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EX-32.1 - 906 CERTIFICATION - Post Holdings, Inc.post2016630ex321.htm
EX-31.2 - CERTIFICATION OF CFO - Post Holdings, Inc.post-2016630ex312.htm
EX-31.1 - CERTIFICATION OF CEO - Post Holdings, Inc.post2016630ex311.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2016
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from _____ to _____

Commission File Number: 1-35305
Post Holdings, Inc.
(Exact name of registrant as specified in its charter)

Missouri
 
45-3355106
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)

2503 S. Hanley Road
St. Louis, Missouri 63144
(Address of principal executive offices) (Zip Code)
(314) 644-7600
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Common stock, $0.01 Par Value – 64,649,700 shares as of August 2, 2016
 


1


POST HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS



i


PART I.     FINANCIAL INFORMATION.
ITEM 1.    FINANCIAL STATEMENTS.
POST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share data)
 
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Net Sales
$
1,246.1

 
$
1,211.8

 
$
3,766.0

 
$
3,338.4

Cost of goods sold
847.9

 
895.3

 
2,596.0

 
2,497.3

Gross Profit
398.2

 
316.5

 
1,170.0

 
841.1

Selling, general and administrative expenses
216.0

 
193.3

 
608.6

 
536.9

Amortization of intangible assets
38.2

 
36.7

 
114.4

 
103.9

Other operating expenses, net
2.0

 
5.2

 
9.6

 
28.4

Operating Profit
142.0

 
81.3

 
437.4

 
171.9

Interest expense, net
77.3

 
65.0

 
232.3

 
184.9

Other expense (income)
62.6

 
(41.9
)
 
169.4

 
41.5

Earnings (Loss) before Income Taxes
2.1

 
58.2

 
35.7

 
(54.5
)
Income tax (benefit) expense
(1.2
)
 
34.2

 
2.0

 
(11.7
)
Net Earnings (Loss)
3.3

 
24.0

 
33.7

 
(42.8
)
Preferred stock dividends (see Note 13)
(3.3
)
 
(4.2
)
 
(21.7
)
 
(12.7
)
Net Earnings (Loss) Available to Common Shareholders
$

 
$
19.8

 
$
12.0

 
$
(55.5
)
 
 
 
 
 
 
 
 
Earnings (Loss) per Common Share:
 
 
 
 
 
 
 
Basic
$

 
$
0.34

 
$
0.17

 
$
(1.02
)
Diluted
$

 
$
0.33

 
$
0.17

 
$
(1.02
)
 
 
 
 
 
 
 
 
Weighted-Average Common Shares Outstanding:
 
 
 
 
 
 
 
Basic
69.2

 
58.9

 
68.6

 
54.4

Diluted
69.2

 
60.8

 
70.1

 
54.4

 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
 



1



POST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(in millions)


 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Net Earnings (Loss)
$
3.3

 
$
24.0

 
$
33.7

 
$
(42.8
)
Pension and postretirement benefits adjustments:
 
 
 
 
 
 
 
Unrealized pension and postretirement benefit obligations

 

 
1.6

 

Reclassifications to net earnings (loss)
(0.7
)
 
0.3

 
(0.2
)
 
0.8

Unrealized gain on plan amendment (see Note 15)

 

 
36.1

 

Foreign currency translation adjustments:
 
 
 
 
 
 
 
Unrealized foreign currency translation adjustments
(0.2
)
 
7.2

 
9.7

 
(33.7
)
Reclassifications to net earnings (loss) (see Note 4)

 

 
(1.3
)
 

Tax benefit (expense) on other comprehensive income (loss)
0.3

 
(0.1
)
 
(14.3
)
 

Total Comprehensive Income (Loss)
$
2.7

 
$
31.4

 
$
65.3

 
$
(75.7
)


See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).



2



POST HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)  
 
June 30, 2016
 
September 30, 2015
ASSETS
Current Assets
 
 
 
Cash and cash equivalents
$
1,033.2

 
$
841.4

Restricted cash
2.7

 
18.8

Receivables, net
367.0

 
366.2

Inventories
508.6

 
465.3

Deferred income taxes

 
47.7

Prepaid expenses and other current assets
51.6

 
42.3

Total Current Assets
1,963.1

 
1,781.7

Property, net
1,339.9

 
1,333.2

Goodwill
3,081.5

 
3,072.8

Other intangible assets, net
2,873.1

 
2,969.3

Other assets
58.1

 
63.4

Total Assets
$
9,315.7

 
$
9,220.4

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
 
 
 
Current portion of long-term debt
$
15.9

 
$
16.0

Accounts payable
227.8

 
265.2

Other current liabilities
370.2

 
329.8

Total Current Liabilities
613.9

 
611.0

Long-term debt
4,493.0

 
4,511.4

Deferred income taxes
737.4

 
831.8

Other liabilities
431.2

 
290.2

Total Liabilities
6,275.5

 
6,244.4

 
 
 
 
Shareholders’ Equity
 
 
 
Preferred stock

 
0.1

Common stock
0.7

 
0.6

Additional paid-in capital
3,537.7

 
3,538.8

Accumulated deficit
(387.3
)
 
(421.0
)
Accumulated other comprehensive loss
(57.5
)
 
(89.1
)
Treasury stock, at cost
(53.4
)
 
(53.4
)
Total Shareholders’ Equity
3,040.2

 
2,976.0

Total Liabilities and Shareholders’ Equity
$
9,315.7

 
$
9,220.4


 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

3


POST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
 
Nine Months Ended
June 30,
 
2016
 
2015
Cash Flows from Operating Activities
 
 
 
Net Earnings (Loss)
$
33.7

 
$
(42.8
)
Adjustments to reconcile net earnings (loss) to net cash flow provided by operating activities:
 
 
 
Depreciation and amortization
226.9

 
196.7

Unrealized loss on interest rate swaps
169.4

 
41.5

Amortization of deferred financing costs and debt discount/premium, net
3.4

 
4.5

Losses on assets held for sale
9.5

 
27.4

Non-cash stock-based compensation expense
12.9

 
20.2

Deferred income taxes
(61.9
)
 
(60.9
)
Other, net
(2.5
)
 
0.3

Other changes in current assets and liabilities, net of business acquisitions:
 
 
 
Decrease in receivables, net
14.3

 
69.0

(Increase) decrease in inventories
(41.4
)
 
17.0

Increase in prepaid expenses and other current assets
(8.4
)
 
(1.7
)
Increase (decrease) in accounts payable and other current liabilities
6.6

 
(17.1
)
Increase in non-current liabilities
5.0

 
7.6

Net Cash Provided by Operating Activities
367.5

 
261.7

 
 
 
 
Cash Flows from Investing Activities
 
 
 
Business acquisitions, net of cash acquired
(94.4
)
 
(1,240.4
)
Additions to property
(81.1
)
 
(74.3
)
Restricted cash
16.1

 
74.0

Proceeds from sale of property and assets held for sale
1.8

 

Proceeds from sale of businesses
6.7

 

Insurance proceeds on property losses

 
1.8

Other, net

 
0.2

Net Cash Used in Investing Activities
(150.9
)
 
(1,238.7
)
 
 
 
 
Cash Flows from Financing Activities
 
 
 
Proceeds from issuance of long-term debt

 
696.5

Proceeds from issuance of common stock, net of issuance costs

 
341.4

Repayments of long-term debt
(11.6
)
 
(20.7
)
Payments of preferred stock dividends
(11.0
)
 
(12.8
)
Preferred stock conversion
(10.9
)
 

Payments of debt issuance costs

 
(18.5
)
Proceeds from exercise of stock awards
6.6

 

Net cash received from stock repurchase contracts
1.1

 

Other, net
0.2

 
(1.7
)
Net Cash (Used in) Provided by Financing Activities
(25.6
)
 
984.2

Effect of Exchange Rate Changes on Cash and Cash Equivalents
0.8

 
(1.3
)
Net Increase in Cash and Cash Equivalents
191.8

 
5.9

Cash and Cash Equivalents, Beginning of Year
841.4

 
268.4

Cash and Cash Equivalents, End of Period
$
1,033.2

 
$
274.3

    
 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 

4


POST HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in millions, except per share information and where indicated otherwise)
NOTE 1 — BASIS OF PRESENTATION
These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), and on a basis substantially consistent with the audited consolidated financial statements of Post Holdings, Inc. (herein referred to as “Post,” “the Company,” “us,” “our” or “we”) as of and for the fiscal year ended September 30, 2015. These unaudited condensed consolidated financial statements should be read in conjunction with such audited consolidated financial statements which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015, filed with the SEC on November 25, 2015.
These unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair statement of the Company’s financial position, results of operations, comprehensive income (loss) and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results for any other interim period or for the entire fiscal year.
On May 4, 2015, Post completed the acquisition of MOM Brands Company (“MOM Brands”). MOM Brands operated on a different fiscal calendar for the third quarter of fiscal 2015. The prior year quarter close date for MOM Brands was June 27, 2015 and results have not been adjusted to conform with Post’s fiscal calendar. As of September 30, 2015, MOM Brands operated on the same fiscal calendar as Post.
NOTE 2 - RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS
In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU” 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross Versus Net),” which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” which clarifies the identification of performance obligations and the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 Emerging Issues Task Force (“EITF”) Meeting,” which rescinds which rescinds certain SEC Staff Observer comments from Accounting Standards Codification (“ASC”) Topic 605 “Revenue Recognition.” These rescissions include changes to topics pertaining to accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which provides clarifying guidance in certain narrow areas and adds some practical expedients. The effective dates for these ASUs are the same as the effective date for ASU 2014-09 (i.e., Post’s financial statements for the year ending September 30, 2019). The Company has not yet selected a transition method, nor has the impact of adoption on the consolidated financial statements been determined.
In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting.” The updated guidance changes the accounting for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of certain items in the statement of cash flows. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods therein (i.e., Post’s financial statements for the year ending September 30, 2018) with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This standards update requires a company to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for lessees, lessors and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods therein (i.e., Post’s financial statements for the year ending September 30, 2020), with early adoption permitted. At adoption, this update will be applied using a modified retrospective approach. The Company is currently evaluating the impact and timing of adopting this guidance.
In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” This standards update requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s)

5


and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods therein (i.e., Post’s financial statements for the year ending September 30, 2019). Early adoption is not permitted. The Company does not expect this guidance to have an impact on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” This standards update requires an entity to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted and can be applied either retrospectively or prospectively. The Company prospectively adopted this ASU at December 31, 2015 and is now presenting all deferred tax assets and liabilities as noncurrent on the Condensed Consolidated Balance Sheets. Balances at September 30, 2015 were not retrospectively adjusted as the Company chose to prospectively adopt this ASU.
NOTE 3 — RESTRUCTURING
In September 2015, the Company announced its plan to close its Dymatize manufacturing facility located in Farmers Branch, Texas and permanently transfer production to third party facilities under co-manufacturing agreements. Plant production ceased in the fourth quarter of 2015.
In May 2015, the Company announced its plan to consolidate its cereal business administrative offices into its Lakeville, Minnesota location. In connection with the consolidation, the Company closed its office located in Parsippany, New Jersey and relocated those functions as well as certain functions located in Battle Creek, Michigan to the Lakeville office. The Parsippany office closure was substantially completed in February 2016.
In March 2015, the Company announced its plan to close its facility in Boise, Idaho, which manufactured certain PowerBar products distributed in North America. Plant production ceased in June 2015 and the facility was sold in September 2015. No additional restructuring costs have been incurred in fiscal 2016.
In April 2013, the Company announced management’s decision to close its cereal plant located in Modesto, California as part of a cost savings and capacity rationalization effort. The transfer of production capabilities and closure of the plant was completed during September 2014, and no additional restructuring costs have been incurred in fiscal 2015 or 2016.
Restructuring charges and the related liabilities are shown in the following table.
 
Employee-Related Costs
 
Pension Curtailment
 
Accelerated Depreciation
 
Total
Balance at September 30, 2014
$
0.7

 
$

 
$

 
$
0.7

Charge to expense
12.8

 

 
1.0

 
13.8

Cash payments
(0.8
)
 

 

 
(0.8
)
Non-cash charges

 

 
(1.0
)
 
(1.0
)
Balance at June 30, 2015
$
12.7

 
$

 
$

 
$
12.7

 
 
 
 
 
 
 
 
Balance at September 30, 2015
$
10.5

 
$

 
$

 
$
10.5

Charge to expense
2.1

 

 
0.4

 
2.5

Cash payments
(9.0
)
 

 

 
(9.0
)
Non-cash charges
(0.9
)
 

 
(0.4
)
 
(1.3
)
Balance at June 30, 2016
$
2.7

 
$

 
$

 
$
2.7

 
 
 
 
 
 
 
 
Total expected restructuring charge
$
18.5

 
$
1.7

 
$
20.1

 
$
40.3

Cumulative restructuring charges incurred to date
18.5

 
1.7

 
20.1

 
40.3

Remaining expected restructuring charge
$

 
$

 
$

 
$


6


In the three and nine months ended June 30, 2016, the Company incurred total restructuring charges of $0.8 and $2.5, respectively, which were reported in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. In the three and nine months ended June 30, 2015, the Company incurred total restructuring charges of $10.7 and $13.8, respectively, which were reported in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. These expenses are not included in the measure of segment performance (see Note 16).
Assets Held for Sale
Related to the closures of its Modesto, California and Farmers Branch, Texas facilities, the Company has land, building, machinery and equipment classified as assets held for sale. The carrying value of the assets included in “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheets was $10.3 and $11.4 as of June 30, 2016 and September 30, 2015, respectively.
Held for sale losses of $1.1 and $9.5 were recorded in the three and nine months ended June 30, 2016, respectively, to adjust the carrying value of the assets to their fair value less estimated selling costs. Held for sale losses in fiscal 2016 relate to the Modesto, California and Farmers Branch, Texas facility closures. Held for sale losses of $4.9 and $27.4 were recorded in the three and nine months ended June 30, 2015, respectively, to adjust the carrying value of the assets to their fair value less estimated selling costs. Held for sale losses in fiscal 2015 related to the closure if its Modesto, California and Boise, Idaho facilities, as well as the sale of a peanut butter manufacturing facility located in Portales, New Mexico and the sale of its Australian business and Musashi trademark. These losses are reported as “Other operating expenses, net” on the Condensed Consolidated Statements of Operations. These expenses are not included in the measure of segment performance (see Note 16).
NOTE 4 — BUSINESS COMBINATIONS AND DIVESTITURES
On October 3, 2015, the Company completed its acquisition of Willamette Egg Farms (“WEF”) for $90.0, subject to working capital and other adjustments, resulting in a payment at closing of $109.0. In December 2015, a final settlement of net working capital and other adjustments was reached, resulting in an additional amount paid by the Company of $4.6. WEF is a producer, processor and wholesale distributor of eggs and egg products and is reported in Post’s Michael Foods Group segment (see Note 16). Based upon the preliminary purchase price allocation, the Company has recorded $12.7 of customer relationships to be amortized over a weighted-average period of 20 years and $2.5 to trademarks and brands to be amortized over a weighted-average period of 20 years. Net sales included in the Condensed Consolidated Statements of Operations was $18.2 and $70.2, for the three and nine months ended June 30, 2016, respectively. Operating profit included in the Condensed Consolidated Statements of Operations was $0.5 and $13.1, for the three and nine months ended June 30, 2016, respectively.
On May 4, 2015, Post completed its acquisition of MOM Brands, a manufacturer and distributer of ready-to-eat (“RTE”) cereals. MOM Brands is reported in the Post Consumer Brands segment (see Note 16). The closing purchase price of the transaction was $1,181.5 and was partially paid by the issuance of 2.45 shares of the Company’s common stock to the former owners of MOM Brands. The shares were valued at the May 1, 2015 closing price of $46.60 per share for a total issuance of $114.4. In September 2015, a final settlement of net working capital and other adjustments was reached, resulting in an amount back to the Company of $4.0.
On November 1, 2014, the Company completed its acquisition of American Blanching Company (“ABC”) for $128.0. ABC is a manufacturer of peanut butter for national brands, private label retail and industrial markets and provider of peanut blanching, granulation and roasting services for the commercial peanut industry. ABC is reported in Post’s Private Brands segment (see Note 16).
On October 1, 2014, the Company completed its acquisition of the PowerBar and Musashi brands and related worldwide assets from Nestlé S.A. (“PowerBar”) for $150.0, subject to a working capital adjustment, which resulted in a payment at closing of $136.1. In March 2015, a final settlement of net working capital and other adjustments was reached, resulting in an amount back to the Company of $1.7. PowerBar is reported in the Active Nutrition segment (see Note 16).
Each of the acquisitions was accounted for using the acquisition method of accounting, whereby the results of operations are included in the financial statements from the date of acquisition. The respective purchase prices were allocated to acquired assets and assumed liabilities based on their estimated fair values at the date of acquisition, and any excess was allocated to goodwill, as shown in the table below. Goodwill represents the value the Company expects to achieve through the implementation of operational synergies and the expansion of the business into new or growing segments of the industry. The Company expects the final fair value of goodwill related to the acquisition of WEF to be deductible for U.S. income tax purposes.
Certain estimated values for the WEF acquisition, including goodwill and deferred taxes, are not yet finalized pending the final purchase price allocation and are subject to change once additional information is obtained.
The following table provides the preliminary allocation of the purchase price related to the fiscal 2016 acquisition of WEF based upon the fair value of assets and liabilities assumed.

7


Cash and cash equivalents
$
19.2

Receivables
11.1

Inventories
10.3

Prepaid expenses and other current assets
0.5

Property
56.2

Goodwill
4.2

Other intangible assets
15.2

Other assets
0.1

Accounts payable
(2.2
)
Other current liabilities
(1.0
)
Total acquisition cost
$
113.6

Divestitures
In March 2016, the Company sold certain assets of its Michael Foods Canadian egg business, included in the Michael Foods Group segment (see Note 16), to a third party for $6.9, subject to working capital and other adjustments, resulting in net cash received of $6.4. In May 2016, a final settlement of net working capital and other adjustments was reached, resulting in additional cash received by the Company of $0.5. During the nine months ended June 30, 2016, the Company recorded a gain of $2.0 related to the transaction, which includes $1.3 of foreign exchange gains that were previously included in accumulated other comprehensive income. This gain is reported as “Other operating expenses, net” in the Condensed Consolidated Statements of Operations.
On July 1, 2015, the Company sold the PowerBar Australia assets and Musashi trademark. In February 2016, a final settlement of net working capital was reached related to this sale, resulting in an amount paid by the Company of $0.2.
Transaction related costs
The Company incurred acquisition and divestiture related expenses of $5.1 and $7.3 during the three and nine months ended June 30, 2016, respectively, and $5.4 and $12.2 during the three and nine months ended June 30, 2015, respectively. The costs are recorded as “Selling, general and administrative expenses,” and include amounts for transactions that were signed, spending for due diligence on potential acquisitions that were not signed or announced at the time of the Company’s reporting, and spending for divestiture transactions.
Pro Forma Information
The following unaudited pro forma information presents a summary of the results of operations of the Company combined with the aggregate results of WEF, MOM Brands, ABC and PowerBar for the periods presented as if the fiscal 2016 acquisition of WEF had occurred on October 1, 2014 and the fiscal 2015 acquisitions had occurred on October 1, 2013, along with certain pro forma adjustments. These pro forma adjustments give effect to the amortization of certain definite-lived intangible assets, adjusted depreciation based upon fair value of assets acquired, interest expense related to the financing of the business combinations, inventory revaluation adjustments on acquired businesses and related income taxes. The following unaudited pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the acquisitions occurred on the assumed dates, nor is it necessarily an indication of future operating results.  
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Pro forma net sales
$
1,246.1

 
$
1,310.5

 
$
3,766.0

 
$
3,888.5

Pro forma net earnings (loss) available to common shareholders
$

 
$
48.5

 
$
13.2

 
$
(9.7
)
Pro forma basic earnings (loss) per common share
$

 
$
0.82

 
$
0.19

 
$
(0.18
)
Pro forma diluted earnings (loss) per common share
$

 
$
0.80

 
$
0.19

 
$
(0.18
)

8


NOTE 5 — GOODWILL
The changes in the carrying amount of goodwill by segment are noted in the following table.
 
Post Consumer Brands
 
Michael Foods Group
 
Active Nutrition
 
Private Brands
 
Total
Balance, September 30, 2015
 
 
 
 
 
 
 
 
 
Goodwill (gross)
$
1,993.9

 
$
1,341.6

 
$
180.7

 
$
254.0

 
$
3,770.2

Accumulated impairment losses
(609.1
)
 

 
(88.3
)
 

 
(697.4
)
Goodwill (net)
$
1,384.8

 
$
1,341.6

 
$
92.4

 
$
254.0

 
$
3,072.8

Goodwill acquired

 
4.2

 

 

 
4.2

Currency translation adjustment
0.2

 

 

 
4.3

 
4.5

Balance, June 30, 2016
 
 
 
 
 
 
 
 
 
Goodwill (gross)
$
1,994.1

 
$
1,345.8

 
$
180.7

 
$
258.3

 
$
3,778.9

Accumulated impairment losses
(609.1
)
 

 
(88.3
)
 

 
(697.4
)
Goodwill (net)
$
1,385.0

 
$
1,345.8

 
$
92.4

 
$
258.3

 
$
3,081.5

NOTE 6 — INCOME TAXES
For the three and nine months ended June 30, 2016, the effective income tax rate was (57.1)% and 5.6%, respectively. In accordance with ASC Topic 740, the Company records income tax (benefit) expense for the interim periods using the estimated annual effective tax rate for the full fiscal year adjusted for the impact of discrete items occurring during the three and nine month periods. Our effective tax rate differed significantly from our statutory tax rate as a result of discrete items occurring in the nine months ended June 30, 2016 primarily relating to the Company’s decision to exit its Canadian egg business reported in the Michael Foods Group segment (see Note 4) and the expectation that the Domestic Production Activities Deduction under the Internal Revenue Code (“DPAD”) will have a favorable impact on the effective income tax rate.
For the three and nine months ended June 30, 2015, the effective income tax rate was 58.8% and 21.5%, respectively. The estimated annual effective tax rate differed significantly from the statutory tax rate primarily due to the Company’s estimate of full year earnings before income taxes which caused small variations in estimated permanent differences to have a magnified impact on the effective income tax rate percentage, the expectation that nondeductible merger and acquisition expenses and other permanently nondeductible expenses would have had an unfavorable impact on the effective income tax rate and the expectation that the DPAD and tax planning strategies implemented for certain recent acquisitions would have had a favorable impact on the effective income tax rate.
NOTE 7 — INTANGIBLE ASSETS, NET
Total intangible assets are as follows:
 
June 30, 2016
 
September 30, 2015
 
Carrying
Amount
 
Accumulated Amortization
 
Net
Amount
 
Carrying
Amount
 
Accumulated Amortization
 
Net
Amount
Subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
2,013.7

 
$
(275.0
)
 
$
1,738.7

 
$
1,998.6

 
$
(192.7
)
 
$
1,805.9

Trademarks/brands
795.4

 
(110.3
)
 
685.1

 
780.9

 
(79.1
)
 
701.8

Other intangible assets
21.9

 
(7.1
)
 
14.8

 
21.3

 
(5.4
)
 
15.9

 
2,831.0

 
(392.4
)
 
2,438.6

 
2,800.8

 
(277.2
)
 
2,523.6

Not subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
Trademarks/brands
434.5

 

 
434.5

 
445.7

 

 
445.7

 
$
3,265.5

 
$
(392.4
)
 
$
2,873.1

 
$
3,246.5

 
$
(277.2
)
 
$
2,969.3

NOTE 8 EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is based on the average number of common shares outstanding during the period. Diluted earnings (loss) per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options, stock appreciation rights and restricted stock equivalents using the “treasury stock” method.

9


The impact of potentially dilutive convertible preferred stock is calculated using the “if-converted” method. The Company’s tangible equity units (“TEUs”) are assumed to be settled at the minimum settlement amount of 1.7114 shares per TEU for weighted-average shares for basic earnings (loss) per share. For diluted earnings (loss) per share, the shares, to the extent dilutive, are assumed to be settled at a conversion factor based on the Company’s daily volume-weighted-average price per share of the Company’s common stock not to exceed 2.0964 shares per TEU.
The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and nine months ended June 30, 2016 and 2015.
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Net earnings (loss) for basic earnings (loss) per share
$

 
$
19.8

 
$
12.0

 
$
(55.5
)
Net earnings (loss) for diluted earnings (loss) per share
$

 
$
19.8

 
$
12.0

 
$
(55.5
)
 
 
 
 
 
 
 
 
Weighted-average shares outstanding
64.3

 
54.0

 
63.7

 
49.5

Effect of TEUs on weighted-average shares for basic earnings (loss) per share
4.9

 
4.9

 
4.9

 
4.9

Weighted-average shares for basic earnings (loss) per share
69.2

 
58.9

 
68.6

 
54.4

Effect of dilutive securities:
 
 
 
 
 
 
 
Stock options

 
0.7

 
1.1

 

Stock appreciation rights

 
0.1

 
0.1

 

Restricted stock awards

 
0.3

 
0.3

 

TEUs

 
0.8

 

 

Total dilutive securities

 
1.9

 
1.5

 

Weighted-average shares for diluted earnings (loss) per share
69.2

 
60.8

 
70.1

 
54.4

 
 
 
 
 
 
 
 
Basic earnings (loss) per common share
$

 
$
0.34

 
$
0.17

 
$
(1.02
)
Diluted earnings (loss) per common share
$

 
$
0.33

 
$
0.17

 
$
(1.02
)
The following table details the securities that have been excluded from the calculation of weighted-average shares for diluted earnings (loss) per share as they were anti-dilutive.
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Stock options
4.2

 
1.3

 
0.3

 
4.6

Stock appreciation rights
0.2

 
0.1

 

 
0.3

Restricted stock awards
0.9

 

 
0.2

 
0.5

TEUs

 

 

 
0.9

Preferred shares conversion to common
9.1

 
11.0

 
9.1

 
11.0

NOTE 9 — INVENTORIES
 
June 30,
2016
 
September 30,
2015
Raw materials and supplies
$
112.1

 
$
142.5

Work in process
20.4

 
15.3

Finished products
342.8

 
286.8

Flocks
33.3

 
20.7

 
$
508.6

 
$
465.3


10


NOTE 10 — PROPERTY, NET
 
June 30,
2016
 
September 30, 2015
Property, at cost
$
1,849.4

 
$
1,737.7

Accumulated depreciation
(509.5
)
 
(404.5
)
 
$
1,339.9

 
$
1,333.2

NOTE 11 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
In the ordinary course of business, the Company is exposed to commodity price risks relating to the acquisition of raw materials and supplies, interest rate risks relating to floating rate debt, and foreign currency exchange rate risks relating to its foreign subsidiaries. The Company utilizes derivative financial instruments, including (but not limited to) futures contracts, option contracts, forward contracts and swaps, to manage certain of these exposures by hedging when it is practical to do so. The Company does not hold or issue financial instruments for speculative or trading purposes.
The Company maintains options, futures contracts and interest rate swaps which have been designated as economic hedges of raw materials, energy purchases and variable rate debt.
At June 30, 2016, the notional amounts of commodity and energy contracts were $32.6 and $17.7, respectively. These contracts relate to inputs that generally will be utilized within the next 12 months. At June 30, 2016 and September 30, 2015, the Company had pledged collateral of $1.0 and $10.7, respectively, related to its commodity and energy contracts. These amounts are classified as “Restricted cash” on the Condensed Consolidated Balance Sheets.
As of June 30, 2016, the Company had interest rate swaps with a notional amount of $77.9 that obligate Post to pay a fixed rate of 3.1% and receive one-month LIBOR. These swaps have the effect of converting a portion of the Company’s variable interest rate term loan debt to fixed interest rates through May 2021. In addition, the Company has interest rate swaps with a $750.0 notional amount that obligate Post to pay a weighted-average fixed interest rate of approximately 4.0% and receive three-month LIBOR and will result in a net lump sum settlement in July 2018, as well as interest rate swaps with a $899.3 notional amount that obligate Post to pay a weighted-average fixed interest rate of approximately 3.7% and receive three-month LIBOR and will result in a net lump sum settlement in December 2019.
Commodity and energy derivatives are valued using an income approach based on index prices less the contract rate multiplied by the notional amount. The Company’s calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve.
The following table presents the balance sheet location and fair value of the Company’s derivative instruments on a gross and net basis as of June 30, 2016 and September 30, 2015. The Company does not offset derivative assets and liabilities within the Condensed Consolidated Balance Sheets.
 
 
Balance Sheet Location
 
June 30,
2016
 
September 30, 2015
Commodity contracts
 
Prepaid expenses and other current assets
 
$
2.2

 
$
0.4

Energy contracts
 
Prepaid expenses and other current assets
 
3.5

 
0.2

Total Assets
 
 
 
$
5.7

 
$
0.6

 
 
 
 
 
 
 
Commodity contracts
 
Other current liabilities
 
0.9

 
1.2

Energy contracts
 
Other current liabilities
 
1.0

 
4.7

Interest rate swaps
 
Other current liabilities
 
1.8

 
4.9

Interest rate swaps
 
Other liabilities
 
300.4

 
127.9

Total Liabilities
 
 
 
$
304.1

 
$
138.7


11


The following table presents the recognized (gain) loss from derivative instruments that were not designated as qualified hedging instruments on the Company’s Condensed Consolidated Statements of Operations.
 
 
 
 
(Gain) Loss Recognized in Statement of Operations
 
 
Statement of Operations Location
 
Three Months Ended
June 30,
 
Nine Months Ended June 30,
 
 
 
2016
 
2015
 
2016
 
2015
Commodity contracts
 
Cost of goods sold
 
$
(1.0
)
 
$
(4.8
)
 
$
3.2

 
$
(13.2
)
Energy contracts
 
Cost of goods sold
 
(4.1
)
 
4.5

 
0.8

 
8.1

Interest rate swaps
 
Other expense (income)
 
62.6

 
(41.9
)
 
169.4

 
41.5

NOTE 12 — FAIR VALUE MEASUREMENTS
The following table represents Post’s assets and liabilities measured at fair value on a recurring basis and the basis for that measurement according to the levels in the fair value hierarchy in ASC Topic 820.
 
June 30, 2016
 
September 30, 2015
 
Total
 
Level 1
 
Level 2
 
Total
 
Level 1
 
Level 2
Assets:
 
 
 
 
 
 
 
 
 
 
 
Deferred compensation investment
$
11.3

 
$
11.3

 
$

 
$
10.3

 
$
10.3

 
$

Derivative assets
5.7

 

 
5.7

 
0.6

 

 
0.6

 
$
17.0

 
$
11.3

 
$
5.7

 
$
10.9

 
$
10.3

 
$
0.6

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Deferred compensation liabilities
$
17.3

 
$

 
$
17.3

 
$
14.2

 
$

 
$
14.2

Derivative liabilities
304.1

 

 
304.1

 
138.7

 

 
138.7

 
$
321.4

 
$

 
$
321.4

 
$
152.9

 
$

 
$
152.9

The following table presents the fair value of Post’s long-term debt which is classified as Level 2 in the fair value hierarchy per ASC Topic 820:
 
June 30,
2016
 
September 30, 2015
Senior notes
$
4,341.9

 
$
4,112.5

Term loan
374.6

 
374.0

TEUs
21.4

 
28.6

4.57% 2012 Series Bond maturing September 2017
1.9

 
2.9

Capital leases

 
2.8

 
$
4,739.8

 
$
4,520.8

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of three levels: 
Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
 Level 3 — Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.
The deferred compensation investment is invested primarily in mutual funds and its fair value is measured using the market approach. This investment is in the same funds and purchased in substantially the same amounts as the participants’ selected investment options (excluding Post common stock equivalents), which represent the underlying liabilities to participants in the Company’s deferred compensation plans. Deferred compensation liabilities are recorded at amounts due to participants in cash,

12


based on the fair value of participants’ selected investment options (excluding certain Post common stock equivalents to be distributed in shares) using the market approach. The Company utilizes the income approach to measure fair value for its derivative assets, which include options and futures contracts for commodities and energy. The income approach uses pricing models that rely on market observable inputs such as yield curves and forward prices. Changes in the deferred compensation investment and related liability are recorded as “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.
Refer to Note 11 for the classification of changes in fair value of derivative assets and liabilities measured at fair value on a recurring basis within the Condensed Consolidated Statements of Operations.
As stated previously (see Note 3), the Company has land, building, machinery and equipment classified as assets held for sale related to the closure of its Modesto, California and Farmers Branch, Texas facilities. At June 30, 2016 and September 30, 2015, the carrying value, as determined by estimated fair value less estimated costs to sell, of the assets held for sale was $10.3 and $11.4, respectively, and is included in “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheets. The fair value of the assets held for sale were measured at fair value on a nonrecurring basis based on third-party offers to purchase the assets. The fair value measurement was categorized as Level 3, as the fair values utilize significant unobservable inputs. The following table summarizes the Level 3 activity.
Balance, September 30, 2015
$
11.4

Transfers into held for sale
10.1

Losses on assets held for sale
(9.5
)
Cash received from sale of assets
(1.7
)
Balance, June 30, 2016
$
10.3

The carrying amounts reported on the Condensed Consolidated Balance Sheets for cash and cash equivalents, receivables and accounts payable approximate fair value because of the short maturities (less than 12 months) of these financial instruments.
NOTE 13 — SHAREHOLDERS’ EQUITY
In December 2015, the Company and a holder of the Company’s 3.75% Series B Cumulative Perpetual Convertible Preferred Stock (the “Series B Preferred”) entered into an exchange agreement pursuant to which the shareholder agreed to deliver 0.9 shares of the Series B Preferred to the Company in exchange for 2.0 shares of common stock and $10.9 of cash. The number of shares of common stock exchanged in the transaction was based upon the current conversion rate, under the Certificate of Designation, Rights and Preferences for the Series B Preferred, of 2.1192 shares of common stock per share of Series B Preferred. The cash paid of $10.9 was recorded as “Additional paid-in capital” on the Condensed Consolidated Balance Sheets. 
The Company may, from time to time, enter into common stock structured repurchase arrangements with financial institutions using general corporate funds. Under such arrangements, the Company pays a fixed sum of cash upon execution of each agreement in exchange for the right to receive either a pre-determined amount of cash or Post common stock. Upon expiration of each agreement, if the closing market price of Post’s common stock is above the pre-determined price, the Company will have the initial investment returned with a premium in cash. If the closing market price of Post’s common stock is at or below the pre-determined price, the Company will receive the number of shares specified in the agreement. In March 2016, the Company entered into a structured share repurchase arrangement which required cash payments totaling $28.3, including transaction-related fees of $0.2. At the May 2016 expiration of the agreement, the market price of Post’s common stock exceeded the pre-determined contract price, resulting in cash payments to the Company of $29.4. Prepayments and cash receipts at settlement under the agreement were recorded as “Additional paid-in capital” on the Condensed Consolidated Balance Sheets.

13


NOTE 14 — LONG-TERM DEBT
Long-term debt as of the dates indicated consists of the following:
 
June 30,
2016
 
September 30, 2015
7.375% Senior Notes maturing February 2022
$
1,375.0

 
$
1,375.0

6.75% Senior Notes maturing December 2021
875.0

 
875.0

6.00% Senior Notes maturing December 2022
630.0

 
630.0

7.75% Senior Notes maturing March 2024
800.0

 
800.0

8.00% Senior Notes maturing July 2025
400.0

 
400.0

Term Loan
374.4

 
374.4

TEUs
14.6

 
25.1

4.57% 2012 Series Bond maturing September 2017
1.9

 
2.9

Capital leases

 
2.8

 
$
4,470.9

 
$
4,485.2

Less: Current Portion
(15.9
)
 
(16.0
)
Plus: Unamortized premiums, net of discounts
38.0

 
42.2

Total long-term debt
$
4,493.0

 
$
4,511.4

On January 29, 2014, the Company entered into a credit agreement (as subsequently amended, the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility with an aggregate principal value of $400.0 as well as an incremental term loan. The revolving credit facility has outstanding letters of credit of $11.9 which reduced the available borrowing capacity to $388.1 at June 30, 2016.
The Credit Agreement contains customary financial covenants including (a) a quarterly maximum senior secured leverage ratio of 3.00 to 1.00, and (b) a quarterly minimum interest coverage ratio of 1.75 to 1.00. The Credit Agreement permits the Company to incur additional unsecured debt only if its consolidated interest coverage ratio, calculated as provided in the Credit Agreement, would be greater than 2.00 to 1.00 after giving effect to such new debt.
The Credit Agreement provides for customary events of default, including material breach of representations and warranties, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay, or default under, certain other material indebtedness, certain events of bankruptcy and insolvency, inability to pay debts, the occurrence of one or more unstayed or undischarged judgments in excess of $75.0 or attachments issued against a material part of the Company’s property, change in control, the invalidity of any loan document, the failure of the collateral documents to create a valid and perfected first priority lien and certain ERISA events. Upon the occurrence of an event of default, the maturity of the loans under the Credit Agreement may be accelerated and the agent and lenders under the Credit Agreement may exercise other rights and remedies available at law or under the loan documents, including with respect to the collateral and guarantees for the Company’s obligations under the Credit Agreement.
Debt Covenants
Under the terms of the Credit Agreement, the Company is required to comply with certain financial covenants consisting of ratios for quarterly maximum senior secured leverage and minimum interest coverage. As of June 30, 2016, the Company was in compliance with such financial covenants. The Company does not believe non-compliance is reasonably likely in the foreseeable future.
NOTE 15 — PENSION AND OTHER POSTRETIREMENT BENEFITS
The Company maintains qualified defined benefit plans in the United States and Canada for certain employees within its Post Consumer Brands segment. Certain of the Company’s employees are eligible to participate in the Company’s qualified and supplemental noncontributory defined benefit pension plans and other postretirement benefit plans (partially subsidized retiree health and life insurance) or separate plans for Post Foods Canada Inc. Amounts for the Canadian plans are included in these disclosures and are not disclosed separately because they do not constitute a significant portion of the combined amounts. Effective January 1, 2011, benefit accruals for defined pension plans were frozen for all administrative employees and certain production employees.
The following tables provide the components of net periodic benefit cost for the plans.

14


 
Pension Benefits
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Components of net periodic benefit cost
 
 
 
 
 
 
 
Service cost
$
1.0

 
$
0.8

 
$
3.0

 
$
2.7

Interest cost
0.7

 
0.6

 
1.9

 
1.7

Expected return on plan assets
(0.6
)
 
(0.6
)
 
(1.9
)
 
(1.8
)
Recognized net actuarial loss
0.3

 
0.3

 
0.8

 
0.7

Recognized prior service cost

 

 
0.2

 
0.2

Net periodic benefit cost
$
1.4

 
$
1.1

 
$
4.0

 
$
3.5


 
Other Benefits
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Components of net periodic benefit cost
 
 
 
 
 
 
 
Service cost
$
0.1

 
$
0.5

 
$
0.9

 
$
1.5

Interest cost
0.8

 
1.1

 
3.2

 
3.5

Recognized net actuarial loss
0.5

 
0.4

 
1.2

 
1.1

Recognized prior service credit
(1.5
)
 
(0.4
)
 
(2.4
)
 
(1.2
)
Net periodic benefit (gain) cost
$
(0.1
)
 
$
1.6

 
$
2.9

 
$
4.9

In the second quarter of fiscal 2016, the Company finalized a new collective bargaining agreement that resulted in an amendment to its other postretirement benefit plan. As a result of this amendment, the Company remeasured its other benefits obligation using inputs as of February 29, 2016 and a gain of $36.1 ($22.3, net of tax) was recognized in accumulated other comprehensive income (loss) with an offsetting reduction in the accumulated postretirement benefit obligation.
NOTE 16 — SEGMENTS
The Company’s reportable segments are as follows:
Post Consumer Brands: primarily RTE cereals;
Michael Foods Group: eggs, potatoes, cheese and pasta;
Active Nutrition: protein shakes, bars and powders and nutritional supplements; and
Private Brands: primarily peanut and other nut butters, dried fruit and nuts, and granola.
Management evaluates each segment’s performance based on its segment profit, which is its operating profit before impairment of property and intangible assets, facility closure related costs, restructuring expenses, losses on assets held for sale, gain on sale of business and other unallocated corporate income and expenses. The following tables present information about the Company’s reportable segments, including corresponding amounts for the prior year.

15


 
 
 
Three Months Ended
June 30,
 
Nine Months Ended
June 30,
 
 
 
2016
 
2015
 
2016
 
2015
Net Sales
 
 
 
 
 
 
 
 
Post Consumer Brands
$
434.5

 
$
356.9

 
$
1,286.2

 
$
818.3

 
Michael Foods Group
518.0

 
564.7

 
1,662.1

 
1,714.3

 
Active Nutrition
156.1

 
153.8

 
415.7

 
418.8

 
Private Brands
137.9

 
136.7

 
403.2

 
389.4

 
Eliminations
(0.4
)
 
(0.3
)
 
(1.2
)
 
(2.4
)
 
Total
$
1,246.1

 
$
1,211.8

 
$
3,766.0

 
$
3,338.4

Segment Profit (Loss)
 
 
 
 
 
 
 
 
Post Consumer Brands
$
75.2

 
$
51.6

 
$
212.8

 
$
140.0

 
Michael Foods Group
65.6

 
48.4

 
236.0

 
130.3

 
Active Nutrition
17.7

 
7.9

 
42.0

 
(2.9
)
 
Private Brands
9.0

 
10.5

 
29.6

 
27.8

 
Total segment profit
167.5

 
118.4

 
520.4

 
295.2

General corporate expenses and other
25.5

 
37.1

 
83.0

 
123.3

Interest expense, net
77.3

 
65.0

 
232.3

 
184.9

Other expense (income)
62.6

 
(41.9
)
 
169.4

 
41.5

Earnings (loss) before income taxes
$
2.1

 
$
58.2

 
$
35.7

 
$
(54.5
)
Depreciation and amortization
 
 
 
 
 
 
 
 
Post Consumer Brands
$
26.1

 
$
19.4

 
$
78.6

 
$
43.6

 
Michael Foods Group
35.5

 
35.7

 
106.0

 
108.8

 
Active Nutrition
6.4

 
6.8

 
18.8

 
20.6

 
Private Brands
6.2

 
6.3

 
18.6

 
18.8

 
 
Total segment depreciation and amortization
74.2

 
68.2

 
222.0

 
191.8

 
Corporate and accelerated depreciation
1.5

 
2.2

 
4.9

 
4.9

 
Total
$
75.7

 
$
70.4

 
$
226.9

 
$
196.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Assets
 
 
 
 
June 30, 2016
 
September 30, 2015
 
Post Consumer Brands
 
 
 
 
$
3,416.1

 
$
3,473.0

 
Michael Foods Group
 
 
 
 
3,509.0

 
3,506.0

 
Active Nutrition
 
 
 
 
632.6

 
645.4

 
Private Brands
 
 
 
 
650.9

 
651.6

 
Corporate
 
 
 
 
1,107.1

 
944.4

 
Total
 
 
 
 
$
9,315.7

 
$
9,220.4


16


NOTE 17 — CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF GUARANTORS
All of the Company’s senior notes (see Note 14) are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing 100% owned domestic subsidiaries and future domestic subsidiaries, the “Guarantors.” Our foreign subsidiaries, the “Non-Guarantors,” do not guarantee the senior notes. These guarantees are subject to release in limited circumstances (only upon the occurrence of certain customary conditions).
Set forth below are the condensed consolidating financial statements presenting the results of operations, financial position and cash flows of the Parent Company (Post Holdings, Inc.), the Guarantors on a combined basis, the Non-Guarantors on a combined basis and eliminations necessary to arrive at the information for the Company as reported, on a consolidated basis. The Condensed Consolidating Financial Statements present the Parent Company’s investments in subsidiaries using the equity method of accounting. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among the Parent Company, the Guarantor and the Non-Guarantor subsidiaries. Post Holdings, Inc. and all of its domestic subsidiaries form a single consolidated tax group for U.S. income tax purposes. Accordingly, income tax expense has been presented on the Guarantors’ Condensed Statements of Operations using the consolidated U.S. effective tax rate for the Company. Income tax payable and deferred tax items for the consolidated U.S. tax paying group reside solely on the Parent Company’s Condensed Consolidated Balance Sheets.



17



POST HOLDINGS, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Unaudited)

 
Three Months Ended June 30, 2016
 
Parent
 
 
 
Non-
 
 
 
 
 
Company
 
Guarantors
 
Guarantors
 
Eliminations
 
Total
Net Sales
$

 
$
1,126.2

 
$
133.3

 
$
(13.4
)
 
$
1,246.1

Cost of goods sold

 
746.3

 
115.0

 
(13.4
)
 
847.9

Gross Profit

 
379.9

 
18.3

 

 
398.2

Selling, general and administrative expenses
5.0

 
202.5

 
8.5

 

 
216.0

Amortization of intangible assets

 
35.9

 
2.3

 

 
38.2

Other operating expenses (income), net

 
2.3

 
(0.3
)
 

 
2.0

Operating (Loss) Profit
(5.0
)
 
139.2

 
7.8

 

 
142.0

Interest expense (income), net
74.7

 
(0.1
)
 
2.7

 

 
77.3

Other expense
62.6

 

 

 

 
62.6

(Loss) Earnings before Income Taxes
(142.3
)
 
139.3

 
5.1

 

 
2.1

Income tax expense (benefit)
2.2

 
(5.0
)
 
1.6

 

 
(1.2
)
Net (Loss) Earnings before Equity in Subsidiaries
(144.5
)
 
144.3

 
3.5

 

 
3.3

Equity earnings in subsidiaries
147.8

 

 

 
(147.8
)
 

Net Earnings
$
3.3

 
$
144.3

 
$
3.5

 
$
(147.8
)
 
$
3.3

Total Comprehensive Income
$
2.7

 
$
143.9

 
$
2.9

 
$
(146.8
)
 
$
2.7

 
Three Months Ended June 30, 2015
 
Parent
 
 
 
Non-
 
 
 
 
 
Company
 
Guarantors
 
Guarantors
 
Eliminations
 
Total
Net Sales
$

 
$
1,077.8

 
$
149.3

 
$
(15.3
)
 
$
1,211.8

Cost of goods sold

 
782.6

 
128.0

 
(15.3
)
 
895.3

Gross Profit

 
295.2

 
21.3

 

 
316.5

Selling, general and administrative expenses
3.9

 
176.9

 
12.5

 

 
193.3

Amortization of intangible assets

 
34.2

 
2.5

 

 
36.7

Other operating expenses, net
1.0

 
4.2

 

 

 
5.2

Operating (Loss) Profit
(4.9
)
 
79.9

 
6.3

 

 
81.3

Interest expense (income), net
61.9

 
(0.2
)
 
3.3

 

 
65.0

Other income
(41.9
)
 

 

 

 
(41.9
)
(Loss) Earnings before Income Taxes
(24.9
)
 
80.1

 
3.0

 

 
58.2

Income tax expense (benefit)
34.3

 
(2.3
)
 
2.2

 

 
34.2

Net (Loss) Earnings before Equity in Subsidiaries
(59.2
)
 
82.4

 
0.8

 

 
24.0

Equity earnings (loss) in subsidiaries
83.2

 
(1.1
)
 

 
(82.1
)
 

Net Earnings
$
24.0

 
$
81.3

 
$
0.8

 
$
(82.1
)
 
$
24.0

Total Comprehensive Income
$
31.4

 
$
81.5

 
$
4.4

 
$
(85.9
)
 
$
31.4








18


 
Nine Months Ended June 30, 2016
 
Parent
 
 
 
Non-
 
 
 
 
 
Company
 
Guarantors
 
Guarantors
 
Eliminations
 
Total
Net Sales
$

 
$
3,404.4

 
$
406.0

 
$
(44.4
)
 
$
3,766.0

Cost of goods sold

 
2,293.7

 
346.7

 
(44.4
)
 
2,596.0

Gross Profit

 
1,110.7

 
59.3

 

 
1,170.0

Selling, general and administrative expenses
14.5

 
566.2

 
27.9

 

 
608.6

Amortization of intangible assets

 
107.6

 
6.8

 

 
114.4

Other operating expenses (income), net

 
19.6

 
(10.0
)
 

 
9.6

Operating (Loss) Profit
(14.5
)
 
417.3

 
34.6

 

 
437.4

Interest expense (income), net
224.7

 
(0.6
)
 
8.2

 

 
232.3

Other expense
169.4

 

 

 

 
169.4

(Loss) Earnings before Income Taxes
(408.6
)
 
417.9

 
26.4

 

 
35.7

Income tax (benefit) expense
(23.2
)
 
19.8

 
5.4

 

 
2.0

Net (Loss) Earnings before Equity in Subsidiaries
(385.4
)
 
398.1

 
21.0

 

 
33.7

Equity earnings in subsidiaries
419.1

 
8.2

 

 
(427.3
)
 

Net Earnings
$
33.7

 
$
406.3

 
$
21.0

 
$
(427.3
)
 
$
33.7

Total Comprehensive Income
$
65.3

 
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