ý | CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 35-2215019 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
399 Jefferson Road Parsippany, New Jersey | 07054 | |
(Address of Principal Executive Offices) | (Zip Code) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit Number | Description | |
99.1 | Release dated July 27, 2017 announcing financial results for the fiscal quarter ended June 25, 2017. |
By: | /s/ CRAIG STEENECK | |
Name: | Craig Steeneck | |
Title: | Executive Vice President and Chief Financial Officer | |
Date: | July 27, 2017 |
Exhibit Number | Description | |
99.1 | Release dated July 27, 2017 announcing financial results for the fiscal quarter ended June 25, 2017. |
• | The benefit of the 53rd week is expected to add approximately 1% to net sales and $0.03 to Adjusted Diluted EPS for the year. This impact will benefit the fourth quarter of 2017. |
• | Input cost inflation for the year continues to be estimated in the range of 2.5% to 3.0%. |
• | Productivity for the year is now estimated to be at the top or slightly ahead of the Company’s 3.5% to 4.0% of cost of products sold range, excluding Boulder Brands acquisition synergies of at least $15 million that will benefit both gross margin and SG&A overhead. |
• | Adjusted Net Interest Expense is now forecasted to be slightly below $123 million. |
• | Adjusted ETR for the year, including the benefit of the new accounting standard for stock-based compensation, is now estimated in the range of 33.0% to 33.4%, with the second half ETR significantly higher than the first half. |
• | The strategic investments that impacted the second quarter are also expected to impact the balance of the year, primarily the third quarter, by $0.05. |
• | The weighted average diluted share count for the year continues to be estimated at approximately 120 million shares, with the second half higher than the first half. |
• | Capital expenditures for the year remain estimated in the range of $115 million to $125 million |
• | Adjusted Gross Profit |
• | Adjusted Gross Profit as a % of sales (Adjusted Gross Profit Margin) |
• | Adjusted EBITDA |
• | Adjusted Earnings Before Interest and Taxes (Adjusted EBIT) |
• | Adjusted Net Interest Expense |
• | Adjusted Net Earnings |
• | Adjusted Diluted Earnings Per Share |
• | Adjusted Effective Income Tax Rate (Adjusted ETR) |
Three months ended | Six months ended | ||||||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | ||||||||||||
Net sales | $ | 744,608 | $ | 756,381 | $ | 1,510,682 | $ | 1,510,636 | |||||||
Cost of products sold | 580,190 | 535,189 | 1,135,200 | 1,090,877 | |||||||||||
Gross profit | 164,418 | 221,192 | 375,482 | 419,759 | |||||||||||
Marketing and selling expenses | 49,470 | 61,036 | 105,064 | 119,934 | |||||||||||
Administrative expenses | 33,630 | 43,703 | 69,641 | 89,591 | |||||||||||
Research and development expenses | 4,580 | 5,098 | 8,601 | 9,283 | |||||||||||
Tradename impairment charges | 27,430 | — | 27,430 | — | |||||||||||
Other expense, net | 5,288 | 3,569 | 9,518 | 12,884 | |||||||||||
120,398 | 113,406 | 220,254 | 231,692 | ||||||||||||
Earnings before interest and taxes | 44,020 | 107,786 | 155,228 | 188,067 | |||||||||||
Interest expense | 28,507 | 35,488 | 109,238 | 67,128 | |||||||||||
Interest income | 13 | 27 | 28 | 104 | |||||||||||
Earnings before income taxes | 15,526 | 72,325 | 46,018 | 121,043 | |||||||||||
(Benefit) provision for income taxes | (3,092 | ) | 26,542 | 4,251 | 50,423 | ||||||||||
Net earnings | 18,618 | 45,783 | 41,767 | 70,620 | |||||||||||
Less: Net (loss) earnings attributable to non-controlling interest | (51 | ) | (1 | ) | 172 | — | |||||||||
Net earnings attributable to Pinnacle Foods, Inc. and subsidiaries common shareholders | $ | 18,669 | $ | 45,784 | $ | 41,595 | $ | 70,620 | |||||||
Net earnings per share attributable to Pinnacle Foods, Inc. and subsidiaries common shareholders: | |||||||||||||||
Basic | $ | 0.16 | $ | 0.39 | $ | 0.35 | $ | 0.61 | |||||||
Weighted average shares outstanding - basic | 118,114 | 116,657 | 117,869 | 116,387 | |||||||||||
Diluted | $ | 0.16 | $ | 0.39 | $ | 0.35 | $ | 0.60 | |||||||
Weighted average shares outstanding - diluted | 119,607 | 117,766 | 119,469 | 117,689 | |||||||||||
Dividends declared | $ | 0.285 | $ | 0.255 | $ | 0.570 | $ | 0.510 |
June 25, 2017 | December 25, 2016 | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 130,869 | $ | 353,076 | |||
Accounts receivable, net of allowances of $10,005 and $12,335, respectively | 277,978 | 289,582 | |||||
Inventories | 477,534 | 445,491 | |||||
Other current assets | 23,152 | 10,687 | |||||
Total current assets | 909,533 | 1,098,836 | |||||
Plant assets, net of accumulated depreciation of $553,767 and $491,397, respectively | 694,064 | 723,345 | |||||
Tradenames | 2,502,218 | 2,529,558 | |||||
Other assets, net | 160,133 | 173,071 | |||||
Goodwill | 2,164,058 | 2,163,156 | |||||
Total assets | $ | 6,430,006 | $ | 6,687,966 | |||
Current liabilities: | |||||||
Short-term borrowings | $ | 1,783 | $ | 2,389 | |||
Current portion of long-term obligations | 35,947 | 23,801 | |||||
Accounts payable | 312,424 | 292,478 | |||||
Accrued trade marketing expense | 33,261 | 51,054 | |||||
Accrued liabilities | 110,211 | 166,741 | |||||
Dividends payable | 35,244 | 35,233 | |||||
Total current liabilities | 528,870 | 571,696 | |||||
Long-term debt | 2,940,800 | 3,140,496 | |||||
Pension and other postretirement benefits | 54,608 | 56,323 | |||||
Other long-term liabilities | 36,889 | 47,529 | |||||
Deferred tax liabilities | 923,855 | 922,980 | |||||
Total liabilities | 4,485,022 | 4,739,024 | |||||
Commitments and contingencies | |||||||
Shareholders' equity: | |||||||
Pinnacle preferred stock: $.01 per share, 50,000,000 shares authorized, none issued | — | — | |||||
Pinnacle common stock: par value $.01 per share, 500,000,000 shares authorized; issued 119,786,044 and 119,127,269, respectively | 1,198 | 1,191 | |||||
Additional paid-in-capital | 1,439,221 | 1,429,447 | |||||
Retained earnings | 574,535 | 601,049 | |||||
Accumulated other comprehensive loss | (38,966 | ) | (51,569 | ) | |||
Capital stock in treasury, at cost, 1,000,000 common shares | (32,110 | ) | (32,110 | ) | |||
Total Pinnacle Foods Inc. and subsidiaries shareholders' equity | 1,943,878 | 1,948,008 | |||||
Non-controlling interest | 1,106 | 934 | |||||
Total Equity | 1,944,984 | 1,948,942 | |||||
Total liabilities and equity | $ | 6,430,006 | $ | 6,687,966 |
Six months ended | |||||||
June 25, 2017 | June 26, 2016 | ||||||
Cash flows from operating activities | |||||||
Net earnings | $ | 41,767 | $ | 70,620 | |||
Non-cash charges (credits) to net earnings | |||||||
Depreciation and amortization | 80,899 | 51,672 | |||||
Intangible asset impairment charge | 27,430 | — | |||||
Amortization of debt acquisition costs and discount on term loan | 2,597 | 4,657 | |||||
Recognition of deferred costs related to refinancing | 28,494 | — | |||||
Change in value of financial instruments, including amounts reclassified from Accumulated Other Comprehensive Loss from settlement of hedges | 25,043 | (7,494 | ) | ||||
Equity-based compensation charges | 9,656 | 5,131 | |||||
Pension expense, net of contributions | (1,136 | ) | 66 | ||||
Other long-term liabilities | (1,193 | ) | 1,198 | ||||
Other long-term assets | — | (1,635 | ) | ||||
Foreign exchange gains | (398 | ) | (1,283 | ) | |||
Excess tax benefits on equity-based compensation | — | (6,369 | ) | ||||
Deferred income taxes | (5,780 | ) | 19,027 | ||||
Changes in working capital (net of effects of acquisition) | |||||||
Other liabilities - cash settlement of hedges related to refinancing | (20,722 | ) | — | ||||
Accounts receivable | 11,777 | (7,557 | ) | ||||
Inventories | (31,745 | ) | 28,351 | ||||
Accrued trade marketing expense | (17,748 | ) | (4,923 | ) | |||
Accounts payable | 35,379 | 2,128 | |||||
Accrued liabilities | (53,991 | ) | 3,041 | ||||
Other current assets | (9,981 | ) | 8,473 | ||||
Net cash provided by operating activities | 120,348 | 165,103 | |||||
Cash flows from investing activities | |||||||
Business acquisition activity (net of cash acquired) | — | (985,365 | ) | ||||
Capital expenditures | (49,355 | ) | (60,187 | ) | |||
Proceeds from sale of plant assets | 1,947 | — | |||||
Net cash used in investing activities | (47,408 | ) | (1,045,552 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from bank term loans | 2,262,000 | 547,250 | |||||
Proceeds from notes offerings | — | 350,000 | |||||
Repayments of long-term obligations | (2,472,320 | ) | (6,478 | ) | |||
Proceeds from short-term borrowings | 1,634 | 1,604 | |||||
Repayments of short-term borrowings | (2,240 | ) | (2,060 | ) | |||
Repayment of capital lease obligations | (4,216 | ) | (1,574 | ) | |||
Dividends paid | (67,412 | ) | (59,460 | ) | |||
Net proceeds from issuance of common stock | 9,051 | 15,642 | |||||
Excess tax benefits on equity-based compensation | — | 6,369 | |||||
Taxes paid related to net share settlement of equity awards | (8,926 | ) | (1,087 | ) | |||
Debt acquisition costs | (12,937 | ) | (21,262 | ) | |||
Net cash (used in) provided by financing activities | (295,366 | ) | 828,944 | ||||
Effect of exchange rate changes on cash | 219 | 300 | |||||
Net change in cash and cash equivalents | (222,207 | ) | (51,205 | ) | |||
Cash and cash equivalents - beginning of period | 353,076 | 180,549 | |||||
Cash and cash equivalents - end of period | $ | 130,869 | $ | 129,344 | |||
Supplemental disclosures of cash flow information: | |||||||
Interest paid | $ | 62,180 | $ | 48,083 | |||
Interest received | 28 | 104 | |||||
Income taxes paid | 47,569 | 19,145 | |||||
Non-cash investing and financing activities: | |||||||
New capital leases | 8,951 | 4,586 | |||||
Dividends payable | 35,244 | 30,998 | |||||
Accrued additions to plant assets | 10,422 | 10,570 |
Three months ended | Six months ended | |||||||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||
Gross Profit (as reported) | $ | 164,418 | $ | 221,192 | $ | 375,482 | $ | 419,759 | ||||||||
Accelerated depreciation expense - Aunt Jemima and other frozen breakfast products exit | 23,602 | — | 23,602 | — | ||||||||||||
Non-cash items | ||||||||||||||||
Unrealized (gains)/losses resulting from hedging (2) | 2,324 | (3,601 | ) | 4,319 | (7,493 | ) | ||||||||||
Purchase accounting adjustments (3) | — | — | — | 10,382 | ||||||||||||
Aunt Jemima and other frozen breakfast products exit (4) | 5,078 | — | 5,078 | — | ||||||||||||
Acquisition, merger and other restructuring charges | ||||||||||||||||
Restructuring and integration costs (5) | 4,021 | 972 | 9,037 | 1,608 | ||||||||||||
Employee severance (6) | — | — | 270 | — | ||||||||||||
Aunt Jemima and other frozen breakfast products exit (7) | 4,324 | — | 4,324 | — | ||||||||||||
Adjusted Gross Profit | $ | 203,767 | $ | 218,563 | $ | 422,112 | $ | 424,256 | ||||||||
Adjusted Gross Profit as a % of sales | ||||||||||||||||
Adjusted Gross Profit | $ | 203,767 | $ | 218,563 | $ | 422,112 | $ | 424,256 | ||||||||
Net sales | $ | 744,608 | $ | 756,381 | $ | 1,510,682 | $ | 1,510,636 | ||||||||
Adjusted Gross Profit as a % of sales | 27.4 | % | 28.9 | % | 27.9 | % | 28.1 | % |
(1) | Excludes Boulder Brands, Wish-Bone and Garden Protein anticipated synergies which are included in calculating Covenant compliance. |
(2) | Represents non-cash gains and losses resulting from mark-to-market obligations under derivative contracts. |
(3) | Represents expense related to the write-up to fair market value of inventories acquired as a result of the Boulder Brands acquisition. |
(4) | Primarily represents charges to adjust inventory to net realizable value resulting from the exit of the business. |
(5) | Primarily represents integration costs of the Garden Protein and Boulder Brands acquisitions. |
(6) | Represents severance costs for terminated employees not related to business acquisitions. |
(7) | Primarily represents employee termination costs and contract termination fees resulting from the exit of the business. |
Three months ended | Six months ended | |||||||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||
Net earnings | $ | 18,618 | $ | 45,783 | $ | 41,767 | $ | 70,620 | ||||||||
Accelerated depreciation expense - Aunt Jemima and other frozen breakfast products exit | 23,602 | — | 23,602 | — | ||||||||||||
Accelerated amortization expense - Aunt Jemima and other frozen breakfast products exit | 3,783 | — | 3,783 | — | ||||||||||||
Accelerated amortization expense - gardein Private Label business exit | — | — | 656 | — | ||||||||||||
Non-cash items | ||||||||||||||||
Unrealized losses/(gains) resulting from hedging (2) | 2,324 | (3,601 | ) | 4,319 | (7,493 | ) | ||||||||||
Purchase accounting adjustments (3) | — | — | — | 10,382 | ||||||||||||
Tradename impairment charges (4) | 27,430 | — | 27,430 | — | ||||||||||||
Foreign exchange gains (5) | (165 | ) | (499 | ) | (398 | ) | (1,283 | ) | ||||||||
Wind down of Boulder Brands UK operations (6) | (771 | ) | — | (771 | ) | — | ||||||||||
Aunt Jemima and other frozen breakfast products exit (7) | 5,078 | — | 5,078 | — | ||||||||||||
Acquisition, merger and other restructuring charges | ||||||||||||||||
Acquisition or other non-recurring expenses (8) | — | — | — | 6,781 | ||||||||||||
Restructuring and integration costs (9) | 4,591 | 11,108 | 10,441 | 25,106 | ||||||||||||
Employee severance (10) | — | — | 977 | — | ||||||||||||
Aunt Jemima and other frozen breakfast products exit (11) | 4,324 | — | 4,324 | — | ||||||||||||
Interest expense (12) | — | — | 49,451 | — | ||||||||||||
Tax Impact of adjustments to Adjusted Net Earnings (13) | (25,572 | ) | (2,813 | ) | (47,216 | ) | (6,757 | ) | ||||||||
Adjusted Net Earnings | $ | 63,242 | $ | 49,978 | $ | 123,443 | $ | 97,356 | ||||||||
Adjusted Earnings Per Share | ||||||||||||||||
Adjusted Net Earnings | $ | 63,242 | $ | 49,978 | $ | 123,443 | $ | 97,356 | ||||||||
Diluted weighted average outstanding shares | 119,607 | 117,766 | 119,469 | 117,689 | ||||||||||||
Adjusted Earnings Per Share | $ | 0.53 | $ | 0.42 | $ | 1.03 | $ | 0.83 | ||||||||
Diluted earnings per share (as reported) | $ | 0.16 | $ | 0.39 | $ | 0.35 | $ | 0.60 | ||||||||
Accelerated depreciation expense - Aunt Jemima and other frozen breakfast products exit | 0.20 | — | 0.20 | — | ||||||||||||
Accelerated amortization expense - Aunt Jemima and other frozen breakfast products exit | 0.03 | — | 0.03 | — | ||||||||||||
Accelerated amortization expense - gardein Private Label business exit | — | — | 0.01 | — | ||||||||||||
Non-cash items | ||||||||||||||||
Unrealized losses/(gains) resulting from hedging (2) | 0.02 | (0.03 | ) | 0.04 | (0.06 | ) | ||||||||||
Purchase accounting adjustments (3) | — | — | — | 0.09 | ||||||||||||
Tradename impairment charges (4) | 0.23 | — | 0.23 | — | ||||||||||||
Foreign exchange gains (5) | — | — | — | (0.01 | ) | |||||||||||
Wind down of Boulder Brands UK operations (6) | (0.01 | ) | — | (0.01 | ) | — | ||||||||||
Aunt Jemima and other frozen breakfast products exit (7) | 0.04 | — | 0.04 | — | ||||||||||||
Acquisition, merger and other restructuring charges | ||||||||||||||||
Acquisition or other non-recurring expenses (8) | — | — | — | 0.06 | ||||||||||||
Restructuring and integration costs (9) | 0.04 | 0.09 | 0.09 | 0.21 | ||||||||||||
Employee severance (10) | — | — | 0.01 | — | ||||||||||||
Aunt Jemima and other frozen breakfast products exit (11) | 0.04 | — | 0.04 | — | ||||||||||||
Interest expense (12) | — | — | 0.41 | — | ||||||||||||
Tax Impact of adjustments to Adjusted Net Earnings (13) | (0.21 | ) | (0.02 | ) | (0.40 | ) | (0.06 | ) | ||||||||
Adjusted Earnings Per Share | $ | 0.53 | $ | 0.42 | $ | 1.03 | $ | 0.83 |
(1) | Excludes Boulder Brands, Wish-Bone and Garden Protein anticipated synergies which are included in calculating Covenant compliance. |
(2) | Represents non-cash gains and losses resulting from mark-to-market obligations under derivative contracts. |
(3) | Represents expense related to the write-up to fair market value of inventories acquired as a result of the Boulder Brands acquisition. |
(4) | For the three and six months ended June 25, 2017, represents tradename impairment on Aunt Jemima. |
(5) | Represents foreign exchange gains resulting from intra-entity loans that are anticipated to be settled in the foreseeable future. |
(6) | Represents adjustments resulting from the voluntary wind-down of the Boulder Brands private-label gluten-free bakery operation which is based in the United Kingdom. |
(7) | Primarily represents charges to adjust inventory to net realizable value resulting from the exit of the business. |
(8) | Represents Boulder Brands acquisition costs. |
(9) | Primarily represents integration costs of the Garden Protein and Boulder Brands acquisitions. |
(10) | Represents severance costs for terminated employees not related to business acquisitions. |
(11) | Primarily represents employee termination costs and contract termination fees resulting from the exit of the business. |
(12) | Represents charges associated with the February 2017 term loan refinancing which consisted of recognizing a $28.5 million non-cash charge for deferred financing costs and original discount as well as a $21.0 cash charge resulting from the de-designation and settlement of interest rate swaps. |
(13) | See Adjusted Effective Income Tax Rate reconciliation for further details. |
Three months ended | Six months ended | |||||||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||
Net earnings | $ | 18,618 | $ | 45,783 | $ | 41,767 | $ | 70,620 | ||||||||
Interest expense, net | 28,494 | 35,461 | 109,210 | 67,024 | ||||||||||||
(Benefit) provision for income taxes | (3,092 | ) | 26,542 | 4,251 | 50,423 | |||||||||||
Earnings before interest and taxes (as reported) | 44,020 | 107,786 | 155,228 | 188,067 | ||||||||||||
Accelerated depreciation expense - Aunt Jemima and other frozen breakfast products exit | 23,602 | — | 23,602 | — | ||||||||||||
Accelerated amortization expense - Aunt Jemima and other frozen breakfast products exit | 3,783 | — | 3,783 | — | ||||||||||||
Accelerated amortization expense - gardein Private Label business exit | — | — | 656 | — | ||||||||||||
Non-cash items | ||||||||||||||||
Unrealized losses/(gains) resulting from hedging (2) | 2,324 | (3,601 | ) | 4,319 | (7,493 | ) | ||||||||||
Purchase accounting adjustments (3) | — | — | — | 10,382 | ||||||||||||
Tradename impairment charges (4) | 27,430 | — | 27,430 | — | ||||||||||||
Foreign exchange gains (5) | (165 | ) | (499 | ) | (398 | ) | (1,283 | ) | ||||||||
Wind down of Boulder Brands UK operations (6) | (771 | ) | — | (771 | ) | — | ||||||||||
Aunt Jemima and other frozen breakfast products exit (7) | 5,078 | — | 5,078 | — | ||||||||||||
Acquisition, merger and other restructuring charges | ||||||||||||||||
Acquisition or other non recurring expenses (8) | — | — | — | 6,781 | ||||||||||||
Restructuring and integration costs (9) | 4,591 | 11,108 | 10,441 | 25,106 | ||||||||||||
Employee severance (10) | — | — | 977 | — | ||||||||||||
Aunt Jemima and other frozen breakfast products exit (11) | 4,324 | — | 4,324 | — | ||||||||||||
Adjusted EBIT | $ | 114,216 | $ | 114,794 | $ | 234,669 | $ | 221,560 | ||||||||
Depreciation | 23,885 | 22,446 | 46,431 | 43,316 | ||||||||||||
Amortization | 2,541 | 4,309 | 6,427 | 8,356 | ||||||||||||
Adjusted EBITDA | $ | 140,642 | $ | 141,549 | $ | 287,527 | $ | 273,232 | ||||||||
(1) | Excludes Boulder Brands, Wish-Bone and Garden Protein anticipated synergies which are included in calculating Covenant compliance. |
(2) | Represents non-cash gains and losses resulting from mark-to-market obligations under derivative contracts. |
(3) | Represents expense related to the write-up to fair market value of inventories acquired as a result of the Boulder Brands acquisition. |
(4) | For the three and six months ended June 25, 2017, represents tradename impairment on Aunt Jemima. |
(5) | Represents foreign exchange gains resulting from intra-entity loans that are anticipated to be settled in the foreseeable future. |
(6) | Represents adjustments resulting from the voluntary wind-down of the Boulder Brands private-label gluten-free bakery operation which is based in the United Kingdom. |
(7) | Primarily represents charges to adjust inventory to net realizable value resulting from the exit of the business. |
(8) | Represents Boulder Brands acquisition costs. |
(9) | Primarily represents integration costs of the Garden Protein and Boulder Brands acquisitions. |
(10) | Represents severance costs for terminated employees not related to business acquisitions. |
(11) | Primarily represents employee termination costs and contract termination fees resulting from the exit of the business. |
Three months ended | Six months ended | |||||||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||
Interest expense | $ | 28,507 | $ | 35,488 | $ | 109,238 | $ | 67,128 | ||||||||
Interest income | 13 | 27 | 28 | 104 | ||||||||||||
Net Interest Expense (as reported) | 28,494 | 35,461 | 109,210 | 67,024 | ||||||||||||
Cash settlement of hedges related to refinancing | — | — | (20,722 | ) | — | |||||||||||
Non-cash recognition of deferred costs related to refinancing | — | — | (28,494 | ) | — | |||||||||||
Other expenses related to refinancing | — | — | (235 | ) | — | |||||||||||
Adjusted Net Interest Expense | $ | 28,494 | $ | 35,461 | $ | 59,759 | $ | 67,024 | ||||||||
Three months ended | Six months ended | |||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||
Effective income tax rate (as reported) | (19.9 | )% | 36.7 | % | 9.2 | % | 41.7 | % | ||||
Acquisition or other non recurring expenses (1) | — | % | — | % | — | % | (0.3 | )% | ||||
Restructuring and integration costs (2) | — | % | — | % | — | % | (0.3 | )% | ||||
Valuation allowance on foreign tax credit due to acquisition (3) | — | % | — | % | — | % | (1.3 | )% | ||||
Increase in deferred tax liability due to acquisition (4) | — | % | 0.1 | % | — | % | (3.1 | )% | ||||
Effect of windfall benefit (5) | 33.2 | % | — | % | 16.1 | % | — | % | ||||
State law changes (6) | 12.7 | % | — | % | 3.8 | % | — | % | ||||
Other | 0.2 | % | 0.2 | % | 0.3 | % | 0.3 | % | ||||
Adjusted Effective Income Tax Rate | 26.2 | % | 37.0 | % | 29.4 | % | 37.0 | % | ||||
(1) | Represents the effective tax rate impact of non-deductible Boulder Brands acquisition costs. |
(2) | Represents the effective tax rate impact of non-deductible severance costs in connection with the integration of the Boulder Brands acquisition. |
(3) | Represents the effective tax rate impact of a valuation allowance on our foreign tax credit. |
(4) | Represents the effective tax rate impact of an increase in our state deferred income tax liability. |
(5) | Represents the differential in the weighted average effect, on a GAAP compared to Adjusted Net Earnings basis, of our deduction for excess tax benefits from share based payment transactions in accordance with ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” effective for the 2017 fiscal year. |
(6) | Represents the differential in the weighted average effect, on a GAAP compared to Adjusted Net Earnings basis, of changes in state tax legislation effective in the reporting period. |
Pinnacle Foods Inc. Reconciliation of Non-GAAP measures (Unaudited) Adjusted Segment amounts (thousands) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||
Net sales - Reported | ||||||||||||||||
Frozen | $ | 295,893 | $ | 288,797 | $ | 616,835 | $ | 619,285 | ||||||||
Grocery | 276,057 | 281,005 | 535,407 | 531,918 | ||||||||||||
Boulder | 94,654 | 94,694 | 191,946 | 174,855 | ||||||||||||
Specialty | 78,004 | 91,885 | 166,494 | 184,578 | ||||||||||||
Total | $ | 744,608 | $ | 756,381 | $ | 1,510,682 | $ | 1,510,636 | ||||||||
Earnings before interest & taxes - Reported | ||||||||||||||||
Frozen | $ | (12,260 | ) | $ | 45,753 | $ | 38,662 | $ | 97,092 | |||||||
Grocery | 61,870 | 53,803 | 113,677 | 93,527 | ||||||||||||
Boulder | 12,249 | 5,809 | 18,921 | 1,285 | ||||||||||||
Specialty | (10,648 | ) | 7,045 | (1,760 | ) | 14,046 | ||||||||||
Unallocated corporate expenses | (7,191 | ) | (4,624 | ) | (14,272 | ) | (17,883 | ) | ||||||||
Total | $ | 44,020 | $ | 107,786 | $ | 155,228 | $ | 188,067 | ||||||||
Adjustments (Non GAAP - See separate table) | ||||||||||||||||
Frozen | $ | 50,341 | $ | (1,252 | ) | $ | 51,285 | $ | (2,670 | ) | ||||||
Grocery | 1,193 | 1,631 | 2,151 | 8,025 | ||||||||||||
Boulder | 3,576 | 6,338 | 10,082 | 20,045 | ||||||||||||
Specialty | 15,085 | 291 | 15,922 | 1,311 | ||||||||||||
Unallocated corporate expenses | — | — | — | 6,782 | ||||||||||||
Total | $ | 70,195 | $ | 7,008 | $ | 79,440 | $ | 33,493 | ||||||||
Earnings before interest & taxes - Adjusted (Non GAAP - See separate discussion and tables) | ||||||||||||||||
Frozen | $ | 38,081 | $ | 44,501 | $ | 89,947 | $ | 94,422 | ||||||||
Grocery | 63,063 | 55,434 | 115,828 | 101,552 | ||||||||||||
Boulder | 15,825 | 12,147 | 29,003 | 21,330 | ||||||||||||
Specialty | 4,437 | 7,336 | 14,162 | 15,357 | ||||||||||||
Unallocated corporate expenses | (7,191 | ) | (4,624 | ) | (14,272 | ) | (11,101 | ) | ||||||||
Total | $ | 114,215 | $ | 114,794 | $ | 234,668 | $ | 221,560 | ||||||||
Pinnacle Foods Inc. Reconciliation of Non-GAAP measures (Unaudited) Supplemental Schedule of Adjustments Detail (millions) | ||||||||||||||||
Adjustments to Earnings Before Interest and Taxes | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 25, 2017 | June 26, 2016 | June 25, 2017 | June 26, 2016 | |||||||||||||
Frozen | ||||||||||||||||
Aunt Jemima and other frozen breakfast products exit | $ | 49.4 | $ | — | $ | 49.4 | $ | — | ||||||||
Restructuring and acquisition integration charges | 0.1 | 0.2 | 0.2 | 0.4 | ||||||||||||
Employee severance | — | — | 0.1 | — | ||||||||||||
Unrealized mark-to-market loss/(gain) | 0.8 | (1.6 | ) | 1.6 | (3.5 | ) | ||||||||||
Expenses related to the write-up to fair value of inventories acquired | — | — | — | 0.3 | ||||||||||||
Other | — | 0.1 | — | 0.1 | ||||||||||||
Total Frozen | $ | 50.3 | $ | (1.3 | ) | $ | 51.3 | $ | (2.7 | ) | ||||||
Grocery | ||||||||||||||||
Restructuring and acquisition integration charges | $ | 0.1 | $ | 3.2 | $ | 0.1 | $ | 7.7 | ||||||||
Employee severance | — | — | 0.1 | — | ||||||||||||
Unrealized mark-to-market loss/(gain) | 1.1 | (1.8 | ) | 2.0 | (3.4 | ) | ||||||||||
Expenses related to the write-up to fair value of inventories acquired | — | — | — | 3.5 | ||||||||||||
Other | — | 0.2 | — | 0.2 | ||||||||||||
Total Grocery | $ | 1.2 | $ | 1.6 | $ | 2.2 | $ | 8.0 | ||||||||
Boulder | ||||||||||||||||
Restructuring and acquisition integration charges | $ | 3.3 | $ | 6.3 | $ | 8.9 | $ | 14.1 | ||||||||
Employee severance | — | — | 0.7 | — | ||||||||||||
Expense related to the write-up to fair market value of inventories acquired | — | — | — | 6.0 | ||||||||||||
Unrealized mark-to-market loss/(gain) | 0.3 | — | 0.5 | (0.1 | ) | |||||||||||
Total Boulder | $ | 3.6 | $ | 6.3 | $ | 10.1 | $ | 20.0 | ||||||||
Specialty | ||||||||||||||||
Aunt Jemima and other frozen breakfast products exit | $ | 14.8 | $ | — | $ | 14.8 | $ | — | ||||||||
Restructuring charges | 0.2 | 0.6 | 0.2 | 1.3 | ||||||||||||
Accelerated amortization due to the exit of the gardein Private Label business | — | — | 0.7 | — | ||||||||||||
Unrealized mark-to-market loss/(gain) | 0.1 | (0.3 | ) | 0.2 | (0.6 | ) | ||||||||||
Expenses related to the write-up to fair value of inventories acquired | — | — | — | 0.6 | ||||||||||||
Total Specialty | $ | 15.1 | $ | 0.3 | $ | 15.9 | $ | 1.3 | ||||||||
Unallocated Corporate Expenses | ||||||||||||||||
Boulder Brands acquisition related charges | $ | — | $ | — | $ | — | $ | 6.8 | ||||||||
Total Unallocated Corporate Expenses | $ | — | $ | — | $ | — | $ | 6.8 |
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