Form 8-K FARMER BROTHERS CO For: Feb 03
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
�CURRENT REPORT�
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PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): February 3, 2015
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Farmer Bros. Co.
(Exact Name of Registrant as Specified in Charter)�
Delaware | 001-34249 | 95-0725980 | ||
(State or Other Jurisdiction �of Incorporation) | (Commission File Number) | (I.R.S. Employer �Identification No.) | ||
20333 South Normandie Avenue, Torrance, California | ||||
(Address of Principal Executive Offices) | ||||
90502 | ||||
(Zip Code) | ||||
310-787-5200 | ||||
(Registrants telephone number, including area code) | ||||
Not Applicable | ||||
(Former Name or Former Address, if Changed Since Last Report) | ||||
Check the appropriate box below if the Form�8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ]��Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425)
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[ ]��Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]��Pre-commencement communications pursuant to Rule�14d-2(b)�under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]��Pre-commencement communications pursuant to Rule�13e-4(c)�under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On February 5, 2015, Farmer Bros. Co., a Delaware corporation (the "Company"), issued a press release announcing its financial results for the second quarter ended December 31, 2014. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated in this Item 2.02 by reference.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On February 5, 2015, the Company announced a plan ("Corporate Relocation Plan") approved by the Board of Directors on February 3, 2015, pursuant to which the Company will close its Torrance, California facility and relocate these operations to a new state-of-the-art manufacturing, distribution and corporate headquarters facility. The new facility is expected to be located in Dallas/Fort Worth, Texas or Oklahoma City, Oklahoma pending the outcome of state and local government incentive negotiations and final site selection. The Companys decision resulted from a comprehensive review of alternatives designed to make the Company more competitive and better positioned to capitalize on growth opportunities.The Company expects to close its Torrance facility in phases beginning in the summer of 2015. Construction of the new facility and relocation are expected to be completed by the end of the summer of 2016. Approximately 350 positions are expected to be impacted as a result of the Torrance facility closure.
Subject to the finalization of certain estimates, the Company estimates that it will incur approximately $25 million in cash costs in connection with the exit of the Torrance facility, consisting of $14 million in employee retention and separation benefits, $4 million in equipment relocation costs and $7 million in other associated costs. The Company expects to incur certain other non-cash asset impairment costs and potential curtailment charges the amount of which the Company has not yet estimated.
The Company expects to recognize approximately 40% of the aggregate cash costs in fiscal 2015, including $1.0 million incurred in the first half of fiscal 2015, with the remainder expected to be recognized in fiscal 2016 and the first quarter of fiscal 2017. The Company also expects to incur approximately $35 million to $40 million in new facility costs with an additional $20 million to $25 million in anticipated capital expenditures for machinery and equipment, furniture and fixtures, and related expenditures. The capital expenditures associated with the new facility are expected to be partially offset by the net proceeds from the planned sale of the Company's Torrance facility. The Company believes that the current land value of the Torrance facility, based strictly on comparable sales data and the size of the parcel (and without any changes or improvements to the parcel or the facility), is estimated to be between $28 million and $35 million.
A copy of the press release announcing the Corporate Relocation Plan is attached hereto as Exhibit 99.1 and incorporated in this Item 2.05 by reference.
Item 7.01. Regulation FD Disclosure.
The information set forth in Item 2.02 and Item 2.05 above is hereby incorporated herein by reference. As provided in General Instruction B.2. of Form 8-K, the information and exhibit furnished pursuant to Item 2.02 and 7.01 of this report are being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing. In addition, the exhibit furnished herewith contains statements intended as "forward-looking statements" that are subject to the cautionary statements about forward-looking statements set forth in such exhibit.
Investor Conference Call
The Company will host an investor conference call at 5:00�p.m. Eastern time (2:00�p.m. Pacific time) on February 5, 2015 to review the Companys results for the second quarter ended December 31, 2014 and to discuss the announcement regarding the Corporate Relocation Plan.� The call will be open to all interested investors through a live audio web broadcast via the Internet athttp://edge.media-server.com/m/p/4wbc6ku5and at the Companys website www.farmerbros.com under Investor Relations.
The audio-only webcast will be available approximately four hours after the end of the live webcast and will be archived for approximately 30 days on the Investor Relations section of the Farmer Bros. Co. website.
Cautionary Statement Regarding Forward-Looking Statements.
Certain statements contained in this Current Report on Form 8-K, including the Companys plans and expectations regarding the Corporate Relocation Plan, are not based on historical fact and are forward-looking statements within the meaning of federal securities laws and regulations. These statements are based on managements current expectations, assumptions, estimates and observations of future events and include any statements that do not directly relate to any historical or current fact; actual results may differ materially due in part to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 filed with the Securities and Exchange Commission (the "SEC") on September 16, 2014.� These forward-looking statements can be identified by the use of words like anticipates, estimates, projects, expects, plans, believes, intends, will, could, assumes and other words of similar meaning. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. We intend these forward-looking statements to speak only at the time of this report and do not undertake to update or revise these statements as more information becomes available except as required under federal securities laws and the rules and regulations of the SEC. Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, the timing and success of implementation of the Corporate Relocation Plan, the relative effectiveness of compensation-based employee incentives in causing improvements in Company performance, the capacity to meet the demands of the Companys large national account customers, the extent of execution of plans for the growth of Company business, achievement of financial metrics related to those plans, the success of the Company to retain and/or attract qualified employees, the effect of the capital markets as well as other external factors on stockholder value, fluctuations in availability and cost of green coffee, competition, organizational changes, changes in the strength of the economy, our ability to refinance or replace our existing credit facility upon its expiration, business conditions in the coffee industry and food industry in general, our continued success in attracting new customers, variances from budgeted sales mix and growth rates, weather and special or unusual events, changes in the quality or dividend stream of third parties securities and other investment vehicles in which we have invested our assets, as well as other risks described in this report and other factors described from time to time in our filings with the SEC.
Item 9.01. Financial Statements and Exhibits.
(d)����Exhibits
Exhibit�No. | Description | |
99.1 | Press Release of Farmer Bros. Co. dated February 5, 2015 | |
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: February 5, 2015
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FARMER BROS. CO. | |||
By: | /s/ Mark J. Nelson | ||
Mark J. Nelson | |||
Treasurer and Chief Financial Officer | |||
EXHIBIT�INDEX
Exhibit�No. | Description | |
99.1 | Press Release of Farmer Bros. Co. dated February 5, 2015 | |
Exhibit 99.1
Farmer Bros. Co.
Announces Next Steps in Business Transformation Process and
Reports Second Quarter Fiscal 2015 Financial Results
TORRANCE, Calif.--(GLOBE NEWSWIRE)Feb. 5, 2015Farmer Bros. Co. (NASDAQ: FARM) today announced a plan ("Corporate Relocation Plan") to close its Torrance, California facility and relocate these operations to a new state-of-the-art manufacturing, distribution and corporate headquarters facility designed to make the Company more competitive and better positioned to capitalize on growth opportunities. The Company expects this plan will result in annualized savings in the range of $12 to $15 million beginning in the latter half of fiscal 2016. The Company also reported financial results for the second quarter ended December 31, 2014.
Corporate Relocation Plan:
Today we are unveiling a logical extension of the strategies that have guided the Companys recent turnaround, enabling us to better compete and grow, said Mike Keown, President and CEO. As we execute on our long-term strategic plans, we will relocate our Company headquarters to a state-of-the-art facility in a location central to our nation-wide customer base, and provide incremental manufacturing capacity to support future growth. Our plan will introduce new efficiencies, automation and quality-control processes improving our ability to win in an extremely competitive market.
The relocation will be from Torrance, California to either Dallas/Fort Worth, Texas or Oklahoma City, Oklahoma pending the outcome of state and local government incentive negotiations and final site selection. The Torrance facility is expected to be closed down in phases commencing in the summer of 2015. Construction of the new facility and relocation are expected to be completed by the end of the summer of 2016.
Subject to the finalization of certain estimates, the Company estimates that it will incur approximately $25 million in cash costs in connection with the exit of the Torrance facility, as further described in Item 2.05 of the Company's Form 8-K filed today. The Company expects to incur certain other non-cash asset impairment costs and potential curtailment charges the amount of which the Company has not yet estimated. The Company expects to recognize approximately 40% of the aggregate cash costs in fiscal 2015, including $1.0 million incurred in the first half of fiscal 2015, with the remainder expected to be
recognized in fiscal 2016 and the first quarter of fiscal 2017. The Company also expects to incur approximately $35 million to $40 million in new facility costs with an additional $20 million to $25 million in anticipated capital expenditures for machinery and equipment, furniture and fixtures, and related expenditures.
The capital expenditures associated with the new facility are expected to be partially offset by the net proceeds from the planned sale of the Company's Torrance facility. The Company believes that the current land value of the Torrance facility, based strictly on comparable sales data and the size of the parcel (and without any changes or improvements to the parcel or facility), is estimated to be between $28 million and $35 million.
Approximately 350 positions are expected to be impacted as a result of the Torrance facility closure. These were difficult decisions and the actions will affect many valued and long-term employees. We appreciate everyones support in helping Farmer Brothers get to this next stage, and we are committed to ensuring a smooth transition for employees, added Mr. Keown.
As we begin to implement the relocation of our Torrance facility and during this transition period, we remain steadfast in our commitment to ensuring continued and uninterrupted service to our thousands of customers nationwide, said Mr. Keown. We are excited at the tremendous opportunities ahead as we prepare Farmer Brothers for the next hundred years.
Second Quarter Fiscal 2015 Highlights:
" | Net sales increased 1.2% to $144.8 million in the second quarter; |
" | Gross profit decreased $(1.3) million to $53.1 million in the second quarter; |
" | Income from operations was $3.5 million in the second quarter compared to $5.7 million; and |
" | Net income was $2.9 million, or $0.18 per diluted common share, compared to $4.7 million, or $0.29 per diluted common share. |
(All comparisons above are to the second quarter of fiscal 2014.)
Second Quarter Fiscal 2015 Results:
Net sales for the second quarter of fiscal 2015 increased $1.7 million, or 1.2%, to $144.8 million from $143.1 million in the second quarter of the prior fiscal year primarily due to increases in sales of our coffee, tea and other beverage products.
Gross profit in the second quarter of fiscal 2015 decreased $(1.3) million, or (2.3)%, to $53.1 million as compared to $54.4 million in the second quarter of fiscal 2014, primarily due to a 43% increase in the average cost of green coffee purchased, partially offset by the increase in net sales. Gross margin decreased 130 basis points to 36.7% in the fiscal quarter ended December 31, 2014 from 38.0% in the comparable period in the prior fiscal year, primarily due to the higher average cost of green coffee purchased.
Treasurer and CFO, Mark Nelson said, In the second quarter, volume growth did not meet our expectations which, coupled with an increase in our coffee commodity input costs, put pressure on our realized gross margin. Mr. Nelson continued, We believe our continuing focus on optimizing our supply chain and back office functions will help improve profitability and make the Company more competitive for the future."
Operating expenses in the second quarter of fiscal 2015 increased $0.9 million, or 1.9%, to $49.6 million from $48.7 million in the second quarter of the prior fiscal year primarily due to expenses incurred in relation to the Corporate Relocation Plan.
Income from operations in the second quarter of fiscal 2015 was $3.5 million compared to $5.7 million in the second quarter of the prior fiscal year.
Total other expense in the second quarter of fiscal 2015 and 2014 was $0.4 million and $0.5 million, respectively.
Income tax expense in the second quarter of fiscal 2015 was $0.3 million compared to $0.4 million in the second quarter of the prior fiscal year.
As a result, net income in the second quarter of fiscal 2015 was $2.9 million, or $0.18 per diluted common share, compared to $4.7 million, or $0.29 per diluted common share, in the second quarter of the prior fiscal year.
Non-GAAP Financial Measures:
Adjusted EBITDA in the second quarter of fiscal 2015 decreased to $11.9 million from $13.8 million in the second quarter of the prior fiscal year. Net income excluding restructuring and other transition expenses per common sharediluted for the second quarter of fiscal 2015 was $0.23 compared to $0.29 in the second quarter of the prior fiscal year. Adjusted EBITDA and Net income excluding restructuring and other transition expenses per common sharediluted are non-GAAP financial measures; reconciliation tables of reported net income to Adjusted EBITDA and reported net income per common sharediluted to Net income excluding restructuring and other transition expenses per common sharediluted are included at the end of this press release.
About Farmer Bros. Co.
Founded in 1912, Farmer Bros. Co. is a manufacturer, wholesaler and distributor of coffee, tea and culinary products. The Company is a direct distributor of coffee to restaurants, hotels, casinos, offices, quick service restaurants ( QSR's ), convenience stores, healthcare facilities and other foodservice providers, as well as private brand retailers in the QSR, grocery, drugstore, restaurant, convenience store, and independent coffee house channels. The Company's product line includes roasted coffee, liquid
coffee, coffee-related products such as coffee filters, sugar and creamers, assorted iced and hot teas, cappuccino, cocoa, spices, gelatins and puddings, soup bases, dressings, gravy and sauce mixes, pancake and biscuit mixes, and jellies and preserves.
Headquartered in Torrance, Calif., Farmer Bros. Co. generated net sales of over $500 million in fiscal 2014 and has approximately 1,800 employees nationwide. The Company's primary brands include Farmer Brothers", Artisan Collection by Farmer Brothers", Superior�, Metropolitan" , Cain's" and McGarvey�. For more information, visit: www.farmerbros.com.
Investor Conference Call
Michael H. Keown, President and Chief Executive Officer, and Mark J. Nelson, Treasurer and Chief Financial Officer, will host an investor conference call today, February 5, 2015, at 5:00�p.m. Eastern time (2:00�p.m. Pacific time) to review the Companys results for the second quarter ended December 31, 2014 and to discuss the announcement regarding the Corporate Relocation Plan.� The call will be open to all interested investors through a live audio web broadcast via the Internet at http://edge.media-server.com/m/p/4wbc6ku5and at the Companys website www.farmerbros.com under Investor Relations. � The call also will be available to investors and analysts by dialing (844) 423-9890. The passcode/ID is 73011472 within the U.S. and Canada.
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The audio-only webcast will be archived for approximately 30 days on the Investor Relations section of the Farmer Bros. Co. website, and will be available approximately four hours after the end of the live webcast.
Forward-Looking Statements
Certain statements contained in this press release, including the Companys plans and expectations regarding the Corporate Relocation Plan, are not based on historical fact and are forward-looking statements within the meaning of federal securities laws and regulations. These statements are based on management's current expectations, assumptions, estimates and observations of future events and include any statements that do not directly relate to any historical or current fact. These forward-looking statements can be identified by the use of words like anticipates, estimates, projects, expects, plans, believes, intends, will, could, assumes and other words of similar meaning. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. The Company intends these forward-looking statements to speak only at the time of this press release and does not undertake to update or revise these statements as more information becomes available except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission ("SEC"). Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, the timing and success of implementation of the Corporate Relocation Plan, the relative effectiveness of compensation-based employee incentives in causing improvements in Company performance, the capacity to meet the demands of the Companys large national account customers, the extent of execution of plans for the growth of Company business and achievement of financial metrics related to those plans, the success of the Company to retain and/or attract qualified employees, the effect of the capital markets as well as other external factors on stockholder value, fluctuations in availability and cost of green coffee, competition, organizational changes, changes in the strength of the economy, the Company's ability to refinance or replace its existing credit facility upon its expiration, business conditions in the coffee industry and food industry in general, the Company's continued success in attracting new customers, variances from budgeted sales mix and growth rates, weather and special or unusual events, changes in the quality or dividend stream of the third parties' securities and other investment vehicles in which the Company has invested its assets, as well as other risks described in this press release and other factors described from time to time in the Company's filings with the SEC.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share and per share data)
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� | Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||
� | 2014 | 2013 | 2014 | 2013 | |||||||||||
Net sales | $ | 144,809 | $ | 143,129 | $ | 280,793 | $ | 272,658 | |||||||
Cost of goods sold | 91,667 | 88,755 | 179,530 | 170,279 | |||||||||||
Gross profit | 53,142 | 54,374 | 101,263 | 102,379 | |||||||||||
Selling expenses | 39,599 | 38,322 | 78,049 | 74,936 | |||||||||||
General and administrative expenses | 9,860 | 10,329 | 16,869 | 18,829 | |||||||||||
Net losses (gains) from sales of assets | 178 | 73 | 239 | (50 | ) | ||||||||||
Operating expenses | 49,637 | 48,724 | 95,157 | 93,715 | |||||||||||
Income from operations | 3,505 | 5,650 | 6,106 | 8,664 | |||||||||||
Other income (expense): | |||||||||||||||
Dividend income | 291 | 258 | 585 | 526 | |||||||||||
Interest income | 90 | 110 | 179 | 218 | |||||||||||
Interest expense | (208 | ) | (393 | ) | (415 | ) | (765 | ) | |||||||
Other, net | (530 | ) | (514 | ) | (594 | ) | (1,420 | ) | |||||||
Total other expense | (357 | ) | (539 | ) | (245 | ) | (1,441 | ) | |||||||
Income before taxes | 3,148 | 5,111 | 5,861 | 7,223 | |||||||||||
Income tax expense | 252 | 402 | 450 | 709 | |||||||||||
Net income | $ | 2,896 | $ | 4,709 | $ | 5,411 | $ | 6,514 | |||||||
Net income per common sharebasic | $ | 0.18 | $ | 0.30 | $ | 0.34 | $ | 0.41 | |||||||
Net income per common sharediluted | $ | 0.18 | $ | 0.29 | $ | 0.33 | $ | 0.41 | |||||||
Weighted average common shares outstandingbasic | 16,030,167 | 15,847,958 | 16,016,984 | 15,825,100 | |||||||||||
Weighted average common shares outstandingdiluted | 16,184,138 | 15,964,682 | 16,158,725 | 15,904,456 | |||||||||||
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FARMER BROS.�CO.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share data)
December 31, 2014 | June 30, 2014 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 4,746 | $ | 11,993 | |||
Restricted cash | 720 | ||||||
Short-term investments | 23,687 | 22,632 | |||||
Accounts and notes receivable, net | 46,183 | 42,230 | |||||
Inventories | 70,677 | 71,044 | |||||
Income tax receivable | 228 | 228 | |||||
Short-term derivative assets | 5,153 | ||||||
Prepaid expenses | 4,919 | 4,180 | |||||
Total current assets | 151,160 | 157,460 | |||||
Property, plant and equipment, net | 92,141 | 95,641 | |||||
Intangible assets, net | 5,628 | 5,628 | |||||
Other assets | 6,045 | 7,034 | |||||
Deferred income taxes | 414 | 414 | |||||
Total assets | $ | 255,388 | $ | 266,177 | |||
LIABILITIES AND STOCKHOLDERS EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 37,245 | $ | 44,336 | |||
Accrued payroll expenses | 19,706 | 22,190 | |||||
Short-term borrowings under revolving credit facility | 1,345 | 78 | |||||
Short-term obligations under capital leases | 3,654 | 3,779 | |||||
Short-term derivative liabilities | 3,720 | ||||||
Deferred income taxes | 1,169 | 1,169 | |||||
Other current liabilities | 5,182 | 5,318 | |||||
Total current liabilities | 72,021 | 76,870 | |||||
Accrued postretirement benefits | 19,477 | 19,970 | |||||
Other long-term liabilitiescapital leases | 4,156 | 5,924 | |||||
Accrued pension liabilities | 39,573 | 40,256 | |||||
Accrued workers compensation liabilities | 8,124 | 7,604 | |||||
Deferred income taxes | 780 | 689 | |||||
Total liabilities | $ | 144,131 | $ | 151,313 | |||
Commitments and contingencies | |||||||
Stockholders equity: | |||||||
Preferred stock, $1.00 par value, 500,000 shares authorized and none issued | $ | $ | |||||
Common stock, $1.00 par value, 25,000,000 shares authorized; 16,591,825 and 16,562,450 issued and outstanding at December 31, 2014 and June�30, 2014, respectively | 16,592 | 16,562 | |||||
Additional paid-in capital | 34,494 | 35,917 | |||||
Retained earnings | 111,623 | 106,212 | |||||
Unearned ESOP shares | (11,234 | ) | (16,035 | ) | |||
Accumulated other comprehensive loss | (40,218 | ) | (27,792 | ) | |||
Total stockholders equity | $ | 111,257 | $ | 114,864 | |||
Total liabilities and stockholders equity | $ | 255,388 | $ | 266,177 | |||
Non-GAAP Financial Measures
In addition to net income determined in accordance with GAAP, we use certain non-GAAP financial measures, including Adjusted EBITDA, "Adjusted EBITDA Margin," "Net income excluding restructuring and other transition expenses" and "Net income excluding restructuring and other transition expenses per common sharediluted" in assessing our operating performance. We believe these non-GAAP financial measures provide a useful measure of the Companys operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company's ongoing operating performance. Further, management utilizes these measures, in addition to GAAP measures, when evaluating and comparing the Company's operating performance against internal financial forecasts and budgets.
We define Adjusted EBITDA, as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization expense, ESOP and share-based compensation expense, non-cash impairment losses, non-cash pension withdrawal expense, other similar non-cash expenses and, beginning in the quarter ended December 31, 2014, restructuring and other transition expenses associated with the recently announced Corporate Relocation Plan. Restructuring and other transition expenses are expenses that are directly attributable to the Corporate Relocation Plan, consisting primarily of consulting and legal expenses in the three and six months ended December 31, 2014. We have excluded these restructuring and other transition expenses from Adjusted EBITDA because we believe they are not reflective of our ongoing operating results. We define "Adjusted EBITDA Margin" as Adjusted EBITDA expressed as a percentage of net sales. We define "Net income excluding restructuring and other transition expenses" as net income excluding restructuring and other transition expenses associated with the recently announced Corporate Relocation Plan, net of tax.We define Net income excluding restructuring and other transition expenses per common sharediluted as Net income excluding restructuring and other transition expenses divided by the weighted-average number of common shares outstanding, inclusive of the dilutive effect of common equivalent shares outstanding during the period.
Adjusted EBITDA, Adjusted EBITDA Margin, Net income excluding restructuring and other transition expenses and Net income excluding restructuring and other transition expenses per common sharediluted, as defined by us, may not be comparable to similarly titled measures reported by other companies. We do not intend for non-GAAP financial measures to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.
Set forth below is a reconciliation of reported net income to Adjusted EBITDA (unaudited):�
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
($ in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income, as reported(1) | $ | 2,896 | $ | 4,709 | $ | 5,411 | $ | 6,514 | ||||||||
Income tax expense | 252 | 402 | 450 | 709 | ||||||||||||
Interest expense | 208 | 393 | 415 | 765 | ||||||||||||
Depreciation and amortization expense | 6,163 | 7,054 | 12,419 | 14,478 | ||||||||||||
ESOP and share-based compensation expense | 1,622 | 1,230 | 2,880 | 2,134 | ||||||||||||
Restructuring and other transition expenses | 784 | 974 | ||||||||||||||
Adjusted EBITDA(1) | $ | 11,925 | $ | 13,788 | $ | 22,549 | $ | 24,600 | ||||||||
Adjusted EBITDA Margin | 8.2 | % | 9.6 | % | 8.0 | % | 9.0 | % | ||||||||
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(1) Includes $2.2 million and $0 in expected beneficial effect of liquidation of LIFO inventory quantities in cost of goods sold in the three months ended December 31, 2014 and 2013, respectively. Includes $2.5 million and $0 in expected beneficial effect of liquidation of LIFO inventory quantities in cost of goods sold in the six months ended December 31, 2014 and 2013, respectively.
Set forth below is a reconciliation of reported net income to Net income excluding restructuring and other transition expenses, and reported net income per common sharediluted to Net income excluding restructuring and other transition expenses per common sharediluted (unaudited):�
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
($ in thousands) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income, as reported(1) | $ | 2,896 | $ | 4,709 | $ | 5,411 | $ | 6,514 | ||||||||
Restructuring and other transition expenses, net of tax of zero(2) | 784 | 974 | ||||||||||||||
Net income excluding restructuring and other transition expenses | $ | 3,680 | $ | 4,709 | $ | 6,385 | $ | 6,514 | ||||||||
Net income per common sharediluted, as reported | $ | 0.18 | $ | 0.29 | $ | 0.33 | $ | 0.41 | ||||||||
Impact of restructuring and other transition expenses, net of tax of zero(2) | $ | 0.05 | $ | $ | 0.06 | $ | ||||||||||
Net income excluding restructuring and other transition expenses per common sharediluted | $ | 0.23 | $ | 0.29 | $ | 0.39 | $ | 0.41 | ||||||||
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(1) Includes $2.2 million and $0 in expected beneficial effect of liquidation of LIFO inventory quantities in cost of goods sold in the three months ended December 31, 2014 and 2013, respectively. Includes $2.5 million and $0 in expected beneficial effect of liquidation of LIFO inventory quantities in cost of goods sold in the six months ended December 31, 2014 and 2013, respectively.
(2) The impact of restructuring and other transition expenses on income tax expense was not material.
Investor Contact:
Mark Nelson
(310) 787-5241
Media Contact:
Rosemary Wilson
(213) 630-6550