholly-owned subsidiaries of the Company), and Pro-Fac (Pro-Fac files periodic reports under the Security Exchange Act of 1934, Commission File Number 0-20539) have jointly and severally, fully and unconditionally guaranteed, on a senior subordinated basis, the obligations of the Company with respect to the Company's 11 7/8 percent Senior Subordinated Notes due 2008 (the "Notes"). In addition, Birds Eye Holdings, Inc., Kennedy Endeavors, Incorporated, GLK Holdings, Inc., BEMSA Holdings, Inc., and Linden Oaks Corporation ("Subsidiary Guarantors") have jointly and severally, fully and unconditionally guaranteed the obligations of the Company with respect to the Company's Senior Credit Facility. The covenants in the Notes and the Senior Credit Facility do not restrict the ability of the Subsidiary Guarantors to make cash distributions to the Company. Presented below is condensed consolidating financial information for (i) Birds Eye Foods, (ii) the subsidiary guarantors, and (iii) non-guarantor subsidiaries. The condensed consolidating financial information has been presented to show the nature of assets held, results of operations, and cash flows of the Company and its Subsidiary Guarantors and non-guarantor subsidiaries in accordance with Securities and Exchange Commission Financial Reporting Release No. 55.

~~Successor~~ Statement of Operations Three Months Ended September 2725, ~~2003~~2004 --------------------------------------------------------------------- Birds Eye Subsidiary Non-Guarantor Eliminating Foods, Inc. Guarantors Subsidiaries Entries Consolidated ----------- ---------- ------------- ----------- ------------ (Dollars in Thousands) Net sales $ ~~187~~172,~~758~~501 $ 6,~~147~~247 $ 0 $(1,~~414~~404) $ ~~192~~177,~~491~~344 Cost of sales (~~146~~138,~~794~~603) (5,~~533~~867) 0 1,~~608~~480 (~~150~~142,~~719~~990) --------- ------- ------ ------- --------- Gross profit 4033,~~964~~898 ~~614~~380 0 ~~194~~76 4134,~~772~~354 Selling, administrative, and general expense (2527,~~612~~507) (~~906~~857) 0 0 (2628,~~518~~364) Other (expense)/income (105,~~402~~867) 105,~~596~~943 0 (~~194~~76) 0 Income from subsidiaries 95,~~022~~131 ~~643~~651 0 (95,~~665~~782) 0 --------- ------- ------ ------- --------- Operating income 135,~~972~~655 106,~~947~~117 0 (95,~~665~~782) 155,~~254~~990 Interest (expense)/income (148,~~478~~909) 21,~~571~~087 1,~~447~~466 0 (106,~~460~~356) --------- ------- ------ ------- --------- Pretax (loss)/income from continuing operations (~~506~~3,254) 137,~~518~~204 1,~~447~~466 (95,~~665~~782) ~~4,794~~(366) Tax benefit/(provision) 31,~~382~~341 (52,~~300~~888) 0 ~~0 (~~1,~~918)~~693 146 --------- ------- ------ ------- --------- (Loss)/Income before discontinued operations 2(1,~~876~~913) 84,~~218~~316 1,~~447~~466 (94,~~665~~089) ~~2,876~~(220) Discontinued operations (net of a tax ~~benefit of $3~~) ~~(4)~~0 0 0 0 ~~(4)~~0 --------- ------- ------ ------- --------- Net (loss)/income $ 2(1,~~872~~913) $ 84,~~218~~316 $1,~~447~~466 $(94,~~665~~089) $ ~~2,872~~(220) ========= ======= ====== ======= =========

~~Successor~~ Balance Sheet September 2725, ~~2003~~2004 ---------------------------------------------------------------------~~----------~~ Birds Eye Subsidiary Non-Guarantor Eliminating Foods, Inc. Guarantors Subsidiaries Entries Consolidated ----------- ---------- ------------- ----------- ------------ (Dollars in Thousands) Assets Cash and cash equivalents $ ~~100~~3,~~159~~573 $ ~~515~~604 $ 0 $ 0 $~~100~~ 4,~~674~~177 Accounts receivable, net 6974,~~015~~869 3,~~622~~649 0 0 7278,~~637~~518 Inventories - Finished goods ~~253~~242,~~899~~531 ~~447~~536 0 0 ~~254~~243,~~346~~067 Raw materials and supplies 26,~~108~~302 ~~917~~1,040 0 0 27,~~025~~342 ---------- --------- ------- --------- -------- Total inventories ~~280~~268,~~007~~833 1,~~364~~576 0 0 ~~281~~270,~~371~~409 Other current assets 3821,~~913~~747 12,~~716~~450 0977 0(977) 4024,~~629~~197 ---------- --------- ------- --------- -------- Total current assets ~~488~~369,~~094~~022 78,~~217~~279 0977 0(977) ~~495~~377,~~311~~301 Property, plant, and equipment, net ~~178~~176,~~152~~279 1825,~~889~~314 0 0 ~~197~~201,~~041~~593 Investment in subsidiaries ~~310~~313,~~869~~974 1214,~~581~~082 0 (~~323~~328,~~450~~056) 0 Goodwill and other intangible assets, net 43112,~~813~~208 ~~161~~157,~~096~~945 0 0 ~~204~~270,~~909~~153 Other assets 3020,~~880~~652 ~~103~~97,~~412~~032 2830,~~336~~739 (~~131~~127,~~430~~502) 3120,~~198~~921 ---------- --------- ------- --------- -------- Total assets $1992,~~051,808~~135 $ ~~303~~302,~~195~~652 $2831,~~336~~716 $(~~454~~456,~~880~~535) $~~928~~869,~~459~~968 ========== ========= ======= ========= ======== Liabilities and Shareholder's Equity Current portion of long-term debt $ 62,~~200~~700 $ 0 $ 0 $ 0 $ 62,~~200~~700 Current portion of Termination and Transitional Services Agreements with Pro-Fac Cooperative, Inc. 9,~~407~~223 0 0 0 9,~~407~~223 Accounts payable 8273,~~559~~910 1,~~107~~097 0 0 8375,~~666~~007 Accrued interest 104,~~064~~362 0 0 0(977) 103,~~064~~385 Intercompany loans ~~314~~ (~~314~~408) 408 0 0 0 Other current liabilities 6273,~~712~~198 74,~~288~~807 0 0 7078,~~000~~005 ---------- --------- ------- --------- -------- Total current liabilities ~~171~~162,~~256~~985 86,~~081~~312 0 0(977) ~~179~~168,~~337~~320 Long-term debt ~~487~~406,~~277~~070 0 0 (2830,~~336~~739) ~~458~~375,~~941~~331 Long-term portion of Termination and Transitional Services Agreements with Pro-Fac Cooperative, Inc. 2013,~~733~~395 0 0 0 2013,~~733~~395 Other non-current liabilities ~~158~~165,~~707~~913 0 0 (~~103~~96,~~094~~763) 5569,~~613~~150 ---------- --------- ------- --------- -------- Total liabilities ~~837~~748,~~973~~363 86,~~081~~312 0 (~~131~~128,~~430~~479) ~~714~~626,~~624~~196 Shareholder's equity ~~213~~243,~~835~~772 ~~295~~296,~~114~~340 2831,~~336~~716 (~~323~~328,~~450~~056) ~~213~~243,~~835~~772 ---------- --------- ------- --------- -------- Total liabilities and shareholder's equity $1992,~~051,808~~135 $ ~~303~~302,~~195~~652 $2831,~~336~~716 $(~~454~~456,~~880~~535) $~~928~~869,~~459~~968 ========== ========= ======= ========= ========

~~Successor~~ Statement of Cash Flows Three Months Ended September 2725, ~~2003~~2004 --------------------------------------------------------------------- Birds Eye Subsidiary Non-Guarantor Eliminating Foods, Inc. Guarantors Subsidiaries Entries Consolidated ----------- ---------- ------------- ----------- ------------ (Dollars in Thousands) Cash Flows From Operating Activities: Net (loss)/income $ 2(1,~~872~~913) $ 84,~~218~~316 $ 1,~~447~~466 $ (94,~~665~~089) $ ~~2,872~~(220) Adjustments to reconcile net (loss)/income to cash provided by/(used in)~~/provided~~ by operating activities - Depreciation 54,~~206~~700 ~~388~~530 0 0 5,~~594~~230 Amortization of certain intangible assets ~~274~~257 188 0 0 ~~462~~445 Amortization of debt issue costs, amendment costs, ~~debt discounts~~ and debt premiums 2,289 ~~and~~0 ~~interest~~(488) ~~in-kind~~0 31,~~134~~801 0Gain on sale of assets (~~1,447~~69) 0 ~~1,687~~0 0 (69) Transitional Services Agreement with Pro-Fac Cooperative, Inc. (~~131~~71) 0 0 0 (~~131~~71) Equity in earnings of subsidiaries (91,~~022~~165) (~~643~~222) 0 91,~~665~~387 0 Change in working capital (4065,~~552~~166) ~~345~~(846) 0(11) 0(1,693) (4067,~~207~~716) --------- ------- ------- -------- --------- Net cash (used in)/provided by operating activities (3861,~~219~~138) 83,~~496~~966 0967 0(4,395) (2960,~~723~~600) --------- ------- ------- -------- --------- Cash Flows From Investing Activities: Purchase of property, plant, and equipment (74,~~394~~757) (~~168~~120) 0 0 (74,~~562~~877) Proceeds from disposals ~~1,971~~134 0 0 0 ~~1,971~~134 ~~Proceeds~~Investment ~~from investment~~ in ~~CoBank~~California ~~821~~& 0Washington 0Company ~~0 821 Issuance of note receivable to Pro-Fac Cooperative, Inc., net~~ (~~300~~73,427) 0 0 0 (~~300~~73,427) ~~Dividends~~Proceeds ~~received~~from ~~7,950~~investment in CoBank 459 0 0 ~~(7,950)~~ 0 459 --------- ------- ------- -------- --------- Net cash ~~provided by/(~~used in) investing activities 3(77,~~048~~591) (~~168~~120) 0 ~~(7,950)~~0 (577,~~070~~711) --------- ------- ------- -------- --------- Cash Flows From Financing Activities: ~~Birds~~Net ~~Eye~~proceeds ~~Holdings,~~from ~~Inc.~~Revolving ~~redemption~~Credit ~~(51)~~Facility 74,500 0 0 0 ~~(51)~~74,500 Payments on long-term debt (~~14,112~~675) 0 0 0 (~~14,112~~675) Payments on Termination Agreement with Pro-Fac Cooperative, Inc. (4,000) 0 0 0 (4,000) Payments on capital ~~lease~~leases (~~126~~224) 0 0 0 (~~126~~224) Dividends paid 0 (73,~~950~~428) 0(967) 74,~~950~~395 0 --------- ------- ------- -------- --------- Net cash provided by/(used in) financing activities 69,601 (183,~~289~~428) (~~7,950~~967) ~~0 7~~4,~~950~~395 ~~(18~~69,~~289)~~601 --------- ------- ------- -------- --------- Net change in cash and cash equivalents (5369,~~460~~128) ~~378~~418 0 0 (5368,~~082~~710) Cash and cash equivalents at beginning of period ~~153~~72,~~619~~701 ~~137~~186 0 0 ~~153~~72,~~756~~887 --------- ------- ------- -------- --------- Cash and cash equivalents at end of period $ ~~100~~3,~~159~~573 $ ~~515~~604 $ 0 $ 0 $ ~~100~~4,~~674~~177 ========= ======= ======= ======== =========

~~Successor~~ Statement of Operations ~~August~~Three ~~19,~~Months ~~2002~~Ended - September 2827, ~~2002~~2003 --------------------------------------------------------------------- Birds Eye Subsidiary Non-Guarantor Eliminating Foods, Inc. Guarantors Subsidiaries Entries Consolidated ----------- ---------- ------------- ----------- ------------ (Dollars in Thousands) Net sales $ ~~100~~184,~~507~~934 $ 26,~~285~~147 $ 0 $ (~~353~~1,414) $ ~~102~~189,~~439~~667 Cost of sales (77144,~~253~~488) (15,~~922~~533) 0 ~~365~~1,608 (78148,~~810~~413) --------- ------- ------ ------- --------- Gross profit 2340,~~254~~446 ~~363~~614 0 12194 2341,~~629~~254 Selling, administrative, and general expense (1425,~~874~~436) (~~398~~906) 0 0 (1526,~~272~~342) Other (expense)/income (510,~~309~~402) 510,~~321~~596 0 (12194) 0 Income from ~~former joint venture and~~ subsidiaries 49,~~153~~022 0643 0 (39,~~890~~665) ~~263~~0 --------- ------- ------ ------- --------- Operating income 713,~~224~~630 510,~~286~~947 0 (39,~~890~~665) 814,~~620~~912 Interest (expense)/income (714,~~285~~261) 2,571 1,~~134~~447 0 0 (610,~~151~~243) --------- ------- ------ ------- --------- Pretax (loss)/income from continuing operations (61631) 613,~~420~~518 01,447 (39,~~890~~665) 24,~~469~~669 Tax benefit/(provision) ~~1,518~~274 (25,~~530~~300) 0 03,157 (1,~~012~~869) --------- ------- ------ ------- --------- Income before discontinued operations 1(357) 8,~~457~~218 31,~~890~~447 0 (36,~~890~~508) 12,~~457~~800 Discontinued operations (net of a tax provision of $1246) 1872 0 0 0 1872 --------- ------- ------ ------- --------- Net income/(loss) $ ~~1,475~~(285) $ 38,~~890~~218 $01,447 $(36,~~890~~508) $ 12,~~475~~872 ========= ======= ====== ======= =========

~~Predecessor~~Balance ~~Statement~~Sheet ~~of Operations~~ June 3026, ~~2002~~2004 - ~~August 18, 2002~~ -------------------------------------------------------------------- Birds Eye Subsidiary Non-Guarantor Eliminating Foods, Inc. Guarantors Subsidiaries Entries Consolidated ----------- ---------- ------------- ----------- ------------ (Dollars in Thousands) ~~Net~~Assets ~~sales~~Cash and cash equivalents $ 9672,~~740~~701 $ ~~2,476~~186 $ ~~1,069~~0 $~~(1,069)~~ 0 $ 9972,~~216~~887 ~~Cost~~Accounts ofreceivable, ~~sales~~net ~~(74~~61,~~322)~~232 (14,~~611)~~358 (10 0 65,~~432)~~590 1Inventories - Finished goods 157,~~110~~394 ~~(76~~696 0 0 158,~~255)~~090 Raw materials and supplies 22,029 964 0 0 22,993 -------- -------- ------- --------- -------- ~~Gross~~Total ~~profit/~~inventories 179,423 1,660 0 0 181,083 Other current assets 38,245 2,160 967 (~~loss~~967) 2240,~~418~~405 ~~865~~-------- -------- ------- --------- -------- Total current assets 351,601 8,364 967 (~~363~~967) ~~41 22~~359,~~961~~965 ~~Selling~~Property, ~~administrative~~plant, and ~~general~~equipment, ~~expense~~net ~~(14~~172,~~668)~~670 ~~(488)~~25,175 0 0 ~~(15~~197,~~156)~~845 ~~Other~~Investment ~~(expense)/income~~in (5subsidiaries 313,~~507)~~403 513,~~507~~860 410 (41327,263) 0 ~~Income~~Goodwill ~~from~~and ~~former~~other ~~joint~~intangible ~~venture~~assets, ~~and~~net ~~subsidiaries~~41,576 4158,~~543~~133 0 0 199,709 Other assets 22,178 98,650 30,250 (4128,~~266~~624) ~~277~~22,454 -------- -------- ------- --------- -------- ~~Operating~~Total ~~income/(loss)~~assets 6$901,~~786~~428 5$304,~~884~~182 ~~(322)~~$31,217 $(4456,~~266~~854) 8$779,~~082~~973 ~~Interest~~======== ======== ======= ========= ======== Liabilities and Shareholder's Equity Current portion of long-term debt $ 2,700 $ 0 $ 0 $ 0 $ 2,700 Current portion of Termination and Transitional Services Agreements with Pro-Fac Cooperative, Inc. 9,220 0 0 0 9,220 Accounts payable 74,889 1,807 0 0 76,696 Accrued interest 2,120 0 0 (~~expense~~967)~~/income~~ 1,153 Intercompany loans 2,327 (82,~~853~~327) 10 0 0 Other current liabilities 49,~~322~~937 8,656 0 0 (758,~~531)~~593 -------- -------- ------- --------- -------- ~~Pretax~~Total current liabilities 141,193 8,136 0 (~~loss~~967)~~/income~~ ~~from~~148,362 ~~continuing~~Long-term ~~operations~~debt 331,842 0 0 (230,~~067~~250) 7301,~~206~~592 ~~(322)~~Long-term (4portion of Termination and Transitional Services Agreements with Pro-Fac Cooperative,~~266)~~ ~~551~~Inc. ~~Tax~~16,830 ~~benefit/(provision)~~0 20 0 16,~~392~~830 (2Other non-current liabilities 167,~~572)~~716 ~~(46)~~0 0 (~~226~~98,374) 69,342 -------- -------- ------- --------- -------- ~~Income/(loss)~~Total ~~before~~liabilities ~~discontinued~~657,581 ~~operations 325 4~~8,~~634~~136 ~~(368)~~0 (4129,~~266~~591) ~~325~~536,126 ~~Discontinued~~Shareholder's ~~operations~~equity ~~(net~~243,847 of296,046 a31,217 ~~tax benefit of $167)~~ (~~240~~327,263) 0243,847 ~~0 0 (240)~~ -------- -------- ------- --------- -------- ~~Net~~Total ~~income/(loss)~~liabilities $and 85shareholder's equity $901,428 4$304,~~634~~182 $31,217 ~~(368)~~ $(4456,~~266~~854) $779,973 85 ======== ======== ======= ========= ========

~~Successor~~Statement ~~Balance~~of ~~Sheet~~Cash ~~June~~Flows 28Three Months Ended September 27, 2003 --------------------------------------------------------------------- Birds Eye Subsidiary Non-Guarantor Eliminating Foods, Inc. Guarantors Subsidiaries Entries Consolidated ----------- ---------- ------------- ----------- ------------ (Dollars in Thousands) ~~Assets~~ Cash ~~and~~Flows ~~cash~~From ~~equivalents~~Operating $Activities: ~~153,619~~Net income $ ~~137~~(285) $ 08,218 $ 01,447 $~~153~~(6,~~756~~508) ~~Accounts~~$ ~~receivable~~2,872 Adjustments to reconcile net 56income to cash (used in)/provided by operating activities - Depreciation 5,~~441~~206 388 0 0 5,594 Amortization of certain intangible assets 274 188 0 0 462 Amortization of debt issue costs, amendment costs, and debt premiums 3,~~630~~134 0 (1,447) 0 601,~~071~~687 ~~Inventories~~Transitional -Services ~~Finished~~Agreement ~~goods~~with ~~185~~Pro-Fac Cooperative,~~423~~ ~~560~~Inc. (131) 0 0 ~~185,983~~0 ~~Raw~~(131) ~~materials~~Equity ~~and~~in ~~supplies~~earnings 19of subsidiaries (1,~~813~~072) ~~788~~(643) 0 1,715 0 20Change in working capital (37,~~601~~395) 345 0 (3,157) (40,207) ---------- -------~~---~~ ------- --------- -------- ~~Total~~Net ~~inventories~~cash ~~205,236~~(used ~~1,348~~in)/provided 0by 0operating ~~206,584~~activities ~~Other current assets 59,323~~ (330,~~151~~269) 08,496 0 56(7,~~172~~950) (29,723) ---------- -------~~---~~ ------- --------- -------- ~~Total~~Cash ~~current~~Flows ~~assets~~From ~~474,619~~Investing ~~1,964~~Activities: 0Purchase 0of ~~476~~property,~~583~~ ~~Property,~~ plant, and equipment, ~~net 187,819~~ (7,~~380~~394) (168) 0 0 ~~195~~(7,~~199~~562) ~~Investment~~Proceeds infrom ~~subsidiaries~~disposals ~~298~~1,~~030~~971 ~~11,939~~0 0 ~~(309,969)~~ 0 ~~Goodwill~~1,971 ~~and~~Proceeds ~~other~~from ~~intangible~~investment ~~assets,~~in ~~net~~CoBank ~~44,088~~821 ~~161,283~~0 0 0 ~~205,371~~821 ~~Other~~Issuance ~~assets~~of ~~31,919~~note ~~102~~receivable to Pro-Fac Cooperative,~~545~~ 26Inc.,~~889~~ net (~~129,123~~300) ~~32,230~~0 0 0 (300) ---------- -------~~---~~ ------- --------- -------- ~~Total~~Net ~~assets~~cash ~~$1,036,475~~used $in ~~285,111~~investing ~~$26,889~~activities $(~~439~~4,~~092~~902) ~~$909,383~~(168) ~~==========~~0 ~~==========~~0 ~~=======~~(5,070) ~~=========~~-------- ~~========~~------- ~~Liabilities~~------- ~~and~~------- ~~Shareholder's~~-------- ~~Equity~~Cash ~~Current~~Flows ~~portion~~From ofFinancing ~~long-term~~Activities: ~~debt~~Birds $Eye 19Holdings,~~611~~ $Inc. 0redemption $(51) 0 $0 0 $(51) ~~19,611~~Payments ~~Current~~on ~~portion of Termination and Transitional Services Agreements with Pro~~long-~~Fac~~term ~~Cooperative,~~debt ~~Inc. 9~~(14,~~403~~112) 0 0 0 9(14,~~403~~112) ~~Accounts~~Payments ~~payable~~on ~~65,826~~Termination ~~1,324~~Agreement 0with 0Pro-Fac 67Cooperative,~~150~~ ~~Accrued~~Inc. ~~interest~~ (4,~~106~~000) 0 0 0 (4,~~106~~000) ~~Intercompany~~Payments ~~loans~~on ~~1,987~~capital lease (~~1,987~~126) 0 0 0 ~~Other~~(126) ~~current~~Dividends ~~liabilities~~paid ~~56,718~~0 2(7,~~694~~950) 0 ~~0 59~~7,~~412~~950 0 ---------- -------~~---~~ ------- --------- -------- ~~Total~~Net ~~current~~cash ~~liabilities~~used ~~157,651~~in ~~2,031~~financing 0activities ~~0 159~~(18,~~682~~289) ~~Long-term debt 486,859 0 0~~ (267,~~889~~950) ~~459,970 Long-term portion of Termination and Transitional Services Agreements with Pro-Fac Cooperative, Inc. 24,031~~ 0 ~~0 0 24~~7,~~031~~950 ~~Other non-current liabilities 156,397 0 0~~ (~~102~~18,~~234~~289) ~~54,163~~ ---------- -------~~---~~ ------- --------- -------- ~~Total~~Net ~~liabilities~~change ~~824,938~~in 2cash and cash equivalents (53,~~031~~460) 378 0 0 (~~129~~53,~~123~~082) ~~697,846~~Cash ~~Shareholder's~~and ~~equity~~cash ~~211,537~~equivalents ~~283,080~~at ~~26,889~~beginning ~~(309~~of period 153,~~969)~~619 ~~211~~137 0 0 153,~~537~~756 ---------- -------~~---~~ ------- --------- -------- ~~Total~~Cash ~~liabilities~~ and ~~shareholder's~~cash ~~equity~~equivalents at end of period $1100,~~036,475~~159 $ ~~285,111~~515 $~~26,889~~ 0 $~~(439,092)~~ 0 $~~909~~100,~~383~~674 ========== =======~~===~~ ======= ========= ========

17 NOTE 11. OTHER MATTERS Legal Matters: Birds Eye Foods is a party to various legal proceedings from time to time in the normal course of its business. In the opinion of management, any liability that the Company might incur upon the resolution of these proceedings will not, in the aggregate, have a material adverse effect on the Company's business, financial condition, or results of operations. Further, no such proceedings are known to be contemplated by any governmental authorities. The Company maintains general liability insurance coverage in amounts deemed to be adequate by management. CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS From time to time, Birds Eye Foods or persons acting on behalf of Birds Eye Foods may make oral and written statements that may constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the "PSLRA") or by the Securities and Exchange Commission ("SEC") in its rules, regulations, and releases. The Company desires to take advantage of the "safe harbor" provisions in the PSLRA for forward-looking statements made from time to time, including, but not limited to, the forward-looking information contained in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this Form 10-Q Equivalent and other statements made in this Form 10-Q Equivalent and in other filings with the SEC. The Company cautions readers that any such forward-looking statements made by or on behalf of the Company are based on management's current expectations and beliefs but are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Among the factors that could impact the Company include: o the impact of strong competition in the food industry, including competitive pricing; o the impact of changes in consumer demand; o the effectiveness of marketing and shifts in market demand; o the impact of weather on the volume and quality of raw product; o the inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance; o the continuation of the Company's success in integrating operations (including the realization of anticipated synergies in operations and the timing of any such synergies), and the availability of acquisition and alliance opportunities; o the Company's ability to achieve gains in productivity and improvements in capacity utilization; o the Company's ability to service debt; and o interest rate fluctuations. 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The purpose of this discussion is to outline the significant reasons for material changes in the Birds Eye Foods financial condition and results of operations in the first quarter of fiscal 2005 as compared to the first quarter of fiscal 2004. This section should be read in conjunction with Part I, Item 1. Financial Statements of this report. Birds Eye Foods has three primary segments including: branded frozen, branded dry, and non-branded. The majority of each of the segments' net sales are within the United States. In addition, all of the Company's operating facilities, excluding one in Mexico, are within the United States. The Company's branded frozen family of products includes traditional frozen vegetables as well as value added products marketed under recognizable brand names such as Birds Eye, Birds Eye Voila!, Birds Eye Simply Grillin', C&W, Freshlike and McKenzie's. The Company's branded dry family of products includes a wide variety of product offerings, including fruit fillings and toppings (Comstock and Wilderness), chili and chili ingredients (Nalley and Brooks), salad dressings (Bernstein's and Nalley), and snacks (Tim's, Snyder of Berlin and Husman). Birds Eye Foods also produces many products for the non-branded markets which include store brand, food service and industrial markets. The Company's store brand products include frozen vegetables, chili products, fruit fillings and toppings, and other canned products. The Company's food service and industrial products include frozen vegetables, salad dressings, mayonnaise, fruit fillings and toppings, and chili products. Reclassifications have been made to the prior year segment presentation below to reflect the reallocation of certain fixed costs which were not eliminated in conjunction with the sale of the Company's Freshlike canned vegetable business in fiscal 2004. The Freshlike canned vegetable business has been reclassified to discontinued operations in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144. See NOTE 3 to the "Notes to Consolidated Financial Statements". The following tables illustrate the results of operations by segment for the three months ended September 25, 2004 and September 27, 2003: Net Sales (Dollars in Millions)

~~Successor~~Three ~~Statement~~Months ofEnded ~~Cash Flows August 19, 2002~~ - ~~September 28, 2002~~ ----------------------------~~----------------------------------------~~ ~~Birds~~September ~~Eye~~25, ~~Subsidiary~~September ~~Non-Guarantor Eliminating Foods~~27, ~~Inc.~~2004 ~~Guarantors~~2003 ~~Subsidiaries Entries Consolidated~~ ------------ -~~---------~~ ------------- ~~-----------~~% ~~------------~~of ~~(Dollars~~% inof ~~Thousands) Cash Flows From Operating Activities: Net income~~ $ ~~1,475~~Total $ ~~3,890~~Total ~~$0 $(3,890) $ 1,475 Adjustments to reconcile net income to cash (used in)/provided by operating activities~~ - ~~Depreciation 3,723 115 0 0 3,838 Amortization of certain intangible assets 49 94 0 0 143 Amortization of debt issue costs, amendment costs, debt discounts and premiums, and interest in~~-~~kind 1,168 0 0 0 1,168 Equity in undistributed earnings of former joint venture and subsidiaries (4,077) 0 0 3,890 (187) Change in working capital (8,638) (323) 0 0 (8,961)~~ ---~~------~~ ------- -- ---~~----~~ -----~~----~~ ~~Net~~Branded ~~cash~~frozen ~~(used~~63.1 ~~in)/provided by operating activities (~~35.6~~,300)~~ ~~3,776~~66.7 ~~0 0 (~~35.2~~,524)~~ ~~---------~~Branded ~~-------~~dry --45.6 ~~-------~~25.7 ~~--------- Cash Flows From Investing Activities: Purchase of property, plant, and equipment (~~49.1~~,779)~~ (13) 0 0 (1,792) Advances to former joint venture (1,117) 0 0 0 (1,117) Dividends received 4,530 0 0 (4,530) 0 --------- ------- -- ------- --------- Net cash provided by/(used in) investing activities 1,634 (13) 0 (4,530) (2,909) --------- ------- -- ------- --------- Cash Flows From Financing Activities: Proceeds from issuance of long-term debt 270,000 0 0 0 270,000 Net proceeds from new revolving credit facility 16,400 0 0 0 16,400 Birds Eye Holdings, Inc25.9 ~~contribution 175,591 0 0 0 175,591 Net payments on prior revolving credit facility (22,000) 0 0 0 (22,000) Payments on long~~Non-~~term~~branded ~~debt (400,800) 0 0 0 (400,800) Payments on Termination Agreement with Pro-Fac Cooperative, Inc~~68. (6~~,120)~~ 038.7 073.9 038.9 ~~(6,120) Payments on capital lease (77) 0 0 0 (77) Cash paid for debt issuance costs (22,314) 0 0 0 (22,314) Cash paid for transaction fees (6,000) 0 0 0 (6,000) Dividends paid 0 (4,530) 0 4,530 0~~ -----~~----~~ ------- -- ---~~----~~ -----~~----~~ ~~Net~~Total ~~cash~~177.3 ~~provided by/(used in) financing activities 4,680 (4,530)~~ 100.0 ~~4,530~~189.7 ~~4,680 --------- ------- -- ------- --------- Net change in cash and cash equivalents 14 (767)~~ 100.0 ~~0 (753) Cash and cash equivalents at beginning of period 4,636 1,281 0 0 5,917 --------- ------- -- ------- --------- Cash and cash equivalents at end of period $ 4,650 $ 514 $0 $ 0 $ 5,164~~ =====~~====~~ ======= == ===~~====~~ =====~~====~~

Operating Income (Dollars in Millions)

~~Predecessor~~Three ~~Statement~~Months ofEnded ~~Cash Flows June 30, 2002~~ - ~~August 18, 2002~~ ----------------------------~~-----------~~ ~~-------------------------------~~September ~~Birds~~25, ~~Eye~~September ~~Subsidiary Non-Guarantor Eliminating (Dollars in Thousands) Foods~~27, ~~Inc.~~2004 ~~Guarantors~~2003 ~~Subsidiaries Entries Consolidated~~ ------------ -~~---------~~ ------------- ~~--------------~~% ~~------------~~of ~~Cash~~% ~~Flows~~of ~~From Operating Activities: Net income/(loss)~~ $ 85Total $ ~~4,634~~Total ~~$ (368) $(4,266) $ 85 Adjustments to reconcile net income/(loss) to net cash (used in)/provided by operating activities~~ - ~~Depreciation 3,741 69 23 0 3,833 Amortization of certain intangible assets 50 94 0 0 144 Amortization of debt issue costs, amendment costs, debt discounts and premiums, and interest in~~-~~kind 1,201 0 0 0 1,201 Equity in undistributed earnings of former joint venture and subsidiaries (4,543) 0 0 4,266 (277) Change in working capital (37,983) 3,890 1,252 0 (32,841)~~ ---~~-----~~ ------- ------ ------- ~~--------~~Branded ~~Net~~frozen cash (used in)/provided by operating activities (37,449) 8,687 907 0 (27,855) -------- ------- ------ ------- -------- Cash Flows From Investing Activities: Purchase of property, plant, and equipment (4.2~~,181)~~ 70.0 (10.6) ~~0 (2,187) Advances to Great Lakes Kraut Company, LLC (~~71.1~~,512)~~ 0Branded 0dry 06.9 ~~(1,512) Proceeds from investment in CoBank 1,~~115 .0 9.0 060.4 ~~1,115 Dividends received 8,750 0 0 (8,750) 0~~ Non-~~-------~~branded ~~------- ------ ------- -------- Net cash provided by/~~(~~used in~~5.1) ~~investing activities 6,172 0~~ (~~6) (8,750) (2,584) -------- ------- ------ ------- -------- Cash Flows From Financing Activities: Net proceeds from old revolving credit facility 22,000~~ 85.0 ~~0 0 22,000 Payments on long-term debt (292~~) ~~0 0 0~~ (~~292~~4.7) ~~Payments on capital leases~~ (3831.5) ~~0 0 0 (38) Dividends paid 0 (8,750) 0 8,750 0~~ ----~~----~~ ------- ------ ------- ~~--------~~Total ~~Net cash provided by/(used in) financing activities 21,670 (8,750)~~ 6.0 ~~8,750 21,670 -------- ------- ------ ------- -------- Net change in cash and cash equivalents (9,607) (63) 901~~ 100.0 ~~(8,769) Cash and cash equivalents at beginning of period~~ 14~~,243~~.9 ~~121 322~~ 100.0 ~~14,686 -------- ------- ------ ------- -------- Cash and cash equivalents at end of period $ 4,636 $ 58 $1,223 $ 0 $ 5,917~~ ====~~====~~ ======= ====== =====~~== ========~~

19 EBITDA(1) The following table sets forth continuing segment EBITDA (defined as income before discontinued operations plus interest, taxes, and depreciation and amortization) for the three months ended September 25, 2004 and September 27, 2003. The Company believes that EBITDA is an additional measure used to evaluate the operating performance of its segments. EBITDA is also a primary measure used externally by the Company's investor and lenders to ensure consistent comparability. However, EBITDA should be considered in addition to, not as a substitute for or superior to operating income, net income, cash flows, and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). As EBITDA is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similarly titled measures employed by other companies. (Dollars in Millions)

Three Months Ended -----------------------------~~--------------~~ September 2725, September 2827, 2004 2003 ~~2002~~ -------------~~------~~ -------------~~------~~ % of % of $ Total $ Total ---- ----- ----- ----- Branded frozen 665.79 3450.64 7212.75 3659.18 Branded dry 517.8 66.7 269.9 5147.54 ~~25.5~~ Non-branded 74(2.10) 38(17.51) 77(1.5) 38(7.42) ----- ----- ----- ----- ~~Total~~Continuing ~~192~~segment EBITDA 11.57 100.0 ~~201~~20.79 100.0 ===== ===== Reconciliation of EBITDA to net income: Depreciation and amortization (5.7) (6.0) ---- ----- Operating income 6.0 14.9 Interest expense (6.4) (10.2) Tax benefit/(provision) 0.2 (1.9) Discontinued operations, net of tax 0.0 0.1 ---- ----- Net (loss)/income (0.2) 2.9 ===== =====

(1) Earnings before interest, taxes, depreciation, and amortization ("EBITDA") is defined as income before discontinued operations plus interest, taxes, depreciation, and amortization. CHANGES FROM FIRST QUARTER FISCAL 2004 TO FIRST QUARTER FISCAL 2005 Net Sales: Net sales for the first quarter of fiscal 2005 were $177.3 million, a decrease of $12.4 million, or 6.5 percent, as compared to net sales of $189.7 million in the first quarter of fiscal 2004. During the first quarter of fiscal 2005, the Company executed a price increase on most product categories to mitigate the impact of industry wide increases in the costs for labor, raw materials and packaging. Management believes its pricing action, coupled with increased merchandising support, negatively impacted net sales during the quarter. Subsequent to the Company's action regarding pricing, other competitors have followed with similar pricing actions. The "Segment Review" below outlines further details. Gross Profit: Gross profit in the fiscal 2005 period decreased $6.9 million to $34.4 million as compared to $41.3 million for the fiscal 2004 period. The decrease in sales volume accounted for a significant portion of the decline. The remainder of the decline was driven by the continued impact of production cost increases, consumer events associated with the Voila! product line, increased merchandising support and other industry wide cost increases. Management believes product cost increases will impact operating results throughout fiscal 2005. Selling, Administrative and General Expenses: Selling, administrative and general expenses in the fiscal 2005 period have increased $2.1 million to $28.4 million, as compared to $26.3 million in the fiscal 2004 period. The increase was a result of the Company's efforts to redesign its current Birds Eye packaging as well as additional advertising and consumer events for the Birds Eye Voila! product category. Operating Income: Operating income for the fiscal 2005 period was $6.0 million, a decrease of $8.9 million as compared to $14.9 million in the fiscal 2004 period. The decline is attributable to those factors discussed above. Decreases in operating income within the branded frozen, branded dry, and non-branded segments were $6.4 million, $2.1 million, and $0.4 million, respectively. Significant variances are highlighted below in the "Segment Review". 20 Interest Expense: Interest expense for the fiscal 2005 period was $6.4 million compared to $10.2 million in the fiscal 2004 period. This decline is primarily the result of the Company's repayment of $150.0 million of its 11 7/8 percent Senior Subordinated Notes on November 24, 2003. Tax Provision: The benefit for income taxes in the first quarter of fiscal 2005 was $0.2 million compared to a provision for income taxes of $1.9 million in the fiscal 2004 period. The variance in these amounts is impacted by the variance in earnings before tax. Net (Loss)/Income: Net loss for the fiscal 2005 period was $0.2 million compared to net income of $2.9 million in the fiscal 2004 period. The variance is the result of the factors outlined above. Segment Review A detailed accounting of the significant reasons for changes in net sales and operating income by segment is outlined below. Branded Frozen: Branded frozen net sales were $63.1 million in the fiscal 2005 period, a net decline of $3.6 million or 5.4 percent as compared to net sales of $66.7 million for the fiscal 2004 period. As outlined above, during the first quarter of the fiscal 2005 period, the Company implemented a price increase to mitigate the impact of industry wide cost increases. Management believes its pricing action, along with increased merchandising support, negatively impacted net sales during the quarter. Subsequent to the Company's action regarding pricing, other competitors have followed with similar pricing actions. During the fiscal 2005 period, the Company also continued to invest in revitalizing its Voila! product category. Improvements in the Voila! product formulation and increased consumer programs drove volume increases of over 25% versus the prior year. The Company tracks retail sales in many of the categories in which it competes using data from Information Resources, Inc. ("IRI"). IRI data is limited, however, as IRI does not capture sales at several of the Company's customers including Wal-Mart, Costco, and others. IRI also does not track non-branded or store brand retail sales by the manufacturer. According to IRI, the frozen vegetable category on a unit basis declined 5.0 percent for the 12-week period ending September 12, 2004. The Company's branded market share on a unit basis at September 12, 2004 was 16.8 percent compared to 17.7 percent at September 14, 2003. The bagged meal category for the 12-week period ending September 12, 2004 declined 4.0 percent on a unit basis. Market share on a unit basis for the Company's Birds Eye Voila! skillet meal product offering for the 12-week period ending September 12, 2004 was 23.6 percent compared to 17.7 percent for the 12-week period ending September 14, 2003. Branded frozen operating income declined from prior year $6.4 million from $10.6 million in the fiscal 2004 period to $4.2 million in the fiscal 2005 period. This decline was primarily the result of increased spending to revitalize the Birds Eye Voila! product category. In addition, earnings were negatively impacted in the first quarter by volume declines, significant product cost increases, and the investment in new packaging for the Birds Eye product line. Branded Dry: Branded dry net sales were $45.6 million for the fiscal 2005 period, a decline of $3.5 million or 7.1 percent as compared to net sales of $49.1 million for the fiscal 2004 period. Declines resulted from the timing of seasonal orders. A shift in various customer orders for holiday activity to October in the current year versus September in the prior year negatively impacted net sales. Operating income for the branded dry segment was $6.9 million for the fiscal 2005 period, a decline of $2.1 million or 23.3 percent as compared to $9.0 million for the fiscal 2004 period. This decline was primarily impacted by both the timing of seasonal orders outlined above and industry wide increases in product cost. The Company's branded dry product line has experienced cost increases in meat, edible oils, steel and commodities. Management is continually evaluating opportunities to mitigate these cost increases while maintaining volumes. Non-branded: Non-branded net sales were $68.6 million for the fiscal 2005 period, a decline of $5.3 million or 7.2 percent as compared to $73.9 million in the fiscal 2004 period. This decline is primarily attributable to a reduction in industrial sales. The reduced crop intake in the fiscal 2005 period has resulted in less inventory available to be sold in this channel. In addition, the Company has experienced a decline in net sales for several co-pack agreements. Industrial and co-pack sales typically yield lower margins than the Company's other product lines, however, provide for greater utilization of manufacturing facilities. Non-branded operating income showed a loss of $5.1 million for the fiscal 2005 period, a $0.4 million decline as compared to an operating loss of $4.7 million for the fiscal 2004 period. As highlighted above, IRI data does not track the Company's non-branded or store brand retail sales. Including management's estimate of the Company's share of the store brand market, the Company believes its overall market share on a unit basis in the frozen vegetable category (excluding frozen soups) for the 12-week period ending September 12, 2004 was 29.2 percent compared to 29.8 percent for the 12-week period ending September 14, 2003. 21 LIQUIDITY AND CAPITAL RESOURCES The following discussion highlights the major variances in the Unaudited Consolidated Statement of Cash Flows for the three months ended September 25, 2004 compared to the three months ended September 27, 2003. Given the seasonal nature of the Company's crop intake for use in year-round production of its products, Birds Eye Foods generates significant negative cash flow from operations in the first quarter of each fiscal year. Net cash used in operating activities for the fiscal 2005 period was $60.6 million as compared to net cash used in operating activities of $29.7 million for the fiscal 2004 period, representing an increase of $30.9 million. Net inventories (including prepaid manufacturing expense) increased $74.3 million in the current period as compared with an increase of $63.5 million during the prior year period. Cost increases experienced throughout the period have raised the carrying value of inventory. In addition, the timing of payments for purchases made during the fourth quarter of fiscal 2004 also negatively impacted cash flow from operations by approximately $17.7 million. Net cash used in investing activities for the fiscal 2005 period was $77.7 million, as compared to net cash used in investing activities of $5.1 million for the fiscal 2004 period. On September 23, 2004, the Company completed the acquisition of California & Washington Company ("C&W"), which accounted for the majority of cash used in investing activities for the fiscal 2005 period. The acquisition of C&W was financed by borrowing on the Revolving Credit Facility. Capital expenditures were $4.9 million for the 2005 period compared to $7.6 million in the prior year period. The decrease in capital expenditures is the result of the timing for various initiatives. Net cash provided by financing activities for the fiscal 2005 period was $69.6 million, as compared to net cash used in financing activities of $18.3 million in the 2004 period, representing a change in cash inflows of $87.9 million. This change was primarily driven by net proceeds from the Revolving Credit Facility to finance the acquisition of California & Washington Company. The Company anticipates future borrowings on its Revolving Credit Facility to be in the ordinary course of business. In addition, the payments on long-term debt for the fiscal 2004 period included a $13.1 million "excess cash flow" payment as required by the Company's Senior Credit Agreement. No such payment was required in September 2004. See NOTE 7 to the "Notes to Consolidated Financial Statements". Senior Credit Facility: In connection with the Transaction, Birds Eye Foods and certain of its subsidiaries entered into a senior secured credit facility (the "Senior Credit Facility") in the amount of $470.0 million with a syndicate of banks and other lenders arranged and managed by JPMorgan Chase Bank ("JPMorgan Chase Bank"), as administrative and collateral agent. The Senior Credit Facility is comprised of (i) a $200.0 million senior secured revolving credit facility (the "Revolving Credit Facility") and (ii) a $270.0 million senior secured B term loan (the "Term Loan Facility"). The Revolving Credit Facility matures in August 2007, and allows up to $40.0 million to be available in the form of letters of credit. As of September 25, 2004, (i) there were $74.5 million of cash borrowings outstanding under the Revolving Credit Facility, (ii) there were $24.2 million in letters of credit outstanding, and therefore (iii) availability under the Revolving Credit Facility was $101.3 million. The Company believes that the cash flow generated by operations and the amounts available under the Revolving Credit Facility provide adequate liquidity to fund working capital needs and expenditures. The Senior Credit Facility bears interest at the Company's option, at a base rate or LIBOR plus, in each case, an applicable percentage. The appropriate applicable percentage corresponds to the Company's Consolidated Leverage Ratio, as defined by the senior credit agreement ("Senior Credit Facility"), and is adjusted quarterly based on the calculation of the Consolidated Leverage Ratio. As of September 25, 2004, the Senior Credit Facility bears interest in the case of base rate loans at the Base Rate plus (i) 1.00 percent for loans under the Revolving Credit Facility, and (ii) 1.75 percent for loans under the Term Loan Facility or in the case of LIBOR loans at LIBOR plus (i) 2.00 percent for loans under the Revolving Credit Facility and (ii) 2.75 percent for loans under the Term Loan Facility. The incremental percentages presented vary based upon the Company's Consolidated Leverage Ratio, as defined. As of September 25, 2004, the interest rate under the Term Loan Facility was approximately 4.42 percent on LIBOR loans. The initial unused commitment fee is 0.375 percent on the daily average unused commitment under the Revolving Credit Facility and also varies based on the Company's Consolidated Leverage Ratio. As of September 25, 2004, the interest rate under the Revolving Credit Facility was approximately 3.84 percent on LIBOR loans. The Term Loan Facility requires payments in quarterly installments in the amount of $675,000 until September 30, 2007. Beginning December 31, 2007, the quarterly payments are $64,125,000. The Term Loan Facility matures in August 2008 upon which the balance will be due. The Term Loan Facility is also subject to mandatory prepayments under various scenarios as defined in the Senior Credit Agreement. Provisions of the Senior Credit Agreement require annual payments, within 105 days after the end of each fiscal year, in the amount of "excess cash flow" be utilized to prepay the commitment at an applicable percentage that corresponds to the Company's Consolidated Leverage Ratio. There was no "excess cash flow" for the year ended June 26, 2004 required to be paid under the Term Loan Facility. 22 The Senior Credit Facility contains customary covenants and restrictions on the Company's activities, including but not limited to: (i) limitations on the incurrence of indebtedness; (ii) limitations on sale-leaseback transactions, liens, investments, loans, advances, guarantees, acquisitions, asset sales, and certain hedging agreements; and (iii) limitations on transactions with affiliates and other distributions. The Senior Credit Facility also contains financial covenants requiring the Company to maintain a maximum average debt to EBITDA ratio, a maximum average senior debt to EBITDA ratio, and a minimum EBITDA to interest expense ratio. As of September 25, 2004, the Company was in compliance with all covenants, restrictions, and requirements under the terms of the Senior Credit Facility. The Company's obligations under the Senior Credit Facility are collateralized by a first priority lien on: (i) substantially all existing or after-acquired assets, tangible or intangible, (ii) the capital stock of Birds Eye foods and its domestic subsidiaries, and (iii) 65% of the voting capital stock and 100% of the non-voting capital stock in certain foreign subsidiaries. The Company's obligations under the Senior Credit Facility are guaranteed by Birds Eye Holdings Inc. and certain of the Company's subsidiaries. See NOTE 10 to the "Notes to Consolidated Financial Statements" included herein. Senior Subordinated Notes - 11 7/8 Percent (due 2008): In fiscal 1999, the Company issued Senior Subordinated Notes (the "Notes") for $200.0 million aggregate principal amount due November 1, 2008. Interest on the Notes accrues at the rate of 11 7/8 percent per annum and is payable semiannually in arrears on May 1 and November 1. On November 24, 2003, the Company repaid $150.0 million of the Notes. The Notes represent general unsecured obligations of the Company, subordinated in right of payment to certain other debt obligations of the Company (including the Company's obligations under the Senior Credit Facility). The Notes are guaranteed by Pro-Fac and certain of the Company's subsidiaries. The Notes contain customary covenants and restrictions on the Company's ability to engage in certain activities, including, but not limited to: (i) limitations on the incurrence of indebtedness and liens; (ii) limitations on consolidations, mergers, sales of assets, transactions with affiliates; and (iii) limitations on dividends and other distributions. The Company is in compliance with all covenants, restrictions, and requirements under the Notes. The Company, principal shareholders, or their affiliates may, from time-to-time, enter the market to purchase or sell Senior Subordinated Notes in compliance with any applicable securities laws. 23 CRITICAL ACCOUNTING POLICIES The preparation of the Company's consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts. The estimates and assumptions are evaluated on a regular basis and are based on historical experience and on various other factors that are believed to be reasonable. Estimates and assumptions include, but are not limited to: trade accounts receivable, inventories, self-insurance programs, promotional activities, and identifiable intangible assets, long-lived assets, and goodwill. The following are considered to be the Company's more critical estimates and assumptions used in the preparation of the consolidated financial statements, although not inclusive. Trade Accounts Receivable: The Company accounts for trade receivables at outstanding billed amounts, net of allowances for doubtful accounts. The Company estimates its allowance for doubtful accounts as a percentage of receivables overdue. Also included in the allowance in their entirety are those accounts that have filed for bankruptcy, been sent to collections, and any other accounts management believes are not collectible based on historical losses. The Company periodically reviews the accounts included in the allowance to determine those to be written off. Generally, after a period of one year, or through legal counsel's advice, accounts are written off. It is not Company policy to accrue interest on past due accounts. Inventories: Under the first-in, first-out ("FIFO") method, the cost of items sold is based upon the cost of the first such items produced. As a result, the last such items produced remain in inventory and the cost of these items are used to reflect ending inventory. The Company prices its inventory at the lower of cost or market value on the FIFO method. A reserve is established for the estimated aged surplus, spoiled or damaged products, and discontinued inventory items and components. The amount of the reserve is determined by analyzing inventory composition, expected usage, historical and projected sales information, and other factors. Changes in sales volume due to unexpected economic or competitive conditions are among the factors that could result in materially different amounts for this item. Self-insurance Programs: The Company records estimates for certain health and welfare and workers' compensation costs that are provided for under self-insured programs. Should a greater amount of claims occur compared to what was estimated or costs of medical care increase beyond what was anticipated, reserves recorded may not be sufficient and additional costs could be incurred. Promotional Activities: The Company's promotional activities are conducted either through the retail trade channel or directly with consumers and involve in-store displays; feature price discounts on the Company's products; consumer coupons; and similar activities. The costs of these activities are generally recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management's judgment regarding the volume of promotional offers that will be redeemed by either the retail trade channel or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. Differences between estimated expense and actual redemptions are normally insignificant and recognized as a change in management estimate in a subsequent period. However, the likelihood exists of materially different reported results if different assumptions or conditions were to prevail. Identifiable Intangible Assets, Long-Lived Assets, and Goodwill: The Company assesses the carrying value of its identifiable intangible assets, long-lived assets, and goodwill whenever events or changes in circumstances indicate that the carrying amount of the underlying asset may not be recoverable. Certain factors which may occur and indicate that an impairment exists include, but are not limited to: significant under performance relative to historical or projected future operating results; significant changes in the manner of the Company's use of the underlying assets; and significant adverse industry or market trends. In the event that the carrying values of assets are determined to be unrecoverable, the Company would record an adjustment to the respective carrying value. 24 OTHER MATTERS The vegetable and fruit portions of the business can be positively or negatively affected by weather conditions nationally and the resulting impact on crop yields. Favorable weather conditions can produce high crop yields and an oversupply situation. This results in depressed selling prices and reduced profitability on the inventory produced from that year's crops. Excessive rain or drought conditions can produce low crop yields and a shortage situation. This typically results in higher selling prices and increased profitability. While the national supply situation controls the pricing, the supply can differ regionally because of variations in weather. The cherry crop from both the 2002 and 2003 growing seasons was adversely affected by weather conditions in the prime growing areas in Michigan. Both raw and frozen cherry costs have, therefore, increased significantly from historic levels. To offset the cherry cost increase, management initiated both pricing actions and changes in promotional programs across all of its cherry items. Early indications from the 2004 growing season indicate adequate crop supply, however, costs have not yet been finalized and are anticipated to be higher than historical averages. Additionally, for the 2004 crop season, a combination of higher than normal precipitation levels and below normal temperatures in the Northeast and Midwest regions has reduced planned crop intake. This reduction in crop intake has impacted production costs and efficiency. Management believes product cost increases will impact operating results throughout fiscal 2005. Management continues, however, to actively pursue cost reductions to mitigate crop-related cost increases. Effective June 28, 2004 the Company initiated a price increase of 5 to 7 percent on most product categories. The price increase was a direct result of increases across commodities, ingredients, packaging and other production costs. MARKET AND INDUSTRY DATA Unless otherwise stated in this report, industry and market share data used throughout this Form 10-Q Equivalent was derived from industry sources believed by the Company to be reliable including information provided by Information Resources, Inc. Consultants' reports and industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. The Company has not independently verified such data and makes no representation to its accuracy. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company, as a result of its operating and financing activities, is exposed to changes in foreign currency exchange rates and certain commodity prices, which may adversely affect its results of operations and financial position. In seeking to minimize the risks and/or costs associated with such activities, the Company has entered into derivative contracts. Certain of the Company's derivative financial instruments are reported in the Company's Annual Report on Form 10-K Equivalent for the year ended June 26, 2004. No material changes have occurred in these instruments which would require additional disclosure in answer to this item. ITEM 4. CONTROLS AND PROCEDURES. Birds Eye Foods management, with the participation of Birds Eye Foods Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of Birds Eye Foods disclosure controls and procedures (as defined in Rule 15d - 15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, Birds Eye Foods Principal Executive and Principal Financial Officers concluded that Birds Eye Foods disclosure controls and procedures as of September 25, 2004 (the end of the period covered by this Report) have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by Birds Eye Foods in reports filed or submitted by it 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. There were no changes to Birds Eye Foods' internal control over financial reporting that occurred during the quarter ended September 25, 2004 that materially affected or are reasonably likely to materially affect Birds Eye Foods' internal control over financial reporting. 25 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Certain of our legal proceedings are reported in our Annual Report on Form 10-K Equivalent for the year ended June 26, 2004. Information about any material developments that may have occurred since June 26, 2004 is described in NOTE 11, "Other Matters - Legal Matters", under "Notes to Consolidated Financial Statements" in Part I, Item 1. of this Form 10-Q Equivalent and is incorporated herein by reference in answer to this item. ITEM 6. EXHIBITS. Exhibits

~~Three~~Exhibit ~~Months~~Number ~~Ended~~Description -------------- ------------------ ~~September 27, September 28, 2003 2002~~ ------------- -------------- ~~% of % of $ Total $ Total~~ ---- ----- ---- ----- ~~Branded frozen~~ 10.61 ~~69.3~~Second 7Amendment and Consent, dated as of October 19, 2004, to the Credit Agreement among Birds Eye Foods, Inc.1, 42Birds Eye Holdings, Inc.5, ~~Branded~~the ~~dry~~lenders 9and other agents from time to time party thereto, and JP Morgan Chase Bank (filed herewith).2 6031.1 ~~11.3~~Certification ~~67.7~~required ~~Non~~by Rule 13a -~~branded~~ 14(~~4.5~~a) ~~(29.4)~~of the Securities Exchange Act of 1934 of the Principal Executive Officer (~~1.7~~filed herewith). ~~(10~~31.2) ~~----~~Certification ~~-----~~required ~~----~~by Rule 13a -~~----~~ ~~Operating~~14(a) ~~income~~of ~~15.3~~the ~~100.0~~Securities ~~16.7~~Exchange ~~100.0~~Act ~~====~~of ~~=====~~1934 ~~====~~of ~~=====~~the Principal Financial Officer (filed herewith).

26 SIGNATURES The Company has duly caused this 10-Q Equivalent to be signed on its behalf by the undersigned, thereunto duly authorized. BIRDS EYE FOODS, INC. Date: November 8, 2004 By: /s/ Earl L. Powers -------------------------------------- EARL L. POWERS EXECUTIVE VICE PRESIDENT and CHIEF FINANCIAL OFFICER and SECRETARY (On Behalf of the Registrant and as Principal Financial Officer and Principal Accounting Officer) 27

Three Months Ended -------------------------------- September 27, September 28, 2003 2002 ------------- -------------- % of % of $ Total $ Total ---- ----- ---- ----- Branded frozen 12.5 58.7 9.4 39.0 Branded dry 10.2 47.9 12.3 51.0 Non-branded (1.4) (6.6) 2.4 10.0 ---- ----- ---- ----- Continuing segment EBITDA 21.3 100.0 24.1 100.0 ===== ===== Reconciliation of EBITDA to net income: Depreciation and amortization (6.0) (7.4) ---- ---- Operating income 15.3 16.7 Interest expense (10.5) (13.7) Tax provision (1.9) (1.2) Discontinued operations, net of tax 0.0 (0.2) ---- ---- Net income 2.9 1.6 ==== ====

Payments Due Within ---------------------------------------------------------------------- Over 5 Contractual Obligations 1 Year 2 Years 3 Years 4 Years 5 Years Years Total ----------------------- ------ ------- ------- ------- ------- ------ ------ Term Loan Facility $ 2.7 $ 2.7 $ 2.7 $ 2.7 $193.1 $ 51.0 $254.9 Senior Subordinated Notes - 11 7/8 Percent(1) 0.0 0.0 0.0 0.0 0.0 200.0 200.0 Obligations under capital leases 0.9 0.9 0.8 0.3 0.0 0.0 2.9 Operating leases 5.6 4.8 3.8 2.6 2.4 6.7 25.9 Termination Agreement 10.0 10.0 10.0 6.0 0.0 0.0 36.0 Other long-term debt 3.5 0.0 0.0 0.0 0.0 0.0 3.5 ----- ----- ----- ----- ------ ------ ------ $22.7 $18.4 $17.3 $11.6 $195.5 $257.7 $523.2 ===== ===== ===== ===== ====== ====== ======

Foreign Currency Forward Outstanding ------------------- Contract amounts 111 million Mexican pesos Weighted average settlement exchange rate 8.5%

Swap Corrugated Outstanding (Unbleached Kraftliner) ------------------------ Notional amount 18,000 short tons Average paid rate $440/short ton Average receive rate Floating rate/short ton - $426 Maturities through June 2004

Swaps Polyethylene Outstanding ------------------------ Notional amount 3,375,000 pounds Average paid rate $0.483/pound Average receive rate Floating rate $0.479/pound Maturities through June 2004

Exhibit Number Description -------------- ------------------------------------------------------------------------------------ 10.1 First Amendment and Consent, dated as of September 17, 2003, to the Credit Agreement among Birds Eye Foods, Inc., Birds Eye Holdings, Inc., the lenders and other agents from time to time party thereto, and JP Morgan Chase Bank (filed herewith). 31.1 Certification required by Rule 13a - 14(a) of the Securities Exchange Act of 1934 of the Principal Executive Officer (filed herewith). 31.2 Certification required by Rule 13a - 14(a) of the Securities Exchange Act of 1934 of the Principal Financial Officer (filed herewith).

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