The foam segment of the disposable cup and container market is highly concentrated. According to recent independent industry analyses, the U.S. foam cup and container market is projected to grow at an annual rate of up to 3% through 2010.

The plastic segment of the disposable cup and container market is significantly more fragmented. Major producers of thermoformed polystyrene plastic cups and containers include Pactiv, Solo Cup, Alcoa Packaging, Sweetheart Cup and Dart Container. A recent independent industry analysis of the U.S. plastic cup and container market through 2006 projects an annual growth rate of approximately 2.5% to 3% for sales of disposable cups and lids to institutions and quick-service restaurants, which is believed constitute approximately 80% of all sales of those products.

Within the disposable product market, foam cup and container usage has increased significantly over the last two decades as a result of factors unique to this segment. These factors include the superior insulating qualities of foam, lower production costs and the flexibility in sizing and molding of foam products. In addition, demand for larger sizes and specialized products contributes to growth of the foam packaging segment. Although the success of foam cups to date has been primarily in the hot drink segment, it is believed that there continue to be significant growth opportunities in the sale of cold drink cups, particularly in the large (16 through 64 ounce) sizes, including specialized products such as car carrier cups.

The Company’s cups, bowls and containers are available with custom offset or embossed printing. The Company also manufactures a broad range of custom-designed foam containers for many of its large national accounts. A significant component of this business is the manufacturing of containers for customers such as Nissin Food Products, Maruchan and Samyang, which use the containers for dried noodle products sold through retail grocery and supermarket chains. The Company also supplies its products in private label packaging for certain of its customers.

In North America, the Company manufactures expandable polystyrene, or EPS, for its internal consumption, in addition to selling directly to third-party manufacturers of foodservice, insulation and protective packaging products. EPS is categorized by size, with the smallest size, or cup-grade, used to manufacture foam cups and containers. Larger sizes are sold to manufacturers of insulation and protective packaging products and include EPS modified for fire retardancy and non-modified EPS.

The Company manufactures a broad range of EPS formulations in Europe for conversion into a variety of standard and specialized insulation and packaging products. This EPS is made primarily for the insulation and protective packaging industries and includes a range of bead sizes and densities for conversion by customers into light and heavy insulation boards as well as various shape products, such as insulated fish packaging boxes. The Company works closely with its European customers to incorporate special product features into its EPS, such as fire retardancy, specialty coatings, higher thermal insulation qualities and antistatic properties.

Gross profit for the nine months ended September 26, 2003 was $45.5 million, a $14.2 million decrease from $59.7 million for the comparable period in 2002.Operating expenses for the nine months ended September 26, 2003 increased by $0.5 million to $40.6 million from $40.1 million for the nine months ended September 27, 2002.

Interest expense for the nine months ended September 26, 2003 of $15.6 million decreased by $0.6 million from $16.2 million for the nine months ended September 27, 2002.