Pinnacle Foods Finance LLC Reports Second Quarter Fiscal 2012 Results

PARSIPPANY, N.J.--(August 9th, 2012)--Pinnacle Foods Finance LLC today announced its financial results for the second quarter ended June 24, 2012. Net sales for the quarter decreased 2% to $589 million, compared to net sales of $602 million in the second quarter of 2011. For the first six months of 2012, net sales of $1.21 billion were essentially even with year-ago. The Company reported a net loss in the quarter of $11 million, after giving effect to $19 million of after-tax charges related to restructuring and refinancing, and a net loss in the six-month period of $1 million, after giving effect to $21 million of after-tax charges related to restructuring and refinancing.

Commenting on the results, Pinnacle Foods Chief Executive Officer Bob Gamgort stated, “We continue to face an especially challenging industry environment, marked by high levels of input cost inflation and weak consumer demand. Despite these headwinds, we sequentially improved the trend in our gross margin performance and invested in new product innovation, such as our breakthrough Duncan Hines® Frosting Creations™, which enabled us to hold or gain share on brands representing approximately half of our profit contribution. Further, we continued to improve our debt profile and reduce interest expense by completing a successful refinancing during the quarter.”

Second Quarter 2012


Net sales of $589 million in the second quarter of 2012 decreased 2.2%, compared to net sales of $602 million in the year-ago period. This performance reflected lower volume, partially offset by higher net pricing.

Net sales in our North American retail businesses declined 3% in the second quarter of 2012, largely reflecting the unfavorable impact of the earlier Easter holiday this year and overall softness in the industry. Mrs. Butterworth's® and Log Cabin® syrups rebounded in the quarter, and Vlasic® pickles, Celeste® pizza, Lender's® bagels and Comstock® and Wilderness® pie fillings experienced growth. Birds Eye® vegetables and Birds Eye® Voila!® complete bagged meals each experienced modest sales declines, but gained market share in a very difficult category environment.

Earnings before interest and taxes (EBIT) were $42 million in the second quarter of 2012, after giving effect to $17 million of pre-tax charges related to restructuring and refinancing, compared to EBIT in the second quarter of 2011 of $59 million, which included $17 million of pre-tax charges related to restructuring and a legal settlement. Excluding these charges in both periods, the change in EBIT for the quarter reflected the impacts of the sales decline and higher input cost inflation, which was only partially offset by productivity improvements and net pricing actions. Consolidated EBITDA, as defined in our borrowing agreements, was $85 million in the second quarter of 2012, compared to Consolidated EBITDA of $100 million in the second quarter of 2011. Consolidated EBITDA is defined below under “Non-GAAP Financial Matters.”

The Company reported a net loss of $11 million in the second quarter of 2012, after giving effect to approximately $19 million of after-tax charges related to restructuring and refinancing, compared to net earnings of $8 million in the second quarter of 2011, which included approximately $10 million of after-tax charges related to restructuring and a legal settlement. Excluding these charges in both periods, the change in net earnings reflected the decline in EBIT, partially offset by lower interest expense stemming from the Company's refinancing activities and lower debt levels. The tax rate for the second quarter of 2012, excluding discrete items, would be approximately 40%.

First Six Months 2012


Net sales of $1.21 billion in the first six months of 2012 were essentially even with net sales in the first six months of 2011. Net sales in the Company's North American retail businesses decreased 1%.

EBIT was $107 million in the first six months of 2012, after giving effect to $20 million in pre-tax charges related to restructuring and refinancing, compared to EBIT in the year-ago period of $144 million, after giving effect to $21 million in pre-tax charges related to restructuring and a legal settlement.

The Company reported a net loss of $1 million in the first six months of 2012, after giving effect to $21 million in after-tax charges related to restructuring and refinancing. This compares with net earnings in the first six months of 2011 of $28 million, which included $13 million of after-tax charges related to restructuring and a legal settlement. Consolidated EBITDA, as defined in the Company's borrowing agreements, was $175 million in the first six months of 2012, compared to Consolidated EBITDA of $207 million in the first six months of 2011. A detailed reconciliation of Consolidated EBITDA to Net Earnings (Loss) is provided in the tables that accompany this release.

Net cash provided by operating activities in the first six months of 2012 was $68 million, compared net cash provided by operating activities of $95 million in the year-ago period.

Refinancing Activities

In April 2012, in order to extend our debt maturities and reduce our cash interest expense, we amended our Senior Secured Credit Facility to extend the maturity of $641 million of our Tranche B Term Loans by 2 1/2 years to October 2016, to borrow $400 million of Tranche E Term Loans due October 2018, to repay $313 million of Tranche D Term Loans and to extend the maturity of our $150 million revolving credit facility to April 2017. Using the net proceeds of the Tranche E Term Loans, along with available cash, we redeemed all $199 million outstanding of our 10.625% Senior Subordinated Notes. We also repurchased and retired $10 million of our 9.25% Senior Notes in June 2012.

Restructuring Activities

In support of the Company's strategy to enhance its supply chain efficiency and drive down the overall cost of doing business, in May 2012, the Company announced plans to consolidate its Vlasic® pickle production into one plant in Imlay City, Michigan, resulting in the planned closure by year-end of the Company's pickle production facility in Millsboro, Delaware.

Conference Call Information

The Company will host a conference call on Thursday, August 9, 2012 at 2:00PM (ET) to discuss results for the fiscal quarter ended June 24, 2012.

To access the call, interested parties can dial (866) 814-1917 and reference conference name: Pinnacle Foods Q2 Earnings Call. A replay of the call will be available, beginning August 9, 2012 at 5:00 PM (ET) until August 23, 2012, by dialing 1-888-266-2081 and referencing Access Code 1586299.

About Pinnacle Foods Finance LLC

Millions of times a day in more than 85% of American households, consumers reach for Pinnacle Foods brands. We are a leading producer, marketer and distributor of high-quality branded food products, which have been trusted household names for decades. Headquartered in Parsippany, NJ, our business employs an average of approximately 4,300 employees. We are a leader in the shelf stable and frozen foods segments and our brands hold the #1 or #2 market position in 8 out of 12 major category segments in which they compete. Our Duncan Hines Grocery Division manages Leadership brands such as Duncan Hines® baking mixes and frostings, Vlasic® shelf-stable pickles and Mrs. Butterworth's® and Log Cabin® table syrups and Foundation brands such as Armour® canned meats, Brooks® and Nalley® chili and chili ingredients, Comstock® and Wilderness® pie and pastry fillings and Open Pit® barbecue sauces. Our Birds Eye Frozen Division manages Leadership brands such as Birds Eye®, Birds Eye Steamfresh®, C&W®, McKenzie's®, and Fresh like® vegetables, Birds Eye Voila!® complete bagged meals and Van de Kamp's® and Mrs. Paul's® seafood and Foundation brands such as Lender's® bagels,Celeste® pizza, Hungry-Man® dinners and entrées and Aunt Jemima® frozen breakfasts. Our Specialty Foods Division manages Tim's Cascade Snacks®, Hawaiian™ Kettle Style Potato Chips, Snyder of Berlin® and Husman's® in addition to our food service and private label businesses. Further information is available at www.pinnaclefoods.com.