Fourth Quarter 2017 Highlights
Snyder’s-Lance, Inc. (Nasdaq-GS:LNCE) today reported financial
results for the fourth quarter and full-year ended December 30,
2017.
Recent Merger AnnouncementOn December 18, 2017,
Snyder’s-Lance and Campbell Soup Company announced a definitive
merger agreement under which Campbell Soup Company will acquire
Snyder’s-Lance for $50 per share in an all-cash transaction valued
at approximately $6.0 billion, including Snyder’s-Lance’s net debt.
As such, the Company will not be providing its outlook for fiscal
2018 or longer-term targets and will not be holding a conference
call to discuss the Company’s financial results for the fourth
quarter and fiscal year ended December 30, 2017. Completion of the
transaction is subject to approval by the Company’s shareholders
and other customary closing conditions. The parties expect to close
the transaction late in the first quarter of 2018.
Summary of Financial Results
Fourth Quarter and Full-Year 2017 Financial
Summary* |
(in thousands, except for earnings per share amounts) |
|
Q4 2017 |
Q4 2016 |
Change |
|
FY17 |
FY16 |
Change |
Total Net Revenue from Continuing Operations |
|
$ |
551,557 |
|
|
$ |
556,163 |
|
|
-0.8 |
% |
$ |
2,226,837 |
|
|
$ |
2,109,227 |
|
|
5.6 |
% |
Core Brand Net Revenue |
|
|
404,688 |
|
|
|
400,321 |
|
|
1.1 |
% |
|
1,613,682 |
|
|
|
1,478,601 |
|
|
9.1 |
% |
Operating Profit from Continuing Operations |
|
|
45,990 |
|
|
|
44,317 |
|
|
3.8 |
% |
|
38,514 |
|
|
|
104,649 |
|
|
-63.1 |
% |
%
of net revenue |
|
|
8.3 |
% |
|
|
8.0 |
% |
|
|
|
1.7 |
% |
|
|
5.0 |
% |
|
|
Operating Profit from Continuing Operations, Excluding Special
Items |
|
|
54,760 |
|
|
|
52,148 |
|
|
5.0 |
% |
|
195,654 |
|
|
|
189,490 |
|
|
3.3 |
% |
% of net revenue |
|
|
9.9 |
% |
|
|
9.4 |
% |
|
|
|
8.8 |
% |
|
|
9.0 |
% |
|
|
GAAP EPS from Continuing Operations |
|
$ |
1.92 |
|
|
$ |
0.19 |
|
|
910.5 |
% |
$ |
1.50 |
|
|
$ |
0.45 |
|
|
233.3 |
% |
EPS from Continuing Operations, Excluding Special Items |
|
$ |
0.33 |
|
|
$ |
0.27 |
|
|
22.2 |
% |
$ |
1.08 |
|
|
$ |
1.11 |
|
|
-2.7 |
% |
Adjusted EBITDA from Continuing Operations |
|
|
78,474 |
|
|
|
77,110 |
|
|
1.8 |
% |
|
293,258 |
|
|
|
284,110 |
|
|
3.2 |
% |
% of net revenue |
|
|
14.2 |
% |
|
|
13.9 |
% |
|
|
|
13.2 |
% |
|
|
13.5 |
% |
|
|
*Descriptions of measures excluding special items are
provided in “Use and Definition of Non-GAAP Measures,” and
reconciliations are provided in the tables at the end of this
release. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2017 Results
Fourth Quarter Net Revenue by Product
Category |
|
(in thousands) |
|
|
Q4 2017 Net Revenue |
|
Q4 2016 Net
Revenue(1) |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Core Brands(2) |
|
|
$ |
404,688 |
|
$ |
400,321 |
|
1.1 |
% |
|
Allied Brands(3) |
|
|
|
41,097 |
|
|
42,686 |
|
-3.7 |
% |
|
Branded |
|
|
|
445,785 |
|
|
443,007 |
|
0.6 |
% |
|
Partner Brand |
|
|
69,255 |
|
|
70,829 |
|
-2.2 |
% |
|
Other |
|
|
|
36,517 |
|
|
42,327 |
|
-13.7 |
% |
|
Total |
|
|
$ |
551,557 |
|
$ |
556,163 |
|
-0.8 |
% |
|
(1) Includes net revenue results from continuing
operations only. (2) The Company's Core Brands include: Snyder's of
Hanover®, Lance®, Kettle Brand®, KETTLE® Chips, Cape Cod®, Snack
Factory® Pretzel Crisps®, Pop Secret®, Emerald® and Late July®. (3)
The Company's Allied Brands include: Krunchers!®, Tom's®, Archway®,
Jays®, Stella D'oro®, Eatsmart Snacks™, O-Ke-Doke® and Metcalfe’s
skinny® |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenue in the fourth quarter of 2017 was $551.6
million, a decrease of 0.8% compared to $556.2 million from
continuing operations in the fourth quarter of 2016. Branded net
revenue increased 0.6% as a result of a 1.1% increase in the
Company’s Core Brands partially offset by a 3.7% decrease in Allied
Brands. The Core Brand net revenue increase was led by growth
in Late July®, Cape Cod®, KETTLE® Chips, Lance®, Snyder’s of
Hanover®, and Snack Factory® Pretzel Crisps®, partially offset by a
decline in Pop Secret®, Emerald®, and Kettle Brand®. In
addition, during the fourth quarter of 2017, net revenue from the
Partner Brand category decreased 2.2% while net revenue from the
Other category declined 13.7%, each compared to the fourth quarter
of 2016.
GAAP operating income in the fourth quarter of 2017 was $46.0
million, as compared to GAAP operating income of $44.3 million from
continuing operations in the fourth quarter of 2016.
Operating income from continuing operations and excluding special
items affecting comparability, in the fourth quarter of 2017 was
$54.8 million, or 9.9% as a percentage of net revenue, as compared
to $52.1 million from continuing operations, or 9.4% as a
percentage of net revenue, in the fourth quarter of 2016. The
operating margin expansion was the result of lower general and
administrative expenses, and supply chain productivity and cost
initiatives. These were partially offset by higher promotional
trade spend, higher service and distribution costs primarily
related to trucking capacity, as well as continued higher than
normal manufacturing costs due to the ramping up of Emerald®
production capacity in Charlotte, NC that was previously located in
the Stockton, CA manufacturing facility.
Net interest expense in the fourth quarter of 2017 was $10.2
million compared to $9.3 million in the fourth quarter of
2016. Excluding special items, the effective income tax rate
from continuing operations was 26.5% in the fourth quarter of 2017
as compared to 37.8% in the fourth quarter of 2016. The decrease in
the effective income tax rate, excluding special items, was
primarily due to the impact of adopting new accounting guidance,
which resulted in excess tax benefits for certain share-based
payments, which were previously included in equity.
GAAP net income attributable to Snyder’s-Lance from continuing
operations in the fourth quarter of 2017 was $188.8 million, or
$1.92 per diluted share, as compared to net income of $18.7
million, or $0.19 per diluted share, in the fourth quarter of
2016. The significant increase in GAAP net income was
primarily due to a non-recurring, non-cash gain of $162.4 million
as the result of the impact of the Income Tax Reform Act enacted in
December 2017 (the “Tax Act”). Net income attributable to
Snyder’s-Lance from continuing operations, excluding special items,
for the fourth quarter of 2017, was $32.7 million, as compared to
$26.4 million, in the fourth quarter of 2016. Earnings per
diluted share from continuing operations, excluding special items,
was $0.33 in the fourth quarter of 2017 compared to $0.27, in the
fourth quarter of 2016.
Adjusted EBITDA from continuing operations in the fourth quarter
of 2017 was $78.5 million, or 14.2% of net revenue, as compared to
adjusted EBITDA from continuing operations of $77.1 million, or
13.9% of net revenue, in the fourth quarter of 2016. Adjusted
EBITDA is a non-GAAP measure defined herein under “Use and
Definition of Non-GAAP Measures,” and is reconciled to net income
in the tables that accompany this release.
Full-Year 2017 Results
Full-Year Net Revenue by Product
Category |
|
(in thousands) |
|
|
2017 Net Revenue |
|
2016 Net
Revenue(1) |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Core Brands(2) |
|
|
$ |
1,613,682 |
|
$ |
1,478,601 |
|
9.1 |
% |
|
Allied Brands(3) |
|
|
|
163,393 |
|
|
159,695 |
|
2.3 |
% |
|
Branded |
|
|
|
1,777,075 |
|
|
1,638,296 |
|
8.5 |
% |
|
Partner Brand |
|
|
291,580 |
|
|
300,436 |
|
-2.9 |
% |
|
Other |
|
|
|
158,182 |
|
|
170,495 |
|
-7.2 |
% |
|
Total |
|
|
$ |
2,226,837 |
|
$ |
2,109,227 |
|
5.6 |
% |
|
(1) Includes net revenue results from continuing
operations only. (2) The Company's Core Brands include: Snyder's of
Hanover®, Lance®, Kettle Brand®, KETTLE® Chips, Cape Cod®, Snack
Factory® Pretzel Crisps®, Pop Secret®, Emerald® and Late July®. (3)
The Company's Allied Brands include: Krunchers!®, Tom's®, Archway®,
Jays®, Stella D'oro®, Eatsmart Snacks™, O-Ke-Doke® and Metcalfe’s
skinny® |
|
|
|
Total net revenue for the full-year 2017 was 2,226.8 million, an
increase of 5.6% compared to $2,109.2 million from continuing
operations in 2016. Branded net revenue increased 8.5% as a result
of a 2.3% increase in the Company’s Allied Brands revenue and a
9.1% increase in Core Brands revenue. In addition, during the
full-year 2017, net revenue from the Partner Brand category
decreased 2.9% while net revenue from the Other category declined
7.2%, each compared to the full-year of 2016.
GAAP operating income from continuing operations for the
full-year 2017 was $38.5 million, as compared to GAAP operating
income of $104.6 million from continuing operations in 2016.
GAAP operating income was negatively impacted by $157.1 million in
pre-tax expenses which affected comparability. These expenses
were primarily related to $104.7 million in non-cash impairment
charges reflecting the write-downs of the Company’s European
reporting unit goodwill, and the Company’s KETTLE® Chips trademark
in the United Kingdom and Pop Secret® trademark. Operating
income from continuing operations and excluding special items
affecting comparability, for the full-year 2017 was $195.7 million,
or 8.8% as a percentage of net revenue, as compared to $189.5
million from continuing operations, or 9.0% as a percentage of net
revenue, in 2016.
Net interest expense for the full-year 2017 was $38.8 million
compared to $32.6 million in 2016. Excluding special items,
the effective income tax rate from continuing operations was 32.5%
in 2017 as compared to 34.1% in 2016.
GAAP net income attributable to Snyder’s-Lance from continuing
operations for the full-year 2017 was $146.6 million, or $1.50 per
diluted share, as compared to net income of $42.0 million, or $0.45
per diluted share, in 2016. The significant increase in GAAP
net income was primarily due to a non-recurring, non-cash gain of
$162.4 million as the result of the impact of the Tax Act. Net
income attributable to Snyder’s-Lance from continuing operations,
excluding special items, for the full-year 2017, was $105.5
million, as compared to $103.5 million, in 2016. Earnings per
diluted share from continuing operations, excluding special items,
was $1.08 for the full-year 2017 compared to $1.11, in 2016.
Adjusted EBITDA from continuing operations for the full-year
2017 was $293.3 million, or 13.2% of net revenue, as compared to
adjusted EBITDA from continuing operations of $284.1 million, or
13.5% of net revenue, in 2016. Adjusted EBITDA is a non-GAAP
measure defined herein under “Use and Definition of Non-GAAP
Measures,” and is reconciled to net income in the tables that
accompany this release.
About Snyder’s-Lance, Inc.Snyder's-Lance, Inc.,
headquartered in Charlotte, NC, manufactures and markets snack
foods throughout the United States and internationally.
Snyder's-Lance's products include pretzels, sandwich crackers,
pretzel crackers, potato chips, cookies, tortilla chips, restaurant
style crackers, popcorn, nuts and other snacks. Products are sold
under the Snyder's of Hanover®, Lance®, Kettle Brand®, KETTLE®
Chips, Cape Cod®, Snack Factory® Pretzel Crisps®, Pop Secret®,
Emerald®, Late July®, Krunchers!®, Tom's®, Archway®, Jays®, Stella
D'oro®, Eatsmart Snacks™, O-Ke-Doke®, Metcalfe’s skinny®, and other
brand names along with a number of third-party brands. Products are
distributed nationally through grocery and mass merchandisers,
convenience stores, club stores, food service outlets and other
channels. For more information, visit the Company's corporate web
site: www.snyderslance.com.LNCE-E
Use and Definition of Non-GAAP
MeasuresSnyder’s-Lance’s management uses non-GAAP
financial measures to evaluate our operating performance and to
facilitate a comparison of the Company’s operating performance on a
consistent basis and to provide measures that, when viewed in
combination with its results prepared in accordance with GAAP,
allow for a more complete understanding of factors and trends
affecting the Company’s business than GAAP measures alone.
The non-GAAP measures and related comparisons should be considered
in addition to, not as a substitute for, our GAAP disclosure, as
well as other measures of financial performance reported in
accordance with GAAP, and may not be comparable to similarly titled
measures used by other companies. Our management believes these
non-GAAP measures are useful for providing increased transparency
and assisting investors in understanding our ongoing operating
performance.
Operating Income and Gross Profit, Excluding Special
ItemsOperating income and gross profit, excluding special items,
are provided because Snyder’s-Lance believes it is useful
information for understanding our results by improving the
comparability of our results. Additionally, operating income and
gross profit, excluding special items, provide transparent and
useful information to management, investors, analysts and other
parties in evaluating and assessing the Company’s primary operating
results after removing the impact of unusual, non-operational or
restructuring or transaction related activities that affect
comparability. Operating income and gross profit, excluding special
items, are two measures management uses for planning and budgeting,
monitoring and evaluating financial and operating results, and in
the analysis of ongoing operating trends.
Net Income, Earnings per Share and Effective Income Tax Rate,
Excluding Special ItemsNet income, earnings per share, and the
effective income tax rate, excluding special items, are metrics
provided to present the reader with the after-tax impact of
operating income, excluding special items, in order to improve the
comparability and understanding of the related GAAP measures. Net
income, earnings per share, and the effective income tax rate,
excluding special items, provide transparent and useful information
to management, investors, analysts and other parties in evaluating
and assessing our primary operating results after removing the
impact of unusual, non-operational or restructuring or transaction
related activities that affect comparability. Net income, earnings
per share, and the effective income tax rate, excluding special
items, are measures management uses for planning and budgeting,
monitoring and evaluating financial and operating results.
Adjusted EBITDASnyder’s-Lance defines adjusted EBITDA as
earnings before interest expense, income taxes, depreciation and
amortization (“EBITDA”), further adjusted to exclude restructuring
or transaction related expenses, and other non-cash or
non-operating items as well as any other unusual items that impact
the comparability of our financial information.
Management uses adjusted EBITDA as a key metric in the
evaluation of underlying Company performance, in making financial,
operating and planning decisions. The Company believes this
measure is useful to investors because it increases transparency
and assists investors in understanding the underlying performance
of the Company and in the analysis of ongoing operating trends.
Additionally, Snyder’s-Lance believes adjusted EBITDA is frequently
used by analysts, investors and other interested parties in their
evaluation of companies, many of which present an adjusted EBITDA
measure when reporting their results. The Company has historically
reported adjusted EBITDA to analysts and investors and believes
that its continued inclusion provides consistency in financial
reporting and enables analysts and investors to perform meaningful
comparisons of past, present and future operating results.
Adjusted EBITDA should not be considered as an alternative to
net income, determined in accordance with GAAP, as an indicator of
the Company’s operating performance, as an indicator of cash flows,
or as a measure of liquidity. 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.
Cautionary Information about Forward Looking
Statements
In this press release, we make statements which may be
forward-looking within the meaning of applicable securities laws,
which represent our current judgment about possible future events.
The statements include projections regarding future revenues,
earnings and other results. In making these statements we
rely on current expectations, assumptions and analyses based on our
experience and perception of historical trends, current conditions
and expected future developments as well as other factors we
consider appropriate under the circumstances. We believe these
judgments are reasonable, but these statements are not guarantees
of any events or financial results, and our actual results may
differ materially due to a variety of important factors, both
positive and negative. These factors include among others:
changes in general economic conditions; price or availability of
raw materials, packaging, energy and labor; food industry
competition; changes in top customer relationships; consolidation
of the retail environment; decision by British voters to exit the
European Union; failure to realize anticipated benefits of
acquisitions and divestitures; loss of key personnel; failure to
execute strategic initiatives; safety and quality of food products;
adulterated or misbranded products; disruption of our supply chain
or information technology systems; improper use or misuse of social
media; ability to anticipate changes in consumer preferences and
trends; distribution through independent operators; protection of
trademarks and intellectual property; impairment in the carrying
value of goodwill or other intangible assets; new regulations or
legislation; interest and foreign currency exchange rate
volatility; concentration of capital stock ownership; increasing
legal complexity and potential litigation; the inability to
successfully execute international expansion strategies; additional
risks from foreign operations; our substantial debt; and the
restrictions and limitations on our business operations in the
agreements and instruments governing our debt.
In addition, this press release contains certain statements with
respect to a transaction involving the Company and Campbell Soup
Company that are also forward-looking within the meaning of
applicable securities laws. Certain risks and uncertainties
related to the transaction include, but are not limited to: failure
to obtain the required vote of the Company’s shareholders; the
timing to consummate the proposed transaction; the risk that a
condition to closing of the proposed transaction may not be
satisfied or that the closing of the proposed transaction might
otherwise not occur; the diversion of management time on
transaction-related issues; and risk that the transaction and its
announcement could have an adverse effect on the Company’s ability
to retain customers and retain and hire key personnel.
Additional information concerning these and other risk factors
can be found in the Company’s filings with the SEC and available
through the SEC’s Electronic Data Gathering and Analysis Retrieval
system at http://www.sec.gov, including the Company’s most recent
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and the Definitive Proxy Statement. The
foregoing list of important factors is not exclusive. The Company’s
forward-looking statements are based on assumptions that the
Company believes to be reasonable but that may not prove to be
accurate. The Company assumes no obligation to update or revise any
forward-looking statements as a result of new information, future
events or otherwise, except as may be required by law. Readers are
cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof.
ADDITIONAL INFORMATION
This communication does not constitute an offer to buy or sell
or the solicitation of an offer to buy or sell any securities or a
solicitation of any vote or approval. This communication relates to
a proposed acquisition of Snyder’s-Lance, Inc. (the
“Company”) by Campbell Soup Company. In connection
with this transaction, the Company has filed a definitive proxy
statement (the “Definitive Proxy Statement”) with
the Securities and Exchange Commission (the “SEC”)
on February 20, 2018, and has filed other relevant materials
regarding the proposed transaction with the SEC. INVESTORS
AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS THAT MAY BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
The Company first mailed the Definitive Proxy Statement to
shareholders of the Company on February 20, 2018. Investors and
security holders may obtain free copies of the Definitive Proxy
Statement and other documents filed with the SEC by the Company
through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by the Company are
available free of charge on the Company’s internet website at
http://ir.snyderslance.com/sec.cfm or by contacting the Company’s
Investor Relations Department by email at kpowers@snyderslance.com
or by phone at 704-557-8279.
PARTICIPANTS IN THE SOLICITATION
The Company, its directors and certain of its executive officers
may be considered participants in the solicitation of proxies from
the Company’s shareholders in connection with the proposed
transaction. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of
proxies in connection with the proposed transaction, including a
description of their direct or indirect interests, by security
holdings or otherwise, is set forth in the Definitive Proxy
Statement and other relevant materials filed with the SEC.
Information about the directors and executive officers of the
Company is set forth in its Annual Report on Form 10-K for the year
ended December 31, 2016, which was filed with the SEC on February
28, 2017, its proxy statement for its 2017 annual meeting of
shareholders, which was filed with the SEC on March 27, 2017, its
Quarterly Report on Form 10-Q for the quarter ended September 30,
2017, which was filed with the SEC on November 9, 2017, and in
other documents filed with the SEC by the Company and its officers
and directors.
These documents can be obtained free of charge from the sources
indicated above. Additional information regarding the participants
in the proxy solicitations and a description of their direct and
indirect interests, by security holdings or otherwise, is contained
in the Definitive Proxy Statement and other relevant materials in
connection with the transaction filed with the SEC.
Investor ContactKevin Powers,
Senior Director, Investor Relations and
Communicationskpowers@snyderslance.com, (704) 557-8279
Media ContactJoey Shevlin,
Director, Corporate Communications & Public
AffairsJShevlin@snyderslance.com, (704) 557-8850
(Tables to Follow)
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESConsolidated Statements of Income
(Unaudited)
|
|
Quarter Ended |
|
Year Ended |
(in
thousands, except per share data) |
|
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
Net revenue |
|
$ |
551,557 |
|
|
$ |
556,163 |
|
|
$ |
2,226,837 |
|
|
$ |
2,109,227 |
|
Cost of sales |
|
352,630 |
|
|
346,115 |
|
|
1,426,666 |
|
|
1,345,437 |
|
Gross profit |
|
198,927 |
|
|
210,048 |
|
|
800,171 |
|
|
763,790 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
150,352 |
|
|
159,301 |
|
|
643,865 |
|
|
593,957 |
|
Transaction and
integration related expenses |
|
1,141 |
|
|
3,693 |
|
|
3,002 |
|
|
66,272 |
|
Impairment charges |
|
1,633 |
|
|
3,096 |
|
|
114,783 |
|
|
4,466 |
|
Other operating
(income)/expense, net |
|
(189 |
) |
|
(359 |
) |
|
7 |
|
|
(5,554 |
) |
Operating income |
|
45,990 |
|
|
44,317 |
|
|
38,514 |
|
|
104,649 |
|
|
|
|
|
|
|
|
|
|
Other (income)/expense,
net |
|
(53 |
) |
|
414 |
|
|
(1,514 |
) |
|
164 |
|
Income before interest
and income taxes |
|
46,043 |
|
|
43,903 |
|
|
40,028 |
|
|
104,485 |
|
|
|
|
|
|
|
|
|
|
Loss on early
extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
4,749 |
|
Interest expense,
net |
|
10,178 |
|
|
9,308 |
|
|
38,765 |
|
|
32,613 |
|
Income before income
taxes |
|
35,865 |
|
|
34,595 |
|
|
1,263 |
|
|
67,123 |
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit)/expense |
|
(153,033 |
) |
|
15,890 |
|
|
(146,144 |
) |
|
25,320 |
|
Income from continuing
operations |
|
188,898 |
|
|
18,705 |
|
|
147,407 |
|
|
41,803 |
|
Income/(loss) from
discontinued operations, net of income taxes |
|
804 |
|
|
(27,426 |
) |
|
1,936 |
|
|
(27,100 |
) |
Net income/(loss) |
|
189,702 |
|
|
(8,721 |
) |
|
149,343 |
|
|
14,703 |
|
Net income/(loss)
attributable to non-controlling interests |
|
79 |
|
|
(41 |
) |
|
851 |
|
|
(182 |
) |
Net income/(loss)
attributable to Snyder’s-Lance, Inc. |
|
$ |
189,623 |
|
|
$ |
(8,680 |
) |
|
$ |
148,492 |
|
|
$ |
14,885 |
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Snyder's-Lance, Inc.: |
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
188,819 |
|
|
$ |
18,746 |
|
|
$ |
146,556 |
|
|
$ |
41,985 |
|
Discontinued
operations |
|
804 |
|
|
(27,426 |
) |
|
1,936 |
|
|
(27,100 |
) |
Net income/(loss)
attributable to Snyder’s-Lance, Inc. |
|
$ |
189,623 |
|
|
$ |
(8,680 |
) |
|
$ |
148,492 |
|
|
$ |
14,885 |
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share: |
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
1.94 |
|
|
$ |
0.19 |
|
|
$ |
1.51 |
|
|
$ |
0.46 |
|
Discontinued
operations |
|
0.01 |
|
|
(0.28 |
) |
|
0.02 |
|
|
(0.29 |
) |
Total basic
earnings/(loss) per share |
|
$ |
1.95 |
|
|
$ |
(0.09 |
) |
|
$ |
1.53 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share: |
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
1.92 |
|
|
$ |
0.19 |
|
|
$ |
1.50 |
|
|
$ |
0.45 |
|
Discontinued
operations |
|
0.01 |
|
|
(0.28 |
) |
|
0.02 |
|
|
(0.29 |
) |
Total diluted
earnings/(loss) per share |
|
$ |
1.93 |
|
|
$ |
(0.09 |
) |
|
$ |
1.52 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per
common share |
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
$ |
0.64 |
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESConsolidated Balance Sheets
(Unaudited)As of December 30, 2017 and
December 31, 2016
(in
thousands, except share data) |
|
2017 |
|
2016 |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
18,703 |
|
|
$ |
35,409 |
|
Restricted cash |
|
446 |
|
|
714 |
|
Accounts
receivable, net of allowances of $2,567 and $1,290,
respectively |
|
219,267 |
|
|
210,723 |
|
Receivable from sale of Diamond of California |
|
— |
|
|
118,577 |
|
Inventories, net |
|
189,889 |
|
|
173,456 |
|
Prepaid
income taxes and income taxes receivable |
|
5,899 |
|
|
5,744 |
|
Assets
held for sale |
|
18,945 |
|
|
19,568 |
|
Prepaid
expenses and other current assets |
|
30,242 |
|
|
27,666 |
|
Total current
assets |
|
483,391 |
|
|
591,857 |
|
Noncurrent
assets: |
|
|
|
|
Fixed
assets, net |
|
492,437 |
|
|
501,884 |
|
Goodwill |
|
1,282,372 |
|
|
1,318,362 |
|
Other
intangible assets, net |
|
1,301,228 |
|
|
1,373,800 |
|
Other
noncurrent assets |
|
58,909 |
|
|
48,173 |
|
Total assets |
|
$ |
3,618,337 |
|
|
$ |
3,834,076 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Current
portion of long-term debt |
|
$ |
49,000 |
|
|
$ |
49,000 |
|
Accounts
payable |
|
111,971 |
|
|
99,249 |
|
Accrued
compensation |
|
31,568 |
|
|
44,901 |
|
Accrued
casualty insurance claims |
|
3,571 |
|
|
4,266 |
|
Accrued
marketing, selling and promotional costs |
|
57,774 |
|
|
50,179 |
|
Other
payables and accrued liabilities |
|
45,797 |
|
|
47,958 |
|
Total current
liabilities |
|
299,681 |
|
|
295,553 |
|
|
|
|
|
|
Noncurrent
liabilities: |
|
|
|
|
Long-term
debt, net |
|
1,025,533 |
|
|
1,245,959 |
|
Deferred
income taxes, net |
|
234,878 |
|
|
378,236 |
|
Accrued
casualty insurance claims |
|
14,831 |
|
|
13,049 |
|
Other
noncurrent liabilities |
|
21,125 |
|
|
25,609 |
|
Total liabilities |
|
1,596,048 |
|
|
1,958,406 |
|
Commitments and
contingencies |
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Common
stock, $0.83 1/3 par value. 110,000,000 shares authorized;
97,857,940 and 96,242,784 shares outstanding, respectively |
|
81,545 |
|
|
80,199 |
|
Preferred
stock, $1.00 par value. 5,000,000 shares authorized; no shares
outstanding |
|
— |
|
|
— |
|
Additional paid-in capital |
|
1,636,500 |
|
|
1,598,678 |
|
Retained
earnings |
|
282,259 |
|
|
195,733 |
|
Accumulated other comprehensive income/(loss) |
|
2,097 |
|
|
(17,977 |
) |
Total Snyder’s-Lance,
Inc. stockholders’ equity |
|
2,002,401 |
|
|
1,856,633 |
|
Non-controlling interests |
|
19,888 |
|
|
19,037 |
|
Total stockholders’
equity |
|
2,022,289 |
|
|
1,875,670 |
|
Total liabilities and stockholders’ equity |
|
$ |
3,618,337 |
|
|
$ |
3,834,076 |
|
|
|
|
|
|
|
|
|
|
SNYDER’S-LANCE, INC., AND
SUBSIDIARIESConsolidated Statements of Cash
FlowsFor the Years Ended December 30, 2017
and December 31, 2016 (in thousands) |
|
2017 |
|
2016 |
Operating
activities: |
|
|
|
|
Net income |
|
$ |
149,343 |
|
|
$ |
14,703 |
|
Adjustments to reconcile net income to cash from operating
activities: |
|
|
|
|
Depreciation and amortization |
|
96,911 |
|
|
99,251 |
|
Stock-based compensation expense |
|
13,890 |
|
|
26,648 |
|
Loss on
sale of fixed assets, net |
|
1,437 |
|
|
141 |
|
(Gain)/loss on disposal of Diamond of California |
|
(3,069 |
) |
|
32,645 |
|
Gain on
sale of route businesses |
|
(2,255 |
) |
|
(1,341 |
) |
Loss on
early extinguishment of debt |
|
— |
|
|
4,749 |
|
Impairment charges |
|
114,783 |
|
|
4,466 |
|
Deferred
income taxes |
|
(153,963 |
) |
|
24,811 |
|
Provision
for doubtful accounts |
|
1,733 |
|
|
472 |
|
Changes
in operating assets and liabilities, excluding business
acquisitions, and foreign currency translation adjustments: |
|
|
|
|
Accounts
receivable |
|
(6,487 |
) |
|
(34,047 |
) |
Inventory |
|
(15,663 |
) |
|
2,036 |
|
Other
current assets |
|
(941 |
) |
|
2,861 |
|
Accounts
payable |
|
9,629 |
|
|
21,762 |
|
Payable
to growers |
|
— |
|
|
41,948 |
|
Other
accrued liabilities |
|
(7,378 |
) |
|
18,312 |
|
Other
noncurrent assets |
|
(3,596 |
) |
|
6,531 |
|
Other
noncurrent liabilities |
|
2,485 |
|
|
1,421 |
|
Net cash provided by
operating activities |
|
196,859 |
|
|
267,369 |
|
Investing
activities: |
|
|
|
|
Purchases
of fixed assets |
|
(69,429 |
) |
|
(73,261 |
) |
Purchases
of route businesses |
|
(53,907 |
) |
|
(42,206 |
) |
Purchases
of equity method investments |
|
(1,500 |
) |
|
— |
|
Proceeds
from sale of fixed assets and insurance recoveries |
|
544 |
|
|
1,409 |
|
Proceeds
from sale of route businesses |
|
56,584 |
|
|
39,619 |
|
Proceeds
from sale of investments |
|
1,090 |
|
|
— |
|
Proceeds
from sale of discontinued operations |
|
119,658 |
|
|
— |
|
Business
acquisitions, net of cash acquired |
|
(2,563 |
) |
|
(1,042,674 |
) |
Net cash provided
by/(used in) investing activities |
|
50,477 |
|
|
(1,117,113 |
) |
Financing
activities: |
|
|
|
|
Dividends
paid to stockholders and non-controlling interests |
|
(61,966 |
) |
|
(57,584 |
) |
Debt
issuance costs |
|
(2,441 |
) |
|
(6,047 |
) |
Issuances
of common stock |
|
27,970 |
|
|
10,096 |
|
Excess
tax benefits from stock-based compensation |
|
— |
|
|
910 |
|
Share
repurchases, including shares surrendered for tax withholding |
|
(2,692 |
) |
|
(10,330 |
) |
Payments
on capital leases |
|
(4,817 |
) |
|
(2,412 |
) |
Repayments of long-term debt |
|
(49,000 |
) |
|
(444,795 |
) |
Proceeds
from issuance of long-term debt |
|
— |
|
|
1,130,000 |
|
Repayments of revolving credit facility |
|
(365,500 |
) |
|
(120,000 |
) |
Proceeds
from revolving credit facility |
|
193,500 |
|
|
347,000 |
|
Net cash (used
in)/provided by financing activities |
|
(264,946 |
) |
|
846,838 |
|
Effect of
exchange rate changes on cash |
|
636 |
|
|
(1,042 |
) |
Net
decrease |
|
(16,974 |
) |
|
(3,948 |
) |
Cash, cash
equivalents and restricted cash at beginning of fiscal
year |
|
36,123 |
|
|
40,071 |
|
Cash, cash
equivalents and restricted cash at end of fiscal year |
|
$ |
19,149 |
|
|
$ |
36,123 |
|
|
|
|
|
|
|
|
|
|
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Gross profit, excluding special
items
|
Quarter Ended |
|
Year Ended |
(in
thousands) |
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
Net revenue |
$ |
551,557 |
|
|
$ |
556,163 |
|
|
$ |
2,226,837 |
|
|
$ |
2,109,227 |
|
Cost of
sales |
352,630 |
|
|
346,115 |
|
|
1,426,666 |
|
|
1,345,437 |
|
Gross profit
from continuing operations |
198,927 |
|
|
210,048 |
|
|
800,171 |
|
|
763,790 |
|
As a % of net
revenue |
36.1 |
% |
|
37.8 |
% |
|
35.9 |
% |
|
36.2 |
% |
|
|
|
|
|
|
|
|
Transaction and
integration related expenses (1) |
— |
|
|
66 |
|
|
237 |
|
|
12,069 |
|
Emerald move and
required packaging changes (2) |
— |
|
|
499 |
|
|
6,704 |
|
|
499 |
|
Transformation
initiative (3) |
3,654 |
|
|
— |
|
|
7,403 |
|
|
— |
|
Other (4) |
— |
|
|
187 |
|
|
(105 |
) |
|
1,090 |
|
Gross profit
from continuing operations, excluding special items |
202,581 |
|
|
210,800 |
|
|
814,410 |
|
|
777,448 |
|
As a % of net
revenue |
36.7 |
% |
|
37.9 |
% |
|
36.6 |
% |
|
36.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Transaction and integration related expenses primarily
consist of severance and relocation benefits for Diamond Foods
personnel and the inventory step-up for the additional cost of
sales as a result of stepping up Diamond Food's inventory to fair
value at the acquisition date.(2) Expenses primarily
associated with the relocation of Emerald production from Stockton,
CA to Charlotte, NC, including packaging write-offs due to required
packaging changes as a result of the transaction.(3)
Transformation initiative costs primarily consist of write off of
certain materials and packaging associated with our elimination of
certain SKU items, expenses associated with the closure of our
Perry, FL manufacturing facility as well as severance benefits
related to our performance transformation plan.(4) Other
items primarily consist of an inventory step-up related to the
Metcalfe transaction, other Metcalfe-related integration expenses
and non-Diamond related severance and retention benefits.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Operating income, excluding special
items
|
Quarter Ended |
|
Year Ended |
(in
thousands) |
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
Operating
income from continuing operations |
45,990 |
|
|
44,317 |
|
|
38,514 |
|
|
104,649 |
|
As a % of net
revenue |
8.3 |
% |
|
8.0 |
% |
|
1.7 |
% |
|
5.0 |
% |
|
|
|
|
|
|
|
|
Transaction and
integration related expenses (1)(2) |
1,141 |
|
|
3,758 |
|
|
3,239 |
|
|
78,341 |
|
Emerald move and
required packaging changes (3) |
27 |
|
|
3,304 |
|
|
9,144 |
|
|
3,869 |
|
Transformation
initiative (4) |
5,819 |
|
|
— |
|
|
37,967 |
|
|
— |
|
Impairment charges
(5) |
— |
|
|
— |
|
|
104,720 |
|
|
863 |
|
Other (6) (7) |
1,783 |
|
|
769 |
|
|
2,070 |
|
|
1,768 |
|
Operating
income from continuing operations, excluding special
items |
$ |
54,760 |
|
|
$ |
52,148 |
|
|
$ |
195,654 |
|
|
$ |
189,490 |
|
As a % of net
revenue |
9.9 |
% |
|
9.4 |
% |
|
8.8 |
% |
|
9.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) For 2017, transaction and integration related expenses
primarily consist of idle facility lease costs and severance for
Diamond Foods personnel.(2) For 2016, transaction and
integration related expenses primarily consist of professional
fees, accelerated stock-based compensation, relocation, severance,
and retention costs associated with the acquisition of Diamond
Foods and the inventory step-up for the additional cost of sales as
a result of stepping up Diamond Food's inventory to fair value at
the acquisition date.(3) Expenses associated primarily with
the relocation of Emerald production from Stockton, CA to
Charlotte, NC, including the packaging write-offs due to required
packaging changes as a result of the transaction.(4)
Transformation initiative costs primarily consist of write off of
certain materials and packaging associated with our elimination of
certain SKU items, expenses associated with the closure of our
Perry, FL manufacturing facility as well as severance benefits and
professional fees related to our performance transformation
plan.(5) For 2017, impairment charges recorded for certain
trademarks and our European reporting unit goodwill. For 2016,
impairment changes recorded for certain unused fixed
assets.(6) For 2017, other items primarily relate to expenses
incurred in relation to the pending acquisition of the Company by
Campbell Soup Company, partially offset by reductions of accruals
associated with certain litigation.(7) For 2016, other items
primarily consist of Metcalfe's transaction-related expenses,
including severance benefits, as well as an inventory step-up
related to this acquisition, partially offset by proceeds from a
business interruption claim.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Earnings per diluted share, excluding
special items
|
Quarter Ended |
|
Year Ended |
|
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
Earnings per
diluted share from continuing operations |
$ |
1.92 |
|
|
$ |
0.19 |
|
|
$ |
1.50 |
|
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
Transaction and
integration related expenses (1)(2) |
0.01 |
|
|
0.03 |
|
|
0.02 |
|
|
0.56 |
|
Emerald move and
required packaging changes (3) |
— |
|
|
0.03 |
|
|
0.06 |
|
|
0.03 |
|
Transformation
initiative (4) |
0.04 |
|
|
— |
|
|
0.28 |
|
|
— |
|
Loss on debt prepayment
(5) |
— |
|
|
— |
|
|
— |
|
|
0.03 |
|
Impairment charges
(6) |
— |
|
|
— |
|
|
0.87 |
|
|
0.01 |
|
Income tax reform
(7) |
(1.66 |
) |
|
— |
|
|
(1.67 |
) |
|
— |
|
Other (8) (9) |
0.02 |
|
|
0.02 |
|
|
0.02 |
|
|
0.03 |
|
Earnings per
diluted share from continuing operations, excluding special
items |
$ |
0.33 |
|
|
$ |
0.27 |
|
|
$ |
1.08 |
|
|
$ |
1.11 |
|
(1) For 2017, transaction and integration related expenses
primarily consist of idle facility lease costs and severance for
Diamond Foods personnel.(2) For 2016, transaction and
integration related expenses primarily consist of professional
fees, accelerated stock-based compensation, relocation, severance,
and retention costs associated with the acquisition of Diamond
Foods and the inventory step-up for the additional cost of sales as
a result of stepping up Diamond Food's inventory to fair value at
the acquisition date.(3) Expenses primarily associated with
the relocation of Emerald production from Stockton, CA to
Charlotte, NC, including the packaging write-offs due to required
packaging changes as a result of the transaction.(4)
Transformation initiative costs primarily consist of write off of
certain materials and packaging associated with our elimination of
certain SKU items, expenses associated with the closure of our
Perry, FL manufacturing facility as well as severance benefits and
professional fees related to our performance transformation
plan.(5) Loss on early extinguishment of debt as a result of
the early repayment of our private placement loan due to the
financing obtained for the acquisition of Diamond Foods.(6)
For 2017, impairment charges recorded for certain trademarks and
our European reporting unit goodwill. For 2016, impairment changes
recorded for certain unused fixed assets.(7) The enactment of
the Tax Act in December 2017, which included numerous changes to
many aspects of U.S. corporate income taxation by, among other
things, lowering the corporate income tax rate from 35% to 21%,
implementing a territorial tax system and imposing a one-time
transition tax on deemed repatriated earning of foreign
subsidiaries, resulted in a tax benefit.(8) For 2017, other
items primarily relate to expenses incurred in relation to the
pending acquisition of the Company by Campbell Soup Company
partially offset by reductions of accruals associated with certain
litigation.(9) For 2016, other items primarily consist of
Metcalfe's transaction-related expenses, including severance
benefits, as well as an inventory step-up related to this
acquisition, partially offset by proceeds from a business
interruption claim.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)EBITIDA and Adjusted
EBITDA
|
Quarter Ended |
|
Year Ended |
|
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
Income from continuing
operations |
$ |
188,898 |
|
|
$ |
18,705 |
|
|
$ |
147,407 |
|
|
$ |
41,803 |
|
Income tax
(benefit)/expense |
(153,033 |
) |
|
15,890 |
|
|
(146,144 |
) |
|
25,320 |
|
Interest expense,
net |
10,178 |
|
|
9,308 |
|
|
38,765 |
|
|
32,613 |
|
Loss on early
extinguishment of debt |
— |
|
|
— |
|
|
— |
|
|
4,749 |
|
Depreciation |
16,870 |
|
|
17,713 |
|
|
69,465 |
|
|
70,075 |
|
Amortization |
6,791 |
|
|
7,663 |
|
|
27,446 |
|
|
24,709 |
|
EBITDA from
continuing operations |
$ |
69,704 |
|
|
$ |
69,279 |
|
|
$ |
136,939 |
|
|
$ |
199,269 |
|
As a % of net
revenue |
12.6 |
% |
|
12.5 |
% |
|
6.1 |
% |
|
9.4 |
% |
|
|
|
|
|
|
|
|
Transaction and
integration related expenses (1)(2) |
1,141 |
|
|
3,758 |
|
|
3,239 |
|
|
78,341 |
|
Emerald move and
required packaging changes (3) |
27 |
|
|
3,304 |
|
|
9,144 |
|
|
3,869 |
|
Transformation
initiative (4) |
5,819 |
|
|
— |
|
|
37,967 |
|
|
— |
|
Impairment charges
(5) |
— |
|
|
— |
|
|
104,720 |
|
|
863 |
|
Other (6) (7) |
1,783 |
|
|
769 |
|
|
1,249 |
|
|
1,768 |
|
Adjusted EBITDA
from continuing operations |
$ |
78,474 |
|
|
$ |
77,110 |
|
|
$ |
293,258 |
|
|
$ |
284,110 |
|
As a % of net
revenue |
14.2 |
% |
|
13.9 |
% |
|
13.2 |
% |
|
13.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) For 2017, transaction and integration related expenses
primarily consist of idle facility lease costs and severance for
Diamond Foods personnel.(2) For 2016, transaction and
integration related expenses primarily consist of professional
fees, accelerated stock-based compensation, relocation, severance,
and retention costs associated with the acquisition of Diamond
Foods and the inventory step-up for the additional cost of sales as
a result of stepping up of inventory to fair value at the
acquisition date.(3) Expenses primarily associated with the
relocation of Emerald production from Stockton, CA to Charlotte,
NC, including the packaging write-offs due to required packaging
changes as a result of the transaction.(4) Transformation
initiative costs primarily consist of write off of certain
materials and packaging associated with our elimination of certain
SKU items, expenses associated with the closure of our Perry, FL
manufacturing facility as well as severance benefits and
professional fees related to our performance transformation
plan.(5) For 2017, impairment charges recorded for certain
trademarks and our European reporting unit goodwill. For 2016,
impairment changes recorded for certain unused fixed
assets.(6) For 2017, other items primarily relate to expenses
incurred in relation to the pending acquisition of the Company by
Campbell Soup Company and reductions of accruals associated with
certain litigation.(7) For 2016, other items primarily
consist of Metcalfe's transaction-related expenses, including
severance benefits, as well as an inventory step-up related to this
acquisition, partially offset by proceeds from a business
interruption claim.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Net income attributable to
Snyder's-Lance, Inc., excluding special items
|
Quarter Ended |
|
Year Ended |
|
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
Net income
attributable to Snyder's-Lance, Inc. from continuing
operations |
$ |
188,819 |
|
|
$ |
18,746 |
|
|
$ |
146,556 |
|
|
$ |
41,985 |
|
|
|
|
|
|
|
|
|
Transaction and
integration related expenses, net of tax (1) (2) |
730 |
|
|
3,039 |
|
|
2,049 |
|
|
52,403 |
|
Emerald move and
required packaging changes, net of tax (3) |
18 |
|
|
2,671 |
|
|
5,898 |
|
|
3,111 |
|
Transformation
initiative, net of tax (4) |
3,809 |
|
|
— |
|
|
27,123 |
|
|
— |
|
Impairment charges, net
of tax (5) |
(265 |
) |
|
— |
|
|
84,591 |
|
|
589 |
|
Loss on debt
extinguishment, net of tax (6) |
— |
|
|
— |
|
|
— |
|
|
3,042 |
|
Income tax reform
(7) |
(162,384 |
) |
|
— |
|
|
(162,384 |
) |
|
— |
|
Other, net of tax (8)
(9) |
2,009 |
|
|
1,986 |
|
|
1,673 |
|
|
2,391 |
|
Net income
attributable to Snyder's-Lance, Inc. from continuing operations,
excluding special items |
$ |
32,736 |
|
|
$ |
26,442 |
|
|
$ |
105,506 |
|
|
$ |
103,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For 2017, transaction and integration related expenses
consist of idle facility lease costs and severance for Diamond
Foods personnel.(2) For 2016, transaction and integration
related expenses primarily consist of professional fees,
accelerated stock-based compensation, relocation, severance, and
retention costs associated with the acquisition of Diamond Foods
and the inventory step-up for the additional cost of sales as a
result of stepping up inventory to fair value at the acquisition
date.(3) Expenses associated with the relocation of Emerald
production from Stockton, CA to Charlotte, NC, including the
packaging write-offs due to required packaging changes as a result
of the transaction.(4) Transformation initiative costs
primarily consist of write off of certain materials and packaging
associated with our elimination of certain SKU items, expenses
associated with the closure of our Perry, FL manufacturing facility
as well as severance benefits and professional fees related to our
performance transformation plan.(5) For 2017, impairment
charges recorded for certain trademarks and our European reporting
unit goodwill. For 2016, impairment changes recorded for certain
unused fixed assets.(6) Loss on early extinguishment of debt
as a result of the early repayment of our private placement loan
due to the financing obtained for the acquisition of Diamond
Foods.(7) The enactment of the Tax Act in December 2017,
which included numerous changes to many aspects of U.S. corporate
income taxation by, among other things, lowering the corporate
income tax rate from 35% to 21%, implementing a territorial tax
system and imposing a one-time transition tax on deemed repatriated
earning of foreign subsidiaries, resulted in a tax benefit in
2017.(8) For 2017, other items primarily relate to expenses
incurred in relation to the pending acquisition of the Company by
Campbell Soup Company partially offset by reductions of accruals
associated with certain litigation.(9) For 2016, other items
primarily consist of Metcalfe's transaction-related expenses,
including severance benefits, as well as an inventory step-up
related to this acquisition, partially offset by proceeds from a
business interruption claim.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Adjusted effective income tax
rate
Quarter ended
December 30, 2017 |
Income from Continuing
Operations |
(in thousands) |
GAAP Income |
|
Adjustments |
|
Adjusted Income |
|
|
|
|
|
|
Income before
income taxes |
$ |
35,865 |
|
|
$ |
8,770 |
|
|
$ |
44,635 |
|
Income tax
(benefit)/expense |
(153,033 |
) |
|
164,853 |
|
|
11,820 |
|
Net
income |
188,898 |
|
|
(156,083 |
) |
|
32,815 |
|
Net income
attributable to non-controlling interests |
79 |
|
|
— |
|
|
79 |
|
Net income
attributable to Snyder's-Lance, Inc. from continuing
operations |
$ |
188,819 |
|
|
$ |
(156,083 |
) |
|
$ |
32,736 |
|
|
|
|
|
|
|
Effective
income tax rate (1) |
|
N/M |
|
|
|
|
26.5 |
% |
|
|
|
|
|
|
|
Quarter ended
December 31, 2016 |
Income from Continuing
Operations |
(in
thousands) |
GAAP Income |
|
Adjustments |
|
Adjusted Income |
|
|
|
|
|
|
Income before income
taxes |
$ |
34,595 |
|
|
$ |
7,831 |
|
|
42,426 |
|
Income tax expense |
15,890 |
|
|
135 |
|
|
16,025 |
|
Net income |
18,705 |
|
|
7,696 |
|
|
26,401 |
|
Net loss attributable
to non-controlling interests |
(41 |
) |
|
— |
|
|
(41 |
) |
Net income attributable
to Snyder's-Lance, Inc. from continuing operations |
$ |
18,746 |
|
|
$ |
7,696 |
|
|
$ |
26,442 |
|
|
|
|
|
|
|
Effective income tax
rate (2) |
45.9 |
% |
|
|
|
37.8 |
% |
|
|
|
|
|
|
|
|
(1) The tax rate on adjusted income varies from the tax
rate on GAAP income primarily due to the enactment of the Tax Act
in December 2017, which included numerous changes to many aspects
of U.S. corporate income taxation by, among other things, lowering
the corporate income tax rate from 35% to 21%, implementing a
territorial tax system and imposing a one-time transition tax on
deemed repatriated earning of foreign subsidiaries and to a lesser
extent the favorable impact of tax benefits on share-based tax
payments, which previously had been included in equity.
(2) The tax rate on adjusted income varies from the tax
rate on GAAP income for the fourth quarter of 2016 primarily due to
the $1.4 million of discrete tax expense associate with our tax
restructuring in the quarter, as well as non-deductible transaction
related costs related to the acquisition of Diamond Foods.
SNYDER’S-LANCE, INC. AND
SUBSIDIARIESReconciliation of Non-GAAP Measures
(Unaudited)Adjusted effective income tax
rate
Year ended
December 30, 2017 |
Income from Continuing
Operations |
(in thousands) |
GAAP Income |
|
Adjustments |
|
Adjusted Income |
|
|
|
|
|
|
Income before
income taxes |
$ |
1,263 |
|
|
$ |
156,319 |
|
|
$ |
157,582 |
|
Income tax
(benefit)/expense |
(146,144 |
) |
|
197,369 |
|
|
51,225 |
|
Net
income |
147,407 |
|
|
(41,050 |
) |
|
106,357 |
|
Net income
attributable to non-controlling interests |
851 |
|
|
— |
|
|
851 |
|
Net income
attributable to Snyder's-Lance, Inc. from continuing
operations |
$ |
146,556 |
|
|
$ |
(41,050 |
) |
|
$ |
105,506 |
|
|
|
|
|
|
|
Effective
income tax rate (1) |
|
N/M |
|
|
|
|
32.5 |
% |
|
|
|
|
|
|
|
Year ended
December 31, 2016 |
Income from Continuing
Operations |
(in thousands) |
GAAP Income |
|
Adjustments |
|
Adjusted Income |
|
|
|
|
|
|
Income before income
taxes |
$ |
67,123 |
|
|
$ |
89,590 |
|
|
$ |
156,713 |
|
Income tax expense |
25,320 |
|
|
28,054 |
|
|
53,374 |
|
Net income |
41,803 |
|
|
61,536 |
|
|
103,339 |
|
Net loss attributable
to non-controlling interests |
(182 |
) |
|
— |
|
|
(182 |
) |
Net income attributable
to Snyder's-Lance, Inc. from continuing operations |
$ |
41,985 |
|
|
$ |
61,536 |
|
|
$ |
103,521 |
|
|
|
|
|
|
|
Effective income tax
rate (2) |
37.7 |
% |
|
|
|
34.1 |
% |
(1) The tax rate on adjusted income varies from the tax
rate on GAAP income primarily due to the enactment of the Tax Act
in December 2017, which included numerous changes to many aspects
of U.S. corporate income taxation by, among other things, lowering
the corporate income tax rate from 35% to 21%, implementing a
territorial tax system and imposing a one-time transition tax on
deemed repatriated earning of foreign subsidiaries and to a lesser
extent the favorable impact of tax benefits on share-based tax
payments, which previously had been included in equity.(2)
The tax rate on adjusted income varies from the tax rate on GAAP
income primarily due to non-deductible transaction costs related to
the acquisition of Diamond Foods.
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