Aurora Foods Inc. (NYSE: AOR) today announced results for the second quarter ending June 30, 2000, with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increasing 19.8% versus the restated year-ago quarter to $32.4 million. Net sales increased 14.9% to $214.7 million, compared with a restated year-ago quarter of $186.9 million.
Net income for the second quarter was a loss of $18.9 million, or $0.28 per share. This includes a one-time pre-tax charge of $6.6 million (of which $3.1 million reflects non-cash expense) for the previously announced consolidation of the Columbus dry goods division into the Company’s new St. Louis headquarters, and a pre-tax charge of $8.5 million for ongoing financial, legal and accounting expenses related to the restatement of earnings announced in April 2000. The consolidation in St. Louis is expected to generate an annual benefit of $12 million to $15 million beginning in 2001.
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The Company also reported that second-quarter adjusted EBITDA increased 12.5% to $32.4 million from a restated first-quarter adjusted EBITDA of $28.8 million. In addition, adjusted EBITDA margin as a percent of net sales improved significantly from 10.2% of net sales in the first quarter to 15.1% in the second quarter. This improvement primarily reflected better cost controls and reductions in inefficient marketing spending associated with previous trade loading that has since been discontinued. Despite the significant reduction in marketing spending in the second quarter, IRI/Nielsen market shares were essentially unchanged versus the past 52-week total, indicating the strong consumer positions of Aurora brands.
Jim Smith, the President and Chief Executive Officer of Aurora Foods, said, “We are certainly moving in the right direction. We are returning the Company to more normal business practices and bringing stability to our operations. We have started important new programs to consolidate and reallocate our resources to increase topline sales and reduce unnecessary costs. The results of the second quarter have come in as planned and demonstrate that our brands are returning to the type of approaches and programs that will achieve sustained growth. We fully expect this momentum to continue and lead to further improvement in the third and fourth quarters of this year.”
Net sales for the second quarter were down 7.8% versus pro forma results in the year-ago quarter. The decline in revenue reflected the Company’s decisions to terminate the practice of heavy quarter-end trade loading, which caused major inefficiencies throughout the Company, and to aggressively drive down the excessive trade inventories that had accumulated as a result of these practices.
The Company said it believes that the inventory draw-down alone reduced second-quarter net sales by $30 million to $35 million and EBITDA by $9 million to $10 million. The Company indicated July revenues would be up an estimated 7% to 8% versus prior year pro forma, and carryover orders going into August are up 20% versus year ago, a further indication that the business is returning to normal operation.
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By GlobalDataAdded Mr. Smith, “As we outlined in the first-quarter earnings release, we expected the second-quarter revenue reduction as we aggressively attacked the excess inventories we had in the trade. This was hurting our brands, incurring unnecessary costs and restricting our ability to partner with our customers to develop the best programs for both their businesses and ours. We are now at appropriate retail inventory levels, and we are seeing the results of this de-loading with our good third-quarter start.”
The Company further stated that unit volume for the second quarter was virtually identical to plan. Second-quarter IRI/Nielsen Retail consumption was more than 4% higher than Retail shipments for the same period, consistent with the Company’s inventory draw-down and indicating that net sales measures understate the vitality of the business. The frozen and dry sales-force consolidation plus the addition of a national broker is beginning to have a measurable impact on the business. The strong August carryover orders partially reflect several major improvements in distribution across the Company. Lastly, sell-in for the new Seafood Shrimp and Lender’s® Frozen and Lender’s® Fresh Bagel items are off to a strong start and should be important contributors to second-half results.
The Company continues to have ongoing discussions with the holders of its Senior Subordinated Notes with the goal of resolving certain non-monetary covenant defaults arising from the restatement of earnings. The Company’s senior lenders have amended its Senior Credit Agreement to provide time for resolution of the subordinated debt defaults until September 30, 2000.
Pro Forma Comparisons and Change in Accounting Principle
The pro forma results treat the acquisitions of Chef’s Choice® and Lender’s® as if they had occurred at the beginning of 1999. Also, the Company said that all reported results reflect its early adoption of EITF 00-14, Accounting for Certain Sales Incentives as of January 1, 2000. This change in accounting principle, required of most companies by the fourth quarter 2000, has the effect of accelerating the recognition of certain marketing expenses as well as requiring that certain items previously classified as promotional and marketing expense be re-classified as reductions of revenue.
The change in accounting principle resulted in a non-recurring after-tax charge of $12.2 million in the restated first quarter, and a $1.0 million reduction in reported first-quarter EBITDA. The effect of the accounting change on ongoing operations is not expected to be meaningful.
For the quarter ended June 30, 2000, net sales were $214.7 million, compared with a restated pro forma $232.9 million in the year-ago period. Net income was a loss of $18.9 million versus a loss of $1.5 million in the prior year. For the six months ended June 30, 2000, net sales were $496.7 million, compared with a restated pro forma $517.9 million in the year-ago period. Net income (including the one-time effect of the change in accounting principle) was a loss of $47.5 million, versus a loss of $3.2 million in the prior year. The Company also reiterated that it remained on-track for full-year adjusted EBITDA in the $170 million range.
The attached statements provide reconciliations of restated and pro forma amounts for the first quarter of 2000 and the four quarters and full year of 1999.
About Aurora Foods
Aurora Foods Inc., which is based in St. Louis, is a leading producer and marketer of premium branded food products including Duncan Hines® baking mixes, Log Cabin® and Mrs. Butterworth’s® syrup, Lender’s® bagels, Van de Kamp’s® and Mrs. Paul’s® frozen seafood, Aunt Jemima® frozen breakfast products, Celeste® frozen pizza and Chef’s Choice® skillet meals. Aurora’s products can be found in all Retail classes of trade, and Foodservice, and command strong positions in their respective categories and/or markets.
Statements contained in this press release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from the forward-looking statements contained in this release and that may affect the Company’s prospects in general are described in the Company’s filing with the Securities and Exchange Commission.
AURORA FOODS INC.
CONSOLIDATED
INCOME STATEMENT
(DOLLARS AND SHARES IN THOUSANDS)
(Unaudited)
Three Months Ended
June 30, June 30,
2000 1999
GROSS SALES 239,507 215,514
COUPONS, RETURNS & ALLOWANCES (24,786) (28,648)
NET SALES 214,721 186,866
COST OF GOODS SOLD 101,458 91,230
GROSS PROFIT 113,263 95,636
BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES
BROKERAGE AND DISTRIBUTION 25,045 23,635
TRADE PROMOTIONS 41,806 30,224
CONSUMER MARKETING 9,849 10,261
TOTAL BROKERAGE, DISTRIBUTION
AND MARKETING EXPENSES 76,700 64,120
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES 10,729 9,292
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 10,608 8,225
OTHER FINANCIAL, LEGAL AND ACCOUNTING EXPENSES 8,487 0
COLUMBUS CONSOLIDATION COSTS 6,550 0
TRANSITION EXPENSES 19 3,121
TOTAL OPERATING EXPENSES 113,093 84,758
OPERATING INCOME 170 10,878
INTEREST EXPENSE, NET 27,176 15,746
AMORTIZATION OF DEFERRED FINANCING EXPENSES 735 486
OTHER BANK AND FINANCING EXPENSES 101 50
INCOME (LOSS) BEFORE INCOME TAXES (27,842) (5,404)
INCOME TAX EXPENSE (BENEFIT) (8,909) (1,675)
NET INCOME (18,933) (3,729)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (0.28) (0.06)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 67,050 67,016
AURORA FOODS INC.
CONSOLIDATED
INCOME STATEMENT
(DOLLARS AND SHARES IN THOUSANDS)
(Unaudited)
Six Months Ended
June 30, June 30,
2000 1999
GROSS SALES 565,554 472,175
COUPONS, RETURNS & ALLOWANCES (68,825) (64,043)
NET SALES 496,729 408,132
COST OF GOODS SOLD 239,860 195,933
GROSS PROFIT 256,869 212,199
BROKERAGE, DISTRIBUTION AND MARKETING EXPENSES
BROKERAGE AND DISTRIBUTION 59,384 45,565
TRADE PROMOTIONS 96,207 72,683
CONSUMER MARKETING 29,960 25,989
TOTAL BROKERAGE, DISTRIBUTION
AND MARKETING EXPENSES 185,551 144,237
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES 21,480 18,164
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 22,669 15,793
OTHER FINANCIAL, LEGAL AND ACCOUNTING EXPENSES 18,088 0
COLUMBUS CONSOLIDATION COSTS 6,550 0
TRANSITION EXPENSES 1,384 7,398
TOTAL OPERATING EXPENSES 255,722 185,592
OPERATING INCOME 1,147 26,607
INTEREST EXPENSE, NET 51,547 30,328
AMORTIZATION OF DEFERRED FINANCING EXPENSES 1,443 882
OTHER BANK AND FINANCING EXPENSES 188 102
INCOME (LOSS) BEFORE INCOME TAXES
AND CUMULATIVE CHANGE IN ACCOUNTING (52,031) (4,705)
INCOME TAX EXPENSE (BENEFIT) (16,649) (1,458)
LOSS BEFORE CUMULATIVE CHANGE IN ACCOUNTING (35,382) (3,247)
CUMULATIVE CHANGE IN ACCOUNTING, NET OF TAX (12,161) 0
NET LOSS (47,543) (3,247)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (0.71) (0.05)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 67,050 67,016
AURORA FOODS INC.
CONSOLIDATED
INCOME STATEMENT
(DOLLARS AND SHARES IN THOUSANDS)
(Unaudited)
Three Months Ended
March 31, March 31,
2000 1999
(Restated)
GROSS SALES 326,047 256,661
COUPONS, RETURNS & ALLOWANCES (44,039) (35,395)
NET SALES 282,008 221,266
COST OF GOODS SOLD 138,402 104,703
GROSS PROFIT 143,606 116,563
BROKERAGE, DISTRIBUTION AND
MARKETING EXPENSES
BROKERAGE AND DISTRIBUTION 34,339 21,930
TRADE PROMOTIONS 54,401 42,459
CONSUMER MARKETING 20,111 15,728
TOTAL BROKERAGE, DISTRIBUTION AND
MARKETING EXPENSES 108,851 80,117
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES 10,751 8,872
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 12,061 7,568
OTHER FINANCIAL, LEGAL AND ACCOUNTING EXPENSES 9,601 0
COLUMBUS CONSOLIDATION COSTS 0 0
TRANSITION EXPENSES 1,365 4,277
TOTAL OPERATING EXPENSES 142,629 100,834
OPERATING INCOME 977 15,729
INTEREST EXPENSE, NET 24,371 14,582
AMORTIZATION OF DEFERRED FINANCING EXPENSES 708 396
OTHER BANK AND FINANCING EXPENSES 87 52
INCOME (LOSS) BEFORE INCOME TAXES
AND CUMULATIVE CHANGE IN ACCOUNTING (24,189) 699
INCOME TAX EXPENSE (BENEFIT) (7,740) 217
LOSS BEFORE CUMULATIVE CHANGE IN ACCOUNTING (16,449) 482
CUMULATIVE CHANGE IN ACCOUNTING, NET OF TAX (12,161) 0
NET LOSS (28,610) 482
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (0.43) 0.01
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 67,050 67,016
AURORA FOODS INC.
CONSOLIDATED
BALANCE SHEET
(IN THOUSANDS)
(Unaudited)
June 30, December 31,
2000 1999
ASSETS:
CASH & CASH EQUIVALENTS 5,623 315
ACCOUNTS RECEIVABLE, NET 59,915 96,332
INVENTORIES 124,360 123,967
PREPAID EXPENSES AND OTHER CURRENT ASSETS 12,476 21,876
CURRENT DEFERRED TAX ASSETS 17,338 17,338
TOTAL CURRENT ASSETS 219,712 259,828
PROPERTY, PLANT AND EQUIPMENT, NET 252,044 257,443
DEFERRED TAX ASSET 24,729 2,357
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 1,285,861 1,294,995
ASSET HELD FOR SALE 0 800
OTHER ASSETS 35,201 35,693
TOTAL ASSETS 1,817,547 1,851,116
LIABILITIES & STOCKHOLDERS’ EQUITY:
SENIOR SECURED TERM DEBT 560,053 571,571
SENIOR SECURED REVOLVING FACILITY 170,600 105,600
SENIOR SUBORDINATED NOTES 401,951 402,049
ACCOUNTS PAYABLE 55,178 87,942
ACCRUED LIABILITIES 98,796 105,192
TOTAL CURRENT LIABILITIES 1,286,578 1,272,354
OTHER LIABILITIES 2,016 2,504
TOTAL LIABILITIES 1,288,594 1,274,858
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER’S EQUITY
PREFERRED STOCK 0 0
COMMON STOCK 671 670
PAID-IN CAPITAL 648,474 648,254
PROMISSORY NOTES (306) (323)
ACCUMULATED DEFICIT (119,886) (72,343)
TOTAL STOCKHOLDERS’ EQUITY 528,953 576,258
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 1,817,547 1,851,116
AURORA FOODS INC.
CONSOLIDATED
CASH FLOW STATEMENT
(IN THOUSANDS)
(Unaudited)
Three Months Ended
June 30, June 30,
2000 1999
CASH FROM OPERATIONS:
NET INCOME (LOSS) (18,933) (3,729)
ADD BACK ITEMS NOT AFFECTING CASH
DEPRECIATION AND
AMORTIZATION EXPENSE 17,873 13,560
DEFERRED INCOME TAXES (9,284) (1,737)
CHANGES TO OPERATING
ASSETS AND LIABILITIES 31,896 (6,758)
NET CASH USED IN OPERATIONS 21,552 1,336
CASH FLOWS FROM INVESTING ACTIVITIES
ADDITIONS TO PROPERTY,
PLANT AND EQUIPMENT, NET (3,437) (8,933)
PROCEED FROM ASSET SALES 1,175 0
CHANGES TO OTHER NONCURRENT
ASSETS AND LIABILITIES (1,352) (415)
PAYMENT FOR ACQUISITION
OF BUSINESSES (7,453) (59,847)
NET CASH (USED FOR)
INVESTMENT ACTIVITIES (11,067) (69,195)
CASH (USED FOR) PROVIDED
BY FINANCING ACTIVITIES:
PROCEEDS FROM SENIOR SECURED
REVOLVING AND TERM DEBT 0 200,500
REPAYMENT OF BORROWINGS (5,758) (129,750)
CAPITAL CONTRIBUTIONS,
NET OF OFFICER PROMISSORY NOTES 237 421
DEBT ISSUANCE AND EQUITY RAISING COSTS 0 (2,323)
NET CASH FROM FINANCING ACTIVITIES (5,521) 68,848
NET CHANGE IN CASH 4,964 989
BEGINNING CASH AND
CASH EQUIVALENTS 659 252
ENDING CASH AND
CASH EQUIVALENTS 5,623 1,241
AURORA FOODS INC.
CONSOLIDATED
CASH FLOW STATEMENT
(IN THOUSANDS)
(Unaudited)
Six Months Ended
June 30, June 30,
2000 1999
CASH FROM OPERATIONS:
NET INCOME (LOSS) (47,543) (3,247)
ADD BACK ITEMS NOT AFFECTING CASH
DEPRECIATION AND AMORTIZATION EXPENSE 35,357 25,708
DEFERRED INCOME TAXES (16,649) (1,520)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING 12,161 0
CHANGES TO OPERATING ASSETS AND LIABILITIES (15,327) (20,542)
NET CASH USED IN OPERATIONS (32,001) 399
CASH FLOWS FROM INVESTING ACTIVITIES
ADDITIONS TO PROPERTY, PLANT
AND EQUIPMENT, NET (6,973) (15,348)
PROCEED FROM ASSET SALES 1,175 11
CHANGES TO OTHER NONCURRENT ASSETS
AND LIABILITIES (2,992) (2,063)
PAYMENT FOR ACQUISITION OF BUSINESSES (7,489) (75,127)
NET CASH (USED FOR) INVESTMENT ACTIVITIES (16,279) (92,527)
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES:
PROCEEDS FROM SENIOR SECURED
REVOLVING AND TERM DEBT 65,000 229,650
REPAYMENT OF BORROWINGS (11,517) (134,750)
CAPITAL CONTRIBUTIONS, NET OF
OFFICER PROMISSORY NOTES 237 438
DEBT ISSUANCE AND EQUITY RAISING COSTS (132) (2,323)
NET CASH FROM FINANCING ACTIVITIES 53,588 93,015
NET CHANGE IN CASH 5,308 887
BEGINNING CASH AND CASH EQUIVALENTS 315 354
ENDING CASH AND CASH EQUIVALENTS 5,623 1,241
AURORA FOODS INC.
PRO FORMA OPERATING INFORMATION
FOR THE THREE MONTHS ENDED
MARCH 31, 1999
(DOLLARS IN THOUSANDS)
(Unaudited)
As Pro Forma Reclassification
Previously As Previously and Pro Forma Restated
Reported Reported Adjustments(1) Pro Forma
Gross Sales 256,662 334,497 — 334,497
Coupons, Returns
& Allowances (2,398) (3,072) (46,348) (49,420)
Net Sales 254,264 331,425 (46,348) 285,077
Cost of Goods Sold 104,703 138,728 — 138,728
Gross Profit 149,561 192,697 (46,348) 146,349
Brokerage, Distribution
and Marketing
Expenses 113,115 147,195 (42,797) 104,398
Amortization of Goodwill
and Other Intangibles 8,872 10,340 — 10,340
Selling, General and
Administrative
Expenses 7,567 10,921 — 10,921
Transition Expenses 4,278 4,278 — 4,278
Total Operating
Expenses 133,832 172,734 (42,797) 129,937
Operating Income 15,729 19,963 (3,551) 16,412
EBITDA 27,525 34,729 31,178
Adjusted EBITDA 31,803 42,796 39,245
(1) Reclassification and Pro Forma Adjustments represent those adjustments
resulting from the adoption of EITF 00-14, Accounting for Certain
Sales Incentives.
AURORA FOODS INC.
PRO FORMA OPERATING INFORMATION
FOR THE THREE MONTHS ENDED
JUNE 30, 1999
(DOLLARS IN THOUSANDS)
(Unaudited)
As Pro Forma Reclassification
Previously As and Pro Forma Restated
Reported Previously Adjustments(1) Pro
Reported Forma
Gross Sales 215,514 265,348 — 265,348
Coupons, Returns &
Allowances (1,480) (2,071) (30,418) (32,489)
Net Sales 214,034 263,277 (30,418) 232,859
Cost of Goods
Sold 91,230 112,635 — 112,635
Gross Profit 122,804 150,642 (30,418) 120,224
Brokerage, Distribution
and Marketing
Expenses 91,288 110,081 (34,107) 75,974
Amortization of Goodwill
and Other
Intangibles 9,292 10,442 — 10,442
Selling, General and
Administrative
Expenses 8,226 11,205 — 11,205
Transition Expenses 3,120 3,120 — 3,120
Total Operating
Expenses 111,926 134,848 (34,107) 100,741
Operating Income 10,878 15,794 3,689 19,483
EBITDA 23,899 31,464 35,153
Adjusted EBITDA 26,464 38,374 42,063
(1) Reclassification and Pro Forma Adjustments represent those
adjustments resulting from the adoption of EITF 00-14, Accounting
for Certain Sales Incentives.
AURORA FOODS INC.
PRO FORMA OPERATING INFORMATION
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS)
(Unaudited)
Pro Forma Reclassification
As Previously As Previously and Pro Forma Restated
Reported Reported Adjustments(1) Pro Forma
Gross Sales 234,179 286,572 — 286,572
Coupons, Returns
& Allowances (2,283) (2,904) (37,295) (40,199)
Net Sales 231,896 283,668 (37,295) 246,373
Cost of Goods Sold 101,536 122,279 — 122,279
Gross Profit 130,360 161,389 (37,295) 124,094
Brokerage, Distribution
and Marketing
Expenses 87,720 108,246 (30,575) 77,671
Amortization of
Goodwil and Other
Intangibles 9,600 10,750 — 10,750
Selling, General and
Administrative
Expenses 8,377 11,356 — 11,356
Transition Expenses 1,697 1,697 — 1,697
Total Operating
Expenses 107,394 132,049 (30,575) 101,474
Operating Income 22,966 29,340 (6,720) 22,620
EBITDA 36,171 45,195 — 38,475
Adjusted EBITDA 37,868 50,681 — 43,961
(1)Reclassification and Pro Forma Adjustments represent those adjustments
resulting from the adoption of EITF 00-14, Accounting for Certain Sales
Incentives.
AURORA FOODS INC.
PRO FORMA OPERATING INFORMATION
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
(Unaudited)
As Pro Forma Reclassification
Previously As and Pro Forma Restated
Reported Previously Adjustments(1) Pro
Reported Forma
Gross Sales 298,650 315,272 — 315,272
Coupons, Returns &
Allowances (3,426) (3,623) (41,678) (45,301)
Net Sales 295,224 311,649 (41,678) 269,971
Cost of Goods Sold 127,467 134,373 — 134,373
Gross Profit 167,757 177,276 (41,678) 135,598
Brokerage, Distribution
and Marketing
Expenses 129,769 136,949 (33,495) 103,454
Amortization of Goodwil
and Other Intangibles 10,541 10,924 — 10,924
Selling, General and
Administrative Expenses 10,854 11,844
— 11,844
Transition Expenses 2,105 2,105 — 2,105
Total Operating
Expenses 153,269 161,822 (33,495) 128,327
Operating Income 14,488 15,454 (8,183) 7,271
EBITDA 29,853 31,702 23,519
Adjusted EBITDA 31,942 34,493 26,310
(1) Reclassification and Pro Forma Adjustments represent those
adjustments resulting from the adoption of EITF 00-14, Accounting for
Certain Sales Incentives.
AURORA FOODS INC.
PRO FORMA OPERATING INFORMATION
FOR THE YEAR ENDED
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
(Unaudited)
Pro
Forma Reclassification
As As and Pro
Previously Previously Forma Restated
Reported Reported Adjustments(1)Pro Forma
Gross Sales 1,005,005 1,201,689 — 1,201,689
Coupons, Returns &
Allowances (9,587) (11,670) (155,739) (167,409)
Net Sales 995,418 1,190,019 (155,739) 1,034,280
Cost of Goods Sold 424,936 508,015 — 508,015
Gross Profit 570,482 682,004 (155,739) 526,265
Brokerage, Distribution
and Marketing Expenses 421,892 502,471 (140,974) 361,497
Amortization of Goodwil
and Other Intangibles 38,305 42,456 — 42,456
Selling, General and
Administrative Expenses 35,024 45,326 — 45,326
Transition Expenses 11,200 11,200 — 11,200
Total Operating Expenses 506,421 601,453 (140,974) 460,479
Operating Income 64,061 80,551 (14,765) 65,786
EBITDA 117,448 143,090 128,325
Adjusted EBITDA 128,077 166,344 151,579
(1) Reclassification and Pro Forma Adjustments represent those
adjustments resulting from the adoption of EITF 00-14, Accounting
for Certain Sales Incentives.
AURORA FOODS INC.
RESTATED OPERATING INFORMATION
FOR THE THREE MONTHS ENDED
MARCH 31, 2000
(DOLLARS IN THOUSANDS)
(Unaudited)
Reclassifications
As Previously and
Reported Adjustments(1) Restated
Gross Sales 326,047 — 326,047
Coupons, Returns & Allowances (3,299) (40,740) (44,039)
Net Sales 322,748 (40,740) 282,008
Cost of Goods Sold 138,402 — 138,402
Gross Profit 184,346 (40,740) 143,606
Brokerage, Distribution and
Marketing Expenses 148,638 (39,787) 108,851
Amortization of Goodwill and
Other Intangibles 10,751 — 10,751
Selling, General and
Administrative Expenses 12,061 — 12,061
Other Financial, Legal and
Accounting Expenses 9,601 — 9,601
Transition Expenses 1,365 — 1,365
Total Operating Expenses 182,416 (39,787) 142,629
Operating Income 1,930 (953) 977
EBITDA 18,756 17,803
Adjusted EBITDA 29,722 28,769
(1) The Reclassifications and Adjustments represent those adjustments
resulting from the adoption of EITF 00-14, Accounting for Certain
Sales Incentives.
EBITDA is defined as net income before the cumulative effect of accounting changes, extraordinary items, interest expense, amortization of deferred financing expense, other bank and financing expenses, depreciation and amortization of goodwill and other intangibles. The Company believes EBITDA provides additional information for determining its ability to meet debt service requirements. EBITDA does not represent and should not be considered an alternative to net income or cash flow from operations as determined by generally accepted accounting principles. EBITDA does not necessarily indicate whether cash flow will be sufficient for cash requirements and should not be deemed to represent funds available to the Company. The calculation of EBITDA does not include the commitments of the Company for capital expenditures and payment of debt. EBITDA, as presented, may not be comparable to similarly-titled measures of other companies.
Adjusted EBITDA is defined as EBITDA plus incentive plan expense (credit), transition expenses, other financial, legal and accounting expenses, Columbus office consolidation costs, and, for pro forma purposes only, the allocation of $16.0 million in 1999, made by the Kellogg Company, the previous owner of Lender’s®, less estimated pro forma costs to be incurred by Company of $3.3 million in 1999, related to the estimated additional administrative costs associated with the Company operating the Lender’s® business.
