2014

Pinnacle Foods Inc. Reports Strong 1st Quarter Fiscal 2013 Results Company Provides Guidance for the Full Year

PARSIPPANY, N.J., May 15, 2013 /PRNewswire/ -- Pinnacle Foods Inc. (NYSE: PF) today announced strong financial results for its first quarter ended March 31, 2013 and provided its outlook for the full year.  Net earnings in the first quarter of 2013 more than doubled to $24.8 million, compared with net earnings of $9.5 million in the first quarter of 2012, and Adjusted EBITDA advanced 16% to $104.5 million, compared to Adjusted EBITDA of $89.9 million last year.  Net sales in the Company's North America Retail business, which is comprised of the Birds Eye Frozen and Duncan Hines Grocery segments, increased 1.4% in the first quarter.

Pinnacle completed its Initial Public Offering of common stock and began trading on the NYSE under the ticker symbol PF on March 28, 2013.  All of the proceeds from the IPO, which closed on April 3, 2013, were used to pay down debt.  In addition, Pinnacle refinanced all of its outstanding indebtedness in April, in a series of transactions that significantly reduced its annual cash interest expense and extended its maturity profile.  Both of these events will benefit the Company's financial performance beginning in the second quarter of fiscal 2013.

In addition, Pinnacle announced yesterday that its Board of Directors has adopted a policy to pay a regular quarterly dividend.  As a result, Pinnacle Foods will pay an initial quarterly cash dividend of $0.18 per share on July 10, 2013 to all common stockholders of record at the close of business on June 20, 2013.

Commenting on the results of the quarter, Pinnacle Foods Chief Executive Officer Bob Gamgort stated, "We are pleased with our excellent start to the year.  The significant growth in our earnings reflects the strength of our business model and provides us with the flexibility to invest in our business and respond, as needed, to potential heightened promotional activity."  

First Quarter Consolidated Results
Net sales in the first quarter declined 0.6% to $613.0 million, compared to net sales of $616.9 million in the first quarter of 2012, driven by a 10.6% decline in the Specialty Foods segment, stemming from the planned exit of low-margin, unbranded businesses, which offset solid growth in the Company's North America Retail business. 

North America Retail sales increased 1.4% due to a 1.2% benefit from higher volume/mix, driven in part by an earlier Easter this year which drove about half of the volume/mix benefit in the quarter, as well as the positive impact of 0.2% from higher net pricing.    

Adjusted EBITDA advanced 16.2% to $104.5 million in the first quarter of 2013, compared to Adjusted EBITDA of $89.9 million in the first quarter of 2012.  The growth in Adjusted EBITDA primarily reflected higher gross profit due largely to the benefit of productivity savings and favorable product mix, which more than offset modest input cost inflation in the quarter.  Adjusted EBITDA is a Non-GAAP measure defined below under "Non-GAAP Financial Measures," and is reconciled to Net Earnings in the tables that accompany this release.

Earnings before interest and taxes (EBIT) increased 23.8% to $80.7 million in the first quarter of 2013, compared to EBIT of $65.2 million in the first quarter of 2012.  Excluding restructuring-related and other items in both periods, EBIT advanced 19.1%.

Net earnings more than doubled in the first quarter of 2013 to $24.8 million, compared to net earnings of $9.5 million in the first quarter of 2012.  Excluding restructuring-related and other items in both periods, adjusted net earnings totaled $27.6 million in the first quarter of 2013, compared to $13.4 million in the first quarter of 2012, primarily reflecting the growth in EBIT as well as an 18% decline in interest expense, resulting from the Company's 2012 refinancing activities and lower overall debt levels.

Net cash provided by operating activities in the first quarter of 2013 was $67.7 million, compared to $33.9 million in the year-ago period.  This improvement was driven by the growth in earnings and continued strong management of working capital. 

First Quarter Segment Results

Birds Eye Frozen
Net sales for the Birds Eye Frozen segment increased 0.7% to $292.5 million in the first quarter of 2013, compared to $290.5 million in the year-ago period.  This growth reflected a 0.5% increase from volume/mix, which was entirely driven by the benefit of an earlier Easter this year, as well as an increase of 0.2% from higher net pricing.  The increase in sales was driven by growth of Birds Eye® Voila! ® complete bag meals, including the Birds Eye® Voila!® Chipotle Chicken line extension introduced during the quarter, and Lender's® bagels, as well as the launch of Mrs. Paul's® and Van de Kamp's® Spicy Fish Fillet Sandwiches, partially offset by a sales decline for Birds Eye® vegetables, driven by a heightened promotional environment. 

EBIT for the Birds Eye Frozen segment increased 31.4% to $48.9 million in the first quarter of 2013, compared to $37.2 million in the year-ago period.  Excluding restructuring-related and other items in both periods, EBIT advanced 16.3%, due to higher gross profit primarily driven by productivity savings.     

Duncan Hines Grocery
Net sales for the Duncan Hines Grocery segment increased 2.3% to $227.2 million in the first quarter of 2013, compared to $222.0 million in the year-ago period.   This growth reflected a 2.0% increase in volume/mix, with approximately one-third of the benefit due to the earlier timing of Easter, as well as an increase of 0.3% from higher net pricing.  The increase in sales was driven by growth of Mrs. Butterworth's® and Log Cabin® syrups, Vlasic® pickles, including the benefit of Vlasic® Farmer's Garden® introduced in the second half of last year, Comstock® and Wilderness® pie and pastry fruit fillings and the Company's Canadian business, partially offset by lower sales of Duncan Hines® frostings.

EBIT for the Duncan Hines Grocery segment advanced 11.9% to $29.4 million in the first quarter of 2013, compared to $26.3 million in the year-ago period.  Excluding restructuring-related and other items in both periods, EBIT advanced 20.7%, due to higher gross profit stemming from lower commodity costs and favorable product mix.

Specialty Foods
Net sales for the Specialty Foods segment declined 10.6% to $93.3 million in the first quarter of 2013, compared to $104.4 million in the first quarter of 2012, reflecting the planned exit of the Company's low-margin, unbranded pickle business and lower sales of private label canned meat. 

EBIT for the Specialty Foods segment advanced 19.1% to $8.2 million in the first quarter of 2013, compared to $6.9 million in the first quarter of 2012.  This improvement primarily reflected higher gross profit largely due to productivity savings.

First Quarter Pro Forma Consolidated Results
The Company's recent IPO and refinancing will have a material, positive impact on its net interest expense and net earnings metrics, beginning in the second quarter of 2013.  As a result, the Company is providing its consolidated results for the first quarter on a pro forma basis, assuming the IPO and refinancing occurred on the first day of fiscal 2013.  In addition, the pro forma basis excludes restructuring-related and other items and some modest IPO expenses.  A reconciliation of the pro forma results to the Company's reported results is included in the tables that accompany this release.

For the first quarter of 2013 on a pro forma basis, net interest expense totaled $20.3 million and net earnings totaled $39.6 million, or $0.34 per diluted share, assuming diluted shares outstanding of 117.4 million.

Outlook for Full Year 2013
Due to the impacts that the Company's IPO and 2013 refinancing will have on its interest expense and diluted EPS beginning in the second quarter of 2013, the Company is providing its annual outlook for these measures for the year on a pro forma basis.  The pro forma basis assumes that the IPO and 2013 refinancing occurred on the first day of fiscal 2013 and excludes IPO and refinancing charges, restructuring-related and other items and non-cash stock-based compensation expense that, combined, total approximately $65 million on an after-tax basis.  Pro forma interest expense is expected to be approximately $82 million for fiscal 2013, and the Company's corresponding outlook for diluted EPS is estimated in the range of $1.49 to $1.55.  This reflects a weighted average share count for the year of 117.4 million shares.  The Company expects to grow its North America Retail revenue in line with the growth of its categories in 2013. 

Finally, to facilitate comparability between 2012 and 2013, the Company is providing key earnings statement data on a pro forma basis for 2012 by quarter, assuming the IPO occurred on January 1, 2012.  This information is provided in the tables that accompany this release.

Conference Call Information
The Company will host an investor conference call on Wednesday, May 15, 2013 at 9:30AM (ET) to discuss the results of the quarter. To access the call, investors and analysts can dial (866) 793-1344 in the U.S. and Canada or (703) 639-1315 from outside the U.S. and Canada and reference conference name:  Pinnacle Foods Q1 Earnings Call.  A replay of the call will be available, beginning May 15, 2013 at 1:00 PM (ET) until May 30, 2013, by dialing (888) 266-2081 in the U.S. and Canada or (703) 925-2533 from the U.S. and Canada and referencing Access Code 1607442.  Access to a live audio webcast and replay of the event will be available in the Investor Center of the Company's corporate website at www.pinnaclefoods.com.

About Pinnacle Foods Inc.
In more than 85% of American households, consumers reach for Pinnacle Foods brands. Pinnacle Foods is a Top 1000 Company ranked on Fortune Magazine's 2012 Top 1000 companies list. We are a leading producer, marketer and distributor of high-quality branded food products, which have been trusted household names for decades. Headquartered in Parsippany, NJ, our business employs an average of 4,400 employees. We are a leader in the shelf stable and frozen foods segments and our brands hold the #1 or #2 market position in 10 of the 12 major categories in which they compete. Our Duncan Hines Grocery Division manages brands such as Duncan Hines® baking mixes and frostings, Vlasic® shelf-stable pickles, Mrs. Butterworth's® and Log Cabin® table syrups, Armour® canned meats, Brooks® and Nalley® chili and chili ingredients, Duncan Hines® Comstock® and Wilderness® pie and pastry fruit fillings and Open Pit® barbecue sauces. Our Birds Eye Frozen Division manages brands such as Birds Eye®, Birds Eye Steamfresh®, C&W®, McKenzie's®, and Freshlike® frozen vegetables, Birds Eye Voila!® complete bagged frozen meals, Van de Kamp's® and Mrs. Paul's® frozen prepared seafood, Hungry-Man® frozen dinners and entrées, Aunt Jemima® frozen breakfasts, Lender's® frozen and refrigerated bagels, and Celeste® frozen pizza. Our Specialty Foods Division manages Tim's Cascade Snacks®, Hawaiian® kettle style potato chips, Erin's® popcorn, Snyder of Berlin® and Husman's® snacks in addition to our food service and private label businesses. Further information is available at http://www.pinnaclefoods.com

Forward Looking Statements
This release may contain statements that predict or forecast future events or results, depend on future events for their accuracy or otherwise contain "forward-looking information." The words "estimates," "expects," "contemplates," "anticipates," "projects," "plans," "intends," "believes," "forecasts," "may," "should," and variations of such words or similar expressions are intended to identify forward-looking statements. These statements are made based on management's current expectations and beliefs concerning future events and various assumptions and are not guarantees of future performance. Actual results may differ materially as a result of various factors, some of which are beyond our control, including but not limited to: general economic and business conditions, deterioration of the credit and capital markets, industry trends, our substantial leverage and changes in our leverage, interest rate changes, changes in our ownership structure, competition, the loss of any of our major customers or suppliers, changes in demand for our products, changes in distribution channels or competitive conditions in the markets where we operate, costs of integrating acquisitions, loss of our intellectual property rights, fluctuations in price and supply of raw materials, seasonality, our reliance on co-packers to meet our manufacturing needs, availability of qualified personnel, changes in the cost of compliance with laws and regulations, including environmental laws and regulations, and the other risks and uncertainties detailed in our final prospectus filed with the Securities and Exchange Commission on March 28, 2013 and subsequent reports filed with the Securities and Exchange Commission. There may be other factors that may cause our actual results to differ materially from the forward-looking statements.  We assume no obligation to update the information contained in the presentation.

 

 



PINNACLE FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(thousands of dollars)




Three months ended



March 31,
2013


March 25,
2012

Net sales


$

612,981



$

616,925


Cost of products sold


458,140



481,248


Gross profit


154,841



135,677


Operating expenses





Marketing and selling expenses


45,628



44,000


Administrative expenses


22,558



20,614


Research and development expenses


2,327



2,207


Other expense (income), net


3,657



3,686


Total operating expenses


74,170



70,507


Earnings before interest and taxes


80,671



65,170


Interest expense


40,656



49,612


Interest income


3



58


Earnings before income taxes


40,018



15,616


Provision for income taxes


15,222



6,077


Net earnings


$

24,796



$

9,539







Net earnings per share





Basic


$

0.31



$

0.12


Diluted


$

0.29



$

0.11



 



PINNACLE FOODS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (unaudited)

(thousands of dollars)



March 31,
2013


December 30,
2012

Current assets:




Cash and cash equivalents

$

132,094



$

92,281


Accounts receivable, net of allowances of $5,768 and $5,149, respectively

168,451



143,884


Inventories

326,126



358,051


Other current assets

16,466



11,862


Deferred tax assets

100,391



99,199


Total current assets

743,528



705,277


Plant assets, net of accumulated depreciation of $259,018 and $244,694, respectively

501,178



493,666


Tradenames

1,603,992



1,603,992


Other assets, net

150,199



155,558


Goodwill

1,441,495



1,441,495


Total assets

$

4,440,392



$

4,399,988






Current liabilities:




Short-term borrowings

$

1,831



$

2,139


Current portion of long-term obligations

14,832



30,419


Accounts payable

127,443



137,326


Accrued trade marketing expense

50,825



44,571


Accrued liabilities

130,129



119,269


Total current liabilities

325,060



333,724


Long-term debt (includes $62,754 and $63,097 owed to related parties, respectively)

2,585,825



2,576,386


Pension and other postretirement benefits

100,046



100,918


Other long-term liabilities

27,360



28,705


Deferred tax liabilities

487,468



471,529


Total liabilities

3,525,759



3,511,262


Commitments and contingencies




Shareholders' equity:




Pinnacle common stock: par value $.01 per share, 200,000,000 shares authorized,

issued and outstanding 83,903,385 and 81,210,672, respectively

839



812


Additional paid-in-capital

696,473



696,512


Retained earnings

277,751



252,955


Accumulated other comprehensive loss

(60,430)



(61,553)


Total shareholders' equity

914,633



888,726


Total liabilities and shareholders' equity

$

4,440,392



$

4,399,988






 


PINNACLE FOODS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(thousands of dollars)



Three months ended


March 31,
2013


March 25,
2012

Cash flows from operating activities




Net earnings

$

24,796



$

9,539


Non-cash charges (credits) to net earnings




Depreciation and amortization

19,270



20,490


Amortization of discount on term loan

314



301


Amortization of debt acquisition costs

1,713



2,559


Amortization of deferred mark-to-market adjustment on terminated swaps



413


Change in value of financial instruments

(414)



(2,425)


Equity-based compensation charge

175



300


Pension expense, net of contributions

(416)



(2,272)


Gain on sale of assets held for sale

(701)




Other long-term liabilities

(613)



32


Other long-term assets



234


Deferred income taxes

14,502



5,183


Changes in working capital




Accounts receivable

(24,729)



(24,119)


Inventories

32,007



18,069


Accrued trade marketing expense

6,317



6,385


Accounts payable

(10,297)



(15,856)


Accrued liabilities

11,053



14,622


Other current assets

(5,233)



402


Net cash provided by operating activities

67,744



33,857


Cash flows from investing activities




Capital expenditures

(18,242)



(13,505)


Proceeds from sale of plant assets

1,775




Net cash used in investing activities

(16,467)



(13,505)


Cash flows from financing activities




Repayments of long-term obligations

(10,581)



(3,125)


Proceeds from short-term borrowings

1,107



815


Repayments of short-term borrowings

(1,415)



(937)


Repayment of capital lease obligations

(550)



(792)


Repurchases of equity

(187)



(350)


Net cash used in financing activities

(11,626)



(4,389)


Effect of exchange rate changes on cash

162



218


Net change in cash and cash equivalents

39,813



16,181


Cash and cash equivalents - beginning of period

92,281



151,031


Cash and cash equivalents - end of period

$

132,094



$

167,212






Supplemental disclosures of cash flow information:




Interest paid

$

36,325



$

35,673


Interest received

3



58


Income taxes paid

304



96


Non-cash investing and financing activities:




New capital leases

4,668





Non-GAAP Financial Measures
Pinnacle Foods Inc. uses the following non-GAAP financial measures as defined by the Securities and Exchange Commission in our financial communications.  These non-GAAP financial measures should be considered in addition to the GAAP reported measures and should not be considered replacements for the GAAP measures.

  • North America Retail Net Sales
  • Adjusted Gross Profit
  • Adjusted EBITDA
  • Adjusted Earnings before Interest and Taxes (Adjusted EBIT)
  • Adjusted interest expense, net
  • Adjusted net earnings
  • Adjusted earnings per share

North America Retail Net Sales
North America Retail Net Sales is the sum of the net sales of the Birds Eye Frozen segment and the net sales of the Duncan Hines Grocery segment.  We refer to this to measure net sales performance of our retail focused branded business in contrast to our Specialty Foods segment where over the last several years we have de-emphasized certain low margin foodservice and private label businesses.

Items Impacting Gross Profit and Earnings

Adjusted Gross Profit
Adjusted gross profit is defined as gross profit before accelerated depreciation related to restructuring activities, certain non-cash items, acquisition, merger and other restructuring charges and other adjustments.  We believe that the presentation of Adjusted gross profit is useful to investors because it is consistent with our definition of Adjusted EBITDA (defined below), a measure frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies in industries similar to ours. In addition, we also use targets based on Adjusted gross profit as one of the components used to evaluate our management's performance.

Adjusted EBITDA
The Company's metric of Adjusted EBITDA, which is used in creating targets for the bonus and equity portions of our compensation plans, is equivalent to Covenant Compliance EBITDA under our debt agreements.

Pinnacle believes that the presentation of Adjusted EBITDA provides investors with useful information, as it is important in measuring covenant compliance in accordance with the financial covenants and determining our ability to engage in certain transactions in compliance with our debt facilities and it is a metric used internally by our Board of Directors and senior management.

Adjusted EBITDA is a non-GAAP measure and may not be comparable to similarly named measures used by other companies.  You should not consider Adjusted EBITDA as an alternative to operating or net earnings (loss), determined in accordance with GAAP, as an indicator of Pinnacle's operating performance, or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows, or as a measure of liquidity.

Adjusted EBITDA is defined as earnings (loss) before interest expense, taxes, depreciation and amortization ("EBITDA"), further adjusted to exclude non-cash items, non-recurring items and other adjustment items permitted in calculating Adjusted under the Senior Secured Credit Facility and the indentures governing the Senior Notes.

EBITDA and Adjusted EBITDA do not represent net earnings or (loss) or cash flow from operations as those terms are defined by Generally Accepted Accounting Principles ("GAAP") and do not necessarily indicate whether cash flows will be sufficient to fund cash needs. In particular, the definitions of Adjusted EBITDA in the Senior Secured Credit Facility and the indentures allow us to add back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net earnings or loss. However, these are expenses that may recur, vary greatly and are difficult to predict. While EBITDA and Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, they are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation.

Our ability to comply with the financial covenants and engage in certain transactions in compliance with our debt agreements in future periods will depend on events beyond our control, and we cannot assure you that we will meet those ratios. A breach of any of these covenants in the future could result in a default under, or an inability to undertake certain activities in compliance with, the Senior Secured Credit Facility and the indentures governing the Senior Notes, at which time the lenders could elect to declare all amounts outstanding under the Senior Secured Credit Facility to be immediately due and payable. Any such acceleration would also result in a default under the indentures governing the Senior Notes.

The tables below provide a reconciliation from our net earnings to EBITDA and Adjusted EBITDA for the three months ended March 31, 2013 and March 25, 2012 and the fiscal year ended December 30, 2012. The terms and related calculations are defined in the Senior Secured Credit Facility and the indentures governing the 8.25% Senior Notes and the 9.25% Senior Notes.

Adjusted Earnings Before Interest and Taxes (Adjusted EBIT)
Adjusted Earnings before Interest and Taxes is provided because Pinnacle believes it is useful information in understanding our EBIT results by improving the comparability of year-to-year results.

Adjusted Interest Expense, Net
Adjusted interest expense, net is provided to assist the reader by eliminating mark to market adjustments and the charges which result from refinancing activities.

Adjusted Net Earnings
Adjusted Earnings Per Share
Adjusted net earnings and the related adjusted earnings per share are provided to present the reader with the after-tax impact of Adjusted EBIT and Adjusted interest expense, net in order to improve the comparability and understanding of the related GAAP measures.



Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the three months ended March 31, 2013

(thousands, except per share amounts)




Reported


Acquisition,








IPO and







Three Months Ended


Merger and


Other




Adjusted


Refinancing


Public


Proforma



March 31,


Other Restructuring


Non-Cash


Other


March 31,


Interest


Company


March 31,



2013


Charges


Items


Adjustments


2013


Adjustments


Costs


2013

Net sales


$

612,981



$



$



$



$

612,981



$



$



$

612,981



















Gross profit


$

154,841



$

1,788



$

(380)



$



$

156,249





$



$

156,249


% of net sales


25.3

%








25.5

%






25.5

%


















Earnings before interest and taxes


$

80,671



$

4,018



$

(229)



$

725



$

85,185





$

(600)



$

84,585



















Interest expense, net


$

40,653



$



$



$



$

40,653



$

(20,367)





$

20,286



















Provision for income taxes


$

15,222



$

1,567



$

(89)



$

283



$

16,982



$

7,943



$

(234)



24,692


% Effective tax rate


38.0

%








38.1

%






38.4

%


















Net earnings


$

24,796



$

2,451



$

(140)



$

442



$

27,550



$

12,424



$

(366)



$

39,608



















Diluted net earnings per share


$

0.29









$

0.32







$

0.34



















Diluted weighted average outstanding shares


86,268









86,268



31,132





117,400



















Adjusted EBITDA (Non GAAP - See separate discussion and tables)

 

EBIT


$

80,671



$

4,018



$

(229)



$

725



$

85,185





$

(600)



$

84,585


Depreciation


15,397









15,397







15,397


Amortization


3,872









3,872







3,872


EBITDA


$

99,940



$

4,018



$

(229)



$

725



$

104,454





$

(600)



$

103,854



















Last twelve months EBITDA










$

440,676

























(1) Proforma data reflects Adjusted Statements of Operations amounts, assuming IPO and 2013 Refinancing occurred on the first day of Fiscal 2013.


 


Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the three months ended March 25, 2012

(thousands, except per share amounts)




Reported


Acquisition,















Three Months Ended


Merger and


Other




Adjusted


IPO


Public


Proforma



March 25,


Other Restructuring


Non-Cash


Other


March 25,


Interest


Company


March 25,



2012


Charges


Items


Adjustments


2012


Adjustments


Costs


2012

Net sales


$

616,925



$



$



$



$

616,925



$



$



$

616,925



















Gross profit


$

135,677



$

3,546



$

(2,389)



$

2,556



$

139,390





$



$

139,390


% of net sales


22

%








22.6

%






22.6

%


















Earnings before interest and taxes


$

65,170



$

3,958



$

(2,128)



$

4,535



$

71,535





$

(750)



$

70,785



















Interest expense, net


$

49,554



$



$

85



$



$

49,639



$

(12,167)



$



$

37,472



















Provision for income taxes


$

6,077



$

1,524



$

(852)



$

1,746



$

8,495



$

4,684



$

(289)



$

12,890


% Effective tax rate


38.9

%








38.8

%






38.7

%


















Net earnings


$

9,539



$

2,434



$

(1,361)



$

2,789



$

13,401



$

7,483



$

(461)



20,423



















Diluted net earnings per share


$

0.11









$

0.15







$

0.17



















Diluted weighted average outstanding shares


86,473









86,473



30,927





117,400




































Adjusted EBITDA (Non GAAP - See separate discussion and tables)

 

EBIT


$

65,170



$

3,958



$

(2,128)



$

4,535



$

71,535





$

(750)



$

70,785


Depreciation


16,608



(2,152)







14,456







14,456


Amortization


3,882









3,882







3,882


EBITDA


$

85,660



$

1,806



$

(2,128)



$

4,535



$

89,873





$

(750)



$

89,123



















(1) Proforma data reflects Adjusted Statements of Operations amounts, assuming IPO occurred on the first day of Fiscal 2012.


 



Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted Segment Amounts (unaudited)

For the three months ended March 31, 2013 and March 25, 2012

(thousands)




Three Months Ended


Three Months Ended




March 31,


March 25,




2013


2012


Net sales - Reported






Birds Eye Frozen


$

292,451



$

290,540



Duncan Hines Grocery


227,208



222,001



North American Retail


519,659



512,541



Specialty Foods


93,322



104,384



Total


$

612,981



$

616,925















Earnings before interest & taxes - Reported





Birds Eye Frozen


$

48,926



$

37,230



Duncan Hines Grocery


29,432



26,294



Specialty Foods


8,186



6,876



Unallocated corporate expenses

(5,873)



(5,230)



Total


$

80,671



$

65,170















Adjustments (Non GAAP - See separate discussion and tables)






Birds Eye Frozen


$

908



$

5,613


(1)

Duncan Hines Grocery


2,536



188


(1)

Specialty Foods




(100)



Unallocated corporate expenses

1,070



664



Total


$

4,514



$

6,365















Earnings before interest & taxes - Adjusted (Non GAAP - See

separate discussion and tables)






Birds Eye Frozen


$

49,834



$

42,843



Duncan Hines Grocery


31,968



26,482



Specialty Foods


8,186



6,776



Unallocated corporate expenses


(4,803)



(4,566)



Total


$

85,185



$

71,535















(1) Q1 2012 includes accelerated depreciation of $1,845 in Birds Eye Frozen and $307 in Duncan Hines Grocery




 


Pinnacle Foods Inc.

Reconciliation from Reported Net Earnings to Adjusted EBITDA (unaudited)

For the three months ended March 31, 2013 and March 25, 2012 and fiscal year ended December 30, 2012

(thousands)



The following table provides a reconciliation from our net earnings to EBITDA and Adjusted EBITDA for the three months ended March 31, 2013 and March 25, 2012 and the fiscal year ended December 30, 2012. The terms and related calculations are defined in the Senior Secured Credit Facility and the indentures governing the 8.25% Senior Notes and the 9.25% Senior Notes.



Three months ended


Fiscal Year

Ended


March 31, 2013


March 25, 2012


December 30,

2012

Net earnings

$

24,796



$

9,539



$

52,519


Interest expense, net

40,653



49,554



198,374


Income tax expense (benefit)

15,222



6,077



32,701


Depreciation and amortization expense

 

19,270



20,490



98,123


EBITDA

$

99,941



$

85,660



$

381,717


Non-cash items (a)

(229)



(2,128)



63


Acquisition, merger and other restructuring

charges (b)

4,018



1,806



23,276


Other adjustment items (c)

723



4,535



21,040


Adjusted EBITDA (unaudited)

104,453



89,873



426,096


Public company expenses

600



750



3,000


Adjusted EBITDA (unaudited) proforma

$

103,853



$

89,123



$

423,096


 


(a) Non-cash items are comprised of the following:



Three months ended


Fiscal Year

Ended


March 31, 2013


March 25, 2012


December 30,

2012

Non-cash equity-related compensation charges 

$

175



$

300



$

850


Unrealized mark-to-market losses

resulting from hedging activities

(404)



(2,428)



(1,307)


Other impairment charge (1)





520


Total non-cash items

$

(229)



$

(2,128)



$

63



 _________________

(1) For the fiscal year ended December 30, 2012 represents tradename impairment on Bernstein's ($520).

 


Pinnacle Foods Inc.
Reconciliation from Reported Net Earnings to Adjusted EBITDA (unaudited)
For the three months ended March 31, 2013 and March 25, 2012 and fiscal year ended December 30, 2012
(thousands)



(b) Acquisition, merger and other restructuring charges are comprised of the following:



Three months ended


Fiscal Year Ended


March 31, 2013


March 25, 2012


December 30,

2012

Expenses in connection with an acquisition

or other non-recurring merger costs

$

339



$

316



$

2,349


Restructuring charges, integration costs and

other business optimization expenses (1)

3,481



1,385



19,911


Employee severance

198



105



1,016


Total non-recurring items

$

4,018



$

1,806



$

23,276



 _________________

(1) For the fiscal year ended December 30, 2012, primarily represents restructuring and restructuring related charges, consulting and business optimization expenses related to closures at our Tacoma, Washington, Fulton, New York, Green Bay, Wisconsin and Millsboro, Delaware facilities, as a result of footprint consolidation projects. For the three months ended March 31, 2013, primarily represents restructuring and restructuring related charges related to the closure of our Millsboro, Delaware facility and consulting and business optimization expenses related to the expansion of direct sales coverage for retailer headquarters to more than fifty percent of our U.S. retail business. For the three months ended March 25, 2012, primarily represents restructuring and restructuring related charges related to the closure of our Fulton, New York facility.

 


(c) Other adjustment items are comprised of the following:



Three months ended


Fiscal Year

Ended


March 31, 2013


March 25, 2012


December 30,

2012

Management, monitoring, consulting and

advisory fees paid to Blackstone

$

723



$

1,311



$

4,707


Other (1)



3,224



16,333


Total other adjustments

$

723



$

4,535



$

21,040



(1) For the fiscal year ended December 30, 2012, primarily represents $14.3 million of the premiums paid on the redemption of $150.0 million of 9.25% Senior Notes due 2015, the redemption of $199.0 million of 10.625% Senior Subordinated Notes due 2017 and the repurchase and retirement of $10.0 million of 9.25% Senior Notes due 2015. For the three months ended March 25, 2012 and the fiscal year ended December 30, 2012, this also includes costs for the recall of Aunt Jemima product of $3.2 million (before insurance recovery) and $2.1 million (after insurance recovery), respectively.


 



Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the three months ended June 24, 2012

(thousands of dollars, except per share amounts)




Reported


Acquisition,















Three Months Ended


Merger and


Other




Adjusted


IPO


Public


Proforma



June 24,


Other Restructuring


Non-Cash


Other


June 24,


Interest


Company


June 24,



2012


Charges


Items


Adjustments


2012


Adjustments


Costs


2012

Net sales


$

588,595



$



$



$



$

588,595



$



$



$

588,595



















Gross profit


$

132,156



$

5,044



$

3,466



$



$

140,666





$



$

140,666


% of net sales


22.5

%








23.9

%






23.9

%


















Earnings before interest and taxes


$

41,989



$

8,628



$

3,727



$

11,826



$

66,170





$

(750)



$

65,420



















Interest expense, net


$

60,484



$



$

91



$

(14,840)



$

45,735



$

(12,167)



$



$

33,568



















Provision for income taxes


$

(7,935)



$

3,322



$

1,400



$

10,266



$

7,053



$

4,684



$

(289)



$

11,449


% Effective tax rate


42.9

%








34.5

%






35.9

%


















Net earnings


$

(10,560)



$

5,306



$

2,236



$

16,400



$

13,382



$

7,483



$

(461)



20,404



















Diluted net earnings per share


$

(0.12)









$

0.15







$

0.17



















Diluted weighted average outstanding shares


86,463









86,463



30,397





117,400




































Adjusted EBITDA (Non GAAP - See separate discussion and tables)

 

EBIT


$

41,989



$

8,628



$

3,727



$

11,826



$

66,170





$

(750)



$

65,420


Depreciation


17,680



(2,402)







15,278







15,278


Amortization


3,886









3,886







3,886


EBITDA


$

63,555



$

6,226



$

3,727



$

11,826



$

85,334





$

(750)



$

84,584



















(1) Proforma data reflects Adjusted Statements of Operations amounts, assuming IPO occurred on the first day of Fiscal 2012.


 


Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the three months ended September 23, 2012

(thousands of dollars, except per share amounts)




Reported


Acquisition,















Three Months Ended


Merger and


Other




Adjusted


IPO


Public


Proforma



September 23,


Other Restructuring


Non-Cash


Other


September 23,


Interest


Company


September 23,



2012


Charges


Items


Adjustments


2012


Adjustments


Costs


2012

Net sales


$

567,905



$



$



$



$

567,905



$



$



$

567,905



















Gross profit


$

129,341



$

16,997



$

(3,075)



$



$

143,263





$



$

143,263


% of net sales


22.8

%








25.2

%






25.2

%


















Earnings before interest and taxes


$

59,895



$

17,518



$

(2,967)



$

4,658



$

79,104





$

(750)



$

78,354



















Interest expense, net


$

44,458



$



$

(265)



$

(2,641)



$

41,552



$

(12,167)



$



$

29,385



















Provision for income taxes


$

5,559



$

6,744



$

(1,040)



$

2,810



$

14,073



$

4,684



$

(289)



$

18,469


% Effective tax rate


36.0

%








37.5

%






37.7

%


















Net earnings


$

9,878



$

10,774



$

(1,662)



$

4,489



$

23,479



$

7,483



$

(461)



30,501



















Diluted net earnings per share


$

0.11









$

0.27







$

0.26



















Diluted weighted average outstanding shares


86,445









86,445



30,955





117,400




































Adjusted EBITDA (Non GAAP - See separate discussion and tables)

 

EBIT


$

59,895



$

17,518



$

(2,967)



$

4,658



$

79,104





$

(750)



$

78,354


Depreciation


22,607



(7,677)







14,930







14,930


Amortization


3,879









3,879







3,879


EBITDA


$

86,381



$

9,841



$

(2,967)



$

4,658



$

97,913





$

(750)



$

97,163




















(1) Proforma data reflects Adjusted Statements of Operations amounts, assuming IPO occurred on the first day of Fiscal 2012.

 


Pinnacle Foods Inc.

Reconciliation from Reported to Adjusted and Proforma (Note 1) Statement of Operations Amounts (unaudited)

For the three months ended December 30, 2012

(thousands of dollars, except per share amounts)




Reported


Acquisition,