Business Overview

We believe we are the largest manufacturer of non-dairy powdered creamer and pickles in the United States, and the largest manufacturer of private label salad dressings in the United States and Canada, based upon total sales volumes. We believe we are also the leading retail private label supplier of non-dairy powdered creamer, soup and pickles in the United States, and jams in Canada. We sell our products primarily to the retail grocery and foodservice channels.

The following discussion and analysis presents the factors that had a material effect on our results of operations for the three months ended March 31, 2009 and 2008. Also discussed is our financial position, as of the end of those periods. This should be read in conjunction with the Condensed Consolidated Financial Statements and the Notes to those Condensed Consolidated Financial Statements included elsewhere in this report. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See "Cautionary Statement Regarding Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions associated with these statements.

We discuss the following segments in this Management's Discussion and Analysis of Financial Condition and Results of Operations: North American Retail Grocery, Food Away From Home, and Industrial and Export. The key performance indicators of our segments are net sales dollars, gross profit and direct operating income, which is gross profit less the cost of transporting products to customer locations (referred to in the tables below as "freight out"), commissions paid to independent sales brokers, and direct segment expenses.

Our current operations consist of the following:

• Our North American Retail Grocery segment sells branded and private label products to customers within the United States and Canada. These products include pickles, peppers, relishes, Mexican sauces, condensed and ready to serve soup, broths, gravies, jams, salad dressings, sauces, non-dairy powdered creamer, aseptic products, and baby food.

• Our Food Away From Home segment sells pickle products, non-dairy powdered creamers, Mexican sauces, aseptic and refrigerated products, and sauces to food service customers, including restaurant chains and food distribution companies, within the United States and Canada.

• Our Industrial and Export segment includes the Company's co-pack business and non-dairy powdered creamer sales to industrial customers for use in industrial applications, including for repackaging in portion control packages and for use as an ingredient by other food manufacturers. Export sales are primarily to industrial customers outside of North America.

Recent Developments

On November 3, 2008, the Company announced plans to close its salad dressings manufacturing plant in Cambridge, Ontario. Production will be moved to the Company's existing manufacturing facilities in Canada and the United States. The closure will result in the Company's production capabilities being more aligned with the needs of our customers. The Company intends to cease all operations by July 2009. The closure costs were included as costs of the acquisition of E.D. Smith and are not expected to impact earnings.

Results of Operations

The following table presents certain information concerning our financial
results, including information presented as a percentage of net sales:

                                                                                             Three Months Ended March 31,
                                                                                            2009                       2008
                                                                                    Dollars      Percent       Dollars      Percent
                                                                                               (Dollars in thousands)
Net sales                                                                          $ 355,396        100.0 %   $ 360,623        100.0 %
Cost of sales                                                                        283,685         79.8       290,234         80.5
Gross profit                                                                          71,711         20.2        70,389         19.5
Operating expenses:
Selling and distribution                                                              25,781          7.3        28,664          8.0
General and
administrative                                                                        15,773          4.4        15,242          4.2
Other operating expense
(income), net                                                                            242          0.1        10,922          3.0
Amortization expense                                                                   3,258          0.9         3,487          1.0
Total operating expenses                                                              45,054         12.7        58,315         16.2
Operating income                                                                      26,657          7.5        12,074          3.3
Other (income) expense:
Interest expense                                                                       4,498          1.2         7,731          2.1
Interest income                                                                            -            -           (20 )          -
Loss on foreign currency
exchange                                                                               2,060          0.6         1,860          0.5
Other income, net                                                                       (112 )          -          (294 )       (0.1 )
Total other expense                                                                    6,446          1.8         9,277          2.5
Income before taxes                                                                   20,211          5.7         2,797          0.8
Income taxes                                                                           7,479          2.1           736          0.2
Net income                                                                         $  12,732          3.6 %   $   2,061          0.6 %

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Net Sales - First quarter net sales decreased 1.4% to $355.4 million in 2009
compared to $360.6 million in the first quarter of 2008. Reduced volume and the
impact of foreign currency were the primary reasons for the decline in net
sales. The Company was able to offset most of the impact by increasing pricing
by approximately 8.9%. Net sales by segment are shown in the following table:

                                                        Net Sales
                                                             $ Increase/      % Increase/
                                  2009          2008         (Decrease)       (Decrease)
                                                 (Dollars in thousands)
North American Retail Grocery   $ 230,682     $ 219,640     $      11,042             5.0  %
Food Away From Home                66,753        70,926            (4,173 )          (5.9 )%
Industrial and Export              57,961        70,057           (12,096 )         (17.3 )%
Total                           $ 355,396     $ 360,623     $      (5,227 )          (1.4 )%

Cost of Sales - All expenses incurred to bring a product to completion are included in cost of sales. These costs include raw materials, ingredient and packaging costs, labor costs, facility and equipment costs, including costs to operate and maintain our warehouses, and costs associated with transporting our finished products from our manufacturing facilities to our own distribution centers. Cost of sales as a percentage of net sales was 79.8% in the first quarter of 2009 compared to 80.5% in 2008. We have experienced increases in ingredient and packaging costs such as metal cans, metal caps, sweeteners, cucumbers and fiber in the first quarter of 2009 compared to 2008. These increases have been more than offset by decreases in the cost of casein, oils and plastic containers. The combination of price increases and the changes in commodity costs in the first quarter of 2009 versus 2008, has resulted in marginal improvement in our consolidated gross profit.

Operating Expenses - Total operating expenses were $45.1 million during the first quarter of 2009 compared to $58.3 million in 2008. Selling and distribution expenses decreased $2.9 million or 10.1% in the first quarter of 2009 compared to the first quarter of 2008 primarily due to a reduction in freight costs related to reduced volume and a reduction in freight rates. General and administrative expenses increased $0.5 million in the first quarter of 2009 compared to 2008. The increase was primarily related to higher research and development costs. Other operating expense was $0.2 million during the first quarter of 2009, and reflected net costs incurred related to the closed Portland, Oregon plant. This is down significantly from the $10.9 million in 2008, reflecting the initial Portland plant closing costs of approximately $10.4 million and $0.5 million related to the fire at our New Hampton, Iowa facility in 2008.

Interest Expense - Interest expense decreased to $4.5 million in the first quarter of 2009, compared to $7.7 million in 2008 due to lower average interest rates and lower debt.

Foreign Currency - Foreign currency losses increased to $2.1 million for the three months ended March 31, 2009 compared to $1.9 million for the three months ended March 31, 2008, primarily due to increased foreign currency transaction losses from U.S. sourced input costs used in our Canadian operations.

Operating Income - Operating income for the first quarter of 2009 was $26.7 million, an increase of $14.6 million, or 120.8%, from operating income of $12.1 million in the first quarter of 2008. Our operating margin was 7.5% in the first quarter of 2009 compared to 3.3% in 2008 due to the significantly higher impact of the Portland plant closure and New Hampton fire in 2008.

Income Taxes - Income tax expense was recorded at an effective rate of 37.0% in the first quarter of 2009 compared to 26.3% in the prior year's quarter. The Company's effective tax rate is favorably impacted by an intercompany financing structure entered into in conjunction with the E.D. Smith, Canadian acquisition. Because consolidated earnings for the three months ended March 31, 2009 were significantly higher than consolidated earnings for the three months ended March 31, 2008, this tax benefit was proportionally much smaller, therefore, increasing the net effective rate in the first quarter of 2009 compared to 2008.

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
- Results by Segment

North American Retail Grocery -

                                         Three Months Ended March 31,
                                        2009                       2008
                                Dollars      Percent       Dollars      Percent
                                            (Dollars in thousands)
Net sales                      $ 230,682        100.0 %   $ 219,640        100.0 %
Cost of sales                    177,352         76.9       174,372         79.4
Gross profit                      53,330         23.1        45,268         20.6
Freight out and commissions       12,325          5.3        13,948          6.3
Direct selling and marketing       6,700          2.9         5,828          2.7
Direct operating income        $  34,305         14.9 %   $  25,492         11.6 %

Net sales in the North American Retail Grocery segment increased by $11.0 million, or 5.0% in the first quarter of 2009 compared to the first quarter of 2008. The change in net sales from 2008 to 2009 was due to the following:

                   Dollars          Percent
                   (Dollars in thousands)
2008 Net sales   $    219,640
Volume                 (9,549 )         (4.3 )%
Acquisitions                -              -
Pricing                24,295           11.0
Mix/other              (3,704 )         (1.7 )
2009 Net sales   $    230,682            5.0 %

The increase in net sales from 2008 to 2009 resulted from the carryover effect of price increases taken in the second half of 2008 due to rising raw material and packaging costs, partially offset by lower case sales of baby food and retail branded pickles, and the impact of foreign currency. While overall case sales decreased in this segment, the Company experienced modest volume increases in soups, Mexican sauces and dressings.

Cost of sales as a percentage of net sales decreased from 79.4% in 2008 to 76.9% in 2009 primarily as a result of price increases to offset the material and packaging cost increases incurred by the Company. Also contributing to the decrease were several cost reduction initiatives and moving away from certain low margin customers over the past year.

Freight out and commissions paid to independent sales brokers was $12.3 million in the first quarter of 2009 compared to $13.9 million in 2008, a decrease of 11.6%, primarily due to reduced volumes and lower freight costs, as fuel prices have decreased since last year.

Food Away From Home -

                                        Three Months Ended March 31,
                                       2009                      2008
                               Dollars      Percent      Dollars      Percent
                                           (Dollars in thousands)
Net sales                      $ 66,753        100.0 %   $ 70,926        100.0 %
Cost of sales                    55,671         83.4       58,065         81.9
Gross profit                     11,082         16.6       12,861         18.1
Freight out and commissions       2,528          3.8        3,461          4.8
Direct selling and marketing      1,548          2.3        1,832          2.6
Direct operating income        $  7,006         10.5 %   $  7,568         10.7 %

Net sales in the Food Away From Home segment decreased by $4.2 million, or 5.9%, in the first quarter of 2009 compared to the prior year. The change in net sales from 2008 to 2009 was due to the following:

                   Dollars          Percent
                   (Dollars in thousands)
2008 Net sales   $    70,926
Volume                (5,362 )          (7.6 )%
Acquisitions               -               -
Pricing                4,049             5.7
Mix/other             (2,860 )          (4.0 )
2009 Net sales   $    66,753            (5.9 )%

Net sales decreased during the first quarter of 2009 compared to 2008 primarily due to reduced volumes resulting from the recent economic down turn, as consumers reduce their spending on dining and eating out. This segment also experienced a decrease in net sales due to both a shift in the sales mix and the impact of foreign currency changes. Net sales of pickle and powder products led the decline by falling 7.5% and 18.2%, respectively. Increased pricing in response to commodity cost increases over the past year partially offset these volume declines.

Cost of sales as a percentage of net sales increased from 81.9% in the first quarter of 2008 to 83.4% in 2009, as sales price increases realized in the quarter helped to partially offset increases in raw material and packaging costs and due to a shift in mix from higher margin food distributors to lower margin national account quick serve customers.

Freight out and commissions paid to independent sales brokers was $2.5 million in the first quarter of 2009 compared to $3.5 million in 2008, a decrease of 27.0%, primarily due to reduced volumes and lower freight costs, as fuel costs have decreased since last year.

Industrial and Export -

                                           Three Months Ended March 31,
                                         2009                          2008
                               Dollars        Percent          Dollars      Percent
                                              (Dollars in thousands)
Net sales                      $ 57,961           100.0 %     $  70,057        100.0 %
Cost of sales                    49,378            85.2          57,797         82.5
Gross profit                      8,583            14.8          12,260         17.5
Freight out and commissions       1,513             2.6           2,424          3.5
Direct selling and marketing        390             0.7             233          0.3
Direct operating income        $  6,680            11.5 %     $   9,603         13.7 %

Net sales in the Industrial and Export segment decreased $12.1 million or 17.3% in the first quarter of 2009 compared to the prior year. The change in net sales from 2008 to 2009 was due to the following:

                    Dollars         Percent
                   (Dollars in thousands)
2008 Net sales   $      70,057
Volume                 (15,500 )       (22.1 )%
Acquisitions                 -             -
Pricing                  3,836           5.4
Mix/other                 (432 )        (0.6 )
2009 Net sales   $      57,961         (17.3 )%

The decrease in net sales is primarily due to reduced volumes resulting from a general decline in consumer usage, and export sales decreasing significantly due to the strength of the U.S. dollar. While the decline in net sales spanned the products sold within this segment, the largest declines were in the non-dairy powdered creamer and soup products. Partially offsetting the volume declines were price increases taken since last year in an effort to offset the increases in input costs.

Cost of sales as a percentage of net sales increased from 82.5% in the first quarter of 2008 to 85.2% in 2009 reflecting increasing raw material and packaging costs, which were partially offset by pricing increases during the quarter.

Freight out and commissions paid to independent sales brokers was $1.5 million in the first quarter of 2009 compared to $2.4 million in 2008, a decrease of 37.6%, primarily due to reduced volumes and lower freight costs, as fuel costs have decreased since last year.

Liquidity and Capital Resources

Cash Flow

Management assesses the Company's liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate positive cash flow from operating activities and remains in a strong financial position, with resources available for reinvestment in existing businesses, acquisitions and managing its capital structure on a short and long-term basis. If additional borrowing is needed to finance future acquisitions, approximately $214.8 million was available on the revolving credit facility as of March 31, 2009. This facility expires in 2011. We believe that, given our cash flow from operating activities and our available credit capacity, we can comply with the current terms of the credit facility and meet foreseeable financial requirements.

The Company's cash flows from operating, investing and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows is summarized in the following tables: