UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~January~~July 2627, 2014

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

For the transition period from to

Commission file number 333-107830-05

BIG HEART PET BRANDS

(Exact name of registrant as specified in its charter)

Delaware

75-3064217

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

One Maritime Plaza,

San Francisco, California 94111

(Address of Principal Executive Offices including Zip Code)

(415) 247-3000

(Registrant’s Telephone Number, Including Area Code)

DEL MONTE CORPORATION

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

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). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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). Yes ¨ No x

The number of shares outstanding of the Company’s common stock, par value $0.01, as of close of business on ~~March~~September 75, 2014 was 10.

LOGO

BIG HEART PET BRANDS

For the Three Months Ended July 27, 2014

Table of Contents

PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS	1
	CONDENSED CONSOLIDATED BALANCE SHEETS – January 26, 2014 (unaudited) and April 28, 2013	1
	CONDENSED CONSOLIDATED BALANCE SHEETS – July 27, 2014 (unaudited) and April 27, 2014	1
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) – three and nine months ended January 26, 2014 and January 27, 2013	2
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) – three months ended July 27, 2014 and July 28, 2013	2
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) – three and nine months ended January 26, 2014 and January 27, 2013	3
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) – three months ended July 27, 2014 and July 28, 2013	3
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) – nine months ended January 26, 2014 and January 27, 2013	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) – three months ended July 27, 2014 and July 28, 2013	4
	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2016
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3626
ITEM 4.	CONTROLS AND PROCEDURES	3828
PART II.	OTHER INFORMATION	3929
ITEM 1.	LEGAL PROCEEDINGS	3929
ITEM 1A.	RISK FACTORS	3929
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4130
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	4130
ITEM 4.	MINE SAFETY DISCLOSURES	4130
ITEM 5.	OTHER INFORMATION	4130
ITEM 6.	EXHIBITS	4231
	SIGNATURES	4332

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

	January 26,2014			April 28,2013
	July 27,2014			April 27,2014
	(unaudited)			(derived from auditedfinancial statements)See Note 1
ASSETS
Cash and cash equivalents	$	2457.62		$	~~581~~112.48
Trade accounts receivable, net of allowance		~~128~~131.79			96127.92
Inventories, net		~~214~~240.98			~~168~~227.85
Prepaid expenses and other current assets		67152.90			70164.63
Discontinued operations -assets		2,129.7			2,085.2
Total current assets		581.9			631.8
Total current assets		2,565.8			3,002.9
Property, plant and equipment, net		374.7			375.4
Property, plant and equipment, net		364.6			357.2
Goodwill		2,113.4			2,113.4
Goodwill		2,113.0			1,976.1
Intangible assets, net		2,143.4			2,155.2
Intangible assets, net		2,167.1			1,919.8
Other assets, net		88.5			87.8
Other assets, net		106.6			107.1
Total assets	$	5,301.9		$	5,363.6
Total assets	$	7,317.1		$	7,363.1
LIABILITIES AND STOCKHOLDER’S EQUITY
Accounts payable and accrued expenses	$	~~371~~321.65		$	~~329~~367.58
Current portion of long-term debt		1917.83			7417.53
Discontinued operations -liabilities		351.7			346.4
Total current liabilities		338.8			385.1
Total current liabilities		743.1			750.4
Long-term debt, net of discount		2,598.6			2,603.0
Long-term debt, net of discount		3,883.7			3,902.7
Deferred tax liabilities		780.9			792.1
Deferred tax liabilities		1,003.2			965.6
Other non-current liabilities		91.5			95.3
Other non-current liabilities		133.5			150.5
Total liabilities		3,809.8			3,875.5
Total liabilities		5,763.5			5,769.2
Stockholder’s equity:
Common stock ($0.01 par value per share, shares authorized:
1,000; 10 issued and outstanding)		—			—
Additional paid-in capital		1,~~587~~592.70			1,~~590~~589.06
Accumulated other comprehensive loss		(15.8	)		(16.4	)
Accumulated other comprehensive income (loss)		(1.3	)		8.4
Retained earnings (accumulated deficit)		(1898.36	)		20(109.39	)
Total stockholder’s equity		1,~~553~~492.61			1,~~593~~488.91
Total liabilities and stockholder’s equity	$	75,~~317~~301.19		$	75,363.16

See accompanying Notes to the Condensed Consolidated Financial Statements.

BIG HEART PET BRANDS AND SUBSIDIARIES

~~(formerly~~CONDENSED ~~known~~CONSOLIDATED asSTATEMENTS ~~DEL~~OF ~~MONTE~~INCOME ~~CORPORATION AND SUBSIDIARIES~~(unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in millions)

	Three Months Ended						~~Nine Months Ended~~
	January 26,2014			January 27,2013			January 26,2014			January 27,2013
	July 27,2014			July 28,2013
Net sales	$	~~575~~529.7		$	~~527~~481.0		$	~~1,608.7~~		$	~~1,482.3~~
Cost of products sold		~~368~~342.50			~~354~~302.61			~~1,026.3~~			~~994.3~~
Gross profit		~~207~~187.27			~~172~~178.49			~~582.4~~			~~488.0~~
Selling, general and administrative expense		~~124~~132.80			~~107~~112.37			~~362.0~~			~~337.7~~
Operating income		8255.47			6566.12			~~220.4~~			~~150.3~~
Interest expense		5835.42			6159.06			~~176.8~~			~~187.2~~
Other (income) expense		(0.2	)		8.4			(9.8	)		(18.8	)
Other (income) expense, net		2.7			(8.4	)
Income (loss) from continuing operations before income taxes		24.2			(4.3	)		53.4			(18.1	)
Income from continuing operations before income taxes		17.8			15.0
Provision (benefit) for income taxes		8.6			(2.8	)		25.0			(9.6	)
Provision for income taxes		6.6			8.4
Income (loss) from continuing operations		15.6			(1.5	)		28.4			(8.5	)
Income from continuing operations		11.2			6.6
Income (loss) from discontinued operations before income taxes		37(4.39	)		4519.45			~~(105.4~~	)		~~114.4~~
Provision (benefit) for income taxes		18(5.70	)		~~15.~~6.2			~~(38.4~~	)		~~41.7~~
Income (loss) from discontinued operations		18.6			29.8			(67.0	)		72.7
Income from discontinued operations		0.1			13.3
Net income (loss)	$	34.2		$	28.3		$	(38.6	)	$	64.2
Net income	$	11.3		$	19.9

See accompanying Notes to the Condensed Consolidated Financial Statements.

BIG HEART PET BRANDS AND SUBSIDIARIES

~~(formerly~~CONDENSED ~~known~~CONSOLIDATED asSTATEMENTS ~~DEL~~OF ~~MONTE~~COMPREHENSIVE ~~CORPORATION~~INCOME ~~AND SUBSIDIARIES~~(unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

(in millions)

	Three Months Ended						~~Nine Months Ended~~
	January 26,2014			January 27,2013			January 26,2014			January 27,2013
	July 27,2014			July 28,2013
Net income (loss)	$	34.2		$	28.3		$	(38.6	)	$	64.2
Net income	$	11.3		$	19.9
Other comprehensive income (loss):
Foreign currency translation adjustments		~~(1.2~~—	)		(0.1	)		~~(1.5~~	)		~~(0.1~~	)
Pension and other postretirement benefits adjustments:
Prior service cost arising during the period, net of tax		(0.2	)		—			(0.6	)		—
Prior service (cost) credit arising during the period, net of tax		0.2			(0.2	)
Gain (loss) on cash flow hedging instruments, net of tax		1(9.49	)		(1.01	)		~~2.7~~			~~(1.8~~	)
Total other comprehensive income (loss)		—(9.7	)		(10.18	)		~~0.6~~			~~(1.9~~	)
Comprehensive income (loss)	$	34.2		$	27.2		$	(38.0	)	$	62.3
Comprehensive income	$	1.6		$	20.7

See accompanying Notes to the Condensed Consolidated Financial Statements.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in millions)

	Nine Months Ended
	Three Months Ended
	January 26,2014			January 27,2013
	July 27,2014			July 28,2013
Operating activities:
Net income (loss)	$	(38.6	)	$	64.2
Net income	$	11.3		$	19.9
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		~~102~~24.31			~~117~~35.75
Deferred taxes		(625.34	)		(213.95	)
Write off of debt issuance costs		~~1.7~~—			21.97
Loss on asset disposals		30.71			20.46
Stock compensation expense		112.84			3.40
Unrealized gain on derivative financial instruments		(25.1	)		(37.3	)
Unrealized (gain) loss on derivative financial instruments		3.4			(16.9	)
Impairment on assets held for sale		193.8			—
Other items, net		3.9			—
Other items, net		(0.6	)		—
Changes in operating assets and liabilities		(72.1	)		(111.1	)
Changes in operating assets and liabilities		(263.4	)		(38.2	)
Net cash used in operating activities		(32.3	)		(53.8	)
Net cash provided by (used in) operating activities		(76.7	)		112.2
Investing activities:
Capital expenditures		(6416.51	)		(6228.74	)
Net proceeds from asset disposals		0.2			—
Cash used in business acquisition, net of cash acquired		—			(337.5	)
Cash used in business acquisition, net of cash acquired		(334.6	)		—
Investments in equity method investees		(2.5	)		(14.6	)
Payment for asset acquisition		—			(12.0	)
Net cash used in investing activities		(18.6	)		(380.5	)
Purchase of equity method investment		(14.6	)		—
Net cash used in investing activities		(413.5	)		(74.7	)
Financing activities:
Proceeds from short-term borrowings		~~239.9~~—			92.32
Payments on short-term borrowings		~~(240.9~~—	)		(73.92	)
Principal payments on long-term debt		(744.53	)		(9174.15	)
Capital contribution, net		0.7			—
Payments of debt related costs		(0.2	)		—
Net cash used in financing activities		(744.85	)		(8975.75	)
Effect of exchange rate changes on cash and cash equivalents		(0.12	)		(10.87	)
Net change in cash and cash equivalents		(~~565~~55.16	)		(54509.01	)
Cash and cash equivalents at beginning of period		~~594~~112.28			~~402~~594.82
Cash and cash equivalents at end of period	$	2957.12		$	~~348~~85.81

See accompanying Notes to the Condensed Consolidated Financial Statements.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

Note 1. Business and Basis of Presentation

On March 8, 2011, Del Monte Foods Company (“DMFC”) was acquired by an investor group led by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (“KKR”), Vestar Capital Partners (“Vestar”) and Centerview Capital, L.P. (“Centerview,” and together with KKR and Vestar, the “Sponsors”). The acquisition (also referred to as the “Merger”) was effected by the merger of Blue Merger Sub Inc. (“Blue Sub”) with and into DMFC, with DMFC being the surviving corporation. As a result of the Merger, DMFC became a wholly-owned subsidiary of Blue Acquisition Group, Inc. (“Parent”). Del Monte Corporation (“DMC,” together with its consolidated subsidiaries, “Del Monte”) was a direct, wholly-owned subsidiary of DMFC. On April 26, 2011, DMFC merged with and into DMC, with DMC being the surviving corporation. In connection with the sale of the Consumer Products Business (see ~~“Discontinued~~Note ~~Operations~~1 ~~and~~of ~~Assets~~the ~~Held~~2014 ~~for~~Annual ~~Sale”~~Report (defined below)) on February 18, 2014, DMC changed its name to Big Heart Pet Brands (together with its consolidated subsidiaries, “Big Heart Pet” or the “Company”).

The Company operates on a 52 or 53-week fiscal year ending on the Sunday closest to April 30. The results of operations for the three months ended ~~January~~July 2627, 2014 and ~~January~~July 2728, 2013 each reflect periods that contain 13 weeks. ~~The results of operations for the nine months ended January 26, 2014 and January 27, 2013 each reflect periods that contain 39 weeks.~~

Big Heart Pet Brands is ~~one of~~ the largest U.S. standalone ~~producers~~producer, ~~distributors~~distributor and ~~marketers~~marketer of premium quality, branded pet food and pet snacks ~~for the U~~.S. ~~retail market.~~ The Company’s pet food and pet snacks brands include well-known household brands such as Meow Mix, Milk-Bone, Kibbles ‘n Bits, ~~Milk-Bone,~~ 9Lives, Natural Balance, Pup-Peroni, Gravy Train, Nature’s Recipe, Canine Carry Outs, Milo’s Kitchen and other brand names. The Company has one operating segment: Pet Products, which manufactures, markets and sells branded and private label dry and wet pet food and pet snacks. The former Consumer Products segment is now reported as discontinued operations. The Consumer Products segment manufactured, marketed and sold branded and private label shelf-stable products, including fruit, vegetable, tomato and broth products with food brands that included Del Monte, Contadina, College Inn, S&W and other brand names. See “Discontinued Operations and Assets Held for Sale” below for details on the divestiture.

The accompanying unaudited condensed consolidated financial statements as of ~~January~~July 2627, 2014 and for the three ~~and nine~~ months ended ~~January 26~~July 27, 2014 and ~~January~~July 2728, 2013 have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements in the Company’s ~~2013~~2014 Annual Report on Form 10-K (“~~2013~~ 2014 Annual Report”). In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. All significant intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited condensed consolidated financial statements. Therefore, actual results could differ from those estimates. Furthermore, operating results for the three ~~and nine~~ months ended ~~January~~July 2627, 2014 are not necessarily indicative of the results expected for the fiscal year ending ~~April~~May 3, 2015 (“fiscal 2015”). The Company’s income from continuing operations and income from discontinued operations for the three months ended July 27, 2014 were increased by $2.7 million and $2.6 million, respectively, as a result of adjustments related to prior periods that were not deemed material to prior year results or to expected results for fiscal 2015.

AsThe ~~described~~results inof ~~Note~~the 5,former onConsumer ~~July 15,~~Products ~~2013,~~Business ~~DMC~~have ~~completed~~been ~~the~~reported ~~acquisition~~as discontinued ofoperations ~~Natural~~for ~~Balance~~all ~~Pet~~periods ~~Foods, Inc~~presented. ~~(“Natural~~Expenses ~~Balance”)~~allocated to discontinued operations are limited to selling, byadministrative ~~obtaining 100%~~and ofdistribution expenses that were directly attributable to the ~~voting~~Consumer ~~interest~~Products Business in accordance with the terms of ~~Natural~~the ~~Balance~~purchase agreement. ~~Natural~~Consequently, ~~Balance~~certain isexpenses athat ~~maker~~have ofhistorically ~~premium~~been ~~pet~~allocated ~~food~~to ~~for~~the ~~dogs~~Consumer ~~and~~Products ~~cats~~segment ~~sold~~are ~~throughout~~not ~~North~~included ~~America~~in discontinued operations. The ~~financial~~Company ~~results~~has combined cash flows from discontinued operations with cash flows from continuing operations within the operating, investing and financing categories in the Condensed Consolidated Statements of ~~Natural~~Cash ~~Balance~~Flows for all periods presented. Cash flows are ~~reported~~not ~~within~~comparable year over year due to the ~~Pet~~sale of the Consumer Products ~~segment~~Business.

OnAs of July 1127, ~~2013~~2014, ~~DMC~~the ~~purchased~~Company had recorded a ~~minority~~gross ~~equity~~receivable ~~interest~~of in$16.3 amillion ~~co-packer~~for ofthe ~~some~~working capital adjustment related to the sale of the Consumer Products Business. In June 2014, the Company’s ~~dog~~received ~~products~~a ~~for~~Notice of Disagreement from the Acquiror disputing the $1416.63 million working capital adjustment presented by the Company as well as the incremental preliminary working capital adjustment of approximately $110 million paid by the Acquiror at closing on February 18, 2014. The ~~investment~~Company believes that the working capital adjustment presented to the Acquiror is ~~accounted~~ ~~for~~appropriate, ~~under~~is in accordance with the terms ~~equity~~of ~~method~~the purchase agreement and isplans ~~stated~~to atvigorously ~~cost~~defend ~~plus~~its position. However, the Company’s ~~share~~cannot currently predict the ultimate outcome of ~~undistributed~~this ~~earnings~~dispute.

~~Discontinued~~Net ~~Operations~~sales from discontinued operations were $0.0 million and $342.9 million for the three months ended July 27, 2014 and July 28, 2013, ~~Assets~~respectively. ~~Held~~Income (loss) from discontinued operations before income taxes was $(4.9) million and $19.5 million for ~~Sale~~the three months ended July 27, 2014 and July 28, 2013, respectively.

OnAll ~~October 9,~~subsequent ~~2013,~~footnote ~~DMC~~disclosures ~~entered~~represent ~~into~~continuing ~~a Purchase Agreement (the “Purchase Agreement”) with Del Monte Pacific Limited (“DMPL”) and its subsidiary, Del Monte Foods Consumer Products, Inc~~operations. (now known as “Del Monte Foods, Inc.”), (the “Acquiror”). Pursuant to the terms of the Purchase Agreement, the Company sold to the Acquiror the interests of certain subsidiaries related to the Company’s Consumer Products business (the “Consumer Products Business”) and generally all assets primarily related to the

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

Consumer Products Business (the “Transferred Assets”) for a purchase price of $1,675.0 million, subject to a post-closing working capital adjustment. The Acquiror assumed the related liabilities (other than certain specified excluded liabilities). The transaction closed on February 18, 2014 and the Company received gross proceeds equal to the purchase price plus an incremental preliminary working capital adjustment of approximately $110 million, subject to a true-up in accordance with the terms of the Purchase Agreement. See Note ~~14 for use of the after tax net proceeds from the sale~~2. ~~From~~Supplemental ~~closing,~~Financial ~~the~~Statement ~~Company~~Information will have continuing involvement with the Acquiror under the terms of a transition services agreement and expects to have continuing cash flows with the discontinued operation for at least 12 months after the transaction close date. Management assessed the nature of its continuing involvement, which includes providing continued administrative, information technology, and accounting service functions during the term of the agreement, and continuing cash flows and determined them to not be significant.

Accordingly, the results of the Consumer Products Business have been reported as discontinued operations for all periods presented. Expenses allocated to discontinued operations are limited to selling, administrative and distribution expenses that were directly attributable to the Consumer Products Business. Consequently, certain expenses that have historically been allocated to the Consumer Products Business are not included in discontinued operations. The Company has combined cash flows from discontinued operations with cash flows from continuing operations within the operating, investing and financing categories in the Condensed Consolidated Statements of Cash Flows for all periods presented.


	July 27, 2014			April 27, 2014
	(in millions)
Trade accounts receivable, net of allowance:
Trade	$	131.9		$	127.2
Allowance for doubtful accounts		—			—

Total	$	131.9		$	127.2

Inventories, net:
Finished products	$	203.8		$	191.5
Raw materials and in-process materials		25.6			24.5
Packaging materials and other		11.4			11.5

Total	$	240.8		$	227.5

Prepaid expenses and other current assets:
Prepaid expenses	$	83.7		$	93.4
Other current assets		68.3			70.9

Total	$	152.0		$	164.3

Property, plant and equipment, net:
Land and land improvements	$	12.4		$	12.4
Buildings and leasehold improvements		125.2			123.3
Machinery and equipment		263.1			256.8
Computers and software		60.7			58.8
Construction in progress		34.0			35.8

		495.4			487.1
Accumulated depreciation		(120.7	)		(111.7	)

Total	$	374.7		$	375.4

Accounts payable and accrued expenses:
Accounts payable-trade	$	146.8		$	175.9
Marketing, advertising and trade promotion		60.5			67.6
Accrued benefits, payroll and related costs		26.2			37.3
Accrued interest		38.3			21.2
Current portion of pension liability		8.5			8.5
Other current liabilities		41.2			57.3

Total	$	321.5		$	367.8

Other non-current liabilities:
Accrued postretirement benefits	$	28.6		$	29.8
Pension liability		19.2			17.1
Other non-current liabilities		43.7			48.4

Total	$	91.5		$	95.3

Accumulated other comprehensive income (loss):
Pension and other postretirement benefits adjustments, net of tax	$	6.2		$	6.0
Income (loss) on cash flow hedging instruments, net of tax		(7.5	)		2.4

Total accumulated other comprehensive income (loss)	$	(1.3	)	$	8.4

Any net proceeds not committed for reinvestment within 12 months of the transaction closing date would be required to be used to repay debt. As such, interest expense has not been allocated to discontinued operations.

All subsequent footnote disclosures represent continuing operations with the exception of Note 4 which details the assets and liabilities of discontinued operations as well as the results of operations for discontinued operations.

Note 2. Recently Issued Accounting Standards

In February 2013, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to comprehensive income. The amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. This new accounting pronouncement is effective for fiscal years and interim periods within those years beginning after December 15, 2012, with early adoption permitted. Accordingly, the Company has included the enhanced disclosure in Note 10.

In March 2013, the FASB issued an ASU to clarify the applicable guidance for the release of foreign currency cumulative translation adjustments under GAAP. The amended guidance clarifies when cumulative translation adjustments should be released into net income in connection with (i) the loss of a controlling financial interest in a subsidiary or group of assets within a foreign entity or (ii) the partial sale of an equity method investment that is a foreign entity. The amended guidance also clarifies the types of events that result in the sale of an investment in a foreign entity. The Company is required to adopt this amended guidance prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

Note 3. ~~Supplemental~~Goodwill ~~Financial~~and ~~Statement~~Intangible ~~Information~~Assets

	January 26,2014			April 28,2013
	(in millions)
Trade accounts receivable, net of allowance:
Trade	$	128.7		$	96.9
Allowance for doubtful accounts		—			—
Total	$	128.7		$	96.9
Inventories, net:
Finished products	$	176.3		$	138.6
Raw materials and in-process materials		25.2			18.8
Packaging materials and other		13.4			11.4
Total	$	214.9		$	168.8
Prepaid expenses and other current assets:
Prepaid expenses	$	30.9		$	30.0
Other current assets		37.0			40.6
Total	$	67.9		$	70.6
Property, plant and equipment, net:
Land and land improvements	$	34.0		$	12.4
Buildings and leasehold improvements		98.2			122.1
Machinery and equipment		239.7			222.9
Computers and software		56.2			47.2
Construction in progress		40.9			33.1
		469.0			437.7
Accumulated depreciation		(104.4	)		(80.5	)
Total	$	364.6		$	357.2
Accounts payable and accrued expenses:
Accounts payable-trade	$	163.1		$	153.8
Marketing, advertising and trade promotion		52.2			35.2
Accrued benefits, payroll and related costs		33.6			45.6
Accrued interest		56.5			33.7
Current portion of pension liability		10.4			10.0
Other current liabilities		55.8			51.2
Total	$	371.6		$	329.5
Other non-current liabilities:
Accrued postretirement benefits	$	57.2		$	55.6
Pension liability		22.9			25.7
Long-term hedge payable		15.1			33.5
Other non-current liabilities		38.3			35.7
Total	$	133.5		$	150.5
Accumulated other comprehensive loss:
Foreign currency translation adjustments	$	(2.3	)	$	(0.8	)
Pension and other postretirement benefits adjustments, net of tax		(9.7	)		(9.1	)
Loss on cash flow hedging instruments, net of tax		(3.8	)		(6.5	)
Total accumulated other comprehensive loss	$	(15.8	)	$	(16.4	)

The following table presents the Company’s goodwill and intangible assets (in millions):


	July 27, 2014			April 27, 2014
Goodwill	$	2,113.4		$	2,113.4

Non-amortizable intangible assets:
Trademarks	$	1,389.9		$	1,389.9

Amortizable intangible assets:
Trademarks		39.3			39.3
Customer relationships		852.7			852.7

		892.0			892.0
Accumulated amortization		(138.5	)		(126.7	)

Amortizable intangible assets, net		753.5			765.3

Total intangible assets, net	$	2,143.4		$	2,155.2

Amortization expense for the periods indicated below was as follows (in millions):


	Three Months Ended
	July 27, 2014		July 28, 2013
Amortization expense	$	11.8	$	9.8

As of July 27, 2014, expected amortization of intangible assets for each of the five succeeding fiscal years and thereafter is as follows (in millions):


2015 (remainder)	$	35.5
2016		47.1
2017		46.7
2018		46.7
2019		46.7
2020 and thereafter		530.8

Note 4. Derivative Financial Instruments

The Company uses interest rate swaps, commodity swaps, futures, option and swaption (an option on a swap) contracts as well as forward foreign currency contracts, to hedge market risks relating to possible adverse changes in interest rates, commodity, transportation, and foreign currency exchange rates and other input price exposures. The Company continually monitors its positions and the credit ratings of the counterparties involved to mitigate the amount of credit exposure to any one party.

The Company designates each derivative contract as one of the following: (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”) or (2) a hedging instrument for which the change in fair value is recognized to act as an economic hedge but does not meet the requirements to receive hedge accounting treatment (“economic hedge”). As of July 27, 2014, the Company had both cash flow and economic hedges.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

~~Note~~Interest 4Rates: The Company’s debt primarily consists of floating rate term loans and fixed rate notes. ~~Discontinued~~The ~~Operations~~Company maintains its floating rate revolver for flexibility and for other general corporate purposes. Interest expense on the Company’s floating rate debt is typically calculated based on a fixed spread over a reference rate, such as LIBOR (also known as the Eurodollar rate). Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.

~~Net~~The ~~sales~~Company from ~~discontinued~~time ~~operations~~to ~~were~~time ~~$423.2~~manages ~~million~~a ~~and~~portion ~~$1,228.9~~of ~~million~~its ~~for~~interest ~~the~~rate ~~three~~risk ~~and~~related ~~nine~~to ~~months~~floating ~~ended~~rate ~~January 26,~~debt ~~2014, respectively,~~by ~~and~~entering ~~were~~into ~~$501.2~~interest ~~million~~rate ~~and~~swaps ~~$1,376.7~~in ~~million~~which ~~for~~ the Company ~~three~~receives ~~and~~floating ~~nine~~rate ~~months~~payments ~~ended~~and ~~January 27,~~makes ~~2013,~~fixed ~~respectively~~rate payments. ~~Income~~Swaps ~~(loss)~~are ~~from~~recorded ~~discontinued~~as ~~operations~~an ~~before~~asset ~~income~~or ~~taxes~~liability ~~was~~in ~~$37.3~~the ~~million~~Condensed ~~and~~Consolidated ~~$(105.4)~~Balance ~~million~~Sheets ~~for~~at ~~the~~fair ~~three and~~value. ~~nine~~The ~~months~~Company ~~ended~~currently ~~January 26,~~accounts ~~2014,~~for ~~respectively,~~these ~~and~~interest ~~was~~rate ~~$45.4~~swaps ~~million~~as economic hedges and ~~$114.4~~gains ~~million for the three~~ and ~~nine~~losses ~~months~~are ~~ended~~recorded ~~January 27,~~directly ~~2013,~~in ~~respectively~~earnings.

~~Assets~~As ~~and liabilities~~ of ~~discontinued~~July 27, ~~operations~~2014, ~~include~~ the following ~~(in~~economic ~~millions)~~hedge swaps were outstanding:

	January 26,		April 28,
Contract date	Notional amount(in millions)		Fixed LIBORrate			Effective date		Maturity date
	2014		2013
April 12, 2011	$	900.0		3.029	%		September 4, 2012		September 1, 2015
Cash and cash equivalents	$	4.5	$	12.8
Trade accounts receivable, net of allowance		105.0		94.8
Inventories, net		792.9		553.3
Prepaid expenses and other assets		75.3		69.5
Property, plant and equipment, net		338.7		406.7
Goodwill		143.6		143.6
Intangible assets, net		669.7		804.5
Total discontinued operations - assets	$	2,129.7	$	2,085.2
Accounts payable and accrued expenses	$	208.5	$	197.7
Short-term borrowings		2.2		3.2
Pension and other post-retirement liabilities		90.4		96.8
Other liabilities		50.6		48.7
Total discontinued operations - liabilities	$	351.7	$	346.4

~~The~~On ~~assets~~August 13, ~~and~~2010, ~~liabilities are classified as held for sale and reflected at fair value less costs to sell. Income (loss) from discontinued operations during~~ the ~~nine~~Company ~~months~~entered ~~ended~~into ~~January 26,~~interest ~~2014,~~rate ~~reflects~~swaps with a ~~non-cash~~total ~~impairment~~notional ~~charge~~amount of $~~193~~300.80 million ~~before~~as ~~income~~the fixed ~~taxes,~~rate ~~recognized~~payer inand ~~the~~an ~~second~~effective ~~quarter~~date of ~~fiscal 2014~~February 1, in2011. ~~the~~The ~~Condensed~~interest ~~Consolidated~~rate ~~Statements~~swaps ~~of Operations.~~fixed ~~The~~LIBOR ~~impairment~~at ~~was~~1.368% ~~allocated~~for ~~between~~the ~~net~~term ~~property,~~of ~~plant~~the ~~and~~swaps ~~equipment~~ and ~~net~~expired ~~intangible~~during ~~assets~~fiscal ~~based~~2014 on ~~the~~February 3, ~~relative book value~~2014.

~~Deferred tax~~Commodities: ~~assets~~Certain commodities such as soybean meal, corn, wheat, soybean oil, diesel fuel and ~~liabilities~~natural gas (collectively, ~~which~~“commodity contracts”) ~~result~~are used in ~~future~~the ~~taxable~~production orand ~~deductible~~transportation ~~amounts~~of ~~for~~the Company’s products. Generally these commodities are purchased based upon market prices that are established with the ~~assets~~vendor as part of the purchase process. The Company uses futures, swaps, swaption and ~~liabilities~~option ~~related~~contracts, as deemed appropriate; to reduce the ~~Consumer~~effect ~~Products~~of ~~Business’~~price ~~domestic~~fluctuations ~~operations,~~on ~~were~~anticipated ~~not~~purchases. ~~allocated~~These contracts may have a term of up to ~~discontinued~~24 ~~operations~~months. The Company accounts for these commodities derivatives as either economic or cash flow hedges. Changes in ~~accordance~~the ~~with~~value of economic hedges are recorded directly in earnings. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and recognized as part of cost of ~~GAAP~~products sold in the appropriate period and the ineffective portion is recognized as other (income) expense.

~~Under~~The ~~the~~table ~~Purchase~~below ~~Agreement,~~presents the ~~Acquiror~~notional amounts ~~assumed~~of ~~all~~the ~~known~~Company’s orcommodity ~~potential~~contracts ~~future~~as ~~legal~~of ~~liabilities related to~~ the ~~Consumer~~dates ~~Products~~indicated ~~Business~~(in atmillions): ~~the closing date of February 18, 2014.~~

Note 5. Natural Balance Acquisition


	July 27, 2014		April 27, 2014
Commodity contracts	$	188.6	$	124.8

OnForeign ~~July 15,~~Currency: ~~2013,~~From ~~DMC~~time ~~completed~~to ~~the acquisition of Natural Balance~~time, athe ~~California~~Company ~~corporation~~manages ~~and~~its ~~maker~~exposure ofto ~~premium~~fluctuations ~~pet~~in ~~food~~foreign ~~for~~currency ~~dogs and~~exchange ~~cats~~rates ~~sold~~by ~~throughout~~entering ~~North~~into ~~America.~~forward ~~The~~contracts ~~total~~to ~~cost~~cover ofa ~~the~~portion ~~Natural~~of ~~Balance~~its ~~acquisition~~projected asexpenditures ofpaid ~~January 26,~~in ~~2014,~~local ~~was $331~~currency.4 ~~million~~These ~~and~~contracts ~~included~~may anhave ~~initial~~a ~~$341.1~~term ~~million~~of ~~cash~~up ~~payment~~to ~~(including~~24 ~~$26~~months.2 ~~million~~The ~~paid~~Company ~~into~~accounts anfor ~~escrow~~these ~~account)~~contracts ~~and contingent~~as ~~consideration~~either ofeconomic ~~$0.3~~or ~~million,~~cash ~~reduced~~flow byhedges. Changes anin ~~estimated~~the ~~working~~value ~~capital~~of ~~adjustment~~economic ~~and~~hedges ~~cash~~are ~~received~~recorded ~~from~~directly ~~escrow~~in earnings. ~~The~~For ~~total~~cash ~~cost~~flow ofhedges, the ~~acquisition~~effective isportion ~~subject~~of toderivative agains ~~post-closing~~and ~~working~~losses ~~capital~~is ~~adjustment~~deferred ~~which~~in ~~was~~equity ~~initially~~and ~~due~~recognized ~~from~~as ~~the Company~~part 90of ~~days~~cost ~~after~~of ~~closing~~products ~~(see~~sold ~~discussion~~in ~~below). Final agreement of~~ the ~~working~~appropriate ~~capital~~period ~~adjustment with~~ and the ~~seller~~ineffective ~~will~~portion ~~not~~is ~~occur~~recognized ~~until~~as ~~more~~other ~~than~~(income) ~~180 days after closing~~expense.

The ~~acquisition~~table isbelow ~~being~~presents ~~accounted~~foreign ~~for~~currency ~~under~~derivative ~~the~~contracts ~~acquisition~~as ~~method~~ of ~~accounting.~~the ~~The~~dates ~~purchase~~indicated (in ~~price~~millions). ~~was~~As ~~allocated~~of toApril 27, 2014, the ~~identifiable~~Company ~~assets~~did ~~and liabilities,~~not ~~including~~have ~~brand~~any ~~names,~~outstanding ~~based~~foreign oncurrency ~~estimated~~hedges ~~fair~~because ~~value,~~the ~~with~~Company ~~any~~did ~~remaining~~not ~~purchase~~believe ~~price~~it ~~being~~was ~~recorded~~in asits ~~goodwill.~~best ~~The~~interest ~~Company~~at ~~utilized~~the antime. ~~independent~~All ~~valuation~~of ~~firm~~the toforeign ~~assist~~currency inderivative ~~estimating~~contracts ~~the~~held ~~fair~~on July 27, ~~value~~2014 ofare ~~Natural~~scheduled ~~Balance’s~~to ~~real estate,~~mature ~~machinery~~prior ~~and~~to ~~equipment,~~the ~~and~~end ~~identifiable~~of ~~intangible~~fiscal ~~assets~~2016.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

As of January 26, 2014, the Company had recorded an adjustment to certain working capital accounts as of the acquisition date and a corresponding receivable for the working capital adjustment, as referred to above. Refinements to the fair values of the assets acquired and liabilities assumed (including property, plant and equipment, goodwill and accrued expenses as well as the working capital adjustment) are expected to be recorded as the Company receives further information during the remainder of fiscal 2014.


	July 27, 2014		April 27, 2014
Contract amount	$	17.4	$	—

~~The~~Fair ~~Company’s~~Value ~~allocation~~ of ~~the~~Derivative ~~purchase~~Instruments ~~price to the net tangible and intangible assets acquired and liabilities assumed, reflective of the working capital adjustments referred to above, is as follows (in millions):~~

	July 15,2013
Cash and cash equivalents	$	3.9
Trade accounts receivable		10.9
Inventories		24.8
Prepaid expenses and other current assets		0.4
Property, plant and equipment		5.1
Goodwill		136.9
Identifiable intangible assets		280.7
Deferred tax assets		3.0
Other assets		1.9
Total assets acquired		467.6
Accounts payable and accrued expenses		20.7
Other current liabilities		2.1
Deferred tax liabilities		109.9
Other non-current liabilities		3.2
Contingent consideration		0.3
Total liabilities assumed		136.2
Net assets acquired	$	331.4

The fair value of derivative instruments recorded in the Condensed Consolidated Balance Sheets as of July 27, 2014 was as follows (in millions):

The acquisition of Natural Balance includes a contingent consideration arrangement that requires additional cash to be paid by the Company based on the future net sales of Natural Balance over a one year period. The range of the undiscounted amounts the Company could pay under the contingent consideration agreement is $0.0 million to $17.5 million, and is based on net sales measured for the 12 month period ending May 1, 2016 with payment due August 22, 2016. The estimated fair value of the contingent consideration recognized on the acquisition date was $0.3 million and was based on the purchase agreement. The fair value was estimated by applying the income approach and approximates the calculated value. The Company has classified the contingent consideration as Level 3 of the fair value hierarchy.

Derivatives in cash flow

hedging relationships

Asset derivatives

Liability derivatives

Balance Sheet location

Fair value

Balance Sheet location

Fair value

Interest rate contracts

Other non-current assets

—

Other non-current liabilities

3.8

⁽²⁾

Interest rate contracts

Prepaid expenses and other current assets

—

Accounts payable and accrued expenses

25.0

⁽²⁾

Commodity and other contracts

Prepaid expenses and other current assets

4.2

⁽¹⁾

Accounts payable and accrued expenses

12.4

⁽³⁾

Foreign currency exchange contracts

Prepaid expenses and other current assets

0.2

Accounts payable and accrued expenses

—

Total

4.4

41.2

~~Goodwill~~(1) isIncludes ~~not expected to be deductible for tax purposes. All of the goodwill of~~ $~~136~~1.96 million ~~was assigned to the Pet Products segment. The Company executed the acquisition~~ of ~~Natural~~commodity ~~Balance~~contracts ~~with~~(asset ~~the~~derivatives) ~~objective~~designated ofas ~~complementing~~economic ~~the Company’s substantial pet products portfolio because Natural Balance operates in the high growth pet specialty channel~~hedges.

~~The results of operations for Natural Balance are included in the Pet Products segment beginning July 15, 2013. The acquired business contributed net sales of $141.~~(2) ~~million~~Represents ~~from~~liability ~~the~~derivatives ~~acquisition~~designated ~~date to January 26, 2014. The following unaudited pro forma financial information presents the combined results of operations of the Company, including Natural Balance,~~ as ifeconomic ~~the acquisition had occurred as of the beginning of the periods presented~~hedges. The unaudited pro forma financial information is not intended to represent or be indicative of the Company’s consolidated financial results of operations that would have been reported had the business combination been completed as of the beginning of the periods presented and should not be taken as indicative of the Company’s future consolidated results of operations (in millions):

⁽³⁾	Includes $0.2 million of commodity contracts (liability derivatives) designated as economic hedges.

The fair value of derivative instruments recorded in the Condensed Consolidated Balance Sheets as of April 27, 2014 was as follows (in millions):

Derivatives in cash flow

hedging relationships

Asset derivatives

Liability derivatives

Balance Sheet location

Fair value

Balance Sheet location

Fair value

Interest rate contracts

Other non-current assets

—

Other non-current liabilities

9.8

⁽²⁾

Interest rate contracts

Prepaid expenses and other current assets

—

Accounts payable and accrued expenses

25.4

⁽²⁾

Commodity and other contracts

Prepaid expenses and other current assets

9.4

⁽¹⁾

Accounts payable and accrued expenses

—

Total

9.4

35.2

⁽¹⁾	Includes $1.8 million of commodity contracts (asset derivatives) designated as economic hedges.

⁽²⁾	Represents liability derivatives designated as economic hedges.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

	Nine Months Ended
	(unaudited)
	January 26,		January 27,
	2014		2013
Net sales	$	1,659.0	$	1,659.5
Income (loss) from continuing operations before income taxes		54.1		(23.3	)
Income (loss) from continuing operations		28.8		(11.8	)

The effect of the Company’s economic hedges on other (income) expense, net in the Condensed Consolidated Statements of Income for the periods indicated below was as follows (in millions):

Note 6. Goodwill and Intangible Assets


	Three Months Ended
	July 27, 2014		July 28, 2013
Interest rate contracts	$	—	$	(1.9	)
Commodity and other contracts		0.5		(6.6	)

Included in other (income) expense, net	$	0.5	$	(8.5	)

The ~~following~~effect ~~table~~of ~~presents~~ the Company’s ~~goodwill~~cash ~~and~~flow ~~intangible~~hedges ~~assets~~in the Condensed Consolidated Statements of Income for the three months ended July 27, 2014 was as follows (in millions):

	January 26,			April 28,
Derivatives in cash flow hedging relationships	(Gain) lossrecognized inAOCI			Location of (gain) loss reclassified from AOCI		(Gain) lossreclassifiedfrom AOCIinto income		Location of (gain) lossrecognized in income(ineffective portion andamount excluded fromeffectiveness testing)	(Gain) loss recognized inincome (ineffectiveportion and amountexcluded fromeffectiveness testing)
	2014			2013
Commodity and other contracts	$	15.8		Cost of products sold		$	0.4	Other (income) expense, net	$	2.4
Goodwill	$	2,113.0		$	1,976.1
Foreign currency exchange contracts		(0.1	)	Cost of products sold			0.1	Other (income) expense, net		—
Non-amortizable intangible assets:
Total	$	15.7				$	0.5		$	2.4
Trademarks	$	1,389.9		$	1,266.6
Amortizable intangible assets:
Trademarks		39.3			39.3
Customer relationships		852.7			695.3
		892.0			734.6
Accumulated amortization		(114.8	)		(81.4	)
Amortizable intangible assets, net		777.2			653.2
Total intangible assets, net	$	2,167.1		$	1,919.8

~~During~~The ~~the~~effect ~~nine~~of ~~months ended January 26, 2014,~~ the Company’s ~~goodwill~~cash ~~and~~flow ~~intangible~~hedges ~~assets~~in ~~increased~~the byCondensed aConsolidated ~~total~~Statements of ~~$417.6~~ ~~million,~~Income ~~with a $123.3 million and $157.4 million increase~~ for ~~non-amortizable~~the ~~trademarks~~three ~~and~~months ended ~~customer relationships~~July 28, ~~respectively,~~2013 ~~and~~was aas ~~$136.9~~follows ~~million increase for goodwill, due to the Natural Balance acquisition~~ (~~see~~in ~~Note 5~~millions).: ~~Further, changes to goodwill or intangible assets may be recorded as the purchase price allocations are finalized through the remainder of fiscal 2014.~~

Amortization expense for the periods indicated below was as follows (in millions):


Derivatives in cash flow hedging relationships	(Gain) loss recognized in AOCI		Location of (gain) loss reclassified from AOCI	(Gain) loss reclassified from AOCI into income			Location of (gain) loss recognized in income (ineffective portion and amount excluded from effectiveness testing)	(Gain) loss recognized in income (ineffective portion and amount excluded from effectiveness testing)
Commodity and other contracts	$	—	Cost of products sold	$	(0.3	)	Other (income) expense, net	$	0.3

	Three Months Ended				Nine Months Ended
	January 26,		January 27,		January 26,		January 27,
	2014		2013		2014		2013
Amortization expense	$	11.8	$	9.5	$	33.4	$	28.5

At July 27, 2014, $8.9 million is expected to be reclassified from AOCI to cost of products sold within the next 12 months.

~~Customer~~Note ~~relationships acquired during the period were classified as amortizable intangible assets, and had a weighted average amortization period of 17~~5.1 ~~years.~~Fair ~~Trademarks~~Value ~~acquired~~Measurements ~~during the period were classified as non-amortizable intangible assets.~~

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended January 26, 2014

(unaudited)

As of January 26, 2014, expected amortization of intangible assets for each of the five succeeding fiscal years and thereafter is as follows (in millions):

2014 (remainder)	$	11.8
2015		47.3
2016		47.1
2017		46.7
2018		46.7
2019 and thereafter		577.6

Note 7. Derivative Financial Instruments

The Company uses interest rate swaps, commodity swaps, futures, option and swaption (an option on a swap) contracts as well as forward foreign currency contracts to hedge market risks relating to possible adverse changes in interest rates, commodity, transportation and other input prices and foreign currency exchange rates. The Company continually monitors its positions and the credit ratings of the counterparties involved to mitigate the amount of credit exposure to any one party.

The Company designates each derivative contract as one of the following: (1) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”) or (2) a hedging instrument for which the change in fair value is recognized to act as an economic hedge but does not meet the requirements to receive hedge accounting treatment (“economic hedge”). As of January 26, 2014, the Company had both cash flow and economic hedges.

Interest Rates: The Company’s debt primarily consists of floating rate term loans and fixed rate notes. The Company historically maintained its floating rate revolver for flexibility to fund seasonal working capital needs and for other uses of cash. Following the sale of the Consumer Products Business, the Company no longer expects to have material changes in working capital due to seasonality. Interest expense on the Company’s floating rate debt is typically calculated based on a fixed spread over a reference rate, such as LIBOR (also known as the Eurodollar rate). Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.

The Company from time to time manages a portion of its interest rate risk related to floating rate debt by entering into interest rate swaps in which the Company receives floating rate payments and makes fixed rate payments. Swaps are recorded as an asset or liability in the Company’s Condensed Consolidated Balance Sheets at fair value. Any gains and losses on economic hedges are recorded as an adjustment to other (income) expense.

As of January 26, 2014, the following economic hedge swaps were outstanding:

Contract date	Notional amount(in millions)		Fixed LIBORrate			Effective date		Maturity date
April 12, 2011	$	900.0		3.029	%		September 4, 2012		September 1, 2015
August 13, 2010	$	300.0		1.368	%		February 1, 2011		February 3, 2014

Commodities: Certain commodities such as soybean meal, corn, wheat, soybean oil, diesel fuel and natural gas (collectively, “commodity contracts”) are used in the production and transportation of the Company’s products. Generally these commodities are purchased based upon market prices that are established with the vendor as part of the purchase process. The Company uses futures, swaps, swaption or option contracts, as deemed appropriate, to reduce the effect of price fluctuations on anticipated purchases. These contracts may have a term of up to 24 months. The Company accounted for these commodity derivatives as either economic or cash flow hedges. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and recognized as part of cost of products sold in the appropriate period and the ineffective portion is recognized as other (income) expense. Changes in the value of economic hedges are recorded directly in earnings. The table below presents the notional amounts of the Company’s commodity contracts as of the dates indicated (in millions):

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended January 26, 2014

(unaudited)

		January 26,2014				April 28,2013
Commodity contracts		$	130.3			$	269.4

Foreign Currency: From time to time, the Company manages its exposure to fluctuations in foreign currency exchange rates by entering into forward contracts to cover a portion of its projected expenditures paid in local currency. These contracts may have a term of up to 24 months. The Company accounted for these contracts as either cash flow or economic hedges. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and recognized as part of cost of products sold in the appropriate period and the ineffective portion is recognized as other (income) expense. Changes in the value of the economic hedges are recorded directly in earnings. As of January 26, 2014, the Company did not have any outstanding foreign currency hedges because the Company did not believe it was in its best interest at the time. The Company may again in the future enter into foreign currency forward contracts.

Fair Value of Derivative Instruments

The fair value of derivative instruments recorded in the Condensed Consolidated Balance Sheets as of January 26, 2014 was as follows (in millions):

Derivatives in economic hedging relationships	Asset derivatives				Liability derivatives
	Balance Sheet location	Fair value			Balance Sheet location	Fair value
Interest rate contracts	Other non-current assets	$	—		Other non-current liabilities	$	15.2
Interest rate contracts	Prepaid expenses and other current assets		—		Accounts payable and accrued expenses		25.8
Commodity and other contracts	Prepaid expenses and other current assets		6.8	(1)	Accounts payable and accrued expenses		8.5	(2)
Total		$	6.8			$	49.5

(1) Includes $2.9 million of commodity contracts (asset derivatives) designated as cash flow hedges.

(2) Includes $8.2 million of commodity contracts (liability derivatives) designated as cash flow hedges.

The fair value of derivative instruments recorded in the Condensed Consolidated Balance Sheets as of April 28, 2013 was as follows (in millions):

Derivatives in economic hedging relationships	Asset derivatives				Liability derivatives
	Balance Sheet location	Fair value			Balance Sheet location	Fair value
Interest rate contracts	Other non-current assets	$	—		Other non-current liabilities	$	33.5
Interest rate contracts	Prepaid expenses and other current assets		—		Accounts payable and accrued expenses		28.4
Commodity and other contracts	Prepaid expenses and other current assets		3.8	(1)	Accounts payable and accrued expenses		10.6	(2)
Total		$	3.8			$	72.5

(1) Includes $0.3 million of commodity contracts (asset derivatives) designated as cash flow hedges.

(2) Represents commodity contracts (liability derivatives) designated as cash flow hedges.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended January 26, 2014

(unaudited)

The effect of the Company’s economic hedges on other (income) expense in the Condensed Consolidated Statements of Operations for the periods indicated below was as follows (in millions):

	Three Months Ended					Nine Months Ended
	January 26,2014			January 27,2013		January 26,2014			January 27,2013
Interest rate contracts	$	0.5		$	—	$	0.7		$	9.2
Commodity and other contracts		(1.7	)		8.2		(10.0	)		(28.1	)
Included in other (income) expense	$	(1.2	)	$	8.2	$	(9.3	)	$	(18.9	)

The effect of the Company’s cash flow hedges in the Condensed Consolidated Statements of Operations for the three and nine months ended January 26, 2014 was as follows (in millions):

	(Gain) lossrecognized in AOCI							(Gain) loss reclassifiedfrom AOCI into income				Location of (gain) lossrecognized in income(ineffective portion andamount excluded fromeffectiveness testing)	(Gain) loss recognized inincome (ineffective portionand amount excluded fromeffectiveness testing)
Derivatives in cash flowhedging relationships	Three MonthsEnded			Nine MonthsEnded				Three MonthsEnded		Nine MonthsEnded			Three MonthsEnded		Nine MonthsEnded
	January 26,2014			January 26,2014			Location of (gain) lossreclassified in AOCI	January 26,2014		January 26,2014			January 26,2014		January 26,2014
Commodity contracts	$	(2.6	)		(4.3	)	Cost of products sold	$	4.7		7.0	Other (income) expense	$	0.5		(1.1	)
Total	$	(2.6	)		(4.3	)		$	4.7		7.0		$	0.5		(1.1	)

The effect of the Company’s cash flow hedges in the Condensed Consolidated Statements of Operations for the three and nine months ended January 27, 2013 was as follows (in millions):

	(Gain) loss recognizedin AOCI					(Gain) loss reclassifiedfrom AOCI into income				Location of (gain) lossrecognized in income(ineffective portion andamount excluded fromeffectiveness testing)	(Gain) loss recognized inincome (ineffective portionand amount excluded fromeffectiveness testing)
Derivatives in cash flowhedging relationships	Three MonthsEnded		Nine MonthsEnded			Three MonthsEnded		Nine MonthsEnded			Three MonthsEnded		Nine MonthsEnded
	January 27,2013		January 27,2013		Location of (gain) lossreclassified in AOCI	January 27,2013		January 27,2013			January 27,2013		January 27,2013
Commodity contracts	$	2.0		3.3	Cost of products sold	$	—		—	Other (income) expense	$	0.3		0.4
Total	$	2.0		3.3		$	—		—		$	0.3		0.4

At January 26, 2014, $3.7 million is expected to be reclassified from AOCI to cost of products sold within the next 12 months.

Note 8. Fair Value Measurements

A three-tier fair value hierarchy is utilized to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:

•

Level 1 Inputs—unadjusted quoted prices in active markets for identical assets or liabilities;

13• Level 2 Inputs—quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and

•

Level 3 Inputs—unobservable inputs reflecting the Company’s own assumptions in measuring the asset or liability at fair value.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

• Level 2 Inputs—quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and

• Level 3 Inputs—unobservable inputs reflecting the Company’s own assumptions in measuring the asset or liability at fair value.

The Company uses interest rate swaps, commodity contracts and forward foreign currency contracts to hedge market risks relating to possible adverse changes in interest rates, commodity prices, diesel fuel prices and foreign exchange rates.

The following table provides the fair value hierarchy for financial assets and liabilities measured on a recurring basis (in millions):

	Level 1				Level 2				Level 3
Description	~~January~~July 2627,2014		April 2827,~~2013~~2014		~~January~~July 2627,2014		April 2827,~~2013~~2014		~~January~~July 2627,2014		April 2827,~~2013~~2014
Assets
Interest rate contracts	$	—	$	—	$	—	$	—	$	—	$	—
Commodity and other contracts	$	2.6	$	7.5	$	1.6	$	1.9	$	—	$	—
Commodity and other contracts		5.0		2.1		1.8		1.7		—		—
Foreign currency exchange contracts		—		—		0.2		—		—		—
Total	$	52.06	$	27.15	$	1.8	$	1.79	$	—	$	—
Liabilities
Interest rate contracts	$	—	$	—	$	4128.08	$	6135.92	$	—	$	—
Commodity and other contracts		812.21		~~5.2~~—		0.3		~~5.4~~—		—		—
Total	$	8.2	$	5.2	$	41.3	$	67.3	$	—	$	—
Contingent consideration		—		—		—		—		3.1		3.1
Total	$	12.1	$	—	$	29.1	$	35.2	$	3.1	$	3.1

The Company’s determination of the fair value of its interest rate swaps was calculated using a discounted cash flow analysis based on the terms of the swap contracts and the observable interest rate curve. The Company’s futures and options contracts are traded on regulated exchanges such as the Chicago Board of Trade, Kansas City Board of Trade and the New York Mercantile Exchange. The Company values these contracts based on the daily settlement prices published by the exchanges on which the contracts are traded. The Company’s commodities swap and swaption contracts are traded over-the-counter and are valued based on the Chicago Board of Trade quoted prices for similar instruments in active markets or corroborated by observable market data available from the Energy Information Administration. The Company measures the fair value of foreign currency forward contracts using an income approach based on forward rates (obtained from market quotes for futures contracts with similar terms) less the contract rate multiplied by the notional amount. There were no foreign currency forward contracts outstanding as of April 27, 2014.

AsThe ofCompany ~~January 26,~~has ~~2014,~~both ~~the~~fixed ~~book~~and ~~value of the Company’s~~ floating rate debt ~~instruments approximates fair value~~. The Company uses Level 2 inputs to estimate the fair value of such debt. As of July 27, 2014, the book value of the Company’s floating rate debt instruments approximates fair value. The following table provides the book value and the fair value of the Company’s fixed rate notes (“Senior Notes”) (in millions):

Senior Notes	~~January~~July 2627,2014		April 2827,~~2013~~2014
Book value	$	~~1,300~~900.0	$	~~1,300~~900.0
Fair value	$	~~1,352~~936.0	$	~~1,381~~938.3

Fair value for both fixed and floating rate debt was estimated based on quoted market prices from the trading desk of a nationally recognized investment bank. As the Senior Notes are available to investors through certain brokerage firms, and as a result not actively traded, the Company has classified the fair value of this debt as Level 2 of the fair value hierarchy.

14The Company has classified contingent consideration as Level 3 in the fair value hierarchy as it is based on unobservable inputs. Significant inputs and assumptions are management’s estimate of net sales using probability weighted estimates and the discount rate used to calculate the present value of the liability. Significant changes in any Level 3 input or assumption would result in increases or decreases to fair value measurements for contingent consideration. See Note 5 of the 2014 Annual Report for additional information.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

Note 96. Retirement Benefits

Periodic Retirement Benefit Cost

~~Big~~The ~~Heart~~Company ~~Pet~~ sponsors a qualified defined benefit pension plan (“pension benefits” or “pension plan”) and several unfunded defined benefit postretirement plans ~~providing~~(“other benefits” or “postretirement plans”) providing certain medical, dental and life insurance benefits to eligible retired, salaried, non-union hourly and union employees. See Note 911 of the ~~2013~~2014 Annual Report for additional information about these plans. The components of net periodic benefit cost for of the ~~qualified~~pension ~~defined~~benefits ~~benefit~~ and ~~post~~other ~~retirement~~benefits ~~plans~~ for the periods indicated ~~below~~ are as follows (in millions):

	Pension Benefits						Other Benefits
	Three Months Ended
	January 26,			January 27,			January 26,			January 27,
	July 27,2014			July 28,2013			July 27,2014			July 28,2013
	2014			2013			2014			2013
Components of net periodic benefit cost:
Service cost for benefits earned during the period	$	1.8		$	1.8		$	—		$	~~0.1~~—
Interest cost on projected benefit obligation		1.84			21.08			0.74			0.97
Expected return on plan assets		(32.42	)		(3.24	)		—			—
Net (loss) gain amortization		—			—			(0.3	)		—
Net gain amortization		—			—			(0.4	)		(0.3	)
Net periodic benefit cost	$	01.20		$	0.62		$	~~0.4~~—		$	1.0.4
	Pension Benefits						Other Benefits
	Nine Months Ended
	January 26,			January 27,			January 26,			January 27,
	2014			2013			2014			2013
Components of net periodic benefit cost:
Service cost for benefits earned during the period	$	5.3		$	5.3		$	0.1		$	0.3
Interest cost on projected benefit obligation		5.5			6.1			2.0			2.7
Expected return on plan assets		(10.1	)		(9.6	)		—			—
Net (loss) gain amortization		—			—			(0.9	)		—
Net periodic benefit cost	$	0.7		$	1.8		$	1.2		$	3.0

Sale of the Consumer Products Business

AsFollowing ~~a result of~~ the sale of the Consumer Products Business, the Company transferred a significant amount of the plan obligations and plan assets for the pension ~~qualified~~benefits ~~defined benefit plan~~ and ~~several~~other ~~unfunded defined benefit postretirement plans~~benefits, as well as the related components of net periodic benefit costs, for the transferred employees and retirees of the Consumer Products Business to the Acquiror. ~~See~~ ~~Note~~Plan 4assets for ~~a summary, as of January 26, 2014, of~~ the ~~assets~~pension ~~and~~benefits ~~liabilities~~must to be ~~transferred~~allocated to the Acquiror. Asin aaccordance ~~result~~with of the ~~plan~~Employee ~~spinoffs,~~Retirement ~~the~~Income ~~Company~~Security ~~will~~Act ~~recognize~~of a1974 ~~significant~~(“ERISA”) ~~non-cash settlement loss~~Section 4044, ~~partially~~which ~~offset~~the byCompany ~~a non-cash~~expects ~~curtailment~~to ~~gain,~~be incompleted ~~discontinued operations~~ in ~~the fourth quarter of~~ fiscal ~~2014~~2015.

~~Plan~~Note ~~Contributions~~7. Accumulated Other Comprehensive Income (Loss)

The ~~Company~~following ~~currently~~table ~~meets~~summarizes ~~and plans to continue to meet~~ the ~~minimum~~reclassifications ~~funding~~from ~~levels~~accumulated ~~required~~other ~~under~~comprehensive ~~the~~income ~~Pension Protection Act of 2006~~ (~~the “Act”~~loss)~~. The~~ ~~Act~~to ~~imposes certain consequences on~~ the ~~Company’s~~Condensed ~~defined~~Consolidated Statements ~~benefit~~of ~~plan~~Income iffor ~~it does not meet~~ the ~~minimum~~periods ~~funding~~indicated ~~levels. The Company currently expects to make a contribution of approximately $10 million~~ (in ~~the~~millions): ~~fourth quarter of fiscal 2014.~~


Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Condensed Consolidated Statements of Income
	Three Months Ended July 27, 2014			Three Months Ended July 28, 2013
Gain (loss) on cash flow hedges:
Commodity and other contracts	$	(0.4	)	$	0.3		Cost of products sold
Foreign currency exchange contracts		(0.1	)		—		Cost of products sold

		(0.5	)		0.3		Total before tax

		(0.2	)		0.1		Provision (benefit) for income taxes

	$	(0.3	)	$	0.2		Net of tax

Defined benefit plan items¹:
Amortization of prior service benefits	$	(0.3	)	$	0.4
Amortization of actuarial losses		0.4			(0.3	)

		0.1			0.1		Total before tax

		—			—		Provision (benefit) for income taxes

Total reclassifications	$	0.1		$	0.1		Net of tax

¹	These accumulated and other comprehensive income (loss) components are included in the computation of net periodic pension and postretirement benefit costs. See Note 6 for additional information.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

Note 10 8. ~~Accumulated~~Legal ~~Other~~Proceedings ~~Comprehensive Loss~~

~~The~~Except ~~following~~as ~~table~~set ~~summarizes~~forth ~~the~~below, ~~reclassifications~~there ~~from~~have ~~accumulated~~been ~~other~~no ~~comprehensive~~material ~~loss~~developments toin the ~~Condensed~~Company’s ~~Consolidated~~legal ~~Statements~~proceedings ~~of Operations~~since ~~for~~ the ~~three~~legal ~~and~~proceedings reported ~~nine~~in ~~months~~the ~~ended January 26,~~ 2014 ~~(in~~Annual ~~millions):~~Report.

Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated OtherComprehensive Loss						Affected Line Item in theCondensed ConsolidatedStatements of Operations
	Three Months EndedJanuary 26, 2014			Nine Months EndedJanuary 26, 2014
Gains on cash flow hedges:
Commodity contracts	$	4.7		$	7.0		Cost of products sold
		4.7			7.0		Total before tax
		1.8			2.7		Benefit for income taxes
	$	2.9		$	4.3		Net of tax
Defined benefit plan items:
Amortization of prior service benefits	$	0.3		$	1.1	(1)
Amortization of actuarial losses		(0.3	)		(1.0	)(1)
		—			0.1		Total before tax
		—			—		Benefit for income taxes
Total reclassifications	$	—		$	0.1		Net of tax

(1) These accumulated and other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit costs. See Note 9 for additional information.

Note 11. Legal Proceedings

Except as indicated in Note 4 and as set forth below, there have been no material developments in the Company’s legal proceedings since the legal proceedings reported in the 2013 Annual Report.

Commercial Litigation Involving the Company

On January 31, ~~2013~~2014, aPlaintiff ~~putative~~filed ~~class~~a ~~action~~ complaint ~~was filed against the Company~~ in the ~~Circuit~~Superior Court of ~~Jackson County~~California, ~~Missouri~~San Francisco County (~~Harmon~~Gamez v. Del Monte) alleging ~~that~~violations of ~~Milo’s~~various ~~Kitchen~~California ~~chicken~~wage ~~jerky treats (“Chicken Jerky Treats”)~~ and ~~Milo’s~~hour ~~Kitchen~~statutes. ~~Chicken~~This ~~Grillers~~lawsuit ~~Recipe~~was ~~home-style~~transferred ~~dog~~to ~~treats~~Del ~~contain~~Monte ~~“poisonous~~Foods, ~~antibiotics and other potentially lethal substances~~Inc.” ~~Plaintiff~~pursuant ~~seeks restitution and damages not~~ to ~~exceed $75,000 per class member and~~ the ~~aggregated~~terms ~~claim for damages~~ of the ~~class~~purchase ~~not to exceed $5~~agreement.0 However, ~~million~~liabilities ~~under~~associated ~~the~~with ~~Missouri Merchandising Practices Act. The complaint also alleges the Company continued to sell its Chicken Jerky Treats in Jackson County~~Kingsburg, ~~Missouri~~CA ~~after~~and itTerminal ~~announced its recall of the product on January 9~~Island, ~~2013. The~~CA ~~complaint~~facilities ~~seeks certification as a class action. The Company successfully removed~~were ~~this~~retained ~~case~~by tothe ~~federal court on March 12, 2013~~Company. On ~~April~~August 97, ~~2013~~2014, ~~Plaintiff filed its Second Amended Class Action Petition against~~ the ~~Company.~~Court ~~The~~approved ~~Company~~to ~~filed~~transfer ~~its~~this ~~Motion~~case to ~~Transfer to~~ the ~~Western~~Superior ~~District~~Court of ~~Pennsylvania on April 19~~California, ~~2013~~Fresno ~~and~~County. ~~its~~Del ~~Motion~~Monte ~~to Stay Pending the Motion to Transfer on April 25~~Foods, ~~2013~~Inc. ~~The~~is ~~Motion~~maintaining toprimary ~~Stay~~defense ~~was~~of ~~granted~~ the ~~same day it was filed. On May 6~~litigation, ~~2013,~~but ~~Plaintiffs~~any ~~filed~~settlement ~~their~~made ~~Opposition to Defendant’s Motion to~~with ~~Transfer.~~the ~~The~~class ~~Company~~will ~~filed~~likely ~~its~~include ~~Reply in Support of its Motion to Transfer on May 23, 2013. The Court denied~~ the Company~~’s Motion to Transfer on July 22, 2013~~. The Company ~~filed its Answer on August 13, 2013 and discovery has commenced. The Plaintiff filed its Motion for Class Certification on February 7, 2014. The Company~~ denies these allegations and intends to vigorously defend itself. The Company ~~cannot~~has ataccrued ~~this~~an ~~time~~estimated ~~reasonably~~amount ~~estimate~~to aresolve ~~range~~this ofmatter ~~exposure,~~that ~~if any,~~is ofnot ~~the~~considered ~~potential liability~~material.

16On April 19, 2013, Plaintiff filed a complaint on behalf of himself and all other similarly situated employees in Superior Court of California, Alameda County (Montgomery v. Del Monte) alleging, inter alia, failure to provide meal and rest periods and pay wages properly in violation of various California wage and hour statutes. This lawsuit was transferred to Del Monte Foods, Inc. pursuant to the terms of the purchase agreement. However, liabilities associated with Kingsburg, CA and Terminal Island, CA facilities were retained by the Company. Del Monte Foods, Inc. is maintaining primary defense of the litigation, but any settlement made with the class will likely include the Company. The Company denies these allegations and intends to vigorously defend itself. Mediation was held on June 24, 2014. A tentative settlement, pending court approval, was reached. The Company has accrued an estimated amount to resolve this matter that is not considered material, and the Company’s share of the settlement is expected to be covered by the amount accrued.

On January 31, 2013, a putative class action complaint was filed against the Company in the Circuit Court of Jackson County, Missouri, Miller v. Del Monte (formerly known as Harmon v. Del Monte) alleging that Milo’s Kitchen chicken jerky treats (“Chicken Jerky Treats”) and Milo’s Kitchen Chicken Grillers Recipe home-style dog treats contain “poisonous antibiotics and other potentially lethal substances.” Plaintiff seeks certification as a class action, as well as restitution and damages not to exceed $75,000 per class member and the aggregated claim for damages of the class not to exceed $5.0 million under the Missouri Merchandising Practices Act. The complaint also alleges the Company continued to sell its Chicken Jerky Treats in Jackson County, Missouri after it announced its recall of the product on January 9, 2013. The Company successfully removed this case to federal court on March 12, 2013. On April 9, 2013, Plaintiff filed a Second Amended Class Action Petition against the Company. The Company filed its Motion to Transfer to the Western District of Pennsylvania on April 19, 2013 and its Motion to Stay Pending the Motion to Transfer on April 25, 2013. The Motion to Stay was granted the same day it was filed. On May 6, 2013, Plaintiff filed an Opposition to Defendant’s Motion to Transfer. The Company filed its Reply in Support of its Motion to Transfer on May 23, 2013. The Court denied the Company’s Motion to Transfer on July 22, 2013. The Company filed its Answer on August 13, 2013 and discovery has commenced. On February 3, 2014, Plaintiff filed a Third Amended Complaint and filed a Fourth Amended Complaint to include an additional named plaintiff on April 22, 2014. The Plaintiffs filed a Fifth Amended Complaint on July 14, 2014 to include an additional Plaintiff and remove Harmon as a named Plaintiff. The Company denies these allegations and intends to vigorously defend itself. The Company cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

On September 6, 2012, October 12, 2012 and October 16, 2012, three separate putative class action complaints were filed against the Company in U.S. District Court for the Northern District of California (Langone v. Del Monte, Ruff v. Del Monte, and Funke v. Del Monte, respectively) alleging product liability claims relating to Chicken Jerky Treats. Specifically, the complaints allege that Plaintiffs’ dogs became ill as a result of consumption of Chicken Jerky Treats. The complaints also allege that the Company breached its warranties and California’s consumer protection laws. Each of the complaints seeks certification as a class action and damages in excess of $5.0 million. The Company denies these allegations and intends to vigorously defend itself. On December 18, 2012,

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

~~On September 6, 2012, October 12, 2012 and October 16, 2012, three separate putative~~ class action complaints were filed against the Company in U.S. District Court for the Northern District of California (Langone v. Del Monte, Ruff v. Del Monte, and Funke v. Del Monte, respectively) alleging product liability claims relating to Chicken Jerky Treats. Specifically, the complaints allege that Plaintiffs’ dogs became ill as a result of consumption of Chicken Jerky Treats. The complaints also allege that the Company breached its warranties and California’s consumer protection laws. Each of the complaints seeks certification as a class action and damages in excess of $5.0 million. The Company denies these allegations and intends to vigorously defend itself. On December 18, 2012, Plaintiffs filed a motion to relate and consolidate the Langone, Ruff and Funke matters. The Company agreed that the cases are related but argued in its response that they should not be consolidated. The Court ordered the cases are related in an Order on January 24, 2013. In the Langone case, the Company filed a Motion to Transfer/Dismiss on February 1, 2013. Plaintiff in the Langone matter voluntarily dismissed his Complaint without prejudice on February 21, 2013 and re-filed in the U.S. District Court for the Western District of Pennsylvania on May 21, 2013. The Company filed its Motion to Dismiss in the Langone case with the U.S. District Court for the Western District of Pennsylvania on August 2, 2013. The individual claims in the Langone case were settled for a de minimus amount, and a stipulation to dismiss with prejudice was filed on November 25, 2013. On April 9, 2013, the Court transferred Ruff and Funke to the U.S. District Court for the Western District of Pennsylvania but denied without prejudice Defendant’s motions to consolidate and dismiss. On April 23, 2013, the Company filed its Motion to Dismiss in Ruff and Funke with the U.S. District Court for the Western District of Pennsylvania and its Reply in Support of its Motion to Dismiss in both cases on June 3, 2013. On February 11, 2014, the Magistrate Judge issued a Report and Recommendation that the Motion to Dismiss be granted as to Plaintiffs’ claim for unjust enrichment and denied in all other respects. The Company filed its objections to the Report and Recommendations on March 5, 2014. The District Judge adopted the Magistrate Judge’s Report and Recommendation on March 25, 2014. The Company filed its Answer on April 8, 2014. The Company cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

On July 19, 2012, a putative class action complaint was filed against the Company in U.S. District Court for the Western District of Pennsylvania (Mazur v. Del Monte) alleging product liability claims relating to Chicken Jerky Treats. Specifically, the complaint alleges that Plaintiff’s dog became ill and had to be euthanized as a result of consumption of Chicken Jerky Treats. The complaint also alleges that the Company breached its warranties and Pennsylvania’s consumer protection laws. The complaint seeks certification as a class action and damages in excess of $5.0 million. The Company denies these allegations and intends to vigorously defend itself. On August 3, 2012, Plaintiff’s counsel filed a Motion to Consolidate the previously filed two similar class actions against Nestle Purina Petcare Company, owner of the Waggin’ Train brand of chicken jerky treats, in U.S. District Court for the Northern District of Illinois under the federal rules for multi-district litigation (“MDL”). Plaintiff’s Motion also sought to include the case against the Company in the proposed MDL consolidation as a “related case.” On September 28, 2012, the Court denied the MDL Motion. The case will now proceed in the jurisdiction in which it was originally filed. Plaintiff filed a Motion for Leave to Commence Limited Discovery on the subject of the voluntary recall of Chicken Jerky Treats on January 25, 2013. The Company filed its response opposing the Motion on February 8, 2013. The Court denied Plaintiff’s Motion on March 12, 2013; thus, discovery is stayed until the Court rules on the Company’s Motion to Dismiss, which was filed on September 24, 2012. On May 24, 2013, the Judge in the matter issued a Report and Recommendation stating that the Motion to Dismiss be granted as to Plaintiff’s claim for unjust enrichment and denied in all other respects. The Company filed its Objections to the Report and Recommendation on June 7, 2013. The Court issued an Order adopting the Magistrate Judge’s Report and Recommendation on June 25, 2013. The Court denied the Company’s Motion for Reconsideration on July 8, 2013. The Company filed its Answer on August 2, 2013. The Company cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

On August 16, 2013, the Langone, Ruff, Funke and Mazur cases were consolidated.

On June 22, 2012, a putative class action complaint was filed against the Company in Los Angeles Superior Court (Webster v. Del Monte) alleging false advertising under California’s consumer protection laws, negligence, breach of warranty and strict liability. Specifically, the complaint alleges that the Company engaged in false advertising by representing that the Chicken Jerky Treats are healthy, wholesome, and safe for consumption by dogs, and alleges that Plaintiff’s pet became ill after consuming Chicken Jerky Treats. The allegations apply to all other putative class members similarly situated. The complaint seeks certification as a class action and unspecified damages, disgorgement of profits, punitive damages, attorneys’ fees and injunctive relief. The Company denies these allegations and intends to vigorously defend itself. On September 6, 2012, the Company filed a Notice of Removal to remove the case to the U.S. District Court for the Central District of California. Plaintiff subsequently filed a motion to amend its complaint to remove the federal class action claims and remand the case back to Los Angeles County Superior Court. The Company subsequently stipulated to Plaintiff’s motion, and the case has been remanded to Los Angeles County Superior Court. The Company filed a Motion for Judgment on the Pleadings on July 3, 2013. The Plaintiff filed an Opposition on August 21, 2013. The Company filed its Reply on August 27, 2013. The Court denied the Company’s Motion for Judgment on the Pleadings on February 20, 2014. The Company cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

1714

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three ~~and nine~~ months ended ~~January~~July 2627, 2014

(unaudited)

Note 129. ~~Segment~~Related ~~Information~~Party Transactions

~~The~~See ~~Company~~Note ~~has~~17 of the 2014 Annual Report for a ~~single~~description ~~operating~~of ~~segment~~the Company’s related party transactions. As of July 27, ~~Pet~~2014, ~~Products~~there was a payable of $1.6 million due to the managers related to the monitoring agreement, which ~~manufactures,~~is ~~markets~~included ~~and~~in ~~sells~~accounts ~~branded~~payable and ~~private~~accrued ~~label~~expenses ~~dry~~in ~~and~~the ~~wet~~Condensed ~~pet~~Consolidated Balance Sheets. As of April 27, 2014, there was a payable of $1.6 ~~food~~million due to the managers related to the monitoring agreement. For each of the three month periods ended July 27, 2014 and ~~pet~~July 28, ~~snacks~~2013, the Company paid $0.7 ~~The~~million ~~former~~to ~~Consumer~~a ~~Products~~KKR ~~segment~~affiliate isfor ~~now~~rent ~~reported~~related asto ~~discontinued~~a ~~operations~~leased ~~(see~~administrative ~~Note~~space in 4)Pittsburgh, PA. During the three months ended July 28, 2013, the Company paid $3.5 million to a Vestar advisor for a finder’s fee related to the Natural Balance acquisition.

The Company’s chief operating decision-maker, its CEO, reviews financial information presented on a consolidated basis accompanied by disaggregated information on operating income, for the operating segment and Corporate expenses, for purposes of making decisions about resources to be allocated to the operating segment and in assessing financial performanceNote 10. ~~Corporate~~Recent ~~costs~~Accounting ~~include~~Pronouncement ~~those~~Subsequent ~~overhead costs not directly attributable~~ to ~~the~~Period ~~operating~~End segment as well as certain types of severance and non-cash costs. The chief operating decision-maker reviews assets of the Company on a consolidated basis only. The accounting policies of the operating segment are the same as those of the Company.

~~The~~In ~~following~~August ~~table~~2014, ~~presents~~the Financial Accounting Standards Board (“FASB”) issued an Accounting Standard Update (“ASU”) which provides guidance on determining when and how to disclose going-concern uncertainties in financial ~~information~~statements. ~~about~~The ~~the~~new ~~Company~~accounting standard requires management to perform interim and annual assessments of an entity’s ~~operating~~ability ~~segment~~to continue as a going concern within one year of the date the financial statements are issued. This new ASU is effective for annual periods ending after December 15, 2016, and ~~Corporate~~interim ~~expenses~~periods ~~(in~~thereafter, ~~millions):~~with early adoption permitted. The Company is currently evaluating this guidance and the impact it may have on its interim and annual consolidated financial statements.

	Three Months Ended						Nine Months Ended
	January 26,			January 27,			January 26,			January 27,
	2014			2013			2014			2013
Operating income:
Pet Products	$	96.3		$	73.9		$	260.8		$	183.0
Corporate expenses		(13.9	)		(8.8	)		(40.4	)		(32.7	)
Total		82.4			65.1			220.4			150.3
Reconciliation to income (loss) from continuing operations before income taxes:
Interest expense		58.4			61.0			176.8			187.2
Other (income) expense		(0.2	)		8.4			(9.8	)		(18.8	)
Income (loss) from continuing operations before income taxes	$	24.2		$	(4.3	)	$	53.4		$	(18.1	)

The following table presents financial information about the Company’s former reportable segment classified in discontinued operations (in millions):

	Three Months Ended				Nine Months Ended
	January 26,		January 27,		January 26,			January 27,
	2014		2013		2014			2013
Discontinued Operations:
Net Sales	$	423.2	$	501.2	$	1,228.9		$	1,376.7
Income (loss) from discontinued operations before income taxes		37.3		45.4		(105.4	)		114.4

Note 13. Related Party Transactions

See Note 14 of the 2013 Annual Report for a description of the Company’s related party transactions. As of January 26, 2014, there was a payable of $1.6 million due to the managers related to the monitoring agreement, which is included in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets. As of April 28, 2013, there was a payable of $1.7 million due to the managers related to the monitoring agreement. For the three and nine months ended January 26, 2014, the Company paid $0.7 million and $2.1 million, respectively, to a KKR affiliate for rent related to leased administrative space in Pittsburgh, PA.

During the nine months ended January 26, 2014, the Company paid $3.5 million to a Vestar advisor for a finder’s fee related to the Natural Balance acquisition.

BIG HEART PET BRANDS AND SUBSIDIARIES

(formerly known as DEL MONTE CORPORATION AND SUBSIDIARIES)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended January 26, 2014

(unaudited)

Note 14. Subsequent Events

In connection with the sale of the Consumer Products Business on February 18, 2014, the Company used a portion of the after tax net proceeds from the sale to repay $881.0 million of the $2,607.4 million Term Loan Facility outstanding as of January 26, 2014. In addition, the Company plans to redeem, at a premium of 103.813%, an aggregate principal amount of $400.0 million of the Company’s Senior Notes due 2019 on March 13, 2014 pursuant to a call notice issued on February 11, 2014. The Company also amended the terms of the Term Loan Facility and extended its maturity date to 2020 as well as refinanced the existing revolving ABL Facility with a new $225.0 million, five-year ABL Facility. In connection with the debt pay down and modification activities described above, the Company expects to incur certain costs, including the redemption premiums referred to above and non-cash write offs of deferred financing fees (currently estimated at approximately $50 million to $60 million), in the fourth quarter of fiscal 2014.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion is intended to further the reader’s understanding of the consolidated financial condition and results of operations of our Company. It should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended April 2827, ~~2013~~2014 (the “~~2013~~2014 Annual Report”). These historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described in “Part I, Item 1A. Risk Factors” in our ~~2013~~2014 Annual Report and in “Part II, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q.

Corporate Overview

Our Business

Big Heart Pet Brands, ~~formerly Del Monte Corporation (“DMC”),~~ and its consolidated subsidiaries (~~together,~~ “Big Heart Pet” or the “Company”) is ~~one of~~ the largest ~~standalone~~U.S. ~~producers~~standalone producer, ~~distributors~~distributor and ~~marketers~~marketer of premium quality, branded pet food and pet snacks ~~for~~generating ~~the~~approximately U$2.S.2 billion ~~retail~~in ~~market.~~net ~~Our~~sales ~~brands~~from ~~include~~continuing ~~Meow~~operations ~~Mix,~~in ~~Kibbles~~fiscal ‘n2014. ~~Bits, Milk-Bone,~~Our ~~9Lives,~~portfolio ~~Natural~~of ~~Balance~~brands, ~~Pup-Peroni,~~with ~~Gravy~~a ~~Train,~~foundation ~~Nature’s~~in ~~Recipe,~~dog ~~Canine~~and ~~Carry~~cat ~~Outs, Milo’s Kitchen~~ food and ~~other~~treats, ~~brand~~strives ~~names.~~to Wecater ~~have~~to ~~one~~every ~~operating~~pet ~~segment:~~life ~~Pet~~stage ~~Products,~~and ~~which~~every ~~manufactures,~~family’s ~~markets~~budget ~~and~~through ~~sells~~the ~~branded~~availability and ~~private~~ ~~label~~accessibility ~~dry~~of ~~and~~our ~~wet~~products. Our pet food and pet ~~snacks.~~snack ~~The~~brands ~~former~~include ~~Consumer~~well ~~Products~~known ~~segment~~household isbrands ~~now~~such ~~reported~~ as ~~discontinued~~Meow ~~operations. The Consumer Products segment manufactured~~Mix, ~~marketed and sold branded and private label shelf~~Milk-~~stable products~~Bone, ~~including~~Kibbles ‘n ~~fruit~~Bits, ~~vegetable~~9Lives, ~~tomato~~Natural ~~and~~Balance, ~~broth~~Pup-Peroni, ~~products~~Gravy ~~with~~Train, ~~food~~Nature’s ~~brands that included Del Monte~~Recipe, ~~Contadina,~~Canine ~~College~~Carry ~~Inn~~Outs, ~~S&W~~Milo’s Kitchen and other brand names. ~~See~~Our ~~“Discontinued~~products ~~Operations”~~are ~~below~~sold ~~for~~nationwide, ~~details~~in onall ~~the~~channels ~~divestiture~~serving retail markets, as well as certain export markets.

~~Discontinued~~The ~~Operations~~results of the Consumer Products Business (see Note 1 of our consolidated financial statements in the 2014 Annual Report) have been reported as discontinued operations for all periods presented. Expenses allocated to discontinued operations are limited to selling, administrative and distribution expenses that were directly attributable to the Consumer Products Business, in accordance with the terms of the purchase agreement. Consequently, certain expenses that have historically been allocated to the Consumer Products segment are not included in discontinued operations. We have combined cash flows from discontinued operations with cash flows from continuing operations within the operating, investing and financing categories in the Condensed Consolidated Statements of Cash Flows in the accompanying financial statements for all periods presented. Cash flows are not comparable year over year due to the sale of the Consumer Products Business.

OnThe ~~October 9,~~discussion ~~2013,~~below ~~DMC entered~~in ~~into a Purchase Agreement (the~~ “~~Purchase~~Executive ~~Agreement~~Overview”~~) with Del Monte Pacific Limited (“DMPL”)~~ and ~~its subsidiary, Del Monte Foods Consumer Products, Inc. (now known as~~ “~~Del~~Results ~~Monte Foods, Inc.”), (the “Acquiror”). Pursuant to the terms~~ of ~~the Purchase Agreement, we sold to the Acquiror the interests of certain subsidiaries related to our Consumer Products business (the “Consumer Products Business~~Operations”) ~~and~~refers ~~generally all assets primarily related~~ to ~~the~~continuing ~~Consumer~~operations ~~Products Business (the “Transferred Assets”) for a purchase price of $1~~only,~~675.0~~ ~~million,~~unless ~~subject~~otherwise ~~to a post-closing working capital adjustment~~stated. The Acquiror assumed related liabilities (other than certain specified excluded liabilities). The transaction closed on February 18, 2014. In connection with the closing, we received approximately $110 million in incremental proceeds representing the preliminary working capital adjustment subject to a true-up in accordance with the terms of the purchase agreement. See “Executive Overview” below regarding the use of the proceeds from the sale.

~~Accordingly,~~Key ~~the~~Performance ~~results~~Indicators of the Consumer Products Business have been reported as discontinued operations for all periods presented. Expenses allocated to discontinued operations are limited to selling, administrative and distribution expenses that were directly attributable to the Consumer Products Business. Consequently, certain expenses that have historically been allocated to the Consumer Products Business are not included in discontinued operations. The reporting of Adjusted EBITDA under the Company’s 7.625% Notes Indenture and credit agreements continues on the same basis as in previous periods.

WeThe ~~have~~following ~~combined~~tables ~~cash~~set ~~flows~~forth ~~from~~some ~~discontinued~~of ~~operations~~our ~~with~~key ~~cash~~performance ~~flows~~indicators ~~from~~that ~~continuing~~we ~~operations~~utilize ~~within~~to ~~the~~assess ~~operating,~~results ~~investing and financing categories in the Condensed Consolidated Statements~~ of ~~Cash~~operations ~~Flows~~(dollars in ~~the~~millions): ~~accompanying financial statements for all periods presented.~~


	Three Months Ended
	July 27, 2014			July 28, 2013			Change			% Change			Volume (a)			Rate (b)
Net sales	$	529.7		$	481.0		$	48.7			10.1	%		14.1	%		(4.0	%)
Cost of products sold		342.0			302.1			39.9			13.2	%		16.2	%		(3.0	%)

Gross profit		187.7			178.9			8.8			4.9	%
Selling, general and administrative expense (“SG&A”)		132.0			112.7			19.3			17.1	%

Operating income	$	55.7		$	66.2		$	(10.5	)		(15.9	%)

Gross margin		35.4	%		37.2	%
SG&A as a % of net sales		24.9	%		23.4	%
Operating income margin		10.5	%		13.8	%

~~From~~(a) ~~closing,~~This wecolumn ~~will~~represents ~~have~~the ~~continuing~~change, ~~involvement~~as ~~with~~compared ~~the~~to ~~Acquiror under~~ the ~~terms~~prior ofyear aperiod, ~~transition~~due ~~services agreement~~to ~~and~~volume. ~~expect~~Volume torepresents ~~have~~the ~~continuing~~change ~~cash~~resulting ~~flows~~from ~~with~~ the ~~discontinued~~number ~~operation~~of ~~for~~units atsold, ~~least~~exclusive 12of ~~months~~any ~~after~~change ~~the~~in ~~transaction~~price. ~~close~~Volume ~~date.~~changes ~~Our~~in ~~continuing~~the ~~involvement~~above ~~will~~table include ~~providing continued administrative~~elasticity, ~~information~~the ~~technology,~~volume ~~and accounting~~decline ~~service~~associated ~~functions~~with ~~during~~price ~~the term of the agreement~~increases.

~~The~~(b) ~~discussion~~This ~~below~~column inrepresents ~~“Executive~~the ~~Overview”~~change, ~~and~~as ~~“Results~~compared ~~of Operations”~~to ~~refers~~the prior year period, attributable to ~~continuing~~per ~~operations~~unit ~~only~~changes in net sales or cost of products sold, ~~unless~~as ~~otherwise~~well ~~stated~~as mix. Mix represents the change attributable to shifts in volume across products or channels.

Natural Balance

Three Months Ended

Trailing Twelve
Months Ended

July 27,
2014

July 28,
2013

July 27,
2014

Adjusted EBITDA (as specified in our debt agreements (c))

64.5

116.2

398.1

Ratio of net debt to Adjusted EBITDA (d)

n/a

6.4 x

~~On July 15, 2013, we completed the acquisition of Natural Balance Pet Foods, Inc.~~ (~~“Natural Balance”~~c), ~~maker~~Refer ofto ~~premium~~“Reconciliation ~~pet food for dogs and cats sold throughout North America. The total cost~~ of ~~the~~Non-GAAP ~~acquisition~~Financial ~~was~~Measures—Adjusted ~~$331.4~~EBITDA” ~~million~~below. ~~The financial results of Natural Balance are reported within the Pet Products segment.~~

~~Merger~~(d) Net debt is calculated as total debt at the end of the period (including both short-term borrowings and long-term debt and excluding debt discount) less cash and cash equivalents.

On March 8, 2011, we were acquired by an investor group led by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (“KKR”), Vestar Capital Partners (“Vestar”) and Centerview Capital, L.P. (“Centerview,” and together with KKR and Vestar, the “Sponsors”). The acquisition (also referred to as the “Merger”) was effected by the merger of Blue Merger Sub Inc. (“Blue Sub”) with and into Del Monte Foods Company (“DMFC”), with DMFC being the surviving corporation. As a result of the Merger, DMFC became a wholly-owned subsidiary of Blue Acquisition Group, Inc. (“Parent”). On April 26, 2011, DMFC merged with and into DMC, with DMC being the surviving corporation. As a result of this merger, DMC became a direct wholly-owned subsidiary of Parent. In connection with the sale of the Consumer Products Business (see “Discontinued Operations” above) on February 18, 2014, DMC changed its name to Big Heart Pet Brands.

Key Performance Indicators

The following tables set forth some of our key performance indicators that we utilize to assess results of operations (in millions, except percentages):

	Three Months Ended
	January 26,2014			January 27,2013
							Change		% Change			Volume (1)			Rate (2)
Net sales	$	575.7		$	527.0		$	48.7		9.2	%		9.7	%		(0.5	%)
Cost of products sold		368.5			354.6		$	13.9		3.9	%		10.1	%		(6.2	%)
Gross profit		207.2			172.4		$	34.8		20.2	%
Selling, general and administrative expense (“SG&A”)		124.8			107.3		$	17.5		16.3	%
Operating income	$	82.4		$	65.1		$	17.3		26.6	%
Gross margin		36.0	%		32.7	%
SG&A as a % of net sales		21.7	%		20.4	%
Operating income margin		14.3	%		12.4	%
	Nine Months Ended
	January 26,2014			January 27,2013			Change		% Change			Volume (1)			Rate (2)
Net sales	$	1,608.7		$	1,482.3		$	126.4		8.5	%		5.2	%		3.3	%
Cost of products sold		1,026.3			994.3		$	32.0		3.2	%		6.2	%		(3.0	%)
Gross profit		582.4			488.0		$	94.4		19.3	%
Selling, general and administrative expense		362.0			337.7		$	24.3		7.2	%
Operating income	$	220.4		$	150.3		$	70.1		46.6	%
Gross margin		36.2	%		32.9	%
SG&A as a % of net sales		22.5	%		22.8	%
Operating income margin		13.7	%		10.1	%

(1) This column represents the change, as compared to the prior year period, due to volume and mix. Volume represents the change resulting from the number of units sold, exclusive of any change in price. Volume changes in the above tables include elasticity, the volume decline associated with price increases. Mix represents the change attributable to shifts in volume across products or channels.

(2) This column represents the change, as compared to the prior year period, attributable to per unit changes in net sales or cost of products sold.

									Trailing Twelve
	Three Months Ended				Nine Months Ended				Months Ended
	January 26,		January 27,		January 26,		January 27,		January 26,
	2014		2013		2014		2013		2014
Adjusted EBITDA (3)	$	165.5	$	164.0	$	447.0	$	439.3	$	604.4
Ratio of net debt to Adjusted EBITDA (4)		n/a		n/a		n/a		n/a		6.4 x

(3) Refer to “Reconciliation of Non-GAAP Financial Measures—Adjusted EBITDA” below. Amounts include both continuing and discontinued operations.

(4) Net debt is calculated as total debt at the end of the period (including both short-term borrowings and long-term debt and excluding debt discount) less cash and cash equivalents, and includes both continuing and discontinued operations.

Executive Overview

~~Basis~~In the first quarter of ~~Presentation~~fiscal –2015, Aswe ~~discussed~~had ~~under~~net ~~“Corporate~~sales ~~Overview~~of –$529.7 million, ~~Discontinued~~operating ~~Operations”~~income ~~above~~of $55.7 million and income from continuing operations of $11.2 million, ~~the~~compared ~~former~~to ~~Consumer~~net ~~Products~~sales of $481.0 million, operating income of ~~segment~~$66.2 million isand ~~reported~~income asfrom ~~discontinued~~continuing operations ~~for~~of ~~all~~$6.6 ~~periods~~million ~~presented~~in the first quarter of fiscal 2014. AsAdjusted aEBITDA ~~result,~~was ~~unless~~$64.5 million ~~otherwise~~for ~~noted~~the three months ended July 27, 2014 and $116.2 million for the ~~amounts~~three ~~discussed~~months ~~below~~ended July 28, ~~are~~2013. ~~for~~Refer ~~continuing~~to ~~operations~~“Reconciliation ~~only~~of Non-GAAP Financial Measures—Adjusted EBITDA” below.

InNet ~~the third quarter of fiscal 2014, we had net~~ sales ofincreased ~~$575.7~~by ~~million, operating income of $82~~10.41% ~~million~~for ~~and income from continuing operations of $15.6~~the ~~million, compared to net sales of $527~~quarter.0 ~~million,~~This ~~operating~~increase ~~income~~was ofdriven ~~$65.1~~by ~~million~~volume ~~and~~from ~~loss~~the ~~from~~prior ~~continuing~~year ~~operations~~acquisition of ~~$1.5 million~~Natural inBalance ~~the~~Pet ~~third~~Foods ~~quarter of fiscal 2013~~Inc. ~~Adjusted EBITDA~~ (~~including~~“Natural ~~continuing~~Balance”) and ~~discontinued~~new ~~operations)~~product ~~was $165.5~~launches ~~million~~across ~~for~~our ~~the~~portfolio ~~three~~of ~~months ended January 26~~brands, ~~2014~~partially ~~and~~offset ~~$164.0~~by ~~million~~volume ~~for~~declines ~~the~~in ~~three~~certain ~~months~~lower margin ~~ended~~pet ~~January 27,~~food ~~2013~~products. ~~Refer to “Reconciliation of Non-GAAP Financial Measures—Adjusted EBITDA” below.~~

22Operating income for the quarter decreased 15.9% as compared to the year-ago quarter. The decrease in operating income was driven by significant marketing and trade spending resulting from recent new product launches across our portfolio of brands, partially offset by the increased volume referred to above.

~~Table~~Adjusted EBITDA decreased 44.5% as compared to the year-ago quarter due to the year-over-year unfavorable impact of ~~Contents~~cash hedge positions, reflecting commodity price fluctuations during the quarter, as well as lower operating income as discussed above. Gains and losses on economic hedging positions are recorded as other (income) expense, net. The cash impact of all hedging activities is reflected in Adjusted EBITDA.

Net sales increased by 9.2% for the quarter. This increase was driven by the Natural Balance acquisition. Volume declines partially offset the increase.

Operating income for the quarter increased 26.6% as compared to the year-ago quarter. The increase in operating income was driven primarily by the absence of costs associated with a voluntary recall in the prior year and increased volume resulting from the Natural Balance acquisition, partially offset by higher marketing costs.

Adjusted EBITDA increased 0.9% as compared to the year-ago quarter. The positive impact of increased operating income and the lapping of the prior year unfavorable impact of cash hedge positions was partially offset by the unfavorable impact of discontinued operations. Gains and losses on economic hedging positions are recorded as other (income) expense. The cash impact of all hedging activities is reflected in Adjusted EBITDA.

On February 18, 2014, we completed the sale of our Consumer Products Business. See “Corporate Overview – Discontinued Operations” above. As a result of the sale of our Consumer Products Business, the related transition services agreement and the use of the sale proceeds to pay down debt, historical results for continuing operations are not indicative of future performance.

On February 24, 2014, we repaid $881.0 million of the outstanding balance of our Senior Secured Term Loan from the after tax net proceeds from the sale of the Consumer Products Business and repriced and extended the maturity. On March 6, 2014, we refinanced our Senior Secured Asset-Based Revolving Credit Facility with a new $225.0 million, five-year ABL Facility. On March 13, 2014, we intend to use a portion of the remaining net proceeds from the sale to redeem $400.0 million of our Senior Notes due 2019 at a redemption price equal to 103.813% of their aggregate principal amount plus accrued and unpaid interest to the redemption date, as announced on February 11, 2014. In connection with these debt pay down and modification activities, we expect to incur certain costs, including the redemption premiums referred to above and non-cash write offs of deferred financing fees (currently estimated to be approximately $50 to $60 million), in the fourth quarter of fiscal 2014.

Results of Operations

The following discussion provides a summary of operating results for the three ~~and nine~~ months ended ~~January~~July 2627, 2014, compared to the results for the three ~~and nine~~ months ended ~~January~~July 2728, 2013 (in millions, except percentages).:

Net sales

Net sales ~~increased 9.2%~~ for the three months ~~ended~~ ~~January~~ended July 2627, 2014 were $529.7 million, an increase of $48.7 million, or 10.1%, compared to $481.0 million for the three months ended ~~January~~July 2728, 2013. This increase was ~~primarily~~ driven by ~~$65.5 million in~~ sales from the Natural Balance acquisition as the current quarter results include Natural Balance for the full 13-week period as compared to two weeks in the year-ago-quarter. New product sales also contributed to the increase. ~~Volume declines~~Unfavorable ~~resulting~~price/mix ~~from~~partially offset the ~~heightened~~increase ~~competitive~~in ~~environment~~net ~~partially~~sales ~~offset~~due ~~the~~to increased ~~increase~~investments in trade spend to support recent new product launches as well as to defend our market share in our mainstream pet food brands. Also impacting net sales were volume declines in certain lower margin pet food products.

~~Net~~17 sales increased 8.5% for the nine months ended January 26, 2014 compared to the nine months ended January 27, 2013. This increase was driven by $141.2 million in sales from the Natural Balance acquisition, as well as net pricing (pricing net of trade spending). Elasticity (the volume declines associated with price increases) and other volume declines resulting from the heightened competitive environment partially offset the increase.

Cost of products sold

Cost of products sold for the three months ended January 26, 2014 was $368.5 million, an increase of $13.9 million, or 3.9%, compared to $354.6 million for the three months ended January 27, 2013. This increase was primarily due to higher volumes resulting from the Natural Balance acquisition, partially offset by the absence of prior year costs related to the voluntary recall of certain Milo’s Kitchen products. Productivity savings and lower ingredient costs partially offset the increase.

Cost of products sold for the nine months ended January 26, 2014 was $1,026.3 million, an increase of $32.0 million, or 3.2%, compared to $994.3 million for the nine months ended January 27, 2013. This increase was primarily due to higher volumes resulting from the Natural Balance acquisition, partially offset by the absence of prior year costs related to the voluntary recall of certain Milo’s Kitchen products. Productivity savings were largely offset by increased ingredient costs.

While the impact of economic hedge transactions is reflected in Corporate other (income) expense, we are now utilizing and expect to continue to utilize hedge accounting treatment for certain of our hedging transactions which began to impact cost of products sold in the second quarter of fiscal 2014. See other (income) expense below.

Cost of products sold

Cost of products sold for the three months ended July 27, 2014 was $342.0 million, an increase of $39.9 million, or 13.2%, compared to $302.1 million for the three months ended July 28, 2013. This increase was primarily due to higher volumes, including the impact of the Natural Balance acquisition.

While the impact of economic hedge transactions is reflected in other (income) expense, we are now utilizing and expect to continue to utilize hedge accounting treatment for certain of our hedging transactions which began to impact cost of products sold in the second quarter of fiscal 2014. See “Other (income) expense, net” below.

Gross margin

Our gross margin percentage for the three months ended ~~January~~July 2627, 2014 ~~increased~~decreased 31.3 8 points to 3635.04% compared to 3237.72% for the three months ended ~~January~~ July 2728, 2013. The ~~increase~~decrease was primarily due to ~~cost savings, including~~ the ~~absence~~increased oftrade ~~the~~spending ~~recall~~mentioned ~~costs described~~ above.

Our gross margin percentage for the nine months ended January 26, 2014 increased 3.3 points to 36.2% compared to 32.9% for the nine months ended January 27, 2013. Net pricing and cost savings, driven by the absence of the recall costs described above, were the primary drivers of the increase in gross margin.

Selling, general and administrative expense

SG&A expense for the three months ended ~~January~~July 2627, 2014 was $~~124~~132.8 0 million, an increase of $1719.5 3 million, or 1617.31%, compared to $~~107~~112.3 7 million for the three months ended ~~January~~July 2728, 2013. This increase was primarily driven by higher marketing ~~expense~~expenses asto ~~well~~support asrecent ~~the~~new ~~Natural~~product ~~Balance~~launches. ~~acquisition,~~We ~~including~~expect ~~the~~marketing ~~amortization~~expenses ofto ~~intangibles,~~be ~~and~~more ~~costs~~heavily ~~associated~~weighted ~~with~~towards the ~~sale~~first half of ~~the~~fiscal ~~Consumer Products Business~~2015.

SG&A expense for the nine months ended January 26, 2014 was $362.0 million, an increase of $24.3 million, or 7.2%, compared to $337.7 million for the nine months ended January 27, 2013. This increase was primarily driven by the Natural Balance acquisition, including transaction costs and the amortization of intangibles, as well as costs associated with the sale of the Consumer Products Business and increased marketing expense.

Operating income

	Three Months Ended
	January 26,			January 27,
	2014			2013			Change			% Change
Operating income:
Pet Products	$	96.3		$	73.9		$	22.4			30.3	%
Corporate expenses (1)		(13.9	)		(8.8	)	$	(5.1	)		58.0	%
Total	$	82.4		$	65.1		$	17.3			26.6	%

Operating income decreased by $10.5 million, or 15.9%, to $55.7 million for the three months ended July 27, 2014 from $66.2 million for the three months ended July 28, 2013. The benefit from the net sales increase discussed above was offset by significant marketing and trade spending resulting from recent new product launches across our portfolio of brands.

	Nine Months Ended
	January 26,			January 27,
	2014			2013			Change			% Change
Operating income:
Pet Products	$	260.8		$	183.0		$	77.8			42.5	%
Corporate expenses (1)		(40.4	)		(32.7	)	$	(7.7	)		23.5	%
Total	$	220.4		$	150.3		$	70.1			46.6	%

(1) See “Note 12. Segment Information” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a description of Corporate expenses.

Our Pet Products segment operating income increased by $22.4 million, or 30.3%, to $96.3 million for the three months ended January 26, 2014 from $73.9 million for the three months ended January 27, 2013. The absence of $14.4 million of prior year costs related to the voluntary recall of certain Milo’s Kitchen products drove the increase in operating income. Higher volume from Natural Balance also contributed to the increase in operating income, partially offset by higher SG&A expense, including marketing expense. Productivity savings also contributed to the increase.

Our Pet Products segment operating income increased by $77.8 million, or 42.5%, to $260.8 million for the nine months ended January 26, 2014 from $183.0 million for the nine months ended January 27, 2013. Net pricing and the absence of $14.4 million of prior year costs related to the voluntary recall of certain Milo’s Kitchen products drove the increase in operating income. Higher volume from Natural Balance also contributed to the increase in operating income, partially offset by the increase in SG&A costs described above. Productivity savings were largely offset by increased ingredient costs.

Our Corporate expenses increased by $5.1 million, or 58.0%, during the three months ended January 26, 2014 compared to the prior year period. Our Corporate expenses increased by $7.7 million, or 23.5%, during the nine months ended January 26, 2014 compared to the prior year period. These increases were primarily due to the transaction costs related to the sale of our Consumer Products Business and the Natural Balance acquisition.

Interest expense

Interest expense decreased by $224.6 4 million, or 440.39%, to $5835.4 2 million for the three months ended ~~January~~July 2627, 2014 from $6159.0 6 million for the three months ended ~~January~~July 2728, 2013. This decrease was primarily driven by the pay-down of long term debt in fiscal 2014 as well as lower interest rates.

~~Interest~~Other ~~expense~~(income) ~~decreased by $10.4 million~~expense, ornet ~~5.6%, to $176.8 million for the nine months ended January 26, 2014 from $187.2 million for the nine months ended January 27, 2013. This decrease was primarily driven by lower interest rates.~~

Other (expense of $2.7 million for the three months ended July 27, 2014 was comprised primarily of hedge ineffectiveness and losses on commodity hedging contracts not subject to hedge accounting. Other income) ~~expense~~of $8.4 million for the three months ended July 28, 2013 was comprised primarily of gains on commodity hedging contracts as well as gains on interest rate swaps treated as economic hedges.

Other income was $0.2 million for the three months ended January 26, 2014. Other expense of $8.4 million for the three months ended January 27, 2013 was comprised primarily of losses on commodity hedging contracts.

Other income of $9.8 million for the nine months ended January 26, 2014 was comprised primarily of gains on commodity hedging contracts. Other income of $18.8 million for the nine months ended January 27, 2013 was comprised primarily of gains on commodity hedging contracts, partially offset by losses on interest rate swaps.

Provision for income taxes

The effective tax rate for continuing operations for the three months ended ~~January~~July 2627, 2014 was 3537.54% compared to 6556.10% for the three months ended ~~January~~July 2728, 2013. The ~~effective tax rate for continuing operations for the nine months ended January 26, 2014 was 46.8% compared to 53.0% for the nine months ended January 27, 2013. The~~ change in the effective tax rates for the three ~~and nine~~ month ~~periods~~period was primarily due to ~~a tax benefit in~~ the ~~prior~~absence ~~year~~of ~~from~~an increase ~~adjusting~~in ~~the~~state tax ~~provision~~rates towhich ~~the~~was ~~tax return~~accounted ~~filed~~for asin athe ~~result~~prior ~~of changes in estimates~~year.

The effective tax rates for continuing operations increased from previously reported rates as a result of the change in pre-tax income attributable to discontinued operations.

Income (loss) from discontinued operations

Income from discontinued operations before income taxes was $37.3 million for the three months ended January 26, 2014 compared $45.4 million for the three months ended January 27, 2013. Income from discontinued operations, net of income taxes was $18.6 million for the three months ended January 26, 2014 compared to $29.8 million for the three months ended January 27, 2013. Lower sales and higher trade spend drove the decline.

Loss from discontinued operations before income taxes was $105.4 million for the nine months ended January 26, 2014 compared to income from discontinued operations before income taxes of $114.4 million for the nine months ended January 27, 2013. Loss from discontinued operations, net of income taxes was $67.0 million for the nine months ended January 26, 2014 compared to income from discontinued operations, net of income taxes of $72.7 million for the nine months ended January 27, 2013. These changes were driven by a non-cash impairment loss of $193.8 million recorded in the second quarter of fiscal 2014. Additionally, lower sales, as well as higher marketing expense and higher raw product costs for the nine months ended January 26, 2014, partially offset by net pricing, contributed to the loss.

Reconciliation of Non-GAAP Financial Measures—Adjusted EBITDA

We report our financial results in accordance with generally accepted accounting principles in the United States (“GAAP”). In this Quarterly Report on Form 10-Q, we also provide certain non-GAAP financial measures — Adjusted EBITDA and ratio of net debt to Adjusted EBITDA. We present Adjusted EBITDA because we believe that this is an important supplemental measure relating to our financial condition since it is used in certain covenant calculations ~~that~~in ~~may be required from time to time under~~ the indenture that governs our 7.625% Senior Notes due 2019 (referred to therein as “EBITDA”) and the credit agreements relating to our term loan and revolver (referred to therein as “Consolidated EBITDA”). We present the ratio of net debt to Adjusted EBITDA because it is used internally to focus management on year-over-year changes in our leverage and we believe this information is also helpful to investors. We use Adjusted EBITDA in this leverage measure because we believe our investors are familiar with Adjusted EBITDA and that consistency in presentation of EBITDA-related measures is helpful to investors.

25EBITDA is defined as income before interest expense, provision for income taxes, and depreciation and amortization. Adjusted EBITDA is defined as EBITDA, further adjusted as required by the definitions of “EBITDA” and “Consolidated EBITDA” contained in our indenture and credit agreements. Our presentation of Adjusted EBITDA has limitations as an analytical tool. Adjusted EBITDA is not a measure of

~~EBITDA is defined as income before interest expense, provision for income taxes, and depreciation and~~ amortization. Adjusted EBITDA is defined as EBITDA, further adjusted as required by the definitions of “EBITDA” and “Consolidated EBITDA” contained in our indenture and credit agreements. Our presentation of Adjusted EBITDA has limitations as an analytical tool. Adjusted EBITDA is not a measure of liquidity or profitability and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure determined in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of cash flow for management’s discretionary use, as it does not consider debt service requirements, obligations under the monitoring agreement with our Sponsors, capital expenditures or other non-discretionary expenditures that are not deducted from the measure.

We caution investors that our presentation of Adjusted EBITDA and ratio of net debt to Adjusted EBITDA may not be comparable to similarly titled measures of other companies. We also caution investors that Adjusted EBITDA is currently presented on a basis consistent with prior periods, but the presentation of Adjusted EBITDA for periods subsequent to the closing date of the sale of the Consumer Products Business may differ from the current presentation.

The following table provides a reconciliation of Adjusted EBITDA (including continuing and discontinued operations) for the periods indicated, (in millions):

							Trailing Twelve						~~Trailing Twelve~~
	Three Months Ended						~~Nine~~ Months Ended						~~Months Ended~~
	January 26, 2014			January 27, 2013			January 26, 2014			January 27, 2013			January 26, 2014
	July 27, 2014			July 28, 2013			July 27, 2014
Reconciliation:
Operating income—Quarter ended July 29, 2012	$	—		$	—		$	—		$	28.1		$	—
Operating income—Quarter ended July 28, 2013		—			66.2			—
Operating income—Quarter ended October 28, 2012		—			—			—			57.1			—
Operating income—Quarter ended October 27, 2013		—			—			71.8
Operating income—Quarter ended January 27, 2013		—			65.1			—			65.1			—
Operating income—Quarter ended January 26, 2014		—			—			82.4
Operating income—Quarter ended April 28, 2013		—			—			—			—			82.8
Operating income—Quarter ended April 27, 2014		—			—			34.4
Operating income—Quarter ended July 28, 2013		—			—			66.2			—			66.2
Operating income—Quarter ended July 27, 2014		55.7			—			55.7
Operating income—Quarter ended October 27, 2013		—			—			71.8			—			71.8
Other income (expense), net		(2.7	)		8.4			1.0
Operating income—Quarter ended January 26, 2014		82.4			—			82.4			—			82.4
Adjustments to arrive at EBITDA:
Discontinued operations before income taxes		37.3			45.4			(105.4	)		114.4			(66.4	)
Depreciation and amortization expense		24.1			23.1			101.3
Add back: Interest expense in discontinued operations		0.1			0.3			0.5			0.6			0.6
Amortization of debt issuance costs and debt discount(1)		(2.8	)		(5.1	)		(18.5	)
Other income (expense)		0.2			(8.4	)		9.8			18.8			0.8
EBITDA		74.3			92.6			328.1
Adjustments to arrive at EBITDA:
Non-cash charges		0.1			0.6			3.0
Depreciation and amortization(1)		27.8			37.4			102.3			117.7			139.1
Derivative transactions(2)		(17.0	)		(2.2	)		(1.0	)
Amortization of debt issuance costs and debt discount(2)		(5.9	)		(5.7	)		(17.0	)		(17.6	)		(23.6	)
Non-cash stock based compensation		2.4			3.0			13.9
EBITDA		141.9			134.1			210.6			384.2			353.7
Non-recurring (gains) losses		(0.2	)		0.2			(0.4	)
Non-cash charges		2.6			0.3			3.7			1.9			5.7
Merger/acquisition-related items		0.3			7.6			5.9
Derivative transactions (3)		5.4			1.4			2.5			(0.7	)		2.3
Disposed business reclassification(3)		—			9.4			19.1
Non-cash stock based compensation		5.3			(1.4	)		11.8			3.4			15.7
Business optimization charges		0.2			1.9			13.7
Non-recurring (gains) losses (4)		0.5			17.6			190.6			22.3			180.9
Other		4.4			3.1			15.8
Merger-related items		1.2			2.1			9.9			3.1			15.8
Adjusted EBITDA	$	64.5		$	116.2	(4)	$	398.1
Business optimization charges		5.9			8.3			11.0			18.8			19.3
Net Debt(5)							$	2,565.0
Other		2.7			1.6			6.9			6.3			11.0
Ratio of net debt to Adjusted EBITDA								6.4 x
Adjusted EBITDA	$	165.5		$	164.0		$	447.0		$	439.3		$	604.4
Net Debt(5)													$	3,880.5
Ratio of net debt to Adjusted EBITDA														6.4 x

(1) ~~Includes~~Represents ~~$0.0~~adjustments ~~million,~~to ~~$0.2~~exclude ~~million,~~amortization ~~$0.0~~of ~~million,~~debt ~~$8.0~~issuance ~~million~~costs and ~~($0.2)~~debt ~~million~~discount ofreflected ~~accelerated~~in depreciation ~~in the three months ended January 26, 2014~~ and ~~January~~amortization ~~27,~~because ~~2013,~~such ~~the~~costs ~~nine~~are ~~months~~not ~~ended~~deducted January 26, 2014 and January 27, 2013 and the trailing twelve months ended January 26, 2014, respectively, related to the closure of our Kingsburg, California facility. See “Note 18. Exit or Disposal Activities” to our consolidated financial statements in ~~our~~arriving ~~2013~~at ~~Annual~~operating ~~Report~~income.

(2) Represents adjustments needed to ~~exclude~~reflect ~~amortization~~only ofthe ~~debt~~cash ~~issuance~~impact ~~costs~~of ~~and~~derivative ~~debt~~transactions ~~discount reflected~~ in ~~depreciation~~the ~~and~~calculation ~~amortization~~of ~~because~~Adjusted ~~such costs are not deducted in arriving at operating income~~EBITDA.

(3) Represents ~~adjustments~~overhead ~~needed~~costs historically allocated to ~~reflect~~the ~~only~~Consumer Products segment (not reflected in discontinued operations in accordance with generally accepted accounting principles). This reclassification is required to determine Adjusted EBITDA, excluding the ~~cash~~Consumer ~~impact~~Products ofBusiness ~~derivative~~(a ~~transactions~~disposed business as defined in our credit agreements), for the ~~calculation~~three months ended July 28, 2013 and the trailing twelve months ended April 27, 2014. Subsequent to the divestiture of ~~Adjusted~~the ~~EBITDA~~Consumer Products Business, such overhead costs will be borne by Big Heart Pet Brands to the extent the costs are not offset by income from a transition services agreement (in place until February 2015) or reduced by cost saving initiatives.

(4) ~~Includes~~For acomparability, ~~non-cash~~Adjusted ~~impairment~~EBITDA ~~loss of approximately $193.8 million~~ for the ~~nine~~three months ~~and trailing twelve months~~ ended ~~January~~July 2628, ~~2014~~2013 ~~related~~has been recast to exclude the ~~former~~ Consumer Products ~~segment which is reported as discontinued operations~~Business.

~~(5)~~19 Net debt is calculated as total debt at the end of the period (including both short-term borrowings and long-term debt and excluding debt discount) less cash and cash equivalents, and includes both continuing and discontinued operations.

⁽⁵⁾	Net debt is calculated as total debt at the end of the period (including both short-term borrowings and long-term debt and excluding debt discount) less cash and cash equivalents.

Liquidity and Capital Resources

Our most significant cash needs relate to the production of our products. In addition, our cash is used for the repayment, including interest and fees, of our primary debt obligations (i.e., our revolver and our term loans, our senior notes and, if necessary, our letters of credit), contributions to our pension plan, expenditures for capital assets, lease payments for some of our equipment and properties and other general business purposes. We have also used cash for acquisitions, legal settlements and transformation and restructuring plans. We may from time to time consider other uses for our cash flow from operations and other sources of cash. Such uses may include, but are not limited to, future acquisitions, transformation or restructuring plans. Our primary sources of cash are typically funds we receive as payment for the products we produce and sell and from our revolving credit facility.

As of ~~January~~July 2627, 2014, we had not made any contributions to our defined benefit pension plan for fiscal ~~2014~~2015. ~~As of January 27, 2013, we had made contributions to our defined benefit pension plan of $15.0 million for fiscal 2013.~~ We currently meet and plan to continue to meet the minimum funding levels required under the Pension Protection Act of 2006 (the “Act”). The Act imposes certain consequences on our defined benefit plan if it does not meet the minimum funding levels. ~~We have made contributions in excess of our required minimum amounts during fiscal 2013 and 2012.~~ Due to uncertainties of future funding levels as well as plan financial returns, we cannot predict whether we will continue to achieve specified plan funding thresholds. We currently expect to make a contribution of approximately $108 million in ~~the fourth quarter of~~ fiscal ~~2014~~2015.

We believe that cash on hand, cash flow from operations and availability under our revolver will provide adequate funds for our working capital needs, planned capital expenditures, debt service obligations and planned pension plan contributions for at least the next 12 months.

OnOur ~~July 11,~~debt ~~2013,~~consists ~~we purchased a minority equity interest in a co-packer~~ of ~~some of our dog products for $14.6 million. The investment is accounted for under~~ the following, ~~equity~~as ~~method and is stated at cost plus our share~~ of ~~undistributed~~the ~~earnings~~dates orindicated, ~~losses.~~(in millions):

On July 15, 2013, we completed the acquisition of Natural Balance, a California corporation and maker of premium pet food for dogs and cats sold throughout North America. The total cost of the acquisition was $331.4 million. The total cost of the acquisition is subject to a post-closing working capital adjustment which was initially due from us 90 days after closing. Final agreement of the working capital adjustment with the seller will not occur until more than 180 days after closing.


	July 27,		April 27,
	2014		2014
Long-term debt:
Term Loan Facility	$	1,722.2	$	1,726.4
Senior Notes		900.0		900.0

		2,622.2		2,626.4
Less unamortized discount		6.3		6.1
Less current portion		17.3		17.3

Total long-term debt	$	2,598.6	$	2,603.0

Discontinued Operations

On October 9, 2013, DMC entered into a Purchase Agreement with Del Monte Pacific Limited (“DMPL”) and its subsidiary, Del Monte Foods Consumer Products, Inc. (now known as “Del Monte Foods, Inc.”), (the “Acquiror”). Pursuant to the terms of the Purchase Agreement, we sold to the Acquiror the interests of certain subsidiaries related to our Consumer Products business (the “Consumer Products Business”) and generally all assets primarily related to the Consumer Products Business (the “Transferred Assets”) for a purchase price of $1,675.0 million, subject to a post-closing working capital adjustment. The Acquiror also assumed related liabilities (other than certain specified excluded liabilities). The transaction closed February 18, 2014. In connection with the closing, we received approximately $110 million in incremental proceeds representing the preliminary working capital adjustment subject to a true-up in accordance with the terms of the purchase agreement. We have used, or intend to use, a portion of the net proceeds from the sale to repay debt. See further discussion below.

Our debt consists of the following, as of the dates indicated, (in millions)(1):

	January 26,		April 28,
	2014		2013
Short-term borrowings:
ABL Facility	$	—	$	—
Total short-term borrowings	$	—	$	—
Long-term debt:
Term Loan Facility	$	2,607.4	$	2,681.9
7.625% Notes		1,300.0		1,300.0
		3,907.4		3,981.9
Less unamortized discount		3.9		4.7
Less current portion		19.8		74.5
Total long-term debt	$	3,883.7	$	3,902.7

(1) Includes continuing operations only.

Description of Indebtedness

~~The~~Refer to the 2014 Annual Report for a summary of our indebtedness, ~~and~~ restrictive and financial covenants ~~set~~and ~~forth~~security ~~below~~interests which is qualified by reference to our senior secured term loan credit agreement, our senior secured asset-based revolving credit facility, our senior ~~notes~~note indenture, and the amendments thereto, all of which are set forth as exhibits to our public filings with the Securities and Exchange Commission (“SEC”).

Senior Secured Term Loan Credit Agreement

~~Our~~ We are party to a senior secured term loan credit agreement (the “Senior Secured Term Loan Credit Agreement”) with the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the other agents named therein, that initially provided for a $2,700.0 million senior secured term loan B facility (with all related loan documents, and as amended from time to time, the “Term Loan Facility”). ~~with~~The amaturity ~~term~~date ofis ~~seven years~~March 8, 2020.

OnLoans ~~February 24,~~under ~~2014,~~the weamended ~~repaid~~Term ~~$881.0~~Loan ~~million~~Facility ofbear ~~the~~interest ~~$2,607.4~~at ~~million~~a rate ~~outstanding~~equal ~~balance~~to ~~from~~an ~~the~~applicable ~~after-tax~~margin, ~~net~~plus, ~~proceeds~~at ~~from~~our ~~the~~option, ~~sale~~either ~~of our~~(i) a ~~Consumer~~LIBOR ~~Products~~rate ~~Business~~(with ~~and~~a ~~entered~~floor ~~into~~of an0.75%) ~~amendment~~or to(ii) a ~~our~~base ~~Senior~~rate ~~Secured~~(with ~~Term~~a ~~Loan~~floor ~~Credit~~of ~~Agreement~~1.75%) ~~The~~equal ~~amendment,~~to ~~among~~the ~~other~~highest ~~things,~~of (1a) ~~lowered~~ the ~~LIBOR~~federal funds rate ~~floor~~plus on0.50%, ~~term~~(b) JPMorgan Chase ~~loans~~Bank, ~~under the credit agreement from 1~~N.~~00%~~A.’s to“prime ~~0.75%~~rate” and (c) the ~~base~~one-month LIBOR rate ~~floor~~plus ~~from 2~~1.00%. toAs ~~1.75%;~~of ~~(2)~~July ~~established~~27, 2014, the applicable ~~interest~~ margin atwith ~~2.75%~~respect onto LIBOR ~~rate~~borrowings ~~loans~~was ~~and 1~~2.75% ~~on base rate loans;~~ and ~~(3) extended~~with ~~the~~respect ~~maturity date of the initial term loans~~ to ~~March 8,~~base ~~2020~~rate ~~from March 8,~~borrowings ~~2018~~was 1.75%.

~~Loans~~20 under the amended Term Loan Facility will bear interest at a rate equal to an applicable margin, plus, at our option, either (i) a LIBOR rate (with a floor of 0.75%) or (ii) a base rate (with a floor of 1.75%) equal to the highest of (a) the federal funds rate plus 0.50%, (b) JPMorgan Chase Bank, N.A.’s “prime rate” and (c) the one-month LIBOR rate plus 1.00%. As of January 26, 2014, the applicable margin with respect to LIBOR borrowings was 3.00% and with respect to base rate borrowings was 2.00%.

The amended Term Loan Facility generally requires quarterly scheduled principal payments of 0.25% of the outstanding principal per quarter from June 30, 2014 to December 31, 2019. The balance is due in full on the maturity date of March 8, 2020. Under the Term Loan Facility, on June 27, 2013 we made a payment of $74.5 million representing the excess annual cash flow payment due for the fiscal year ended April 28, 2013. As a result of the February 24, 2014 amendment, no excess annual cash flow payment will be due for the fiscal year ending April 27, 2014. Scheduled principal payments with respect to the Term Loan Facility are subject to reduction following any mandatory or voluntary prepayments on terms and conditions set forth in the Senior Secured Term Loan Credit Agreement. As of January 26, 2014, the amount of outstanding loans under the Term Loan Facility was $2,607.4 million and the blended interest rate payable was 4.00%, or 5.09% after giving effect to our interest rate swaps. On February 24, 2014, immediately following the repayment described above, the amount of outstanding loans under the Term Loan Facility was $1,726.4 million. See “Note 7. Derivative Financial Instruments” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of our interest rate swaps.

The amended Term Loan Facility generally requires quarterly scheduled principal payments of 0.25% of the outstanding principal per quarter from June 30, 2014 to December 31, 2019, with any remaining principal balance due on the maturity date. Scheduled principal payments with respect to the Term Loan Facility are subject to reduction following any mandatory or voluntary prepayments on terms and conditions set forth in the Senior Secured Term Loan Credit Agreement. ~~also~~As ~~requires~~of usJuly 27, to2014, ~~prepay~~the amount of outstanding loans under the Term Loan Facility was $1,722.2 million ~~subject~~and the toblended ~~certain~~interest ~~exceptions,~~rate ~~with~~payable was 3.50%, ~~among~~or ~~other~~4.96% ~~things:~~after giving effect to our interest rate swaps. See “Note 4. Derivative Financial Instruments” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of our interest rate swaps.

• 50% (which percentage will be reduced to 25% if our leverage ratio is 5.5x or less and to 0% if our leverage ratio is 4.5x or less) of our annual excess cash flow, as defined in the Senior Secured Term Loan Credit Agreement;

• 100% of the net cash proceeds of certain casualty events and non-ordinary course asset sales or other dispositions of property for a purchase price above $10 million, in each case, subject to our right to reinvest the proceeds; and

• 100% of the net cash proceeds of any incurrence of debt, other than proceeds from debt permitted under the Senior Secured Term Loan Credit Agreement.

We have the right to request an additional $500.0 million plus an additional amount of secured indebtedness under the Term Loan Facility. Lenders under this facility are under no obligation to provide any such additional loans, and any such borrowings will be subject to customary conditions precedent, including satisfaction of a prescribed leverage ratio, subject to the identification of willing lenders and other customary conditions precedent.

Senior Secured Asset-Based Revolving Credit Agreement

We ~~have~~maintain ~~historically maintained~~ a revolver for flexibility ~~to fund our seasonal working capital needs~~ and for other general corporate purposes. ~~Following~~The related credit agreement (the ~~sale~~“Senior ofSecured ~~our~~Asset-Based ~~Consumer~~Revolving ~~Products~~Credit ~~Business~~Facility”) with JPMorgan Chase Bank, weN.A., noas ~~longer~~administrative ~~expect~~agent, toand ~~have~~the ~~material~~other ~~changes~~lenders inand ~~working~~agents ~~capital~~parties ~~needs~~thereto, ~~due~~provides tofor ~~seasonality~~a $225.0 million Onfacility ~~March 6,~~(with ~~2014~~all related loan documents, weand ~~refinanced~~as ~~our~~amended ~~Senior~~from ~~Secured~~time ~~Asset-Based~~to ~~Revolving~~time, ~~Credit~~the “ABL Facility”). ~~with~~The aABL ~~new~~Facility ~~$225.0 million~~will mature, ~~five-year~~and ~~ABL~~the ~~Facility~~commitments thereunder will terminate, on March 6, 2019.

Borrowings under the ~~new~~ ABL Facility ~~will~~ bear interest at an initial interest rate equal to an applicable margin, plus, at our option, either (i) a LIBOR rate, or (ii) a base rate equal to the highest of (a) the federal funds rate plus 0.50%, (b) ~~J.P.~~JPMorgan ~~Morgan~~ Chase Bank, N.A.’s “prime rate” and (c) the one-month LIBOR rate plus 1.00%. The applicable margin with respect to LIBOR borrowings is ~~initially~~currently 1.50% (and may increase to 1.75% depending on average excess availability) and with respect to base rate borrowings is currently 0.50% (and may increase to 0.75% depending on average excess availability).

InAvailability ~~addition~~under the ABL Facility is subject to ~~paying~~a ~~interest~~borrowing onbase. ~~outstanding~~The ~~principal~~borrowing ~~under~~base, determined at the ~~ABL~~time ~~Facility~~of calculation, weis ~~are~~an ~~required~~amount equal to: (a) 85% ~~pay~~of aeligible ~~commitment~~accounts ~~fee~~receivable ~~at an~~and ~~initial~~(b) 85% ~~rate~~of the net orderly liquidation value of ~~0.25% per~~eligible ~~annum~~inventory in(provided ~~respect~~that net orderly liquidation value cannot exceed the net book value) of the ~~unutilized~~borrowers ~~commitments~~under ~~thereunder.~~the Wefacility ~~must~~at ~~also~~such ~~pay~~time, less customary ~~letter~~reserves. As of ~~credit~~July 27, ~~fees~~2014, ~~and~~there ~~fronting~~were ~~fees~~no ~~for~~loans ~~each~~outstanding ~~letter~~under the ABL Facility, the amount of letters of credit issued under the ABL Facility was $33.4 million and the net availability under the ABL Facility was $178.3 million.

Availability under the ABL Facility is subject to a borrowing base. The borrowing base, determined at the time of calculation, is an amount equal to: (a) 85% of eligible accounts receivable and (b) 85% of the net orderly liquidation value of eligible inventory (provided that net orderly liquidation value cannot exceed the net book value), of the borrowers under the facility at such time, less customary reserves. The ABL Facility will mature, and the commitments thereunder will terminate, on March 6, 2019. We borrowed $234.6 million under our former ABL Facility during the nine months ended January 26, 2014 and repaid a total of $234.6 million. As of January 26, 2014, there were no loans outstanding under the ABL Facility, the amount of letters of credit issued under the ABL Facility was $33.4 million. Following the closing of the sale of the Consumer Products Business and the refinancing of the ABL Facility, we expect the net availability under the new $225.0 million ABL Facility to be $140 to $160 million.

The ABL Facility includes a sub-limit for letters of credit and for borrowings on same-day notice, referred to as “swingline loans.” Certain letters of credit outstanding under the former ABL Facility were cancelled and reissued under the new ABL Facility. We are the lead borrower under the ABL Facility and other domestic subsidiaries may be designated as borrowers on a joint and several basis.

The commitments under the ABL Facility may be increased, subject only to the consent of the new or existing lenders providing such increases, such that the aggregate principal amount of commitments does not exceed $325 million. The lenders under this facility are under no obligation to provide any such additional commitments, and any increase in commitments will be subject to customary conditions precedent. Notwithstanding any such increase in the facility size, our ability to borrow under the facility will remain limited at all times by the borrowing base (to the extent the borrowing base is less than the commitments).

All our obligations under the Senior Secured Term Loan Credit Agreement and Senior Secured Asset-Based Revolving Credit Agreement are unconditionally guaranteed by Parent and by substantially all our existing and future, direct and indirect, wholly-owned material restricted domestic subsidiaries, subject to certain exceptions.

Senior Notes Due 2019

~~Our~~We have $900.0 million of senior notes due February 15, 2019 ~~have~~with ~~an aggregate principal amount of $1,300.0 million and~~ a stated interest rate of 7.625% (the “~~7.625%~~Senior Notes”). Interest on the ~~7.625%~~Senior Notes is payable semi-annually on February 15 and August 15 of each year, commencing August 15, 2011. The Senior Notes are required to be fully and unconditionally guaranteed by each of our existing and future domestic restricted subsidiaries that guarantee our obligations under the Term Loan Facility and ABL Facility.

~~The~~We ~~7.625%~~may redeem all or a part of the Senior Notes ~~are~~at ~~required~~a premium ranging from 103.813% to be101.906% ~~fully~~of ~~and~~the ~~unconditionally~~aggregate ~~guaranteed~~principal byamount. ~~each~~Beginning on February 15, 2016, we may redeem all or a part of ~~our~~the ~~existing~~Senior ~~and~~Notes ~~future~~at ~~domestic~~face ~~restricted~~value. ~~subsidiaries~~Any ~~that guarantee~~redemption ~~our~~as ~~obligations~~described ~~under~~above is subject to the ~~Term~~concurrent ~~Loan~~payment ~~Facility~~of accrued and ~~ABL~~unpaid ~~Facility~~interest, if any, upon redemption.

Under the terms of the indenture related to our 7.625% Notes, beginning on February 15, 2014, we may redeem all or a part of the 7.625% Notes at a premium ranging from 103.813% to 101.906% of the aggregate principal amount. Finally, beginning on February 15, 2016, we may redeem all or a part of the 7.625% Notes at face value. Any redemption as described above is subject to the concurrent payment of accrued and unpaid interest, if any, upon redemption.

On March 13, 2014, we intend to use a portion of the remaining net proceeds from the sale of our Consumer Products Business to redeem $400.0 million of our 7.625% Notes at a redemption price equal to 103.813% of their aggregate principal amount plus accrued and unpaid interest to the redemption date, as announced on February 11, 2014.

Security Interests and Guarantees

Indebtedness under the Term Loan Facility is generally secured by a first priority lien on substantially all of our assets other than inventories and accounts receivable, and by a second priority lien with respect to inventories and accounts receivable. The ABL Facility is generally secured by a first priority lien on our inventories and accounts receivable and by a second priority lien on substantially all of our other assets. The 7.625% Notes are our senior unsecured obligations and rank senior in right of payment to the existing and future indebtedness and other obligations that expressly provide for their subordination to the 7.625% Notes; rank equally in right of payment to all of the existing and future unsecured indebtedness; are effectively subordinated to all of the existing and future secured debt (including obligations under the Term Loan Facility and ABL Facility described above) to the extent of the value of the collateral securing such debt; and are structurally subordinated to all existing and future liabilities, including trade payables, of the non-guarantor subsidiaries, to the extent of the assets of those subsidiaries.

All our obligations under the senior secured term loan credit agreement and senior secured asset-based revolving facility agreement are unconditionally guaranteed by Parent and by substantially all our existing and future, direct and indirect, wholly-owned material restricted domestic subsidiaries, subject to certain exceptions. The 7.625% Notes are required to be fully and unconditionally guaranteed by each of our existing and future domestic restricted subsidiaries that guarantee our obligations under the Term Loan Facility and ABL Facility. Subsequent to the July acquisition described above, Natural Balance became a guarantor subsidiary under our debt agreements.

Maturities

As of ~~January~~July 2627, 2014, scheduled maturities of long-term debt (representing debt under the Term ~~Loans~~Loan Facility and ~~7.625%~~Senior Notes) are as follows (in millions) (1):

2014 (remainder)	$	—
2015		26.4
2016		26.4
2017		26.4
2018		2,528.2
Thereafter		1,300.0

(1) Does not reflect any excess cash flow or other principal prepayments that may be required under the terms of the senior secured term loan credit agreement, as described above.

Following the partial repayment, repricing and extension of the maturity of our Term Loan Facility and the partial redemption of our 7.625% Notes, we expect scheduled maturities of long-term debt to be as follows:

2014 (remainder)	$	—
2015		17.3
2016		17.3
2017		17.3
2018		17.3
Thereafter		2,557.2

Restrictive and Financial Covenants


2015 (remainder)	$	13.1
2016		17.3
2017		17.3
2018		17.3
2019		917.3
Thereafter		1,639.9

~~The~~(1) ~~Term~~Does ~~Loan~~not ~~Facility,~~reflect ~~ABL~~any ~~Facility~~excess ~~and~~cash ~~indenture~~flow ~~related~~or toother ~~our~~principal ~~7.625%~~prepayments ~~Notes~~beyond ~~contain~~fiscal ~~restrictive~~2015 ~~covenants.~~that ~~See~~may ~~“Note~~be 5.required ~~Short-Term~~under ~~Borrowings~~the ~~and Long-Term~~terms ~~Debt”~~of tothe ~~our~~amended ~~consolidated~~Senior ~~financial~~Secured ~~statements~~Term inLoan ~~our~~Credit ~~2013~~Agreement, ~~Annual~~as ~~Report~~described ~~for additional information regarding the covenants~~above.

The Term Loan Facility, ABL Facility and indenture related to our 7.625% Notes generally do not require that we comply with financial maintenance covenants. The ABL Facility, however, contains a financial covenant that applies if availability under the ABL Facility falls below a certain level.

The restrictive and financial covenants in the Term Loan Facility, the ABL Facility and indenture related to the 7.625% Notes may adversely affect our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest, such as acquisitions.

We believe that we are currently in compliance with all of our applicable covenants and were in compliance therewith as of January 26, 2014. Compliance with these covenants is monitored periodically in order to assess the likelihood of continued compliance. Our ability to continue to comply with these covenants may be affected by events beyond our control. If we are unable to comply with the covenants under the Term Loan Facility, the ABL Facility and indenture related to the 7.625% Notes, there would be a default, which, if not waived, could result in the acceleration of a significant portion of our indebtedness. See “Part I, Item 1A. Risk Factors—Restrictive covenants in the Credit Facilities and the indenture governing the Notes may restrict our operational flexibility. If we fail to comply with these restrictions, we may be required to repay our debt, which would materially and adversely affect our financial position and results of operations” in our 2013 Annual Report.

Cash Flow

Cash flows for all periods presented include both continuing and discontinued operations. During the ~~nine~~three months ended ~~January~~July 2627, 2014, our cash and cash equivalents decreased by $~~565~~55.1 6 million and during the ~~nine~~three months ended ~~January~~July 2728, 2013, our cash and cash equivalents decreased by $54509.0 1 million.

	Nine Months Ended
	Three Months Ended
	January 26,			January 27,
	July 27,			July 28,
	2014			2013
	(in millions)
Net cash provided by (used in) operating activities	$	(76.7	)	$	112.2
Net cash used in operating activities	$	(32.3	)	$	(53.8	)
Net cash used in investing activities		(~~413~~18.56	)		(74380.75	)
Net cash used in financing activities		(744.85	)		(8975.75	)

Operating Activities

Cash used in operating activities was $7632.7 3 million for the ~~nine~~three months ended ~~January~~July 2627, 2014, ~~compared~~reflecting tolower ~~cash~~net ~~provided~~income bydue ~~operating~~to ~~activities of $112.2~~significant ~~million~~marketing ~~for~~and ~~the~~trade ~~nine~~promotion ~~months ended January 27~~investments, ~~2013.~~significant ~~This~~hedging ~~change~~payments ~~was~~and ~~driven by~~ higher ~~inventories~~inventory ~~related~~ to ~~the~~support ~~Consumer~~recent ~~Products~~new ~~Business~~product ~~(included~~launches. Cash used in ~~discontinued~~operating ~~operations)~~activities ~~due~~for tothe ~~lower~~three ~~volume~~months ofended ~~sales~~July 28, ~~than~~2013 ~~the~~is ~~prior~~not ~~year,~~comparable asdue ~~well~~to asthe ~~higher~~sale of ~~cash~~the ~~taxes~~Consumer Products Business.

Typically, the cash requirements of the Consumer Products Business (in discontinued operations) varied significantly during the year to coincide with the seasonal growing cycles of fruit, vegetables and tomatoes. The vast majority of our fruit, vegetable and tomato inventories were produced during the packing season, from June through October, and then depleted during the remaining months of the fiscal year. As a result, historically (including the Consumer Products Business), the vast majority of our total operating cash flow was generated during the second half of the fiscal year. Following the sale of our Consumer Products Business, we do not expect this seasonality in cash flows experienced as a result of annual cash requirements for the seasonal pack to continue.

Investing Activities

Cash used in investing activities was $~~413~~18.5 6 million for the ~~nine~~three months ended ~~January~~July 2627, 2014 and $74380.7 5 million for the ~~nine~~three months ended ~~January~~ July 2728, 2013. During the ~~nine~~three months ended ~~January~~July 2628, ~~2014~~2013, we used $~~334~~337.6 5 million for the acquisition of Natural Balance and $14.6 million to acquire a minority equity interest in a co-packer ~~for some of our dog products~~. Capital spending was $6416.5 1 million for the ~~nine~~three months ended ~~January~~July 2627, 2014 compared to $6228.7 4 million for the ~~nine~~three months ended ~~January~~ July 2728, 2013. ~~Capital spending for the remainder of fiscal 2014 is expected to be $25 million to $35 million and is expected to be funded by cash on hand and cash generated by operating activities.~~

Financing Activities

During the first ~~nine~~three months of ~~fiscal 2014, we borrowed $239.9 million in short-term borrowings and repaid $240.9 million in short-term borrowings, primarily~~ ~~as a result of incurring seasonal borrowing for the Consumer Products Business. During the first nine months of~~ fiscal ~~2014~~2015, we made $744.5 3 million in payments on long-term debt. ~~representing~~No ~~the~~annual excess ~~annual~~ cash flow payment will be due in fiscal 2015 for the fiscal year ended April 2827, ~~2013~~2014.

During the first ~~nine~~three months of fiscal ~~2013~~2014, we ~~had net borrowings of $1.4 million on our short term borrowings and~~ made $9174.1 5 million in payments on long-term debt representing the excess annual cash flow payment due for the fiscal year ended April 2928, ~~2012~~2013.

Recently Issued Accounting Standards

In February 2013, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to comprehensive income. The amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. This new accounting pronouncement is effective for fiscal years and interim periods within those years beginning after December 15, 2012, with early adoption permitted. Accordingly, we have included the enhanced disclosure in “Note 10. Accumulated Other Comprehensive Loss” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

In March 2013, the FASB issued an ASU to clarify the applicable guidance for the release of foreign currency cumulative translation adjustments under GAAP. The amended guidance clarifies when cumulative translation adjustments should be released into net income in connection with (i) the loss of a controlling financial interest in a subsidiary or group of assets within a foreign entity or (ii) the partial sale of an equity method investment that is a foreign entity. The amended guidance also clarifies the types of events that result in the sale of an investment in a foreign entity. We are required to adopt this amended guidance prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

Critical Accounting Policies and Estimates

Our discussion and analysis of the financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we ~~reevaluate~~re-evaluate our estimates, including those related to trade promotions, goodwill and intangibles, retirement benefits and retained-insurance liabilities. Estimates in the assumptions used in the valuation of our stock compensation expense are updated periodically and reflect conditions that existed at the time of each new issuance of stock awards. We base estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the book values of assets and liabilities that are not readily apparent from other sources. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, these estimates routinely require adjustment.

~~Management~~22 has discussed the selection of critical accounting policies and estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed our disclosure relating to critical accounting policies and estimates in this Quarterly Report on Form 10-Q. Our significant accounting policies are described in “Note 2. Significant Accounting Policies” to our consolidated financial statements in our 2013 Annual Report. The following is a summary of the more significant judgments and estimates used in the preparation of our financial statements:

Trade Promotions

Trade promotions are an important component of the sales and marketing of our products and are critical to the support of our business. Trade spending includes amounts paid to encourage retailers to offer temporary price reductions for the sale of our products to consumers, to advertise our products in their circulars, to obtain favorable display positions in their stores and to obtain shelf space. We accrue for trade promotions, primarily at the time products are sold to customers, by reducing sales and recording a corresponding accrued liability. The amount we accrue is based on an estimate of the level of performance of the trade promotion, which is dependent upon factors such as historical trends with similar promotions, expectations regarding customer and consumer participation, and sales and payment trends with similar previously offered programs. Our original estimated costs of trade promotions are reasonably likely to change in the future as a result of changes in trends with regard to customer and consumer participation, particularly for new programs and for programs related to the introduction of new products. We perform monthly evaluations of our outstanding trade promotions, making adjustments, where appropriate, to reflect changes in our estimates. The ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by our customers for amounts they consider due to them. Final determination of the permissible trade promotion amounts due to a customer generally may take up to 18 months from the product shipment date. Our evaluations during the three months ended January 26, 2014 and

~~January 27, 2013 resulted in no significant adjustments to our estimates relating to trade promotion~~ ~~liability~~form ~~which related to prior year activity. Our evaluations during~~ the ~~nine~~basis ~~months~~for ~~ended~~making ~~January 26,~~judgments ~~2014~~about ~~resulted in a net reduction to~~ the ~~trade~~book ~~promotion~~values ~~liability and increase in net sales from continuing operations~~ of ~~$1.4~~assets ~~million.~~and ~~Our evaluations~~liabilities ~~during~~that ~~the~~are ~~nine~~not ~~months~~readily ~~ended~~apparent ~~January 27, 2013 resulted in a net reduction to the promotion liability and increase in net sales~~ from ~~continuing~~other ~~operations of $0~~sources.3 ~~million.~~For ~~All~~all of ~~the~~these ~~adjustments~~estimates, ~~noted~~we ~~above~~caution ~~relate~~that ~~only~~future ~~to continuing~~events ~~operations~~rarely ~~and~~develop ~~are~~exactly ~~not~~as ~~material~~forecasted toand, ~~trade~~therefore, ~~promotion~~these ~~expense~~estimates ~~for~~routinely ~~the~~require ~~respective periods~~adjustment.

Management has discussed the selection of critical accounting policies and estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed our disclosure relating to critical accounting policies and estimates in this Quarterly Report on Form 10-Q. Our significant accounting policies are described in “Note 2. Significant Accounting Policies” to our consolidated financial statements in our 2014 Annual Report. The following is a summary of the more significant judgments and estimates used in the preparation of our financial statements:

Trade Promotions

Trade promotions are an important component of the sales and marketing of our products and are critical to the support of our business. Trade spending includes amounts paid to encourage retailers to offer temporary price reductions for the sale of our products to consumers, to advertise our products in their circulars, to obtain favorable display positions in their stores, and to obtain shelf space. We accrue for trade promotions, primarily at the time products are sold to customers, by reducing sales and recording a corresponding accrued liability. The amount we accrue is based on an estimate of the level of performance of the trade promotion, which is dependent upon factors such as historical trends with similar promotions, expectations regarding customer and consumer participation, and sales and payment trends with similar previously offered programs. Our original estimated costs of trade promotions are reasonably likely to change in the future as a result of changes in trends with regard to customer and consumer participation, particularly for new programs and for programs related to the introduction of new products. We perform monthly evaluations of our outstanding trade promotions; making adjustments, where appropriate, to reflect changes in our estimates. The ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by our customers for amounts they consider due to them. Final determination of the permissible trade promotion amounts due to a customer generally may take up to 18 months from the product shipment date. Our evaluations during the three months ended July 27, 2014 resulted in a net reduction to the trade promotion liability and an increase in net sales from continuing operations of approximately $3.7 million which related to prior year activity and is not material to trade promotion expense. Our evaluations during the three months ended July 28, 2013 resulted in no significant adjustments to our estimates relating to the trade promotion liability which related to prior year activity.

Goodwill and Intangibles

We produce, distribute and market products under many different brand names (also referred to as trademarks). During an acquisition, the purchase price is allocated to identifiable assets and liabilities, including brand names and other intangibles, based on estimated fair value, with any remaining purchase price recorded as goodwill. As a result of the Merger, we applied the acquisition method of accounting and established a new basis of accounting on March 8, 2011. Accordingly, each of our active brand names now has a value on our balance sheet.

We have evaluated our capitalized brand names and determined that some have lives that generally range from 5 to 25 22 years (“Amortizing Brands”) and others have indefinite lives (“Non-Amortizing Brands”). Non-Amortizing Brands typically have significant market share and a history of strong earnings and cash flow, which we expect to continue into the foreseeable future.

Amortizing Brands and customer relationships are amortized over their estimated lives. We review the asset groups containing Amortizing Brands and customer relationships (including related tangible assets) for impairment whenever events or changes in circumstances indicate that the book value of an asset group may not be recoverable. An asset or asset group is considered impaired if its book value exceeds the undiscounted future net cash flow the asset or asset group is expected to generate. If an asset or asset group is considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the asset exceeds its fair value. Non-Amortizing Brands and goodwill are not amortized, but are instead tested for impairment at least annually. Our annual impairment tests occur during the fourth quarter of our fiscal year. Non-Amortizing Brands are considered impaired if the book value exceeds the estimated fair value. The goodwill impairment test is a two-step process. Initially, we compare the book value of net assets to the fair value of ~~each~~the reporting unit that has goodwill assigned to it. If the fair value is determined to be less than the book value, a second step is performed to compute the amount of the impairment.

The estimated fair value of our Non-Amortizing Brands is determined using the relief from royalty method, which is based upon the estimated rent or royalty we would pay for the use of a brand name if we did not own it. For goodwill, the estimated fair value of a reporting unit is determined using the income approach, which is based on the cash flows that the unit is expected to generate over its remaining life, and the market approach, which is based on market multiples of similar businesses. Our reporting unit is the same as our operating segment—Pet Products—reflecting the way that we manage our business. Annually, we engage third-party valuation experts to assist in this process. Considerable management judgment is necessary in estimating future cash flows, market interest rates, discount rates and other factors affecting the valuation of goodwill and intangibles, including the operating and macroeconomic factors that may affect them. We use historical financial information, internal plans and projections, and industry information in making such estimates.

We23 did not recognize any impairment charges in continuing operations for our Amortizing Intangibles, Non-Amortizing Brands or goodwill during the three and nine months ended January 26, 2014 and January 27, 2013. As of January 26, 2014 our Pet Products segment had $2,113.0 million of goodwill, $1,389.9 million of Non-Amortizing Brands, $30.2 million of Amortizing Brands, net of amortization and $747.0 million of customer relationships, net of amortization. The Meow Mix and Milk-Bone brands together, which are included in the Pet Products segment, comprise 55% of Non-Amortizing Brands. Beginning in the second quarter of fiscal 2014, the goodwill, Non-Amortizing Brands and Amortizing Brands of our former Consumer Products segment were reclassified to assets held for sale. See “Note 4. Discontinued Operations” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

We did not recognize any impairment charges for our goodwill, Amortizing Brands, customer relationships or Non-Amortizing Brands during the three months ended July 27, 2014 and July 28, 2013. As of July 27, 2014, we had $2,113.4 million of goodwill, $1,389.9 million of Non-Amortizing Brands, $28.7 million of Amortizing Brands, net of amortization and $724.8 million of customer relationships, net of amortization. The Meow Mix and Milk-Bone brands together comprise approximately 55% of Non-Amortizing Brands.

We have not identified any events that lead us to believe that goodwill or Non-Amortizing brands are impaired as of July 27, 2014. In our fiscal 2014 impairment test, fair value exceeded the book value of net assets by approximately 35%. Additionally, the fair value of our Non-Amortizing Brands each exceeded the book value by at least 10%, except for one brand representing 22% of our Non-Amortizing Brands for which fair value exceeded book value by approximately 3%. Our forecasts utilized in our fiscal 2014 impairment test assume, among other things, that we will achieve sales growth by successfully executing new product innovation supported by broad consumer messaging campaigns (including various forms of advertising, media and shopper marketing) which will improve category trends, enhance our pricing power, improve our share performance and facilitate further new product innovation. If these initiatives do not achieve the desired results, future impairment losses may occur.

Stock Compensation Expense

We believe an effective way to align the interests of certain employees with those of our equity stakeholders are through employee stock-based incentives. Stock options are stock-based incentives in which employees benefit to the extent that the price for the stock underlying the option exceeds the strike price of the stock option before expiration. A stock option is the right to purchase a share of common stock at a predetermined exercise price. Restricted stock-based incentives are incentives in which employees receive the right to own shares of common stock and do not require the employee to pay an exercise price. Restricted stock-based incentives include restricted stock, restricted stock units, performance share units and performance accelerated restricted stock units. We follow the fair value method of accounting for stock compensation expense, under which employee stock option grants and other stock-based compensation are expensed over the vesting period, based on the fair value at the time the stock option is granted.

Parent has issued to certain of our executive officers and other employees service-based stock options and performance-based stock options and restricted common stock. Service-based stock options and performance-based stock options generally vest over a four or five year period and the term may not be more than ten-years from the date of its grant. Performance-based stock options vest only if certain pre-determined performance criteria are met. Certain shares of restricted common stock vest in equal annual installments over a three-year period. We measure stock compensation expense at the date of grant using the Black-Scholes option pricing model. This model estimates the fair value of the options based on a number of assumptions, such as expected option life, interest rates, the current fair market value and expected volatility of common stock and expected dividends.

Valuation of stock options. The fair value of service-based stock options granted during the three months ended July 27, 2014 was $4.7 million. The fair value of performance-based stock options granted during the three months ended July 27, 2014 was $2.4 million. The following table presents the weighted-average valuation assumptions used for the recognition of stock compensation expense for all stock options granted during the three months ended July 27, 2014:


Expected life (in years)		5.9
Expected volatility		45.0	%
Risk-free interest rate		1.03	%
Dividend yield		0.0	%
Weighted average exercise price	$	6.65
Weighted average option value	$	2.87

Valuation of Restricted Common Stock. The fair value of restricted common stock is calculated by multiplying the price of Parent’s common stock on the date of grant by the number of shares.

Retirement Benefits

We sponsor a ~~non-contributory~~ qualified defined benefit pension plan (“DBpension benefits” or “pension plan”), ~~defined~~and ~~contribution~~several other unfunded retirement benefit plans (“other benefits”) providing certain medical, ~~multi~~dental and life insurance benefits to eligible retired, salaried, non-~~employer~~union ~~plans~~hourly and ~~certain~~union ~~other~~employees. ~~unfunded~~We ~~retirement~~also ~~benefit~~sponsor defined contribution plans and multi-employer plans for our eligible employees. The amount of DBpension ~~plan~~ benefits eligible retirees receive is based on their earnings and age. ~~Retirees may also be eligible for medical, dental~~ and ~~life~~the ~~insurance~~amount ~~benefits~~of (“other benefits”) ifretirees ~~they~~receive ~~meet~~are based on meeting certain age and service requirements at retirement. Generally, other ~~benefit~~benefits ~~costs~~ are subject to plan maximums, such that ~~the~~we ~~Company~~ and ~~retiree~~retirees both share in the cost of these benefits.

3324

Our Assumptions

We utilize third-party actuaries to assist us in calculating the expense and liabilities related to ~~the~~pension ~~DB plan~~ benefits and other benefits. DBPension ~~plan~~ benefits ~~and~~ and other benefits which are expected to be paid are expensed over the employees’ expected service period. The actuaries measure our annual DBpension ~~plan~~ benefits and other benefits expense by relying on certain assumptions made by us. Such ~~assumptions~~ assumptions include:

• The discount rate used to determine projected benefit obligation and net periodic benefit cost (DBpension ~~plan~~ benefits and other benefits);

• The expected long-term rate of return on assets (DBpension ~~plan~~ benefits);

• The rate of increase in compensation levels (DBpension ~~plan~~ benefits); and

•

Other factors including employee turnover, retirement age, mortality and health care cost trend rates.

These assumptions reflect our historical experience and our best judgment regarding future expectations. The assumptions, the plan assets and the plan obligations are used to measure our annual DBpension ~~plan~~ benefits ~~expense~~ and other benefits expense.

Since the DBpension ~~plan~~ benefits and other benefits liabilities are measured on a discounted basis, the discount rate is a significant assumption. The discount rate was determined based on an analysis of interest rates for high-quality, long-term corporate debt at the measurement date. In order to appropriately match the bond maturities with expected future cash payments, we utilize differing bond portfolios to estimate the discount rates for ~~the~~pension DBbenefits ~~plan~~ and ~~for the~~ other benefits. The discount rate used to determine DBthe ~~plan and other benefits~~ projected benefit obligation as of the balance sheet date is the rate in effect at the measurement date. The same rate is also used to determine DBpension ~~plan~~benefits and other benefits expense for the following fiscal year. The long-term rate of return for DBthe pension plan’s assets is based on our historical experience, our DBpension plan’s investment guidelines and our expectations for long-term rates of return. Our DBpension plan’s investment guidelines are established based upon an evaluation of market conditions, tolerance for risk and cash requirements for benefit payments.

During the three ~~and nine~~ months ended ~~January~~July 2627, 2014, ~~for~~and ~~continuing~~July 28, ~~operations~~2013, we recognized expense for our ~~qualified~~pension DB plan of $01.20 million and $0.72 million , respectively, and other benefits expense of $0.40 million and $~~1.2 million. Our remaining fiscal 2014 periodic pension expense for our DB plan is currently estimated to be approximately $~~0.64 million, ~~and periodic other benefits expense is currently estimated to be approximately $0~~respectively.2 ~~million.~~ These ~~amounts~~estimates doincorporate ~~not~~our ~~include~~fiscal ~~the~~2015 ~~impact of curtailments and settlements which will be reflected in discontinued operations~~assumptions. Our actual future pension and other benefit expense amounts may vary depending upon the accuracy of our original assumptions and future assumptions.

InRetained ~~connection~~Insurance ~~with~~Liabilities the sale of the Consumer Products Business, we have transferred significant retirement plan liabilities, as well as assets, related to transferred employees and retirees of the Consumer Products Business to the Acquiror. See “Note 4. Discontinued Operations” to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a summary, as of January 26, 2014, of the assets and liabilities to be transferred to the Acquiror. As a result of the plan spinoffs, we will recognize a significant non-cash settlement loss, partially offset by a non-cash curtailment gain in the fourth quarter of fiscal 2014.

Stock Compensation Expense

We believe an effective way to align the interests of certain employees with those of our equity stakeholders is through employee stock-based incentives. Stock options are stock incentives in which employees benefit to the extent that the stock price for the stock underlying the option exceeds the strike price of the stock option before expiration. A stock option is the right to purchase a share of common stock at a predetermined exercise price. Restricted stock incentives are stock incentives in which employees receive the right to own shares of common stock and do not require the employee to pay an exercise price. Restricted stock incentives include restricted stock, restricted stock units, performance share units and performance accelerated restricted stock units. We follow the fair value method of accounting for stock-based compensation, under which employee stock option grants and other stock-based compensation are expensed over the vesting period, based on the fair value at the time the stock-based compensation is granted.

Subsequent to the Merger, Parent has issued to certain of our executive officers and other employees service-based stock options and performance-based stock options and restricted common stock. Service-based stock options generally vest in equal annual installments over a four or five-year period and generally have a ten-year term until expiration. Performance-based stock options granted prior to fiscal 2013 initially were to vest only if certain pre-determined performance criteria are met and also have a ten-year term. Certain shares of restricted common stock vested immediately, while certain other shares vest in equal annual installments over a three-year period.

During fiscal 2013, Parent modified the outstanding performance-based options. For half of the performance-based options the performance targets were revised (“EBITDA Performance Options”). For the remaining half of the then-outstanding performance-based options (“Exit Return Performance Options”), the modification resulted in vesting now being subject only to market-based vesting conditions, where upon the occurrence of an event or transaction pursuant to which the Sponsors realize a cash return on their interests in the Parent greater than a predetermined threshold, the options will vest depending on the extent to which the realized return exceeds such threshold.

Our Post Merger Stock Option Assumptions. We measure stock option expense for both service-based options and performance-based options at the date of grant using the Black-Scholes valuation model. This model estimates the fair value of the options based on a number of assumptions, such as interest rates, employee exercises, the current price and expected volatility of common stock and expected dividends. The fair value of service-based stock options granted during the nine months ended January 26, 2014 was $2.1 million. The fair value of performance-based stock options granted during the nine months ended January 26, 2014 was $1.1 million. The following table presents the weighted-average valuation assumptions used for the recognition of stock option expense for stock options granted during the nine months ended January 26, 2014:

	Service-based			Performance-based
	Options			Options
Expected life (in years)		5.85			5.85
Expected volatility		45.00	%		45.00	%
Risk-free interest rate		1.03	%		1.03	%
Dividend yield		0.00	%		0.00	%
Weighted average exercise price	$	5.96		$	5.96
Weighted average option value	$	2.57		$	2.57

Valuation of Restricted Common Stock. The fair value of restricted common stock is calculated by multiplying the price of Parent’s common stock on the date of grant by the number of shares granted.

Retained-Insurance Liabilities

Our business exposes us to the risk of liabilities arising out of our operations. For example, liabilities may arise out of claims of employees, customers or other third parties for personal injury or property damage occurring in the course of our operations. We manage these risks through various insurance contracts from third-party insurance carriers. We, however, retain an insurance risk for the deductible portion of each claim. For example, the deductible under our loss-sensitive worker’s compensation insurance policy is up to $0.5 million per claim. A third-party actuary is engaged to assist us in estimating the ultimate costs of certain retained insurance risks. Actuarial determination of our estimated retained-insurance liability is based upon the following factors:

•

Losses which have been reported and incurred by us;

•

Losses which we have knowledge of but have not yet been reported to us;

•

Losses which we have no knowledge of but are projected based on historical information from both our Company and our industry; and

•

The projected costs to resolve these estimated losses.

Our estimate of retained-insurance liabilities is subject to change as new events or circumstances develop which might materially impact the ultimate cost to settle these losses. ~~For~~During ~~continuing operations, during~~ the three ~~and nine~~ months ended ~~January~~July 2627, 2014 and ~~January~~July 2728, 2013, we experienced no significant adjustments to our estimates.

3525

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have a risk management program that was adopted with the objective of minimizing our exposure to changes in interest rates, commodity, transportation ~~and~~, ~~other price and~~ foreign currency exchange rates and other input price exposures. We do not trade or use instruments with the objective of earning financial gains on price fluctuations alone or use instruments where there are not underlying exposures. We believe that the use of derivative instruments to manage risk is in our best interest. As of ~~January~~July 2627, 2014, we had both cash flow and economic hedges.

During the ~~nine~~ three months ended ~~January~~July 2627, 2014, we were primarily exposed to the risk of loss resulting from adverse changes in interest rates, commodity and other input prices as well as foreign currency exchange rates.

Interest Rates: Our debt primarily consists of floating rate term loans and fixed rate notes. We ~~historically~~maintain ~~maintained~~ our floating rate revolver for flexibility ~~to fund seasonal working capital needs~~ and for other ~~uses~~general ofcorporate ~~cash~~purposes. ~~Following the sale of the Consumer Products Business, we no longer expect to have material changes in working capital due to seasonality.~~ Interest expense on our floating rate debt is typically calculated based on a fixed spread over a reference rate, such as LIBOR (also known as the Eurodollar rate). Therefore, fluctuations in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt.

From time to time, we manage a portion of our interest rate risk related to floating rate debt by entering into interest rate swaps in which we receive floating rate payments and make fixed rate payments. OnWe ~~April 12,~~currently ~~2011,~~account wefor ~~entered~~these ~~into~~ interest rate swaps ~~with a total notional amount of $900.0 million~~ as ~~the~~economic ~~fixed~~hedges ~~rate~~and ~~payer.~~gains ~~The interest rate swaps fix LIBOR at 3.029% for the term of the swaps. The swaps have an effective date of September 4, 2012~~ and alosses ~~maturity~~are ~~date~~recorded ofdirectly ~~September 1,~~in ~~2015~~earnings. On ~~August~~April 1312, ~~2010~~2011, we entered into an interest rate ~~swap~~swaps with a total notional amount of $~~300~~900.0 million as the fixed rate payer and effective date of September 4, 2012. The interest rate ~~swap~~swaps ~~fixes~~fix LIBOR at 13.~~368~~029% for the term of the ~~swap~~swaps. The ~~swap~~swaps ~~has~~have ana ~~effective~~maturity date of ~~February~~September 1, ~~2011 and matured on February 3, 2014~~2015.

~~The~~On ~~fair~~August 13, ~~values~~2010, ofwe ~~our~~entered into an interest rate ~~swaps~~swap ~~from~~with ~~continuing~~a ~~operations~~notional ~~were~~amount ~~recorded~~of $300.0 million as ~~current~~the ~~liabilities~~fixed ofrate ~~$15.2~~payer ~~million~~ and ~~non-current~~an ~~liabilities~~effective date of ~~$25.8 million at January~~February 261, ~~2014~~2011. The ~~fair values of our~~ interest rate swaps ~~from~~expired ~~continuing~~during ~~operations~~fiscal ~~were~~2014 ~~recorded~~on asFebruary 3, ~~current~~2014 ~~liabilities of $28.4 million~~ and ~~non-current~~fixed ~~liabilities~~LIBOR ofat ~~$33~~1.5368% ~~million~~for atthe ~~April 28,~~term ~~2013~~of the swaps.

~~Assuming~~The ~~average~~fair ~~floating~~values ~~rate~~of ~~term~~our ~~loans~~interest ~~during~~rate ~~the~~swaps ~~period~~were ~~and~~recorded ~~average~~as ~~revolver~~current ~~borrowings~~liabilities ~~for~~of ~~the~~$25.0 million ~~period~~and ~~equal~~non-current toliabilities ~~the~~of ~~trailing~~$3.8 million ~~twelve months average~~at July 27, ~~a hypothetical~~2014. ~~one~~The ~~percentage~~fair ~~point~~values ~~increase~~of inour interest ~~rates~~rate ~~would~~swaps ~~increase~~were ~~interest~~recorded ~~expense~~as bycurrent ~~approximately~~liabilities of $1125.24 million ~~for~~and ~~the~~non-current ~~nine~~liabilities ~~months~~of ~~ended~~$9.8 million ~~January~~at April 2627, 2014.

~~Commodities:~~Assuming ~~Certain~~average ~~commodities~~floating ~~such~~rate asterm ~~soybean~~loans ~~meal,~~during ~~corn,~~the ~~wheat,~~period ~~soybean oil, diesel fuel~~ and ~~natural~~average ~~gas~~revolver ~~(collectively,~~borrowings ~~“commodity contracts”)~~for ~~are used in~~ the ~~production~~period orequal ~~transportation~~to ofthe ~~our~~trailing ~~products.~~twelve Asmonths ~~part of our commodity risk management activities~~average, ~~we use derivative financial instruments, primarily futures, swaps, options and swaptions (an option on~~ a ~~swap), to~~ ~~reduce~~hypothetical ~~the~~one ~~effect~~percentage ofpoint ~~changing~~increase ~~prices~~in ~~and~~interest asrates awould ~~mechanism~~increase tointerest ~~procure~~expense ~~the~~by ~~underlying~~approximately ~~commodity where applicable~~$2.2 million ~~We account~~ for ~~these commodities derivatives as either economic or cash flow hedges. Changes in~~ the ~~value~~three ofmonths ~~economic~~ended ~~hedges are recorded directly in earnings. For cash flow hedges~~July 27, the effective portion of the derivative gains and losses is deferred in equity and recognized as part of cost of products sold in the appropriate period and the ineffective portion is recognized as other (income) expense2014.

OnCommodities: ~~January 26~~Certain commodities such as soybean meal, ~~2014~~corn, wheat, soybean oil, diesel fuel and natural gas (collectively, “commodity contracts”) are used in the ~~fair~~production ~~values~~or transportation of our ~~commodities~~products. ~~hedges~~As ~~from~~part ~~continuing~~of ~~operations~~our ~~were~~commodity ~~recorded~~risk management activities, we use derivative financial instruments, primarily futures, swaps, options and swaptions (an option on a swap), to reduce the effect of changing prices and as ~~current~~a ~~assets~~mechanism to procure the underlying commodity where applicable. These contracts may have a term of $6up to 24 months.8 We account for these commodities derivatives as either economic or cash flow ~~million~~hedges. ~~and~~Changes ~~current~~in ~~liabilities~~the value of ~~$8.5~~economic ~~million~~hedges are recorded directly in earnings. OnFor ~~April 28,~~cash ~~2013~~flow hedges, the ~~fair~~effective ~~values~~portion of ~~our~~the ~~commodities~~derivative ~~hedges~~gains ~~from~~and ~~continuing~~losses ~~operations~~is ~~were~~deferred ~~recorded~~in equity and recognized as ~~current~~part ~~assets~~of cost of ~~$3.8~~products ~~million~~sold in the appropriate period and ~~current~~the ~~liabilities~~ineffective ofportion ~~$10.6~~is ~~million~~recognized as other (income) expense.

The fair values of our commodities hedges were recorded as current assets of $4.2 million and current liabilities of $12.4 million at July 27, 2014. The fair values of our commodities hedges were recorded as current assets of $9.4 million at April 27, 2014.

The sensitivity analyses presented below (in millions) reflect potential losses of fair value resulting from hypothetical changes in market prices related to commodities. Sensitivity analyses do not consider the actions we may take to mitigate our exposure to changes, nor do they consider the effects such hypothetical adverse changes may have on overall economic activity. Actual changes in market prices may differ from hypothetical changes.

	January 26,		April 28,
	July 27,		April 27,
	2014		~~2013~~2014
Effect of a hypothetical 10% change in market price:
Commodity contracts	$	1215.97	$	2613.4

3626

Foreign Currency: From time to time, we manage our exposure to fluctuations in foreign currency exchange rates by entering into forward contracts to cover a portion of our projected expenditures paid in local currency. These contracts may have a term of up to 24 months. We account for these contracts as either economic or cash flow hedges. Changes in the value of the economic hedges are recorded directly in earnings. For cash flow hedges, the effective portion of derivative gains and losses is deferred in equity and recognized as part of cost of products sold in the appropriate period and the ineffective portion is recognized as other (income) expense. Changes in the value of the economic hedges are recorded directly in earnings. As of January 26, 2014, we did not have any outstanding foreign currency hedges because we did not believe it was in our best interest at the time. We may again in the future enter into foreign currency forward contracts.

37As of July 27, 2014, the fair values of our foreign currency hedges were recorded as current assets of $0.2 million. As of April 27, 2014, we did not have any outstanding foreign currency hedges because we did not believe it was in our best interest at the time. The table below (in millions) presents our foreign currency derivative contracts as of July 27, 2014 and April 27, 2014. All of the foreign currency derivative contracts held on July 27, 2014 are scheduled to mature prior to the end of fiscal 2016.


	July 27,		April 27,
	2014		2014
Contract amount	$	17.4	$	—

A summary of the fair value and the market risk associated with a hypothetical 10% adverse change in foreign currency exchange rates on our foreign currency hedges are as follows (in millions):


	July 27,			April 27,
	2014			2014
Fair value of foreign currency contracts, net asset	$	0.2		$	n/a
Potential net loss in fair value of a hypothetical 10% adverse change in currency exchange rates	$	(1.1	)	$	n/a

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, or “Disclosure Controls,” as of the end of the period covered by this Quarterly Report on Form 10-Q. This evaluation, or “Controls Evaluation” was performed under the supervision and with the participation of management, including our President and Chief Executive Officer (our “CEO”) and our Executive Vice President, Chief Financial Officer and Treasurer (our “CFO”). Disclosure Controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure Controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our Disclosure Controls include some, but not all, components of our internal control over financial reporting.

38Based upon the Controls Evaluation, and subject to the limitations noted in this Part 1, Item 4, as a result of the material weakness in internal control over financial reporting identified as of April 27, 2014 and previously disclosed in our 2014 Annual Report, our CEO and CFO were unable to conclude that as of the end of the period covered by this Quarterly Report on Form 10-Q, our Disclosure Controls were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and that material information relating to Big Heart Pet Brands and its consolidated subsidiaries is made known to management, including our CEO and CFO, particularly during the period when our periodic reports are being prepared.

Previously identified material weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis. As previously disclosed in our 2014 Annual Report, we determined that, as of April 27, 2014, a material weakness existed in that we had insufficient resources to effectively address our significant recent transactions. Specifically, in fiscal 2014 we experienced an acquisition, the divestiture of approximately half of our business, the formation of two joint ventures, and the modification of debt and stock options, among other things, and the related increased complexity of the business and accounting environment. Because of the lack of resources, our internal controls were not effective at preventing or detecting certain errors, primarily in accounting for significant transactions, and certain more routine controls were not consistently operating effectively.

Our remediation plan includes hiring additional technical resources, continuing to utilize expert external advisors, and strengthening planning, review and documentation processes. As of July 27, 2014, our remediation plan had progressed but was not complete. The previously identified material weakness will not be considered fully remediated until the remediation is completed and the enhanced controls have been in place for a sufficient period of time. Management is committed to maintaining strong internal controls over financial reporting.

Despite the fact that the material weakness had not been fully remediated as of July 27, 2014, management believes that our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented and that this Quarterly Report on Form 10-Q does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our Disclosure Controls or our internal controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Big Heart Pet have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our Disclosure Controls include some, but not all, components of our internal control over financial reporting.

Based upon the Controls Evaluation, and subject to the limitations noted in this Part I, Item 4, our CEO and CFO have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, our Disclosure Controls were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and that material information relating to Big Heart Pet Brands and its consolidated subsidiaries is made known to management, including the CEO and CFO, particularly during the period when our periodic reports are being prepared.

Our Quarterly Report on Form 10-Q for the period ended October 27, 2013, noted that based upon the Controls Evaluation, our CEO and CFO concluded that as of the end of the period covered by that Quarterly Report on Form 10-Q, our Disclosure Controls were effective, with the exception of an infrequent and unusual item specific to the pending sale of the Consumer Products Business. The exception related to Disclosure Controls over non-routine transactions to ensure that the adjustment to the book value of assets held for sale of the Consumer Products Business discontinued operations was recorded properly. This exception was considered to be a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our interim financial statements would not be prevented or detected on a timely basis.

Management has evaluated Disclosure Controls in this area and has made an enhancement to its Disclosure Controls and Procedures. We believe the enhancement adequately addresses the exception noted above. Since management determined that the enhanced Disclosure Controls and Procedures were operating effectively as of the end of the period covered by this Quarterly Report on Form 10-Q (as noted above), management believes that the material weakness has been remediated.

Limitations on the Effectiveness of Controls

Changes in Internal Control Over Financial Reporting

~~There~~Except as described above, as well as below in this paragraph, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. In July 2013, we acquired Natural Balance Pet Foods, Inc. (“Natural Balance”) and continue to be in the process of integrating Natural Balance into our overall internal control over financial reporting process.

CEO and CFO Certifications

The certifications of the CEO and the CFO required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended, or the “Rule 13a-14 Certifications” are filed as Exhibits 31.1 and 31.2 of this Quarterly Report on Form 10-Q. This Part I, Item 4 of the Quarterly Report on Form 10-Q should be read in conjunction with the Rule 13a-14 Certifications for a more complete understanding of the topics presented.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of material developments in our pending legal proceedings, see “Note 118. Legal Proceedings” in our Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

This Quarterly Report on Form 10-Q, including the section entitled “Item 1. Financial Statements” and the section entitled “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Act of 1934. Statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. In some cases, you can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terms.

Forward-looking statements are based on our plans, estimates, expectations and assumptions as of the date of this Quarterly Report on Form 10-Q, and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. Accordingly, you should not place undue reliance on them. A detailed discussion of the known risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” in our 2014 Annual Report. Such risks and uncertainties include matters relating to:

39• competition, including pricing and promotional spending levels by competitors;

•

reliance on co-packers;

•

contaminated ingredients;

•

allegations that our products cause injury or illness, product recalls and product liability claims and other litigation;

•

our ability to launch new products and anticipate changing pet and consumer preferences;

•

our ability to maintain or increase prices and persuade consumers to purchase our branded products versus lower-priced branded and private label offerings and shifts in consumer purchases to lower-priced or other value offerings, particularly during economic downturns;

•

cost and availability of inputs, commodities, ingredients and other raw materials, including without limitation, energy (including natural gas), fuel, packaging, grains (including corn), sugar, spices, meats, meat by-products, soybean meal, water, fats, oils and chemicals;

•

our ability to implement productivity initiatives to control or reduce costs;

•

the loss of significant customers or a substantial reduction in orders from these customers or the financial difficulties, bankruptcy or other business disruption of any such customer;

•

our debt levels and ability to service our debt and comply with covenants;

•

the failure of the financial institutions that are part of the syndicate of our revolving credit facility to extend credit to us;

•

logistics and other transportation-related costs;

could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” in our 2013 Annual Report. Such risks and uncertainties include matters relating to:

• our debt levels and ability to service our debt and comply with covenants;

• the failure of the financial institutions that are part of the syndicate of our revolving credit facility to extend credit to us;

• competition, including pricing and promotional spending levels by competitors;

• our ability to launch new products and anticipate changing pet and consumer preferences;

• our ability to maintain or increase prices and persuade consumers to purchase our branded products versus lower-priced branded and private label offerings and shifts in consumer purchases to lower-priced or other value offerings, particularly during economic downturns;

• our ability to implement productivity initiatives to control or reduce costs;

• cost and availability of inputs, commodities, ingredients and other raw materials, including without limitation, energy (including natural gas), fuel, packaging, grains (including corn), sugar, spices, meats, meat by-products, soybean meal, water, fats, oils and chemicals;

• logistics and other transportation-related costs;

•

hedging practices and the financial health of the counterparties to our hedging programs;

• interest rate fluctuations;

• the loss of significant customers or a substantial reduction in orders from these customers or the financial difficulties, bankruptcy or other business disruption of any such customer;

• contaminated ingredients;

• allegations that our products cause injury or illness, product recalls and product liability claims and other litigation;

•

transformative plans;

•

strategic transaction endeavors, if any, including identification of appropriate targets and successful implementation;

• ~~reliance~~changes onin, ~~certain~~or ~~third~~the ~~parties~~failure or inability to comply with, ~~including~~U.S., ~~co-packers~~foreign and local governmental regulations, ~~our~~including ~~broker~~packaging and ~~third-party~~labeling ~~distribution~~regulations, ~~centers~~environmental orregulations ~~managers~~and import/export regulations;

• changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including packaging and labeling regulations, environmental regulations and import/export regulations or duties;

•

sufficiency and effectiveness of marketing and trade promotion programs;

•

failure of our information technology systems;

•

adverse weather conditions, natural disasters, pestilences and other natural conditions that affect inputs or otherwise disrupt operations;

• any disruption to our manufacturing or supply chain;

•

impairments in the book value of goodwill or other intangible assets;

•

any disruption to our manufacturing or supply chain;

•

reliance on certain third parties, including third-party distribution centers or managers and our logistics provider;

•

pension costs and funding requirements;

•

negative comments posted on social media which may influence consumers’ perception of our brands;

• protecting our intellectual property rights or intellectual property infringement or violation claims; strikes or work stoppages; and

•

the control of substantially all of our common stock by a group of private investors and conflicts of interest potentially posed by such ownership.

All forward-looking statements in this Quarterly Report on Form 10-Q are made only as of the date of this report. We undertake no obligation, other than as required by law, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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

(a) NONE.

(b) NONE.

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in our ~~2013~~2014 Annual Report for a description of the restrictions on our ability to pay dividends.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE.

ITEM 4. MINE SAFETY DISCLOSURES

NONE.

ITEM 5. OTHER INFORMATION

(a) NONE.

(b) NONE.

4130

ITEM 6. EXHIBITS

(a) Exhibits.

Incorporated by Reference

Number

Description

Number

Description

Form

Exhibit

Filing Date

*31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

3.1

Certificate of Amendment filed with the Delaware Secretary of State on February 18, 2014

8-K

3.1

February 19, 2014

*31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

3.2

By-laws of the Company, as amended on February 18, 2014

8-K

3.2

February 19, 2014

*32.1

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

10.1

Transition Services Agreement, dated as of February 18, 2014, by and between Del Monte Corporation, Del Monte Foods, Inc. and Del Monte Pacific Limited

8-K

10.2

February 19, 2014

*32.2

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

10.2

Transitional Trademark License Agreement, dated as of February 18, 2014, by and between Del Monte Foods, Inc. and Del Monte Corporation

8-K

10.3

February 19, 2014

*101.INS

XBRL Instance Document

10.3

Amendment No. 2, dated as of February 24, 2014, to the Credit Agreement, dated as of March 8, 2011, among Blue Acquisition Group, Inc., the Company, the lending institutions from time to time parties thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent.

8-K

10.1

February 27, 2014

*101.SCH

XBRL Taxonomy Extension Schema Document

10.4

Credit Agreement, dated as of March 6, 2014, among Blue Acquisition Group, Inc., Big Heart Pet Brands, Natural Balance Pet Foods, Inc., the Lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as the Administrative Agent and Collateral Agent, and the other Agents named therein

8-K

10.1

March 7, 2014

*101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

*31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

*31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*101.LAB

XBRL Taxonomy Extension Label Linkbase Document

*32.1

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*32.2

Certification of the Chief Financial Officer 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 Label Linkbase Document

*101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed or furnished herewith

4231

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.


BIG HEART PET BRANDS

By:		/s/ David J. West
		David J. West
		President and Chief Executive Officer; Director

By:		/s/ Larry E. Bodner
		Larry E. Bodner
		Executive Vice President,
		Chief Financial Officer and Treasurer

Dated: ~~March~~September 109, 2014

4332

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

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