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INDEX TO FINANCIAL STATEMENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
For the fiscal year ended December 31, 2011
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-32596

REDDY ICE HOLDINGS, INC.
REDDY ICE CORPORATION
(Exact name of registrant as specified in its charter)


DELAWARE NEVADA (State or other jurisdiction of incorporation or organization)		56-2381368 75-2244985 (IRS Employer Identification No.)
8750 North Central Expressway, Suite 1800 DALLAS, TEXAS 75231 (Address of principal executive offices) (214) 526-6740 (Registrant's telephone number, including area code)

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

Title of each class		Name of each exchange on which registered
Common Stock, par value $0.01 per share		New York Stock Exchange

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

Common ~~Securities~~Stock, ~~registered~~par ~~pursuant~~value to$0.01 ~~Section 12(g)~~per ~~of the Act: None.~~share (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


	Reddy Ice Holdings, Inc.		Yes o No ý
	Reddy Ice Corporation		Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.


	Reddy Ice Holdings, Inc.		Yes o No ý
	Reddy Ice Corporation		Yes o No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.


	Reddy Ice Holdings, Inc.		Yes ý No o
	Reddy Ice Corporation		Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


	Reddy Ice Holdings, Inc.		Yes o No o *
	Reddy Ice Corporation		Yes o No o *

* Registrant is not subject to the requirements of Rule 405 of Regulation S-T at this time.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.


	Reddy Ice Holdings, Inc.		o
	Reddy Ice Corporation		ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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


	Reddy Ice Holdings, Inc.		Yes o No ý
	Reddy Ice Corporation		Yes o No ý

The aggregate market value of common stock held by non-affiliates as of June 30, ~~2010~~2011 was approximately $7465.07 million, using the closing price per share of $32.2381, as reported on the New York Stock Exchange as of such date. The number of shares of registrant's common stock outstanding as of March 2830, ~~2011~~2012 was 23,~~311~~982,~~456~~010.

DOCUMENTS INCORPORATED BY REFERENCE:

Part III incorporates certain information by reference to either (x) the Proxy Statement for the ~~2010~~ 2011 Annual Meeting of Stockholders or (y) an amendment to this Form 10-K, in either case to be filed by the date which is 120 days following the end of the Companies' fiscal year

~~REDDY~~Table ~~ICE~~of ~~HOLDINGS, INC. ANNUAL~~Contents ~~REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2010~~

REDDY ICE HOLDINGS, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2011

TABLE OF CONTENTS

				Page	~~Page~~
PART I				3	3
ITEM 1.	~~ITEM 1.~~	Business	~~Business~~	3	3
ITEM 1A.	~~ITEM 1A.~~	Risk Factors	~~Risk Factors~~	21	15
ITEM 1B.	~~ITEM 1B.~~	Unresolved Staff Comments	~~Unresolved Staff Comments~~	34	25
ITEM 2.	~~ITEM 2.~~	Properties	~~Properties~~	34	26
ITEM 3.	~~ITEM 3.~~	Legal Proceedings	~~Legal Proceedings~~	35	27
ITEM 4.	~~ITEM 4.~~	Mine Safety Disclosures	~~Removed and Reserved~~	38	30
PART II				39	31
ITEM 5.	~~ITEM 5.~~	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	~~Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	39	31
ITEM 6.	~~ITEM 6.~~	Selected Financial Data	~~Selected Financial Data~~	41	33
ITEM 7.	~~ITEM 7.~~	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~	43	35
ITEM 7A.	~~ITEM 7A.~~	Quantitative and Qualitative Disclosures About Market Risk	~~Quantitative and Qualitative Disclosures About Market Risk~~	69	57
ITEM 8.	~~ITEM 8.~~	Financial Statements and Supplementary Data	~~Financial Statements and Supplementary Data~~	69	57
ITEM 9.	~~ITEM 9.~~	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~	69	57
ITEM 9A.	~~ITEM 9A.~~	Controls and Procedures	~~Controls and Procedures~~	69	57
ITEM 9B.	~~ITEM 9B.~~	Other Information	~~Other Information~~	71	59
PART III				72	59
ITEM 10.	~~ITEM 10.~~	Directors, Executive Officers and Corporate Governance	~~Directors, Executive Officers and Corporate Governance~~	72	59
ITEM 11.	~~ITEM 11.~~	Executive Compensation	~~Executive Compensation~~	72	59
ITEM 12.	~~ITEM 12.~~	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~	72	59
ITEM 13.	~~ITEM 13.~~	Certain Relationships and Related Transactions and Director Independence	~~Certain Relationships and Related Transactions and Director Independence~~	72	59
ITEM 14.	~~ITEM 14.~~	Principal Accountant Fees and Services	~~Principal Accountant Fees and Services~~	72	59
PART IV				73	60
ITEM 15.	~~ITEM 15.~~	Exhibits and Financial Statement Schedules	~~Exhibits and Financial Statement Schedules~~	73	60
SIGNATURES				77	64

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UNCERTAINTY OF FORWARD LOOKING STATEMENTS AND INFORMATION

Other than statements of historical facts, statements made in this Form 10-K, statements made by us in periodic press releases, oral statements made by our management to analysts and stockholders and statements made in the course of presentations about our Company constitute "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We believe the expectations reflected in such forward-looking statements are accurate. However, we cannot assure you that such expectations will occur. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results expressed or implied by the forward-looking statements. Factors you should consider that could cause these differences are:

•: general economic trends and seasonality;
•: weather conditions;
•: the ability of our subsidiary to make distributions to us in amounts sufficient to service our debt and pay our taxes;
•: our substantial leverage and ability to service our debt;
•: our ability to complete the contemplated restructuring transactions;
•: the restrictive covenants and financial covenants under our indebtedness;
•: the availability of capital sources;
•: fluctuations in our operating costs, including in the prices of electricity, fuel, polyethylene and other required expenses;
•: competitive practices in the industry in which we compete;
•: changes in labor conditions;
•: our capital expenditure requirements;
•: the risks associated with acquisitions and the failure to integrate acquired businesses;
•: technological changes and innovations;
•: the costs and effects of legal and administrative proceedings, settlements, investigations and claims;
•: legislative or regulatory requirements; and
•: all the other factors described herein under Item 1A.

You should not unduly rely on these forward-looking statements as they speak only as of the date of this report. Except as required by law, we are not obligated to publicly release any revisions to these forward looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events. Important factors that could cause our actual results to differ materially from our expectations are discussed elsewhere in this report.

Except as otherwise noted, there are no material differences between the consolidated balances presented herein and the balances of Reddy Ice Corporation. References to "Reddy Holdings" refer to Reddy Ice Holdings, Inc.; references to "Reddy Corp" refer to Reddy Ice Corporation.

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PART I

Due to deterioration in our business related principally to price declines driven by industry competition across our markets, and coupled with broader economic instability and rising commodity prices, we experienced significant net losses in 2011 and 2010. Our financial results are also burdened by high interest costs resulting from our highly leveraged capital structure. These factors and uncertainty in our ability to generate sufficient liquidity to meet our future obligations in a timely manner have caused management to conclude that there is substantial doubt regarding our ability to continue as a going concern.

In response to these factors we began to explore alternatives to address our capital structure. In recent months these efforts have accelerated, with an informal committee of the largest holders of our existing first and second lien notes negotiating the terms of a restructuring of our debt obligations (the "Restructuring"). To effect the Restructuring and related transactions as described throughout this document we intend to commence the solicitation of acceptances with respect to a plan of reorganization (the "Plan"). Shortly after commencing such solicitation, Reddy Ice Holdings, Inc. and Reddy Ice Corporation intend to file voluntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code (the "Bankruptcy Cases") in the United States Bankruptcy Court for the Northern District of Texas (the "Bankruptcy Court").

The information included herein should be evaluated in that context. See Item 1A, "Risk Factors", and Note 1 to our audited financial statements under Item 8, included herein, for additional information.

ITEM 1. Business

BUSINESS

Overview

We are the largest manufacturer and distributor of packaged ice in the United States. We serve a variety of customers in 34 states and the District of Columbia under the Reddy Ice® brand name. Our principal product is ice packaged in 4 to 50 pound bags, which we sell to a highly diversified customer base, including supermarkets, mass merchants and convenience stores. For the year ended December 31, ~~2010~~2011, we sold approximately 1.7 million tons of ice. Our products are primarily sold throughout the southern United States (the "Sun Belt"), one of the most attractive regions in the country for packaged ice sales due to warm weather, extended peak selling seasons and historically favorable population growth patterns. NoFor ~~other~~the ~~manufacturer~~year ~~and~~ended ~~distributor~~December 31, of2011, ~~packaged~~we ~~ice~~had inrevenues ~~the~~of ~~United~~$328.5 million ~~States~~and ~~has~~a ~~the~~net ~~geographic~~loss ~~presence,~~of ~~infrastructure~~$69.5 million. orOver ~~capacity~~the ~~necessary~~last tothree ~~meet~~years, ~~the~~our ~~multi-state~~business ~~demands~~and ofthe ~~customers~~ice industry in ~~our~~general ~~markets.~~has ~~Our~~been ~~business~~adversely isimpacted ~~characterized~~ by ~~attractive~~macroeconomic ~~margins~~factors ~~and~~such ~~modest~~as ~~annual~~reduced ~~maintenance~~consumer ~~capital expenditure requirements~~demand, ~~which~~fluctuating ~~generate~~and ~~strong~~generally ~~free~~higher ~~cash~~commodity ~~flow.~~prices ~~For~~and the ~~year ended~~reduced ~~December 31,~~availability ~~2010, we had revenues~~ of ~~$315~~ credit.~~5 million.~~

We market our ice products to satisfy a broad range of customers, primarily under the Reddy Ice brand name. We produce ice in cube, half-moon, cylindrical and crushed forms (collectively referred to as "cubed ice") as well as block forms. Our primary ice product is cubed ice packaged in ten pound bags, which we sell principally to convenience stores and supermarkets. We also sell cubed ice in assorted bag sizes ranging from 16 to 50 pounds to restaurants, bars, sporting and other special events, airlines, vendors, caterers, and public and private disaster relief organizations and block ice in 10, 25 and 300 pound sizes to commercial, agricultural and industrial users. The majority of our sales are direct to supermarket chains, convenience stores, mass merchants and other commercial customers. In addition, a portion of our products is sold through distributors who deliver ice to our customers on our behalf and who resell ice to their own customers. We also contract with ice manufacturers outside our geographic footprint to produce and deliver ice to our customers on our behalf.

We have built a strong customer base by providing a high level of service and quality at competitive prices utilizing our extensive network of ice manufacturing plants, distribution centers and our proprietary in-store bagging equipment ("ISB"), which we call The Ice Factory®. Our Ice Factory machines are located in high volume locations and produce, package and store ice through an automated, self-contained process that significantly reduces our distribution and delivery costs. We have a diverse customer base and long-standing relationships with our customers across all major retail channels as evidenced by our high retention rates with prominent supermarkets, mass merchants, value stores and convenience stores such as Circle-K, Dollar General, ExxonMobil, Food Lion, Kroger, Safeway, 7-Eleven, SuperValu and Wal-Mart. In addition, we are focused on expanding our non-retail sales channels, including sales to construction, airline, sporting and other special events and agricultural customers. Our largest customer, Wal-Mart and Sam's Club on a combined basis, accounted for approximately 14% of our revenue in each of 2010 and 2009. Most of our major customers, including virtually all of our top twenty retail ice customers in terms of revenues, have purchased ice from us and our predecessor companies for over a decade. Within our markets, we supply substantially all of the packaged ice to most of our top twenty retail ice customers. The percentages both of our total revenues derived from and also our volume sold to national and regional convenience and grocery store chains have grown over the last several years as each of these retail channels has consolidated. We have benefited from supplying these national and regional retailers as many of these customers have grown at rates in excess of industry averages.

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AtWe ~~March 25~~have built a strong customer base by providing a high level of service and quality at competitive prices utilizing our extensive network of ice manufacturing plants, ~~2011~~distribution centers and our proprietary in-store bagging equipment ("ISB"), which we ~~owned~~call orThe ~~operated~~Ice 58Factory®. Our Ice Factory machines are located in high volume locations and produce, package and store ice ~~manufacturing~~through ~~facilities~~an automated, 72self-contained process that significantly reduces our distribution ~~centers~~and delivery costs. We have a diverse customer base and long-standing ~~approximately~~relationships 3with our customers across all major retail channels as evidenced by our high retention rates with prominent supermarkets,~~500~~ ~~ISB~~mass ~~machines.~~merchants, Asvalue ofstores ~~the~~and convenience ~~same~~stores ~~date~~such as Circle-K, Dollar General, ExxonMobil, Food Lion, Kroger, Safeway, 7-Eleven, SuperValu and Wal-Mart. In addition, we ~~had~~are anfocused ~~aggregate~~on ~~daily~~expanding our non-retail sales channels, including sales to construction, airline, sporting and other special events and agricultural customers. Our largest customer, Wal-Mart and Sam's Club on a combined basis, accounted for approximately 14% of our revenue in each of 2011 and 2010. Most of our major customers, including virtually all of our top twenty retail ice ~~manufacturing~~customers in ~~capacity~~terms of ~~approximately~~revenues, 18have purchased ice from us and our predecessor companies for over a decade. Within our markets,~~000~~ ~~tons~~we supply substantially all of the packaged ice to most of our top twenty retail ice customers. The percentages both of our total revenues derived from and also our volume sold to national and regional convenience and grocery store chains have grown over the last several years as each of these retail channels has consolidated. We have benefited from supplying these national and regional retailers as many of these customers have grown at rates in excess of industry averages.

At March 30, 2012, we owned or operated 58 ice manufacturing facilities, 77 distribution centers and approximately 3,500 ISB machines. As of the same date, we had an aggregate daily ice manufacturing capacity of approximately 17,000 tons.

Industry Overview

We estimate that the annual wholesale market demand for packaged ice in the United States and Canada, including packaged ice resold through retail channels and packaged ice utilized in non-retail applications, is approximately $2.3 billion. This market is serviced by manufacturers such as ourselves, ice vendors and in-house production, primarily by small retail operations and, to a lesser extent, by large retailers. The packaged ice industry is highly ~~fragmented~~competitive and ~~includes~~highly ~~us,~~fragmented. ~~one~~In ~~other multi-regional~~the ~~operator~~United States, ~~one~~the ~~multi-state~~packaged ~~operator~~ice ~~and~~industry ~~numerous~~includes ~~local~~us, ~~and~~two other multi-regional ~~companies~~operators, hundreds of ~~varying~~local ~~size~~operators and ~~resources,~~numerous operators ~~with~~of ~~most~~ISB ~~ice~~and ~~manufacturers~~vending ~~having annual revenues of less than $2 million~~technology.

Traditional ice manufacturers produce and distribute packaged ice from a centrally located facility through direct store delivery ("DSD"). As a result of high transportation costs, producers are typically limited to servicing customers within approximately 100 miles from the point of production, subject to fuel costs, route density and other factors. Packaged ice suppliers compete based primarily on service, quality and price, with success dependent upon prompt and reliable delivery during peak seasonal months, an efficient manufacturing and distribution system, high-density customer distribution routes within a region and high customer concentration in a market area. Each customer location typically carries one brand of ice provided by a single supplier.

In addition to traditional manufacturing and distribution, the packaged ice market is served by a range of on-premises manufacturing solutions, including The Ice Factory, our automated ISB system, ice vending machines and manufacturing and bagging operations within a store location. We expect technological innovation in on-premises manufacturing solutions to continue and believe technologically sophisticated solutions will continue to play a larger role within the packaged ice industry.

The packaged ice industry is highly seasonal, characterized by peak demand during the warmer months of May through September, with an extended peak selling season in the southern United States. We believe volume growth in the packaged ice industry generally tracks population growth, thus favoring geographic markets with faster population growth. Demand within each geographic market can also be affected by weather conditions, with cool or rainy weather negatively impacting ice purchases, as well as by macroeconomic factors, including changes in the level of recreational and construction activity.

Business Strategy

Our vision is to be the "Total Ice Solution" for our customers. The key components of our strategy for achieving this goal are as follows:

Achieve Operational Efficiencies. Plant operations and distribution represent the largest portion of our annual expenses. We continue to review our manufacturing processes and are currently reducing our operating costs by deploying best practices throughout our manufacturing operations and making targeted expenditures for improving plant efficiency, including investments in automation technologies. In addition, we have identified opportunities for continued facility consolidations. In the last nine years, we have consolidated our ice manufacturing and distribution facilities, reducing the total number of facilities (including all acquired facilities) from 159 at December 31, 2001 to 121 at December 31, 2010. Despite this reduction in the number of manufacturing plants, we have increased our overall capacity by redeploying equipment from closed facilities and investing in new equipment. As we introduce additional automation technologies in our production facilities, the output of those facilities increases, which provides additional opportunities for plant network optimization and facility rationalization.

We believe our distribution and logistics operations also offer significant opportunities for operational improvement. We have developed operational protocols and programs to reduce the cost of

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~~operating~~also ~~our~~be ~~distribution~~affected ~~fleet.~~by Inweather ~~addition~~conditions, wewith ~~have~~cool ~~made,~~or ~~and~~rainy ~~will~~weather ~~continue~~negatively toimpacting ~~make,~~ice ~~investments in labor- and time-saving equipment and technologies for distribution route optimization. For example~~purchases, inas ~~recent~~well ~~years,~~as weby ~~have~~macroeconomic ~~deployed handheld technology devices for streamlined routing~~factors, ~~invoicing~~including ~~and~~changes ~~other functionality throughout our distribution fleet. Developments~~ in ~~handheld~~ ~~device~~the ~~technology~~level and functionality now offer additional opportunities for efficiency improvements. We are currently engaging in a process to upgrade our fixed assets system which will enable real time tracking and management of ~~our~~recreational ~~ice merchandiser deployment, enhance controls,~~ and construction ~~pave the way for further efficiencies from capacity and routing optimization~~activity.

Business Strategy

Our vision is to be the "Total Ice Solution" for our customers. The key components of our strategy for achieving this goal are described below. Our ability to execute on certain components of these strategies will be dependent on our liquidity situation and the availability of capital.

Achieve Operational Efficiencies. Plant operations and distribution represent the largest portion of our annual expenses. We continue to review our manufacturing processes and are currently reducing our operating costs by deploying best practices throughout our manufacturing operations and making targeted expenditures for improving plant efficiency, including investments in automation technologies. In addition, we have identified opportunities for continued facility consolidations. In the last nine years, we have consolidated our ice manufacturing and distribution facilities, reducing the total number of facilities (including all acquired facilities) from 163 at December 31, 2001 to 135 at December 31, 2011. Despite this reduction in the number of manufacturing plants, we have increased our overall capacity by redeploying equipment from closed facilities and investing in new equipment. As we introduce additional automation technologies in our production facilities, the output of those facilities increases, which provides additional opportunities for plant network optimization and facility rationalization.

We believe our distribution and logistics operations also offer significant opportunities for operational improvement. We have developed operational protocols and programs to reduce the cost of operating our distribution fleet. In addition, we have made, and will continue to make, investments in labor- and time-saving equipment and technologies for distribution route optimization. For example, in recent years, we have deployed handheld technology devices for streamlined routing, invoicing and other functionality throughout our distribution fleet. Developments in handheld device technology and functionality now offer additional opportunities for efficiency improvements. We are currently in the final stages of implementing a new fixed assets system which will allow enhanced tracking and management of our ice merchandiser deployment, enhance controls, and pave the way for further efficiencies from capacity and routing optimization.

We are also pursuing opportunities to reduce costs through further centralization of certain administrative functions currently carried out in our facilities and the implementation of technology based administrative process improvements and improved staffing utilization. Extensive work is being done to re-engineer processes to identify and eliminate non-value-added activity and enhance efficiencies and productivity. These efficiencies are intended to improve working capital, standardize processes, streamline customer account management, facilitate scalability of the customer service function and enhance overall communications with employees, customers and vendors.

We ~~expect~~are totargeting ~~realize~~over ~~at least~~ $~~8.0~~5 million in incremental cost savings infrom ~~2011~~our as2012 aoperations ~~result~~efficiency ofinitiatives ~~our~~when ~~operational~~compared ~~efficiency~~with ~~initiatives~~2011 results achieved.

Grow DSD. We intend to achieve growth in our DSD business by addressing non-retail market opportunities, distributing through new retail channels and enhancing our distribution relationships with existing customers. We believe non-retail users of packaged ice, including agricultural, industrial, construction, airline and catering customers, represent a significant opportunity for revenue growth as our market share among these customers is low. We believe that our range of distribution and service options will allow us to effectively serve the diverse needs of these and other non-retail customers. We also believe there are opportunities for growth in retail channels, including the value channel, which have not historically sold packaged ice. We are able to customize our product offerings and distribution methods to align with the needs of end-users who shop at these retailers. We also believe there are opportunities for continued growth with our existing customers. We intend to capitalize on our long-standing customer relationships by growing with our large national and regional customers as they seek to increase their market share and consolidate the retail segments in which they operate. As the primary supplier in our regions to most of these customers, we are well positioned to share in our customers' growth. In addition there is an opportunity to capture incremental volume as these customers continue to reduce their supplier base in order to achieve efficiencies across the supply chain. We have also developed protocols to provide our customers with substantial quantities of emergency or backup ice in response to unexpected or unusual events, including natural disasters. Our proven ability to respond in extreme circumstances is critically important to our customers and strengthens our relationships with our customers and the populations they serve.

Expand ISB and On-Premise Supply. With an asset base of approximately 3,500 units, we are the leading provider of ISB's in the United States. We believe our proven ability to rapidly deploy substantial numbers of ISBs nationally is a key differentiator between our product and service offerings and our competitors. We will continue to use ISB technology as a means to efficiently service our customers' high-volume locations, reduce our cost to produce and deliver ice to certain locations, service customer locations we cannot economically service through our DSD business, and respond to customer and societal demands for enhanced environmental sustainability in our business. We are pursuing improvements to our existing ISB technology to reduce ISB operating costs and manufacturing costs of ISB equipment, improve ISB production capabilities and expand our ISB service offerings to include ice vending and other retail capabilities.

Expand Ice Machine Subscriptions. We have historically had a limited presence in the ice machine subscription market and have an equity investment in an innovative entrant in this market. An ice machine subscription is a unique value proposition offering ice as a service. It provides the customer

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~~with~~long-standing ~~installation~~customer ofrelationships anby ~~ice-making~~growing ~~machine, as well as maintenance and backup ice for a monthly subscription cost. In connection~~ with our ~~vision~~large tonational beand ~~the~~regional ~~"Total Ice Solution" for our~~ customers, weas ~~intend~~they toseek ~~expand our capability~~ to ~~place~~increase ~~commercial~~their ~~ice-makers~~market ~~under~~share ~~subscriptions to our customers~~ and toconsolidate ~~reach~~the ~~new~~retail ~~customers,~~segments ~~such~~in aswhich ~~restaurants, healthcare facilities and~~they ~~hotels,~~operate. ~~which~~As ~~have~~the ~~not~~primary ~~traditionally~~supplier ~~been~~in ~~served~~our byregions ~~the~~to ~~packaged~~most ~~ice~~of ~~industry.~~these ~~In total~~customers, we ~~estimate~~are ~~ice~~well ~~machine~~positioned ~~sales~~to ~~and~~share ~~leasing~~in ~~is a $1.0 billion market. Ice-makers are frequently used by~~ our ~~retail~~ customers' ingrowth ~~support~~and ofto ~~their~~pursue ~~food~~opportunities ~~merchandising~~to ~~operations.~~capture ~~For~~incremental ~~example,~~volume. aWe ~~supermarket may~~ have also andeveloped ~~ice~~protocols ~~machine in the back of the store~~ to provide ~~ice~~our ~~for~~customers ~~seafood displays~~with ~~and~~substantial ~~another~~quantities ~~on top~~ of ~~the~~emergency ~~fountain~~or ~~drink~~backup ~~dispenser~~ice in ~~the~~response ~~deli.~~to ~~These~~unexpected ~~ice~~or ~~machines~~unusual ~~are~~events, ~~separate~~including ~~from~~natural ~~the~~disasters. ~~packaged-ice~~Our ~~retailing~~proven ~~equipment~~ability ~~located~~to respond atin ~~the~~extreme ~~front~~circumstances ofis ~~the~~critically ~~store.~~important ~~By drawing~~to on our ~~expertise~~customers ~~in the purchase, installation, maintenance~~ and ~~backup~~strengthens ofour ~~ice-making~~relationships ~~equipment,~~with ~~we believe we can provide a value-added service to~~ our customers ~~both~~and at the ~~front end~~populations ~~and~~they ~~back end of their store operations~~serve.

~~Growth~~ Expand ~~Through~~ISB ~~Acquisitions~~and On-Premise Supply. ~~Acquisitions~~With ~~are~~ an ~~integral~~asset ~~component~~base of ~~our~~approximately ~~strategy~~3,500 ~~for~~units, ~~achieving~~we ~~our~~are ~~vision~~the leading provider of ~~being~~ISB's ~~the~~in ~~"Total~~the ~~Ice Solution~~United States." We believe ~~there~~our ~~are~~proven ~~opportunities~~ability ~~for~~to ~~growth~~rapidly ~~through~~deploy ~~the~~substantial ~~disciplined~~numbers ~~pursuit~~ of ~~acquisitions~~ISBs innationally ~~support~~is ofa ~~each~~key ofdifferentiator ~~the~~between ~~strategies~~our ~~described~~product ~~above.~~and Inservice ~~particular,~~offerings ~~the packaged ice industry~~ and ~~the~~our ~~ice machine subscription markets continue to be highly fragmented~~competitors. We will continue to ~~evaluate~~use ~~and~~ISB ~~pursue~~technology ~~strategic~~as ~~acquisitions,~~a ~~including~~means ~~acquisitions~~to ofefficiently ~~packaged~~service ~~ice manufacturers and ice machine leasing businesses in existing or adjacent geographic markets that enhance the density of~~ our ~~distribution~~customers' ~~routes,~~high-volume ~~provide capacity rationalization opportunities~~locations, ~~increase~~reduce our ~~market~~cost ~~penetration~~to inproduce ~~existing~~and ~~markets~~deliver orice ~~expand~~to ~~our~~certain ~~presence~~locations, inservice ~~contiguous~~customer ~~markets.~~locations ~~Also,~~ we cannot ~~regularly~~economically ~~evaluate~~service ~~new~~through ~~markets~~our ~~for~~DSD ~~expansion~~business, ~~opportunities.~~and ~~From~~respond ~~2003~~ to ~~2010,~~customer weand ~~acquired~~societal 69demands ~~businesses~~ for ~~purchase~~enhanced ~~prices~~environmental ~~aggregating~~sustainability ~~approximately $149.1 million, excluding direct acquisition costs incurred~~ in ~~connection~~our ~~with 2009 and 2010 acquisitions~~business. InWe ~~the~~are ~~last~~continuously ~~eight~~investing ~~years~~in ~~we also purchased leased manufacturing facilities for an aggregate purchase price of~~process ~~$13.7 million.~~and ~~Two~~technology ~~out~~enhancements ofto ~~sixteen~~our ~~acquisitions~~existing ~~completed~~ISB ~~during~~technology ~~2010~~to ~~were~~reduce ~~ice~~ISB ~~machine~~operating ~~leasing~~costs ~~businesses.~~and Inmanufacturing ~~each~~costs of ~~these~~ISB ~~acquisitions~~equipment, weimprove ~~were~~ISB ~~successful~~production incapabilities ~~completing~~and ~~the~~expand ~~integration~~our ofISB ~~the~~service ~~acquired~~offerings ~~business~~to ~~with~~include ~~our~~ice ~~operations,~~vending ~~financial~~ and ~~management~~other ~~systems~~retail ~~and customer service departments within a 12-month period after the acquisition was consummated~~capabilities.

Expand Ice Machine Subscriptions. We have historically had a limited presence in the ice machine subscription market and have in recent years increased our equity investment in an innovative entrant in this market. We are pleased with the performance of our investment and believe this delivery model presents opportunities for continued future growth both organically and through acquisitions. An ice machine subscription is a unique value proposition offering ice as a service. It provides the customer with installation of an ice-making machine, as well as maintenance and backup ice for a monthly subscription cost. In connection with our vision to be the "Total Ice Solution" for our customers, we intend to expand our capability to place commercial ice-makers under subscriptions to our customers and to reach new customers, such as restaurants, healthcare facilities and hotels, which have not traditionally been served by the packaged ice industry. In total, we estimate ice machine sales and leasing is a $1.0 billion market. For example, a supermarket may have an ice machine in the back of the store to provide ice for seafood displays and another on top of the fountain drink dispenser in the deli. These ice machines are separate from the packaged-ice retailing equipment located at the front of the store. By drawing on our expertise in the purchase, installation, maintenance and backup of ice-making equipment, we believe we can provide a value-added service to our customers both at the front end and back end of their store operations. While ice-makers are frequently used by our existing retail customers in support of their food merchandising operations, we also believe that delivering ice through a fleet of ice machines that are scaled to meet the individual customer's demand for ice will allow us to access new customer segments, predominantly within the food services industry, such as hotels, bars and restaurants.

Growth Through Acquisitions. Acquisitions are an integral component of our strategy for achieving our vision of being the "Total Ice Solution." We believe there are opportunities for growth through the disciplined pursuit of acquisitions in support of each of the strategies described above. In particular, the packaged ice industry and the ice machine subscription markets continue to be highly fragmented. We will continue to evaluate and pursue strategic acquisitions, including acquisitions of packaged ice manufacturers and ice machine leasing businesses in existing or adjacent geographic markets that enhance the density of our distribution routes, provide capacity rationalization opportunities, increase our market penetration in existing markets or expand our presence in contiguous markets. Also, we regularly evaluate new markets for expansion opportunities. From 2003 to 2011, we acquired 78 businesses for purchase prices aggregating approximately $162.4 million, excluding direct acquisition costs incurred in connection with 2009, 2010 and 2011 acquisitions. In the last nine years we also

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purchased leased manufacturing facilities for an aggregate purchase price of $13.7 million. Two out of sixteen acquisitions completed during 2010 were ice machine leasing businesses. In each of these acquisitions, we were successful in completing the integration of the acquired business with our operations, financial and management systems and customer service departments within a 12-month period after the acquisition was consummated.

Ice Products

Our ice operations consist of the traditional manufacture and delivery of ice from a central point of production to the point of sale as well as sales from our ISB machines. In ~~2010~~2011, traditional ice manufacturing and ISB revenues accounted for approximately 89% and 1110% of our revenues, respectively.

We market our ice products to satisfy a broad range of customers, primarily under the Reddy Ice® brand name. We produce our ice in cube, half-moon, cylindrical and crushed forms and also produce ice in block form. Our primary ice product is cubed ice packaged in ten pound bags, which we sell principally to mass merchants, convenience stores and supermarkets. We also sell significant amounts of small (seven pound) and medium (16 to 20 pound) bags of cubed ice and ten-pound block bags to the same mass merchants, convenience stores and supermarkets. We sell cubed ice in assorted bag sizes ranging from 16 to 50 pounds to restaurants, bars, sporting and other special event venues, airlines, vendors, caterers, and public and private disaster relief organizations. In addition, we sell block ice in 10, 25 and 300 pound sizes to commercial, agricultural and industrial customers. From time-to-time, we continue to evaluate opportunities to broaden our product and service offerings through the introduction of new sizes of bagged cubed ice as well as new ice products.

Manufacturing

To ensure that the water supplied by each municipality meets our quality standards, the water is often filtered for use in the ice making process. We use low micron filtration, carbon filtration, water softeners, ozone generators and reverse osmosis as needed to achieve the proper water quality needed to produce a clear product. All of our ice manufacturing facilities are certified by the International Packaged Ice Association. This certification requires the inspection of more than 50 areas of operation, ensuring high water quality, a sanitary operating environment and safe working conditions.

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to produce a clear product. All of our ice manufacturing facilities are certified by the International Packaged Ice Association. This certification requires the inspection of more than 50 areas of operation, ensuring high water quality, a sanitary operating environment and safe working conditions.

We manufacture ice in two ways: the vertical plate method and the vertical tube method. In both methods, water is circulated over cold vertical surfaces where the flowing water freezes into ice. The process of freezing the water while in motion acts as a final purification process by extracting minerals and other dissolved solids still present in the water following the filtration process. When the ice builds to the proper thickness it is detached from the plates or tubes by heating the freezing surfaces. In the vertical plate method, the sheet of ice falls onto a motor driven cutter which chops the ice into smaller sizes and empties into a collection bin. In the vertical tube method, as the tube of ice falls into the collection bin, it is cut into small cubes by a rotating cutter. From the collection bin, the ice is transferred to a central refrigerated holding bin where the ice is mechanically raked and dried.

From the central refrigerated holding bin, the ice is then mechanically screened to remove any small pieces and to separate the ice according to size. The ice is then transferred to packaging machines, where the ice is measured and packaged into a variety of bag sizes. The product is then palletized and stored in our cold storage vaults before being delivered to customer locations.

For the majority of our manufacturing facilities, we use ammonia as the refrigerant in the ice makers and storage vaults. Ammonia is a common refrigerant used for most industrial refrigeration systems.

Our ISB system manufactured ice is produced primarily by standard commercial ice makers using the vertical plate method. Water is circulated over cold vertical surfaces where the flowing water freezes into ice. The process of freezing the water while in motion acts as a final purification process by extracting minerals and other dissolved solids still present in the water following the filtration process. When the ice builds to the proper cube thickness it is detached from the plates or tubes by heating the freezing surfaces. The ice maker empties into a collection bin. From the collection bin, the ice is transferred automatically to the bag via an auger located in the holding bin. After achieving its required weight, the bag of ice is heat-sealed and dropped into the storage box for merchandising and sale.

Distribution

Due to high product transportation and shipping costs, the ice business has historically been a local-service business in which manufacturers produce and package ice at centrally-located facilities and distribute to a limited-market radius of approximately 100 miles. Due to these geographic constraints and the limited amount of product differentiation in the packaged ice industry, we focus on maintaining an efficient service, distribution and pricing system in each of our markets. We deliver ice through both traditional distribution methods and the ISB systems. We believe that this unique combination of distribution service offerings enables us to better serve our customers.

Traditional Distribution. We produce and bag ice at centrally-located manufacturing facilities and subsequently sell the product with several delivery alternatives. These delivery alternatives include: (1) delivering packaged ice directly to the customers' retail locations and then refilling our on-site merchandisers (known as direct store delivery or DSD), (2) delivering pallet quantities to retail locations where our customers' employees refill our merchandisers and (3) warehouse shipments of ice from our facilities to the facilities of our customers who then choose to deliver ice to their retail locations through their own distribution network. Our products are delivered through our own distribution operation as well as by third-party distributors who transport and deliver the product to our customers. These distributors also purchase ice from us for resale to their own customers. To store ice inventory, we own or rent appropriate freezer space. We own, lease, or rent up to 1,300 vehicles during the summer, our peak selling season. Additionally, ice is distributed to our customers' locations that are outside of our distribution area by co-packers who produce and deliver their ice to our customers.

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Our ISB system manufactured ice is produced primarily by standard commercial ice makers using the vertical plate method. The ice maker empties into a collection bin. From the collection bin, the ice is transferred automatically to the bag via an auger located in the holding bin. After achieving its required weight, the bag of ice is heat-sealed and dropped into the storage box for merchandising and sale.

Distribution

Traditional Distribution. We produce and bag ice at centrally-located manufacturing facilities and subsequently sell the product with several delivery alternatives. These delivery alternatives include: (1) delivering packaged ice directly to the customers' retail locations and then refilling our on-site merchandisers (known as direct store delivery or DSD), (2) delivering pallet quantities to retail locations where our customers' employees refill our merchandisers and (3) warehouse shipments of ice from our facilities to the facilities of our customers who then choose to deliver ice to their retail locations through their own distribution network. Our products are delivered through our own distribution operation as well as by third-party distributors who transport and deliver the product to our customers. These distributors also purchase ice from us for resale to their own customers. To store ice inventory, we own or rent appropriate freezer space. We own, lease, or rent up to 1,100 vehicles during the summer, our peak selling season. Additionally, ice is distributed to our customers' locations that are outside of our distribution area by co-packers who produce and deliver their ice to our customers.

We currently serve most customers through traditional distribution methods by filling tens of thousands of company-owned ice merchandisers installed at our customers' locations. Our size and scale allow for an efficient production and distribution network by focusing on areas with the appropriate customer density, providing superior production capacity and through the use of large dedicated distribution centers. Servicing areas with high customer density improves routing efficiencies and reduces transportation costs. This is critical, since distribution accounts for a large percentage of our overall costs. In addition, our production capacity in adjacent geographic markets has allowed us to avoid "out of ice" situations and related lost sales during peak periods.

Ice Factory Systems. The Ice Factory is our proprietary self-contained automated in-store bagging system placed at the customer's location that manufactures, bags and stores packaged ice. Each unit is built to our specifications and includes ice makers, a merchandiser and a bagging machine. The unit is capable of producing and packaging approximately one to two tons of ice per day, depending on the configuration of the unit. ISB machines are most frequently used in high volume customer locations such as mass merchants and supermarkets. The ISB systems, when combined with traditional delivery methods, provide our customers with the flexibility to meet their specific supply requirements in a cost-efficient manner. Transportation costs, the most significant cost of traditional ice delivery, are significantly reduced by on-site production. As a result of these cost savings, we believe that ISB systems provide us with operating efficiencies in high volume locations compared to traditional ice delivery.

We believe that providing frequent, regular and reliable service and support to our customers is one of the most important elements in operating our Ice Factory network. Our National Service Center serves as the hub for all equipment, technical support, parts distribution, and data connection relating to the performance of the service network. Recent innovations made it possible to interface with individual Ice Factories over the internet. We intend to use such capability to improve customer service and reduce maintenance costs. This will allow the National Service Center to serve as the core for all maintenance, repair, and sales logistics. Service calls related to ISB machines located outside of our market area are dispatched to co-packers, who service our ISB machines on our behalf.

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to the performance of the service network. Recent innovations made it possible to interface with individual Ice Factories over the internet. We intend to use such capability to improve customer service and reduce maintenance costs. This will allow the National Service Center to serve as the core for all maintenance, repair, and sales logistics. Service calls related to ISB machines located outside of our market area are dispatched to co-packers, who service our ISB machines on our behalf.

ISB locations are selected only after a thorough review and analysis of historical ice sales and the local competitive environment. Our ISB systems located outside of our primary territories are maintained under service agreements with other ice suppliers.

Customers

We market our ice products to a broad range of customers, including supermarket chains, mass merchants, convenience stores, wholesale ice and food distributors, commercial and industrial users, bars and restaurants, sporting and other special event venues, agricultural buyers and competitive producers and self-suppliers who experience supply shortages. The primary purchasers of our traditional ice products and users of our ISB systems are retailers with no internal ice production capacity. We believe that our high level of service, quality products and competitive prices result in customer retention.

In 2010, we ~~continued~~began to significantly ~~expand~~expanding our presence within the value channel through a major effort with several of the largest industry ~~participants~~retailers. The value channel is the ~~fastest~~ fastest growing retail segment in the United States today as it expands its product offering and store counts to attract more consumers. ~~This~~We ~~initiative~~expect ~~will~~continued ~~continue~~growth in ~~2011 with other major players in~~ this important segment in 2012.

We also specialize in providing ice in times of disaster as packaged ice can play an important role in relief and recovery efforts. We operate a dedicated Emergency Management solution to provide federal, state and local relief agencies, as well as our own customers in the affected areas, with safe, clean, food grade quality ice in times of need. With our centralized systems, we can bring to bear the full impact of our network of 135 manufacturing and distribution facilities to respond to any catastrophe.

8 While we have a diversified customer base, our largest customer, Wal-Mart and Sam's Club on a combined basis, accounted for approximately 14% of our revenues in both 2011 and 2010. Our other largest accounts include the supermarket chains Food Lion, HEB, Publix, Kroger, Safeway and SuperValu. Our largest national accounts also include the national and regional convenience and petroleum store chains Circle K, 7-Eleven, ExxonMobil, Valero/Diamond Shamrock and RaceTrac.

~~Table~~ In 2011, approximately 92% of ~~Contents~~our ice sales, measured in terms of tons, were to retail customers, such as supermarkets, mass merchants and convenience stores, while approximately 8% was to non-retail customers such as airlines, agricultural users and construction companies. In 2011, our sales, measured in terms of tons, were allocated to our retail channels as follows: 43% to supermarket and mass merchant chains, 28% to convenience, petroleum and liquor store chains, 14% to distributors, 3% to retailers in the value channel and 12% to other channels. Due to consolidation within those retail channels, the percentage of our total volume measured in terms of tons sold to national and regional chains has grown over the past decade.

full impact of our network of 130 manufacturing and distribution facilities to respond to any catastrophe.

While we have a diversified customer base, our largest customer, Wal-Mart and Sam's Club on a combined basis, accounted for approximately 14% of our revenues in each of 2010 and 2009. Our other largest accounts include the supermarket chains Food Lion, HEB, Publix, Kroger, Safeway and SuperValu. Our largest national accounts also include the national convenience and petroleum store chains Circle K, 7-Eleven and ExxonMobil and the regional convenience and petroleum store chains Valero/Diamond Shamrock, The Pantry and RaceTrac. In 2010, our sales, measured in terms of tons, were allocated to our retail channels as follows: 41% to supermarket and mass merchant chains, 26% to convenience, petroleum and liquor store chains, 14% to distributors and 19% to other channels. Due to consolidation within those retail channels, the percentage of our total volume measured in terms of tons sold to national and regional chains has grown over the past decade.

Sales and Marketing

Our sales and marketing personnel communicate regularly with our existing customers and initiate discussions with potential new customers. Sales and marketing personnel at our corporate headquarters, along with certain members of our senior management, communicate with our larger national and regional chain customers while our field personnel handle smaller local customers and local representatives of our larger national and regional chain customers.

Typically, our customer relationships are long term and turnover of major customers is infrequent. As a result, a significant portion of our corporate sales and marketing efforts are focused on maintaining and expanding these existing relationships. We also regularly explore and develop new customer relationships. We maintain a National Accounts Sales team to seek out opportunities to service our current large chain customers, as well as develop opportunities in the non-retail commercial and industrial segments. Our Field Sales team has been expanded to do the same at the local level with more regional and independent business operators.

Competition

The traditional packaged ice industry is highly competitive and highly fragmented. In the United States, the traditional packaged ice industry includes us, one other multi-regional operator, one multi-state operator and hundreds of local operators. Although our largest competitors generally do not serve customers in our primary markets, we have placed ISB systems in certain of the primary markets of our largest competitors and we compete with numerous smaller local and regional companies of varying sizes and competitive resources in our primary markets. Most ice manufacturers have annual revenues of less than $2 million. In addition to the competition we face from traditional ice manufacturers, numerous convenience and grocery retailers operate commercial ice plants for internal use or manufacture and bag ice at their store locations. Our ice products generally do not face competition within a particular store as almost all of our customers rely on a single supplier of packaged ice at each point of sale. In 2010, the traditional packaged ice business saw an increase in competitive activity, especially in the Arizona, California and Colorado markets, that has resulted in increased customer turnover and lower average pricing. From time to time, new competitors emerge to compete with us in various areas, including the technology and distribution methods included in our ISB systems. Certain competitors had some success in rolling out such systems in certain of our markets, resulting in loss of business to these competitors. In recent years, other competitors focused on selling and operating free-standing ice vending machines have appeared more prominently in the marketplace. These new competitors provide certain convenience and cost benefits relative to the traditional distribution model, however we believe that these new competitors, on their own, lack the full range of flexibility, service and support we can offer. We closely monitor industry developments and trends and the impact of competitors on our business.

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~~Competition~~Typically, inour ~~the~~customer ~~packaged~~relationships ~~ice~~are ~~industry~~long isterm ~~based~~and ~~primarily~~turnover onof ~~service,~~major ~~quality~~customers ~~and~~is ~~price~~infrequent. ToAs ~~compete~~a ~~successfully~~result, ana ~~ice~~significant ~~manufacturer~~portion ~~must~~of beour ~~able~~corporate tosales ~~offer~~and ~~significant~~marketing ~~supply~~efforts ~~and~~are ~~distribution~~focused ~~capacity~~ on amaintaining ~~seasonal~~and ~~basis~~expanding ~~while~~these ~~maintaining~~existing ~~cost efficiency~~relationships. We ~~are~~also ~~the~~regularly ~~largest~~explore ~~company~~and indevelop ~~the~~new ~~packaged~~customer ~~ice~~relationships. ~~industry,~~We ~~serving~~maintain ~~customers~~a inNational 34Accounts ~~states~~Sales ~~and~~team ~~the~~to ~~District~~seek ~~of Columbia. Our~~out ~~large~~opportunities ~~geographic~~to ~~footprint,~~service ~~manufacturing~~our ~~capacity~~current ~~and~~large ~~distribution~~chain ~~infrastructure~~customers, ~~including~~as ~~traditional~~well ~~ice~~as ~~delivery,~~develop ~~warehouse~~opportunities ~~delivery~~in ~~and ISB technology, give us~~ the ~~ability~~non-retail tocommercial ~~service large retailers across multiple states~~ and ~~regions~~industrial ~~in a variety of ways~~segments. ~~Because~~Our ofField ~~these~~Sales ~~attributes,~~team wehas ~~are~~been ~~positioned~~expanded to do ~~benefit~~the ~~from~~same ~~continued~~at ~~consolidation~~the ~~within~~local ~~our~~level ~~customer~~with ~~base~~more ~~and~~regional ~~from increased reliance by national~~ and ~~regional~~independent ~~customers~~business ~~on suppliers that serve multiple markets~~operators.

Competition

The packaged ice industry is highly competitive and highly fragmented. In the United States, the packaged ice industry includes us, two other multi-regional operators, hundreds of local operators and numerous operators of ISB and vending technology. Although our largest competitors generally do not serve customers in our primary markets, we have placed ISB systems in certain of the primary markets of our largest competitors and we compete with numerous smaller local and regional companies of varying sizes and competitive resources in our primary markets. In addition to the competition we face from traditional ice manufacturers and technology competitors, numerous convenience and grocery retailers operate commercial ice plants for internal use or manufacture and bag ice at their store locations. Our ice products generally do not face competition within a particular store as almost all of our customers rely on a single supplier of packaged ice at each point of sale.

From time to time, new competitors emerge to compete with us using ISB technology and free-standing ice vending machines. These new competitors provide certain convenience and cost benefits relative to the traditional distribution model, however we believe that these new competitors, on their own, lack the full range of flexibility, service and support we can offer. We closely monitor industry developments and trends and the impact of competitors on our business.

In recent years, we have seen increased levels of competition in the ice industry, particularly in certain markets in the western United States from traditional packaged ice competitors, as well as increased activity around the country from technology competitors, primarily ISB and ice vending companies. Specifically, we estimate that ice vending competitors have captured approximately 8% of the sales in the markets that we serve, with approximately 7% acquired since 2006. In addition, local packaged ice competitors form alliances from time to time across different geographies in an attempt to better compete with us. We have also become aware recently that certain parties in industries adjacent to packaged ice have expressed interest in entering the packaged ice business.

Competition in the packaged ice industry is based primarily on service, quality and price. To compete successfully, an ice manufacturer must be able to offer significant supply and distribution capacity on a seasonal basis while maintaining cost efficiency. We are the largest company in the packaged ice industry, serving customers in 34 states and the District of Columbia. Our large geographic footprint, manufacturing capacity and distribution infrastructure, including traditional ice delivery, warehouse delivery and ISB technology, give us the ability to service large retailers across multiple states and regions in a variety of ways. Because of these attributes, we are positioned to benefit from continued consolidation within our customer base.

We have been providing ice products and delivery services to many of our large customers for more than a decade. Our customers depend on our consistent ability to ensure prompt and reliable delivery, particularly during peak seasonal months and during relief efforts immediately following major natural disasters due to our ability to produce and ship ice from unaffected areas into disaster recovery areas. The strength of our customer relationships is further reinforced by the fact that most of our customers rely on us for substantially all of the packaged ice at each point of sale. We believe that the strength of our customer relationships provides us with a significant competitive advantage over other suppliers in our markets.

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Acquisitions

From 1997 through 1999, we pursued a consolidation strategy within the highly fragmented packaged ice industry. During that period, we completed approximately 80 acquisitions. Significant acquisitions included the purchase of Reddy Ice Corporation from Suiza Foods Corporation in April 1998 and the purchase of Cassco Ice & Cold Storage, Inc. in July 1998. Reddy Ice Corporation, prior to our acquisition of it, had been active in the consolidation of the packaged ice industry, having made 28 acquisitions from January 1997 to April 1998. Cassco was a leading regional producer and distributor of packaged ice products and was an owner/operator of refrigerated warehouses in the mid-Atlantic region. We did not complete any significant acquisitions from 2000 through the third quarter of 2003.

Since the beginning of the fourth quarter of 2003, we have completed a total of 6978 acquisitions in the packaged ice and ice machine business. Information regarding our acquisitions during this period is set forth in the table below.

Year		Aggregate Purchase Price(1)
2003	2	$	67.4 million
2004	11		16.9 million
2005	2		0.9 million
2006	10		12.9 million
2007	20		26.8 million
2008	7		4.0 million
2009	1		1.0 million
2010	16		19.2 million
2011	9		13.3 million

(1)As a result of changes in accounting guidance on business combinations effective for ~~the~~us ~~Company~~ on January 1, 2009, acquisition costs incurred in 2009, 2010 and ~~2010~~2011 are excluded from the aggregate price in the above table.

We will continue to consider strategic acquisitions, principally in existing or adjacent geographic markets, that enhance the density of our distribution routes, provide capacity rationalization opportunities, increase our market penetration in existing markets or expand our presence in contiguous or new markets.

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Dispositions

In recent years, as part of our efforts to strategically deploy our assets, we have periodically evaluated and disposed of excess and non-core assets, including real estate and equipment. In ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, we realized $0.78 million, $0.67 million and $2.0.6 million, respectively, in proceeds from non-core assets disposed of, primarily through the sale of real estate. In ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, we recorded losses on the dispositions of assets in the amount of $20.62 million, $2.36 million, and $12.93 million, respectively. In 2011 and 2010, $04.82 million and $10.6 million in impairment charges were recognized as a result of impairing acertain ~~parcel~~fixed assets ofand real estate ~~and~~identified ~~certain~~for ~~fixed assets~~disposition. No impairment charges were recognized in 2009. In 2008 and 2007, impairments of $0.2 million and $1.4 million, respectively, were recorded on four pieces of real estate. These amounts exclude the disposition of our bottled water and cold storage operations in 2007 and impairments associated with these operations.

Employees and Labor Relations

At March 2530, ~~2011~~2012, we ~~directly~~ employed approximately 1,300 ~~company~~year-round employees and retained approximately 300 additional ~~temporary~~ temporary employees. Each year, during the second and third calendar quarters, our labor force increases to approximately 2,700 total employees due to seasonal increases in ice demand and during the first and fourth calendar quarters our total labor force decreases to approximately 1,500 total employees due to seasonal decreases in ice demand. We generally have not experienced any difficulty in meeting these seasonal employment needs.

Labor costs, including the associated payroll taxes and benefit expenses, is our most significant expense item and were approximately 34% of our revenues for the year ended December 31, 2010. As of March 25, 2011, no employees were represented by a union or subject to a collective bargaining agreement. We have never experienced a work stoppage due to labor difficulties and we believe our relationship with our employees is good. 11

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quarters, our labor force increases to approximately 2,700 total employees due to seasonal increases in ice demand and during the first and fourth calendar quarters our total labor force decreases to approximately 1,500 total employees due to seasonal decreases in ice demand. We generally have not experienced any difficulty in meeting these seasonal employment needs.

Labor costs, including the associated payroll taxes and benefit expenses, is our most significant expense item and were approximately 33% of our revenues for the year ended December 31, 2011. As of March 30, 2012, no employees were represented by a union or subject to a collective bargaining agreement. We have never experienced a work stoppage due to labor difficulties and we believe our relationship with our employees is good.

Raw Materials and Suppliers

We have not experienced any material supply problems in the past with respect to our business.

We use large quantities of plastic bags. The cost of bags was approximately 6% of our revenues in ~~2010~~2011. Historically, market prices for plastic bags have fluctuated in response to a number of factors, including changes in polyethylene prices, which are generally linked to natural gas and oil prices. The cost of plastic bags has been particularly volatile since 2005. Significant increases in the cost of plastic bags could have a material adverse effect on our business as we may not be able to pass this expense through to our customers.

In order to provide cost benefits as compared to our historical relationships, we entered into a five year supply contract with a supplier to provide the majority of our bag needs beginning March 1, 2008. The contract requires a minimum purchase of 250 million bags per year. We met the 250 million minimum bag purchase commitment during ~~2010 and anticipate being in compliance with the 250 million minimum bag purchase commitment in future periods~~2011. There are numerous plastic bag manufacturers throughout the United States with the capability of providing for our plastic bag needs. Our contract ends on December 31, 2012 and we are in ongoing negotiations to ensure a continued and stable supply of our bags.

Electricity is a significant component of our manufacturing costs. The cost of electricity was approximately 5% of our revenues in ~~2010~~2011. Since 2002, our plants have been operating in both regulated and deregulated electricity markets. A significant number of our manufacturing facilities operate in regulated electricity markets and pay rates based on standard schedules for similar industrial facilities. With the assistance of an outside consultant and through our own internal resources, we regularly monitor and review rate schedules, usage and other statistical data to ensure proper billing and identify additional cost control opportunities that may be available in these regulated markets. In deregulated electricity markets, we regularly evaluate market conditions and competing suppliers to obtain the best pricing available. In early 2012, we put a supply contract in place that fixes the price of electricity through 2014 in our largest deregulated markets at levels below the average price for 2011. Significant increases in electricity rates in both the regulated and deregulated markets in which we operate could have a material adverse effect on our results of operations as we may not be able to pass this expense through to our customers.

11 We also use large quantities of fuel in our distribution process. Numerous vendors throughout the United States provide the fuel for our vehicles. Fuel expenses in 2011 were approximately 6% of revenues. Market prices for fuel have fluctuated widely over the last several years. Significant increases in fuel prices could have a material adverse effect on our business as we may not be able to pass this expense through to our customers. During 2011 and 2010, increases in the price of fuel resulted in approximately $5.1 million and $3.1 million of additional costs, respectively, while decreases in fuel prices in 2009 reduced our costs by approximately $7.2 million. In February 2009, we entered into a hedging arrangement to lock the price of diesel for a substantial portion of our 2009 needs at then current prices. In March 2011, we entered into a hedge to lock in the current market price for 1.2 million gallons of diesel for the time period of April 2011 to December 2011. On May 6, 2011, we entered into an additional hedge to lock in the current market price for 1.1 million gallons for the time

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~~We also use large quantities~~ period of ~~fuel~~June in2011 ~~our~~to ~~distribution~~December ~~process~~2012. ~~Numerous~~Approximately ~~vendors~~0.5 million ~~throughout~~gallons ~~the~~of ~~United~~this ~~States~~hedge ~~provide~~were ~~the fuel~~ for ~~our~~2012, ~~vehicles.~~which ~~Fuel~~represented ~~expenses in 2010 were~~ approximately 411% of ~~revenues.~~our ~~Market~~projected ~~prices for~~ fuel ~~have~~needs ~~fluctuated~~for ~~widely~~that ~~over the last several years~~year. ~~Significant increases in fuel prices could have a material adverse effect on our~~On ~~business~~April 5, as2012 we ~~may~~sold ~~not be able to pass this expense through to~~ our ~~customers.~~hedge ~~During~~contract ~~2010~~covering ~~and 2008, increases in the price of fuel resulted in approximately $3~~0.~~1 million and $~~4.8 million of ~~additional~~gallons ~~costs, respectively, while decreases in fuel prices in 2009 reduced our costs by approximately $7.2 million. In February 2009, we entered into a hedging arrangement to lock the price of diesel~~ for a ~~substantial~~gain ~~portion~~ of ~~our 2009 needs at then current prices~~$0. ~~In March 2011, we entered into a hedge to lock in the current market price for 1.2~~05 million ~~gallons of diesel for the time period of April 2011 to December 2011~~. ~~This represents approximately 33% of our anticipated fuel usage during that period.~~ We continue to evaluate additional hedging arrangements for ~~2011~~ 2012 and beyond.

We have relationships with approximately 120 third party ice distributors throughout our market area who deliver a portion of our products to our customers and sell our ice to their own customers. We have contractual relationships with substantially all of these distributors. Our contracts contain standard terms governing their relationship with us, including exclusivity and price. Distributors handled approximately 28% of our ice sales, measured in terms of tons, in ~~2010~~2011, either delivering the product to our customers for a delivery fee or reselling the ice to their own customers. Total costs related to these distribution services were approximately 6% of our revenues in ~~2010~~2011.

We have relationships with approximately 65 third party co-packers who produce and deliver ice to customer locations outside of our market area. Certain of these co-packers also service our ISB machines on our behalf. We have a contractual relationship with substantially all of these co-packers. We maintain the customer relationship and handle all billings and collections.

Information Systems

Internal information systems are critical to our ability to operate efficiently. We monitor individual manufacturing plants and ISB system performance on a daily basis through automated and manual reporting systems. This information enables us to track detailed cost and profitability information, identify opportunities to redistribute traditional manufacturing capacity among markets, assess the cost-effectiveness of an ISB system at a particular location and to analyze market sales trends. In addition, all of our accounting and financial reporting functions are integrated into a single accounting platform that is centrally administered at our Dallas, Texas facility. This system facilitates centralized cash management, timely financial reporting, consistent reporting formats and inventory tracking. Hand-held mobile technology is being upgraded to enable our delivery personnel to create and record sales transactions at the point of sale. This technology will help automate the sales transaction process and eventually improve the efficiency of each driver's daily route. Software is also being implemented to route our traditional ice deliveries, which will allow for automated and centralized planning of delivery routes. IT organizational changes have been made to improve core support competencies and to ensure a higher level of systems availability and service quality. We consider information systems and administrative functions to be important areas for further evaluation and investment.

Intellectual Property

We regard The Ice Factory®, our in store bagging machine, as proprietary and rely primarily on a combination of patents, nondisclosure and confidentiality agreements and other protection methods to secure and protect our intellectual property rights. We hold or have exclusive rights to several patents relating to The Ice Factory, including the bagging device and the overall assembly of the unit. Active patents issued in the United States, Mexico and Canada relating to The Ice Factory expire at various dates from ~~2011~~2012 through 2026. We also hold or have exclusive rights to U.S. patent applications related to the Ice Factory. Any patents which may be issued on, from or as a result of the U.S. patent applications relating to the Ice Factory will most likely expire in 2026 or thereafter. These intellectual property rights are limited in scope and value and competitors with technology similar to The Ice Factory appear in the marketplace from time to time and we take appropriate actions as needed to protect our intellectual property. We continue to develop improvements to the Ice Factory and intend to pursue additional intellectual property protection covering any improvements deemed strategic or otherwise significant, including ice vending and other retail capabilities.

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applications relating to the Ice Factory will most likely expire in 2026 or thereafter. These intellectual property rights are limited in scope and value and competitors with technology similar to The Ice Factory appear in the marketplace from time to time and we take appropriate actions as needed to protect our intellectual property. We continue to develop improvements to the Ice Factory and intend to pursue additional intellectual property protection covering any improvements deemed strategic or otherwise significant, including ice vending and other retail capabilities.

In addition, we have developed or acquired a number of trademarks (both registered and common law) and trade names for use in our ice business, and we hold licenses for the use of additional trademarks from third parties. We believe the use of our trademarks creates goodwill and results in product differentiation. However, we do not believe that the loss of any of our trademarks would have a material adverse effect on our business or results of operations.

We vigorously enforce our intellectual property rights, including by filing suit against makers of devices which infringe our patents relating to The Ice Factory.

Government Regulation

The packaged ice industry is subject to various federal, state and local laws and regulations. These require us to, among other things, obtain licenses for our plants and machines, pay annual license and inspection fees, comply with certain detailed design and quality standards regarding our plants and ISB systems and continuously control the quality and quantity of our ice.

Our packaged ice products are subject to federal and state regulation as a food pursuant to the Federal Food, Drug and Cosmetic Act, regulations promulgated thereunder by the Food and Drug Administration and analogous state statutes. These statutes and regulations impose comprehensive food manufacturing practices governing the sanitary conditions of the facilities where ice is manufactured, the design and maintenance of the equipment used to manufacture the ice, the quality of source water and the sanitary practices of employees during ice production. We cannot predict the types of government regulations that may be enacted in the future by federal, state or local governments or how existing or future laws or regulations will be interpreted or enforced. The enactment of more stringent laws or regulations or a stricter interpretation of existing laws and regulations may require additional expenditures by us, some of which could be material. Various states have imposed additional requirements including (1) quarterly testing of ice for the presence of microbes and certain substances regulated under the federal Safe Drinking Water Act, (2) specific requirements for keeping ice packaging operations separate from other activities and (3) labeling requirements for the bags used, including the display of the name of the ice manufacturer, manufacturing location and net weight. Certain of our ISB systems and ice manufacturing facilities are subject to routine and random safety, health and quality inspections. We believe that our facilities, manufacturing practices and ISB systems are in substantial compliance with all applicable federal, state and local laws and regulations and that we will be able to maintain such substantial compliance in the future.

Recently, the FDA and certain states, including states in the regions in which we operate, have begun implementing more stringent regulations regarding health and sanitation standards and more actively enforcing existing rules and regulations. The Food Safety Modernization Act signed in January 2011 ~~will~~ ultimately ~~result~~resulted in stricter regulations on self bagging operators to meet ~~the~~ the standards of food grade product. There will be more opportunity for us as retailers seek to replace their self bagging operations due to higher expenses and testing of product. We have supported ~~such~~ such efforts and believe our facilities and quality standards will exceed any contemplated new regulation or enforcement standards.

We are subject to certain health and safety regulations, including Occupational Safety and Health Act regulations. These regulations require us to comply with certain manufacturing, health and safety standards to protect our employees from accidents. From time to time, our employees experience accidents on the job, which on occasion will result in a review or an investigation by the Occupational Safety and Health Administration. Such reviews may result in penalties or the requirement that we make modifications to our procedures or facilities, all of which may result in increased costs.

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Safety and Health Administration. Such reviews may result in penalties or the requirement that we make modifications to our procedures or facilities, all of which may result in increased costs.

Environmental Matters

Our ice manufacturing operations are subject to a wide range of environmental laws and regulations governing, among other things, air emissions, wastewater discharges, the use, management and disposal of hazardous and non-hazardous materials and wastes, and the cleanup of contamination. These requirements are complex, changing and tend to become more stringent over time. Noncompliance with such laws and regulations, or incidents resulting in environmental releases, could cause us to incur substantial costs, including cleanup costs, fines and penalties, third party claims for personal injury, investments to retrofit or upgrade our facilities and programs, or curtailment of our operations.

Our facilities use refrigerants such as ammonia and Freon in manufacturing and cold storage operations. We have implemented risk and safety management plans at our facilities, as required under applicable laws and regulations, based on the quantity of ammonia stored and/or used at these locations. We will continue to review our facilities on an ongoing basis, including recently acquired facilities, to evaluate the feasibility of reducing on-site ammonia storage through engineering controls or, where required, to implement or update such programs. Some of our facilities that use various Freon compounds may not be in compliance with applicable Freon refrigerant requirements, including leak detection and repair, recordkeeping or reporting. We have implemented ozone depleting substance compliance programs at all facilities that utilize these refrigerants. We will continue to identify facilities and to implement procedural or mechanical changes as necessary to comply with applicable laws and regulations. To date, maintaining compliance with and addressing violations under these and other environmental laws and regulations has not had a significant effect on our business, financial condition or results of operations. However, significant operating costs and capital expenditures could be incurred if additional or more stringent requirements are imposed in the future.

From time to time, our use of ammonia has resulted in incidents that have temporarily disrupted our manufacturing operations and resulted in liability for administrative penalties and claims for personal injury. To date our costs to resolve these liabilities have not been material. Although we carry liability insurance against such losses, we could incur significant costs if our coverage is not sufficient to pay for all or a large part of any judgments against us, or if our carrier refuses coverage for these losses.

In addition, some Freon refrigerants are subject to phase-outs and, as a result, are very costly to obtain. We will continue to reduce our dependence on such Freon compounds by upgrading or modifying our operations and by identifying approved substitutes. Based on current information, we believe that the Freon phase-outs will not impede our ability to produce and store ice or result in material cost increases for Freon substitutes.

Certain of our current and former facilities, including facilities acquired in our ongoing acquisition program, have a history of industrial or commercial operations. In connection with our acquisitions, we regularly review the potential environmental liabilities of the acquired entities and assets. Because some environmental laws can impose liability for the entire cost of cleanup upon any of the current or former owners or operators, regardless of fault, it is possible that we could become liable for investigating or remediating contamination at these properties if any investigation or remediation is required in the future. Such costs have not historically had, and are not expected to have in the future, a material adverse effect on our business, financial condition or results of operations.

Seasonality

The packaged ice business is highly seasonal, characterized by peak demand during the warmer months of May through September, with an extended peak selling season in the southern United States. Approximately 71%, 71%, 69%, 69% and 68% of our annual revenues occurred during the second and third calendar quarters in each of 2011, 2010, 2009, 2008 and 2007. For information on our

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~~States. Approximately 71%, 69%, 69%, 68% and 70% of our annual~~ revenues ~~occurred during the second and third calendar quarters in each of 2010, 2009, 2008, 2007 and 2006. For information on our~~ ~~revenues~~ per quarter for each of ~~2010~~2011 and ~~2009~~2010, see Note 16 to our audited financial statements included under Item 8. As a result of seasonal revenue declines and a less than proportional decline in expenses during the first and fourth quarters, we typically experience lower margins resulting in losses during these periods. In addition, because our operating results depend significantly on sales during our peak season, our quarterly and annual results of operations may fluctuate significantly as a result of adverse weather during this peak selling period if the weather is unusually cool or rainy on a national or regional basis.

Corporate Information

Reddy Ice Holdings, Inc. is a Delaware corporation formed on May 8, 2003. Reddy Ice Corporation is a Nevada corporation formed on August 17, 1998. Our corporate headquarters is located at 8750 North Central Expressway, Suite 1800, Dallas, Texas 75231.

Going Concern Analysis

Our ability to successfully recapitalize the business and ensure sufficient liquidity to support our operations as a going concern is dependent on our ability to obtain approval by the U.S. Bankruptcy Court of the refinancing plan described below and to generate future cash flows and maintain liquidity sufficient to service our debt.

Restructuring Transactions

We have a substantial amount of debt, as discussed more fully in Note 9 to our audited financial statements included under Item 8. Certain of the capitalized terms used below are defined therein.

In 2011, as our EBITDA declined, we began to explore alternatives to address our capital structure. In recent months these efforts have accelerated, with an informal committee of the largest holders of our existing first and second lien notes negotiating the terms of a restructuring of our debt obligations (the "Restructuring"). One of the members of the informal committee is Centerbridge Capital Partners II, L.P. and one or more of its parallel funds and related vehicles (collectively, "Centerbridge"), a fund managed by Centerbridge Partners L.P., and a private investment firm that currently has approximately $19 billion in capital under management. Described below are the anticipated terms of the Restructuring. There can be no assurance that the Restructuring will be consummated on the terms described below, or at all.

Strategic Acquisition Opportunity. In addition to addressing our declining EBITDA and current debt, the Restructuring is also intended to provide us with the opportunity to pursue a strategic acquisition of all or substantially all of the businesses and assets of Arctic Glacier Income Fund and its subsidiaries ("Arctic"). As is the case with our business, Arctic has encountered financial difficulties due to adverse trends in our industry in recent years. On February 22, 2012, Arctic filed for protection under the Companies' Creditors Arrangement Act in Canada and Chapter 15 of the Bankruptcy Code in the United States. Arctic has initiated a Sale and Investor Solicitation Process ("SISP"). The purpose

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of the SISP is to seek sale proposals and investment proposals from qualified bidders and to implement one or a combination of them in respect of Arctic's property and business.

On March 28, 2012, we submitted a non-binding letter of intent to Arctic regarding participation in the SISP. The letter of intent contemplates our acquisition of substantially all of Arctic's business and assets. On April 5, 2012, we were advised by the financial adviser to Arctic that we were approved to move to phase 2 of the SISP. The successful bidder will be selected at the end of phase 2 of the SISP. Our interest in Arctic remains subject to, among other things, completion of due diligence, negotiation of acceptable transaction documents, and receipt of sufficient commitments for debt and equity financing for the acquisition. Centerbridge has indicated its interest in providing the entire amount of the equity financing for the Arctic acquisition. There can be no assurance that we will consummate an acquisition of Arctic.

In order to have the ability to acquire Arctic, we must restructure our debt obligations in a manner which creates a sustainable capital structure and permits us to obtain additional debt and equity financing. Described below are the terms of the Restructuring that we have negotiated with the informal committee of certain of our existing first and second lien note holders.

Chapter 11 Bankruptcy Cases. In order to consummate the transactions described below, including the entry into the DIP Credit Facility, the amendment to the First Lien Notes, the exchange of the Second Lien Notes, the cancellation of the Discount Notes, and the consummation of the rights offering, we intend to commence the solicitation of acceptances with respect to a plan of reorganization (the "Plan") pursuant to this Disclosure Statement. Shortly after commencing such solicitation, Reddy Ice Holdings, Inc. and Reddy Ice Corporation intend to file voluntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code (the "Bankruptcy Cases") in the United States Bankruptcy Court for the Northern District of Texas (the "Bankruptcy Court"). This process could, but is not expected to, have an adverse effect on our operations. Immediately upon filing, we will request Bankruptcy Court approval to pay critical suppliers and other vendors in the ordinary course of business. All of our customers will continue to be serviced without interruption. Although we intend to continue to provide such products and services to our customers in the normal course, there can be no assurances that counterparties will continue to conduct business with us while we are in Chapter 11.

With respect to the Plan, we will be soliciting acceptances from only the holders of the First Lien Notes, the Second Lien Notes (and their respective guarantees), the Discount Notes and certain other unsecured creditors of Reddy Holdings, although the Plan will seek Bankruptcy Court approval of recoveries to holders of other unsecured creditors and the Common Stock as well. The deadline for voting to accept or reject the Plan is May 8, 2012, unless such deadline is extended. In addition, we will request the Bankruptcy Court to set a confirmation hearing with respect to the Plan for early May 2012 and hope to exit protection under the Bankruptcy Code in the second or third week of May—before final round bids must be submitted with respect to the proposed Arctic acquisition.

Support agreements for the Plan have been executed by holders of approximately 60% of the principal amount of the First Lien Notes, approximately 58% of the principal amount of the Second Lien Notes and approximately 92% of the principal amount of the Discount Notes. Such support agreements require the holders of the First Lien Notes, the Second Lien Notes and the Discount Notes to, among other things, vote to accept the Plan.

First Lien Notes. Except as described below and except for other minor modifications, we do not plan to modify our obligations in respect of our existing First Lien Notes in the Restructuring.

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need to continue as a reporting company under the Securities Exchange Act of 1934 (the "Exchange Act"). The First Lien Notes will continue to be guaranteed by Reddy Holdings.

In the event that we fail to consummate the Arctic acquisition, Centerbridge has agreed to convert $68.18 million in aggregate principal amount and accrued and unpaid interest of its First Lien Notes into preferred stock of Reddy Holdings with a liquidation preference of $75 million.

Second Lien Notes. Pursuant to the Plan, we are seeking to have holders of our Second Lien Notes exchange those Notes for their ratable share of (i) 6,094,327 shares of common equity of reorganized Reddy Holdings, subject to dilution in accordance with the other provisions of the Plan of Reorganization and a further distribution of certain of such shares upon the occurrence of certain events and (ii) new preferred stock of reorganized Reddy Holdings pursuant to the rights offering (to the extent such holder elects to participate in the rights offering).

Discount Notes. Under the Plan, the Discount Notes will be cancelled; however, subject to Bankruptcy Court approval and other conditions, the holders of the Discount Notes will receive such holder's ratable share of: (i) $4.7 million in cash on the consummation of the Restructuring and (ii) promissory notes in an initial amount of $1.2 million payable on the three month anniversary of the consummation of the Restructuring. The Discount Notes payment due under the promissory notes will accrue interest at a rate of 7% per annum from the consummation of the Restructuring to the three month anniversary of the consummation of the Restructuring. In the event that the Arctic acquisition is consummated prior to the three month anniversary of the consummation of the Restructuring, the principal amount of the promissory notes will be increased and the holders of the Discount Notes will receive their ratable share of an additional $2.3 million, which additional amount will accrue interest at a rate of 7% per annum from the consummation of the Restructuring until the three month anniversary of the consummation of the Restructuring. In the event that the Arctic acquisition is consummated after the three month anniversary of the consummation of the Restructuring, the additional payment will be made within ten (10) business days following the Arctic acquisition and will accrue interest at a rate of 7% per annum from the consummation of the Restructuring until the payment date. Such payments to the existing holders of the Discount Notes will be made from the distributions under the Plan of Reorganization to the holders of the Second Lien Notes.

Common Stock. Under the Plan, the common stock of Reddy Holdings will be cancelled. Subject to Bankruptcy Court approval and other conditions existing holders of our common stock will be entitled to receive a cash payment of approximately $0.12 per share for their shares, with an additional payment of approximately $0.05 per share made in the event the Arctic acquisition is consummated. Holders of common stock who hold at least 25,000 shares will be entitled to elect to receive common shares of reorganized Reddy Holdings in lieu of the cash payment. Assuming all existing shares converted into stock of reorganized Reddy Holdings, following the consummation of the Restructuring, holders of the existing common stock of Reddy Holdings would initially hold approximately 2.0% of the equity of reorganized Reddy Holdings (inclusive of the New Preferred Stock on an as converted basis). In the event that we consummate the Arctic acquisition, holders of the existing common stock of Reddy Holdings who elected to receive shares of common stock of reorganized Reddy Holdings will be entitled to an additional distribution of shares of common stock of reorganized Reddy Holdings such that the aggregate value of the common stock of reorganized Reddy Holdings received by such holders is approximately equivalent to the aggregate cash distributions they would have been entitled to receive if they had elected to receive the cash distributions. Such payments and the issuance of shares of reorganized Reddy Holdings to the existing holders of common stock will be made from the distributions made under the Plan to the holders of the Second Lien Notes.

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holders of voting securities for vote. The share of class A common stock of reorganized Reddy Holdings will be entitled to 10,000,000 votes. Class A common stock of reorganized Reddy Holdings will not be entitled to the payment of any dividends or distributions and is redeemable by Reddy Holdings for $0.01 upon (x) the liquidation, dissolution or winding up of the affairs of Reddy Holdings or (y) the consummation or termination of the Arctic Acquisition.

Preferred Stock. Holders of Second Lien Notes who participate in the rights offering and Centerbridge, in connection with the Investment Agreement, the equity financing of the Arctic acquisition (if applicable) and the conversion of a portion of its First Lien Notes (if applicable), will receive new preferred stock of reorganized Reddy Holdings. The preferred stock will be perpetual, participating, cumulative preferred stock, with a 7.0% cumulative coupon payable in cash or in-kind at our option. The preferred stock will mandatorily convert into common stock upon the earlier of (x) our achievement of a total net debt to EBITDA ratio of less than 3.0:1.0 for a period of four consecutive quarters or (y) completion of a qualifying initial public offering of reorganized Reddy Holdings' common stock. The preferred stock may be optionally converted by the holder at any time. Holders of preferred stock will vote with the common stock on an as converted basis.

Investment Agreement. In order to fund costs associated with the Restructuring and further reduce our level of indebtedness upon emergence, as well as to help enable us to acquire Arctic in the event we are the successful bidder, we have entered into an investment agreement with Centerbridge (the "Investment Agreement"). The Investment Agreement includes commitments of Centerbridge to (w) backstop the rights offering, (x) directly purchase New Preferred Stock in an amount not less than $7.5 million, (y) provide equity capital for the acquisition of Arctic and (z) in the event of the failure to acquire Arctic, exchange First Lien Notes for New Preferred Stock of Reddy Holdings, in each case subject to certain terms and conditions.

Rights Offering. In order to fund costs associated with the Restructuring and further reduce our level of indebtedness upon emergence, we will undertake and consummate a $17.5 million rights offering for preferred stock of Reddy Holdings in connection with our emergence from protection under the Bankruptcy Code. The rights offering will be open to existing holders of our Second Lien Notes on a ratable basis.

Credit Facility. On March 27, 2012, we entered into an amendment of our existing credit facility with Macquarie Bank Limited, the sole lender under our existing credit facility. The amendment (i) eliminates the minimum liquidity contained in the existing credit facility through July 15, 2013 and (ii) permits us to obtain additional liquidity through (x) an additional $10 million term loan from Macquarie Bank Limited, secured by certain unencumbered real estate assets, and (y) the factoring of accounts receivable. Assuming we execute on the Restructuring described below by filing the Bankruptcy Cases and obtaining the DIP Credit Facility, we do not anticipate utilizing the additional liquidity mechanisms described above. In connection with obtaining the amendment to our existing credit facility and Macquarie Bank Limited's commitment for the additional term loan, we paid a non-refundable fee of $2.0 million to Macquarie Bank Limited in March of 2012.

On March 30, 2012, we obtained a waiver from Macquarie Bank Limited of any default or event of default that may have occurred as a result of our failure to deliver our 2011 financial statements by March 30, 2012, or that may occur as a result of our delivery of our 2011 financial statements containing an impermissible qualification as defined in our existing credit facility relative to substantial doubt about our ability to continue as a going concern. The waiver extends the time period during which we may deliver our 2011 financial statements to Macquarie Bank Limited to April 16, 2012. The waiver terminates (i) on April 16, 2012 if we have not delivered our 2011 financial statements by that date, (ii) upon the occurrence of an event of default not specifically waived and (iii) in all other circumstances on March 30, 2013.

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Upon commencing the Bankruptcy Cases described above, we will seek Bankruptcy Court approval to enter into a new debtor-in-possession revolving credit facility with Macquarie Bank Limited, as the sole lender and administrative agent (the "DIP Credit Facility"). There can be no assurance that the Bankruptcy Court will approve the DIP Credit Facility. If approved, the DIP Credit Facility will consist of a $70 million revolving credit facility, the proceeds of which will be used to repay our existing credit facility upon entry of the interim order approving the DIP Credit Facility. The DIP Credit Facility will also provide additional liquidity during the restructuring process described below and will, subject to the satisfaction of certain conditions, some of which are not in our control, be converted into a senior secured first lien revolving credit facility on substantially the same terms as the existing credit facility upon our emergence from bankruptcy.

Borrowings under the DIP Credit Facility will bear interest at a rate equal to LIBOR plus an applicable margin of 7.0% per annum, or, at our option, the Alternative Base Rate plus an applicable margin of 6.0% per annum. LIBOR and the Base Rate are subject to floors of 1.5% and 2.5% respectively. The DIP Credit Facility will not provide for the issuance of letters of credit. The DIP Credit Facility will mature three months from the date of initial availability under the DIP Credit Facility, with a three month extension at our option, subject to limited conditions to extension, including the payment of an extension fee equal to 1.25% of the full amount of the DIP Credit Facility.

The obligations under the DIP Credit Facility will be fully and unconditionally guaranteed by Reddy Holdings and will also be guaranteed by any future domestic subsidiaries of Reddy Corp. Subject to the approval of the bankruptcy court, the DIP Credit Facility will be collateralized by first priority liens on substantially all of Reddy Corp's assets and will be entitled to superpriority administrative claim status.

Subject to certain conditions, mandatory prepayments of the DIP Credit Facility (and mandatory commitment reductions of the DIP Credit Facility) will be required to be made with portions of proceeds from asset sales, subject to various exceptions.

The DIP Credit Facility will contain affirmative and negative covenants applicable to Reddy Corp and its future subsidiaries, subject to materiality and other qualifications, baskets and exceptions. The affirmative and negative covenants will be substantially the same as the existing credit facility, modified as necessary to reflect the commencement and continuation of the Bankruptcy Cases and the effects that customarily result from reorganization under Chapter 11 of the Bankruptcy Code. The financial covenants will include a maximum leverage ratio, compliance with cash flow budgets and repayment limitation.

Obligations under the DIP Credit Facility may be declared immediately due and payable upon the occurrence of certain events of default, subject to thresholds and grace periods in some cases. The events of default will be substantially the same as those contained in the existing credit facility, modified as necessary to reflect the commencement of the Bankruptcy Cases and such other matters as the administrative agent shall specify.

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WEBSITE ACCESS TO COMPANY'S REPORTS

Our Internet website address is www.reddyice.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. Our Corporate Governance Guidelines, Board of Directors committee charters (including the charters of the Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee), Insider Trading Policy and Code of Business Conduct and Ethics are also available on our website. Our filings may also be read and copied at the SEC's Public Reference Room at 100 F Street, NE Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

ITEM 1A. Risk Factors

Risks Related to the Chapter 11 cases and the Plan of Reorganization

The commencement of a Chapter 11 cases for the purposes of implementing the Plan of Reorganization may result in a number of adverse consequences.

The Chapter 11 environment may adversely affect our business.

We are engaged in manufacturing and distributing packaged ice and providing related services to customers. Although we intend to continue to provide such products and services to our customers in the normal course, there can be no assurances that counterparties will continue to conduct business with us while we are in Chapter 11. The failure to provide these products and services will result in material losses.

If the Company receives the requisite votes to accept the Plan of Reorganization, there can be no assurance that the Bankruptcy Court will confirm the Plan of Reorganization.

Although we may obtain the requisite votes to accept the Plan of Reorganization, there can be no assurance that parties will not seek to oppose confirmation of the Plan of Reorganization or that the Bankruptcy Court may otherwise decline to confirm the Plan of Reorganization.

If the Plan of Reorganization is confirmed, there can be no assurance that the effective date of the Plan of Reorganization will occur.

Although we believe that the effective date of the Plan of Reorganization will occur reasonably soon after the Bankruptcy Court enters a confirmation order on the docket of the Bankruptcy Cases, there can be no assurance as to such timing or as to whether it will occur.

There can be no assurance that the Bankruptcy Court will approve the classification scheme in the Plan of Reorganization.

The Bankruptcy Court, which sits as a court of equity, may exercise substantial discretion in connection with the Plan of Reorganization. Section 1122 of the Bankruptcy Code requires that the Plan of Reorganization classify claims against, and interests in, us. The Bankruptcy Code also provides that the Plan of Reorganization may place a claim or interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of such class. We believe that all claims and interests have been appropriately classified in the Plan of Reorganization. There can be no

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assurance, however, that the Bankruptcy Court will conclude that such claims and interests are properly classified in the Plan of Reorganization.

In the event that we are unable to reduce our indebtedness through the transactions contemplated by the Plan of Reorganization, there is substantial doubt about our ability to continue as a going concern.

If we are unable to complete the transactions contemplated by the Plan of Reorganization, we may need to seek bankruptcy protection without the benefit of a plan supported by major creditors. We cannot guarantee that we can generate sufficient cash flow to continue to meet our obligations in the future, and if we cannot do so, we will not be able to continue as a going concern.

The Plan of Reorganization and the related transactions, which contemplate transactions that will modify our capital structure and the structure and operation of our businesses, are based in large part upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, our plan may be unsuccessful in its execution and we may be unable to continue as a going concern.

The Plan of Reorganization and the transactions related thereto, which contemplate transactions that will affect both our capital structure and the structure and operation of our businesses, are based upon assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we consider appropriate under the circumstances. Whether actual future results and developments will be consistent with our expectations and assumptions depends on a number of factors, including but not limited to (i) our ability to obtain adequate liquidity and financing sources and establish an appropriate level of debt, including our ability to consummate the transactions contemplated by the Plan of Reorganization; (ii) our ability to restore customers' confidence in our viability as a continuing entity and to attract and retain sufficient customers; (iii) our ability to retain key employees in those businesses that we intend to continue to emphasize; and (iv) the overall strength and stability of general economic conditions, both in the United States and in global markets. The failure of any of these factors could materially adversely affect the successful execution of the restructuring of our businesses.

In addition, the Plan of Reorganization and the transactions contemplated thereby rely upon financial forecasts, including with respect to revenue growth, improved earnings before interest, taxes, depreciation and amortization, improved interest margins, and growth in cash flow. Financial forecasts are necessarily speculative, and it is likely that one or more of the assumptions and estimates that are the basis of these financial forecasts will not be accurate. Accordingly, we expect that our actual financial condition and results of operations will differ, perhaps materially, from what we have anticipated. Consequently, there can be no assurance that the results or developments contemplated by the Plan of Reorganization and the transactions contemplated thereby will occur or, even if they do occur, that they will have the anticipated effects on us and our subsidiaries or our businesses or operations. The failure of any such results or developments to materialize as anticipated could materially adversely affect the successful execution of the transactions contemplated by the Plan of Reorganization.

Our operations will be subject to the uncertainties of the bankruptcy process.

While our voluntary refinancing plan has been approved by a substantial portion of our creditors and we expect to complete the filing process expeditiously, negative events or publicity associated with our process and events during the proceedings could adversely affect our relationships with customers, vendors or employees, which in turn could adversely affect our operations and financial condition. Further, our ability to obtain court approval of routine motions that will allow us to operate our business normally is not within our control. The voluntary refinancing plan is also subject to certain closing conditions, all of which must be satisfied in order for us to emerge from the Chapter 11

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process. There can be no assurance that the Restructuring will be consummated on the terms described herein, or at all.

The strategic acquisition opportunity may not be successful.

On March 28, 2012, we submitted a non-binding letter of intent to Arctic Glacier Income Fund related to our interest in acquiring substantially all of Arctic's business and assets. On April 5, 2012, we were advised by the financial adviser to Arctic that we were approved to move to phase 2 of the SISP. The successful bidder will be selected at the end of phase 2 of the SISP. There can be no assurance that our bid will be successful, or, if so, that we will be able to meet the conditions and timelines of Arctic's SISP, and any final bid is subject to, among other things, completion of due diligence, negotiation of transaction documents and financing commitments. In the event that we do not acquire Arctic, we will not realize the benefits we hope to achieve from the Arctic acquisition.

Risks Related to Our Business

We have a substantial amount of indebtedness, which may reduce our cash flow and impede our ability to remain in compliance with debt covenants, make payments on our indebtedness, operate our business and pay dividends on our common stock.

As of December 31, ~~2010~~2011, we had outstanding indebtedness of approximately $~~450~~471.75 million, which represented approximately ~~107~~126% of our total consolidated capitalization on a book basis. As of December 31, ~~2010~~2011, we also had availability of $5029.03 million under our revolving credit facility.

Our substantial indebtedness could have important consequences. For example, it could:

•: make it more difficult for us to comply with the terms of our outstanding debt;
•: require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt;
•: make us more vulnerable to, and reduce our flexibility in planning for, changes in general economic, industry and competitive conditions;
•: limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our strategy, or other purposes; and
•: place us at a disadvantage compared to our competitors with less debt.

15 Any of the above listed factors could make us more vulnerable to defaults and place us at a competitive disadvantage, therefore making an investment in our common stock less attractive when compared to other investments. Further, if we do not have sufficient earnings to service our debt, we would need to restructure all or part of our existing debt, sell assets, borrow more money or sell securities, none of which we can guarantee we will be able to do on commercially reasonable terms or at all.

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Any of the above listed factors could make us more vulnerable to defaults and place us at a competitive disadvantage, therefore making an investment in our common stock less attractive when compared to other investments. Further, if we do not have sufficient earnings to service our debt, we would need to refinance all or part of our existing debt, sell assets, borrow more money or sell securities, none of which we can guarantee we will be able to do on commercially reasonable terms or at all.

Despite our current indebtedness levels, we may still incur significant additional indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness.

We may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. The terms of the indentures governing the first lien notes, the second lien notes, and our revolving credit facility do not limit Reddy Holdings' ability to incur additional indebtedness. The terms of the indentures governing the first lien notes, the second lien notes, and our revolving credit facility limit, but do not prohibit, Reddy Corp from incurring additional indebtedness. In addition, the indentures and our revolving credit facility allow us to issue additional first lien notes and second lien notes under certain circumstances. Such additional notes will also be guaranteed by Reddy Holdings and will share in the collateral that secures the first lien notes, the second lien notes and the revolving credit facility. The indentures and our revolving credit facility also allow Reddy Corp to incur certain other additional secured debt and allow any future foreign subsidiaries to incur additional debt. In addition, the indentures and our revolving credit facility do not prevent Reddy Corp from incurring other liabilities that do not constitute indebtedness. If we incur new debt or other liabilities, the related risks that we now face could intensify.

Our new credit facility and the indentures governing the first lien notes and the second lien notes impose significant operating and financial restrictions on us and our future subsidiaries, which may prevent us from capitalizing on business opportunities and taking some actions. 23

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Reddy Holdings and will share in the collateral that secures the first lien notes, the second lien notes and the revolving credit facility. The indentures and our revolving credit facility also allow Reddy Corp to incur certain other additional secured debt and allow any future foreign subsidiaries to incur additional debt. In addition, the indentures and our revolving credit facility do not prevent Reddy Corp from incurring other liabilities that do not constitute indebtedness. If we incur new debt or other liabilities, the related risks that we now face could intensify.

Our credit facility and the indentures governing the first lien notes and the second lien notes impose significant operating and financial restrictions on us and our future subsidiaries, which may prevent us from capitalizing on business opportunities and taking some actions.

The agreements that govern the terms of our debt, including the indentures that govern the first lien notes and the second lien notes and our revolving credit facility, impose significant operating and financial restrictions on us. These restrictions limit our ability to, among other things:

•: incur additional indebtedness;
•: incur liens;
•: make investments and sell assets;
•: pay dividends and make other distributions;
•: purchase our stock;
•: engage in business activities unrelated to our current business;
•: enter into transactions with affiliates; or
•: consolidate, merge or sell all or substantially all of our assets.

In addition, under our revolving credit facility we are required to satisfy and maintain specified financial ratios and other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those ratios and tests. A breach of any of these covenants could result in a default under our revolving credit facility. Upon the occurrence of an event of default under our revolving credit facility, our lenders could elect to declare all amounts outstanding under our revolving credit facility to be immediately due and payable and terminate all commitments to extend further credit. If more than $10.0 million of indebtedness is outstanding under our revolving credit facility at the time of any such acceleration, an event of default will occur under the indentures governing the first lien notes and the second lien notes.

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As a result of these covenants and restrictions, we are limited in how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be due and payable immediately and proceed against any collateral securing that indebtedness.

This, in turn, could cause our other debt to become due and payable as a result of cross-acceleration provisions contained in the agreements governing such other debt. In the event that some or all of our debt is accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to ~~refinance~~restructure, such debt.

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We may not be able to generate sufficient cash to service our indebtedness and we may be forced to take other actions to satisfy our payment obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to ~~refinance~~restructure our debt obligations depends on our future performance, which will be affected by financial, business and economic conditions and other factors. We will not be able to control many of these factors, such as economic conditions in the industry in which we operate and competitive pressures. Our cash flow may not be sufficient to allow us to pay principal and interest on our debt and to meet our other obligations. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or ~~refinance~~ restructure our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In addition, the terms of existing or future debt agreements, including our revolving credit facility and the indentures relating to the first lien notes and the second lien notes, may restrict us from pursuing any of these alternatives.

Litigation and investigations pending against us could materially impact our business and results of operations.

We are currently a party to various legal proceedings, claims, disputes, litigation and investigations. In particular, various state attorneys general are conducting civil investigations into possible antitrust violations in the packaged ice industry. Numerous putative class actions have also been filed against us, certain of our current and former directors and officers and other packaged ice producers alleging violations of Federal and state antitrust laws and related claims. Class actions have also been filed alleging violations of Federal securities laws ~~and derivative claims have been filed against our directors and officers~~.

Investigating these matters and responding to the government investigations and related civil litigation involve substantial expense to us, which ~~has~~ had and could continue to have a material adverse impact on our financial position and our results of operations, and may distract and disrupt our business. We have reached settlements with our insurance carriers regarding these matters and do not anticipate any further insurance recoveries to fund these expenses. In addition, our financial results could be materially and adversely impacted by unfavorable outcomes in any of these or other pending or future litigation or investigations. We may be required to pay substantial amounts as damages and costs in the civil litigation as a result of an unfavorable determination by a court or jury. We could also pay substantial amounts in settlement of some or all of the civil claims and investigations. In addition, our ability to do business with the government may be negatively impacted by an unfavorable outcome of the civil investigations. Our ability to complete potential acquisitions may also be negatively impacted by antitrust investigations and litigation in the packaged ice industry. Our ability to comply with the covenants in our debt agreements may also be adversely affected by the costs of such investigations and litigation as well as any unfavorable outcomes in these or other pending or future litigation or investigations. There can be no assurances as to the outcome of any litigation or investigation and the outcome of any such litigation, investigations and other claims are subject to inherent uncertainties. There also exists the possibility of a material adverse impact on our financial position and our results of operations for the period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable.

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litigation or investigations. There can be no assurances as to the outcome of any litigation or investigation and the outcome of any such litigation, investigations and other claims are subject to inherent uncertainties. There also exists the possibility of a material adverse impact on our financial position and our results of operations for the period in which the effect of an unfavorable final outcome becomes probable and reasonably estimatable.

The seasonal nature of the ice business results in losses and lower margins in the first and fourth quarters of the year.

We experience significant seasonal fluctuations in our net sales and profitability. We make a disproportionate amount of our sales in the second and third calendar quarters when the weather is generally warmer, which results in an increased demand for ice. We also earn any net income during these same periods. As a result of seasonal revenue declines and the lack of a corresponding decrease in certain expenses, we experience net losses and materially lower profit margins during the first and fourth calendar quarters. Variations in demand could have a material adverse effect on the timing of our cash flows and therefore limit our ability to timely service our obligations with respect to our indebtedness, our ability to pay dividends and our ability to incur capital expenditures. In addition, because our operating results depend significantly on sales during the second and third calendar quarters, our results of operations may fluctuate significantly if the weather during these periods is cool or rainy.

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fourth calendar quarters. Variations in demand could have a material adverse effect on the timing of our cash flows and therefore limit our ability to timely service our obligations with respect to our indebtedness, our ability to pay dividends and our ability to incur capital expenditures. In addition, because our operating results depend significantly on sales during the second and third calendar quarters, our results of operations may fluctuate significantly if the weather during these periods is cool or rainy.

Our revenues and sales volumes may be negatively impacted by macroeconomic factors outside of our control.

We believe end users of our products use packaged ice in many applications, including recreational activities, the construction industry, agriculture and special events. In the past three years multiple segments of the United States economy, including housing and construction and the credit markets, have deteriorated. Our revenues, sales volumes and profits have declined as a result of this deterioration and our revenues, sales volumes and profits may continue to decline as activity by commercial end users of our products declines. Furthermore, weakness in the national economy combined with other factors including inflation, interest rate fluctuations, increases in fuel and other energy costs and healthcare costs and the availability of financing, including mortgages and consumer credit, may negatively impact consumer confidence and result in changes to consumer spending patterns. If consumer or commercial activities associated with the use of our products decline, our revenues, sales volumes, profits and cash flows may decline.

Weather conditions and weather events can decrease our sales or increase our expenses.

Cool or rainy weather can decrease sales, while extremely hot weather may increase our expenses, each resulting in a negative impact on our operating results and cash flow. Ice consumers demand ice for a variety of reasons, but many of them buy ice in connection with outdoor related activities, both commercial and recreational. As a result, demand for ice increases during periods of warm, sunny weather, and conversely, demand decreases during periods of cool, rainy weather. During extended periods of cool or rainy weather on a national or regional basis, our revenues and resulting net income may substantially decline. Also, hot weather does not necessarily result in greater net income. During extended periods of hot weather, our profits and cash flow may decline because of an increase in expenses in response to excess demand. We may have to transport ice from one plant to another and, in some cases, purchase ice from third party sources and transport it to a specific market to meet this excess demand, resulting in higher expenses and inconsistent service and product quality. Finally, although extreme weather events such as hurricanes can cause an increase in volume sales, those sales are not necessarily profitable due to added costs and disruptions to our normal service and distribution routes.

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Implementation of our business strategy will require substantial capital investments; failure to obtain sufficient capital resources could limit our prospects, adversely affecting our results of operations and cause us to lose market share.

We have developed a strategic vision to become our customers' "Total Ice Solution." Implementation of this strategic vision will require substantial capital resources to make investments in our infrastructure, manufacture and install additional ISB systems and invest in the ice machine subscription business. We may be unable to obtain access to sufficient capital to implement any or all of these initiatives. If we fail to successfully implement our strategic plan, our business will not grow as we intend, our results of operations could be adversely affected and we may be unable to repay our debt.

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Our failure to successfully compete in our markets, retain existing customers and obtain new customers could limit our prospects and cause us to lose market share.

Our business is highly competitive. We have many competitors in each of our geographic markets offering similar products and services. We also face competitors offering alternative technological solutions to ice production and delivery throughout our markets, including ice vending. Competition in our business is based primarily on service, quality and price. We could lose market share if we fail to successfully compete against our competitors in any of these areas, if our existing competitors expand their capacity, if new entrants successfully penetrate our markets, if we fail to adequately serve our existing base of customers, or if our larger mass merchant, grocery or convenience store customers decide to manufacture their own ice rather than purchase our products.

Increases in the prices of electricity, certain raw materials, fuel, insurance and other required expenses could, if we cannot pass those price increases along to our customers, have an adverse effect on our results of operations.

We use substantial amounts of polyethylene, which is the primary raw material used to manufacture the bags we use to package our ice, electricity in connection with our manufacturing process and fuel to operate the refrigerated trucks for ice delivery. We use approximately 45 million gallons of diesel and gasoline an annual basis. A one dollar change in the price of crude oil translates into an approximately two cents change in the price per gallon of fuel or $0.081 million on an annual basis. We also carry general liability, workers' compensation, health and vehicle insurance. We have experienced increases in bag, fuel, electricity and insurance costs in the past and may experience increases in such costs in the future. If the prices for these items or other expenses increase beyond the amounts that we are able to pass along to our customers, our margins and our operating cash flow would decrease.

Our acquisitions may not be successfully integrated and could cause unexpected financial or operational difficulties; failure to make acquisitions may limit our growth.

From ~~the fourth quarter of~~ 2003 through March ~~2011~~2012, we completed a total of 7778 acquisitions. We expect to continue to acquire additional businesses, assets or securities of companies that we believe would provide a strategic fit with our business. Acquisitions are also accompanied by risks, such as potential exposure to unknown liabilities of acquired companies and the possible loss of key employees and customers of the acquired business. Further, acquisitions are subject to risks associated with the difficulty and expense of integrating the operations and personnel of the acquired companies, the potential disruption to our business and the diversion of management time and attention, any of which could increase the costs of operating our business, negate the expected benefits of the acquisitions or result in the loss of customers. We may also incur substantial costs in connection with the pursuit of acquisitions which are not ultimately consummated.

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We are continuing to evaluate acquisition opportunities as part of our ongoing acquisition strategy. These opportunities will be evaluated in light of the availability of capital resources, which may be constrained. A substantial portion of the historical growth in our business has been as a result of acquisitions. If the size and number of our future acquisitions decreases from our historical trend, our business may not grow as rapidly, or at all, as compared to historical periods.

We could incur substantial costs as a result of violations of or liabilities under environmental laws.

Our operations are subject to a wide range of environmental laws and regulations governing, among other things, air emissions, wastewater discharges, the use, management and disposal of hazardous and non-hazardous materials and wastes and the cleanup of contamination. Noncompliance with such laws and regulations, or incidents resulting in environmental releases, could cause us to incur substantial costs, including cleanup costs, fines and penalties, third party claims for personal injury, investments to retrofit or upgrade our facilities and programs, or curtailment of our operations. For example, our ice manufacturing and distribution operations use refrigerants such as ammonia and Freon. Some of our facilities may not be in compliance with certain Freon refrigerant requirements, such as leak detection and repair, recordkeeping or reporting. In addition, the market price of Freon is rising as a result of phase-outs under federal laws, which could significantly increase our operating costs in the future if we are not able to obtain approved substitutes. From time to time, our use of ammonia has resulted in releases that have temporarily disrupted our manufacturing operations and resulted in lawsuits or administrative penalties.

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substantial costs, including cleanup costs, fines and penalties, third party claims for personal injury, investments to retrofit or upgrade our facilities and programs, or curtailment of our operations. For example, our ice manufacturing and distribution operations use refrigerants such as ammonia and Freon. Some of our facilities may not be in compliance with certain Freon refrigerant requirements, such as leak detection and repair, recordkeeping or reporting. In addition, the market price of Freon is rising as a result of phase-outs under federal laws, which could significantly increase our operating costs in the future if we are not able to obtain approved substitutes. From time to time, our use of ammonia has resulted in releases that have temporarily disrupted our manufacturing operations and resulted in lawsuits or administrative penalties.

Material violations of, or liabilities under, environmental laws, including violations and liabilities incurred by entities which we have acquired, may require us to incur substantial costs which could reduce our margins, or divert resources from ongoing environmental programs and improvements, which could delay our efforts to integrate acquisitions and upgrade our operations, or expose us to risk of further environmental liability.

Our business could be disrupted or we could incur substantial costs because of government laws and regulations.

We are subject to various federal, state and local laws relating to many aspects of our business, including labeling, sanitation, health and safety and manufacturing processes. We cannot predict the types of government regulations that may be enacted in the future or how existing or future laws or regulations will be interpreted or enforced. The enactment of more stringent laws or regulations or a stricter interpretation of existing laws and regulations may cause a disruption in our operations or require additional expenditures by us, some of which could be material. We may incur material costs and liabilities in order to comply with any such laws and regulations and such costs and liabilities may result in substantial expenses to us and could divert management's time and attention.

If we are unable to retain senior executives and attract and retain other qualified employees, our business might be adversely affected.

Our success depends in part on our ability to attract, hire, train and retain qualified managerial, sales and marketing personnel. Competition for these types of personnel is high. Our success also depends to a significant extent on the continued service and performance of our management team and, in particular, our senior management, including our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Administrative Officer, and Chief Customer Officer. We may be unsuccessful in attracting and retaining the personnel we require to conduct our operations successfully. We cannot assure you that we will be successful in attracting suitable candidates for other positions that are or may need to be filled. In particular, uncertainty related to the ongoing antitrust investigations and related civil litigation may make attracting qualified personnel more difficult and may make it more difficult to retain our existing management team. Our inability to successfully attract and retain qualified personnel or the loss of any member of our management team could impair our ability to execute our business plan. In addition, we do not carry "key man" life insurance which would mitigate the impact of any such impairment.

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execute our business plan. In addition, we do not carry "key man" life insurance which would mitigate the impact of any such impairment.

Accidents involving our products and equipment could expose us to increased costs as a result of product liability claims.

We are subject to a risk of product liability claims and adverse publicity if a consumer is or claims to be harmed while using our products or equipment. Any such claim may result in negative publicity, loss of revenues or higher costs associated with litigation.

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We currently carry product liability insurance. However, this insurance may be insufficient to pay for all or a large part of these losses. If our insurance does not adequately cover these losses, our results of operations and cash flow would decrease and such a decrease could be material.

We may lose customers' business to competitors as a result of our limited intellectual property protection, including on The Ice Factory.

As the major ice supplier with the most widely deployed on-site production and delivery system at our customers' retail locations, we have enjoyed a competitive advantage over our competitors. Our proprietary ISB system is preferred by certain of our high volume customers to traditional ice delivery and gives us more flexibility during peak seasons. However, our intellectual property rights are limited in scope and value, and certain of our patents are set to expire at various dates from ~~2011~~2012 through 2026. Competitors sometimes test and deploy machines similar to our ISB system. Certain competitors had some success in rolling out such systems in certain of our markets, resulting in loss of business to these competitors. If any of our competitors are successful with a significant rollout of any such systems, we could lose business to these companies, which would result in decreased cash flows and results of operations.

Other competitors in the ice vending segment are testing and deploying self-contained units to produce ice at the point of sale. Certain of these competitors have had limited success in our markets.

It is our practice to protect certain of our proprietary materials and processes by relying on trade secret laws and non-disclosure and confidentiality agreements. Confidentiality or trade secrets may not be maintained and others may independently develop or obtain access to such materials or processes, which could adversely affect our competitive position and ability to differentiate our products and services from our competitors' offerings.

Limitations on our ability to utilize our tax assets before they expire may negatively affect financial results and the ability to pay dividends.

As of December 31, ~~2010~~2011, we had net operating loss carryforwards for U.S. federal income tax purposes of approximately $~~150~~203.30 million, of which approximately $21.2 million were generated prior to August 15, 2003. There are annual limitations on the utilization of the $21.2 million portion of the net operating loss carryforwards due to changes in ownership on and prior to August 15, 2003. Further, since at the closing of our initial public offering on August 12, 2005 our prior equity investors ceased to own a majority of our common stock, new limitations apply to the approximately $32.6 million of net operating loss carry-forwards that were generated from August 15, 2003 to August 12, 2005 and additional limitations apply to the net operating loss carry-forwards generated prior to August 15, 2003.

If we are not able to utilize our tax assets in the manner or in the timeframe we anticipate, our future after-tax cash flow will be reduced.

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We do not have written customer agreements with most of our customers, which could lead to unexpected customer loss and adversely affect our business.

As is customary in our industry, we do not have written agreements with most our customers, although recent trends indicate that written agreements with larger national accounts are becoming more prevalent. As a result, most of our customers can terminate their relationship with us at any time without notice or penalty. In addition, even if our customers should decide to continue their relationship with us, there can be no guarantee that our customers will purchase the same amount of our products as in the past, or that purchases will be on similar terms. Any loss of a significant customer, change in the terms of the relationship with a significant customer or a material decrease in the amount of products purchased by a significant customer could have a material adverse ~~affect~~effect on our business, results of operation and financial condition.

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The expansion of our ISB and ice machine subscription businesses may not provide expected returns, which could adversely affect our results of operations and financial condition.

Our strategic vision calls for, among other things, expansion of our ISB and ice machine subscription businesses.

Proper site selection is critical to achieving the required financial return on an ISB system to support the upfront capital expenditures required to build and place each ISB system. If we fail to properly select sites for additional ISB systems, if the costs of operating and maintaining those systems exceed our expectations or if we fail to obtain sufficient pricing from our customers to support those systems, we would not achieve our expected returns on our investments in additional ISB systems and our results of operations and financial condition could be adversely affected.

We have limited experience in the ice machine subscription business. Expansion of that business will require capital investments and may involve ~~unforseen~~unforeseen risks. Failure to achieve our anticipated results in the ice machine subscription business could adversely affect our results of operations and financial condition.

Risks Relating to Our Common Stock

~~Our~~The price of our common stock ~~could~~may bedecline ~~delisted~~as ~~from~~a ~~the~~result ~~New~~of ~~York~~our ~~Stock~~Chapter 11 ~~Exchange~~filing.

~~The~~As ~~continued listing standards~~ of ~~the New York Stock Exchange ("NYSE") require us to maintain~~March 30, ~~among other things~~2012, awe ~~market capitalization~~had orapproximately ~~stockholders~~24.0 million ~~equity~~of ~~above~~common astock ~~specified~~shares ~~threshold~~outstanding. ~~Although~~The weprice ~~are~~of ~~currently in compliance with the minimum market capitalization requirement,~~ our ~~market~~common ~~capitalization is not~~stock ~~significantly~~could inbe ~~excess~~adversely ofaffected ~~the~~by ~~threshold.~~our Todecision ~~the~~to ~~extent~~commence wea ~~cannot~~Chapter 11 ~~meet the applicable standards~~filing, ~~our~~due ~~stock could ultimately become delisted. We cannot assure you that we will be able~~ to ~~maintain our listing with~~ the ~~NYSE,~~potential ornegative ~~list~~impacts onof ana ~~alternate~~filing ~~stock~~as ~~exchange~~well inas the ~~event~~potential ~~our~~dilutive ~~common~~impact ~~stock~~on, isor ~~delisted~~elimination ~~by the NYSE. A delisting~~ of ~~our common stock could materially and adversely affect~~, ~~among other~~ ~~things,~~existing ~~the~~shares ~~liquidity and market price~~ of ~~our~~ common stock; ~~the~~as ~~number~~a result of ~~investors willing to hold or acquire our common stock; and our access to capital markets to raise capital in the future~~restructuring.

The limited trading market for our common stock ~~may~~results bein ~~volatile,~~limited ~~which~~liquidity ~~could~~for ~~cause~~shares ~~the~~of ~~value~~our ofcommon ~~your~~stock ~~investment~~and tosignificant ~~decrease~~volatility in our stock price.

~~Volatility~~Although inprices ~~the~~for ~~market~~our ~~price~~shares of ~~our~~ common stock ~~may~~are ~~prevent~~quoted ~~you~~on ~~from~~the ~~being~~OTC ~~able~~electronic tointerdealer ~~sell~~quotation ~~our~~system ~~common~~("OTCBB"), ~~stock~~there ~~held~~is bylittle current ~~you~~trading atand orno ~~above~~assurance ~~the price~~can ~~you~~be ~~paid~~given ~~for~~that ~~it.~~an ~~The~~active public trading market ~~price~~will ofdevelop ~~our~~or, ~~common~~if ~~stock~~developed, ~~may~~that ~~fluctuate~~it ~~widely~~will be sustained. The OTCBB is generally regarded as a ~~result~~less ofefficient ~~various~~and less ~~factors,~~prestigious ~~such~~trading asmarket ~~period-to-period~~than ~~fluctuations~~other innational markets. There is no assurance if or when our ~~actual~~common stock will be quoted on another more prestigious exchange or ~~anticipated~~ ~~operating~~market. ~~results,~~Active ~~developments~~trading markets generally result in ~~litigation~~lower ~~and~~price ~~investigations~~volatility ~~impacting~~and ~~us,~~more ~~sales~~efficient execution of ~~our~~buy ~~common~~and ~~stock~~sell byorders. ~~our~~The ~~existing~~absence ~~equity~~of ~~investors,~~an ~~developments~~active intrading ~~our~~market ~~industry,~~reduces the ~~failure~~liquidity of our common stock.

22 The market price of our stock is likely to be highly volatile because for some time there will likely be a thin trading market for the stock, which causes trades of small blocks of stock to have a significant impact on our stock price. As a result of the lack of trading activity, the quoted price for our common stock on the OTCBB is not necessarily a reliable indicator of its fair market value. Further, if we cease to be quoted, holders of our common stock would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our common stock, and the market value of our common stock would likely decline.

Trading in our common stock will be subject to regulatory restrictions since our common stock is considered a "penny stock".

Our common stock is currently, and in the near future will likely continue to be, considered a "penny stock." The Securities and Exchange Commission ("SEC") has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume

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~~securities~~information ~~analysts~~with respect to ~~cover~~transactions ~~our~~in ~~common~~such ~~stock~~securities is provided by the exchange or ~~changes~~system). inThe ~~financial~~penny ~~estimates~~stock byrule ~~analysts~~requires a broker-dealer, ~~failure~~prior to ~~meet~~a ~~financial~~transaction ~~estimates~~in bya ~~analysts~~penny stock not otherwise exempt from those rules, ~~competitive~~to ~~factors~~deliver a standardized risk disclosure document prepared by the SEC, ~~general~~which ~~economic~~specifies information about penny stocks and ~~securities market~~the ~~conditions~~nature and ~~other~~significance ~~external~~of ~~factors~~risks of the penny stock market. ~~Also,~~The ~~securities~~broker-dealer ~~markets~~also ~~worldwide~~must ~~experience~~provide ~~significant~~the ~~price~~customer with bid and ~~volume~~offer ~~fluctuations.~~quotations ~~This~~for ~~market~~the ~~volatility~~penny stock, asthe ~~well~~compensation asof ~~general~~the ~~economic~~broker-dealer orand ~~market conditions~~any salesperson in the transaction, and monthly ~~market~~account ~~conditions~~statements ~~affecting~~indicating the ~~stock~~market value of ~~companies~~each inpenny ~~our~~stock ~~industry~~held in ~~particular~~the customer's account. In addition, ~~could~~the ~~reduce~~penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the ~~market~~broker-dealer ~~price~~must ofmake ~~our~~a ~~common~~special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosures and other requirements may adversely affect the trading activity in ~~spite~~the ofsecondary market for our ~~operating~~common ~~performance~~stock.

~~Limited~~The ~~trading~~market ~~volume~~for of our common stock may ~~contribute~~be tovolatile, ~~its~~which ~~price~~could ~~volatility~~cause the value of your investment to decrease.

~~For~~Volatility in the ~~year~~market ~~ended~~price ~~2010,~~of ~~the~~our ~~average~~common ~~daily~~stock ~~trading~~may ~~volume~~prevent ~~for~~you from being able to sell our common stock asheld ~~reported~~ by you at or above the price ~~NYSE~~you ~~was~~paid ~~approximately~~for ~~135,532~~it. ~~shares and~~The ~~the~~market ~~median~~price ~~daily~~of ~~trading~~our ~~volume~~common ~~was~~stock ~~approximately~~may ~~80,950~~fluctuate ~~shares.~~widely Asas a result of various factors, ~~relatively~~such ~~small~~as ~~trades~~period-to-period ~~may~~fluctuations ~~have~~in aour ~~significant~~actual ~~impact~~or anticipated onoperating ~~the~~results, ~~price~~developments in litigation and investigations impacting us, sales of our common stock. ~~Additionally~~by our existing equity investors, developments in our industry, the failure of securities analysts to cover our common stock or changes in financial estimates by analysts, failure to meet financial estimates by analysts, competitive factors, general economic and securities ~~has~~market ~~very~~conditions ~~limited~~and ~~equity~~other ~~analyst~~external ~~coverage~~factors. Also, ~~which~~securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic or market conditions, and market conditions affecting the stock of companies in our industry in particular, could ~~negatively~~reduce ~~affect~~the market ~~demand~~price ~~for~~of our common stock in spite of our operating performance.

If our share price is volatile, we may be the target of securities litigation, which is costly and time-consuming to defend.

In the past, following periods of market volatility in the price of a company's securities, security holders have instituted class action litigation. We are currently the subject of securities class actions and stockholder derivative actions. This type of litigation, regardless of the outcome, can result in substantial legal costs and the diversion of our management's attention from the operation of our business, causing our business to suffer.

We are a holding company with no operations, and unless we receive dividends, distributions, advances, transfers of funds or other payments from our subsidiary, we will be unable to meet our debt service and other obligations.

We are a holding company and conduct all of our operations through our subsidiary. We do not have, apart from our ownership of our subsidiary, any independent operations. As a result, we will rely on dividends and other payments or distributions from our subsidiary to meet our debt service and other obligations. The ability of our subsidiary to pay dividends or make other payments or distributions to us will depend on our operating results and may be restricted by, among other things, the covenants that are contained in our indentures and our revolving credit facility and the covenants of any future outstanding indebtedness we or our subsidiary incur.

In addition, because we are a holding company, claims by our stockholders will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our subsidiary, including obligations under our indentures and our revolving credit facility. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our ~~subsidiary will be able to satisfy the claims of our stockholders only after all of our and our subsidiary's liabilities and obligations have been paid in full.~~

~~Provisions of our charter documents and the DGCL may inhibit a takeover, which could negatively affect our stock price.~~ 31

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~~without~~subsidiary ~~any~~will ~~vote~~be orable ~~action~~to bysatisfy ~~our stockholders. Our Board of Directors could therefore authorize and issue shares of preferred stock with voting or conversion rights that could dilute~~ the ~~voting~~claims ~~power or diminish other rights~~ of ~~holders of~~ our ~~common~~stockholders ~~stock.~~only ~~Additional~~after ~~provisions~~all ~~are~~of ~~included in~~ our ~~amended~~ and ~~restated~~our ~~certificate~~subsidiary's ofliabilities ~~incorporation~~ and ~~by-laws~~obligations ~~which~~have ~~could~~been ~~make~~paid itin ~~more difficult~~full. ~~for stockholders to effect certain corporate actions, including:~~

Provisions of our charter documents and the DGCL may inhibit a takeover, which could negatively affect our stock price.

Provisions of our charter documents and the corporation laws of the state in which we are incorporated could discourage potential acquisition proposals or make it more difficult for a third party to acquire control of our company, even if doing so might be beneficial to our stockholders. Our amended and restated certificate of incorporation and by-laws provide for various procedural and other requirements that could make it more difficult for stockholders to effect certain corporate actions. For example, our amended and restated certificate of incorporation authorizes our Board of Directors to determine the rights, preferences, privileges and restrictions of unissued series of preferred stock without any vote or action by our stockholders. Our Board of Directors could therefore authorize and issue shares of preferred stock with voting or conversion rights that could dilute the voting power or diminish other rights of holders of our common stock. Additional provisions are included in our amended and restated certificate of incorporation and by-laws which could make it more difficult for stockholders to effect certain corporate actions, including:

•: the sole power of a majority of the Board of Directors to fix the number of directors and to fill any vacancy on the Board of Directors;
•: requirements for advance notification of stockholder nominations and proposals; and
•: the inability of stockholders to act by written consent and restrictions on the ability of stockholders to call special meetings.

These provisions may discourage acquisition proposals and may make it more difficult or expensive for a third party to acquire a majority of our outstanding voting stock or may delay, prevent or deter a merger, acquisition, tender offer or proxy contest, which may negatively affect our stock price.

In addition, Section 203 of the General Corporation Law of the State of Delaware ("DGCL") prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns or within the last three years has owned 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Accordingly, Section 203 may discourage, delay or prevent a change in control of our company.

The payment of dividends is at the sole discretion of our Board of Directors.

We are not obligated to pay dividends on our common stock. On September 15, 2008, our Board of Directors amended our prior dividend policy and suspended our quarterly cash dividends indefinitely. No dividends have been declared for any period after July 1, 2008. The payment of dividends is at the sole discretion of our Board of Directors. Changes in our dividend policy may cause the market price of our common stock to decline and could further cause your shares of common stock to become less liquid, which may result in losses by you.

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Even if our Board of Directors desires to declare and pay dividends, we might not have cash in the future to pay dividends in the intended amounts or at all or we may be contractually or legally prohibited from paying dividends.

Our ability to pay dividends, and our Board of Directors' determination to declare any future dividends, will depend on numerous factors, including the following:

•: the state of our business, competition and changes in our industry;
•: changes in the factors, assumptions and other considerations made by our Board of Directors in reviewing and revising whether to declare any future dividends;
•: our future results of operations, financial condition, liquidity needs and capital resources;
•: our various expected cash needs, including cash interest and principal payments on our indebtedness, capital expenditures, the purchase price of acquisitions, incremental costs associated with being a public company and taxes;
•: our ability to maintain compliance with covenants in the agreements governing our outstanding indebtedness;
•: costs and expenses related to litigation, investigations and claims, including the ongoing antitrust investigations and related litigation; and
•: potential sources of liquidity, including borrowing under our revolving credit facility or possible asset sales.

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Our actual cash available to pay dividends may not equal or exceed the amount necessary to pay dividends at any time. Over time, our capital and other cash needs will invariably be subject to uncertainties, which could affect whether we pay dividends and the level of any dividends we may pay in the future. In addition, to the extent that we would seek to raise additional cash from additional debt incurrence or equity security issuances, we cannot assure you that such financing will be available on reasonable terms or at all. Each of the factors listed above could negatively affect our ability to pay any future dividends.

In addition, our revolving credit facility and our indentures restrict our ability to pay dividends. We refer you to "~~Long Term~~ Debt and Other Obligations" under Item 7, where we ~~describe~~ describe the terms of our indebtedness, including provisions limiting our ability to declare and pay dividends.

Also, under the DGCL, our Board of Directors may not authorize payment of a dividend unless it is either paid out of our surplus, as calculated in accordance with the DGCL, or if we do not have a surplus, it is paid out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

These restrictions may limit the dividends we are permitted to pay, or prohibit the payment of dividends entirely.

We have identified a material weakness in our internal controls over financial reporting.

We are required to make an assessment of the effectiveness of our internal control over financial reporting. ~~Our~~Based on our assessment in 2011, our management concluded that we did not maintain effective controls, including monitoring with respect to the ~~following~~accuracy, valuation, completeness, and existence of ice merchandiser equipment and other equipment and machinery. Although we made significant improvements to our processes during 2011 and are nearing completion of our remediation efforts, this control failure constitutes a material weakness in ~~the~~our ~~Company's~~ internal control over financial reporting as of December 31, ~~2010~~2011. (see Item 9A of Part II, "Controls and Procedures").

~~We did not maintain effective controls, including monitoring with respect to the accuracy, valuation, completeness, and existence of ice merchandiser equipment.~~ 33

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The Public Company Accounting Oversight Board (United States) ("PCAOB") defines a material weakness as a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

If we are unable to correct the identified deficiencies in our internal control in a timely manner, or if we identify other material weaknesses or deficiencies in the future, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC could be adversely affected. This failure could cause investors to lose confidence in our reported financial information, negatively affect the market price of our common stock, subject us to investigations and penalties, or otherwise adversely impact our business and financial condition.

ITEM 1B. Unresolved Staff Comments

None.

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ITEM 2. Properties

We maintain our principal executive offices in Dallas, Texas, where we lease approximately 32,217 square feet of space. The lease in Dallas expires in 2015. As of March 2530, ~~2011,~~2012 we owned or leased 58 ice manufacturing plants and 7277 distribution centers. As of March 2530, ~~2011~~2012, we leased 1314 of our ice manufacturing plants and 3133 of our distribution centers. The leases are scheduled to expire at various dates from ~~2011~~2012 to 2021. Including our owned and operated base of approximately 3,500 Ice Factories, we had a combined, rated ice manufacturing capacity of approximately 1817,000 tons per day. We believe that our current physical properties, along with our planned capital expenditures, are adequate for us to execute our current business strategy.

Certain manufacturing and distribution facilities may be permanently closed in conjunction with the ongoing review of our network of facilities, while others may be closed on a seasonal basis depending upon production requirements.

~~The following is a list of our active facilities and total rated traditional ice manufacturing capacity as of March 25, 2011:~~ 34


Alabama		5	4	1,150
Arizona		3	6	1,130
Arkansas		1	3	240
California		1	1	80
Colorado		3	1	435
Florida		8	8	2,032
Georgia		3	6	872
Louisiana		3	3	742
Maryland		1	1	240
Mississippi		1	2	80
Missouri		1	1	180
Nevada		1	—	260
New Mexico		1	3	160
North Carolina		3	3	920
Oklahoma		3	3	532
Oregon		1	2	160
South Carolina		3	3	735
Tennessee		2	—	325
Texas		10	16	3,005
Utah		1	—	160
Virginia		2	3	600
Washington		1	2	110
West Virginia		—	1	—
	Total	58	72	14,148

(1)Does not include the rated ice manufacturing capacity of our owned and operated Ice Factories, which was approximately 3,500 tons per day in the aggregate as of March 25, 2011.

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The following is a list of our active facilities and total rated traditional ice manufacturing capacity as of March 30, 2012:



Alabama	4	5	942
Arizona	3	6	1,130
Arkansas	1	3	240
California	1	1	80
Colorado	3	1	435
Florida	8	8	2,032
Georgia	2	8	672
Idaho	1	—	70
Louisiana	3	3	742
Maryland	1	1	240
Mississippi	1	2	120
Missouri	1	1	180
Nevada	1	—	260
New Mexico	1	3	160
North Carolina	3	3	920
Oklahoma	3	3	532
Oregon	1	2	160
South Carolina	3	3	735
Tennessee	2	—	325
Texas	10	16	2,990
Utah	1	—	160
Virginia	2	3	600
Washington	2	4	390
West Virginia	—	1	—

Total	58	77	14,115

(1): Does not include the rated ice manufacturing capacity of our owned and operated Ice Factories, which was approximately 3,500 tons per day in the aggregate as of March 30, 2012.

ITEM 3. Legal Proceedings

Antitrust Matters

In March 2008, the Company and certain of its employees, including members of its management, received subpoenas issued by a federal grand jury sitting in the Eastern District of Michigan seeking documents and information in connection with an investigation by the Antitrust Division of the United States Department of Justice ("DOJ") into possible antitrust violations in the packaged ice industry. In addition, on March 5, 2008, federal officials executed a search warrant at the Company's corporate office in Dallas, Texas. ~~On August 28, 2008, the Company received a second subpoena for documents from the federal grand jury sitting in the Eastern District of Michigan.~~ Current and former employees were also subpoenaed to testify and testified before a federal grand jury in the Eastern District of Michigan and before a federal grand jury in the Southern District of Ohio. The search warrant and subpoenas that the Company and our employees received were connected with a broader industry inquiry by the Antitrust Division of the DOJ. The Home City Ice Company, Arctic Glacier International, Inc., and three former employees of Arctic Glacier entered guilty pleas regarding a conspiracy to allocate customers and territories in southeastern Michigan and the Detroit, Michigan, metropolitan area. Sentencing of the three former Arctic Glacier employees took place on February 2, 3 and 4, 2010, sentencing of Arctic Glacier occurred on February 11, 2010, and Home City was sentenced on March 2, 2010. On October 29, 2010, the Company was informed that the Antitrust Division of the DOJ would take no action against the Company or any of its employees in connection with its investigation of the packaged ice industry. In January 2011, counsel for the Company confirmed that the Antitrust Division of the DOJ ~~has~~had formally closed its investigation of the packaged ice industry.

On March 25, 2008, the Company was served by the Office of the Attorney General of the State of Florida with an antitrust civil investigative demand (the "Florida CID") requesting the production of documents and information relating to an investigation of agreements in restraint of trade and/or price fixing with respect to the market for packaged ice. On June 11, 2008, the Company received a civil investigative demand from the Office of the Attorney General of the State of Arizona (the "Arizona CID"). All of the documents and information requested by the Arizona CID were included in the Florida CID and the Arizona CID states that it will be satisfied by the production of information which had been and would be provided to Florida in response to the Florida CID. On or about June 16, 2009, the Company was served by the State of Michigan, Department of the Attorney General, with a civil investigative demand requesting information and documents relating to sales of ice to units of government in Michigan, sales of ice in Michigan for which we the Company made or received payment, and contracts and agreements with Michigan entities (the "Michigan CID"). The Company has been advised that the Florida CID, the Arizona CID and the Michigan CID are related to a multi state antitrust investigation of the packaged ice industry and that the Attorneys General of 19 states and the District of Columbia are participating in the multi-state investigation. The states' investigation is related to the investigation of the packaged ice industry by the Antitrust Division of the DOJ. The Company has complied with all requests for documents and information regarding these matters. The Company may in the future receive additional civil investigative demands or similar information requests from states participating in the multi-state investigation or conducting their own investigations. 35

On November 19, 2008, the Company was notified by the Civil Fraud Division of the DOJ (the "Civil Fraud Division") that the Civil Fraud Division had opened an investigation with respect to the Company. The Civil Fraud Division's investigation examined whether the Company may have violated the federal False Claims Act by submitting, or causing to be submitted, false claims to the federal government as a result of entering into allegedly anticompetitive agreements which may have affected the sale of packaged ice to the government. The Company provided information and documents requested by the Civil Fraud Division. On March 21, 2011, the Company was informed that the Civil

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~~Fraud~~ In ~~Division~~March ~~has~~2008, ~~closed~~June ~~its~~2008, and June 2009, the Company was served with antitrust civil investigative demands ("CIDs") by the Offices of the Attorneys General of the States of Florida, Arizona and Michigan, respectively, requesting the production of documents and information relating to an investigation of agreements in restraint of trade and/or ~~will~~price ~~take~~fixing nowith ~~action~~respect ~~against~~to the market for packaged ice. The Company has been advised that these CIDs are related to a multi-state antitrust investigation of the packaged ice industry. The Company has cooperated with the investigation and has complied with all requests for documents and information regarding these matters. The Company may in the future receive additional civil investigative demands or similar information requests from states participating in the multi-state investigation or conducting their own investigations. However, it has been several months since the Company had any communication with the representatives of ~~its~~the ~~current~~two orstates ~~former~~regarding ~~employees~~this investigation.

The Company is cooperating with the authorities in the multi-state attorney general investigation. The Company expects to continue to make available documents and other information in response to any subpoenas, requests or civil investigative demands received from the investigating agencies. At this time, the Company is unable to predict the outcome of that investigation, the possible loss or possible range of loss, if any, associated with the resolution of that investigation or any potential effect the investigation may have on the Company, its employees or operations.

OnBeginning ~~March 6,~~in 2008, ~~the~~a ~~Company's~~number ~~Board~~ of ~~Directors~~lawsuits, ~~formed~~including aputative ~~special~~class ~~committee~~action oflawsuits, ~~independent~~were ~~directors~~filed toagainst ~~conduct~~the anCompany, ~~internal~~Reddy ~~investigation~~Ice ofCorporation, ~~these~~Home ~~matters.~~City ~~The~~Ice ~~Special~~Company, ~~Committee~~Arctic Glacier Income ~~retained~~Fund, ~~counsel~~Arctic toGlacier, Inc. ~~assist~~and inArctic ~~its~~Glacier ~~investigation~~International, Inc., Inin ~~order~~various tofederal ~~maintain~~and ~~the~~state ~~independence~~courts in multiple jurisdictions alleging violations of ~~the~~federal ~~Special~~and ~~Committee's~~state ~~investigation,~~antitrust ~~officers~~laws and related claims and ~~employees~~seeking ~~who~~damages ~~were~~and ~~employed~~injunctive byrelief. One of the ~~Company~~state atcourt cases filed against the ~~time~~Company was dismissed. Pursuant to an Order from the Judicial Panel on Multidistrict ~~investigation~~Litigation, ~~commenced~~the ~~did~~other ~~not~~civil actions have ~~access~~been totransferred ~~information~~and ~~obtained~~consolidated for pretrial proceedings in the ~~Special~~United ~~Committee's~~States ~~investigation~~District orCourt for the ~~results~~Eastern District of ~~the investigation~~Michigan. ~~The~~Home ~~Special~~City ~~Committee~~entered ~~completed~~into ~~its~~a settlement ~~investigation~~agreement ~~and did~~with ~~not~~the ~~reach~~direct apurchaser ~~determination~~plaintiffs that ~~any~~was ~~violations~~approved ofby the ~~antitrust~~Court ~~laws~~on byFebruary 22, ~~the~~2011. ~~Company~~On orMarch 30, ~~any~~2011, ofArctic ~~its~~Glacier ~~employees~~announced that it had ~~occurred~~entered into a proposed settlement agreement with the direct purchaser plaintiffs. ~~The~~Preliminary ~~Special~~approval ~~Committee~~of ~~was~~that ~~formally~~settlement ~~disbanded~~was granted on ~~January~~July 320, 2011, and a final fairness hearing was held on ~~after~~October 28, ~~having~~2011. ~~confirmed~~The ~~that~~settlement was approved by the ~~Antitrust~~Court ~~Division~~on ofDecember 13, ~~the~~2011. ~~DOJ~~The ~~had~~Company ~~formally~~is ~~closed~~unable ~~its~~to ~~investigation~~predict what, if any, effect the filing of bankruptcy by Arctic Glacier may have on this settlement. Discovery is ongoing regarding the ~~packaged~~claims ~~ice~~asserted ~~industry~~on behalf of direct purchasers against the Company.

~~Effective~~On ~~September~~March 1311, ~~2008~~2011, ~~Ben~~the D.Court ~~Key,~~entered ~~our~~an ~~Executive~~Order ~~Vice~~granting ~~President—Sales~~in part and denying in part motions to dismiss the indirect purchaser claims. On May &25, ~~Marketing~~2011, ~~was~~the ~~placed~~indirect onpurchaser plaintiffs filed a ~~paid~~Consolidated ~~leave~~Class ofAction ~~absence~~Complaint ~~and~~asserting ~~relieved~~violations of ~~his duties at~~ the ~~direction~~antitrust laws of ~~the~~various ~~Special~~states ~~Committee.~~and related claims. The ~~Special~~Company ~~Committee~~and ~~has~~the ~~found~~other ~~that~~defendants ~~Mr. Key~~filed ~~violated~~motions ~~our~~to ~~policies~~dismiss ~~and~~the ~~was~~Consolidated ~~associated~~Class ~~with~~Action ~~matters~~Complaint. ~~that~~Those motions were ~~under~~heard ~~investigation.~~on ~~Effective February~~October 28, 2011, ~~Mr.~~and the Court granted in part and denied in part on December ~~Key~~12, ~~voluntarily~~2011. ~~resigned~~The ~~from~~Company filed an answer to the ~~Company~~remaining claims on December 27, 2011.

~~Following~~On ~~the~~March 1, ~~announcement that the Antitrust Division of the DOJ had instituted an investigation of the packaged ice industry~~2010, a ~~number of lawsuits, including~~ putative class action ~~lawsuits,~~ ~~were~~Statement of Claim was filed against the Company, ~~Reddy~~in ~~Ice~~the ~~Corporation,~~Ontario ~~Home~~Superior ~~City~~Court ~~Ice~~of ~~Company,~~Justice ~~Arctic Glacier Income Fund, Arctic Glacier, Inc. and Arctic Glacier International, Inc.,~~ in ~~various~~ ~~federal~~Canada ~~courts in multiple jurisdictions~~ alleging violations of ~~federal~~Part VI of ~~and~~the ~~state~~Competition ~~antitrust~~Act ~~laws~~ and ~~related claims and~~ seeking ~~damages~~general ~~and injunctive relief. Pursuant to an Order from the Judicial Panel on Multidistrict Litigation~~damages, ~~the~~punitive ~~civil actions pending in federal courts have been transferred~~ and ~~consolidated~~exemplary ~~for pretrial proceedings in the United States District Court for the Eastern District of Michigan. On June 1~~damages, ~~2009,~~pre-judgment ~~the Court appointed interim lead~~ and ~~liaison~~post-judgment ~~counsel~~interest, ~~for the putative direct~~ and ~~indirect purchaser classes~~costs. On ~~September~~March 158, ~~2009~~2010, ~~the lead~~a ~~plaintiffs for each of the~~ putative class ~~direct~~action ~~and~~Statement ~~indirect purchaser classes filed consolidated amended complaints. The Company and Arctic Glacier filed motions to dismiss both~~ of ~~these~~Claim ~~complaints. Home~~was ~~City~~ filed aagainst ~~motion to dismiss~~ the ~~indirect purchaser complaint and entered into a proposed settlement agreement with the direct purchaser plaintiffs. The motions by the~~ Company ~~and~~in ~~Arctic Glacier to dismiss~~ the ~~direct purchaser claims were denied by the~~ Court ~~on July 1, 2010. An Order granting final approval~~ of ~~Home City~~Queen's ~~settlement~~Bench ~~with~~of ~~the direct purchasers was entered on February 22~~Alberta, ~~2011.~~Judicial OnDistrict ~~March 11,~~of ~~2011~~Calgary, ~~the Court entered an Order granting~~ in ~~part~~Canada, ~~and~~alleging ~~denying~~violations inof ~~part~~Part VI ~~the~~of ~~motions to dismiss~~ the ~~indirect purchaser claims. That Order dismissed all of~~ ~~the~~Competition ~~indirect~~Act ~~purchaser~~and ~~claims~~seeking ~~under~~general ~~the~~damages, ~~laws~~special ~~of 25 states~~ and ~~the~~pecuniary ~~District of Columbia; dismissed the indirect purchaser claims under the consumer protection laws of Florida~~damages, ~~Michigan~~punitive and ~~New~~exemplary ~~York; and dismissed the indirect purchaser unjust enrichment claims~~damages, ~~but~~interest ~~granted~~and ~~the Plaintiffs an opportunity to amend their complaint to state unjust enrichment claims under the laws of specified states~~costs. ~~Discovery~~ ~~is beginning in that matter.~~

28 An agreement has been reached to resolve the class actions filed in Canada against Reddy Ice and Arctic Glacier, Inc. The agreement provides that Arctic Glacier will pay CDN $2,000,000, all claims asserted against Reddy Ice and Arctic Glacier in both Ontario and Alberta will be dismissed, and Reddy Ice and Arctic Glacier will be granted full and final releases with regard to those claims. Reddy Ice is not making any payment in connection with this settlement. The agreement is subject to the

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Onexecution ~~March 1,~~of ~~2010,~~final asettlement ~~putative~~documents ~~class~~and ~~action~~court ~~Statement~~approval. ofThe ~~Claim was filed against the~~ Company inis ~~the~~unable ~~Ontario~~to ~~Superior~~predict ~~Court~~what, ofif ~~Justice in Canada~~any, ~~alleging~~effect ~~violations~~the ~~of Part VI~~filing of ~~the~~bankruptcy ~~Competition~~by ~~Act~~Arctic ~~and~~Glacier ~~seeking~~may ~~general~~have ~~damages,~~on ~~punitive~~this ~~and exemplary damages, pre-judgment and post-judgment interest, and costs~~settlement. ~~Proceedings relating to Plaintiffs' Motion for Certification of a Class are ongoing in that matter.~~

OnOne ~~March 8,~~direct ~~2010, a putative class~~ action ~~Statement~~lawsuit ~~of Claim~~ was filed against ~~the~~us ~~Company~~ in the ~~Court~~United ofStates ~~Queen's~~District ~~Bench~~Court offor ~~Alberta,~~the ~~Judicial~~Eastern District of ~~Calgary,~~Michigan inasserting ~~Canada, alleging~~claims based on alleged violations of ~~Part VI~~federal ofand ~~the~~state antitrust ~~Competition~~laws, ~~Act~~RICO and ~~seeking~~tortious ~~general~~interference and seeking damages, ~~special~~civil penalties and ~~pecuniary~~injunctive ~~damages,~~relief. ~~punitive~~The ~~and~~defendants ~~exemplary~~filed ~~damages,~~motions ~~interest~~to ~~and~~dismiss ~~costs~~that case. On ~~March~~May 429, ~~2011~~2009, the Court dismissed all claims against us in that lawsuit. On June 29, 2009, the ~~Company~~plaintiff ~~was~~filed ~~served~~a ~~with~~motion anfor ~~Amended~~reconsideration, ~~Statement~~and ofon ~~Claim~~July 17, 2009 the Court reversed, in ~~that~~part, ~~matter~~its May 29, 2009 ~~which~~order, ~~asserts~~reinstating ~~similar~~only the RICO claim against us. The dismissal of the remaining claims was not affected. On August 10, 2009, the Company filed an answer to the reinstated claim. Discovery is ongoing in that matter.

On ~~March~~April 420, 2011, aan ~~putative~~Order ~~class~~was ~~action~~entered ~~lawsuit~~unsealing ~~was~~a Qui Tam complaint filed ~~against~~on June 25, 2008, by Martin McNulty, on behalf of the ~~Company~~United ~~and~~States, ~~other~~against ~~defendants~~Reddy inIce Holdings, Inc., ~~state~~Reddy ~~court~~Ice inCorporation, ~~Kansas~~Arctic Glacier Income Fund, Arctic Glacier, Inc., ~~That~~Arctic ~~lawsuit~~Glacier International, Inc., and Home City Ice Company, Inc. The complaint alleges ~~violation~~alleged violations of the ~~Kansas Restraint~~federal ofFalse ~~Trade~~Claims Act, ~~violation~~by presentation of ~~the~~false ~~Kansas~~claims, ~~Consumer~~making ~~Protection~~or ~~Statute,~~using ~~and~~a ~~Unjust~~false ~~Enrichment~~record or statement, and ~~seeks~~conspiracy ~~treble~~to ~~overcharge damages~~defraud, ~~full~~and ~~consideration~~seeks ~~damages,~~sought ~~compensatory~~ damages, civil penalties, ~~costs,~~ ~~and~~ attorney fees and costs. The ~~Company~~Government has elected not ~~been~~to ~~served~~intervene ~~with~~in that ~~lawsuit~~case and the Company and the other defendants have filed motions to dismiss that complaint. Those motions were granted, the complaint was dismissed, and a final judgment was entered in favor of the defendants on December 7, 2011.

~~One~~The ~~direct~~Company ~~action~~intends ~~lawsuit~~to ~~has~~vigorously ~~been~~defend ~~filed~~all ~~against~~pending uslawsuits. inAt ~~the~~this ~~United~~time, ~~States District Court for~~ the ~~Eastern~~Company ~~District~~is ofunable ~~Michigan~~to ~~asserting~~predict ~~claims~~the ~~based~~outcome ~~on alleged violations~~ of ~~federal~~these ~~and state antitrust laws, RICO and tortious interference and seeking damages, civil penalties and injunctive relief~~lawsuits. The ~~defendants~~Company ~~filed~~has ~~motions~~not toallocated ~~dismiss~~any ~~that~~funds ~~case.~~for payment Onof ~~May 29, 2009,~~ the ~~Court dismissed~~antitrust ~~all~~ claims ~~against~~described usabove in ~~that~~our ~~lawsuit.~~plan Onof ~~June 29,~~reorganization. ~~2009~~However, the ~~plaintiff~~Company ~~filed~~is ~~a motion for reconsideration, and on July 17, 2009 the Court reversed~~ in ~~part~~discussions ~~its~~with ~~May 29, 2009~~certain ~~order,~~parties ~~reinstating~~and ~~only~~has ~~the~~accrued ~~RICO claim against us~~$0. ~~The dismissal of the remaining claims was not affected. On August~~5 ~~10,~~million ~~2009,~~for ~~the~~potential ~~Company filed an answer to the reinstated claim.~~settlements ~~Discovery~~that ismay ~~ongoing~~result infrom ~~that~~those ~~matter~~discussions.

The Company intends to vigorously defend the pending lawsuits. At this time, the Company is unable to predict the outcome of these lawsuits, the possible loss or possible range of loss, if any, associated with the resolution of these lawsuits or any potential effect they may have on the Company or its operations.

SEC Inquiry

On or about October 21, 2008, the Company received notice that the Securities and Exchange Commission had initiated an informal inquiry into matters that were the subject of the investigation by the Special Committee of our Board of Directors. On October 29, 2010, the Company was informed the SEC had closed that inquiry and no action would be taken against the Company or any of its current or former employees.

Stockholder Litigation

Beginning on August 8, 2008, putative class action complaints were filed in the United States District Court for the Eastern District of Michigan asserting claims under the federal securities laws against the Company and certain of its current or former senior officers. ~~The~~On ~~complaints~~July 17, ~~which were substantially similar~~2009, ~~alleged~~ ~~that~~ the ~~defendants~~Court ~~misrepresented~~consolidated the actions and ~~failed~~appointed toa ~~disclose~~lead ~~the~~plaintiff ~~existence of,~~ and ~~the~~interim ~~Company~~lead plaintiff's ~~alleged~~counsel. ~~participation~~The ~~in,~~lead anplaintiff ~~alleged~~filed ~~antitrust~~a ~~conspiracy~~consolidated inamended ~~the~~complaint ~~packaged~~on ~~ice~~November 2, ~~industry~~2009. ~~The complaints~~That ~~purported~~complaint purports to assert claims on behalf of ~~various~~an alleged ~~classes~~class of purchasers of the Company's common stock. Onand ~~July 17,~~alleges ~~2009,~~that the ~~Court~~defendants ~~consolidated~~misrepresented ~~the~~and ~~actions~~failed ~~and~~to ~~appointed~~disclose athe ~~lead plaintiff~~existence of, and ~~interim~~the ~~lead plaintiff~~Company's ~~counsel.~~alleged participation ~~The~~in, ~~lead~~an ~~plaintiff~~alleged ~~filed~~antitrust aconspiracy ~~consolidated~~in ~~amended~~the ~~complaint~~packaged onice ~~November 2, 2009~~industry. The Company and the other defendants have filed ~~motions~~an toanswer ~~dismiss~~in ~~the consolidated~~that ~~amended complaint. On December 6~~case, ~~2010,~~a anbriefing ~~Order~~schedule ~~was~~relating ~~entered granting the motion~~ to ~~dismiss~~class certification ashas tobeen ~~Raymond Booth~~entered, ~~former COO of Reddy Ice,~~ and ~~denying~~discovery ~~the~~is ~~motions~~ongoing. ~~as to the Company~~

29 On April 4, 2012, a tentative settlement agreement was reached with the Plaintiffs pursuant to which the Company will pay $1.0 million in exchange for full and final releases of all claims asserted against the Company and the individual defendants. That agreement is subject to the execution of final settlement documents and court approval.

Two stockholder derivative actions have been filed on the Company's behalf in state district court in Dallas County, Texas, naming as defendants, among others, certain current and former officers and members of the Company's Board of Directors. Those cases have been consolidated in the 68th Judicial District Court of Dallas County, Texas. On August 1, 2011, the Court granted in part and denied in part Special Exceptions filed by the defendants. The Company filed a petition with the Court of Appeals seeking a writ of mandamus relating to the denial of certain Special Exceptions. On September 1, 2011, a Third Amended Consolidated Shareholder Derivative Petition was filed in that matter. That Third Amended Petition asserts claims for breach of fiduciary duty, unjust enrichment,

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~~and~~abuse ~~all~~of ~~other~~control, ~~defendants~~and gross mismanagement and seeks damages, equitable relief, attorney fees, expenses and costs. On ~~December~~October 2010, ~~2010~~2011, the ~~Company~~petition for a writ of mandamus was conditionally granted by the Court of Appeals and the trial court was ordered to grant the Special Exception relating to demand futility. The plaintiffs filed a Motion for Rehearing, which was denied on November 7, 2011. On November 14, 2011, the Court entered an ~~answer~~Order togranting Special Exception No.1 and requiring the ~~consolidated~~plaintiffs ~~amended~~to ~~complaint~~re-plead. ~~Discovery~~This iscase ~~beginning~~was indismissed ~~that~~with prejudice ~~matter~~on March 20, 2012.

Two stockholder derivative actions have been filed on the Company's behalf in state district court in Dallas County, Texas, naming as defendants, among others, certain current and former officers and members of the Company's Board of Directors. Those cases have been consolidated in the 68th Judicial District Court of Dallas County, Texas. On March 17, 2011, a Second Amended Consolidated Shareholder Derivative Petition was filed in that matter. That Second Amended Petition asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, and gross mismanagement and seeks damages, equitable relief, attorney fees, expenses and costs. The consolidated case is currently set for trial on August 2, 2011.

Other Matters

During the years ended December 31, 2010 and 2009, we incurred gross costs of $4.9 million and $6.3 million, respectively, in connection with legal fees and other expenses associated with the antitrust investigation that was conducted by the Antitrust Division of the Department of Justice and the ongoing related litigation. During the years ended December 31, 2010 and 2009, these costs were offset by $5.0 million and $7.2 million, respectively, related to reimbursements from our insurance carriers.

We are also involved in various other claims, lawsuits and proceedings arising in the ordinary course of business, including intellectual property matters. There are uncertainties inherent in the ultimate outcome of such matters and it is difficult to determine the ultimate costs that we may incur. We believe the resolution of such other ordinary course uncertainties and the incurrence of such costs will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

As a result of the decline in our stock price and the reduction in our stockholders' equity resulting from the decline in earnings, we were notified by the New York Stock Exchange ~~ITEM~~("NYSE") 4on December 21, 2011 that our common stock (ticker symbol—FRZ) was to be suspended prior to the market opening on Thursday, December 29, 2011. ~~Removed~~ On December 28, 2011, we announced that our common stock would be quoted on the OTC electronic interdealer quotation system ("OTCBB") and ~~Reserved~~ the OTCQB™ Marketplace ("OTCQB") beginning Thursday, December 29, 2011. Trading of our common stock on the NYSE and our trading symbol "FRZ" were discontinued as of the close of the market on December 28, 2011. Effective Thursday, December 29, 2011, our stock was quoted on the OTCBB and OTCQB under the symbol "RDDY".

30 ITEM 4. Mine Safety Disclosures

Not applicable.

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PART II

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock was quoted in the OTCBB and OTCQB under the symbol "RDDY" on December 29, 2011. Prior to that time, our common stock was listed on the New York Stock Exchange ("NYSE") under the symbol "FRZ" beginning on August 10, 2005. Prior to ~~that time~~August 10, 2005, there was no public market for our common stock. The following table presents the high and low sales prices for the common stock on the NYSE and OTCQB during the periods indicated and the dividends declared during such periods:

	NYSE Market Price
	Market Price				Cash dividends declared per share(1)
					Cash dividends declared per share(1)
	High		Low
2009
First Quarter	$	1.85	$	1.04		—
Second quarter	$	3.90	$	1.47		—
Third quarter	$	6.30	$	1.51		—
Fourth quarter	$	5.79	$	3.39		—
2010
First Quarter	$	6.12	$	3.72		—
Second quarter	$	5.00	$	3.13		—
Third quarter	$	3.74	$	2.04		—
Fourth quarter	$	3.74	$	2.09		—
2011
First Quarter (through March 25, 2011)	$	2.55	$	3.81		—
First Quarter	$	3.81	$	2.55		—
Second quarter	$	3.30	$	2.69		—
Third quarter	$	3.06	$	1.11		—
Fourth quarter	$	1.58	$	0.15		—
2011
First Quarter	$	0.58	$	0.22		—

(1): See "Dividend Policy" below for additional information regarding dividends.

As of March 2830, ~~2011~~2012 there were approximately ~~172~~159 registered holders of record of our common stock and 23,~~311~~982,~~456~~010 shares of our common stock outstanding. Because many of our shares of common stock are held by brokers and other institutions on behalf of beneficial stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.

~~The~~As ~~continued listing standards of the NYSE require us to maintain, among other things,~~ a ~~market capitalization or stockholders equity above a specified threshold. As a~~ result of the decline in our stock price and the reduction in our stockholders' equity resulting from ~~the~~its ~~impairment~~decline ofin ~~our goodwill as of September 30~~earnings, ~~2008,~~ we were notified by the ~~NYSE~~New inYork ~~November~~Stock ~~2008~~Exchange ("NYSE") on December 21, 2011 that weour ~~were~~common ~~not~~stock in(ticker ~~compliance~~symbol—FRZ) ~~with~~was ~~their~~to ~~continued~~be ~~listing~~suspended ~~standards~~prior to the market opening on Thursday, December 29, 2011. On ~~February~~December 1328, ~~2009~~2011, ~~the~~we announced ~~NYSE~~that ~~accepted~~ our ~~plan~~common tostock ~~achieve~~would ~~compliance~~be ~~with~~quoted on the ~~continuing~~OTCBB ~~listing~~and ~~standards~~OTCQB ~~within 18~~beginning Thursday, December ~~months~~29, 2011. InTrading ~~May~~of ~~2010,~~our common stock on the NYSE ~~removed~~and usour trading symbol "FRZ" were ~~from~~discontinued as of the ~~list~~close of ~~companies~~the ~~not~~market inon ~~compliance~~December 28, ~~with~~2011. ~~their~~Effective ~~continued~~Thursday, ~~listing~~December 29, ~~standards.~~2011, Weour ~~are~~stock ~~currently~~was inquoted ~~compliance~~on ~~with~~the ~~NYSE's~~OTCBB ~~listing~~and ~~standards~~OTCQB under the symbol "RDDY".

Dividend Policy

We paid quarterly cash dividends from 2005 through 2008. On September 15, 2008, our Board of Directors announced that the payment of quarterly cash dividends had been suspended indefinitely.

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The amounts available to us to pay further cash dividends are restricted by our credit facilities and the indenture governing our senior discount notes. For additional information about the restrictions on our ability to pay future dividends, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Covenant Compliance."

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Equity Compensation Plans

Information concerning securities authorized for issuance under equity compensation plans is set forth in "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."

Sales of Unregistered Securities

None.

Use of Proceeds from Sales of Registered Securities

None.

3240

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ITEM 6. Selected Financial Data

The following table sets forth selected consolidated data derived from our consolidated financial statements. The following information should be read in conjunction with our consolidated financial statements, including the notes thereto, and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this report.

	Year Ended December 31,	~~Year Ended December 31,~~
		2010			2009			2008			2007			2006
	2011			2010			2009			2008			2007
Operating Data:
Revenues	$	$328,463	~~315,455~~	$	$315,455	~~312,331~~	$	$312,331	~~329,298~~	$	$329,298	~~339,038~~	$	$339,038	~~334,950~~
Cost of sales (excluding depreciation)		229,114	~~211,260~~		211,260	~~198,241~~		198,241	~~214,905~~		214,905	~~215,204~~		215,204	~~205,936~~
Depreciation expense related to cost of sales		27,598	~~26,088~~		26,088	~~21,406~~		21,406	~~20,796~~		20,796	~~19,832~~		19,832	~~18,532~~
Gross profit		71,751	~~78,107~~		78,107	~~92,684~~		92,684	~~93,597~~		93,597	~~104,002~~		104,002	~~110,482~~
Operating expenses		57,210	~~54,436~~		54,436	~~50,782~~		50,782	~~47,550~~		47,550	~~44,981~~		44,981	~~48,475~~
Depreciation and amortization expense		8,969	~~8,802~~		8,802	~~7,066~~		7,066	~~6,715~~		6,715	~~6,176~~		6,176	~~5,621~~
Loss on dispositions of assets		233	~~2,600~~		2,600	~~2,329~~		2,329	~~1,869~~		1,869	~~1,743~~		1,743	~~1,060~~
Impairment of goodwill and long-lived assets			10,578			—			149,905			1,440			370
Acquisition expense		4,633			1,176			79			—			—
Acquisition expense			1,176			79			—			—			—
Impairment of goodwill and long-lived assets		4,162			10,578			—			149,905			1,440
Gain on diesel hedge		—	—		—	~~(581~~	)	(581	—)		—	—		—	—
Cost of antitrust investigations and related litigation, net of insurance proceeds			(124	)		(891	)		15,524			—			—
Gain on contingent acquisition consideration		(418	)		—			—			—			—
Transaction costs related to merger agreement			—			—			835			2,456			—
Cost of antitrust investigations and related litigation, net of insurance proceeds		5,049			(124	)		(891	)		15,524			—
Gain on property insurance settlement			—			—			(1,036	)		—			—
Transaction costs related to merger agreement		—			—			—			835			2,456
Interest expense			50,078			26,802			31,893			31,307			29,624
Gain on property insurance settlement		—			—			—			(1,036	)		—
Interest income			(20	)		(133	)		(825	)		(852	)		(869	)
Interest expense		58,714			50,078			26,802			31,893			31,307
Gain on bargain purchase, net of acquisition costs			(232	)		(661	)		—			—			—
Interest income		(15	)		(20	)		(133	)		(825	)		(852	)
Gain on termination of merger agreement			—			—			(17,000	)		—			—
Gain on bargain purchase, net of acquisition costs		—			(232	)		(661	)		—			—
Debt refinance costs			8,839			—			—			—			—
Gain on termination of merger agreement		—			—			—			(17,000	)		—
Income tax benefit (expense)			17,537			(3,658	)		21,402			(7,347	)		(10,349	)
Debt refinance costs		696			8,839			—			—			—
Income (loss) from continuing operations			(40,489	)		4,234			(120,431	)		9,404			15,852
Income tax benefit (expense)		(1,973	)		17,537			(3,658	)		21,402			(7,347	)
Income (loss) from discontinued operations, net of tax(1)			—			—			—			939			(1,191	)
Income (loss) from continuing operations		(69,455	)		(40,489	)		4,234			(120,431	)		9,404
Net income (loss)		$	(40,489	)	$	4,234		$	(120,431	)	$	10,343		$	14,661
Income (loss) from discontinued operations, net of tax(1)		—			—			—			—			939
Basic net income (loss) per share:(2)
Net income (loss)		(69,455	)	$	(40,489	)	$	4,234		$	(120,431	)	$	10,343
Income (loss) from continuing operations		$	(1.80	)	$	0.19		$	(5.47	)	$	0.43		$	0.73
Basic net income (loss) per share:(2)
Income (loss) from discontinued operations			—			—			—			0.04			(0.05	)
Income (loss) from continuing operations	$	(3.05	)	$	(1.80	)	$	0.19		$	(5.47	)	$	0.43
Net income (loss)		$	(1.80	)	$	0.19		$	(5.47	)	$	0.47		$	0.68
Income (loss) from discontinued operations		—			—			—			—			0.04
Weighted average common shares outstanding			22,470			22,364			22,025			22,125			21,791
Net income (loss)	$	(3.05	)	$	(1.80	)	$	0.19		$	(5.47	)	$	0.47
Diluted net income (loss) per share:(2)
Weighted average common shares outstanding		22,758			22,470			22,364			22,025			22,125
Income (loss) from continuing operations		$	(1.80	)	$	0.19		$	(5.47	)	$	0.42		$	0.72
Diluted net income (loss) per share:(2)
Income (loss) from discontinued operations			—			—			—			0.04			(0.05	)
Income (loss) from continuing operations	$	(3.05	)	$	(1.80	)	$	0.19		$	(5.47	)	$	0.42
Net income (loss)		$	(1.80	)	$	0.19		$	(5.47	)	$	0.46		$	0.67
Income (loss) from discontinued operations		—			—			—			—			0.04
Weighted average common shares outstanding			22,470			22,537			22,025			22,251			21,882
Net income (loss)	$	(3.05	)	$	(1.80	)	$	0.19		$	(5.47	)	$	0.46
Cash dividends declared per share		$	—		$	—		$	0.84		$	1.66		$	1.58
Weighted average common shares outstanding		22,758			22,470			22,537			22,025			22,251
Cash dividends declared per share	$	—		$	—		$	—		$	0.84		$	1.66

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		Year Ended December 31,	~~Year Ended December 31,~~
			2010			2009			2008			2007			2006
		2011			2010			2009			2008			2007
Balance Sheet Data:
Cash and cash equivalents		$	$9,944	~~42,173~~	$	$42,173	~~44,649~~	$	$44,649	~~39,684~~	$	$39,684	~~17,183~~	$	$17,183	~~39,434~~
Restricted cash and cash equivalents			13,024	~~10,110~~		10,110	—		—	—		—	~~17,262~~		17,262	—
Working capital(3)			(457,538	~~42,307~~)		42,307	~~60,422~~		60,422	~~46,893~~		46,893	~~17,051~~		17,051	~~39,323~~
Total assets			434,029	~~470,925~~		470,925	~~455,665~~		455,665	~~454,559~~		454,559	~~607,560~~		607,560	~~610,272~~
Total debt			471,505	~~450,691~~		450,691	~~390,602~~		390,602	~~390,500~~		390,500	~~378,258~~		378,258	~~364,895~~
Total stockholders' equity (deficit)			(96,798	~~(29,793~~)	)	(29,793	~~8,796~~)		8,796	~~872~~		872	~~139,982~~		139,982	~~167,648~~
Other Financial Data:
Net cash provided by (used in):	~~Net cash provided by (used in):~~
Cash flows—operating activities	~~Cash flows—operating activities~~	$	$(22,018	~~19,895~~)	$	$19,895	~~33,528~~	$	$33,528	~~52,029~~	$	$52,029	~~62,236~~	$	$62,236	~~70,265~~
Cash flows—investing activities	~~Cash flows—investing activities~~		(30,231	~~(62,314~~)	)	(62,314	~~(28,537~~)	)	(28,537	~~(1,576~~)	)	(1,576	~~(48,437~~)	)	(48,437	~~(29,534~~)	)
Cash flows—financing activities	~~Cash flows—financing activities~~		20,020	~~39,943~~		39,943	~~(26~~	)	(26	~~(27,952~~)	)	(27,952	~~(36,050~~)	)	(36,050	~~(35,294~~)	)
Capital expenditures(4)			(15,071	~~(31,912~~)	)	(31,912	~~(24,465~~)	)	(24,465	~~(18,004~~)	)	(18,004	~~(24,605~~)	)	(24,605	~~(18,582~~)	)
Proceeds from dispositions			840	~~698~~		698	~~590~~		590	~~2,006~~		2,006	~~1,193~~		1,193	~~1,967~~
Cost of acquisitions and purchase of leased assets			(13,339	~~(19,188~~)	)	(19,188	~~1,025~~)		(1,025	~~4,359~~)		(4,359	~~27,209~~)		(27,209	~~12,936~~)
Cost of equipment to be placed under operating leases(5)			(1,766	~~(3,990~~)	)	(3,990	~~(7,995~~)	)	(7,995	—)		—	—		—	—
Reimbursement of cost of equipment placed under operating leases			3,074	~~7,082~~		7,082	~~5,994~~		5,994	—		—	—		—	—

34 (1)During the third quarter of 2007, we sold our bottled water business and substantially all of our cold storage business. As a result, the results of operations for those businesses, including the gain on sale, are presented as "Discontinued Operations" in the consolidated statements of operations for 2007. (2)Adjusted for the retrospective application of the provision of the new earnings per share accounting guidance, which became effective for us on January 1, 2009. For further information on this new guidance, see Note 2 to our audited financial statements included under Item 8. (3)Working capital is defined as current assets less current liabilities. Due to the planned proceedings, we have classified $439.0 million of the long term debt as a current obligation as of December 31, 2011. See Note 1 and Note 2 to Consolidated Financial Statements. (4)Excludes the costs of acquisitions and purchases of leased assets. (5)Cost of equipment placed under operating leases in 2009 includes $2.0 million of assets placed under operating leases in January 2010.

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ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the "Item 6. Selected Financial Data," and our consolidated financial statements, including the notes thereto beginning on page F-1, and the other information appearing elsewhere in this report.

Overview

We are the largest manufacturer and distributor of packaged ice in the United States and serve a variety of customers in 34 states and the District of Columbia. Our business consists of:

•: the traditional manufacture and delivery of ice from a central point of production to the point of sale; and
•: the installation and operation of The Ice Factory, our proprietary in-store bagging ("ISB") equipment located in high volume locations that produces, packages and stores ice through an automated, self-contained system.

Seasonality. Our results of operations are highly seasonal, characterized by peak demand during the warmer months of May through September, with an extended peak selling season in the southern United States. As a result of this seasonality and the fixed costs in our business, the proportion of revenues earned and the ratio of costs to revenues in any given quarter are not necessarily indicative of the ratios for a full year. Revenues within specific markets can also be affected by weather conditions, with cool or rainy weather negatively impacting demand and extremely hot weather increasing our costs as we respond to excess customer demand for our products. Approximately 71%, 6971%, and 69% of our revenues occurred during the second and third calendar quarters in ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, respectively. As a result of seasonal revenue declines and a less than proportional decline in certain expenses during the first and fourth calendar quarters, we typically experience lower profit margins resulting in losses during these periods. In addition, because a significant portion of our annual sales are generated during the second and third calendar quarters, our annual results of operations may fluctuate significantly if the weather during these periods is unusually cool or rainy on a national or regional basis. Cool and rainy weather has a negative impact on operations, while warm and dry weather generally has a positive impact. For additional information concerning the impact of seasonality on our results of operations, see "—General Economic Trends and Seasonality".

Revenues. Our revenues primarily represent sales of packaged ice and packaged ice bags for use in our ISB equipment. There is no right of return with respect to these products. ~~A portion of our revenues also represents fees earned under management agreements for ISB systems located outside our primary territories that are recognized as earned under contract terms.~~

Cost of Sales (Excluding Depreciation). Our cost of sales (excluding depreciation) consists of costs related to the manufacturing and distribution of our products, including, in particular:

•: manufacturing and distribution labor costs;
•: raw materials (primarily polyethylene-based plastic bags);
•: product delivery expenses, including fuel and vehicle rental expense related to products delivered by our own distribution network, as well as fees paid to distributors who deliver ice to our customers on our behalf;
•: utility expenses (primarily electricity used in connection with the manufacturing, storage and distribution processes); and
•: ISB system costs associated with customer service representatives and machine technicians (ISB systems generally do not increase our plant occupancy, delivery or utility costs).

35 Depreciation Expense Related to Cost of Sales and Depreciation and Amortization. Depreciation and amortization are divided into two line items: depreciation expense related to cost of sales and

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~~Depreciation Expense Related to Cost of Sales and Depreciation and Amortization. Depreciation and amortization are divided into two line items:~~ depreciation ~~expense related to cost of sales~~ and ~~depreciation and~~ amortization expense. Depreciation expense related to cost of sales consists of depreciation expense for our production and distribution equipment. Depreciation and amortization expense consists of depreciation and amortization expense for our selling, general and administrative functions.

Operating Expenses. Our operating expenses are costs associated with selling, general and administrative functions. These costs include executive officers' compensation, office and administrative salaries, insurance, legal and other professional services and costs associated with leasing office space. Labor costs, including associated payroll taxes and benefit costs, but excluding non-cash stock-based compensation expense, included in operating expenses represented approximately 109%, 910% and 79% of sales in ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009, respectively.

Facilities. At March 2530, ~~2011~~2012, we owned or operated 58 ice manufacturing facilities, 7277 distribution centers and approximately 3,500 Ice Factories. As of the same date, we had an aggregate daily ice manufacturing capacity of approximately 1817,000 tons.

Year Ended December 31, 2011 Compared to the Year Ended December 31, 2010

	Year Ended December 31,						Change from Previous Year

	2011			2010			Dollars			%
	(dollars in thousands)
Consolidated Results:
Revenues	$	328,463		$	315,455		$	13,008			4.1
Cost of sales (excluding depreciation)		229,114			211,260			17,854			8.5
Depreciation expense related to cost of sales		27,598			26,088			1,510			5.8

Gross profit		71,751			78,107			(6,356	)		(8.1	)
Operating expenses		57,210			54,436			2,774			5.1
Depreciation and amortization expense		8,969			8,802			167			1.9
Loss on dispositions of assets		233			2,600			(2,367	)		(91.0	)
Acquisition expense		4,633			1,176			3,457			294.0
Impairment of long-lived assets		4,162			10,578			(6,416	)		(60.7	)
Gain on contingent acquisition consideration		(418	)		—			(418	)		—
Cost (insurance recoveries) related to antitrust investigations and related litigation (net)		5,049			(124	)		5,173			4,171.8

Income (loss) from operations		(8,087	)		639			(8,726	)		(1,365.6	)
Interest expense, net		(58,699	)		(50,058	)		(8,641	)		17.3
Gain on bargain purchase		—			232			(232	)		(100.0	)
Debt refinance costs		(696	)		(8,839	)		8,143			92.1

Loss before income taxes		(67,482	)		(58,026	)		(9,456	)		16.3
Income tax benefit (expense)		(1,973	)		17,537			(19,510	)		(111.3	)

Net loss	$	(69,455	)	$	(40,489	)	$	(28,966	)		71.5

Revenues: Revenues increased $13.0 million from 2010 to 2011. The low single digits percentage increase in packaged ice volume sales is primarily due to acquisitions, as well as improved weather patterns in most of our markets and the addition of new customers through organic growth, partially offset by the effects of economic conditions impacting same store sales and competition.

Cost of sales (excluding depreciation): Cost of sales (excluding depreciation) increased $17.9 million from 2010 to 2011. This increase is partially due to higher sales volumes due to acquisitions and the net additions of customers, as well as unit cost increases of fuel and plastic bags and the effect of additional operating leases related to plant equipment.

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Significant expenses included in Cost of sales include the following:

	Percentage of Revenues

	2011			2010
Labor costs, including associated payroll taxes and benefit costs (including health insurance)		23	%		24	%
Plastic bags		6	%		6	%
Operating leases (including vehicles, plant equipment and ISB equipment)		7	%		6	%
Fuel		6	%		4	%
Independent third party distribution services		6	%		6	%
Maintenance		5	%		4	%
Vehicle maintenance and insurance claims		2	%		2	%
Electricity		5	%		5	%

Depreciation expense related to cost of sales: Depreciation expense related to cost of sales increased $1.5 million from 2010 to 2011 as a result of new production and distribution equipment placed in service in 2011, partially offset by dispositions and assets becoming fully depreciated.

Operating expenses: Operating expenses increased $2.8 million to $57.2 million in 2011. This increase is primarily due to a $0.8 million increase in labor and benefits costs due to acquisitions, a $0.6 million increase in bad debt expense, and a $1.2 million aggregate increase in operating costs for items such as rent, repairs and maintenance, insurance, communications costs, non-cash stock compensation expense and other operating expenses.

Depreciation and amortization expense: Depreciation and amortization expense increased $0.2 million from 2010 to 2011 as a result of new equipment placed in service and the recognition of certain intangible assets in connection with acquisitions in 2011, partially offset by dispositions and assets becoming fully depreciated.

Loss on dispositions of assets: The loss on dispositions of assets of $0.2 million was recognized in 2011 as a result of the disposition of certain excess facilities and other assets. The loss on disposition of assets in 2010 was $2.6 million.

Acquisition expense: We incurred $4.6 million of expense during 2011 in connection with our ongoing acquisition program as compared to $1.2 million of expenses in 2010. Approximately $4.2 million of these expenses were in connection with our evaluation of a strategic merger opportunity within the packaged ice industry.

Impairment of long-lived assets: Impairment charges of $4.2 million and $10.6 million recognized in 2011 and 2010, respectively, are primarily due to $3.3 million and $9.8 million charges related to the impairment of ice merchandisers and other equipment and machinery in 2011 and 2010, respectively, as a result of physical inventory procedures. Additional impairment charges of $0.9 million and $0.8 million were recognized as a result of impairing certain real estate and fixed assets identified for disposition in 2011 and 2010, respectively. As a result of an increased focus on operational efficiency, we are evaluating our operating facilities and expect to dispose of additional real estate in the future. Deterioration of current real estate market conditions or changes in facility operations could trigger additional impairments or losses on dispositions in future periods.

Cost (insurance recoveries) related to antitrust investigations and related litigation, net of costs: During 2011 and 2010, we incurred $5.0 million and $4.9 million, respectively, of gross legal fees and other expenses associated with the antitrust investigation conducted by the Antitrust Division of the United States Department of Justice and the related litigation. Costs incurred in 2011 include accruals of

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$1.5 million for potential settlements that may result from discussions with certain parties related to our antitrust and stockholder litigation, as discussed in Note 15 to our audited financial statements. During 2010 we received $5.0 million of cost reimbursements from our insurance carriers. We became aware of and began incurring expenses related to the investigation in March of 2008.

Interest expense, net: Net interest expense increased by $8.6 million from 2010 to 2011. This change is related to increased interest costs associated with our new 11.25% Senior Secured Notes and 13.25% Senior Secured Notes, as well as additional interest associated with borrowings under our revolving credit facility. The amount of net interest expense recognized by Reddy Holdings was $1.3 million and $4.4 million during 2011 and 2010, respectively.

Debt refinance costs: Costs of $0.7 million and $8.8 million were incurred in 2011 and 2010, respectively, in connection with financing activities associated with the strategic merger opportunity in 2011 and the refinancing activities related to our debt in 2010.

Income tax benefit (expense): The effective tax rate decreased from 30.2% of our pre-tax loss in 2010 to a negative 2.9% of our 2011 pre-tax loss as a result of the effects of state income taxes based on margin and valuation allowances recorded against certain federal and state net operating loss carryforwards and other deferred tax assets. As a result of these changes our financial statements reflect an income tax benefit in 2010 and income tax expense in 2011.

Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009

	Year Ended December 31,						Change from Previous Year

	2010			2009			Dollars			%
	(dollars in thousands)
Consolidated Results:
Revenues	$	315,455		$	312,331		$	3,124			1.0
Cost of sales (excluding depreciation)		211,260			198,241			13,019			6.6
Depreciation expense related to cost of sales		26,088			21,406			4,682			21.9

Gross profit		78,107			92,684			(14,577	)		(15.7	)
Operating expenses		54,436			50,782			3,654			7.2
Depreciation and amortization expense		8,802			7,066			1,736			24.6
Loss on dispositions of assets		2,600			2,329			271			11.6
Impairment of long-lived assets		10,578			—			10,578			—
Acquisition expense		1,176			79			1,097			1,388.6
Gain on diesel hedge		—			(581	)		581			100.0
Insurance recoveries related to antitrust investigations and related litigation, net of costs		(124	)		(891	)		767			86.1

Income (loss) from operations		639			33,900			(33,261	)		(98.1	)
Interest expense, net		(50,058	)		(26,669	)		(23,389	)		87.7
Gain on bargain purchase		232			661			(429	)		(64.9	)
Debt refinance costs		(8,839	)		—			(8,839	)		—

Income (loss) before income taxes		(58,026	)		7,892			(65,918	)		(835.3	)
Income tax benefit (expense)		17,537			(3,658	)		21,195			(579.4	)

Net income (loss)	$	(40,489	)	$	4,234		$	(44,723	)		(1,056.3	)

Revenues: Revenues increased $3.1 million from 2009 to 2010. This increase is primarily due to positive increases in packaged ice volume sales related to improved weather patterns in most markets during the second and third calendar quarters of 2010, new distribution, and a $5.3 million increase in revenues resulting from acquisitions. Partially offsetting these increases were lower average sales prices, primarily related to increased competitive activity and changes in mix within our distribution channels,

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revenues resulting from acquisitions. Partially offsetting these increases were lower average sales prices, primarily related to increased competitive activity and changes in mix within our distribution channels, and unfavorable weather patterns in most of our markets during the three months ended March 31, 2010.

Cost of sales (excluding depreciation): Cost of sales (excluding depreciation) increased $13.0 million from 2009 to 2010. This increase is partially due to higher sales volumes, although cost of sales increased proportionally more than related revenues, due to the effects of customer transition and startup activities during 2010, our response to peak demand in certain markets which temporarily outpaced supply during the summer and the effect of fixed costs during the three months ended March 31, 2010 when adverse weather conditions reduced sales volumes in most of our markets.

Significant expenses included in Cost of sales include the following:

	Percentage of Revenues

	2010			2009
Labor costs, including associated payroll taxes and benefit costs (including health insurance)		24	%		25	%
Plastic bags		6	%		6	%
Operating leases (including vehicles, plant equipment and ISB equipment)		6	%		5	%
Fuel		4	%		3	%
Independent third party distribution services		6	%		6	%
Maintenance		4	%		4	%
Vehicle maintenance and insurance claims		2	%		1	%
Electricity		5	%		6	%

Depreciation expense related to cost of sales: Depreciation expense related to cost of sales increased $4.7 million from 2009 to 2010 as a result of a change in accounting estimate to eliminate salvage value on certain equipment and new production and distribution equipment placed in service in 2009 and 2010, partially offset by dispositions and assets becoming fully depreciated. The impact of the change in accounting estimate in 2010 was $3.0 million.

Operating expenses: Operating expenses increased $3.7 million to $54.4 million in 2010. This increase is primarily due to a $3.3 million increase in labor and benefits due to additional headcount at the senior management level, a $0.4 million increase in bad debt expense, and a $1.9 million aggregate increase in operating costs for items such as rent, repairs and maintenance, insurance and communications costs. These increases were partially offset by a $1.6 million decrease in professional service expenses and a $0.5 million decrease in incentive compensation expense.

Depreciation and amortization expense: Depreciation and amortization expense increased $1.7 million from 2009 to 2010 as a result of new equipment placed in service and the recognition of certain intangible assets in connection with acquisitions in 2010, partially offset by dispositions and assets becoming fully depreciated.

Loss on dispositions of assets: The loss on dispositions of assets increased by $0.3 million from $2.3 million in 2009 to $2.6 million in 2010 as a result of the disposition of certain excess facilities and other assets.

Impairment of long-lived assets: Impairment charges of $10.6 million recognized in 2010 are primarily due to a $9.8 million impairment of ice merchandisers as a result of physical inventory procedures. Additional impairment charges of $0.8 million were recognized as a result of impairing a parcel of real estate and certain fixed assets identified for disposition in 2010. No impairment charges were recognized in 2009. As a result of an increased focus on operational efficiency, we are evaluating our operating facilities and expect to dispose of additional real estate in the future. Deterioration of

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~~current~~were recognized in 2009. As a result of an increased focus on operational efficiency, we are evaluating our operating facilities and expect to dispose of additional real estate in the future. Deterioration of current real estate market conditions or changes in facility operations could trigger additional impairments or losses on dispositions in future periods.

Acquisition expense: We incurred $1.2 million of expense during 2010 in connection with our ongoing acquisition program as compared to $0.1 million of expenses in 2009.

Gain on diesel hedge: A gain of $0.6 million was recognized during 2009 in connection with a derivative used to hedge the cost of diesel used in our delivery operations. The gain was composed of $0.6 million of cash settlements as the floating amount received from the counterparty was greater than the fixed price we were obligated to pay.

Insurance recoveries related to antitrust investigations and related litigation, net of costs: During 2010 and 2009, we incurred $4.9 million and $6.3 million, respectively, of gross legal fees and other expenses associated with the antitrust investigation being conducted by the Antitrust Division of the United States Department of Justice and the related litigation. During 2010 and 2009, we received $5.0 million and $7.2 million, respectively, of cost reimbursements from our insurance carriers. One of our insurance carriers also paid $0.2 million of costs directly to certain service providers during 2009. We became aware of and began incurring expenses related to the investigation in March of 2008.

Interest expense, net: Net interest expense increased by $23.4 million from 2009 to 2010. This increase is related to higher interest costs associated with our new 11.25% senior secured notes and 13.25% senior secured notes issued in March 2010, as compared to the indebtedness refinanced, and additional total indebtedness outstanding following the refinancing. The amount of net interest expense recognized by Reddy Holdings was $4.4 million and $16.5 million during 2010 and 2009, respectively.

Debt refinance costs: Costs of $8.8 million were incurred in 2010 in connection with refinancing activities related to our debt.

Income tax benefit (expense): The effective tax rate decreased from ~~an expense of~~ 46.3% of pre-tax income in 2009 to ~~a benefit of~~ 30.2% of our pre-tax loss in 2010 as a result of the effects of state income taxes based on margin and valuation allowances recorded against certain federal and state net operating loss carryforwards and other deferred tax assets. As a result of these changes our financial statements reflect income tax expense in 2009 and a tax benefit in 2010.

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Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008

	Year Ended December 31,						Change from Previous Year
	2009			2008			Dollars			%
	(dollars in thousands)
Consolidated Results:
Revenues	$	312,331		$	329,298		$	(16,967	)		(5.2	)
Cost of sales (excluding depreciation)		198,241			214,905			(16,664	)		(7.8	)
Depreciation expense related to cost of sales		21,406			20,796			610			2.9
Gross profit		92,684			93,597			(913	)		(1.0	)
Operating expenses		50,782			47,550			3,232			6.8
Depreciation and amortization expense		7,066			6,715			351			5.2
Loss on dispositions of assets		2,329			1,869			460			24.6
Impairment of goodwill and long-lived assets		—			149,905			(149,905	)		(100	)
Acquisition expense		79			—			79			—
Gain on diesel hedge		(581	)		—			(581	)		—
Cost of antitrust investigations and related litigation, net of insurance proceeds		(891	)		15,524			(16,415	)		(105.7	)
Transaction costs related to merger agreement		—			835			(835	)		(100	)
Gain on property insurance settlement		—			(1,036	)		1,036			100
Income (loss) from operations		33,900			(127,765	)		161,665			126.5
Interest expense, net		(26,669	)		(31,068	)		4,399			(14.2	)
Gain on bargain purchase		661			—			661			—
Gain on termination of merger agreement		—			17,000			(17,000	)		(100	)
Income (loss) before income taxes		7,892			(141,833	)		149,725			105.6
Income tax benefit (expense)		(3,658	)		21,402			(25,060	)		(117.1	)
Net income (loss)	$	4,234		$	(120,431	)	$	124,665			103.5

Revenues: Revenues decreased $17.0 million from 2008 to 2009. This decrease is primarily due to an approximate 9% reduction in packaged ice volume sales related to the effect of various economic trends on our customers and the end users of our products, less favorable weather conditions in most of our markets and a decline in hurricane-related demand, partially offset by higher ISB volume related to mass merchant customer expansion, additional DSD accounts and higher average sales prices.

Cost of Sales (Excluding Depreciation): Cost of sales (excluding depreciation) decreased $16.7 million from 2008 to 2009. This decrease in cost of sales is primarily due to lower costs of fuel, plastic bags and labor and the implementation of operational efficiency initiatives, partially offset by increased health insurance costs. The decreases in fuel and bag costs were primarily due to declines in energy prices, commodity prices and to a lesser extent by reduced sales volumes. The operational efficiency initiatives contributed approximately $3 million in savings related to the implementation of advanced routing technology, automation of certain aspects of our plant and delivery functions, network optimization and a wide range of cost reduction measures.

Labor costs, including associated payroll taxes and benefit costs (including health insurance), accounted for approximately 25% and 24% of revenues in 2009 and 2008, respectively. Cost of plastic bags represented approximately 6% and 7% of revenues in 2009 and 2008, respectively. Fuel expenses represented approximately 3% and 5% of revenues in 2009 and 2008, respectively. Expenses for independent third party distribution services represented approximately 6% of revenues in 2009 and 2008. Electricity expense represented approximately 5% and 6% of revenues in 2009 and 2008, respectively.

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Depreciation Expense Related to Cost of Sales: Depreciation expense related to cost of sales increased $0.6 million due to new production and distribution equipment placed in service in 2009 as a result of capital expenditures, partially offset by dispositions.

Operating Expenses: Operating expenses increased $3.2 million from 2008 to 2009. This increase is primarily due to a $3.2 million increase in labor and benefits related to additional management headcount and increased health insurance costs and a $0.3 million increase in non-cash stock-based compensation. Offsetting these increases was a $0.6 million reduction in professional services related to reduced audit and consulting fees and a $0.3 million reduction in bad debt expense.

Depreciation and Amortization Expense: Depreciation and amortization increased $0.4 million from 2008 to 2009. This increase is primarily due to additional depreciation expense associated with assets placed in service in 2009 as a result of capital expenditures throughout the year.

Impairment of Goodwill and Long-Lived Assets: As a result of the decline in our stock price during the three months ended September 30, 2008, our stockholders' equity exceeded our equity market capitalization (including the application of a reasonable control premium) as of September 30, 2008 and, as a result, we performed a goodwill impairment assessment as of September 30, 2008. Based on the analysis, a non-cash charge of $149.7 million (pretax) was recorded during the three months ended September 30, 2008 to reduce goodwill to its estimated fair value as of September 30, 2008. Additionally, $0.2 million of miscellaneous asset impairments were recorded throughout 2008.

No impairments were recorded in 2009.

Gain on diesel hedge: A gain of $0.6 million was recognized during the year ended December 31, 2009 in connection with a derivative contract used to hedge the cost of diesel used in our delivery operations. The derivative contract was in-place through December 28, 2009.

Cost of Antitrust Investigations and Related Litigation, Net of Insurance Proceeds: During 2009 and 2008, we incurred gross costs of $6.3 million and $15.5 million, respectively, in connection with legal fees and other expenses associated with the antitrust investigation being conducted by the Antitrust Division of the United States Department of Justice and the related litigation. During 2009, these costs were offset by $7.2 million of gains related to reimbursements from one of our insurance carriers. We became aware of and began incurring expenses related to the investigation in March 2008.

Transaction Costs Related to Merger Agreement: During 2008, professional service expenses totaling $0.8 million, net of $0.2 million of insurance recoveries, were incurred in connection with the termination of the merger transaction with GSO and the related stockholder litigation.

No transactions costs related to the merger agreement were recorded in 2009.

Gain on Property Insurance Settlement: During 2008, a property insurance claim related to fire damage at one of our manufacturing facilities was settled, which resulted in a one-time gain of $1.0 million.

Interest Expense, net: Net interest expense decreased $4.4 million from 2008 to 2009. This decrease was primarily due to lower interest rates on the unhedged portion of our term loan, lower average outstanding balances under the revolving credit facility, and lower interest rates on the hedged portion of the term loan as a result of entering into a new interest rate hedge in February 2009, partially offset by scheduled increases in the interest expense associated with our 101/2% senior discount notes and decreases in interest income primarily related to the decline in market interest rates. The amount of net interest expense recognized by Reddy Holdings was $16.5 million and $15.1 million during 2009 and 2008, respectively.

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Gain on Bargain Purchase: In December of 2009, we acquired an entity whose fair value of net assets exceeded the purchase price. As such, we recorded a gain of $0.6 million, net of acquisition costs of $0.1 million.

Gain on Termination of Merger Agreement: During 2008, the merger agreement with affiliates of GSO was terminated, which resulted in a one-time $21 million termination fee being paid by GSO. Offsetting this fee was $4 million of fees and expenses incurred by GSO and its third-party consultants in connection with the transaction that we agreed to pay. We received a net payment of $17 million from GSO on February 5, 2008.

Income Tax Benefit (Expense): The effective tax rate for continuing operations increased from 15.1% in 2008 to 46.3% in 2009 primarily as result of the non-recurrence of the goodwill impairment charge recorded in 2008, a significant portion of which was non-deductible for income tax purposes and the effects of state margin taxes.

Liquidity and Capital Resources

We ~~intend~~generate tocash ~~fund~~from the sale of packaged ice through traditional delivery methods, by which we manufacture, package and store ice at a central facility and transport it to our ~~ongoing~~customers' ~~capital~~retail locations when needed, and ~~working~~through ~~capital~~Ice ~~requirements~~Factories, aswhich ~~well~~manufacture, aspackage and store ice in our customers' retail locations. Our primary uses of cash are (a) cost of sales, (b) operating expenses, (c) debt service, ~~including~~(d) capital expenditures related to replacing and modernizing the capital equipment in our traditional ~~internal~~ice ~~growth~~plants and acquiring and installing additional Ice Factories, (e) acquisitions, and (f) investments. We have been and may continue to be required to use substantial amounts of cash to pay expenses relating to the investigations by various state agencies and related civil litigation. See Item 3. Legal Proceedings. Historically, we have financed our debt service, capital and working capital requirements, including our acquisitions, through a combination of cash flows from operations, borrowings under our ~~existing~~revolving credit facilities, ~~operating leases~~ and ~~other potential financing arrangements~~operating leases.

WeDue ~~generate~~to ~~cash~~deterioration ~~from~~in ~~the~~our ~~sale~~business ofrelated ~~packaged~~principally ~~ice~~to ~~through~~price ~~traditional~~declines ~~delivery~~driven ~~methods,~~ by ~~which~~industry wecompetition ~~manufacture,~~across ~~package and store ice at a central facility and transport it to~~ our ~~customers'~~ ~~retail locations when needed~~markets, and ~~through~~coupled ~~Ice~~with ~~Factories,~~broader ~~which~~economic ~~manufacture,~~instability ~~package~~ and ~~store ice in our customers' retail locations. Our primary uses of cash are (a) cost of sales,~~rising ~~(b) operating~~commodity ~~expenses~~prices, ~~(c) debt~~we ~~service,~~experienced ~~(d) capital~~significant ~~expenditures~~net ~~related~~losses ~~to replacing and modernizing the capital equipment~~ in ~~our~~2011 ~~traditional ice plants~~ and ~~acquiring~~2010. ~~and installing~~Our ~~additional~~financial ~~Ice~~results ~~Factories, (e) acquisitions, and (f) investments. We~~ have also been ~~and~~burdened ~~may continue to be required to use substantial amounts of cash to pay expenses relating to the investigations~~ by ~~various~~high ~~state~~interest ~~agencies~~costs ~~and~~resulting ~~related~~from ~~civil litigation. See Item 3. Legal Proceedings. Historically, we have financed~~ our ~~capital~~highly ~~and~~leveraged ~~working~~ capital ~~requirements, including~~structure. ~~our~~These ~~acquisitions,~~factors ~~through a combination of cash flows from operations, borrowings under our revolving credit facilities~~ and ~~operating leases.~~

During 2010, capital expenditures totaled $31.9 million. During this period, we also received $7.1 million related to the reimbursement of the cost of equipment acquired in 2009 and 2010 and subsequently placed under operating leases in 2010. As we consolidate acquisitions into the existing Company infrastructure, we have identified non-core and excess assets which can be disposed of, such as real estate and machinery and equipment. From time to time, we also dispose of other assets which are no longer useful in our operations. As a result of dispositions of these non-core and excess assets, we realized proceeds of approximately $0.7 million during 2010. Our capital expenditures during 2010 were $28.1 million, net of dispositions and reimbursements of the cost of equipment purchased in 2009 and 2010 and placed under operating leases in 2010. 48

During 2010, we completed the acquisition of 16 ice companies for a total cash purchase price of approximately $19.2 million. We will continue to evaluate acquisition opportunities as they become available. In conjunction with these evaluations, we will consider our liquidity, availability under our credit facility, mandatory principal repayments under our debt agreements and availability of other capital resources.

Cash Flows for the Years Ended December 31, 2010, 2009 and 2008

Net cash provided by operating activities was $19.9 million, $33.5 million, and $52.0 million in 2010, 2009 and 2008, respectively. The decrease in cash provided by operations from 2009 to 2010 was

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~~primarily~~uncertainty ~~due to a $37.6 million decline~~ in ~~net~~our ~~income~~ability ~~after~~to ~~adjusting~~generate ~~for~~sufficient ~~non-cash~~liquidity ~~expenses~~to ~~and~~meet ~~charges,~~our ~~offset~~future byobligations ~~a $24.0 million increase~~ in ~~cash~~a ~~provided~~timely bymanner ~~changes~~have ~~in working~~caused ~~capital.~~management ~~The~~to ~~working~~conclude ~~capital~~that ~~change~~there ~~was~~is ~~driven~~substantial bydoubt ~~increased~~regarding ~~interest expense and changes in the timing of interest payments related to~~ our ~~new financing arrangements. The decrease in cash~~ability ~~provided by operations from 2008~~ to ~~2009~~continue ~~was~~as ~~primarily~~a ~~due~~going toconcern. aAccordingly, ~~$10.4 million~~the ~~decline~~opinion inof ~~net~~our ~~income,~~independent ~~after~~registered ~~adjusting~~public ~~for~~accounting ~~non-cash~~firm ~~expenses~~on ~~and~~our ~~charges,~~Consolidated asFinancial ~~well~~Statements ascontains an ~~additional $8.1 million~~explanatory ~~decrease~~paragraph indescribing ~~cash~~the existence ~~provided~~of bysubstantial ~~changes~~doubt inregarding ~~working~~the ~~capital.~~Company's ~~The~~ability ~~working~~to ~~capital~~continue ~~change~~as ~~was driven by~~ a ~~decrease~~going ~~in accounts payable and accrued expenses, which was partially offset by decreases in accounts receivable and inventory~~concern.

~~Net~~As ~~cash~~a ~~used~~result inof ~~investing~~these ~~activities was $62.3 million~~factors, ~~$28.5 million~~we ~~and~~began ~~$1.6 million~~to inexplore ~~2010,~~alternatives ~~2009~~to ~~and~~address ~~2008,~~our ~~respectively. Net cash used in investing activities in 2010 was composed of net~~ capital ~~expenditures of $28~~structure.~~1 million,~~ ~~acquisitions~~In ofrecent ~~ice~~months ~~companies~~these ~~totaling~~efforts ~~$19.2 million,~~have ~~funding of a restricted cash account of $10.1 million~~accelerated, ~~and the~~with ~~purchase~~an ofinformal ~~investments~~committee of $4.7 million. Net cash used in investing activities in 2009 was composed of capital expenditures of $23.9 million, acquisitions of ice companies totaling $1.0 million, equipment deployed in 2009 but subsequently placed under operating leases totaling $2.0 million and the ~~purchase of investments of $1.6 million. Net cash used in~~ ~~investing~~largest ~~activities~~holders ~~in 2008 was composed~~ of ~~net~~our ~~capital~~existing ~~expenditures~~first ~~of $16.0 million~~ and ~~acquisitions~~second oflien ~~ice~~notes ~~companies~~negotiating ~~and a leased manufacturing facility totaling $4.4 million, offset by~~ the ~~receipt~~terms of ~~$1.5 million in connection with~~ a ~~property~~restructuring ~~insurance settlement and the release~~ of ~~$17.3 million of restricted cash related to the sale of~~ our ~~non-ice businesses~~debt ~~in 2007~~obligations. ~~The~~See ~~net~~"Restructuring ~~proceeds~~Transactions" ~~from~~on ~~the sale of those businesses were $19.4~~page ~~million.~~16 ~~Our~~for ~~senior credit agreement requires that the net proceeds from the sales be used either to repay term~~further ~~borrowings under the credit facility or to make acquisitions and/or capital expenditures within twelve months of the receipt of such proceeds~~information. ~~Until used, the proceeds were on deposit in a restricted account with the administrative agent under the senior credit facility.~~

~~Net~~During ~~cash~~2011, ~~provided~~capital byexpenditures ~~financing~~totaled ~~activities~~$15.1 million. ~~was~~During this period, we also received $393.91 million inrelated ~~2010~~to as the ~~refinancing~~reimbursement of ~~substantially~~the ~~all~~cost of ~~our~~equipment ~~debt~~acquired ~~resulted~~ in 2010 ~~the~~and ~~net~~2011 ~~issuance~~and ofsubsequently ~~$60 million~~placed ~~of additional~~under ~~debt.~~operating ~~Approximately~~leases ~~$20~~in 2011.~~1 million~~ ofAs we consolidate acquisitions into the ~~proceeds~~existing ~~were~~Company ~~used~~infrastructure, towe ~~pay~~have ~~fees~~identified non-core and ~~expenses~~excess ~~associated~~assets which ~~with~~can ~~the~~be ~~refinancing~~disposed ~~transactions.~~of, ~~Net~~such ~~cash~~as ~~used~~real inestate ~~financing~~and ~~activities~~machinery ~~was $0.03 million~~ and ~~$28~~equipment.~~0 million~~ inFrom ~~2009~~time ~~and~~to ~~2008~~time, ~~respectively.~~we ~~The~~also ~~use~~dispose of ~~cash~~other inassets which ~~financing~~are ~~activities~~no longer useful in ~~2009~~our ~~was~~operations. ~~due~~As toa ~~the~~result ~~retirement~~of dispositions of ~~common~~these ~~stock.~~non-core ~~The~~and ~~use~~excess assets, we realized proceeds of ~~cash~~approximately in$0.8 million ~~financing~~during 2011. Our ~~activities~~capital inexpenditures ~~2008~~during ~~was~~2011 ~~primarily~~were ~~the~~$12.9 million, ~~result~~net of dispositions and reimbursements of the ~~payment~~cost of ~~cash~~equipment ~~dividends~~purchased toin ~~our~~2010 ~~common~~and ~~stockholders~~2011 and placed under operating leases in 2011.

During 2011, ~~Long-term~~we ~~Debt~~completed the acquisition of 9 ice companies for a total cash purchase price of approximately $13.3 million. We will continue to evaluate acquisition opportunities as they become available. In conjunction with these evaluations, we will consider our liquidity, availability under our credit facility, mandatory principal repayments under our debt agreements and availability ~~Other~~of ~~Obligations~~ other capital resources.

~~Overview. At~~ ~~December 31,~~Cash ~~2010,~~Flows wefor ~~had~~the ~~$450.7 million~~Years ofEnded ~~total~~December 31, ~~debt~~2011, ~~outstanding~~2010 asand ~~follows:~~ 2009

~~There~~Net cash used in operating activities was $22.0 million in 2011. Net cash provided by operating activities was $19.9 million and $33.5 million in 2010 and 2009, respectively. The decrease in cash provided by operating activities from 2010 to 2011 was noprimarily ~~balance~~due ~~outstanding~~to ~~under~~a ~~Reddy~~$25.0 million decline ~~Corp's~~in ~~revolving~~net ~~credit~~income ~~facility~~after adjusting for non-cash expenses and charges, as ofwell ~~December~~as an $16.9 ~~31,~~million decrease in cash provided by changes in working capital. The working capital change was driven by a decrease in cash provided by changes in accounts payable and accrued expenses driven by changes in accrued interest and an increase in accounts receivable associated with increased sales. The decrease in cash provided by operations from 2009 to 2010 was primarily due to a $37.6 million decline in net income after adjusting for non-cash expenses and charges, offset by a $24.0 million increase in cash provided by changes in working capital. The working capital change was driven by increased interest expense and changes in the timing of interest payments related to our new financing arrangements.

~~11.25%~~ Net cash ~~Senior~~used ~~Secured~~in ~~Notes~~investing activities was $30. On2 million, ~~March~~$62.3 15million and $28.5 million in 2011, 2010 and 2009, ~~Reddy~~respectively. ~~Corp~~Net ~~issued~~cash used in investing activities in 2011 was composed of net capital expenditures of $~~300~~12.09 million, inacquisitions ~~aggregate~~of ~~principal~~ice ~~amount~~companies ~~of 11~~totaling $13.~~25%~~3 million, ~~Senior~~funding ~~Secured Notes~~of ~~due~~a ~~2015~~restricted (cash account of $2.9 million, and the ~~"First~~purchase ~~Lien~~of ~~Notes")~~investments of $1.0 million. Net cash used in ainvesting ~~private~~activities ~~placement~~in ~~offering~~2010 was composed of net capital expenditures of $28.1 million, ~~The~~acquisitions ~~First~~of ~~Lien~~ice ~~Notes~~companies totaling ~~were~~$19.2 million, ~~subsequently~~funding ~~registered~~of ~~within~~a ~~the~~restricted ~~SEC~~cash ~~effective~~account ~~August~~of $10.1 2million, ~~2010~~and the purchase of investments of $4.7 million. ~~Cash~~Net ~~interest~~cash ~~accrues~~used onin ~~the First~~investing ~~Lien~~activities ~~Notes~~in at2009 awas composed ~~rate~~of capital expenditures of 11$23.~~25%~~9 million, ~~per~~acquisitions ~~annum~~of ~~and~~ice iscompanies ~~payable~~totaling ~~semi-annually~~$1.0 million, equipment deployed in ~~arrears~~2009 onbut ~~March~~subsequently placed under operating leases totaling $2.0 15million and ~~September~~the purchase of investments of $1.6 15million. ~~The~~Our ~~First~~senior ~~Lien~~credit ~~Notes~~agreement ~~mature~~requires onthat ~~March 15,~~the ~~2015.~~net ~~The~~ proceeds offrom the ~~offering~~sales ~~were~~be used either to repay ~~certain~~term ofborrowings ~~Reddy~~under ~~Corp's~~the credit ~~preexisting~~facility or to make acquisitions and/or

4249

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~~debt~~capital ~~(see~~expenditures ~~"Old~~within ~~Senior~~twelve ~~Credit~~months ~~Facilities"~~of ~~below),~~the ~~pay~~receipt ~~fees~~of ~~and~~such ~~expenses~~proceeds. ~~related~~Until toused, the ~~transactions~~proceeds ~~and~~were ~~provide~~on ~~the~~deposit ~~Company~~in a restricted account with ~~cash~~the ~~for~~administrative ~~future~~agent ~~use~~under the senior credit facility.

Net cash provided by financing activities was $20.0 million in 2011 and mostly consisted of $20.7 million of net borrowings under our revolving credit facility. Net cash provided by financing activities was $39.9 million in 2010 as the refinancing of substantially all of our debt resulted in the net issuance of $60 million of additional debt. Approximately $20.1 million of the proceeds were used to pay fees and expenses associated with the refinancing transactions. Net cash used in financing activities was $0.03 million in 2009. The use of cash in financing activities in 2009 was due to the retirement of common stock.

Debt and Other Obligations

Overview. At December 31, 2011, we had $471.5 million of total debt outstanding as follows:

•: $300.0 million of Reddy Corp's 11.25% senior secured notes due 2015;
•: $139.0 million of Reddy Corp's 13.25% senior secured notes due 2015 (net of unamortized early tender premium of $0.6 million);
•: $11.7 million of Reddy Holdings' 10¹/2% senior discount notes due November 1, 2012;
•: $20.7 million of borrowings under Reddy Corp's revolving credit facility; and
•: $0.1 million in other notes payable.

11.25% Senior Secured Notes. On March 15, 2010, Reddy Corp issued $300.0 million in aggregate principal amount of 11.25% Senior Secured Notes due 2015 (the "First Lien Notes") in a private placement offering. The First Lien Notes were subsequently registered with the SEC effective August 2, 2010. Cash interest accrues on the First Lien Notes at a rate of 11.25% per annum and is payable semi-annually in arrears on March 15 and September 15. The First Lien Notes mature on March 15, 2015. The proceeds of the offering were used to repay certain of Reddy Corp's preexisting debt (see "Old Senior Credit Facilities" below), pay fees and expenses related to the transactions and provide the Company with cash for future use.

The First Lien Notes are senior secured obligations of Reddy Corp and are:

•: guaranteed by Reddy Holdings;
•: secured on a first-priority basis by liens on substantially all of the assets of Reddy Corp and Reddy Holdings;
•: senior in right of payment to all of Reddy Corp's and Reddy Holdings' future subordinated indebtedness; and
•: effectively senior to all of Reddy Corp's and Reddy Holdings' existing and future unsecured senior indebtedness.

The First Lien Notes include customary covenants that restrict, among other things, Reddy Corp's and its future subsidiaries' ability to incur additional debt or issue certain preferred stock, pay dividends or redeem, repurchase or retire its capital stock or subordinated indebtedness, make certain investments, create liens, enter into arrangements that restrict dividends from its subsidiaries, merge or sell all or substantially all of its assets or enter into various transactions with affiliates. From and after March 15, 2013, Reddy Corp may redeem any or all of the First Lien Notes by paying a redemption premium, which is initially 5.625% of the principal amount of the First Lien Notes and declines to 0% for the period commencing on March 15, 2014 and thereafter. Prior to March 15, 2013, Reddy Corp may redeem any or all of the First Lien Notes by paying a "make-whole" redemption premium. If Reddy Corp experiences a change of control, Reddy Corp will be required to make an offer to ~~repurchase the First Lien Notes at a price equal~~ to 101% of their accreted value, plus accrued and unpaid interest, if any, to the date of purchase. Reddy Corp may also be required to make an offer to purchase the First Lien Notes with proceeds of asset sales that are not reinvested in the Company's business or used to repay other indebtedness.

The indenture governing the First Lien Notes restricts the amount of dividends, distributions and other restricted payments Reddy Corp may make. Under the indenture, Reddy Corp is restricted from paying dividends to Reddy Holdings unless, at the time of such payment: 50

The first lien leverage ratio under the indenture governing the First Lien Notes means the ratio of first lien indebtedness (as defined in the indenture) to EBITDA (as defined in the indenture) for the most recent four fiscal quarters. Reddy Corp is generally required to calculate its first lien leverage ratio on a pro forma basis to give effect to the incurrence and repayment of indebtedness as well as acquisitions and dispositions. As of December 31, 2010, the first lien leverage ratio was 5.5 to 1.0.

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repurchase the First Lien Notes at a price equal to 101% of their accreted value, plus accrued and unpaid interest, if any, to the date of purchase. Reddy Corp may also be required to make an offer to purchase the First Lien Notes with proceeds of asset sales that are not reinvested in the Company's business or used to repay other indebtedness.

•: no default or event of default has occurred and is continuing or would occur as a consequence thereof;
•: the first lien leverage ratio set forth in the indenture governing the First Lien Notes is less than or equal to 3.5 to 1.0; and
•: there is sufficient capacity under the buildup amount under the indenture governing the First Lien Notes.

The buildup amount equals 50% of the consolidated net income of Reddy Corp accrued during the period (treated as one accounting period) from April 1, 2010 to the end of the most recent fiscal quarter for which internal financial statements are available (or, if such consolidated net income is a deficit, minus 100% of such deficit), plus, the net cash proceeds to Reddy Corp of the issuance of capital stock, subject to certain exceptions, and any cash capital contribution received by Reddy Corp from its stockholder, in each case after April 1, 2010, plus the amount by which Reddy Corp indebtedness is reduced on its balance sheet as a result of the conversion or exchange of such indebtedness for capital stock, plus the net reduction in certain restricted investments made by Reddy Corp, less the amount of certain restricted payments made from time to time, including, among other things, the payment of cash dividends. Reddy Corp is not currently permitted to pay dividends under this provision.

In addition, regardless of the leverage ratio or whether Reddy Corp could make any restricted payments under the buildup amount provision referred to above, Reddy Corp is permitted to make certain restricted payments including (1) dividend payments at any time in an aggregate amount of up to $25.0 million if no default has occurred and is continuing under the indenture, (2) the payment of interest when due on the remaining 10¹/2% Senior Discount Notes and the repayment, redemption or retirement of remaining 10¹/2% Senior Discount Notes from the proceeds of certain indebtedness of Reddy Corp incurred after the date of issuance of the First Lien Notes, (3) the payment of dividends to Reddy Holdings in an amount per year not to exceed $1.0 million to pay franchise taxes and overhead expenses of Reddy Holdings and (4) the payment of dividends to Reddy Holdings in an amount per year not to exceed 6.0% of the aggregate net cash proceeds received by Reddy Corp from all public equity offerings after the date of issuance of the First Lien Notes subject to specified conditions. However, the amount of dividend payments permitted under this 6.0% provision will correspondingly reduce the amount otherwise available under the buildup amount for restricted payments, including dividends.

~~13.25% Senior Secured Notes. On March 15, 2010, Reddy Corp issued $137.6 million in aggregate principal amount of~~For ~~13.25%~~information ~~Senior~~regarding ~~Secured Notes~~changes ~~due~~expected ~~2015~~to ~~(the~~be ~~"Second~~made ~~Lien~~to ~~Notes") in~~ the ~~initial~~First ~~settlement of a private placement exchange offer for the outstanding Discount Notes (the "Exchange Offer"). The Second~~ Lien Notes ~~were subsequently registered within the SEC effective August 2, 2010. On March 24, 2010, Reddy Corp issued an additional $1.8 million~~ in aggregate principal amount of Second Lien Notes in the final settlement of the Exchange Offer. Reddy Corp received no cash proceeds from the issuance of the Second Lien Notes. Cash interest accrues on the Second Lien Notes at a rate of 13.25% per annum and is payable semi-annually in arrears on May 1 and November 1, with the first payment occurring on November 1, 2010. The Second Lien Notes mature on November 1, 2015. In connection with the ~~Exchange Offer~~Restructuring, ~~the Company issued $0.6 million of Second Lien Notes to certain bondholders as an early tender premium (~~see ~~"101/2%~~ ~~Senior Discount Notes~~"Restructuring ~~below~~Transactions—First ~~for further information). These additional Second~~ Lien Notes" ~~were not reflected in the Company's condensed consolidated balance sheet upon issuance,~~on ~~but will be recognized as additional debt through interest expense over the term of the Second Lien Notes~~page 17.

~~The Second Lien Notes are senior secured obligations of Reddy Corp and are:~~ 51

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13.25% Senior Secured Notes. On March 15, 2010, Reddy Corp issued $137.6 million in aggregate principal amount of 13.25% Senior Secured Notes due 2015 (the "Second Lien Notes") in the initial settlement of a private placement exchange offer for the outstanding Discount Notes (the "Exchange Offer"). The Second Lien Notes were subsequently registered with the SEC effective August 2, 2010. On March 24, 2010, Reddy Corp issued an additional $1.8 million in aggregate principal amount of Second Lien Notes in the final settlement of the Exchange Offer. Reddy Corp received no cash proceeds from the issuance of the Second Lien Notes. Cash interest accrues on the Second Lien Notes at a rate of 13.25% per annum and is payable semi-annually in arrears on May 1 and November 1, with the first payment occurring on November 1, 2010. The Second Lien Notes mature on November 1, 2015. In connection with the Exchange Offer, the Company issued $0.6 million of Second Lien Notes to certain bondholders as an early tender premium (see "10¹/2% Senior Discount Notes" below for further information). These additional Second Lien Notes were not reflected in the Company's condensed consolidated balance sheet upon issuance, but will be recognized as additional debt through interest expense over the term of the Second Lien Notes.

The Second Lien Notes are senior secured obligations of Reddy Corp and are:

•: guaranteed by Reddy Holdings;
•: secured on a second-priority basis by liens on substantially all of the assets of Reddy Corp and Reddy Holdings;
•: senior in right of payment to all of Reddy Corp's and Reddy Holdings' future subordinated indebtedness; and
•: effectively senior to all of Reddy Corp's and Reddy Holdings' existing and future unsecured senior indebtedness.

The Second Lien Notes include customary covenants that restrict, among other things, Reddy Corp's and its future subsidiaries' ability to incur additional debt or issue certain preferred stock, pay dividends or redeem, repurchase or retire its capital stock or subordinated indebtedness, make certain investments, create liens, enter into arrangements that restrict dividends from its subsidiaries, merge or sell all or substantially all of its assets or enter into various transactions with affiliates. From and after March 1, 2013, Reddy Corp may redeem any or all of the Second Lien Notes by paying a redemption premium, which is initially 6.625% of the principal amount of the Second Lien Notes and declines to 0% for the period commencing on March 1, 2014 and thereafter. Prior to March 1, 2013, Reddy Corp may redeem any or all of the Second Lien Notes by paying a "make-whole" redemption premium. If Reddy Corp experiences a change of control, Reddy Corp will be required to make an offer to repurchase the Second Lien Notes at a price equal to 101% of their accreted value, plus accrued and unpaid interest, if any, to the date of purchase. Reddy Corp may also be required to make an offer to purchase the Second Lien Notes with proceeds of asset sales that are not reinvested in the Company's business or used to repay other indebtedness.

The indenture governing the Second Lien Notes restricts the amount of dividends, distributions and other restricted payments Reddy Corp may make. Under the indenture, Reddy Corp is restricted from paying dividends to Reddy Holdings unless, at the time of such payment:

•: no default or event of default has occurred and is continuing or would occur as a consequence thereof;
•: the secured leverage ratio set forth in the indenture governing the Second Lien Notes is less than or equal to 6.0 to 1.0; and
•: there is sufficient capacity under the buildup amount under the indenture governing the Second Lien Notes.

The secured leverage ratio under the indenture governing the Second Lien Notes means the ratio of secured indebtedness (as defined in the indenture) to EBITDA (as defined in the indenture) for the most recent four fiscal quarters. Reddy Corp is generally required to calculate its secured leverage ratio on a pro forma basis to give effect to the incurrence and repayment of indebtedness as well as acquisitions and dispositions. As of December 31, 2010, the second lien leverage ratio was 8.0 to 1.0.

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most recent four fiscal quarters. Reddy Corp is generally required to calculate its secured leverage ratio on a pro forma basis to give effect to the incurrence and repayment of indebtedness as well as acquisitions and dispositions. As of December 31, 2011, the second lien leverage ratio was 10.4 to 1.0.

In addition, regardless of the leverage ratio or whether Reddy Corp could make any restricted payments under the buildup amount provision referred to above, Reddy Corp is permitted to make certain restricted payments including (1) dividend payments at any time in an aggregate amount of up to $25.0 million if no default has occurred and is continuing under the indenture, (2) the payment of interest when due on the remaining Discount Notes and the repayment, redemption or retirement of remaining Discount Notes from the proceeds of certain indebtedness of Reddy Corp incurred after the date of issuance of the Second Lien Notes, (3) the payment of dividends to Reddy Holdings in an amount per year not to exceed $1.0 million to pay franchise taxes and overhead expenses of Reddy Holdings and (4) the payment of dividends to Reddy Holdings in an amount per year not to exceed 6.0% of the aggregate net cash proceeds received by Reddy Corp from all public equity offerings after the date of issuance of the Second Lien Notes subject to specified conditions. However, the amount of dividend payments permitted under this 6.0% provision will correspondingly reduce the amount otherwise available under the buildup amount for restricted payments, including dividends.

45 For information regarding changes expected to be made to the Second Lien Notes in connection with the Restructuring, see "Restructuring Transactions—Second Lien Notes" on page 18.

10¹/2% Senior Discount Notes. On October 27, 2004, Reddy Holdings issued $151 million in aggregate principal amount at maturity of 10¹/2% Senior Discount Notes due 2012 (the "Discount Notes") in a private placement offering. The Discount Notes were subsequently registered with the SEC, effective August 26, 2005. Each Discount Note had an initial accreted value of $663.33 per $1,000 principal amount at maturity. The accreted value of each Discount Note increased from the date of issuance until November 1, 2008 at a rate of 10¹/2% per annum such that the accreted value equaled the stated principal amount on November 1, 2008. Thereafter, cash interest began accruing November 1, 2008 and is payable semi-annually in arrears on May 1 and November 1 at a rate of 10¹/2% per annum. The Discount Notes mature and are payable on November 1, 2012. During the years ended December 31, 2011 and 2010, Reddy Corp paid cash dividends to Reddy Holdings in the amount of $1.2 million and $6.7 million, respectively, to fund the semi-annual interest payments on the Discount Notes.

On February 22, 2010, Reddy Corp launched the Exchange Offer, offering $1,000 in aggregate principal amount of Second Lien Notes for each $1,000 of Discount Notes exchanged. In addition, for Discount Notes exchanged on or prior to March 5, 2010, Reddy Corp offered an early tender premium of $5 in aggregate principal amount of Second Lien Notes for each $1,000 of Discount Notes exchanged. In conjunction with the Exchange Offer, Reddy Corp solicited consents to eliminate substantially all of the restrictive covenants from the indenture governing the Discount Notes. At the expiration of the Exchange Offer on March 19, 2010, approximately 92.2% of the aggregate principal amount of the Discount Notes had been tendered into the Exchange Offer. Following the final

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~~6.0%~~settlement of the ~~aggregate~~Exchange ~~net cash proceeds received by Reddy Corp from all public equity offerings after the date of issuance of the Second Lien Notes subject to specified conditions. However~~Offer, ~~the amount of dividend payments permitted under this 6~~$11.0%7 million ~~provision~~in ~~will~~aggregate ~~correspondingly~~principal ~~reduce the~~ amount ~~otherwise~~of ~~available under~~ the ~~buildup~~Discount ~~amount~~Notes ~~for~~remain ~~restricted payments, including dividends~~outstanding.

101/2% Senior Discount Notes. On October 27, 2004, Reddy Holdings issued $151 million in aggregate principal amount at maturity of 101/2% Senior Discount Notes due 2012 (the "Discount Notes") in a private placement offering. The Discount Notes were subsequently registered with the SEC, effective August 26, 2005. Each Discount Note had an initial accreted value of $663.33 per $1,000 principal amount at maturity. The accreted value of each Discount Note increased from the date of issuance until November 1, 2008 at a rate of 101/2% per annum such that the accreted value equaled the stated principal amount on November 1, 2008. Thereafter, cash interest began accruing November 1, 2008 and is payable semi-annually in arrears on May 1 and November 1 at a rate of 101/2% per annum. During the years ended December 31, 2010 and 2009, Reddy Corp paid cash dividends to Reddy Holdings in the amount of $6.7 million and $15.8 million, respectively, to fund the semi-annual interest payments on the Discount Notes.

The Discount Notes are unsecured obligations of Reddy Holdings and are:

•: not guaranteed by Reddy Corp;
•: senior in right of payment to all of Reddy Holdings' future subordinated indebtedness;
•: equal in right of payment with any of Reddy Holdings' existing and future unsecured senior indebtedness;
•: effectively subordinated to Reddy Holdings' existing and future secured debt, including the debt under the First Lien Notes, the Second Lien Notes and the credit facility, which are guaranteed on a secured basis by Reddy Holdings; and
•: structurally subordinated to all obligations and preferred equity of Reddy Corp.

~~From~~As ~~and~~of ~~after~~ November 1, ~~2008~~2010, Reddy Holdings may redeem any or all of the Discount Notes bywithout paying aany redemption premium~~, which was initially 5~~.~~25%~~ ~~of the principal amount at maturity of the Discount Notes and declined annually to 0% for the period commencing on November 1, 2010 and thereafter.~~

For information regarding changes expected to be made to the Discount Notes in connection with the Restructuring, see "Restructuring Transactions—Discount Notes on page 18.

Senior Credit Facilities. On March 15, 2010, Reddy Corp entered into a revolving credit facility with a syndicate of banks, financial institutions and other entities as lenders, including JPMorgan Chase Bank, N.A., as Administrative Agent (the "March 2010 Credit Facility"). The March 2010 Credit Facility provided for a $35 million revolving credit facility. Under the March 2010 Credit Facility, Reddy Corp had the right to request the aggregate commitments to be increased to $50 million provided certain conditions were met. On August 4, 2010, the aggregate commitments under the March 2010 Credit Facility were increased to $50 million.

The March 2010 Credit Facility was an obligation of Reddy Corp and was guaranteed by Reddy Holdings. The March 2010 Credit Facility was scheduled to mature on January 31, 2014.

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Principal balances outstanding under the March 2010 Credit Facility bore interest per annum, at Reddy Corp's option, at the sum of the base rate or LIBOR plus the applicable margin. The applicable margin for base rate loans was initially 3.75% and for LIBOR loans was initially 4.75%, with such applicable margins subject to reduction based upon the Company's net leverage ratio (as defined in the March 2010 Credit Facility). The Company also paid (i) a quarterly fee on the average availability under the revolving credit facility at an annual rate of 0.875%, with such availability fee subject to reduction based upon the Company's net leverage ratio, (ii) a $50,000 annual loan servicing fee, and (iii) an annual commitment fee of $0.2 million to one of the lenders.

On October 22, 2010, Reddy Corp and the lenders party thereto amended and restated the March 2010 Credit Facility (the "New Credit Facility"). The New Credit Facility provides for a $50 million revolving credit facility. Macquarie Bank Limited ("Macquarie"), a lender under the March 2010 Credit Facility, is currently the sole lender under the New Credit Facility. On December 10, 2010, Macquarie became the successor administrative agent under the New Credit Facility.

The New Credit Facility provides that outstanding loans will bear interest at rates based on LIBOR plus an applicable margin of 7.0% per annum or, at the option of Reddy Corp, the Base Rate, plus an applicable margin of 6.0% per annum, the relevant margin being the applicable margin. Swing line loans will bear interest at the Base Rate plus the applicable margin. LIBOR and Base Rates are subject to floors of 1.5% and 2.5%, respectively. Interest on LIBOR loans is payable upon maturity of the LIBOR loan or on the last day of the quarter if the term of the LIBOR loan exceeds 90 days. Reddy Corporation will pay an anniversary fee on each anniversary of the effectiveness of the New Credit Facility equal to 1.0% of the commitments under the New Credit Facility on the first anniversary and increasing on each subsequent anniversary by 0.5%, as well as a $50,000 quarterly loan servicing fee. Additionally, for each full calendar year beginning with 2011, if the average balance outstanding under the New Credit Facility is less than $12.5 million for the calendar year, the Borrower shall pay to the Lenders an amount equal to (x) the difference between the average balance outstanding and $12.5 million multiplied by (y) the average interest rate for LIBOR Loans during that calendar year (determined based on average one month LIBOR rates as of the end of each quarter during such calendar year). The New Credit Facility will mature on October 22, 2014. At December 31, 2010, the Company had no amounts outstanding and $50 million of availability under the New Credit Facility.

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fee. Additionally, for each full calendar year beginning with 2011, if the average balance outstanding under the New Credit Facility is less than $12.5 million for the calendar year, the Borrower shall pay to the Lenders an amount equal to (x) the difference between the average balance outstanding and $12.5 million multiplied by (y) the average interest rate for LIBOR Loans during that calendar year (determined based on average one month LIBOR rates as of the end of each quarter during such calendar year). The New Credit Facility will mature on October 22, 2014. At December 31, 2011, the Company had $20.7 million outstanding and $29.3 million of availability under the New Credit Facility. The weighted average interest rate on borrowings under the New Credit Facility as of December 31, 2011 was 8.6%.

The obligations under the New Credit Facility are fully and unconditionally guaranteed by Reddy Holdings and will also be guaranteed by any future domestic subsidiaries of Reddy Corp, subject to certain exceptions.

The New Credit Facility does not require any scheduled principal payments prior to its stated maturity date. Subject to certain conditions, mandatory repayments of the New Credit Facility (and mandatory commitment reductions of the New Credit Facility) are required to be made with portions of the proceeds from (1) asset sales, (2) the issuance of debt securities and (3) insurance and condemnation awards, subject to various exceptions. In the event of a change in control, as defined in the New Credit Facility, an event of default will occur under the New Credit Facility.

The New Credit Facility also contains affirmative and negative covenants applicable to Reddy Corp and its future subsidiaries, subject to materiality and other qualifications, baskets and exceptions. The affirmative and negative covenants are substantially consistent with those contained in the March 2010 Credit Facility. The negative covenants, among other things, restrict the ability of Reddy Corp to:

•: incur additional indebtedness or issue certain preferred shares;
•: create liens;
•: make investments;
•: pay dividends or make other restricted payments;
•: consolidate or merge or acquire or dispose of assets;
•: enter into transactions with affiliates;
•: permit consensual encumbrances or restrictions on Reddy Corp's restricted subsidiaries' ability to pay dividends or make certain other payments to Reddy Corp; and
•: prepay certain indebtedness, including the First Lien Notes and the Second Lien Notes.

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Under the restricted payments covenant in the New Credit Facility, Reddy Corp is generally prohibited from paying dividends and otherwise transferring assets to Reddy Holdings. Reddy Corp is permitted to pay certain limited dividends to Reddy Holdings, the proceeds of which must be used for specific purposes, such as to maintain Reddy Holdings' corporate existence, repurchase the Discount Notes and pay interest on the Discount Notes. Reddy Corp may also distribute certain investments to Reddy Holdings.

In addition, Reddy Corp may also pay dividends to Reddy Holdings for specified purposes, including the payment of cash interest on the Discount Notes. The New Credit Facility (and the March 2010 Credit Facility, while it was in effect) precludes Reddy Corp from declaring any dividends if an event of default under the credit facility has occurred and is continuing. In particular, it will be an event of default under the New Credit Facility if Reddy Corp's leverage ratio (defined as the ratio of the outstanding balance of the New Credit Facility on the last day of each quarter to EBITDA (as defined in the New Credit Facility) over the preceding four quarters) exceeds 2.50:1.00 as of the end of any quarter. The New Credit Facility ~~requires~~required the maintenance of a minimum liquidity amount of $5 million at all times. Liquidity for purposes of this covenant is defined as the sum of available ~~borrowing~~ capacity under the New Credit Facility and unrestricted cash held by Reddy Corp. The New Credit Facility is collateralized by substantially all of the Company's assets. Reddy Holdings guarantees the New Credit Facility and such guarantee is collateralized by a pledge of substantially all of the assets of Reddy Holdings.

Under the March 2010 Credit Facility, it was an event of default if Reddy Corp's leverage ratio (as defined in the March 2010 Credit Facility) exceeded the level specified in the credit agreement, which was 7.75:1.00 for periods ending through December 31, 2010, or Reddy Corp's fixed charge coverage ratio was less than the level specified in the credit agreement, which was 1.00:1.00 for periods ending through September 30, 2011. While Reddy Corp would not have met the leverage ratio requirement of the March 2010 Credit Facility at September 30, 2010, no compliance certificate for that period was delivered before the March 2010 Credit Facility was amended and restated through the New Credit Facility. Reddy Corp is in compliance with the covenant requirements of the New Credit Facility. Furthermore, Reddy Corp could also only pay dividends to Reddy Holdings in an amount not greater than Reddy Corp's Cumulative Available Cash (as defined in the March 2010 Credit Facility) for the period (taken as one accounting period) from April 1, 2010 to the end of its most recently ended fiscal quarter for which a covenant compliance certificate under the March 2010 Credit Facility had been delivered to the lenders. 55

~~Obligations under~~Table ~~the New Credit Facility may be declared immediately due and payable upon the occurrence~~ of certain events of default as defined in the credit agreement, including failure to pay any principal when due and payable, failure to pay interest within five (5) days after due, failure to comply with any covenant, representation or condition of any loan document, any change of control, cross-defaults, and certain other events as set forth in the credit agreement, with grace periods in some cases. Contents

borrowing capacity under the New Credit Facility and unrestricted cash held by Reddy Corp. On March 27, 2012, we amended the New Credit Facility to eliminate the minimum liquidity covenant through July 15, 2013. On March 30, 2012, we obtained a waiver to (i) extend the deadline to submit our 2011 financial statements to April 16, 2012 and (ii) waive any event of default that may occur as a result of our delivering 2011 financial statements containing an impermissible qualification as defined in the credit facility relative to substantial doubt about our ability to continue as a going concern. See "Restructuring Transactions—Credit Facility" below. The New Credit Facility is collateralized by substantially all of the Company's assets. Reddy Holdings guarantees the New Credit Facility and such guarantee is collateralized by a pledge of substantially all of the assets of Reddy Holdings. At December 31, 2011, Reddy Corp was in compliance with the ratio requirements included in New Credit Facility.

Obligations under the New Credit Facility may be declared immediately due and payable upon the occurrence of certain events of default as defined in the credit agreement, including failure to pay any principal when due and payable, failure to pay interest within five (5) days after due, failure to comply with any covenant, representation or condition of any loan document, any change of control, cross-defaults, bankruptcy and certain other events as set forth in the credit agreement, with grace periods in some cases.

An acceleration of the indebtedness under the New Credit Facility would be an event of default under the First Lien Notes and Second Lien Notes if the outstanding balance of the New Credit Facility at the time of acceleration is over $10 million.

At December 31, ~~2010~~2011, Reddy Holdings had $128.08 million of cash on hand that was not subject to restrictions under our New Credit Facility.

For information regarding recent amendments to the New Credit Facility, covenant waivers and other expected changes, see "Restructuring Transactions—Credit Facility" on page 19.

EBITDA as defined in our New Credit Facility is hereafter referred to as "Adjusted EBITDA".

48 The following table presents Adjusted EBITDA for the twelve month period ended December 31, 2011 on a pro forma basis after giving effect to the adjustments related to the acquisition or disposal of businesses which are permitted under the description of the definition of Leverage Ratio as set forth in the New Credit Facility. Adjusted EBITDA is different from EBITDA that is derived solely from GAAP components. Adjusted EBITDA should not be construed as an alternative to net income (loss), cash flows from operations or net cash from operating or investing activities as defined by GAAP, and it is not necessarily indicative of cash available to fund our cash needs as determined in accordance with GAAP. In addition, not all companies use identical calculations, and this presentation may not be comparable to similarly titled measures of other companies. A reconciliation of net income to EBITDA and Adjusted EBITDA follows the table.

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The following table presents Adjusted EBITDA for the twelve month period ended December 31, 2010 on a pro forma basis after giving effect to the adjustments related to the acquisition or disposal of businesses which are permitted under the description of the definition of Leverage Ratio as set forth in the New Credit Facility. Adjusted EBITDA is different from EBITDA that is derived solely from GAAP components. Adjusted EBITDA should not be construed as an alternative to net income (loss), cash flows from operations or net cash from operating or investing activities as defined by GAAP, and it is not necessarily indicative of cash available to fund our cash needs as determined in accordance with GAAP. In addition, not all companies use identical calculations, and this presentation may not be comparable to similarly titled measures of other companies. A reconciliation of net income to EBITDA and Adjusted EBITDA follows the table.

The following table sets forth pro forma Adjusted EBITDA as calculated under our New Credit Facility and the financial covenants contained in the New Credit Facility:

	Year Ended December 31, 2010
	Year Ended December 31, 2011
	(unaudited, in thousands)
Pro forma adjusted EBITDA	$	5544,~~020~~088
Leverage ratio		0.05:1.0
Minimum liquidity	$	7629,~~898~~543

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The following table sets forth a reconciliation of net loss to EBITDA and Adjusted EBITDA:

			Year Ended December 31, 2010
		Year Ended December 31, 2011
		(In thousands)	~~(In thousands)~~
Net loss		$	$(69,455	~~(40,489~~)	)
Depreciation expense related to cost of sales			27,598	~~26,088~~
Depreciation and amortization expense			8,969	~~8,802~~
Interest expense			58,714	~~50,078~~
Interest income			(15	~~(20~~)	)
Income tax benefit				(17,537	)
Income tax expense			1,973
EBITDA			27,784	~~26,922~~
Other non-cash items:
	Stock-based compensation expense(a)			2,075
Stock-based compensation expense			2,242
Loss on dispositions of assets	~~Loss on dispositions of assets~~		233	~~2,600~~
Impairment of long-lived assets	~~Impairment of long-lived assets~~		4,162	~~10,578~~
	Gain on bargain purchase			(232	)
Decrease in fair value of derivative			86
Acquisition expense	~~Acquisition expense~~		4,633	~~1,176~~
Debt refinance costs	~~Debt refinance costs~~		696	~~8,839~~
Reddy Holdings items:
Gain on contingent acquisition consideration			(418	)
	Cost (insurance recoveries) related to antitrust investigations and related litigation, net(b)			(124	)
Reddy Holdings items:
Adjusted EBITDA				51,834
Cost (insurance recoveries) related to antitrust investigations and related litigation, net(a)			5,049
Acquisition adjustments(c)				3,186
Adjusted EBITDA			44,467
Pro forma adjusted EBITDA			$	55,020
Acquisition adjustments(b)			(379	)
Pro forma adjusted EBITDA		$	44,088

(a)Represents the elimination of the net costs incurred in connection with the ongoing antitrust investigations and related litigation of insurance recoveries. The costs related to the antitrust investigations and related civil litigation and related insurance recoveries are excluded from the calculation of Adjusted EBITDA as these costs have been paid, and $2the related insurance recoveries have been received, by Reddy Holdings.~~1 million~~ Reddy Holdings is currently paying these costs from the excess cash remaining from the initial public offering of its common stock~~-based~~ ~~compensation~~in ~~expense~~August ~~for~~2005, the ~~year~~funds ~~ended~~paid ~~December~~to Reddy Holdings by affiliates of GSO Capital Partners ~~31,~~LP ~~2010~~in ~~includes~~February 2008 in connection with the termination of a merger agreement, insurance proceeds related to the antitrust investigations and related litigation, and dividends received from Reddy Corp in the amount of $04.20 million ~~accrual~~since ~~for~~the ~~Board~~DOJ ofinvestigation ~~Directors~~began. (b)Represents the ~~stock~~Adjusted ~~awards~~EBITDA ~~earned~~of ~~during~~acquired businesses as if each acquisition had been consummated on the ~~year~~first ~~and~~day ~~expected~~of tothe beperiod ~~granted~~presented. inAll acquisitions included herein were consummated on or before December 31, 2011.

49 Letters of Credit. The New Credit Facility does not provide for the issuance of standby letters of credit. In March 2010, Reddy Corp entered into a separate $15 million letter of credit facility with JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association (the "LC Facility"). Letters of credit issued under the LC Facility are cash collateralized at 102% of the amount of the letter of credit and are used primarily to secure certain insurance and operating lease obligations. As of December 31, 2011, $12.8 million of letters of credit were outstanding. The cash collateral provided under the LC Facility is maintained in a restricted account at JP Morgan Chase Bank, N.A. and is reported as "Restricted Cash" in the consolidated balance sheets.

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Letters of Credit. The New Credit Facility does not provide for the issuance of standby letters of credit. In March 2010, Reddy Corp entered into a separate letter of credit facility with JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association (the "LC Facility"). Letters of credit issued under the LC Facility are cash collateralized at 102% of the amount of the letter of credit and are used primarily to secure certain insurance and operating lease obligations. The cash collateral provided under the LC Facility is maintained in a restricted account at JP Morgan Chase Bank, N.A. and is reported as "Restricted Cash" in the consolidated balance sheets.

Old Senior Credit Facilities. On August 12, 2005, the Company amended and restated its credit facilities with a syndicate of banks, financial institutions and other entities as lenders, including Credit Suisse, Cayman Islands Branch, as Administrative Agent, Wachovia Bank, N.A., JP Morgan Chase, N.A., CIBC World Markets Corp., Bear Stearns Corporate Lending Inc. and Lehman Commercial Paper, Inc. (the "Old Credit Facilities"). The Old Credit Facilities provided for a $60 million revolving credit facility (the "Old Revolving Credit Facility") and a $240 million term loan (the "Old Term Loan"). The Old Credit Facilities were obligations of Reddy Corp and were guaranteed by Reddy Holdings. The Old Revolving Credit Facility and Old Term Loan were scheduled to mature on August 12, 2010 and August 12, 2012, respectively. On March 15, 2010, the Old Credit Facilities were terminated and all amounts owed thereunder were repaid from the proceeds of the sale of the First Lien Notes.

Lehman Commercial Paper, Inc. ("LCP") had a $10 million commitment under the Revolving Credit Facility. LCP filed for bankruptcy in October 2008. During the year ended December 31, 2009, Reddy Corp made borrowings under the Revolving Credit Facility. LCP failed to fund its commitments related to such borrowings and the Reddy Corp did not believe LCP would fund borrowing requests made in the future. As a result, the amount available to Reddy Corp under the Old Revolving Credit Facility had been effectively reduced by $10 million.

Principal balances outstanding under the Old Credit Facility bore interest per annum, at the Company's option, at the sum of the base rate plus 0.75% or LIBOR plus 1.75%. The base rate was defined as the greater of the prime rate (as announced from time to time by the Administrative Agent) or the federal funds rate plus 0.5%. Interest on base rate loans was payable on the last day of each quarter. Interest on LIBOR loans was payable upon maturity of the LIBOR loan or on the last day of the quarter if the term of the LIBOR loan exceeded 90 days. Reddy Corp also paid a quarterly fee on the average availability under the revolving credit facility at an annual rate of 0.5%.

The Old Revolving Credit Facility and Old Term Loan did not require any scheduled principal payments prior to their stated maturity dates. The Old Credit Facilities contained financial covenants, which include the maintenance of certain financial ratios, as defined in the Credit Facilities, and were collateralized by substantially all of the Company's assets.

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which include the maintenance of certain financial ratios, as defined in the Credit Facilities, and were collateralized by substantially all of the Company's assets.

Interest Rate Hedging Agreements. Effective September 12, 2005, we entered into an interest rate hedging agreement (the "2005 Hedge") to lock the interest rate on a portion of our Term Loan. The 2005 Hedge had a term of three years and ten months and expired on July 12, 2009. The 2005 Hedge had an initial notional balance of $220 million. We paid a fixed rate of 4.431% on the notional balance outstanding and received an amount equal to 3-month LIBOR.

Effective February 17, 2009, we entered into a second interest rate hedging agreement (the "2009 Hedge") to lock the interest rate on a portion of our Term Loan. The 2009 Hedge had a term of 10 months and expired on December 17, 2009. The 2009 Hedge had a notional balance of $50 million from the inception date to July 17, 2009, at which time the notional balance increased to $210 million for the remaining term. We paid a fixed rate of 1.165% on the notional balance outstanding and received an amount equal to 1-month LIBOR. Any net payable or receivable amount was settled monthly. We used interest rate hedges to minimize the risk of increases in floating interest rates. The interest rate hedges were not for trading purposes and were accounted for as cash flow hedges.

Diesel Hedging ~~Agreement~~Agreements. On ~~February~~March 225, ~~2009~~2011, wethe Company entered into a hedge to fix the price per gallon of a portion of the ~~our~~Company's diesel fuel requirements (the "Diesel Hedge"). The Diesel Hedge began ~~February~~April 21, ~~2009~~2011 and expired on December 28, ~~2009~~2011. The notional amount of gallons hedged changed on a monthly basis to match ~~our~~ anticipated utilization and totaled 1.2 million Wegallons. The Company paid a weighted average fixed ~~rate~~price of $13.5517 per gallon (wholesale basis) and received an amount equal to a wholesale index rate. Any net payable or receivable ~~amount~~amounts ~~was~~were settled monthly. ~~We used~~On May 6, 2011, the ~~Diesel~~Company ~~Hedge~~entered into a hedge to ~~minimize~~fix the ~~risk~~price per gallon of ~~rising~~a portion of the Company's diesel fuel requirements ~~prices~~(the "Second Diesel Hedge"). The ~~hedge~~Second ~~was~~Diesel ~~not~~Hedge ~~for~~began ~~trading~~June 1, ~~purposes~~2011 and was ~~accounted~~effective ~~for~~through ason anDecember 31, ~~economic~~2012. The notional amount of gallons hedged changes on a monthly basis to match anticipated usage and totals 1.1 million gallons, 0.5 million gallons of which related to expected 2012 usage. On April 5, 2012 we sold our hedge contract covering 0.4 million gallons for a gain of $0.05 million. The Company paid a weighted average fixed price of $3.04 per gallon (wholesale basis) and ~~was~~received ~~not~~an ~~designated~~amount asequal to a wholesale ~~hedging~~index ~~instrument~~rate. Net payable or receivable amounts were settled monthly. The Company used the hedges to minimize the risk of

On March 25, 2011, we entered into a hedge to fix the price per gallon of a portion of the Company's diesel fuel requirements (the "2011 Diesel Hedge"). The 2011 Diesel Hedge begins April 1, 2011 and expires on December 28, 2011. The notional amount of gallons hedged changes on a monthly basis to match our anticipated utilization and totals 1.2 million gallons. We will pay a weighted average fixed rate of $3.17 per gallon (wholesale basis) and receive an amount equal to a wholesale index rate. Any net payable or receivable amount will be settled monthly. 58

Liquidity Outlook. Due to the seasonal nature of our business, we record the majority of our revenues and profits during the months of May through September. The majority of the cash generated from those operations is received between July and November. We fully utilized the excess cash generated from our 2010 selling season during the winter of 2010 and spring of 2011 to fund our operations, debt service, capital expenditures and acquisitions. In March 2010, we refinanced substantially all of our outstanding debt. The March 2010 refinancing provided us with additional cash proceeds of $43.5 million, net of transaction costs, which allowed for additional acquisitions and capital expenditures. In August 2010, we increased the size of our revolving credit facility from $35 million to $50 million. In October 2010, we amended and restated our revolving credit facility to, among other changes, modify financial covenants and extend the maturity date from January 31, 2014 to October 22, 2014. The annual cash interest associated with our current debt is approximately $55 million.

Our capital expenditures are used to maintain and expand our traditional ice and ISB operations. In the normal course of our business, we dispose of obsolete, worn-out and unneeded assets and have historically applied those funds against capital expenditures. Our net capital expenditures for the year ended December 31, 2010 were $28.1 million. Additionally, we spent $19.2 million during 2010 to acquire other ice businesses. Through March 30, 2011, we spent $8.4 million to complete additional acquisitions of packaged ice companies. We currently expect our net capital expenditures in 2011 to approximate $8 to $10 million. This represents our minimum capital expenditures for the maintenance of our traditional packaged ice and ISB operations net of proceeds from dispositions and expected

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~~reimbursements~~rising offuel ~~the~~prices. ~~cost~~The ofhedges ~~2010~~were ~~equipment~~not ~~placed~~for ~~under~~trading ~~operating~~purposes ~~leases,~~and ~~although~~were weaccounted ~~continue to evaluate opportunities to deploy additional capital expenditures~~ for ~~projects~~as ~~with~~economic ~~attractive returns~~hedges and~~/or~~ ~~acquisitions~~were innot ~~the~~designated ~~packaged~~as ~~ice~~hedging ~~and ice machine leasing business~~instruments.

~~Based on~~ ~~our~~Going ~~expected~~Concern level of operations, we believe that cash flows from operations, together with available borrowings under our revolving credit facility, will be adequate to meet our future liquidity needs for at least the next twelve months. As of March 30, 2011, we had approximately $10.6 million of cash on hand at Reddy Holdings, approximately $0.3 million of unrestricted cash and $10.2 million of restricted cash at Reddy Corp and $37.8 million of availability under our revolving credit facility. Depending on our level of capital expenditures and acquisitions over the next twelve months, additional borrowings under our revolving credit facility will occur in the spring of 2011 as our cash flows from operations decline to their lowest point during March and April due to reduced sales in January and February, and we make interest payments on our outstanding notes in March and May. We incur a substantial portion of our annual capital expenditures prior to the summer selling season and we need to finance seasonal increases in accounts receivable and inventories as temperatures and sales volumes begin to increase in April and May. In addition to monitoring opportunities to repay or refinance the $11.7 million of remaining discount notes which mature on November 1, 2012, we are also evaluating other potential avenues to raise capital to fund our strategic plans, including the incurrence of additional debt and/or the issuance of equity. Analysis

~~As noted~~Due ~~previously,~~to wedeterioration ~~record~~in ~~the~~our ~~majority~~business ofrelated principally to price declines driven by industry competition across our ~~sales~~markets, and coupled ~~any~~with ~~profits~~broader ~~during~~economic ~~the~~instability ~~months~~and ofrising ~~May~~commodity ~~through~~prices, ~~September~~we experienced significant net losses in 2011 and ~~the~~2010. ~~majority~~Our offinancial ~~the~~results ~~cash~~are ~~generated~~also ~~from~~burdened ~~those~~by ~~operations~~high isinterest costs resulting ~~received~~from inour ~~July~~highly ~~through~~leveraged ~~November,~~capital bystructure. ~~which~~These ~~time,~~factors weand ~~expect~~uncertainty in our ability to generate sufficient liquidity to meet our future obligations in a timely manner have ~~repaid~~caused ~~all~~management ~~amounts~~to conclude ~~borrowed~~that ~~under~~there is substantial doubt regarding our ~~revolving~~ability ~~credit~~to ~~facility~~continue inas ~~the~~a ~~spring~~going concern. Accordingly, ~~fund~~the ~~current~~opinion ~~capital~~of ~~expenditures~~our ~~and~~independent ~~debt~~registered ~~service and~~public ~~build~~accounting upfirm ~~cash~~on ~~balances.~~our WeConsolidated Financial ~~expect~~Statements tocontains bean inexplanatory ~~compliance~~paragraph ~~with~~describing ~~our~~the ~~debt~~existence ~~covenants~~of ~~over~~substantial doubt regarding the ~~next~~Company's ~~twelve~~ability ~~months~~to continue as a going concern.

~~Expenses~~Our inability ~~connection~~to ~~with~~successfully recapitalize the ~~antitrust~~business ~~investigations~~ and ~~related~~ensure ~~civil~~sufficient ~~litigation~~liquidity ~~may~~to ~~require~~support ~~the use of cash on hand at Reddy Holdings or Reddy Corp. or borrowings under~~ our ~~revolving~~ ~~credit~~operations ~~facility.~~as Asa ofgoing ~~March 30,~~concern ~~2011,~~is ~~our~~dependent ~~cash~~ on ~~hand~~our atability ~~Reddy~~to ~~Holdings,~~obtain ~~net~~approval ofby ~~accrued expenses related~~ the ~~antitrust investigations and related civil litigation, was approximately~~ $9U.~~7 million~~S. ~~Based~~Bankruptcy onCourt ~~the current status~~ of the ~~investigation~~refinancing ~~and~~plan ~~related~~described ~~civil~~below ~~litigation~~ and ~~projected expenses, we believe Reddy Holdings' cash balance will be sufficient~~ to ~~fund~~generate ~~these expenses~~future ~~for the next twelve months; however, this expectation includes assumptions regarding matters beyond our control or knowledge. If Reddy Holdings were to require additional~~ cash toflows ~~fund its expenses related to the antitrust investigations, Reddy Corp. has the ability under the credit facility to transfer $1 million to Reddy Holdings on an annual basis~~ and anmaintain ~~additional~~liquidity ~~general~~sufficient ~~restricted payment basket of $5 million over the remaining life of the credit facility. Reddy Holdings has no restrictions on its ability~~ to ~~raise~~service ~~additional~~our debt. We have received reimbursements of $12.2 million to date from our insurance carriers as reimbursements of certain legal expenses. The settlements related to these reimbursements were final and we do not expect to receive any further reimbursements related the antitrust investigations and related civil litigation.

52 Restructuring Transactions

We have a substantial amount of debt, as discussed more fully in Note 9 to our audited financial statements included under Item 8. Certain of the capitalized terms used below are defined therein.

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~~Contractual~~In order ~~Obligations~~to have the ability to acquire Arctic, we must restructure our debt obligations in a manner which creates a sustainable capital structure and permits us to obtain additional debt and equity financing. ~~The~~ ~~table~~Described below ~~summarizes~~are the ~~future~~terms ~~payments~~of ~~due~~the ~~under~~Restructuring ~~our~~that ~~significant~~we ~~contractual~~have ~~obligations~~negotiated aswith the informal committee of ~~December 31, 2010:~~ certain of our existing first and second lien note holders.

	Total		2011		2012		2013		2014		2015		2016 and thereafter
	(in millions)
Long-term debt(1)	$	688.8	$	54.5	$	66.0	$	53.3	$	53.1	$	461.8	$	0.1
Operating leases		50.5		18.2		15.6		9.3		4.2		2.7		0.5
Purchase obligations(2)		38.1		19.8		18.3		—		—		—		—
Uncertain tax positions(3)		—		—		—		—		—		—		—
Total contractual obligations	$	777.4	$	92.5	$	99.9	$	62.6	$	57.3	$	464.5	$	0.6

With respect ~~(1)Includes estimated~~to ~~cash~~the ~~interest~~Plan, towe will be ~~paid~~soliciting ~~over~~acceptances ~~the~~from ~~remaining~~only ~~terms~~the holders of the ~~debt. (2)Consists of~~First ~~our~~Lien ~~obligation~~Notes, tothe ~~purchase~~Second Lien Notes (iand their respective guarantees) 9,~~500~~ ~~merchandisers~~the ~~during~~Discount ~~the~~Notes ~~period~~and certain ~~from~~other ~~September 8,~~unsecured ~~2009~~creditors toof ~~December 31~~Reddy Holdings, ~~2012~~although ~~under~~the ~~a supply~~Plan ~~agreement~~will ~~that~~seek ~~expires~~Bankruptcy ~~December 31,~~Court ~~2012,~~approval ~~(ii) 250 million~~of ~~plastic~~recoveries ~~bags~~to ~~per~~holders ~~year~~of ~~under~~other aunsecured ~~supply~~creditors ~~agreement~~and ~~that~~the ~~expires~~Common onStock ~~December 31,~~as ~~2012~~well. ~~and~~The ~~(iii) preferred~~deadline ~~units~~for ofvoting anto ~~ice~~accept ~~machine~~or ~~leasing~~reject ~~and~~the ~~service~~Plan ~~company~~is May 8, ~~which~~2012, ~~can~~unless besuch ~~canceled~~deadline atis ~~any time~~extended. ~~(3)Due to~~ ~~the~~In ~~uncertainty~~addition, ~~related~~we towill request the ~~timing~~Bankruptcy ~~and~~Court ~~reversal~~to ofset ~~uncertain~~a ~~tax~~confirmation ~~positions,~~hearing ~~only~~with respect to the ~~short-term~~Plan ~~uncertain~~for ~~tax~~early ~~benefits~~May ~~were~~2012 ~~considered in~~and ~~the~~hope ~~table~~to ~~above.~~exit Asprotection ofunder ~~December 31,~~the ~~2010,~~Bankruptcy ~~there~~Code ~~were~~in nothe ~~short-term~~second ~~uncertain~~or ~~tax~~third ~~benefits.~~week ~~The~~of ~~long-term~~May—before ~~amounts~~final ~~excluded~~round ~~from~~bids ~~the~~must ~~table~~be ~~above~~submitted ~~were~~with ~~approximately $1.3 million.~~respect to the proposed Arctic acquisition.

First Lien Notes. Except as described below and except for other minor modifications, we do not plan to modify our obligations in respect of our existing First Lien Notes in the Restructuring.

We plan to amend the indenture governing the First Lien Notes to, among other things, permit (i) the incurrence of incremental pari passu first lien acquisition financing for the Arctic transaction, (ii) an amendment to the change of control provisions to prevent the occurrence of a change of control as a result of the Restructuring and (iii) an amendment to the reporting requirements to eliminate the need to continue as a reporting company under the Securities Exchange Act of 1934 (the "Exchange Act"). The First Lien Notes will continue to be guaranteed by Reddy Holdings.

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Class A Common Stock. Under the Plan, Centerbridge will receive one share of class A common stock of the reorganized Reddy Holdings. The holder of the share of the class A common stock will be entitled to vote with all voting securities of reorganized Reddy Holdings on all matters submitted to the holders of voting securities for vote. The share of class A common stock of reorganized Reddy Holdings will be entitled to 10,000,000 votes. Class A common stock of reorganized Reddy Holdings will not be entitled to the payment of any dividends or distributions and is redeemable by Reddy Holdings for $0.01 upon (x) the liquidation, dissolution or winding up of the affairs of Reddy Holdings or (y) the consummation or termination of the Arctic Acquisition.

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common stock. The preferred stock may be optionally converted by the holder at any time. Holders of preferred stock will vote with the common stock on an as converted basis.

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Liquidity Outlook. Due to the seasonal nature of our business, we record the majority of our revenues and profits during the months of May through September. The majority of the cash generated from those operations is received between July and November. We fully utilized the excess cash generated from our 2011 selling season during the winter of 2011 and spring of 2012 to fund our operations, debt service, and capital expenditures.

In March 2010, we refinanced substantially all of our outstanding debt. The March 2010 refinancing provided us with additional cash proceeds of $43.5 million, net of transaction costs, which allowed for additional acquisitions and capital expenditures. In August 2010, we increased the size of our revolving credit facility from $35 million to $50 million. In October 2010, we amended and restated our revolving credit facility to, among other changes, modify financial covenants and extend the maturity date from January 31, 2014 to October 22, 2014. The annual cash interest associated with our current debt is approximately $55 million.

Our capital expenditures are used to maintain and expand our traditional ice and ISB operations. In the normal course of our business, we dispose of obsolete, worn-out and unneeded assets and have historically applied those funds against capital expenditures. Our net capital expenditures in 2011 were $12.9 million. This represents our capital expenditures for the maintenance of our traditional packaged ice and ISB operations net of proceeds from dispositions and net reimbursements of the cost of equipment purchased and placed under operating leases, and additional expenditures for key projects related to acquisitions and opportunities with attractive return on investment. We currently expect our net capital expenditures in 2012 to approximate $10 million. Planned expenditures provide for minimum capital expenditures to maintain our traditional packaged ice and ISB operations, net of proceeds from dispositions. We also anticipate an additional $1 to $2 million expenditure to purchase leased assets for which the agreements will expire in 2012.

In March of 2012, Reddy Corp issued an Intercompany Promissory Note to Reddy Holdings for the principal amount of approximately $8.6 million. The note matures on September 1, 2012 and bears an interest rate of 12.5% per annum. As of March 30, 2012, we had no cash on hand at Reddy Holdings, approximately $4.9 million of unrestricted cash and $10.6 million of restricted cash at Reddy

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Corp. We had no additional under our revolving credit facility as of March 30, 2012. Our cash flows from operations and liquidity decline to their lowest point during the March to May period due to seasonally lower sales in January and February and interest payments on our outstanding notes in March and May. We incur a portion of our annual capital expenditures and need to finance seasonal increases in accounts receivable and inventories as temperatures and sales volumes begin to increase in April and May.

As discussed above, we have embarked on restructuring transactions which will substantially modify our existing debt obligations. Our liquidity and cash needs in 2012 will depend substantially on our ability to consummate the contemplated restructuring transactions. There can be no assurances that the restructuring transactions will be consummated on the terms discussed above or at all. In the event the restructuring transactions cannot be completed as discussed, we are evaluating other potential avenues to raise funds to provide additional liquidity. Potential sources of cash and liquidity include the incurrence of additional debt and/or the issuance of equity or equity linked securities, adjustments to the timing of capital expenditures and the disposition of ancillary facilities, operations, and other assets, including investments.

Expenses in connection with the antitrust investigations and related civil litigation may require the use of cash on hand at Reddy Holdings or Reddy Corp. or borrowings under our revolving credit facility. We have received reimbursements of $12.2 million to date from our insurance carriers as reimbursements of certain legal expenses. The settlements related to these reimbursements were final and we do not expect to receive any further reimbursements related the antitrust investigations and related civil litigation.

Contractual Obligations. The table below summarizes the future payments due under our significant contractual obligations as of December 31, 2011:

	Total		2012		2013		2014		2015		2016		2017 and thereafter

	(in millions)
Long-term debt(1)	$	671.8	$	671.6	$	—	$	—	$	—		—	$	0.2
Operating leases		54.0		20.0		13.5		7.7		4.4		2.9		5.5
Purchase obligations(2)		24.7		24.7		—		—		—		—		—
Uncertain tax positions(3)		—		—		—		—		—		—		—

Total contractual obligations	$	750.5	$	716.3	$	13.5	$	7.7	$	4.4	$	2.9	$	5.7

(1): Includes estimated cash interest to be paid over the remaining terms of the debt. Due to the planned proceedings included elsewhere within this document, we have classified our debt as a current obligation as of December 31, 2011. The contractual principle maturities with estimated interest expense are $67.5 million in 2012, $55.1 million in 2013, $87.3 million in 2014, $461.7 million in 2015 and $0.2 million in 2017 and thereafter.
(2): Consists of our obligation to purchase (i) 9,500 merchandisers during the period from September 8, 2009 to December 31, 2012 under a supply agreement that expires December 31, 2012 and (ii) 250 million plastic bags per year under a supply agreement that expires on December 31, 2012.
(3): Due to the uncertainty related to the timing and reversal of uncertain tax positions, only the short-term uncertain tax benefits were considered in the table above. As of December 31, 2011, there were no short-term uncertain tax benefits. The long-term amounts excluded from the table above were approximately $1.3 million.

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General Economic Trends and Seasonality

Our results of operations are generally affected by the economic trends in our market area. We believe end users of our products use packaged ice in many applications, including recreational activities, the construction industry, agriculture and special events. Weakness in the national economy combined with other factors including inflation, interest rate fluctuations, increases in fuel and other energy costs, labor and healthcare costs and the availability of financing, may negatively impact consumer confidence and the business prospects of our commercial customers. If consumer activities associated with the use of our products decline or the business activities of our commercial customers decrease, our revenues and sales volumes may decline.

Our results to date have not been significantly impacted by inflation, other than costs directly related to energy prices, such as fuel, plastic bags and electricity. If we experience high inflation in these costs in the future, or inflationary pressures have significant effects on other cost categories, we may not be able to pass on all of these higher costs to our customers in the short term. We do believe that we will be able to pass on higher costs to our customers over longer periods of time, however there can be no assurance that we will be successful in such efforts.

The ice business is highly seasonal, with the bulk of demand coming in the warmer spring and summer months. Accordingly, we experience seasonal fluctuations in our net sales and profitability. We make a disproportionate amount of our sales in the second and third calendar quarters. We also typically earn any net income in these same periods, whereas we typically experience net losses in the first and fourth calendar quarters. We believe that approximately two-thirds of our revenues will occur during the second and third calendar quarters when the weather conditions are generally warmer and demand is greater, while approximately one-third of our revenues will occur during the first and fourth calendar quarters when the weather is generally cooler. This belief is consistent with historical trends. As a result of seasonal revenue declines and the lack of proportional corresponding expense decreases, we will most likely experience lower profit margins and losses during the first and fourth calendar quarters. In addition, because our operating results depend significantly on sales during our peak season, our quarterly results of operations may fluctuate significantly as a result of adverse weather during this peak selling period if the weather is unusually cool or rainy on a more national or regional basis.

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quarters. In addition, because our operating results depend significantly on sales during our peak season, our quarterly results of operations may fluctuate significantly as a result of adverse weather during this peak selling period if the weather is unusually cool or rainy on a more national or regional basis.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that may affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities. Management has established accounting policies that they believe are appropriate in order to reflect the accurate reporting of the Company's operating results, financial position and cash flows. Management bases their estimates on historical experience, current and expected economic conditions and various other factors that management believes to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The Company reevaluates these significant factors and makes adjustments where facts and circumstances dictate. Future events and their effects cannot be determined with absolute certainty, and therefore actual results may differ from estimates. Our critical accounting policies are set forth below.

Allowances for Doubtful Accounts. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make the required payments on their accounts. We have attempted to reserve for these estimated losses based on our past experience with similar accounts receivable and believe our reserves to be adequate. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments on their accounts, additional allowances may be required. At December 31, 2010 and 2009, the Company has recorded reserves of $0.4 million and $0.2 million. 65

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Allowances for Doubtful Accounts. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make the required payments on their accounts. We have attempted to reserve for these estimated losses based on our past experience with similar accounts receivable and believe our reserves to be adequate. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments on their accounts, additional allowances may be required. At December 31, 2011 and 2010, the Company has recorded reserves of $0.7 million and $0.4 million.

Long-Lived Assets. Property and equipment is carried at cost and is being depreciated on a straight-line basis over estimated lives of 10 to 40 years for buildings and site improvements and 2 to 20 years for plant, equipment and machinery. Leasehold improvements are depreciated over the shorter of the lease term or the assets useful life. Maintenance and repairs are charged to expense as incurred, while capital improvements that extend the useful lives of the underlying assets are capitalized. We accounted for all of our historical acquisitions using the purchase method of accounting and as a result recorded significant amounts of goodwill. Other intangible assets include the following that are amortized over their useful lives:

Intangible Assets		Useful Life

Goodwill		Indefinite life
Trade name		Indefinite life
Patent		Remaining legal life as of acquisition date
Non-competition agreements		Straight line method over economic lives of two to five years
Customer relationships		Straight line method over economic lives of eight to thirty years

Reserves for Claims. We are exposed to various claims relating to our business, including those for which we retain portions of the losses through the application of deductibles and self-insured retentions. These claims include workers compensation claims, automobile claims for injury or property damage involving our fleet and general liability claims typically involving certain slip and fall injuries at customer locations. These types of claims may take time to resolve and, accordingly, the ultimate liability associated with a particular claim may not be known for a period of time. Our methodology for developing self-insurance reserves is based on management estimates, which incorporate periodic actuarial valuations. Our estimation process considers, among other matters, the cost of known claims over time, cost inflation and incurred but not reported claims. These estimates may change based on, among other things, changes in our claims history or receipt of additional information relevant to assessing the claims. Further, these estimates may prove to be inaccurate due to factors such as adverse judicial determinations or settlements at higher than estimated amounts. Accordingly, we may be required to increase or decrease our reserve levels. At December 31, 2011 and 2010, the Company has recorded reserves of $3.7 million and $3.0 million, respectively. These reserves do not provide for any claims related to the antitrust investigations and related civil litigation.

54 Impairment of Goodwill and Long-Lived Assets. We periodically review long-lived assets and certain identifiable intangible assets for impairment in accordance with Accounting Standards Codification ("ASC") 360, "Property, Plant, and Equipment." Goodwill and intangible assets not subject to amortization are reviewed annually for impairment in accordance with ASC 350, "Intangibles—Goodwill and Other," or more often if there are indications of possible impairment. The determination of recoverability of long-lived assets and certain other identifiable intangible assets is based on an estimate of undiscounted future cash flows resulting from the use of the asset or its disposition. Measurement of an impairment loss for long-lived assets and other intangible assets that management expects to hold and use are based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or net realizable value. In accordance with ASC 350, goodwill is evaluated using a market valuation approach, based on valuations of comparable businesses, multiples of earnings of comparable businesses and discounted cash flows. Goodwill and certain other intangible assets are

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~~damage~~evaluated ~~involving our fleet and general liability claims typically involving certain slip and fall injuries~~ at ~~customer~~each ~~locations.~~fiscal ~~These~~year ~~types~~end ~~of claims may take time to resolve~~ and, ~~accordingly,~~whenever ~~the ultimate liability~~events ~~associated~~or with a particular claim may not be known for a period of time. Our methodology for developing self-insurance reserves is based on management estimates, which incorporate periodic actuarial valuations. Our estimation process considers, among other matters, the cost of known claims over time, cost inflation and incurred but not reported claims. These estimates may change based on, among other things, changes in ~~our~~circumstances ~~claims~~indicate ~~history~~that orit ~~receipt~~is ofmore ~~additional~~likely ~~information relevant to assessing the claims. Further, these estimates may prove to be inaccurate due to factors such as adverse judicial determinations or settlements at higher~~ than estimated amounts. Accordingly, we may be required to increase or decrease our reserve levels. At December 31, 2010 and 2009, the Company has recorded reserves of $3.0 million and $2.8 million, respectively. These reserves do not ~~provide~~that ~~for~~a ~~any~~goodwill ~~claims~~impairment ~~related to the antitrust investigations and related civil litigation~~exists.

~~Impairment~~ The Company ofperformed ~~Goodwill~~its ~~and~~annual ~~Long-Lived~~goodwill ~~Assets. We periodically review long-lived assets and certain identifiable intangible assets for~~ impairment inassessment ~~accordance~~as ~~with~~of ~~Accounting Standards Codification ("ASC") 360~~December 31, ~~"Property, Plant, and Equipment~~2011." ~~Goodwill~~The ~~and~~Company ~~intangible~~consists ~~assets not~~of ~~subject~~a tosingle ~~amortization~~reporting ~~are~~unit ~~reviewed~~and ~~annually~~is ~~for~~currently ~~impairment~~ in ~~accordance~~a ~~with~~net ~~ASC 350, "Intangibles—Goodwill and Other," or more often~~stockholders' ifdeficit ~~there are indications of possible impairment~~position. ~~The~~Management ~~determination~~identified ofthe ~~recoverability~~presence of ~~long-lived~~certain ~~assets~~factors, ~~and~~including ~~certain~~the ~~other~~continued ~~identifiable~~decline ~~intangible~~in ~~assets~~the isCompany's ~~based~~stock onprice anduring ~~estimate~~the ~~of undiscounted~~three ~~future~~months ~~cash~~ended ~~flows~~December 31, ~~resulting~~2011, ~~from~~a cumulative ~~the~~loss ~~use~~position ofover the ~~asset~~past orthree ~~its~~years, ~~disposition.~~as ~~Measurement~~well ofas ancontinued ~~impairment~~margin ~~loss~~decline ~~for~~and ~~long-lived~~tightening ~~assets~~liquidity ~~and~~forecasts. ~~other~~Management ~~intangible~~concluded ~~assets~~ that ~~management expects~~it towas ~~hold~~more ~~and~~likely ~~use~~than ~~are~~not ~~based~~that ona ~~the~~goodwill impairment ~~fair~~existed ~~value~~and oftherefore ~~the~~performed ~~asset.~~Step ~~Long-lived~~2 ~~assets to be disposed~~ of ~~are reported at~~ the ~~lower~~goodwill ofimpairment ~~carrying~~assessment ~~amount~~in oraccordance ~~net~~with ~~realizable~~FASB ~~value.~~Accounting InStandard ~~accordance~~Codification ~~with ASC~~ 350,—Intangibles—Goodwill ~~goodwill~~and isOther. ~~evaluated~~This ~~using~~analysis arequires ~~market~~that ~~valuation~~we ~~approach,~~assign ~~based~~the onfair ~~valuations~~value of ~~comparable~~the ~~businesses,~~reporting ~~multiples~~unit ofto ~~earnings~~all of ~~comparable~~the ~~businesses~~assets and ~~discounted~~liabilities ~~cash flows. Goodwill~~as ~~and~~if ~~certain~~the ~~other~~reporting ~~intangible~~unit ~~assets~~had ~~are~~been ~~evaluated~~acquired atin ~~each~~a ~~fiscal~~business ~~year~~combination ~~end~~ and ~~whenever~~measure ~~events or changes in circumstances indicate that~~ the ~~carrying~~excess ~~amount may not be recoverable. At December 31, 2010, we performed our annual assessment~~ of ~~goodwill, considering~~ the ~~market~~fair value of ~~our~~the ~~stock~~reporting ~~and~~unit aover ~~reasonable~~the ~~control~~amounts ~~premium~~assigned to ~~evaluate~~its ~~the~~assets ~~recoverability~~and ofliabilities ~~our~~to ~~goodwill. We~~determine ~~determined~~the ~~that~~implied nofair ~~impairment~~value ~~existed as~~ of ~~December 31, 2010~~goodwill.

~~Inherent~~The Company used a combination of the discounted cash flow approach, guideline public company approach and guideline transaction approach to estimate the Company's enterprise value used in the ~~determination~~goodwill assessment. Key valuation assumptions used in the discounted cash flow approach included expected cash flows for the periods from 2012 through 2016, taking into account historical growth rates, as well as forecasts and long-term business plans. The Company used a risk adjusted discount rate of ~~such~~13% to estimated fair value, which took into account the Company's specific risk factors, uncertainly inherent in estimating future cash flows, and ~~valuations~~the ~~are~~weighted ~~certain~~average ~~estimates~~cost ~~and~~of ~~judgments,~~capital. ~~including~~Additional key assumptions in the ~~interpretation~~valuation of ~~current~~customer ~~economic~~relationships ~~indicators~~included customer attrition rates calculated based on the Company's historical customer retirement activity and ~~market~~changes ~~values~~ in customers revenues. The fair value of both real and ~~assumptions~~personal ~~about~~property ~~our~~were ~~strategic~~estimated using ~~plans~~sales ~~with~~comparison, ~~regards~~cost toand ~~our~~market ~~operations~~approaches. ToThe tradename was valued using a relief from royalty method with the ~~extent~~estimated ~~additional~~royalty ~~information~~rate ~~arises~~based oron ~~our~~such ~~strategies~~qualitative ~~change~~factors as longevity, itconsumer recognition, ismarket ~~possible~~share, ~~that~~and ~~our~~historical ~~conclusions~~and ~~regarding~~projected financial results. The guideline public company approach utilizes the ~~impairment~~ financial metrics of ~~goodwill~~market orparticipants ~~other~~in ~~long-lived~~businesses ~~assets~~similar ~~could~~to ~~change~~the Company in terms of industry, product lines, market, growth, margins and ~~result~~risk. The guideline transaction approach utilizes multiples observed in amarket ~~material~~transactions ~~effect~~for businesses similar to the Company's. Less weighting was placed on ~~our~~both ~~financial~~the ~~position~~guideline orpublic ~~results~~company and guideline transaction approaches due to the limited availability of ~~operations~~data for comparable market participants.

Our analysis indicated that the implied fair value of the Company' goodwill exceeds the carrying value of goodwill by more than 20% and, as a result, no impairment was recorded. Due to the uncertainties associated with the estimates, interpretations and assumptions, actual results could differ from projected results, and impairment of goodwill could be recorded in the future.

When the Company sells or intends to sell an existing property, it evaluates the presentation of these properties as "held for sale" under standards governing the accounting for and valuation of long lived assets. An impairment of assets held for sale is recognized when management and, if required, the Company's Board of Directors has approved and committed to a plan to dispose of the assets, the assets are available for disposal, the disposal is probable of occurring within 12 months, and the net sales proceeds are expected to be less than the assets' net book value, among other factors. An impairment charge is recognized for the difference between the net book value of assets and the estimated sales price, less costs of disposal.

Income Taxes. We account for income taxes under the liability method, which requires, among other things, recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. Under this method, deferred income tax assets and liabilities are determined based on the temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and the recognition of available tax carryforwards. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or all of the deferred

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assets and liabilities and the recognition of available tax carryforwards. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or all of the deferred tax asset will not be realized. We account for the benefit from uncertain tax positions only if it is more likely than not that the tax positions will be sustained upon examination by ~~taxing~~ taxing authorities having full knowledge of all relevant information. Interest and penalties related to uncertain tax liabilities are included in tax expense.

Revenue Recognition. Revenues are recognized when persuasive evidence of an arrangement exists, delivery of packaged ice ~~products~~ products has occurred or services have been rendered, the price is fixed or determinable, and ~~collectibility~~collectability is reasonably assured. There is no right of return with respect to the delivered packaged ice products.

Stock-based Compensation. We account for stock-based compensation arrangements, including stock option grants and restricted stock awards, in accordance with the provisions of ASC 718, "Compensation—Stock Compensation." Under this guidance, compensation cost is recognized based on the fair value of equity awards on the date of grant. The compensation cost is then amortized over the vesting period. We use the Black-Scholes option pricing model to determine the fair value of stock options at the date of grant. This model requires us to make assumptions such as expected term, volatility, and forfeiture rates that determine the stock options' fair value. These key assumptions are based on historical information and judgment regarding market factors and trends.

Recently Adopted Accounting Pronouncements

In December ~~2009~~2010, the FASB issued ASU ~~2009~~2010-1728, ~~"Consolidations (Topic 810)~~Intangibles—~~Improvements~~Goodwill ~~to Financial Reporting~~and byOther. ~~Enterprises~~ASU ~~Involved~~2010-28 ~~with~~modifies ~~Variable~~step ~~Interest~~one ~~Entities."~~of ~~ASU~~the ~~2009-17~~goodwill ~~changes~~impairment ~~how~~test afor reporting ~~entity~~units ~~determines~~with ~~when~~zero anor ~~entity~~negative ~~that~~carrying isamounts ~~insufficiently~~and ~~capitalized~~offers orguidance ison ~~not~~when ~~controlled~~to ~~through~~perform ~~voting~~step ~~(or similar~~two ~~rights)~~of ~~should~~the ~~be consolidated~~testing. ~~ASU~~For ~~2009-17~~those ~~also~~reporting ~~requires~~units, aan ~~reporting~~ entity is required to ~~provide~~perform ~~additional~~Step ~~disclosures~~2 ~~about~~of ~~its~~the ~~involvement~~goodwill ~~with~~impairment ~~variable~~test ~~interest~~if ~~entities~~it ~~and~~is ~~any~~more likely than not that a goodwill impairment exists ~~significant~~based ~~changes~~upon infactors ~~risk~~such ~~exposure~~as ~~due~~unanticipated tocompetition, ~~that~~the ~~involvement~~loss of key personnel and adverse regulatory changes. ASU ~~2009~~2010-1728 is effective for fiscal years, and interim periods within those years, beginning after ~~November~~December 15, ~~2009~~2010. ~~and~~As ~~for~~a ~~interim~~result ~~periods~~of ~~within~~adopting ASU 2010-28 and the ~~first annual~~Company's ~~reporting~~net ~~period.~~stockholders' ~~The~~deficit ~~adoption~~position ofthe ~~ASU~~Company ~~2009-17~~was onrequired ~~January 1,~~to ~~2010~~perform ~~did~~step ~~not~~two ~~have~~of the agoodwill ~~material~~impairment ~~effect~~test. onAs discussed above, the Company's ~~results~~did ofnot ~~operations~~impair ~~and~~its ~~financial~~goodwill ~~position~~in 2011.

In ~~February~~December 2010, the FASB issued ASU 2010-0929, ~~Subsequent~~which ~~Events—Amendments~~updates tothe ~~Certain~~guidance ~~Recognition~~in ~~and~~ASC ~~Disclosure Requirements~~805, ~~which~~Business ~~amends~~Combinations, ~~Accounting~~to ~~Standards~~clarify ~~Codification~~that pro ~~("ASC")~~forma ~~Topic~~disclosures ~~855,~~should ~~Subsequent~~be ~~Events,~~presented soas ~~that~~if ~~SEC~~a ~~filers~~business nocombination ~~longer~~occurred ~~are~~at ~~required~~the tobeginning ~~disclose~~of the ~~date~~prior ~~through~~annual ~~which subsequent~~period ~~events~~for ~~have~~purposes ~~been~~of ~~evaluated~~preparing inboth ~~originally~~the ~~issued~~current reporting period and ~~revised~~the prior reporting period pro forma financial ~~statements~~information. ~~The~~These ~~adoption~~disclosures should be accompanied by a narrative description about the nature and amount of ~~ASU~~material, nonrecurring pro forma adjustments. ASU 2010-0929 ~~did~~is ~~not~~effective ~~have~~for abusiness ~~material~~combinations ~~impact~~consummated onin periods beginning after December 15, 2010, and is required to be applied prospectively as of the date of adoption. The Company's has reflected the adoption of ASU 2010-29 in the disclosures accompanying the consolidated financial statements.

New Accounting Pronouncements

In ~~December~~June ~~2010~~of 2011, the FASB issued ASU ~~2010~~2011-2805, ~~Intangibles—Goodwill~~Comprehensive ~~and Other~~Income. ASU ~~2010~~ 2011-2805 ~~modifies~~requires ~~step~~that ~~one~~all ofnon-owner ~~the~~changes ~~goodwill~~in ~~impairment~~stockholders' ~~test~~equity ~~for~~be ~~reporting~~presented ~~units~~either ~~with~~in ~~zero~~a orsingle ~~negative~~continuous ~~carrying~~statement ~~amounts~~of ~~and~~comprehensive ~~offers~~income ~~guidance~~or onin ~~when to perform step~~ two ofseparate ~~the~~but consecutive ~~testing~~statements. ~~For~~In ~~those~~the ~~reporting~~two-statement ~~units~~approach, anthe ~~entity~~first isstatement ~~required~~should topresent ~~perform~~total ~~Step~~net 2income ofand ~~the~~its ~~goodwill~~components ~~impairment~~followed ~~test~~by ifa itsecond isstatement ~~more likely than not~~ that ashould ~~goodwill~~present ~~impairment~~total ~~exists~~other ~~based~~comprehensive ~~upon factors such as unanticipated competition~~income, the ~~loss~~components of ~~key~~other ~~personnel~~comprehensive income, and the ~~adverse~~total ~~regulatory~~of ~~changes~~comprehensive income. ASU ~~2010~~2011-2805 is effective for fiscal years, and interim periods within those years, beginning after December 15, ~~2010~~2011. The adoption of ASU ~~2010~~ 2011-2805 is not expected to have a material effect on the Company's consolidated financial statements. In December of 2011

In December 2010, the FASB issued ASU 2010-29, which updates the guidance in ASC 805, Business Combinations, to clarify that pro forma disclosures should be presented as if a business combination occurred at the beginning of the prior annual period for purposes of preparing both the current reporting period and the prior reporting period pro forma financial information. These disclosures should be accompanied by a narrative description about the nature and amount of material, 68

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~~nonrecurring~~FASB ~~pro~~issued ~~forma adjustments.~~ ASU ~~2010~~2011-2912, isComprehensive Income, deferring the effective date for ~~business~~amendments ~~combinations~~to ~~consummated~~the inpresentation ~~periods~~of ~~beginning~~reclassifications ~~after~~of ~~December 15,~~items out ~~2010,~~of ~~and~~accumulated isother ~~required~~comprehensive toincome bein ~~applied prospectively~~ASU as2011-05. ofAll ~~the~~other ~~date~~requirements ofin ~~adoption~~ASU 2011-05 are not affected by ASU 2011-12. The adoption of ASU ~~2010~~ 2011-2912 ~~did~~is not expected to have a material effect on the Company's consolidated financial statements.

In September of 2011, the FASB issued ASU 2011-08, Intangibles—Goodwill and Other. ASU 2011-08 modifies the goodwill impairment test by allowing for an assessment of qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, based on this assessment, the entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the entity may bypass performing the two-step goodwill impairment test. However, if the entity concludes otherwise, it is required to perform Step 1 of the two-step goodwill impairment test. ASU 2011-08 will be effective for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 is not expected to have a material effect on the Company's consolidated financial statements.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk generally represents the risk that losses may occur in the value of financial instruments as a result of movements in interest rates, foreign currency exchange rates and commodity prices. Our main market risk category is interest rate risk.

We are exposed to some market risk due to the floating interest rates under our senior credit facilities. Principal balances outstanding under our revolving credit facility bear interest, at our option, at the London Inter-Bank Offered Rate ("LIBOR") plus 7.0% or the prime rate (as announced from time to time by the lender) plus 6.0%. LIBOR and prime rate loans are subject to floors of 1.5% and 2.5%, respectively.

As of December 31, ~~2010~~2011, ~~there~~$20.7 million ~~were~~was ~~no balances~~ outstanding under our revolving credit facility.

ITEM 8. Financial Statements and Supplementary Data

The financial statements and supplementary data required hereunder are included in this report as set forth in Item 15(a) of Part IV hereof and are incorporated herein by reference.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

ITEM 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We conducted an evaluation of the effectiveness of our "disclosure controls ~~and~~ and procedures" ("Disclosure Controls"), as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of December 31, ~~2010~~2011, the end of the period covered by this Annual Report on Form 10-K ("Annual Report"). The Disclosure Controls evaluation was ~~done~~performed under the supervision and with the participation of management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). There are inherent limitations to the effectiveness of any system of ~~disclosure~~Disclosure ~~controls and procedures~~Controls. Accordingly, even effective ~~disclosure~~Disclosure ~~controls~~Controls ~~and procedures~~ can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, and ~~solely~~ as a result of the material weakness in internal control over financial reporting described below, our CEO and CFO have concluded that our Disclosure Controls were not effective ~~at the reasonable assurance level~~ as of December 31, ~~2010~~2011.

In light of the material weakness described below, we performed additional analysis and other procedures to ensure that our consolidated financial statements included in this Annual Report were prepared in accordance with generally accepted accounting principles ("GAAP"). These measures included, among other things, expansion of our physical inventory procedures and dedication of significant internal resources to review our ice merchandiser and other plant and equipment balances at a detailed level. As a result of these and other expanded procedures we concluded that our consolidated financial statements included in this Annual Report present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP. 69

Management's Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in

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~~Rules 13a-15(f)~~ In light of the material weakness described below, we performed additional analysis and ~~15d-15(f)~~other ~~under~~procedures to ensure that our consolidated financial statements included in the ~~Exchange~~Annual Report ~~Act~~were prepared in accordance with generally accepted accounting principles ("GAAP"). ~~Internal~~These ~~control~~measures ~~over~~included, ~~financial~~among ~~reporting~~other isthings, the design and execution of a new physical inventory process, extensive ~~designed~~data toanalysis, ~~provide~~and ~~reasonable~~dedication ~~assurance~~of ~~regarding~~significant internal and external resources under the ~~reliability~~ oversight of ~~financial~~our ~~reporting~~management and ~~preparation~~the Audit Committee. As a result of ~~the~~these and other expanded procedures we concluded that our consolidated financial statements ~~for~~included ~~external~~in ~~reporting~~this ~~purposes~~Annual Report present fairly, in ~~accordance~~all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Management's Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of consolidated financial statements for external reporting purposes in accordance with GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate over time.

Management, including our CEO and our CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2010~~2011. In making its assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its Internal Control—Integrated Framework. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

Based on this assessment using the COSO criteria, management concluded that, as of December 31, ~~2010~~2011, our internal control over financial reporting was not effective because of the material weakness ~~resulting~~identified ~~from~~and previously disclosed in our 2010 Annual Report which was not remediated as of December 31, 2011. The material weakness relates to our accounting for ice merchandiser equipment and other equipment and machinery. Specifically, we did not maintain effective controls, including monitoring with respect to the accuracy, valuation, completeness, and existence of ice merchandiser equipment and other equipment and machinery. This material weakness resulted in an out of period ~~error~~errors recorded during the ~~year~~years ended December 31, ~~2010~~2011 and 2010 related to the impairment of long-lived assets of $93.83 million, ~~offset~~and ~~by a related tax benefit of~~ $39.08 million, respectively, as further discussed in Note 17 ofto our ~~consolidated~~audited financial statements included under Item 8.

Additionally, this ~~deficiency~~material weakness could result in ~~the~~a ~~misstatements~~material misstatement of the ~~related~~aforementioned accounts and related disclosures ~~that~~which would result in a material misstatement of the consolidated financial statements that would not be prevented or detected on a timely basis.

Plan for Remediation of Material Weakness. We have made and will continue to make improvements to our internal control over financial reporting, and management, with oversight from our Audit Committee, has identified and ~~intends~~is toexecuting ~~execute~~ the following actions that we believe will remediate the material weakness described above. Specifically, ~~with~~ with regard to the accounting for ice ~~merchandisers~~merchandiser and plant and equipment assets, management intends to:

•: Establish increased operational ownership and accountability for our ice merchandiser, plant, and equipment assets;

The foregoing notwithstanding, the Company is still evaluating the appropriate remediation measures required in order to address the above-described material weakness and progress relative to our remediation measures will be disclosed in our subsequent Exchange Act reports. 70

Changes in Internal Controls over Financial Reporting. There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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•: Upgrade the fixed asset system and related procedures to provide a more accurate and automated means of managing our fixed assets, including our ice merchandiser, plant, and equipment assets, with specific focus on processes and controls governing the tracking and timely disposition and inventory of fixed assets; and
•: Redesign and enhance inventory control procedures over our fixed assets including increased education, training, support and oversight of our employees tasked with the completion of inventory procedures.

Subsequent to filing our 2010 Annual Report on March 31, 2011, we initiated a redesign of our fixed asset processes and procedures as well as the implementation of a new fixed asset system. We have made significant progress in our remediation efforts. Key milestones achieved in 2011 include the selection of a new fixed asset system, the re-design of certain policies and procedures to ensure adequate internal controls over fixed assets are maintained and the performance of redesigned 2011 fixed asset inventory and tagging procedures. We have completed the tagging of our fixed assets with tags readable via a handheld barcode scanner, in connection with the 2011 physical fixed asset inventory. We further initiated the physical implementation of the selected fixed asset system, and the training of our employees on the new and revised policies and procedures. The newly re-designed procedures will be adopted in conjunction with the final implementation of the selected fixed asset system. As of December 31, 2011 we have not fully completed our remediation plans and thus concluded that the material weakness was not remediated as of that date. As of the date of this filing we are in the final stages of converting our fixed asset records to the new fixed asset system and beginning to operate under the accompanying policies and procedures. We anticipate completing the remaining remediation activities in 2012.

The foregoing notwithstanding, we continue to evaluate the appropriate remediation measures required in order to address the above-described material weakness and further progress relative to our remediation measures will be disclosed in our subsequent Exchange Act reports.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. Other Information

None.

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PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

The information called for by this item is hereby incorporated by reference from either (x) our Proxy Statement for the ~~2011~~ 2012 Annual Meeting of Stockholders or (y) an amendment to this Form 10-K, in either case to be filed by the date which is 120 days following the end of the Companies' fiscal year.

ITEM 11. Executive Compensation

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

ITEM 13. Certain Relationships and Related Transactions and Director Independence

ITEM 14. Principal Accountant Fees and Services

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PART IV

ITEM 15. Exhibits and Financial Statement Schedules

(a): The following documents are filed as part of this Annual Report or are incorporated by reference:
1.: Financial Statements

Reports of Independent Registered Public Accounting Firm

Reddy Ice Holdings, Inc. Consolidated Balance Sheets as of December 31, ~~2010~~2011 and ~~2009~~2010.

Reddy Ice Holdings, Inc. Consolidated Statements of Operations for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009.

Reddy Ice Holdings, Inc. Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009.

Reddy Ice Holdings, Inc. Consolidated Statements of Cash Flows for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009.

Reddy Ice Corporation Balance Sheets as of December 31, ~~2010~~2011 and ~~2009~~2010.

Reddy Ice Corporation Statement of Stockholder's Equity (Deficit) for the Years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009.

Reddy Ice Corporation Statements of Cash Flows for the Years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009

Notes to Consolidated and Reddy Ice Corporation Financial Statements for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009.

2.: Exhibits

Exhibit No.			Description

	3.1		Amended and Restated Certificate of Incorporation of Reddy Ice Holdings, Inc., dated August 2, 2005. (Exhibit 3.1)(4)
	3.2		Amended and Restated By-Laws of Reddy Ice Holdings, Inc. (Exhibit 3.2)(6)
	4.1		Form of Certificate of Common Stock (Exhibit 4.1)(4)
	4.2		Reddy Ice Holdings, Inc. Shareholders Agreement, dated August 14, 2003. (Exhibit 9.1)(1)
	4.3		Indenture of 10¹/2% Senior Discount Notes due 2012 between Reddy Ice Holdings, Inc. and U.S. Bank National Association dated as of October 27, 2004. (Exhibit 4.2)(2)
	4.4		First Supplemental Indenture of 10¹/2% Senior Discount Notes due 2012 between Reddy Ice Holdings, Inc. and U.S. Bank National Association, dated as of July 28, 2005. (Exhibit 4.6) (6)
	4.5		Supplemental Indenture of 10¹/2% Senior Discount Notes due 2012 between Reddy Ice Holdings, Inc. and U.S. Bank National Association, dated as of March 3, 2010. (Exhibit 4.3)(12)
	4.6		Indenture of 11.25% Senior Secured Notes due 2015 between Reddy Ice Corporation, Reddy Ice Holdings, Inc., certain subsidiaries of Reddy Ice Corporation from time to time and Wells Fargo Bank, National Association, dated as of March 15, 2011. (Exhibit 4.1)(12)
	4.7		Indenture of 13.25% Senior Secured Notes due 2015 between Reddy Ice Corporation, Reddy Ice Holdings, Inc., certain subsidiaries of Reddy Ice Corporation from time to time and Wells Fargo Bank, National Association, dated as of March 15, 2011. (Exhibit 4.2)(12)

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Exhibit No.			Description

	10.1		Form of Indemnification Agreement between Officers of Reddy Ice Holdings, Inc. and Reddy Ice Holdings, Inc., effective August 14, 2003. (Exhibit 10.2)(1)
	10.2		Form of Indemnification Agreement between Officers of Packaged Ice, Inc. and Packaged Ice, Inc. (n/k/a Reddy Ice Corporation), effective August 14, 2003. (Exhibit 10.3)(1)
	10.3		Form of Indemnification Agreement between Directors of Reddy Ice Holdings, Inc. and Reddy Ice Holdings, Inc., effective August 14, 2003. (Exhibit 10.4)(1)
	10.4		Form of Indemnification Agreement between Directors of Packaged Ice, Inc. and Packaged Ice, Inc. (n/k/a Reddy Ice Corporation), effective August 14, 2003. (Exhibit 10.5)(1)
	10.5		Purchase Agreement among Reddy Ice Holdings, Inc., Credit Suisse First Boston LLC, CIBC World Markets Corp. and Bear, Stearns & Co. Inc., dated October 19, 2004. (Exhibit 10.1) (2)
	10.6		Registration Rights Agreement among Reddy Ice Holdings, Inc., Credit Suisse First Boston LLC, CIBC World Markets Corp. and Bear, Stearns & Co. Inc. dated October 27, 2004. (Exhibit 10.2)(2)
	10.7		Dealer Manager and Consent Solicitation Agreement between Reddy Ice Group, Inc. and Credit Suisse First Boston LLC dated as of March 22, 2005. (Exhibit 10.25)(3)
	10.8		Registration Rights Agreement governing the 11.25% Senior Secured Notes due 2015 among Reddy Ice Corporation, Reddy Ice Holdings, Inc. and J.P. Morgan Securities Inc. dated as of March 15, 2010. (Exhibit 10.1)(12)
	10.9		Registration Rights Agreement governing the 13.25% Senior Secured Notes due 2015 among Reddy Ice Corporation, Reddy Ice Holdings, Inc. and Broadpoint Capital Inc. dated as of March 15, 2010. (Exhibit 10.2)(12)
	10.10		Pledge and Security Agreement dated as of March 15, 2010, by and among Reddy Ice Corporation, Reddy Ice Holdings, Inc. and Wells Fargo Bank, National Association, in connection with the 11.25% Senior Secured Notes due 2015. (Exhibit 10.4)(12)
	10.11		Pledge and Security Agreement dated as of March 15, 2010, by and among Reddy Ice Corporation, Reddy Ice Holdings, Inc. and Wells Fargo Bank, National Association, in connection with the 13.25% Senior Secured Notes due 2015. (Exhibit 10.5)(12)
	10.12		Amended and Restated Credit Agreement dated as of October 22, 2010, by and among Reddy Ice Corporation, the lenders party thereto and JPMorgan Chase Bank, N.A. (Exhibit 10.1)(14)
	10.13		Pledge and Security Agreement dated as of March 15, 2010, by and among Reddy Ice Corporation, Reddy Ice Holdings, Inc. and JPMorgan Chase Bank, N.A. (Exhibit 10.6)(12)
	10.14		First Lien Intercreditor Agreement, dated as of March 15, 2010, by and among Reddy Ice Corporation, the other Grantors party thereto, JP Morgan Chase Bank, N.A., as credit agreement collateral agent, Wells Fargo Bank, National Association, as senior secured notes collateral agent, and each Additional Collateral Agent from time to time party thereto. (Exhibit 99.2)(13)
	10.15		Junior Lien Intercreditor Agreement, dated as of March 15, 2010, by and among Reddy Ice Corporation, the other Grantors party thereto, JP Morgan Chase Bank, N.A., as credit agreement collateral agent, Wells Fargo Bank, National Association, as senior secured notes collateral agent, and each Additional Collateral Agent from time to time party thereto. (Exhibit 99.3)(13)
	10.16		Reddy Ice Holdings, Inc. 2005 Long Term Incentive and Share Award Plan, as amended on May 20, 2009. (Exhibit 4.1)(9)

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		Description
10.17		Form of Restricted Share Unit Agreement for certain members of management. (Exhibit 10.1)(7)
10.18		Form of Restricted Share Unit Agreement. (Exhibit 10.2)(7)
10.19		Form of Restricted Stock Agreement of Mr. Cassagne, Mr. Janusek and Mr. Smith (Exhibit 10.4)(10)
10.20		Form of Restricted Stock Agreement of certain other Executive Officers (Exhibit 10.5)(10)
10.21		Form of Non-Qualified Stock Option Agreement of Mr. Cassagne, Mr. Smith and Mr. Janusek (Exhibit 10.1)(10)
10.22		Form of Non-Qualified Stock Option Agreement of certain other Executive Officers (Exhibit 10.1)(10)
10.23		Form of Severance Agreement for Mr. Cassagne, Mr. Janusek and Mr. Smith (Exhibit 10.1)(11)
10.24		Form of Severance Agreement for a certain other Executive Officer (Exhibit 10.2)(11)
10.25		Form of Severance Agreement for certain other Executive Officers (Exhibit 10.2)(11)
11.1	*	Statement Regarding Computation of Per Share Earnings
10.26		Amendment No. 1 dated March 27, 2012 to the Amended and Restated Credit Agreement dated as of October 22, 2010 by and among Reddy Ice Corporation, the lenders party thereto and Macquarie Bank Limited as Administrative Agent. (Exhibit 10.1)(16)
12.1	*	Statements Regarding Computation of Ratios
10.27		Waiver dated March 30, 2012 to the Amended and Restated Credit Agreement dated as of October 22, 2010 by and among Reddy Ice Corporation, the lenders party thereto and Macquarie Bank Limited as Administrative Agent. (Exhibit 10.2)(16)
14.1	†	Code of Business Conduct and Ethics, effective March 16, 2010
11.1*		Statement Regarding Computation of Per Share Earnings
12.1*		Statements Regarding Computation of Ratios
14.1		Code of Business Conduct and Ethics, effective March 16, 2010 (Exhibit 14.1)(15)
21.1		List of subsidiaries. (Exhibit 21.1)(8)
23.1	†	Consent of PricewaterhouseCoopers LLP.
23.1†		Consent of PricewaterhouseCoopers LLP.
31.1	†	Rules 13a-14(a) and 15d-14(a) Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1†		Rules 13a-14(a) and 15d-14(a) Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Rules 13a-14(a) and 15d-14(a) Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†		Rules 13a-14(a) and 15d-14(a) Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	†	Section 1350 Certification of Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
32.1†		Section 1350 Certification of Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	†	Section 1350 Certification of Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
32.2†		Section 1350 Certification of Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS†		XBRL Instance Document
101.SCH†		XBRL Taxonomy Extension Schema Document
101.CAL†		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF†		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB†		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE†		XBRL Taxonomy Extension Presentation Linkbase Document

*Included in our consolidated financial statements. †Filed herewith. ~~(1)Filed as~~ ~~an Exhibit to our Form S-4 filed with the Commission on November 13, 2003 and incorporated herein by reference.~~ ~~(2)Filed as~~ an Exhibit to our Form 8-K filed with the Commission on October 27, 2004 and incorporated herein by reference. (3)Filed as an Exhibit to our Form 10-K filed with the Commission on March 31, 2005 and incorporated herein by reference. (4)Filed as an Exhibit to our Form S-1/A filed with the Commission on August 4, 2005 and incorporated herein by reference. (5)Filed as an Exhibit to our Form 8-K filed with the Commission on August 15, 2005 and incorporated herein by reference. (6)Filed as an Exhibit to our Form S-4/A filed with the Commission on August 24, 2005 and incorporated herein by reference. (7)Filed as an Exhibit to our Form 8-K filed with the Commission on November 4, 2005 and incorporated herein by reference.

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63 (1)Filed as an Exhibit to our Form S-4 filed with the Commission on November 13, 2003 and incorporated herein by reference. (2)Filed as an Exhibit to our Form 8-K filed with the Commission on October 27, 2004 and incorporated herein by reference. (3)Filed as an Exhibit to our Form 10-K filed with the Commission on March 31, 2005 and incorporated herein by reference. (4)Filed as an Exhibit to our Form S-1/A filed with the Commission on August 4, 2005 and incorporated herein by reference. (5)Filed as an Exhibit to our Form 8-K filed with the Commission on August 15, 2005 and incorporated herein by reference. (6)Filed as an Exhibit to our Form S-4/A filed with the Commission on August 24, 2005 and incorporated herein by reference. (7)Filed as an Exhibit to our Form 8-K filed with the Commission on November 4, 2005 and incorporated herein by reference. (8)Filed as an Exhibit to our Form 10-K filed with the Commission on March 14, 2007 and incorporated herein by reference. (9)Filed as an Exhibit to our Form S-8 filed with the Commission on May 20, 2009 and incorporated herein by reference. (10)Filed as an Exhibit to our Form 10-Q filed with the Commission on May 1, 2009 and incorporated herein by reference. (11)Filed as an Exhibit to our Form 8-K filed with the Commission on January 6, 2010 and incorporated herein by reference. (12)Filed as an Exhibit to our Form 8-K filed with the Commission on March 16, 2010 and incorporated herein by reference. (13)Filed as an Exhibit to our Form 8-K/A filed with the Commission on May 20, 2010 and incorporated herein by reference. (14)Filed as an Exhibit to our Form 8-K filed with the Commission on October 25, 2010 and incorporated herein by reference. (15)Filed as an Exhibit to our Form 10-K filed with the Commission on March 31, 2011 and incorporated herein by reference. (16)Filed as an Exhibit to our Form 8-K filed with the Commission on April 2, 2012 and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	REDDY ICE HOLDINGS, INC.
	By:		/s/ STEVEN J. JANUSEK Steven J. Janusek Chief Financial and Accounting Officer

~~March~~April 3111, ~~2011~~2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title
/s/ GILBERT M. CASSAGNE Gilbert M. Cassagne	Chairman of the Board, Chief Executive Officer and President	~~March~~April 3111, ~~2011~~2012
/s/ WILLIAM P. BRICK William P. Brick	Director	~~March~~April 3111, ~~2011~~2012
/s/ KEVIN J. CAMERON Kevin J. Cameron	Director	~~March~~April 3111, ~~2011~~2012
/s/ THEODORE J. HOST Theodore J. Host	Director	~~March~~April 3111, ~~2011~~2012
/s/ MICHAEL S. MCGRATH Michael S. McGrath	Director	~~March~~April 3111, ~~2011~~2012
/s/ MICHAEL H. RAUCH Michael H. Rauch	Director	~~March~~April 3111, ~~2011~~2012
/s/ ROBERT N. VERDECCHIO Robert N. Verdecchio	Director	~~March~~April 3111, ~~2011~~2012

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SIGNATURES


	REDDY ICE CORPORATION
	By:		/s/ STEVEN J. JANUSEK Steven J. Janusek Chief Financial and Accounting Officer

~~March~~April 3111, ~~2011~~2012

Name	Title
/s/ GILBERT M. CASSAGNE Gilbert M. Cassagne	Chairman of the Board, Chief Executive Officer and President	~~March~~April 3111, ~~2011~~2012
/s/ STEVEN J. JANUSEK Steven J. Janusek	Director	~~March~~April 3111, ~~2011~~2012
/s/ KENNETH C. FERNANDEZ Kenneth C. Fernandez	Director	~~March~~April 3111, ~~2011~~2012

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INDEX TO FINANCIAL STATEMENTS

		Page
Reddy Ice Holdings, Inc. and Subsidiary
Financial Statements
Reports of Independent Registered Public Accounting Firm		F-2
Reddy Ice Holdings, Inc. Consolidated Balance Sheets as of December 31, 2010 and 2009		F-4
Reddy Ice Holdings, Inc. Consolidated Balance Sheets as of December 31, 2011 and 2010		F-4
Reddy Ice Holdings, Inc. Consolidated Statements of Operations for the Years ended December 31, 2010, 2009 and 2008		F-5
Reddy Ice Holdings, Inc. Consolidated Statements of Operations for the Years ended December 31, 2011, 2010 and 2009		F-5
Reddy Ice Holdings, Inc. Consolidated Statements of Stockholders' Equity (Deficit) for the Years ended December 31, 2010, 2009 and 2008		F-6
Reddy Ice Holdings, Inc. Consolidated Statements of Stockholders' Equity (Deficit) for the Years ended December 31, 2011, 2010 and 2009		F-6
Reddy Ice Holdings, Inc. Consolidated Statements of Cash Flows for the Years ended December 31, 2010, 2009 and 2008		F-7
Reddy Ice Holdings, Inc. Consolidated Statements of Cash Flows for the Years ended December 31, 2011, 2010 and 2009		F-7
Reddy Ice Corporation Balance Sheets as of December 31, 2010 and 2009		F-8
Reddy Ice Corporation Balance Sheets as of December 31, 2011 and 2010		F-8
Reddy Ice Corporation Statements of Operations for the Years ended December 31, 2010, 2009 and 2008		F-9
Reddy Ice Corporation Statements of Operations for the Years ended December 31, 2011, 2010 and 2009		F-9
Reddy Ice Corporation Statement of Stockholder's Equity (Deficit) for the Years ended December 31, 2010, 2009 and 2008		F-10
Reddy Ice Corporation Statement of Stockholder's Equity (Deficit) for the Years ended December 31, 2011, 2010 and 2009		F-10
Reddy Ice Corporation Statements of Cash Flows for the Years ended December 31, 2010, 2009 and 2008		F-11
Reddy Ice Corporation Statements of Cash Flows for the Years ended December 31, 2011, 2010 and 2009		F-11
Notes to Consolidated and Reddy Ice Corporation Financial Statements for the Years ended December 31, 2010, 2009 and 2008		F-12
Notes to Consolidated and Reddy Ice Corporation Financial Statements for the Years ended December 31, 2011, 2010 and 2009		F-12

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Reddy Ice Holdings, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Reddy Ice Holdings, Inc. and its subsidiary (the "Company") at December 31, ~~2010~~2011 and ~~2009~~2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2010~~2011 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred a net loss from operations for the years ended December 31, 2011 and 2010 and had a stockholders' deficit as of December 31, 2011. In addition, the Company expects to file voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP

Dallas, Texas ~~March~~April 3111, ~~2011~~2012

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of Reddy Ice Corporation:

In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Reddy Ice Corporation (the "Company") at December 31, ~~2010~~2011 and ~~2009~~2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2010~~2011 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred a net loss from operations for the years ended December 31, 2011 and 2010 and had a stockholder's deficit as of December 31, 2011. In addition, the Company expects to file voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP

Dallas, Texas ~~March~~April 3111, ~~2011~~2012

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REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

		December 31,		~~December 31,~~
				2010			2009
		2011			2010
		(in thousands, except share data)		~~(in thousands, except share data)~~
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	~~Cash and cash equivalents~~	$	9,944	$	~~42,173~~$	42,173	$	~~44,649~~
Accounts receivable, net	~~Accounts receivable, net~~		26,293		~~21,432~~	21,432		~~26,289~~
	Inventories, parts and supplies				12,549			11,057
Notes receivable from affiliate			1,973			—
	Prepaid expenses and other current assets				3,849			3,840
Inventories, parts and supplies			12,551			12,549
	Assets held for sale				1,056			—
Prepaid expenses and other current assets			4,395			3,849
	Deferred tax assets				716			1,744
Assets held for sale			2,084			1,056
		Total current assets			81,775			87,579
Deferred tax assets			1,844			716
RESTRICTED CASH					10,110			—
Total current assets			59,084			81,775
PROPERTY AND EQUIPMENT, net					204,898			215,853
RESTRICTED CASH			13,024			10,110
GOODWILL					83,368			79,493
PROPERTY AND EQUIPMENT, net			185,841			204,898
OTHER INTANGIBLES, net					72,204			67,919
GOODWILL			87,036			83,368
INVESTMENTS					6,318			1,648
OTHER INTANGIBLES, net			71,926			72,204
OTHER ASSETS, NET					12,252			3,173
INVESTMENTS			7,357			6,318
TOTAL				$	470,925		$	455,665
OTHER ASSETS, NET			9,761			12,252
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
TOTAL		$	434,029		$	470,925
CURRENT LIABILITIES:
LIABILITIES AND STOCKHOLDERS' DEFICIT
	Current portion of long-term obligations			$	1		$	1
CURRENT LIABILITIES:
	Revolving credit facility				—			—
Current portion of long-term obligations		$	450,705		$	1
	Accounts payable				15,290			13,536
Revolving credit facility			20,700			—
	Accrued expenses				24,177			13,620
Accounts payable			18,578			15,290
		Total current liabilities			39,468			27,157
Accrued expenses			26,639			24,177
LONG-TERM OBLIGATIONS					450,690			390,601
Total current liabilities			516,622			39,468
DEFERRED TAXES AND OTHER LIABILITIES, net					10,560			29,111
LONG-TERM OBLIGATIONS			100			450,690
COMMITMENTS AND CONTINGENCIES (Note 15)					—			—
DEFERRED TAXES AND OTHER LIABILITIES, net			14,105			10,560
STOCKHOLDERS' EQUITY (DEFICIT):
COMMITMENTS AND CONTINGENCIES (Note 15)			—			—
	Preferred stock; 25,000,000 shares authorized; no shares issued or outstanding				—			—
STOCKHOLDERS' DEFICIT:
	Common stock, $0.01 par value; 75,000,000 shares authorized; 22,962,000 and 22,579,016 shares issued and outstanding at December 31, 2010 and 2009, respectively				230			226
Preferred stock; 25,000,000 shares authorized; no shares issued or outstanding			—			—
	Additional paid-in capital				225,208			223,312
Common stock, $0.01 par value; 75,000,000 shares authorized; 23,402,706 and 22,962,000 shares issued and outstanding at December 31, 2011 and 2010, respectively			234			230
	Accumulated deficit				(255,231	)		(214,742	)
Additional paid-in capital			227,654			225,208
		Total stockholders' equity (deficit)			(29,793	)		8,796
Accumulated deficit			(324,686	)		(255,231	)
TOTAL				$	470,925		$	455,665
Total stockholders' deficit			(96,798	)		(29,793	)
TOTAL		$	434,029		$	470,925

See accompanying notes to consolidated financial statements.

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REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

		Year Ended December 31,	~~Year Ended December 31,~~
			2010			2009			2008
		2011			2010			2009
		(in thousands, except per share amounts)	~~(in thousands, except per share amounts)~~
Revenues		$	$328,463	~~315,455~~	$	$315,455	~~312,331~~	$	$312,331	~~329,298~~
Cost of sales (excluding depreciation)			229,114	~~211,260~~		211,260	~~198,241~~		198,241	~~214,905~~
Depreciation expense related to cost of sales			27,598	~~26,088~~		26,088	~~21,406~~		21,406	~~20,796~~
Gross profit			71,751	~~78,107~~		78,107	~~92,684~~		92,684	~~93,597~~
Operating expenses			57,210	~~54,436~~		54,436	~~50,782~~		50,782	~~47,550~~
Depreciation and amortization expense			8,969	~~8,802~~		8,802	~~7,066~~		7,066	~~6,715~~
Loss on dispositions of assets			233	~~2,600~~		2,600	~~2,329~~		2,329	~~1,869~~
Acquisition expenses			4,633	~~1,176~~		1,176	79		79	—
Impairment of goodwill and long-lived assets (Note 2)			4,162	~~10,578~~		10,578	—		—	~~149,905~~
Gain on diesel hedge			—	—		—	~~(581~~	)	(581	—)
Cost (insurance recoveries) related to antitrust investigations and related litigation, net (Note 15)				(124	)		(891	)		15,524
Gain on contingent acquisition consideration			(418	)		—			—
Transaction costs related to merger agreement (Note 1)				—			—			835
Cost (insurance recoveries) related to antitrust investigations and related litigation, net (Note 15)			5,049			(124	)		(891	)
Gain on property insurance settlement				—			—			(1,036	)
Income (loss) from operations			(8,087	)		639			33,900
Income (loss) from operations				639			33,900			(127,765	)
Interest expense			(58,714	)		(50,078	)		(26,802	)
Interest expense				(50,078	)		(26,802	)		(31,893	)
Interest income			15			20			133
Interest income				20			133			825
Gain on bargain purchase			—			232			661
Gain on bargain purchase				232			661			—
Debt refinance costs			(696	)		(8,839	)		—
Gain on termination of merger agreement (Note 1)				—			—			17,000
Income (loss) before income taxes			(67,482	)		(58,026	)		7,892
Debt refinance costs				(8,839	)		—			—
Income tax benefit (expense)			(1,973	)		17,537			(3,658	)
Income (loss) before income taxes				(58,026	)		7,892			(141,833	)
Net income (loss)		$	(69,455	)	$	(40,489	)	$	4,234
Income tax benefit (expense)				17,537			(3,658	)		21,402
Basic net income (loss) per share:
Net income (loss)		$	$(3.05	~~(40,489~~)	)$	$(1.80	~~4,234~~)	$	$0.19	~~(120,431~~	)
Basic net income (loss) per share:
Weighted average common shares outstanding			22,758			22,470			22,364
	Net income (loss)		$	(1.80	)	$	0.19		$	(5.47	)
Diluted net income (loss) per share:
	Weighted average common shares outstanding			22,470			22,364			22,025
Net income (loss)		$	(3.05	)	$	(1.80	)	$	0.19
Diluted net income (loss) per share:
Weighted average common shares outstanding			22,758			22,470			22,537
	Net income (loss)		$	(1.80	)	$	0.19		$	(5.47	)
	Weighted average common shares outstanding			22,470			22,537			22,025
Cash dividends declared per share			$	—		$	—		$	0.84

See accompanying notes to consolidated financial statements.

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Table of Contents

REDDY ICE HOLDINGS, INC. AND SUBSIDIARY ~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)~~

		Common Stock											Accumulated Other Comprehensive Income (Loss)
		Number of Shares			Par Value		Additional Paid-In Capital			Accumulated Deficit						Total
Balance at December 31, 2007			22,000		$	220	$	220,679		$	(80,052	)	$	(865	)	$	139,982
Compensation expense related to stock-based awards			—			—		1,611			—			—			1,611
Cash dividends declared			—			—		—			(18,493	)		—			(18,493	)
Issuance of restricted stock			50			—		—			—			—			—
Vesting of restricted stock units			83			1		(1	)		—			—			—
Repurchase and retirement of common stock			(19	)		—		(199	)		—			—			(199	)
Tax deficiency in connection with vesting of restricted stock units			—			—		(266	)		—			—			(266	)
Comprehensive loss:
	Net loss		—			—		—			(120,431	)		—			(120,431	)
	Change in fair value of derivative		—			—		—			—			(1,332	)		(1,332	)
	Total comprehensive loss																(121,763	)
Balance at December 31, 2008			22,114		$	221	$	221,824		$	(218,976	)	$	(2,197	)	$	872
Compensation expense related to stock-based awards			—			—		1,951			—			—			1,951
Issuance of restricted stock			373			4		(4	)		—			—			—
Vesting of restricted stock units			104			1		(1	)		—			—			—
Repurchase and retirement of common stock			(12	)		—		(26	)		—			—			(26	)
Tax deficiency in connection with vesting of restricted stock units			—			—		(432	)		—			—			(432	)
Comprehensive income:
	Net income		—			—		—			4,234			—			4,234
	Change in fair value of derivatives		—			—		—			—			2,197			2,197
	Total comprehensive income																6,431
Balance at December 31, 2009			22,579		$	226	$	223,312		$	(214,742	)	$	—		$	8,796
Compensation expense related to stock-based awards			—			—		1,883			—			—			1,883
Issuance of restricted stock			319			3		(3	)		—			—			—
Forfeiture of restricted stock			(27	)		—		—			—			—			—
Vesting of restricted stock units			15			—		—			—			—			—
Issuance of vested shares to directors			69			1		(1	)		—			—			—
Common stock issued upon exercise of stock options			7			—		17			—			—			17
Comprehensive income:
	Net loss		—			—		—			(40,489	)		—			(40,489	)
	Total comprehensive loss																(40,489	)
Balance at December 31, 2010			22,962		$	230	$	225,208		$	(255,231	)	$	—		$	(29,793	)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

	Common Stock											Accumulated Other Comprehensive Income (Loss)

	Number of Shares			Par Value		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2008		22,114		$	221	$	221,824		$	(218,976	)	$	(2,197	)	$	872
Compensation expense related to stock-based awards		—			—		1,951			—			—			1,951
Issuance of restricted stock		373			4		(4	)		—			—			—
Vesting of restricted stock units		104			1		(1	)		—			—			—
Repurchase and retirement of common stock		(12	)		—		(26	)		—			—			(26	)
Tax deficiency in connection with vesting of restricted stock units		—			—		(432	)		—			—			(432	)
Comprehensive income:
Net income		—			—		—			4,234			—			4,234
Change in fair value of derivatives		—			—		—			—			2,197			2,197

Total comprehensive income																6,431

Balance at December 31, 2009		22,579		$	226	$	223,312		$	(214,742	)	$	—		$	8,796

Compensation expense related to stock-based awards		—			—		1,883			—			—			1,883
Issuance of restricted stock		319			3		(3	)		—			—			—
Forfeiture of restricted stock		(27	)		—		—			—			—			—
Vesting of restricted stock units		15			—		—			—			—			—
Issuance of vested shares to directors		69			1		(1	)		—			—			—
Common stock issued upon exercise of stock options		7			—		17			—			—			17
Comprehensive income:
Net loss		—			—		—			(40,489	)		—			(40,489	)

Total comprehensive loss																(40,489	)

Balance at December 31, 2010		22,962		$	230	$	225,208		$	(255,231	)	$	—		$	(29,793	)

Compensation expense related to stock-based awards		—			—		2,434			—			—			2,434
Issuance of restricted stock		344			3		(3	)		—			—			—
Forfeiture of restricted stock		(26	)		—		—			—			—			—
Vesting of restricted stock units		20			—		—			—			—			—
Issuance of vested shares to directors		96			1		(1	)		—			—			—
Common stock issued upon exercise of stock options		7			—		16			—			—			16
Comprehensive income:
Net loss		—			—		—			(69,455	)		—			(69,455	)

Total comprehensive loss																(69,455	)

Balance at December 31, 2011		23,403		$	234	$	227,654		$	(324,686	)	$	—		$	(96,798	)

See accompanying notes to consolidated financial statements.

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REDDY ICE HOLDINGS, INC. AND SUBSIDIARY ~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

				Year Ended December 31,
				2010			2009			2008
				(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)			$	(40,489	)	$	4,234		$	(120,431	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities (excluding working capital from acquisitions):
		Depreciation and amortization expense			34,890			28,472			27,511
		Amortization of debt issue costs and debt discounts and accretion of early tender premium			2,664			1,458			13,719
		Gain on bargain purchase			(232	)		(661	)		—
		Debt refinance costs			8,839			—			—
		Deferred tax expense (benefit)			(17,881	)		2,883			(22,083	)
		Loss on disposition of assets			2,600			2,329			1,869
		Stock-based compensation expense			2,075			1,951			1,611
		Impairment of goodwill and long-lived assets			10,578			—			149,905
		Gain on property insurance settlement			—			—			(1,036	)
		Changes in assets and liabilities, net of the effects of acquisitions:
			Accounts receivables		5,002			1,591			(1,034	)
			Inventories, parts and supplies		(808	)		1,325			(1,527	)
			Prepaid assets		(624	)		(890	)		146
			Accounts payable, accrued expenses and other		13,281			(9,164	)		3,379
	Net cash provided by operating activities				19,895			33,528			52,029
CASH FLOWS FROM INVESTING ACTIVITIES:
	Property and equipment additions				(31,912	)		(24,465	)		(18,004	)
	Cost of equipment to be placed under operating leases				(3,990	)		(7,995	)		—
	Reimbursement of the cost of equipment placed under operating leases				7,082			5,994			—
	Proceeds from dispositions of property and equipment				698			590			2,006
	Cost of acquisitions, net of cash acquired				(19,188	)		(1,025	)		(3,934	)
	Cost of purchases of leased assets				—			—			(425	)
	Purchase of investments				(4,670	)		(1,648	)		—
	Other intangible asset additions				(224	)		(21	)		—
	Decrease (increase) in restricted cash and cash equivalents, net				(10,110	)		—			17,262
	Proceeds from property insurance settlement				—			—			1,496
	Issuance of note receivable				—			(450	)		—
	Collection of note receivable				—			483			23
	Net cash used in investing activities				(62,314	)		(28,537	)		(1,576	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from the exercise of employee stock options				17			—			—
	Repurchase and retirement of common stock				—			(26	)		(199	)
	Dividends and other distributions to stockholders				—			—			(27,733	)
	Issuance of debt				300,000			—			—
	Debt issuance costs				(20,073	)		—			—
	Repayment of debt				(240,001	)		—			(20	)
	Net cash provided by (used in) financing activities				39,943			(26	)		(27,952	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					(2,476	)		4,965			22,501
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					44,649			39,684			17,183
CASH AND CASH EQUIVALENTS, END OF PERIOD				$	42,173		$	44,649		$	39,684
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash payments for interest			$	36,743		$	28,439		$	15,672
	Cash receipts of interest income			$	20		$	117		$	877
	Cash payments for income taxes			$	309		$	658		$	1,145
	Borrowings under the revolving credit facility			$	—		$	6,667		$	55,000
	Repayments under the revolving credit facility			$	—		$	(6,667	)	$	(55,000	)
	Increase (decrease) in fair value of interest rate derivative			$	—		$	2,564		$	(1,036	)
	Additions to property and equipment included in accounts payable			$	1,070		$	1,834		$	1,076

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,

	2011			2010			2009
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(69,455	)	$	(40,489	)	$	4,234
Adjustments to reconcile net income (loss) to net cash provided by operating activities (excluding working capital from acquisitions):
Depreciation and amortization expense		36,567			34,890			28,472
Amortization of debt issue costs and debt discounts and accretion of early tender premium		3,043			2,664			1,458
Gain on bargain purchase		—			(232	)		(661	)
Debt refinance costs		—			8,839			—
Deferred tax expense (benefit)		1,570			(17,881	)		2,883
Loss on disposition of assets		233			2,600			2,329
Decrease in fair value of diesel hedge		86			—			—
Stock-based compensation expense		2,242			2,075			1,951
Impairment of goodwill and long-lived assets		4,162			10,578			—
Gain on contingent acquisition consideration		(418	)		—			—
Changes in assets and liabilities, net of the effects of acquisitions:
Accounts receivables		(4,906	)		5,002			1,591
Inventories, parts and supplies		690			(808	)		1,325
Prepaid assets		228			(624	)		(890	)
Accounts payable, accrued expenses and other		3,940			13,281			(9,164	)

Net cash (used in) provided by operating activities		(22,018	)		19,895			33,528

CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions		(15,071	)		(31,912	)		(24,465	)
Proceeds from dispositions of property and equipment		840			698			590
Cost of equipment to be placed under operating leases		(1,766	)		(3,990	)		(7,995	)
Reimbursement of the cost of equipment placed under operating leases		3,074			7,082			5,994
Cost of equipment sold to affiliate		(1,260	)		—			—
Reimbursement of cost of equipment sold to affiliate		1,260			—			—
Cost of acquisitions, net of cash acquired		(13,339	)		(19,188	)		(1,025	)
Other intangible asset additions		(17	)		(224	)		(21	)
Increase in restricted cash and cash equivalents, net		(2,913	)		(10,110	)		—
Issuance of note receivable		—			—			(450	)
Collection of note receivable		—			—			483
Purchase of investments		(1,039	)		(4,670	)		(1,648	)

Net cash used in investing activities		(30,231	)		(62,314	)		(28,537	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of employee stock options		16			17			—
Repurchase and retirement of common stock		—			—			(26	)
Borrowings under the credit facility		153,125			—			6,667
Repayments under the credit facility		(132,425	)		—			(6,667	)
Issuance of debt		—			300,000			—
Debt issuance costs		(696	)		(20,073	)		—
Repayment of debt		—			(240,001	)		—

Net cash provided by (used in) financing activities		20,020			39,943			(26	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(32,229	)		(2,476	)		4,965
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		42,173			44,649			39,684

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	9,944		$	42,173		$	44,649

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	$	55,462		$	36,743		$	28,439

Cash receipts of interest income	$	22		$	20		$	117

Cash payments for income taxes, net	$	442		$	309		$	658

Issuance of notes receivable-affiliate	$	(1,973	)	$	—		$	—

Noncash short-term financing	$	1,973		$	—		$	—

Increase in fair value of interest rate derivative	$	—		$	—		$	2,564

Additions to property and equipment included in accounts payable	$	3,056		$	1,070		$	1,834

See accompanying notes to consolidated financial statements.

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Table of Contents

REDDY ICE CORPORATION BALANCE SHEETS

BALANCE SHEETS

	December 31, 2011			December 31, 2010

	(in thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,106		$	30,153
Accounts receivable, net		26,293			21,432
Accounts receivable from Parent		16			19
Notes receivable from affiliate		1,973			—
Inventories, parts and supplies		12,551			12,549
Prepaid expenses and other current assets		4,395			3,849
Assets held for sale		2,084			1,056
Deferred tax assets		2,067			716

Total current assets		50,485			69,774
RESTRICTED CASH		13,024			10,110
PROPERTY AND EQUIPMENT, net		185,841			204,898
GOODWILL		87,036			83,368
OTHER INTANGIBLES, net		71,926			72,204
INVESTMENTS		7,357			6,318
OTHER ASSETS, net		9,714			12,149

TOTAL	$	425,383		$	458,821

LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Current portion of long-term obligations	$	438,969		$	1
Revolving credit facility		20,700			—
Accounts payable		16,810			14,375
Accrued expenses		27,127			24,665

Total current liabilities		503,606			39,041
LONG-TERM OBLIGATIONS		100			438,954
DEFERRED TAXES AND OTHER LIABILITIES, net		14,009			32,344
COMMITMENTS AND CONTIGENCIES (Note 15)		—			—
STOCKHOLDER'S DEFICIT:
Common stock, $0.01 par value; 1,000 shares authorized; 100 shares issued and outstanding at December 31, 2011 and December 31, 2010		—			—
Additional paid-in capital		308,854			306,420
Accumulated deficit		(401,186	)		(357,938	)

Total stockholder's deficit		(92,332	)		(51,518	)

TOTAL	$	425,383		$	458,821

			December 31, 2010			December 31, 2009
			(in thousands, except share data)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	30,153		$	40,440
	Accounts receivable, net			21,432			19,689
	Accounts receivable from Parent			19			20
	Inventories, parts and supplies			12,549			11,057
	Prepaid expenses and other current assets			3,849			3,839
	Assets held for sale			1,056			—
	Deferred tax assets			716			1,744
		Total current assets		69,774			76,789
RESTRICTED CASH				10,110			—
PROPERTY AND EQUIPMENT, net				204,898			215,854
GOODWILL				83,368			79,493
OTHER INTANGIBLES, net				72,204			67,919
INVESTMENTS				6,318			1,648
OTHER ASSETS, net				12,149			1,121
TOTAL			$	458,821		$	442,824
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
	Current portion of long-term obligations		$	1		$	1
	Revolving credit facility			—			—
	Accounts payable			14,375			12,691
	Accrued expenses			24,665			11,679
		Total current liabilities		39,041			24,371
LONG-TERM OBLIGATIONS				438,954			240,101
DEFERRED TAXES AND OTHER LIABILITIES, net				32,344			54,589
COMMITMENTS AND CONTIGENCIES (Note 15)				—			—
STOCKHOLDER'S EQUITY (DEFICIT):
	Common stock, $0.01 par value; 1,000 shares authorized; 100 shares issued and outstanding at December 31, 2010 and December 31, 2009			—			—
	Additional paid-in capital			306,420			302,782
	Accumulated deficit			(357,938	)		(179,019	)
		Total stockholder's equity (deficit)		(51,518	)		123,763
TOTAL			$	458,821		$	442,824

See accompanying notes to financial statements.

F-8

Table of Contents

REDDY ICE CORPORATION STATEMENTS OF OPERATIONS

STATEMENTS OF OPERATIONS

	Year Ended December 31,

	2011			2010			2009
	(in thousands, except per share amounts)
Revenues	$	328,463		$	315,455		$	312,331
Cost of sales (excluding depreciation)		229,114			211,260			198,241
Depreciation expense related to cost of sales		27,598			26,088			21,406

Gross profit		71,751			78,107			92,684
Operating expenses		57,210			54,436			50,782
Depreciation and amortization expense		8,969			8,802			7,066
Loss on dispositions of assets		233			2,600			2,329
Acquisition expense		4,633			1,176			79
Impairment of goodwill and long-lived assets (Note 2)		4,162			10,578			—
Gain on diesel hedge		—			—			(581	)
Gain on contingent acquisition consideration		(418	)		—			—

Income (loss) from operations		(3,038	)		515			33,009
Interest expense		(57,425	)		(45,660	)		(10,275	)
Interest income		15			20			94
Gain on bargain purchase		—			232			661
Debt refinance costs		(696	)		(8,839	)		—

Income (loss) before income taxes		(61,144	)		(53,732	)		23,489
Income tax benefit (expense)		20,129			21,231			(9,184	)

Net income (loss)	$	(41,015	)	$	(32,501	)	$	14,305

	Year Ended December 31,
	2010			2009			2008
	(in thousands, except per share amounts)
Revenues	$	315,455		$	312,331		$	329,298
Cost of sales (excluding depreciation)		211,260			198,241			214,905
Depreciation expense related to cost of sales		26,088			21,406			20,796
Gross profit		78,107			92,684			93,597
Operating expenses		54,436			50,782			47,550
Depreciation and amortization expense		8,802			7,066			6,715
Loss on dispositions of assets		2,600			2,329			1,869
Acquisition expense		1,176			79			—
Impairment of goodwill and long-lived assets (Note 2)		10,578			—			149,905
Gain on diesel hedge		—			(581	)		—
Gain on property insurance settlement		—			—			(1,036	)
Income (loss) from operations		515			33,009			(111,406	)
Interest expense		(45,660	)		(10,275	)		(16,274	)
Interest income		20			94			328
Gain on bargain purchase		232			661			—
Debt refinance costs		(8,839	)		—			—
Income (loss) before income taxes		(53,732	)		23,489			(127,352	)
Income tax (expense) benefit		21,231			(9,184	)		16,491
Net income (loss)	$	(32,501	)	$	14,305		$	(110,861	)

See accompanying notes to financial statements.

F-9

Table of Contents

REDDY ICE CORPORATION STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)

STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)

	Common Stock

	Common Stock										Accumulated Other Comprehensive Income (Loss)
	Number of Shares		Par Value		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
			(in thousands)
Balance at December 31, 2008		—	$	—	$	301,263		$	(176,521	)	$	(2,197	)	$	122,545
Compensation expense related to stock-based awards		—		—		1,951			—			—			1,951
Tax deficiency related to restricted stock units vesting		—		—		(432	)		—			—			(432	)
Dividend to Parent		—		—		—			(16,803	)		—			(16,803	)
Comprehensive loss:
Net income		—		—		—			14,305			—			14,305
Increase in fair value of interest rate derivatives		—		—		—			—			2,197			2,197

Total comprehensive loss		—		—		—			—			—			16,502

Balance at December 31, 2009		—	$	—	$	302,782		$	(179,019	)	$	—		$	123,763

Compensation expense related to stock-based awards		—		—		1,883			—			—			1,883
Dividend to Parent		—		—		—			(7,654	)		—			(7,654	)
Contribution from Parent		—		—		1,755			—						1,755
Assumption of Parent debt		—		—		—			(138,764	)		—			(138,764	)
Comprehensive loss:
Net loss		—		—		—			(32,501	)		—			(32,501	)

Total comprehensive loss		—		—		—			—			—			(32,501	)

Balance at December 31, 2010		—	$	—	$	306,420		$	(357,938	)	$	—		$	(51,518	)

Compensation expense related to stock-based awards		—		—		2,434			—			—			2,434
Dividend to Parent		—		—		—			(2,233	)		—			(2,233	)
Comprehensive loss:
Net loss		—		—		—			(41,015	)		—			(41,015	)

Total comprehensive loss		—		—		—			—			—			(41,015	)

Balance at December 31, 2011		—	$	—	$	308,854		$	(401,186	)	$	—		$	(92,332	)

		Common Stock
												Accumulated Other Comprehensive Income (Loss)
		Number of Shares		Par Value		Additional Paid-In Capital			Accumulated Deficit						Total
									(in thousands)
Balance at January 1, 2008			—	$	—	$	299,856		$	(36,927	)	$	(865	)	$	262,064
Compensation expense related to stock-based awards			—		—		1,611			—			—			1,611
Tax deficiency related to restricted stock units vesting			—		—		(204	)		—			—			(204	)
Dividend to Parent			—		—		—			(28,733	)		—			(28,733	)
Comprehensive loss:													—
	Net loss		—		—		—			(110,861	)		—			(110,861	)
	Decrease in fair value of interest rate derivatives		—		—		—			—			(1,332	)		(1,332	)
	Total comprehensive loss		—		—		—			—			—			(112,193	)
Balance at December 31, 2008			—	$	—	$	301,263		$	(176,521	)	$	(2,197	)	$	122,545
Compensation expense related to stock-based awards			—		—		1,951			—			—			1,951
Tax deficiency related to restricted stock units vesting			—		—		(432	)		—			—			(432	)
Dividend to Parent			—		—		—			(16,803	)		—			(16,803	)
Comprehensive loss:
	Net income		—		—		—			14,305			—			14,305
	Increase in fair value of interest rate derivatives		—		—		—			—			2,197			2,197
	Total comprehensive loss		—		—		—			—			—			16,502
Balance at December 31, 2009			—	$	—	$	302,782		$	(179,019	)	$	—		$	123,763
Compensation expense related to stock-based awards			—		—		1,883			—			—			1,883
Dividend to Parent			—		—		—			(7,654	)		—			(7,654	)
Contribution from Parent			—		—		1,755			—						1,755
Assumption of Parent debt			—		—		—			(138,764	)		—			(138,764	)
Comprehensive loss:
	Net loss		—		—		—			(32,501	)		—			(32,501	)
	Total comprehensive loss		—		—		—			—			—			(32,501	)
Balance at December 31, 2010			—	$	—	$	306,420		$	(357,938	)	$	—		$	(51,518	)

See accompanying notes to financial statements.

F-10

Table of Contents

REDDY ICE CORPORATION STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS

	Year Ended December 31,

	2011			2010			2009
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(41,015	)	$	(32,501	)	$	14,305
Adjustments to reconcile net income (loss) to net cash provided by operating activities (excluding working capital from acquisitions):
Depreciation and amortization expense		36,567			34,890			28,472
Amortization of debt issue costs and accretion of early tender premium		1,698			2,150			733
Gain on bargain purchase		—			(232	)		(661	)
Debt refinance costs		—			8,839			—
Deferred tax expense (benefit)		(20,533	)		(19,750	)		7,845
Loss on disposition of assets		233			2,600			2,329
Stock-based compensation expense		2,242			2,075			1,951
Decrease in fair value of diesel hedge		86			—			—
Impairment of goodwill and long-lived assets		4,162			10,578			—
Gain on contingent acquisition consideration		(418	)		—			—
Changes in assets and liabilities, net of the effects of acquisitions:
Accounts receivable		(4,906	)		(1,599	)		10,575
Inventories, parts and supplies		690			(808	)		1,325
Prepaid assets		228			(624	)		(890	)
Accounts payable, accrued expenses and other		4,379			14,137			(7,842	)

Net cash (used in) provided by operating activities		(16,587	)		19,755			58,142

CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions		(15,071	)		(31,912	)		(24,465	)
Proceeds from dispositions of property and equipment		840			698			590
Cost of equipment to be placed under operating leases		(1,766	)		(3,990	)		(7,995	)
Reimbursement of the cost of equipment placed under operating leases		3,074			7,082			5,994
Cost of equipment sold to affiliate		(1,260	)		—			—
Reimbursement of the cost of equipment sold to affiliate		1,260			—			—
Cost of acquisitions, net of cash acquired		(13,339	)		(19,188	)		(1,025	)
Other intangible asset additions		(17	)		(224	)		(21	)
Increase in restricted cash and cash equivalents, net		(2,913	)		(10,110	)		—
Purchase of investments		(1,039	)		(4,670	)		(1,648	)
Issuance of note receivable		—			—			(450	)
Collection of note receivable		—			—			483

Net cash used in investing activities		(30,231	)		(62,314	)		(28,537	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to Parent		(2,233	)		(7,654	)		(16,803	)
Borrowings under the credit facility		153,125			—			6,667
Repayments under the credit facility		(132,425	)		—			(6,667	)
Issuance of debt		—			300,000			—
Debt issuance costs		(696	)		(20,073	)		—
Repayment of debt		—			(240,001	)		—

Net cash provided by (used in) financing activities		17,771			32,272			(16,803	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(29,047	)		(10,287	)		12,802
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		30,153			40,440			27,638

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	1,106		$	30,153		$	40,440

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest	$	54,230		$	30,177		$	12,029

Cash receipts of interest income	$	22		$	19		$	78

Cash payments for income taxes, net	$	442		$	309		$	658

Issuance of notes receivable—affiliate	$	(1,973	)	$	—		$	—

Non-cash short term financing	$	1,973		$	—		$	—

Increase in fair value of interest rate derivative	$	—		$	—		$	2,564

Additions to property and equipment included in accounts payable	$	3,056		$	1,070		$	1,834

				Year Ended December 31,
				2010			2009			2008
				(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)			$	(32,501	)	$	14,305		$	(110,861	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities (excluding working capital from acquisitions):
		Depreciation and amortization expense			34,890			28,472			27,511
		Amortization of debt issue costs and accretion of early tender premium			2,150			733			733
		Gain on bargain purchase			(232	)		(661	)		—
		Debt refinance costs			8,839			—			—
		Deferred tax expense (benefit)			(19,750	)		7,845			(17,572	)
		Loss on disposition of assets			2,600			2,329			1,869
		Stock-based compensation expense			2,075			1,951			1,611
		Impairment of goodwill and long-lived assets			10,578			—			149,905
		Gain on property insurance settlement			—			—			(1,036	)
		Changes in assets and liabilities, net of the effects of acquisitions:
			Accounts receivables		(1,599	)		10,575			(3,182	)
			Inventories, parts and supplies		(808	)		1,325			(1,566	)
			Prepaid assets		(624	)		(890	)		146
			Accounts payable, accrued expenses and other		14,137			(7,842	)		(300	)
	Net cash provided by operating activities				19,755			58,142			47,258
CASH FLOWS FROM INVESTING ACTIVITIES:
	Property and equipment additions				(31,912	)		(24,465	)		(18,004	)
	Cost of equipment to be placed under operating leases				(3,990	)		(7,995	)		—
	Reimbursement of the cost of equipment placed under operating leases				7,082			5,994			—
	Proceeds from dispositions of property and equipment				698			590			2,006
	Cost of acquisitions, net of cash acquired				(19,188	)		(1,025	)		(3,934	)
	Cost of purchases of leased assets				—			—			(425	)
	Purchase of investments				(4,670	)		(1,648	)		—
	Other intangible asset additions				(224	)		(21	)		—
	Decrease (increase) in restricted cash and cash equivalents, net				(10,110	)		—			17,262
	Proceeds from property insurance settlement				—			—			1,496
	Issuance of note receivable				—			(450	)		—
	Collection of note receivable				—			483			23
	Net cash used in investing activities				(62,314	)		(28,537	)		(1,576	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Dividends to Parent				(7,654	)		(16,803	)		(28,733	)
	Issuance of debt				300,000			—			—
	Debt issuance costs				(20,073	)		—			—
	Repayment of debt				(240,001	)		—			(20	)
	Net cash provided by (used in) financing activities				32,272			(16,803	)		(28,753	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					(10,287	)		12,802			16,929
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					40,440			27,638			10,709
CASH AND CASH EQUIVALENTS, END OF PERIOD				$	30,153		$	40,440		$	27,638
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash payments for interest			$	30,177		$	12,029		$	15,672
	Cash receipts of interest income			$	19		$	78		$	354
	Cash payments for income taxes			$	309		$	658		$	1,145
	Borrowings under the revolving credit facility			$	—		$	6,667		$	55,000
	Repayments under the revolving credit facility			$	—		$	(6,667	)	$	(55,000	)
	Increase (decrease) in fair value of interest rate derivative			$	—		$	2,564		$	(1,036	)
	Additions to property and equipment included in accounts payable			$	1,070		$	1,834		$	1,076

See accompanying notes to financial statements.

F-11

Table of Contents

REDDY ICE HOLDINGS, INC. AND SUBSIDIARY ~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

Reddy Ice Holdings, Inc. ("Reddy Holdings"), and its wholly-owned subsidiary, Reddy Ice Corporation ("Reddy Corp."), referred to collectively as the "Company", manufactures and distributes packaged ice products. The Company consists of a single operating segment. The common stock of Reddy Holdings is publicly traded on the ~~New~~OTC ~~York~~electronic ~~Stock~~interdealer ~~Exchange~~quotation ~~under~~system ("OTCBB") and the ~~ticker~~OTCQBTM Marketplace ("OTCQB") under the symbol "~~FRZ~~RDDY".

This Annual Report on Form 10-K is a combined report of the Company and Reddy Corp. These financial statements have been prepared by the Company pursuant to the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). The notes to the consolidated financial statements apply to both the Company and Reddy Corp. Reddy Corp comprises all or substantially all of the Company's consolidated balances or activities unless otherwise noted.

On August 12, 2005, Reddy Holdings completed an initial public offering of its common stock. As a result of the offering, Reddy Holdings' common shares ~~are~~were publicly traded on the New York Stock Exchange under the ticker symbol "FRZ".

On January 1, 2007, Reddy Ice Group Inc., a wholly-owned subsidiary of Reddy Holdings, merged with its wholly-owned subsidiary, Reddy Corp., with Reddy Corp. being the surviving entity.

OnAs ~~July 2,~~a ~~2007,~~result of the decline in the Company's ~~announced~~stock ~~that~~price itand ~~had~~the ~~entered~~reduction ~~into~~in anits ~~Agreement~~stockholders' ~~and~~equity ~~Plan~~resulting offrom ~~Merger~~its decline in earnings, ~~dated~~the asCompany ofwas ~~July 2,~~notified ~~2007~~by (the ~~"Merger~~New ~~Agreement~~York Stock Exchange ("NYSE") on December 21, by2011 ~~and~~that ~~among~~the ~~Reddy~~common ~~Ice Holdings~~stock of the Company (ticker symbol—FRZ) was to be suspended prior to the market opening on Thursday, December ~~Inc~~29, 2011. ~~and~~On ~~certain~~December 28, ~~affiliates~~2011, ofthe ~~GSO~~Company ~~Capital~~announced ~~Partners~~that its common stock would be quoted on the OTCBB and OTCQB beginning Thursday, December LP29, ~~("GSO")~~2011. ~~The~~Trading ~~Merger~~of ~~Agreement~~the Company's ~~provided~~common ~~for~~stock on the ~~acquisition~~NYSE ofand the Company's ~~outstanding~~trading ~~common~~symbol ~~stock~~"FRZ" ~~for~~was adiscontinued ~~cash~~as ~~purchase price~~of the close of ~~$31~~the market on December 28, 2011.25 ~~per~~Effective ~~share~~Thursday, December 29, 2011, the Company's stock was quoted on the OTCBB and OTCQB under the symbol "RDDY".

~~On January 31,~~ Preparation ~~2008,~~of ~~the~~Consolidated ~~Company~~Financial ~~reached~~Statements. We anhave ~~agreement~~prepared ~~with~~the ~~affiliates~~consolidated offinancial ~~GSO~~statements toon ~~terminate~~ the ~~Merger~~basis ~~Agreement.~~that ~~A settlement agreement (~~the Company ~~"Settlement~~will ~~Agreement") was entered~~continue ~~into~~as ~~which~~a ~~released~~going ~~all~~concern. ~~parties~~Due ~~from any claims related~~ to ~~the~~deterioration ~~contemplated~~in ~~acquisition~~our ~~and~~business ~~provided~~related ~~for~~principally ~~a $21.0 million termination fee~~ to beprice ~~paid~~declines driven by ~~GSO.~~industry ~~The~~competition ~~Company~~across ~~agreed~~our tomarkets, ~~pay~~and upcoupled ~~to $4.0 million~~with ofbroader ~~fees~~economic instability and rising ~~expenses~~commodity ~~incurred~~prices, bywe ~~GSO~~experienced ~~and~~significant ~~its~~net ~~third-party~~losses ~~consultants~~ in ~~connection~~2011 ~~with~~and ~~the transaction~~2010. ~~The~~Our ~~Company~~financial ~~received~~results aare ~~net~~also ~~payment~~burdened ofby ~~$17.0 million~~high ~~on February 5,~~interest ~~2008.~~costs ~~During~~resulting ~~2008~~from ~~the~~our ~~Company~~highly ~~incurred~~leveraged $0capital structure.~~8 million~~ These offactors ~~legal~~ and ~~other~~uncertainty ~~professional~~in ~~service~~our ~~expenses~~ability into ~~connection~~generate ~~with~~sufficient ~~the~~liquidity ~~transaction~~to ~~and~~meet ~~the~~our ~~related~~future ~~stockholder litigation.~~obligations ~~Such~~in ~~costs~~a ~~are~~timely ~~included~~manner inhave ~~the~~caused ~~caption~~management ~~"Transaction~~to ~~costs~~

Reddy Ice Holdings, Inc.

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Reddy Ice Corporation

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