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EX-31.2 - SECTION 302 CERTIFICATION OF CFO - PRETIUM PACKAGING L L Cpretium630201210qex312.htm
EX-31.1 - SECTION 302 CERTIFICATION OF CEO - PRETIUM PACKAGING L L Cpretium630201210qex311.htm
EX-32.1 - SECTION 906 CERTIFICATION OF CEO - PRETIUM PACKAGING L L Cpretium630201210qex321.htm
EX-32.2 - SECTION 906 CERTIFICATION OF CFO - PRETIUM PACKAGING L L Cpretium630201210qex322.htm
EXCEL - IDEA: XBRL DOCUMENT - PRETIUM PACKAGING L L CFinancial_Report.xls



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

FORM 10-Q
(Mark One)
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to

For the quarterly period ended June 30, 2012
_____________________________________
PRETIUM PACKAGING, L.L.C.
PRETIUM FINANCE, INC.
(Exact name as specified in its charter)
_____________________________________

15450 South Outer Forty Drive
Chesterfield, Missouri 63017
(314) 727-8200
Commission File Number
Registrant
IRS Employer Identification Number
State or other jurisdiction of incorporation or organization
333-176592
Pretium Packaging, L.L.C.
43-1817802
Delaware
333-176592-08
Pretium Finance, Inc.
30-0668528
Delaware

Securities registered under Section 12(b) of the Exchange Act:   None
Securities registered under Section 12(g) of the Exchange Act:   None
_____________________________________

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.  
Pretium Packaging, L.L.C
Yes ý
No ¨
Pretium Finance, Inc.
Yes ý
No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Pretium Packaging, L.L.C
Yes ý
No ¨
Pretium Finance, Inc.
Yes ý
No ¨








Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and smaller reporting company” in Rule 12b-2 of the Exchange Act.
Pretium Packaging, L.L.C.
Large accelerated filer
o
Accelerated Filer
o
Non-accelerated filer
ý
Smaller reporting company
o

Pretium Finance, Inc.
Large accelerated filer
o
Accelerated Filer
o
Non-accelerated filer
ý
Smaller reporting company
o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Pretium Packaging, L.L.C
Yes o
No ý
Pretium Finance, Inc.
Yes o
No ý

As of August 14, 2012:
Pretium Packaging, L.L.C.
100% of Membership Interests owned by Pretium Intermediate Holding, LLC.
Pretium Finance, Inc.
100 shares of Common Stock, par value $0.01 per share outstanding.

This Form 10-Q is a combined quarterly report being filed separately by two registrants: Pretium Packaging, L.L.C. and Pretium Finance, Inc. Pretium Finance, Inc. meets the conditions set forth in general instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.







Index to Form 10-Q





























i


Unless otherwise noted, references to the terms “the Company”, “Pretium”, “we,” “us” and “our” refer to Pretium Packaging, L.L.C. and its consolidated subsidiaries. “Pretium Finance” refers to Pretium Finance, Inc. “PVC” refers to PVC Container Corporation. “Robb” refers to Robb Container Corporation. “Pretium Intermediate” refers to Pretium Intermediate Holding, LLC. “Pretium Holding” and “our parent” refer to Pretium Holding, LLC, an entity controlled by Castle Harlan and its affiliates. “Castle Harlan” refers to Castle Harlan, Inc. The “PVC Acquisition” refers to Pretium's acquisition of PVC on February 16, 2010. The “Acquisition” refers collectively to Pretium Holding's acquisition of Pretium, the PVC Acquisition and the restructuring of Pretium's equity and debt on February 16, 2010. The “Refinancing” means, collectively, (1) the issuance on March 31, 2011 of senior secured notes with a maximum aggregate principal amount of $150.0 million (the “Notes”) and the application of the net proceeds therefrom and (2) the closing of our new asset backed revolving credit facility (the “ABL Facility”) and the initial borrowings thereunder.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements which may be "forward-looking statements" within the meaning of the federal securities laws, All of the statements other than historical facts, are forward-looking statements. As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations, and beliefs relating to matters that are not historical in nature. The words “could,” “anticipate,” “preliminary,” “expect,” “believe,” “estimate,” “intend,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements.
Although we believe that these statements are based on reasonable assumptions, they are subject to numerous risks, uncertainties and other factors that may be beyond our control. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements.
These risks, uncertainties and other factors include, but are not limited to:
our substantial indebtedness and ability to incur more debt;
our liquidity and capital resources;
macroeconomic conditions in the United States, Canada and elsewhere;
competitive pressures and trends in the plastic packaging industry;
changes in the prevailing prices and availability of resin and other raw materials and our ability to pass on increases in raw material prices on a timely basis;
changes in the demand for, supply of or prices of our products;
changes in U.S. dollar and Canadian dollar exchange rates;
our ability to successfully implement our business strategy;
increases in the cost of compliance with laws and regulations;
catastrophic loss or shutdown of one of our manufacturing facilities;
our ability to attract and retain qualified management personnel; and
increased labor costs or prolonged work stoppages at any of our facilities with unionized labor.
The foregoing factors should not be construed as exhaustive and should be read together with important information regarding risks and factors that may affect the Company’s future performance set forth under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011 (under "Item 1A Risk Factors").
These statements reflect the current views and assumptions of management with respect to future events. The Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. The inclusion of any statement in this Quarterly Report on Form 10-Q does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.



ii


PART 1 – FINANCIAL INFORMATION

Item 1.
Financial Statements

PRETIUM PACKAGING, L.L.C. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
 
June 30,
2012
 
September 30,
2011
Assets
 
 
 
Current assets:
 
 
 
Cash
$
912

 
$
1,156

Accounts receivable, net of allowances of $835 and $754
24,078

 
25,543

Inventories
23,045

 
24,017

Prepaid expenses and other assets
2,876

 
4,047

Deferred tax assets
631

 
642

Total current assets
51,542

 
55,405

Property, plant and equipment, net
73,404

 
77,172

Other assets:
 
 
 
Goodwill
40,447

 
40,354

Other intangibles, net
35,098

 
35,874

Deferred financing fees, net
7,226

 
8,688

Other non current assets
378

 
442

Total other assets
83,149

 
85,358

Total assets
$
208,095

 
$
217,935

Liabilities and Members' Equity
 
 
 
Current liabilities:
 
 
 
Current maturities of long-term debt
$
178

 
$
169

Accounts payable
17,727

 
21,570

Accrued expenses
5,907

 
5,727

Accrued interest and bank fees
4,380

 
8,711

Total current liabilities
28,192

 
36,177

Long-term liabilities:
 
 
 
Long-term debt, less current maturities
156,670

 
150,688

Deferred tax liabilities
9,883

 
8,691

Other long-term liabilities
708

 
806

Total long-term liabilities
167,261

 
160,185

 
 
 
 
Members' equity:
 
 
 
Members' equity
12,035

 
21,636

Accumulated other comprehensive income (loss)
607

 
(63
)
Total members' equity
12,642

 
21,573

Total liabilities and members' equity
$
208,095

 
$
217,935


See accompanying notes to condensed consolidated financial statements.

1


PRETIUM PACKAGING, L.L.C. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)

 
Three Months Ended
 
Nine Months Ended
 
June 30,
 
June 30,
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Net sales
$
60,686

 
$
62,968

 
$
174,783

 
$
178,432

Cost of sales
52,288

 
54,731

 
150,865

 
153,150

Gross profit
8,398

 
8,237

 
23,918

 
25,282

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative expenses
4,661

 
4,591

 
13,794

 
13,685

Restructuring expenses

 
486

 

 
2,328

Transaction-related fees and expenses
107

 
847

 
307

 
1,237

Loss (gain) on foreign currency exchange
80

 
(125
)
 
71

 
(341
)
Depreciation
112

 
104

 
332

 
278

Amortization of intangibles
324

 
326

 
972

 
978

Total operating expenses
5,284

 
6,229

 
15,476

 
18,165

Income from operations
3,114

 
2,008

 
8,442

 
7,117

Other expenses:
 
 
 
 
 
 
 
Interest
4,919

 
4,948

 
14,764

 
11,455

Loss on extinguishment of debt

 

 

 
5,470

Total other expenses
4,919

 
4,948

 
14,764

 
16,925

Loss before income tax provision
(1,805
)
 
(2,940
)
 
(6,322
)
 
(9,808
)
Income tax provision
1,039

 
963

 
2,490

 
1,892

Net loss
$
(2,844
)
 
$
(3,903
)
 
$
(8,812
)
 
$
(11,700
)

See accompanying notes to condensed consolidated financial statements.


2


PRETIUM PACKAGING, L.L.C. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Nine Months Ended
 
June 30,
 
2012
 
2011
Cash Flows From Operating Activities
 
 
 
Net loss
$
(8,812
)
 
$
(11,700
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation
10,902

 
9,587

Amortization of intangibles
972

 
978

Amortization of deferred financing fees
1,478

 
840

Noncash interest expense

 
668

Noncash charges on extinguishment of debt

 
3,634

Deferred taxes
392

 
499

Changes in assets and liabilities:
 
 
 
Accounts receivable
1,566

 
1,464

Inventories
1,197

 
(6,846
)
Prepaid expenses and other assets
1,245

 
1,438

Accounts payable and accrued expenses
(3,807
)
 
(345
)
Accrued interest and bank fees
(4,331
)
 
2,561

Other
(52
)
 
(50
)
Net cash provided by operating activities
750

 
2,728

Cash Flows From Investing Activities
 
 
 
Purchase of property, plant and equipment
(6,989
)
 
(6,930
)
Net cash used in investing activities
(6,989
)
 
(6,930
)
Cash Flows From Financing Activities
 
 
 
Members' investment

 
950

Members' distribution

 
(30,900
)
Repayments to revolving line of credit
(50,637
)
 
(41,458
)
Proceeds from revolving line of credit
56,753

 
32,725

Proceeds from issuance of debt obligations

 
150,000

Repayments of other debt obligations
(125
)
 
(95,878
)
Payment of bank and other related loan fees
(16
)
 
(9,567
)
Net cash provided by financing activities
5,975

 
5,872

Net (decrease) increase in cash
(264
)
 
1,670

Effect of foreign currency translation adjustment
20

 
42

Cash - beginning of period
1,156

 
1,278

Cash - end of period
$
912

 
$
2,990

Supplemental Disclosure of Cash Flow Information
 
 
 
Interest paid
$
17,584

 
$
6,711

Income taxes paid
$
1,273

 
$
1,094

See accompanying notes to condensed consolidated financial statements.

3


PRETIUM PACKAGING, L.L.C. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(Unaudited)

Note 1.
Summary of Significant Accounting Policies
Basis of Presentation
Pretium Packaging, L.L.C. (the “Company”) was formed in 1998 (its origins date back to 1992) as a Delaware limited liability company for the purpose of acquiring and operating plastics manufacturing related businesses.
On February 16, 2010, all of the Company's operations were acquired by Pretium Intermediate Holding, LLC (the “Acquisition”), a newly formed Delaware limited liability company for the purpose of the Acquisition. This transaction was accounted for as a business combination, which required an allocation of the total consideration to the identifiable assets and liabilities measured at fair value at the acquisition date. The Company is now a wholly owned subsidiary of Pretium Intermediate Holding, LLC (“Pretium Intermediate”), which is a wholly owned subsidiary of Pretium Holding, LLC (“Pretium Holding”).
The Company conducts its business from its corporate headquarters in Chesterfield, Missouri, with nine manufacturing plants in the United States and two in Canada (“Pretium Canada”). The Company manufactures a variety of injection blow molded (“IBM”), extrusion blow molded (“EBM”), injection stretch blow molded (“SBM”) and injection molded (“IM”) plastic bottles, jars, containers, preforms, and closures.
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such financial statements.
The unaudited interim condensed consolidated financial statements should be read in conjunction with the complete consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011.
Other than as specifically indicated in these “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q, the Company has not materially changed its significant accounting policies from those disclosed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2011.
Certain prior quarter amounts have been reclassified to conform with the presentation in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2011.

New Accounting Standards
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) – Presentation of Comprehensive Income (“ASU 2011-05”). This update requires that the components of net income, the components of other comprehensive income and the total of comprehensive income be presented as a single continuous financial statement or in two separate but consecutive statements. The option of presenting other comprehensive income in the statement of stockholders’ equity is eliminated. This update

4


also requires the presentation on the face of the financial statements of reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statements where the components of net income and the components of other comprehensive income are presented. In December 2011, the FASB issued ASU 2011-12, which deferred the guidance on whether to require entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement where net income is presented and the statement where other comprehensive income is presented for both interim and annual financial statements. ASU 2011-12 reinstated the requirements for the presentation of reclassifications that were in place prior to the issuance of ASU 2011-05 and did not change the effective date for ASU 2011-05. For public entities, the amendments in ASU 2011-05 and ASU 2011-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and should be applied retrospectively. The adoption of this guidance concerns disclosure only and will not have an impact on the Company's consolidated financial position or results of operations.
In September 2011, the FASB issued ASU No. 2011-08, Testing for Goodwill Impairment (“ASU 2011-08”). ASU 2011-08 amends existing guidance by giving an entity the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the performance of the two-step goodwill impairment test, as currently prescribed by ASC Topic 350, is required. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance will not have a significant impact on the Company's consolidated financial position or results of operations.
In July 2012, the FASB issued ASU No. 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment (“ASU 2012-02”). ASU 2012-02 amends existing guidance by giving an entity the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If an entity determines that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, then the performance of the quantitative impairment test, as currently prescribed by ASC Topic 350-30, is required. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance will not have a significant impact on the Company's consolidated financial position or results of operations.


Note 2.
Inventories

Inventories, stated at lower of cost or market, consisted of the following at June 30, 2012 and September 30, 2011:  
 
 
June 30,
2012
 
September 30,
2011
Finished goods
$
13,468

 
$
12,849

Raw materials
9,577

 
11,168

Inventories
$
23,045

 
$
24,017





5


Note 3.
Property, Plant, and Equipment, Net

Property, plant, and equipment at June 30, 2012 and September 30, 2011 consisted of the following:  

 
 
June 30,
2012
 
September 30,
2011
Land
 
$
2,120

 
$
2,120

Buildings and improvements
 
24,546

 
23,549

Machinery and equipment
 
52,102

 
48,805

Molds
 
23,822

 
21,635

Capital improvements in progress
 
2,519

 
1,790

Property, plant and equipment, gross
 
105,109

 
97,899

Accumulated depreciation
 
(31,705
)
 
(20,727
)
Property, plant and equipment, net
 
$
73,404

 
$
77,172


Depreciation expense for the three month periods ended June 30, 2012 and 2011 was $3.7 million and $3.3 million, respectively. Depreciation expense for the nine month periods ended June 30, 2012 and 2011 was $10.9 million and $9.6 million, respectively.


Note 4.
Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the nine month period ended June 30, 2012 and the year ended September 30, 2011 are presented in the table below: 
 
 
June 30,
2012
 
September 30,
2011
Beginning balance
 
$
40,354

 
$
40,413

Currency translation adjustment
 
93

 
(59
)
Ending balance
 
$
40,447

 
$
40,354


Other Intangible Assets

The following table presents the gross carrying amount and accumulated amortization of other intangible assets at June 30, 2012:

 
 
Gross carrying amount
 
Weighted average amortization period
 
Accumulated Amortization
 
Currency Translation Adjustment
 
Net Book Value
Customer relationships
 
$
25,800

 
20 years
 
(3,084
)
 
112

 
$
22,828

Trademarks
 
12,280

 
Indefinite
 
(80
)
 
70

 
12,270

Total
 
$
38,080

 
 
 
(3,164
)
 
182

 
$
35,098




6


The following table presents the gross carrying amount and accumulated amortization of other intangible assets at September 30, 2011:
 
 
Gross carrying amount
 
Weighted average amortization period
 
Accumulated Amortization
 
Currency Translation Adjustment
 
Net Book Value
Customer relationships
 
$
25,800

 
20 years
 
$
(2,112
)
 
$
(1
)
 
$
23,687

Trademarks
 
12,280

 
Indefinite
 
(80
)
 
(13
)
 
12,187

Total
 
$
38,080

 
 
 
$
(2,192
)
 
$
(14
)
 
$
35,874


Customer relationships are amortized over 20 years. The accumulated amortization related to the Trademarks is related to the subsequent amortization of the PVC trademarks. The Pretium trademark is not amortized and has an indefinite useful life.

Amortization expense for each of the three and nine month periods ended June 30, 2012 and 2011 was $0.3 million and $1.0 million, respectively.


Note 5.
Long-term Debt

At June 30, 2012 and September 30, 2011, long-term debt obligations consisted of the following:
 
 
June 30,
 
September 30,
 
2012
 
2011
Long-term debt:
 
 
 
Revolving line of credit
$
6,620

 
$
504

11.5% senior secured notes
150,000

 
150,000

Total Senior Debt
156,620

 
150,504

Other
228

 
353

Total long-term debt, including current maturities
156,848

 
150,857

Current maturities of long-term debt
178

 
169

Total long-term debt, less current maturities
$
156,670

 
$
150,688


Under the terms of the Company’s debt agreements, at June 30, 2012, the scheduled interest rates and maturity dates were as follows:
 
 
Interest rates
 
Scheduled maturity dates
Revolving line of credit
Prime plus 0.5% *
 
September 30, 2015
11.5% senior secured notes
11.5%
 
April 1, 2016

*
The revolving line of credit also has interest rate options based on LIBOR plus a margin of 1.5%. At June 30, 2012, the applicable rate under the prime and LIBOR options was 3.75% and 1.74%, respectively.




7


Note 6.
Pretium Capital Structure
During the nine month period ended June 30, 2012, the Company made a capital contribution of property, plant, and equipment to Robb. Robb subsequently contributed this property to PVC. As part of this transaction, PVC established a deferred tax liability of $0.8 million to reflect the difference between the tax basis and the book basis of the contributed property, which also decreased Members' equity by this amount.
At June 30, 2012, the Company’s capital structure consisted of 1 share of its Class A Member units, held by Pretium Intermediate. Pretium Intermediate is 100% owned by Pretium Holding as of June 30, 2012. The membership units of Pretium Holding are designated Class A units, Class B-1 units, Class B-2 units and Class B-3 units. The Class A and B-2 units contain certain distribution and liquidation preferences, the Class B-1 units contain voting rights and the Class B-3 units are non-voting units intended for employees and directors.


Note 7.
Income Taxes

The Company is a pass-through tax entity except for certain states in which it conducts business. No provision for income taxes has been made in these condensed consolidated financial statements other than for certain subsidiaries which are Subchapter C Corporations.

The effective tax rate differs from the statutory tax rate for the Company primarily due to the Company’s pass-through entity treatment for tax purposes. Losses before income tax at the partnership level exceeded the income before income tax at the subsidiary level and the Company recorded an income tax provision for each of the three and nine month periods ended June 30, 2012 and 2011.

The Company evaluates the net realizable value of its deferred tax assets each reporting period. The Company must consider all objective evidence, both positive and negative, in evaluating the future realization of its deferred tax assets, including tax loss carry forwards. Historical information is supplemented by all currently available information about future tax years. Realization requires sufficient taxable income to use deferred tax assets. The Company records a valuation allowance for each deferred tax asset for which realization is assessed as not more likely than not. In particular, the Company’s assessment that deferred tax assets will be realized considered the estimate of future  taxable income generated from various sources, including the expected recovery of operations from the Canadian subsidiary, and increased profitability due to prior cost reductions, plant restructuring, and revenue growth. If the current estimates of future taxable income are not realized, or future estimates of taxable income are reduced, then the assessment regarding the realization of deferred tax assets could change and have a material impact on the statement of operations. As of June 30, 2012, the Company’s valuation allowance of $3.2 million increased $0.3 million from September 30, 2011.

At June 30, 2012 and September 30, 2011, the total balance of unrecognized tax benefits was $0.1 million.


Note 8.
Contingencies
The Company is involved in various claims and legal proceedings and administrative actions arising in the ordinary course of business. In the opinion of management, the ultimate conclusion of these matters will not have a material effect on the Company’s consolidated results of operations, financial position or cash flows.


8


Note 9.
Restructuring Initiatives

During fiscal 2010, the Company implemented several initiatives to restructure and realign certain manufacturing and administrative resources subsequent to the PVC Acquisition. These plans included the elimination of certain redundant administrative positions at the former PVC corporate headquarters in Eatontown, New Jersey, which was completed in September 2010. They also included the closure and relocation of all manufacturing operations at the Nashua, New Hampshire facility into the Philmont, New York location, which was completed in June 2010. In addition, two Hazleton, Pennsylvania operations were combined with one location retained as a shipping warehouse. The Hazleton consolidation was completed in August 2010. In August 2010 the Company closed the Muscatine, Iowa facility and transferred its operations to Seymour, Indiana and Manchester, Pennsylvania. The Muscatine transition was completed in March 2011. The total costs incurred during the three and nine month periods ended June 30, 2011 was $0.5 million and $2.3 million, respectively. These costs were comprised of severance payments, facility consolidation costs, and other exit costs. There were no such costs incurred during the three and nine month periods ended June 30, 2012.


Note 10.
Fair Value Measurement
The Company's financial instruments consist primarily of cash equivalents, trade receivables, trade payables and debt instruments. The book value of these instruments is a reasonable estimate of their respective fair values.
The Company does not have any financial assets or liabilities measured at fair value on a recurring basis as of June 30, 2012.
Non-financial assets and liabilities, such as goodwill and long-lived assets, are tested for impairment on the occurrence of a triggering event or in the case of goodwill and other indefinite-lived intangible assets, on at least an annual basis.
The Company does not have any other financial instruments within the scope of the fair value disclosure requirements as of June 30, 2012.


Note 11.
Related Party Transactions
On February 17, 2010, the former majority owner of the Company, who now serves on the Company's Board of Directors, entered into a seven year consulting agreement (including a non-competition clause). The Company's cost for these services was $0.3 million and $0.8 million for each of the three and nine month periods ended June 30, 2012 and 2011.
The Company has entered into a management agreement to retain Castle Harlan, Inc. to provide business and organizational strategy, financial and investment management, advisory, and merchant and investment banking services to the Company. In exchange for these services, the Company pays management fees of $2.3 million, annually. The Company recorded total expense related to this agreement of $0.6 million and $1.7 million for each of the three and nine month periods ended June 30, 2012 and 2011.
The fees for both of these related party agreements are included within selling, general and administrative expenses in the condensed consolidated statements of operations.




9


Note 12.
Segment Information
The Company operates as a single reportable segment based on the “management” approach. This approach designates the internal reporting used by management for making decisions and assessing performance as the source of the reportable segments.
The following table provides the geographic distributions of the Company's net sales for the three month periods ended June 30, 2012 and 2011:
 
Net Sales
 
U.S.
 
Canada
 
Total
Quarter ended June 30, 2012
 
$
50,665

 
$
10,021

 
$
60,686

Quarter ended June 30, 2011
 
$
52,536

 
$
10,432

 
$
62,968

The following table provides the geographic distributions of the Company's net sales for the nine month periods ended June 30, 2012 and 2011:

Net Sales
 
U.S.
 
Canada
 
Total
Nine months ended June 30, 2012
 
$
144,757

 
$
30,026

 
$
174,783

Nine months ended June 30, 2011
 
$
148,849

 
$
29,583

 
$
178,432

 
The following table provides the geographic distributions of the Company's long-lived assets as of June 30, 2012 and September 30, 2011:

Total Long-lived Assets
 
U.S.
 
Canada
 
Total
June 30, 2012
 
$
131,492

 
$
17,457

 
$
148,949

September 30, 2011
 
$
135,415

 
$
17,985

 
$
153,400



10


Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011, including the financial statements, accompanying notes and management’s discussion and analysis of financial condition and results of operations, and the interim condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q.

Selected Factors Affecting Our Results
Our net sales are derived from the manufacture and sale of plastic containers to our customers. We operate manufacturing facilities which are typically located in close proximity to our customers. Our profitability is driven by several factors including, but not limited to, (i) the number of units produced, (ii) the amount of resin consumed, (iii) the efficiency of our manufacturing operations, (iv) the level of customization of our products, and (v) the product mix of the book of business in any given period. The number of units produced is driven by both packaging market trends, such as the long term trend of conversion towards plastic packaging, as well as customer specific demand.
Our product mix is reasonably stable with most products providing a similar material margin (i.e., net sales minus raw material costs) and contribution margin (sales price minus variable costs), though smaller units have lower transaction costs. The only significant exception is with regard to preforms sold. While we utilize most of the preforms we manufacture internally to produce bottles for customers, we also sell preforms to customers who then manufacture their own bottles. This enables us to utilize already established capital assets. Sold preforms are manufactured by the injection molding process and generally have the lowest material margin of any product we sell.
Our raw materials consist of resins, colorants, and packaging materials. Over the past several years there have been significant fluctuations in the price of resin, which is our largest component of cost of goods sold. Various factors including changes in the prices of natural gas, crude oil and other petrochemical intermediates from which resins are produced have contributed to these price fluctuations. Primary resins used in our products are PET and HDPE. Our other manufacturing costs consist of labor, utilities and facilities maintenance.
Based on certain resin industry indices, the following table summarizes average market prices per pound of PET and HDPE resins in the United States during the periods indicated:
 
 
Three months ended June 30,
 
Nine months ended June 30,
 
2012
 
2011
 
2012
 
2011
PET
$
0.89

 
$
0.97

 
$
0.92

 
$
0.89

HDPE
$
0.70

 
$
0.77

 
$
0.70

 
$
0.70

Source: ChemData

Our raw material costs and product unit sales prices fluctuate with changes in the prices of the resins utilized in production. When resin prices increase, our raw materials costs increase, and when resin prices decrease, our raw materials costs decline. We pass through 100% of the changes in resin costs by means of corresponding changes in product pricing, in accordance with our customer contracts and agreements with these customers and industry practice. These pass through mechanisms are typically subject to a one to four month timing delay.


11


As a result of this timing delay, there can be a lag between changes in market prices and when that price change is passed through to customers. For example, in periods of rising resin prices, increases in unit sales pricing lag the increases in raw material costs. Therefore the analysis of trends in our net sales and raw material costs must take this effect into consideration. We believe that material margin, which ultimately is reflected in gross profit, is a key measure of profitability, as it is reflective of our ability to pass-through resin costs. In addition, our net sales will fluctuate as we pass along increased resin costs to customers with often limited effects to gross profit.
Selling, general and administrative costs consist primarily of management and clerical salaries, legal, accounting and other professional fees, insurance, commissions, travel and various other costs.
We have a disciplined capital expenditures policy, investing in new projects and equipment only when we believe it will result in incremental net sales with our customers. Our maintenance capital expenditures, which we identify as the minimum capital expenditures to service current customer volumes and initiatives, are approximately $3-3.5 million annually.


Results of Operations
Performance during the Quarter Ended June 30, 2012 (“Q3 FY12”) Compared with the Quarter Ended June 30, 2011 (“Q3 FY11”)

Net Sales
Net sales were $60.7 million during Q3 FY12, which represents a decrease of $2.3 million, or 4%, as compared to $63.0 million during Q3 FY11. The decrease in net sales was attributable to a shift in product mix to lighter weight products combined with lower resin prices which resulted in lower transaction prices compared to Q3 FY11. Total units sold increased approximately 1%, consisting of a 6% increase in sales of preforms and a 1% increase in bottle sales compared to Q3 FY11. The increase in unit volumes was more than offset by the impact of the shift in product mix and lower resin prices compared to Q3 FY11.
Gross Profit
Gross profit during Q3 FY12 was $8.4 million, which represents an increase of $0.2 million compared to $8.2 million during Q3 FY11. Gross profit was positively impacted by lower conversion costs which was primarily driven by integration related manufacturing variances of $0.5 million in Q3 FY11 being eliminated in Q3 FY12. These lower costs more than offset an increase in depreciation of $0.4 million compared to Q3 FY11. Gross profit as a percentage of net sales during Q3 FY12 was 13.8% compared to 13.1% during Q3 FY11.

Operating Expenses
SG&A Expenses
SG&A expenses for Q3 FY12 were $4.7 million, compared to expenses of $4.6 million in Q3 FY11.
Other Operating Expenses
Other operating expenses during Q3 FY12 were $0.6 million, which represents a decrease of $1.0 million compared to Q3 FY11. The improvement in other operating expenses is due to a $0.7 million decrease in transaction related fees and expenses associated with our exploration of acquisition opportunities and a $0.5 million decrease in restructuring expenses compared to Q3 FY11. Unfavorable changes in foreign currency exchange rates resulted in a $0.1 million loss during Q3 FY12 compared to a $0.1 million gain

12


during Q3 FY11. The impact of unfavorable changes in foreign currency exchange rates partially offset the decreases in transaction related fees and expenses and restructuring expenses.
Interest Expense
Interest expense during Q3 FY12 was $4.9 million, which was unchanged compared to Q3 FY11.
Income Tax Provision
As a limited liability company, we are a pass-through tax entity. No provision, except for certain states in which we conduct business, as well as certain of our subsidiaries, is made in the financial statements for income taxes. Our subsidiaries, Robb and PVC, are subject to corporate income taxes under Subchapter C of the Internal Revenue Code. We recognized an income tax provision of $1.0 million during Q3 FY12 and Q3 FY11 for for Robb and PVC based on their pre-tax income or loss.


Performance during the Nine Months Ended June 30, 2012 Compared with the Nine Months Ended June 30, 2011

Net Sales
Net sales were $174.8 million during the nine month period ended June 30, 2012, which represents a decrease of $3.6 million, or 2%, as compared to $178.4 million during the nine month period ended June 30, 2011. The decrease was attributable to a shift in product mix to lighter weight bottles with lower transaction prices, which more than offset a 2% increase in total units sold, compared to the nine month period ended June 30, 2011.
Gross Profit
Gross profit during the nine month period ended June 30, 2012 was $23.9 million, which represents a decrease of $1.4 million, or 5% as compared to $25.3 million during the same nine month period in 2011. The decrease in gross profit was primarily driven by an increase in depreciation expense during the nine month period ended June 30, 2012 of $1.3 million compared to the same nine month period in 2011. Gross profit was positively impacted by lower conversion costs during the nine month period ended June 30, 2012 which was primarily driven by the elimination of integration related manufacturing variances of $2.4 million compared to the same nine month period in 2011. These lower conversion costs more than offset the impact of the decline in net sales compared to the nine month period ended June 30, 2011. Gross margin as a percentage of net sales, while higher than prior year in Q3 FY12 as discussed above, was lower during the nine month period ended June 30, 2012 at 13.7% compared to 14.2% during the same nine month period in 2011. Most of the decline in gross margin as a percentage of net sales during the nine month period ended June 30, 2012 occurred during the three month period ended December 31, 2011 as margins began this fiscal year at a lower level due to raw material cost increases during the last two months of the prior fiscal year.

Operating Expenses
SG&A Expenses
SG&A expenses during the nine month period ended June 30, 2012 were $13.8 million compared to expenses of $13.7 million in nine month period ended June 30, 2011.


13


Other Operating Expenses
Other operating expenses during the nine month period ended June 30, 2012 were $1.7 million, which represents a decrease of $2.8 million compared to the nine month period ended June 30, 2011. The improvement in other operating expenses was primarily due to $2.3 million of restructuring expenses during the nine month period ended June 30, 2011 related to our integration plan subsequent to the Acquisition. There were no restructuring expenses during the nine month period ended June 30, 2012. The nine month period ended June 30, 2012 includes $0.2 million of fees associated with the registration of the 11.5% Senior Secured Notes with the SEC and $0.1 million of fees and expenses associated with our exploration of acquisition opportunities. The nine month period ended June 30, 2011 included $1.2 million of fees and expenses associated with exploration of acquisition opportunities. Unfavorable changes in foreign currency exchange rates resulted in a $0.1 million loss during nine month period ended June 30, 2012 compared to a $0.3 million gain during the nine month period ended June 30, 2011.
Interest Expense
Interest expense for the nine month period ended June 30, 2012 was $14.8 million, which represents an increase of $3.3 million as compared to the nine month period ended June 30, 2011. Interest expense, excluding amortization of deferred financing fees, increased $2.7 million due to the increased level of indebtedness compared to the nine month period ended June 30, 2011 as a result of the Refinancing. Amortization of deferred financing fees included in interest increased $0.6 million due to the capitalization of $9.3 million of deferred financing fees on March 31, 2011 as a result of the Refinancing.
Income Tax Provision
As a limited liability company, we are a pass-through tax entity. No provision, except for certain states in which we conduct business, as well as certain of our subsidiaries, is made in the financial statements for income taxes. Our subsidiaries, Robb and PVC, are subject to corporate income taxes under Subchapter C of the Internal Revenue Code. For the nine month period ended June 30, 2012, we recognized an income tax provision of $2.5 million compared to a provision of $1.9 million for the nine month period ended June 30, 2011 for Robb and PVC based on their pre-tax income or loss.


Non-GAAP Financial Measures
To supplement the Company's financial information presented in accordance with GAAP, management, from time to time, uses additional measures to clarify and enhance understanding of past performance and prospects for the future.
EBITDA and Adjusted EBITDA are supplemental measures to assess our operating performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are not measures of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as measures of our liquidity. When evaluating EBITDA and Adjusted EBITDA, investors should consider, among other factors, (i) increasing or decreasing trends in EBITDA and Adjusted EBITDA, (ii) whether EBITDA and Adjusted EBITDA have remained at positive levels historically, and (iii) how EBITDA and Adjusted EBITDA compares to our outstanding debt.
We define EBITDA as net income (loss) plus interest expense, tax expense (benefit), and depreciation and amortization, and Adjusted EBITDA as EBITDA further adjusted to eliminate the impact of certain noteworthy items that we do not consider indicative of our ongoing operating performance.


14


The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA for the three and nine month periods ended June 30, 2012 and 2011:

 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
2012
 
2011
 
2012
 
2011
Net Loss to Adjusted EBITDA Reconciliation:
 
 
 
 
 
 
 
 
Net loss
 
$
(2,844
)
 
$
(3,903
)
 
$
(8,812
)
 
$
(11,700
)
Interest expense, net
 
4,919

 
4,948

 
14,764

 
11,455

Tax expense
 
1,039

 
963

 
2,490

 
1,892

Depreciation and amortization expense
 
4,062

 
3,598

 
11,874

 
10,565

EBITDA
 
7,176

 
5,606

 
20,316

 
12,212

Management fees (a)
 
562

 
562

 
1,688

 
1,690

Consulting fees (b)
 
250

 
250

 
800

 
795

Restructuring expenses (c)
 

 
486

 

 
2,328

Loss on extinguishment of debt (d)
 

 

 

 
5,470

Transaction related fees and expenses (e)
 
107

 
847

 
307

 
1,237

Integration-related manufacturing variances (f)
 

 
465

 

 
2,356

Adjusted EBITDA
 
$
8,095

 
$
8,216

 
$
23,111

 
$
26,088


(a)
In connection with the Acquisition, we entered into a management services agreement with Castle Harlan to provide business and organizational strategy, financial and investment management, advisory, and merchant and investment banking services.
(b)
In connection with the Acquisition, we entered into a consulting agreement with Keith S. Harbison, the controlling equity holder of Pretium prior to the Acquisition, and an equity co-investor in Pretium Holding.
(c)
Represents the implementation of several initiatives to restructure and realign manufacturing and administrative resources. These costs incurred in connection with these initiatives consisted of severance, facility consolidation costs, and other exit costs. Restructuring expenses were incurred as part of the integration plan initiated subsequent to the Acquisition.
(d)
We recorded a loss on the extinguishment of debt related to the Refinancing on March 31, 2011. The amount represents the write off of net deferred financing costs from previously outstanding costs, original issue discount, prepayment penalties and other related costs from the refinancing.
(e)
Represents professional fees associated with the registration of our notes with the SEC and the exploration of acquisition opportunities.
(f)
As a result of the Acquisition and related operational integration plans, we consolidated the Nashua, New Hampshire operation into the Philmont, New York plant and we consolidated PVC's Hazelton, Pennsylvania operation into our Hazelton, Pennsylvania plant. Beginning in July 2010, we experienced certain material and labor variances from our standard operating costs reflected in our historical results. We consider these material and labor variances to be noteworthy as we incurred incremental costs to manufacture our products. Variances in the amount of $0.5 million and $2.4 million were incurred during the three and nine month periods ended June 30, 2011, respectively. These material and labor variances associated with the integration plans ceased in the period ended June 30, 2011.

15


Our measurements of EBITDA and Adjusted EBITDA and the ratios related thereto may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA and Adjusted EBITDA in this Quarterly Report on Form 10-Q because they are the basis upon which our management assesses our operating performance, are components of certain covenants in our ABL Facility and we believe that such information is used by certain investors as measures of evaluating our operating performance. Furthermore, we believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of debt issuers, many of which present EBITDA and Adjusted EBITDA when reporting their results. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by other noteworthy items.
EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our operating results or cash flows as reported under GAAP. Some of these limitations are:
EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
EBITDA and Adjusted EBITDA do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments, on our debt;
although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
EBITDA and Adjusted EBITDA are adjusted for certain noteworthy and non-cash income or expense items that are reflected in our statements of cash flows; and
other companies in our industry will calculate the measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only for supplemental purposes.


Liquidity and Capital Resources
Liquidity
Our principal ongoing source of operating liquidity is cash generated by our business operations and borrowings from our ABL Facility.
On March 31, 2011 the Company and Pretium Finance issued the Notes. The Notes have a maximum aggregate principal amount of $150.0 million, are guaranteed by the Company's subsidiaries (other then Pretium Finance) and mature on April 1, 2016.
Concurrently with the completion of the offering of the Notes, we entered into the ABL Facility, which was subsequently amended on April 20, 2011 to provide additional borrowing capacity thereunder, among other things. The ABL Facility provides senior secured financing of up to $30.0 million, subject to borrowing base and certain other restrictions on availability. As of June 30, 2012, there was $6.6 million

16


outstanding under our ABL Facility. Borrowings under the ABL Facility bear interest at variable rates and mature on September 30, 2015. At June 30, 2012, letters of credit issued and outstanding were $1.6 million and borrowing availability was $21.8 million.
We believe that cash flows from operations and borrowings from the ABL Facility will be sufficient to meet our existing liquidity needs for the next 12 months. We were in compliance with all of the covenants contained in our Notes and ABL Facility as of June 30, 2012.
Cash Flows
Nine Months Ended June 30, 2012 Compared with the Nine Months Ended June 30, 2011
As of June 30, 2012, we had cash and cash equivalents of $0.9 million. We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. The carrying value of these investments approximates fair value.
Cash provided by operating activities was $0.8 million during the nine month period ended June 30, 2012, compared to $2.7 million of cash provided by operating activities during the nine month period ended June 30, 2011. The decrease in cash provided by operating activities was primarily due to the payment of accrued interest under the Notes. The change in operating assets and liabilities used $4.2 million of cash during the nine month period ended June 30, 2012 and $1.8 million during the nine month period ended June 30, 2011. The changes in operating assets and liabilities included:
Cash provided by accounts receivable of $1.6 million and $1.5 million during the nine month period ended June 30, 2012 and June 30, 2011, respectively, reflected timing of shipments within both periods and an improvement in days sales outstanding attributable to improvements in collection efforts during those periods.
Cash provided by inventories was $1.2 million during the nine month period ended June 30, 2012 due to improvements in inventory management and decreasing resin costs. Inventories required $6.8 million of cash during the nine month period ended June 30, 2011 primarily due to significant increases in resin costs during the period, particularly PET.
Prepaid expenses and other current assets decreased, providing $1.2 million and $1.4 million of cash during the nine month period ended June 30, 2012 and June 30, 2011, respectively. The cash generated during both periods was primarily due to a decrease in prepaid insurance.
Changes in accounts payable and accrued expenses used cash of $3.8 million and $0.3 million during the nine month periods ended June 30, 2012 and 2011, respectively, primarily due to timing of payments to vendors at June 30.
Accrued interest and bank fees used cash of $4.3 million during nine month period ended June 30, 2012 and generated cash of $2.6 million during nine month period ended June 30, 2011. The Notes require payment of interest semiannually on April 1 and October 1 and, at June 30, 2012 and 2011 there was three months of interest accrued under the Notes. The generation of cash during the prior period is due to the increased level of indebtedness and accrued interest as a result of the Refinancing.

Net cash used in investing activities was $7.0 million and $6.9 million during the nine month periods ended June 30, 2012 and 2011, respectively, resulting from specific cash purchases of property, plant and equipment.
Net cash provided by financing activities was $6.0 million and $5.9 million during the nine month periods ended June 30, 2012 and 2011, respectively. The cash generated during both periods primarily represented borrowings under our ABL Facility to fund operating and investing activities.

17


Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements as defined in Regulation S-K, Item 303(a)(4)(ii).

New Accounting Standards
Refer to "Note 1 Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” included in this Quarterly Report on Form 10-Q, for a description of new accounting pronouncements, including the expected impact on the Company’s condensed consolidated financial statements and related disclosures.

Critical Accounting Policies
Management has evaluated the accounting policies used in the preparation of the Company’s condensed financial statements and related notes and believes those policies to be reasonable and appropriate. Certain of these accounting policies require the application of significant judgment by management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on historical experience, trends in the industry, information provided by customers and information available from other outside sources, as appropriate. The most significant areas involving management judgments and estimates may be found in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011, filed on December 19, 2011, in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis and in "Note 1 Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements.” There were no significant changes to the Company’s critical accounting policies during the three and nine month periods ended June 30, 2012.


Item 3.
Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in connection with changes in foreign exchange rates and interest rates, primarily in connection with interest on the outstanding balance under our ABL Facility.

Foreign Exchange Risk

We are exposed to fluctuations in foreign currency cash flows related to our Canadian operations, intercompany product shipments and intercompany loans. Additionally, we are exposed to volatility in the translation of foreign currency earnings to U.S. dollars. Primary exposures include the U.S. dollar versus functional currencies of our major markets, which include the Canadian dollar. We assess foreign currency risk based on transactional cash flows, identify naturally offsetting positions and purchase hedging instruments to protect anticipated exposures. We do not consider the potential loss arising from a hypothetical 10% adverse change in quoted foreign currency exchange rates, as of June 30, 2012, to be material.

Interest Rate Risk

We are exposed to interest rate volatility with regard to the current existing issuances of variable rate debt under our ABL Facility. Primary exposure includes movements in the U.S. prime rate and LIBOR. We manage interest rate risk by incurring a mix of indebtedness bearing interest at both floating and fixed rates at inception and maintain an ongoing balance between floating and fixed rates on this mix of indebtedness through the use of interest rate swaps when necessary. At June 30, 2012, approximately 4.2%, or $6.6 million of our debt was floating rate debt and the weighted average interest rate for all debt was 11.1%. If the relevant interest rates for all of the Company's floating rate debt was 100 basis points

18


higher than actual during each of the three and nine month periods ended June 30, 2012, the Company's interest expense would have increased by less than $0.1 million.


Item 4.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company's management carried out an evaluation (as required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to the Company and its consolidated subsidiaries required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms, and (ii) is accumulated and communicated to the Company's management, including its principal executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Controls and Procedures
In addition, the Company's management carried out an evaluation, as required by Rule 13a-15(d) of the Exchange Act, with the participation of the Chief Executive Officer and the Chief Financial Officer, of changes in the Company's internal control over financial reporting. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that there were no changes in the Company's internal control over financial reporting that occurred during the quarter ended June 30, 2012 that have materially affected, or that are reasonably likely to materially affect, the Company's internal control over financial reporting.

19


PART 2 – OTHER INFORMATION


Item 1.
Legal Proceedings

The Company is involved in various legal proceedings and administrative actions arising in the ordinary course of business. The information regarding these proceedings and actions is included under "Note 8 Contingencies” to the Company’s Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.


Item 1A.
Risk Factors

There have been no material changes to any of the risk factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011 (under "Item 1A Risk Factors").


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

None.


Item 3.
Defaults upon Senior Securities

None.


Item 4.
Mine Safety Disclosures

None.


Item 5.
Other Information

None.


Item 6.
Exhibits

See the list of exhibits in the Exhibit Index to this Quarterly Report on Form 10-Q, which is incorporated herein by reference.


20


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. 

 
 
PRETIUM PACKAGING, L.L.C.
 
 
 
 
 
 
 
 
Date: 
August 14, 2012
By:
/s/ George A. Abd
 
 
 
George A. Abd
 
 
 
President and Chief Executive Officer
 
 
 
 
 
 
 
 
Date: 
August 14, 2012
By:
/s/ Robert A. Robison
 
 
 
Robert A. Robison
 
 
 
Vice President and Chief Financial Officer





21


EXHIBIT INDEX

Exhibit No.
Description
 
 
31.1 *
Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
31.2 *
Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14, 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. Section 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. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
101
The following materials from Pretium Packaging, L.L.C. and Pretium Finance, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 are furnished herewith, formatted in XBRL (eXtensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Balance Sheets as of June 30, 2012 and September 30, 2011, (ii) the Unaudited Condensed Consolidated Statement of Operations for the three and nine month periods ended June 30, 2012 and June 30, 2011, (iii) the Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2012 and June 30, 2011, and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements

*
Filed herewith.


22