EFTA01381275

Form $-I Table of Contentt Our substantial indebtedness may have a material adverse effect on our business, financial condition and results of operations. As of March 31, 2015, we had a total of $390.1 million of indebtedness, consisting of amounts outstanding under our term loan facilities, and a total availability of $40.0 million under our revolving credit facility. Our indebtedness could have significant consequences. including: • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of funding growth, working capital, capital expenditures, investments or other cash requirements; • reducing our flexibility to adjust to changing business conditions or obtain additional financing; • exposing us to the risk of increased interest rata as certain of our borrowings, including borrowings under our tent loan facilities are at variable rates; • making it more difficult for us to make payments on our indebtedness; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • subjecting us to restrictive covenants that may limit our flexibility in operating our business; and limiting our ability to obtain additional financing for working capital. capital expenditures. debt service requirements and general corporate or other purposes. If our cash from operations is not sufficient to meet our current or future operating needs, expenditures and debt service obligations. our business, financial condition and results of operations may be nutterially adversely affected. Our ability to generate cash to meet our operating needs, expenditures and debt service obligations will depend on our future performance and financial condition, which will be affected by financial, business, economic legislative, regulatory and other factors, including potential changes in costs, pricing, the success of product innovation and marketing. competitive pressure and consumer preferences. If our cash flow and capital resources are insufficient to fund our debt service obligations and other cash needs, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. Our revolving credit facility and our term loan facilities restrict our ability to take these actions and we may not be able to affect any such alternative measures on commercially reasonable terms or at all. If we cannot make scheduled payments on our debt, the lenders under our senior secured credit facilities can terminate their commitments to loan money, can declare all outstanding principal and interest to be due and payable and foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. In addition, any downgrade of our debt ratings by any of the major rating agencies, which could result from our financial performance, acquisitions or other factors, would also negatively impact ow access to additional debt financing (including leasing) or refinancing on favorable terms, or at all. Even if we are successful in taking any such alternative actions, such actions may not allow us to meet our scheduled debt service obligations and, as a result, our business, financial condition and results of operations may be materially adversely affected. Failure to protect our intellectual property could harm our competitive position or require us to incur significant expenses to enforce our rights. Our trademarks such as "Blue Buffalo," "LifeSource Bits," "Life Protection Formula,- "BLUE Basics," "BLUE Freedom," and "BLUE Wildernew" along with the BLUE shield logo, the Blue Buffalo figure logo and the tag line "Love them like family. Feed them like family." are valuable assets that support our brand and consumers' perception of our products. We rely on trademark. copyright, trade secret, patent and other 28 http:thanesce.gov/Archi vestedgar/datat I 609989/000119312515218883/d734898dsl.htm17/20/2015 10:30:13 AM] CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0080115 SDNY GM_00228299 EFTA01381275