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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)


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

For the fiscal year ended December 31, 2005


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

For the transition period from to

Commission file number 0-27818

Doane Pet Care Company

(Exact Name of Registrant as Specified in Its Charter)


Delaware		43-1350515
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

210 Westwood Place South,
Suite 400
Brentwood, TN 37027
(Address of principal executive office, including zip code)

(615) 373-7774
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes þ No

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. þ Yes o No

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes þ No

As of the last business day of the registrant’s most recently completed second fiscal quarter, the registrant had no common equity held by non-affiliates.

As of March 30, 2006, the registrant had outstanding 1,001 shares of Class A common stock and 71.32 shares of Class B common stock.

TABLE OF CONTENTS


	PART I

Item 1.	Business	1

Item 1A.	Risk Factors	9

Item 1B.	Unresolved Staff Comments	20

Item 2.	Properties	20

Item 3.	Legal Proceedings	21

Item 4.	Submissions of Matters to a Vote of Security Holders	21

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	21

Item 6.	Selected Financial Data	22

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 8.	Financial Statements and Supplementary Data	38

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	38

Item 9A.	Controls and Procedures	38

Item 9B.	Other Information	39

	PART III

Item 10.	Directors and Executive Officers of the Registrant	39

Item 11.	Executive Compensation	41

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47

Item 13.	Certain Relationships and Related Transactions	50

Item 14.	Principal Accountant Fees and Services	51

	PART IV

Item 15.	Exhibits, Financial Statement Schedules	52

Signatures		55

Index to Financial Statements		F-1
Bylaws
Supplemental Executive Retirement Plan
List of Subsidiaries
Consent of KPMG LLP
Certification of CEO pursuant to Rule 13a-14(a)/15(d)-14(a)
Certification of CFO pursuant to Rule 13a-14(a)/15(d)-14(a)
Certification of CEO pursuant to 18 U.S.C. 1350
Certification of CFO pursuant to 18 U.S.C. 1350

In this Annual Report on Form 10-K, “Doane,” “the Company,” “we,” “us” and “our” refer to Doane Pet Care Company and its subsidiaries, unless the context indicates otherwise. All references in this Annual Report on Form 10-K to “Doane Enterprises,” “parent,” or “parent corporation” refer to Doane Pet Care Enterprises, Inc.

Explanatory Note

As a result of the Acquisition described in “Item 1 — Business — Recent Developments — The Acquisition,” our results for fiscal 2005 consist of the predecessor period from January 2 through October 23, 2005 and the successor period from October 24 through December 31, 2005. We often refer to our results in this annual report on Form 10-K for fiscal 2005, except for the audited consolidated financial statements which begin at page F-1, based upon the mathematical addition of the predecessor period and the successor period and have identified the sum of the results from the two periods as “combined.” This approach is not consistent with GAAP and may yield results that are not strictly comparable on a period-to-period basis primarily due to the impact of required purchase accounting adjustments and the new basis of accounting established as a result of the Acquisition. However, we believe that this is the most meaningful way to discuss our results. Such results are not always indicative of what the results for fiscal 2005 would have been had the Acquisition not occurred.

PART I

ITEM 1 — Business

General

We are the largest manufacturer of store brand pet food and the second largest manufacturer of dry pet food overall in the United States. We are also a leading manufacturer of store brand pet food in Europe. We sell to approximately 650 customers around the world and serve many of the top pet food retailers in North America and Europe. We offer our customers a full range of pet food products predominately for dogs and cats, including dry, wet, soft-dry, treats and dog biscuits.

We categorize our sales into three product areas:

	•		Store brands (82.0% of our fiscal 2005 (combined) net sales). Store brands, also known as private label, are brands owned or licensed by retailers that typically provide a lower cost alternative to nationally branded products while providing comparable quality. We believe store brand programs are continuing to increase in strategic importance to global retailers, with the pet food category emerging as a leader in this trend. We believe pet food is a destination purchase item, and therefore the pet food consumer is valuable to retailers. A strong store brand program provides our retail customers with the opportunity to create customer loyalty by providing better value for their consumers. In addition, we believe store brands typically provide higher profit margin percentages for retailers than nationally advertised brands. Our store brand customer base is broad and includes leading mass merchandisers, grocery chains, farm and fleet companies and pet specialty stores. Globally, we manufacture approximately 200 store brands.

	•		Co-manufacturing (15.1% of our fiscal 2005 (combined) net sales). As nationally advertised brand pet food companies continue to consolidate and focus on the marketing of their branded products, we believe they will continue to outsource a portion of their pet food manufacturing to us and choose our global network to help service their growing needs. Our co-manufacturing customers include the five largest global brand pet food companies by revenue for whom we produce, package and ship a portion of their pet food products.

	•		Regional brands that we own (2.9% of our fiscal 2005 (combined) net sales). We produce and market regional brands that provide our customers with the opportunity to broaden their pet food product offering. We primarily sell our regional brands to grocery chains and farm and fleet companies. Globally, we manufacture approximately 30 regional brands.

We have been the primary supplier of store brand pet food to Wal-Mart Stores, Inc., or Wal-Mart, since 1973 and have been a supplier to its Sam’s Club division, or Sam’s Club, since 1990. We manufacture a wide variety of products for Wal-Mart and Sam’s Club, including the majority of Wal-Mart’s top selling store brand pet foods, Ol’ Roy and Special Kitty. Ol’ Roy is the number one selling brand of dry pet food by volume in the United States. Special Kitty is the number one selling store brand dry cat food in the United States, and we believe it will become the number one selling dry cat food brand in the United States by volume in 2006. As the primary supplier of store brand dry pet food to Wal-Mart, we jointly developed a cost-effective and innovative North American logistics network designed to facilitate the delivery of our pet food to Wal-Mart. This logistics network benefits us and Wal-Mart by reducing handling costs, minimizing freight and shipping costs and maximizing inventory turns. Our net sales to Wal-Mart and Sam’s Club accounted for 42%, 43% and 43% of our total net sales for fiscal 2003, 2004 and 2005 (combined), respectively.

Doane Pet Care Company is a Delaware corporation that was incorporated in 1995. Our principal executive offices are located at 210 Westwood Place South, Suite 400, Brentwood, Tennessee 37027 and our telephone number is (615) 373-7774. Doane Pet Care Enterprises, Inc., our parent corporation, was also incorporated in 1995 and has no other material assets or activities other than the ownership of our common stock.

Our fiscal year ends on the Saturday nearest to the end of December; and therefore, fiscal 2001, 2002, 2003, 2004 and 2005 ended on December 29, 2001, December 28, 2002, January 3, 2004, January 1, 2005 and December 31, 2005, respectively.

Recent Developments

The Acquisition

On October 24, 2005, pursuant to the Agreement and Plan of Merger dated August 28, 2005, Ontario Teachers’ Pension Plan Board, or OTPP, acquired beneficial ownership of substantially all of the outstanding capital stock of Doane Enterprises. This transaction, referred to as the Acquisition, was effected by the merger of DPC Newco Inc., a direct, wholly-owned subsidiary of OTPP, with and into Doane Enterprises with Doane Enterprises surviving the merger. In connection with the Acquisition, OTPP and our senior management have investments in Doane Enterprises of $306.0 million and $4.7 million, respectively, less equity issuance costs of approximately $7.5 million. Following the Acquisition, Doane Enterprises continues to beneficially own substantially all of our outstanding capital stock.

The Financing Transactions

In connection with the Acquisition, we effected a series of recapitalization transactions, referred to as the Financing Transactions, and, together with the Acquisition, the Transactions, including, among others:

	•		the termination and full settlement of our old $230.0 million senior credit facility and the closing of a new $210.0 million senior credit facility;

	•		the closing of the private placement of $152.0 million aggregate principal amount of 10 ⁵/₈% senior subordinated notes due 2015 at an original issue discount of 99.2% and the subsequent exchange of these private placement notes for $152.0 million of 10 ⁵/₈% senior subordinated notes due 2015 that have been registered with the Securities and Exchange Commission;

	•		the redemption of our 9 ³/4% senior subordinated notes due 2007 at a price of 100% of the aggregate principal amount of $150.0 million plus accrued and unpaid interest to, but not including, the redemption date of November 22, 2005, which resulted in a total redemption amount of $157.7 million;

	•		the redemption of our 14.25% senior preferred stock due 2007 at a purchase price equal to 101% of the liquidation value thereof, which included a 1% change of control premium, plus accrued and unpaid dividends to, but not including, the redemption date of November 22, 2005 and resulted in a total redemption amount of $125.2 million; and

	•		the repurchase of $2.8 million aggregate principal amount of our 7.25% Ottawa County Finance Authority industrial development revenue bonds at a purchase price equal to 101% of the principal amount thereof, which included a 1% change of control premium, plus accrued and unpaid interest to, but not including, the purchase date of December 22, 2005.

Cost Savings Initiatives

In fiscal 2005, we announced several initiatives to further reduce our cost structure and to increase operating efficiencies. These initiatives included the closure of three U.S. manufacturing facilities, the permanent shutdown of our dry dog and cat food production lines at another manufacturing facility and the reduction of our global corporate salaried workforce. In connection with these cost savings initiatives, we incurred asset impairment charges of $6.1 million and severance costs of $2.7 million in fiscal 2005 (combined), and expect to incur future costs of approximately $0.4 million primarily related to the carrying costs of the three closed manufacturing facilities. We expect our future annualized savings associated with these cost savings initiatives will be in the range of $3.0 million to $3.5 million.

As part of an ongoing strategy to focus on manufactured products, we also announced in fiscal 2005 that we will discontinue providing distribution services for our non-manufactured products in the United States, which we expect will reduce our future annualized revenues by approximately $50 million. This action will allow for more efficient distribution of our manufactured products and an increased focus on higher margin, value-added business such that

we do not expect the impact on our income from operations to be material. We completed this transition in the first quarter of fiscal 2006.

Products and Services

We provide our customers with comprehensive pet food category management services designed to expand each customer’s pet food product lines and to improve the category’s profitability. Category management services include:

	•		product development services;

	•		packaging design services; and

	•		pricing and marketing strategy services in connection with our customers’ store brand programs.

Our store brand programs involve the formulation and supply of a wide variety of high quality pet food products, including dry, soft-dry, treats and dog biscuits in the United States as well as dry and wet pet food products and treats in Europe. We believe that these products are comparable in quality to, and sold at a lower price than, competing nationally advertised brand pet food products. For our nationally advertised brand customers, we manufacture pet food products to meet those customers’ specifications and quality standards. Our regional brands are generally economically priced and marketed by our customers as a complement to their other pet food offerings.

Globally, we manufacture dry pet food under approximately 200 store brands. In the United States, our store brands include, among others, Dura Life, Maxximum Nutrition, NutriCare, Ol’ Roy, Pet Pride, PMI-Nutrition, Retriever, Special Kitty and Sportsman’s Choice. Our regional brands manufactured in the United States, which include Country Prime, Kozy Kitten and TrailBlazer, allow our customers to broaden their pet food product offerings. We also offer our Bonkers and Pet Lovers brand treats to retailers. In Europe, we manufacture pet food under a variety of store brands, including, among others, store brands for European retailers such as Mercadona (the Compy brand), Lidl (the Cashida, Opticat and Optidog brands), Reve (the Ja, ProCat and proDo brands) and Cap Italia (the Colbi and Conni brands).

A description of each of our product lines is set forth below:

	•		Dry pet food (71.3% of our fiscal 2005 (combined) net sales). We are the second largest manufacturer of dry pet food in the United States. We produce, market and distribute a wide selection of high quality dry pet food products, predominately for dogs and cats. Our dry pet food product lines include high protein, premium-blended, puppy food, gravy style, soft-dry and super premium meat inclusion products for dogs, and include regular and blended products for cats.

	•		Wet and all other pet food (21.3% of our fiscal 2005 (combined) net sales). These products are distinguishable from dry pet food based on their higher moisture level content, the technology used to manufacture such products and their higher packaging costs. Europe has a much stronger market for wet products than the United States. We manufacture and sell wet pet food throughout Europe, including chunks and gravy, pâté and loaf, in a variety of multi-serve and single-serve packaging, such as cans, alucups and pouches.

	•		Biscuits and treats (7.4% of our fiscal 2005 (combined) net sales). We are a leading global manufacturer of dog biscuits and a manufacturer of soft treats. The manufacturing process for dog biscuits primarily involves baking, whereas, manufacturing of dry pet food involves extrusion.

In addition to manufacturing pet food products, we maintain an in-house engineering, machinery and fabrication services group. This group designs and builds extruders, conveyors, dryers and other parts and equipment, including replacement parts, for our pet food manufacturing facilities and for third parties. Our engineering services group maintains repair staff that service and repair machinery and equipment at our manufacturing facilities, giving us the ability to make timely repairs and reduce downtime. Our in-house engineers generally design and supervise plant construction, thereby reducing plant construction costs and resulting in consistency in manufacturing processes and

quality control. We believe our engineering services group provides us with services at a lower cost and more timely and efficiently than we could obtain from third parties.

Seasonality

Our sales are moderately seasonal. We normally experience an increase in our sales volume during the first and fourth quarters of each year, which is typical in the pet food industry. Generally, cooler weather results in increased dog food consumption.

Marketing

We believe our success depends upon our ability to partner with our customers and create brands and products that their consumers’ believe their pets will love. It also depends on the ability of our people, together with our customers, to find new and appealing ways to deliver those brands to pet-owning consumers everywhere. Our marketing approach emphasizes fundamental consumer, pet, brand and category research which we leverage to build successful brand programs. Our team of experienced marketing professionals provides consumer and category trend analysis, category and shelf management expertise, product development direction, packaging design and promotional planning to drive profitable growth for our customers’ brands and our company.

Sales and Distribution

Our sales team works directly with current and prospective customers, including mass merchandisers, membership clubs, farm and fleet stores, pet specialty stores and grocery chains. We also use independent food brokers to sell our products. We generate new business, in part, through the expansion of our pet food product lines and the development of new marketing programs for existing customers.

As described earlier, we jointly developed a cost effective and innovative North American logistic network with Wal-Mart to facilitate the delivery of our pet food to Wal-Mart seven days a week on Wal-Mart’s trailers. In addition, we distribute a substantial amount of our pet food products to other customers utilizing their transportation networks. We are a just-in-time supplier to several of our largest customers who choose to maintain trailers at our manufacturing and distribution facilities. Proximity to certain of our customers’ distribution centers and retail locations is a key consideration in deciding the location of our manufacturing and distribution facilities and, we believe, is a significant competitive advantage. Our customers’ trailers can be loaded for shipment either directly to individual stores or to their own distribution centers. Those customers that have products shipped directly from our manufacturing and distribution facilities to their retail stores are able to reduce their inventory, freight and handling costs by avoiding shipment to their own distribution centers. Like Wal-Mart, those customers that use their own transportation fleet have the opportunity to utilize their trailers that would otherwise be empty to backhaul a load of pet food on return to their distribution center or directly to another retail store.

For customers that do not utilize their own transportation fleet, we provide transportation on a contract basis through common carriers. We do not own or operate any transportation equipment.

We provide vendor-managed inventory fulfillment services for our customers. We offer the ability to communicate on-line with our customers’ inventory management systems, evaluate their inventory levels and place orders on their behalf. We believe these services provide our customers with significant competitive advantages, which include shorter lead-time requirements, higher inventory turns, reduced out-of-stock positions and fresh pet food product for their customers.

Customers

We manufacture pet food products for approximately 650 customers globally. Our store brand customers in the United States include mass merchandisers such as Wal-Mart and Sam’s Club, pet specialty stores such as PetSmart, grocery chains such as Food Lion, Kroger, Royal Ahold and Safeway, and farm and fleet stores such as Tractor Supply, Mid-States and Land O’Lakes Purina Feeds. Net sales to Wal-Mart and Sam’s Club accounted for 42%, 43% and 43% of our total net sales for fiscal 2003, 2004 and 2005 (combined), respectively. In addition, we manufacture products for many of the largest nationally advertised brand pet food companies in the United States.

Our European customer base is similar to the United States. We sell to many of the leading retailers, farm and fleet outlets, and pet specialty stores, including, among others, Mercadona, Lidl, Sainsbury and Coop Italia. In addition, we manufacture products in Europe for several global brand pet food companies. Globally, we sell to customers in approximately 40 countries.

Competition

The pet food industry is highly competitive. The companies that produce and market the major nationally advertised brand pet foods are national or international conglomerates that are substantially larger than us and possess significantly greater financial and marketing resources than we do. Our store brand pet food products compete for shelf space with nationally advertised brand pet food products on the basis of quality and price. In addition, certain nationally advertised brand companies also manufacture store brands. Nationally advertised brand products compete principally through advertising to create brand awareness and loyalty. We experience direct and indirect price competition from nationally advertised brand pet food products. To the extent that significant price competition from nationally advertised brand products exists, or manufacturers of nationally advertised brands significantly increase their store brand presence, our operating results and cash flows could be adversely affected. We also compete with manufacturers of regional brands and other store brand manufacturers.

We believe we differentiate our company from the nationally advertised brand pet food manufacturers by offering comparable, lower-priced products tailored for each retail customer. This provides retailers with the opportunity to increase pet food category profitability and provides a destination purchase item in this important consumer category. In addition, we believe we differentiate our company from other store brand pet food manufacturers by offering higher quality products and national manufacturing and distribution capabilities.

Raw Materials and Packaging

The principal ingredients required for our dry pet food operations in the United States and Europe are bulk commodity grains and food stocks, including corn, soybean meal, wheat, rice flour, wheat middling, poultry meal, meat and bone meal, corn gluten meal, tallow and poultry fat. We purchase ingredients from large national commodity companies and local grain cooperatives. The ingredient requirements of each of our manufacturing facilities are purchased locally when available and economically feasible due to the high freight costs of transporting bulk commodity products. As a result, ingredient costs may vary substantially among our manufacturing facilities due to the impact of local supply and demand and varying freight costs. Manufacturing of our wet pet food in Europe requires fresh or frozen pork, beef and poultry products which are purchased either from suppliers that aggregate and process meat by-products or directly from suppliers of meat by-products. Packaging, which includes bags, cartons, pouches, cans and alucups, is also a significant component of our material costs. We have several packaging suppliers in the United States and Europe. We generally do not maintain long-term contracts or agreements with any of our suppliers, with the exception of our Denmark manufacturing operations where we utilize sole source suppliers for certain raw materials and packaging. We believe alternative suppliers of raw materials and packaging are readily available.

Our pricing strategy is based on the costs of raw materials, packaging, freight and other manufacturing costs plus a conversion charge, which includes a profit factor. We periodically adjust our selling prices based on fluctuations in raw material, packaging and other manufacturing costs. Future selling price increases may not be acceptable to our customers in the event of increased material costs to us.

We have cost-sharing arrangements with certain of our domestic customers to reduce the impact of volatile commodity costs on our domestic business. We expect to continue to effectively pass through approximately half of future commodity cost fluctuations to our domestic customers, assuming the arrangements continue. Because we generally do not have long-term contracts with our customers, our cost-sharing arrangements could change.

We are exposed to market risk related to changes in commodity prices. We seek to manage commodity price risk associated with market fluctuations by using derivative instruments for portions of our corn, soybean meal, alternative proteins and natural gas purchases, principally through exchange traded futures and options contracts. The terms of such contracts are generally less than one year.

Research and Development

We continuously strive to develop new and improved pet food products and manufacturing processes. Our research and development department includes a full-time staff of food technologists, chemists and companion animal nutritionists, a central laboratory with chemists and microbiologists for research and development, and quality control laboratories at each of our manufacturing facilities. Our research and development team formulates new pet food recipes comprised of ingredients fortified with vitamins and minerals, and tests the nutritional content of new products. We exclusively use independent commercial kennels and catteries which, for our domestic market, are USDA licensed and inspected, that meet our strict animal care and welfare standards for comparison feeding tests with nationally advertised brand products to assure comparable digestibility and palatability and to substantiate the nutritional claims of new products.

Quality Assurance

We maintain a comprehensive program for qualifying new vendors, testing raw materials for nutritional adequacy and screening to detect the presence of mycotoxins and other harmful substances. We continuously test pet food production at each of our manufacturing facilities by analyzing our pet food products against specifications, formula and regulatory requirements. Packaging is inspected for print quality, proper dimensions, construction and compliance with labeling regulations.

Environmental and Safety Matters

We are subject to a broad range of federal, state, local and foreign environmental laws and regulations intended to protect public health and the environment, including those governing discharges into the air, soil and water, the storage of petroleum substances and chemicals, the handling and disposal of solid or hazardous wastes, and the investigation or remediation of contamination associated with releases of wastes or hazardous substances. Violations of or liability under with these laws and regulations may result in administrative, civil or criminal penalties being levied against us, permit revocation or modification, performance of environmental investigatory or remedial activities, as well as, in certain instances, the issuance of injunctions that may limit or prohibit our operations. Environmental laws and regulations have changed substantially over the years and we believe the trend of more strict and expansive environmental laws and regulations will continue. While we believe that we are in substantial compliance with current applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse impact on us, we cannot provide any assurance that our environmental compliance costs or environmental-related capital expenditures will not have a material adverse impact on us in the future.

Our U.S. operations involve the current use of aboveground storage tanks and belowground sumps and, in the past, have involved the use of regulated underground storage tanks. Under applicable laws and regulations, we are responsible for the proper use, maintenance and abandonment of regulated storage tanks that we own or operate and for remediation of soils, groundwater and surface water impacted by releases from such existing aboveground or previously abandoned regulated underground storage tanks as well as from below ground sumps.

Our U.S. operations are also subject to laws and regulations governing remediation, recycling and disposal. The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, also known as CERCLA or the “Superfund” law, and analogous state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered responsible for the release of a “hazardous substance” into the environment. These persons include the owner or operator of a facility where a hazardous substance release occurred and companies that disposed or arranged for the disposal of hazardous substances found at the site. Under CERCLA, such persons may be subject to strict, joint and several liability for the costs of environmental response measures and natural resource damages, and it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. In the course of our operations, we generate materials that may be characterized as hazardous substances. We also generate hazardous and non-hazardous wastes that are subject to the federal Resource Conservation and Recovery Act, as amended, also known as RCRA, and comparable state statutes. The U.S. Environmental Protection Agency, or EPA, and various state agencies have limited the approved methods of disposal for certain hazardous and nonhazardous wastes and any future changes to such methods that are more rigorous or restrictive can increase the operating and disposal requirements incurred by us as well as by the industry in general. In the past, nearby industries have suffered releases of hazardous substances to the environment

that are the subject of investigations under CERCLA or analogous state laws. It is possible that these neighboring environmental activities may have impacted some of our properties. We have not been advised, nor do we expect to be advised, by any environmental agency that we are currently considered a potentially responsible party for the neighboring environmental conditions, and we have no reason to believe that such neighboring conditions would have a material adverse effect on our company. In connection with the area wide groundwater contamination underlying portions of the City of San Bernardino, California, the EPA issued to us an information request on August 17, 2004 regarding the use of any tetrachloroethylene, thichloroethylene, or Freon 11 or 12 at our San Bernardino facility. We responded to the EPA in November 2004 and have not received any follow-up correspondence from the agency on this matter since that time.

We currently own or lease properties and through acquisitions in the future could own or lease additional properties that, in some instances, have been used for pet food manufacturing or feed mill operations for many years. Although we have utilized operating and disposal practices that were standard in the industry at the time, in some locations environmentally sensitive materials were spilled or released on or under the properties owned or leased by us or on or under other locations where such materials were taken for disposal. In addition, many of these properties have been operated by third parties whose use, handling and disposal of such environmentally sensitive materials or wastes were not under our control. These properties and the waste materials spilled, released or otherwise found thereon may be subject to CERCLA, RCRA, and analogous state laws. Under such laws, we can be required to remove or remediate previously spilled or released waste materials (including such materials spilled or released by prior owners or operators) or property contamination (including groundwater contamination caused by prior owners or operators), or to perform monitoring or remedial activities to prevent future contamination (including releases from previously operated underground storage tanks or existing aboveground bulk petroleum storage facilities). While we do not believe any pending remedial activities will have a material adverse effect on our financial condition, there is no assurance that we will not incur additional environmental response costs in the future at existing manufacturing facilities or at other sites where waste material impacts resulting from historical or ongoing operations may be identified or that such future costs will not be material.

Our U.S. operations are also subject to the federal Clean Water Act, as amended, and analogous state laws relating to the discharge of pollutants into state and federal waters. These laws also regulate the discharge of stormwater in process areas. Local sewerage authorities have established regulations governing connections to and discharges into their sewer systems and treatment plants. Pursuant to these laws and regulations, we are required to obtain and maintain approvals or permits at a number of our facilities for the discharge of our wastewater and stormwater and develop and implement spill prevention control and countermeasure plans, also referred to as SPCC plans, in connection with on-site storage of greater than threshold quantities of oil. In July 2002, the EPA issued a revised SPCC rule, whereby SPCC plans are subject to more rigorous review and certification procedures. The implementation date of this rule has been extended by the EPA. Under the current EPA deadlines, SPCC plans must be amended, if necessary to ensure compliance, and implemented by no later than October 31, 2007. Compliance with this rule will require us to update and implement amended SPCC plans at a number of our facilities where the plans are required. In addition, as part of the regular overall evaluation of our ongoing operations, we are re-evaluating and, as necessary, updating the stormwater discharge permitting coverage at certain of our facilities. Also, from time to time, we are required to make capital improvements or make certain operational upgrades at certain of our facilities to assure compliance with regulatory and permit conditions relating to our wastewaters discharged offsite as well as our other operating activities. Failure to comply with these laws, regulations and permit conditions may result in the imposition of administrative, civil and criminal penalties. We believe that our operations are in substantial compliance with the Clean Water Act and analogous state and local requirements, and that the implementation of amended SPCC plans and the installation of any wastewater discharge capital improvements will not have a material adverse effect on our operations or financial condition.

Our U.S. operations are subject to federal, state and local requirements pertaining to air emissions. We have been required from time to time to install air emission control or odor control devices to satisfy applicable air requirements. It is possible that in the future, additional air emission or odor control devices may be required to be installed at facilities of ours as deemed necessary to satisfy existing or future requirements.

The manufacturing and marketing of our products in the United States are subject to regulation by federal regulatory agencies, including the Occupational Safety and Health Administration, the Food and Drug Administration and the Department of Agriculture, and by various state and local authorities. The Food and Drug Administration also regulates the labeling of our products. Substantial administrative, civil and criminal penalties

may be imposed for violations of Occupational Safety and Health Administration, Food and Drug Administration and Department of Agriculture regulations, and violations may be restrained through injunction proceedings. We procure and maintain the necessary permits and licenses to operate our U.S. facilities and consider our company to be in material compliance with applicable Occupational Safety and Health Administration, Food and Drug Administration and Department of Agriculture requirements.

Our facilities outside of the United States are potentially subject to similar foreign governmental controls and restrictions pertaining to the environment, safety, and public health. Among the controls and restrictions imposed on our facilities outside of the United States are requirements for obtaining necessary environmental permits, cleanup of subsurface conditions beneath our facilities arising from primarily historical operations, control of odors resulting from our operations, limitation of pollutants that are contained in wastewater effluent discharged or otherwise transported from our facilities, and development and implementation or upgrading of environmental management systems at our facilities to assure compliance with applicable laws and regulations.

We believe our U.S. and foreign operations are in compliance in all material respects with applicable current environmental, safety and public health laws and regulations; however, those laws and regulations may change in the future and we may incur significant costs in the future to comply with those laws and regulations or in connection with the effect of these matters on our business.

Trademarks

Certain of our brands are protected by trademark registrations in the United States and in certain foreign countries. We believe our registered trademarks are adequate to protect such brand names.

Employees

As of March 1, 2006, our global workforce consisted of 2,202 employees. We had 1,427 employees in the United States and 775 employees in Europe, comprised of 588 management and administrative personnel and 1,614 manufacturing personnel. We have 334 employees represented by labor unions at six of our U.S. manufacturing facilities. A collective bargaining agreement at our Muscatine, Iowa facility covered 38 employees as of March 1, 2006 and expires on June 30, 2006. A collective bargaining agreement at our Portland, Indiana facility covered 45 employees as of March 1, 2006 and expires on July 22, 2007. A collective bargaining agreement at our Allentown, Pennsylvania facility covered 32 employees as of March 1, 2006 and expires on July 16, 2008. A collective bargaining agreement at our Birmingham, Alabama facility covered 66 employees as of March 1, 2006 and expires on July 20, 2008. A collective bargaining agreement covering 59 employees at our Miami, Oklahoma facility was ratified on March 6, 2006 and expires on April 30, 2008. The collective bargaining agreement at our Joplin, Missouri facility expired on February 4, 2006. The agreement covered 94 employees. These employees initiated a strike as of February 18, 2006 and continue to be on strike while negotiations for a new agreement continue. Nevertheless, we are continuing to operate the Joplin facility. Except with respect to this facility, generally, we consider relations with our employees to be satisfactory.

Foreign Operations

See Note 18 to our accompanying audited consolidated financial statements included herein for geographical segment data relating to our manufacturing operations based in the United States and Europe.

Forward-Looking Statements

Certain of the statements in our 2005 10-K, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some of these statements can be identified by terms and phrases such as “anticipate,” “believe,” “assume,” “intend,” “estimate,” “expect,” “continue,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions. These forward-looking statements appear in a number of places and reflect management’s beliefs and assumptions and are based on information currently available to management. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or performance to be materially different from

any future results or performance expressed or implied by us in those statements. These risks, uncertainties and other factors include among others:

	•		reliance on a few customers for a large portion of our sales and our ability to maintain our relationships with these customers;

	•		our exposure to, and our ability to manage, our market risk relating to commodity, oil and natural gas prices, interest rates and foreign currency exchange rates;

	•		changes in demand for our products;

	•		future capital expenditures and our ability to finance these capital expenditures;

	•		our ability to make required interest or principal payments on our senior credit facility and our other indebtedness and to comply with the financial covenants under our debt agreements;

	•		our business strategies and other plans and objectives for future operations;

	•		general economic and business conditions and changes in market trends;

	•		business opportunities that may be presented to and pursued by us from time to time;

	•		risks related to our international operations;

	•		risks related to product liability claims and product recalls;

	•		the outcome of any legal proceedings to which we or any of our subsidiaries may be a party; and

	•		the impact of existing or new accounting pronouncements.

These forward-looking statements are based on our assumptions and analyses and are not guarantees of our future performance. These statements are subject to risks, many of which are beyond our control, that could cause our actual results to differ materially from those contained in our forward-looking statements. We undertake no obligation to update or revise any forward-looking statements for any new information, future events or otherwise. All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

ITEM 1A — Risk Factors

Risks Relating to Our Indebtedness

Our level of indebtedness could negatively impact our financial condition, results of operations and business prospects and prevent us from fulfilling our debt service obligations.

We are highly leveraged. As of the end of fiscal 2005, we had $564.3 million of outstanding indebtedness, including premiums and discounts. Our substantial indebtedness could have important consequences to our operations including:

	•		making it more difficult for us to satisfy our debt service obligations which, if we fail to comply with the requirements of any of our debt agreements, could result in an event of default;

	•		requiring us to dedicate a substantial portion of our cash flows from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow for capital expenditures, working capital, acquisitions and other general business activities;

	•		limiting our ability to obtain additional financing in the future for capital expenditures, working capital, acquisitions and other general business activities;

	•		limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

	•		making us vulnerable to fluctuations in interest rates because indebtedness under our senior credit facility is subject to variable interest rates;

	•		detracting from our ability to successfully withstand a downturn in our business or the general economy; and

	•		placing us at a competitive disadvantage against other less leveraged pet food companies.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt, which could further exacerbate the risks associated with our substantial indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of our debt agreements do not fully prohibit us or our subsidiaries from doing so. If new indebtedness is added to our or our subsidiaries’ current debt levels, the related risks that we and they now face would increase. In addition, the debt agreements governing our senior credit facility, senior notes and senior subordinated notes do not prevent us from incurring obligations that do not constitute indebtedness. As of the end of fiscal 2005, we had available borrowings under our revolving credit facility of $45.5 million, net of $4.5 million of issued and undrawn letters of credit.

We may not be able to generate sufficient cash flow to service our indebtedness.

Our ability to make required interest and principal payments on our indebtedness, and to fund planned capital expenditures and other general business activities, will depend upon our ability to generate cash and our future operating results. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Our business may not generate sufficient cash flows from operations and future borrowings may not be available to us under our senior credit facility or otherwise to enable us to repay our indebtedness or fund our other liquidity needs. If we fail to make required interest or principal payments or fail to comply with the financial and operating covenants contained in our debt agreements, we would be in default, and our lenders would have the ability to require us to immediately repay our outstanding indebtedness. If the lenders required immediate payment from us, we may not have sufficient assets to satisfy the obligations under our indebtedness.

We also could be forced to sell assets to make up for any shortfall in our payment obligations under unfavorable circumstances. Our senior credit facility and the obligations under our senior notes and senior subordinated notes limit our ability to sell assets and also restrict the use of proceeds from any such sale of assets. Furthermore, our senior credit facility is secured by substantially all of our assets. Therefore, we may not be able to sell our assets quickly enough or generate sufficient proceeds to enable us to meet our debt service obligations.

In addition, we may need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness, including our senior credit facility, senior notes or senior subordinated notes, on commercially reasonable terms or at all.

Our debt agreements limit certain business activities and could materially affect our operations.

Our senior credit facility, the instruments governing the indebtedness of our foreign subsidiaries and the indentures governing our senior notes and senior subordinated notes limit our ability and the ability of our parent corporation and our restricted subsidiaries to take a number of actions that we or they may otherwise desire to take, including:

•

incurring additional indebtedness or issuing certain types of capital stock;

	•		incurring liens;

	•		paying dividends or making other restricted payments;

	•		entering into transactions with affiliates;

	•		merging or consolidating with another entity;

	•		selling or disposing of our assets;

	•		making certain investments; or

	•		entering into certain lines of business.

In addition, our senior credit facility has financial and operating covenants that require us to, among other things, maintain specified financial ratios and satisfy certain financial condition tests. Our ability to satisfy the requirements of these financial ratios and tests can be affected by events beyond our control, such as prevailing economic, financial or industry conditions, and we may not be able to meet these ratios or tests. We have experienced difficulty in the past satisfying the financial covenants in our previous senior credit facilities and have either negotiated amendments or obtained waivers from our previous lenders for fiscal 2000, 2001 and 2003. If we violate the financial covenants in our senior credit facility and are unable to negotiate amendments or obtain waivers from our lenders, we could be in default and our lenders may accelerate our debt, and we would not be able to draw upon additional availability under our senior credit facility to meet our liquidity needs. Additionally, lenders under our senior credit facility could proceed against the collateral that secures their indebtedness. Our assets may not be sufficient to repay in full this secured indebtedness or any other indebtedness. We were in compliance with the financial covenants in our senior credit facility as of the end of fiscal 2005.

If we are unable to generate sufficient operating cash flows in the future to service our indebtedness, to comply with covenants and to meet other commitments of our indebtedness, we may be required to take certain actions, such as selling material assets or operations, reducing or delaying capital expenditures, or revising or delaying our strategic plans. We may not be able to take any of these actions on a timely basis or with satisfactory terms or take actions that would enable us to continue to satisfy our capital requirements. Certain of these actions may be prohibited by our debt agreements or require the consent of our lenders.

In addition, an event of default under one of our debt agreements may affect other debt agreements that contain cross-acceleration or cross-default provisions, which may cause obligations under the other agreements to be accelerated and become due and payable. If any of these events occur, we may not be able to make necessary payments to the lenders and may not be able to find alternative financing. Even if we were able to obtain alternative financing, it may not be on terms that are acceptable to us.

Our senior notes and the related guarantees are effectively subordinated to all of our secured debt, including the debt under our senior credit facility, and if a default occurs, we may not have sufficient funds to fulfill our obligations under our senior notes.

Our senior notes and the related guarantees are not secured by any of our assets and, therefore, are effectively subordinated to all of our and our guarantors’ secured debt as well as any secured debt of our subsidiary guarantors to the extent of the value of the assets securing that debt. We have pledged substantially all of our assets as collateral to secure our indebtedness under our senior credit facility. As of the end of fiscal 2005, our senior notes and related guarantees would have been effectively subordinated to $182.2 million in principal amount, consisting of $159.2 million under our senior credit facility, $12.0 million under our industrial development revenue bonds and $11.0 million of indebtedness of our foreign subsidiaries. We and our guarantors may also incur additional secured indebtedness in the future. As of the end of fiscal 2005, we had $45.5 million of available secured borrowings under our revolving credit facility, net of $4.5 million of issued and undrawn letters of credit.

In the event of the bankruptcy, liquidation, reorganization or other winding up of our Company, our assets that serve as collateral for our secured indebtedness will be available, if at all, to pay obligations on our senior notes only after all secured indebtedness has been repaid in full from those assets. Likewise, because the obligations under our senior credit facility are secured obligations, our failure to comply with the terms of our senior credit facility would entitle those lenders to foreclose on substantially all of our assets that serve as collateral. In this event, these lenders would be entitled to be repaid in full from the proceeds of the liquidation of those assets before those assets would be available for distribution to other creditors, including holders of our senior notes. Holders of our senior notes will participate in the distribution of our remaining assets, if any, ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as our senior notes, and potentially with all our other general creditors. There may not be sufficient assets remaining to pay amounts due on any or all of our senior notes then outstanding. The guarantees of our senior notes are similarly subordinated to secured indebtedness of the guarantors.

Our senior subordinated notes and the related guarantees are effectively subordinated to all of our secured debt as a result of liens granted by us, including the debt under our senior credit facility, and if a default occurs, we may not have sufficient funds to fulfill our obligations under our senior subordinated notes.

Our senior subordinated notes and the related guarantees are not secured by any of our assets and, therefore, are effectively subordinated to all of our and our guarantors’ secured debt to the extent of the value of the assets securing that debt. We have pledged substantially all of our assets as collateral to secure our indebtedness under our senior credit facility. As of the end of fiscal 2005, our senior subordinated notes and related guarantees would have been effectively subordinated to $182.2 million in principal amount of total secured outstanding indebtedness consisting of $159.2 million under our senior credit facility, $12.0 million under our industrial development revenue bonds and $11.0 million of indebtedness of our foreign subsidiaries. We and our guarantors may also incur additional secured indebtedness in the future. As of the end of fiscal 2005, we had $45.5 million of available secured borrowings under our revolving credit facility, net of $4.5 million of issued and undrawn letters of credit.

In the event of the bankruptcy, liquidation, reorganization or other winding up of our company, our assets that serve as collateral for our secured indebtedness will be available, if at all, to pay obligations on the notes only after all secured indebtedness has been repaid in full from those assets. Likewise, because the obligations under our senior credit facility are secured obligations, our failure to comply with the terms of our senior credit facility would entitle those lenders to foreclose on substantially all of our assets that serve as their collateral. In this event, those lenders would be entitled to be repaid in full from the proceeds of the liquidation of those assets before those assets would be available for distribution to other creditors, including holders of our senior subordinated notes. The senior subordinated notes also rank junior to our senior notes and therefore upon any distribution to our creditors or the creditors of our guarantors in a bankruptcy, liquidation, reorganization or similar proceeding relating to us or any of the guarantors of our senior notes, holders of our senior notes are entitled to be paid in full in cash before any payment may be made with respect to the notes or any related guarantees. Holders of the senior subordinated notes will participate in the distribution of our remaining assets, if any, ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as the senior subordinated notes, and potentially with all our other general creditors. There may not be sufficient assets remaining to pay amounts due on any or all of the senior subordinated notes. The guarantees of the senior subordinated notes are similarly subordinated to secured indebtedness of our guarantors and the guarantees of the senior notes.

Our senior notes and senior subordinated notes are structurally subordinated to all indebtedness of our subsidiaries that are not guarantors of these notes.

Our senior notes and senior subordinated notes are guaranteed only by our existing domestic restricted subsidiaries. These notes are not guaranteed by our foreign subsidiaries. Holders of these notes do not have any claim as a creditor against our subsidiaries that are not guarantors of the notes, and indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will be effectively senior to claims of the holders of these notes against the assets of those subsidiaries. All obligations owed by our non-guarantor subsidiaries would have to be satisfied before any of the assets of those subsidiaries would be available for distribution, upon a liquidation or otherwise, to us or a subsidiary that is a guarantor of the notes. Our non-guarantor subsidiaries represented 29.3% of our net sales and 24.9% of our operating income for fiscal 2005 (combined). As of the end of fiscal 2005, our non-guarantor subsidiaries represented 35.8% of our total assets, after intercompany eliminations, and had $11.0 million of outstanding indebtedness. This amount of total liabilities excludes $234.1

million of intercompany obligations owed to our guarantor subsidiaries and $50.8 million of trade payables and other liabilities. Our non-guarantor subsidiaries may incur additional indebtedness in the future.

The right of holders of our senior subordinated notes to receive payments on these notes is junior to the borrowings under our senior credit facility, senior notes and all future senior indebtedness. Further, the guarantees of our senior subordinated notes are junior to our guarantors’ senior indebtedness.

Our senior subordinated notes rank behind all of our existing senior indebtedness, including our senior notes and borrowings under our senior credit facility, and our future senior indebtedness, if any. Additionally, the related guarantees rank behind any of our guarantors’ old and new senior indebtedness, including guarantees of our senior notes and borrowings under our senior credit facility; except, in each case, for any indebtedness that expressly provides that it ranks equal with, or is subordinated in right of payment to, the senior subordinated notes or the related guarantees, as applicable. As a result, upon any distribution to our creditors or the creditors of any of our guarantors in a bankruptcy, liquidation, reorganization or similar proceeding relating to us or any of our guarantors or their respective property or assets, the holders of our senior indebtedness and the senior indebtedness of any of our guarantors will be entitled to be paid in full in cash before any payment may be made with respect to our senior subordinated notes or any related guarantees.

In addition, all payments on our senior subordinated notes and any related guarantees will be blocked in the event of a payment default on our senior indebtedness and may be blocked for up to 179 consecutive days in the event of certain non-payment defaults on our senior indebtedness.

In the event of our bankruptcy, liquidation, reorganization or similar proceeding or that of any of our guarantors, holders of the senior subordinated notes will participate with trade creditors and all other holders of our and any of our guarantors’ senior subordinated indebtedness in the assets remaining after we and any of our guarantors have paid all of our or their respective senior indebtedness. However, because the indenture governing the senior subordinated notes requires that amounts otherwise payable to holders of the senior subordinated notes in a bankruptcy or similar proceeding be paid to holders of senior indebtedness instead, holders of the senior subordinated notes may receive less, ratably, than holders of trade payables in any such proceeding. In any of these cases, we and our guarantors may not have sufficient funds to pay all of our creditors, and holders of the senior subordinated notes may receive less, ratably, than the holders of senior indebtedness.

As of the end of fiscal 2005, our senior subordinated notes were subordinated in right of payment to $395.2 million in principal amount of outstanding senior indebtedness and $45.5 million of available borrowings under our revolving credit facility, net of $4.5 million of issued and undrawn letters of credit, which would have been available for borrowing as additional senior indebtedness under the revolving credit portion of our senior credit facility. We may be permitted to borrow substantial additional indebtedness, including senior indebtedness, in the future under the terms of the indenture governing the senior subordinated notes. If new senior indebtedness is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face would increase.

Even if a transaction constitutes a change of control that would obligate us to offer to repurchase certain of our indebtedness, we may not be permitted or have the ability to satisfy our obligation to repurchase this indebtedness.

Upon the occurrence of certain change of control events, holders of our senior notes, senior subordinated notes, industrial development revenue bonds, and the lenders under the indebtedness of our foreign subsidiaries, may require us to repurchase all or part of the indebtedness. Even if a transaction constitutes a change of control, we may not have sufficient funds at the time of the change of control to make the required repurchases. Additionally, restrictions in our senior credit facility may not allow such repurchases and certain events that would constitute a change of control as defined in the indentures governing our senior notes, senior subordinated notes and industrial development revenue bonds, and the credit agreement governing the indebtedness of our foreign subsidiaries, may constitute an event of default under our senior credit facility. Such an event of default would, if it should occur, permit the lenders to accelerate the indebtedness outstanding under our senior credit facility and that, in turn, would cause an event of default under the indentures governing our senior notes, senior subordinated notes and industrial development revenue bonds, and the credit agreement governing the indebtedness of our foreign subsidiaries.

The source of funds for any repurchase required as a result of a change of control will be our available cash or cash generated from our operations or other sources, including borrowings, sales of assets, sales of equity or funds provided by third parties. Sufficient funds may not be available at the time of any change of control to make any required repurchases of our senior notes, senior subordinated notes or industrial development revenue bonds and to repay the indebtedness under our senior credit facility. Furthermore, using available cash to fund the potential consequences of a change of control may impair our ability to obtain additional financing in the future. Any future credit agreements or other agreements relating to debt to which we may become a party will most likely contain similar restrictions on our ability to make repurchases upon a change of control.

A guarantee of our senior notes or senior subordinated notes could be voided or subordinated because of federal bankruptcy law or comparable state law provisions.

Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, one or more of the guarantees of our senior notes or senior subordinated notes could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and

	•		was insolvent or rendered insolvent by reason of such incurrence;

	•		was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital;

	•		intended to incur, or believed that it would incur, indebtedness beyond its ability to pay such debts as they mature; or

	•		was a defendant in an action for monetary damages, or had a judgment for monetary damages against it if, in either case, after final judgment, the judgment is unsatisfied.

In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor.

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

	•		the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;

	•		the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on existing debts, including contingent liabilities, as they become absolute and mature;

	•		the guarantor was a defendant in an action for monetary damages, or had a judgment for monetary damages docketed against it if, in either case, after final judgment, the judgment is unsatisfied; or

	•		it could not pay its debts as they become due.

A court may apply a different standard in making these determinations.

Risks Relating to Our Business Operations

One of our customers accounts for a substantial portion of our revenue and the loss of this customer, or a significant decrease or change in business with this customer, would have a material adverse effect on our results of operations and reduce our ability to service our debt obligations.

Net sales to Wal-Mart and Sam’s Club accounted for 42%, 43% and 43% of our total net sales for fiscal 2003, 2004 and 2005 (combined), respectively. We do not have a long-term contract with Wal-Mart or Sam’s Club. The loss of Wal-Mart and Sam’s Club as a customer, or a significant decrease or adverse change in business from them, would have a material adverse effect on our results of operations, financial condition and cash flows. In addition, our results of operations and ability to service our debt obligations would be negatively impacted to the extent that Wal-Mart or Sam’s Club were unable to make payments or did not make timely payments on its outstanding accounts receivable with us.

We rely on a small number of customers, certain of which are able to make greater demands of us.

We rely on a small number of customers to generate a substantial portion of our sales. As a result of the leading market positions of many of our customers, they are able to exert pressure on us with respect to pricing, promotions, new product introductions and other services that may affect our results of operations. For our store brand and co-manufacturing customers, we rely on the strength of brands that we do not own or control and on the willingness of the owners of such brands to promote them to increase sales volume. Our net sales and results of operations may be increasingly sensitive to a deterioration in the financial condition of, or other adverse developments with, one or more of our customers.

Increases in raw materials, packaging, oil and natural gas costs and volatility in the commodity markets has in the past and may in the future adversely affect our results of operations.

Our financial results depend to a large extent on the costs of raw materials, packaging, oil and natural gas and our ability to pass through increases in these costs to our customers. Historically, market prices for commodity grains and food stocks have fluctuated in response to a number of factors, including changes in U.S. government farm support programs, changes in international agricultural trading policies, impacts of disease outbreaks on protein sources and the potential effect on supply and demand as well as weather conditions during the growing and harvesting seasons. Fluctuations in paper and plastic prices, which affect our costs for packaging materials, have resulted from changes in supply and demand, general economic conditions and other factors. In addition, we have exposure to changes in the pricing of oil, steel and natural gas, which affects our manufacturing, packaging and freight costs.

In the event of any increases in raw materials, packaging, oil and natural gas costs, we may be required to seek increased selling prices for our products to avoid margin deterioration. We cannot provide any assurances as to the timing or extent of our ability to implement future selling price increases in the event of increased raw materials, packaging, oil or natural gas costs or of whether any price increases implemented by us may affect future sales volumes to our customers.

Our results of operations have in the past been adversely affected by volatility in the commodity, oil and natural gas markets and our results of operations may be adversely affected in the future by this volatility.

The use of commodity derivative instruments may expose us to increased risk of market fluctuations in commodity prices and may reduce our flexibility in managing fluctuations in the costs of our raw materials, which may adversely affect our results of operations.

We have sought and may continue to seek to manage our commodity price risk associated with market fluctuations by using derivative instruments for portions of our corn, soybean meal, alternative proteins and natural gas purchases, principally through exchange traded futures and options contracts. The terms of such contracts are generally less than one year. Although we may seek to manage the price risk of market fluctuations by hedging portions of our primary commodity product purchases, our results of operations have been adversely affected in the past by these fluctuations and they may be adversely affected by these fluctuations in the future.

The use of commodity derivative instruments and the related accounting treatment have adversely affected our results of operations in the past due to the volatility of commodity prices and may adversely affect our results of operations in the future.

The use of certain commodity contracts reduces our ability to take advantage of short-term reductions in raw material costs. If one or more of our competitors is able to reduce their costs by taking advantage of any reductions in raw material costs, we may face pricing pressures from these competitors and may be forced to reduce our selling prices or face a decline in sales volumes, either of which could have a material adverse effect on our business, results of operations and financial condition.

Restrictions imposed in reaction to outbreaks of “mad cow disease,” “bird flu,” “foot-and-mouth disease” or other animal diseases could adversely impact the cost and availability of our raw materials.

The cost of our raw materials has been adversely impacted in the past by the publicity surrounding bovine spongiform encephalopathy, or BSE, which is also known as “mad cow disease” and is a terminal brain disease of cattle. Cases of BSE were found in Europe, among other areas, in late 2000 and in Canada and the United States in 2003, and again in March 2006 in the United States. As a result of extensive global publicity and trade restrictions imposed to provide safeguards against the disease, the cost of alternative sources for our raw material proteins, such as soybeans, pork meat and bone meal, have increased significantly from time to time in the past and may increase in the future if additional cases of BSE are found in areas where we manufacture or sell our products.

In fiscal 2001, an outbreak of foot-and-mouth disease, or FMD, was discovered in Europe. FMD affects animals with cloven hooves, such as cattle, swine, sheep, goats and deer. While FMD is not considered a threat to humans, people who come in contact with the virus can spread it to animals.

In 2004, the first case in 20 years of highly pathogenic Avian Influenza, or HPAI and commonly known as “bird flu,” was detected in the United States. The U.S. HPAI virus was identified as the H5N2 strain and, while classified as highly virulent to birds, has not been shown to affect humans and is not related to the highly publicized H5N1 strain of the Asian HPAI virus. The H5N1 strain of the Asian HPAI virus first emerged in Hong Kong in 1997, re-emerged in 2003 in South Korea and is known to have spread to Southeast Asia, including China, Vietnam, Thailand, Cambodia, India, Pakistan and Indonesia, and to countries to the west, including Russia, Ukraine, Iraq, Turkey, Greece, Romania, Egypt, Nigeria, Italy, Poland, Germany and France. Of the approximately 176 people who are known to have contracted the virus associated with the H5N1 strain purportedly from exposure to infected birds, at least 97 people have died. In an effort to limit the spread of the H5N1 strain, governmental authorities have been ordering the destruction of infected flocks and imposing bans against imports of poultry from countries where the virus is known to exist. These measures may adversely impact the price and availability of our sources of raw material proteins.

If BSE, FMD, HPAI or any other animal disease impacts the availability of our raw materials, we may be required to locate alternative sources for our raw materials. We can give no assurance that those sources would be available to sustain our sales volumes or that these alternative sources would not be more costly. If outbreaks of BSE, FMD, HPAI or any other animal disease or the resulting regulation or publicity, impacts the cost of our raw materials, or the cost of alternative raw materials compared to current costs, we may be required to increase the selling price of our products to avoid margin deterioration. We can give no assurance of the timing or extent of our ability to implement future price increases in the event of higher raw material costs or of whether any such price adjustments implemented by us may affect demand for our products from our customers.

Our acquisition activities, including integration, operation and management of these businesses, may not be successful or may subject us to losses.

Any acquisition we may pursue could be based on identifying and acquiring businesses engaged in manufacturing and distributing pet food products in markets where we currently do not operate or businesses with products that would complement our product mix. Our lack of experience in new markets we may enter through future acquisitions could have an adverse effect on our results of operations and financial condition. Acquisitions may require investment of additional capital and financial resources and could require integration of dissimilar operations, assimilation of employees, diversion of management time and resources, increases in administrative costs, potential loss of key employees of the acquired company and additional costs associated with debt or equity financing. Our acquisitions have in the past and may in the future result in subsequent losses associated with our discontinued operations.

We may encounter increased competition for acquisitions in the future, which could result in acquisition prices we do not consider acceptable. We may not have sufficient available capital resources to execute potential acquisitions, and our ability to enter into acquisitions may be limited by our senior credit facility and agreements covering our other indebtedness. We may not find suitable acquisition candidates at acceptable prices or succeed in integrating any acquired business into our existing business or in retaining key customers of acquired businesses.

Our operating results and financial condition could be adversely affected by acquisitions if any of the following were to occur:

	•		the expected operating efficiencies from the acquisitions do not materialize;

	•		we fail to successfully integrate the acquisitions into our existing operations; or

	•		the cost of integrating the acquired entity exceeds expectations.

The amount of goodwill and other intangible assets we have recorded from the Acquisition may not be realized, which could have a material adverse effect on our results of operations.

As of the end of fiscal 2005, we had $321.1 million of goodwill and $283.5 million of other identifiable intangible assets that were recorded in connection with the Acquisition. These assets, which represented 54.5% of our total assets as of the end of fiscal 2005, may become impaired in the future. Our other intangible assets consist of certain significant customer relationships that were identified as of the Acquisition date based upon an independent third party appraisal to have intangible value to us. We have segregated these customer relationships into two classifications based upon an assessment of the expected lifespan of these assets. Our results of operations in future periods could be materially adversely affected if our goodwill and customer relationships are determined to be impaired.

We face significant competition from national, regional and store brand manufacturers, many of whom are larger than we are and have significantly greater resources than we do.

The pet food industry is highly competitive. The companies that produce and market the major nationally advertised brand pet foods are national or international conglomerates that are substantially larger than us and possess significantly greater financial and marketing resources than us. Our store brand pet food products compete for shelf space with nationally advertised brand pet food products on the basis of quality and price. In addition, certain nationally advertised brand manufacturers also manufacture store brands. Nationally advertised brand products compete principally through advertising to create brand awareness and loyalty. We experience direct and indirect price competition from nationally advertised brand products. To the extent significant price competition from nationally advertised brand products exists or the nationally advertised brand manufacturers significantly increase their store brand presence, our operating results and cash flows could be adversely affected. We also compete with regional brand manufacturers and other store brand manufacturers.

A significant portion of our revenues is derived from our international operations, which subject us to additional business, economic and political risks and could limit our ability to successfully execute our business strategy.

Our business strategy is based, in part, on the expansion of our international operations and sales. We have manufacturing facilities in Austria, Denmark, Spain and the United Kingdom and a joint venture in Italy. Globally, we sell to customers in approximately 40 countries. In fiscal 2005 (combined), our foreign subsidiaries had net sales of $290.4 million, or 29.3% of our total net sales, with the majority of these sales in Europe.

We have foreign currency exposure relating to our business transactions in currencies other than the U.S. dollar. Our functional currencies other than the U.S. dollar include the Euro, Danish Krona and British Pound Sterling. The timing and extent of fluctuations in foreign currency exchange rates may have a material adverse effect on our operations due to the translations of the financial statements of our foreign subsidiaries. Our efforts to manage our foreign currency exposure may not protect us from fluctuations in foreign currency exchange rates.

Other risks relating to our international operations include:

	•		import and export license requirements;

	•		trade restrictions;

	•		foreign tax laws, tariffs, and other foreign laws and regulations;

	•		limitations on repatriating earnings back to the United States;

	•		difficulties in staffing and managing our international operations, including potential labor interruptions;

	•		nationalization;

	•		expropriation;

	•		restrictive actions by local governments;

	•		acts of terrorism;

	•		war and civil disturbance; and

	•		disruptions or delays in shipments.

Any of these events could have a material adverse effect on our operations in foreign countries and an interruption of our international operations could have a material adverse effect on our results of operations and financial condition.

If we lose certain key employees or are unable to hire additional qualified employees, we may not be successful.

Our success depends, in part, upon the continued services of our employees involved in management, sales, manufacturing and distribution, and, in particular, upon the efforts and abilities of our senior management team. If we lose the service of any of the members of our senior management team, the loss could have a material adverse effect on our business, financial condition and results of operations. We do not have key person life insurance covering any of our employees. Our success also depends upon our ability to attract and retain highly qualified employees.

We are subject to extensive environmental regulation and our compliance with existing or future laws and regulations or making any product recalls pursuant thereto could cause us to incur substantial expenditures.

We are subject to a broad range of federal, state, local and foreign laws and regulations intended to protect public health, natural resources and the environment, including those governing discharges into the air and water, the storage of petroleum substances and chemicals, the handling and disposal of hazardous and non-hazardous wastes and the remediation of contamination associated with releases of wastes or hazardous substances. Our U.S. operations are also subject to regulation by the Occupational Safety and Health Administration, the Food and Drug Administration, the Department of Agriculture and by various state and local authorities regarding the processing, packaging, storage, distribution, advertising and labeling of our products, including food safety standards. Our foreign operations are subject to similar environmental, safety and public health laws and regulations that are enforced by governmental agencies, such as the European Commissioner of Foods, which is the controlling body for public health of the European Union. The European Union regulates the use of raw materials for manufacturing and the labeling of pet food.

Violations of or liability under any of these laws and regulations may result in administrative, civil or criminal penalties being levied against us, permit revocation or modification, performance of environmental investigatory or remedial activities, voluntary or involuntary product recalls, or a cease and desist order against operations that are not in compliance. These laws and regulations may change in the future and we may incur material costs in our

efforts to comply with current or future laws and regulations or to effect any product recalls. These matters may have a material adverse effect on our business. See the section above on environmental and safety matters.

If we or our customers are the subject of product liability claims, we may incur significant and unexpected costs and our business reputation could be adversely affected.

We and our customers for whom we manufacture products may be exposed to product liability claims and adverse public relations if consumption or use of our products is alleged to cause injury or illness. Our insurance may not be adequate to cover all liabilities we incur in connection with product liability claims. We may not be able to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost, if at all. A product liability judgment against us or against one of our customers for whom we manufacture products, or our or their agreement to settle a product liability claim, could also result in substantial and unexpected expenditures, which would reduce operating income and cash flow. In addition, even if product liability claims against us or our customers for whom we manufacture products are not successful or are not fully pursued, defending these claims would likely be costly and time-consuming and may require management to spend time defending the claims rather than operating our business. Product liability claims, or any other events that cause consumers to no longer associate our brands or those of our customers for whom we manufacture products with high quality and safety, may hurt the value of our and their brands and lead to decreased demand for our products. In addition, as a result of any such claims against us, we may be exposed to claims by our customers for damage to their reputations and brands. Product liability claims may also lead to increased scrutiny by federal and state regulatory agencies of our operations and could have a material adverse effect on our brands, business, results of operations and financial condition.

If we experience product recalls, we may incur significant and unexpected costs and our business reputation could be adversely affected.

We and our customers for whom we manufacture products may be exposed to product recalls and adverse public relations if our products are alleged to cause injury or illness or if we are alleged to have violated governmental regulations. A product recall could result in substantial and unexpected expenditures, which would reduce our operating income and cash flows. In addition, a product recall may require significant management attention. Product recalls may hurt the value of our and our customers’ brands and lead to decreased demand for our products. Product recalls may also lead to increased scrutiny by federal, state and foreign regulatory agencies of our operations and could have a material adverse effect on our brands, business, results of operations and financial condition.

The board of directors of Doane Enterprises, our parent corporation, and our board of directors are controlled by certain stockholders and their interests may be different than those of our noteholders.

Doane Enterprises is a holding company with no operations. We are its sole operating subsidiary and Doane Enterprises controls the designation of our board of directors. OTPP, while owning less than 30% of Doane Enterprises’ shares that carry a right to elect directors, has contractual rights to designate a majority of Doane Enterprises’ board of directors. Accordingly, OTPP controls our policies, management and affairs and may effectively prevent or cause a change in our control. OTPP, together with its affiliates, has other business interests and activities in addition to its ownership interest in us. It is possible that OTPP may exercise its control in ways that serve its interest but do not serve the best interests of our noteholders.

We may be subject to work stoppages at our facilities or those of our principal customers or transportation companies with whom we do business, which could have a material adverse effect on the profitability of our business.

A portion of our global work force is unionized. If our unionized workers were to engage in a strike, work stoppage or other slowdown in the future, we could experience a significant disruption of our operations, which could have a material adverse effect on us. Furthermore, our principal customers or transportation companies responsible for shipping our products may be impacted by strikes, work stoppages or other slowdowns staged by the unions representing employees of such customers or transportation companies. Any interruption in the delivery of our products could have a material adverse effect on us.

If the investments in our pension plans do not perform as expected, we may have to contribute additional amounts to the plans.

We maintain a non-contributory inactive pension plan that was frozen in 1998 and an active pension plan that covers approximately 40 union employees at one of our facilities. As of the end of fiscal 2005, the assets of our pension plans were $5.4 million less than the accumulated benefit obligations due to an overall decline since fiscal 2000 in the market value of these plans’ assets and interest rates used in discounting benefit liabilities. Under federal law, we were not required to make any cash contributions to our inactive plan in fiscal 2002 through 2005 and do not expect to make any cash contributions in fiscal 2006. We were required to make contributions to our active plan in fiscal 2002 through 2005 of approximately $0.1 million each year and we expect to contribute approximately $0.1 million in fiscal 2006. However, if underperformance of the plans’ investments continues, we may be required in the future to contribute additional funds to ensure that the pension plans will be able to pay out benefits as scheduled. An increase in funding could result in a decrease in our available cash flow, which would limit our ability to fund our business activities or make required interest and principal payments on our debt.

ITEM 1B — Unresolved Staff Comments

None.

ITEM 2 — Properties

Our corporate headquarters are located in Brentwood, Tennessee. Our manufacturing and distribution facilities are generally located in rural areas in close proximity to our customers, raw materials and transportation networks, including rail transportation. We believe our broad number of strategically located facilities enhances our position as a low cost provider of pet food by reducing freight costs for raw materials and finished goods. Our rural locations also reduce land and labor costs. We believe we can construct new manufacturing facilities at a lower cost than competitors by using our in-house engineering, machinery and fabrication services group to design and construct most of the necessary manufacturing equipment.

The following table shows our U.S. and European manufacturing and distribution facilities:


Location	Principal products	Square footage

U.S. manufacturing and distribution facilities:
Allentown, PA	Dry dog/cat food		70,000
Birmingham, AL	Dry dog/cat food		115,000
Butler, MO	Dry dog/cat food		57,000
Clinton, OK	Dry dog/cat food		197,000
Dexter, MO	Dry dog/cat food		70,000
Everson, PA	Dry dog/cat food		74,000
Joplin, MO	Dry dog/cat food; dog biscuits		308,000
LeSueur, MN	Dry dog/cat food; dog biscuits		160,000
Manassas, VA	Dry dog/cat food		80,000
McKenzie, TN	Dry dog/cat food		90,000
Miami, OK	Dog and cat treats		76,000
Muscatine, IA	Dry dog/cat food		100,000
Orangeburg, SC	Dry dog/cat food		139,000
Portland, IN	Dog biscuits		120,000
Pueblo, CO	Dry dog/cat food		125,000
San Bernardino, CA	Dry dog/cat food		169,000
Temple, TX	Dry dog/cat food		110,000
Tomah, WI	Dry dog/cat food		98,000
Tracy, CA	Dry dog/cat food		110,000
Washington Courthouse, OH	Dry dog/cat food; dog biscuits		190,000

U.S. distribution warehouses:
Johnstown, NY⁽¹⁾	N/A		41,000
Ocala, FL	N/A		76,000

European manufacturing and distribution facilities:
Carat, Austria ⁽¹⁾	Wet dog/cat food		38,000
Esbjerg, Denmark	Wet dog/cat food; treats		487,000
Norwich, England ⁽¹⁾	Dry dog/cat food		81,000
Valladolid, Spain	Dry dog/cat food		112,000
Vejen, Denmark	Dry dog/cat food; treats		151,000

Joint venture facility:
Milano, Italy	Dry dog/cat food		67,000


(1)		These facilities are leased. All other facilities are owned by us other than the joint venture facility.

In addition to the above facilities, we own the following facilities which have been closed and are held for sale: Cartersville, Georgia; Delavan, Wisconsin; Hillburn, New York; and Vrä, Denmark.

ITEM 3 — Legal Proceedings

In the ordinary course of business, we are party to litigation from time to time; however, we are not a party to any material pending legal proceedings that, if adversely determined, we believe would have a material adverse effect on our results of operations or financial condition.

ITEM 4 — Submissions of Matters to a Vote of Security Holders

On December 7, 2005, Doane Enterprises, as holder of all of our issued and outstanding shares of Class A common stock, approved, by written consent, an amendment to our Certificate of Incorporation to increase the number of authorized shares of our Class A common stock to 2,000 from 1,000. In addition, the amendment eliminated all of our authorized preferred stock, including our 14.25% senior preferred stock which had been redeemed pursuant to a change of control offer completed on November 22, 2005. All issued and outstanding shares of our Class A common stock were voted in favor of the amendment to our Certificate of Incorporation. No votes were cast against or withheld and there were no abstentions or broker non-votes.

PART II

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

Market Information

Our parent corporation, Doane Enterprises, owns all of our issued and outstanding shares of Class A common stock and 21.32 shares of our issued and outstanding Class B common stock. The remaining 50 shares of our issued and outstanding Class B common stock were issued to an entity that is wholly-owned by Law Debenture Corporation p.l.c., a provider of trustee services organized under the laws of the United Kingdom, which we refer to as the Jersey Entity. No established public trading market currently exists for our common stock.

OTPP owns 3,059,979 shares of the issued and outstanding Class A common stock of Doane Enterprises. The remaining 7,475 shares of issued and outstanding Class A common stock of Doane Enterprises are owned by Douglas J. Cahill, President and Chief Executive Officer of Doane and Doane Enterprises. OTPP also owns 21.32 shares of the issued and outstanding Class B common stock of Doane Enterprises. The remaining 50 shares of issued and outstanding shares of Class B common stock of Doane Enterprises are owned by the Jersey Entity.

Sales of Unregistered Equity Securities

In connection with the Acquisition, we sold shares of our Class B common stock to the Jersey Entity pursuant to a private placement exemption under Section 4(2) of the Securities Act of 1933, as amended. Please see Item 3.02 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 27, 2005. In addition, effective November 22, 2005, we sold one additional share of our Class A common stock to Doane Enterprises. This sale was also effected pursuant to a private placement exemption under Section 4(2) of the Securities Act of 1933, as amended.

Dividends

We did not declare any cash dividends on our common stock in fiscal 2003, 2004 and 2005 (combined) and do not anticipate paying any cash dividends in the foreseeable future. We intend, instead, to retain any future earnings for reinvestment in our business or other corporate purposes. Any future determination as to the payment of dividends will be made at the discretion of our board of directors and will depend on our operating results, financial condition, capital requirements, general business conditions and such other factors as the board of directors deems relevant.

Our ability to pay dividends is also restricted by our senior credit facility and the indentures governing our senior notes and senior subordinated notes.

Equity Compensation Plan Information

Please refer to Item 12 of our 2005 Form 10-K for information concerning securities authorized under our equity compensation plan.

ITEM 6 — Selected Financial Data

The selected financial data presented below (except for volume of pet food manufactured and sold data) was derived from our consolidated financial statements, which have been audited by KPMG LLP, our independent registered public accounting firm. The selected data should be read in conjunction with the accompanying audited consolidated financial statements and related notes included herein our 2005 Form 10-K. Our fiscal year ends on the Saturday nearest to the end of December; and therefore, fiscal 2001, 2002, 2003, 2004 and 2005 ended on December 29, 2001, December 28, 2002, January 3, 2004, January 1, 2005 and December 31, 2005, respectively. Fiscal 2001, 2002, 2004 and 2005 were each 52-week years and fiscal 2003 was a 53-week year. Our results of operations, cash flows and other data for fiscal 2005 (combined) include the predecessor period from January 2 through October 23, 2005 and the successor period from October 24 through December 31, 2005. The footnotes below refer to our results for fiscal 2005 (combined) based upon the mathematical addition of the predecessor period and the successor period, and have identified the sum of the results from the two periods as “combined.” This approach is not consistent with GAAP and may yield results that are not strictly comparable on a period-to-period basis primarily due to the impact of required purchase accounting adjustments and the new basis of accounting established as a result of the Acquisition. We believe that this is the most meaningful way to discuss our results. Such results are not always indicative of what the results for fiscal 2005 would have been had the Acquisition not occurred. The tables presented below are in thousands.


	Predecessor															Successor
													Period			Period
													January 2			October 24
													through			through			Combined
													October 23,			December 31,			basis
	2001 ⁽¹⁾⁽²⁾			2002			2003			2004			2005			2005			2005
Statement of income data:
Net sales	$	895,830		$	887,333		$	1,013,865		$	1,051,241		$	795,476		$	196,134		$	991,610
Cost of goods sold		749,092			701,418			851,578			896,191			654,312			162,208			816,520

Gross profit		146,738			185,915			162,287			155,050			141,164			33,926			175,090
Operating expenses:
Promotion and distribution		58,241			52,445			57,616			56,805			46,230			11,441			57,671
Selling, general and administrative		47,945			48,712			52,015			51,861			41,479			9,702			51,181
Amortization ⁽³⁾		13,743			4,583			4,989			4,313			3,419			2,348			5,767
Transaction costs ⁽⁴⁾		—			1,447			—			333			23,370			—			23,370
Other operating expenses (income), net ⁽⁵⁾		8,655			—			7,227			6,645			5,326			(624	)		4,702

Income from operations		18,154			78,728			40,440			35,093			21,340			11,059			32,399
Interest expense, net		57,020			62,395			57,494			72,841			61,936			11,137			73,073
Debt extinguishments ⁽⁶⁾		—			—			4,438			4,137			—			—			—
Other income, net		(757	)		(724	)		(1,156	)		(1,417	)		(752	)		(408	)		(1,160	)

Income (loss) before income taxes		(38,109	)		17,057			(20,336	)		(40,468	)		(39,844	)		330			(39,514	)
Income tax expense (benefit)		(16,171	)		1,786			25,039			5,124			4,094			1,114			5,208

Net income (loss)	$	(21,938	)	$	15,271		$	(45,375	)	$	(45,592	)	$	(43,938	)	$	(784	)	$	(44,722	)


	Predecessor																Successor
													Period				Period
													January 2				October 24
													through				through		Combined
													October 23,				December 31,		basis
	2001 ⁽¹⁾⁽²⁾			2002			2003			2004			2005				2005		2005
Other data:
Cash flows provided by (used in) operating activities	$	(23,936	)	$	78,773		$	55,663		$	21,287		$	30,410		$	6,478		$	36,888
Cash flows provided by (used in) investing activities		1,466			(25,902	)		(30,185	)		(20,054	)		(18,516	)		(8,981	)		(27,497	)
Cash flows provided by (used in) financing activities		25,433			(51,731	)		(4,572	)		(1,829	)		(4,504	)		(24,904	)		(29,408	)
Depreciation and amortization		41,430			32,164			37,161			40,356			32,018			9,884			41,902
Capital expenditures ⁽⁷⁾		17,316			24,348			28,062			18,856			17,227			8,878			26,105
Volume of pet food manufactured and sold (thousands of U.S tons):
North America		1,626			1,656			1,781			1,588			1,222			324			1,546
Europe		282			258			276			289			236			63			299


	Predecessor end of
									Successor
									end of
	2001 ⁽¹⁾⁽²⁾		2002		2003		2004		2005
Balance sheet data:
Working capital ⁽⁸⁾	$	46,995	$	59,215	$	41,704	$	28,830	$	47,651
Total assets		836,545		870,667		885,914		901,906		1,109,338
Total debt ⁽⁹⁾		587,823		554,020		574,046		690,184		564,276
Senior Preferred Stock (Redeemable) ⁽⁹⁾		65,672		77,550		91,052		—		—
Stockholders’ equity		37,926		58,503		32,549		7,126		301,283


(1)		Results for fiscal 2001 include the results of two divestitures until the dates of sale. We sold our Perham, Minnesota facility, including the Tuffy’s Brand on April 27, 2001, and our Deep Run domestic wet pet food business May 3, 2001.

(2)		Results for fiscal 2001 include $16.9 million of expenses associated with strategic initiatives that commenced in fiscal 2001 and consist of $6.7 million of other operating expenses related to the divestitures and $10.2 million of expenses associated with cost reduction initiatives. The expenses were classified as follows: (1) $0.3 million as a reduction in net sales; (2) $6.6 million as cost of goods sold; (3) $0.9 million as promotion and distribution expenses; (4) $0.4 million as selling, general and administrative expenses; and (5) $2.0 million as other operating expenses.

(3)		As of the beginning of fiscal 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets, or SFAS 142, and


		ceased amortization of goodwill and other intangible assets with indefinite lives. Net loss for fiscal 2001, as adjusted to give effect to the adoption of SFAS 142 as of the beginning of fiscal year, would have been $14.3 million.

(4)		Transaction costs of $1.4 million in fiscal 2002 consist of $0.8 million related to our postponed senior note offering and $0.6 million for an abandoned strategic initiative.

		Transaction costs of $0.3 million in fiscal 2004 relate to an unconsummated strategic initiative.

		Transaction costs of $23.4 million in fiscal 2005 (combined) primarily relate to the Acquisition and consist of transaction fees and expenses of $3.4 million incurred by us and compensation expenses of $20.0 million associated with the payment of transaction bonuses and the settlement of all outstanding stock options in cash.

(5)		Other operating expenses, net, of $8.7 million in fiscal 2001 include a $4.7 million net loss from the divestitures described above, $1.0 million of asset impairments associated with cost reduction initiatives and a U.S. plant closure and $3.0 million of severance for the elimination of corporate positions due to the divestitures and cost reduction initiatives.

		Other operating expenses, net, of $7.2 million in fiscal 2003 primarily consist of asset impairments of $5.3 million related to the building and certain equipment of our Vrä, Denmark manufacturing facility in connection with our European restructuring plan and $2.4 million related to the divestiture of our 51% interest in Crona.

		Other operating expenses, net, of $6.6 million in fiscal 2004 primarily related to our European restructuring plan and include $3.2 million of severance, $2.5 million of equipment installation costs and $1.3 million for manufacturing inefficiencies. In addition, we had litigation settlements of $0.6 million in fiscal 2004 consisting of $0.6 million of proceeds from an arbitration award and $0.7 million of proceeds from a lawsuit settlement, partially offset by $0.7 million paid by us to a former vendor as settlement costs.

		Other operating expenses, net, of $4.7 million in fiscal 2005 (combined) include $6.1 million of asset impairments and $2.7 million of severance costs primarily related to our 2005 cost savings initiatives. In addition, we had favorable litigation settlements of $5.1 million.

(6)		Debt extinguishments of $4.4 million in fiscal 2003 consist of $4.1 million related to our February 2003 refinancing transactions and $0.3 million related to the write-off of a pro-rata portion of unamortized debt issuance costs for an optional prepayment we made on a previous senior credit facility.

		Debt extinguishment of $4.1 million in fiscal 2004 relates to the write-off of unamortized debt issuance costs in connection with the November 2004 refinancing of our senior credit facility.

(7)		Capital expenditures exclude payments for acquisitions.

(8)		Working capital has been calculated as current assets less current liabilities, excluding cash and cash equivalents and current maturities of long-term debt.

(9)		Senior Preferred Stock (Redeemable) was reclassified to long-term debt as of the beginning of fiscal 2004 upon adoption of SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.

ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion together with the accompanying audited consolidated financial statements and related notes included herein our 2005 Form 10-K. You are also urged to read the sections on forward-looking statements in Item 1 and risk factors in Item 1A for some of the factors that could cause our actual results to differ materially from those contained in any forward-looking statements in this discussion.

The following discussion and analysis of our results of operations includes periods prior to the acquisition by OTPP of beneficial ownership of substantially all of the outstanding capital stock of Doane Enterprises, as discussed under the heading Fiscal 2005 Year in Review — The Acquisition. Accordingly, the discussion and analysis of historical periods prior to October 24, 2005 does not give effect to the Acquisition.

We discuss our results of operations and cash flows for fiscal 2005 based upon the mathematical addition of the predecessor period from January 2 through October 23, 2005 and the successor period from October 24 through December 31, 2005. We have identified the sum of the results from the two periods as “combined”. This approach is not consistent with GAAP and may yield results that are not strictly comparable on a period-to-period basis primarily due to the impact of required purchase accounting adjustments and the new basis of accounting established as a result of the Acquisition. We believe that this is the most meaningful way to present our results of operations. Such results are not indicative of what the results for fiscal 2005 would have been had the Acquisition not occurred.

Business Overview

The U.S. pet food industry is approximately a $15 billion industry with a compound annual growth rate of 4.4% from 2001 through 2005. From 2001 to 2005, the U.S. dog and cat population grew from approximately 135 million to 143 million, or 5.9%.

Recent trends in the U.S. pet food industry include the following:

	•		Dry pet food has grown more rapidly than wet pet food. From 2001 to 2005, dry pet food grew at a compound annual growth rate of 4.7% compared to 2.9% for wet pet food.

	•		Store brand dry pet food has grown more rapidly than nationally advertised brand dry pet food. From 2001 to 2005, store brand dry pet food grew at a compound annual growth rate of 8.8% compared to 3.7% for nationally advertised brand dry pet food.

	•		Sales through mass merchandisers have grown more rapidly than sales through the grocery channel. From 2001 to 2005, pet food sales through mass merchandisers grew at a compound annual growth rate of 9.2%, compared to a decline of 1.3% for the grocery channel. In fiscal 2005, 30% of pet food sales through mass merchandisers were store brands compared to 12% for the grocery channel.

	•		Consolidation. Over the past several years, consolidation occurred among pet food producers, including Nestlé S.A.’s 2001 acquisition of Ralston Purina Company in the United States and Mars, Inc.’s 2002 acquisition of Royal Canin S.A. in Europe. On March 2, 2006, Del Monte Foods Company announced that it had entered into an agreement to acquire The Meow Mix Company for $705 million. The Meow Mix business had been sold to private investors in connection with Nestle S.A.’s acquisition of Ralston Purina Company. On March 16, 2006, Del Monte Foods Company announced that it had entered into an agreement to acquire from Kraft Foods Global, Inc. certain pet food assets, including the Milk Bone brand, for $580 million.

We manufacture pet food, primarily store brands, in the United States and Europe using 25 combined manufacturing and distribution facilities. We manufacture pet food products predominately for dogs and cats, including dry, wet, soft-dry, treats and dog biscuits. We sell to approximately 650 customers around the world and serve many of the top pet food retailers in North America and Europe, including Wal-Mart and its Sam’s Club division. Our net sales to Wal-Mart and its Sam’s Club division accounted for 42%, 43% and 43% of our total net sales for fiscal 2003, 2004 and 2005 (combined), respectively.

Historically, approximately 75% of our cost of goods sold has been comprised of raw material and packaging costs with the remainder primarily comprised of salaries, wages and related fringe benefits, utilities and depreciation. Our operating expenses consist of promotion and distribution expenses, selling, general and administrative expenses, amortization and other operating expenses. Promotion and distribution expenses are primarily comprised of promotions, freight, brokerage fees and warehousing expenses. Selling, general and administrative expenses primarily include salaries and related fringe benefits, depreciation and other corporate overhead costs, which typically do not increase proportionately with increases in net sales and sales volumes.

Our financial results depend to a large extent on the costs of raw materials, packaging, oil and natural gas and our ability to pass through increases in these costs to our customers. Historically, market prices for commodity grains and food stocks have fluctuated in response to a number of factors, including changes in U.S. government farm support programs, changes in international agricultural trading policies, impacts of disease outbreaks on raw materials and the potential effect on supply and demand, changes in international demand, trading activity in the commodity markets, as well as weather conditions during the growing and harvesting seasons. Fluctuations in paper and plastic prices, which affect our costs for packaging materials, have resulted from changes in supply and demand, general economic conditions and other factors. In addition, we have exposure to changes in pricing of oil and natural gas, which affects our manufacturing, packaging and freight costs. Our results of operations have been exposed to volatility in the commodity, oil and natural gas markets in the past and may be exposed to such volatility in the future.

In the event of any increases in raw materials, packaging, oil or natural gas costs, we may be required to seek increased selling prices for our products to avoid margin deterioration. We cannot provide assurances regarding the timing or extent of our ability to implement such price increases or whether any price increases implemented by us may affect future sales volumes with our customers.

Our sales are moderately seasonal. We normally experience an increase in sales volume during the first and fourth quarters of each year, which is typical in the pet food industry. Generally, cooler weather results in increased dog food consumption.

Fiscal 2005 Year in Review

In fiscal 2005 (combined), our net sales decreased 5.7% to $991.6 million from $1,051.2 million in fiscal 2004. This decrease was primarily due to our domestic cost-sharing arrangements, and the related impact of passing through a portion of our lower commodity costs, and lower domestic sales volume, partially offset by higher European sales volume. Our gross profit increased 12.9%, or $20.0 million, in fiscal 2005 primarily as a result of lower global commodity costs, partially offset by the above factors affecting net sales. Net loss of $44.7 million for fiscal 2005 was affected by the above factors impacting net sales and gross profit as well as by expenses associated with the Acquisition and cost savings initiatives discussed below.

The Acquisition

On October 24, 2005, pursuant to the Agreement and Plan of Merger dated August 28, 2005, OTPP acquired beneficial ownership of substantially all of the outstanding capital stock of our parent corporation. This transaction, referred to as the Acquisition, was effected by the merger of DPC Newco with and into Doane Enterprises with Doane Enterprises surviving the merger. In connection with the Acquisition, OTPP and our senior management have investments in Doane Enterprises of $306.0 million and $4.7 million, respectively, less equity issuance costs of approximately $7.5 million. Following the Acquisition, Doane Enterprises continues to beneficially own substantially all of our outstanding capital stock.

The Financing Transactions

In connection with the Acquisition, we effected a series of recapitalization transactions, referred to as the Financing Transactions, and together with the Acquisition, the Transactions, including, among others:

	•		the termination and full settlement of our old $230.0 million senior credit facility and the closing of a new $210.0 million senior credit facility;

	•		the closing of the private placement of $152.0 million in aggregate principal amount of 10 ⁵/₈% senior subordinated notes due 2015 at an original issue discount of 99.2% and the subsequent exchange of these private placement notes for $152.0 million of 10 ⁵/₈% senior subordinated notes due 2015 that have been registered with the Securities and Exchange Commission;

	•		the redemption of our 9 ³/4% senior subordinated notes due 2007 at a price of 100% of the aggregate principal amount of $150.0 million plus accrued and unpaid interest to, but not including, the redemption date of November 22, 2005, which resulted in a total redemption amount of $157.7 million;

	•		the redemption of our 14.25% senior preferred stock due 2007 at a purchase price equal to 101% of the liquidation value thereof, which included a 1% change of control premium, plus accrued and unpaid interest to, but not including, the redemption date of November 22, 2005 and resulted in a total redemption amount of $125.2 million; and

	•		the repurchase of $2.8 million aggregate principal amount of our 7.25% Ottawa County Finance Authority industrial development revenue bonds at a purchase price equal to 101% of the principal amount thereof, which includes a 1% change of control premium, plus accrued and unpaid interest to, but not including, the repurchase date of December 22, 2005.

We recognized transaction costs of $22.5 million related to the Acquisition, which were incurred in the predecessor period and recognized as transaction costs in the accompanying consolidated statement of operations for the predecessor period January 2 through October 23, 2005. In addition, we recognized approximately $10.6 million of debt issuance costs related to the Financing Transactions.

Cost Savings Initiatives

In the fiscal 2005 predecessor period, we announced several initiatives to further reduce our cost structure and to increase operating efficiencies. These initiatives included the closure of three U.S. manufacturing facilities as well as the permanent shutdown of our dry dog and cat food production lines at another manufacturing facility and the reduction of our global corporate salaried workforce. Our fiscal 2005 cost savings initiatives were based upon a number of factors including manufacturing and supply chain costs, as well as our ongoing efforts to optimize operating efficiencies. Our customers for whom we manufactured product out of these closed facilities are now being serviced through our other facilities.

In connection with our cost savings initiatives, we incurred non-cash asset impairment charges of $6.1 million and severance costs of $2.7 million in fiscal 2005 (combined), and expect to incur future costs of approximately $0.4 million primarily related to the carrying costs of the three closed facilities. We expect our future annualized savings associated with these cost savings initiatives to be in the range of $3.0 million to $3.5 million.

Results of Operations

Our fiscal year ends on the Saturday nearest to the end of December and, therefore, fiscal 2003, 2004 and 2005 ended on January 3, 2004, January 1, 2005 and December 31, 2005, respectively. Fiscal 2004 and 2005 were each 52-week years and fiscal 2003 was a 53-week year.

We have foreign currency exposure relating to our business transactions in currencies other than the U.S. dollar. In addition, the timing and extent of foreign currency exchange rate fluctuations may have a material impact on our operations due to the translations of the financials statements of our foreign subsidiaries. Although our functional currencies other than the U.S. dollar include the Euro, Danish Krona and British Pound Sterling, the Euro to U.S. dollar exchange rate approximates the impact of movements in our individual functional foreign currency exchange rates. For the purpose of analyzing our results of operations, the average Euro to U.S. dollar exchange rates for fiscal 2003, 2004 and 2005 (combined) were 1.128, 1.242 and 1.244, respectively. For the purpose of analyzing our financial position, the Euro to U.S. dollar exchange rates as of the end of fiscal 2004 and 2005 were 1.360 and, 1.184, respectively.

Statement of operations data. The following tables, of which the first table shows the mathematical addition of the predecessor period and successor period results of operations for fiscal 2005, set forth our statement of operations derived from the accompanying audited consolidated financial statements included herein and expressed as a percentage of net sales for the fiscal years indicated (in thousands, except percentages):


	Predecessor period					Successor period
	January 2 through October					October 24 through December
	23, 2005					31, 2005					Combined basis 2005
Net sales	$	795,476		100.0	%	$	196,134		100.0	%	$	991,610		100.0	%
Cost of goods sold:
Commodities		370,271		46.5			87,934		44.8			458,205		46.2
Other		284,041		35.7			74,274		37.9			358,315		36.1

Total cost of goods sold		654,312		82.2			162,208		82.7			816,520		82.3

Gross profit		141,164		17.8			33,926		17.3			175,090		17.7
Operating expenses:
Promotion and distribution		46,230		5.8			11,441		5.8			57,671		5.8
Selling, general and administrative		41,479		5.2			9,702		4.9			51,181		5.2
Amortization		3,419		0.4			2,348		1.2			5,767		0.6
Transaction costs		23,370		2.9			—		—			23,370		2.3
Other operating expenses (income), net		5,326		0.7			(624	)	(0.3	)		4,702		0.5

Income from operations		21,340		2.8			11,059		5.7			32,399		3.3
Interest expense, net		61,936		7.8			11,137		5.7			73,073		7.4
Other income, net		(752	)	(0.1	)		(408	)	(0.2	)		(1,160	)	(0.1	)

Income (loss) before income taxes		(39,844	)	(4.9	)		330		(0.2	)		(39,514	)	(4.0	)
Income tax expense		4,094		0.5			1,114		0.6			5,208		0.5

Net loss	$	(43,938	)	(5.4	)%	$	(784	)	(0.4)	%	$	(44,722	)	(4.5	)%


	2003					2004					Combined basis 2005
Net sales	$	1,013,865		100.0	%	$	1,051,241		100.0	%	$	991,610		100.0	%
Cost of goods sold:
Commodities		494,302		48.8			531,980		50.6			458,205		46.2
Other		357,276		35.2			364,211		34.7			358,315		36.1

Total cost of goods sold		851,578		84.0			896,191		85.3			816,520		82.3

Gross profit		162,287		16.0			155,050		14.7			175,090		17.7
Operating expenses:
Promotion and distribution		57,616		5.7			56,805		5.4			57,671		5.8
Selling, general and administrative		52,015		5.1			51,861		4.9			51,181		5.2
Amortization		4,989		0.5			4,313		0.4			5,767		0.6
Transaction costs		—		—			333		—			23,370		2.3
Other operating expenses, net		7,227		0.7			6,645		0.7			4,702		0.5

Income from operations		40,440		4.0			35,093		3.3			32,399		3.3
Interest expense, net		57,494		5.7			72,841		6.8			73,073		7.4
Debt extinguishments		4,438		0.4			4,137		0.4			—		—
Other income, net		(1,156	)	(0.1	)		(1,417	)	(0.1	)		(1,160	)	(0.1	)

Loss before income taxes		(20,336	)	(2.0	)		(40,468	)	(3.8	)		(39,514	)	(4.0	)
Income tax expense		25,039		2.5			5,124		0.5			5,208		0.5

Net loss	$	(45,375	)	(4.5	)%	$	(45,592	)	(4.3	)%	$	(44,722	)	(4.5	)%

Fiscal 2005 (Combined) Compared to Fiscal 2004

Net sales. Net sales for fiscal 2005 (combined) decreased 5.7%, or $59.6 million, to $991.6 million from $1,051.2 million in fiscal 2004. The decrease in our net sales was primarily due to our domestic cost-sharing arrangements, and the related impact of passing through a portion of our lower U.S. commodity costs to certain customers. In addition, net sales decreased due to lower domestic sales volume, partially offset by higher European sales volume.

Gross profit. Gross profit for fiscal 2005 (combined) increased 12.9%, or $20.0 million, to $175.1 million from $155.1 million in fiscal 2004. This increase was primarily due to lower global commodity costs, which decreased as a percentage of net sales to 46.2% for fiscal 2005 from 50.6% in fiscal 2004, partially offset by the above factors affecting our net sales. Other cost of goods sold as a percentage of net sales increased to 36.1% for fiscal 2005 (combined) from 34.7% in fiscal 2004 primarily related to increased global packaging costs due to higher oil and steel prices and the $1.8 million expense associated with the fair value adjustment to finished goods inventory related to the Acquisition, partially offset by increased manufacturing efficiencies primarily related to our fiscal 2004 European restructuring. In addition, we had a $2.8 million unfavorable period-over-period change related to the volatility of commodity prices combined with the fair value accounting for our commodity derivative instruments under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133.

Promotion and distribution. Promotion and distribution expenses for fiscal 2005 (combined) increased 1.5% to $57.7 million from $56.8 million in fiscal 2004. As a percentage of net sales, those costs increased to 5.8% for fiscal 2005 (combined) from 5.4% in fiscal 2004 resulting from both the impact of rising gasoline prices on our freight costs and resumed shipments to Mexico.

Selling, general and administrative expenses. Selling, general and administrative expenses for fiscal 2005 (combined) decreased 1.3%, or $0.7 million, to $51.2 million from $51.9 million primarily due to cost savings achieved from our fiscal 2005 domestic restructuring activities and our fiscal 2004 European restructuring activities.

Transaction costs. Transaction costs of $23.4 million for fiscal 2005 (combined) primarily relate to the Acquisition and consist of fees and expenses of $3.4 million and compensation expenses of $20.0 million associated with the payment of transaction bonuses and the settlement of all outstanding stock options of our parent corporation in cash. Fiscal 2004 transaction costs consist of $0.3 million related to an unconsummated strategic initiative.

Other operating expenses, net. Other operating expenses, net, of $4.7 million in fiscal 2005 (combined) include $6.1 million of asset impairments and $2.7 million of severance costs primarily related to the closure of three U.S. manufacturing facilities, the permanent shutdown of our dry dog and cat food production lines at another production facility and the reduction of our global corporate salaried workforce. In addition, the Company had $5.1 million of favorable litigation settlements. Other operating expenses, net, of $6.6 million in fiscal 2004 primarily relate to our European restructuring plan and include $3.2 million of severance, $2.5 million of equipment installation costs and $1.3 million for manufacturing inefficiencies. In fiscal 2004, we also had litigation settlements of $0.6 million, consisting of $0.6 million of proceeds from an arbitration award and $0.7 million of proceeds from a favorable lawsuit settlement, partially offset by $0.7 million paid by us to a former vendor as settlement costs.

Interest expense, net. Interest expense, net, for fiscal 2005 (combined) of $73.1 million was consistent with fiscal 2004 interest expense, net, of $72.8 million, but consisted of offsetting factors. We had interest expense on both our new and old senior subordinated notes from the issuance date of the new 10 ⁵/8% senior subordinated notes on October 24, 2005 through the redemption date of the old 9 ³/4% senior subordinated notes on November 22, 2005. This additional interest expense was offset by a reduction in interest expense due to the redemption of our senior preferred stock on November 22, 2005.

Debt extinguishments. Debt extinguishments of $4.1 million in fiscal 2004 related to the write-off of unamortized debt issuance costs in connection with the November 2004 refinancing of our senior credit facility.

Income tax expense. We recognized income tax expense of $5.2 million in fiscal 2005 (combined) and $5.1 million in fiscal 2004. The overall effective tax rate for both periods differs from the expected U.S. federal income tax rate of 35% due to U.S. state and local and foreign income taxes; the non-tax deductibility of dividends on the senior preferred stock; and changes in the valuation allowances against our deferred tax assets that are not considered recoverable through known reversals of deferred tax liabilities.

Fiscal 2004 Compared to Fiscal 2003

Net sales. Net sales in fiscal 2004 increased 3.7% to $1,051.2 million from $1,013.9 million in fiscal 2003. The increase was due to the domestic price increases implemented in the first half of fiscal 2004, sales volume growth in our European business and the positive impact of foreign currency exchange rate fluctuations. These items were partially offset by a decrease in domestic sales volume and the extra week in fiscal 2003. Excluding both the impact of the foreign currency exchange rate and the 53rd week, net sales increased 2.6% in fiscal 2004.

Gross profit. Gross profit in fiscal 2004 decreased 4.5%, or $7.2 million, to $155.1 million from $162.3 million in fiscal 2003. Excluding the impact of foreign currency exchange rate fluctuations and the 53rd week, gross profit decreased 6.7%, or $10.7 million from fiscal 2003. Of this decrease in gross profit, $7.3 million is due to the fair value accounting of our commodity derivative instruments under SFAS 133 combined with the volatility of commodity prices which resulted in a $2.1 million increase in cost of goods sold in fiscal 2004 compared to a $5.2 million reduction in cost of goods sold in fiscal 2003. In addition, depreciation expense increased $3.9 million. Excluding the impact of these factors, higher global commodity costs and lower domestic sales volume were offset by our pricing strategy and manufacturing efficiencies in both the United States and Europe.

Promotion and distribution. Promotion and distribution expenses in fiscal 2004 decreased 1.4% to $56.8 million from $57.6 million in fiscal 2003. As a percentage of net sales, promotion and distribution expenses decreased to 5.4% in fiscal 2004 from 5.7% in fiscal 2003 primarily due to lower distribution expenses associated with the closure of a U.S. distribution facility.

Selling, general and administrative. Selling, general and administrative expenses in fiscal 2004 decreased 0.3%, or $0.2 million. Excluding the foreign currency exchange rate impact and the 53^rd week, selling, general and administrative expenses increased 2.4%, or $1.3 million from fiscal 2003. This increase is primarily due to variable compensation incentives paid to employees that are tied to our business performance, partially offset by lower sales and marketing expenses.

Other operating expenses. Other operating expenses of $7.2 million in fiscal 2003 primarily consist of asset impairments of $5.3 million related to the building and certain equipment of our manufacturing facility in Vrä, Denmark in connection with our European restructuring plan and $2.4 million related to the divestiture of our 51% interest in Crona. See fiscal 2004 operating expenses described above in the section on fiscal 2005 (combined) compared to fiscal 2004.

Interest expense, net. Interest expense in fiscal 2004 increased 26.7% to $72.8 million from $57.5 million in fiscal 2003. Excluding the foreign currency exchange rate impact and the 53^rd week, interest expense increased 28.8%, or $16.2 million primarily due to $15.4 million of accretion and dividends in fiscal 2004 relating to our senior preferred stock.

Debt extinguishments. Debt extinguishments of $4.4 million in 2003 consisted of $4.1 million related to our February 2003 refinancing transactions and $0.3 million related to the write-off of a pro-rata portion of unamortized debt issuance costs for an optional prepayment we made on a previous senior credit facility. See fiscal 2004 debt extinguishments described above in the section on fiscal 2005 (combined) compared to fiscal 2004.

Income tax expense. We recognized income tax expense of $5.1 million in fiscal 2004 compared to $25.0 million in fiscal 2003. We recognized increases in the valuation allowance against deferred tax assets of $15.8 million in fiscal 2004 and $39.0 million in fiscal 2003. The overall effective tax rate in these periods differs from the expected U.S. federal income tax rate of 35% due to U.S. state and local and foreign income taxes; the non-tax deductibility of dividends on the senior preferred stock; and changes in the valuation allowances against our deferred tax assets that are not considered recoverable through known reversals of deferred tax liabilities.

Liquidity and Capital Resources

General

We have historically funded our operations, capital expenditures and working capital requirements with cash flows from operations, bank borrowings and the issuance of other indebtedness.

Financial Covenant Compliance

One of our major risks is our ability to finance our cash requirements for debt service under our senior credit facility and our other indebtedness and to comply with the financial covenants under our senior credit facility. Our senior credit facility requires us to maintain specified financial ratios and satisfy certain financial tests which, if violated, could place us in default, and our lenders could then accelerate our debt and prohibit us from borrowing additional funds from this facility to meet our liquidity needs.

Our ability to meet the financial ratios and tests required under our senior credit facility can be affected by events beyond our control, such as prevailing economic, financial or industry conditions. The occurrence of any adverse event may prevent us from meeting these financial ratios and tests. We have experienced difficulty in the past satisfying the financial covenants in our previous senior credit facilities and negotiated amendments and obtained waivers from our previous lenders for fiscal 2000, 2001 and 2003 due to covenant non-compliance. If we violate the covenants under our senior credit facility and are unable to either negotiate amendments or obtain waivers from our current lenders, we could be in default under our senior credit facility and permit a majority of the lenders to accelerate the outstanding debt under our senior credit facility, terminate our revolving credit commitment and seize the cash in our operating accounts. Such acceleration would result in cross-defaults under our senior notes and senior subordinated notes. In that event, we may not have sufficient liquidity to make interest and required principal payments on our debt and for operational and capital requirements. We were in compliance with the financial covenants in our senior credit facility as of the end of fiscal 2005.

Cash Flows

The following discussion is based on the cash flow activity derived from our accompanying audited consolidated statements of cash flows included herein. As discussed above, the cash flow activity for fiscal 2005 (combined) is based on the mathematical addition of the predecessor period and the successor period, and is not indicative of what the cash flow activity for fiscal 2005 would have been had the Acquisition not occurred.

Net cash provided by our operating activities in fiscal 2003, 2004 and 2005 (combined) was $55.7 million, $21.3 million and $36.9 million, respectively. Operating cash flows in fiscal 2004 were lower than fiscal 2003 primarily due to unusually favorable payment terms with certain customers in fiscal 2003. In fiscal 2005 (combined), our earnings were higher as a result of lower global commodity costs, partially offset by the related pass-through impact of the Company’s domestic cost-sharing arrangements.

Net cash used in our investing activities in fiscal 2003, 2004 and 2005 (combined) was $30.2 million, $20.1 million and $27.5 million, respectively. Capital expenditures in these years were $28.1 million, $18.9 million and $26.1 million, respectively. Capital expenditures in fiscal 2003 were higher than fiscal 2004 primarily due to our manufacturing facility expansion in Carat, Austria. In fiscal 2005 (combined), the Company had higher capital expenditures compared to fiscal 2004 due to increased spending on process improvements and cost savings projects.

Net cash used in our financing activities in fiscal 2003, 2004 and 2005 (combined) was $4.6 million, $1.8 million and $29.4 million, respectively. In fiscal 2003, we issued our senior notes and used the proceeds to repay a portion of our senior credit facility and to repay the shareholder loan in full, including accrued interest. We also paid transaction fees and expenses associated with our senior note offering and concurrent amendments to our senior credit facility. In addition, we made an optional prepayment on our senior credit facility in fiscal 2003. In fiscal 2004, we refinanced our senior credit facility as well as certain debt in Europe repaying in full each of the previous facilities. We also paid transaction fees and expenses associated with a first quarter 2004 amendment to our senior

credit facility and the November 2004 refinancing of our senior credit facility. In fiscal 2005 (combined), we completed the Transactions described above in the Fiscal 2005 Year in Review section and paid Transaction costs relating to the Acquisition and debt issuance costs for our new senior credit facility and the issuance of our 10 ⁵/8% senior subordinated notes.

Liquidity

We are highly leveraged and have significant cash requirements for debt service relating to our senior credit facility, senior notes, senior subordinated notes, industrial development revenue bonds and foreign debt.

As of the end of fiscal 2005, our principal sources of liquidity consisted of working capital of $47.7 million, excluding cash and cash equivalents of $8.2 million and current maturities of long-term debt of $3.2 million. We also had $45.5 million of availability out of total availability of $50.0 million under our revolving credit facility, net of $4.5 million of issued and undrawn letters of credit.

In connection with the Acquisition, which closed on October 24, 2005, we completed a series of Financing Transactions that included, among others, closing our new senior credit facility and issuing the 10 ⁵/8% senior subordinated notes. As of the end of fiscal 2005, we had $564.3 million of outstanding indebtedness in comparison to $690.2 million of outstanding indebtedness at the end of fiscal 2004.

Our ability to incur additional indebtedness is limited by our senior credit facility, including compliance with the financial covenants therein, and by the indentures governing our senior notes and senior subordinated notes. Our principal sources of liquidity are cash flows from our business and future borrowings under our $50.0 million multi-currency revolving credit facility. We believe that these sources of liquidity will be sufficient in the near term to enable us to make required interest and principal payments on our debt and to provide us with the necessary liquidity for operational and capital requirements in our current operating environment.

We believe the capital expenditures permitted under our senior credit facility are sufficient to provide us with the necessary flexibility to meet our maintenance capital expenditure requirements and at the same time fund any facility expansions, cost reduction initiatives and customer requirements for fiscal 2006. We anticipate that our capital expenditures for fiscal 2006 will approximate $27 million to $30 million, with approximately $10 million to $12 million required to maintain our current business and the remainder available for any facility expansions, cost reduction initiatives and customer requirements.

Any future acquisitions, joint ventures or similar transactions will likely require additional capital and we may not have such capital available to us on commercially reasonable terms, on terms acceptable to us, or at all. Our business may not generate sufficient cash flows or future borrowings may not be available in an amount sufficient to enable us to make required interest and principal payments on our indebtedness, including our senior credit facility, senior notes, and senior subordinated notes or to fund our other liquidity needs. In addition, our business may not generate sufficient operating results and cash flows to allow us to comply with the financial covenants in our senior credit facility. In the event of default under our senior credit facility, absent an amendment or a waiver from the lenders, a majority of our lenders could accelerate outstanding indebtedness under the senior credit facility, terminate our revolving credit facility and seize the cash in our operating accounts. In that event, we may not have sufficient liquidity to make required interest and principal payments on our debt or to fund operational and capital requirements.

Debt

Our long-term debt as of the end of fiscal 2004 and 2005 follows (in thousands):


	Predecessor			Successor
	end of 2004			end of 2005
Revolving credit facility	$	—		$	—
U.S. dollar term loan facility		—			104,737
Euro term facility		—			54,481
Old term loan facility		194,513			—
10 3/4% senior notes		211,144			231,493
10 5/8% senior subordinated notes		—			150,843
9 3/4% senior subordinated notes		149,147			—
Industrial development revenue bonds		14,493			11,754
Debt of foreign subsidiaries		14,466			10,968

		583,763			564,276
Less: Current maturities		(3,673	)		(3,158	)

		580,090			561,118
Senior preferred stock		106,421			—

Total	$	686,511		$	561,118

New Senior Credit Facility

In connection with the closing of the Acquisition on October 24, 2005, we entered into a new senior credit facility with a syndicate of banks and other institutional investors, as lenders, and Lehman Commercial Paper Inc., as administrative agent.

The following is a summary of certain of the provisions of our new senior credit facility:

The facilities. The new senior credit facility provides for total commitments of $210.0 million, including a $55.0 million U.S. dollar equivalent term loan facility denominated in Euros (the Euro term loan facility), a $105.0 million U.S. dollar term loan facility and a $50.0 million multi-currency revolving credit facility with a $15.0 million sub-limit for Euro-denominated revolving credit loans.

Interest. All borrowings denominated in U.S. dollars under the new senior credit facility bear interest, at our option, at a rate per annum equal to an applicable margin, plus (i) the higher of (x) the prime rate or (y) the federal funds effective rate, plus one half percent (0.50%) per annum or (ii) the Eurodollar rate. All borrowings denominated in Euros bear interest at a rate per annum equal to the EURIBOR rate plus an applicable margin. In addition to paying interest on outstanding principal under the new senior credit facility, we are required to pay a commitment fee to the lenders in respect of unutilized loan commitments at a rate of 0.50% per annum.

Maturities. The new revolving credit facility matures on October 24, 2010 and the new term loan facilities mature on October 24, 2012, except that all facilities terminate 91 days prior to the maturity of the senior notes, unless the senior notes are redeemed or refinanced.

Prepayments. We are required to repay amounts borrowed under the new term loan facilities in quarterly installments of 0.25% of the aggregate principal amount borrowed on October 24, 2005 for the first six years and nine months after the closing date with the remainder payable at maturity. The loans under our new senior credit facility may be prepaid and commitments may be reduced. Optional prepayments of the term loan facilities may not be reborrowed.

Subject to certain exceptions, the new senior credit facility requires that 100% of the net proceeds from certain asset sales, casualty insurance, condemnations and debt issuances, 50% of the net proceeds from equity offerings and 75% of excess cash flow for each fiscal year (reducing to 50% based on performance levels agreed upon) must be used to pay down outstanding borrowings.

Guarantees; collateral. The obligations under the new senior credit facility are guaranteed by our parent corporation and by each of our domestic restricted subsidiaries. In addition, the new senior credit facility is secured by first priority perfected security interest in substantially all of our existing and future material assets and the existing and future material assets of our subsidiary guarantors, except that only up to 65% of the capital stock of our first-tier foreign subsidiaries is pledged in favor of the lenders under the new senior credit facility.

Covenants. The new senior credit facility contains customary covenants, including maximum consolidated senior secured leverage and maximum capital expenditure requirements, and certain other limitations on our and certain of our subsidiaries’ ability to engage in certain activities.

10 ⁵/8% Senior Subordinated Notes

On October 24, 2005, we closed a private placement of $152.0 million in aggregate principal amount of new 10 ⁵/8% senior subordinated notes. These senior subordinated notes were subsequently exchanged for new notes with identical terms of the private placement notes, except that the new notes are registered under the Securities Act of 1933 and do not contain registration rights, provisions for additional interest or restrictions on transfer. The 10 ⁵/8% senior subordinated notes were issued at a discount of 99.2% of par, resulting in gross proceeds of $150.8 million.

The 10 ⁵/8% senior subordinated notes mature on November 15, 2015, with interest payable semiannually in arrears on May 15 and November 15 of each year, commencing on May 15, 2006. The senior subordinated notes are general unsecured senior subordinated obligations, expressly subordinated in right of payment to all of our existing and future senior indebtedness, including debt under our senior credit facility and senior notes. The senior subordinated notes are effectively subordinated to any of our secured indebtedness to the extent of the value of the collateral, and are structurally subordinated to all liabilities, including trade payables, of each of our subsidiaries that is not a guarantor of the senior subordinated notes. Our senior subordinated notes are unconditionally guaranteed on an unsecured senior subordinated basis by DPC Investment Corp., Doane/Windy Hill Joint Venture L.L.C. and Doane Management Corp., representing each of our domestic restricted subsidiaries as of the issuance date of the senior subordinated notes, and may be guaranteed by additional domestic restricted subsidiaries in the future.

Use of Proceeds From the Transactions

In connection with the Transactions, OTPP and our senior management have investments in Doane Enterprises of $306.0 million and $4.7 million, respectively, less equity issuance costs of approximately $7.5 million. In addition, we received cash proceeds from the new senior credit facility and the 10 ⁵/8% senior subordinated notes of $160.0 million and $150.8 million, respectively. The equity investments and cash proceeds were allocated to purchase the outstanding common stock of our parent corporation, repay our old senior credit facility, redeem our 9 ³/4% senior subordinated notes and senior preferred stock, pay all accrued interest associated with all of our indebtedness through the closing of the Acquisition on October 24, 2005, and pay transaction fees and expenses. We did not receive any proceeds from the issuance of the 10 ⁵/8% senior subordinated notes in the exchange offer.

Long-Term Debt Maturities

A summary of the annual maturities of our long-term debt as of the end of fiscal 2005 follows (in thousands):


Maturities by year
2006	$	3,158
2007		3,360
2008		3,504
2009		3,623
2010		235,209
2011 and thereafter		315,422

Total	$	564,276

Contractual Obligations

A summary of the maturities of our contractual obligations and other commercial obligations as of the end of fiscal 2005 follows (in thousands):


	Payments due by period
							2011 and
	2006		2007-2008		2009-2010		thereafter		Total
Contractual obligations:
Long-term debt	$	3,158	$	6,864	$	238,832	$	315,422	$	564,276
Operating leases		3,770		6,264		2,631		2,706		15,371

Total	$	6,928	$	13,128	$	241,463	$	318,128	$	579,647


	Payments due by period
							2011 and
	2006		2007-2008		2009-2010		thereafter		Total
Other commerical obligations:
Standby letters of credit	$	4,521	$	—	$	—	$	—	$	4,521

Commitments and Contingencies

We believe our operations are in compliance in all material respects with environmental, safety and other regulatory requirements; however, these requirements may change in the future, which may cause us to incur material costs to comply with these requirements or in connection with the effect of these matters on our business.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Inflation and Changes in Prices

Our financial results depend to a large extent on the costs of raw materials, packaging, oil and natural gas, and our ability to pass through increases in these costs to our customers using price increases or our cost-sharing arrangements. Historically, market prices for commodity grains and food stocks have fluctuated in response to a number of factors, including changes in U.S. government farm support programs, changes in international agricultural trading policies, impacts of disease outbreaks on protein sources and the potential effect on supply and demand, changes in international demand, trading activity in the commodity markets, as well as weather conditions during the growing and harvesting seasons. Our costs for packaging materials are affected by fluctuations in paper, steel and oil prices, resulting from changes in supply and demand, general economic conditions and other factors. In addition, our manufacturing costs are affected by changes in natural gas prices and our freight costs are affected by changes in gasoline prices. Our results of operations have been exposed to volatility in the commodity and natural gas markets in the past. We have cost-sharing arrangements with certain of our domestic customers to reduce the

impact of volatile commodity costs; however, these arrangements only reduce our exposure to such volatility and are subject to change.

In the event of any increases in raw materials, packaging, natural gas and freight costs, we may be required to seek increased selling prices for our products to avoid margin deterioration. We cannot provide any assurances as to the timing or extent of our ability to implement future selling price increases in the event of increased raw materials, packaging, natural gas or freight costs or of whether any selling price increases implemented by us may affect future sales volumes to our customers.

Critical Accounting Policies

Accounts receivable allowances. As of the end of fiscal 2004 and 2005, our gross accounts receivable were $116.3 million and $107.9 million, respectively. We had allowances for doubtful accounts and outstanding deductions with customers of $2.7 million and $1.8 million as of the end of the fiscal 2004 and 2005, respectively. We estimate our allowances by applying a recovery percentage based on historical collection experience. We accrue additional allowances based on a specific identification review for amounts deemed to be at risk. Receivables are written off against the allowances at the point in which an amount is deemed uncollectible by us. We may revise our allowances against accounts receivable as we receive more information or as we assess other factors impacting the realizability of our accounts receivable.

Inventories allowances. As of the end of fiscal 2004 and 2005, our gross inventories were $71.2 million and $67.6 million, respectively. We had allowances of $2.9 million and $2.4 million, primarily for obsolete and slow-moving packaging inventories, as of the end of fiscal 2004 and 2005, respectively. We estimate our allowances against inventories based on a specific identification review of obsolete stock keeping units, or SKUs, or probable SKUs to be rationalized. In addition, we estimate our slow-moving inventory allowance by applying a historical write off percentage to aged inventory balances. We may revise our allowance against inventories as we receive more information or as we assess other factors impacting the realizability of our inventories.

Deferred tax assets. As of the end of fiscal 2004 and 2005, our U.S. federal net operating loss, or NOL, carryforwards were $142.2 million and $181.8 million, respectively, and our foreign NOL carryforwards were $22.6 million and $59.6 million, respectively. Our gross deferred tax assets, including U.S. federal and state and foreign NOL carryforwards, were $79.0 million and $110.5 million as of the end of fiscal 2004 and 2005, respectively, and our gross deferred tax liabilities were $54.8 million and $187.1 million, respectively.

We have concluded that it is more likely than not that we will not generate sufficient future taxable income to realize our deferred tax assets and that a valuation allowance is necessary. Our consolidated valuation allowance was $55.4 million and $16.8 million as of the end of fiscal 2004 and 2005, respectively. During fiscal 2004, we increased the valuation allowance against our U.S. federal and state deferred tax assets and foreign deferred tax assets by $15.8 million and decreased it by $38.7 million in fiscal 2005 (combined), primarily as a result of the Acquisition and the allocation of the purchase price. We currently expect that future years’ deferred income tax expense (benefit) will include deferred tax expense approximating the growth in our deferred tax liabilities related to the amortization of goodwill for income tax purposes.

Goodwill and intangible assets. As of the end of fiscal 2004 and 2005, our goodwill and intangible assets were $405.8 million and $608.5 million, respectively. In connection with the Acquisition, we recorded goodwill and other identifiable intangible assets of $321.2 million and $286.0 million, respectively. Our other identifiable intangible assets consist of customer relationships, the fair value of which was determined based upon an independent third party appraisal. We have segregated these customer relationships into two classifications based upon an assessment of the expected lifespan of these assets.

We test the carrying value of our goodwill and customer relationship with an indefinite life for impairment annually in the fourth quarter of each fiscal year and upon the occurrence of certain events. Our impairment test includes quantitative analyses of discounted future cash flows, market multiples of earnings and comparable transactions, if available. If the estimated fair value of goodwill and the customer relationship intangible asset of either our domestic or European reporting unit is less than the carrying value, an impairment loss will be recognized. The Company did not perform an annual impairment test in the fourth quarter of fiscal 2005, using the methodology described above, because it met the criteria under SFAS 141, which permits us to carryforward our most recent fair

value determination, which was completed in connection with the Acquisition. As a result, we concluded that no impairment was evident in fiscal 2005.

We also review other long-lived assets, including the intangible asset for the remainder of our customer relationships with estimable useful lives, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. These assets are measured at the lower of the carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. An impairment loss would be recognized to the extent that the carrying amount of an asset exceeds its fair value. We have concluded that no known events or circumstances exist since the Acquisition date of October 24, 2005 through the end of fiscal 2005 that would indicate an impairment test is necessary.

Recently Issued Accounting Pronouncements

See Note 2 to our accompanying audited consolidated financial statements included herein for a description of recent accounting pronouncements and the expected dates of adoption, if applicable, and the potential impact on our consolidated results of operations and financial condition.

ITEM 7A — Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, which may give rise to losses from adverse changes in market prices and rates. Our market risks could arise from changes in commodity prices, interest rates and foreign currency exchange rates.

Commodity price risk. We are exposed to market risk related to changes in commodity prices. We may seek to manage our commodity price risk associated with market fluctuations by using derivative instruments for portions of our corn, soybean meal, alternative proteins, oil and natural gas purchases, principally through exchange traded futures and options contracts. The terms of such contracts are generally less than one year. During the term of a contract, we balance positions daily with cash payments to or from the exchanges. At the termination of a contract, we have the ability to settle financially or by exchange for the physical commodity, in which case, we would deliver the contract against the acquisition of the physical commodity. Our policy does not permit speculative commodity trading.

Although we may seek to manage the price risk of market fluctuations by hedging portions of our primary commodity product purchases, our results of operations have been adversely affected in the past by these fluctuations and may in the future. Moreover, the use of certain hedging instruments also reduces our ability to take advantage of short-term reductions in raw material prices. If one or more of our competitors is able to reduce their manufacturing costs by taking advantage of any reductions in raw material prices, we may face pricing pressures from these competitors and may be forced to reduce our selling prices or face a decline in sales volume, either of which could have a material adverse effect on our business, results of operations and financial condition.

Our commodity derivative instruments are measured at fair value under SFAS 133 in our financial statements. Our results of operations for certain periods have been adversely affected in the past under SFAS 133 fair value accounting of our commodity derivative instruments due to the volatility in commodity prices and, similarly, our results of operations may be adversely affected in the future by SFAS 133 accounting.

As of the end of fiscal 2005, we had open commodity contracts with a fair value gain of $1.8 million. Based upon an analysis we completed as of the end of fiscal 2005 in which we utilized our actual derivative contractual volumes and assumed a 5% adverse movement in commodity prices, we determined the potential decrease in the fair value of our commodity derivative instruments would be approximately $0.9 million.

Interest rate risk. We are exposed to market risk related to changes in interest rates. We have in the past and may in the future enter into interest rate swap and cap contracts to limit our exposure to the interest rate risk associated with our floating rate debt, which was $159.2 million as of the end of fiscal 2005. Changes in market values of these financial instruments are highly correlated with changes in market values of the hedged item both at inception and over the life of the contract. At the end of fiscal 2005, we had no outstanding interest rate swap or cap contracts.

Our results of operations may be adversely affected by changes in interest rates. Assuming a 100 basis point increase in the interest rates on our floating rate debt as of the end of fiscal 2005, interest expense would have increased by approximately $1.6 million for fiscal 2005. Such a change would have also resulted in a decrease of approximately $16.7 million in the fair value of our fixed rate debt as of the end of fiscal 2005. In the event of an adverse change in interest rates, we could take action to mitigate our exposure; however, due to the uncertainty of these potential actions and the possible adverse effects, our analysis assumes no such actions. Furthermore, our analysis does not consider the effect of any changes in the level of overall economic activity that may exist in such an environment.

Foreign currency exchange risk. We have foreign currency exposure relating to the translation of the financial statements of our foreign operations into U.S. dollars. Our functional currencies, other than the U.S. dollar, include the Euro, Danish Krona and British Pound Sterling. The cumulative translation adjustment for the net investment in our European operations is recognized in accumulated other comprehensive income in our financial statements. In addition, we have designated our Euro term loan facility as a hedge against a portion of our foreign currency exposure related to the net investment in our foreign operations. For fiscal 2005, we had a cumulative translation net loss of $1.0 million, which consists of a cumulative loss of $1.4 million for the translation of the financial statements of our foreign operations into U.S. dollars, partially offset by a cumulative translation gain of $0.4 million for the translation of our outstanding Euro term loan facility and payments thereon to U.S. dollars as of the end of and for fiscal 2005. We also periodically enter into foreign currency options and forward contracts to seek to manage our exposure to exchange rate fluctuations on foreign currency translations. As of the end of fiscal 2005, we had open foreign currency contracts related to foreign currency translations with a fair value of $0.5 million.

We also have foreign currency exposure, to a lesser extent, relating to transacting business in countries with foreign currencies other than our functional currencies. From time to time, we may enter into foreign currency options or forward contracts for the purchase or sale of a foreign currency to mitigate the risk from foreign currency exchange rate fluctuations in those transactions and translations. We had no open foreign currency contracts related to foreign currency transactions at the end of fiscal 2005.

ITEM 8 — Financial Statements and Supplementary Data

Reference is made to the information beginning on page F-1, which is filed as a part of our 2005 Form 10-K.

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

None.

ITEM 9A — Controls and Procedures

Evaluation of disclosure controls and procedures. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we performed an evaluation of the design and operation of our disclosure controls and procedures in effect as of the end of fiscal 2005. Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of the end of fiscal 2005, such disclosure controls and procedures were effective to ensure that material information relating to the company, including our consolidated subsidiaries, was accumulated and communicated to our management and made known to our chief executive officer and chief financial officer.

Changes in internal controls over financial reporting. There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

ITEM 9B — Other Information

Supplemental Executive Retirement Plan. On March 27, 2006, we modified our supplemental retirement benefits for management by adopting a Supplemental Executive Retirement Plan, which we refer to as the SERP. The SERP will provide additional retirement benefits to certain of our and our affiliates’ employees. Our Named Executive Officers have been named as participants under the SERP, replacing their individual Non-Qualified Salary Continuation Agreements.

Annual Target Bonuses for Executive Officers. On March 27, 2006, our board of directors approved increases in the annual target bonuses for Joseph J. Meyers, Vice President, Supply Chain, Quality and Chief Information Officer and Kenneth H. Koch, Vice President, Doane Europe. The annual bonuses for our executive officers is calculated by multiplying their respective target bonus amounts times a factor determined according to the achievement of a company performance incentive target. For 2006, the target bonus for Mr. Meyers and Mr. Koch is 75% of their annual base salary amounts, which are $250,000 each.

PART III

ITEM 10 — Directors and Executive Officers of the Registrant

The following table identifies the names, ages and titles of the directors and executive officers of Doane Enterprises. Each of the members of the board of directors of Doane Enterprises named below also serves on the board of directors of Doane. Officers serve at the discretion of the boards of directors.


Name	Age	Position
Douglas J. Cahill ⁽¹⁾	46	Chief Executive Officer, President and Director
Philip K. Woodlief ⁽¹⁾	52	Vice President, Finance and Chief Financial Officer
David L. Horton	45	Vice President and General Manager, North American Operations
Joseph J. Meyers	44	Vice President, Supply Chain, Quality and Chief Information Officer
Richard A. Hannasch	52	Vice President, Co-Manufacturing and Specialty
Kenneth H. Koch	50	Vice President, Doane Europe
Dean G. Metcalf	50	Chairman of the Board
Terry R. Peets	61	Director
Glen Silvestri	34	Director


⁽¹⁾		These executive officers hold the same positions at Doane and Doane Enterprises

Set forth below is a brief description of the business experience of the directors and executive officers of Doane and Doane Enterprises. Each of the directors of Doane Enterprises will be elected to serve a three-year term. The directors of Doane are elected at each annual meeting to serve for the ensuing year.

Douglas J. Cahill became Chief Executive Officer of Doane and Doane Enterprises in July 1998 and served as President of Doane and Doane Enterprises from January 1998 to July 1998 and Chief Operating Officer of Doane and Doane Enterprises from September 1997 to January 1998. He has been a director of Doane and Doane Enterprises since December 1998 and served as the Chairman of the Pet Food Institute from 2003 to 2005. Prior to joining us, Mr. Cahill served as President of Olin Corporation’s Winchester Division, Corporate Vice President of Olin Corporation and held various other positions with Olin Corporation from July 1984 through September 1997.

Philip K. Woodlief became Vice President, Finance and Chief Financial Officer of Doane and Doane Enterprises in June 2000 and served as Vice President, Finance for Doane from February 1999 to June 2000. From April 1997 to May 1998, Mr. Woodlief was Vice President and Corporate Controller of Insilco Corporation, a diversified consumer and industrial products manufacturing company, and served as Corporate Controller of Insilco from January 1989 to April 1997.

David L. Horton became Vice President and General Manager of North American Operations in June 2001 and served as Vice President, Manufacturing, Engineering, and Quality from August 1999 to June 2001, Vice President Manufacturing and Engineering from January 1999 to August 1999 and Vice President, Fulfillment from December 1997 to January 1999. Mr. Horton joined Doane in December 1997. Prior to joining us, Mr. Horton served as Vice President of Manufacturing and Engineering for Olin Corporation’s Winchester Division and held various other positions with Olin Corporation from January 1984 to November 1997.

Joseph J. Meyers began serving as Vice President Supply Chain, Quality in June 2001 and previously served as Vice President, Fulfillment from August 1999 to June 2001. Mr. Meyers joined Doane as our Chief Information Officer in August 1998 and has continued in such role to the present. Prior to joining us, Mr. Meyers held various information technology positions at Realtime Consulting, PricewaterhouseCoopers LLP and Olin Corporation from 1992 to 1998.

Richard A. Hannasch began serving as Vice President, Co-Manufacturing and Specialty in March 2000 and previously served as Vice President, Business Integration from August 1999 to March 2000, Vice President, Fulfillment from January 1999 to August 1999, Vice President, Strategic Planning from June 1998 to January 1999 and Vice President, Marketing from November 1997 to January 1999. Mr. Hannasch joined Doane in October 1996. Prior to joining us, Mr. Hannasch served as Director, Business Development for Ralston Purina Company’s International Division and held various other positions at Ralston Purina Company from December 1978 to October 1996.

Kenneth H. Koch joined Doane in November 2003 as Vice President, Doane Europe and in July 2004 was made an executive officer. Prior to joining us, Mr. Koch was the President and Chief Executive Officer, and a director of Inrange Technologies Corporation, a Nasdaq listed manufacturer of high speed switching optical networking and data extension and connectivity products, from July 2002 through the company’s sale in May 2003. He previously served as Vice President and General Counsel of Inrange Technologies from July 2000 until becoming its President. Before joining Inrange Technologies, Mr. Koch was Vice President and General Counsel of Insilco Corporation, a diversified consumer and industrial products manufacturing company, from 1993 through 1999.

Dean G. Metcalf began serving as Chairman of the Board of Doane and Doane Enterprises in October 2005. Mr. Metcalf is a Vice President at Teachers’ Private Capital, the private equity arm of OTPP, which manages over $4 billion in private equity capital. Mr. Metcalf joined OTPP in 1991. Previously, he worked in commercial and corporate lending for several years and, in particular, provided acquisition financing for mid-market buyouts. Mr. Metcalf received a BA and MBA from York University. He is a director of Shoppers Drug Mart Corporation, Worldspan, L.P., Maple Leaf Sports and Entertainment and Yellow Pages Group.

Terry R. Peets became a director of Doane and Doane Enterprises in October 2001 and served until the closing of the Acquisition on October 24, 2005. He again became a director of Doane and Doane Enterprises on February 10, 2006. Mr. Peets is a consultant to JPMorgan Partners, LLC. Over the past 25 years, Mr. Peets has

served as Executive Vice President of Vons Grocery Company, Executive Vice President of Ralph’s Grocery Company, and President and CEO of PIA Merchandising, Inc. He has an M.B.A. with distinction from the Graduate School of Management at Pepperdine University. He currently serves as the Chairman of the Board and a director of World Kitchens, Inc., Vice Chairman of the City of Hope and is a director of Pinnacle Food Corporation, Ruiz Foods Inc. and Berry Plastics Corporation.

Glen Silvestri began serving as a director of Doane and Doane Enterprises in October 2005. Mr. Silvestri is a Portfolio Manager for Teachers’ Private Capital, the private equity arm of OTPP, which manages over $4 billion in private equity capital. Mr. Silvestri began his career with Price Waterhouse in audit and consulting, and then subsequently served as director of finance and then treasurer of MDC Corporation, a mid-sized public company traded on The Toronto Stock Exchange. Mr. Silvestri has been with Teachers’ Private Capital since January of 2001 and serves on the board of CFM Corporation and Young America Corporation. Mr. Silvestri has a BA in English Literature from the University of Western Ontario and is a Chartered Accountant.

Board Committees

Our audit and compensation committees are both comprised of Messrs. Metcalf, Silvestri and Peets. Our audit committee recommends the annual appointment of auditors with whom the audit committee will review the scope of audit and non-audit assignments and related fees, accounting principles we will use in financial reporting, internal auditing procedures and the testing for adequacy of our internal control procedures. Mr. Peets is an “audit committee financial expert” as defined in Item 401(h) of Regulation S-K and is “independent” as that term is defined in Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange’s listing standards. The compensation committee reviews and recommends to our board of directors the compensation and benefits of our executive officers, stock option grants and other incentive arrangements, employment and related agreements, and administers our employee benefit plans.

Code of Ethics

We have adopted a code of ethics which contains the ethical principles by which our chief executive officer, chief financial officer, controller and principal accounting officer, assistant controller, finance director, purchasing director, treasurer, assistant treasurer, European finance director and European managing director, among others, are expected to conduct themselves when carrying out their duties and responsibilities. A copy of our code of ethics is available without charge upon oral or written request by contacting us at Doane Pet Care Company, 210 Westwood Place South, Suite 400, Brentwood, Tennessee 37027, attention human resources department, telephone (615) 373-7774.

ITEM 11 — Executive Compensation

Summary Compensation Table

The following table sets forth information for fiscal 2005 (combined) with respect to the chief executive officer and the other four most highly compensated individuals serving as our executive officers who earned $100,000 or more in combined salary and bonus during such year (collectively, the Named Executive Officers):


										Long-term
										compensation
										awards of
										securities
			Annual compensation ⁽¹⁾							underlying
Name and principal	Fiscal						Other annual			options/SARS
position at Doane	year		Salary		Bonus⁽²⁾		compensation			(#)		All other compensation
Douglas J. Cahill		2005		450,000		742,500	$	—			71,415		7,097,235	^{(3)(4)(5)(6)(7)(8)}
President and Chief		2004		437,500		742,500		—			—		347,255	^{(4)(5)(6)(7)(8)}
Executive Officer		2003		400,000		—		—			100,000		206,350	^{(4)(5)(6)(7)(8)}
Philip K. Woodlief		2005		275,000		226,875		—			37,939		2,614,906	^{(3)(4)(5)(6)(7)(8)}
Vice President, Finance and		2004		268,750		226,875		—			—		114,649	^{(4)(5)(6)(7)(8)}
Chief Financial Officer		2003		250,000		—		—			70,000		66,112	^{(4)(5)(6)(7)(8)}
David L. Horton		2005		275,000		226,875		—			37,939		2,112,413	^{(3)(4)(5)(6)(7)(8)}
Vice President and General		2004		268,750		226,875		—			—		112,657	^{(4)(5)(6)(7(8)}
Manager, North American		2003		250,000		—		—			70,000		61,569	^{(4)(5)(6)(7)(8)}
Operations
Joseph J. Meyers		2005		250,000		170,000		—			37,939		2,071,951	^{(3)(4)(5)(6)(7)(8)}
Vice President, Supply Chain,		2004		242,500		137,500		—			20,000		70,450	^(4)(5)(6)(7)
Quality and Chief		2003		220,000		—		—			50,000		54,251	^(4)(5)(6)(7)
Information Officer
Kenneth H. Koch (9)		2005		250,000		137,500		74,996	⁽¹⁰⁾		37,939		1,507,414	^{(3)(4)(5)(6)(7)}
Vice President, Doane Europe		2004		250,000		137,500		102,510	⁽¹⁰⁾		100,000		1,349	⁽⁶⁾⁽⁷⁾
		2003		24,000		—		4,723	⁽¹⁰⁾		—		—


(1)		Amounts exclude perquisites and other personal benefits that did not exceed the lesser of either $50,000 or 10% of the total annual salary and bonus reported for each Named Executive Officer.

(2)		The annual bonus for the Executive Officers for 2003 and 2005 was, and for 2006 will be, calculated by multiplying their respective target bonus amounts times a factor that is determined according to the achievement of a company performance incentive target. For 2004, the annual bonus also included individual performance incentive targets. For such year, the company performance target and the individual performance targets were weighted 60% and 40%, respectively. Actual company performance and individual performance can result in the actual bonus being less than or greater than the target bonus. The target bonus for Mr. Cahill is 150% of his annual base salary amount, which is currently $450,000, and the target bonuses for each of Messrs. Woodlief and Horton are 75% of their annual base salary amounts, which are $275,000, each. The target bonus for each of Messrs. Meyers and Koch was 50% for each of the years 2003 through 2005, and for 2006 will be 75% of their annual base salary amounts, which are $250,000 each. In addition, Mr. Meyers’ annual bonus was increased by $32,500 in 2006 for extraordinary performance. Bonus payments for fiscal 2005 and 2004 were each 110% of the incentive target. The bonus payments for fiscal 2005 were paid contemporaneously with the filing of this Form 10-K. No annual bonus payments were made in 2003.

(3)		Amounts include transaction bonuses paid in connection with the Acquisition in cash and contractual rights to receive shares of Class A common stock of Doane Enterprises in fiscal 2005 as follows: Mr. Cahill — $6,750,000; Mr. Woodlief — $2,500,000; Mr. Horton and Mr. Meyers — $2,000,000; and Mr. Koch — $1,500,000. See “Management Investment” and “Transaction Bonuses” for a description of these contractual rights to receive shares and for the amount of these transaction bonuses that were paid in cash.

(4)		Amounts include retention bonuses paid as follows: Mr. Cahill — $200,000 in 2003, $337,500 in 2004 and $337,500 in 2005; Mr. Woodlief — $56,250 in 2003, $103,125 in 2004 and $103,125 in 2005; Mr. Horton — $56,250 in 2003, $103,125 in 2004 and $103,125 in 2005; and Mr. Meyers — $50,000 in 2003, $62,500 in 2004 and $62,500 in 2005.

(5)		Amounts include a company match under the Doane Pet Care Retirement Savings Plan as follows: Mr. Cahill —$2,769 in 2003, $6,150 in 2004 and $6,500 in 2005; Mr. Woodlief — $6,000 in 2003, $7,650 in 2004 and $8,273 in 2005; Mr. Horton — $1,950 in 2003, $6,150 in 2004 and $6,273 in 2005; Mr. Meyers —$2,331 in 2003, $6,016 in 2004 and $6,447 in 2005; and Mr. Koch — $865 in 2004 and $5,846 in 2005.

(6)		Amounts include term life insurance premiums as follows: Mr. Cahill — $192 in 2003, $216 in 2004 and $207 in 2005; Mr. Woodlief —$120 in 2003, $132 in 2004 and $127 in 2005; Mr. Horton —$120 in 2003, $132 in 2004 and $127 in 2005; Mr. Meyers —$106 in 2003, $120 in 2004 and $115 in 2005; and Mr. Koch — $30 in 2004 and $115 in 2005.

(7)		Amounts include disability insurance premiums in 2003 and 2004 of $1,814 except for Mr. Koch which includes $454 in 2004 and premiums in 2005 of $1,453.


(8)		Amounts include supplemental long-term disability premiums as follows: Mr. Cahill — $1,575 in 2003, 2004 and 2005; Mr. Woodlief — $1,928 in 2003, 2004 and 2005; Mr. Horton — $1,435 in 2003, 2004 and 2005; and Mr. Meyers — $1,436 in 2005.

(9)		Mr. Koch was hired in November 2003 as Vice President, Doane Europe, and in July 2004, was made an executive officer.

(10)		Amounts include reimbursement for the payment of taxes of $58,517 in 2004 and $4,723 in 2003, a housing allowance of $33,356 in 2004 and $57,857 in 2005, and a car allowance of $10,687 in 2004 and $17,139 in 2005.

Employment and Retirement Agreements

In connection with the Acquisition, we and Doane Enterprises entered into new employment agreements with Messrs. Cahill, Woodlief, Horton, Meyers and Koch, of which each agreement has a one-year term that will renew annually absent notice of termination. The terms of their employment agreements are substantially similar except for salary and annual bonus amounts. The agreements are subject to early termination for cause (as defined in the employment agreements) without severance. The employment agreements for Messrs. Woodlief, Horton, Meyers and Koch provide that a termination without cause, an involuntary termination (as defined in the employment agreements) and a non-renewal of any agreement by us will entitle the executive to receive the following severance benefits: (1) a payment equal to two times the executive’s then current base salary and target annual bonus, (2) payment of a pro-rata portion of any annual bonus actually earned in the year of termination, (3) continued payment of employee health and welfare benefits until the earlier of two years after termination of employment and the date the executive receives similar coverage from a new employer and (4) up to $25,000 in outplacement services. The employment agreement for Mr. Cahill contains similar severance benefit provisions; however, his severance payment is equal to three times his then current base salary and target annual bonus, and he is eligible to receive continued payment of health and welfare benefits for up to three-years after termination of employment. Additionally, all executives will be entitled to receive a full tax gross-up payment for any golden parachute taxes imposed under the Internal Revenue Code of 1986, as amended, as a result of the Acquisition (but not for any subsequent change in control transactions). Under these employment agreements, Mr. Cahill is subject to a three-year non-competition restriction commencing upon termination for any reason, and each of the other named executive officers are subject to a similar restriction for a two-year period.

Under the terms of his new employment agreement, Mr. Cahill continues to receive a base salary of $450,000 and his annual bonus target remains at an amount equal to 150% of his base salary. Under the terms of their new employment agreements, Messrs. Woodlief and Horton each continues to receive a base salary of $275,000 and their annual bonus targets remain at an amount equal to 75% of their base salaries. Under the terms of their new employment agreements, Messrs. Meyers and Koch each continues to receive a base salary of $250,000 and their annual bonus targets have been increased to an amount equal to 75% of their base salaries. The annual bonuses will be calculated by multiplying their respective target bonus amounts times a factor that is determined according to the achievement of a company performance incentive target. Actual company performance can result in the actual bonus being less than or greater than the target bonus.

Compensation of Directors

During Mr. Peets prior service as an independent director of Doane and Doane Enterprises, he was paid a $1,500 per month retainer fee and $2,000 for each board of directors meeting he attended. Edward H. D’Alelio and Paul E. Suckow served as independent directors of Doane until the closing of the Acquisition. Messrs. D’Alelio and Suckow were paid $2,000 for each board of directors meeting they attended. In fiscal 2005, Messrs. Peets, D’Alelio and Suckow earned $26,500, $12,000 and $12,000, respectively, for their service as board members. In addition, Lawrence S. Benjamin, who served as an independent director of Doane and Doane Enterprises until his resignation from this position effective February 1, 2005, and Mr. Peets had each been granted stock options covering 40,000 shares under the 1999 Stock Incentive Plan. These options had a time-vesting schedule pursuant to which one-third of the stock options would vest after each of the first three years following the grant date. In connection with the Acquisition, Mr. Peets’ unvested options were immediately vested and all of his outstanding options were then cashed out. At the time of Mr. Benjamin’s resignation, he had 19,998 vested options. In connection with the

Acquisition, all of his vested options were settled in cash. Messrs. Peets and Benjamin received $20,639 and $10,417 for these options, respectively. No compensation was paid by us to our other directors.

Mr. Peets will receive annual compensation of $35,000 for his service as an independent director and $15,000 for his service on the audit committee. Currently, Messrs. Metcalf and Silvestri receive no compensation for their services on the board of directors and related committees.

Transaction Bonuses

In connection with the Acquisition, Doane Enterprises awarded one-time transaction bonuses of $15.5 million to members of our senior management and other key employees for their prior service. These bonuses were paid, at the discretion of Doane Enterprises’ board of directors, in cash and contractual rights to receive shares of Doane Enterprises’ Class A common stock that will remain outstanding following the Acquisition. Cash bonuses were awarded to each of our Named Executive Officers as follows: Douglas J. Cahill — $5,102,047; Philip K. Woodlief — $1,796,500; David L. Horton — $1,407,000; Joseph J. Meyers — $1,478,000; and Kenneth H. Koch — $994,000. In addition, contractual rights to receive shares of Class A common stock of Doane Enterprises were awarded to each of the Named Executive Officers as follows: Douglas J. Cahill — 16,480 shares, or $1,648,000; Philip K. Woodlief — 7,035 shares, or $703,500; David L. Horton — 5,930 shares, or $593,000; Joseph J. Meyers — 5,220 shares, or $522,000; and Kenneth H. Koch — 5,060 shares or $506,000.

Stock Option Plans

In connection with the Acquisition, Doane Enterprises terminated its existing stock option plans and established a new stock option plan, the Doane Pet Care Enterprises, Inc. Stock Incentive Plan. The termination of the two previous plans, consisting of the 1996 Stock Option Plan and the 1999 Stock Incentive Plan, was effected by immediately vesting all unvested outstanding options and then canceling and settling all options under the previous plans in cash. As a result of the payout, the Named Executive Officers received the following amounts on October 24, 2005: Mr. Cahill — $537,339, Mr. Woodlief — $164,464, Mr. Horton — $186,234, Mr. Meyers — $153,580, and Mr. Koch — $47,423. On December 30, 2005, the Named Executive Officers received the following additional amounts, which were paid out of monies held in escrow under the terms of the Agreement and Plan of Merger associated with the Acquisition: Mr. Cahill — $86,616, Mr. Woodlief — $26,950, Mr. Horton — $30,414, Mr. Meyers — $25,218, and Mr. Koch — $8,660. The total amount of canceled options underlying these amounts paid to the Named Executive Officers were as follows: Mr. Cahill — 1,000,200 options, Mr. Woodlief — 311,200, Mr. Horton — 351,200, Mr. Meyers — 291,200, and Mr. Koch — 100,000. The Named Executive Officers may be paid additional amounts related to the options payout pending the settlement of amounts held in escrow in accordance with the Agreement and Plan of Merger.

Under the new plan, a total of 9.5%, or 326,175 shares, of the fully-diluted Class A common stock of our parent corporation is available for option grants. On October 24, 2005, Doane Enterprises granted 223,171 stock options to our Named Executive Officers and on December 1, 2005 granted 49,497 stock options to other key employees, each with an exercise price of $100 per share which was equal to the fair value of the common stock on the date of the grants. These stock option grants have a 10-year life and vest ratably in five equal installments on each of the first five anniversaries of the effective date of such grants with the potential for accelerated vesting upon a change of control of our parent corporation. The stock option grants to the Named Executive Officers were as follows: Mr. Cahill — 71,415, Mr. Woodlief — 37,939, Mr. Horton — 37,939, Mr. Meyers — 37,939, and Mr. Koch — 37,939.

Stock Option Grants

The following table sets forth certain information on options granted in fiscal 2005, all of which were granted under the 2005 Stock Incentive Plan, to our Named Executive Officers (dollars in thousands):


										Potential		Potential
										realizable		realizable
										value at		value at
	Individual grants									assumed 5%		assumed 10%
	Number of		% of total							annual rate		annual rate
	securities		options							of stock price		of stock price
	underlying		granted to			Exercise				appreciation		appreciation
	options		employees in			price per		Expiration		for option		for option
Name	granted		fiscal 2005			share		date		term		term
Douglas J. Cahill		71,415		26.2	%	$	100.00		2015	$	4,491	$	11,382
Philip K. Woodlief		37,939		13.9			100.00		2015		2,386		6,047
David L. Horton		37,939		13.9			100.00		2015		2,386		6,047
Joseph J. Meyers		37,939		13.9			100.00		2015		2,386		6,047
Kenneth H. Koch		37,939		13.9			100.00		2015		2,386		6,047

Stock Option Exercises

The following table sets forth certain information on exercises of stock options in fiscal 2005 by the Named Executive Officers and the number of shares underlying unexercised stock options held by such officers as of the end of fiscal 2005:


	Number of
	shares				Number of shares underlying				Value of shares underlying in-the-
	acquired on				unexercised options				money unexercised options
Name	exercise		Value realized		Exercisable		Unexercisable		Exercisable		Unexercisable
Douglas J. Cahill		—	$	—		—		71,415	$	—	$	—
Philip K. Woodlief		—		—		—		37,939		—		—
David L. Horton		—		—		—		37,939		—		—
Joseph J. Meyers		—		—		—		37,939		—		—
Kenneth H. Koch		—		—		—		37,939		—		—

The fair value of Doane Enterprises Class A common stock was equal to the exercise price per share of the options granted in fiscal 2005 under the 2005 Stock Incentive Plan, and therefore, no in-the-money unexercised options existed at the end of fiscal 2005. All options under the 1996 Stock Option Plan and the 1999 Stock Incentive Plan that were held by the Named Executive Officers were canceled and paid out in cash as described above.

Compensation Committee Interlocks and Insider Participation

George B. Kelly, Jeffrey C. Walker and Lawrence S. Benjamin were members of our previous boards of directors and served on our compensation committee in fiscal 2005. Mr. Benjamin resigned from the previous boards of directors and compensation committee as of February 1, 2005.

Other Compensatory Arrangements

401(k) plans. We currently have two active 401(k) plans. On January 1, 2000, we adopted the Doane Pet Care Retirement Savings Plan, which was formed through the merger of two predecessor plans. The merged plan was amended and restated and is intended to be a qualified plan under the Internal Revenue Code. The plan provides coverage for eligible employees and permits employee contributions from 1% to 60% of pre-tax earnings, subject to annual dollar limits set by the IRS. We match 50% of the first 6% of the participant’s contribution with a provision

for other contributions at the board of directors’ discretion. Employer contributions are vested 25% per year for each of the first four years of an employee’s service. Thereafter, all employer contributions are fully vested.

The Doane Pet Care Savings and Investment Plan — Union Plan covers eligible union employees at the Joplin, Missouri and Muscatine, Iowa plants. This plan is intended to be a qualified plan under the Internal Revenue Code and permits employee contributions between 1% and 60% of pre-tax earnings, subject to annual dollar limits set by the IRS.

Pursuant to the terms of the SERP, if a participant remains employed with us or our affiliates until age 65, then, upon termination of employment, the participant will be entitled to receive a monthly pension benefit payable for the remainder of the participant’s lifetime equal to the excess, if any, of (a) one-twelfth of 2% of the participant’s final average compensation (as determined under the SERP) multiplied by his or her years of service with us or our affiliates minus (b) the sum of (i) the monthly amount of the annuity equivalent of the aggregate hypothetical employer matching contributions under the Doane Pet Care Retirement and Savings Plan for the participant (determined on an actuarial equivalent basis (using assumptions set forth in the SERP) and assuming the maximum employer matching contribution under the terms of such plan was contributed each year and was credited with interest at the rate of 6% per annum) and (ii) one-half of the participant’s “old-age insurance benefit” under the Social Security Act as determined based on certain assumptions set forth in the SERP. Assuming the Named Executive Officers remain employed by us or our affiliates until age 65 and then retire and receive their benefits under the SERP in the form of a life annuity, they will receive the following monthly payments for the remainder of their lives : Mr. Cahill — $79,150; Mr. Woodlief — $18,608; Mr. Horton — $33,100; Mr. Meyers — $30,667; and Mr. Koch — $14,958.

A participant becomes 100% vested in his or her SERP benefit upon the earlier of his or her completion of five years of service with us or our affiliates or attainment of age 65. If a vested participant terminates employment prior to attaining age 65, then the participant’s SERP benefit will commence on the later of his or her separation from service with us and our affiliates or attainment of age 55. The participant’s early retirement benefit is reduced depending upon the participant’s age as of the date his or her benefits commence ranging from 100% at age 65 to 41.81% at age 55.

The SERP also includes a pre-retirement death benefit such that, in the event of the participant’s death after completing five years of service and prior to the commencement of retirement benefits under the SERP, the participant’s beneficiary will receive a monthly benefit for life.

Upon the occurrence of certain events constituting a change of control, as defined by the SERP, on or after one year from the effective date of the SERP, then all participants who are then employed by us or our affiliates will become 100% vested in their SERP benefit, and each participant in the SERP will be paid the actuarially equivalent present value of their unpaid accrued benefit in a lump sum payment in lieu of any other benefit under the SERP.

Management Investment

Our senior management has an investment of $4.7 million in Doane Enterprises. A portion of this investment is comprised of 7,475.47 shares of Doane Enterprises’ Class A common stock that Mr. Cahill received in exchange for his existing shares of capital stock in Doane Enterprises, or $747,547. The remainder of the investment is in the form of deferred shares, which represent contractual rights to receive shares of Doane Enterprises’ Class A common stock awarded by Doane Enterprises’ board of directors as a portion of senior management’s transaction bonuses in connection with the Acquisition. These members of management will receive a distribution of actual shares of Class A common stock in respect of their contractual rights upon certain specified trigger events, including any termination of their employment. Messrs. Cahill, Woodlief, Horton, Meyers and Koch do not have voting or investment power over the deferred shares they acquired. However, such individuals are deemed to beneficially own

the shares of Class A common stock subject to these deferred shares because in certain circumstances they may acquire the shares of Class A common stock subject to the deferred shares within 60 days of the date hereof.

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

Description of Doane Enterprises’ Capital Stock

Doane Enterprises’ authorized capital stock consists of:

	•		Class A common stock, par value $0.01 per share, of which approximately 98.5% is beneficially owned by OTPP and of which approximately 1.5% is beneficially owned by members of our senior management, which ownership percentage includes senior management’s contractual rights to acquire additional shares of Class A common stock pursuant to certain deferred stock agreements; and

	•		Class B common stock, par value $0.01 per share, of which approximately 29.9% has been issued to OTPP and of which approximately 70.1% has been issued to an entity that is wholly-owned by Law Debenture Corporation p.l.c., a provider of trustee services organized under the laws of the United Kingdom, which entity we refer to as the Jersey Entity.

All shares of Doane Enterprises’ Class A common stock and Class B common stock are fully paid and non-assessable.

Voting. The holders of Class A common stock are entitled to vote on all matters, except that the Class A common stockholders do not have the right to vote with respect to the election or removal of directors. Except as otherwise required by law, the Class B common stockholders are entitled to vote only for the election or removal of directors. Both the Class A common stockholders and the Class B common stockholders are entitled to one vote per share on all matters on which they have a right to vote; neither has cumulative voting rights. The Stockholders Agreement (as defined below) provides, among other things, that the Chief Executive Officer of Doane Enterprises will serve on the board of directors of Doane Enterprises and that OTPP, which owns less than 30% of Doane Enterprises’ shares that carry a right to elect directors, has a contractual right to designate all other directors. The Jersey Entity has agreed to vote all of the shares of Class B common stock owned by it in favor of the Chief Executive Officer and the OTPP designees, and the Jersey Entity has granted OTPP an irrevocable proxy in furtherance of this obligation.

Dividends. Holders of Class A common stock and holders of Class B common stock are entitled to receive, ratably, on a per share basis, such dividends as may be declared by the board of directors from time to time out of funds legally available therefore. The holders of the Class B common stock received a special dividend, which was payable promptly after the closing of the Acquisition, equal to $176,234 in the aggregate. In addition, on each anniversary of the closing, the holders of the Class B common stock are entitled to an annual dividend in an aggregate amount of approximately $70,000. This annual dividend is subject to adjustment from time to time.

Board of directors. The board of directors of Doane Enterprises currently consists of four members, each of whom was elected by the holders of the outstanding Class B common stock of Doane Enterprises. The organizational documents of Doane Enterprises provide that the number of directors may be increased or decreased from time to time by OTPP, but the board of directors will at no time consist of fewer than three directors.

Description of Our Capital Stock

Capitalization. Our authorized capital stock as of the Acquisition date consists of:

	•		Class A common stock, par value $0.01 per share, all of which is owned by Doane Enterprises; and

	•		Class B common stock, par value $0.01 per share, of which 29.9% is owned by Doane Enterprises and of which 70.1% is owned by the Jersey Entity.

All shares of our Class A and Class B common stock are fully paid and non-assessable.

Voting. The holders of Class A common stock are entitled to vote on all matters, except that the Class A common stockholders do not have the right to vote with respect to the election or removal of directors. Except as otherwise required by law, the Class B common stockholders are entitled to vote only for the election or removal of directors. Both the Class A common stockholders and the Class B common stockholders are entitled to one vote per share on all matters on which they are entitled to vote; neither has cumulative voting rights. Doane Enterprises and the Jersey Entity have entered into a voting agreement which provides, among other things, that our Chief Executive Officer will serve on our board of directors and that Doane Enterprises has the right to designate all other directors. It further requires that the Jersey Entity vote all of the shares of Class B common stock owned by it in favor of the designees of Doane Enterprises, and the Jersey Entity has granted Doane Enterprises an irrevocable proxy in furtherance of this obligation.

Dividends. Holders of Class A common stock are entitled to receive, ratably, on a per share basis, such dividends as may be declared by the board of directors from time to time out of funds legally available therefore. The Class B common stockholders are not entitled to any dividend payments.

Board of directors. Our board of directors currently consists of four members, each of whom was elected by the holders of our outstanding Class B common stock. Our organizational documents provide that the number of directors may be increased or decreased from time to time by Doane Enterprises, but the board of directors will at no time consist of fewer than three directors.

Beneficial Ownership

Doane Enterprises may from time to time issue shares of its capital stock, or options, warrants or other instruments to acquire shares of its capital stock, to management, its directors or other investors. The following table sets forth the beneficial ownership as of the end of fiscal 2005 of Doane Enterprises of:

	•		each person or entity known to us to own 5% or more of any class of Doane Enterprises common stock;

	•		each member of Doane Enterprises’ board of directors;

	•		each of our Named Executive Officers;

	•		all members of Doane Enterprises’ board of directors and our executive officers as a group.

Beneficial ownership of shares is determined under the rules of the Securities and Exchange Commission and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as indicated by footnote, and subject to applicable community property laws, each person identified in the table possesses sole voting and investment power with respect to all shares of common stock held by them. Unless otherwise noted, the address for each director and executive officer is c/o Doane Pet Care Company, 210 Westwood Place South, Suite 400, Brentwood, Tennessee 37027.


	Common Stock
	Percentage of Class A			Percentage of Class B
	Common Stock			Common Stock
Name of beneficial owner ⁽¹⁾	Beneficially Owned ⁽¹⁾			Beneficially Owned ⁽²⁾
OTPP ⁽³⁾		98.5	%		100.0	%
Jersey Entity⁽⁴⁾		—			70.1	%
Douglas J. Cahill		*			—
Philip K. Woodlief		*			—
David L. Horton		*			—
Joseph J. Meyers		*			—
Kenneth H. Koch		*			—
Dean G. Metcalf ^(3)(5)(6)		—			—
Glen Silvestri ^(3)(5)(6)		—			—
All directors and management members as a group (7 persons) ⁽⁵⁾		1.5	%		—


*		Represents less than one percent.

(1)		Messrs. Cahill, Woodlief, Horton, Meyers and Koch do not have voting or investment power over the deferred shares they acquired, which deferred shares represent the contractual right to acquire the corresponding number of shares of Class A common stock. Such individuals are deemed to beneficially own the shares of Class A common stock subject to these deferred shares because in certain circumstances they may acquire the shares of Class A common stock subject to the deferred shares within 60 days of the date hereof.

(2)		By virtue of the irrevocable proxy granted to OTPP by the Jersey Entity, OTPP and the Jersey Entity have shared voting power over shares of the Class B common stock held by the Jersey Entity.

(3)		The address of OTPP and Messrs. Metcalf and Silvestri is c/o Ontario Teachers’ Pension Plan Board, 5650 Yonge Street, Toronto, Ontario M2M 4H5.

(4)		In connection with the Acquisition, Doane Enterprises, OTPP, the Jersey Entity and Mr. Cahill entered into a stockholders agreement and we, Doane Enterprises and the Jersey Entity entered into a voting agreement pursuant to which the Jersey Entity will vote in favor of the board designees of OTPP and for the Chief Executive Officer of Doane Enterprises and in favor of the board designees of Doane Enterprises and our Chief Executive Officer, respectively. In connection with these agreements, the Jersey Entity granted to OTPP and Doane Enterprises, respectively, an irrevocable proxy in furtherance of these obligations.

(5)		Does not include the shares of Doane Enterprises common stock held by OTPP with respect to which Messrs. Metcalf and Silvestri may be deemed to have the power to dispose of the shares as described in footnote (6) below.

(6)		Messrs. Metcalf and Silvestri may be deemed to have the power to dispose of the shares held by OTPP due to a delegation of authority from the board of directors of OTPP, and each expressly disclaims beneficial ownership of such shares.

Equity Compensation Plans

Neither we nor our subsidiaries or affiliates have any compensation plans or individual compensation arrangements under which our equity securities are authorized for issuance to employees or non-employees in exchange for consideration in the form of goods or services. The compensation plans under which the equity securities of our parent are authorized for issuance are discussed above.

ITEM 13 — Certain Relationships and Related Transactions

Stockholders Agreement

Concurrently with the closing of the Acquisition, Doane Enterprises entered into a stockholders agreement, or the Stockholders Agreement, with OTPP, the Jersey Entity and Mr. Cahill. The Stockholders Agreement provides, among other things, that the Chief Executive Officer of Doane Enterprises will serve on the board of directors of Doane Enterprises and that OTPP has the right to designate or request the removal of all other directors. The Stockholders Agreement further requires that the Jersey Entity vote all of the shares of Class B common stock owned by it in favor of the Chief Executive Officer and the OTPP designees, and the Jersey Entity has granted OTPP an irrevocable proxy in furtherance of this obligation. Other members of senior management will become party to the Stockholders Agreement upon conversion of their deferred shares into shares of Doane Enterprises’ Class A common stock.

The Stockholders Agreement generally restricts the transfer of shares of common stock owned by the Jersey Entity, Mr. Cahill and other members of our senior management, or collectively, the management stockholders, who are or who become party to the agreement. Exceptions to transfer restrictions applicable to the management stockholders include transfers for estate planning purposes.

In addition, the management stockholders have “tag-along” rights to sell their shares on a pro rata basis with OTPP in sales to third parties. Similarly, OTPP has “drag-along” rights to cause the management stockholders to sell their shares on a pro rata basis with OTPP to third parties in certain circumstances. The Stockholders Agreement provides for “put” rights, which entitle a management stockholder to require Doane Enterprises to acquire shares of common stock held by such management stockholder, and “call” rights, which entitle Doane Enterprises to require a management stockholder to sell such shares to it upon certain terminations of employment of the management stockholder with Doane Enterprises or its subsidiaries and at differing prices, depending on the circumstances of termination. Additionally, pursuant to the Stockholders Agreement, the Jersey Entity has the right to “put” its shares of Class B common stock to Doane Enterprises, and Doane Enterprises has the right to redeem the shares of Class B common stock owned by the Jersey Entity. Certain of the foregoing provisions of the Stockholders Agreement will terminate upon the consummation of an initial public offering (as defined in the Stockholders Agreement).

Registration Rights Agreement

Doane Enterprises entered into a registration rights agreement with Mr. Cahill and OTPP pursuant to which OTPP has the right to make an unlimited number of requests that Doane Enterprises use its best efforts to register its shares under the Securities Act of 1933. In any demand registration, all of the parties to the registration rights agreement are expected to have the right to participate on a pro rata basis, subject to certain conditions. In addition, if Doane Enterprises proposes to register any of its shares (other than registrations related to exchange offers, benefit plans and certain other exceptions), all of the holders party to the registration rights agreement are expected to have the right to include their shares in the registration statement, subject to certain conditions.

Voting Agreement

We, Doane Enterprises and the Jersey Entity entered into a voting agreement upon the closing of the Acquisition pursuant to which our Chief Executive Officer was elected to our board of directors and Doane Enterprises has the right to designate all other directors. The voting agreement further requires that the Jersey Entity vote all of the shares of Class B common stock owned by it in favor of the designees of Doane Enterprises, and the Jersey Entity has granted Doane Enterprises an irrevocable proxy in furtherance of this obligation. In addition, the voting agreement provides the Jersey Entity with a right to “put” its shares of Class B common stock to Doane Enterprises, and Doane Enterprises with a right to redeem the shares of Class B common stock held by the Jersey Entity.

ITEM 14 — Principal Accountant Fees and Services

The following table sets forth fees for professional audit services rendered by KPMG LLP for the annual audit of the Company’s consolidated financial statements and fees billed for other services rendered by KPMG LLP in fiscal 2004 and 2005 (combined). All auditing services and permitted non-audit services performed for us by KPMG LLP must be pre-approved by the audit committee.


	Predecessor		Combined
	year ended		basis
	2004		2005
Audit fees	$	744,000	$	1,314,000
Audit related fees ⁽¹⁾		38,000		94,000
Tax fees ⁽²⁾		241,500		582,000

Total fees ⁽³⁾	$	1,023,500	$	1,990,000


(1)		Audit related fees consisted principally of fees for audits of financial statements of certain employee benefit plans, due diligence services and consultation on accounting matters.

(2)		Tax fees consisted of fees for tax consultation and tax compliance services.

(3)		Total fees include some amounts in foreign currencies that have been translated to U.S. dollars as of the date such fees were approved.

PART IV

ITEM 15 — Exhibits, Financial Statements Schedules

(a) The following documents are filed as part of this report:

	(1)		Consolidated Financial Statements

			The following financial statements and the Report of Independent Registered Public Accounting Firm thereon are included beginning at page F-1 of this Annual Report on Form 10-K:

	•		Report of Independent Registered Public Accounting Firm

	•		Consolidated Balance Sheets as of the end of fiscal 2004 (Predecessor) and 2005 (Successor)

	•		Consolidated Statements of Operations for fiscal 2003, 2004 and the period January 2 through October 23, 2005 (Predecessor) and the period October 24 through December 31, 2005 (Successor)

	•		Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for fiscal 2003, 2004 and the period January 2 through October 23, 2005 (Predecessor) and the period October 24 through December 31, 2005 (Successor)

	•		Consolidated Statements of Cash Flows for fiscal 2003, 2004 and the period January 2 through October 23, 2005 (Predecessor) and the period October 24 through December 31, 2005 (Successor)

	•		Notes to Consolidated Financial Statements

	(2)		Consolidated Financial Statement Schedules.

			All schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated financial statements or notes thereto in this Annual Report on Form 10-K.

	(3)		Exhibits

The following exhibits are filed as part of this report:


Exhibit
number		Description

3.1		Second Amended and Restated Certificate of Incorporation of Doane Pet Care Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (Reg No. 333-130739) filed on December 28, 2005)

3.2*		Bylaws of Doane Pet Care Company

4.1		Indenture for the 10 ⁵/₈% Senior Subordinated Notes Due 2015, dated as of October 24, 2005, among Doane Pet Care Company, Doane Management Corp., DPC Investment Corp. and Doane/Windy Hill Joint Venture L.L.C., as guarantors, and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 27, 2005)


Exhibit
number		Description

4.3		Indenture dated February 28, 2003 between Doane Pet Care Company and Wilmington, Trust Company (incorporated by reference to Exhibit 4.3 to Doane Pet Care Company’s Annual Report on Form 10-K for the year ended December 28, 2002)

10.1^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Douglas J. Cahill, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.2^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Philip K. Woodlief, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.3^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among David L. Horton, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.4^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Joseph J. Meyers, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.5^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Kenneth H. Koch, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.6^†		Doane Pet Care Enterprises, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.7*		Supplemental Executive Retirement Plan dated as of March 27, 2006

10.8^†		Deferred Shares Agreement (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.9		Stockholders Agreement, dated as of October 24, 2005, among Doane Pet Care Enterprises, Inc., Ontario Teachers’ Pension Plan Board, Wilchester Investments Limited, Douglas J. Cahill and the other signatories thereto (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.10		Registration Rights Agreement, dated as of October 24, 2005, among Doane Pet Care Enterprises, Inc., Ontario Teachers’ Pension Plan Board, Wilchester Investments Limited, Douglas J. Cahill and the other signatories thereto (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.11		Voting Agreement, dated as of October 24, 2005, among Doane Pet Care Enterprises, Inc.,


Exhibit
number		Description

		Doane Pet Care Company and Wilchester Investments Limited, (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

21.1*		List of Subsidiaries of Doane Pet Care Company

23.1*		Consent of KPMG LLP

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) / 15(d)-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) / 15(d)-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith.

**		Not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

†		Management contracts or compensatory plans or arrangements.

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.


		DOANE PET CARE COMPANY

		By: /s/ PHILIP K. WOODLIEF Philip K. Woodlief
		Vice President, Finance and Chief Financial Officer

		By: /s/ STEPHEN P. HAVALA
		Stephen P. Havala
		Corporate Controller and Principal Accounting Officer

Date: March 30, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ DEAN METCALF Dean Metcalf	Chairman of the Board and Director	March 30, 2006
/s/ DOUGLAS J. CAHILL Douglas J. Cahill	Chief Executive Officer, President and Director (Principal Executive Officer)	March 30, 2006
/s/ PHILIP K. WOODLIEF Philip K. Woodlief	Vice President, Finance and Chief Financial Officer (Principal Financial Officer)	March 30, 2006
/s/ STEPHEN P. HAVALA Stephen P. Havala	Corporate Controller (Principal Accounting Officer)	March 30, 2006
/s/ TERRY R. PEETS Terry R. Peets	Director	March 30, 2006
/s/ GLEN SILVESTRI Glen Silvestri	Director	March 30, 2006

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act.

No annual report or proxy material has been sent to our security holder as of the date hereof. We do not expect to furnish our security holder with an annual shareholder’s report or proxy soliciting material subsequent to the filing of our 2005 Form 10-K.

DOANE PET CARE COMPANY AND SUBSIDIARIES

FINANCIAL INFORMATION

INDEX TO FINANCIAL STATEMENTS


	Page
Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of the end of fiscal 2004 (Predecessor) and 2005 (Successor)		F-3

Consolidated Statements of Operations for fiscal 2003, 2004 and the period January 2 through October 23, 2005 (Predecessor) and the period October 24 through December 31, 2005 (Successor)		F-4

Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for fiscal 2003, 2004 and the period January 2 through October 23, 2005 (Predecessor) and the period October 24 through December 31, 2005 (Successor)		F-5

Consolidated Statements of Cash Flows for fiscal 2003, 2004 and the period January 2 through October 23, 2005 (Predecessor) and the period October 24 through December 31, 2005 (Successor)		F-6

Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Doane Pet Care Company:

We have audited the accompanying consolidated balance sheets of Doane Pet Care Company and subsidiaries (successor) as of December 31, 2005, and of Doane Pet Care Company and subsidiaries (predecessor) as of January 1, 2005, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for the periods from October 24, 2005 to December 31, 2005 (successor period), and from January 2, 2005 to October 23, 2005 and for each of the fiscal years in the two-year period ended January 1, 2005 (predecessor periods). These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the aforementioned successor consolidated financial statements present fairly, in all material respects, the financial position of Doane Pet Care Company and subsidiaries as of December 31, 2005, and the results of their operations and their cash flows for the successor period, in conformity with U.S. generally accepted accounting principles. Further, in our opinion, the aforementioned predecessor consolidated financial statements present fairly, in all material respects, the financial position of Doane Pet Care Company and subsidiaries as of January 1, 2005, and the results of their operations and their cash flows for the predecessor periods, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, effective October 24, 2005, Ontario Teachers’ Pension Plan Board acquired beneficial ownership of substantially all of the outstanding stock of the Company’s Parent, Doane Pet Care Enterprises, Inc., in a business combination accounted for as a purchase. As a result of the acquisition, the consolidated financial information for the periods after the acquisition (referred to as the successor period above) is presented on a different cost basis than that for the periods before the acquisition (referred to as the predecessor periods) and, therefore, is not comparable.

As discussed in Note 3 to the consolidated financial statements, effective January 4, 2004, the Company adopted Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.



	/s/ KPMG LLP

Nashville, Tennessee
March 23, 2006

F-2

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)


	Predecessor			Successor
	end of 2004			end of 2005
ASSETS
Current assets:
Cash and cash equivalents	$	28,847		$	8,221
Accounts receivable, net		112,445			105,069
Inventories		68,321			65,169
Deferred tax assets		2,414			5,394
Prepaid expenses and other current assets		7,038			8,774

Total current assets		219,065			192,627
Property, plant and equipment, net		258,070			284,988
Intangible assets		77,892			287,373
Goodwill		327,954			321,115
Other assets		18,925			23,235

Total assets	$	901,906		$	1,109,338


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Current maturities of long-term debt	$	3,673		$	3,158
Accounts payable		102,149			79,984
Accrued liabilities		59,239			56,771

Total current liabilities		165,061			139,913


Long-term debt:
Long term debt, excluding current maturities		580,090			561,118
Senior Preferred Stock (Redeemable), 3,000,000 shares authorized 1,200,000 shares issued and outstanding at end of 2004		106,421			—

Total long-term debt		686,511			561,118

Deferred tax liabilities		33,641			98,760
Other long-term liabilities		9,567			8,264

Total liabilities		894,780			808,055

Commitments and contingencies

Stockholders’ equity:
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding at end of 2004		—			—
Class A common stock, $0.01 par value; 2,000 shares authorized; 1,001 shares issued and outstanding at end of 2005		—			—
Class B common stock, $0.01 par value; 100 shares authorized; 71.32 shares issued and outstanding at end of 2005		—			—
Additional paid-in-capital		115,674			303,059
Accumulated other comprehensive income (loss)		62,650			(992	)
Accumulated deficit		(171,198	)		(784	)

Total stockholders’ equity		7,126			301,283

Total liabilities and stockholders’ equity	$	901,906		$	1,109,338

See accompanying notes to consolidated financial statements.

F-3

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)


	Predecessor									Successor
							Period January			Period October
							2 through			24 through
							October 23,			December 31,
	2003			2004			2005			2005
Net sales	$	1,013,865		$	1,051,241		$	795,476		$	196,134
Cost of goods sold		851,578			896,191			654,312			162,208

Gross profit		162,287			155,050			141,164			33,926

Operating expenses:
Promotion and distribution		57,616			56,805			46,230			11,441
Selling, general and administrative		52,015			51,861			41,479			9,702
Amortization		4,989			4,313			3,419			2,348
Transaction costs		—			333			23,370			—
Other operating expenses (income), net		7,227			6,645			5,326			(624	)

Income from operations		40,440			35,093			21,340			11,059

Interest expense, net		57,494			72,841			61,936			11,137
Debt extinguishments		4,438			4,137			—			—
Other income, net		(1,156	)		(1,417	)		(752	)		(408	)

Income (loss) before income taxes		(20,336	)		(40,468	)		(39,844	)		330

Income tax expense		25,039			5,124			4,094			1,114

Net loss		(45,375	)		(45,592	)		(43,938	)		(784	)

Senior preferred stock dividends and accretion		(13,502	)		—			—			—

Net loss available to common shares	$	(58,877	)	$	(45,592	)	$	(43,938	)	$	(784	)

See accompanying notes to consolidated financial statements.

F-4

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND
COMPREHENSIVE INCOME (LOSS)
(In thousands, except share amounts)


																	Accumulated
						Class A				Class B				Additional			other
	Common stock					common stock				common stock				paid-in			comprehensive			Accumulated
	Shares			Amount		Shares		Amount		Shares		Amount		capital			income (loss)			deficit			Total
Predecessor balances at the end of 2002		1,000			—		—	$	—		—	$	—	$	115,674		$	9,558		$	(66,729	)	$	58,503

Comprehensive loss:
Net loss		—			—		—		—		—		—		—			—			(45,375	)		(45,375	)
Foreign currency translation		—			—		—		—		—		—		—			31,021			—			31,021
Reclassification of realized loss, net of deferred tax benefit of $849		—			—		—		—		—		—		—			1,333			—			1,333
Decrease in minimum pension liability, net of deferred tax expense of $362		—			—		—		—		—		—		—			569			—			569

Total comprehensive loss																								(12,452	)

Senior preferred stock dividends		—			—		—		—		—		—		—			—			(12,425	)		(12,425	)
Senior preferred stock accretion		—			—		—		—		—		—		—			—			(1,077	)		(1,077	)

Predecessor balances at the end of 2003		1,000			—		—		—		—		—		115,674			42,481			(125,606	)		32,549

Comprehensive loss:
Net loss		—			—		—		—		—		—		—			—			(45,592	)		(45,592	)
Foreign currency translation		—			—		—		—		—		—		—			20,243			—			20,243
Increase in minimum pension liability, net of deferred tax benefit of $45		—			—		—		—		—		—		—			(74	)		—			(74	)

Total comprehensive loss																								(25,423	)

Predecessor balances at the end of 2004		1,000			—		—		—		—		—		115,674			62,650			(171,198	)		7,126

Comprehensive loss for period January 2 through October 23, 2005:
Net loss		—			—		—		—		—		—		—			—			(43,938	)		(43,938	)
Foreign currency translation		—			—		—		—		—		—		—			(32,615	)		—			(32,615	)

Increase in minimum pension liability		—			—		—		—		—		—		—			(698	)		—			(698	)

Total comprehensive loss																								(77,251	)

Predecessor balances at October 23, 2005		1,000			—		—		—		—		—		115,674			29,337			(215,136	)		(70,125	)

Elimination of Predecessor’s equity in connection with the Acquisition		(1,000	)		—		—		—		—		—		(115,674	)		(29,337	)		215,136			70,125

Issuance of common stock in connection with the Acquisition		—			—		1,001		—		71.32		—		303,059			—			—			303,059
Comprehensive loss for period October 24 through December 31, 2005:
Net loss		—			—		—		—		—		—		—			—			(784	)		(784	)
Foreign currency translation		—			—		—		—		—		—		—			(992	)		—			(992	)

Total comprehensive loss																								(1,776	)

Successor balances at the end of 2005		—		$	—		1,001	$	—		71.32	$	—	$	303,059		$	(992	)	$	(784	)	$	301,283

See accompanying notes to consolidated financial statements.

F-5

DOANE PET CARE COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


	Predecessor									Successor
							Period			Period
							January 2			October 24
							through			through
							October 23,			December 31,
	2003			2004			2005			2005
Cash flows from operating activities:
Net loss	$	(45,375	)	$	(45,592	)	$	(43,938	)	$	(784	)
Items not requiring (providing) cash:
Depreciation		31,178			35,049			28,531			7,536
Amortization		5,983			5,307			3,487			2,348
Deferred tax expense		23,644			4,415			3,494			228
Equity in joint ventures		(616	)		(969	)		(373	)		(300	)
Non-cash interest expense		4,906			20,229			18,353			867
Debt extinguishments		4,438			4,137			—			—
Asset impairments		7,727			215			6,129			—
Transaction costs		—			—			22,411			—
Other non-cash charges (income), net		(372	)		447			1,110			1,559
Changes in current assets and liabilities:											—
Accounts receivable, net		45,653			(15,632	)		10,809			(11,035	)
Inventories		(1,323	)		2,790			(46	)		234
Prepaid expenses and other current assets		(5,310	)		5,675			(1,919	)		(666	)
Accounts payable		(1,462	)		(2,342	)		(22,260	)		5,676
Accrued liabilities		(13,408	)		7,558			4,622			815

Net cash provided by operating activities		55,663			21,287			30,410			6,478

Cash flows from investing activities:
Capital expenditures		(28,062	)		(18,856	)		(17,227	)		(8,878	)
Proceeds from sale of assets		1,378			865			143			340
Other, net		(3,501	)		(2,063	)		(1,432	)		(443	)

Net cash used in investing activities		(30,185	)		(20,054	)		(18,516	)		(8,981	)

Cash flows from financing activities:
Net borrowings (repayments) under revolving credit facility		1,000			(16,000	)		—			—
Proceeds from issuance of senior credit facilities		—			195,000			—			160,000
Proceeds from issuance of 10 5/8% senior subordinated notes		—			—			—			150,824
Other proceeds from issuance of long-term debt		210,444			13,078			—			—
Repayments on long-term debt related to Transactions		—			—			—			(471,007	)
Other repayments on long-term debt		(208,255	)		(185,526	)		(2,647	)		(942	)
Payments for debt issuance costs		(7,761	)		(8,381	)		(1,857	)		(9,127	)
Proceeds from issuance of common stock related to the Acquisition		—			—			—			298,339
Distribution to equity holders		—			—			—			(127,215	)
Payments of Transaction costs		—			—			—			(25,776	)

Net cash used in financing activities		(4,572	)		(1,829	)		(4,504	)		(24,904	)


Effect of exchange rate changes on cash and cash equivalents		791			150			(531	)		(78	)

Increase (decrease) in cash and cash equivalents		21,697			(446	)		6,859			(27,485	)

Cash and cash equivalents, beginning of period		7,596			29,293			28,847			35,706

Cash and cash equivalents, end of period	$	29,293		$	28,847		$	35,706		$	8,221

See accompanying notes to consolidated financial statements.

F-6

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) The Acquisition

On October 24, 2005, pursuant to the Agreement and Plan of Merger dated August 28, 2005, Ontario Teachers’ Pension Plan Board, or OTPP, acquired beneficial ownership of substantially all of the outstanding capital stock of the Company’s Parent, Doane Pet Care Enterprises, Inc., or Parent. This transaction, referred to as the Acquisition, and together with the Financing Transaction described in Note 9, the Transactions, was effected by the merger of DPC Newco Inc., a direct, wholly-owned subsidiary of OTPP, with and into Parent with Parent surviving the merger. In connection with the Acquisition, OTPP and the Company’s senior management have investments in Parent of $306.0 million and $4.7 million, respectively, less equity issuance costs of approximately $7.5 million. Following the Acquisition, Parent continues to beneficially own substantially all of the capital stock of the Company.

The purchase price was allocated as follows (in thousands):


Fair value of assets acquired:
Current assets	$	173,597
Property, plant and equipment		288,528
Intangible assets		286,000
Goodwill		321,205
Other assets		26,232

Gross assets acquired		1,095,562
Liabilities assumed		(153,803	)
Deferred tax liabilities, net		(93,089	)

Purchase price of net assets acquired	$	848,670

The purchase price allocated to the Company was funded from the following sources (in thousands):


New senior credit facility	$	160,000
New 10 5/8% senior subordinated notes		150,824
Assumption of 10 3/4% senior notes		211,433
Assumption of other long-term debt		23,354
Equity investment		303,059

Purchase price of net assets acquired	$	848,670

In accordance with SFAS No. 141, Business Combinations, or SFAS 141, the Company accounted for the Acquisition using the purchase method of accounting whereby the total purchase price, including estimated fees and expenses, was allocated to the Company’s net tangible and intangible assets based upon the preliminary estimated fair values of those assets. The fair values of the Company’s property, plant and equipment and the intangible assets for customer relationships as of the Acquisition date were based upon an independent third party appraisal. The excess of the purchase price over the estimated fair value of the net tangible and intangible assets was recorded as goodwill. The Company has substantially completed its purchase price allocation; however, future adjustments to the allocation could affect the amount of goodwill recorded as of the Acquisition date. The Company recognized transaction costs of $22.5 million related to the Acquisition, which were recognized as transaction costs in the consolidated statement of operations for the predecessor period from January 2 through October 23, 2005.

F-7

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s consolidated financial statements report periods up to and including October 23, 2005 as the predecessor period, and the period subsequent to October 23, 2005 as the successor period.

The following unaudited condensed pro forma disclosure of net sales, income from operations and net loss are based on the consolidated financial statements, adjusted to give effect to the Transactions. These pro forma disclosures assume that the Transactions occurred as of the beginning of each period presented and include adjustments for depreciation, amortization and interest expense. Transaction costs related to the Acquisition of $22.5 million included in the predecessor period from January 2 through October 23, 2005 and debt extinguishment costs of $4.1 million included in fiscal 2004 and 2005 have been eliminated in the pro forma disclosures for the respective years. In addition, the pro forma disclosures for fiscal 2004 do not reflect the expense associated with the fair value adjustment to finished goods inventory of $1.8 million. The pro forma results for fiscal 2004 and 2005 follows (in thousands):


	2004			2005
Net sales	$	1,051,241		$	991,610
Income from operations		24,145			44,503
Net loss		(33,964	)		(8,326	)

(2) Summary of Significant Accounting Policies

Nature of Business

Doane Pet Care Company, or the Company, is primarily owned by Doane Pet Care Enterprises, Inc., or Parent. The Company is a leading global provider of pet food, primarily store brands, with 25 manufacturing facilities in the United States and Europe. The Company manufactures pet food products predominately for dogs and cats, including dry, wet, soft-dry, treats and dog biscuits. The Company categorizes its sales into three product areas consisting of store brands, co-manufacturing and regional brands. The Company also operates a machine shop and a structural steel fabrication plant that sells to third parties and supports the Company’s facilities.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company also has investments in companies that are not majority-owned and have been included in the consolidated financial statements of the Company using the equity method of accounting. The Company’s share of the profit or loss of these unconsolidated subsidiaries is recognized in other income, net, in the consolidated statements of operations and the related increase or decrease in the investments in these unconsolidated subsidiaries is recognized in other assets in the consolidated balance sheets of the Company.

Certain consolidated and unconsolidated subsidiaries of the Company have calendar year-end fiscal years and quarters. Any intervening events between the period ends of the Company and its subsidiaries would be disclosed to the extent they have a material impact on the Company’s consolidated results of operations or financial condition.

52-53 Week Fiscal Year

The Company’s fiscal years end on the Saturday nearest to the end of December and its quarters end on the Saturday nearest to the end of the respective calendar month. As a result of the Acquisition, the Company’s results for fiscal 2005 consist of the predecessor period from January 2 through October 23, 2005 and the successor period from October 24 through December 31, 2005. Fiscal 2003 and 2004 ended on January 3, 2004 and January 1, 2005, respectively. Fiscal 2004 was a 52-week year and fiscal 2003 was a 53-week year. The fourth quarter of fiscal 2003 included the extra week occurring in that year.

F-8

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reclassifications

Certain fiscal 2003 and 2004 amounts have been reclassified to conform with the fiscal 2005 presentation.

Use of Estimates

In conformity with accounting principles generally accepted in the United States, preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements; and therefore, actual results could ultimately differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all liquid investments with original maturities of three months or less.

Accounts Receivable

Accounts receivable, principally consisting of trade accounts receivable, are stated at net realizable value through recording valuation allowances for doubtful accounts and outstanding deductions with customers. In addition, the Company reduces accounts receivable for cash discounts offered to its customers. The Company estimates its allowances by applying a recovery percentage based on historical collection experience. The Company accrues additional allowances based on a specific identification review for amounts deemed to be at risk. Receivables are written off against the allowances at the point in which an amount is deemed uncollectible by the Company.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out method and consists of raw material, packaging, labor and overhead expenses. Inventories are stated net of valuation allowances primarily for obsolete and slow moving packaging inventories. The Company estimates its allowances based on a specific identification review for obsolete stock keeping units, or SKUs, or probable SKUs to be rationalized. In addition, we estimate our slow moving inventory allowance by applying a historical write off percentage to aged inventory balances.

Property, Plant and Equipment

Property, plant and equipment are stated at cost or the fair value determined as of the date of acquisition for property, plant and equipment acquired in a business combination. The Company expenses repair and maintenance costs as incurred and expenditures that significantly increase useful lives of existing property, plant and equipment are capitalized. Property, plant and equipment are depreciated using the straight-line method over the estimated useful lives of 20 to 40 years for buildings and improvements and 3 to 12 years for machinery and equipment.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill and a customer relationship deemed to have an indefinite life are not amortized. The remaining customer relationships are amortized using the straight-line method over 15 years. In addition, the Company has other intangible assets consisting of plate development costs being amortized over three years and software being amortized over three to five years.

Prior to the Acquisition, the Company’s intangible assets included trademarks and other intangible assets that were related to previous acquisitions, including customer lists, non-compete agreements and contracts and other miscellaneous intangible assets. Trademarks were stated at cost and were not amortized. The other remaining intangible assets were amortized over the respective terms of the agreements.

F-9

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Assets

Other assets include (1) debt issuance costs, (2) investments in joint ventures, (3) assets held for sale and (4) other miscellaneous long-term assets. The Company amortizes debt issuance costs into interest expense over the life of each related indebtedness using the effective interest method. Assets held for sale consists of property, plant and equipment related to manufacturing facilities that have been closed by the Company. These assets are stated at their fair value less cost to sell and are evaluated for impairment whenever events or circumstances indicate an impairment assessment is necessary. The Company expects to sell these facilities within the next 12 months.

Impairment

The Company tests the carrying value of goodwill and intangible assets with indefinite lives for impairment annually and upon the occurrence of certain events. Our impairment test includes quantitative analyses of discounted future cash flows, market multiples of earnings and comparable transactions, if available. If the estimated fair value of goodwill or intangible assets with indefinite lives of either the Company’s North American or European reporting unit is less than the carrying value, an impairment loss will be recognized. In the fourth quarters of fiscal 2003 and 2004, the Company performed its required annual assessment for impairment of goodwill and intangible assets with indefinite lives and determined no impairment was evident at the assessment dates. The Company did not perform an annual impairment test in the fourth quarter of fiscal 2005, using the methodology described above, because it met the criteria under SFAS No. 142, Goodwill and Intangible Assets, which permits the Company to carryforward its most recent fair value determination, which was completed in connection with the Acquisition. As a result, the Company concluded that no impairment was evident in fiscal 2005.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Long-lived assets principally consist of property, plant and equipment and intangible assets with estimable lives. Long-lived assets to be disposed of by sale are measured at the lower of the carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. An impairment loss would be recognized to the extent that the carrying amount of an asset exceeds its fair value.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and the tax effect of net operating loss and tax credit carryforwards. The differences are measured by applying enacted tax rates and laws to taxable years in which such differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of any change in tax rates is recognized in the period that includes the enactment date. The Company assesses the likelihood that net deferred tax assets will be realized in future periods and records a valuation allowance against its net deferred tax assets if the Company determines that it is more likely than not that such deferred tax assets will not be realized.

Revenue Recognition

The Company recognizes revenue when products are shipped, the customer takes ownership and assumes risk of loss, collection of the related account receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. Net sales are comprised of gross sales less cash discounts and other allowances, deductions and volume incentive rebates. Products are generally sold with no right of return except in the case of goods which do not meet product specifications or that are damaged.

Cost of Goods Sold

Cost of goods sold consist of expenses incurred directly in the manufacturing of the Company’s products sold. These costs include raw materials, packaging, labor, overhead, intercompany freight and depreciation expense related to capitalized assets used in production.

F-10

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Promotion and Distribution

Promotion expenses primarily consist of allowances offered by the Company to its customers for providing certain goods and services, such as advertising, coupons, gift certificates or free products and services. Distribution expenses include outbound freight costs, brokerage fees and warehousing expenses. In fiscal 2003, 2004 and the predecessor and successor periods of fiscal 2005, promotion expenses were $17.8 million, $15.9 million, $11.3 million and $2.0 million, respectively, and distribution expenses were $39.8 million, $40.9 million, $34.9 million and $9.4 million, respectively.

Comprehensive Income (Loss)

Comprehensive income (loss) includes: (1) net income (loss); (2) foreign currency translation; (3) changes in the fair value of derivative instruments designated as cash flow hedges; and (4) changes in the minimum pension liability.

The Company has from time to time entered into senior credit facilities that include a Euro-denominated term loan facility and has designated its Euro term loan facility as a hedge of the Company’s net investment in Europe. Gains and losses arising from the Euro to U.S. dollar translation of this outstanding indebtedness at the end of each period and arising from principal payments on this indebtedness are deferred in accumulated other comprehensive income (loss) until the Company’s European operations are sold or substantially liquidated.

Foreign Currency Translation and Transactions

The Company’s foreign operations have functional currencies in the Euro, Danish Krona and British Pound Sterling. The Company translates to U.S. dollars its foreign assets and liabilities using the exchange rates in effect at the period end dates for its consolidated balance sheets and its results of foreign operations using the average exchange rates during the periods covered in its consolidated statements of operations. The cumulative translation adjustment for the Company’s net investment in foreign operations is recognized in accumulated other comprehensive income (loss) in the consolidated balance sheets. Additionally, the Company designated its Euro term loan facility as a hedge against a portion of its foreign currency exposure related to the net investment in its foreign operations. Translation gains or losses related to the Euro term loan facility are also recognized in accumulated other comprehensive income (loss) in the consolidated balance sheets.

The Company also sells its products in countries with foreign currencies other than its functional currencies. The foreign currency translation gains and losses associated with these transactions are recognized in the consolidated statements of operations as incurred.

Financial Instruments

The carrying value of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximates fair value due to the relatively short maturity of such instruments. The Company determines the fair value of its long-term debt based on market value, if the debt is traded, or otherwise by using alternative fair value methods. The carrying values of the Company’s derivative financial instruments are recorded at fair value based on quoted market prices.

Commodity Derivative Instruments

The Company is exposed to market risk related to changes in commodity prices. The Company seeks to manage its commodity price risk associated with market fluctuations by using derivative instruments for portions of its corn, soybean meal, alternative proteins and natural gas purchases, principally through exchange traded futures and

F-11

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

options contracts. The terms of these contracts are generally less than one year. During the term of the contract, the Company balances positions daily with cash payments to or from the exchanges. At the termination of a contract, the Company has the ability to settle financially or by exchange for the physical commodity, in which case, the Company would deliver the contract against the acquisition of the physical commodity. The Company’s policy does not permit speculative commodity trading. The fair value of the Company’s open commodity derivative instruments at each period end is recognized in prepaid expenses and other current assets or accrued liabilities in the consolidated balance sheets. Changes in the fair value of these instruments are included in cost of goods sold in the consolidated statements of operations as incurred. Upon maturity, sale or other termination, gains and losses associated with these instruments are also recognized in cost of goods sold.

Foreign Currency Derivative Instruments

The Company has foreign currency exposure related to the translation of the financial statements of its foreign operations into U.S. dollars and related to transacting business in countries with foreign currencies other than its functional currencies. The Company’s functional currencies, other than the U.S. dollar, include the Euro, Danish Krona and British Pound Sterling. The Company periodically enters into foreign currency options and forward contracts to seek to manage its exposure to exchange rate fluctuations on foreign currency translations. In addition, the Company has designated its Euro term loan facility as a hedge against a portion of the foreign currency exposure related to the net investment in its foreign operations. Changes in market values of these financial instruments are highly correlated with changes in market values of the hedged item both at inception and over the life of the contracts. The Company’s policy does not permit speculative trading related to foreign currency.

The fair value of the Company’s open foreign currency derivative instruments at each period end is recognized in prepaid expenses and other current assets or accrued liabilities in the consolidated balance sheets. Changes in the fair value of foreign currency contracts that have been designated as cash flow hedges are recognized in accumulated other comprehensive income, net of deferred taxes, until they are realized, at which point, they are recognized in other income, net, in the consolidated statements of operations. The changes in fair value of foreign currency contracts that qualify for fair value hedging treatment are recognized in other income, net, in the consolidated statements of operations. Upon maturity, sale or other termination, gains and losses associated with these instruments are also recognized in other income, net.

Stock-Based Employee Compensation

The Company accounts for stock-based employee compensation using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or APB 25, and related Interpretations, as permitted by SFAS No. 123, Accounting for Stock-Based Compensation, or SFAS 123. Under the intrinsic value method, the fair value of Parent’s Class A common stock at the date of the grant was less than or equal to the exercise price of the options resulting in no compensation expense. Stock options under Parent’s 1996 Stock Option Plan and 1999 Stock Incentive Plan were canceled and settled in cash at the fair value of the options as of the Acquisition date for $4.0 million, which has been recognized as transaction costs in the consolidated statement of operations for the predecessor period of fiscal 2005.

Pro forma information for net loss and net loss available to common shares determined as if the Company accounted for its employee stock options under the minimum fair value method required by SFAS 123 follows (in thousands):

F-12

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor									Successor
							Period			Period
							January 2			October 24
							through			through
							October 23,			December 31,
	2003 restated			2004			2005			2005
Net loss, as reported	$	(45,375	)	$	(45,592	)	$	(43,938	)	$	(784	)
Less: Stock-based employee compensation expense determined based on the fair value method for all awards, net of income tax benefit		(8	)		(6	)		(5	)		(350	)

Pro forma net loss	$	(45,383	)	$	(45,598	)	$	(43,943	)	$	(1,134	)


Net loss available to common shares, as reported	$	(58,877	)	$	(45,592	)	$	(43,938	)	$	(784	)


Pro forma net loss available to common shares	$	(58,885	)	$	(45,598	)	$	(43,943	)	$	(1,134	)

The effect of applying SFAS 123, as calculated above, may not be representative of the effect on reported net income (loss) for future years.

Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board, or the FASB, issued SFAS No. 123 (revised 2004), Share Based Payment, or SFAS 123R. SFAS 123R replaces SFAS 123 and supercedes SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure – An Amendment of FASB Statement No. 123 and APB Opinion No. 25. SFAS 123R eliminates the alternative to use the intrinsic value method of accounting under APB 25 previously allowed under SFAS 123 and requires entities to recognize the cost of services received in exchange for awards of equity instruments, or compensation cost, based on the fair value of those awards at the grant date. SFAS 123R is effective as of the beginning of the first annual reporting period that begins after December 15, 2005 for all awards granted after the effective date and for all awards modified, repurchased or canceled after that date. The Company meets the nonpublic entity criteria under SFAS 123R and will adopt SFAS 123R using the prospective method. Accordingly, upon adoption, the grant-date fair value of awards of equity share options and similar instruments granted subsequent to December 31, 2005 is to be calculated using the historical volatility of an appropriate industry sector index rather than expected volatility of the Company’s share price.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, or SFAS 151, which amends the guidance in Chapter 4 of Accounting Research Bulletin No. 43, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage). SFAS 151 requires those items to be recognized as current period charges regardless of whether they meet the criterion of “so abnormal” and also requires the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005 with earlier application permitted for such costs incurred after the date this statement was issued. The Company does not anticipate that the adoption of SFAS 151 will have a material impact on its results of operations or financial position.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, or SFAS 154, which replaces Accounting Principles Board, or APB, Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company does not anticipate that the adoption of SFAS 154 will have a material impact on its results of operations or financial position.

In March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, which requires entities to recognize a liability for the fair value of a legal obligation to perform asset retirement activities that are conditional on a future event, if the amount can be reasonably estimated. Some of the Company’s manufacturing facilities contain asbestos. The asbestos is contained and current regulations do not require the remediation of this material until the building is demolished or is significantly modified. A liability for such retirement obligation has not been recognized in the consolidated financial statements as the timing of settlement is presently indeterminable and the fair value of this liability cannot be reasonably estimated. The Company does not expect this retirement obligation to have a material impact on the Company’s consolidated results of operations or financial position.

F-13

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(3) Change in Accounting Principle

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, or SFAS 150. SFAS 150 requires companies to classify as liabilities those financial instruments that meet the definition of mandatorily redeemable, as defined in SFAS 150. SFAS 150 was effective for the first fiscal period beginning after December 15, 2003 for nonpublic entities. The Company adopted SFAS 150 as of the beginning of fiscal 2004 and, as a result, reclassified its Senior Preferred Stock (Redeemable), or senior preferred stock, to long-term debt in its consolidated balance sheets at the adoption date and recognized the related accretion and dividends beginning in fiscal 2004 as interest expense in its consolidated statements of operations. Prior to the adoption of SFAS 150, the Company recognized its senior preferred stock as a separate component of its consolidated balance sheets between the liabilities and equity sections and recognized the related accretion and dividends as a direct component of accumulated deficit.

(4) Inventories

A summary of inventories follows (in thousands):


	Predecessor			Successor
	end of			end of
	2004			2005
Raw materials	$	16,041		$	16,098
Packaging materials		20,564			20,172
Finished goods		34,573			31,280

		71,178			67,550
Less: Allowances		(2,857	)		(2,381	)

Total	$	68,321		$	65,169

(5) Property, Plant and Equipment

A summary of property, plant and equipment follows (in thousands):


	Predecessor			Successor
	end of			end of
	2004			2005
Land	$	11,601		$	14,013
Buildings and improvements		104,778			84,089
Machinery and equipment		320,097			178,511
Construction-in-progress		6,727			10,131

		443,203			286,744
Less: Accumulated depreciation		(185,133	)		(1,756	)

Total	$	258,070		$	284,988

(6) Intangible Assets

A summary of intangible assets follows (in thousands):

F-14

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor		Successor
	end of		end of
	2004		2005
Intangible assets with indefinite lives:
Customer relationship	$	—	$	137,000
Trademarks		62,517		—

		62,517		137,000


Intangible assets with estimable lives:
Customer relationships		—		146,509
Plate development costs		4,450		3,609
Software		761		255
Customer lists		3,804		—
Non-compete agreements and other contracts		6,344		—
Other		16		—

		15,375		150,373

Total	$	77,892	$	287,373

The gross carrying value and accumulated amortization of intangible assets with estimable useful lives follows (in thousands):


	Predecessor					Successor
	end of 2004					end of 2005
	Gross					Gross
	carrying		Accumulated			carrying		Accumulated
	value		amortization			value		amortization
Customer relationships	$	—	$	—		$	148,413	$	(1,904	)
Plate development costs		18,535		(14,085	)		4,005		(396	)
Software		9,733		(8,972	)		300		(45	)
Customer lists		4,505		(701	)		—		—
Non-compete agreements and other contracts		9,432		(3,088	)		—		—
Other		150		(134	)		—		—

Total	$	42,355	$	(26,980	)	$	152,718	$	(2,345	)

A summary of the expected amortization expense for each of the next five succeeding fiscal years follows (in thousands):


	Expected
Years ending	amortization
2006	$	11,891
2007		11,092
2008		10,371
2009		10,034
2010		9,944

F-15

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(7) Other Assets

A summary of other assets follows (in thousands):


	Predecessor		Successor
	end of		end of
	2004		2005
Debt issuance costs	$	12,394	$	10,373
Investments in joint ventures		4,649		8,837
Assets held for sale		—		2,976
Other		1,882		1,049

Total	$	18,925	$	23,235

Debt issuance costs amortized into interest expense in fiscal 2003, 2004 and the predecessor and successor periods of fiscal 2005 were $3.0 million, $3.8 million, $3.5 million and $0.2 million, respectively. The Company paid debt issuance costs of $4.6 million associated with the Company’s new senior credit facility and $6.0 million associated with the issuance of the Company’s 10 ⁵/₈% senior subordinated notes, each of which was effected on October 24, 2005 in connection with the Financing Transactions.

As of the end of fiscal 2005, the Company’s unconsolidated subsidiaries included 50% joint venture investments in two companies, Doane International Pet Products, LLC in the United States and Effeffe S.p.A in Italy. The Company’s previous majority-owned subsidiary, Crona, in Russia, was divested in fiscal 2004. On January 19, 2006, the Company purchased an additional 25% of Doane International Pet Products, LLC for $0.3 million. The Company will consolidate its 75% majority-owned interest in this subsidiary beginning as of the purchase date.

As of the end of fiscal 2005, the Company’s assets held for sale included the property, plant and equipment associated with the three domestic facilities closed in conjunction with its fiscal 2005 cost savings initiatives.

(8) Accrued Liabilities

A summary of accrued liabilities follows (in thousands):


	Predecessor		Successor
	end of		end of
	2004		2005
Rebates and promotions	$	20,838	$	17,443
Compensation		17,407		15,945
Interest		11,237		11,964
Other		9,757		11,419

Total	$	59,239	$	56,771

(9) Long-Term Debt and Liquidity

A summary of long-term debt follows (in thousands):

F-16

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor			Successor
	end of			end of
	2004			2005
Revolving credit facility	$	—		$	—
U.S. dollar term loan facility		—			104,737
Euro term loan facility		—			54,481
Old term loan facility		194,513			—
10 3/4% senior notes		211,144			231,493
10 5/8% senior subordinated notes		—			150,843
9 3/4% senior subordinated notes		149,147			—
Industrial development revenue bonds		14,493			11,754
Debt of foreign subsidiaries		14,466			10,968

		583,763			564,276
Less: Current maturities		(3,673	)		(3,158	)

		580,090			561,118
Senior preferred stock		106,421			—

Total	$	686,511		$	561,118

Financing Transactions

In connection with the Acquisition, the Company effected a series of recapitalization transactions, referred to as the Financing Transactions, and together with the Acquisition, as the Transactions, including, among others:

	•		The termination and full settlement of the Company’s old $230.0 million senior credit facility and the closing of a new $210.0 million senior credit facility;

	•		the closing of the private placement of $152.0 million in aggregate principal amount of 10 ⁵/₈% senior subordinated notes due 2015 at an original issue discount of 99.2% and the subsequent exchange of these private placement notes for $152.0 million of 10 ⁵/₈% senior subordinated notes due 2015 that have been registered with the Securities and Exchange Commission;

	•		the redemption of the Company’s 9 ³/4% senior subordinated notes due 2007 at a price of 100% of the aggregate principal amount of $150.0 million, plus accrued and unpaid interest to, but not including, the redemption date of November 22, 2005 and resulted in a total redemption amount of $157.7 million;

	•		the redemption of the Company’s 14.25% senior preferred stock at a purchase price equal to 101% of the liquidation value thereof, which included a 1% change of control premium, plus accrued and unpaid dividends to, but not including, the redemption date of November 22, 2005 and resulted in a total redemption amount of $125.2 million; and

	•		the repurchase of $2.8 million aggregate principal amount of the Company’s 7.25% Ottawa County Finance Authority Industrial Development Revenue Bonds at a purchase price equal to 101% of the principal amount thereof, which included a 1% change of control premium, plus accrued and unpaid interest to, but not including, the repurchase date of December 22, 2005.

New Senior Credit Facility

On October 24, 2005, the Company entered into a new senior credit facility with a syndicate of banks and other institutional investors, as lenders, and Lehman Commercial Paper Inc., as administrative agent. The new $210.0 million senior credit facility provides for a $55.0 million U.S. dollar equivalent term loan facility denominated in Euros (the Euro term loan facility), a $105.0 million U.S. dollar term loan facility and a $50.0 million multi-

F-17

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

currency revolving credit facility with a $15.0 million sub-limit for Euro-denominated revolving credit loans. The credit agreement provides that all borrowings denominated in U.S. dollars under the senior credit facility bear interest, at the Company’s option, at a rate per annum equal to an applicable margin, plus (i) the higher of (x) the prime rate or (y) the federal funds effective rate, plus one half percent (0.50%) per annum or (ii) the Eurodollar rate. All borrowings denominated in Euros bear interest at a rate per annum equal to the EURIBOR rate plus an applicable margin. In addition to paying interest on outstanding principal under the senior credit facility, the Company is required to pay a commitment fee to the lenders related to unutilized loan commitments at a rate of 0.50% per annum. The revolving credit facility matures on October 24, 2010 and the term loan facilities mature on October 24, 2012, except that all facilities terminate 91 days prior to the maturity of the Company’s senior notes, unless the senior notes are redeemed or refinanced. Availability of funds under the senior credit facility is subject to certain customary terms and conditions.

The Company is required to make quarterly principal payments of 0.25% of the aggregate principal amount borrowed under each of the term loan facilities for the first six years and nine months after the closing date with the remainder payable at maturity. The loans under the senior credit facility may be prepaid and commitments may be reduced. Optional prepayments of the term loan facilities may not be reborrowed. Subject to certain exceptions, the senior credit facility requires that 100% of the net proceeds from certain asset sales, casualty insurance, condemnations and debt issuances, 50% of the net proceeds from equity offerings and 75% of excess cash flow for each fiscal year (reducing to 50% based on performance levels agreed upon) must be used to pay down outstanding borrowings.

The obligations under the Company’s senior credit facility are guaranteed by Parent and by each of the Company’s domestic restricted subsidiaries. In addition, the senior credit facility is secured by first priority perfected security interests in substantially all of the Company’s existing and future material assets and the existing and future material assets of its subsidiary guarantors, except that only up to 65% of the capital stock of its first-tier foreign subsidiaries is pledged in favor of the lenders under the senior credit facility. The senior credit facility contains certain financial and other covenants usual and customary for a secured credit agreement.

The Company had no borrowings outstanding under its revolving credit facility as of the end of fiscal 2005, and $4.5 million of letters of credit issued and undrawn, resulting in $45.5 million of availability under its revolving credit facility. As of the end of fiscal 2005, the U.S. dollar term loan facility bore interest of 6.8% and the Euro term loan facility bore interest of 3.8%. The Company was in compliance with the financial covenants of its senior credit facility as of the end of fiscal 2005.

New 10 ⁵/₈% Senior Subordinated Notes

On October 24, 2005, the Company closed on a private placement of $152.0 million in aggregate principal amount of new 10 ⁵/₈% senior subordinated notes due November 15, 2015. The senior subordinated notes were issued at a discount of 99.2% of par, resulting in gross proceeds of $150.8 million. The discount is being amortized as non-cash interest expense over the term of the senior subordinated notes. Interest on the senior subordinated notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2006, and will be computed on the basis of a 360-day year comprised of twelve 30-day months. On March 16, 2006, the Company completed the exchange of the privately placed senior subordinated notes for $152.0 million of 10 ⁵/₈% senior subordinated notes due 2015 that have been registered with the Securities and Exchange Commission.

The senior subordinated notes are general unsecured senior subordinated obligations of the Company and are expressly subordinated in right of payment to all the existing and future senior indebtedness of the Company and senior in right of payment to any current or future indebtedness of the Company that, by its terms, is subordinated to the senior subordinated notes. The senior subordinated notes are effectively subordinated to all existing and future secured indebtedness of the Company and its subsidiaries and are structurally subordinated to all indebtedness and other liabilities, including trade payables, of each non-guarantor subsidiary of the Company. The senior subordinated notes are unconditionally guaranteed on an unsecured senior subordinated basis by each existing and future domestic restricted subsidiary of the Company. The senior subordinated notes have certain covenants that, among other things, limit the Company’s and its restricted subsidiaries’ ability to incur or guarantee

F-18

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

additional indebtedness and issue preferred stock, pay dividends or make certain other distributions, create liens, sell assets, place restrictions on the ability of its restricted subsidiaries to pay dividends or make certain other distributions, engage in mergers or consolidations with other entities, engage in certain transactions with affiliates and make certain investments.

Subject to certain conditions, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the senior subordinated notes with the net cash proceeds of one or more equity offerings at a redemption price of 110.625% of the principal amount thereof plus accrued and unpaid interest, if any, and additional interest, if any, thereon to, but not including, the redemption date. The senior subordinated notes are otherwise not redeemable until November 15, 2010. On and after November 15, 2010, the Company may at any time redeem all or, from time to time, a part of the senior subordinated notes at the following redemption prices, plus accrued and unpaid interest, if any, and additional interest, if any, to the applicable redemption date:


Years beginning
November 15,	Percentage
2010		105.313	%
2011		103.542	%
2012		101.771	%
2013 and thereafter		100.000	%

10 ³/4% Senior Notes

On February 28, 2003, the Company issued $213.0 million in aggregate principal amount of 10³/4% senior notes due March 1, 2010, or senior notes, with interest payable semi-annually on March 1 and September 1 of each year, commencing on September 1, 2003. The senior notes were issued at a discount of 98.8% of par that was being amortized as interest expense over the term of the notes leading up to the Transactions. At the date of the Transactions, the Company recorded the senior notes at their fair value, which resulted in a premium of 109% of face value that is being amortized over the remaining term of the senior notes as a reduction of interest expense. The senior notes are general unsecured obligations and are effectively subordinated in right of payment to all secured indebtedness and senior in right of payment to any current or future indebtedness of the Company that, by its terms, is subordinated to the senior notes. The senior notes have certain covenants that have restrictions on dividends, distributions, indebtedness, affiliate transactions and lines of business.

The Company may redeem the senior notes at any time on or after March 1, 2007, in whole or in part, at the option of the Company, at the redemption prices set forth below, plus accrued and unpaid interest, if any, to the redemption date:


Years beginning
March 1,	Percentage
2007		105.375	%
2008		102.688	%
2009 and thereafter		100.000	%

At any time prior to March 1, 2007, the senior notes may also be redeemed in whole, but not in part, at the option of the Company upon the occurrence of a Change in Control (as defined in the Note Indenture) at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium (as defined in the Note Indenture) and the accrued and unpaid interest, if any, to the date of redemption. Upon a Change in Control, holders of the senior notes may require the Company to purchase all or a portion of the senior notes at a purchase price equal to 101% of their principal amount plus accrued interest, if any. Before March 1, 2007, up to 35% of the senior notes may also be redeemed at the option of the Company with the proceeds of one or more equity offerings of its Parent’s common stock at a purchase price equal to 110.75% of the principal amount plus accrued and unpaid interest, if any. In

F-19

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

connection with certain asset dispositions, the Company may be required to use the proceeds from those asset dispositions to make an offer to repurchase the senior notes at 100% of their principal amount plus accrued and unpaid interest, if any, if the proceeds are not otherwise used to repay senior secured indebtedness or to repay indebtedness under the senior credit facility or to invest in assets related to the Company’s business.

Industrial Development Revenue Bonds

On March 12, 1997, the Company issued $6.0 million of 7.25% Ottawa County Finance Authority Industrial Development Revenue Bonds, or the Miami Bonds, of which $3.0 million remains outstanding as of the end of fiscal 2005. The Miami Bonds are subject to mandatory redemption prior to maturity, under certain circumstances, at a redemption price of 110% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, in varying principal amounts on June 1 of each year beginning in 2007 through final maturity in 2017. The Miami Bonds are senior secured obligations of the Company and effectively rank senior to the Company’s unsecured debt to the extent of the value of the assets that serve as collateral and otherwise rank on a parity in right of payment with all other senior indebtedness of the Company. The Company repurchased $2.8 million if the Miami Bonds on December 22, 2005 in conjunction with the Financing Transactions. The Company received waivers from the remaining holders of its Miami bonds in connection with the Acquisition related to the change of control provisions in the indenture.

On July 24, 1998, the Company issued $9.0 million of 6.25% Oklahoma Development Finance Authority Industrial Development Revenue Bonds, Series 1998, or the Clinton Bonds, through the Oklahoma Development Finance Authority. The Clinton Bonds are subject to mandatory redemption prior to maturity, under certain circumstances, at a redemption price of 105% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, in varying principal amounts on July 15 of each year beginning in 2018 through final maturity in 2023. The Clinton Bonds are senior secured obligations of the Company and effectively rank senior to the Company’s unsecured debt to the extent of the value of the assets that serve as collateral and otherwise rank on a parity in right of payment with all other senior indebtedness of the Company. On their issuance date, the Company’s wholly-owned subsidiary, DPC Investment Corp., purchased the bonds and then sold these bonds on May 6, 1999 to third parties at a net price of $8.7 million. The Company received waivers from the holders of its Clinton bonds in connection with the Acquisition related to the change of control provisions in the indenture.

Debt of Foreign Subsidiaries

In fiscal 2004, the Company refinanced its previous FIH (Finansierings Instituttet for Industri og Handvaerk A/S, a Danish lender) loans, denominated in Euros (€), and the majority of its Danish Krona, or DKK-denominated, debt by entering into a new FIH loan, denominated in Euros. As of the end of fiscal 2005, the outstanding balance on the new FIH loan was €9.3 million ($11.0 million assuming a Euro to U.S. dollar exchange rate of 1.184). The new FIH loan has a fixed interest rate of 5.05% and matures in 2012. The Company received a waiver from the lender of its FIH loans in connection with the Acquisition related to the change of control provisions in the credit agreement.

Old Senior Credit Facilities

The Company entered into its previous senior credit facility in November 2004 with a syndicate of institutional investors, as lenders, and Credit Suisse First Boston, as administrative agent. The November 2004 senior credit facility provided for total commitments of $230.0 million, consisting of a $195.0 million term loan facility and a $35.0 million revolving credit facility with a $20.0 million sub-limit for issuance of stand-by letters of credit. The term loan facility bore interest, at the option of the Company, of adjusted LIBOR plus 4.00%, or ABR plus 3.00%. The revolving credit facility bore interest, at the option of the Company, of adjusted LIBOR plus 4.50%, or ABR plus 3.50%. The Company settled all outstanding borrowings under the November 2004 senior credit facility on October 24, 2005 in conjunction with the Financing Transactions.

The Company incurred pre-tax losses from debt extinguishment of $4.4 million and $4.1 million in fiscal 2003 and 2004, respectively. The fiscal 2004 debt extinguishment resulted from the write-off of unamortized debt

F-20

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

issuance costs in connection with the November 2004 senior credit facility refinancing. Prior to the November 2004 senior credit facility, the Company entered into a senior credit facility in May 2000 with a syndicate of banks and other institutional investors. The fiscal 2003 debt extinguishments consisted of $4.1 million related to the February 2003 repayments and amendments to the May 2000 senior credit facility that occurred concurrent with the issuance of the 10³/4% senior notes and full repayment of promissory notes under a shareholder loan. The remaining $0.3 million related to the write-off of a pro-rata portion of unamortized debt issuance costs for a $15.0 million optional prepayment made by the Company on the May 2000 senior credit facility following the February 2003 refinancing.

Old 9 ³/4% Senior Subordinated Notes

On November 12, 1998, the Company issued $150.0 million in aggregate principal amount of 9³/4% Senior Subordinated Notes due May 15, 2007, or the old senior subordinated notes, with interest payable semi-annually on May 15 and November 15 of each year. The old senior subordinated notes were issued at a discount of 98.0% of par amortized as interest expense over the term of the notes. The old senior subordinated notes were general unsecured obligations and were subordinated in right of payment to all senior indebtedness and senior in right of payment to any current or future indebtedness of the Company that, by its terms, is subordinated to the old senior subordinated notes. The Company redeemed its old senior subordinated notes for $157.7 million on November 22, 2005 in conjunction with the Financing Transactions.

Senior Preferred Stock (Redeemable)

On October 5, 1995, the Company authorized 3,000,000 shares of senior preferred stock, of which 1,200,000 shares of 14.25% Senior preferred stock due 2007 were issued, with an initial liquidation preference of $25 per share, or $30.0 million for all shares. The senior preferred stock was initially recorded at the net proceeds of $17.1 million after deducting $12.9 million paid to the Company for 5,417,912 warrants of Parent, which were issued in connection with the senior preferred stock. Pursuant to SFAS 150, as of the beginning of fiscal 2004, the senior preferred stock, including the cumulative accretion and dividends, was reclassified to long-term debt in the Company’s consolidated balance sheet and the related accretion and dividends have been recognized as interest expense in the consolidated statement of operations. As of the end of fiscal 2004, the cumulative accretion was $9.9 million and the cumulative dividends were $79.4 million associated with the senior preferred stock. The Company redeemed its senior preferred stock for $125.2 million on November 22, 2005 in conjunction with the Financing Transactions.

Annual Maturities of Long-Term Debt

A summary of the annual maturities of long-term debt as of the end of fiscal 2005 follows (in thousands):


Maturities by year
2006	$	3,158
2007		3,360
2008		3,504
2009		3,623
2010		235,209
2011 and thereafter		315,422

Total	$	564,276

(10) Fair Value of Financial Instruments

A summary of the estimated fair value of financial instruments, other than current assets and liabilities, follows (in thousands):

F-21

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor end of 2004				Successor end of 2005
			Estimated				Estimated
	Book value		fair value		Book value		fair value
Long-term debt:
U.S. dollar term loan facility	$	—	$	—	$	104,737	$	106,047
Euro term loan facility		—		—		54,481		55,025
Old term loan facility		194,513		197,431		—		—
10 3/4% senior notes		211,144		225,924		231,493		231,371
10 5/8% senior subordinated notes		—		—		150,843		158,650
9 3/4% senior subordinated notes		149,147		146,910		—		—
Senior preferred stock		106,421		106,421		—		—
Other		28,959		28,959		22,722		22,722

	$	690,184	$	705,645	$	564,276	$	573,815


Derivative instruments:
Commodity	$	232	$	232	$	1,810	$	1,810
Foreign currency		—		—		471		471

The fair value of long-term debt was determined based on the traded market price, where available, on the date closest to the Company’s fiscal year end. The Company considers the carrying value of its other long-term debt to approximate fair value.

(11) Common Stock and Warrants of Parent

In connection with the Acquisition, the certificates of incorporation of Parent and the Company were amended to provide that the authorized capital stock of each of Parent and the Company consists of Class A common stock and Class B common stock, each with par value of $0.01 per share. OTPP and members of the Company’s senior management beneficially own 98.5% and 1.5% of Parent’s Class A common stock, respectively. OTPP is the record owner of 29.9%, but beneficially owns 100%, of Parent’s Class B common stock and the remaining 70.1% is owned by an entity that is wholly-owned by Law Debenture Corporation, p.l.c., a provider of trustee services organized under the laws of the United Kingdom, referred to as the Jersey Entity. As of the closing of the Acquisition, Parent owns 100% of the Company’s Class A common stock and 29.9% of its Class B common stock. The remaining 70.1% of the Company’s Class B common stock is owned by the Jersey Entity.

The holders of Class A common stock of Parent and the Company are entitled to vote on all matters of the respective entities, except that the holders of Class A common stock shall not have the right to vote on the election or removal of directors. Except, as otherwise required by law, the holders of Class B common stock are entitled to vote only for the election or removal of directors of the respective entities. Both the Class A and Class B common stock holders of each entity are entitled to one vote per share on all matters on which they are entitled to vote; neither has cumulative voting rights. Holders of Class A common stock of each entity and Class B common stock of Parent are entitled to receive, ratably, on a per share basis, such dividends as may be declared by the respective board of directors from time to time. Holders of the Company’s Class B common stock are not entitled to any dividends.

As of the end of fiscal 2004, Parent had 5,417,912 warrants outstanding with an exercise price of $0.0025 for each warrant and 8,966,607 warrants outstanding with an exercise price of $0.01 for each warrant. These warrants were issued in connection with the Company’s issuance of senior preferred stock in 1995 and in connection with a shareholder loan of the Company in 2001 that has been repaid. The holders of these warrants were entitled to the right to pay their respective exercise price and within 60 days of making such payment to receive one share of Class A common stock for each warrant exercised. Of the total warrants, 45,652 warrants with an exercise price of $0.01

F-22

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

for each warrant were exercised in the predecessor period of fiscal 2005. In accordance with the Agreement and Plan of Merger dated August 28, 2005, Parent canceled and paid all holders of outstanding and unexercised warrants cash in exchange for the cancellation of their rights as warrant holders. The amount paid to the holders was equal to the difference between the share price of Parent’s Class A common stock paid to the former equity holders, or approximately $3.60 per share, and the exercise price of the warrants. A total of 14,338,957 warrants were canceled and the holders were paid $43.5 million by the Company on October 24, 2005.

(12) Stock Option Plan of Parent

In connection with the Acquisition, Parent terminated its existing stock option plans and established a new stock option plan, the Doane Pet Care Enterprises, Inc. Stock Incentive Plan (the 2005 Stock Incentive Plan), which covers certain employees of the Company. Prior to the Acquisition, certain employees of the Company were covered under two stock-based employee compensation plans of the Company’s Parent, the 1996 Stock Option Plan and the 1999 Stock Incentive Plan. The termination of the previous plans was effected by immediately vesting all unvested outstanding options and then canceling and settling all options under the previous plans in cash.

A summary of the activity associated with the stock option plans follows:


				Weighted-
	Number of			average exercise
	options			price
Outstanding at end of fiscal 2002 (predecessor)		3,804,000		$	2.50
Granted		725,000			2.57
Exercised		—			—
Forfeited		(333,650	)		2.50

Outstanding at end of fiscal 2003 (predecessor)		4,195,350			2.51
Granted		135,000			2.57
Exercised		—			—
Forfeited		(591,200	)		2.51

Outstanding at end of fiscal 2004 (predecessor)		3,739,150			2.51
Granted		—			—
Exercised		—			—
Forfeited		(74,502	)		2.52
Settlement		(3,664,648	)		2.51

Outstanding at October 23, 2005 (predecessor)		—			—
Granted		272,668			100.00
Exercised		—			—
Forfeited		—			—

Outstanding at end of fiscal 2005 (successor)		272,668			100.00

Under the 2005 Stock Incentive Plan, a total of 9.5%, or 326,175 shares, of the fully-diluted Class A common stock of Parent is available for option grants. In the successor period of fiscal 2005, Parent granted 272,668 of the total authorized shares to senior management and other key employees of the Company with an exercise price of $100 per share, which was equal to the fair value of the common stock on the date of the grants. These stock options have a 10-year life and vest ratably in five equal installments on each of the first five anniversaries of the effective date of such grants with the potential for accelerated vesting upon a change of control of Parent. At the end of fiscal 2005, the Company had 272,668 options outstanding at an exercise price of $100 per share and a weighted-average contractual remaining life of 9.8 years.

F-23

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At the end of fiscal 2003 and 2004, Parent had total exercisable options of 1,956,273 and 2,303,884, respectively, under the two previous stock option plans. The weighted-average exercise price of options exercisable was $2.51 in each of fiscal 2003 and 2004. Under the previous plans, each stock option granted allowed for the purchase of one share of Parent’s common stock upon vesting and expired ten years from the date of grant. Substantially all of the grants had a time-vesting schedule pursuant to which 50% of an individual’s stock options would vest two years after the grant date, 25% would vest after the third year, and the remaining 25% would vest after the fourth year.

The Company and its Parent elected to continue to follow APB 25, as permitted by SFAS 123, to account for fixed stock awards granted to employees. Using the intrinsic value method, the Company did not recognize any compensation expense in fiscal 2003, 2004 and the predecessor and successor periods of fiscal 2005 related to stock options, except for the settlement of the stock options in fiscal 2005 in connection with the Acquisition. All stock options under the Company’s 1996 Stock Option Plan and 1999 Stock Incentive Plan were canceled and settled in cash as of the Acquisition date for an amount equal to the difference between the common stock conversion amount of $3.60 per share and the exercise price of the options for $4.0 million, which represents the total settlement amount of all options. The options settlement has been recognized as transaction costs in the consolidated statement of operations for the predecessor period of fiscal 2005. Under SFAS 123, the Company has the option to use the minimum fair value method, which requires the use of option valuation models, to determine compensation expense related to its stock awards granted to employees or is otherwise required to make pro forma disclosures on the impact of using this method on net income (loss) and net income (loss) available to common shares. To determine the required pro forma disclosures, the Company uses the Black-Scholes Option Pricing Model to estimate the fair value of its employee stock options. In addition, the Company used the assumptions of a weighted-average risk-free rate of return of 4.2%, 4.3%, 4.7% as of the end of fiscal 2003, 2004 and 2005, respectively, an expected life for options outstanding of nine years as of the end of fiscal 2003 and 2004 and six years as of the end of fiscal 2005, 28% volatility and no payments of dividends. These assumptions yielded a minimal amount of fair value per share for options granted in each of fiscal 2003 and 2004, and $37.48 per share in the successor period of fiscal 2005.

(13) Accumulated Other Comprehensive Income (Loss)

A summary of accumulated other comprehensive income (loss) follows (in thousands):


										Accumulated
	Foreign			Minimum			Unrealized and			other
	currency			pension liability,			realized gains			comprehensive
	translation			net			(losses), net			income (loss)
Predecessor balances at the end of 2002	$	16,475		$	(5,584	)	$	(1,333	)	$	9,558
Other comprehensive income		31,021			569			1,333			32,923

Predecessor balances at the end of 2003		47,496			(5,015	)		—			42,481
Other comprehensive income (loss)		20,243			(74	)		—			20,169

Predecessor balances at the end of 2004		67,739			(5,089	)		—			62,650
Other comprehensive loss		(32,615	)		(698	)		—			(33,313	)

Predecessor balances at October 23, 2005		35,124			(5,787	)		—			29,337
Elimination of predecessor balances in connection with the Acquisition		(35,124	)		5,787			—			(29,337	)

Successor balances at October 24, 2005		—			—			—			—
Other comprehensive loss		(992	)		—			—			(992	)

Successor balances at the end of 2005	$	(992	)	$	—		$	—		$	(992	)

F-24

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of the end of fiscal 2004, the Company had a cumulative translation net gain consisting of a cumulative gain of $86.9 million for the translation of the financial statements of the Company’s previous foreign operations into U.S. dollars, partially offset by $19.2 million cumulative translation loss for the Company’s previous Euro-denominated debt translated to U.S. dollars and designated as a hedge against the net investment in Europe through the final repayment date. As of the end of fiscal 2005, the Company had a cumulative translation net loss of $1.0 million, consisting of a $1.4 million cumulative translation loss for the translation of the financial statements of the Company’s foreign operations and a $0.4 million cumulative translation gain for the impact of the Euro term loan facility designated as a hedge of the net investment in Europe that was entered into in connection with the senior credit facility effected on the Acquisition date.

(14) Operating Leases

The Company leases certain facilities, machinery and equipment under operating lease agreements with varying terms and conditions, including usual and customary renewal and fair value purchase options. A summary of the future annual minimum lease payments required under lease commitments with initial or remaining terms in excess of one year as of the end of the fiscal 2005 follows (in thousands):


	Minimum
Years ending	annual payments
2006	$	3,770
2007		3,198
2008		3,066
2009		2,013
2010		618
2011 and thereafter		2,706

	$	15,371

Rent expense for fiscal 2003, 2004 and the predecessor and successor periods of fiscal 2005 was $7.2 million, $6.4 million, $5.5 million and $1.3 million, respectively.

(15) Other Operating Expenses (Income)

A summary of other operating expenses (income) follows (in thousands):

F-25

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor									Successor
							January 2			October 24
							through			through
							October 23,			December 31,
	2003			2004			2005			2005
Transaction costs	$	—		$	333		$	23,370		$	—
Litigation settlements		—			(612	)		(3,189	)		(1,890	)
Other miscellaneous costs		—			—			327			665


Restructuring costs:
Plant closure costs		—			3,820			171			258
Severance		—			3,157			2,387			343
Asset impairments		7,727			215			6,129			—
Revision to estimates		(500	)		65			(499	)		—

Total restructuring costs		7,227			7,257			8,188			601

Total other operating expenses (income)	$	7,227		$	6,978		$	28,696		$	(624	)

Transaction Costs

Transaction costs for the predecessor period of fiscal 2005 primarily relate to the Acquisition and include transaction fees and expenses of $3.4 million incurred by the Company prior to the Acquisition and compensation expenses of $20.0 million associated with the payment of transaction bonuses and the settlement of all outstanding stock options of Parent in cash.

Litigation Settlements

Fiscal 2004 litigation settlements included $0.6 million of proceeds from an arbitration award and $0.7 million of proceeds received from a favorable lawsuit settlement, partially offset by $0.7 million paid by the Company to a former vendor as settlement costs.

Fiscal 2005 litigation settlements for the predecessor and successor periods of fiscal 2005 relate to proceeds received from favorable lawsuit settlements.

Restructuring Costs

Fiscal 2003 restructuring costs of $7.2 million consisted of $5.3 million related to the Company’s European restructuring plan, $2.4 million related to a divestiture and $0.5 million of net positive revisions to estimates of previously accrued restructuring costs. In December 2003, the Company finalized plans to consolidate its wet pet food operations in Vrä, Denmark into its facility in Esbjerg, Denmark and its expanded facility in Carat, Austria during fiscal 2004. As a result, the Company recorded asset impairments of $5.3 million for the building and certain equipment from the Vrä, Denmark facility to be disposed of or sold. In January 2004, the Company divested its 51% interest in Crona, which owns a manufacturing facility in Tver, Russia, and recorded asset impairments of $2.4 million in the fourth quarter of fiscal 2003 based on an evaluation of the net assets of this facility. The Company’s net positive revisions to estimates of previously accrued restructuring costs primarily related to plant closures in prior years.

F-26

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fiscal 2004 restructuring costs consisted of $7.0 million related to the Company’s European restructuring plan and $0.3 million related to domestic plant closures. In fiscal 2004, the Company expanded its European restructuring plan to include the reorganization of certain European subsidiaries to more efficiently manage its foreign operations and reduce selling, general and administrative expenses. The Company recorded $3.2 million of severance costs, $2.5 million of installation costs for transferred equipment from the Vrä, Denmark facility and $1.3 million of costs for manufacturing inefficiencies during the transition period. The Company completed its European restructuring plan in the fourth quarter of fiscal 2004. In addition, the Company had asset impairments of $0.2 million primarily related to machinery and equipment at a U.S. distribution facility that was closed during fiscal 2004 and net revisions to estimates of previously accrued restructuring costs of $0.1 million primarily related to plant closures in prior years.

In the predecessor period of fiscal 2005, the Company entered into certain initiatives to reduce its cost structure and to increase operating efficiencies. These initiatives included the closure of three U.S. manufacturing facilities, the permanent shutdown of the dry pet food production lines at its Portland, Indiana manufacturing facility and a reduction of its U.S. corporate salaried workforce by approximately 7%. The three manufacturing facility closures were the Cartersville, Georgia dry pet food facility, the Hillburn, New York biscuit facility and the Delavan, Wisconsin semi-moist facility. The Company also closed a sales office in Germany. In connection with these cost savings initiatives, the Company incurred asset impairment charges of $6.1 million and severance costs of $2.4 million in the fiscal 2005 predecessor period and severance costs of $0.3 million in the fiscal 2005 successor period, and expects to incur future costs of $0.4 million primarily related to the carrying costs of the closed facilities. The Company also had revisions to estimates of previously accrued restructuring costs of $0.5 million in the predecessor period primarily related to plant closures in prior years.

A summary of the activity for the Company’s accrued restructuring costs for fiscal 2003, 2004 and the predecessor and successor periods of fiscal 2005 follows (in thousands):


Predecessor balance at end of 2002	$	2,752
Revisions to estimates		(500	)
Cash payments and other		(1,098	)

Predecessor balance at end of 2003		1,154
Plant closure costs		3,820
Severance		3,157
Revisions to estimates		65
Cash payments and other		(7,474	)

Predecessor balance at end of 2004		722
Plant closure costs		171
Severance		2,387
Revision to estimates		(311	)
Cash payments and other		(945	)

Predecessor balance at October 23, 2005		2,024
Plant closure costs		258
Severance		343
Cash payments and other		(918	)

Successor balance at the end of 2005	$	1,707

The future expected payout of the Company’s accrued restructuring costs, primarily for severance, as of the end of fiscal 2005 follows (in thousands):

F-27

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Fiscal years ending
2006	$	1,380
2007		327
Total	$	1,707

(16) Income Taxes

A summary of income tax expense (benefit) follows (in thousands):


	Predecessor						Successor
					January 2		October 24
					through		through
					October 23,		December 31,
	2003		2004		2005		2005
Current:
Federal	$	—	$	—	$	—	$	—
State and local		—		—		—		—
Foreign		1,395		709		600		886

Net current tax expense		1,395		709		600		886


Deferred:
Federal		19,740		3,453		3,050		726
State and local		3,600		630		339		81
Foreign		304		332		105		(579	)

Net deferred tax expense		23,644		4,415		3,494		228

Total income tax expense	$	25,039	$	5,124	$	4,094	$	1,114

A summary of income (loss) before income taxes by domestic and foreign source follows (in thousands):


	Predecessor									Successor
							January 2			October 24
							through			through
							October 23,			December 31,
	2003			2004			2005			2005
Domestic	$	(2,211	)	$	(19,095	)	$	(24,408	)	$	206
Foreign		(18,125	)		(21,373	)		(15,436	)		124

Total	$	(20,336	)	$	(40,468	)	$	(39,844	)	$	330

Income tax expense (benefit) differs from the amount computed by applying the U.S. federal statutory rate of 35% to pre-tax income (loss) as follows (in thousands):

F-28

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor									Successor
							January 2			October 24
							through			through
							October 23,			December 31,
	2003			2004			2005			2005
Computed “expected” U.S. federal tax expense (benefit)	$	(7,118	)	$	(14,164	)	$	(13,963	)	$	116
State and local tax expense		2,340			409			(398	)		62
Foreign tax expense (benefit)		1,271			382			1,978			(419	)
Senior preferred stock		—			5,379			4,910			477
Meals and entertainment, and other		84			59			63			12
Change in valuation allowance		28,462			13,059			11,504			866

Total	$	25,039		$	5,124		$	4,094		$	1,114

A summary of the income tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities follows (in thousands):


	Predecessor			Successor
	end of			end of
	2004			2005
Current deferred tax assets (liabilities):
Accounts receivable	$	652		$	731
Inventories		1,795			547
Accrued liabilities and other allowances		5,203			5,362
Valuation allowance		(5,236	)		(1,246	)

Net current deferred tax assets	$	2,414		$	5,394


Noncurrent deferred tax assets (liabilities):
Net operating loss carryforwards	$	55,653		$	70,713
Property, plant and equipment		(22,721	)		(40,580	)
Goodwill and other assets		(26,634	)		(116,918	)
Long-term debt		—			7,776
Accumulated other comprehensive income		3,240			—
Foreign assets		11,761			22,670
Foreign liabilities		(5,400	)		(29,564	)
Other		662			2,673
Valuation allowance		(50,202	)		(15,530	)

Net noncurrent deferred tax liabilities		(33,641	)		(98,760	)

Total net deferred tax liabilities	$	(31,227	)	$	(93,366	)

At the end of fiscal 2004, the Company had U.S. federal and state income tax receivables of $0.7 million and foreign income tax payables of $0.8 million. At the end of fiscal 2005, the Company had no U.S. federal and state income tax receivables or payables, and foreign income tax payables of $1.3 million. The Company’s total deferred tax assets, including U.S. federal and state, and foreign, net operating loss, or NOL, carryforwards, were $79.0 million and $110.5 million as of the end of fiscal 2004 and 2005, respectively, and its total deferred tax liabilities were $54.8 million and $187.1 million, respectively. As of the end of fiscal 2004 and 2005, the Company’s U.S. federal NOL carryforwards were $142.2 million and $181.8 million, respectively, and its foreign NOL carryforwards were $22.6 million and $59.6 million, respectively. The Company’s U.S. federal and state NOL carryforwards are available to offset future taxable income through 2025. Utilization of the U.S. federal NOL carryforwards are limited annually pursuant to Internal Revenue Code Section 382. The Company’s foreign NOL carryforwards as of the end of fiscal 2005 resulted in deferred tax assets of $16.7 million, which are indefinite in duration.

F-29

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In assessing the realizability of the Company’s deferred tax assets, management determines whether it is more likely than not that some portion or all existing deferred tax assets will not be realized in future periods. If management concludes in the future that it is more likely than not the Company will not generate sufficient future taxable income to realize a tax benefit for the deductible temporary differences, the deferred tax assets would be reduced by a valuation allowance to the amount that is more likely than not to be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Primarily due to the magnitude of operating losses in fiscal 2003 and 2004 and the predecessor and successor periods of fiscal 2005, and the variability of historical earnings, management has determined the Company no longer meets the “more likely than not” recoverability criteria necessary to recognize deferred tax assets, except for those assets which will be recovered through known reversals of deferred tax liabilities. The Company’s consolidated valuation allowance against its domestic and foreign deferred tax assets was $55.4 million and $16.8 million as of the end of fiscal 2004 and 2005, respectively. In connection with the Acquisition and the allocation of the purchase price, the valuation allowance at October 24, 2005 was reduced to $15.9 million. For the predecessor period from January 2 through October 23, 2005, the Company recognized increases in the valuation allowance of $11.4 million against its U.S. federal and state deferred tax assets and $3.2 million against its foreign deferred tax assets. For the successor period from October 24 through December 21, 2005, the Company recognized increases in the valuation allowance of $0.2 million against its U.S. federal and state deferred tax assets and increases of $0.7 million against its foreign deferred tax assets. During fiscal 2004, the Company recognized increases in the valuation allowance of $14.5 million against its U.S. federal and state deferred tax assets and $1.3 million against its foreign deferred tax assets. The $1.3 million increase in foreign valuation allowance in fiscal 2004 includes a $6.3 million reduction of a previously recorded valuation allowance due to the elimination of a deferred tax asset from a tax law change in one of the foreign jurisdictions in which the Company operates.

Cumulative undistributed earnings of the Company’s foreign operations were $19.1 million as of the end of fiscal 2004. These earnings were considered indefinitely reinvested and, accordingly, no deferred taxes had been recognized. A deferred tax liability will be recognized when the Company is no longer able to demonstrate that it plans to permanently reinvest undistributed earnings. Determination of the amount of unrecognized deferred tax liability is not practical because of complexities in tax laws and assumptions associated with its calculation. The Company had no cumulative undistributed earnings as of the end of fiscal 2005.

(17) Employee Benefit Plans

Pension and Other Postretirement Plans

The Company has a defined benefit, non-contributory inactive pension plan which was frozen on May 28, 1998. As a result, future benefits no longer accumulate and the Company no longer incurs service cost related to the plan. The Company’s funding policy for this inactive plan is to make the minimum annual contribution required by applicable regulations. The Company also has an active pension plan covering approximately 40 union employees at one of its facilities as of the end of fiscal 2005. The Company also has salary continuation agreements with 19 persons as of the end of fiscal 2005. Under these agreements, participants who reach age 55 and have 10 years of service with the Company begin vesting in their benefits, which are payable in 10 equal annual installments after retirement. The salary continuation agreements also include a death benefit such that in the event of a participant’s death, the beneficiary would receive an annual death benefit over the longer of 10 years or the number of years from the year of death to the year in which the participant would have reached age 65. In addition, the Company has a separate deferred compensation agreement with a former employee that provides for payments over 10 consecutive years, of which three years and two months remain as of the end of fiscal 2005. The pension benefit disclosures below include the salary continuation and deferred compensation agreements.

The Company has a postretirement healthcare plan that provides medical coverage for eligible retirees and their dependents. The Company pays benefits under this plan when due and does not fund its plan obligations as they

F-30

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

accrue; therefore, there are no plan assets. The Company uses a December 31 measurement date for its pension and other postretirement plans.

A summary of the benefit obligations and funded status for the Company’s pension and other postretirement plans follows (in thousands):


	Pension benefits									Other postretirement benefits
	Predecessor						Successor			Predecessor						Successor
							October 24									October 24
				January 2			through						January 2			through
				through			December						through			December
				October 23,			31,						October 23,			31,
	2004			2005			2005			2004			2005			2005
Change in benefit obligation:
Benefit obligation, beginning of period	$	17,262		$	18,206		$	18,028		$	5,014		$	4,017		$	2,031
Service cost		34			32			30			11			14			2
Interest cost		1,049			820			230			259			171			19
Plan participants’ contributions		—			—			—			182			150			30
Benefits paid		(1,247	)		(961	)		(341	)		(424	)		(381	)		(72	)
Actuarial (gain) loss		1,078			(69	)		42			385			(1,940	)		—
Salary continuation and deferred compensation agreements		—			—			3,873			—			—			—
Plan amendments		30			—			—			(1,410	)		—			—

Benefit obligation, end of period		18,206			18,028			21,862			4,017			2,031			2,010


Change in plan assets:
Fair value of plan assets, beginning of period		16,562			17,023			15,960			—			—			—
Employer contributions		83			81			62			242			231			42
Plan participants’ contributions		—			—			—			182			150			30
Actual return on plan assets		1,625			(183	)		792			—			—			—
Benefits paid		(1,247	)		(961	)		(341	)		(424	)		(381	)		(72	)

Fair value of plan assets, end of period		17,023			15,960			16,473			—			—			—


Funded status		(1,183	)		(2,068	)		(5,389	)		(4,017	)		(2,031	)		(2,010	)
Unrecognized net (gain) loss		8,328			9,026			(511	)		1,905			—			—
Unrecognized prior service cost		192			183			—			(1,605	)		—			—
Unrecognized transition obligation		49			46			—			—			—			—

Net amount recognized	$	7,386		$	(7,187	)	$	(5,900	)	$	(3,717	)	$	(2,031	)	$	(2,010	)

The Company uses alternative methods to amortize unrecognized prior service cost and unrecognized net (gain) loss associated with its pension and other postretirement plans. The unrecognized prior service cost is amortized using the straight-line method and unrecognized net (gain) loss in excess of the 10% corridor is amortized over the average remaining working lifetime of active participants for the pension plans and the average remaining life of retired participants for the other postretirement plan.

A summary of the amounts recognized in the consolidated balance sheets in other long-term liabilities follows (in thousands):

F-31

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Pension benefits					Other postretirement benefits
	Predecessor			Successor		Predecessor			Successor
	end of			end of		end of			end of
	2004			2005		2004			2005
Accrued benefit costs	$	(1,183	)	$	5,900	$	(3,717	)	$	(2,010	)
Intangible asset		241			—		—			—
Accumulated other comprehensive loss		8,328			—		—			—

Net amount recognized	$	7,386		$	5,900	$	(3,717	)	$	(2,010	)

A summary of the pension plans’ benefit obligation in excess of the fair value of plan assets as of the end of the year follows (in thousands):


	Pension benefits
	Predecessor		Successor
	end of		end of
	2004		2005
Projected benefit obligation	$	18,206	$	21,862
Accumulated benefit obligation		18,206		21,015
Fair value of plan assets		17,023		16,473

A summary of the weighted-average assumptions used to determine benefit obligations as of the end of the year follows:

Pension benefits

Other postretirement benefits

Predecessor

Successor

Predecessor

Successor

end of

2004

2005

2004

2005

Discount rate

5.75

Rate of compensation increase

N/A

A summary of the net periodic (benefit) cost follows (in thousands):


	Pension benefits												Other postretirement benefits
	Predecessor									Successor			Predecessor								Successor
										October											October
							January 2			24								January 2			24
							through			through								through			through
							October			December								October			December
							23,			31,								23,			31,
	2003			2004			2005			2005			2003		2004			2005			2005
Service cost	$	29		$	34		$	32		$	30		$	19	$	11		$	14		$	2
Interest cost		1,072			1,049			820			230			313		259			171			19
Expected return on plan assets		(1,246	)		(1,336	)		(1,128	)		(241	)		—		—			—			—
Recognition of actuarial loss		736			670			544			—			—		—			—			—
Amortization		13			15			12			—			26		(46	)		(99	)		—

Net periodic cost	$	604		$	432		$	280		$	19		$	358	$	224		$	87		$	21


Increase (decrease) in minimum pension liability included in other comprehensive loss	$	(931	)	$	119		$	698		$	—			N/A		N/A			N/A			N/A

F-32

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the weighted-average assumptions used by the Company to determine net periodic (benefit) cost follows:

Pension benefits

Other postretirement benefits

Predecessor

Successor

Predecessor

Successor

October

January 2

through

October

December

October

December

23,

31,

23,

31,

2003

2004

2005

2003

2004

2005

Discount rate

6.75

6.25

5.75

6.75

6.25

5.75

Expected long-term rate of return on plan assets

8.42

8.41

8.50

N/A

Rate of compensation increase

N/A

The discount rate assumption used to determine the pension and other postretirement benefit obligations is based on current yield rates in the AA bond market. The discount rate was selected using a method that matches projected payouts from the plan with a zero-coupon AA bond yield curve. This yield curve was constructed from the underlying bond price and yield data collected as of the plans’ measurement date and is represented by a series of annualized, individual discount rates with durations ranging from six months to 30 years. Each discount rate in the curve was derived from an equal weighting of the AA or higher bond universe, apportioned into distinct maturity groups. These individual discount rates are then converted into a single equivalent discount rate. To ensure the resulting rates can be achieved by the pension or other postretirement benefit plans, only bonds that satisfy certain criteria, and are expected to remain available through the period of maturity of the plan benefits, are used to develop the discount rate.

The Company’s weighted-average asset allocations by asset category for its pension plans as of the end of the year follows:


				Percentage of plan assets
				Predecessor			Successor
	Target asset			end of			end of
	allocation			2004			2005
Asset categories:
Equity securities		40-70	%		69	%		70	%
Debt securities		25-40	%		30	%		30	%
Other		0-5	%		1	%		—	%

Total					100	%		100	%

The expected long-term rate of return for the Company’s pension plan assets is based on current expected long-term inflation and historical rates of return on equities and fixed income securities, taking into account the investment policy under the plan. The expected long-term rate of return is weighted based on the target allocation for each asset category. Equity securities are expected to return between 10% and 11% and debt securities are expected to return between 4% and 7%. The Company expects its pension plan asset managers will provide a premium of approximately 0.5% to 1.0% per annum to the respective market benchmark indices.

The Company’s investment policy related to its pension plans is to provide for growth of capital with a moderate level of volatility by investing in accordance with the target asset allocations stated above. The Company reviews its investment policy, including its target asset allocations, on a semi-annual basis to determine whether any changes in market conditions or amendments to its pension plans require a revision to its investment policy.

F-33

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of the healthcare cost trend rate assumptions used by the Company to determine postretirement benefit obligations as of the end of the year follows:


	Predecessor			Successor
	end of			end of
	2004			2005
Healthcare cost trend rate assumed for next year		8.50	%		10.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.50	%		4.50	%
Year that the rate reaches the ultimate trend rate		2008			2017

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the Company’s postretirement healthcare plan. A one percentage point change in assumed healthcare cost trend rates would have the following impact (in thousands):


	Predecessor														Successor
											January 2 through				October 24 through
	2003					2004					October 23, 2005				December 31, 2005
	One percentage point					One percentage point					One percentage point				One percentage point
	Increase		Decrease			Increase		Decrease			Increase		Decrease		Increase		Decrease
Impact on service and interest costs	$	36	$	(30	)	$	23	$	(20	)	$	18	$	(15)	$	3	$	(3	)
Impact on postretirement benefit obligation		530		(443	)		364		(317	)		183		(160)		181		(158	)

The Company expects to contribute $0.4 million to its active pension plan and $0.1 million to its postretirement plan in fiscal 2006. In addition, the Company expects that employee contributions to its postretirement plan will approximate $0.2 million in fiscal 2006.

The estimated future benefit payments reflecting future service as of the end of fiscal 2005 for the Company’s pension and other postretirement plans follows (in thousands):


	Pension		Other postretirement
Years ending	benefits		benefits
2006	$	1,543	$	149
2007		1,499		163
2008		1,466		178
2009		1,269		194
2010		1,295		192
2011 - 2015		5,940		911

Defined Contribution Plans

The Company has a defined contribution plan called the Doane Pet Care Retirement Savings Plan which was adopted on January 1, 2000 and was formed through the merger of two predecessor plans. The merged plan was amended and restated and is intended to be a qualified plan under the Internal Revenue Code. The plan provides coverage for eligible employees and permits employee contributions from 1% to 60% of pre-tax earnings, subject to annual dollar limits set by the IRS. The Company matches 50% of the first 6% of the employee contribution with a provision for other contributions at the discretion of the board of directors of the Company. Participant vesting for the employer’s matching contributions are 25% per year for each of the first four years of an employee’s service. Thereafter, all employer contributions are fully vested. The Company contributed $1.0 million to the Doane Pet Care Retirement Savings Plan in each of fiscal 2003 and 2004 and contributed $0.9 million and $0.1 million for the predecessor

F-34

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and the successor periods of fiscal 2005, respectively.

The Company also has a plan called the Doane Pet Care Savings and Investment Plan — Union Plan which was adopted on June 1, 1998 and covers eligible union employees at the Joplin, Missouri and Muscatine, Iowa facilities. This plan is intended to be a qualified retirement plan under the Internal Revenue Code. The plan permits employee contributions between 1% and 60% of pre-tax earnings, subject to annual dollar limits set by the IRS, and provides for a variety of investment options. The Company does not contribute to this plan.

(18) Segment Data

The Company has manufacturing and distribution facilities based in two distinct geographical markets, North America and Europe. Its operations in both of these markets have similar manufacturing and distribution processes, products, services and customer types as well as similar economic characteristics. Long-lived assets of the Company are attributed to individual countries on the basis of where these assets are domiciled. The Company’s net sales are attributed to individual countries on the basis of where its products are manufactured. A summary of long-lived assets and net sales by geographical segment follows (in thousands):


	Predecessor		Successor
	end of		end of
	2004		2005
Long-lived assets:
North America:
United States	$	434,937	$	612,971


Europe:
Denmark		202,634		263,225
Spain		38,465		27,771
United Kingdom		6,805		12,744

Total Europe		247,904		303,740

Total long-lived assets	$	682,841	$	916,711


	Predecessor						Successor
					January 2		October 24
					through		through
					October 23,		December 31,
	2003		2004		2005		2005
Net sales:
North America:
United States	$	758,459	$	763,226	$	562,043	$	139,191



Europe:
Denmark		201,827		207,946		184,370		43,734
Spain		38,897		61,593		34,252		9,825
United Kingdom		14,682		18,476		14,811		3,384

Total Europe		255,406		288,015		233,433		56,943

Total net sales	$	1,013,865	$	1,051,241	$	795,476	$	196,134

The Company has goodwill of $188.8 million related to its North American geographical segment and $132.3 million related to its European geographical segment.

F-35

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

See Note 25 for condensed financial statements of the Company’s guarantor subsidiaries, which comprise its North American geographical segment and non-guarantor subsidiaries, which comprise its European geographical segment.

(19) Major Customer

In fiscal 2003, 2004, and the predecessor and successor periods of fiscal 2005, the same customer, based in the United States, accounted for 42%, 43%, 43% and 45%, respectively, of the Company’s net sales in the consolidated statements of operations. This customer’s primary operating division accounted for the customer relationship intangible asset with an indefinite life. The Company does not have a long-term contract with this customer. Trade accounts receivable with this customer were 35% and 33% of accounts receivable, net, in the consolidated balance sheets as of the end of fiscal 2004 and 2005, respectively. The loss of this customer, or a significant decrease or change in business with this customer, would have a material adverse impact on the Company’s financial position, results of operations and liquidity.

(20) Supplemental Cash Flow Information

Supplemental cash flow information for fiscal 2003, 2004 and the predecessor and successor periods of fiscal 2005 follows (in thousands):


	Predecessor						Successor
					January 2		October 24
					through		through
					October 23,		December 31,
	2003		2004		2005		2005
Cash paid during the year:
Interest	$	55,584	$	52,630	$	42,284	$	11,380
Income taxes		1,447		985		291		358

(21) Related Party Transactions

Prior to the Acquisition, J.P. Morgan Partners (BHCA), L.P., or JPMP, and one of its affiliates owned shares of senior preferred stock of the Company and common stock and warrants of Parent. JPMP was a party to the previous investors’ agreement, and in accordance with that agreement, designated two individuals to the previous boards of directors of the Company and Parent. JPMP is an affiliate of JP Morgan Chase Bank (JPM). JPM and its affiliates received payments of fees for various investment banking and commercial banking services, as described below, that were provided to the Company and Parent. Such fees were $2.1 million and $0.5 million in fiscal 2003 and 2004, respectively.

Prior to the Acquisition, DLJ Merchant Banking Partners, L.P., or DLJMBP, and certain of its affiliates owned shares of common stock and warrants of Parent. DLJMBP and certain affiliates were parties to the previous investors’ agreement, and in accordance with that agreement, designated one individual to the previous boards of directors of the Company and Parent. DLJMBP is an affiliate of Credit Suisse First Boston LLC., or CSFB. CSFB and its affiliates received payments of fees for various investment banking and commercial banking services, as described below, that were provided to the Company and Parent. Such fees were $3.3 million and $5.2 million in fiscal 2003 and 2004, respectively.

CSFB and an affiliate of JPM were joint book-running managers in the Company’s offering of 10³/4% senior notes in fiscal 2003. Affiliates of JPMP were holders of $16.9 million of promissory notes under a shareholder loan that were fully repaid with a portion of the net proceeds from the sale of the senior notes. JPM served as the administrative agent and a lender under the Company’s February 2003 senior credit facility. An affiliate of CSFB was the syndication agent and a lender under the February 2003 senior credit facility. An affiliate of CSFB was the sole administrative agent, book-runner and lead arranger under the Company’s November 2004 senior credit facility.

F-36

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition to promissory notes under the shareholder loan that were held by JPMP and related persons, as discussed above, affiliates of other persons known to the Company to beneficially own more than 5% of the common stock of Parent also held promissory notes under the shareholder loan which were repaid with proceeds from the senior note offering. Bruckmann, Rosser, Sherrill & Co., L.P. received $7.5 million, Summit Capital Inc. received $2.3 million and PNC Capital Corp. received $1.2 million of the net proceeds from the sale of the 10³/4% senior notes. In addition, certain executive officers of the Company each received $0.1 million in fiscal 2003 from the repayment of their promissory notes under the shareholder loan in connection with the sale of the 10³/4% senior notes.

(22) Commitments and Contingencies

The Company is a party, in the ordinary course of business, to claims and litigation. In management’s opinion, the resolution of such matters is not expected to have a material impact on the future financial condition, results of operations or cash flows of the Company.

(23) Quarterly Financial Data (Unaudited)

A summary of quarterly results for fiscal 2004 and 2005 follows (in thousands):


	Fiscal 2004
	First			Second			Third			Fourth
	quarter			quarter			quarter			quarter
Net sales	$	270,880		$	258,338		$	250,977		$	271,046
Gross profit		40,818			33,137			32,812			48,283
Net loss		(7,807	)		(17,737	)		(15,225	)		(4,823	)


	Fiscal 2005
	Predecessor											Successor
									October 2			October 24
									through			through
	First		Second			Third			October 23,			December 31,
	quarter		quarter			quarter			2005			2005
Net sales	$	267,136	$	243,872		$	231,388		$	53,080		$	196,134
Gross profit		52,103		42,721			37,106			9,234			33,926
Net income (loss)		7,176		(7,547	)		(19,053	)		(24,514	)		(784	)

(24) Other Supplemental Information

A summary of activity in the Company’s valuation allowances for accounts receivable follows (in thousands):


	Beginning							Ending
Fiscal	balances		Provisions		Write-offs			balances
2003	$	4,025	$	3,655	$	(5,642	)	$	2,038
2004		2,038		3,033		(2,329	)		2,742
Predecessor period from January 2 through October 23, 2005		2,742		1,210		(2,140	)		1,812
Successor period from October 24 through December 31, 2005		1,812		398		(398	)		1,812

F-37

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(25) Financial Information Related to Guarantor Subsidiaries

The Company’s guarantor subsidiaries are wholly-owned domestic subsidiaries who have jointly and severally guaranteed on a full and unconditional basis all of the Company’s senior notes and senior subordinated notes, including the 9 ³/4% senior subordinated notes prior to redemption and the 10 ⁵/₈% senior subordinated notes issued in connection with the Acquisition. The guarantor subsidiaries are minor subsidiaries of the Company’s domestic operations that have no material operations of their own; and therefore, no separate information for these subsidiaries is presented. The financial information presented below in the guarantor columns is substantially that of the Company, excluding its European operations. The financial information presented below in the non-guarantor columns consist of the Company’s non-guarantor subsidiaries, which are its wholly-owned European subsidiaries.

Condensed consolidated financial information follows (in thousands, except share amounts):

F-38

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED BALANCE SHEET


	Predecessor end of 2004
				Non-			Intercompany
	Guarantor			guarantor			eliminations			Consolidated
ASSETS

Current assets:
Cash and cash equivalents	$	24,963		$	3,884		$	—		$	28,847
Accounts receivable, net		48,660			63,785			—			112,445
Inventories		39,406			28,915			—			68,321
Deferred tax assets		2,414			—			—			2,414
Prepaid expenses and other current assets		6,128			910			—			7,038

Total current assets		121,571			97,494			—			219,065
Property, plant and equipment, net		147,293			110,777			—			258,070
Intangible assets		58,459			19,433			—			77,892
Goodwill		214,437			113,517			—			327,954
Other assets		262,108			4,177			(247,360	)		18,925

Total assets	$	803,868		$	345,398		$	(247,360	)	$	901,906


LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)

Current liabilities:
Current maturities of long-term debt	$	1,950		$	1,723		$	—		$	3,673
Accounts payable		52,131			50,018			—			102,149
Accrued liabilities		46,623			12,616			—			59,239

Total current liabilities		100,704			64,357			—			165,061

Long-term debt, excluding current maturities		567,347			165,574			(152,831	)		580,090
Senior Preferred Stock (Redeemable), 3,000,000 shares authorized, 1,200,000 shares issued and outstanding		106,421			—			—			106,421

Total long-term debt		673,768			165,574			(152,831	)		686,511

Deferred tax liabilities		30,714			2,927			—			33,641
Other long-term liabilities		9,567			—			—			9,567

Total liabilities		814,753			232,858			(152,831	)		894,780

Commitments and contingencies
Stockholder’s equity (deficit):
Common stock, $0.01 par value; 1,000 shares authorized, issued and outstanding		—			—			—			—
Additional paid-in-capital		115,674			95,861			(95,861	)		115,674
Accumulated other comprehensive income (loss)		(24,555	)		85,873			1,332			62,650
Accumulated deficit		(102,004	)		(69,194	)		—			(171,198	)

Total stockholder’s equity (deficit)		(10,885	)		112,540			(94,529	)		7,126

Total liabilities and stockholder’s equity (deficit)	$	803,868		$	345,398		$	(247,360	)	$	901,906

F-39

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED BALANCE SHEET


	Successor end of 2005
							Intercompany
	Guarantor			Non-guarantor			eliminations			Consolidated
ASSETS

Current assets:
Cash and cash equivalents	$	479		$	7,742		$	—		$	8,221
Accounts receivable, net		48,238			56,831			—			105,069
Inventories		36,913			28,256			—			65,169
Deferred tax assets		5,394			—			—			5,394
Prepaid expenses and other current assets		7,586			1,188			—			8,774

Total current assets		98,610			94,017			—			192,627
Property, plant and equipment, net		187,048			97,940			—			284,988
Intangible assets		221,812			65,561			—			287,373
Goodwill		188,817			132,298			—			321,115
Other assets		345,064			7,941			(329,770	)		23,235

Total assets	$	1,041,351		$	397,757		$	(329,770	)	$	1,109,338


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Current maturities of long-term debt	$	1,596		$	1,562		$	—		$	3,158
Accounts payable		41,139			38,845			—			79,984
Accrued liabilities		44,844			11,927			—			56,771

Total current liabilities		87,579			52,334			—			139,913
Long-term debt, excluding current maturities		551,712			243,464			(234,058	)		561,118
Deferred tax liabilities		90,956			7,804			—			98,760
Other long-term liabilities		8,264			—			—			8,264

Total liabilities		738,511			303,602			(234,058	)		808,055


Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.01 par value; 2,000 shares authorized; 1,001 shares issued and outstanding		—			—			—			—
Class B common stock, $0.01 par value; 100 shares authorized; 71.32 shares issued and outstanding		—			—			—			—
Additional paid-in-capital		303,059			95,712			(95,712	)		303,059
Accumulated other comprehensive income (loss)		382			(1,374	)		—			(992	)
Accumulated deficit		(601	)		(183	)		—			(784	)

Total stockholders’ equity		302,840			94,155			(95,712	)		301,283

Total liabilities and stockholders’ equity	$	1,041,351		$	397,757		$	(329,770	)	$	1,109,338

F-40

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS


	Predecessor 2003
	Guarantor			Non-guarantor			Consolidated
Net sales	$	758,459		$	255,406		$	1,013,865
Cost of goods sold		653,367			198,211			851,578

Gross profit		105,092			57,195			162,287

Operating expenses:
Promotion and distribution		29,642			27,974			57,616
Selling, general and administrative		35,074			16,941			52,015
Amortization		4,229			760			4,989
Other operating expenses (income), net		(500	)		7,727			7,227

Income from operations		36,647			3,793			40,440
Interest expense, net		35,748			21,746			57,494
Debt extinguishments		4,438			—			4,438
Other expense (income), net		(1,328	)		172			(1,156	)

Loss before income taxes		(2,211	)		(18,125	)		(20,336	)
Income tax expense		23,340			1,699			25,039

Net loss		(25,551	)		(19,824	)		(45,375	)
Senior preferred stock dividends and accretion		(13,502	)		—			(13,502	)

Net loss available to common shares	$	(39,053	)	$	(19,824	)	$	(58,877	)


	Predecessor 2004
	Guarantor			Non-guarantor			Consolidated
Net sales	$	763,226		$	288,015		$	1,051,241
Cost of goods sold		667,231			228,960			896,191

Gross profit		95,995			59,055			155,050

Operating expenses:
Promotion and distribution		25,878			30,927			56,805
Selling, general and administrative		35,839			16,022			51,861
Amortization		3,487			826			4,313
Other operating expenses, net		17			6,961			6,978

Income from operations		30,774			4,319			35,093
Interest expense, net		47,830			25,011			72,841
Debt extinguishment		4,137			—			4,137
Other expense (income), net		(2,098	)		681			(1,417	)

Loss before income taxes		(19,095	)		(21,373	)		(40,468	)
Income tax expense		4,083			1,041			5,124

Net loss	$	(23,178	)	$	(22,414	)	$	(45,592	)

F-41

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS


				Predecessor
	Period January 2 through October 23, 2005
	Guarantor			Non-guarantor			Consolidated
Net sales	$	562,043		$	233,433		$	795,476
Cost of goods sold		469,339			184,973			654,312

Gross profit		92,704			48,460			141,164
Operating expenses:
Promotion and distribution		19,927			26,303			46,230
Selling, general and administrative		28,281			13,198			41,479
Amortization		2,744			675			3,419
Other operating expenses, net		26,573			2,123			28,696

Income from operations		15,179			6,161			21,340
Interest expense, net		40,948			20,988			61,936
Other expense (income), net		(1,361	)		609			(752	)

Loss before income taxes		(24,408	)		(15,436	)		(39,844	)
Income tax expense		3,392			702			4,094

Net loss	$	(27,800	)	$	(16,138	)	$	(43,938	)


				Successor
	Period October 24 through December 31, 2005
	Guarantor			Non-guarantor			Consolidated
Net sales	$	139,191		$	56,943		$	196,134
Cost of goods sold		116,993			45,215			162,208

Gross profit		22,198			11,728			33,926
Operating expenses:
Promotion and distribution		5,407			6,034			11,441
Selling, general and administrative		7,484			2,218			9,702
Amortization		1,496			852			2,348
Other operating expenses (income), net		(1,350	)		726			(624	)

Income from operations		9,161			1,898			11,059
Interest expense, net		9,147			1,990			11,137
Other income, net		(192	)		(216	)		(408	)

Income before income taxes		206			124			330
Income tax expense		807			307			1,114

Net loss	$	(601	)	$	(183	)	$	(784	)

F-42

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


	Predecessor 2003
				Non-
	Guarantor			guarantor			Consolidated
Cash flows from operating activities:
Net loss	$	(25,551	)	$	(19,824	)	$	(45,375	)
Items not requiring (providing) cash:
Depreciation and amortization		22,607			14,554			37,161
Deferred tax expense		23,340			304			23,644
Debt extinguishments		4,438			—			4,438
Asset impairments		—			7,727			7,727
Other non-cash charges (income), net		4,633			(715	)		3,918
Changes in current assets and liabilities		8,244			15,906			24,150

Net cash provided by operating activities		37,711			17,952			55,663

Cash flows from investing activities:
Capital expenditures		(15,653	)		(12,409	)		(28,062	)
Proceeds from sale of assets		1,150			228			1,378
Other, net		3,083			(6,584	)		(3,501	)

Net cash used in investing activities		(11,420	)		(18,765	)		(30,185	)

Cash flows from financing activities:
Net borrowings under revolving credit agreement		1,000			—			1,000
Proceeds from issuance of long-term debt		210,444			—			210,444
Repayments on long-term debt		(204,092	)		(4,163	)		(208,255	)
Payments for debt issuance costs		(7,761	)		—			(7,761	)

Net cash used in financing activities		(409	)		(4,163	)		(4,572	)


Effect of exchange rate changes on cash and cash equivalents		—			791			791

Increase (decrease) in cash and cash equivalents		25,882			(4,185	)		21,697

Cash and cash equivalents, beginning of year		57			7,539			7,596

Cash and cash equivalents, end of year	$	25,939		$	3,354		$	29,293

F-43

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


	Predecessor 2004
				Non-
	Guarantor			guarantor			Consolidated
Cash flows from operating activities:
Net loss	$	(23,178	)	$	(22,414	)	$	(45,592	)
Items not requiring (providing) cash:
Depreciation and amortization		23,422			16,934			40,356
Deferred tax expense		4,083			332			4,415
Debt extinguishments		4,137			—			4,137
Asset impairments		215			—			215
Other non-cash charges (income), net		20,427			(720	)		19,707
Changes in current assets and liabilities		(20,226	)		18,275			(1,951	)

Net cash provided by operating activities		8,880			12,407			21,287

Cash flows from investing activities:
Capital expenditures		(10,181	)		(8,675	)		(18,856	)
Proceeds from sale of assets		457			408			865
Other, net		273			(2,336	)		(2,063	)

Net cash used in investing activities		(9,451	)		(10,603	)		(20,054	)

Cash flows from financing activities:
Net repayments under revolving credit facility		(16,000	)		—			(16,000	)
Proceeds from issuance of long-term debt		195,000			13,078			208,078
Repayments on long-term debt		(171,024	)		(14,502	)		(185,526	)
Payments for debt issuance costs		(8,381	)		—			(8,381	)

Net cash used in financing activities		(405	)		(1,424	)		(1,829	)

Effect of exchange rate changes on cash and cash equivalents		—			150			150

Increase (decrease) in cash and cash equivalents		(976	)		530			(446	)
Cash and cash equivalents, beginning of year		25,939			3,354			29,293

Cash and cash equivalents, end of year	$	24,963		$	3,884		$	28,847

F-44

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


	Predecessor
	Period January 2 through October 23, 2005
				Non-
	Guarantor			guarantor			Consolidated
Cash flows from operating activities:
Net loss	$	(27,800	)	$	(16,138	)	$	(43,938	)
Items not requiring (providing) cash:
Depreciation and amortization		18,237			13,781			32,018
Deferred tax expense		3,392			102			3,494
Asset impairments		6,129			—			6,129
Other non-cash charges (income), net		18,888			22,613			41,501
Changes in current assets and liabilities		(4,927	)		(3,867	)		(8,794	)

Net cash provided by operating activities		13,919			16,491			30,410

Cash flows from investing activities:
Capital expenditures		(11,791	)		(5,436	)		(17,227	)
Proceeds from sale of assets		44			99			143
Other, net		2,568			(4,000	)		(1,432	)

Net cash used in investing activities		(9,179	)		(9,337	)		(18,516	)

Cash flows from financing activities:
Principal payments on long-term debt		(1,463	)		(1,184	)		(2,647	)
Payments for debt issuance costs		(1,857	)		—			(1,857	)

Net cash used in financing activities		(3,320	)		(1,184	)		(4,504	)

Effect of exchange rate changes on cash and cash equivalents		—			(531	)		(531	)

Increase in cash and cash equivalents		1,420			5,439			6,859
Cash and cash equivalents, beginning of period		24,963			3,884			28,847

Cash and cash equivalents, end of period	$	26,383		$	9,323		$	35,706

F-45

DOANE PET CARE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


				Successor
	Period October 24 through December 31, 2005
				Non-
	Guarantor			guarantor			Consolidated
Cash flows from operating activities:
Net loss	$	(601	)	$	(183	)	$	(784	)
Items not requiring (providing) cash:
Depreciation and amortization		6,656			3,228			9,884
Deferred tax expense		807			(579	)		228
Other non-cash charges (income), net		(73	)		2,199			2,126
Changes in current assets and liabilities		(1,115	)		(3,861	)		(4,976	)

Net cash provided by (used in) operating activities		5,674			804			6,478

Cash flows from investing activities:
Capital expenditures		(6,780	)		(2,098	)		(8,878	)
Proceeds from sale of assets		8			332			340
Other, net		(443	)		—			(443	)

Net cash used in investing activities		(7,215	)		(1,766	)		(8,981	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		310,824			—			310,824
Repayments on long-term debt		(471,408	)		(541	)		(471,949	)
Payments for debt issuance costs		(9,127	)		—			(9,127	)
Proceeds from issuance of common stock related to the Acquisition		298,339			—			298,339
Distribution to equity holders		(127,215	)		—			(127,215	)
Payments of Transaction costs		(25,776	)		—			(25,776	)

Net cash used in financing activities		(24,363	)		(541	)		(24,904	)

Effect of exchange rate changes on cash and cash equivalents		—			(78	)		(78	)

Decrease in cash and cash equivalents		(25,904	)		(1,581	)		(27,485	)
Cash and cash equivalents, beginning of period		26,383			9,323			35,706

Cash and cash equivalents, end of period	$	479		$	7,742		$	8,221

F-46

INDEX TO EXHIBITS


Exhibit
number		Description

3.1		Second Amended and Restated Certificate of Incorporation of Doane Pet Care Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (Reg No. 333-130739) filed on December 28, 2005)

3.2*		Bylaws of Doane Pet Care Company

4.1		Indenture for the 10 ⁵/₈% Senior Subordinated Notes Due 2015, dated as of October 24, 2005, among Doane Pet Care Company, Doane Management Corp., DPC Investment Corp. and Doane/Windy Hill Joint Venture L.L.C., as guarantors, and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

4.3		Indenture dated February 28, 2003 between Doane Pet Care Company and Wilmington, Trust Company (incorporated by reference to Exhibit 4.3 to Doane Pet Care Company’s Annual Report on Form 10-K for the year ended December 28, 2002).

10.1^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Douglas J. Cahill, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.2^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Philip K. Woodlief, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.3^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among David L. Horton, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.4^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Joseph J. Meyers, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.5^†		Amended and Restated Employment Agreement, dated as of October 24, 2005, among Kenneth H. Koch, Doane Pet Care Enterprises, Inc. and Doane Pet Care Company (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.6^†		Doane Pet Care Enterprises, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on October 27, 2005)


Exhibit
number		Description

10.7*		Supplemental Executive Retirement Plan dated as of March 27, 2006

10.8^†		Deferred Shares Agreement (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.9		Stockholders Agreement, dated as of October 24, 2005, among Doane Pet Care Enterprises, Inc., Ontario Teachers’ Pension Plan Board, Wilchester Investments Limited, Douglas J. Cahill and the other signatories thereto (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.10		Registration Rights Agreement, dated as of October 24, 2005, among Doane Pet Care Enterprises, Inc., Ontario Teachers’ Pension Plan Board, Wilchester Investments Limited, Douglas J. Cahill and the other signatories thereto (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

10.11		Voting Agreement, dated as of October 24, 2005, among Doane Pet Care Enterprises, Inc., Doane Pet Care Company and Wilchester Investments Limited, (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on October 27, 2005)

21.1*		List of Subsidiaries of Doane Pet Care Company

23.1*		Consent of KPMG LLP

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) / 15(d)-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) / 15(d)-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Filed herewith.

**		Not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

^†		Management contracts or compensatory plans or arrangements

EX-3.2 2 h34448exv3w2.htm BYLAWS exv3w2

Exhibit 3.2

DOANE PET CARE COMPANY

BY-LAWS

As Amended and Restated on February 10, 2006

Table of Contents


Section		Page
ARTICLE I

STOCKHOLDERS

Section 1.01	Annual Meetings		1

Section 1.02	Special Meetings		1

Section 1.03	Notice of Meetings; Waiver		1

Section 1.04	Quorum		2

Section 1.05	Voting		2

Section 1.06	Voting by Ballot		3

Section 1.07	Adjournment		3

Section 1.08	Proxies		3

Section 1.09	Organization; Procedure		3

Section 1.10	Consent of Stockholders in Lieu of Meeting		4

ARTICLE II

BOARD OF DIRECTORS

Section 2.01	General Powers		4

Section 2.02	Number and Term of Office		4

Section 2.03	Election of Directors		4

Section 2.04	Annual and Regular Meetings		5

Section 2.05	Special Meetings; Notice		5

Section 2.06	Quorum; Voting		5

Section 2.07	Adjournment		5

Section 2.08	Action Without a Meeting		5

Section 2.09	Regulations; Manner of Acting		6

Section 2.10	Action by Telephonic Communications		6

Section 2.11	Resignations		6

Section 2.12	Removal of Directors		6

Section 2.13	Vacancies and Newly Created Directorships		6

Section 2.14	Compensation		6

Section 2.15	Reliance on Accounts and Reports, etc.		6


Section		Page
ARTICLE III

EXECUTIVE COMMITTEE AND OTHER COMMITTEES

Section 3.01	How Constituted		7

Section 3.02	Powers		7

Section 3.03	Proceedings		8

Section 3.04	Quorum and Manner of Acting		8

Section 3.05	Action by Telephonic Communications		8

Section 3.06	Absent or Disqualified Members		9

Section 3.07	Resignations		9

Section 3.08	Removal		9

Section 3.09	Vacancies		9

ARTICLE IV

OFFICERS

Section 4.01	Number		9

Section 4.02	Election		9

Section 4.03	Salaries		9

Section 4.04	Removal and Resignation; Vacancies		9

Section 4.05	Authority and Duties of Officers		10

Section 4.06	The President		10

Section 4.07	The Vice President		10

Section 4.08	The Secretary		10

Section 4.09	The Treasurer		11

Section 4.10	Additional Officers		12

Section 4.11	Security		12

ARTICLE V

CAPITAL STOCK

Section 5.01	Certificates of Stock, Uncertificated Shares		12

Section 5.02	Signatures; Facsimile		12

Section 5.03	Lost, Stolen or Destroyed Certificates		13

Section 5.04	Transfer of Stock		13

Section 5.05	Record Date		13


Section		Page
Section 5.06	Registered Stockholders		14

Section 5.07	Transfer Agent and Registrar		14

ARTICLE VI

INDEMNIFICATION

Section 6.01	Nature of Indemnity		14

Section 6.02	Successful Defense		15

Section 6.03	Determination That Indemnification Is Proper		15

Section 6.04	Advance Payment of Expenses		16

Section 6.05	Procedure for Indemnification of Directors and Officers		16

Section 6.06	Survival; Preservation of Other Rights		16

Section 6.07	Insurance		17

Section 6.08	Severability		17

ARTICLE VII

OFFICES

Section 7.01	Registered Office		17

Section 7.02	Other Offices		17

ARTICLE VIII

GENERAL PROVISIONS

Section 8.01	Dividends		18

Section 8.02	Reserves		18

Section 8.03	Execution of Instruments		18

Section 8.04	Corporate Indebtedness		18

Section 8.05	Deposits		19

Section 8.06	Checks		19

Section 8.07	Sale, Transfer, etc. of Securities		19

Section 8.08	Voting as Stockholder		19

Section 8.09	Fiscal Year		19

Section 8.10	Seal		19

Section 8.11	Books and Records; Inspection		19

iii


Section		Page
ARTICLE IX

AMENDMENT OF BY-LAWS

Section 9.01	Amendment		20

ARTICLE X

CONSTRUCTION

Section 10.01	Construction		20

DOANE PET CARE COMPANY

BY-LAWS

As amended and restated February 10, 2006

ARTICLE I

STOCKHOLDERS

Section 1.01 Annual Meetings. Subject to Section 1.10 of these By-Laws, the annual meeting of the stockholders for the election of directors and for the transaction of such other business as properly may come before such meeting shall be held at such place, either within or without the State of Delaware, or, within the sole discretion of the Board of Directors, by remote electronic communication technologies, and at such date and hour as may be fixed from time to time by resolution of the Board of Directors and set forth in the notice or waiver of notice of the meeting.

Section 1.02 Special Meetings. Special meetings of the stockholders may be called at any time by the President (or, in the event of his or her absence or disability, by any Vice President), or by the Board of Directors. A special meeting shall be called by the President (or, in the event of his or her absence or disability, by any Vice President), or by the Secretary, immediately upon receipt of a written request therefor, in the case of a special meeting for the election or removal of directors, including for filling vacancies and newly created directorships, by stockholders holding in the aggregate not less than a majority of the outstanding shares of Class B common stock, par value $0.01 per share, of the Corporation (“Class B Shares”) at the time entitled to vote at such meeting, and in the case of all other special meetings, by stockholders holding in the aggregate not less than a majority of the outstanding shares of Class A common stock, par value $0.01 per share, of the Corporation at the time entitled to vote at such meeting. If such officers or the Board of Directors shall fail to call such meeting within twenty days after receipt of such request, any stockholder executing such request may call such meeting. Such special meetings of the stockholders shall be held at such places, within or without the State of Delaware, or, within the sole discretion of the Board of Directors, by remote electronic communication technologies, as shall be specified in the respective notices or waivers of notice thereof.

Section 1.03 Notice of Meetings; Waiver. The Secretary or any Assistant Secretary, if any, shall cause written notice of the place, if any, date and hour of each meeting of the stockholders, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which such meeting is called, to be given personally or by mail, not less than ten nor more than sixty days prior to the meeting, to each stockholder of record entitled to vote at such meeting. If a stockholder meeting is to be held via electronic communications and stockholders will take action at such meeting, the notice of such meeting must: (i) specify the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present and vote at such meeting; and (ii) provide the information required to access the stockholder list.

For notice given by electronic transmission to a stockholder to be effective, such stockholder must consent to the Corporation’s giving notice by that particular form of electronic transmission. A stockholder may revoke consent to receive notice by electronic transmission by written notice to the Corporation. A stockholder’s consent to notice by electronic transmission is automatically revoked if the Corporation is unable to deliver two consecutive electronic transmission notices and such inability becomes known to the Secretary, the transfer agent or other person responsible for giving notice.

Notices are deemed given (i) if delivered in person; (ii) if by mail, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the record of stockholders of the Corporation, or, if he or she shall have filed with the Secretary of the Corporation a written request that notices to him or her be mailed to some other address, then directed to him or her at such other address; (iii) if by facsimile, when faxed to a number where the stockholder has consented to receive notice; (iv) if by electronic mail, when mailed electronically to an electronic mail address at which the stockholder consented to receive such notice; (v) if by posting on an electronic network (such as a website or chatroom) together with a separate notice to the stockholder of such specific posting, upon the later to occur of (A) such posting or (B) the giving of the separate notice of such posting; or (vi) if by any other form of electronic communication, when directed to the stockholder in the manner consented to by the stockholder. Such further notice shall be given as may be required by law.

A written waiver of any notice of any annual or special meeting signed by the person entitled thereto, or a waiver by electronic transmission by the person entitled to notice, shall be deemed equivalent to notice, whether provided before of after the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in a waiver of notice. The attendance of any stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.

Section 1.04 Quorum. Except as otherwise required by law or by the Certificate of Incorporation, the presence in person or by proxy of the holders of record of a majority of the shares entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business at such meeting.

Section 1.05 Voting. If, pursuant to Section 5.05 of these By-Laws, a record date has been fixed, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share outstanding in his or her name on the books of the Corporation at the close of business on such record date. If no record date has been fixed, then every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one vote for each share of stock standing in his or her name on the books of the Corporation at the close of business on the day next preceding the day on which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law or by the Certificate of Incorporation or by these By-Laws, the vote of a majority of the shares represented in person or by proxy at any meeting at which a quorum is present shall be sufficient for the transaction of any business at such meeting.

Section 1.06 Voting by Ballot. No vote of the stockholders need be taken by written ballot, or by a ballot submitted by electronic transmission, unless otherwise required by law. Any vote which need not be taken by written ballot, or by a ballot submitted by electronic transmission, may be conducted in any manner approved by the meeting.

Section 1.07 Adjournment. If a quorum is not present at any meeting of the stockholders, the stockholders present in person or by proxy shall have the power to adjourn any such meeting from time to time until a quorum is present. Notice of any adjourned meeting of the stockholders of the Corporation need not be given if the place, if any, date and hour thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, are announced at the meeting at which the adjournment is taken, provided, however, that if the adjournment is for more than thirty days, or if after the adjournment a new record date for the adjourned meeting is fixed pursuant to Section 5.05 of these By-Laws, a notice of the adjourned meeting, conforming to the requirements of Section 1.03 of these By-Laws, shall be given to each stockholder of record entitled to vote at such meeting. At any adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted on the original date of the meeting.

Section 1.08 Proxies. Any stockholder entitled to vote at any meeting of the stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person or persons to vote at any such meeting and express such consent or dissent for him or her by proxy. A stockholder may authorize a valid proxy by executing a written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person designated as the holder of the proxy, a proxy solicitation firm or a like authorized agent. No such proxy shall be voted or acted upon after the expiration of three years from the date of such proxy, unless such proxy provides for a longer period. Every proxy shall be revocable at the pleasure of the stockholder executing it, except in those cases where applicable law provides that a proxy shall be irrevocable. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the Secretary. Proxies by telegram, cablegram or other electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

Section 1.09 Organization; Procedure. At every meeting of stockholders the presiding officer shall be the President or, in the event of his or her absence or disability, a presiding officer chosen by a majority of the stockholders present in person or by proxy. The Secretary, or in the event of his or her absence or disability, the Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary, an appointee of the presiding officer, shall

act as Secretary of the meeting. The order of business and all other matters of procedure at every meeting of stockholders may be determined by such presiding officer.

Section 1.10 Consent of Stockholders in Lieu of Meeting. To the fullest extent permitted by law, whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, such action may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted (but not less than the minimum number of votes otherwise prescribed by law) and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

ARTICLE II

BOARD OF DIRECTORS

Section 2.01 General Powers. Except as may otherwise be provided by law, by the Certificate of Incorporation or by these By-Laws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board of Directors may exercise all the powers of the Corporation.

Section 2.02 Number and Term of Office. The number of Directors constituting the entire Board of Directors shall be four (4), which number may be modified by Doane Pet Care Enterprises, Inc., pursuant to Section 3(a) of the Voting Agreement, dated October 24, 2005, by and among the Corporation and the other parties thereto (the “Voting Agreement”), by written notice to the Corporation, but in no event shall the number of Directors be less than three. Each director (whenever elected) shall hold office until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.

Section 2.03 Election of Directors. Except as otherwise provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be elected at each annual meeting by the holders of the Class B Shares (collectively, the “Class B Stockholders”). If the annual meeting for the election of Directors is not held on the date designated therefor, the Directors shall cause the

meeting to be held as soon thereafter as convenient. At each meeting of the Class B Stockholders for the election of Directors, provided a quorum is present, the Directors shall be elected by a plurality of the votes validly cast in such election.

Section 2.04 Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held as soon as possible following adjournment of the annual meeting of the stockholders at the place of such annual meeting of the stockholders. Notice of such annual meeting of the Board of Directors need not be given. The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or without the State of Delaware) and the date and hour of such meetings. Notice of regular meetings need not be given, provided, however, that if the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be mailed promptly, or sent by telegram, radio or cable, to each Director who shall not have been present at the meeting at which such action was taken, addressed to him or her at his or her usual place of business, or shall be delivered to him or her personally. Notice of such action need not be given to any Director who attends the first regular meeting after such action is taken without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting.

Section 2.05 Special Meetings; Notice. Special meetings of the Board of Directors shall be held whenever called by the President or, in the event of his or her absence or disability, by any Vice President, at such place (within or without the State of Delaware), date and hour as may be specified in the respective notices or waivers of notice of such meetings. Special meetings of the Board of Directors may be called on twenty-four hours’ notice, if notice is given to each Director personally or by telephone, facsimile, telegram or electronic transmission, or on five days’ notice, if notice is mailed to each Director, addressed to him or her at his or her usual place of business. Notice of any special meeting need not be given to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting, and any business may be transacted thereat.

Section 2.06 Quorum; Voting. At all meetings of the Board of Directors, the presence of a majority of the total authorized number of Directors shall constitute a quorum for the transaction of business. Except as otherwise required by law and except as provided in Section 3(a) of the Voting Agreement, the vote of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

Section 2.07 Adjournment. A majority of the Directors present, whether or not a quorum is present, may adjourn any meeting of the Board of Directors to another time or place. No notice need be given of any adjourned meeting unless the time and place of the adjourned meeting are not announced at the time of adjournment, in which case notice conforming to the requirements of Section 2.05 of these By-Laws shall be given to each Director.

Section 2.08 Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the

Board of Directors consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 2.09 Regulations; Manner of Acting. To the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws, the Board of Directors may adopt such rules and regulations for the conduct of meetings of the Board of Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may deem appropriate. The Directors shall act only as a Board, and the individual Directors shall have no power as such.

Section 2.10 Action by Telephonic Communications. Members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

Section 2.11 Resignations. Any Director may resign at any time by submitting an electronic transmission or by delivering a written notice of resignation, signed by such Director, to the President or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery.

Section 2.12 Removal of Directors. Any Director may be removed at any time at a special meeting, either for or without cause, upon the affirmative vote of a majority of the Class B Stockholders entitled to vote for the election of such Director. Any vacancy in the Board of Directors caused by any such removal may be filled at such meeting (or in the written instrument effecting such removal, if such removal was effected by consent without a meeting) by the Class B Stockholders entitled to vote for the election of the Director so removed.

Section 2.13 Vacancies and Newly Created Directorships. If any vacancies shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue to act, and such vacancies and newly created directorships shall be filled as promptly as practicable by a vote of the majority of the Class B Stockholders at a special meeting. A Director elected to fill a vacancy or a newly created directorship shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.

Section 2.14 Compensation. The amount, if any, which each Director shall be entitled to receive as compensation for his or her services as such shall be fixed from time to time by resolution of the Board of Directors.

Section 2.15 Reliance on Accounts and Reports, etc. A Director, or a member of any Committee designated by the Board of Directors shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or Committees designated by the Board of Directors, or by

any other person as to the matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

ARTICLE III

EXECUTIVE COMMITTEE AND OTHER COMMITTEES

Section 3.01 How Constituted. The Board of Directors may designate one or more Committees, including an Executive Committee, each such Committee to consist of such number of Directors as from time to time may be fixed by the Board of Directors. The Board of Directors may designate one or more Directors as alternate members of any such Committee, who may replace any absent or disqualified member or members at any meeting of such Committee. Thereafter, members (and alternate members, if any) of each such Committee may be designated at the annual meeting of the Board of Directors. Any such Committee may be abolished or re-designated from time to time by the Board of Directors. Each member (and each alternate member) of any such Committee (whether designated at an annual meeting of the Board of Directors or to fill a vacancy or otherwise) shall hold office until his or her successor shall have been designated or until he or she shall cease to be a Director, or until his or her earlier death, resignation or removal.

Section 3.02 Powers. During the intervals between the meetings of the Board of Directors, the Executive Committee, except as otherwise provided in this section, shall have and may exercise all the powers and authority of the Board of Directors in the management of the property, affairs and business of the Corporation, including the power to declare dividends and to authorize the issuance of stock. Each such other Committee, except as otherwise provided in this section, shall have and may exercise such powers of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors. Neither the Executive Committee nor any such other Committee shall have the power or authority:

(a) to amend the Certificate of Incorporation (except that a Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series);

(b) to adopt an agreement of merger or consolidation;

(c) to recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets;

(d) to recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution;

(e) to amend the By-Laws of the Corporation;

(f) to remove any President, Vice President, Assistant Secretary or Assistant Treasurer of the Corporation;

(g) to authorize the borrowing of funds, other than under existing facilities, that is material to the capital structure of the Corporation;

(h) to authorize any new compensation or benefit program;

(i) to appoint or discharge the Corporation’s independent public accountants;

(j) to authorize the annual operating plan, annual capital expenditure plan and strategic plan; or

(k) to abolish or usurp the authority of the Board of Directors.

The Executive Committee shall have, and any such other Committee may be granted by the Board of Directors, power to authorize the seal of the Corporation to be affixed to any or all papers which may require it.

Section 3.03 Proceedings. Each such Committee may fix its own rules of procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time. Each such Committee shall keep minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following any such proceedings.

Section 3.04 Quorum and Manner of Acting. Except as may be otherwise provided in the resolution creating such Committee, at all meetings of any Committee the presence of members (or alternate members) constituting a majority of the total authorized membership of such Committee shall constitute a quorum for the transaction of business. The act of the majority of the members present at any meeting at which a quorum is present shall be the act of such Committee. Any action required or permitted to be taken at any meeting of any such Committee may be taken without a meeting, if all members of such Committee shall consent to such action in writing or by electronic transmission, and such writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. The members of any such Committee shall act only as a Committee, and the individual members of such Committee shall have no power as such.

Section 3.05 Action by Telephonic Communications. Members of any Committee designated by the Board of Directors may participate in a meeting of such Committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.

Section 3.06 Absent or Disqualified Members. In the absence or disqualification of a member of any Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Section 3.07 Resignations. Any member (and any alternate member) of any Committee may resign at any time by delivering a written notice of resignation, signed by such member, to the President. Unless otherwise specified therein, such resignation shall take effect upon delivery.

Section 3.08 Removal. Any member (and any alternate member) of any Committee may be removed from his or her position as a member (or alternate member, as the case may be) of such Committee at any time, either for or without cause, by resolution adopted by a majority of the whole Board of Directors.

Section 3.09 Vacancies. If any vacancy shall occur in any Committee, by reason of disqualification, death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board of Directors.

ARTICLE IV

OFFICERS

Section 4.01 Number. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice Presidents and a Secretary. The Board of Directors also may elect a Treasurer, one or more Assistant Secretaries and Assistant Treasurers in such numbers as the Board of Directors may determine. Any number of offices may be held by the same person. No officer need be a Director of the Corporation.

Section 4.02 Election. Unless otherwise determined by the Board of Directors, the officers of the Corporation shall be elected by the Board of Directors at the annual meeting of the Board of Directors, and shall be elected to hold office until the next succeeding annual meeting of the Board of Directors. In the event of the failure to elect officers at such annual meeting, officers may be elected at any regular or special meeting of the Board of Directors. Each officer shall hold office until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal.

Section 4.03 Salaries. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.

Section 4.04 Removal and Resignation; Vacancies. Any officer may be removed for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering notice of resignation, either in writing signed by such officer or by electronic transmission, to the Board of Directors or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the

Corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors.

Section 4.05 Authority and Duties of Officers. The officers of the Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these By-Laws, except that in any event each officer shall exercise such powers and perform such duties as may be required by law.

Section 4.06 The President. The President shall preside at all meetings of the stockholders and directors at which he or she is present, shall be the chief executive officer and the chief operating officer of the Corporation, shall have general control and supervision of the policies and operations of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He or she shall manage and administer the Corporation’s business and affairs and shall also perform all duties and exercise all powers usually pertaining to the office of a chief executive officer and a chief operating officer of a corporation. He or she shall have the authority to sign, in the name and on behalf of the Corporation, checks, orders, contracts, leases, notes, drafts and other documents and instruments in connection with the business of the Corporation, and together with the Secretary or an Assistant Secretary, conveyances of real estate and other documents and instruments to which the seal of the Corporation is affixed. He or she shall have the authority to cause the employment or appointment of such employees and agents of the Corporation as the conduct of the business of the Corporation may require, to fix their compensation, and to remove or suspend any employee or agent elected or appointed by the President or the Board of Directors. The President shall perform such other duties and have such other powers as the Board of Directors or the Chairman may from time to time prescribe.

Section 4.07 The Vice President. Each Vice President shall perform such duties and exercise such powers as may be assigned to him or her from time to time by the President. In the absence of the President, the duties of the President shall be performed and his or her powers may be exercised by such Vice President as shall be designated by the President, or failing such designation, such duties shall be performed and such powers may be exercised by each Vice President in the order of their earliest election to that office; subject in any case to review and superseding action by the President.

Section 4.08 The Secretary. The Secretary shall have the following powers and duties:

(a) He or she shall keep or cause to be kept a record of all the proceedings of the meetings of the stockholders and of the Board of Directors in books provided for that purpose.

(b) He or she shall cause all notices to be duly given in accordance with the provisions of these By-Laws and as required by law.

(c) Whenever any Committee shall be appointed pursuant to a resolution of the Board of Directors, he or she shall furnish a copy of such resolution to the members of such Committee.

(d) He or she shall be the custodian of the records and of the seal of the Corporation and cause such seal (or a facsimile thereof) to be affixed to all certificates representing shares of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized in accordance with these By-Laws, and when so affixed he or she may attest the same.

(e) He or she shall properly maintain and file all books, reports, statements, certificates and all other documents and records required by law, the Certificate of Incorporation, these By-Laws or the Voting Agreement.

(f) He or she shall have charge of the stock books and ledgers of the Corporation and shall cause the stock and transfer books to be kept in such manner as to show at any time the number of shares of stock of the Corporation of each class issued and outstanding, the names (alphabetically arranged) and the addresses of the holders of record of such shares, the number of shares held by each holder and the date as of which each became such holder of record.

(g) He or she shall sign (unless the Treasurer, an Assistant Treasurer or an Assistant Secretary, if any, shall have signed) certificates representing shares of the Corporation the issuance of which shall have been authorized by the Board of Directors.

(h) He or she shall perform, in general, all duties incident to the office of secretary and such other duties as may be specified in these By-Laws or as may be assigned to him or her from time to time by the Board of Directors, or the President.

Section 4.09 The Treasurer. The Treasurer, if appointed, shall have the following powers and duties:

(a) He or she shall have charge and supervision over and be responsible for the moneys, securities, receipts and disbursements of the Corporation, and shall keep or cause to be kept full and accurate records of all receipts of the Corporation.

(b) He or she shall cause the moneys and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected in accordance with Section 8.05 of these By-Laws.

(c) He or she shall cause the moneys of the Corporation to be disbursed by checks or drafts (signed as provided in Section 8.06 of these By-Laws) upon the authorized depositaries of the Corporation and cause to be taken and preserved proper vouchers for all moneys disbursed.

(d) He or she shall render to the Board of Directors or the President, whenever requested, a statement of the financial condition of the Corporation and of all his or her transactions as Treasurer, and render a full financial report at the annual meeting of the stockholders, if called upon to do so.

(e) He or she shall be empowered from time to time to require from all officers or agents of the Corporation reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation.

(f) He or she may sign (unless the Secretary, an Assistant Treasurer or an Assistant Secretary, if any, shall have signed) certificates representing stock of the Corporation the issuance of which shall have been authorized by the Board of Directors.

(g) He or she shall perform, in general, all duties incident to the office of treasurer and such other duties as may be specified in these By-Laws or as may be assigned to him or her from time to time by the Board of Directors, or the President.

Section 4.10 Additional Officers. The Board of Directors may appoint such other officers and agents as it may deem appropriate, and such other officers and agents shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board of Directors. The Board of Directors from time to time may delegate to any officer or agent the power to appoint subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Any such officer or agent may remove any such subordinate officer or agent appointed by him or her, for or without cause.

Section 4.11 Security. The Board of Directors may require any officer, agent or employee of the Corporation to provide security for the faithful performance of his or her duties, in such amount and of such character as may be determined from time to time by the Board of Directors.

ARTICLE V

CAPITAL STOCK

Section 5.01 Certificates of Stock, Uncertificated Shares. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation, by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, representing the number of shares registered in certificate form. Such certificate shall be in such form as the Board of Directors may determine, to the extent consistent with applicable law, the Certificate of Incorporation, these By-Laws and the Voting Agreement.

Section 5.02 Signatures; Facsimile. All signatures on the certificate referred to in Section 5.01 of these By-Laws may be in facsimile, engraved or printed form, to the extent permitted by law. In case any officer, transfer agent or registrar who has signed, or whose

facsimile, engraved or printed signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

Section 5.03 Lost, Stolen or Destroyed Certificates. The Board of Directors may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon delivery to the Board of Directors of an affidavit of the owner or owners of such certificate, setting forth such allegation. The Board of Directors may require the owner of such lost, stolen or destroyed certificate, or his or her legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

Section 5.04 Transfer of Stock. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of the State of Delaware. Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.

Section 5.05 Record Date. In order to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than sixty nor less than ten days before the date of such meeting. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s

registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights of the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 5.06 Registered Stockholders. Prior to due surrender of a certificate for registration of transfer, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be transferred, both the transferor and transferee request the Corporation to do so.

Section 5.07 Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or registrars.

ARTICLE VI

INDEMNIFICATION

Section 6.01 Nature of Indemnity. The Corporation shall indemnify, to the full extent permitted by the General Corporation Law of the State of Delaware, as amended from time to time, or other applicable law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer, of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, and may indemnify any person who was or is a party or is threatened to be made a party to such an action, suit or proceeding by reason of the fact that he or she is or was or has agreed to become an employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees),

judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding had no reasonable cause to believe his or her conduct was unlawful; except that in the case of an action or suit by or in the right of the Corporation to procure a judgment in its favor (1) such indemnification shall be limited to expenses (including attorneys’ fees) actually and reasonably incurred by such person in the defense or settlement of such action or suit, and (2) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Notwithstanding the foregoing, but subject to Section 6.05 of these By-Laws, the Corporation shall not be obligated to indemnify a director or officer of the Corporation in respect of a Proceeding (or part thereof) instituted by such director or officer, unless such Proceeding (or part thereof) has been authorized by the Board of Directors.

The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

Section 6.02 Successful Defense. To the extent that a present or former director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 6.01 of these By-Laws or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

Section 6.03 Determination That Indemnification Is Proper. Any indemnification of a present or former director or officer of the Corporation under Section 6.01 of these By-Laws (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of such person is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws. Any indemnification of a present or former employee or agent of the Corporation under Section 6.01 of these By-Laws (unless ordered by a court) may be made by the Corporation upon a determination that indemnification of the employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws. Any such determination shall be made, with respect to a person who is a director or officer at the time of such determination (1) by a majority vote of the Directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are

no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.

Section 6.04 Advance Payment of Expenses. Expenses (including attorneys’ fees) incurred by a present director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate. The Corporation, or in respect of a present director or officer the Board of Directors, may authorize the Corporation’s counsel to represent such present or former director, officer, employee or agent in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding.

Section 6.05 Procedure for Indemnification of Directors and Officers. Any indemnification of a director, officer, employee or agent of the Corporation under Sections 6.01 and 6.02 of these By-Laws, or advance of costs, charges and expenses to such person under Section 6.04 of these By-Laws, shall be made promptly, and in any event within thirty days, upon the written request of such person. If a determination by the Corporation that such person is entitled to indemnification pursuant to this Article is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within thirty days, the right to indemnification or advances as granted by this Article shall be enforceable by such person in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of these By-Laws where the required undertaking, if any, has been received by or tendered to the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of these By-Laws, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors or any committee thereof, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of these By-Laws, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors or any committee thereof, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 6.06 Survival; Preservation of Other Rights. The foregoing indemnification provisions shall be deemed to be a contract between the Corporation and each director, officer, employee and agent who serves in any such capacity at any time while these provisions as well as the relevant provisions of the Delaware Corporation Law are in effect and any repeal or

modification thereof shall not affect any right or obligation then existing with respect to any state of facts then or previously existing or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such a “contract right” may not be modified retroactively without the consent of such director, officer, employee or agent.

The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 6.07 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or on his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article, provided that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the entire Board of Directors.

Section 6.08 Severability. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director or officer and may indemnify each employee or agent of the Corporation as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE VII

OFFICES

Section 7.01 Registered Office. The registered office of the Corporation in the State of Delaware shall be located at Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle.

Section 7.02 Other Offices. The Corporation may maintain offices or places of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE VIII

GENERAL PROVISIONS

Section 8.01 Dividends. Subject to any applicable provisions of law and the Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors and any such dividend may be paid in cash, property, or shares of the Corporation’s Capital Stock.

A member of the Board of Directors, or a member of any Committee designated by the Board of Directors shall be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or Committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid.

Section 8.02 Reserves. There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may similarly modify or abolish any such reserve.

Section 8.03 Execution of Instruments. The President, any Vice President or the Secretary may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. The Board of Directors or the President may authorize any other officer or agent to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation. Any such authorization must be in writing or by electronic transmission and may be general or limited to specific contracts or instruments.

Section 8.04 Corporate Indebtedness. No loan shall be contracted on behalf of the Corporation, and no evidence of indebtedness shall be issued in its name, unless authorized by the Board of Directors or the President. Such authorization may be general or confined to specific instances. Loans so authorized may be effected at any time for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual. All bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans shall be made, executed and delivered as the Board of Directors or the President shall authorize. When so authorized by the Board of Directors or the President, any part of or all the properties, including contract rights, assets, business or good will of the Corporation, whether then owned or thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or assigned in trust as security for the payment of such bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation, and of the interest thereon, by instruments executed and delivered in the name of the Corporation..

Section 8.05 Deposits. Any funds of the Corporation may be deposited from time to time in such banks, trust companies or other depositaries as may be determined by the Board of Directors or the President, or by such officers or agents as may be authorized by the Board of Directors or the President to make such determination.

Section 8.06 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as the Board of Directors or the President from time to time may determine.

Section 8.07 Sale, Transfer, etc. of Securities. To the extent authorized by the Board of Directors or by the President, any Vice President, the Secretary or any other officers designated by the Board of Directors or the President may sell, transfer, endorse, and assign any shares of stock, bonds or other securities owned by or held in the name of the Corporation, and may make, execute and deliver in the name of the Corporation, under its corporate seal, any instruments that may be appropriate to effect any such sale, transfer, endorsement or assignment in accordance with the Voting Agreement.

Section 8.08 Voting as Stockholder. Unless otherwise determined by resolution of the Board of Directors, the President or any Vice President shall have full power and authority on behalf of the Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other rights, powers and privileges incident to the ownership of such stock. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons.

Section 8.09 Fiscal Year. The fiscal year of the Corporation shall commence on the first day of January of each year (except for the Corporation’s first fiscal year which shall commence on the date of incorporation) and shall terminate in each case on December 31.

Section 8.10 Seal. The seal of the Corporation shall be circular in form and shall contain the name of the Corporation, the year of its incorporation and the words “Corporate Seal” and “Delaware”. The form of such seal shall be subject to alteration by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or reproduced, or may be used in any other lawful manner.

Section 8.11 Books and Records; Inspection. Except to the extent otherwise required by law, the books and records of the Corporation shall be kept at such place or places within or without the State of Delaware as may be determined from time to time by the Board of Directors.

ARTICLE IX

AMENDMENT OF BY-LAWS

Section 9.01 Amendment. These By-Laws may be amended, altered or repealed:

(a) by resolution adopted by a majority of the Board of Directors at any special or regular meeting of the Board if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting; or

(b) at any regular or special meeting of the stockholders if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting.

ARTICLE X

CONSTRUCTION

Section 10.01 Construction. In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of the Certificate of Incorporation of the Corporation as in effect from time to time, the provisions of such Certificate of Incorporation shall be controlling.

EX-10.7 3 h34448exv10w7.htm SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN exv10w7

Exhibit 10.7

DOANE PET CARE COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective March 27, 2006

DOANE PET CARE COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS


			Page
FOREWORD			i

ARTICLE I		DEFINITIONS	1

	1.1	Actuarial Equivalent	1
	1.2	Affiliate	1
	1.3	Appropriate Form	1
	1.4	Basic Plan	1
	1.5	Beneficiary	2
	1.6	Board of Directors	2
	1.7	Change of Control	2
	1.8	Code	3
	1.9	Company	3
	1.10	Compensation	3
	1.11	Disability	3
	1.12	Earliest Retirement Date	4
	1.13	Early Retirement Date	4
	1.14	Effective Date	4
	1.15	Employee	4
	1.16	Employer	4
	1.17	ERISA	4
	1.18	Final Average Compensation	5
	1.19	Hypothetical Contribution Amount	5
	1.20	Key Employee	5
	1.21	Normal Retirement Date	6

DOANE PET CARE COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS


			Page
	1.22	Parent	6
	1.23	Participant	6
	1.24	Plan	6
	1.25	Plan Administrator	6
	1.26	Plan Year	6
	1.27	Primary Insurance Amount	6
	1.28	Separation from Service	7
	1.29	Service	7
	1.30	Social Security Act	7

ARTICLE II		PARTICIPATION	9
	2.1	Designation to Participate	9
	2.2	Continuation of Participation	9
	2.3	Adopting Entities	9

ARTICLE III		RETIREMENT BENEFITS	11
	3.1	Normal Retirement Benefit	11
	3.2	Early Retirement Benefit	12
	3.3	Vested Retirement Benefit	13
	3.4	Disability Retirement Benefit	14
	3.5	Benefits Upon Change of Control	15

ARTICLE IV		DEATH BENEFITS	18
	4.1	Pre-Retirement Death Benefits	18

ARTICLE V		PAYMENT OF RETIREMENT BENEFITS	21
	5.1	Payment of Benefits	21
	5.2	Automatic Form of Payment	21

DOANE PET CARE COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS


			Page
	5.3	Optional Forms of Payment	21

ARTICLE VI		ADMINISTRATION OF PLAN	25
	6.1	Plan Administrator	25
	6.2	Powers and Duties	25
	6.3	Rules and Regulations of the Plan Administrator	26
	6.4	Claims Procedure	26

ARTICLE VII		GENERAL MATTERS	31
	7.1	Benefits from General Assets	31
	7.2	No Assignment	31
	7.3	Expenses of Plan	32
	7.4	Amendment or Termination	32
	7.5	Limitation on Benefits and Payments	32
	7.6	Time of Payment Obligations	33
	7.7	Limitation of Liability	33
	7.8	Agent for Service of Process	34
	7.9	Delivery of Elections to Plan Administrator	34
	7.10	Delivery of Notice to Participants	34
	7.11	No Enlargement of Employee Rights	34
	7.12	Tax Withholding	35
	7.13	Incapacity of Recipient	35
	7.14	Unclaimed Benefit	35

ARTICLE VIII		CONSTRUCTION OF THE PLAN	37
	8.1	Construction of the Plan	37
	8.2	Headings	37

DOANE PET CARE COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

TABLE OF CONTENTS


			Page
	8.3	Separability	37
	8.4	Counterparts	37

APPENDIX A		COMPENSATION (OTHER THAN PERFORMANCE BONUSES) OF CERTAIN PARTICIPANTS AS IN EFFECT IMMEDIATELY PRECEDING THE EFFECTIVE DATE	39

APPENDIX B		REDUCTION FACTORS UNDER SECTION 3.2(b)	40

DOANE PET CARE COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

FOREWORD

Doane Pet Care Company adopted the Doane Pet Care Company Supplemental Executive Retirement Plan (the “Plan”) for the benefit of certain of its executives, effective as of March 27, 2006.

The Plan is intended to enable the Employer (as hereinafter defined) to attract and retain highly qualified executives and to encourage those executives to devote their full-time best efforts to the Employer by providing to them supplemental retirement income in consideration of those efforts. The Plan is intended to replace the individual Non-Qualified Salary Continuation Agreements in effect for certain executives immediately prior to the Effective Date (as hereinafter defined) of the Plan.

The Plan is intended to constitute an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees for purposes of the Employee Retirement Income Security Act of 1974.

ARTICLE I

DEFINITIONS

Where the following words and phrases appear in the Plan, they shall have the respective meanings as set forth below unless the context clearly indicates the contrary.

1.1		“Actuarial Equivalent” means a benefit of equivalent value when computed on the basis of interest at 6% per annum and the RP-2000 Mortality Table. Notwithstanding the foregoing, solely for purposes of determining the benefit payable pursuant to Section 3.5, the Actuarial Equivalent present value shall be computed on the basis of interest at the average annual rate of interest on 30-year Treasury securities for the second calendar month preceding the month in which a Change of Control occurs and the RP-2000 Mortality Table.

1.2		“Affiliate” means, with respect to a person (as defined in Section 7701(a)(1) of the Code), any other person with whom the person would be considered a single employer under Section 414(b) of the Code (employees of controlled group of corporations), and any other person with whom the person would be considered a single employer under Section 414(c) of the Code (employees of partnerships, proprietorships, etc., which are under common control).

1.3		“Appropriate Form” means the written form provided or prescribed by the Plan Administrator for the particular purpose.

1.4		“Basic Plan” means the Doane Pet Care Retirement Savings Plan.

1.5		“Beneficiary” means the person, persons or entity designated by the Participant to receive benefits in the event of the Participant’s death; provided, however,

		that for purposes of Sections 4.1(b) and 5.3(a)(i), a Participant may designate only one person as the Beneficiary to receive the benefits under such Sections and may not designate an entity as the Beneficiary under such Sections. In the absence of any effective designation, a Participant’s Beneficiary shall be the Participant’s surviving legal spouse. If such spouse dies before receiving payment to which he or she is entitled hereunder, then payment shall be made to such person or persons, including his or her estate, as he or she may designate in the last Beneficiary designation received by the Plan Administrator from such spouse prior to his or her death. If the Participant is not survived by a legal spouse, or if such spouse shall fail to so appoint, the said payment shall be made to the then living children of the Participant, if any, in equal shares. If there are no surviving children, the payment will be made to the estate of the later to die of the Participant and (if any) his or her legal spouse.

1.6		“Board of Directors” means the Board of Directors of the Company.

1.7		“Change of Control” means, with respect to Parent, a change in the ownership or effective control of Parent or in the ownership of a substantial portion of Parent’s assets, within the meaning of Code Section 409A(a)(2)(A)(v) (and applicable administrative guidance thereunder). With respect to an Employer other than Parent, the Employer shall be deemed to have undergone a “Change of Control” in the event that the Employer ceases to be an Affiliate of Parent, provided that the transaction or series of transactions that resulted in such cessation constitutes a change in the ownership or effective control of the Employer or a majority shareholder of the Employer (or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, with the chain ending at the Employer), within the meaning of Section 409A(a)(2)(A)(v) of the Code (and applicable administrative guidance thereunder). In the case of a non-corporate Employer, the preceding sentence shall be applied by analogy to such non-corporate

		Employer in the manner prescribed in applicable administrative guidance under Section 409A of the Code.

1.8		“Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference to a specific provision of the Code shall include such provision, any valid regulation or ruling promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

1.9		“Company” means Doane Pet Care Company and any successor thereto by merger, purchase, reorganization or otherwise.

1.10		“Compensation” means for each Plan Year (including periods that would be Plan Years but for the fact that they occurred prior to the Effective Date) the base salary plus any performance bonuses earned under the Employer’s Annual Bonus Plan (or any successor annual performance bonus plan) paid by the Employer to or for the benefit of a Participant for services rendered or labor performed. A Participant’s base salary and performance bonuses shall be determined before any reductions in compensation made pursuant to any salary reduction agreement under (a) Section 125, 132(f)(4), 401(k) or 402(h)(1)(B) of the Code or (b) any nonqualified deferred compensation plan maintained by the Employer.

1.11		“Disability” means a Participant’s physical or mental condition for which the Participant qualifies for permanent disability benefits under the Company’s or other Employer’s long-term disability plan for active employees, or, if a Participant does not participate in such a plan, a physical or mental condition for which the Participant would have qualified for permanent disability benefits under such a plan had the Participant been a participant in such a plan, as determined in the sole discretion of the Plan Administrator. If the Company or

		other Employer does not sponsor such a plan, or discontinues sponsoring such a plan, Disability shall be defined as any physical or mental condition resulting from bodily injury or disease occurring after the Effective Date that (a) during the first 24 months of such condition prevents the Participant from performing substantially all the work of his or her regular occupation, and (b) thereafter, wholly prevents the Participant from engaging in any gainful occupation for which he or she may become reasonably fitted by reason of his or her education, training or experience. The Plan Administrator will apply the provisions of this Section 1.11 in a consistent and uniform manner.

1.12		“Earliest Retirement Date” has the meaning contained in Section 4.1(b)(i).

1.13		“Early Retirement Date” means the first day of the month coinciding with or next following the date on which the Participant attains at least age 55 and completes at least 5 years of Service, but before the Participant’s Normal Retirement Date.

1.14		“Effective Date” means March 27, 2006.

1.15		“Employee” means an employee of the Employer on whose behalf benefits are payable under the Basic Plan.

1.16		“Employer” means the Company and any other adopting entity that adopts the Plan pursuant to the provisions of Section 2.3.

1.17		“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a specific provision of ERISA shall include such provision, any valid regulation or ruling promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

1.18		“Final Average Compensation” means the annual average of the Participant’s Compensation during the period of five full consecutive Plan Years (including periods that would be Plan Years but for the fact that they occurred prior to the Effective Date) that produces the highest such average, or during the actual number of such full consecutive Plan Years (including periods that would be Plan Years but for the fact that they occurred prior to the Effective Date) if less than five.

1.19		“Hypothetical Contribution Amount” means the aggregate of the individual amounts deemed to be contributed for each plan year under the Basic Plan that the Participant is eligible to participate thereunder (whether before or after the Effective Date). For each such plan year, the amount deemed to be contributed shall be the maximum permitted amount of Employer matching contributions under the Basic Plan for such plan year, determined based on the assumption that the Participant made the maximum permitted amount of employee contributions (including salary deferrals) under the Basic Plan for such plan year. For the plan year in which the Participant is first eligible to participate in the Basic Plan and the plan year in which the Participant incurs a Separation from Service, the amount deemed to be contributed will be prorated based on the number of full calendar months while such Participant is eligible to participate in the Basic Plan divided by 12. The amount deemed to be contributed for each plan year of the Basic Plan shall be assumed to have been made on the first day of such plan year with interest credited at a rate of 6% per annum.

1.20		“Key Employee” means a key employee within the meaning of Section 416(i) of the Code, without regard to Section 416(i)(5) thereof, provided that the capital stock of the Company or any Affiliate of the Company is publicly traded on an established securities market or otherwise.

1.21		“Normal Retirement Date” means the first day of the month coinciding with or next following the date on which a Participant attains age 65.

1.22		“Parent” means Doane Pet Care Enterprises, Inc.

1.23		“Participant” means an Employee who has been designated for participation in the Plan pursuant to Section 2.1.

1.24		“Plan” means the Doane Pet Care Company Supplemental Executive Retirement Plan, as set forth herein and as may be amended from time to time.

1.25		“Plan Administrator” means the person, persons or committee designated by the Board of Directors to administer and supervise the Plan in accordance with Section 6.1. In the absence of any such designation, the Company shall be the Plan Administrator.

1.26		“Plan Year” means the twelve consecutive month period beginning each January 1 and ending December 31.

1.27		“Primary Insurance Amount” means the monthly amount of a Participant’s “old-age insurance benefit”, as defined in Section 402 of the federal Social Security Act in effect on the date of the Participant’s Separation from Service, payable on the later of the Participant’s Normal Retirement Date or Separation from Service, whether or not the Participant actually applies for and receives such amount for any month. The Primary Insurance Amount shall be determined by assuming that the Participant will receive Compensation in the amount applicable during the Plan Year in which such Separation from Service occurs over a further period of employment, if any, extending to his or her Normal Retirement Date. The Primary Insurance Amount shall be determined on the

		basis of the actual Compensation paid to the Participant by the Employer during all periods of employment with the Employer during which the Participant was covered by the Social Security Act. With respect to years before the Participant’s commencement of service with the Employer, it will be assumed that the Participant received compensation for such service in an amount computed by projecting backwards the actual Compensation paid to the Participant by the Employer during the first full year of employment with the Employer, utilizing relative rates that approximate the national average wages used for indexing purposes under the Social Security Act from the determination date to the Participant’s twenty-first birthday, subject to the Participant’s furnishing evidence of his or her actual past compensation for such years treated as wages under the Social Security Act. For any Participant for whom the Primary Insurance Amount cannot be ascertained as herein provided, said amount shall be the amount that the Plan Administrator shall reasonably determine.

1.28		“Separation from Service” means a Participant’s separation from service with the Employer and its Affiliates within the meaning of Section 409A(a)(2)(A)(i) of the Code (and applicable administrative guidance thereunder).

1.29		“Service” means the total of all consecutive 12-month periods of the Participant’s employment with the Employer (whether before or after the Effective Date), plus 1/12 fractions thereof for each additional completed month of such employment.

1.30		“Social Security Act” means the United States Social Security Act, as amended from time to time. Reference to a specific provision of the Social Security Act shall include such provision, any valid regulation or ruling promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

ARTICLE II

PARTICIPATION

2.1		Designation to Participate

		Upon the designation of the Employer, and subject to the approval of the Board of Directors, Employees may become Participants as of the date designated by the Employer.

2.2		Continuation of Participation

		An Employee who has become a Participant shall remain a Participant as long as benefits are payable to or with respect to such Participant under the Plan.

2.3		Adopting Entities

		It is contemplated that other entities may adopt the Plan and thereby become an Employer. Any such entity, whether or not presently existing, may become a party hereto by appropriate action of its officers and upon approval of the Board of Directors, but without the need for approval of such entity’s board of directors (or noncorporate counterpart) or of the Plan Administrator; provided, however, that such entity must be an Affiliate of Parent. The provisions of the Plan shall apply separately and equally to each Employer and its employees in the same manner as is expressly provided for the Company and its employees, except that the power to amend or terminate the Plan and to approve the designation of Employees as Participants shall be exercised by the Board of Directors alone. In determining the period of Service of any Participant employed by an adopting Employer, the Board of Directors may determine the extent, if any, to which credit is granted for service with such Employer or its

predecessors or affiliated companies prior to the time such Employer adopts the Plan. Any Employer may, by appropriate action of its officers and upon approval of the Board of Directors, but without the need for approval of such Employer’s board of directors (or noncorporate counterpart) or of the Plan Administrator, terminate its participation in the Plan effective immediately prior to the start of any subsequent Plan Year. Moreover, the Plan Administrator or the Board of Directors may, in its discretion, terminate an Employer’s Plan participation effective immediately prior to the start of any subsequent Plan Year; provided, however, that if an Employer ceases to be an Affiliate of Parent, such Employer’s Plan participation may be terminated by the Plan Administrator effective immediately upon such cessation. In no event shall the termination of an Employer’s Plan participation have a material adverse impact upon the accrued benefits of anyone participating in the Plan as of the date of such termination, unless he or she consents to the same in writing.

ARTICLE III

RETIREMENT BENEFITS

3.1		Normal Retirement Benefit

(a)		Upon a Participant’s Separation from Service for a reason other than death on or after his or her Normal Retirement Date, the Participant shall be entitled to receive a monthly benefit payable in the form of payment described in Section 5.2, beginning on the first day of the calendar month coinciding with or immediately following his or her Separation from Service, equal to the excess, if any, of one-twelfth of 2% of the Participant’s Final Average Compensation multiplied by his or her years of Service, minus the sum of each of the following amounts:

	(i)		the monthly amount of the annuity equivalent of the Participant’s Hypothetical Contribution Amount, expressed as a single life annuity for the life of the Participant (payable beginning on the first day of the calendar month coinciding with or immediately following the later of the Participant’s Normal Retirement Date or Separation from Service) determined by applying an Actuarial Equivalent factor to such Hypothetical Contribution Amount, and

	(ii)		50% of the Participant’s Primary Insurance Amount.

(b)

Solely with respect to an individual who is a Participant on the Effective Date, in no event shall the monthly benefit described above be less than the Actuarial Equivalent amount payable for the Participant’s lifetime of an annual amount of 40% of the Participant’s Compensation, determined without regard to performance bonuses, as in effect on the day immediately preceding the

Effective Date (which Compensation amount for each such Participant is set forth on Appendix A), payable over a ten-year period commencing at age 65.

3.2		Early Retirement Benefit

(a)		Upon a Participant’s Separation from Service for a reason other than death on or after his or her Early Retirement Date and prior to his or her Normal Retirement Date, the Participant shall be entitled to receive a monthly benefit payable in the form of payment described in Section 5.2 beginning on the first day of the calendar month coinciding with or immediately following his or her Separation from Service. The monthly benefit shall be the amount that otherwise would have commenced on his or her Normal Retirement Date, calculated in accordance with the provisions of Section 3.1(a) (but considering the Participant’s Final Average Compensation and years of Service to the date of his or her Separation from Service), and shall be reduced for early commencement by multiplying such amount by a reduction factor in accordance with the following table:


Commencement Age	Reduction Factor
65		100	%
64		90.83	%
63		82.70	%
62		75.47	%
61		69.01	%
60		63.22	%
59		58.02	%
58		53.34	%
57		49.11	%
56		45.28	%
55		41.81	%

The reduction factors described above shall be applied proportionately to the nearest monthly interval.

(b)		Solely with respect to an individual who is a Participant on the Effective Date and has completed at least 10 years of Service as of the date of his or her Separation from Service that occurs on or after his or her Early Retirement Date but before his or her Normal Retirement Date, in no event shall the monthly benefit described in Section 3.2(a) be less than the Actuarial Equivalent amount payable for the Participant’s lifetime of an annual amount of 40% of the Participant’s Compensation, determined without regard to performance bonuses, as in effect on the day immediately preceding the Effective Date (which Compensation amount for each Participant on the Effective Date is set forth on Appendix A), payable over a ten-year period commencing on the first day of the calendar month coinciding with or next following the Participant’s Separation from Service and reduced for early commencement by multiplying such amount by a reduction factor in accordance with the table contained in Appendix B.

3.3		Vested Retirement Benefit

(a)		A Participant shall have a 100 percent vested nonforfeitable right to a monthly benefit upon the earlier of his or her completion of five years of Service or attainment of age 65. If the Participant subsequently incurs a Separation from Service for reasons other than retirement under Sections 3.1 or 3.2, Disability or death, he or she shall be eligible for a vested retirement benefit determined pursuant to the provisions of paragraph (b) below. If the Participant incurs a Separation from Service for reasons other than retirement under Sections 3.1 or 3.2 or death prior to the date upon which he or she has a 100 percent vested nonforfeitable right to a monthly benefit as provided above, then no benefit

under the Plan (other than the benefit described in Section 3.4, if applicable) shall be payable under the Plan to or on behalf of such Participant.

(b)		The vested retirement benefit payable in the form of payment described in Section 5.2 shall begin on the Participant’s Early Retirement Date and shall be equal to the amount that otherwise would have commenced on the Participant’s Normal Retirement Date, calculated in accordance with the provisions of Section 3.1(a) (but considering the Participant’s Final Average Compensation and years of Service to the date of his or her Separation from Service), reduced for early commencement in accordance with the provisions of Section 3.2(a).

3.4		Disability Retirement Benefit

		A Participant who has incurred a Disability while in the employment of the Employer and prior to his or her Normal Retirement Date shall be entitled to receive a monthly benefit calculated in accordance with the provisions of Section 3.1 and payable in the form of payment described in Section 5.2 commencing on the Participant’s Normal Retirement Date, notwithstanding that the Participant has incurred a Separation from Service as a result of the Disability. For purposes of the preceding sentence, (a) Service shall continue to be granted during the period of Disability until the earliest of the Participant’s recovery from Disability, Normal Retirement Date or death, notwithstanding that the Participant has incurred a Separation from Service as a result of the Disability, and (b) the Participant’s Final Average Compensation shall be determined by assuming that his or her Compensation continued during the period described in clause (a) of this sentence in an amount equal to his or her Compensation during the 12 calendar month period immediately preceding the date he or she incurred a Disability.

3.5		Benefits Upon Change of Control

(a)		Notwithstanding the provisions of Section 3.3, a Participant shall have a 100 percent nonforfeitable vested right to retirement benefits upon the occurrence of a Change of Control of Parent that occurs on or after the first anniversary of the Effective Date, without regard to any Service or age requirement, if the Participant is employed by the Employer immediately prior to the date upon which such Change of Control of Parent occurs. In addition, a Participant who is employed by an Employer other than Parent immediately prior to a Change of Control of that Employer that occurs on or after the first anniversary of the Effective Date shall have a 100 percent nonforfeitable vested right to retirement benefits upon the occurrence of such Change of Control.

(b)		Upon the occurrence of a Change of Control of Parent that occurs on or after the first anniversary of the Effective Date, a retirement benefit shall be payable to (i) each Participant employed by the Employer immediately prior to the date upon which such Change of Control occurs or (ii) each Participant who has incurred a Separation from Service with the Employer and is entitled to a vested retirement benefit under Section 3.3 or a Disability retirement benefit under Section 3.4, neither of which is in pay status as of the date upon which such Change of Control occurs, and, in each such case, such retirement benefit shall be in lieu of any other benefit under the preceding provisions of this Article III or under Article IV. Such retirement benefit shall be calculated as if the Participant incurred a Separation from Service as of the earlier of the date of such Change of Control or the date of the Participant’s actual Separation from Service (or, in the case of a Participant described in Section 3.4, as if the Participant recovered from his or her Disability as of the earlier of the actual date of such recovery or the date of such Change of Control), shall be paid in a lump sum upon the date of such Change of Control and shall be the Actuarial Equivalent present value of the Participant’s monthly benefit calculated in

accordance with the provisions of Section 3.3 or 3.4, whichever is applicable, as if the commencement date of such benefit were the Participant’s Normal Retirement Date, payable in the form of payment described in Section 5.2.

(c)		Upon the occurrence of a Change of Control of an Employer other than Parent that occurs on or after the first anniversary of the Effective Date, a retirement benefit shall be payable to (i) each Participant employed by that Employer immediately prior to the date upon which such Change of Control occurs or (ii) each Participant who has incurred a Separation from Service with that Employer and is entitled to a vested retirement benefit under Section 3.3 or a Disability retirement benefit under Section 3.4, neither of which is in pay status as of the date upon which such Change of Control occurs, and, in each such case, such retirement benefit shall be in lieu of any other benefit under the preceding provisions of this Article III or under Article IV. Such retirement benefit shall be calculated as if the Participant incurred a Separation from Service as of the earlier of the date of such Change of Control or the date of the Participant’s actual Separation from Service (or, in the case of a Participant described in Section 3.4, as if the Participant recovered from his or her Disability as of the earlier of the actual date of such recovery or the date of such Change of Control), shall be paid in a lump sum upon the date of such Change of Control and shall be the Actuarial Equivalent present value of the Participant’s monthly benefit calculated in accordance with the provisions of Section 3.3 or 3.4, whichever is applicable, as if the commencement date of such benefit were the Participant’s Normal Retirement Date, payable in the form of payment described in Section 5.2.

(d)		To the extent permitted under Section 409A of the Code, the benefit of any Participant in pay status as of the date of a Change of Control of Parent that occurs on or after the first anniversary of the Effective Date shall be commuted

and the Actuarial Equivalent present value of such commuted benefit shall be paid to such Participant in a lump sum on the date of such Change of Control.

(e)

To the extent permitted under Section 409A of the Code, the benefit of any Participant who has incurred a Separation from Service with an Employer other than Parent, which benefit is in pay status as of the date of a Change of Control of that Employer that occurs on or after the first anniversary of the Effective Date, shall be commuted and the Actuarial Equivalent present value of such commuted benefit shall be paid to such Participant in a lump sum on the date of such Change of Control.

ARTICLE IV

DEATH BENEFITS

4.1		Pre-Retirement Death Benefits

(a)		This Section 4.1(a) shall apply only with respect to an individual who is a Participant as of the Effective Date. If such a Participant dies prior to incurring a Separation from Service, a pre-retirement death benefit will be payable to the Participant’s Beneficiary. The pre-retirement death benefit payable pursuant to this Section 4.1(a) shall be an annual amount equal to (i) the Participant’s Compensation, determined without regard to performance bonuses, as in effect at his or her date of death, payable on the first day of the calendar month following the month in which the Participant’s date of death occurs, and (ii) 50% of the Participant’s Compensation, determined without regard to performance bonuses, as in effect at his or her date of death, payable commencing on the first day of the calendar month following the month in which the first anniversary of the Participant’s date of death occurs and ending with the last annual payment on the first day of the calendar month following the later of (A) the month in which the anniversary of the Participant’s date of death by which he or she would have first attained age 64 occurs or (B) the month in which the ninth anniversary of the Participant’s date of death occurs.

(b)		If a Participant who has completed five years of Service dies prior to commencement of his or her payments under Article III, whether or not he or she has incurred a Separation from Service prior to his or her date of death, a pre-retirement death benefit will be payable to the Participant’s Beneficiary. The pre-retirement death benefit payable pursuant to this paragraph shall be a monthly amount payable to, and during the life of, the Participant’s Beneficiary and shall be based on the benefit that would have been payable to the

Participant under Article III on his or her date of death, calculated in accordance with (i) or (ii) below, as applicable, and (iii), if applicable:

	(i)		If the Participant’s death occurs prior to the earliest date on which he or she would have been eligible to receive retirement benefits pursuant to Section 3.2, 3.3 or 3.4 (“Earliest Retirement Date”), the pre-retirement death benefit shall be calculated as if the Participant had terminated employment on the earlier of his or her Separation from Service or date of death, had survived until his or her Earliest Retirement Date, had retired at that time and elected to have payments commence immediately in the form of a 100 percent joint and survivor annuity, as described in Section 5.3(a)(i), that is the Actuarial Equivalent of the monthly benefit that otherwise would be payable pursuant to Section 5.2 and had died on the day after his or her Earliest Retirement Date. Benefit payments under such annuity shall commence on the date on which the Participant would have attained his or her Earliest Retirement Date. Benefits commencing prior to the date that would have been the Participant’s Normal Retirement Date shall be reduced for early commencement in accordance with the provisions of Section 3.2(a).

	(ii)		If the Participant’s death occurs on or after his or her Earliest Retirement Date, the pre-retirement death benefit shall be calculated as if the Participant had retired on the first day of the month coinciding with or immediately preceding the earlier of his or her Separation from Service or date of death, with payments commencing immediately in the form of a 100 percent joint and survivor annuity, as described in Section 5.3(a)(i), that is the Actuarial Equivalent of the monthly benefit that otherwise would be payable pursuant to Section 5.2 and had died on the day after his or her retirement. Benefit payments under such annuity shall commence on the first day of the calendar month following the

month in which the Participant’s death occurs. Benefits commencing prior to the date that would have been the Participant’s Normal Retirement Date shall be reduced for early commencement in accordance with the provisions of Section 3.2(a).

(iii)

The pre-retirement death benefit payable pursuant to this Section 4.1(b) is in addition to and not in substitution for the pre-retirement death benefit, if any, payable pursuant to Section 4.1(a), provided that the amount of the pre-retirement death benefit payable pursuant to this Section 4.1(b) shall be offset, but not below zero, by the Actuarial Equivalent of the pre-retirement death benefit, if any, payable pursuant to Section 4.1(a).

(c)

To the extent that the Employer acquires an insurance policy in connection with the liabilities assumed by it hereunder pursuant to the provisions of Section 7.1, the pre-retirement death benefit payable pursuant to the provisions of this Section 4.1 shall be provided by the Employer to the extent, if any, not provided by the proceeds of such insurance policy. Any such insurance policy shall be issued to the Employer, which shall have and may exercise all ownership rights in such policy that do not compromise or reduce the pre-retirement death benefit payable to the Beneficiary. If a Participant dies while eligible for an insured pre-retirement death benefit as described in this Section 4.1(c), the Employer shall take such action as may be necessary to obtain payment from the insurer of the amounts payable to the Beneficiary as provided herein.

ARTICLE V

PAYMENT OF RETIREMENT BENEFITS

5.1		Payment of Benefits

		A Participant’s monthly retirement benefit shall commence in accordance with the provisions of Section 3.1, 3.2, 3.3 or 3.4, whichever is applicable, provided, however, that if the Participant is a Key Employee on September 1 of the calendar year prior to the Plan Year in which the Participant incurs a Separation from Service, the Participant’s monthly retirement benefit under Article III may not commence to be paid prior to the date that is the six-month anniversary of the Participant’s Separation from Service. Any Participant or Beneficiary who is subject to delayed payments pursuant to this Section 5.1 shall receive a lump sum cash payment in an amount equal to the payments such individual would have otherwise received during the period of delay plus interest at the rate of 6% compounded annually, and such payment shall be made on the first day following the expiration of the delay period under this Section 5.1.

5.2		Automatic Form of Payment

		If a Participant has not elected an optional form of payment as provided in Section 5.3, the Participant’s retirement benefits shall be paid in monthly installments ending with the last monthly payment before death.

5.3		Optional Forms of Payment

(a)		Any Participant may, by written notice received by the Plan Administrator during the election period and pursuant to the procedures specified in Section

5.3(b), elect to receive the retirement benefits payable to him or her in a benefit form of Actuarial Equivalent value, as provided in one of the options named below.

	(i)		Reduced monthly benefit payments during the life of the Participant, continuing after the Participant’s death at the rate of 50 percent or 100 percent of such reduced monthly payments, as the Participant elects, during the life of and to the Beneficiary named by him or her when he or she elected the option.

	(ii)		Reduced monthly benefit payments during the life of the Participant ending with the last monthly payment before the Participant’s death, unless the Participant has not received 120 monthly installments (the “period certain”). In the event of the death of the Participant prior to the expiration of the period certain, payments shall continue to be made to his or her Beneficiary until all guaranteed payments have been made. If the Beneficiary also dies before the expiration of the period certain, further monthly payments shall be made for the remainder of the period certain to the alternate Beneficiary designated by the Participant. If there is no surviving alternate Beneficiary to receive the remainder of any guaranteed payments, a single sum payment that is the Actuarial Equivalent of the remaining guaranteed payments shall be paid to the estate of the last surviving Beneficiary.

	(iii)		Monthly cash installments over a period of 120 months, with no life contingency. In the event of the death of the Participant prior to receiving 120 monthly payments, payments shall continue to be made to his or her Beneficiary until all guaranteed payments have been made. If the Beneficiary also dies before all guaranteed payments have been made, further monthly payments shall be made for the remainder of the

			guaranteed period to the alternate Beneficiary designated by the Participant. If there is no surviving alternate Beneficiary to receive the remainder of any guaranteed payments, a single sum payment that is the Actuarial Equivalent of the remaining guaranteed payments shall be paid to the estate of the last surviving Beneficiary.

	(iv)		Monthly benefit payments ending with the last monthly payment before the Participant’s death.

(b)

An election of a form of payment under paragraph (a) above may be made on the Appropriate Form within 30 days of the effective date of participation described in Section 2.1 (or, with respect to an individual who is a Participant on the Effective Date, within 30 days after the date of adoption of the Plan by the Board of Directors). For purposes of applying the procedures for changing an elected form of payment set forth in the remaining provisions of this Section 5.3(b), a Participant who did not timely elect an optional form of payment as provided in the preceding sentence shall be deemed to have elected the optional form of payment described in Section 5.3(a)(iv). An election of an optional form of payment not made within the time limit described in the first sentence of this Section 5.3(b) may be made on the Appropriate Form within a reasonable period prior to the date on which monthly retirement benefits are due to commence pursuant to Section 5.1, except that (i) the election of the optional form described in Section 5.3(a)(iii) may not take effect until at least 12 months after the date on which the election is made, (ii) the election of such optional form must be made at least one year prior to the date on which monthly retirement benefits are due to commence pursuant to Section 5.1, and (iii) payment pursuant to such optional form may not commence for at least five years following the date on which monthly retirement benefits are due to commence pursuant to Section 5.1. An election of an optional form of payment may be revoked on the Appropriate Form and a new election made at any time

and any number of times during the applicable election period, provided that a revocation of an optional form described in Section 5.3(a)(i), (ii) or (iv) and new election of the optional form described in Section 5.3(a)(iii) is subject to the provisions of the preceding sentence regarding timing and payment commencement and a revocation of the optional form described in Section 5.3(a)(iii) and new election of an optional form described in Section 5.3(a)(i), (ii) or (iv) is subject to the provisions of the preceding sentence regarding timing and payment commencement as if the appropriate optional form described in Section 5.3(a)(i), (ii) or (iv) were substituted for the optional form described in Section 5.3(a)(iii). An election of an optional form of payment shall become effective on the date payments commence and may not be changed or revoked thereafter.

An election of the optional form described in Section 5.3(a)(i) shall be deemed to be revoked in the event the Beneficiary named under the option shall die prior to the date payments commence and the Participant may make another election, subject to the conditions required therefor. If a Participant who has elected an option shall die prior to the effective date of his or her election, the option shall not become operative and the provisions of Section 4.1 shall apply. A Participant may change the Beneficiary named in his or her election at any time prior to the date distribution under the option actually commences, or, in the case of the optional form described in Section 5.3(a)(ii), at any time prior to the expiration of the period certain.

ARTICLE VI

ADMINISTRATION OF PLAN

6.1		Plan Administrator

		The general administration of the Plan and the responsibility for carrying out the provisions of the Plan shall be delegated to the Plan Administrator. The Plan Administrator shall be either an individual appointed by the Board of Directors, an office or position of the Company whose occupant is to act in this capacity or a committee, as determined from time to time by the Board of Directors.

6.2		Powers and Duties

		The Plan Administrator shall have full charge of the administration of the Plan with all powers necessary to enable it properly to carry out its duties. The Plan Administrator shall have discretionary authority to determine eligibility and to grant or deny benefits, including the right to make factual determinations in connection therewith and to make a determination in its discretion as to the right of any person to a benefit under the Plan, and shall have the exclusive right to construe and interpret the Plan and to decide any and all matters arising thereunder or in connection with the administration of the Plan. The decisions of the Plan Administrator will, to the extent permitted by law, be conclusive and binding upon all persons having or claiming to have any right or interest in or under the Plan.

6.3		Rules and Regulations of the Plan Administrator

		The Plan Administrator may promulgate such rules and regulations in connection with its administration of the Plan as are consistent with the terms and provisions hereof.

6.4		Claims Procedure

(a)		Claim for Benefits

		For purposes of the Plan, a claim for benefits is a written application for a benefit or benefits filed with the Plan Administrator or its delegate. A Participant or Beneficiary or either of their authorized representative who believes that he or she is entitled to payments other than those initially determined to be payable (“claimant”) may file a claim for benefits stating the nature of his or her claim, the facts supporting the claimant’s claim, the amount claimed and the claimant’s name and current address.

(b)		Notice of Denial of Claim

		In the event that the Plan Administrator determines that any claim for benefits should be denied in whole or in part, the Plan Administrator shall, by written or electronic communication, notify such claimant within a reasonable period of time but not later than 90 days after receipt of such claim that the claimant’s claim has been denied. Such notification shall be written in a manner calculated to be understood by the claimant and shall include:

(i)

the specific reason or reasons for the denial,

	(ii)		specific references to the pertinent Plan provisions on which the denial is based,

	(iii)		a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary, and

	(iv)		an explanation of how the claimant can obtain review of such denial, including the Plan’s review procedures, the time limits applicable to such procedures, and a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.

(c)		Review of Claim Denial

		Within 60 days after receipt by the claimant of notice of denial of claim, such claimant may request, by mailing or delivery of written notice to the Plan Administrator, a review by the Plan Administrator of the decision denying the claim. Unless the Plan Administrator for good cause extends the 60-day period, if the claimant fails to request such a review within such 60-day period, it shall be conclusively determined for all purposes of this Plan that the denial of such claim by the Plan Administrator is correct. If a review is requested, the claimant may submit written comments, documents, records and other information relating to the claim for benefits. The claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits. Any such review shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. After such review, the Plan Administrator shall

within a reasonable period of time, but not later than 60 days after receipt of the claimant’s request for review, determine whether such denial of the claim was correct and shall notify such claimant by written or electronic communication of its determination. In the case of an adverse determination on review, such notification shall be written in a manner calculated to be understood by the claimant and shall include:

	(i)		the specific reason or reasons for the adverse determination,

	(ii)		specific reference to the pertinent Plan provisions on which the decision is based,

	(iii)		a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits, and

	(iv)		a statement of the claimant’s right to bring an action under Section 502(a) of ERISA.

(d)		Extension for Special Circumstances

		The 90-day and 60-day periods for the Plan Administrator’s review of a claim or a claim denial as described in subsections (b) and (c) above, respectively, may be extended for as much as a second 90-day or 60-day period, as the case may be, if the Plan Administrator determines that special circumstances (such as the need to hold a hearing) require an extension of time for processing the claim or request for review of claim denial, whichever is applicable. If the Plan Administrator determines that an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the

termination of the initial period, indicating the special circumstances requiring such extension of time and the date by which a final determination is expected.

(e)		Electronic Communication

		Any electronic communication provided under subsection (b) or (c), above, shall comply with the standards imposed by Department of Labor Regulation Section 2520.104b-1(c)(1)(i), (iii) and (iv).

(f)		Determination of Relevance

		For purposes of subsection (c), above, a document, record or other information shall be considered “relevant” to a claimant’s claim if such document, record, or other information

	(i)		was relied upon in making the benefit determination,

	(ii)		was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination, or

	(iii)		was consistent with administrative processes and Plan document provisions applicable in making the benefit determination.

(g)		Exhaustion of Administrative Remedies

		No claimant shall be entitled to challenge the Plan Administrator’s denial of benefits or determination on review in judicial or administrative proceedings without first complying with the procedures in this Section 6.4. The Plan

Administrator’s determinations made pursuant to this Section 6.4 are intended to be binding and conclusive on claimants.

ARTICLE VII

GENERAL MATTERS

7.1		Benefits from General Assets

		Benefits under the Plan will be paid from the general assets of the Employer. In the event that the Employer shall decide to establish an advance accrual reserve on its books against the future expense of benefit payments or contributions, or establish a “grantor trust” within the meaning of Sections 671 through 679 of the Code, such reserve or grantor trust shall not under any circumstances be deemed to be an asset of the Plan but at all times shall remain a part of the general assets of the Employer, subject to claims of the Employer’s creditors.

		Neither a Participant nor his or her Beneficiary will have any interest in any specific asset of the Employer as a result of the Plan. Any insurance policy that may be acquired by the Employer in connection with the liabilities assumed by it hereunder shall not be deemed to be held under any trust for the benefit of a Participant or his or her Beneficiary or to be security for the performance of the obligations of the Employer, but shall be, and remain, a general, unpledged, unrestricted asset of the Employer.

7.2		No Assignment

		Benefits payable under the Plan will not be subject to assignment, transfer, sale, pledge, encumbrance, alienation or charge by a Participant, surviving spouse, contingent annuitant or Beneficiary, nor may any such benefits be taken, either voluntarily or involuntarily for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for

alimony, support, separate maintenance and claims in bankruptcy proceedings.

7.3		Expenses of Plan

		All expenses of the Plan will be paid by the Employer.

7.4		Amendment or Termination

		The Plan may be amended or terminated at any time by the Board of Directors; provided, however, that, to the extent required by Section 409A of the Code, the Plan may not be amended or terminated in a manner that would give rise to an impermissible acceleration of the time or form of a payment of a benefit under the Plan pursuant to Section 409A(a)(3) of the Code and any regulations or guidance issued thereunder. Further, no amendment or termination of the Plan may have a material adverse impact upon the accrued benefits of anyone participating in the Plan as of the amendment or termination date, unless he or she consents to such amendment in writing; provided, however, that if the Board of Directors determines that the terms of the Plan do not, in whole or in part, satisfy the requirements of Section 409A of the Code, then the Board of Directors may, in its sole discretion, amend the Plan without obtaining any such consent in such manner as the Board of Directors deems appropriate to comply with Section 409A of the Code and any regulations or guidance issued thereunder.

7.5		Limitation on Benefits and Payments

		A person entitled to benefits under the Plan shall have a claim upon his or her Employer only to the extent of the monthly payments, if any, due up to and including the then current month and shall not have a claim against the

		Employer for any subsequent monthly payment unless and until such payment shall become due and payable. Notwithstanding any provision of the Plan to the contrary, the right of a Participant or the Participant’s Beneficiary to receive retirement benefits otherwise payable hereunder shall cease upon the discharge of the Participant from employment with the Employer for acts that constitute fraud, embezzlement, or dishonesty.

7.6		Time of Payment Obligations

		Any obligation hereunder to make a payment on a specified date shall be deemed to have been satisfied in the event that such payment is made within (i) ten days of such specified date if the payment is due pursuant to Section 3.5 or (ii) 60 days after such specified date if the payment is due pursuant to any other provision of the Plan.

7.7		Limitation of Liability

		The Plan Administrator shall not be liable for any act or omission on its part, excepting only its own willful misconduct or gross negligence or except as otherwise expressly provided by applicable law. To the extent permitted by applicable law and not otherwise covered by insurance, the Employer shall indemnify and save harmless the Plan Administrator against any and all claims, demands, suits or proceedings in connection with the Plan that may be brought by Participants or their Beneficiaries, or by any other person, corporation, entity, government or agency thereof; provided, however, that such indemnification shall not apply with respect to acts or omissions of willful misconduct or gross negligence. The Board of Directors, at the expense of the Employer, may settle any such claim or demand asserted or suit or proceeding brought against the Plan Administrator when such settlement appears to be in the best interest of the Employer.

7.8		Agent for Service of Process

		The Plan Administrator or such other person as may from time to time be designated by the Plan Administrator shall be the agent for service of process under the Plan.

7.9		Delivery of Elections to Plan Administrator

		All elections, designation, requests, notices, instructions and other communications required or permitted under the Plan from the Employer, a Participant, Beneficiary or other person to the Plan Administrator shall be on the Appropriate Form, shall be mailed by first-class mail or delivered to such address as shall be specified by the Plan Administrator, and shall be deemed to have been given or delivered only upon actual receipt thereof by the Plan Administrator at such location.

7.10		Delivery of Notice to Participants

		All notices, statements, reports and other communications required or permitted under the Plan from the Employer or the Plan Administrator to any officer, Participant, Beneficiary or other person shall be deemed to have been duly given when delivered to, or when mailed by first-class mail, postage prepaid, and addressed to such person at the address last appearing on the records of the Plan Administrator.

7.11		No Enlargement of Employee Rights

		No Participant shall have any right to receive retirement benefits under the Plan except in accordance with the terms of the Plan. Establishment of the

Plan shall not be construed to give any Participant the right to be retained in the service of the Company or any Employer.

7.12		Tax Withholding

		The Employer shall withhold from Participants’ retirement benefits any taxes required to be withheld under federal, state, or local law. Each Participant shall bear the ultimate responsibility for payment of all taxes owed under this Plan.

7.13		Incapacity of Recipient

		If any person entitled to a distribution under the Plan is deemed by the Plan Administrator to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until claim therefor shall have been made by a duly appointed guardian or other legal representative of such person, the Plan Administrator may provide for such payment or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such payment shall be a payment for the account of such person and a complete discharge of any liability of the Employer, the Plan Administrator and the Plan therefor.

7.14		Unclaimed Benefit

		In the event that all, or any portion, of the retirement benefits payable to a Participant or Beneficiary hereunder shall, at the expiration of five years after it shall become payable, remain unpaid solely by reason of the inability of the Employer or the Plan Administrator, after sending a registered letter, return receipt requested, to the last known address, and after further diligent effort,

to ascertain the whereabouts of such Participant or Beneficiary, the amount so distributable shall be treated as a forfeiture and shall be retained by the Employer as part of its general assets.

ARTICLE VIII

CONSTRUCTION OF THE PLAN

8.1		Construction of the Plan

		The Plan is intended to constitute an arrangement that is unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of ERISA. The provisions of the Plan shall be construed, regulated and administered according to the laws of the State of Tennessee, other than with respect to choice of law and except to the extent preempted by federal law.

8.2		Headings

		The headings in this document and in the table of contents prefixed hereto are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge or describe the scope of intent of the Plan and shall in no way affect the Plan or the construction of any provisions thereof.

8.3		Separability

		If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provisions of the Plan.

8.4		Counterparts

		This Plan has been established by the Company in accordance with the resolutions adopted by the Board of Directors and may be executed in any number of counterparts, each of which shall be deemed to be an original. All the counterparts shall constitute one instrument, which may be sufficiently evidenced by any one counterpart.

IN WITNESS WHEREOF, and as evidence of the adoption of the Plan by Doane Pet Care Company, the undersigned officer duly authorized has appended his or her signature this day of March, 2006.


ATTEST:		DOANE PET CARE COMPANY

		By:

APPENDIX A
COMPENSATION (OTHER THAN PERFORMANCE BONUSES)
OF CERTAIN PARTICIPANTS AS IN EFFECT IMMEDIATELY
PRECEDING THE EFFECTIVE DATE


Participant Name	Compensation Amount*
Douglas J. Cahill	$	450,000
Philip K. Woodlief	$	275,000
David L. Horton	$	275,000
Joseph J. Meyers	$	250,000
Kenneth H. Koch	$	250,000


* Compensation, determined without regard to performance bonuses, as in effect on the day immediately preceding the Effective Date.

APPENDIX B
REDUCTION FACTORS UNDER SECTION 3.2(b)


Commencement Age	Reduction Factor
65		100	%
64		94.3	%
63		89.0	%
62		84.0	%
61		79.2	%
60		74.7	%
59		70.5	%
58		66.5	%
57		62.7	%
56		59.2	%
55		55.8	%

The reduction factors described above shall be applied proportionately to the nearest monthly interval.

EX-21.1 4 h34448exv21w1.htm LIST OF SUBSIDIARIES exv21w1

EXHIBIT 21.1

SUBSIDIARIES OF DOANE PET CARE COMPANY


	JURISDICTION OF	PERCENTAGE
NAME	FORMATION	OWNED

Doane Management Corp.	Delaware		100	%

DPC Investment Corp	Delaware		100	%

Doane Pet Care (Europe) ApS	Denmark		100	%

A/S Arovit Pet Food	Denmark		100	%

DPC International Limited	United Kingdom		100	%

Ipes Iberica, S.A.	Spain		100	%

Doane Pet Care (UK) Limited	United Kingdom		100	%

Arovit Petfood Deutschland G.m.b.H.	Germany		100	%

Arovit Petfood Italia S.R.L.	Italy		100	%

Arovit Petfood UK Ltd.	United Kingdom		100	%

Arovit Petfood Benelux B.V.	The Netherlands		100	%

Carat Tiernahrungsgesellschaft m.b.H.	Austria		100	%

Pyramid Pet Equipment ApS	Denmark		100	%

Doane/Windy Hill Joint Venture L.L.C.	Texas		100	%

Effeffe S.p.A.	Italy		50	%

Doane International Pet Products LLC	Delaware		75	%

EX-23.1 5 h34448exv23w1.htm CONSENT OF KPMG LLP exv23w1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Doane Pet Care Company:

We consent to the incorporation by reference in the registration statements (Nos. 333-130739 and 333-104767) on Form S-4 of Doane Pet Care Company of our report dated March 23, 2006, with respect to the consolidated balance sheets of Doane Pet Care Company and subsidiaries as of December 31, 2005 (successor) and January 1, 2005 (predecessor) and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for the periods from October 24, 2005 to December 31, 2005 (successor period), and from January 2, 2005 to October 23, 2005 and for each of the fiscal years in the two-year period ended January 1, 2005 (predecessor periods), which report is included in the Annual Report of Doane Pet Care Company on Form 10-K for the year ended December 31, 2005.

Our report dated March 23, 2006 contains explanatory paragraphs that refer to the October 24, 2005 acquisition of substantially all of the outstanding stock of the Company’s Parent, Doane Pet Care Enterprises, Inc., by Ontario Teachers’ Pension Plan Board in a business combination accounted for as a purchase, and state that the Company adopted Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, effective January 4, 2004.

/s/ KPMG LLP

Nashville, Tennesse
March 23, 2006

EX-31.1 6 h34448exv31w1.htm CERTIFICATION OF CEO PURSUANT TO RULE 13A-14(A)/15(D)-14(A) exv31w1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Douglas J. Cahill, President and Chief Executive Officer of Doane Pet Care Company, hereby certify that:

1.		I have reviewed this annual report on Form 10-K of Doane Pet Care Company;

2.		Based on my knowledge, this report 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 period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	c)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: March 30, 2006

	/s/ DOUGLAS J. CAHILL
	Douglas J. Cahill
	President and Chief Executive Officer Doane Pet Care Company

EX-31.2 7 h34448exv31w2.htm CERTIFICATION OF CFO PURSUANT TO RULE 13A-14(A)/15(D)-14(A) exv31w2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Philip K. Woodlief, Vice President and Chief Financial Officer of Doane Pet Care Company, hereby certify that:

1.		I have reviewed this annual report on Form 10-K of Doane Pet Care Company;

2.		Based on my knowledge, this report 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 period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	c)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: March 30, 2006

	/s/ PHILIP K. WOODLIEF
	Philip K. Woodlief
	Vice President, Finance and Chief Financial Officer Doane Pet Care Company

EX-32.1 8 h34448exv32w1.htm CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. 1350 exv32w1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OF DOANE PET CARE COMPANY
PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. § 1350 and in connection with the accompanying annual report on Form 10-K of Doane Pet Care Company for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of Doane Pet Care Company hereby certifies that:

1. The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of Doane Pet Care Company.



Date: March 30, 2006

	/s/ DOUGLAS J. CAHILL
	Douglas J. Cahill
	President and Chief Executive Officer Doane Pet Care Company

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to Doane Pet Care Company and will be retained by Doane Pet Care Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 9 h34448exv32w2.htm CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. 1350 exv32w2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER OF DOANE PET CARE COMPANY
PURSUANT TO 18 U.S.C. SECTION 1350

1. The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of Doane Pet Care Company.



Date: March 30, 2006

	/s/ PHILIP K. WOODLIEF
	Philip K. Woodlief
	Vice President, Finance and Chief Financial Officer Doane Pet Care Company

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