Attached files
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| 8-K - FORM 8-K - Hillshire Brands Co | d475689d8k.htm |
Exhibit 99
Hillshire Brands
Consolidated Statements of Income
For the Quarters and Full Year ended June 30, 2012 and Quarter ended September 29, 2012 (in millions, except per share data—unaudited)
| Fiscal 2012 | Fiscal 2013 | |||||||||||||||||||||||
| First | Second | Third | Fourth | Full | First | |||||||||||||||||||
| Quarter (3) | Quarter (3) | Quarter (3) | Quarter | Year | Quarter | |||||||||||||||||||
| Continuing operations |
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| Net sales |
$ | 987 | $ | 1,053 | $ | 935 | $ | 983 | $ | 3,958 | $ | 974 | ||||||||||||
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| Cost of sales |
714 | 755 | 675 | 713 | 2,857 | 680 | ||||||||||||||||||
| Selling, general and administrative expenses |
218 | 226 | 202 | 284 | 930 | 213 | ||||||||||||||||||
| Net charges for exit activities, asset and business dispositions |
21 | 45 | 4 | 11 | 81 | (3 | ) | |||||||||||||||||
| Impairment charges |
10 | 4 | — | — | 14 | — | ||||||||||||||||||
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| Operating income (loss) |
24 | 23 | 54 | (25 | ) | 76 | 84 | |||||||||||||||||
| Interest expense |
23 | 22 | 22 | 10 | 77 | 11 | ||||||||||||||||||
| Interest income |
(1 | ) | (1 | ) | (2 | ) | (1 | ) | (5 | ) | (2 | ) | ||||||||||||
| Debt extinguishment costs |
— | — | — | 39 | 39 | — | ||||||||||||||||||
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| Income (loss) from continuing operations before income taxes |
2 | 2 | 34 | (73 | ) | (35 | ) | 75 | ||||||||||||||||
| Income tax expense (benefit) |
(3 | ) | (8 | ) | 7 | (11 | ) | (15 | ) | 26 | ||||||||||||||
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| Income (loss) from continuing operations |
$ | 5 | $ | 10 | $ | 27 | $ | (62 | ) | $ | (20 | ) | $ | 49 | ||||||||||
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| Income (loss) per share of common stock—Diluted: |
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| As reported |
$ | 0.04 | $ | 0.09 | $ | 0.23 | $ | (0.52 | ) | $ | (0.16 | ) | $ | 0.40 | ||||||||||
| Less Significant items (1) |
(0.22 | ) | (0.39 | ) | (0.18 | ) | (0.83 | ) | (1.61 | ) | (0.09 | ) | ||||||||||||
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| Adjusted EPS (1) |
$ | 0.26 | $ | 0.48 | $ | 0.41 | $ | 0.31 | $ | 1.45 | $ | 0.49 | ||||||||||||
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| Average shares outstanding (2): |
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| Basic |
118 | 118 | 119 | 119 | 119 | 122 | ||||||||||||||||||
| Diluted |
119 | 119 | 119 | 121 | 120 | 123 | ||||||||||||||||||
| Operating income (loss)—as reported |
$ | 24 | $ | 23 | $ | 54 | $ | (25 | ) | $ | 76 | $ | 84 | |||||||||||
| Less: Increase (decrease) in operating income (loss) from : |
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| Dispositions |
4 | 3 | 1 | — | 8 | 5 | ||||||||||||||||||
| Restructuring actions |
(39 | ) | (60 | ) | (13 | ) | (84 | ) | (196 | ) | (11 | ) | ||||||||||||
| Accelerated depreciation |
(6 | ) | (6 | ) | (17 | ) | (17 | ) | (46 | ) | (11 | ) | ||||||||||||
| Gain on HBI tax settlement |
15 | — | — | — | 15 | — | ||||||||||||||||||
| Litigation accrual |
— | (11 | ) | — | — | (11 | ) | — | ||||||||||||||||
| Pension curtailment/withdrawal/other |
— | — | — | (6 | ) | (6 | ) | — | ||||||||||||||||
| Mexican tax indemnification charge |
3 | — | — | — | 3 | — | ||||||||||||||||||
| Impairment charges |
(10 | ) | (4 | ) | — | — | (14 | ) | — | |||||||||||||||
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| Adjusted operating income (1) |
$ | 57 | $ | 101 | $ | 83 | $ | 82 | $ | 323 | $ | 101 | ||||||||||||
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| (1) | Represents a non-GAAP financial measure. See detailed explanation of these and other non-GAAP measures at the end of this report. |
| (2) | In periods in which there was a net loss from continuing operations, the dilutive effect of stock options and award plans were excluded from the average shares outstanding in calculating earnings per share because they would be antidilutive. |
| (3) | As disclosed in the company’s Annual Report on Form 10-K for the year ended June 30, 2012, the company restated its previously issued unaudited financial results for the first three quarters of Fiscal 2012 to recognize the correction of accounting errors. See Note 1 to the Annual Report for additional information. |
Page 1
Hillshire Brands
Impact of Significant Items on Income from Continuing Operations
Fiscal 2012
Unaudited
| Quarter ended Oct. 1, 2011 | Quarter ended Dec. 31, 2011 | |||||||||||||||||||||||
| Diluted | Diluted | |||||||||||||||||||||||
| Pretax | Net | EPS | Pretax | Net | EPS | |||||||||||||||||||
| (In millions except per share data) |
Impact | Income/(loss) | Impact (1) | Impact | Income/(loss) | Impact (1) | ||||||||||||||||||
| Continuing Operations: |
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| Restructuring actions: |
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| Severance/ retention charges |
$ | (16 | ) | $ | (10 | ) | $ | (0.09 | ) | $ | (2 | ) | $ | (2 | ) | $ | (0.01 | ) | ||||||
| Lease and contractual obligation exit costs |
(6 | ) | (4 | ) | (0.03 | ) | (44 | ) | (28 | ) | (0.23 | ) | ||||||||||||
| Consulting, advisory and other costs |
(17 | ) | (14 | ) | (0.11 | ) | (14 | ) | (10 | ) | (0.09 | ) | ||||||||||||
| Accelerated depreciation |
(6 | ) | (4 | ) | (0.03 | ) | (6 | ) | (3 | ) | (0.03 | ) | ||||||||||||
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| Total restructuring actions |
(45 | ) | (32 | ) | (0.26 | ) | (66 | ) | (43 | ) | (0.37 | ) | ||||||||||||
| Gain on HBI tax settlment |
15 | 10 | 0.08 | — | 5 | 0.04 | ||||||||||||||||||
| Impairment charges |
(10 | ) | (6 | ) | (0.05 | ) | (4 | ) | (3 | ) | (0.02 | ) | ||||||||||||
| Tax indemnification accrual adjustment |
3 | 2 | 0.01 | — | 2 | 0.02 | ||||||||||||||||||
| Litigation accrual |
— | — | — | (11 | ) | (7 | ) | (0.06 | ) | |||||||||||||||
| Pension curtailment/withdrawal/other |
— | — | — | — | — | — | ||||||||||||||||||
| Debt extinguishment costs |
— | — | — | — | — | — | ||||||||||||||||||
| Tax audit settlements/reserve adjustments |
— | — | — | — | — | — | ||||||||||||||||||
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| Impact of significant items on income/(loss) from continuing operations |
$ | (37 | ) | $ | (26 | ) | $ | (0.22 | ) | $ | (81 | ) | $ | (46 | ) | $ | (0.39 | ) | ||||||
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| Impact of significant items on income/(loss) from continuing operations before income taxes |
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| Cost of sales |
$ | (6 | ) | $ | (5 | ) | ||||||||||||||||||
| Selling, general and administrative expenses |
— | (27 | ) | |||||||||||||||||||||
| Impairment charges |
(10 | ) | (4 | ) | ||||||||||||||||||||
| Exit and business dispositions |
(21 | ) | (45 | ) | ||||||||||||||||||||
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| Impact on operating income |
(37 | ) | (81 | ) | ||||||||||||||||||||
| Debt extinguishment costs |
— | — | ||||||||||||||||||||||
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| Total |
$ | (37 | ) | $ | (81 | ) | ||||||||||||||||||
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| Quarter ended Mar. 31, 2012 | Quarter ended June 30, 2012 | |||||||||||||||||||||||
| Diluted | Diluted | |||||||||||||||||||||||
| Pretax | Net | EPS | Pretax | Net | EPS | |||||||||||||||||||
| (In millions except per share data) |
Impact | Income/(loss) | Impact (1) | Impact | Income/(loss) | Impact (1) | ||||||||||||||||||
| Continuing Operations: |
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| Restructuring actions: |
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| Severance/ retention charges |
$ | (2 | ) | $ | (1 | ) | $ | (0.01 | ) | $ | (11 | ) | $ | (7 | ) | $ | (0.06 | ) | ||||||
| Lease and contractual obligation exit costs |
(3 | ) | (2 | ) | (0.02 | ) | (2 | ) | (1 | ) | (0.01 | ) | ||||||||||||
| Consulting, advisory and other costs |
(8 | ) | (11 | ) | (0.09 | ) | (71 | ) | (49 | ) | (0.41 | ) | ||||||||||||
| Accelerated depreciation |
(17 | ) | (11 | ) | (0.09 | ) | (17 | ) | (11 | ) | (0.09 | ) | ||||||||||||
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| Total restructuring actions |
(30 | ) | (25 | ) | (0.21 | ) | (101 | ) | (68 | ) | (0.56 | ) | ||||||||||||
| Gain on HBI tax settlment |
— | — | — | — | — | — | ||||||||||||||||||
| Impairment charges |
— | — | — | — | — | — | ||||||||||||||||||
| Tax indemnification accrual adjustment |
— | — | — | — | — | — | ||||||||||||||||||
| Litigation accrual |
— | — | — | — | — | — | ||||||||||||||||||
| Pension curtailment/withdrawal/other |
— | — | — | (6 | ) | (4 | ) | (0.03 | ) | |||||||||||||||
| Debt extinguishment costs |
— | — | — | (39 | ) | (25 | ) | (0.21 | ) | |||||||||||||||
| Tax audit settlements/reserve adjustments |
— | 4 | 0.03 | — | (3 | ) | (0.03 | ) | ||||||||||||||||
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| Impact of significant items on income/(loss) from continuing operations |
$ | (30 | ) | $ | (21 | ) | $ | (0.18 | ) | $ | (146 | ) | $ | (100 | ) | $ | (0.83 | ) | ||||||
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| Impact of significant items on income/(loss) from continuing operations before income taxes |
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| Cost of sales |
$ | (7 | ) | $ | (10 | ) | ||||||||||||||||||
| Selling, general and administrative expenses |
(19 | ) | (86 | ) | ||||||||||||||||||||
| Impairment charges |
— | — | ||||||||||||||||||||||
| Exit and business dispositions |
(4 | ) | (11 | ) | ||||||||||||||||||||
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| Impact on operating income |
(30 | ) | (107 | ) | ||||||||||||||||||||
| Debt extinguishment costs |
— | (39 | ) | |||||||||||||||||||||
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| Total |
$ | (30 | ) | $ | (146 | ) | ||||||||||||||||||
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| (1) | EPS amounts are rounded to the nearest $0.01 and may not add to the total. |
Significant items represent a non-GAAP fianancial measure. See detailed explanation of these and other non-GAAP measures at the end of this report.
Page 2
Hillshire Brands
Impact of Significant Items on Income from Continuing Operations
Fiscal 2013
Unaudited
| Quarter ended Sept. 29, 2012 | ||||||||||||
| Diluted | ||||||||||||
| Pretax | Net | EPS | ||||||||||
| (In millions except per share data) |
Impact | Income/(loss) | Impact (1) | |||||||||
| Continuing Operations: |
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| Restructuring actions: |
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| Lease and contractual obligation exit costs |
$ | (3 | ) | $ | (2 | ) | $ | (0.01 | ) | |||
| Consulting, advisory and other costs |
(8 | ) | (5 | ) | (0.04 | ) | ||||||
| Income from asset dispositions |
5 | 3 | 0.03 | |||||||||
| Accelerated depreciation |
(11 | ) | (7 | ) | (0.06 | ) | ||||||
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| Total restructuring actions |
(17 | ) | (11 | ) | (0.08 | ) | ||||||
| Impact of significant items on income/(loss) from continuing operations |
$ | (17 | ) | $ | (11 | ) | $ | (0.09 | ) | |||
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| Impact of significant items on income/(loss) from continuing operations before income taxes |
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| Cost of sales |
$ | (3 | ) | |||||||||
| Selling, general and administrative expenses |
(17 | ) | ||||||||||
| Impairment charges |
— | |||||||||||
| Exit and business dispositions |
3 | |||||||||||
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| Impact on operating income |
(17 | ) | ||||||||||
| Debt extinguishment costs |
— | |||||||||||
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| Total |
$ | (17 | ) | |||||||||
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| (1) | EPS amounts are rounded to the nearest $0.01 and may not add to the total. |
Significant items represent a non-GAAP fianancial measure. See detailed explanation of these and other non-GAAP measures at the end of this report.
Page 3
Explanation of Non-GAAP Financial Measures
Management measures and reports Hillshire Brands’ financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). In this report, Hillshire Brands highlights certain items that have significantly impacted the company’s financial results and uses several non-GAAP financial measures to help investors understand the financial impact of these significant items. Other companies may calculate these non-GAAP financial measures differently than Hillshire Brands.
“Significant items” are income or charges (and related tax impact) that management believes have had or are likely to have a significant impact on the earnings of the applicable business segment or on the total company for the period in which the item is recognized, are not indicative of the company’s core operating results and affect the comparability of underlying results from period to period. Significant items may include, but are not limited to: charges for exit activities; consulting and advisory costs; lease and contractual obligation exit costs; impairment charges; pension partial withdrawal liability charges; debt extinguishment costs; spin-off related costs; tax charges on deemed repatriated earnings; tax costs and benefits resulting from the disposition of a business; impact of tax law changes; gains on the sale of discontinued operations; changes in tax valuation allowances and favorable or unfavorable resolution of open tax matters based on the finalization of tax authority examinations or the expiration of statutes of limitations. Management highlights significant items to provide greater transparency into the underlying sales or profit trends of Hillshire Brands or the applicable business segment or discontinued operations and to enable more meaningful comparability between financial results from period to period. Additionally, Hillshire Brands believes that investors desire to understand the impact of these factors to better project and assess the longer term trends and future financial performance of the company.
This report contains certain non-GAAP financial measures that exclude from a financial measure computed in accordance with GAAP the impact of the significant items and the impact of dispositions. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of Hillshire Brands’ business that, when viewed together with Hillshire Brands’ financial results computed in accordance with GAAP, provide a more complete understanding of factors and trends affecting Hillshire Brands’ historical financial performance and projected future operating results, greater transparency of underlying profit trends and greater comparability of results across periods. These non-GAAP financial measures are not intended to be a substitute for the comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
In addition, investors frequently have requested information from management regarding the impact of significant items. Management believes, based on feedback it has received during earnings calls and discussions with investors, that these non-GAAP measures enhance investors’ ability to assess Hillshire Brands’ historical and project future financial performance. Management also uses certain of these non-GAAP financial measures, in conjunction with the GAAP financial measures, to understand, manage and evaluate our businesses, in planning for and forecasting financial results for future periods, and as one factor in determining achievement of incentive compensation. Two of the five performance measures under Hillshire Brands’ annual incentive plan are net sales and earnings before interest and taxes (EBIT), which are the reported amounts as adjusted for significant items and other items. Many of the significant items will recur in future periods; however, the amount and frequency of each significant item varies from period to period.
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The following is an explanation of the non-GAAP financial measures presented in this report.
“Adjusted Operating Income” for continuing operations excludes from operating income the impact of significant items. It also excludes the results of businesses that have been exited or divested for all periods presented but does not exclude the impact of businesses acquired after the start of the fiscal period presented. Results for businesses acquired are included from the date of acquisition onward.
“Adjusted EPS” for continuing operations excludes from diluted earnings per share (EPS) as reported for continuing operations, the per share impact of significant items recognized in the fiscal period presented. It does not exclude the impact of businesses that have been exited or divested and does not exclude the impact of businesses acquired after the start of the fiscal period presented. Results for businesses acquired are included from the date of acquisition onward.
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