DEAN FOODS COMPANY DALLAS, Aug. 8, 2016 /PRNewswire/ -- Dean Foods Company (NYSE: DF) today reported second quarter 2016 results.
Highlights
-- Q2 net income per diluted share was $0.36 and adjusted net income per
diluted share was $0.38, toward the high end of previous provided
guidance
-- Q2 operating income of $73 million demonstrates continued year-over-year
improvement, driven by diligent cost focus and pricing discipline
-- Acquisition of Friendly's ice cream business completed June 20
-- Q3 2016 diluted earnings per share are expected to be $0.28 to $0.36;
adjusted diluted earnings per share are expected to be $0.32 to $0.40
Chief Executive Officer Gregg Tanner said, "Our second quarter performance demonstrates our continued focus on driving strong operational and financial performance across all functions. We have a clear strategic vision for long-term growth, and our entire organization is focused on executing our agenda."
Second Quarter 2016 Operating Results
Financial
Summary
* Three months ended Six months ended
June 30, June 30,
-------- --------
(In
millions,
except
per
share
amounts) 2016 2015 2016 2015
---------- ---- ---- ---- ----
Gross
Profit
GAAP $ 493 $ 496 $ 997 $ 974
Adjusted $ 490 $ 496 $ 995 $ 973
Operating
Income
(Loss)
GAAP $ 73 $ 57 $ 151 $ (3)
Adjusted $ 70 $ 67 $ 153 $ 119
Interest
Expense
GAAP $ 17 $ 17 $ 34 $ 34
Adjusted $ 17 $ 17 $ 33 $ 33
Net
Income
(Loss)
GAAP $ 33 $ 27 $ 73 $ (47)
Adjusted $ 35 $ 32 $ 76 $ 54
Diluted
Earnings
(Loss)
Per
Share
(EPS)
GAAP $ 0.36 $ 0.28 $ 0.79 $ (0.50)
Adjusted $ 0.38 $ 0.33 $ 0.83 $ 0.57
* Adjustments to GAAP due to
the exclusion of expenses,
gains or losses associated
with certain transactions and
other non-recurring items are
described and reconciled to
the comparable GAAP amounts in
the attached tables.
The second quarter 2016 average Class I Mover, a measure of raw milk costs, was $13.53 per hundred-weight, an approximately 7% sequential decrease from the first quarter 2016 and a decrease of nearly 15% from the second quarter 2015. The third quarter 2016 average Class I Mover forecast of $15.00 per hundred-weight represents an approximately 11% increase sequentially but an approximately 8% decline year-over-year.
Total volume across all products was 632 million gallons for the second quarter 2016, a 3.2% decline compared to total volume of 653 million gallons in the second quarter 2015. For the third quarter 2016, as compared to the prior year period, the Company expects total volumes to decline in the low single digits, but improving versus recent trends.
Based on fluid milk sales data published by the USDA through May, fluid milk volumes improved sequentially from a 0.6% decline in the first quarter of 2016 to a 0.1% increase in the second quarter of 2016 on an unadjusted basis. On this same basis, Dean Foods' share of U.S. fluid milk volumes decreased by 10 basis points sequentially to 34.5% for the quarter-to-date through May.
Cash Flow
Net cash provided by continuing operations for the six months ended June 30, 2016 totaled $125 million. Free cash flow provided by continuing operations, which is defined as net cash provided by continuing operations less capital expenditures, was $80 million for the six months ended June 30, 2016, a $144 million decrease as compared to the prior year period. Year-to-date free cash flow is comparable to the prior year period after reconciling for higher incentive compensation payouts in the first quarter 2016 and the $56 million associated with the Company's 2014 Federal Tax refund received in the first quarter 2015. Capital expenditures totaled $29 million for the quarter. In the second quarter, the Company executed $25 million in share repurchases, successfully repurchasing 1.4 million shares, or 1.5% of total shares outstanding.
Debt
Total outstanding debt at June 30, 2016, net of $24 million cash on hand, was approximately $896 million. The Company's net debt to bank EBITDA ratio, on an all cash netted basis, increased sequentially to 2.00 times at the end of the second quarter 2016 with strong free cash flow, increased bank EBITDA, and the acquisition of the Friendly's ice cream business, which was completed in June.
Forward Outlook
"For the third quarter, with improving volume performance, continued pricing and cost discipline, and favorable year-over-year commodity costs, we expect diluted earnings of between $0.28 and $0.36 per share, and adjusted diluted earnings of between $0.32 and $0.40 per share," concluded Tanner.
Non-GAAP Financial Measures
In addition to the results prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), we have presented certain non-GAAP financial measures, including Adjusted gross profit, Adjusted selling and distribution expenses, Adjusted general and administrative expenses, Adjusted total operating costs and expenses, Adjusted operating income, Adjusted interest expense, Adjusted net income (loss), Adjusted earnings per diluted share, Adjusted EBITDA, Free Cash Flow and total leverage ratio, each as described below.
This non-GAAP financial information is provided as supplemental information for investors and is not in accordance with, or an alternative to, GAAP. Additionally, these non-GAAP measures may be different than similar measures used by other companies.
We believe that the presentation of these non-GAAP financial measures, when considered together with our GAAP financial measures and the reconciliations to the corresponding GAAP financial measures, provides investors with a more complete understanding of the factors and trends affecting our business than could be obtained absent these disclosures. Our management uses these non-GAAP financial measures when evaluating our performance, when making decisions regarding the allocation of resources, in determining incentive compensation for management, and in determining earnings estimates.
A full reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures for the three and six months ended June 30, 2016 and 2015 is set forth in the tables herein.
Adjusted Operating Results
We have supplemented the presentation of our reported GAAP gross profit, selling and distribution expenses, general and administrative expenses, total operating costs and expenses, operating income, interest expense, net income (loss) and earnings per diluted share, with non-GAAP measures that adjust the GAAP measures to exclude the impact of the following (as applicable):
-- asset impairment charges;
-- incremental non-cash trademark amortization triggered by the launch of a
national fresh white milk brand;
-- gains or losses related to discontinued operations and divestitures;
-- facility closing, reorganization and realignment costs;
-- costs associated with the early retirement of long-term debt;
-- debt issuance costs;
-- gains (losses) on the mark-to-market of our derivative contracts;
-- closed deal costs;
-- interest accretion in connection with litigation settlements;
-- income tax impacts of the foregoing adjustments; and
-- adjustments to normalize our income tax expense at a rate of 38%.
We believe these non-GAAP measures provide useful information to investors by excluding expenses, gains or losses that are not indicative of the company's core operating performance. In addition, we cannot predict the timing and amount of gains or losses associated with such items. We believe these non-GAAP measures provide more accurate comparisons of our ongoing business operations and are better indicators of trends in our underlying business. In addition, these adjustments are consistent with how management views our business. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating the company's ongoing performance. Further, adjusted gross profit and adjusted operating income are used by management to evaluate key performance indicators of brand mix and low cost, respectively.
Adjusted EBITDA
Adjusted EBITDA is defined as net income before interest expense, income tax expense, depreciation and amortization, as further adjusted to exclude the impact of the adjustments discussed under "Adjusted Operating Results" above (other than the normalized income tax rate, as Adjusted EBITDA excludes the full amount of income tax expense). This information is provided to assist investors in making meaningful comparisons of our operating performance between periods and to view our business from the same perspective as our management. We believe Adjusted EBITDA is a useful measure for analyzing the performance of our business and is a widely-accepted indicator of our ability to incur and service indebtedness and generate free cash flow. We also believe that EBITDA measures are commonly reported and widely used by investors and other interested parties as measures of a company's operating performance and debt servicing ability because such measures assist in comparing performance on a consistent basis without regard to capital structure, depreciation or amortization (which can vary significantly) and non-operating factors (such as historical cost).
Total Leverage Ratio
Our total leverage ratio is calculated as net debt divided by Bank EBITDA for the trailing four quarters. Net debt is calculated as consolidated funded indebtedness in accordance with our credit agreement, except on an all cash netted basis. Bank EBITDA is calculated as Adjusted EBITDA, as further adjusted to exclude certain non-cash and non-recurring or extraordinary expenses as permitted in calculating covenant compliance under our credit agreement. Management believes analysts and investors commonly use our total leverage ratio as indicators of our ability to service existing debt and our liquidity.
Free Cash Flow
We define Free Cash Flow as net cash provided by operating activities from continuing operations less cash payments for capital expenditures. We believe Free Cash Flow is a meaningful non-GAAP measure that offers supplemental information and insight regarding the liquidity of our operations and our ability to generate sufficient cash flow to, among other things, repay debt, invest in our business and repurchase shares of our common stock. A limitation of Free Cash Flow is that it does not represent the total increase or decrease in the cash balance for the period.
Conference Call/Webcast
A webcast to discuss the Company's financial results and outlook will be held at 9:00 a.m. ET today and may be heard live by visiting the "Webcast" section of the Company's website at http://www.deanfoods.com. A slide presentation will accompany the webcast.
About Dean Foods
Dean Foods(®) is a leading food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States. Headquartered in Dallas, Texas, the Dean Foods portfolio includes DairyPure(®), the country's first and largest fresh, white milk national brand, and TruMoo®, the leading national flavored milk brand, along with well-known regional dairy brands such as Alta Dena(®), Berkeley Farms(®), Country Fresh(®), Dean's(®), Friendly's(®), Garelick Farms(®), LAND O LAKES(®*) milk and cultured products*, Lehigh Valley Dairy Farms(®), Mayfield(®), McArthur(®), Meadow Gold(®), Oak Farms(®), PET(®)**, T.G. Lee(®), Tuscan(®) and more. In all, Dean Foods has more than 50 national, regional and local dairy brands as well as private labels. Dean Foods also makes and distributes ice cream, cultured products, juices, teas, and bottled water. Almost 17,000 employees across the country work every day to make Dean Foods the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion. For more information about Dean Foods and its brands, visit www.deanfoods.com.
*The LAND O LAKES brand is owned by Land O'Lakes, Inc. and is used by license.
**PET is a trademark used by license.
Some of the statements made in this press release are "forward-looking" and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements relating to: (1) our financial forecast, including projected sales (including specific product lines and the Company as a whole), price realization, profit margins, net income, earnings per share, free cash flow, our leverage ratio and debt covenant compliance, (2) the Company's regional and national branding and marketing initiatives, (3) the Company's innovation, research and development plans and its ability to successfully launch new products or brands, (4) commodity prices and other inputs and the Company's ability to forecast or predict commodity prices, milk production and milk exports, (5) the Company's cost-savings initiatives, including plant closures and route reductions, and its ability to achieve expected savings, (6) planned capital expenditures, (7) the status of the Company's litigation matters, (8) the Company's plans related to its capital structure, (9) the Company's dividend policy, (10) possible repurchases of shares of the Company's common stock, and (11) potential acquisitions. These statements involve risks and uncertainties that may cause results to differ materially from those set forth in this press release, including the risks disclosed by the Company in its filings with the Securities and Exchange Commission. Financial projections are based on a number of assumptions. Actual results could be materially different than projected if those assumptions are erroneous. The cost and supply of commodities and other raw materials are determined by market forces over which the Company has limited or no control. Sales, operating income, net income, debt covenant compliance, financial performance and earnings per share can vary based on a variety of economic, governmental and competitive factors, which are identified in the Company's filings with the Securities and Exchange Commission. The Company's ability to profit from its branding and marketing initiatives depends on a number of factors including consumer acceptance of its products. The declaration and payment of cash dividends under the Company's dividend policy remains at the sole discretion of the Board of Directors and will depend upon its financial results, cash requirements, future prospects, restrictions in its credit agreement and debt covenant compliance, applicable law and other factors that may be deemed relevant by the Board. All forward-looking statements in this press release speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in its expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based except as required by law.
CONTACT: Corporate Communications, Jamaison Schuler, +1-214-721-7766; or Investor Relations, Sherri Baker, +1-214-303-3438
DEAN FOODS COMPANY
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Net sales $1,848,788 $2,014,706 $3,727,616 $4,065,468
Cost of sales 1,355,535 1,519,065 2,730,295 3,091,518
--------- --------- --------- ---------
Gross profit 493,253 495,641 997,321 973,950
Operating costs and expenses:
Selling and distribution 331,150 338,092 664,037 676,276
General and administrative 86,614 87,243 171,765 174,719
Amortization of intangibles 4,120 8,206 10,445 8,912
Facility closing and
reorganization costs, net (1,400) 5,408 (234) 6,653
Impairment of intangible assets - - - 109,910
Total operating costs and
expenses 420,484 438,949 846,013 976,470
------- ------- ------- -------
Operating income (loss) 72,769 56,692 151,308 (2,520)
Other (income) expense:
Interest expense 16,830 16,974 33,706 33,502
Other income, net (2,210) (294) (3,207) (740)
Loss on early retirement of long-
term debt - - - 43,609
Income (loss) from continuing
operations before income taxes 58,149 40,012 120,809 (78,891)
Income tax expense (benefit) 24,778 13,493 48,237 (31,759)
Income (loss) from continuing
operations 33,371 26,519 72,572 (47,132)
Loss on sale of discontinued
operations, net of tax - - - (89)
--- --- --- ---
Net income (loss) $33,371 $26,519 $72,572 $(47,221)
======= ======= ======= ========
Average common shares:
Basic 91,245 94,386 91,407 94,308
Diluted 91,680 94,900 91,995 94,308
Basic earnings per common share:
Income (loss) from continuing
operations $0.37 $0.28 $0.79 $(0.50)
Loss from discontinued operations - - - -
Net income (loss) $0.37 $0.28 $0.79 $(0.50)
===== ===== ===== ======
Diluted earnings per common share:
Income (loss) from continuing
operations $0.36 $0.28 $0.79 $(0.50)
Loss from discontinued operations - - - -
Net income (loss) $0.36 $0.28 $0.79 $(0.50)
===== ===== ===== ======
DEAN FOODS COMPANY
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
ASSETS June 30, 2016 December 31, 2015
------ ------------- -----------------
Cash and cash equivalents $ 23,810 $ 60,734
Other current assets 950,661 1,016,829
---------
Total current assets 974,471 1,077,563
Property, plant and equipment, net 1,153,061 1,174,137
Intangibles and other assets, net 409,814 268,463
------- -------
Total Assets $ 2,537,346 $ 2,520,163
=== ========= === =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Total current liabilities, excluding
debt $ 642,208 $ 760,402
Total long-term debt, including
current portion 908,754 834,573
Other long-term liabilities 405,677 379,684
Total stockholders' equity 580,707 545,504
------- -------
Total Liabilities and Stockholders'
Equity $ 2,537,346 $ 2,520,163
=== ========= === =========
DEAN FOODS COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six months ended
June 30,
--------
Operating
Activities 2016 2015
----------- ---- ----
Net cash
provided by
operating
activities $125,319 $271,771
Investing
Activities
-----------
Payments for
property,
plant and
equipment (45,752) (48,051)
Payments for
acquisitions,
net of cash
acquired (157,321) -
Proceeds
from sale
of fixed
assets 10,711 12,815
Net cash
used in
investing
activities (192,362) (35,236)
Financing
Activities
-----------
Net proceeds
from debt 72,405 394,099
Early
retirement
of long-
term debt - (476,188)
Premiums
paid on
early
retirement
of long-
term debt - (37,309)
Payments of
financing
costs - (15,091)
Repurchase
of common
stock (25,000) -
Cash
dividends
paid (16,514) (13,212)
Issuance of
common
stock, net
of share
repurchases
for
withholding
taxes (646) 939
Other 699 199
Net cash
provided by
(used in)
financing
activities 30,944 (146,563)
Effect of
exchange
rate
changes on
cash and
cash
equivalents $(825) $(644)
Change in
cash and
cash
equivalents $(36,924) $89,328
Cash and
cash
equivalents,
beginning
of period 60,734 16,362
Cash and
cash
equivalents,
end of
period $23,810 $105,690
======= ========
DEAN FOODS COMPANY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share data)
Three months ended
June 30, 2016
Asset write- Closed deal Facility Loss on Mark-to- Other Income
downs costs closing early market adjustments tax
and (gain) and retirement on
loss on reorganization of debt derivative
sale of costs, net contracts
assets
GAAP (a) (b) (c) (d) (e) (f) (g) Adjusted*
---- --- --- --- --- --- --- --- --------
Gross profit $ 493,253 $ - $ - $ - $ - $ (3,120) $ - $ - $ 490,133
Selling and distribution 331,150 - - - - 5,564 - - 336,714
General and administrative 86,614 - (4,083) - - - - - 82,531
Total operating costs and 420,484 (3,384) (4,083) 1,400 - 5,564 - - 419,981
expenses
Operating income 72,769 3,384 4,083 (1,400) - (8,684) - - 70,152
Interest expense 16,830 - - - - - (218) - 16,612
Net income 33,371 3,384 4,083 (1,400) - (8,684) 218 3,592 34,564
Diluted earnings per share $ 0.36 $ 0.04 $ 0.05 $ (0.02) $ - $ (0.09) $ - $ 0.04 $ 0.38
Three months ended
June 30, 2015
Asset write- Closed deal Facility Loss on Mark-to- Other Income
downs costs closing early market adjustments tax
and (gain) and retirement on
loss on reorganization of debt derivative
sale of costs, net contracts
assets
GAAP (a) (b) (c) (d) (e) (f) (g) Adjusted*
---- --- --- --- --- --- --- --- --------
Gross profit $495,641 $ - $ - $ - $ - $ 140 $ - $ - $ 495,781
Selling and distribution 338,092 - - - - 2,196 - - 340,288
General and administrative 87,243 - - - - - (6) - 87,237
Total operating costs and 438,949 (7,422) - (5,408) - 2,196 (6) - 428,309
expenses
Operating income 56,692 7,422 - 5,408 - (2,056) 6 - 67,472
Interest expense 16,974 - - - - - (426) - 16,548
Net income 26,519 7,422 - 5,408 - (2,056) 432 (5,971) 31,754
Diluted earnings per share $0.28 $ 0.08 $ - $ 0.05 $ - $ (0.02) $ - $ (0.06) $ 0.33
* See Notes to Earnings
Release Tables
DEAN FOODS COMPANY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share data)
Six months ended
June 30, 2016
Asset write- Closed Facility Loss on Mark-to- Other Income
downs deal closing early market adjustments tax
and (gain) costs and retirement on
loss on reorganization of debt derivative
sale of costs, net contracts
assets
GAAP (a) (b) (c) (d) (e) (f) (g) Adjusted*
---- --- --- --- --- --- --- --- --------
Gross profit $ 997,321 $ - $ - $ - $ - $ (2,587) $ - $ - $ 994,734
Selling and distribution 664,037 - - - - 8,242 - - 672,279
General and administrative 171,765 - (4,083) - - - - - 167,682
Total operating costs and 846,013 (8,973) (4,083) 234 - 8,242 - - 841,433
expenses
Operating income 151,308 8,973 4,083 (234) - (10,829) - - 153,301
Interest expense 33,706 - - - - - (436) - 33,270
Net income 72,572 8,973 4,083 (234) - (10,829) 436 1,405 76,406
Diluted earnings per share $ 0.79 $ 0.10 $ 0.04 $ - $ - $ (0.12) $ - $ 0.02 $ 0.83
Six months ended
June 30, 2015
Asset write- Closed Facility Loss on Mark-to- Other Income
downs deal closing early market adjustments tax
and (gain) costs and retirement on
loss on reorganization of debt derivative
sale of costs, net contracts
assets
GAAP (a) (b) (c) (d) (e) (f) (g) Adjusted*
---- --- --- --- --- --- --- --- --------
Gross profit $ 973,950 $ - $ - $ - $ - $ (1,141) $ - $ - $ 972,809
Selling and distribution 676,276 - - - - 1,206 - - 677,482
General and administrative 174,719 - - - - - 12 - 174,731
Total operating costs and 976,470 (117,332) - (6,653) - 1,206 12 - 853,703
expenses
Operating income (loss) (2,520) 117,332 - 6,653 - (2,347) (12) - 119,106
Interest expense 33,502 - - - - - (852) - 32,650
Net income (loss) (47,221) 117,332 - 6,653 43,609 (2,347) 929 (64,895) 54,060
Diluted earnings (loss) per share (h) $ (0.50) $ 1.25 $ - $ 0.06 $0.46 $ (0.02) $ 0.01 $ (0.69) $ 0.57
* See Notes to Earnings
Release Tables
DEAN FOODS COMPANY
Reconciliation of Non-GAAP Financial Measures*
(Unaudited)
(In thousands, except ratio data)
Three months ended Six months ended Trailing
twelve
June 30, June 30, months ended
June 30,
--------
2016 2015 2016 2015 2016
---- ---- ---- ---- ----
Reconciliation of Net Income to Adjusted EBITDA and
Bank EBITDA
Net income (loss) $33,371 $26,519 $72,572 $(47,221) $111,283
Interest expense 16,830 16,974 33,706 33,502 67,017
Income tax expense (benefit) 24,778 13,493 48,237 (31,759) 74,767
Depreciation and amortization 41,403 46,405 85,029 84,302 172,058
Asset write-downs and (gain) loss on sale of assets (a) - - - 109,910 -
Closed deal costs (b) 4,083 - 4,083 - 4,083
Facility closing and reorganization costs, net (c) (1,400) 5,408 (234) 6,653 12,957
Loss on early retirement of debt (d) - - - 43,609 -
Mark-to-market on derivative contracts (e) (8,684) (2,056) (10,829) (2,347) (2,513)
Other adjustments (f) - 6 - 77 344
--- --- --- --- ---
Adjusted EBITDA $110,381 $106,749 $232,564 $196,726 439,996
======== ======== ======== ======== -------
Non-cash share-based compensation expense 8,750
-----
Bank EBITDA $448,746
========
June 30, 2016
-------------
Reconciliation of net debt and total
leverage ratio
Total long-term debt, including
current portion $908,754
Unamortized discounts and debt
issuance costs 10,862
Cash and cash equivalents (23,810)
Net debt $895,806
========
Bank EBITDA 448,746
Total leverage ratio 2.00
Six months ended
June 30,
--------
2016 2015
---- ----
Reconciliation
of Free Cash
Flow provided
by (used in)
continuing
operations
Net cash
provided by
operating
activities $125,319 $271,771
Payments for
property,
plant and
equipment (45,752) (48,051)
Free Cash Flow
provided by
continuing
operations $79,567 $223,720
======= ========
* See Notes to Earnings
Release Tables
DEAN FOODS COMPANY
Reconciliation of Non-GAAP Financial Measures*
(Unaudited)
Three
months
ended
September
30,
2016
----
Reconciliation of Diluted Adjusted Earnings Per
Share Guidance
Diluted GAAP Earnings per share
guidance $0.28 - $0.36
Trademark amortization (a) 0.03
Facility closing and reorganization
costs, net (c) 0.01
Mark-to-market on commodity
derivative contracts (e) -
Diluted Adjusted Earnings per share
guidance $0.32 - $0.40
===========
* See Notes to Earnings
Release Tables
Notes to Earnings Release Tables
--------------------------------
For the three and six months ended June 30, 2016 and 2015, the
adjusted results and certain other non-GAAP financial measures
differ from the Company's results under GAAP due to the exclusion of
expenses, gains or losses associated with certain transactions and
other non-recurring items that we believe are not indicative of our
core operating results. For additional information on our non-GAAP
financial measures, see the section entitled "Non-GAAP Financial
Measures" in this release.
(a) In conjunction
with our decision
to launch
DairyPure in the
first quarter of
2015, we
reclassified
certain of our
indefinite-lived
trademarks to
finite-lived,
resulting in a
triggering event
for impairment
testing purposes.
The related
adjustment
reflects the
elimination of
the following:
i. A non-cash charge of $109.9 million
($68.7 million net of tax) in the
first quarter of 2015 related to the
impairment of certain intangible
assets, and $7.4 million of related
amortization expense in the second
quarter of 2015; and
ii. Amortization expense recorded on
these finite-lived trademarks of
$3.4 million and $9.0 million for
the three and six months ended June
30, 2016, respectively.
(b) The adjustment
reflects the
elimination of
$4.1 million in
expenses related
to the
acquisition of
Friendly's Ice
Cream Holdings
Corp. completed
on June 20, 2016.
(c) The adjustment
reflects the
elimination of
severance charges
and non-cash
asset
impairments, net
of (gains) losses
on related asset
sales, for
approved facility
closings and
restructuring
plans.
(d) During the first
quarter of 2015,
we redeemed the
remaining
outstanding
principal amount
of $476.2 million
of our 2016
senior notes.
The adjustment
reflects the
related
elimination of
the following:
i. A $38.3 million pre-tax loss on the
early extinguishment of debt in the
first quarter of 2015, which
consisted of debt redemption
premiums of $37.3 million, a write-
off of unamortized debt issue costs
of $0.8 million, and a write-off of
the remaining bond discount and
interest rate swaps of $0.2 million;
and
ii. In conjunction with the execution of
our current credit agreement and the
amendment of our receivables-backed
facility in the first quarter of
2015, the write-off of unamortized
debt issue costs related to our
previous credit facility of $5.3
million.
(e) The adjustment
reflects the
elimination of
the (gain) loss
on the mark-to-
market of our
commodity
derivative
contracts. All of
our commodity
derivative
contracts are
marked to market
in our statement
of operations
during each
reporting period
with a
corresponding
derivative asset
or liability on
our balance
sheet.
(f) The adjustment
reflects the
elimination of
the following:
i. Interest accretion in connection with
the settlement of a previously
disclosed dairy farmer class action
lawsuit filed in the United States
District Court for the Eastern
District of Tennessee. The Court
granted final approval of the
settlement agreement on June 15,
2012 and the final installment
payment was made in June of 2016;
and
ii. A taxing authority settlement of
certain contingent obligations that
we retained in connection with prior
discontinued operations.
(g) The adjustment
reflects the
income tax impact
of adjustments
(a) through (f)
and an adjustment
to our income tax
expense (benefit)
to reflect income
tax at a tax rate
of 38%, which we
believe
represents our
normalized long-
term effective
tax rate as a
U.S. domiciled
business.
(h) Includes an
adjustment to
diluted shares
outstanding to
reflect an add-
back of
approximately 454
thousand dilutive
shares, which
were anti-
dilutive for GAAP
purposes.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/dean-foods-announces-second-quarter-2016-results-300310099.html
SOURCE Dean Foods Company
