CONSTAR INTERNATIONAL INC - FORM 10-K - March 24, 2010

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

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

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

For the transition period from                      to                     

Constar International Inc.

Delaware (State or other jurisdiction of incorporation or organization)		13-1889304 (I.R.S. Employer Identification Number)
One Crown Way, Philadelphia, PA (Address of principal executive offices)		19154 (Zip Code)

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

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

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. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). Yes o No o

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 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. o

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 definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ
				(Do not check if a smaller reporting company)

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

As of June 30, 2009, the aggregate market value of the shares of the registrant’s common stock held by non-affiliates was approximately $17,236,800 based upon the closing market price of the Company’s common stock on June 30, 2009.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No o

As of March 24, 2010, 1,750,000 shares of the registrant’s Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

TABLE OF CONTENTS

PART I
Item 1. Business			3
Item 1A. Risk Factors			8
Item 1B. Unresolved Staff Comments			15
Item 2. Properties			15
Item 3. Legal Proceedings			15
Item 4. Reserved			17
PART II
Item 5. Market for Registrant’s Common Stock and Related Stockholder Matters and Issuer Purchases of Equity Securities			17
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 8. Financial Statements and Supplementary Data			32
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			86
Item 9A. Controls and Procedures			86
Item 9B. Other Information			86
PART III
Item 10. Directors, Executive Officers and Corporate Governance			87
Item 11. Executive Compensation			89
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			98
Item 13. Certain Relationships and Related Transactions, and Director Independence			100
Item 14. Principal Accounting Fees and Services			100
PART IV
Item 15. Exhibits and Financial Statement Schedules			102
SIGNATURES			105
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K includes forward-looking statements. Forward-looking statements can be identified by words such as “anticipate”, “believe”, “expect”, “intend”, “plan”, “project”, “will”, “may”, “could”, “should”, “pro forma”, “continues”, “estimates”, “potential”, “predicts”, “goal”, “ objective” or similar expressions. Statements made regarding future results are subject to numerous assumptions, uncertainties and risks that may cause future results to be materially different from the results stated or implied in this document. The following are among the important factors that could cause actual results to differ materially from any results projected, forecasted, estimated or budgeted:

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Our $220 million of Secured Notes will mature on February 15, 2012. We do not have sufficient funds on hand to repay them, nor do we expect to generate sufficient funds from operations to repay them;

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We have had net losses in recent years and may not generate profits in the future;

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Our debt level and our ability to service existing debt or, if necessary, to refinance that debt;

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The impact of our debt on operating flexibility;

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We expect to fund operations using a credit facility that is subject to conditions and borrowing base limitations;

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Our ability to comply with the financial and operating covenants in the instruments governing our indebtedness;

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The market for our products is dominated by a few large purchasers, and a significant portion of our sales is concentrated with some of them;

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Our concentration of sales in conventional containers, the risk that the market for such products may decline, our ability to grow our custom business, and the risk of product obsolescence;

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Customers may not purchase our products in the amounts expected by us under their contracts;

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The impact of PepsiCo’s acquisition of formerly independent bottlers, and the impact of other customer consolidation;

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The impact of increased industry capacity on pricing and volumes;

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General economic and political conditions;

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The impact of price competition on gross margins and profitability;

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The continued movement of customers toward self-manufacturing;

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Our customers’ success in selling their products in their markets;

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Risks associated with our international operations;

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The terms upon which we acquire resin and our ability to pass through resin related price increases in our sales;

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Our ability to obtain resins that are compatible with our technologies;

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Increases in the price of petrochemical products such as PET resin and the effect of such increases on the demand for PET products;

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Our ability to protect our existing technologies and to develop new technologies;

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Our ability to timely market products incorporating our MonOxbar™ and DiamondClear™ technologies;

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The expiration of patents pertaining to the MonOxbar™ technology, and no patents have been issued on DiamondClear and other technologies;

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Our stock is no longer listed on a national securities exchange, and it will likely be more difficult for stockholders and investors to sell our common stock or to obtain accurate quotations of the share price of our common stock;

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Our ability to maintain an effective system of internal controls and remediate any material weaknesses or significant deficiencies that may be identified from time to time;

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Legal and regulatory proceedings and developments;

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Seasonal fluctuations in demand and the impact of weather on sales;

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Our ability to identify trends in the markets in which we compete and to offer new solutions that address the changing needs of these markets;

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Our ability to successfully execute our business model and enhance our product mix;

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As a result of our Chapter 11 reorganization, our historical financial information may not be indicative of our future financial performance;

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Our ability to successfully prosecute or defend the legal proceedings to which we are a party; and

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The other factors disclosed from time to time by the Company in its filings with the Securities and Exchange Commission.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors, including without limitation those discussed under “Risk Factors” below, could also have material adverse effects on future results. The Company undertakes no obligation to update publicly any forward-looking statement whether as a result of new information or future events.

PART I

ITEM 1.		BUSINESS

General

Constar International Inc. (the “Company” or “Constar”) is a Delaware corporation originally incorporated in 1927. The Company’s principal executive office is located at One Crown Way, Philadelphia, PA 19154-4599, and its telephone number is (215) 552-3700.

Constar filed for Chapter 11 protection on December 30, 2008 and emerged from Chapter 11 on May 29, 2009. See Note 2 — “Emergence from Voluntary Reorganization under Chapter 11 Proceedings” in the accompanying Consolidated Financial Statements for additional information.

Constar produces plastic containers made from polyethylene terephthalate (“PET”) used as packaging for food, beverages, and other end use applications The Company also produces plastic closures representing approximately 5% of 2009 net sales.

The PET Container Market

The Company’s products include both bottles and preforms. Preforms are test-tube shaped intermediate products in the bottle manufacturing process. Some companies purchase preforms that they self-manufacture into bottles. Preform sales generally carry lower variable per unit profitability than bottle sales. Preforms are utilized in both conventional and custom applications. In the United States, the Company’s customers typically buy finished bottles, while its European customers typically buy preforms. Given the recent trend in the United States towards self manufacturing of conventional products, the Company’s bottle volume has decreased and preform volume has increased. Bottles and preforms accounted for 71% and 29%, respectively, of the conventional volume in the United States for the year ended December 31, 2009 as compared to 94% and 6%, respectively, for the same period in 2008.

Beverage categories dominate the PET market. The PET container industry is generally divided into two product categories, conventional and custom.

The conventional category is larger by volume and is characterized by high volume production of containers for use in packaging carbonated soft drinks and water. Conventional products are supplied by independent producers such as Constar, and by bottling companies that make containers themselves or through captive affiliates. Due to the simplicity and cost advantage of integrating water bottle production and filling, very few water bottles are produced by independent PET manufacturers. There has also been some movement by certain companies to manufacture their own carbonated soft drink bottles. The Company has been able to retain a majority of the preforms from its customers that have chosen to self-manufacture their bottles. Constar’s carbonated soft drink bottle volume has declined due to this self-manufacturing, a shift by consumers towards alternative beverages, and the negative impact of the economy on the convenience store and gas station distribution channels.

The custom category consists of containers for food and beverage products with special packaging requirements, such as an oxygen barrier or the ability to withstand filling at high temperatures. The custom category is generally characterized by more complex manufacturing processes, specialized materials, innovative product designs and technological know-how. Because of these factors, many custom PET applications have greater profitability and higher barriers to entry than conventional PET packaging. While proprietary technologies exist in this segment, the technology to produce certain types of custom products is commonly available, which has resulted in increased competition and reduced profitability for such products.

The Company’s net sales by market category for the years ended December 31, 2009 and 2008 are summarized below:

(In millions)		2009				2008
Conventional		$	427.2			$	594.9
Custom			182.5				221.2
Other			28.7				41.8
Total		$	638.4			$	857.9

Technologies

The Company invests in research and development in order to develop technologies for increased penetration of the custom PET market.

Oxygen-Barrier Technology. Oxygen barriers inhibit oxygen from penetrating packaging, which can impact product shelf life by causing flavor and color degradation. The Company’s DiamondClear^TM technology, and in particular, the most recent formulation known as DiamondClear 300, provides several advantages that the Company believes makes DiamondClear 300 the best oxygen scavenging material on the market.

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Exceptional Clarity. Some PET containers with alternative oxygen barrier technologies appear cloudy, giving a less than perfect presentation when filled and placed on store shelves. DiamondClear delivers glass-like clarity.

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Barrier Protection. DiamondClear is a powerful oxygen scavenger. DiamondClear 300 is particularly powerful, keeping products fresh and colors vibrant for long periods of time.

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Recycling. Some oxygen barrier products will negatively impact the PET recycling stream. DiamondClear 300 provides a significant improvement in recyclability.

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Monolayer Structure. Multilayer oxygen scavenging bottles require special production equipment to incorporate barrier material between two or more layers of PET. Monolayer bottles incorporate the scavenging technology into a single layer of PET without specialized equipment. In a multi-layer structure, layers can separate. This delamination impairs the bottle’s clarity and poses aesthetic concerns. DiamondClear monolayer PET bottles eliminate delamination.

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Light-weighting. Bottling companies wish to minimize container weight to reduce cost and improve sustainability. As the thickness of a container decreases, the amount of oxygen that penetrates the package wall increases. DiamondClear 300’s robust oxygen scavenging capacity allows for more light-weighting without compromising shelf life.

The Company has filed patent applications on the DiamondClear technologies. In addition to selling PET packaging incorporating DiamondClear, the Company may sell the barrier material directly to other manufacturers. The Company obtained FDA approval for DiamondClear 300 in July of 2009, following which many customers commenced product testing. Commercial sales of DiamondClear 300 are expected to commence in 2010. The Company commenced sales of earlier generation DiamondClear products in 2008. Constar also continues to sell products employing its MonOxbar ^TM oxygen scavenging technology.

Hot-fill Technology. When a container is filled with a hot food or beverage product, a vacuum is created as the product cools. The vacuum, if not already considered in the bottle design, can cause bottle distortion and collapse. The Company has developed technologies that address this challenge without the use of traditional vacuum panels, which interfere with the grip and labeling of the container.

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Vertical Compensation. PET bottles with vertical compensation technology, or VCTTM, use concentric rings (or “hoop” geometry) to absorb vacuum and eliminate the need for traditional vacuum panels.

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X-4TM. Containers using X-4TM technology absorb the vacuum in the base, allowing for cylindrical containers with smooth, rigid walls. The X-4 technology provides complete design flexibility to customers converting from glass to PET who want to retain the same bottle shape.

Patent applications have been filed on the VCT and X-4 technologies.

CONSTruct™ is a proprietary software solution, developed by Constar, which automates the time-intensive process of analyzing and predicting bottle performance when designing new packages. CONSTruct™, developed specifically for PET bottle applications, improves accuracy and reduces development time for new and revised packaging.

R&D Centers. The Company conducts its major research, development and engineering activities, as well as testing and product qualification, at in-house laboratories. From laboratory locations in Alsip, Illinois and Sherburn, United Kingdom, the Company’s research, development and engineering staff provides project support for the design and development needs of its existing and potential customers, and is responsible for the full range of activity from concept to commercialization. Research and technology expenditures were $8.0 million and $8.5 million in 2009 and 2008, respectively.

Intellectual Property. The Company relies on trade secrets, proprietary know-how, and other unpatented proprietary technology to maintain its competitive position. The Company attempts to protect its proprietary know-how and its other trade secrets by executing, when deemed appropriate, confidentiality agreements with its customers and employees. The Company may choose to protect inventions through patent applications, but there can be no assurance that patents will be granted or, if granted, that patents would be upheld if challenged. The Company cannot be assured that its competitors will not discover comparable or the same knowledge and techniques through independent development or other means.

Customers

Generally, Constar supplies its customers pursuant to contracts with terms of one year or longer. The Company’s contracts are generally requirements-based, granting it all or a percentage of the customer’s actual requirements for a particular period of time, instead of a specific commitment of unit volume. All of the Company’s sales are subject to the marketing actions taken by its customers. In 2009, the Company’s top five customers accounted for approximately 59% of the Company’s sales, while the Company’s top ten customers accounted for approximately 77% of the Company’s sales. During the same period, purchases by Pepsi accounted for approximately 32% of the Company’s sales and purchases by Cott Corporation accounted for approximately 11% of the Company’s sales. Pepsi, as defined in this document, refers to PepsiCo, Inc., Pepsi Bottling Group, Pepsi Americas, and the independent bottlers that have designated Pepsi’s global procurement organization to negotiate purchasing on their behalf.

Sources and Availability of Raw Materials

PET resin represents approximately 40-45% of the cost of a PET bottle and approximately 75-80% of the cost of a preform. The Company buys PET resin directly from a diverse base of leading resin suppliers in the United States, Europe and Asia. The Company believes that the large volume of resin that it purchases provides leverage that assists it in negotiating favorable resin purchasing agreements.

Certain customer supply contracts enable customers to “soft toll” some or all of the resin for products to be supplied in the respective contracts. In these cases, the customer negotiates resin pricing directly with resin suppliers, and the Company then purchases the resin requirements for such customer at the negotiated price. There is an increasing trend of customers seeking to soft toll resin. Although this has not had a material impact on the Company’s ability to obtain favorable resin pricing, there can be no assurance that additional soft tolling will not have such impact.

Specific resins are often required for custom applications. Our MonOxbar™, DiamondClear 100™ and DiamondClear 300™ oxygen barrier materials are only qualified with one resin vendor but with multiple resins that it produces. Testing is in process to identify other commercially available alternate resins for all barrier materials. The Company anticipates that additional resins will be qualified shortly but there can be no assurance that such qualifications will take place. In addition, DiamondClear 300™ requires special raw materials that are currently only available from limited sources in China, India, and Germany. These raw materials also require long lead times to obtain. Raw materials are processed into DiamondClear by a third party. In the event that the Company was unable to obtain DiamondClear raw materials, or in the event of any interruption of supply from the Company’s current sole processor, the Company may be unable to sell products incorporating the DiamondClear technology. One qualified resin needed for MonOxbar™ will be discontinued by the end of 2010. An alternate resin has been identified and is being pursued, however testing a substitute resin may require customer cooperation, may take several months, and may not result in the qualification of such resin. If the Company cannot obtain the resins that it requires on reasonable commercial terms, the Company’s business may be materially adversely affected. Any failure to obtain resin on a timely basis at an affordable cost, or any significant delays or interruptions of supply, could prevent the Company from supplying customers on a timely basis.

Competition

PET competes in the packaging market against a number of materials including glass, metal, paperboard and other plastics. Various factors affect the choice of packaging material. In the food and beverage markets, PET’s advantages include consumer preference for PET containers’ transparency, resealability, light weight and shatter resistance. PET bottles and jars have also gained acceptance due to PET’s custom molding potential, which allows customers to differentiate their products using innovative designs and shapes that increase promotional appeal.

The Company’s major PET industry competitors in the United States are Amcor Ltd., Ball Corporation, Graham Packaging Company and Plastipak Holdings, Inc. In Europe, the competitive landscape is much more fragmented.

Competition in the PET industry is intense. In each of the Company’s markets, high standards of service, reliability, and quality are prerequisites to obtaining significant awards of business from customers. Profit margins are lower in the conventional business and where custom technologies are commonly available. Differentiation is obtained by price, quality and customer service. In the custom category, proprietary technology and design capabilities are significant differentiation factors.

Seasonality

Many of the Company’s products have seasonal demand characteristics typically resulting in higher sales and profits in the second and third quarters compared to the first and fourth quarters. Sales of single service convenience beverage bottles are strongest in the summer months. All of Constar’s sales are subject to marketing actions taken by customers as they adjust their mix of product presentations.

Working Capital

Historically, the Company’s cash requirements were higher during the first six to nine months of the year to finance seasonal inventory building. As a result of the Company’s available capacity and lean manufacturing initiatives, the Company expects to reduce this need for seasonal working capital, and that cash requirements will decline accordingly. The Company’s working capital requirements are funded by cash on hand, its revolving credit facility, and cash from operations. Collection and payment periods tend to be longer for the Company’s operations located outside the United States due to local business practices. Further information relating to the Company’s liquidity and capital resources is set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Environmental Liabilities and Costs

The Company’s facilities and operations are subject to a variety of federal, state, local and foreign environmental laws and regulations, including those relating to air emissions, wastewater discharges, chemical and hazardous waste management, and disposal and remediation of environmental sites. The Company is also subject to employee health and safety laws. The nature of its operations exposes the Company to the risk of liabilities or claims with respect to environmental and worker health and safety matters. The Company believes its operations are in material compliance with applicable requirements; however, there can be no assurance that material costs will not be incurred in connection with these liabilities or claims. Based on the Company’s experiences to date, it believes that the future cost of compliance with existing environmental and employee safety laws and regulations will not have a material adverse effect on the Company. Future events, including changes in laws and regulations or their interpretations and the discovery of presently unknown conditions, may nevertheless give rise to additional costs that could be material.

Employees

As of December 31, 2009, the Company employed 1,238 employees, with 1,057 in the United States and 181 in Europe. None of its U.S. employees are unionized. There are union workers at its Sherburn, United Kingdom plant and its Zevenaar, Netherlands plant. The Company believes that its employee relations are generally good and that its practices in the areas of training, safety, progression, retention, lean manufacturing training and team involvement foster continuous improvement in capabilities and satisfaction levels throughout its workforce.

Financial Information by Segment

The Company has one business segment with manufacturing facilities in the United States and Europe. For additional information regarding net customer sales and long-lived assets for the countries in which the Company operates, see Part II, Item 8 — “Financial Statements and Supplemental Data” — Note 25.

Securities Exchange Act Reports

The Company maintains an Internet website at the following address: www.constar.net. The information on the Company’s website is not incorporated by reference into this annual report on Form 10-K. Constar makes available on or through its website certain reports and amendments to those reports that Constar files with or furnishes to the SEC in accordance with the Securities Exchange Act of 1934. These include annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Constar makes this information available on its website free of charge as soon as reasonably practicable after it electronically files the information with, or furnishes it to, the SEC. You may also read and copy any materials Constar files with the SEC at the SEC’s Public Reference Room that is located at 100 F Street, NE, Washington DC 20549. Information about the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. You can also access Constar’s filings through the SEC’s internet site: www.sec.gov.

ITEM 1A.		RISK FACTORS

Our business involves a number of risks, some of which are beyond our control. You should carefully consider each of the risks and uncertainties we describe below, and all of the other information in this Form 10-K and the Company’s other SEC filings. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also become important factors that may harm our business.

We do not have sufficient funds to repay our Secured Notes that mature on February 15, 2012.

Our $220.0 million of Secured Notes mature on February 15, 2012. We do not have sufficient funds, nor do we anticipate generating sufficient funds, to repay these notes and may not be able to refinance these notes prior to their maturity. Failure to refinance the Secured Notes within 90 days of their maturity is an event of default under our credit facility. In addition, if we fail to refinance the Secured Notes prior to the issuance of the Company’s Form 10-K for the year ended December 31, 2010, our auditors may issue a going concern opinion on our consolidated financial statements. In connection with the adoption of fresh-start accounting, for purposes of the Company’s financial statements the Secured Notes were adjusted to fair value based upon their quoted market price; however, the total amount due at maturity remains $220.0 million.

We may not generate profits in the future and we had net losses in recent years.

For the fiscal years ended December 31, 2009 and 2008 we incurred net losses excluding the impact of reorganization items of $27.2 million and $48.6 million, respectively, and we may not generate net income in the future. Continuing net losses may limit our ability to service our debt and fund our operations. Factors contributing to net losses in recent years included, but were not limited to, price competition and the implementation of price reductions to extend customer contracts; asset write-downs and impairment charges; delays in conversions to PET from other forms of packaging; a high proportion of conventional products in our product mix; customers shifting to self manufacturing of bottles; loss of customers due to contract expirations and competition; and operating difficulties in our European businesses. These and other factors may adversely affect our ability to generate profits in the future.

Our indebtedness may reduce our operating flexibility and may adversely affect our ability to incur additional debt to fund future needs.

Our debt may have important negative consequences for us, such as:

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limiting our ability to obtain additional financing for capital expenditures, working capital, and other general corporate purposes, particularly because substantially all of our assets are currently subject to liens;

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increasing our vulnerability to economic downturns and changing market and industry conditions;

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limiting our ability to compete with companies that are not as highly leveraged and that may be better positioned to withstand economic downturns;

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impacting the Company’s ability to retain existing customers and attract new customers; and

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requiring us to dedicate a substantial portion of our cash flow from operations to service our debt, thereby reducing the availability of cash to fund business needs.

Our credit facility includes borrowing base limitations and other restrictions under which we may not be able to borrow the full amount of the facility.

We currently plan to finance ordinary business operations through borrowings under our credit facility. If we are unable to fully access our credit facility, we may become illiquid and we may be unable to finance our ordinary business activities. Our ability to borrow funds under our credit facility is subject to our compliance with various covenants as of the date of borrowing. Even if we are in compliance with all such covenants, the total amount of the facility may be unavailable because we can only borrow a percentage of the eligible “borrowing base.” The borrowing base is comprised of eligible accounts receivable and inventory of our United States and United Kingdom operations. As the value of such accounts receivable and inventory declines, our ability to borrow is reduced. Factors that could cause such value to decline include, among other things:

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management of working capital;

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a decline in the price of resin or other declines in the prices of our products;

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an increase in the value of the United States dollar relative to foreign currencies; and

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the administrative agent is entitled to conduct field audits and inventory appraisals that may result in the application of a lower valuation.

The borrowing base is subject to further limitations, including that:

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if inventory is located on properties that we lease and if we are unable to obtain consents from the landlords such inventory may not be eligible for inclusion in the borrowing base; and

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the administrative agent has the ability to reduce our borrowing availability at any time by, for example, establishing reserves or declaring certain collateral ineligible.

We must comply with financial and other covenants in our credit facility and other debt agreements.

Our credit facility contains a financial covenant that require us to maintain $40.0 million of consolidated EBITDA (calculated on a trailing twelve month basis as of the last day of the then immediately preceding fiscal quarter) if our borrowing availability during any fiscal quarter falls below $15.0 million for any period of five consecutive business days during such fiscal quarter. Based upon its current projections, the Company expects to be in compliance with its debt covenants during 2010. The Company believes that the trailing twelve month Consolidated EBITDA will fall below $40.0 million at the end of the second quarter of 2010, but that the Company will remain in compliance with this covenant because available credit will not fall below $15.0 million for five consecutive business days. The Company’s projected availability and Consolidated EBITDA may be impacted by unit volume changes, resin price changes, movements in foreign currency, working capital changes, changes in product mix, factors impacting the value of the borrowing base, and other factors. In response to these factors, the Company would plan to delay or eliminate certain capital expenditures, reduce its inventory, institute cost reduction initiatives, seek additional funding related to its unsecured assets or seek a waiver of the covenant. There can be no assurance that such actions would be successful.

In addition, our credit facility limits our capital expenditures to $25.0 million per year with a carryover permitted into the immediately following year of 75% of any unused portion. Our credit facility and the indenture governing our Secured Notes also contain covenants customary for such financings that, among other things, restrict our ability to sell assets, incur debt, incur liens and engage in certain transactions. These restrictions may limit our operating flexibility or our ability to take advantage of potential business opportunities as they arise. These covenants may have a material adverse impact on our operations.

Our failure to comply with any of these covenants may constitute an event of default. Our credit facility and indenture also contain other events of default customary for such financings. If an event of default was to occur and we are unable to obtain an amendment or waiver, the lenders could declare outstanding borrowings immediately due and payable, discontinue further lending to us, apply any of our cash to repay outstanding loans, or foreclose on assets. We cannot provide assurance that we would have sufficient liquidity to repay or refinance borrowings upon an event of default. In addition, the credit facility and indenture contain provisions under which a default or acceleration of one of such documents may result in a cross acceleration of the other.

Our key technologies are not covered by patents.

The key patents on our Oxbar technology have expired. We have filed patent applications for our DiamondClear, X-4 and other new technologies related to our custom business. If these patents are not issued, our ability to compete in the custom business may be materially adversely affected. We currently maintain patents covering various aspects of the design and construction of our products, but our patents may not withstand challenge in litigation, and patents do not ensure that competitors will not develop competing products, design around our patents or infringe upon our patents.

We market our products internationally and the patent laws of foreign countries may offer less protection than the patent laws of the United States. Not all of our domestic patents have been registered in other countries. We also rely on trade secrets, know-how and other unpatented proprietary technology, and others may independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets, know-how and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements with us. These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of this information. In addition, we have from time to time received letters from third parties suggesting that we may be infringing on their intellectual property rights, and third parties may bring infringement suits against us. If the claims of these third parties are successful, we may be required to seek licenses from these third parties or refrain from using the claimed technology.

A significant portion of our sales is concentrated with a few large customers.

In 2009, our sales to Pepsi and Cott Corporation accounted for approximately 32% and 11%, respectively, of consolidated net sales. The Company’s ten largest customers accounted for approximately 77% and 76% of our consolidated net sales in 2009 and 2008, respectively. Our supply contract with Pepsi expires on December 31, 2012. The loss or reduction of our business with any of our significant customers could have a material adverse impact on our net sales, profitability, and cash flows. A decrease in cash flows may cause the carrying value of our assets to become unrecoverable and could trigger a write-down of assets due to impairment.

In addition, the market for PET packaging is dominated by a handful of large customers. Opportunities to obtain significant new awards from such customers are limited, as are the opportunities to replace any lost business from such customers.

Conventional PET containers account for a significant portion of our consolidated net sales.

For the years ended December 31, 2009 and 2008, approximately 67% and 69%, respectively, of our sales related to conventional PET containers which are used for carbonated soft drinks and bottled water. On average, the variable profit margin of the conventional category is lower than the custom category. The demand for our conventional products is declining due to the trend of bottlers manufacturing their own bottles in-house. In addition, the single serve carbonated soft drink market, whose primary distribution channel is gasoline stations and convenience stores, has declined with the economy and its recovery to historical levels cannot be assured. Furthermore, the carbonated soft drink market may continue to decline as consumers shift their preferences to alternative beverages.

Our customers are engaging in self-manufacturing.

Self-manufacturing by customers may have a material adverse impact on the Company’s sales volumes and financial results. The Company believes that the majority of single serve water bottles are now being self-manufactured. Carbonated soft drink containers are also being self-manufactured, and the Company expects this transition to continue over time at locations where merchant suppliers’ transportation costs are high, and where large volume, low complexity and available space to install blow-molding equipment exists. While customers may continue to purchase water and CSD preforms from merchant suppliers to support their in-house blow-molding operations, preform sales are typically less profitable than bottle sales. In addition, hot-fill custom containers could shift to self-manufacturing if a customer were to change the product formulation from hot-fill to cold-fill, or if the customer adopted an aseptic filling process.

Consolidation of our customers may reduce the Company’s volumes and profitability.

PepsiCo’s acquisition of Pepsi Bottling Group and Pepsi Americas provides PepsiCo with the opportunity to consolidate filling operations and potentially increase its self-manufacturing of bottles. This may reduce the Company’s volume of business with PepsiCo.

Generally, the consolidation of our customers may reduce our net sales and profitability. If one of our larger customers acquires one of our smaller customers, or if two of our customers merge, the combined customer’s negotiating leverage with us may increase and our business with the combined customer may become less profitable. In addition, if one of our customers is acquired by a company that has a relationship with one of our competitors, we may lose that customer’s business. The consolidation of purchasing power through buyer cooperatives or similar organizations may also harm our profitability.

Contracts with customers generally do not require them to purchase any minimum amounts of products from us, and customers may not purchase amounts that meet our expectations.

Our contracts, including those with Pepsi, our largest customer, are generally requirements-based, granting us all or a percentage of the customer’s actual requirements for a particular period of time, instead of a specific commitment of unit volume. In addition, certain contracts permit customers to terminate contracts if the customer receives an offer from another manufacturer that we choose not to match. Increases in resin prices relative to alternative packaging materials, or other price increases, may cause customers to decrease their purchases from us. Additionally, if customers discontinue products or convert products from one type to another, we may lose a source of revenues and profits. As a result, despite the existence of supply contracts with our customers, we face the risk that in the future customers will not continue to purchase amounts that meet our expectations.

Pricing and volumes in our markets are sensitive to production capacity utilization.

Our business is sensitive to industry capacity utilization. Self-manufacturing of water bottles and carbonated soft drink bottles may result in increased industry capacity, which could increase price competition and affect our profitability.

If the Company’s custom PET packaging business does not grow, our growth and profitability may be lower than we currently expect.

To the extent that we do not grow custom PET volume as much or as quickly as anticipated, our profitability may be lower than we currently expect. We believe that one of the keys to our future success will be our ability to sell more custom PET products, in particular, those products incorporating the Company’s oxygen scavenging material. Partly because of the more complex technologies required for certain custom PET applications, profitability is generally higher for custom PET products than for conventional PET products. We believe a number of products will convert from glass, metal and other packaging to custom PET packaging. The lead time for major new business projects ranges from two to four years. A slower rate of conversion would limit our growth opportunities. During 2009, custom beverage sales were reduced due to factors including the negative impact of prevailing economic conditions on the convenience store and gas station distribution channels where custom PET single serve beverages are sold. In addition, general economic conditions may impact our customers’ willingness to convert to PET from other forms of packaging. These trends may continue in the future.

Our products and services may become obsolete.

Significant technological changes could render our existing technology or our products and services obsolete. The markets in which we operate are characterized by rapid technological change, frequent new product and service introductions and evolving industry standards. Our ability to compete may be weakened if our existing technologies are rendered obsolete. If we are unable to respond successfully to technological developments or do not respond in a cost-effective way, or if we do not develop new technologies, our net sales and profitability may decline. To be successful, we must adapt to rapidly changing markets by continually improving our products and services and by developing new products and services to meet the needs of our customers. Our ability to develop these products and services will depend, in part, on our ability to license leading technologies useful in our business and develop new offerings and technology that address the needs of our customers. Similarly, the equipment that we use may be rendered obsolete by new technologies. A significant investment in new equipment may reduce our profitability.

We are dependent on a limited number of resin and chemical suppliers

Specific resins are often required for custom applications. Our MonOxbar™, DiamondClear 100™ and DiamondClear 300™ oxygen barrier materials are only qualified with one resin vendor but with multiple resins that it produces. Testing is in process to identify other commercially available alternate resins for all barrier materials. The Company anticipates that additional resins will be qualified shortly but there can be no assurance that such qualifications will take place. In addition, DiamondClear 300™ requires special raw materials that are currently only available from limited sources in China, India, and Germany. These raw materials also require long lead times to obtain. Raw materials are processed into DiamondClear by a third party. In the event that the Company was unable to obtain DiamondClear raw materials, or in the event of any interruption of supply from the Company’s current sole processor, the Company may be unable to sell products incorporating the DiamondClear technology. The only qualified resin needed for MonOxbar™ will be discontinued by the end of 2010. An alternate resin has been identified and is being pursued, however testing a substitute resin may require customer cooperation, may take several months, and may not result in the qualification of such resin. If the Company cannot obtain the resins that it requires on reasonable commercial terms, the Company’s business may be materially adversely affected. Any failure to obtain resin on a timely basis at an affordable cost, or any significant delays or interruptions of supply, could prevent the Company from supplying its customers on a timely basis.

Increases in the price of resin may negatively impact our financial results and may deter the growth of the PET market.

PET resin is the principal raw material used in the manufacture of our products. We use large quantities of PET resin in manufacturing our products. Increases in the price of resin may increase the cost of our products, reduce our profitability and reduce our prospects for growth. Resin is subject to substantial price fluctuations. Resin is a petrochemical product and resin prices may fluctuate with prices in the worldwide oil and gas markets. Political or economic events in oil or gas producing countries, such as those in the Middle East, may impact the price of resin.

Although substantially all of our sales are made pursuant to mechanisms that permit us to pass changes in the price of resin through to our customers, market conditions may not permit us to fully pass through any future resin price increases or may force us to grant other concessions to customers. In addition, the arrangements that we make to limit our exposure to fixed or other resin pricing mechanisms may not operate as expected, including under circumstances where our resin suppliers are unable or unwilling to perform. Resin price increases against which we are not protected may have a material adverse impact on our business. Significant increases in resin prices, coupled with an inability to promptly pass such increases on to customers, may increase our cost of products sold and reduce our profitability. A sustained increase in the price of resin may slow the rate of conversion of alternative packaging materials, such as glass and metal, to PET, or may make these alternative packaging materials more attractive than PET. A sustained increase in the price of resin may also result in an increased price to consumers, which may affect consumer preference for PET packaging. If these factors reduce the demand for PET packaging, it may significantly reduce our prospects for growth.

Customers may supply us with an increasing amount of resin, which may reduce our ability to negotiate favorable resin purchase contracts.

Because we are a large purchaser of resin, we enjoy significant leverage in negotiating resin purchase agreements. To the extent that our customers choose to supply us with an increasing amount of resin, the amount of resin that we purchase will decline and we may lose some of our leverage in negotiating resin purchase agreements. If we have to pay higher prices for resin, our costs will increase and we may not be able to offer our customers pricing terms as favorable as those we offer now or as favorable as those offered by our competitors.

We earn a significant portion of our revenue in warmer months, and cool weather may result in lower sales and cash flows.

Unseasonably cool weather could reduce our sales and profitability and cash flows. A significant portion of our revenue is attributable to the sale of beverage containers. Demand for beverages tends to peak during the summer months. In the past, significant changes in summer weather conditions have affected the demand for beverages, which in turn affects the demand for beverage containers manufactured by us.

Cash flow requirements are the greatest in the first several months of each fiscal year because of the increased working capital required to build inventory for the warmer months and because of lower levels of profitability associated with softer sales during the first few months of each fiscal year. Lower demand due to unseasonably cool weather may have a significant impact on cash flow because of lower profitability and the impact on working capital.

A small number of stockholders are in a position to influence most of our significant corporate actions because they hold a significant amount of our common stock.

In their various filings with the Securities and Exchange Commission, FMR L.L.C., Solus Alternative Capital Management LP, JPMorgan Chase & Co., Trafelet Capital Management L.P., and/or their respective affiliates, have publicly reported the ownership of approximately 59% of our common stock in the aggregate. These entities, acting alone or in concert, may be able to influence the outcome of corporate actions requiring stockholder approval. As a result, these entities are in a position to influence most of our significant corporate actions.

Our interest expense may increase since indebtedness under the Secured Notes and our Credit Facility is subject to floating interest rates.

The Secured Notes and our borrowings under our credit facility are subject to floating interest rates and the amount outstanding under the credit facility will change from time to time. Changes in economic conditions could result in higher interest rates, thereby increasing our interest expense and reducing our funds available for operations and other purposes. A 1.0% increase in market interest rates on our un-hedged floating rate borrowings outstanding as of December 31, 2009 would result in an annual increase in our interest expense and a decrease in our income before income taxes of approximately $1.3 million.

We are subject to foreign currency risk and other instabilities from our international operations.

For the years ended December 31, 2009 and 2008, we derived approximately 20% of our revenue from sales in foreign currencies. In our financial statements, we translate local currency financial results into United States dollars based on average exchange rates prevailing during a reporting period. Our most significant foreign currency exposures are to the British pound and the Euro. During times of a strengthening United States dollar, our reported international revenue and earnings will be reduced because the local currency will translate into fewer United States dollars.

We are exposed to the risk of liabilities or claims related to environmental and health and safety standards.

Our facilities and operations are subject to federal, state, local and foreign environmental and employee health and safety laws and regulations, including those regarding the use, storage, handling, generation, transportation, treatment, emission and disposal of certain substances and remediation of environmental impacts to soil and groundwater. The nature of our operations exposes us to the risk of liabilities or claims with respect to environmental and worker health and safety matters.

Currently, we are involved in a small number of compliance and remediation efforts primarily concerning wastewater discharge and possible soil and groundwater contamination, including investigations and certain other activities at our Netherlands facility. Based on information presently available, we do not believe that the cost of these efforts will be material. However, environmental and health and safety matters cannot be predicted with certainty, and actual costs may increase materially.

Our operations and profitability could suffer if we experience labor relations problems or if we do not reach new union agreements on satisfactory terms.

A prolonged work stoppage or strike could prevent us from operating our manufacturing facilities. The contract with our union employees in our Netherlands facility expires on October 31, 2010. The contract with our hourly union employees in our Sherburn, England facility expires on December 31, 2010. The workforce is the U.S. is non-union. While we believe that our employee relations are generally good, there can be no assurance that new contracts can be negotiated and if so, what impact the terms will have on the Company.

We face product liability risks and the risk of negative publicity if our products fail or if our customers and suppliers are affected by product liability risks or negative publicity.

Our business is exposed to product liability risk and the risk of negative publicity if our products fail. In addition, we are exposed to the product liability risk and negative publicity affecting our customers and suppliers. Because many of our customers are food, beverage and other consumer products companies, with their own product liability risks, our sales may decline if any of our customers are sued on a product liability claim, or if they halt production or recall products voluntarily or involuntarily due to safety concerns. We may also suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public perceptions in general regarding our products or our customers’ products that use our containers.

As a result of our Chapter 11 reorganization, our historical financial information may not be indicative of our future financial performance.

Under fresh-start accounting our assets and liabilities were adjusted to their fair values and our accumulated deficit was adjusted to zero. Accordingly, our financial condition and results of operations following our emergence from Chapter 11 may not be comparable to the financial condition or results of operations reflected in our historical financial statements.

We have a significant amount of goodwill and intangible assets that we may be required to write down in certain circumstances, which would result in lower reported net income (or higher net losses) and a reduction to stockholders’ equity.

At December 31, 2009 we had $118.7 million of goodwill and $31.4 million of intangible assets. Under accounting principles generally accepted in the United States, we are required to evaluate our goodwill and trade name at least annually to determine whether the assets are impaired. The Company has selected October 1 as its annual testing date. Our technology and leasehold interest intangible assets are tested for impairment whenever a triggering event occurs that indicates the carrying value may not be recoverable. We may also test our goodwill and trade name for impairment on an interim basis if a triggering event occurs that would indicate that the fair value of our company or our trade name has declined. Under certain circumstances, we may be required to recognize an additional impairment charge.

We are subject to lawsuits and claims that could adversely affect our results of operations and financial position.

We are subject to lawsuits and claims in the normal course of business and related to businesses operated by predecessor corporations. See “Our Business—Legal Proceedings” for a fuller description of certain cases to which we are currently party. Litigation can be costly and time-consuming and the outcomes of lawsuits cannot be predicted. A significant judgment against us could materially and adversely impact our results of operations and financial position. In addition, certain judgments against us would constitute an event of default under our debt agreements.

We have underfunded pension plans and an unfunded post-retirement medical/life insurance plan, which could affect our cash flows and financial condition.

We maintain funded pension plans in the U.S., the U.K. and Holland and an unfunded retiree medical/life insurance plan in the U.S. In 2009, we contributed approximately $3.8 million in the aggregate to the pension and retiree medical/life insurance plans, and we expect to contribute approximately $4.2 million in the aggregate to these plans for 2010. The Company’s pension plans were underfunded by approximately $27.7 million and $33.6 million as of December 31, 2009 and 2008, respectively. The difference between pension plan obligations and assets, or the funded status of the plans, significantly affects the net periodic benefit costs of the Company’s pension plans and the ongoing funding requirements of those plans. Among other factors, volatility in the equity and debt markets, changes in interest rates, investment returns and the market value of plan assets can substantially increase our future pension plan funding requirements. A significant increase in our funding requirements could have a negative impact on our results of operations and profitability. In addition, our unfunded retiree medical and life insurance benefit obligation was approximately $4.4 million and $5.3 million at December 31, 2009 and 2008, respectively.

The U.S. pension plan’s assets consist primarily of common stocks and fixed income securities. If the performance of these investments does not meet our assumptions, the underfunding of the U.S. pension plan may increase and we may have to contribute additional funds to the U.S. pension plan. In addition, the Pension Protection Act of 2006 could require us to accelerate the timing of our contributions to the U.S. pension plan and also increase the premiums that we pay to the Pension Benefit Guaranty Corporation (the “PBGC”). The actual impact of the Pension Protection Act on our U.S. pension plan funding requirements will depend upon the interest rates required for determining the plan’s liabilities and the investment performance of the plan’s assets. An increase in U.S. pension plan contributions and expenses could decrease our available cash to pay outstanding obligations and our net income. While the U.S. pension plan continues in effect, we will continue to incur additional pension obligations. Our U.S. pension plan is subject to the Employee Retirement Income Security Act of 1974, or ERISA. Under ERISA, the PBGC has the authority to terminate an underfunded plan under certain circumstances. In the event that our U.S. pension plan is terminated for any reason while the plan is underfunded, we will incur a liability to the PBGC that may be equal to the entire amount of the under funding.

Our stock is not listed on a national securities exchange. It will likely be more difficult for stockholders and investors to sell our common stock or to obtain accurate quotations of the share price of our common stock.

Our stock is traded over the counter. We can provide no assurance that we will be able to list our common stock on a national securities exchange in the future, or that our stock will continue being traded over the counter. The trading of our common stock over the counter negatively impacts the trading price of our common stock and the levels of liquidity available to our stockholders.

ITEM 1B.		UNRESOLVED STAFF COMMENTS

None.

ITEM 2.		PROPERTIES

The Company’s corporate headquarters are located at One Crown Way, Philadelphia, Pennsylvania. The Company believes that its plants, which are of varying ages and types of construction, are in good condition, are suitable for its operations and generally are expected to provide sufficient capacity to meet its requirements for the foreseeable future. The Company maintains facilities in the United States and Europe. The locations of these facilities, their respective sizes and ownership/lease status are as follows:

Location		Type of Facility		Size(1)				Ownership Status
United States
Philadelphia, Pennsylvania		Headquarters			24,328			Leased
Alsip, Illinois		Research and Development			44,392			Leased
Atlanta, Georgia		Warehouse			186,731			Leased
Atlanta, Georgia		Plant and Warehouse			121,704			Owned
Charlotte, North Carolina		Warehouse			185,768			Leased
Charlotte, North Carolina		Plant and Warehouse			142,500			Owned
Cheraw, South Carolina (closed)		Plant and Warehouse			91,356			Leased
Collierville, Tennessee (closed)		Plant			200,001			Owned
Dallas, Texas		Plant and Warehouse			636,480			Leased
Havre de Grace, Maryland		Plant and Warehouse			437,564			Owned
Havre de Grace, Maryland		Plant and Warehouse			175,200			Owned
Houston, Texas (closed)		Plant and Warehouse			191,537			Leased
Jackson, Mississippi		Plant and Warehouse			127,043			Owned
Kansas City, Kansas		Warehouse			47,277			Leased
Kansas City, Kansas		Plant and Warehouse			236,633			Leased
Hebron, Ohio		Warehouse			211,200			Leased
Hebron, Ohio		Plant			109,800			Leased
Orlando, Florida		Plant and Warehouse			360,000			Leased
Orlando, Florida		Plant and Warehouse			139,332			Leased
West Chicago, Illinois		Warehouse			100,990			Leased
West Chicago, Illinois		Plant and Warehouse			123,100			Owned
Europe
Zevenaar, Netherlands		Plant			22,030			Owned
Sherburn, England		Plant			22,748			Owned
Sherburn, England		Warehouse			5,125			Owned

All owned U.S. and U.K. real property is subject to a lien under the Secured Notes.

As part of our restructuring plan, facilities located in Cheraw, South Carolina, Dallas, Texas and Collierville, Tennessee, were closed during 2009, and a facility located in Houston, Texas was closed during 2008. The Dallas facility shown in the table above is separate from the Dallas facility that was closed in 2009.

From time to time the Company secures additional warehouse space on a short-term basis as needed to meet inventory storage requirements.

ITEM 3.		LEGAL PROCEEDINGS

As discussed in Note 2 — “Emergence from Voluntary Reorganization under Chapter 11 Proceedings” in the notes to the Consolidated Financial Statements, on December 30, 2008, Constar and certain of its subsidiaries filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking reorganization relief under the provisions of Chapter 11 of the Bankruptcy Code. The Company and such subsidiaries emerged from Chapter 11 on May 29, 2009.

The Company, one of its present directors and certain of its former directors, along with Crown Holdings, Inc., as well as various underwriters, have been named as defendants in a consolidated securities class action lawsuit filed in the United States District Court for the Eastern District of Pennsylvania, In re Constar International Inc. Securities Litigation (Master File No. 03-CV-05020) generally alleging that the registration statement and prospectus for the Company’s initial public offering of its common stock on November 14, 2002 contained material misrepresentations and/or omissions. This action consolidates previous lawsuits, namely Parkside Capital LLC v. Constar International Inc et al. (Civil Action No. 03-5020), filed on September 5, 2003 and Walter Frejek v. Constar International Inc. et al. (Civil Action No. 03-5166), filed on September 15, 2003 In connection with the Company’s emergence from Chapter 11 and in accordance with the Company’s Second Amended and Restated Plan of Reorganization (the “Plan”), all such claims are to be subordinated pursuant to Section 510(b) of the Bankruptcy Code and treated as equity interests. The Plan further provides that all pre-petition equity interests in Constar will be extinguished, as will any claims relating to, or arising in connection with, such equity interests (or the purchase or sale of such interests), including all indemnification and contribution obligations related to this action. Accordingly, the Company and the plaintiffs filed a joint stipulation to dismiss Constar from the action based on the Plan. This stipulation dismissing Constar from the action was approved by the District Court on November 4, 2009.

On October 8, 2008, Marshall Packaging Co. LLC filed a complaint in the Eastern District of Texas, C. A. No. 6:08cv394, against the Company, as well as certain bottled water companies, alleging infringement of U.S. Patent No. RE 38,770, entitled “Collapsible Container,” and seeking injunctive relief and monetary damages. The complaint alleged that the Company had infringed and was infringing the patent by making and selling certain beverage containers, but did not specifically identify the accused containers. In the third quarter of 2009, the Company entered into a settlement agreement with Marshall Packaging Co. LLC, the terms of which are confidential. The settlement did not have a material impact on the Company’s financial position or results of operations.

The Company is subject to other lawsuits and claims in the normal course of business and related to businesses operated by predecessor corporations. Management believes that the ultimate liabilities resulting from these lawsuits and claims will not materially impact its results of operations or financial position. Certain judgments against us would constitute an event of default under our debt agreements.

The Company is in discussions with the Italian tax authorities regarding the tax returns filed by the Company’s Italian subsidiary for fiscal years 2002-2004. The Company is negotiating to reach an out of court settlement, but there can be no assurance that any such settlement will be reached. The Company estimates its maximum exposure, including interest and penalties, at approximately $3.4 million. The Company intends to defend against this matter vigorously. The Company has established a reserve, including estimated penalties and interest, of $0.9 million at December 31, 2009 and 2008, for this matter. These reserves are included in other liabilities on the consolidated balance sheets.

Constar has received requests for information or notifications of potential responsibility from the Environmental Protection Agency (“EPA”), and certain state environmental agencies for certain off-site locations. Constar has not incurred any significant costs relating to these matters. Constar has been identified by the Wisconsin Department of Natural Resources as a potentially responsible party at two adjacent sites in Wisconsin and agreed to share in the remediation costs with one other party. Remediation is ongoing at these sites. Constar has also been identified as a potentially responsible party at the Bush Valley Landfill site in Abingdon, Maryland and entered into a settlement agreement with the EPA in July 1997. The activities required under that agreement are ongoing. Constar’s share of the remediation costs has been minimal thus far and no accrual has been recorded for future remediation at these sites.

The Company’s Netherlands facility has been identified as impacting soil and groundwater from volatile organic compounds at concentrations that exceed those permissible under Dutch law. The main body of the groundwater plume is beneath the Netherlands facility but it also appears to extend from an up gradient neighboring property. The Company commenced trial remediation in 2007. The Company records an environmental liability on an undiscounted basis when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. The Company has recorded an accrual as of December 31, 2009 and 2008, of $0.2 million for estimated costs associated with completing the required remediation activities. As more information becomes available relating to what additional actions may be required at the site, this accrual may be adjusted. There are no other accruals for environmental matters.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and the time periods over which site remediation occurs. It is possible that some of these matters, the outcomes of which are subject to various uncertainties, may be decided in a manner unfavorable to Constar.

ITEM 4.		RESERVED

PART II

ITEM 5.		MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As a result of the Company’s Chapter 11 filing, the Company’s common stock (“Predecessor Common Stock”) was delisted from the NASDAQ Stock Market (“NASDAQ National Market”) on January 8, 2009. Subsequent to that date and through the date of our emergence from Chapter 11 on May 29, 2009, our common stock was traded in the “over-the-counter” market under the symbol CNSTQ.PK. On May 29, 2009, pursuant to the Plan of Reorganization, all Predecessor Common Stock was cancelled and 1.75 million shares of new common stock (“Successor Common Stock”) were issued. The Successor Common Stock is not listed on an exchange and was available for trading “over-the-counter” under the symbol “CNRN.PK” on May 29, 2009. The Company is currently applying to list its common stock on the NASDAQ Capital Market. The Company’s application has been approved but the Company has not yet effected the listing.

Financial results of the Company after the adoption of fresh-start accounting on May 1, 2009 (the “Successor” company) are not comparable to the results of the Company prior to May 1, 2009 (the “Predecessor” company). In addition, the share price of the Predecessor Common Stock bears no relation to the share price of the Successor Common Stock.

The following table sets forth, for the periods indicated, the high and low bid prices per share of the Company’s common stock, as quoted on The NASDAQ National Market through January 8, 2009, and as quoted in the “over-the-counter” market subsequent to that date.

		Predecessor								Successor
						Period from				Period from
						April 1, 2009				May 30, 2009
		1st Quarter				to May 29, 2009				to June 30, 2009				3rd Quarter				4th Quarter
2009:
High		$	0.07			$	0.05			$	16.00			$	20.00			$	27.00
Low		$	0.01			$	0.02			$	0.01			$	10.50			$	17.20

		Predecessor
		1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
2008:
High		$	4.44			$	3.22			$	2.52			$	1.07
Low		$	1.95			$	1.80			$	0.62			$	0.03

Holders of Common Stock

As of March 22, 2010 there was 1 holder of record of the Company’s common stock, however, substantially all of the Company’s outstanding stock is held by depositories or nominees on behalf of beneficial holders.

Dividends

The Company did not declare dividends on its common stock during the past two fiscal years and it does not intend to declare dividends on its common stock in the foreseeable future. In addition, under the terms of our credit facility and the indenture governing the Secured Notes, the Company’s ability to pay dividends or repurchase its common stock is restricted.

Securities Authorized for Issuance Under Equity Compensation Plans

Information with respect to shares of common stock that may be issued under the Company’s equity compensation plans is set forth in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Report.

ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The Company is a manufacturer of PET plastic containers, preforms, and plastic closures used for the packaging of food and beverages. Containers, preforms, and closures represented 63%, 32%, and 5%, respectively, of net sales in 2009. The Company has operations in the United States, United Kingdom and Holland. Approximately 80% of the Company’s revenues in 2009 were generated in the United States, with the remainder attributable to its European operations. During 2009, Pepsi and Cott accounted for approximately 32% and 11%, respectively of the Company’s net sales. The top ten customers accounted for an aggregate of approximately 77% of the Company’s net sales in 2009.

There are two primary market categories within the PET market, conventional and custom. Conventional PET containers are primarily used for packaging carbonated soft drinks (“CSD”) and bottled water. The conventional market is the largest market category for PET packaging. Conventional products represented approximately 67% of the Company’s net sales in 2009. Over the last few years, demand for the Company’s conventional PET products has decreased significantly due to a shift to self-manufacturing by beverage companies. The Company believes that this trend for water bottles is reaching the end of its cycle, with the majority of single serve water bottles now being produced in-house. Water bottle revenue represented approximately 3% of the Company’s 2009 net sales as compared to 12% of net sales in 2006. The Company expects the trend of self-manufacturing of CSD packages by large beverage companies to continue. CSD self-manufacturing infrastructure costs are higher than what is required for water because of the complexity associated with a greater diversity of product types. Thus, the Company expects a transition over time at locations where independent producers’ transportation costs are high, and where large volume, low complexity and available space to install blow-molding equipment exists. The Company believes that in most cases, customers will continue to purchase water and CSD preforms from independent producers to support their in-house blow-molding operations. The Company plans to continue its efforts to offset the potential financial impact on the Company of customers blowing their own bottles through cost reductions, plant consolidations and retaining the replacement preform volume at acceptable margins. Other factors that have contributed to an overall decline in demand for CSD packaging in the United States include consumers shifting their preferences to alternative beverages such as teas, juices and energy drinks, and the negative impact that prevailing economic conditions are having on the convenience store and gas station distribution channels. The Company expects these trends to continue.

The Company’s strategy is to increase its presence in the custom category of the market. On average, the variable profit margin of the custom category is higher than the conventional category. In addition, oxygen barrier technology and innovative bottle designs add value that generally results in higher margins than custom products produced from commonly available technology. For custom products that require oxygen barrier technology, the Company believes its oxygen scavenging technology, DiamondClear, is the best performing oxygen barrier technology in the market today. The Company believes that there are growth opportunities for its DiamondClear technology where it replaces less effective oxygen barrier technology and in the conversion of oxygen sensitive products packaged in glass and other packaging materials. During 2009, custom beverage sales were reduced due to the negative impact of prevailing economic conditions on the convenience store and gas station distribution channels. Approximately 29% of the Company’s net sales in 2009 related to custom PET containers with approximately 10% of these net sales containing the Company’s oxygen scavenging technology.

In negotiations with certain customers for the continuation and the extension of supply agreements, the Company has historically agreed to price concessions. In 2009, the Company achieved a net positive impact of price increases of $4.8 million as compared to 2008. However, in 2010, the impact of contractual price reductions, assuming 2009 constant volume, is expected to be between $10-12 million. There can be no assurance that this amount will not change as contracts are renegotiated in 2010. The Company plans to offset the impact of these price reductions through custom unit growth and cost savings.

The Company believes that it will continue to face several sources of pricing pressure. One source is customer consolidation. When customers aggregate their purchasing power by combining their operations with other customers or purchasing through buying cooperatives, the profitability of the Company’s business tends to decline. Another source of pricing pressure may come as a result of excess capacity in the industry driven by self manufacturing and declining demand for products sold in the convenience store and gas station channels of distribution. In addition, certain contracts permit customers to terminate contracts if the customer receives an offer from another manufacturer that the Company chooses not to match.

As is common in its industry, the Company’s contracts are generally requirements-based, granting it all or a percentage of the customer’s actual requirements for a particular period of time, instead of a specific commitment of unit volume. The typical term for the Company’s customer supply contracts is three to four years. Thus, while there may be variations from year to year, in any given year between 15-40% of our customer contracts may be scheduled to expire. The Company’s contract with Pepsi, its largest customer, expires on December 31, 2012. Customers often put expiring contracts out for competitive bidding, which means that the Company may not retain the business, or may be forced to make price concessions in order to retain the business.

The primary raw material and component cost of the Company’s products is PET resin, which is a commodity available globally. The price the Company pays for PET resin is subject to frequent fluctuations resulting from changes in the cost of raw materials used to make PET resin, which are affected by prices of oil and its derivatives in the United States and overseas markets, normal supply and demand influences, and seasonal demand effects. Substantially all of the Company’s sales are made pursuant to mechanisms that allow for the pass-through of changes in the price of PET resin to its customers. The timing of these adjustments to selling prices typically lags 30-90 days behind a change in the price of resin. The Company believes that the impact of this lag is immaterial over time. In addition to PET resin, the Company has the ability to pass through changes in transportation and energy costs on the majority of its volume.

As a result of the Company’s ability to pass through certain costs to its customers, the Company may experience a change in net sales without a corresponding change in gross profit. Therefore, period to period comparisons of gross profit as a percentage of net sales may not be meaningful indicators of actual performance because the effects of the pass-through mechanisms are affected by the magnitude and timing of these changes. For example, assuming gross profit is a constant, when pass through related costs increase, the Company’s net sales will increase as a result of the costs passed through to customers, and gross profit as a percent of net sales will decline. The opposite is true during periods of decreasing costs; the Company’s net sales will be lower causing gross profit as a percent of net sales to increase. As a result, the Company believes that volume trends and absolute gross profit trends are better indicators of the Company’s performance.

Chapter 11 Proceedings

Constar emerged from Chapter 11 on May 29, 2009. See Note 1 — “Emergence from Voluntary Reorganization under Chapter 11 Proceedings” in the accompanying consolidated financial statements for additional information.

Relationship with Crown

Constar was a wholly owned subsidiary of Crown Holdings, Inc. (“Crown”) from 1992 until the closing of Constar’s initial public offering on November 20, 2002. From November 20, 2002 until the Company’s emergence from bankruptcy, Crown owned 1,255,000 shares, or approximately 10%, of the Predecessor’s outstanding common stock. In connection with the Company’s reorganization and emergence from bankruptcy, all existing shares of the Predecessor Company’s capital stock were canceled. Consequently, after May 1, 2009, transactions between Crown and the Company are no longer presented as related party transactions.

For the four months ended April 30, 2009 and the year ended December 31, 2008, the Company paid rent to Crown of $0.2 million and $1.7 million, respectively for its Philadelphia headquarters, a research facility in Alsip, Illinois and a warehouse facility in Belcamp, Maryland. The leasing arrangements for the Alsip and Belcamp facilities ended in 2008. The Company continues to rent the Alsip facility from a third party that purchased the building from Crown. The current Philadelphia lease agreement is on a month-to-month basis.

Under a service agreement, Crown provided certain general and administrative services to the Company. The current agreement has no fixed expiration date. Instead, the services renew each year unless either party gives advance notice to terminate the services. In connection with this agreement, the Company recorded an expense of $0.7 million and $2.4 million for the four months ended April 30, 2009 and the year ended December 31, 2008, respectively. Amounts due to Crown under the agreements described above as of April 30, 2009 and December 31, 2008 were $0.9 million and $0.6 million, respectively.

In November 2007, the Company and Crown entered into a five year supply agreement. Sales to Crown under the contract were approximately $2.8 million and $8.4 million for the four months ended April 30, 2009, and the year ended December 31, 2008, respectively. The Company had a net receivable from Crown of approximately $0.9 million and $0.1 million related to this agreement at April 30, 2009 and December 31, 2008, respectively.

In 2002, the Company entered into a License and Royalty Sharing Agreement with Crown under which the Company agreed to pay a portion of any royalties earned on licenses of our Oxbar™ technology. The Company had a net payable to Crown of approximately $3.4 million and $3.2 million related to this agreement at April 30, 2009 and December 31, 2008, respectively.

Basis of Presentation

As of May 1, 2009, the Company adopted fresh-start accounting. The Company selected May 1, 2009 as the date to effectively apply fresh-start accounting based on the absence of any material contingencies at the May 4, 2009 confirmation hearing and the immaterial impact of transactions between May 1, 2009 and May 4, 2009. The adoption of fresh-start accounting resulted in the Company becoming a new entity for financial reporting purposes. Accordingly, the financial statements prior to May 1, 2009 are not comparable with the financial statements for periods on or after May 1, 2009. References to “Successor” or “Successor Company” refer to the Company on or after May 1, 2009, after giving effect to the cancellation of Constar common stock issued prior to the Effective Date, the issuance of new Constar common stock in accordance with the Plan, and the application of fresh-start accounting. References to “Predecessor” or “Predecessor Company” refer to the Company prior to May 1, 2009. See Note 4 — “Fresh Start Accounting” in the notes to the Consolidated Financial Statements for further details.

The Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) 852 “Reorganizations” applied to the Company’s financial statements while the Company operated under the provisions of Chapter 11. ASC 852 does not change the application of generally accepted accounting principles in the preparation of financial statements. However, for periods including and subsequent to the filing of the Chapter 11 petition ASC 852 does require that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses, gains, and losses that were realized or incurred during the Chapter 11 proceedings have been classified as “reorganization items, net” in the accompanying consolidated statements of operations. In addition, pre-petition obligations that were impacted by the Plan were classified as “liabilities subject to compromise” on the consolidated balance sheet as of December 31, 2008.

The Company has classified the results of operations of its Italian operation beginning in 2006 as a discontinued operation in the consolidated statements of operations for all periods presented. The assets and related liabilities of this entity have been classified as assets and liabilities of discontinued operations on the consolidated balance sheets. See Note 20 - “Discontinued Operations” for further details. Unless otherwise indicated, amounts provided throughout this Form 10-K relate to continuing operations only.

For discussions on the results of operations, the Company has combined the results of operations for the four months ended April 30, 2009 with the results of operations for the eight months ended December 31, 2009. The combined periods have been compared to the year ended December 31, 2008. The Company believes that the combined financial results provide management and investors a more meaningful analysis of the Company’s performance and trends for comparative purposes.

The following discussion should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements for the years ended December 31, 2009 and 2008.

Results of Operations

2009 Compared to 2008

Net Sales

																		$				%
		December 31,																Increase				Increase
(dollars in millions)		2009								2008								(Decrease)				(Decrease)
United States		$	508.1				79.6	%		$	683.7				79.7	%		$	(175.6	)			(25.7	)
Europe			130.3				20.4	%			174.2				20.3	%			(43.9	)			(25.2	)
Total		$	638.4				100.0	%		$	857.9				100.0	%		$	(219.5	)			(25.6	)

The decrease in United States net sales in 2009 as compared to 2008 was driven primarily by lower volumes of $92.1 million, the negative impact of the mix shift to preforms from bottles of $42.6 million and the pass through of lower resin costs to customers accounting for approximately $44.8 million of the sales decline. Total U.S. PET unit volume decreased 18.9% in 2009 as compared to 2008. This decrease reflects a conventional unit volume decline of 23.1% and a custom unit volume decline of 5.9%. The decline in conventional volume is primarily due to reduced volume under the new Pepsi cold-fill agreement that went into effect on January 1, 2009, the continued movement of water bottlers to self-manufacturing and the impact of the general economic conditions in the United States. The decline in custom volume was driven by a customer switching its product formulation from hot-fill to cold-fill. Had this change not occurred, custom unit volume would have increased 15% and conventional unit volume would have decreased by 29.9% in 2009 as compared to 2008.

The decrease in European net sales in 2009 was primarily due to a weakening of the British Pound and Euro against the U.S. Dollar of approximately $22.8 million, volume and mix decline of $17.0 million and the pass through of lower resin costs to customers accounting for approximately $5.1 million. European PET volume decreased 6.0% while closure volume decreased 15.4% in 2009 as compared to 2008.

Gross Profit

		December 31,								Increase
(dollars in millions)		2009				2008				(Decrease)
United States		$	25.5			$	36.2			$	(10.7	)
Europe			5.8				(1.0	)			6.8
Total		$	31.3			$	35.2			$	(3.9	)
Percent of net sales			4.9	%			4.1	%

In the United States, the decline in gross profit for the year ended December 31, 2009 is primarily due to the impact of lower sales of $25.3 million, increased depreciation expense of $11.4 million, a $1.6 million fresh-start accounting adjustment to inventory and the elimination of the positive impact of one-time adjustments of $3.8 million that were recorded in 2008, offset in part by cost reductions from the Company’s restructuring programs of $20.0 million and lower utilities and freight costs of $10.7 million. During the year ended December 31, 2009, the Company accelerated the depreciation on idled machinery and equipment resulting in a non-recurring charge of $6.3 million. The equipment was used to produce conventional products. The equipment was idled due to the continuing decline in sales of conventional products. The remainder of the increase in depreciation was primarily due to the revaluation of the Company’s assets as a result of its adoption of fresh-start accounting.

The gross profit improvement in Europe was driven primarily by reduced electricity costs of approximately $5.3 million, reduced manufacturing costs of $5.1 million and reduced depreciation expense of $1.3 million offset, in part, by the impact of reduced sales volume of $4.9 million.

Selling and Administrative Expenses

Selling and administrative expense includes compensation and related expenses for employees in the selling and administrative functions as well as other operating expenses not directly related to manufacturing or research, development and engineering activities.

Selling and administrative expenses decreased $2.7 million in 2009 as compared to 2008 driven primarily by reduced payroll expenses of $1.5 million, reduced expenditures for outside consultants of $1.5 million and reduced travel and entertainment expenses of $0.8 million. These cost savings were offset by an increase in a bonus accrual of $1.2 million as the Company did not pay bonuses related to 2008 performance.

Research and Technology Expenses

Research and technology expenses, which include engineering and development costs related to developing new products and designing significant improvements to existing products, are expensed as incurred. Research and technology expenses were $8.0 million in 2009 and $8.5 million in 2008. This decrease was primarily driven by lower expenditures for outside consultants.

Provision for Restructuring

Restructuring charges were $2.2 million in 2009 compared to $4.8 million in 2008. The restructuring charges recorded in 2009 primarily relate to the restructuring actions taken due to the impact of the new Pepsi supply agreement, including the closure of three U.S. manufacturing facilities and a reduction of operations in three other manufacturing facilities, and the 2008 shutdown of the Company’s Houston, Texas facility as a result of previously disclosed customer losses and a strategic decision to exit the Company’s limited extrusion blow-molding business. The restructuring charges in 2009 consist primarily of facility exit costs. Cash savings realized in 2009 as a result of reducing manufacturing costs and corporate overhead was approximately $22.4 million. See Note 14 — “Restructuring and other Related Charges” in the notes to the accompanying consolidated financial statements for additional information.

Impairment of Intangible Assets

The Company recorded an impairment charge of $4.0 million related to its trade name intangible asset. See Note 10 — “Goodwill and Intangible Assets” in the notes to the accompanying consolidated financial statements for additional information.

Interest Expense

Interest expense decreased $9.6 million to $28.8 million in 2009 from $38.7 million in 2008 primarily due to the conversion of the Company’s $175.0 million of Senior Subordinated Notes to common stock as part of the Company’s Plan of Reorganization which reduced interest expense by approximately $19.3 million, lower interest rates which reduced interest expense by $1.9 million, and $10.6 million of lower average borrowings under the Company’s credit facility which reduced interest expense by $0.7 million. This was offset by non-cash accretion of $13.6 million of the fair market value of the Company’s Secured Notes to their face value at maturity and a write-off of deferred financing fees of $1.4 million.

Reorganization Items, Net

The Company has recorded all costs directly related to its Chapter 11 filing as reorganization expenses. During 2009, the Company incurred certain professional fees and other expenses directly associated with the bankruptcy proceedings in the amount of $10.6 million. In addition, the Company recorded a gain of $84.8 million on the conversion of the Senior Subordinated Notes to common stock and a gain of $68.1 million from the net impact of fresh-start accounting adjustments as reorganization items. See Note 5 — “Liabilities Subject to Compromise and Reorganization Items” to the consolidated financial statements for further discussion of reorganization items.

During 2008, the Company adjusted the carrying values of certain prepetition debt, including related debt issuance costs and debt discounts, costs incurred to obtain debtor-in-possession and exit financing, and incurred professional fees associated with the bankruptcy cases. These reorganization items resulted in an expense of $9.2 million, of which $3.9 million represented non-cash charges.

Other Income (Expense), Net

Other income (expense), net primarily includes gains and losses on foreign currency transactions including the impact of currency fluctuations on intra-company loan balances, royalty income and expense, and interest income.

Other income, net was $4.0 million in 2009 compared to other expense, net of $10.7 million in 2008. The increase in other income primarily resulted from a $15.5 million positive impact of foreign currency on the translation of intra-company balances and offset in part by lower royalty income of $1.0 million.

(Provision for) Benefit from Income Taxes

In 2009, the Company recorded a provision for income taxes related to continuing operations of $26.0 million compared to a benefit from income taxes of $0.4 million in 2008, primarily as a result of the adoption of fresh-start accounting. Income from continuing operations before taxes was $115.3 million in 2009 compared to a loss of $58.2 million in 2008.

Total unrecognized income tax benefits as of December 31, 2009 and 2008 were $0.7 million and are included in “other liabilities” on the consolidated balance sheets. In addition, the Company had accrued approximately $0.2 million for estimated penalties and interest on uncertain tax positions as of December 31, 2009 and 2008. The Company believes that it has adequately provided for any reasonably foreseeable resolution of any tax disputes, but will adjust its reserves if events so dictate. To the extent that the ultimate results differ from the original or adjusted estimates of the Company, the effect will be recorded in the provision for income taxes.

The effective tax rate was 22.6% in 2009 compared to essentially zero in 2008. A reconciliation of the provision for income taxes and the amount of income tax determined by applying the U.S. federal statutory rate of 35% to pretax income or loss is presented in Note 16 to the accompanying Notes to the Consolidated Financial Statements.

Liquidity and Capital Resources

Cash Flow

		Year ended
		December 31,
(dollars in millions)		2009				2008
Net cash provided by operations		$	25.6			$	14.1
Net cash used in investing activities		$	(21.9	)		$	(23.5	)
Net cash provided by (used in) financing activities		$	(15.6	)		$	19.6

The primary factors that impact cash generated from operations are the seasonality of the Company’s sales, profit margins, and changes in working capital. The Company primarily uses cash generated from operations and borrowings under its credit facility to meet its short-term liquidity needs. Net cash provided by operations for 2009 compared to 2008 increased principally due to decreased cash interest expense of $19.3 million as result of the conversion of $175.0 million of debt into equity as part of the Company’s Plan of Reorganization. This benefit was offset, in part, by the payment in 2009 of pre-petition liabilities that were accrued for as of December 31, 2008 and legal and other costs incurred as part of the Plan of Reorganization.

Net cash used in investing activities in 2009 was comparable to 2008 but the drivers of the costs changed. Purchases of property, plant and equipment were reduced by approximately $10.7 million which was offset by an increase in restricted cash of $7.6 million as the Company posted cash collateral for its interest rate swap. In conjunction with the signing in the first quarter of 2010 of the new credit facility described below (the “Credit Agreement”), this cash was returned to the Company and a non-cash reserve of $7.6 million was placed against the Company’s borrowing base.

Net cash used in financing activities in 2009 was $15.6 million as the Company repaid short-term borrowings primarily as a result of its improved cash flow from operations. Working capital is impacted by the normal timing of purchases to meet customer demand and the timing of payments to vendors in accordance with negotiated terms that may vary from year to year and during the year.

Liquidity, defined as cash and borrowing availability under the Credit Agreement, will vary on a daily, monthly and quarterly basis based upon the seasonality of the Company’s sales as well as the impact of changes in the price of resin, the Company’s cash generated from operating activities, the change in the value of the U.S. dollar as compared to the British pound, reserves and revaluations imposed by the administrative agent and other factors. The Company’s cash requirements are typically greater during the first six to nine months of the year because of the build-up of inventory levels in anticipation of the seasonal sales increase during the warmer months and the collection cycle from customers following the higher seasonal sales. The Company believes it will have sufficient liquidity to finance its operations over the next 12 months.

On February 11, 2010, the Company entered into the Credit Agreement with General Electric Capital Corporation (“Lender”) and terminated its previous credit agreement. The Credit Agreement provides for up to $75.0 million of available credit, with a sublimit of up to $15 million for the issuance of letters of credit and up to $15.0 million in the case of swing loans. Available credit under the Credit Agreement is limited to a borrowing base consisting of the sum of:

(a)		up to 85% of the dollar equivalent of the book value of eligible accounts receivable; plus
(b)		subject to certain limitations, the lesser of (i) 65% of the dollar equivalent of the book value of eligible inventory valued at the lower of cost on a first-in, first-out basis or market, and (ii) up to 85% of the dollar equivalent of the book value of the net orderly liquidation value of eligible inventory; minus

(c)		$2.5 million; minus
(d)		such reserves as the Agent may from time to time establish in its discretion in connection with hedging arrangements; minus
(e)		such reserves as the Agent may from time to time establish in its discretion in connection with eligibility criteria or otherwise.

Actual available credit under the Credit Agreement will fluctuate because it depends on inventory and accounts receivable values that fluctuate and is subject to discretionary reserves and revaluation adjustments that may be imposed by the agent from time to time and other limitations. As of December 31, 2009 the Company’s borrowing base under its previous credit agreement was $50.5 million and its available credit was $41.4 million after taking into consideration the $5.0 million of outstanding borrowings and $4.0 million of outstanding letters of credit. Available credit at December 31, 2008 under the previous credit agreement was $15.3 million. As of March 18, 2010 the Company’s borrowing base under the new Credit Agreement was $19.4 million and its available credit was $27.2 million after taking into consideration outstanding borrowings and letters of credit.

The Credit Agreement’s scheduled expiration date is February 11, 2013. However, the Credit Agreement may terminate earlier if the Company’s Secured Notes are not refinanced at least 90 days prior to their scheduled maturity date of February 15, 2012, or in the case of an event of default.

The Company will pay monthly a commitment fee equal to 0.75% per year on the undrawn portion of the Credit Agreement. Loans will bear interest, at the option of the Company, at one of the following rates: (i) a fluctuating base rate of not less than 3.5% plus a margin ranging from 2.75% to 3.25% per year, or (ii) a fluctuating LIBOR base rate of not less than 2.5% plus a margin ranging from 3.75% to 4.25% per year. Letters of credit carry an issuance fee of 0.25% per annum of the outstanding amount and a monthly fee accruing at a rate per year of 4% of the average daily amount outstanding.

The Company, its U.S. subsidiaries and its UK subsidiary jointly and severally guarantee the obligations under the Credit Agreement. Collateral under the Credit Agreement is composed of all of the stock of the Company’s domestic and United Kingdom subsidiaries, 65% of the stock of the Company’s other foreign subsidiaries, and all of the inventory, accounts receivable, investment property, instruments, chattel paper, documents, deposit accounts and certain intangibles of the Company and its domestic and United Kingdom subsidiaries.

The Credit Agreement contains certain financial covenants. Capital expenditures may not exceed $25 million in any fiscal year plus the carry over of up to 75% of such amount from the immediately preceding fiscal year if not used in that year. In addition, if the amount of available credit less all outstanding loans and letters of credit during any fiscal quarter is less than $15 million for any period of five consecutive business days, the Company must maintain Consolidated EBITDA, as defined in the Credit Agreement, of not less than $40 million, calculated on a trailing twelve month basis as of the last day of the then immediately preceding fiscal quarter. Based upon its current projections, the Company expects to be in compliance with its debt covenants during 2010. The Company believes that the trailing twelve month Consolidated EBITDA will fall below $40.0 million at the end of the second quarter of 2010, but that the Company will remain in compliance with this covenant because available credit will not fall below $15.0 million for five consecutive business days. The Company’s projected availability and Consolidated EBITDA may be impacted by unit volume changes, resin price changes, movements in foreign currency, working capital changes, changes in product mix, factors impacting the value of the borrowing base, and other factors. In response to these factors, the Company would plan to delay or eliminate certain capital expenditures, reduce its inventory, institute cost reduction initiatives, seek additional funding related to its unsecured assets or seek a waiver of the covenant. There can be no assurance that such actions would be successful.

The Credit Agreement contains other customary covenants and events of default. If an event of default should occur and be continuing, the Lender may, among other things, accelerate the maturity of the Credit Agreement. The Credit Agreement also contains cross-default provisions if there is an event of default under the Secured Notes that has occurred or is continuing. The Company was in compliance with the covenants of the old credit facility as of December 31, 2009.

Consolidated EBITDA as defined under the Credit Agreement, which we refer to as Adjusted EBITDA, generally consists of consolidated net income (loss) adjusted to exclude income tax expense, interest expense, loss from extraordinary items, depreciation and amortization expense, certain transaction expenses, certain cash restructuring charges and certain non-cash items. Adjusted EBITDA is not intended to represent cash flow from operations as defined by generally accepted accounting principles and should not be used as an alternative to net income as an indicator or operating performance or to cash flow as a measure of liquidity. The Company’s management believes that the inclusion of Adjusted EBITDA in this report is appropriate to provide additional information to investors about the calculation of a financial covenant in the credit facility that we believe is a material term of the credit facility. Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:

•

Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

•

non-cash compensation may be a part of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;

•

Adjusted EBITDA does not reflect the impact of certain cash charges; and

•

other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Reconciliation of net income to EBITDA

		Four Quarters
		Ended
(in thousands)		December 31, 2009
Net income		$	89,086
Interest expense			28,845
Income taxes			25,991
Depreciation and amortization			42,871
EBITDA		$	186,793

Reconciliation of EBITDA to Adjusted EBITDA

		Four Quarters
		Ended
(in thousands)		December 31, 2009
EBITDA		$	186,793
Cash restructuring charges			2,232
Cash reorganization charges			9,661
Gain from discharge of debt			(84,745	)
Gain from fresh-start accounting adjustments			(68,109	)
Other non-cash charges (i)			1,271
Adjusted EBITDA		$	47,103

The ability to borrow under our Credit Agreement is primarily driven by borrowing base limitations. The Credit Agreement borrowing base is impacted by changes in resin prices and the foreign currency exchange rate of the British pound. An increase in resin prices results in higher book values of our inventory that also result in an increase to the borrowing base limit. A weakening U.S. dollar versus the British pound causes an increase in the value of our U.K. inventory when its value is translated into U.S. dollars. Consequently, a weakening U.S. dollar tends to increase our borrowing base and a strengthening U.S. dollar tends to decrease our borrowing base. Because the Credit Agreement’s borrowing base increases and decreases based upon varying levels of accounts receivable and inventory, the ability to borrow under the Credit Agreement tends to increase when the Company’s cash needs are the highest such as when we are building inventories.

The Company’s debt structure also includes $220.0 million of Secured Notes due February 15, 2012. The indenture governing the Secured Notes includes such events of default as failure to pay principal and interest payments, failure to observe certain non-financial covenants, failure to pay certain judgments, insolvency and other customary events of default and covenants. If an event of default shall occur and be continuing under the indenture, either the Trustee or holders of a specified percentage of the applicable notes may accelerate the maturity of such notes. If there is an event of default under the Credit Agreement that has occurred or is continuing, the Trustee may accelerate the maturity of the Secured Notes. The Company does not have sufficient funds to repay the Secured Notes and intends to refinance them prior to their maturity. In connection with the adoption of fresh-start accounting, for purposes of the Company’s financial statements the Secured Notes were adjusted to fair value based upon their quoted market price; however, the total amount due at maturity remains at $220.0 million.

Capital Expenditures

Capital expenditures decreased to $14.5 million in 2009 from $25.3 million in 2008. New capital investments for 2009 included the following:

•

Purchase of new molds and refurbishment of existing molds for new customer awards;

•

Acquisition of new equipment for productivity improvement and capacity expansion primarily in custom products;

•

Costs associated with implementing restructuring plans; and,

•

Maintenance and upgrade of facilities.

The Company’s ability to make capital expenditures is limited by the financial covenants contained in its Credit Agreement. Capital expenditures may not exceed $25 million in any fiscal year plus the carry over of up to 75% of such amount from the immediately preceding fiscal year if not used in that year.

Pension Funding

Under current funding rules, we estimate that the funding requirements under our pension plans for 2010 will be approximately $4.0 million. If the return on plan assets is less than expected or if discount rates decline from current levels, plan contribution requirements could increase significantly in the future.

Accounting for pension plans requires the use of estimates and assumptions regarding numerous factors, including discount rates, rates of return on plan assets, compensation increases, mortality rates, and employee turnover. Actual results may differ from the Company’s actuarial assumptions, which may have an impact on the amount of reported expense or liability for pensions. The decline in value of the U.S. and global equity markets, coupled with a decline in interest rates during 2008 created a shortfall between the accounting measurement of the Company’s U.S. and European pension obligations and the market value of the pension assets. This condition required a balance sheet adjustment in stockholders’ deficit at December 31, 2008 of $26.6 million.

Critical Accounting Policies and Estimates

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States which require that management make numerous estimates and assumptions. Actual results could differ from those estimates and assumptions, impacting the reported results of operations and the financial position of the Company. The Company’s significant accounting policies are more fully described in Note 3 to the Consolidated Financial Statements. Certain accounting policies, however, are considered to be critical in that (i) they are most important to the depiction of the Company’s financial condition and results of operations and (ii) their application requires management’s most subjective judgment in making estimates about the effect of matters that are inherently uncertain.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable. Such circumstances would include items such as a significant decrease in the market price of the long-lived asset, a significant adverse change in the manner which the assets is being used or in its physical condition or a history of operating cash flow losses associated with use of the asset. The carrying amount of an asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The Company monitors its assets for potential impairment on a quarterly basis.

For purposes of recognition and measurement of an impairment loss, long-lived assets such as property, plant and equipment, are grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. Based upon these criteria, the Company has identified three asset groups with one each in the U.S., U.K., and Holland. In the case where the carrying amount of an asset or asset group is not recoverable, an impairment loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. The key variables that the Company must estimate include assumptions regarding future sales volume, prices and other economic factors. Significant management judgment is involved in estimating these variables, and they include inherent uncertainties since they are forecasting future events. If such assets are considered impaired, they are written down to fair value as appropriate.

In all of our analyses, the undiscounted cash flows of the asset groups significantly exceeded the carrying amounts of the asset groups, and therefore, we did not need to measure the asset groups’ fair value to determine whether an impairment loss should be recognized. In the event a fair value analysis would be required, the Company would rely on appraisals and discounted cash flow analyses in order to estimate the fair value of assets. Significant assumptions for discounted cash flow purposes are the life of the primary asset, the discount rate and cash flow projections. The assumptions and methodologies for valuing property, plant and equipment and intangible assets have been applied consistently during the reporting periods included in this report.

Goodwill Impairment

On an annual basis, or more frequently if facts and circumstances indicate that goodwill may be impaired, the Company performs an impairment review by comparing the fair value of a reporting unit, including goodwill, to its carrying value. The impairment review involves a number of assumptions and judgments including the identification of the appropriate reporting units, the estimation of future cash flows, and the calculation of estimated fair value. The Company’s estimates of future cash flows include assumptions concerning future operating performance, economic conditions, and technological changes and may differ from actual future cash flows.

The Company completed its annual goodwill impairment assessment as of October 1, 2009, and does not believe that the Company’s goodwill balance was impaired. In addition to the annual test, described more fully in Note 10 to the consolidated financial statements, the Company performed an interim goodwill impairment assessment as of December 31, 2009 since the Company’s market capitalization of $33.3 million was less than the carrying value of its stockholders’ equity of $78.6 million. The calculation of the fair value of the Company’s reporting unit was performed consistently with the annual test performed at October 1, 2009, with updated assumptions where appropriate. The most significant change to the October 1 valuation was a downward revision to projected cash flows due to declines in the Company’s projected sales from its previous projection utilized in its annual impairment test. Based upon the analysis performed as of December 31, 2009, the Company failed Step 1 of the goodwill impairment test. Consequently, the Company performed a hypothetical purchase price allocation to determine the amount of goodwill impairment, if any. The significant fair value adjustment in the hypothetical purchase price allocation was an increase to long-term debt. The adjustments to measure the assets, liabilities and intangibles at fair value were for the purpose of measuring the implied fair value of goodwill. Such adjustments are not reflected in the consolidated balance sheet.

The results of the second step of the goodwill impairment test indicated that goodwill was not impaired in 2009. A small negative change in the assumptions used in the valuation, particularly the projected cash flows, the discount-rate, the terminal year growth-rate, and the market multiple assumptions , could significantly affect the results of the impairment analysis. If the Company makes additional downward revisions to its cash flow projections in the future, the Company may experience material impairment charges to the carrying amount of its goodwill in the future. At December 31, 2009, an approximate 5% decline in the estimated fair value of the Company’s reporting unit would have resulted in an impairment charge. Recognition of an impairment of a significant portion of goodwill would negatively affect the Company’s reported results of operations and total capitalization, the effect of which could be material and could have a negative impact on the Company’s ability to raise capital on attractive terms.

Impairment of Indefinite-Lived Intangible Assets

The Company also performed an annual impairment test of its trade name indefinite-lived intangible asset as of October 1, 2009 and an interim impairment test as of December 31, 2009. No triggering events occurred prior to October 1, 2009, that would have caused the Company to believe that the fair value of its trade name had declined below its carrying value. Impairment in the carrying value of an indefinite-lived intangible asset is recognized whenever its carrying value exceeds its fair value. The amount of impairment recognized is the difference between the carrying value of the asset and its fair value. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount and growth rates, reflecting varying degrees of perceived risk. Significant estimates and assumptions used to estimate the fair value of the Company’s trade name were internal sales projections, a long-term growth rate of 3%, and a discount rate of approximately 13.5%. Based on these evaluations the Company recorded impairment charges related to its trade name intangible asset of $1.0 million as of October 1, 2009, and $3.0 million as of December 31, 2009. The impairment charges are included within operating expenses in the accompanying consolidated statement of operations for the eight months ended December 31, 2009. The primary factor contributing to the impairment charges were a reduction in sales expectations from its previous projections utilized in its annual impairment test.

Defined Benefit Pension Plans

Accounting for pensions and postretirement benefit plans requires the use of estimates and assumptions regarding numerous factors, including discount rates, rates of return on plan assets, compensation increases, health care cost increases, mortality rates, and employee turnover. Actual results may differ from the Company’s actuarial assumptions, which may have an impact on the amount of reported expense or liability for pensions or postretirement benefits.

The rate of return assumptions are reviewed at each measurement date based on the pension plans’ investment policies, current asset allocations and an analysis of the historical returns of the capital markets. For 2009, the Company used an expected rate of return on plan assets of 8.5% in the U.S. which was unchanged from 2008. The U.S. plan’s assumed asset rate of return of 8.5% was based on a calculation using underlying assumed rates of return of 9.8% for equity securities and 6.4% for debt securities. An assumed rate of 9.8% was used for equity securities based on the total return of the S&P 500 for the 25 year period ended December 31, 2009. The Company believes that the equity securities included in the S&P 500 are representative of the equity securities in its U.S. plan, and that 25 years provides a sufficient time horizon as a basis for estimating future returns. The Company used a 6.4% assumed return for debt securities, consistent with the U.S. plan discount rate and the return on AA corporate bonds with duration equal to the plan’s liabilities. The underlying debt securities in the plan are primarily invested in various corporate and government agency securities and are benchmarked against returns on AA corporate bonds. The discount rate is developed at each measurement date by reference to published indices of high-quality bond yields. The European plan’s assumed asset rate of return of 8% is based on expected returns by asset class and weighting these returns by the actual allocation by asset class. Equity securities are expected to return between 8% and 10% over the long-term, while debt securities are expected to return between 4% and 7%.

A 1.0% change in the expected rate of return on plan assets would have increased 2009 pension expense by approximately $0.6 million. A 0.5% decrease in the discount rate would have increased 2009 pension expense by $0.2 million.

Inventory

The Company writes down its inventories for estimated slow moving and obsolete goods by amounts equal to the difference between the carrying cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions.

Income Taxes

Income taxes are accounted for using the asset and liability method under which deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and operating losses and tax credit carry forwards. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date. Management provides valuation allowances against the deferred tax assets for amounts which are not considered more likely than not to be realized.

Self-Insurance

The Company maintains a program of insurance with third-party insurers for certain property, casualty and other risks. The policies are subject to deductibles and exclusions that result in our retention of a level of risk on a self-insurance basis. The Company retains the risk with regard to (i) potential liabilities under a number of health and welfare insurance plans (including workers’ compensation) that we sponsor for our employees and (ii) other potential liabilities that are not insured. The types and amounts of insurance obtained vary from time to time and from location to location, depending on availability, cost, and our decisions with respect to risk retention. Our risk and insurance programs are regularly evaluated to seek to obtain the most favorable terms and conditions. We estimate the liabilities associated with the risks retained by us, in part, by considering historical claims experience, demographic and severity factors and other actuarial assumptions which, by their nature, are subject to a degree of variability. Any actuarial projection of losses concerning workers’ compensation and general liability is also subject to a degree of variability. Among the causes of this variability are unpredictable external factors, future inflations rates, discount rates, litigation trends, legal interpretations, benefits level changes and claim settlement patterns. The amount of self insurance liability at December 31, 2009 and 2008 was $3.8 million and $4.7 million, respectively.

Related to workers’ compensation, the Company has insurance that limits its loss per claim to $250 thousand and its total losses in any policy year to $3.3 million. Related to medical costs, the Company has a lifetime cap of benefits of $1.5 million per covered participant and a loss limit of $300 thousand per covered participant, per year. The Company has aggregate stop loss coverage of $1.0 million if aggregate medical costs exceed $11.4 million annually. The Company would be responsible for medical costs exceeding $12.4 million.

Recent Accounting Pronouncements

On July 1, 2009, the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) became effective. The Codification is the single source of authoritative U.S. Generally Accepted Accounting Principles (“GAAP”) to be applied by nongovernmental entities, except for the rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification is organized by topic, subtopic, section, and paragraph, each of which is identified by a numerical designation. This Annual Report on Form 10-K contains references to the Codification as needed. The adoption of the Codification did not have a material impact on the Company’s results of operations or financial condition.

In September 2006, the FASB issued guidance under ASC 820-10 “Fair Value Measurements and Disclosures” that establishes a common definition for fair value to be applied to GAAP guidance requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. In February 2008, the FASB delayed the effective date of the guidance for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until January 1, 2009. The adoption of this guidance did not have a material impact on the Company’s results of operations or financial condition.

In December 2007, the FASB issued new guidance for business combinations. The new guidance is contained in ASC 805 “Business Combinations.” This new guidance revises how acquirors recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination. In addition, it expands required disclosures surrounding the nature and financial effects of business combinations. The new guidance is effective for fiscal years beginning on or after December 15, 2008 with earlier adoption prohibited. The impact of this new guidance on the Company’s consolidated financial statements could be material for business combinations which may be consummated subsequent to the effective date. The application of ASC 805 as a result of applying the fresh-start accounting provisions of ASC 852 “Reorganizations” upon emergence from Chapter 11 has resulted in material adjustments to the historical carrying amounts of the Predecessor Company’s assets and liabilities. The impact of these adjustments is summarized in Note 4 — “Fresh Start Accounting” in the notes to the Consolidated Financial Statements.

In April 2009, the FASB issued new guidance addressing the fair value of financial instruments. The new guidance addresses determining fair value when the volume and level of activity for an asset or liability has significantly decreased and identifying transactions that are not orderly, and the recognition and presentation of other than temporary impairments. The new guidance also requires additional disclosures about financial instruments in interim period financial statements. The Company adopted this guidance in the second quarter of 2009. The adoption of this guidance did not have a material impact on the Company’s results of operations or financial condition.

Effective for fiscal years ending after December 15, 2009, ASC 715-20 “Compensation — Retirement Benefits”, requires additional disclosures about employers’ plan assets of a defined benefit pension or other postretirement plan. The requirements include disclosing investing strategies, major categories of plan assets, concentrations of risk within plan assets, information about fair value measurements of plan assets, and valuation techniques used to measure the fair value of plan assets. Adoption of these additional requirements did not have an impact on the Company’s results of operations or financial condition.

ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSTAR INTERNATIONAL INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

Management’s Report on Internal Control over Financial Reporting			33
Reports of Independent Registered Public Accounting Firm			34
Consolidated Balance Sheets			36
Consolidated Statements of Operations			37
Consolidated Statements of Cash Flows			38
Consolidated Statements of Stockholders’ Equity (Deficit)			39
Notes to Consolidated Financial Statements			40
Financial Statement Schedules
Schedule II—Valuation and Qualifying Accounts and Reserves			85

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

Management’s Reports on Responsibility for Financial Statements and
Internal Control over Financial Reporting

Management’s Report on Responsibility for Financial Statements

Management is responsible for the Consolidated Financial Statements and the other financial information contained in this Annual Report on Form 10-K. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and are considered by management to present fairly the Company’s financial position, results of operations and cash flows. The financial statements include some amounts that are based on management’s best estimates and judgments. The financial statements have been audited by the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP. The purpose of their audit is to express an opinion as to whether the Consolidated Financial Statements included in this Annual Report on Form 10-K present fairly, in all material respects, the Company’s financial position, results of operations and cash flows. Their report is presented on the following page.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that:

	i.		pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
	ii.		provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the company; and
	iii.		provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting has certain inherent limitations which may not prevent or detect misstatements. In addition, changes in conditions and business practices may cause variation in the effectiveness of internal controls.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2009.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, which is presented on the following page.

/s/ Michael J. Hoffman				/s/ J. Mark Borseth
Michael J. Hoffman				J. Mark Borseth
President and Chief Executive Officer				Executive Vice President and Chief Financial Officer

March 24, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Constar International Inc:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Constar International Inc. (Successor) and its subsidiaries at December 31, 2009, and the results of their operations and their cash flows for the period from May 1, 2009 to December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the period from May 1, 2009 to December 31, 2009 listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audit. We conducted our audit 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 and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the United States Bankruptcy Court for the District of Delaware confirmed the Company’s Second Amended Joint Plan of Reorganization (the “Plan”) on May 14, 2009. Confirmation of the Plan resulted in the discharge of certain claims against the Company that arose before December 30, 2008 and substantially alters right and interests of equity security holders as provided for in the Plan. The Plan was substantially consummated on May 4, 2009 and the Company emerged from bankruptcy. In connection with its emergence from bankruptcy, the Company adopted fresh start accounting on May 1, 2009.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
March 24, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Constar International Inc:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Constar International Inc. (Predecessor) and its subsidiaries at December 31, 2008, and the results of their operations and their cash flows for the period from January 1, 2009 to April 30, 2009 and for the year ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index for the year ended December 31, 2008 and the period from January 1, 2009 to April 30, 2009 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. The Company’s management is responsible for these financial statements and financial statement schedule. Our responsibility is to express opinions on these financial statements and on the financial statement schedule 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of the financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the Company and substantially all of its subsidiaries voluntarily filed a petition on December 30, 2008 with the United States Bankruptcy Court for the District of Delaware for reorganization under the provisions of Chapter 11 of the Bankruptcy Code. The Company’s Second Amended Joint Plan of Reorganization was substantially consummated on May 4, 2009 and the Company emerged from bankruptcy. In connection with its emergence from bankruptcy, the Company adopted fresh start accounting.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
March 24, 2010

Constar International Inc.

Consolidated Balance Sheets
(In thousands, except par value)

		Successor					Predecessor
		December 31,					December 31,
		2009					2008
ASSETS
Current Assets:
Cash and cash equivalents		$	2,469				$	14,292
Accounts receivable, net			39,054					45,695
Accounts receivable — related party			—					109
Inventories, net			44,058					49,765
Prepaid expenses and other current assets			7,896					24,649
Restricted cash			7,589					—
Deferred income taxes			—					896
Total current assets			101,066					135,406
Property, plant and equipment, net			151,526					132,371
Goodwill and intangible assets, net			150,080					148,813
Other assets			3,592					1,626
Total assets		$	406,264				$	418,216
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Short-term debt		$	5,000				$	20,000
Current portion of long-term debt			—					220,000
Accounts payable			59,128					61,747
Accrued expenses and other current liabilities			25,253					30,081
Deferred income taxes			1,222					—
Accounts payable and accrued expenses — related party			—					3,765
Total current liabilities			90,603					335,593
Long term debt, net of current portion			167,919					—
Pension and postretirement liabilities			31,105					38,512
Deferred income taxes			23,531					896
Other liabilities			14,503					18,088
Liabilities subject to compromise			—					186,229
Total liabilities			327,661					579,318
Commitments and contingencies (Note 19)
Stockholders’ Equity (Deficit):
Predecessor preferred stock, $.01 par value — none issued or outstanding at December 31, 2008			—					—
Predecessor common stock, $.01 par value — 13,297 shares issued, 12,922 shares outstanding at December 31, 2008			—					125
Successor common stock, $.01 par value, 75,000 shares authorized, 1,750 shares issued and outstanding at December 31, 2009			18					—
Additional paid-in capital			101,466					277,371
Accumulated other comprehensive loss, net of tax			(1,769	)				(50,317	)
Predecessor treasury stock, at cost — 375 shares at December 31, 2008			—					(1,033	)
Accumulated deficit			(21,112	)				(387,248	)
Total stockholders’ equity (deficit)			78,603					(161,102	)
Total liabilities and stockholders’ equity (deficit)		$	406,264				$	418,216

The accompanying notes are an integral part of these consolidated financial statements.

Constar International Inc.

Consolidated Statements of Operations
(In thousands, except per share data)

		Successor					Predecessor
		Eight Months					Four Months
		Ended					Ended				Year Ended
		December 31,					April 30,				December 31,
		2009					2009				2008
Net customer sales		$	421,187				$	213,925			$	850,740
Net affiliate sales			—					3,256				7,129
Net sales			421,187					217,181				857,869
Cost of products sold, excluding depreciation and amortization			374,680					189,537				789,861
Depreciation and amortization			33,138					9,733				32,811
Gross profit			13,369					17,911				35,197
Selling and administrative expenses			13,019					7,005				22,745
Research and technology expenses			5,284					2,698				8,536
Provision for restructuring			1,584					648				4,811
Impairment of intangible assets			4,000					—				—
Gain on disposal of assets			(427	)				(396	)			(1,227	)
Total operating expenses			23,460					9,955				34,865
Operating income (loss)			(10,091	)				7,956				332
Interest expense			(23,279	)				(5,512	)			(38,412	)
Interest expense — related party			—					(54	)			(244	)
Reorganization items, net			(1,906	)				144,168				(9,190	)
Other income (expense), net			2,433					1,543				(10,711	)
Income (loss) from continuing operations before income taxes			(32,843	)				148,101				(58,225	)
(Provision for) benefit from income taxes			11,816					(37,807	)			447
Income (loss) from continuing operations			(21,027	)				110,294				(57,778	)
Loss from discontinued operations, net of taxes			(85	)				(96	)			(57	)
Net income (loss)		$	(21,112	)			$	110,198			$	(57,835	)
Basic and diluted income (loss) per common share:
Continuing operations		$	(12.02	)			$	8.86			$	(4.66	)
Discontinued operations			(0.04	)				(0.01	)			—
Net income (loss) per share		$	(12.06	)			$	8.85			$	(4.66	)
Weighted average common shares outstanding:
Basic and diluted			1,750					12,455				12,403

The accompanying notes are an integral part of these consolidated financial statements.

Constar International Inc.

Consolidated Statements of Cash Flows
(In thousands)

		Successor					Predecessor
		Eight Months					Four Months
		Ended					Ended				Year Ended
		December 31,					April 30,				December 31,
		2009					2009				2008
Cash flows from operating activities:
Net income (loss)		$	(21,112	)			$	110,198			$	(57,835	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			33,139					10,060				35,160
Debt accretion expense			13,644					—				—
Impairment of intangible asset			4,000					—				—
Bad debt expense (recovery)			435					(483	)			1,841
Stock-based compensation			—					591				608
Gain on disposal of assets			(427	)				(396	)			(964	)
Non-cash reorganization costs			—					—				3,851
Deferred income taxes			(11,800	)				37,835				—
Changes in operating assets and liabilities:
Accounts receivable			20,177					(11,480	)			9,119
Inventories			13,619					(5,432	)			20,907
Prepaid expenses and other current assets			(786	)				977				5,343
Accounts payable			(19,321	)				6,727				(5,138	)
Change in book overdrafts			(184	)				10,453				(12,695	)
Accrued expenses and other current liabilities			(15,771	)				4,905				13,965
Pension and postretirement benefits			(587	)				954				(571	)
Fresh start accounting adjustments			—					(68,109	)			—
Reorganization items, net			(6,893	)				(79,299	)			550
Net cash provided by operating activities			8,133					17,501				14,141
Cash flows from investing activities:
Restricted cash			1,738					(9,327	)			—
Purchases of property, plant and equipment			(8,793	)				(5,723	)			(25,322	)
Proceeds from sale of property, plant, and equipment			9					149				1,852
Net cash used in investing activities			(7,046	)				(14,901	)			(23,470	)
Cash flows from financing activities:
Costs associated with debt			(575	)				—				—
Proceeds from short-term financing			458,000					212,723				779,096
Repayment of short-term financing			(458,000	)				(227,723	)			(759,534	)
Net cash provided by (used in) financing activities			(575	)				(15,000	)			19,562
Effect of exchange rate changes on cash and cash equivalents			73					(8	)			(195	)
Net increase (decrease) in cash and cash equivalents			585					(12,408	)			10,038
Cash and cash equivalents at beginning of period			1,884					14,292				4,254
Cash and cash equivalents at end of period		$	2,469				$	1,884			$	14,292

The accompanying notes are an integral part of these consolidated financial statements.

Constar International Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)
(In thousands)

										Accumulated
						Additional				Other												Total
		Common				Paid-in				Comprehensive				Treasury				Accumulated				Stockholders’
		Stock				Capital				Income (Loss)				Stock				Deficit				Equity (Deficit)
Balance, December 31, 2007 (Predecessor)		$	125			$	276,546			$	(18,620	)		$	(945	)		$	(329,413	)		$	(72,307	)
Net loss																			(57,835	)			(57,835	)
Foreign currency translation adjustments											3,317												3,317
Amortization of prior service cost											(290	)											(290	)
Amortization of actuarial net loss											3,179												3,179
Pension and postretirement adjustment to funded status											(25,655	)											(25,655	)
Pension curtailment adjustment											(5,757	)											(5,757	)
Revaluation of cash flow hedge											(6,491	)											(6,491	)
Comprehensive loss																							(89,532	)
Treasury stock purchased															(88	)							(88	)
Issuance of common stock under benefit plans							8																8
Stock-based compensation			—				817				—				—				—				817
Balance, December 31, 2008 (Predecessor)			125				277,371				(50,317	)			(1,033	)			(387,248	)			(161,102	)
Net income																			110,198				110,198
Foreign currency translation adjustments											(1,134	)											(1,134	)
Amortization of prior service cost											(97	)											(97	)
Amortization of actuarial net loss											2,016												2,016
Revaluation of cash flow hedge											951												951
Comprehensive income																							111,934
Stock-based compensation			—				597				—				—				—				597
Balance, April 30, 2009 (Predecessor)			125				277,968				(48,581	)			(1,033	)			(277,050	)			(48,571	)
Fresh-Start Adjustments:
Cancellation of Predecessor common stock and elimination of Predecessor accumulated deficit			(125	)			(277,968	)			—				1,033				277,050				(10	)
Elimination of Predecessor accumulated other comprehensive loss			—				—				48,581				—				—				48,581
Balance, May 1, 2009 (Predecessor)			—				—				—				—				—				—
Issuance of 1.75 million shares of common stock in connection with emergence from Chapter 11			18				101,466				—				—				—				101,484
Balance, May 1, 2009 (Successor)			18				101,466				—				—				—				101,484
Net loss																			(21,112	)			(21,112	)
Pension and postretirement adjustment to funded status											(2,460	)											(2,460	)
Revaluation of cash flow hedge											662												662
Foreign currency translation adjustments											29												29
Comprehensive loss			—				—				—				—				—				(22,881	)
Balance, December 31, 2009 (Successor)		$	18			$	101,466			$	(1,769	)		$	—			$	(21,112	)		$	78,603

The accompanying notes are an integral part of these consolidated financial statements.

Constar International Inc.

Notes to Consolidated Financial Statements
(Amounts in thousands unless otherwise noted)

1. Description of Business

Constar International Inc. (the “Company” or “Constar”) operates eleven plants in the United States, one plant in the United Kingdom, and one plant in the Netherlands. Constar produces polyethylene terephthalate (“PET”) plastic packaging for beverage, food and other consumer end-use applications.

2. Emergence from Voluntary Reorganization Under Chapter 11 Proceedings

Background — On December 30, 2008 (the “Petition Date”), Constar and certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). These Chapter 11 cases were jointly administered for procedural purposes under the caption In re Constar International Inc., et al., Chapter 11 Case No. 08-13432 (PJW) (the “Chapter 11 Cases”).

Plan of Reorganization — The Debtors’ Second Amended Joint Plan of Reorganization (the “Plan”) provided as follows (capitalized terms used in the bullets below are defined in the Plan):

•		Holders of Allowed Administrative Claims, Priority Tax Claims, Other Priority Claims, and Other Secured Claims would receive full payment in cash;
•		The DIP Credit Facility would be converted into the Company’s Exit Facility;
•		Holders of Senior Secured Floating Rate Notes would be deaccelerated and reinstated in full as of the date immediately preceding the Petition Date;
•		Holders of Other Secured Claims, except to the extent that a Holder agrees otherwise, would receive one of the following treatments, in full satisfaction, settlement, release and discharge of and in exchange for each Allowed Other Secured Claim, at the sole discretion of the Debtors: (i) payment in full in Cash; (ii) delivery of the collateral securing any such Allowed Other Secured Claim; (iii) deacceleration and reinstatement in full; or (iv) any other treatment rendering the claim unimpaired;
•		Holders of Senior Subordinated Notes would receive 100% of the new Common Stock of the reorganized Company (except for stock reserved for incentive plans) in full satisfaction, settlement, and release, and discharge of such notes;
•		Holders of Allowed General Unsecured Claims would receive full payment in cash in the ordinary course of business;
•		Section 510(b) Claims (which are subordinated securities law claims as further described in the Plan of Reorganization) would be extinguished; and
•		Holders of our Common Stock would not receive any distribution under the Plan of Reorganization and their shares would be cancelled on the effective date of the Plan of Reorganization.

Confirmation and Consummation of the Plan of Reorganization — a hearing on the confirmation of the Plan of Reorganization was held on May 4, 2009. On May 14, 2009, the Bankruptcy Court entered an order approving and confirming the Plan of Reorganization that was presented in substance during the May 4, 2009 hearing. The Plan of Reorganization became effective and the Debtors emerged from Chapter 11 on May 29, 2009 (the “Effective Date”).

In connection with the consummation of the Plan of Reorganization, on the Effective Date, the Company’s existing Senior Secured Super-Priority Debtor in Possession and Exit Credit Agreement, dated as of December 31, 2008 (the “Exit Facility”) was converted into exit financing in accordance with its terms. Pursuant to the Plan of Reorganization, all existing shares of the Predecessor Company’s (as defined below) capital stock were canceled. In addition, all of the Company’s Senior Subordinated 11% Notes Due 2012 were canceled and the related indenture was terminated (except for purposes of allowing the note holders to receive distributions under the Plan of Reorganization). Pursuant to the Restated Certificate of Incorporation of the Company, 75.0 million shares of common stock in the Successor Company were authorized for issuance, with a par value of $0.01 per share and according to the Plan of Reorganization, a total of 1.75 million shares of the Company’s Common Stock were distributed to the holders of Senior Subordinated Note Claims. Holders of the Senior Subordinated Note Claims received ten shares of new Common Stock per one thousand dollars face amount of the Senior Subordinated Notes.

In addition, upon the Effective Date, the following incentive plans were terminated (and any and all awards granted under such plans were terminated and will no longer be of any force or effect): (1) the 2007 Non-Employee Directors’ Equity Incentive Plan; (2) the 2007 Stock-Based Incentive Compensation Plan; (3) Constar International Inc. Non-Employee Directors’ Equity Incentive Plan; (4) Constar International Inc. 2002 Stock-Based Incentive Compensation Plan; (5) the Amended and Restated Constar International Inc. Supplemental Executive Retirement Plan; and (6) the Amended and Restated Constar International Inc. Annual Incentive and Management Stock Purchase Plan, which was replaced by the Constar International Inc. Annual Incentive Plan, adopted May 26, 2009 (the “AIP”). For a description of the AIP, please see the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 1, 2009.

Under the Plan, the Company reduced its total pre-petition liabilities by $186.2 million through the elimination of the Senior Subordinated Notes plus accrued interest thereon. The elimination of the Senior Subordinated Notes will result in a reduction to cash interest expense of approximately $19.3 million annually.

On January 4, 2010, the Bankruptcy Court executed a final decree closing the Chapter 11 Cases. Certain claims were not resolved in the Chapter 11 process, and the claimants have retained their rights to such claims. The Company does not believe such claims to be material.

Trading of Common Stock — The Predecessor Company’s common stock ceased trading on the NASDAQ stock market on January 8, 2009 and began trading in the “over-the-counter” market under the symbol CNSTQ.PK. Upon the Effective Date of the Plan of Reorganization, the outstanding common stock of the Predecessor Company was cancelled for no consideration. Consequently, the Predecessor Company’s stockholders no longer have any interest as stockholders in the Successor Company by virtue of their ownership of the Predecessor Company’s common stock prior to emergence from bankruptcy. The common stock of the Successor Company is not listed on an exchange and was available for trading “over-the-counter” under the symbol “CNRN.PK” on May 29, 2009. The Company is currently applying to list its common stock on the NASDAQ Capital Market. There can be no assurance as to when, or whether, such listing will be achieved.

3. Summary of Significant Accounting Policies

Basis of Presentation

The Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) 852 “Reorganizations” applied to the Company’s financial statements while the Company operated under the provisions of Chapter 11. ASC 852 does not change the application of generally accepted accounting principles in the preparation of financial statements. However, for periods including and subsequent to the filing of the Chapter 11 petition ASC 852 does require that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses, gains, and losses that were realized or incurred during the Chapter 11 proceedings have been classified as “reorganization items, net” in the accompanying consolidated statements of operations. In addition, pre-petition obligations that were impacted by the Plan of Reorganization were classified as “liabilities subject to compromise” on the consolidated balance sheet as of December 31, 2008.

As of May 1, 2009, the Company adopted fresh-start accounting. The Company selected May 1, 2009 as the date to effectively apply fresh-start accounting based on the absence of any material contingencies at the May 4, 2009 confirmation hearing and the immaterial impact of transactions between May 1, 2009 and May 4, 2009. The adoption of fresh-start accounting resulted in the Company becoming a new entity for financial reporting purposes. Accordingly, the financial statements prior to May 1, 2009 are not comparable with the financial statements for periods on or after May 1, 2009. References to “Successor” or “Successor Company” refer to the Company on or after May 1, 2009, after giving effect to the cancellation of Constar common stock issued prior to the Effective Date, the issuance of new Constar common stock in accordance with the Plan of Reorganization, and the application of fresh-start accounting. References to “Predecessor” or “Predecessor Company” refer to the Company prior to May 1, 2009. See Note 4 — “Fresh-Start Accounting” in the notes to these consolidated financial statements for further details.

The Company has classified the results of operations of its Italian operation as a discontinued operation in the consolidated statements of operations for all periods presented. The assets and related liabilities of this entity have been classified as assets and liabilities of discontinued operations on the consolidated balance sheets. See Note 20 — “Discontinued Operations” for further details. Unless otherwise indicated, amounts provided throughout this Form 10-K relate to continuing operations only.

Reclassifications — Certain reclassifications have been made to prior year balances in order to conform these balances to the current year’s presentation.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses in the consolidated financial statements and accompanying notes. Examples include, but are not limited to, allowances for doubtful accounts and sales returns, allowances for inventory obsolescence, the lives of depreciable assets, long-lived asset impairments, goodwill and intangible asset impairments, valuation allowances for deferred tax assets, self-insurance reserves, pension and postretirement benefit liabilities, restructuring reserves, asset retirement obligations, the fair value of derivative financial instruments, and loss contingencies. Actual results may differ materially from management’s estimates.

Under fresh-start accounting, the Company’s asset values were remeasured and allocated in conformity with ASC 805, “Business Combinations.” In addition, fresh-start accounting also requires that all liabilities, other than deferred taxes and pension and other postretirement benefit obligations, be reported at fair value or the present values of the amounts to be paid using appropriate market interest rates. Deferred taxes were reported in conformity with ASC 740, “Income Taxes.” Pension and postretirement liabilities were remeasured in conformity with ASC 715, “Compensation — Retirement Benefits.”

Estimates of fair value represent the Company’s best estimates based on independent appraisals and valuations, industry data and trends and by reference to relevant market rates and transactions. The estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the control of the Company. Accordingly, we cannot provide assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially. Any adjustments to the recorded fair values of these assets and liabilities may impact the amount of recorded goodwill.

Cash and Cash Equivalents

The Company considers highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Where right of offset does not exist, book overdrafts representing outstanding checks are included in accounts payable in the accompanying consolidated balance sheets since the Company is not relieved of its obligations to vendors until the outstanding checks have cleared the bank. The change in outstanding book overdrafts is considered an operating activity and is presented as such in the consolidated statement of cash flows. When outstanding checks are presented for payment subsequent to the balance sheet date, the Company deposits funds (subsequent to the balance sheet date) in the disbursement account from cash either available from other accounts or a combination of cash available from other accounts and from funds from the Company’s available credit facilities (subsequent to the balance sheet date). The amount of book overdrafts included in accounts payable were $10,269 and $-0- at December 31, 2009 and 2008, respectively.

Restricted Cash

During 2009 the administrative agent for the Exit Facility required the Company to fully collateralize its interest rate swap liability with cash. Restricted cash represents the cash collateral balance at December 31, 2009.

Revenue Recognition

Revenue is recognized from product sales when there is persuasive evidence of an arrangement, the price is fixed or determinable, the goods are shipped and the title and risk of loss pass to the customer, and collectability is reasonably assured. Constar’s business generally does not operate under a formal inspection/acceptance process. Provisions for discounts and rebates to customers, and returns and other adjustments, are provided in the same period that the related sales are recorded. See Note 24 for a description of related party transactions.

Royalty revenues are recognized based on contractual agreements.

Trade Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Allowances for doubtful accounts are based on historical experience and known factors regarding specific customers. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required. Account balances are charged off against the allowance when it is probable the receivable will not be recovered. Bad debt expense (recovery) was $435, $(483), and $1,841 for the eight months ended December 31, 2009, the four months ended April 30, 2009, and the year ended December 31, 2008, respectively. Bad debt expense (recovery) is included in selling and administrative expenses in the accompanying consolidated statements of operations.

Inventories

Inventories are stated at the lower of cost or market with the cost principally determined using an average cost method. Provisions for potentially obsolete or slow-moving inventory are made based on management’s analysis of inventory levels, historical usage and market conditions.

Property, Plant and Equipment

For the Predecessor Company, property, plant and equipment were carried at cost and included expenditures for new facilities and equipment and those costs which substantially increased the useful lives of existing assets. For the Successor Company, property, plant, and equipment were adjusted to fair value as of May 1, 2009, and are currently stated at that value less accumulated depreciation and amortization. Property, plant and equipment acquired after May 1, 2009, are stated at acquisition cost less accumulated depreciation and amortization. The Company capitalizes interest costs associated with significant capital projects using its average borrowing rate. When property, plant and equipment is retired or otherwise disposed of, the net carrying amount is eliminated with any gain or loss on disposition recognized in earnings at that time. Maintenance and repairs are expensed as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

(In Years)		Successor		Predecessor
Land improvements		25		25
Building and building improvements		3 to 40		25 to 40
Machinery and equipment		2 to 10		10
Furniture, computer equipment, and tools		2 to 10		5 to 10
Molds		Shorter of the useful life or contract term		5
Leasehold improvements		Shorter of the useful life or lease term		Shorter of the useful life or lease term

When depreciable assets are idled, the Company records depreciation over the revised expected remaining useful life of the assets considering their estimated salvage value.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying amount of an asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset and its eventual disposition. In that event, an impairment loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset or asset group.

Goodwill and Intangible Assets

Goodwill reflects the excess of the reorganization value of the Successor over the fair value of tangible and identifiable intangible assets as determined upon the adoption of fresh-start accounting. The Company recorded $118.7 million of goodwill as a result of the adoption of fresh-start accounting. The goodwill is not deductible for tax purposes.

Identifiable intangible assets consist of the Company’s trade name, technology, and leasehold interests. The Company’s trade name is an indefinite-lived asset and consequently is not amortized. Technology and leasehold interests are finite-lived intangible assets and are amortized over their useful lives.

The Company has one reporting unit and therefore assesses goodwill for impairment at the consolidated company level. The Company’s annual impairment reviews for goodwill and indefinite-lived intangible assets are performed as of October 1. The Company also performs interim reviews when the Company determines that a triggering event has occurred that would more likely than not reduce the fair value of the reporting unit below its carrying value.

The Company uses a two-step impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). The Step 1 calculation used to identify potential impairment compares the calculated fair value for the Company’s single reporting unit to its book value, including goodwill, on the measurement date. If the fair value of the reporting unit is less than its book value, then a Step 2 calculation is performed to measure the amount of the impairment loss (if any) for the reporting unit.

The Step 2 calculation compares the implied fair value of the goodwill to the book value of goodwill. The implied fair value of goodwill is equal to the excess of the fair value of the reporting unit above the fair value of identified assets and liabilities. If the book value of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess (not to exceed the book value of goodwill).

See Note 10 for a description of the Company’s annual and interim impairment tests performed at October 1, 2009 and December 31, 2009.

Derivative Financial Instruments

Derivative instruments are reported as either assets or liabilities in the consolidated balance sheets at their fair values. Changes in the fair value of derivatives are recorded in earnings or other comprehensive income, based on whether the instrument is designated as part of a hedge transaction, and if so, the type of hedge transaction. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the period in which earnings are affected by the underlying hedged item. The ineffective portion of all hedges is recognized in earnings in the current period. Changes in the fair values of derivative instruments that are not designated as hedges are recorded in current period earnings. See Note 26 for additional information.

Restructuring

The Company records restructuring charges for the costs associated with an exit or disposal activity in the period in which the liability is incurred. See Note 14 for additional information.

Asset Retirement Obligations

The Company recognizes asset retirement obligations (“AROs”) and the related asset retirement costs when a legal obligation to retire the asset exists, including obligations incurred as a result of the acquisition, construction, or normal operation of a long-lived asset. The fair values of these AROs are recorded on a discounted basis at the time the obligation is incurred, and accreted over time using the interest method. Asset retirement costs are recorded by increasing the carrying amount of the related long-lived assets and depreciating those assets over their estimated remaining useful life.

Reserves for Self Insurance

The Company maintains a program of insurance with third-party insurers for certain property, casualty and other risks. The policies are subject to deductibles and exclusions that result in our retention of a level of risk on a self-insurance basis. The Company retains the risk with regard to (i) potential liabilities under a number of health and welfare insurance plans (including workers’ compensation) that we sponsor for our employees and (ii) other potential liabilities that are not insured. The types and amounts of insurance obtained vary from time to time and from location to location, depending on availability, cost, and our decisions with respect to risk retention. Our risk and insurance programs are regularly evaluated to seek to obtain the most favorable terms and conditions. We estimate the liabilities associated with the risks retained by us, in part, by considering historical claims experience, demographic and severity factors and other actuarial assumptions. Any actuarial projection of losses concerning workers’ compensation and general liability is subject to variability. Among the causes of this variability are unpredictable external factors, future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns.

The amount of self insurance liability at December 31, 2009 and 2008 was $3.8 million and $4.7 million, respectively.

Related to workers’ compensation, the Company has insurance that limits its loss per claim to $250 thousand and its total losses in any policy year to $3.3 million. Related to medical costs, the Company has a lifetime cap of benefits of $1.5 million per covered participant and a loss limit of $300 thousand per covered participant, per year. The Company has aggregate stop loss coverage of $1.0 million if aggregate medical costs exceed $11.4 million annually. The Company is responsible for medical costs exceeding $12.4 million.

Deferred Financing Costs

Costs related to the issuance of debt are capitalized and amortized to interest expense on a straight-line basis over the life of the related debt.

Foreign Currency Translation

The financial position and results of operations of the Company’s foreign subsidiaries are measured using local currencies as the functional currency. Assets and liabilities are translated into U.S. dollars at year-end exchange rates. Income and expense items are translated at average exchange rates for the year. The translation adjustments for these subsidiaries are recorded in accumulated other comprehensive income as a separate component of stockholders’ equity. Cumulative translation adjustments are not adjusted for income taxes as they relate to earnings permanently reinvested in foreign subsidiaries. In the event of a divestiture of a foreign subsidiary, the related foreign currency translation results are reversed from equity to income.

Gains and losses resulting from foreign currency transactions are included in the determination of net income.

Shipping and Handling Costs

Shipping and handling costs are included as a component of cost of products sold in the consolidated statements of operations.

Income Taxes

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax bases of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

No provision has been made for income taxes on the portion of unremitted earnings of foreign subsidiaries which are deemed to be permanently invested in those operations.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.

Stock-Based Compensation

The Company recognizes compensation expense for awards on a straight-line basis over the requisite service period. Stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based upon historical experience.

The fair value of restricted stock awards is equal to the quoted market price of the Company’s common stock at the date of grant. Restricted stock units (“RSUs”) are classified as liabilities in the accompanying consolidated financial statements. The fair value of the liabilities related to the RSUs is remeasured at each balance sheet date. Adjustments to the fair value of the RSU liabilities are recorded as compensation expense.

Net Loss Per Share

Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share (“Diluted EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period after giving effect to all potentially dilutive securities outstanding during the period.

The Predecessor Company’s potentially dilutive securities consisted of potential common shares related to restricted stock awards. Diluted EPS includes the impact of potentially dilutive securities except in periods in which there is a loss from continuing operations because the inclusion of the potential common shares would be anti-dilutive. There were no potentially dilutive securities issued or outstanding at December 31, 2009.

The computation of Diluted EPS for the year ended December 31, 2008 excludes 536 shares of restricted stock due to the loss for the period.

Research and Technology

Research and technology expenditures are expensed as incurred. Substantially all engineering and development costs are related to developing new products or designing significant improvements to existing products or processes. Costs primarily include salaries and benefits, facility costs and outside services.

Concentration of Credit Risk

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and are maintained with high quality financial institutions, therefore bearing minimal credit risk.

The Company’s trade receivables result from sales to a relatively few number of customers and are unsecured. The Company continually assesses the financial strength of its customers to reduce the risk of loss. Write-offs of uncollectible accounts have historically not been significant.

Fair Value Measurements

The Company measures fair value in accordance with accounting guidance that requires an entity to base fair value on an exit price and maximize the use of observable inputs and minimize the use of unobservable inputs when determining an exit price. Fair value is the price to sell an asset or transfer a liability between market participants as of the measurement date. Fair value measurements assume the asset or liability is exchanged in an orderly manner; the exchange is in the principal market for that asset or liability (or in the most advantageous market when no principal market exists); and the market participants are independent, knowledgeable, able and willing to transact an exchange.

Considerable judgment is required in interpreting market data used to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. A description of the fair value hierarchy follows:

Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves that are observable at commonly quoted intervals, and credit risks; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs are unobservable inputs that are used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the asset or liability or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing an asset or liability.

Recent Accounting Pronouncements

On July 1, 2009, the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) became effective. The Codification is the single source of authoritative U.S. Generally Accepted Accounting Principles (“GAAP”) to be applied by nongovernmental entities, except for the rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification is organized by topic, subtopic, section, and paragraph, each of which is identified by a numerical designation. This Annual Report on Form 10-K contains references to the Codification as needed. The adoption of the Codification did not have a material impact on the Company’s results of operations or financial condition.

In September 2006, the FASB issued guidance under ASC 820-10 “Fair Value Measurements and Disclosures” that establishes a common definition for fair value to be applied to GAAP guidance requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. In February 2008, the FASB delayed the effective date of the guidance for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until January 1, 2009. The adoption of this guidance did not have a material impact on the Company’s results of operations or financial condition.

In December 2007, the FASB issued new guidance for business combinations. The new guidance is contained in ASC 805 “Business Combinations.” This new guidance revises how acquirors recognize and measure the consideration transferred, identifiable assets acquired, liabilities assumed, noncontrolling interests, and goodwill acquired in a business combination. In addition, it expands required disclosures surrounding the nature and financial effects of business combinations. The new guidance is effective for fiscal years beginning on or after December 15, 2008 with earlier adoption prohibited. The impact of this new guidance on the Company’s consolidated financial statements could be material for business combinations which may be consummated subsequent to the effective date. The application of ASC 805 as a result of applying the fresh-start accounting provisions of ASC 852 “Reorganizations” upon emergence from Chapter 11 has resulted in material adjustments to the historical carrying amounts of the Predecessor Company’s assets and liabilities. The impact of these adjustments is summarized in Note 4 — “Fresh Start Accounting” in the notes to these consolidated financial statements.

In April 2009, the FASB issued new guidance addressing the fair value of financial instruments. The new guidance addresses determining fair value when the volume and level of activity for an asset or liability has significantly decreased and identifying transactions that are not orderly, and the recognition and presentation of other than temporary impairments. The new guidance also requires additional disclosures about financial instruments in interim period financial statements. The Company adopted this guidance in the second quarter of 2009. The adoption of this guidance did not have a material impact on the Company’s results of operations or financial condition.

Effective for fiscal years ending after December 15, 2009, ASC 715-20 “Compensation — Retirement Benefits”, requires additional disclosures about employers’ plan assets of a defined benefit pension or other postretirement plan. The requirements include disclosing investing strategies, major categories of plan assets, concentrations of risk within plan assets, information about fair value measurements of plan assets, and valuation techniques used to measure the fair value of plan assets. Adoption of these additional requirements did not have an impact on the Company’s results of operations or financial condition.

4. Fresh-Start Accounting

On May 1, 2009, the Company adopted fresh-start accounting. Fresh-start accounting results in the Company becoming a new entity for financial reporting purposes. Accordingly, the Company’s consolidated financial statements for periods prior to May 1, 2009 are not comparable to consolidated financial statements presented on or after May 1, 2009.

In applying fresh-start accounting, the Successor Company must determine a value to be assigned to the equity of the emerging company as of the date of adoption of fresh-start accounting. To facilitate this calculation the Company first determined the enterprise value of the Successor Company. The valuation methods included (i) a discounted cash flow analysis, considering a range of the weighted average cost of capital between 12.5% and 13.5% and multiples of projected earnings of between 5 and 7 times for its terminal value, (ii) a market multiples analysis, considering multiple ranges of between 5 and 6.5 times and (iii) precedent transaction multiples of between 7 and 8 times. This analysis resulted in an estimated enterprise value of between $260 million and $300 million. Due to prevailing economic conditions, the Company used the low end of this range for purposes of applying fresh-start accounting.

The estimated enterprise value, and corresponding equity value, is highly dependent upon achieving the future financial results set forth in the financial projections included in the Company’s Plan of Reorganization, as filed with the Bankruptcy Court. These projections were limited by the information available to the Company as of the date of the preparation of the projections and reflected numerous assumptions concerning anticipated future performance and prevailing and anticipated market and economic conditions that were and continue to be beyond the Company’s control and that may not materialize. Projections are inherently subject to uncertainties and to a wide variety of significant business, economic and competitive risks. Therefore variations from the projections may be material.

After deducting the fair value of the Secured Notes (as determined by quoted market prices) and the outstanding Exit Facility balance (net of cash), the equity value of the Company was calculated to be $101.5 million. The estimates and assumptions made in this valuation are inherently subject to significant uncertainties. Accordingly, there can be no assurance that the estimates, assumptions, and amounts reflected in the valuations will be realized, and actual results could vary materially. Moreover, the market value of the Company’s common stock may differ materially from the equity valuation used for accounting purposes.

Fresh-start accounting reflects the value of the Company as determined in the confirmed Plan of Reorganization. Under fresh-start accounting, the Company’s asset values are remeasured and allocated in conformity with ASC 805, “Business Combinations”. The excess of reorganization value over the fair value of tangible and identifiable intangible assets is recorded as goodwill in the accompanying consolidated balance sheet. Fresh-start accounting also requires that all liabilities, other than deferred taxes and pension and other postretirement benefit obligations, should be stated at fair value. Deferred taxes are determined in conformity with ASC 740, “Income Taxes.” Pension and postretirement liabilities are remeasured in conformity with ASC 715, “Compensation — Retirement Benefits.”

Estimates of fair value included in the Successor Company financial statements represent the Company’s best estimates based on independent appraisals and valuations, industry data and trends and by reference to relevant market rates and transactions. The foregoing estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the control of the Company. Accordingly, the Company cannot provide assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially.

The following fresh-start consolidated balance sheet presents the financial effects on the Company of the implementation of the Plan of Reorganization and the adoption of fresh-start accounting. The effect of the consummation of the transactions contemplated in the Plan of Reorganization includes the settlement of liabilities and the issuance of common stock.

The effects of the Plan of Reorganization and fresh-start reporting on the Company’s consolidated balance sheet are as follows:

						Reclassifications
		Predecessor				and				Fresh Start				Successor
		April 30,				Plan of				Accounting				May 1,
(In thousands)		2009				Reorganization				Adjustments				2009
ASSETS
Current Assets:
Cash and cash equivalents		$	1,884			$	—			$	—			$	1,884
Accounts receivable, net			48,021				876	a			(26	) g			48,871
Accounts receivable — related party			876				(876	) a			—				—
Inventories, net			55,179				—				1,621	g			56,800
Prepaid expenses and other current assets			23,626				(13,870	) b, k			(1,132	) g			8,624
Deferred income taxes			1,594				—				(714	) i			880
Current assets of discontinued operations			310				—				—				310
Total current assets			131,490				(13,870	)			(251	)			117,369
Property, plant and equipment, net			128,938				11,216	k			37,385	g			177,539
Goodwill			148,813				—				(31,500	) g, h			117,313
Intangible assets			—				—				36,404	g, h			36,404
Restricted cash			9,327				—				—				9,327
Other assets			1,265				2,654	b			(2,654	) g			1,265
Total assets		$	419,833			$	—			$	39,384			$	459,217
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Short-term debt		$	5,000			$	—			$	—			$	5,000
Current portion of long-term debt			220,000				(220,000	) b			—				—
Accounts payable			83,407				850	a			—				84,257
Accrued expenses and other current liabilities			27,165				4,148	a, c, d			(459	) g			30,854
Accounts payable and accrued expenses — related party			4,108				(4,108	) a			—				—
Deferred income taxes			1,594				—				(1,594	) i			—
Current liabilities of discontinued operations			131				—				—				131
Total current liabilities			341,405				(219,110	)			(2,053	)			120,242
Long-term debt, net of current portion			—				220,000	b			(65,725	) g			154,275
Pension and postretirement liabilities			37,545				(367	) d			(7,424	) g			29,754
Deferred income taxes			—				—				38,715	i			38,715
Other liabilities			16,919				—				(2,984	) g			13,935
Non-current liabilities of discontinued operations			812				—				—				812
Liabilities subject to compromise			186,229				(186,229	) e			—				—
Total liabilities			582,910				(185,706	)			(39,471	)			357,733
Commitments and contingencies
Stockholders’ Equity (Deficit):
Predecessor preferred stock			—				—				—				—
Predecessor common stock			125				(125	) f			—				—
Predecessor additional paid-in capital			277,968				(277,968	) f			—				—
Predecessor treasury stock			(1,033	)			1,033	f			—				—
Successor common stock			—				18	e			—				18
Successor additional paid-in capital			—				101,466	e			—				101,466
Accumulated other comprehensive loss, net of tax			(48,581	)			—				48,581	j			—
Accumulated deficit			(391,556	)			361,282	c, e, f			30,274	j			—
Total stockholders’ equity (deficit)			(163,077	)			185,706				78,855				101,484
Total liabilities and stockholders’ equity (deficit)		$	419,833			$	—			$	39,384			$	459,217