Form 8-K Performance Food Group For: May 03
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 3, 2016
Performance Food Group Company
(Exact name of registrant as specified in its charter)
| Delaware | 001-37578 | 43-1983182 | ||
| (State or other jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) | ||
| 12500 West Creek Parkway Richmond, Virginia |
23238 | |||
| (Address of registrant’s principal executive office) | (Zip code) | |||
(804) 484-7700
(Registrant’s 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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 203.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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.
On May 4, 2016, Performance Food Group Company (the “Company”) issued a press release announcing the results of the Company’s operations for the fiscal quarter ended March 26, 2016. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in this Item 2.02.
The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 3, 2016, Robert D. Evans notified the Company of his intent to retire from his position as Senior Vice President and Chief Financial Officer of the Company. Mr. Evans’s retirement will be effective on the date that the Company appoints a new Chief Financial Officer (the “Effective Date”). The Company is working with an executive search firm to assist in the search for Mr. Evans’s successor. Following Mr. Evans’s retirement, Mr. Evans will remain available to provide transition and advisory services to the Company pursuant to the transition agreement described below from the Effective Date until the earlier of (i) September 30, 2016, (ii) the date that the Company’s Chief Executive Officer determines that transition services are no longer necessary and (iii) Mr. Evans’s death or permanent Disability (as defined in the Performance Food Group Company 2015 Omnibus Incentive Plan) (such date, the “Termination Date”).
On May 3, 2016, the Company entered into a transition agreement with Mr. Evans (the “Transition Agreement”).
Pursuant to the Transition Agreement, Mr. Evans will continue to receive his current base salary and remain eligible to receive an annual bonus through the Termination Date. Following the Termination Date and for a period of one year, Mr. Evans will provide consulting services to the Company, for which the Company will pay Mr. Evans a consulting fee of $460,000.
Subject to Mr. Evans’ continued compliance with certain restrictive covenants and the execution and non-revocation of a release of claims in favor of the Company, Mr. Evans will be entitled to the following: (i) an amount equal to $525,000, payable over 12 months; (ii) an annual bonus for fiscal year 2016 (either full or pro-rated depending on whether the Termination Date occurs prior to or after the completion of fiscal year 2016) based on the Company’s achievement of performance targets, payable when such annual bonuses are paid to other Company executives; (iii) a pro-rated annual bonus for fiscal year 2017 based on the Company’s achievement of performance targets, payable when such annual bonuses are paid to other Company executives; (iv) payments for annual fees for participation in the Company’s executive health programs for two years; (v) all unvested options and shares of restricted stock granted pursuant to the Company’s Amended and Restated 2007 Management Option Plan (the “2007 Plan”) will remain outstanding and eligible to vest subject to the achievement of the “performance vesting” conditions described in the 2007 Plan; (vi) vesting of 25% of the options and restricted stock (time-based vesting award) granted pursuant to the Company’s 2015 Omnibus Incentive Plan (the “2015 Plan”), with the remaining 75% of such awards expiring as of the date of the Transition Agreement; and (vii) the target number of shares of restricted stock (performance-based vesting award) granted pursuant to the 2015 Plan will be reduced by 75% and expire as of the date of the Transition Agreement and up to 25% of the remaining target number of shares of restricted stock (performance-based vesting award) will remain eligible to vest based on the achievement of performance targets, as determined on June 30, 2018.
The Transition Agreement also contains customary restrictive covenants, including non-competition and non-solicitation covenants each with a one year duration following the Termination Date and an indefinite non-disparagement covenant.
The foregoing summary description of the terms of the Transition Agreement is qualified in its entirety by reference to the Transition Agreement, which is filed as Exhibit 10.1 hereto.
The Company expects to incur a charge of approximately $1.1 million related to Mr. Evans’s departure through the period ending with the Termination Date. Additionally, the $460,000 of consulting costs will be recognized over the period of the consulting services.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit |
Description | |
| 10.1 | Transition Agreement, dated May 3, 2016, between Performance Food Group Company and Robert D. Evans. | |
| 99.1 | Press Release of Performance Food Group Company, dated May 4, 2016, announcing results for the fiscal quarter ended March 26, 2016. | |
SIGNATURE
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.
| PERFORMANCE FOOD GROUP COMPANY (Registrant) | ||||||
| Dated: May 4, 2016 | By: | /s/ A. Brent King | ||||
| Name: | A. Brent King | |||||
| Title: | Senior Vice President, General Counsel and Secretary | |||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 10.1 | Transition Agreement, dated May 3, 2016, between Performance Food Group Company and Robert D. Evans. | |
| 99.1 | Press Release of Performance Food Group Company, dated May 4, 2016, announcing results for the fiscal quarter ended March 26, 2016. | |
Exhibit 10.1
May 3, 2016
Mr. Robert D. Evans
7612 Arrowood Road
Bethesda, MD 20817
Dear Bob,
In light of your notifying Performance Food Group Company (the “Company”) of your intention to retire from the Company, this letter agreement (the “Letter Agreement”) confirms our understanding of your role going forward with the Company. The terms of your continued service with the Company are summarized below:
| 1. | Position: During any period of employment from the date hereof (the “Effective Date”) through the date that the Company appoints a new Chief Financial Officer (the “Successor CFO”), you shall serve as the Company’s Chief Financial Officer (the “CFO”). From the date that the Successor CFO is appointed until the Termination Date (as defined below, such period the “Transition Period”), you shall serve the Company and provide transition and advisory services to the Company and the Successor CFO. On the Termination Date, you shall cease to be an employee of the Company and shall resign from all titles, offices or boards of directors of the Company or any of its subsidiaries, if any, which you hold or on which you serve. For purposes of this Letter Agreement, “Termination Date” shall mean the earlier of (i) September 30, 2016, (ii) the date that the Company’s Chief Executive Officer determines that transition services are no longer necessary (as determined in the Chief Executive Officer’s sole discretion) or (iii) your death or permanent Disability (as defined in the Performance Food Group Company 2015 Omnibus Incentive Plan (the “2015 Plan”)); provided, that in the event that the Company terminates your employment with the Company prior to September 30, 2016 as a result of clause (ii) above, you will be entitled to Base Compensation, 2016 Bonus and 2017 Bonus (each as defined below) as though your employment with the Company continued through September 30, 2016. |
As CFO and during the Transition Period, you agree to render services to the Company on a full-time basis and to devote your full business time and energy to the performance of your duties and the business and affairs of the Company and any parent, subsidiary or affiliate of the Company.
| 2. | Term: The term of this Agreement shall commence as of the Effective Date and shall continue until the Termination Date (such period, the “Term”). |
| 3. | Annual Base Compensation: During the Term, you will continue to receive your current annual base compensation of $460,000 (the “Base Compensation”). Base Compensation shall be pro-rated for the portion of each year during which you are actually employed by the Company and shall be paid in accordance with the Company’s customary payroll practices. |
| 4. | Annual Bonus: You shall remain eligible to receive an annual bonus (the “Annual Bonus”), subject to your continued employment with the Company on the date that such annual bonus is paid to other executives of the Company. If you are not employed by the Company on such payment date, you shall receive a pro-rated bonus for the fiscal year in which the Termination Date occurs as discussed further in Section 5. |
| 5. | Payments and Benefits upon Termination of Employment: |
| (a) | Transition Incentive Payments and Benefits. In full satisfaction of, and in lieu of, any payments you may be eligible for under the Senior Management Severance Plan, as modified by the letter agreement by and between you and the Company, dated as of April 4, 2011 (the “Plan”) and subject to your continued employment through the Termination Date and compliance with Sections 11 and 12 of this Letter Agreement, the Company will provide to you the following payments and benefits: |
| (i) | $525,000, payable over twelve (12) months in equal installments in accordance with the Company’s customary payroll practices; |
| (ii) | with respect to the Annual Bonus for fiscal year 2016 (the “2016 Bonus”), in the event that the Termination Date occurs prior to the completion of the 2016 fiscal year, non-prorated 2016 Bonus that you would have been entitled to receive if your employment had not terminated, based on the Company’s achievement of the applicable performance targets for fiscal year 2016, payable at such time as 2016 Bonuses are paid to other executives of the Company, but no later than two and one-half (2 1⁄2) months after the last day of fiscal year 2016; |
| (iii) | with respect to the Annual Bonus for fiscal year 2017 (the “2017 Bonus”), in the event that the Termination Date occurs after the beginning of the 2017 fiscal year, a pro-rata portion of the 2017 Bonus that you would have been entitled to receive if your employment had not terminated, based on the Company’s achievement of the applicable performance targets for fiscal year 2017, payable at such time as 2017 Bonuses are paid to other executives of the Company, but no later than two and one-half (2 1⁄2) months after the last day of fiscal year 2017; and |
| (iv) | in lieu of the Company paying your premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company will pay for the annual fee for your participation in the Company’s executive health program, as applicable, for two (2) years following the Termination Date. |
| (b) | Treatment of Equity. In full satisfaction of, and in lieu of, any treatment you may be eligible for pursuant to awards you have been granted pursuant to the Performance Food Group Company (f/k/a Wellspring Distribution Corp.) Amended and Restated 2007 Management Option Plan (the “2007 Plan”) and |
| the 2015 Plan and subject to your continued employment with the Company through the Termination Date and compliance with Sections 11 and 12 of this Letter Agreement, you will be entitled to the treatment described below. Capitalized terms in this Section 5(b) that are not defined in this Letter Agreement shall have the meaning ascribed to them in the 2007 Plan, the 2015 Plan or the award agreements (collectively, the “Equity Documents”) thereunder, as applicable. |
| (i) | With respect to your outstanding equity awards granted pursuant to the 2007 Plan: |
| (A) | you shall have 30 days from the Termination Date to exercise your vested Tranche I Options; and |
| (B) | following the Termination Date, you will continue to be eligible to cliff vest in 100% of your unvested Tranche II Options, Tranche II Restricted Stock, Tranche III Options and Tranche III Restricted Stock on the earliest of either: |
| (1) | March 12, 2019 (unless Blackstone Capital Partners V L.P. and Wellspring Capital Partners IV, L.P. together with their respective affiliates have disposed of all of their equity securities in the Company, including securities that are convertible into equity securities of the Company, prior to such date and the criteria set forth in (2) below is not satisfied); or |
| (2) | the date that both of the following performance criteria are achieved: |
| (x) | the Sponsor IRR is equal to or greater than 12%; and |
| (y) | the Sponsor Inflows are at least 2.0 times Sponsor Outflows for Tranche II Options and Tranche II Restricted Stock and 2.5 times Sponsor Outflows for Tranche III Options and Tranche III Restricted Stock. |
| (ii) | With respect to your outstanding equity awards granted pursuant to the 2015 Plan: |
| (A) | 75% of the Options shall expire immediately for no consideration upon execution of this Agreement and, on the Termination Date, your remaining Options shall vest and be exercisable (to the extent not previously vested). You shall have 90 days from the Termination Date to exercise such vested Options, at which time any unexercised Options shall be forfeited to the Company by you for no consideration therefor; |
| (B) | 75% of your shares of Restricted Stock (Time-Based Vesting Award) shall expire immediately for no consideration upon execution of this Agreement and, on the Termination Date, your remaining shares of Restricted Stock (Time-Based Vesting Award) shall vest and the restrictions on such shares shall lapse; and |
| (C) | upon execution of this Agreement, your Target Number of Shares of Restricted Stock (Performance-Based Vesting Award) shall be reduced by 75% and expire immediately for no consideration and up to 25% of the remaining Target Number of Shares of Restricted Stock (Performance-Based Vesting Award) shall remain eligible to vest based on the Total Earned Amount, as determined on June 30, 2018. |
| 6. | Release: The amounts payable and benefits provided to you under Section 5 (the “Transition Incentive Benefits”) are subject to execution and non-revocation of a release of claims by you (or, if applicable, your estate or legal representative, in such capacity), substantially in the form attached hereto as Exhibit A, within twenty one (21) days of the Termination Date. Except as provided in the preceding sentence, if you (or, if your estate or legal representative) fail to execute the release of claims in such a timely manner so as to permit any revocation period to expire prior to the end of such twenty-one (21)-day period, or revoke your acceptance of such release in a writing delivered to the Company’s General Counsel within seven (7) days of its execution, you shall not be entitled to any of the Transition Incentive Benefits. |
| 7. | Employee Benefits: During the Term, you will remain eligible to participate in the Company’s health and welfare plans and other employee benefit plans and programs, in effect from time to time, as determined by the Company. For the avoidance of doubt, except as provided in Section 5(a)(iv), you will not be eligible to participate in the Company’s employee benefit plans and programs following the Termination Date. |
| 8. | Consulting Appointment: You shall serve as a consultant to the Company until the first (1st) anniversary of the Termination Date, or such earlier date if earlier terminated by the Company (the “Consulting Term”). During the Consulting Term, you will make yourself available, on an as-needed basis, to provide your assistance and expertise in all matters reasonably requested by the Company in connection with the transition of your duties and responsibilities, and with respect to such other matters relating to the business of the Company and its affiliates and subsidiaries (the “Consulting Services”). Notwithstanding the foregoing, the Consulting Term shall immediately terminate upon any breach by you of the Letter Agreement (including any restrictive covenant set forth in Article IX of the 2007 Plan), and the Company shall have no further obligations with respect to the Consulting Fee or the Consulting Services upon such early termination of the Consulting Term. In connection with your provision of the Consulting Services, the Company shall pay you an amount equal to $460,000 (the “Consulting Fee”) in a lump sum as soon as practicable following the completion of the Consulting Term. |
You acknowledge that, during the Consulting Term, you will not be an “employee” (or person of similar status) of the Company or its affiliates or subsidiaries for purposes of the Internal Revenue Code of 1986, as amended (the “Code”), and as a result, the Company will not withhold or deduct from the Consulting Fees any amounts as federal income tax withholding from wages or as employee contributions under the Federal Insurance Contributions Act or any other state or federal laws, and you will be solely responsible for the payment of any federal, state or local income or payroll taxes with respect to the Consulting Fee. In the event that the consulting arrangement described herein is reclassified as an employment relationship by any governmental agency or court, you acknowledge and agree that you will not seek to participate in or benefit from any of the employee benefit plans or programs of the Company or its affiliates as a result of such reclassification. In addition, it is understood by you and the Company that during the Consulting Term, you shall be an independent contractor with respect to the Company and not an employee of the Company. You acknowledge and agree that following the Termination Date, and in each case other than as required by COBRA, you (and your eligible dependents) shall no longer be eligible for, actively participate in, accrue service credit or have contributions made, either by you or on your behalf, under any employee benefit plan sponsored or maintained by the Company in respect of periods commencing following the Termination Date, including without limitation, workers’ or unemployment compensation benefits, any plan which is intended to qualify under Section 401(a) of the Code, fringe benefits or other similar plans of the Company, and you shall have no further right to receive any such benefits from the Company.
| 9. | Termination. Your service with the Company is “at-will.” You and the Company may each terminate this Letter Agreement at any time upon sixty (60) days’ written notice, and in connection with such termination the Company shall be obligated to pay you only the Base Compensation accrued but unpaid through date of the termination; provided that in the event the Company terminates this Letter Agreement for Cause (as such term is defined in the Plan or the Equity Documents), in the Company’s sole discretion, the termination may have immediate effect. |
| 10. | Compliance with Company Policies. You agree that, during the Term, you will continue to comply with all company policies to the extent relevant to your activities. |
| 11. | Non-Disparagement: During and after the Term, you agree that you will make no disparaging or defamatory comments in any respect regarding the Company or its direct and indirect subsidiaries and affiliates or significant beneficial owners, each of their successors, their respective past, current or future directors, officers, or employees, or their respective products or services or make any comments concerning any aspect of your relationship with the Company or, if applicable, the conduct or events which precipitate your termination of service from the Company. All reference requests submitted to the Company regarding your employment and service with the Company will be directed to the Senior Vice President and Chief Human Resources Officer who will be the only person on behalf of the Company to respond and will do so in accordance with the Company’s current policies. |
| 12. | Continued Compliance with Restrictive Covenants: You acknowledge and agree that (i) during and after the Term, you shall continue to be subject to the restrictive covenants set forth in Article IX of the 2007 Plan and (ii) notwithstanding anything in the Letter Agreement to the contrary, in the event that you violate the restrictive covenants set forth in Article IX of the 2007 Plan following the Termination Date without the permission of the Company, you will immediately forfeit your Transition Incentive Benefits and any then-vested equity, for no consideration therefor. |
| 13. | Tax Withholding: The Company shall be entitled to withhold from the payment of any compensation and provision of any benefit under this Letter Agreement such amounts as may be required by applicable law, including without limitation for purposes of the payment of payroll and income taxes. |
| 14. | Section 409A: The intent of the parties is that payments and benefits under this Letter Agreement comply with or be exempt from Section 409A of the Internal Revenue Code, as amended (“Section 409A”), and this Letter Agreement shall be interpreted and construed in a manner that establishes an exemption from (or compliance with) the requirements of Section 409A. Any terms of this Letter Agreement that are undefined or ambiguous shall be interpreted in a manner that complies with Section 409A to the extent necessary to comply with Section 409A. With respect to any reimbursement or in-kind benefit plans, policies or arrangements of the Company that constitute deferred compensation for purposes of Section 409A, except as otherwise permitted by Section 409A, the following conditions shall be applicable: (i) the amount eligible for reimbursement, or in-kind benefits provided, under any such plan, policy or arrangement in one calendar year may not affect the amount eligible for reimbursement, or in-kind benefits to be provided, under such plan, policy or arrangement in any other calendar year (except that the health and dental plans may impose a limit on the amount that may be reimbursed or paid), (ii) any reimbursement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. For purposes of Section 409A, your right to receive any installment payments shall be treated as a right to receive a series of separate and distinct payments. In no event may you, directly or indirectly, designate the calendar year of any payment to be made under this Letter Agreement, to the extent such payment is subject to Section 409A. The Company shall not be subject to any claim, liability or expense relating to, and the Company shall not have any obligation to indemnify or otherwise protect you from the obligation to pay any taxes, interest or penalties pursuant to, Section 409A. |
Further, any provision of this Letter Agreement to the contrary notwithstanding, if at the time of your separation from service, the Company determines that you are a “specified employee,” within the meaning of Section 409A, then to the extent any payment or benefit that you become entitled to under this Letter Agreement on account of such separation from service would be considered nonqualified deferred compensation under Section 409A, such payment or benefit shall be paid or provided at the date which is the earlier of (i) six (6) months and one day after such separation from service and (ii) the date of your death (the “Delay Period”). Upon the expiration of the Delay Period, all
| payments and benefits delayed pursuant to this Section 14 (whether they would have otherwise been payable in a lump sum or in installments in the absence of such delay) shall be paid or provided to you in a lump sum, and any remaining payments and benefits due under this Letter Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. |
| 15. | Amendment; Waiver: No provision of this Letter Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and you or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any breach with respect to any provision, condition or requirement of this Letter Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent breach or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. |
| 16. | Severability: If any provision of this Letter Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Letter Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Letter Agreement. |
| 17. | Executive: Your rights and obligations under this Agreement shall not be transferable by you by assignment or otherwise, without the prior written consent of the Company; provided, however, that if you die, all amounts payable to you hereunder on or following your death shall be paid in accordance with the terms of this Agreement to your devisee, legatee, or other designee, or if there be no such designee, to your estate. |
| 18. | Entire Agreement: This Letter Agreement contains the entire understanding and agreement of the parties, and supersedes any and all other prior and/or contemporaneous understandings and agreements, either oral or in writing, between the parties hereto with respect to the subject matter hereof, all of which are merged herein. |
| 19. | Other Conditions: This Letter Agreement shall be interpreted and governed in accordance with the laws of the State of Delaware without reference to rules relating to conflicts of law. This Letter Agreement may be executed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. |
Please acknowledge your agreement to the terms and conditions of this Letter Agreement, which will govern your continued service with the Company, by signing and dating this letter on the space provided below.
| PERFORMANCE FOOD GROUP COMPANY | ||
| By: | /s/ Carol O’Connell | |
| Name: Carol O’Connell Title: CHRO | ||
[Signature Page to Evans Letter Agreement]
| ACCEPTED AND AGREED: |
| /s/ Robert D. Evans |
| Robert D. Evans |
[Signature Page to Evans Letter Agreement]
Exhibit A
RELEASE AND WAIVER OF CLAIMS
This Release and Waiver of Claims (“Release”) is entered into as of this [●] day of [●], 2016, by ROBERT D. EVANS (the “Executive”) and delivered to Performance Food Group Company (the “Company”).
Executive agrees as follows:
The employment relationship between Executive and the Company and its subsidiaries and affiliates, as applicable, terminated on the [●] day of [●], 2016 (the “Termination Date”) pursuant to the Letter Agreement between the Company and Executive dated May 2, 2016 (“Letter Agreement”).
In consideration of the payments, rights and benefits provided for in Section 5 of the Letter Agreement (“Separation Terms”), the sufficiency of which Executive hereby acknowledges, Executive, on behalf of himself and Executive’s agents, representatives, attorneys, administrators, heirs, executors and assigns (collectively, the “Employee Releasing Parties”), hereby releases and forever discharges the Company Released Parties (as defined below), from all claims, charges, causes of action, obligations, expenses, damages of any kind (including attorney’s fees and costs actually incurred) or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Release, arising from or relating to Executive’s employment or termination from employment with the Company, including a release of any rights or claims Executive may have under Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the Older Workers Benefit Protection Act; the Americans with Disabilities Act of 1990; the Rehabilitation Act of 1973; the Family and Medical Leave Act of 1993; Section 1981 of the Civil Rights Act of 1866; Section 1985(3) of the Civil Rights Act of 1871; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act; any other federal, state or local laws against discrimination; and any other federal, state, or local statute, regulation or common law relating to employment, wages, hours, or any other terms and conditions of employment. This includes a release by Executive of any and all claims or rights arising under contract (whether written or oral, express or implied), covenant, public policy, tort or otherwise. For purposes hereof, “Company Released Parties” shall mean the Company and any of its past or present employees, agents, insurers, attorneys, administrators, officials, directors, shareholders, investors, partners, divisions, parents, members, subsidiaries, affiliates, predecessors, successors, employee benefit plans, and the sponsors, fiduciaries, or administrators of the Company’s employee benefit plans.
Executive acknowledges that Executive is waiving and releasing rights that Executive may have under the ADEA and other federal, state and local statutes contract and the common law and that this Release is knowing and voluntary. This Release does not apply to any rights or claims that may arise after the date of execution by Executive of this Release. Executive acknowledges that the consideration given for this Release is in addition to anything of value to
which Executive is already entitled. Executive further acknowledges that Executive has been advised by this writing that: (i) Executive should consult with an attorney prior to executing this Release; (ii) Executive has up to twenty-one (21) days within which to consider this Release, although Executive may, at Executive’s discretion, sign and return this Release at an earlier time, in which case Executive waives all rights to the balance of this twenty-one (21) day review period; and (iii) for a period of seven (7) days following the execution of this Release in duplicate originals, Executive may revoke this Release in a writing delivered to the Company’s General Counsel, and this Release shall not become effective or enforceable until the revocation period has expired.
This Release does not release the Company Released Parties from (i) any obligations due to Executive under the Separation Terms or this Release, (ii) any rights Executive has to indemnification by the Company and to directors and officers liability insurance coverage, or (iii) any vested rights Executive has under the Company’s 401(k) plan as a result of Executive’s actual service with the Company.
Executive represents and warrants that he has not filed any action, complaint, charge, grievance, arbitration or similar proceeding against the Company Released Parties that is currently pending.
This Release is not an admission by the Company Released Parties or the Employee Releasing Parties of any wrongdoing, liability or violation of law.
Executive waives any right to reinstatement or future employment with the Company following Executive’s separation from the Company on the Termination Date.
Executive shall continue to be bound by the restrictive covenants contained in the Letter Agreement.
This Release shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to the principles of conflict of laws.
This Release represents the complete agreement between Executive and the Company concerning the subject matter in this Release and supersedes all prior agreements or understandings, written or oral. This Release may not be amended or modified otherwise than by a written agreement executed by Executive and the Company or their respective successors and legal representatives.
Each of the sections contained in this Release shall be enforceable independently of every other section in this Release, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Release.
Executive acknowledges that Executive has carefully read and understands this Release, that Executive has the right to consult an attorney with respect to its provisions and that this Release has been entered into knowingly and voluntarily. Executive acknowledges that no representation, statement, promise, inducement, threat or suggestion has been made by any of the Company Released Parties to influence Executive to sign this Release except such statements as are expressly set forth herein or in the Letter Agreement.
The parties to this Release have executed this Release as of the day and year first written above.
| EXECUTIVE |
|
|
| ROBERT D. EVANS |
Exhibit 99.1
| NEWS RELEASE
For Immediate Release May 4, 2016 |
Investors: Michael D. Neese VP, Investor Relations (804) 287-8126 |
Media: Joe Vagi Manager, Corporate Communications (804) 484-7737 |
Performance Food Group Company Reports Third-Quarter Fiscal 2016 Results;
Provides Full-Year Fiscal 2016 Adjusted EBITDA Growth Outlook of 10% to 12%
Third-Quarter Fiscal 2016 Highlights
| • | Increased case volume by 4.1% |
| • | Increased net sales by 3.0% to $3.9 billion |
| • | Increased gross profit by 6.5% to $480.8 million |
| • | Increased operating profit by 38.7% to $37.6 million |
| • | Increased net income by 224.1% to $9.4 million |
| • | Increased Adjusted EBITDA by 10.2% to $76.4 million1 |
| • | Increased diluted earnings per share (EPS) by 200% to $0.09 |
| • | Increased Adjusted diluted EPS by 36.4% to $0.151 |
| • | Signed Multi-year Distribution Agreement with Red Lobster |
First-Nine Months Fiscal 2016 Highlights
| • | Increased case volume by 4.5% |
| • | Increased net sales by 4.0% to $11.7 billion |
| • | Increased gross profit by 6.7% to $1.4 billion |
| • | Increased operating profit by 26.7% to $135.4 million |
| • | Increased net income by 75.3% to $39.1 million |
| • | Increased Adjusted EBITDA by 11.4% to $251.9 million1 |
| • | Increased diluted EPS by 60.0% to $0.40 |
| • | Increased Adjusted diluted EPS by 35.6% to $0.611 |
| 1 | This earnings release includes several metrics, including EBITDA, Adjusted EBITDA, Adjusted Cost of Goods Sold, Adjusted Gross Profit, Adjusted Operating Expense, Adjusted Operating Profit, Adjusted Net Income, and Adjusted Diluted Earnings per Share that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”). Please see Tables B and C for the definitions of such non-GAAP financial measures and reconciliations of such non-GAAP financial measures to their respective most comparable financial measures calculated in accordance with GAAP. |
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RICHMOND, Va. – Performance Food Group Company (“PFG”) (NYSE: PFGC) today announced its third-quarter and first- nine months fiscal 2016 business results.
“We are pleased with our third-quarter results, which featured double-digit growth in both Adjusted EBITDA and EPS,” said George Holm, PFG’s President and Chief Executive Officer. “All of our segments are executing their growth strategies, which led both to gaining share and growing margins. Our largest segment, Performance Foodservice, posted its 27th consecutive quarter of growing independent case volume in excess of 6% over the prior quarter.”
“We are excited to announce that we have secured Red Lobster as a new customer to our Customized segment,” added Holm. “Our new opportunity is a testament to our capabilities in foodservice distribution, the value of our supply chain efficiencies, and our shared commitment to providing high-quality products and a world-class experience to Red Lobster’s millions of loyal customers.”
“Our strategic initiatives remain on track,” noted Holm, “and, as a result, we have increased the bottom end of our EBITDA growth outlook from 9% to 12% such that our new EBITDA growth outlook is 10% to 12% reflecting our strong year-to-date results.”
Third-Quarter and First-Nine Months Fiscal 2016 Financial Summary
Total case volume growth increased 4.1% in the third quarter of fiscal 2016 compared to the prior year period and was driven by 3.8% organic growth. For the third quarter and first nine months of fiscal 2016, case growth reflected new and expanding business with Street customers in the Performance Foodservice segment and broad-based growth in Vistar’s sales channels. For the first nine months of 2016, case volume grew 4.5% compared to the prior year period, of which 4.2% was organic.
Net sales for the third quarter of fiscal 2016 were $3.9 billion, an increase of 3.0% versus the comparable prior year period. The net sales growth was primarily driven by an increase in cases sold. Net sales for the first nine months were $11.7 billion, an increase of 4.0% versus the comparable prior year period.
Gross profit dollars increased 6.5% in the third quarter compared to the prior year period, to $480.8 million. The increase in gross profit was the result of growth in cases sold and a higher gross profit per case driven by selling an improved mix of customer channels and products. For the first nine months of 2016, gross profit dollars increased 6.7% compared to the prior year period, to $1.4 billion.
Operating expenses compared to the third quarter of fiscal 2015 and the nine-month period of fiscal 2015 rose 4.4% and 4.9%, respectively, which was slower than gross margin growth, as a result of leverage of our fixed expenses, initiatives undertaken to reduce operating expenses, and lower fuel prices.
In the third quarter, operating profit increased 38.7% compared to the prior year period, to $37.6 million. The increase was primarily driven by the growth in cases sold, improved gross profit, and strong control of operating expenses. For the first nine months of 2016, operating profit increased 26.7% over the prior year period, to $135.4 million.
Net income increased 224.1% to $9.4 million for the third quarter of 2016 compared to net income of $2.9 million in the prior year period. For the quarter, the income tax rate decreased 630 basis points to 39.4%. The decrease in the tax rate was a result of the reduction of non-deductible expenses and state income taxes as a percentage of income before taxes. Diluted earnings per share grew 200% in the third quarter over the prior year period, to $0.09. Adjusted diluted EPS advanced 36.4% in the third quarter over the prior year period, to $0.15 per share.
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For the first nine months of 2016, net income increased 75.3% to $39.1 million. Year-to-date, the income tax rate decreased 250 basis points to 40.6%. The decrease in the tax rate was a result of the reduction of non-deductible expenses and state income taxes as a percentage of income before taxes. Diluted earnings per share grew 60% in the first nine months of 2016 compared to the prior year period, to $0.40. Adjusted diluted EPS of $0.61 grew 35.6%.
EBITDA increased 15.7% in the third quarter of 2016 to $66.5 million. Adjusted EBITDA increased 10.2% to $76.4 million. The Company’s Adjusted EBITDA margin as a percentage of gross profit expanded 60 basis points to 15.9% versus the prior year period, which reflects selling to a more profitable mix of customers and increasing the share of our sales mix in proprietary Performance Brands. For the first nine months of 2016, EBITDA increased 11.5% compared to the prior year period, to $217.9 million. Adjusted EBITDA was $251.9 million, or an 11.4% increase for the first nine months of 2016 compared to the prior year period.
Multi-Year Distribution Agreement with Red Lobster
PFG entered into a distribution agreement with Red Lobster, the world’s largest seafood restaurant company. Under the multi-year agreement, PFG will provide distribution solutions to all of Red Lobster’s more than 670 restaurants in the United States.
PFG anticipates numerous strategic, financial, and operational benefits from the distribution agreement, including:
| • | Red Lobster and its management team have built one of the best and most enduring casual dining businesses in the world, and winning it as a customer solidifies PFG Customized’s position as the premier distributor to full-service chain restaurants. |
| • | Red Lobster’s network of U.S. restaurants has substantial overlap with PFG Customized’s existing business, which enables us to increase sales by over half a billion dollars annually from within Customized’s current network of distribution centers. |
| • | PFG anticipates that the agreement will be accretive to Adjusted EBITDA and Adjusted EPS in fiscal 2017 and expects it to improve PFG’s return on invested capital. |
| • | PFG Customized will begin rolling out service to Red Lobster in its fiscal first and second quarters of 2017. |
Executive Management Change
PFG announced that its Chief Financial Officer (CFO), Bob Evans, has notified the company of his intention to retire from the company. The Company is actively working with an executive search firm to assist in the search for Mr. Evans’ successor. Mr. Evans has agreed to continue to serve as CFO until a successor comes on board and will be available for consulting thereafter to help assure a seamless transition. “We will miss Bob and his insight on the business,” said Holm. “I thank him for all the contributions he has made to PFG over the past seven years.” Mr. Evans led PFG in its critical transition from a private to a public company with a very successful IPO and an enhanced capital structure. During his tenure, PFG has grown its sales by more than 50%. Holm noted, “Bob leaves us with a very solid financial foundation, not least of which is our excellent Finance team. I personally wish Bob the very best, as do all of PFG’s associates.”
Cash Flow and Capital Spending
In the first nine months of 2016, PFG delivered $117.6 million in cash flow from operating activities, an improvement of $89.2 million versus the prior year period. PFG’s net debt at the end of the third quarter stood at $1,203.4 million, a decline of $291.4 million versus the end of the comparable prior year period. In the first nine months, the Company invested $68.0 million in capital expenditures, an increase of $4.3 million versus the prior year.
Asset-Based Lending (ABL) Facility
In the third quarter, an amendment to the Company’s Amended and Restated Credit Agreement went into effect, which upsized the ABL Facility from $1.4 billion to $1.6 billion, lowered the interest rates for LIBOR-based loans by 25 basis
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points, and extended the maturity to February 2021. In connection with the closing of the ABL Facility amendment, PFG borrowed $200 million under the ABL Facility and used the proceeds to repay $200 million aggregate principal amount of loans under its Term loan facility. This payment, plus the lowering of the interest rates under the ABL Facility, will save PFG cash interest of approximately $9 million over the next 12 months, which is expected to translate into $0.05 per share after tax. There was a one-time, non-cash charge in the third quarter of approximately $5.8 million or $0.03 per share related to the Term loan repayment transaction.
Third-Quarter and First-Nine Months of Fiscal 2016 Segment Results
Performance Foodservice (PFS)
Third quarter net sales for PFS increased 4.1% to $2.3 billion, and year-to-date net sales increased 4.1% to $7.0 billion for the prior year periods. Net sales growth in both the third quarter and year-to-date was driven by an increase in cases sold. Strong independent and proprietary Performance Brand case growth led the increase, which in turn was driven by securing new Street customers and further penetrating existing customers. Independent case growth was within our 6% to 10% growth goal range and has gained sequential momentum from our fiscal first quarter through third quarter. Case sales of our proprietary Performance Brands to Street customers grew double digits in the third quarter.
Third quarter EBITDA for PFS increased 19.3% compared to the prior year period and increased 19.9% for the first nine months of 2016. The growth was a result of an increase in gross profit, partially offset by an increase in operating expenses excluding depreciation and amortization. Gross profit increased by 8.5% both in the third quarter and the first nine months of 2016, a result of an increase in cases sold as well as an increase in gross profit per case. The increase in gross profit per case was driven by a favorable shift in the mix of cases sold toward Street customers and Performance Brands, as well as by improved procurement gains from our Winning Together program. For the third quarter, operating expense increased 6.2%, driven by increases in case volume and bonus expense, as well as an increased investment in its sales force, which were partially offset by leverage of our fixed costs, improved productivity in our warehouse and transportation operations from our Winning Together program, and lower fuel expense.
PFG Customized
Net sales for PFG Customized decreased 3.2% in the third quarter to $957.9 million and increased 0.6% for the first nine months compared to the prior year period. The decrease in net sales in the third quarter was primarily a result of a decrease in case volume, which reflected trends among some customers in the casual dining channel. The increase in net sales over the nine-month period was the result of an amendment to an agreement with an existing customer and was partially offset by a decrease in case volume.
Segment EBITDA for PFG Customized increased 1.0% in the third quarter to $9.7 million and increased 2.3% to $26.2 million for the first nine months of 2016, compared to the prior year periods. The increase in the third quarter and first nine months of 2016 was primarily attributable to a decrease in operating expenses excluding depreciation and amortization, partially offset by a decrease in gross profit, an increase in transportation wages, and higher costs associated with upgrading a portion of its fleet. Gross profit for PFG Customized decreased in the third quarter and first nine months of 2016 primarily as a result of a decrease in case volume.
Vistar
Third quarter net sales for Vistar increased 9.0% to $651.2 million and for the first nine months increased 8.7% to $1.9 billion compared to the respective prior year periods. The increase in sales was primarily driven by broad-based organic case sales growth across the channels Vistar serves.
Third quarter segment EBITDA for Vistar increased 4.7% to $26.7 million and for the first nine months increased 5.7% to $83.7 million compared to the respective prior year periods. This increase in EBITDA was the result of gross profits
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increasing faster than operating expenses excluding depreciation and amortization. Gross profit grew 4.4% for the third quarter and 5.9% for the first nine months, primarily driven by an increase in the number of cases sold, a favorable shift in channel mix toward higher gross margin per case, and the benefits of operational improvements, partially offset by a shift toward higher cost to serve customers and by inflation-based inventory gains in the prior year period.
Fiscal 2016 Outlook
For fiscal 2016, PFG increased the bottom end of its previously announced EBITDA growth outlook from 9% to 12% such that its new EBITDA growth outlook is 10% to 12% reflecting the Company’s strong year-to-date results. The comparable fiscal 2015 Adjusted EBITDA was $328.6 million. The fiscal 2016 outlook for Adjusted EBITDA includes a 53rd week, which falls in the fourth quarter. The Company anticipates the extra week will add at least two percentage points to the fiscal 2016 outlook for Adjusted EBITDA.
Please see the “Forward-Looking Statements” section of this release for a discussion of certain risks to PFG’s outlook.
Conference Call
As previously announced, a conference call with the investment community and news media will be webcast on May 4, 2016 at 9:00 a.m. Eastern Standard Time. Access to the webcast and presentation slides is available at www.pfgc.com.
About Performance Food Group Company
Through its family of leading foodservice distributors – Performance Foodservice, Vistar, and PFG Customized – Performance Food Group Company (PFG) markets and distributes approximately 150,000 food and food-related products from 69 distribution centers to over 150,000 customer locations across the United States. PFG’s 12,000+ associates serve a diverse mix of customers, from independent and chain restaurants to schools, business and industry locations, hospitals, vending distributors, office coffee service distributors, big box retailers, and theaters. The company sources its products from more than 5,000 suppliers and serves as an important partner to its suppliers by providing them access to the company’s broad customer base. For more information, visit www.pfgc.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources and other non-historical statements, including the statements in the “Outlook” section of this press release. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.
Such forward-looking statements are subject to various risks and uncertainties. The following factors, in addition to those discussed under the section entitled “Risk Factors” in our prospectus dated October 1, 2015, filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) of the Securities Act on October 2, 2015, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, could cause actual future results to differ materially from those expressed in any forward-looking statements:
| • | competition in our industry is intense, and we may not be able to compete successfully; |
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| • | we operate in a low margin industry, which could increase the volatility of our results of operations; |
| • | we may not realize anticipated benefits from our operating cost reduction and productivity improvement efforts, including Winning Together; |
| • | our profitability is directly affected by cost inflation or deflation and other factors; |
| • | lack of long-term contracts with certain of our customers; |
| • | group purchasing organizations may become more active in our industry and increase their efforts to add our customers as members of these organizations; |
| • | changes in eating habits of consumers; |
| • | extreme weather conditions; |
| • | our reliance on third-party suppliers and purchasing cooperatives; |
| • | labor risks and availability of qualified labor; |
| • | volatility of fuel costs; |
| • | changes in pricing practices of our suppliers; |
| • | inability to adjust cost structure where one or more of our competitors successfully implement lower costs; |
| • | risks relating to any future acquisitions; |
| • | environmental, health, and safety costs; |
| • | reliance on technology and risks associated with disruption or delay in implementation of new technology; |
| • | difficult economic conditions affecting consumer confidence; |
| • | product liability claims relating to the products we distribute and other litigation; |
| • | negative media exposure and other events that damage our reputation; |
| • | anticipated multiemployer pension related liabilities and contributions to our multiemployer pension plan; |
| • | impact of uncollectibility of accounts receivable; and |
| • | departure of key members of senior management. |
Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. Any forward-looking statement, including any contained herein, speaks only as of the time of this release and we do not undertake to update or revise them as more information becomes available or to disclose any facts, events, or circumstances after the date of this release that may affect the accuracy of any forward-looking statement, except as required by law.
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TABLE A
PERFORMANCE FOOD GROUP COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
| ($ in millions, except share and per share data) |
Three months ended March 26, 2016 |
Three months ended March 28, 2015 |
Nine months ended March 26, 2016 |
Nine months ended March 28, 2015 |
||||||||||||
| Net sales |
$ | 3,909.1 | $ | 3,795.5 | $ | 11,731.9 | $ | 11,285.6 | ||||||||
| Cost of goods sold |
3,428.3 | 3,343.9 | 10,283.2 | 9,927.3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
480.8 | 451.6 | 1,448.7 | 1,358.3 | ||||||||||||
| Operating expenses |
443.2 | 424.5 | 1,313.3 | 1,251.4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit |
37.6 | 27.1 | 135.4 | 106.9 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other expense, net: |
||||||||||||||||
| Interest expense, net |
21.6 | 21.6 | 65.9 | 64.6 | ||||||||||||
| Other, net |
0.5 | 0.3 | 3.7 | 3.2 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other expense, net |
22.1 | 21.9 | 69.6 | 67.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before taxes |
15.5 | 5.2 | 65.8 | 39.1 | ||||||||||||
| Income tax expense |
6.1 | 2.3 | 26.7 | 16.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 9.4 | $ | 2.9 | $ | 39.1 | $ | 22.3 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted-average common shares outstanding: |
||||||||||||||||
| Basic |
99,698,267 | 86,874,101 | 95,230,548 | 86,874,101 | ||||||||||||
| Diluted |
101,360,286 | 87,706,396 | 96,750,311 | 87,664,715 | ||||||||||||
| Earnings per common share: |
||||||||||||||||
| Basic |
$ | 0.09 | $ | 0.03 | $ | 0.41 | $ | 0.26 | ||||||||
| Diluted |
$ | 0.09 | $ | 0.03 | $ | 0.40 | $ | 0.25 | ||||||||
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PERFORMANCE FOOD GROUP COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
| ($ in millions) |
As of March 26, 2016 |
As of June 27, 2015 |
As of March 28, 2015 |
|||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash |
$ | 10.7 | $ | 9.2 | $ | 6.8 | ||||||
| Accounts receivable |
979.1 | 964.6 | 953.7 | |||||||||
| Inventories, net |
899.1 | 882.6 | 881.4 | |||||||||
| Prepaid expenses and other current assets |
39.1 | 26.4 | 38.2 | |||||||||
| Deferred income tax asset, net |
17.1 | 17.5 | 15.8 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current assets |
1,945.1 | 1,900.3 | 1,895.9 | |||||||||
| Goodwill |
676.2 | 664.0 | 664.0 | |||||||||
| Other intangible assets, net |
167.4 | 186.9 | 199.7 | |||||||||
| Property, plant and equipment, net |
604.3 | 594.7 | 577.0 | |||||||||
| Restricted cash and other assets |
47.1 | 45.0 | 40.7 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total assets |
$ | 3,440.1 | $ | 3,390.9 | $ | 3,377.3 | ||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Current liabilities: |
||||||||||||
| Trade accounts payable and outstanding checks in excess of deposits |
$ | 1,034.7 | $ | 1,022.2 | $ | 1,021.8 | ||||||
| Accrued expenses |
216.9 | 234.1 | 195.5 | |||||||||
| Long-term debt-current installments |
9.4 | 9.4 | 7.5 | |||||||||
| Capital and finance lease obligations-current installments |
2.4 | 3.5 | 3.0 | |||||||||
| Derivative liabilities |
6.6 | 7.8 | 8.9 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current liabilities |
1,270.0 | 1,277.0 | 1,236.7 | |||||||||
| Long-term debt |
1,170.2 | 1,395.8 | 1,458.9 | |||||||||
| Deferred income tax liability, net |
98.8 | 100.3 | 101.3 | |||||||||
| Capital and finance lease obligations, excluding current installments |
32.1 | 33.8 | 32.2 | |||||||||
| Other long-term liabilities |
99.2 | 91.0 | 90.8 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities |
2,670.3 | 2,897.9 | 2,919.9 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total shareholders’ equity |
769.8 | 493.0 | 457.4 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities and shareholders’ equity |
$ | 3,440.1 | $ | 3,390.9 | $ | 3,377.3 | ||||||
|
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|
|
|
|
|
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PERFORMANCE FOOD GROUP COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| ($ in millions) |
Nine months ended March 26, 2016 |
Nine months ended March 28, 2015 |
||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 39.1 | $ | 22.3 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
| Depreciation and intangible asset amortization |
86.2 | 91.7 | ||||||
| Non cash activities |
39.7 | 13.9 | ||||||
| Changes in operating assets and liabilities, net: |
||||||||
| Accounts receivable |
(12.1 | ) | (125.1 | ) | ||||
| Inventories |
(8.3 | ) | (32.3 | ) | ||||
| Prepaid expenses and other assets |
(17.4 | ) | (15.9 | ) | ||||
| Trade accounts payable and outstanding checks in excess of deposits |
4.7 | 77.7 | ||||||
| Accrued expenses and other liabilities |
(14.3 | ) | (3.9 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
117.6 | 28.4 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Purchases of property, plant and equipment |
(68.0 | ) | (63.7 | ) | ||||
| Net cash paid for acquisition |
(40.2 | ) | (0.4 | ) | ||||
| Other |
0.7 | (2.2 | ) | |||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(107.5 | ) | (66.3 | ) | ||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Net (payments on) borrowings under debt |
(230.2 | ) | 37.7 | |||||
| Proceeds from equity |
226.5 | — | ||||||
| Other |
(4.9 | ) | 1.7 | |||||
|
|
|
|
|
|||||
| Net cash (used in) provided by financing activities |
(8.6 | ) | 39.4 | |||||
|
|
|
|
|
|||||
| Net increase in cash |
1.5 | 1.5 | ||||||
| Cash, beginning of period |
9.2 | 5.3 | ||||||
|
|
|
|
|
|||||
| Cash, end of period |
$ | 10.7 | $ | 6.8 | ||||
|
|
|
|
|
|||||
Supplemental disclosures of cash flow information:
| ($ in millions) |
Nine months ended March 26, 2016 |
Nine months ended March 28, 2015 |
||||||
| Cash paid during the year for: |
||||||||
| Interest |
$ | 54.0 | $ | 60.0 | ||||
| Income taxes, net of refunds |
39.1 | 26.0 | ||||||
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TABLE B
Statement Regarding Non-GAAP Financial Measures
This earnings release and the accompanying financial statement tables include several financial measures that are not calculated in accordance with GAAP, including EBITDA, Adjusted EBITDA, Adjusted Cost of Goods Sold, Adjusted Gross Profit, Adjusted Operating Expense, Adjusted Operating Profit, Adjusted Net Income, and Adjusted Diluted Earnings per Share. Such measures are not recognized terms under GAAP, should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP, and are not indicative of net income (loss) as determined under GAAP. EBITDA, Adjusted EBITDA, Adjusted Cost of Goods Sold, Adjusted Gross Profit, Adjusted Operating Expense, Adjusted Operating Profit, Adjusted Net Income, Adjusted Diluted Earnings per Share, and other non-GAAP financial measures have limitations that should be considered before using these measures to evaluate the Company’s liquidity or financial performance. EBITDA, Adjusted EBITDA, Adjusted Cost of Goods Sold, Adjusted Gross Profit, Adjusted Operating Expense, Adjusted Operating Profit, Adjusted Net Income, and Adjusted Diluted Earnings per Share, as presented, may not be comparable to similarly titled measures of other companies because of varying methods of calculation.
Management measures operating performance based on PFG’s EBITDA, defined as net income (loss) before interest expense (net of interest income), income taxes, and depreciation and amortization.
PFG believe that the presentation of EBITDA enhances an investor’s understanding of PFG’s performance. PFG believes this measure is a useful metric to assess PFG’s operating performance from period to period by excluding certain items that PFG believes are not representative of PFG’s core business. PFG uses this measure to evaluate the performance of its segments and for business planning purposes. The company believes that EBITDA will provide investors with a useful tool for assessing the comparability between periods of the company’s ability to generate cash from operations sufficient to pay taxes, to service debt, and to undertake capital expenditures because it eliminates depreciation and amortization expense.
In addition, management uses Adjusted EBITDA, defined as net income (loss) before interest expense (net of interest income), income and franchise taxes, and depreciation and amortization, further adjusted to exclude certain unusual, non-cash, non-recurring, cost reduction, and other adjustment items permitted in calculating covenant compliance under the company’s credit agreements (other than certain pro forma adjustments permitted under our credit agreements relating to the Adjusted EBITDA contribution of acquired entities or businesses prior to the acquisition date). Under PFG’s credit agreements, the company’s ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and making restricted payments is tied to ratios based on Adjusted EBITDA (as defined in the credit agreements).
Management also uses Adjusted Cost of Goods Sold, Adjusted Gross Profit, Adjusted Operating Expense, Adjusted Operating Profit, Adjusted Net Income, and Adjusted Diluted Earnings per Share, each of which is calculated by adjusting the most directly comparable GAAP financial measure by excluding the same items excluded in PFG’s calculation of Adjusted EBITDA to the extent that each such item was included in the applicable GAAP financial measure. The adjustments to Adjusted Net Income and Adjusted Diluted Earnings per Share are calculated on a post-tax basis.
PFG believes that the presentation of Adjusted EBITDA, Adjusted Cost of Goods Sold, Adjusted Gross Profit, Adjusted Operating Expense, Adjusted Operating Profit, Adjusted Net Income, and Adjusted Diluted Earnings per Share is useful to investors because these metrics are frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies in PFG’s industry.
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The following tables include a reconciliation of non-GAAP financial measures to the applicable most comparable U.S. GAAP financial measures.
PERFORMANCE FOOD GROUP COMPANY
Non-GAAP Reconciliation (Unaudited)
| Three months ended | ||||||||||||||||
| ($ in millions, except share and per share data) |
March 26, 2016 |
March 28, 2015 |
Change | % | ||||||||||||
| Net income (GAAP) |
$ | 9.4 | $ | 2.9 | $ | 6.5 | 224.1 | |||||||||
| Interest expense, net |
21.6 | 21.6 | — | — | ||||||||||||
| Income tax expense |
6.1 | 2.3 | 3.8 | 165.2 | ||||||||||||
| Depreciation |
20.1 | 19.3 | 0.8 | 4.1 | ||||||||||||
| Amortization of intangible assets |
9.3 | 11.4 | (2.1 | ) | (18.4 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
66.5 | 57.5 | 9.0 | 15.7 | ||||||||||||
| Impact of non-cash items (A) |
2.8 | (0.1 | ) | 2.9 | N/A | |||||||||||
| Impact of acquisition, integration & reorganization charges (B) |
1.8 | 9.5 | (7.7 | ) | (81.1 | ) | ||||||||||
| Impact of productivity initiatives (C) |
2.9 | 1.1 | 1.8 | 163.6 | ||||||||||||
| Impact of other adjustment items (D) |
2.4 | 1.3 | 1.1 | 84.6 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA (Non-GAAP) |
$ | 76.4 | $ | 69.3 | $ | 7.1 | 10.2 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cost of goods sold (GAAP) |
$ | 3,428.3 | $ | 3,343.9 | $ | 84.4 | 2.5 | |||||||||
| Impact of non-cash items |
1.3 | 0.3 | 1.0 | 333.3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Cost of Goods Sold (Non-GAAP) |
$ | 3,429.6 | $ | 3,344.2 | $ | 85.4 | 2.6 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit (GAAP) |
$ | 480.8 | $ | 451.6 | $ | 29.2 | 6.5 | |||||||||
| Impact of non-cash items |
(1.3 | ) | (0.3 | ) | (1.0 | ) | 333.3 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Gross Profit (Non-GAAP) |
$ | 479.5 | $ | 451.3 | $ | 28.2 | 6.2 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expense (GAAP) |
$ | 443.2 | $ | 424.5 | $ | 18.7 | 4.4 | |||||||||
| Impact of non-cash items |
(5.1 | ) | (0.3 | ) | (4.8 | ) | 1,600.0 | |||||||||
| Impact of acquisition, integration & reorganization charges |
(1.8 | ) | (9.5 | ) | 7.7 | (81.1 | ) | |||||||||
| Impact of productivity initiatives |
(2.9 | ) | (1.1 | ) | (1.8 | ) | 163.6 | |||||||||
| Impact of other adjustment items |
(0.9 | ) | (0.8 | ) | (0.1 | ) | 12.5 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Operating Expense (Non-GAAP) |
$ | 432.5 | $ | 412.8 | $ | 19.7 | 4.8 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit (GAAP) |
$ | 37.6 | $ | 27.1 | $ | 10.5 | 38.7 | |||||||||
| Impact of non-cash items |
3.8 | — | 3.8 | N/A | ||||||||||||
| Impact of acquisition, integration & reorganization charges |
1.8 | 9.5 | (7.7 | ) | (81.1 | ) | ||||||||||
| Impact of productivity initiatives |
2.9 | 1.1 | 1.8 | 163.6 | ||||||||||||
| Impact of other adjustment items |
0.9 | 0.8 | 0.1 | 12.5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Operating Profit (Non-GAAP) |
$ | 47.0 | $ | 38.5 | $ | 8.5 | 22.1 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
11
| Three months ended | ||||||||||||||||
| ($ in millions, except share and per share data) |
March 26, 2016 |
March 28, 2015 |
Change | % | ||||||||||||
| Net income (GAAP) (E) |
$ | 9.4 | $ | 2.9 | $ | 6.5 | 224.1 | |||||||||
| Impact of non-cash items |
1.7 | (0.1 | ) | 1.8 | N/A | |||||||||||
| Impact of acquisition, integration & reorganization charges |
1.1 | 5.4 | (4.3 | ) | (79.6 | ) | ||||||||||
| Impact of productivity initiatives |
1.8 | 0.6 | 1.2 | 200.0 | ||||||||||||
| Impact of other adjustment items |
1.5 | 0.8 | 0.7 | 87.5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Net Income (Non-GAAP) (E) |
$ | 15.5 | $ | 9.6 | $ | 5.9 | 61.5 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted earnings per share (GAAP) (E) |
$ | 0.09 | $ | 0.03 | $ | 0.06 | 200.0 | |||||||||
| Impact of non-cash items |
0.02 | — | 0.02 | N/A | ||||||||||||
| Impact of acquisition, integration & reorganization charges |
0.01 | 0.06 | (0.05 | ) | (83.3 | ) | ||||||||||
| Impact of productivity initiatives |
0.02 | 0.01 | 0.01 | 100.0 | ||||||||||||
| Impact of other adjustment items |
0.01 | 0.01 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Diluted Earnings per Share (Non-GAAP) (E) |
$ | 0.15 | $ | 0.11 | $ | 0.04 | 36.4 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| A. | Includes adjustments for non-cash charges arising from employee stock compensation, changes in fair value of fuel collar instruments, and gain/loss on disposal of assets. Stock compensation cost was $4.8 million and $0.4 million for the third quarter of fiscal 2016 and fiscal 2015, respectively. In addition, this includes a decrease in the LIFO reserve of $1.3 million and $0.3 million for the third quarter of fiscal 2016 and fiscal 2015, respectively |
| B. | Includes professional fees and other costs related to completed and abandoned acquisitions, costs of integrating certain of our facilities, facility closing costs, and advisory fees paid to the Sponsors. |
| C. | Consists primarily of professional fees and related expenses associated with the Winning Together program and other productivity initiatives. |
| D. | Consists primarily of costs related to settlements on our fuel collar derivatives, certain financing transactions, lease amendments, and franchise tax expense and other adjustments permitted under our credit agreements. |
| E. | The Adjusted Net Income and Adjusted Diluted Earnings per Share impacts are shown net of tax. Tax impact of adjustments for certain items was $3.8 million and $5.1 million for the three months ended March 26, 2016 and March 28 2015, respectively. Amounts are calculated by multiplying the impact of each item by the effective tax rate for the related time period. |
12
PERFORMANCE FOOD GROUP COMPANY
Non-GAAP Reconciliation (Unaudited)
| Nine months ended | ||||||||||||||||
| ($ in millions, except share and per share data) |
March 26, 2016 |
March 28, 2015 |
Change | % | ||||||||||||
| Net income (GAAP) |
$ | 39.1 | $ | 22.3 | $ | 16.8 | 75.3 | |||||||||
| Interest expense, net |
65.9 | 64.6 | 1.3 | 2.0 | ||||||||||||
| Income tax expense |
26.7 | 16.8 | 9.9 | 58.9 | ||||||||||||
| Depreciation |
58.3 | 57.1 | 1.2 | 2.1 | ||||||||||||
| Amortization of intangible assets |
27.9 | 34.6 | (6.7 | ) | (19.4 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
217.9 | 195.4 | 22.5 | 11.5 | ||||||||||||
| Impact of non-cash items (A) |
13.2 | 2.3 | 10.9 | 473.9 | ||||||||||||
| Impact of acquisition, integration & reorganization charges (B) |
5.9 | 16.1 | (10.2 | ) | (63.4 | ) | ||||||||||
| Impact of non-recurring items (C) |
1.7 | — | 1.7 | N/A | ||||||||||||
| Impact of productivity initiatives (D) |
7.7 | 6.9 | 0.8 | 11.6 | ||||||||||||
| Impact of multiemployer plan withdrawals (E) |
— | 2.8 | (2.8 | ) | N/A | |||||||||||
| Impact of other adjustment items (F) |
5.5 | 2.6 | 2.9 | 111.5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA (Non-GAAP) |
$ | 251.9 | $ | 226.1 | $ | 25.8 | 11.4 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cost of goods sold (GAAP) |
$ | 10,283.2 | $ | 9,927.3 | $ | 355.9 | 3.6 | |||||||||
| Impact of non-cash items |
2.5 | 0.4 | 2.1 | 525.0 | ||||||||||||
| Impact of non-recurring items |
(1.9 | ) | — | (1.9 | ) | N/A | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Cost of Goods Sold (Non-GAAP) |
$ | 10,283.8 | $ | 9,927.7 | $ | 356.1 | 3.6 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit (GAAP) |
$ | 1,448.7 | $ | 1,358.3 | $ | 90.4 | 6.7 | |||||||||
| Impact of non-cash items |
(2.5 | ) | (0.4 | ) | (2.1 | ) | 525.0 | |||||||||
| Impact of non-recurring items |
1.9 | — | 1.9 | N/A | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Gross Profit (Non-GAAP) |
$ | 1,448.1 | $ | 1,357.9 | $ | 90.2 | 6.6 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expense (GAAP) |
$ | 1,313.3 | $ | 1,251.4 | $ | 61.9 | 4.9 | |||||||||
| Impact of non-cash items |
(15.3 | ) | 0.2 | (15.5 | ) | N/A | ||||||||||
| Impact of acquisition, integration & reorganization charges |
(5.9 | ) | (16.1 | ) | 10.2 | (63.4 | ) | |||||||||
| Impact of non-recurring items |
0.2 | — | 0.2 | N/A | ||||||||||||
| Impact of productivity initiatives |
(7.7 | ) | (6.9 | ) | (0.8 | ) | 11.6 | |||||||||
| Impact of multiemployer plan withdrawals |
— | (2.8 | ) | 2.8 | N/A | |||||||||||
| Impact of other adjustment items |
(2.1 | ) | (2.1 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Operating Expense (Non-GAAP) |
$ | 1,282.5 | $ | 1,223.7 | $ | 58.8 | 4.8 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit (GAAP) |
$ | 135.4 | $ | 106.9 | $ | 28.5 | 26.7 | |||||||||
| Impact of non-cash items |
12.8 | (0.6 | ) | 13.4 | N/A | |||||||||||
| Impact of acquisition, integration & reorganization charges |
5.9 | 16.1 | (10.2 | ) | (63.4 | ) | ||||||||||
| Impact of non-recurring items |
1.7 | — | 1.7 | N/A | ||||||||||||
| Impact of productivity initiatives |
7.7 | 6.9 | 0.8 | 11.6 | ||||||||||||
| Impact of multiemployer plan withdrawals |
— | 2.8 | (2.8 | ) | N/A | |||||||||||
| Impact of other adjustment items |
2.1 | 2.1 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Operating Profit (Non-GAAP) |
$ | 165.6 | $ | 134.2 | $ | 31.4 | 23.4 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
13
| Nine months ended | ||||||||||||||||
| ($ in millions, except share and per share data) |
March 26, 2016 |
March 28, 2015 |
Change | % | ||||||||||||
| Net income (GAAP) (G) |
$ | 39.1 | $ | 22.3 | $ | 16.8 | 75.3 | |||||||||
| Impact of non-cash items |
7.8 | 1.3 | 6.5 | 500.0 | ||||||||||||
| Impact of acquisition, integration & reorganization charges |
3.5 | 9.2 | (5.7 | ) | (62.0 | ) | ||||||||||
| Impact of non-recurring items |
1.0 | — | 1.0 | N/A | ||||||||||||
| Impact of productivity initiatives |
4.6 | 3.9 | 0.7 | 17.9 | ||||||||||||
| Impact of multiemployer plan withdrawals |
— | 1.6 | (1.6 | ) | N/A | |||||||||||
| Impact of other adjustment items |
3.3 | 1.5 | 1.8 | 120.0 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Net Income (Non-GAAP) (G) |
$ | 59.3 | $ | 39.8 | $ | 19.5 | 49.0 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted earnings per share (GAAP) (G) |
$ | 0.40 | $ | 0.25 | $ | 0.15 | 60.0 | |||||||||
| Impact of non-cash items |
0.08 | 0.02 | 0.06 | 300.0 | ||||||||||||
| Impact of acquisition, integration & reorganization charges |
0.04 | 0.10 | (0.06 | ) | (60.0 | ) | ||||||||||
| Impact of non-recurring items |
0.01 | — | 0.01 | N/A | ||||||||||||
| Impact of productivity initiatives |
0.05 | 0.04 | 0.01 | 25.0 | ||||||||||||
| Impact of multiemployer plan withdrawals |
— | 0.02 | (0.02 | ) | N/A | |||||||||||
| Impact of other adjustment items |
0.03 | 0.02 | 0.01 | 50.0 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Diluted Earnings per Share (Non-GAAP) (G) |
$ | 0.61 | $ | 0.45 | $ | 0.16 | 35.6 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| A. | Includes adjustments for non-cash charges arising from employee stock compensation, changes in fair value of fuel collar instruments, and gain/loss on disposal of assets. Stock compensation cost was $13.6 million and $0.9 million for the first nine months of fiscal 2016 and fiscal 2015, respectively. In addition, this includes a decrease in the LIFO reserve of $2.5 million and $0.4 million for the first nine months of fiscal 2016 and fiscal 2015, respectively. |
| B. | Includes professional fees and other costs related to completed and abandoned acquisitions, costs of integrating certain of our facilities, facility closing costs, and advisory fees paid to the Sponsors. |
| C. | Consists of an expense related to our withdrawal from a purchasing cooperative, pre-PFG acquisition worker’s compensation claims related to an insurance company that went into liquidation, and amounts received from business interruption insurance because of weather related or other one-time events. |
| D. | Consists primarily of professional fees and related expenses associated with the Winning Together program and other productivity initiatives. |
| E. | Includes amounts related to the withdrawal from the Central States Southeast and Southwest Areas Pension Fund. |
| F. | Consists primarily of costs related to settlements on our fuel collar derivatives, certain financing transactions, lease amendments, and franchise tax expense and other adjustments permitted under our credit agreements. |
| G. | The Adjusted Net Income and Adjusted Diluted Earnings per Share impacts are shown net of tax. Tax impact of adjustments for certain items was $13.8 million and $13.2 million for the nine months ended December 26, 2015 and December 27 2014, respectively. Amounts are calculated by multiplying the impact of each item by the effective tax rate for the related time period. |
14
PERFORMANCE FOOD GROUP COMPANY
Non-GAAP Reconciliation (Unaudited)
| Fiscal Year Ended June 27, 2015 | ||||||||||||||||
| ($ in millions, except share and per share data) |
Q1 | Q2 | Q3 | Q4 | ||||||||||||
| Net income (GAAP) |
$ | 6.6 | $ | 12.8 | $ | 2.9 | $ | 34.2 | ||||||||
| Interest expense, net |
21.2 | 21.8 | 21.6 | 21.1 | ||||||||||||
| Income tax expense |
4.7 | 9.8 | 2.3 | 23.3 | ||||||||||||
| Depreciation |
18.6 | 19.2 | 19.3 | 19.2 | ||||||||||||
| Amortization of intangible assets |
11.6 | 11.6 | 11.4 | 10.4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
62.7 | 75.2 | 57.5 | 108.2 | ||||||||||||
| Impact of non-cash items (A) |
1.3 | 1.1 | (0.1 | ) | 2.0 | |||||||||||
| Impact of acquisition, integration & reorganization charges (B) |
2.0 | 4.6 | 9.5 | (15.7 | ) | |||||||||||
| Impact of non-recurring items (C) |
— | — | — | 5.1 | ||||||||||||
| Impact of productivity initiatives (D) |
3.5 | 2.3 | 1.1 | 1.4 | ||||||||||||
| Impact of multiemployer plan withdrawals (E) |
— | 2.8 | — | — | ||||||||||||
| Impact of other adjustment items (F) |
0.7 | 0.6 | 1.3 | 1.5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA (Non-GAAP) |
$ | 70.2 | $ | 86.6 | $ | 69.3 | $ | 102.5 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cost of goods sold (GAAP) |
$ | 3,248.2 | $ | 3,335.2 | $ | 3,343.9 | $ | 3,494.4 | ||||||||
| Impact of non-cash items |
(1.8 | ) | 1.9 | 0.3 | (2.1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Cost of Goods Sold (Non-GAAP) |
$ | 3,246.4 | $ | 3,337.1 | $ | 3,344.2 | $ | 3,492.3 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit (GAAP) |
$ | 449.4 | $ | 457.3 | $ | 451.6 | $ | 490.0 | ||||||||
| Impact of non-cash items |
1.8 | (1.9 | ) | (0.3 | ) | 2.1 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Gross Profit (Non-GAAP) |
$ | 451.2 | $ | 455.4 | $ | 451.3 | $ | 492.1 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating expense (GAAP) |
$ | 416.7 | $ | 410.2 | $ | 424.5 | $ | 436.8 | ||||||||
| Impact of non-cash items |
0.7 | (0.2 | ) | (0.3 | ) | (1.0 | ) | |||||||||
| Impact of acquisition, integration & reorganization charges |
(2.0 | ) | (4.6 | ) | (9.5 | ) | (9.3 | ) | ||||||||
| Impact of non-recurring items |
— | — | — | (5.1 | ) | |||||||||||
| Impact of productivity initiatives |
(3.5 | ) | (2.3 | ) | (1.1 | ) | (1.4 | ) | ||||||||
| Impact of multiemployer plan withdrawals |
— | (2.8 | ) | — | — | |||||||||||
| Impact of other adjustment items |
(0.7 | ) | (0.6 | ) | (0.8 | ) | (0.8 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Operating Expense (Non-GAAP) |
$ | 411.2 | $ | 399.7 | $ | 412.8 | $ | 419.2 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating profit (GAAP) |
$ | 32.7 | $ | 47.1 | $ | 27.1 | $ | 53.2 | ||||||||
| Impact of non-cash items |
1.1 | (1.7 | ) | — | 3.1 | |||||||||||
| Impact of acquisition, integration & reorganization charges |
2.0 | 4.6 | 9.5 | 9.3 | ||||||||||||
| Impact of non-recurring items |
— | — | — | 5.1 | ||||||||||||
| Impact of productivity initiatives |
3.5 | 2.3 | 1.1 | 1.4 | ||||||||||||
| Impact of multiemployer plan withdrawals |
— | 2.8 | — | — | ||||||||||||
| Impact of other adjustment items |
0.7 | 0.6 | 0.8 | 0.8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Operating Profit (Non-GAAP) |
$ | 40.0 | $ | 55.7 | $ | 38.5 | $ | 72.9 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
15
| Fiscal Year Ended June 27, 2015 | ||||||||||||||||
| ($ in millions, except share and per share data) |
Q1 | Q2 | Q3 | Q4 | ||||||||||||
| Net income (GAAP) (G) |
$ | 6.6 | $ | 12.8 | $ | 2.9 | $ | 34.2 | ||||||||
| Impact of non-cash items |
0.7 | 0.7 | (0.1 | ) | 1.2 | |||||||||||
| Impact of acquisition, integration & reorganization charges |
1.2 | 2.6 | 5.4 | (9.0 | ) | |||||||||||
| Impact of non-recurring items |
— | — | — | 3.0 | ||||||||||||
| Impact of productivity initiatives |
2.1 | 1.2 | 0.6 | 1.0 | ||||||||||||
| Impact of multiemployer plan withdrawals |
— | 1.6 | — | — | ||||||||||||
| Impact of other adjustment items |
0.4 | 0.3 | 0.8 | 0.9 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Net Income (Non-GAAP) (G) |
$ | 11.0 | $ | 19.2 | $ | 9.6 | $ | 31.3 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted earnings per share (GAAP) (G) |
$ | 0.08 | $ | 0.15 | $ | 0.03 | $ | 0.39 | ||||||||
| Impact of non-cash items |
0.01 | 0.01 | — | 0.01 | ||||||||||||
| Impact of acquisition, integration & reorganization charges |
0.02 | 0.03 | 0.06 | (0.10 | ) | |||||||||||
| Impact of non-recurring items |
— | — | — | 0.04 | ||||||||||||
| Impact of productivity initiatives |
0.02 | 0.01 | 0.01 | 0.01 | ||||||||||||
| Impact of multiemployer plan withdrawals |
— | 0.02 | — | — | ||||||||||||
| Impact of other adjustment items |
— | — | 0.01 | 0.01 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Diluted Earnings per Share (Non-GAAP) (G) |
$ | 0.13 | $ | 0.22 | $ | 0.11 | $ | 0.36 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| A. | Includes adjustments for non-cash charges arising from employee stock compensation, changes in fair value of fuel collar instruments, and adjustments to reflect certain assets held for sale to their net realizable value. In addition, this includes an increase of $1.8 million, a decrease $1.9 million, a decrease $0.3 million, and an increase $2.1 million in LIFO reserve for Q1, Q2, Q3 and Q4, respectively. |
| B. | Includes professional fees and other costs related to completed and abandoned acquisitions, costs of integrating certain of our facilities, facility closing costs, and advisory fees paid to the Sponsors. |
| C. | Consists of a legal settlement. |
| D. | Consists primarily of professional fees and related expenses associated with the Winning Together program and other productivity initiatives. |
| E. | Includes amounts related to the withdrawal from the Central States Southeast and Southwest Areas Pension Fund. |
| F. | Consists primarily of costs related to settlements on our fuel collar derivatives, certain financing transactions, lease amendments, and franchise tax expense and other adjustments permitted under our credit agreements. |
| G. | The Adjusted Net Income and Adjusted Diluted Earnings per Share impacts are shown net of tax. Tax impact of adjustments for certain items was $3.1 million, $5.0 million, $5.1 million, and a negative $2.8 million for Q1, Q2, Q3 and Q4, respectively. Amounts are calculated by multiplying the impact of each item by the effective tax rate for the related time period. |
16
| For the Year Ended June 27, 2015 |
||||
| ($ in millions) | ||||
| Net income |
$ | 56.5 | ||
| Interest expense, net |
85.7 | |||
| Income tax expense |
40.1 | |||
| Depreciation |
76.3 | |||
| Amortization of intangible assets |
45.0 | |||
|
|
|
|||
| EBITDA |
303.6 | |||
| Non-cash items |
4.3 | |||
| Acquisition, integration and reorganization charges |
0.4 | |||
| Non-recurring items |
5.1 | |||
| Productivity initiatives |
8.3 | |||
| Multiemployer plan withdrawal |
2.8 | |||
| Other adjustment items |
4.1 | |||
|
|
|
|||
| Adjusted EBITDA |
$ | 328.6 | ||
|
|
|
|||
17
TABLE C
Net Sales
| Three Months Ended | ||||||||||||||||
| March 26, 2016 | March 28, 2015 | Change | % | |||||||||||||
| Performance Foodservice |
$ | 2,298.7 | $ | 2,207.8 | $ | 90.9 | 4.1 | |||||||||
| PFG Customized |
957.9 | 989.2 | (31.3 | ) | (3.2 | ) | ||||||||||
| Vistar |
651.2 | 597.6 | 53.6 | 9.0 | ||||||||||||
| Corporate & All Other |
53.1 | 47.0 | 6.1 | 13.0 | ||||||||||||
| Intersegment Eliminations |
(51.8 | ) | (46.1 | ) | (5.7 | ) | (12.4 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total net sales |
$ | 3,909.1 | $ | 3,795.5 | $ | 113.6 | 3.0 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Nine Months Ended | ||||||||||||||||
| March 26, 2016 | March 28, 2015 | Change | % | |||||||||||||
| Performance Foodservice |
$ | 6,983.4 | $ | 6,708.9 | $ | 274.5 | 4.1 | |||||||||
| PFG Customized |
2,800.1 | 2,783.9 | 16.2 | 0.6 | ||||||||||||
| Vistar |
1,944.6 | 1,788.3 | 156.3 | 8.7 | ||||||||||||
| Corporate & All Other |
158.8 | 139.8 | 19.0 | 13.6 | ||||||||||||
| Intersegment Eliminations |
(155.0 | ) | (135.3 | ) | (19.7 | ) | (14.6 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total net sales |
$ | 11,731.9 | $ | 11,285.6 | $ | 446.3 | 4.0 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
EBITDA
| Three Months Ended | ||||||||||||||||
| March 26, 2016 | March 28, 2015 | Change | % | |||||||||||||
| Performance Foodservice |
$ | 63.0 | $ | 52.8 | $ | 10.2 | 19.3 | |||||||||
| PFG Customized |
9.7 | 9.6 | 0.1 | 1.0 | ||||||||||||
| Vistar |
26.7 | 25.5 | 1.2 | 4.7 | ||||||||||||
| Corporate & All Other |
(32.9 | ) | (30.4 | ) | (2.5 | ) | (8.2 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total EBITDA |
$ | 66.5 | $ | 57.5 | $ | 9.0 | 15.7 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Nine Months Ended | ||||||||||||||||
| March 26, 2016 | March 28, 2015 | Change | % | |||||||||||||
| Performance Foodservice |
$ | 206.9 | $ | 172.6 | $ | 34.3 | 19.9 | |||||||||
| PFG Customized |
26.2 | 25.6 | 0.6 | 2.3 | ||||||||||||
| Vistar |
83.7 | 79.2 | 4.5 | 5.7 | ||||||||||||
| Corporate & All Other |
(98.9 | ) | (82.0 | ) | (16.9 | ) | (20.6 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total EBITDA |
$ | 217.9 | $ | 195.4 | $ | 22.5 | 11.5 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
18