NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in millions, except per share information and where indicated otherwise)
NOTE 1 — BASIS OF PRESENTATION
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), and on a basis substantially consistent with the audited consolidated financial statements of Post Holdings, Inc. (herein referred to as “Post,” “the Company,” “us,” “our” or “we”) as of and for the fiscal year ended September 30, 2018. These unaudited condensed consolidated financial statements should be read in conjunction with such audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, filed with the SEC on November 16, 2018.
These unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair statement of the Company’s results of operations, comprehensive income, financial position, cash flows and shareholders’ equity for the interim periods presented. Interim results are not necessarily indicative of the results for any other interim period or for the entire fiscal year. Certain prior year amounts have been reclassified to conform with the fiscal 2019 presentation. These reclassifications had no impact on net earnings or shareholders’ equity as previously reported.
On October 1, 2018, Post and affiliates of Thomas H. Lee Partners, L.P. (collectively, “THL”) separately capitalized 8th Avenue Food & Provisions, Inc. (“8th Avenue,” and such transactions, the “8th Avenue Transactions”), and 8th Avenue became the holding company for Post’s historical private brands business. Post received gross proceeds of
$875.0
, as well as
$16.8
related to final working capital adjustments,
from the 8th Avenue Transactions, and the Company retained shares of common stock equal to
60.5%
of the common equity in 8th Avenue. Effective October 1, 2018, 8th Avenue was no longer consolidated in the Company's financial statements and the
60.5%
common equity retained interest in 8th Avenue is accounted for using the equity method. 8th Avenue is reported historically herein as Post’s Private Brands segment. For additional information, see Notes 4, 6, 9 and 17.
NOTE 2 — RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS
The Company has considered all new accounting pronouncements and has concluded there are no new pronouncements (other than the ones described below) that had or will have an impact on the Company’s results of operations, comprehensive income, financial condition, cash flows or shareholders’ equity based on current information.
Recently Issued
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842).” This ASU requires a company to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for lessees, lessors and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods therein (i.e., Post’s financial statements for the year ending September 30, 2020), with early adoption permitted. The Company will adopt this ASU on October 1, 2019 and expects to use the modified retrospective method of adoption. The Company has selected a software vendor and is in the process of assessing its lease agreements to identify those that fall within the scope of this guidance. This ASU will result in a material increase in both assets and liabilities; however, the Company is unable to quantify the impact at this time. In addition, the Company expects to provide expanded disclosures to present additional information related to its leasing arrangements.
Recently Adopted
In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” This ASU largely aligns the guidance for recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for recognizing implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. The Company adopted this ASU on October 1, 2018 on a prospective basis, as permitted by the ASU. The adoption of this ASU did not have a material impact on the Company’s financial statements.
In June 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This ASU largely aligns the accounting for share-based payment awards issued to employees and nonemployees, whereby the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution
of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services, and the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The Company adopted this ASU on October 1, 2018 on a prospective basis, as permitted by the ASU. In accordance with this ASU, historical share-based payment awards that were granted to employees of 8th Avenue are accounted for as nonemployee compensation. The adoption of this ASU did not have an impact on the Company’s financial statements.
In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU requires an entity to report the service cost component of periodic net benefit cost as an operating expense in the same line item or items as other compensation costs arising from services rendered by employees during the period. Other components of net benefit cost are to be presented outside of income from operations in the income statement separately from the service cost component. This ASU also allows only the service cost component to be eligible for capitalization when applicable. The Company adopted this ASU on October 1, 2018 and used the retrospective method of adoption, as required by the ASU. The adoption of this ASU resulted in an increase in “Cost of goods sold” and “Selling, general and administrative expenses” of
$3.3
and
$0.3
, respectively, and a corresponding increase in “Other income, net” of
$3.6
, for the three months ended March 31, 2018, and an increase in “Cost of goods sold” and “Selling, general and administrative expenses” of
$6.5
and
$0.6
, respectively, and a corresponding increase in “Other income, net” of
$7.1
, for the six months ended March 31, 2018, to reflect the exclusion of all components of benefit cost, with the exception of service cost, from operating profit. For additional disclosures about pension and other postretirement benefits, refer to Note 18.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” This ASU requires that a statement of cash flows explain the change in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents, and therefore, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning of year cash balance to the end of year cash balance as shown on the statement of cash flows. The Company adopted this ASU on October 1, 2018 and used the retrospective method of adoption, as required by the ASU. The adoption of this ASU resulted in an increase in “Net Cash Used in Investing Activities” of
$1.9
for the six months ended March 31, 2018.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which superseded all previously existing revenue recognition guidance under GAAP. This ASU’s core principle is that a company will recognize revenue when it transfers promised goods or services to a customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU also calls for additional disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted this ASU on October 1, 2018 and used the modified retrospective transition method of adoption. The adoption of this ASU did not have a material impact on the Company’s financial statements as the impact of this ASU was limited to recognition timing and classification changes of immaterial amounts within the statement of operations and on the balance sheet. For additional information, refer to Note 3.
NOTE 3 — REVENUE FROM CONTRACTS WITH CUSTOMERS
In conjunction with the adoption of ASU 2014-09 (see Note 2), the Company updated its policy for recognizing revenue. The Company utilized a comprehensive approach to assess the impact of this ASU by reviewing its customer contract portfolio and existing accounting policies and procedures in order to identify potential differences that would result from applying the new requirements of Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.” A summary of the updated policy is included below.
Revenue Recognition Policy
The Company recognizes revenue when performance obligations have been satisfied by transferring control of the goods to customers. Control is generally transferred upon delivery of the goods to the customer. At the time of delivery, the customer is invoiced using previously agreed-upon credit terms. Shipping and/or handling costs that occur before the customer obtains control of the goods are deemed fulfillment activities and are accounted for as fulfillment costs. The Company’s contracts with customers generally contain one performance obligation.
Many of the Company’s contracts with customers include some form of variable consideration. The most common forms of variable consideration are trade promotions, rebates and discounts. Variable consideration is treated as a reduction of revenue at the time product revenue is recognized. Depending on the nature of the variable consideration, the Company uses either the “expected value” or the “most likely amount” method to determine variable consideration. The Company does not believe that there will be significant changes to its estimates of variable consideration when any uncertainties are resolved with customers. The Company reviews and updates estimates of variable consideration each period. Uncertainties related to the estimate of variable consideration are resolved in a short time frame and do not require any additional constraint on variable consideration.
The Company’s products are sold with no right of return, except in the case of goods which do not meet product specifications or are damaged. No services beyond this assurance-type warranty are provided to customers. Customer remedies include either a cash refund or an exchange of the product. As a result, the right of return and related refund liability is estimated and recorded as a reduction of revenue based on historical sales return experience.
Impacts of Adoption
The Company used the modified retrospective transition method of adoption and, accordingly, recorded an adjustment to retained earnings to reflect the application of its updated revenue recognition policy, which resulted in changes to the timing of when variable consideration payments are recognized. The cumulative adjustment resulted in a reduction of retained earnings and deferred income taxes of
$0.9
and
$0.3
, respectively, and a corresponding increase in other current liabilities of
$1.2
at October 1, 2018.
The Company elected the following practical expedients in accordance with ASC Topic 606:
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•
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Significant financing component
— The Company elected not to adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, the period between the transfer of a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
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|
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•
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Shipping and handling costs
— The Company elected to account for shipping and handling activities that occur before the customer has obtained control of a good as fulfillment activities (i.e., an expense), rather than as promised services.
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•
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Measurement of transaction price
— The Company elected to exclude from the measurement of transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer for sales taxes.
|
The following tables summarize the impact of the Company’s adoption of ASC Topic 606 on a modified retrospective basis in the Company’s Condensed Consolidated Statements of Operations. As a result of the adoption, certain payments to customers totaling
$7.6
and
$12.3
in the three and six months ended March 31, 2019, respectively, previously classified in “Selling, general, and administrative expenses” were classified as “Net Sales” in the Condensed Consolidated Statements of Operations. These payments to customers relate to trade advertisements that support the Company’s sales to customers. In accordance with ASC Topic 606, these payments were determined not to be distinct within the customer contracts and, as such, require classification within net sales. Additionally, in the three and six months ended March 31, 2019, the Company has recognized revenue of
$0.3
and
$0.7
, respectively, that was deferred upon the adoption of ASC Topic 606 in accordance with the satisfaction of the related performance obligation. The recognition of unearned revenue is included in “Net Sales” in the Company’s Condensed Consolidated Statements of Operations. No material changes to the balance sheet were required by the adoption of ASC Topic 606.
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Three Months Ended March 31, 2019
|
|
|
As Reported Under Topic 606
|
|
As Reported Under Prior Guidance
|
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Impact of Adoption
|
|
Net Sales
|
$
|
1,387.8
|
|
|
$
|
1,395.1
|
|
|
$
|
(7.3
|
)
|
|
Cost of goods sold
|
936.5
|
|
|
936.5
|
|
|
—
|
|
|
Gross Profit
|
451.3
|
|
|
458.6
|
|
|
(7.3
|
)
|
|
Selling, general and administrative expenses
|
225.8
|
|
|
233.4
|
|
|
(7.6
|
)
|
|
Amortization of intangible assets
|
40.4
|
|
|
40.4
|
|
|
—
|
|
|
Gain on sale of business
|
(2.6
|
)
|
|
(2.6
|
)
|
|
—
|
|
|
Other operating expenses, net
|
1.4
|
|
|
1.4
|
|
|
—
|
|
|
Operating Profit
|
$
|
186.3
|
|
|
$
|
186.0
|
|
|
$
|
0.3
|
|
|
|
|
|
|
|
|
|
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|
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Six Months Ended March 31, 2019
|
|
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As Reported Under Topic 606
|
|
As Reported Under Prior Guidance
|
|
Impact of Adoption
|
|
Net Sales
|
$
|
2,799.1
|
|
|
$
|
2,810.7
|
|
|
$
|
(11.6
|
)
|
|
Cost of goods sold
|
1,921.3
|
|
|
1,921.3
|
|
|
—
|
|
|
Gross Profit
|
877.8
|
|
|
889.4
|
|
|
(11.6
|
)
|
|
Selling, general and administrative expenses
|
442.9
|
|
|
455.2
|
|
|
(12.3
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)
|
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Amortization of intangible assets
|
80.7
|
|
|
80.7
|
|
|
—
|
|
|
Gain on sale of business
|
(127.3
|
)
|
|
(127.3
|
)
|
|
—
|
|
|
Other operating expenses, net
|
1.3
|
|
|
1.3
|
|
|
—
|
|
|
Operating Profit
|
$
|
480.2
|
|
|
$
|
479.5
|
|
|
$
|
0.7
|
|
Disaggregated Revenues
The following table presents net sales by product. The amounts for the three and six months ended March 31, 2019 are presented under ASC Topic 606 “Revenue from Contracts with Customers,” and the amounts for the three and six months ended March 31, 2018 are presented under ASC Topic 605 “Revenue Recognition.”
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Three Months Ended
March 31,
|
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Six Months Ended
March 31,
|
|
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2019
|
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2018
|
|
2019
|
|
2018
|
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Cereal and granola
|
$
|
563.2
|
|
|
$
|
595.1
|
|
|
$
|
1,119.4
|
|
|
$
|
1,150.8
|
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|
Egg and egg products
|
381.1
|
|
|
380.2
|
|
|
775.8
|
|
|
761.3
|
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|
Side dishes
|
123.4
|
|
|
111.9
|
|
|
269.1
|
|
|
168.1
|
|
|
Cheese and dairy
|
53.7
|
|
|
59.6
|
|
|
124.0
|
|
|
131.3
|
|
|
Sausage
|
36.7
|
|
|
28.7
|
|
|
80.3
|
|
|
28.7
|
|
|
Protein-based products and supplements
|
216.5
|
|
|
205.2
|
|
|
402.3
|
|
|
391.2
|
|
|
Nut butters and dried fruit and nut
|
—
|
|
|
118.3
|
|
|
—
|
|
|
232.6
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Pasta
|
—
|
|
|
68.8
|
|
|
—
|
|
|
136.4
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Other
|
13.7
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|
|
19.6
|
|
|
29.1
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21.2
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Eliminations
|
(0.5
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)
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(1.3
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)
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(0.9
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)
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|
(2.4
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)
|
|
Net Sales
|
$
|
1,387.8
|
|
|
$
|
1,586.1
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|
|
$
|
2,799.1
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|
|
$
|
3,019.2
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NOTE 4 — BUSINESS COMBINATIONS AND DIVESTITURES
The Company accounts for business combinations using the acquisition method of accounting, whereby the results of operations are included in the financial statements from the date of acquisition. The purchase price is allocated to acquired assets and assumed liabilities based on their estimated fair values at the date of acquisition, and any excess is allocated to goodwill. Goodwill represents the value the Company expects to achieve through the implementation of operational synergies and the expansion of the business into new or growing segments of the industry. The Company includes results of operations for business divestitures from the date of acquisition through the date of sale.
On October 1, 2018, the Company completed the 8th Avenue Transactions in which Post and THL separately capitalized 8th Avenue and 8th Avenue became the holding company for Post’s private brands business. Post received gross proceeds of
$875.0
from the 8th Avenue Transactions,
as well as
$16.8
related to final working capital adjustments, retaining shares of common stock equal to
60.5%
of the common equity in 8th Avenue. Post’s gross proceeds consisted of (i)
$250.0
from THL and (ii)
$625.0
from a committed senior increasing rate bridge loan (the “Bridge Loan”), which was funded in fiscal 2018 prior to the closing of the 8th Avenue Transactions (see Note 17). THL received
2.5
shares of 8th Avenue preferred stock with an
11%
cumulative, quarterly compounding dividend and a
$100.00
per share liquidation value and shares of common stock equal to
39.5%
of the common equity in 8th Avenue. During the three and six months ended March 31, 2019, the Company recorded gains of
$2.6
and
$127.3
, respectively, related to the 8th Avenue Transactions, which were reported as “Gain on sale of business” in the Condensed Consolidated Statements of Operations. Such gains recorded in the six months ended March 31, 2019 included foreign exchange losses previously recorded in accumulated other comprehensive income (“OCI”) of
$42.1
. Effective October 1, 2018, 8th Avenue was no longer consolidated
in the Company's financial statements and the
60.5%
common equity retained interest in 8th Avenue is accounted for using the equity method. For additional information regarding the Company’s equity method investment in 8th Avenue, refer to Note 9.
In order to calculate the recorded gains related to the 8th Avenue Transactions of
$127.3
, management was required to estimate the fair value of the Company’s equity method investment in 8th Avenue. In making this estimate, management used an approach combining the estimated implied value from the 8th Avenue Transactions, an income approach and a market approach, in which the greatest value was placed on the implied value from the 8th Avenue Transactions. In order to calculate the fair value implied by the 8th Avenue Transactions, management was required to estimate the value of the 8th Avenue equity. In making this estimate, management used a lattice model, which required significant assumptions, including estimates for the term, credit spread, yield volatility and risk free rates associated with 8th Avenue’s preferred stock. The income approach was based on discounted future cash flows and required significant assumptions, including estimates regarding future revenue, profitability and capital requirements. The market approach was based on a market multiple (revenue and EBITDA, which stands for earnings before interest, income taxes, depreciation and amortization) and required an estimate of appropriate multiples based on the market data.
On January 12, 2018, the Company completed its acquisition of Bob Evans Farms, Inc. (“Bob Evans”), resulting in the Company owning all of the outstanding shares of Bob Evans common stock. At closing, the Company paid each holder of shares of Bob Evans common stock, other than holders who demanded appraisal of their shares under Delaware law and had not withdrawn their demands as of the closing date,
$77.00
per share, resulting in a payment at closing of
$1,381.2
(which, in addition to the amounts paid to Bob Evans stockholders, includes amounts paid to retire certain debt and other obligations of Bob Evans). Any shares of Bob Evans common stock subject to appraisal as of the closing date were canceled and no longer outstanding after closing. The closing payment did not include any amounts due to former holders of approximately
4.35
shares of Bob Evans common stock who demanded appraisal under Delaware law and had not withdrawn their demands as of the closing date. At September 30, 2018, former holders of
3.3
shares of Bob Evans common stock had not withdrawn their appraisal demands and had not been paid for their shares of Bob Evans common stock. Related to these shares, the Company accrued
$267.0
at September 30, 2018, which was the number of shares of Bob Evans common stock for which former Bob Evans stockholders demanded appraisal and had not withdrawn their demands multiplied by the
$77.00
per share merger consideration, plus accrued interest at the Federal Reserve Discount Rate plus a spread of
5.00%
. In December 2018, the Company made payments of
$257.6
to the former holders of Bob Evans common stock who had demanded appraisal and had not been paid for their shares. The payments constitute a settlement with one former stockholder as well as prepayments of the
$77.00
per share merger consideration to the remaining former stockholders. At March 31, 2019, the Company had a remaining accrual of
$14.0
, which represents the accrued interest at the Federal Reserve Discount Rate plus a spread of
5.00%
related to
2.5
shares for which the
$77.00
per share merger consideration was paid. Additional payments related to these
2.5
shares could be made in the future. The liabilities were reported in “Other current liabilities” and “Other liabilities” on the Condensed Consolidated Balance Sheets at March 31, 2019 and September 30, 2018, respectively. For additional information regarding the proceedings brought by former holders of Bob Evans common stock who demanded appraisal under Delaware law, refer to Note 16.
Bob Evans is a producer of refrigerated potato and pasta side dishes, pork sausage and a variety of refrigerated and frozen convenience food items. Bob Evans is reported in two reportable segments. The results of Bob Evans’s foodservice operations are reported in the Foodservice segment and the results of Bob Evans’s retail operations are reported in the Refrigerated Retail segment (see Note 20). Based upon the purchase price allocation, the Company recorded
$376.0
of customer relationships to be amortized over a weighted-average period of
18
years,
$6.0
of definite-lived trademarks to be amortized over a weighted-average period of
10
years and
$400.0
of indefinite-lived trademarks.
The goodwill generated by the Company’s acquisition of Bob Evans is not deductible for U.S. federal income tax purposes; however,
$13.8
of goodwill generated by business combinations completed by Bob Evans in periods prior to its acquisition was transferred to Post and is tax deductible.
The following table provides the final allocation of the purchase price related to the fiscal 2018 acquisition of Bob Evans based upon the fair value of assets and liabilities assumed, including the provisional amounts recognized related to the acquisition as of September 30, 2018, as well as measurement period adjustments made during fiscal 2019. The allocation of purchase price was finalized as of December 31, 2018, and no additional adjustments have been or will be made.
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Acquisition Date Amounts Recognized as of September 30, 2018 (a)
|
|
Adjustments During Fiscal 2019
|
|
Acquisition Date Amounts Recognized (as Adjusted)
|
|
Cash and cash equivalents
|
$
|
15.6
|
|
|
$
|
—
|
|
|
$
|
15.6
|
|
|
Receivables
|
58.5
|
|
|
—
|
|
|
58.5
|
|
|
Inventories
|
27.1
|
|
|
—
|
|
|
27.1
|
|
|
Prepaid expenses and other current assets
|
34.3
|
|
|
—
|
|
|
34.3
|
|
|
Property
|
184.3
|
|
|
—
|
|
|
184.3
|
|
|
Goodwill
|
898.3
|
|
|
(0.7
|
)
|
|
897.6
|
|
|
Other intangible assets
|
782.0
|
|
|
—
|
|
|
782.0
|
|
|
Other assets
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
Accounts payable
|
(18.2
|
)
|
|
—
|
|
|
(18.2
|
)
|
|
Other current liabilities
|
(58.5
|
)
|
|
—
|
|
|
(58.5
|
)
|
|
Deferred tax liability - long-term
|
(194.9
|
)
|
|
0.7
|
|
|
(194.2
|
)
|
|
Other liabilities
|
(5.3
|
)
|
|
—
|
|
|
(5.3
|
)
|
|
Total acquisition cost
|
$
|
1,723.6
|
|
|
$
|
—
|
|
|
$
|
1,723.6
|
|
(a) As previously reported in Post’s Annual Report on Form 10-K for fiscal 2018 filed with the SEC on November 16, 2018.
Transaction-related Expenses
The Company incurs transaction-related expenses in connection with both completed and contemplated acquisitions, divestitures and mergers. These expenses generally include third party costs for due diligence, advisory services and transaction success fees. Transaction-related expenses of
$3.8
and
$14.5
were incurred during the three and six months ended March 31, 2019, respectively, and
$20.9
and
$24.0
were incurred during the three and six months ended March 31, 2018, respectively. These expenses were recorded as “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. Transaction-related expenses included costs attributable to the 8th Avenue Transactions of
$0.8
and
$9.9
for the three and six months ended March 31, 2019, respectively, and
$1.3
and
$2.0
for the three and six months ended March 31, 2018, respectively.
Pro Forma Information
The following unaudited pro forma information presents a summary of the results of operations of the Company combined with the results of Bob Evans for the periods presented as if the fiscal 2018 acquisition had occurred on October 1, 2016, along with certain pro forma adjustments. Additionally, the impact of the 8th Avenue Transactions is presented in this unaudited pro forma information as if the transactions had occurred on October 1, 2017. These pro forma adjustments give effect to the amortization of certain definite-lived intangible assets, adjusted depreciation based upon the fair value of assets acquired, interest expense related to the financing of the business combinations, inventory revaluation adjustments on acquired businesses, transaction and extinguished debt costs and related income taxes. Additionally, gains of
$2.6
and
$127.3
in the three and six months ended March 31, 2019, respectively, related to the 8th Avenue Transactions have been adjusted out of the current year results. The following unaudited pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the transactions occurred on the assumed dates, nor is it necessarily an indication of future operating results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Pro forma net sales
|
$
|
1,387.8
|
|
|
$
|
1,392.0
|
|
|
$
|
2,799.1
|
|
|
$
|
2,771.4
|
|
|
Pro forma net earnings available to common shareholders
|
$
|
42.0
|
|
|
$
|
96.8
|
|
|
$
|
84.3
|
|
|
$
|
373.9
|
|
|
Pro forma basic earnings per common share
|
$
|
0.59
|
|
|
$
|
1.45
|
|
|
$
|
1.23
|
|
|
$
|
5.63
|
|
|
Pro forma diluted earnings per common share
|
$
|
0.57
|
|
|
$
|
1.31
|
|
|
$
|
1.16
|
|
|
$
|
4.96
|
|
NOTE 5 — RESTRUCTURING
In February 2018, the Company announced its plan to close its cereal manufacturing facility in Clinton, Massachusetts, which manufactures certain Weetabix products distributed in North America. The transfer of production capabilities to other Post Consumer Brands facilities and the closure of the facility is expected to be completed by September 2019.
Restructuring charges and the related liabilities are shown in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee-Related Costs
|
|
Accelerated Depreciation
|
|
Total
|
|
Balance at September 30, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Charge to expense
|
1.5
|
|
|
0.3
|
|
|
1.8
|
|
|
Cash payments
|
—
|
|
|
—
|
|
|
—
|
|
|
Non-cash charges
|
—
|
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|
Balance at March 31, 2018
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2018
|
$
|
2.7
|
|
|
$
|
—
|
|
|
$
|
2.7
|
|
|
Charge to expense
|
1.5
|
|
|
4.3
|
|
|
5.8
|
|
|
Cash payments
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
Non-cash charges
|
—
|
|
|
(4.3
|
)
|
|
(4.3
|
)
|
|
Balance, March 31, 2019
|
$
|
4.1
|
|
|
$
|
—
|
|
|
$
|
4.1
|
|
|
|
|
|
|
|
|
|
Total expected restructuring charge
|
$
|
5.2
|
|
|
$
|
10.5
|
|
|
$
|
15.7
|
|
|
Cumulative restructuring charges incurred to date
|
4.2
|
|
|
6.8
|
|
|
11.0
|
|
|
Remaining expected restructuring charge
|
$
|
1.0
|
|
|
$
|
3.7
|
|
|
$
|
4.7
|
|
The Company incurred total restructuring charges of
$3.3
and
$5.8
in the three and six months ended March 31, 2019, respectively, and
$1.8
in the three and six months ended March 31, 2018. Employee-related costs were included in “Selling, general and administrative expenses” and accelerated depreciation expense was included in “Cost of goods sold” in the Condensed Consolidated Statements of Operations. These expenses are not included in the measure of segment performance (see Note 20).
NOTE 6 — ASSETS AND LIABILITIES HELD FOR SALE
The major classes of assets and liabilities comprising “Current assets held for sale,” “Other assets held for sale,” “Current liabilities held for sale” and “Other liabilities held for sale” on the Condensed Consolidated Balance Sheet as of September 30, 2018 are shown in the following table. There were no assets or liabilities held for sale at March 31, 2019.
|
|
|
|
|
|
|
|
|
September 30, 2018
|
|
Current assets held for sale
|
|
|
Restricted cash
|
$
|
0.7
|
|
|
Receivables, net
|
79.8
|
|
|
Inventories
|
111.6
|
|
|
Prepaid expenses and other current assets
|
1.5
|
|
|
Property, net (a)
|
1.4
|
|
|
|
$
|
195.0
|
|
|
Other assets held for sale
|
|
|
Property, net (a)
|
$
|
165.1
|
|
|
Goodwill
|
417.1
|
|
|
Other intangible assets, net
|
270.4
|
|
|
Other assets
|
4.0
|
|
|
|
$
|
856.6
|
|
|
Current liabilities held for sale
|
|
|
Accounts payable
|
$
|
37.4
|
|
|
Other current liabilities
|
28.2
|
|
|
|
$
|
65.6
|
|
|
Other liabilities held for sale
|
|
|
Long-term debt
|
$
|
614.6
|
|
|
Deferred income taxes
|
79.9
|
|
|
Other liabilities
|
0.6
|
|
|
|
$
|
695.1
|
|
|
|
|
|
(a)
|
In accordance with ASC Topic 360, “Property, Plant, and Equipment,” the building classified as held for sale related to the closure of the Company’s Post Consumer Brands cereal warehouse in Clinton, Massachusetts and the 8th Avenue properties held for sale are classified as current and noncurrent, respectively, on the Condensed Consolidated Balance Sheet.
|
In connection with the 8th Avenue Transactions, the Company had assets and liabilities held for sale at September 30, 2018. On October 1, 2018, the Company completed the 8th Avenue Transactions, and effective on that date, 8th Avenue was no longer consolidated in the Company's financial statements (see Notes 4 and 9). Additionally, at September 30, 2018, the Company had a building classified as held for sale related to the closure of the Company’s Post Consumer Brands cereal warehouse in Clinton, Massachusetts. The building was sold in November 2018.
In connection with the 8th Avenue Transactions, the Company recorded gains of
$2.6
and
$127.3
in the three and six months ended March 31, 2019, respectively, which were reported as “Gain on sale of business” in the Condensed Consolidated Statements of Operations, as well as a loss of
$2.6
in the six months ended March 31, 2019, which was included in “Loss on extinguishment of debt, net” in the Condensed Consolidated Statement of Operations. During the six months ended March 31, 2019, a gain of
$0.6
was recorded related to the sale of the Company’s Post Consumer Brands cereal warehouse in Clinton, Massachusetts and was included in “Other operating expense, net” in the Condensed Consolidated Statement of Operations. There were no held for sale gains or losses recorded in the three or six months ended March 31, 2018.
NOTE 7 — GOODWILL
The changes in the carrying amount of goodwill by segment are noted in the following table. Goodwill for the historical Private Brands segment was classified as held for sale at September 30, 2018 (see Note 6).
On October 1, 2018, the Company completed the reorganization of its refrigerated foods businesses, which resulted in the assignment of the foodservice and retail components previously included in the historical Refrigerated Food segment to its Foodservice and Refrigerated Retail segments. In connection with the reorganization, the Company assigned goodwill previously reported within the historical Refrigerated Food segment to reporting units within the Foodservice and Refrigerated Retail segments. The historical Refrigerated Food segment contained two reporting units: refrigerated food and cheese and dairy. The Company’s cheese and dairy reporting unit was not impacted by the reorganization and is now reported within the Refrigerated Retail segment. The remaining goodwill balance within the refrigerated food reporting unit was allocated between the Foodservice and Refrigerated Retail segments based on the relative fair value of the businesses. The fair values of the foodservice and refrigerated retail businesses were determined using methodologies consistent with the Company’s annual goodwill impairment assessment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post Consumer Brands
|
|
Weetabix
|
|
Foodservice
|
|
Refrigerated Retail
|
|
Active Nutrition
|
|
Total
|
|
Balance, September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (gross)
|
$
|
2,012.0
|
|
|
$
|
900.9
|
|
|
$
|
1,336.1
|
|
|
$
|
793.8
|
|
|
$
|
180.7
|
|
|
$
|
5,223.5
|
|
|
Accumulated impairment losses
|
(609.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(114.8
|
)
|
|
(723.9
|
)
|
|
Goodwill (net)
|
$
|
1,402.9
|
|
|
$
|
900.9
|
|
|
$
|
1,336.1
|
|
|
$
|
793.8
|
|
|
$
|
65.9
|
|
|
$
|
4,499.6
|
|
|
Acquisition related adjustment
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
(0.7
|
)
|
|
Currency translation adjustment
|
(0.2
|
)
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance, March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (gross)
|
$
|
2,011.8
|
|
|
$
|
901.1
|
|
|
$
|
1,335.6
|
|
|
$
|
793.6
|
|
|
$
|
180.7
|
|
|
$
|
5,222.8
|
|
|
Accumulated impairment losses
|
(609.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(114.8
|
)
|
|
(723.9
|
)
|
|
Goodwill (net)
|
$
|
1,402.7
|
|
|
$
|
901.1
|
|
|
$
|
1,335.6
|
|
|
$
|
793.6
|
|
|
$
|
65.9
|
|
|
$
|
4,498.9
|
|
NOTE 8 — INTANGIBLE ASSETS, NET
Total intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
September 30, 2018
|
|
|
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
|
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
|
Subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
$
|
2,307.0
|
|
|
$
|
(503.9
|
)
|
|
$
|
1,803.1
|
|
|
$
|
2,307.0
|
|
|
$
|
(444.4
|
)
|
|
$
|
1,862.6
|
|
|
Trademarks and brands
|
815.2
|
|
|
(209.4
|
)
|
|
605.8
|
|
|
768.5
|
|
|
(188.2
|
)
|
|
580.3
|
|
|
Other intangible assets
|
3.1
|
|
|
(3.1
|
)
|
|
—
|
|
|
3.1
|
|
|
(3.1
|
)
|
|
—
|
|
|
|
3,125.3
|
|
|
(716.4
|
)
|
|
2,408.9
|
|
|
3,078.6
|
|
|
(635.7
|
)
|
|
2,442.9
|
|
|
Not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks and brands
|
1,049.7
|
|
|
—
|
|
|
1,049.7
|
|
|
1,096.4
|
|
|
—
|
|
|
1,096.4
|
|
|
|
$
|
4,175.0
|
|
|
$
|
(716.4
|
)
|
|
$
|
3,458.6
|
|
|
$
|
4,175.0
|
|
|
$
|
(635.7
|
)
|
|
$
|
3,539.3
|
|
NOTE 9 — EQUITY INTERESTS AND RELATED PARTY TRANSACTIONS
8th Avenue
In connection with the 8th Avenue Transactions, the Company has a
60.5%
common equity retained interest in 8th Avenue that is accounted for using the equity method. In determining the accounting treatment of the retained interest, management concluded that 8th Avenue was not a variable interest entity as defined by ASC Topic 810, “Consolidation” and, as such, was evaluated under the voting interest model. Based on the terms of 8th Avenue’s governing documents, management determined that the Company does not have a controlling voting interest in 8th Avenue due to substantive participating rights held by THL associated with the governance of 8th Avenue. However, Post does retain significant influence, and therefore, the use of the equity method of accounting is required.
The following table presents the calculation of the Company’s equity method loss attributable to 8th Avenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2019
|
|
Six Months Ended
March 31, 2019
|
|
8th Avenue’s net loss available to 8th Avenue’s common shareholders
|
$
|
(11.3
|
)
|
|
$
|
(22.8
|
)
|
|
|
60.5
|
%
|
|
60.5
|
%
|
|
Equity method loss available to Post
|
$
|
(6.8
|
)
|
|
$
|
(13.8
|
)
|
|
Less: Amortization of basis difference, net of tax (a)
|
1.8
|
|
|
5.4
|
|
|
Equity method loss, net of tax
|
$
|
(8.6
|
)
|
|
$
|
(19.2
|
)
|
|
|
|
|
(a)
|
The Company adjusted the historical basis of 8th Avenue’s assets and liabilities to fair value and recognized a total basis difference of
$70.3
, which represents Post’s retained portion of the gain on sale. The basis difference related to inventory of
$2.0
, net of tax, was included in equity method loss in the six months ended March 31, 2019. The basis difference related to property, plant and equipment and other intangible assets is being amortized over the weighted average useful lives of the assets. At March 31, 2019, the remaining basis difference to be amortized was
$64.9
.
|
Summarized financial information of 8th Avenue is presented in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2019
|
|
Six Months Ended
March 31, 2019
|
|
Net sales
|
$
|
213.7
|
|
|
$
|
427.8
|
|
|
Gross profit
|
$
|
35.5
|
|
|
$
|
69.2
|
|
|
|
|
|
|
|
Net loss
|
$
|
(4.2
|
)
|
|
$
|
(8.7
|
)
|
|
Less: Preferred stock dividend
|
7.1
|
|
|
14.1
|
|
|
Net Loss Available to 8th Avenue Common Shareholders
|
$
|
(11.3
|
)
|
|
$
|
(22.8
|
)
|
Prior to the 8th Avenue Transactions, Post’s historical private brands business used certain functions and services performed by the Company. These functions and services included information systems, procurement, accounting shared services, legal, tax, human resources, payroll and cash management. After the completion of the 8th Avenue Transactions, the Company continued to provide many of these services to 8th Avenue under a master services agreement (“MSA”). In addition, Post and THL both provide certain advisory services to 8th Avenue for a fee. During the three and six months ended March 31, 2019, the Company recorded MSA and advisory income of
$1.1
and
$2.1
, respectively, which were recorded in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. No such income was recorded in the three and six months ended March 31, 2018.
During the three and six months ended March 31, 2019, the Company had net sales to 8th Avenue of
$0.9
and
$2.0
, respectively, and purchases from and royalties paid to 8th Avenue of
$2.8
and
$5.1
, respectively. The investment in 8th Avenue was
$158.3
at March 31, 2019 and was included in “Equity method investments” on the Condensed Consolidated Balance Sheet. The Company had receivables and payables with 8th Avenue of
$3.0
and
$0.7
, respectively, at March 31, 2019, related to the separation of 8th Avenue from the Company, the closing of the 8th Avenue Transactions, including the MSA fees owed by 8th Avenue to the Company and related party sales and purchases. The receivables and payables were included in “Receivables, net” and “Accounts payable,” respectively, on the Condensed Consolidated Balance Sheet.
Alpen and Weetabix East Africa
The Company holds an equity interest in
two
legal entities, Alpen Food Company South Africa (Proprietary) Limited (“Alpen”) and Weetabix East Africa Limited (“Weetabix East Africa”), whose assets are reported in the Weetabix segment (see Note 20).
Alpen is a South African-based company that produces ready-to-eat (“RTE”) cereal and muesli. The Company owns
50%
of Alpen’s common stock with no other indicators of control, and accordingly, the Company accounts for its investment in Alpen using the equity method. The investment in Alpen was
$4.8
and
$5.2
at March 31, 2019 and September 30, 2018, respectively, and was included in “Equity method investments” on the Condensed Consolidated Balance Sheets. The Company had a note receivable balance with Alpen of
$1.0
and
$1.0
at March 31, 2019 and September 30, 2018, respectively, which was included in “Other assets” on the Condensed Consolidated Balance Sheets.
Weetabix East Africa is a Kenyan-based company that produces RTE cereal and muesli. The Company owns
50.1%
of Weetabix East Africa and holds a controlling voting and financial interest through its appointment of management and representation on Weetabix East Africa’s Board of Directors. Accordingly, Weetabix East Africa is fully consolidated into the Company’s financial statements.
NOTE 10 — INCOME TAXES
The effective income tax rate was
(28.0)%
and
14.5%
during the three and six months ended March 31, 2019, respectively, and
20.7%
and
(149.5)%
for the three and six months ended March 31, 2018, respectively. In accordance with ASC Topic 740, “Income Taxes,” the Company records income tax (benefit) expense for interim periods using the estimated annual effective income tax rate for the full fiscal year adjusted for the impact of discrete items occurring during the interim periods.
In the fiscal 2019 periods, the effective income tax rates differed significantly from the statutory rate as a result of
$21.2
of discrete tax benefit items occurring in the three months ended March 31, 2019, of which
$17.6
related to excess tax benefits for share-based payments.
In the six months ended March 31, 2018, the Company recorded an income tax benefit of
$231.9
. This benefit was driven by the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017. The Tax Act resulted in significant impacts to the Company’s accounting for income taxes with the most significant of these impacts resulting from the reduction of the U.S. federal corporate income tax rate, a one-time transition tax on unrepatriated foreign earnings and full expensing of certain qualified depreciable assets placed in service after September 27, 2017 and before January 1, 2023. The Tax Act enacted a new U.S. federal corporate income tax rate of
21%
that went into effect for the Company’s 2019 tax year and was prorated with the pre-December 22, 2017 U.S. federal corporate income tax rate of
35%
for the Company’s 2018 tax year. This proration resulted in a blended U.S. federal corporate income tax rate of
24.5%
for fiscal 2018. During the six months ended March 31, 2018, the Company (i) remeasured its existing deferred tax assets and liabilities considering both the 2018 fiscal year blended rate and the
21%
rate for periods beyond fiscal 2018 and recorded a provisional tax benefit of
$272.4
(adjusted to
$281.2
during the year ended September 30, 2018) and (ii) calculated the one-time transition tax and recorded provisional tax expense of
$7.1
(adjusted to
$10.3
during the year ended September 30, 2018). Full expensing of certain depreciable assets resulted in temporary differences, which were analyzed throughout fiscal 2018 as assets were placed in service. Included in (i) above is a tax benefit adjustment of
$1.7
, recorded in the three months ended March 31, 2018, to further refine the remeasurement made in the first quarter of fiscal 2018 of the Company’s existing deferred tax assets and liabilities considering both the 2018 fiscal year blended rate and the
21%
rate for periods beyond fiscal 2018. The impacts of the Tax Act have been finalized, and no additional adjustments were or will be recorded in fiscal 2019.
NOTE 11
—
EARNINGS PER SHARE
Basic earnings per share is based on the average number of common shares outstanding during the period. Diluted earnings per share is based on the average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options, stock appreciation rights and restricted stock equivalents using the “treasury stock” method. The impact of potentially dilutive convertible preferred stock is calculated using the “if-converted” method. In the second quarter of fiscal 2019, the Company completed the redemption of its
2.5%
Series C Cumulative Perpetual Convertible Preferred Stock (“Series C Preferred”). Substantially all of the
3.2
shares of Series C Preferred outstanding as of January 10, 2019, the date the Series C Preferred redemption was announced, were converted into
5.9
shares of the Company’s common stock pursuant to the conversion rights applicable to the Series C Preferred, and the remaining shares of Series C Preferred were redeemed. In the second quarter of fiscal 2018, the Company completed the redemption of its
3.75%
Series B Cumulative Perpetual Convertible Preferred Stock (“Series B Preferred”). Substantially all of the
1.5
shares of Series B Preferred outstanding as of January 10, 2018, the date the Series B Preferred redemption was announced, were converted into
3.1
shares of the Company’s common stock pursuant to the conversion rights applicable to the Series B Preferred, and the remaining shares of Series B Preferred were redeemed. For additional information regarding the Series B Preferred and Series C Preferred redemptions, refer to Note 19.
The following table sets forth the computation of basic and diluted earnings per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net earnings for basic earnings per share
|
$
|
43.0
|
|
|
$
|
88.9
|
|
|
$
|
166.6
|
|
|
$
|
380.4
|
|
|
Dilutive preferred stock dividends
|
1.0
|
|
|
2.6
|
|
|
3.0
|
|
|
6.0
|
|
|
Net earnings for diluted earnings per share
|
$
|
44.0
|
|
|
$
|
91.5
|
|
|
$
|
169.6
|
|
|
$
|
386.4
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares for basic earnings per share
|
70.6
|
|
|
66.8
|
|
|
68.6
|
|
|
66.4
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
Stock options
|
1.7
|
|
|
1.7
|
|
|
1.9
|
|
|
1.7
|
|
|
Stock appreciation rights
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
Restricted stock awards
|
0.4
|
|
|
0.2
|
|
|
0.4
|
|
|
0.3
|
|
|
Preferred shares conversion to common
|
2.5
|
|
|
7.2
|
|
|
4.2
|
|
|
8.1
|
|
|
Total dilutive securities
|
4.7
|
|
|
9.2
|
|
|
6.6
|
|
|
10.2
|
|
|
Weighted-average shares for diluted earnings per share
|
75.3
|
|
|
76.0
|
|
|
75.2
|
|
|
76.6
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
$
|
0.61
|
|
|
$
|
1.33
|
|
|
$
|
2.43
|
|
|
$
|
5.73
|
|
|
Diluted earnings per common share
|
$
|
0.58
|
|
|
$
|
1.20
|
|
|
$
|
2.26
|
|
|
$
|
5.04
|
|
The following table details the securities that have been excluded from the calculation of weighted-average shares for diluted earnings per share as they were anti-dilutive.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Stock options
|
0.1
|
|
|
0.6
|
|
|
0.4
|
|
|
0.6
|
|
NOTE 12 — INVENTORIES
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
September 30,
2018
|
|
Raw materials and supplies
|
$
|
97.6
|
|
|
$
|
107.8
|
|
|
Work in process
|
17.0
|
|
|
17.8
|
|
|
Finished products
|
406.3
|
|
|
324.1
|
|
|
Flocks
|
34.2
|
|
|
34.5
|
|
|
|
$
|
555.1
|
|
|
$
|
484.2
|
|
NOTE 13 — PROPERTY, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
September 30,
2018
|
|
Property, at cost
|
$
|
2,647.4
|
|
|
$
|
2,543.0
|
|
|
Accumulated depreciation
|
(928.7
|
)
|
|
(833.3
|
)
|
|
|
$
|
1,718.7
|
|
|
$
|
1,709.7
|
|
NOTE 14 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
In the ordinary course of business, the Company is exposed to commodity price risks relating to the acquisition of raw materials and supplies, interest rate risks relating to floating rate debt and foreign currency exchange rate risks. The Company utilizes derivative financial instruments, including (but not limited to) futures contracts, option contracts, forward contracts and swaps, to manage certain of these exposures by hedging when it is practical to do so. The Company does not hold or issue financial instruments for speculative or trading purposes.
At
March 31, 2019
, the Company’s derivative instruments consisted of:
Not designated as hedging instruments under ASC Topic 815
|
|
|
|
•
|
Commodity and energy futures and option contracts, which relate to inputs that generally will be utilized within the next year;
|
|
|
|
|
•
|
foreign currency forward contracts maturing within the next year that have the effect of hedging currency fluctuations between the Euro and the U.S. Dollar;
|
|
|
|
|
•
|
a pay-fixed, receive-variable interest rate swap maturing in May 2021 that requires monthly settlements and has the effect of hedging interest payments on debt expected to be issued but not yet priced; and
|
|
|
|
|
•
|
rate-lock interest rate swaps that require six lump sum settlements with the first settlement occurring in December 2019 and the last in July 2023 and have the effect of hedging interest payments on debt expected to be issued but not yet priced.
|
Designated as hedging instruments under ASC Topic 815
|
|
|
|
•
|
Pay-fixed, receive-fixed cross-currency swaps with maturities in July 2022 that require quarterly cash settlements and are used as net investment hedges of the Company’s investment in Weetabix, which is denominated in Pounds Sterling; and
|
|
|
|
|
•
|
a pay-fixed, receive-variable interest rate swap maturing in May 2024 that requires monthly settlements and is used as a cash flow hedge of forecasted interest payments on the Company’s variable rate term loan.
|
In the first quarter of fiscal 2019, the Company terminated
$800.0
and
$214.2
notional value of its interest rate swap and cross-currency swap contracts, respectively, that were designated as hedging instruments. In connection with the interest rate swap terminations, the Company received cash proceeds of
$29.8
, and reclassified previously recorded gains from accumulated OCI to “Interest expense, net” in the Condensed Consolidated Statement of Operations for the six months ended March 31, 2019. In connection with the cross-currency swap terminations, the Company received cash proceeds of
$26.2
, which were recorded to accumulated OCI. Reclassification of amounts recorded in accumulated OCI into earnings will only occur in the event all United Kingdom-based operations are liquidated.
As of January 1, 2018, the Company changed the designation of its foreign currency forward contracts from a cash flow hedge to a non-designated hedging instrument. In connection with the new designation, the Company reclassified gains previously recorded in accumulated OCI of
$1.8
, of which
$1.3
was reclassified to “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2018.
The following table shows the notional amounts of derivative instruments held.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
September 30,
2018
|
|
Not designated as hedging instruments under ASC Topic 815:
|
|
|
|
|
|
Commodity contracts
|
|
$
|
33.0
|
|
|
$
|
64.3
|
|
|
Energy contracts
|
|
49.3
|
|
|
20.8
|
|
|
Foreign exchange contracts - Forward contracts
|
|
4.0
|
|
|
9.3
|
|
|
Interest rate swap
|
|
73.9
|
|
|
74.6
|
|
|
Interest rate swaps - Rate-lock swaps
|
|
1,649.3
|
|
|
1,649.3
|
|
|
Designated as hedging instruments under ASC Topic 815:
|
|
|
|
|
|
Foreign exchange contracts - Cross-currency swaps
|
|
448.7
|
|
|
662.9
|
|
|
Interest rate swap
|
|
200.0
|
|
|
1,000.0
|
|
The following table presents the balance sheet location and fair value of the Company’s derivative instruments, along with the portion designated as hedging instruments under ASC Topic 815. The Company does not offset derivative assets and liabilities within the Condensed Consolidated Balance Sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
Portion Designated as Hedging Instruments
|
|
|
|
Balance Sheet Location
|
|
March 31,
2019
|
|
September 30,
2018
|
|
March 31,
2019
|
|
September 30,
2018
|
|
Asset Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
1.1
|
|
|
$
|
1.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Energy contracts
|
|
Prepaid expenses and other current assets
|
|
4.7
|
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
Commodity contracts
|
|
Other assets
|
|
1.5
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
Energy contracts
|
|
Other assets
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
Foreign exchange contracts
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.1
|
|
|
Foreign exchange contracts
|
|
Other assets
|
|
—
|
|
|
17.6
|
|
|
—
|
|
|
17.6
|
|
|
Interest rate swaps
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
6.4
|
|
|
—
|
|
|
6.4
|
|
|
Interest rate swaps
|
|
Other assets
|
|
—
|
|
|
33.9
|
|
|
—
|
|
|
30.6
|
|
|
|
|
|
|
$
|
7.3
|
|
|
$
|
66.4
|
|
|
$
|
—
|
|
|
$
|
55.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
|
Other current liabilities
|
|
$
|
0.9
|
|
|
$
|
2.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Energy contracts
|
|
Other current liabilities
|
|
0.9
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
Foreign exchange contracts
|
|
Other current liabilities
|
|
0.9
|
|
|
1.5
|
|
|
0.9
|
|
|
1.4
|
|
|
Foreign exchange contracts
|
|
Other liabilities
|
|
11.2
|
|
|
19.4
|
|
|
11.2
|
|
|
19.4
|
|
|
Interest rate swaps
|
|
Other current liabilities
|
|
53.4
|
|
|
23.6
|
|
|
0.1
|
|
|
—
|
|
|
Interest rate swaps
|
|
Other liabilities
|
|
176.2
|
|
|
94.3
|
|
|
0.5
|
|
|
—
|
|
|
|
|
|
|
$
|
243.5
|
|
|
$
|
141.4
|
|
|
$
|
12.7
|
|
|
$
|
20.8
|
|
The following tables present the effects of the Company’s derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Statement of Operations Location
|
|
Loss (Gain) Recognized in Statement of Operations
|
|
|
|
2019
|
|
2018
|
|
Commodity contracts
|
|
Cost of goods sold
|
|
$
|
3.2
|
|
|
$
|
(5.1
|
)
|
|
Energy contracts
|
|
Cost of goods sold
|
|
(8.3
|
)
|
|
(0.7
|
)
|
|
Interest rate swaps
|
|
Expense (income) on swaps, net
|
|
63.0
|
|
|
(50.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Hedging Instruments
|
|
Loss (Gain) Recognized in OCI
|
|
Gain Reclassified from Accumulated OCI into Earnings
|
|
Statement of Operations Location
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Foreign exchange contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1.3
|
)
|
|
Selling, general and administrative expenses
|
|
Interest rate swaps
|
|
2.5
|
|
|
(20.6
|
)
|
|
(0.4
|
)
|
|
(0.5
|
)
|
|
Interest expense, net
|
|
Cross-currency swaps
|
|
9.4
|
|
|
15.2
|
|
|
—
|
|
|
—
|
|
|
Expense (income) on swaps, net
|
The following tables present the effects of the Company’s derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income for the six months ended March 31, 2019 and 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Statement of Operations Location
|
|
Loss (Gain) Recognized in Statement of Operations
|
|
|
|
2019
|
|
2018
|
|
Commodity contracts
|
|
Cost of goods sold
|
|
$
|
3.0
|
|
|
$
|
(4.7
|
)
|
|
Energy contracts
|
|
Cost of goods sold
|
|
—
|
|
|
(2.9
|
)
|
|
Foreign exchange contracts
|
|
Selling, general and administrative expenses
|
|
—
|
|
|
0.2
|
|
|
Interest rate swaps
|
|
Expense (income) on swaps, net
|
|
114.7
|
|
|
(53.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Hedging Instruments
|
|
Loss (Gain) Recognized in OCI
|
|
Gain Reclassified from Accumulated OCI into Earnings
|
|
Statement of Operations Location
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Foreign exchange contracts
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
$
|
(1.3
|
)
|
|
Selling, general and administrative expenses
|
|
Interest rate swaps
|
|
7.1
|
|
|
(29.6
|
)
|
|
(30.5
|
)
|
|
(0.2
|
)
|
|
Interest expense, net
|
|
Cross-currency swaps
|
|
(19.6
|
)
|
|
25.9
|
|
|
—
|
|
|
—
|
|
|
Expense (income) on swaps, net
|
Accumulated OCI included a
$32.0
net gain on hedging instruments before taxes (
$32.0
after taxes) at March 31, 2019, compared to a
$50.0
net gain before taxes (
$37.4
after taxes) at September 30, 2018. Approximately
$0.1
of the net hedging losses reported in accumulated OCI at March 31, 2019 are expected to be reclassified into earnings within the next 12 months. For gains or losses associated with interest rate swaps, the reclassification will occur over the term of the related debt. Reclassification of gains and losses reported in accumulated OCI into earnings related to the cross-currency swaps will only occur in the event all United Kingdom-based operations are liquidated. Accumulated OCI included settlements of cross-currency swaps of
$34.4
and
$4.8
at March 31, 2019 and September 30, 2018, respectively. In connection with the settlements of cross-currency swaps, the Company recognized gains in accumulated OCI of
$1.3
and
$29.6
during the three and six months ended March 31, 2019, respectively, and
$0.7
and
$1.5
during the three and six months ended March 31, 2018, respectively.
At
March 31, 2019
and
September 30, 2018
, the Company had pledged collateral of
$1.9
and
$4.5
, respectively, related to its commodity and energy contracts. These amounts are classified as “Restricted cash” on the Condensed Consolidated Balance Sheets.
NOTE 15 — FAIR VALUE MEASUREMENTS
The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis and the basis for that measurement according to the levels in the fair value hierarchy in ASC Topic 820.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
September 30, 2018
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation investments
|
$
|
10.6
|
|
|
$
|
10.6
|
|
|
$
|
—
|
|
|
$
|
43.6
|
|
|
$
|
43.6
|
|
|
$
|
—
|
|
|
Derivative assets
|
7.3
|
|
|
—
|
|
|
7.3
|
|
|
66.4
|
|
|
—
|
|
|
66.4
|
|
|
|
$
|
17.9
|
|
|
$
|
10.6
|
|
|
$
|
7.3
|
|
|
$
|
110.0
|
|
|
$
|
43.6
|
|
|
$
|
66.4
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation liabilities
|
$
|
30.4
|
|
|
$
|
—
|
|
|
$
|
30.4
|
|
|
$
|
52.2
|
|
|
$
|
—
|
|
|
$
|
52.2
|
|
|
Derivative liabilities
|
243.5
|
|
|
—
|
|
|
243.5
|
|
|
141.4
|
|
|
—
|
|
|
141.4
|
|
|
|
$
|
273.9
|
|
|
$
|
—
|
|
|
$
|
273.9
|
|
|
$
|
193.6
|
|
|
$
|
—
|
|
|
$
|
193.6
|
|
The deferred compensation investments are primarily invested in mutual funds, and the fair value is measured using the market approach. These investments are in the same funds or funds that employ a similar investment strategy, and are purchased in substantially the same amounts, as the participants’ selected investment options (excluding Post common stock equivalents), which represent the underlying liabilities to participants in the Company’s deferred compensation plans. Deferred compensation liabilities are recorded at amounts due to participants in cash, based on the fair value of participants’ selected investment options (excluding certain Post common stock equivalents to be distributed in shares) using the market approach. In connection with the acquisition of Bob Evans (see Note 4), the Company had current deferred compensation investments of
$24.3
and current deferred compensation liabilities of
$24.1
at September 30, 2018. The Bob Evans deferred compensation plans have been terminated, the investments have been liquidated and amounts previously accrued by the Company were paid in January 2019.
The Company utilizes the income approach to measure fair value for its commodity and energy derivatives. The income approach uses pricing models that rely on market observable inputs such as yield curves and forward prices. Foreign exchange contracts are valued using the spot rate less the forward rate multiplied by the notional amount. The Company’s calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve. Refer to Note 14 for the classification of changes in fair value of derivative assets and liabilities measured at fair value on a recurring basis within the Condensed Consolidated Statements of Operations.
The Company’s financial assets and liabilities also include cash and cash equivalents, receivables and accounts payable for which the carrying value approximates fair value due to their short maturities (less than 12 months). The Company does not record its current portion of long-term debt and long-term debt at fair value on the Condensed Consolidated Balance Sheets. Based on current market rates, the fair value of the Company’s debt (Level 2) was
$6,320.0
and
$7,790.9
as of March 31, 2019 and September 30, 2018, respectively. At September 30, 2018, the fair value of the Company’s debt included amounts classified as held for sale.
Certain assets and liabilities, including long-lived assets, goodwill, indefinite-lived intangibles and assets held for sale, are measured at fair value on a non-recurring basis.
As stated previously (see Note 6), the Company had assets and liabilities held for sale at September 30, 2018 related to (i) the 8th Avenue Transactions and (ii) the closure of the Company’s Post Consumer Brands cereal warehouse in Clinton, Massachusetts. On October 1, 2018, the Company completed the 8th Avenue Transactions, and effective as of that date, 8th Avenue was no longer consolidated in the Company's financial statements and the
60.5%
common equity retained interest in 8th Avenue is accounted for using the equity method. The Post Consumer Brands cereal warehouse was sold in November 2018. The fair value of assets and liabilities held for sale were measured at fair value on a nonrecurring basis based on the lower of book value or third party valuations. When applicable, the fair value is adjusted to reflect an offer to purchase the assets and liabilities. The fair value measurement was categorized as Level 3, as the fair values utilize significant unobservable inputs. The following table summarizes the Level 3 activity.
|
|
|
|
|
|
|
|
Balance, September 30, 2018
|
$
|
290.9
|
|
|
Gains related to assets and liabilities held for sale
|
125.3
|
|
|
Proceeds from the sale of assets and liabilities held for sale
|
(276.6
|
)
|
|
Investment in 8th Avenue, working capital and other adjustments
|
(139.6
|
)
|
|
Balance, March 31, 2019
|
$
|
—
|
|
NOTE 16 — COMMITMENTS AND CONTINGENCIES
Legal Proceedings
Antitrust claims
In late 2008 and early 2009, approximately
22
class action lawsuits were filed in various federal courts against Michael Foods, Inc. (“MFI”), a wholly owned subsidiary of the Company, and approximately
20
other defendants (producers of shell eggs and egg products, and egg industry organizations), alleging violations of federal and state antitrust laws in connection with the production and sale of shell eggs and egg products, and seeking unspecified damages. All cases were transferred to the Eastern District of Pennsylvania for coordinated and/or consolidated pretrial proceedings.
The case involved
three
plaintiff groups: (i) a nationwide class of direct purchasers of shell eggs (“direct purchaser class”); (ii) individual companies (primarily large grocery chains and food companies that purchase considerable quantities of eggs) that opted out of various settlements and filed their own complaints related to their purchases of shell eggs and egg products (“opt-out plaintiffs”); and (iii) indirect purchasers of shell eggs (“indirect purchaser plaintiffs”).
Resolution of claims:
To date, MFI has resolved the following claims, including all class claims: (i) in December 2016, MFI settled all claims asserted against it by the direct purchaser class for a payment of
$75.0
, which was approved by the district court in December 2017; (ii) MFI settled all claims asserted against it by opt-out plaintiffs related to shell egg purchases on confidential terms in January 2017; and (iii) in June 2018, MFI settled all claims asserted against it by indirect purchaser plaintiffs on confidential terms. MFI has at all times denied liability in this matter, and no settlement contains any admission of liability by MFI.
Remaining portion of the case:
MFI remains a defendant only with respect to claims that seek damages based on purchases of egg products by six opt-out plaintiffs. The district court had granted summary judgment precluding any claims for egg products purchases by such opt-out plaintiffs, but the Third Circuit Court of Appeals reversed and remanded these claims for further pre-trial proceedings. Defendants have filed a second motion for summary judgment seeking dismissal of the claims, and that motion is currently pending.
Although the likelihood of a material adverse outcome in the egg antitrust litigation has been significantly reduced as a result of the MFI settlements described above, the remaining portion of the case could still result in a material adverse outcome.
Related to these settlements, the Company expensed
$2.0
in the three and six months ended March 31, 2018, which was included in “Selling, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. No expense was recorded related to these matters in the three or six months ended March 31, 2019. At March 31, 2019 and September 30, 2018, the Company had
$6.0
accrued for this matter, which was included in “Other current liabilities” on the Condensed Consolidated Balance Sheets. The Company records reserves for litigation losses in accordance with ASC Topic 450, “Contingencies.” Under ASC Topic 450, a loss contingency is recorded if a loss is probable and can be reasonably estimated. The Company records probable loss contingencies based on the best estimate of the loss. If a range of loss can be reasonably estimated, but no single amount within the range appears to be a better estimate than any other amount within the range, the minimum amount in the range is accrued. These estimates are often initially developed earlier than when the ultimate loss is known, and the estimates are adjusted if additional information becomes known. Although the Company believes its accruals for this matter are appropriate, the final amounts required to resolve such matter could differ materially from recorded estimates and the Company’s financial position, results of operations and cash flows could be materially affected.
Under current law, any settlement paid, including the settlements with the direct purchaser plaintiffs, the opt-out plaintiffs and the indirect purchaser plaintiffs, is deductible for federal income tax purposes.
Bob Evans Appraisal Proceedings
Prior to completion of the Company’s acquisition of Bob Evans on January 12, 2018, Bob Evans received demands from certain stockholders demanding appraisal of their shares of Bob Evans common stock. After the completion of the acquisition, several such former stockholders filed petitions in the Delaware Court of Chancery (
Arbitrage Fund v. Bob Evans Farms, Inc.
filed on January 23, 2018;
Blue Mountain Credit Alternatives Master Fund L.P., et al. v. Bob Evans Farms, Inc.
filed on April 30, 2018; and
2017 Clarendon LLC, et al. v. Bob Evans Farms, Inc.
filed on April 30, 2018) seeking appraisal of their shares of Bob Evans common stock pursuant to Section 262 of the Delaware General Corporation Law (“Section 262”). The lawsuits seek appraisal for such shares, plus statutory interest, as well as the costs of the proceedings and such other relief as appropriate. Under Section 262, persons who were stockholders at the time of the closing are entitled to have their shares appraised by the Delaware Court of Chancery and receive payment of the “fair value” of such shares (plus statutory interest) as determined by the Delaware Court of Chancery. In May 2018, the court consolidated the lawsuits into one action.
In December 2018, the Company settled with one petitioner, Arbitrage Fund, and Arbitrage Fund was dismissed with prejudice from the consolidated action. In addition, in December 2018, the Company pre-paid the
$77.00
per share merger consideration to the Blue Mountain and 2017 Clarendon petitioners, effectively stopping the continued accrual of statutory interest on that amount.
The Company made total payments of
$257.6
related to these matters in December 2018. However, the consolidated action remains active with respect to the determination of the fair value of the shares formerly held by the two remaining petitioners.
Approximately
2.5
shares of Bob Evans common stock are before the court for appraisal in the consolidated action. As of completion of the acquisition, former Bob Evans stockholders can no longer submit new demands for appraisal. All other former stockholders have been paid for their shares. The Company intends to vigorously defend the consolidated action.
At September 30, 2018, former holders of
3.3
shares of Bob Evans common stock had not withdrawn their appraisal demands and had not been paid for their shares of Bob Evans common stock. Related to these shares, the Company accrued
$267.0
at September 30, 2018, which was the number of shares of Bob Evans common stock for which former Bob Evans stockholders demanded appraisal and had not withdrawn their demands multiplied by the
$77.00
per share merger consideration, plus accrued interest at the Federal Reserve Discount Rate plus a spread of
5.00%
. At March 31, 2019, former holders of
2.5
shares of Bob Evans common stock had not withdrawn their appraisal demands, and the Company had a remaining accrual of
$14.0
, which represents the accrued interest related to the
2.5
shares for which the
$77.00
per share merger consideration was paid. Additional payments related to these
2.5
shares could be made in the future. The liabilities were reported in “Other current liabilities” and “Other liabilities” on the Condensed Consolidated Balance Sheets at March 31, 2019 and September 30, 2018, respectively.
While the Company believes its accrual for these matters is appropriate, the final amounts required to resolve such matters could differ materially and the Company’s financial position, results of operations and cash flows could be materially affected. Accordingly, the Company cannot predict what impact, if any, these matters and any results from such matters could have on the Company’s future financial position, results of operations or cash flows.
Weetabix Limited Environmental Matter
In March 2019, Weetabix Limited, one of the Company’s subsidiaries, received notification from the United Kingdom Environment Agency (the “Environment Agency”) that the Environment Agency intends to charge Weetabix Limited in relation to a spill of diesel fuel into the ground at Weetabix Limited’s Burton Latimer site in the United Kingdom that occurred in November 2016, prior to the Company’s acquisition of the Weetabix business. Upon discovery of the spill, Weetabix Limited promptly informed the Environment Agency and took steps to address the spill, including putting in place monitoring and remediation measures. Weetabix Limited has cooperated with the Environment Agency at all times regarding the containment and assessment of the incident. A first court hearing will be scheduled for a future date. The Company does not expect this matter will have a material effect on its financial condition, results of operations or cash flows.
Other
The Company is subject to various other legal proceedings and actions arising in the normal course of business. In the opinion of management, based upon the information presently known, the ultimate liability, if any, arising from such pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are likely to be asserted, taking into account established accruals for estimated liabilities (if any), are not expected to be material individually or in the aggregate to the financial position, results of operations or cash flows of the Company. In addition, although it is difficult to estimate the potential financial impact of actions regarding expenditures for compliance with regulatory matters, in the opinion of management, based upon the information currently available, the ultimate liability arising from such compliance matters is not expected to be material to the financial position, results of operations or cash flows of the Company.
Leases
Historically, Bob Evans guaranteed certain payment and performance obligations associated with the leases for
143
properties (the “Guarantee”) leased by the restaurant business formerly owned by Bob Evans (the “Bob Evans Restaurant Business”). The Guarantee remained in effect following the Company’s acquisition of Bob Evans. In the event the Bob Evans Restaurant Business fails to meet its payment and performance obligations under these leases, the Company may be required to make rent and other payments to the landlord under the requirements of the Guarantee. Should the Company, as guarantor of the lease obligations, be required to make all lease payments due for the remaining term of the leases subsequent to March 31, 2019, the maximum amount the Company may be required to pay is equal to the annual rent amount for the remainder of the lease terms. The current annual rent on these leases is
$13.5
and will increase up to
1.5%
annually based on indexed inflation. The lease terms extend for approximately
17
years from March 31, 2019, and the Guarantee would remain in effect in the event the leases are extended for a renewal period. In the event the Company is obligated to make payments under the Guarantee, the Company believes its exposure is limited due to protections and recourse available in the leases associated with the leased properties, including a requirement of the landlord to mitigate damages by re-letting the properties in default. The Bob Evans Restaurant Business continues to meet its obligations under these leases, and there have been no events that would indicate the obligations will not continue to be met. As such, the Company believes the fair value of the Guarantee is immaterial as of March 31, 2019.
NOTE 17 — LONG-TERM DEBT
Long-term debt as of the dates indicated consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
September 30, 2018
|
|
5.625% Senior Notes maturing January 2028
|
$
|
940.9
|
|
|
$
|
960.9
|
|
|
5.50% Senior Notes maturing March 2025
|
1,000.0
|
|
|
1,000.0
|
|
|
5.75% Senior Notes maturing March 2027
|
1,299.3
|
|
|
1,326.3
|
|
|
5.00% Senior Notes maturing August 2026
|
1,697.3
|
|
|
1,710.3
|
|
|
8.00% Senior Notes maturing July 2025
|
122.2
|
|
|
122.2
|
|
|
Term Loan
|
1,309.5
|
|
|
2,172.5
|
|
|
Bridge Loan (a)
|
—
|
|
|
—
|
|
|
Capital lease
|
0.1
|
|
|
0.2
|
|
|
|
$
|
6,369.3
|
|
|
$
|
7,292.4
|
|
|
Less: Current portion of long-term debt
|
(6.7
|
)
|
|
(22.1
|
)
|
|
Debt issuance costs, net
|
(67.1
|
)
|
|
(71.2
|
)
|
|
Plus: Unamortized premium
|
30.7
|
|
|
33.0
|
|
|
Total long-term debt
|
$
|
6,326.2
|
|
|
$
|
7,232.1
|
|
|
|
|
|
(a)
|
In connection with the 8th Avenue Transactions, the Company classified its Bridge Loan and associated debt issuance costs as held for sale at September 30, 2018. See below for more information about the Bridge Loan. See Note 6 for information about assets and liabilities held for sale.
|
Senior Notes
On February 8, 2019, the Company received consents (the “Requisite Consents”) from holders of a majority of the outstanding aggregate principal amount of its outstanding
5.00%
Senior Notes due August 2026 (the “Notes”) to approve proposed amendments to the indenture relating to the Notes (the “Indenture”). Following receipt of the Requisite Consents, the Company, its subsidiary guarantors and the trustee for the Indenture executed a supplemental indenture documenting the amendments, which more closely aligns certain provisions of the Indenture with the comparable provisions included in the indentures for the Company’s other senior notes, specifically to (i) add an exception to the restricted payments covenant in the Indenture and (ii) revise the “Permitted Investments” definition in the Indenture to add an additional category of Permitted Investments under the Indenture. In connection with the consents, the Company incurred
$8.4
of debt modification costs, which were deferred and will be amortized to interest expense over the remaining term of the Notes, and recorded expense of
$1.3
in the three and six months ended March 31, 2019, which is included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.
Credit Agreement
On March 28, 2017, the Company entered into an amended and restated credit agreement (as further amended, the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility in an aggregate principal amount of
$800.0
(the “Revolving Credit Facility”), with the commitments thereunder to be made available to the Company in U.S. Dollars, Canadian Dollars, Euros and Pounds Sterling. The issuance of letters of credit is available under the Credit Agreement in an aggregate amount of up to
$50.0
. The Revolving Credit Facility has outstanding letters of credit of
$22.8
, which reduced the available borrowing capacity under the Credit Agreement to
$777.2
at
March 31, 2019
.
The Credit Agreement also provides for potential incremental revolving and term facilities at the request of the Company and at the discretion of the lenders, in each case on terms to be determined, and permits the Company, subject to certain conditions, to incur incremental equivalent debt, in an aggregate maximum amount (for incremental revolving and term facilities and incremental equivalent debt combined) not to exceed the greater of (1)
$700.0
and (2) the maximum amount at which (A) the Company’s pro forma consolidated leverage ratio (as defined in the Credit Agreement) would not exceed
6.50
to 1.00 and (B) the Company’s pro forma senior secured leverage ratio (as defined in the Credit Agreement) would not exceed
3.00
to 1.00 as of the date such indebtedness is incurred. The outstanding amounts under the Revolving Credit Facility must be repaid on or before March 28, 2022.
The Credit Agreement permits the Company to designate certain of its subsidiaries as unrestricted subsidiaries and once so designated, permits the disposition of (and authorizes the release of liens on) the assets of, and the equity interests in, such unrestricted subsidiaries and permits the release of such unrestricted subsidiaries as guarantors under the Credit Agreement.
Borrowings under the Revolving Credit Facility will bear interest, at the option of the Company, at an annual rate equal to either the Base Rate, Eurodollar Rate or CDOR Rate (as such terms are defined in the Credit Agreement) plus an applicable margin
ranging from
1.75%
to
2.25%
for Eurodollar Rate-based loans and CDOR Rate-based loans and from
0.75%
to
1.25%
for Base Rate-based loans, depending in each case on the Company’s senior secured leverage ratio. Commitment fees on the daily unused amount of commitments under the Revolving Credit Facility will accrue at rates ranging from
0.25%
to
0.375%
, also depending on the Company’s senior secured leverage ratio.
The Credit Agreement provides for customary events of default, including material breach of representations and warranties, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay, or default under, indebtedness in excess of
$75.0
, certain events of bankruptcy and insolvency, inability to pay debts, the occurrence of one or more unstayed or undischarged judgments in excess of
$75.0
, attachments issued against a material part of the Company’s property, change in control, the invalidity of any loan document, the failure of the collateral documents to create a valid and perfected first priority lien and certain Employee Retirement Income Security Act of 1974 events. Upon the occurrence of an event of default, the maturity of the loans under the Credit Agreement may be accelerated and the agent and lenders under the Credit Agreement may exercise other rights and remedies available at law or under the loan documents, including with respect to the collateral and guarantees for the Company’s obligations under the Credit Agreement.
Term Loan
In the first quarter of fiscal 2019, the Company utilized a portion of the net proceeds from the 8th Avenue Transactions (see Note 4) to repay
$863.0
of the outstanding principal value of its term loan, as required by the Credit Agreement. As a result of the prepayment, quarterly principal installment payments on the term loan are not required until December 31, 2019. Beginning on December 31, 2019, the term loan will require quarterly principal installment payments of
$3.3
, compared to the previously required quarterly principal installment payments of
$5.5
, which began on September 30, 2017. The term loan bears interest at an annual rate equal to either the Base Rate or Eurodollar Rate plus an applicable margin of
2.00%
for Eurodollar Rate-based loans and
1.00%
for Base Rate-based loans. The interest rate on the term loan was
4.49%
and
4.22%
at March 31, 2019 and September 30, 2018, respectively. The maturity date for the term loan is May 24, 2024.
Bridge Loan
On September 24, 2018, in connection with the 8th Avenue Transactions (see Note 4), the Company entered into a
$625.0
bridge facility agreement (the “Bridge Loan Facility”) and borrowed
$625.0
under the Bridge Loan Facility (the Bridge Loan, as defined in Note 4). In connection with the Bridge Loan Facility, the Company incurred issuance costs of
$10.4
in fiscal 2018, of which
$7.8
were refunded to the Company at the closing of the 8th Avenue Transactions on October 1, 2018. Upon the closing of the 8th Avenue Transactions on October 1, 2018, the Bridge Loan was assumed by 8th Avenue and the Company was released from its repayment obligations thereunder while retaining the proceeds from the Bridge Loan.
Repayments of Long-Term Debt
The following tables show the Company’s repayments of long-term debt and associated gain or loss included in “Loss on extinguishment of debt, net” in the Condensed Consolidated Statements of Operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of Long-Term Debt
|
|
Loss on Extinguishment of Debt, net
|
|
Three Months Ended
March 31,
|
|
Issuance or Borrowing
|
|
Principal Amount Repaid
|
|
Debt Repurchased at a Discount
|
|
Premium and Debt Extinguishment Costs Paid
|
|
Write-off of Debt Issuance Costs
|
|
Write-off of Unamortized (Premium)/Discount
|
|
|
|
Capital lease
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2019
|
|
Total
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.75% Senior Notes
|
|
$
|
98.0
|
|
|
$
|
(1.3
|
)
|
|
$
|
—
|
|
|
$
|
1.1
|
|
|
$
|
(2.7
|
)
|
|
|
|
8.00% Senior Notes
|
|
14.0
|
|
|
—
|
|
|
1.8
|
|
|
0.1
|
|
|
—
|
|
|
|
|
Term Loan (a)
|
|
5.5
|
|
|
—
|
|
|
0.9
|
|
|
0.4
|
|
|
—
|
|
|
2018
|
|
Total
|
|
$
|
117.5
|
|
|
$
|
(1.3
|
)
|
|
$
|
2.7
|
|
|
$
|
1.6
|
|
|
$
|
(2.7
|
)
|
|
|
|
|
(a)
|
In connection with an amendment to the Credit Agreement entered into on March 8, 2018, the Company paid debt extinguishment costs and recorded a write-off of debt issuance costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of Long-Term Debt
|
|
Loss on Extinguishment of Debt, net
|
|
Six Months Ended
March 31,
|
|
Issuance or Borrowing
|
|
Principal Amount Repaid
|
|
Debt Repurchased at a Discount
|
|
Premium and Debt Extinguishment Costs Paid
|
|
Write-off of Debt Issuance Costs
|
|
Write-off of Unamortized (Premium)/Discount
|
|
|
|
Term Loan
|
|
$
|
863.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7.6
|
|
|
$
|
—
|
|
|
|
|
5.75% Senior Notes
|
|
27.0
|
|
|
(1.5
|
)
|
|
—
|
|
|
0.3
|
|
|
(0.7
|
)
|
|
|
|
5.625% Senior Notes
|
|
20.0
|
|
|
(1.3
|
)
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
|
|
5.00% Senior Notes
|
|
13.0
|
|
|
(1.2
|
)
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
|
|
Capital lease
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Bridge Loan (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
2019
|
|
Total
|
|
$
|
923.1
|
|
|
$
|
(4.0
|
)
|
|
$
|
—
|
|
|
$
|
10.8
|
|
|
$
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.00% Senior Notes
|
|
$
|
630.0
|
|
|
$
|
—
|
|
|
$
|
30.8
|
|
|
$
|
6.5
|
|
|
$
|
—
|
|
|
|
|
5.75% Senior Notes
|
|
98.0
|
|
|
(1.3
|
)
|
|
—
|
|
|
1.1
|
|
|
(2.7
|
)
|
|
|
|
8.00% Senior Notes
|
|
14.0
|
|
|
—
|
|
|
1.8
|
|
|
0.1
|
|
|
—
|
|
|
|
|
Term Loan (b)
|
|
11.0
|
|
|
—
|
|
|
0.9
|
|
|
0.4
|
|
|
—
|
|
|
2018
|
|
Total
|
|
$
|
753.0
|
|
|
$
|
(1.3
|
)
|
|
$
|
33.5
|
|
|
$
|
8.1
|
|
|
$
|
(2.7
|
)
|
|
|
|
|
(a)
|
In connection with the assumption of the Bridge Loan by 8th Avenue discussed above, the Company recorded a write-off of debt issuance costs during the six months ended March 31, 2019 for costs that were not refunded at closing of the 8th Avenue Transactions.
|
|
|
|
|
(b)
|
In connection with an amendment to the Credit Agreement entered into on March 8, 2018, the Company paid debt extinguishment costs and recorded a write-off of debt issuance costs.
|
Debt Covenants
Under the terms of the Credit Agreement, the Company is required to comply with a financial covenant consisting of a ratio for quarterly maximum senior secured leverage (as defined in the Credit Agreement) not to exceed
4.25
to 1.00, measured as of the last day of any fiscal quarter, if, as of the last day of such fiscal quarter, the aggregate outstanding amount of all revolving credit loans, swing line loans and letter of credit obligations (subject to certain exceptions specified in the Credit Agreement) exceeds
30%
of the Company’s revolving credit commitments. As of
March 31, 2019
, the Company was not required to comply with such financial covenant as the aggregate amount of the aforementioned obligations did not exceed
30%
.
The Credit Agreement permits the Company to incur additional unsecured debt if, among other conditions, the pro forma consolidated interest coverage ratio, calculated as provided in the Credit Agreement, would be greater than or equal to
2.00
to 1.00 after giving effect to such new debt. As of
March 31, 2019
, the pro forma consolidated interest coverage ratio exceeded this threshold.
NOTE 18 — PENSION AND OTHER POSTRETIREMENT BENEFITS
The Company maintains qualified defined benefit plans in the United States, the United Kingdom and Canada for certain employees primarily within its Post Consumer Brands and Weetabix segments. Certain of the Company’s employees are eligible to participate in the Company’s postretirement benefit plans (partially subsidized retiree health and life insurance). Amounts for the Canadian plans are included in the North America disclosures and are not disclosed separately because they do not constitute a significant portion of the combined amounts. On October 1, 2018, the Company adopted ASU 2017-07 (see Note 2).
The following tables provide the components of net periodic benefit cost (gain) for the pension plans.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Service cost
|
$
|
0.9
|
|
|
$
|
1.0
|
|
|
$
|
1.9
|
|
|
$
|
2.1
|
|
|
Interest cost
|
1.0
|
|
|
0.9
|
|
|
2.0
|
|
|
1.8
|
|
|
Expected return on plan assets
|
(1.6
|
)
|
|
(1.1
|
)
|
|
(3.2
|
)
|
|
(2.2
|
)
|
|
Recognized net actuarial loss
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.6
|
|
|
Recognized prior service cost
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
Net periodic benefit cost
|
$
|
0.4
|
|
|
$
|
1.1
|
|
|
$
|
0.8
|
|
|
$
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other International
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Service cost
|
$
|
1.5
|
|
|
$
|
1.7
|
|
|
$
|
2.9
|
|
|
$
|
3.4
|
|
|
Interest cost
|
4.8
|
|
|
5.1
|
|
|
9.6
|
|
|
9.9
|
|
|
Expected return on plan assets
|
(7.3
|
)
|
|
(8.2
|
)
|
|
(14.6
|
)
|
|
(16.0
|
)
|
|
Net periodic benefit gain
|
$
|
(1.0
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
(2.7
|
)
|
The following table provides the components of net periodic benefit gain for the North American other postretirement benefit plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Service cost
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
Interest cost
|
0.5
|
|
|
0.5
|
|
|
1.1
|
|
|
1.0
|
|
|
Recognized net actuarial loss
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
Recognized prior service credit
|
(1.2
|
)
|
|
(1.1
|
)
|
|
(2.4
|
)
|
|
(2.3
|
)
|
|
Net periodic benefit gain
|
$
|
(0.6
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(0.9
|
)
|
NOTE 19 — SHAREHOLDERS’ EQUITY
Stock Repurchases
During the three months ended March 31, 2019, the Company repurchased
0.4
shares of its common stock at an average share price of
$97.68
per share for a total cost of
$40.5
, including broker’s commissions. In the six months ended March 31, 2019, the Company repurchased
0.7
shares of its common stock at an average share price of
$93.77
for a total cost of
$65.8
, including broker’s commissions. During the three months ended March 31, 2018, the Company repurchased
1.1
shares of its common stock at an average share price of
$74.03
per share for a total cost of
$82.8
, including broker’s commissions. During the six months ended March 31, 2018, the Company repurchased
1.8
shares of its common stock at an average share price of
$75.59
per share for a total cost of
$138.8
, including broker’s commissions.
2.5% Series C Cumulative Perpetual Convertible Preferred Stock Conversion and Redemption
In the second quarter of fiscal 2019, the Company completed the redemption of its Series C Preferred. Substantially all of the
3.2
shares of Series C Preferred outstanding as of January 10, 2019, the date the Series C Preferred redemption was announced, were converted into
5.9
shares of the Company’s common stock pursuant to the conversion rights applicable to the Series C Preferred. The remaining shares of Series C Preferred were redeemed.
3.75% Series B Cumulative Perpetual Convertible Preferred Stock Conversion and Redemption
In the second quarter of fiscal 2018, the Company completed the redemption of its Series B Preferred. Substantially all of the
1.5
shares of Series B Preferred outstanding as of January 10, 2018, the date the Series B Preferred redemption was announced, were converted into
3.1
shares of the Company’s common stock pursuant to the conversion rights applicable to the Series B Preferred. The remaining shares of Series B Preferred were redeemed.
Exercises of Stock Options
In the three and six months ended March 31, 2019, the Company had
1.3
stock options exercised at a weighted average exercise price per share of
$32.71
. In connection with the exercises, the Company received proceeds of
$41.5
.
NOTE 20 — SEGMENTS
During the first quarter of fiscal 2019, the Company reorganized its reportable segments in accordance with ASC Topic 280, “Segment Reporting.” At March 31, 2019, the Company’s reportable segments were as follows:
|
|
|
|
•
|
Post Consumer Brands: North American RTE cereal business;
|
|
|
|
|
•
|
Weetabix: the RTE cereal and branded muesli business sold and distributed primarily outside of North America;
|
|
|
|
|
•
|
Foodservice: primarily egg and potato products;
|
|
|
|
|
•
|
Refrigerated Retail: refrigerated retail products, inclusive of side dishes, egg, cheese and sausage; and
|
|
|
|
|
•
|
Active Nutrition: protein shakes and other ready-to-drink beverages, powders, nutrition bars and supplements.
|
Due to the level of integration between the Foodservice and Refrigerated Retail segments, it is impracticable to present total assets separately for each segment. Where practicable, all fiscal 2018 segment results reported herein have been reclassified to conform with the March 31, 2019 presentation. Additionally, effective October 1, 2018, 8th Avenue was no longer consolidated in the Company's financial statements and the
60.5%
common equity retained interest in 8th Avenue is accounted for using the equity method. All historical segment results of 8th Avenue are reported herein as Post’s historical Private Brands segment.
Management evaluates each segment’s performance based on its segment profit, which is its earnings before income taxes and equity method earnings/loss before impairment of property, goodwill and intangible assets, facility closure related costs, restructuring expenses, gain/loss on assets held for sale, gain/loss on sale of businesses and facilities, interest expense, net and other unallocated corporate income and expenses. The following tables present information about the Company’s reportable segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
Post Consumer Brands
|
$
|
459.1
|
|
|
$
|
462.3
|
|
|
$
|
914.4
|
|
|
$
|
894.3
|
|
|
|
Weetabix
|
104.1
|
|
|
109.0
|
|
|
205.0
|
|
|
208.7
|
|
|
|
Foodservice
|
389.1
|
|
|
380.2
|
|
|
797.2
|
|
|
749.1
|
|
|
|
Refrigerated Retail
|
219.5
|
|
|
219.8
|
|
|
481.1
|
|
|
361.5
|
|
|
|
Active Nutrition
|
216.5
|
|
|
205.2
|
|
|
402.3
|
|
|
391.2
|
|
|
|
Private Brands
|
—
|
|
|
212.6
|
|
|
—
|
|
|
419.0
|
|
|
|
Eliminations
|
(0.5
|
)
|
|
(3.0
|
)
|
|
(0.9
|
)
|
|
(4.6
|
)
|
|
|
Total
|
$
|
1,387.8
|
|
|
$
|
1,586.1
|
|
|
$
|
2,799.1
|
|
|
$
|
3,019.2
|
|
|
Segment Profit
|
|
|
|
|
|
|
|
|
|
Post Consumer Brands
|
$
|
83.2
|
|
|
$
|
91.1
|
|
|
$
|
167.2
|
|
|
$
|
161.3
|
|
|
|
Weetabix
|
23.6
|
|
|
15.7
|
|
|
42.5
|
|
|
32.5
|
|
|
|
Foodservice
|
47.4
|
|
|
42.9
|
|
|
100.1
|
|
|
88.8
|
|
|
|
Refrigerated Retail
|
26.5
|
|
|
19.8
|
|
|
57.0
|
|
|
43.0
|
|
|
|
Active Nutrition
|
44.0
|
|
|
26.1
|
|
|
79.2
|
|
|
45.9
|
|
|
|
Private Brands
|
—
|
|
|
14.2
|
|
|
—
|
|
|
31.1
|
|
|
|
Total segment profit
|
224.7
|
|
|
209.8
|
|
|
446.0
|
|
|
402.6
|
|
|
General corporate expenses and other
|
37.3
|
|
|
45.5
|
|
|
85.7
|
|
|
73.8
|
|
|
Gain on sale of business
|
(2.6
|
)
|
|
—
|
|
|
(127.3
|
)
|
|
—
|
|
|
Interest expense, net
|
85.5
|
|
|
98.8
|
|
|
144.9
|
|
|
189.3
|
|
|
Loss on extinguishment of debt, net
|
—
|
|
|
0.3
|
|
|
6.1
|
|
|
37.6
|
|
|
Expense (income) on swaps, net
|
63.0
|
|
|
(50.5
|
)
|
|
114.7
|
|
|
(53.2
|
)
|
|
Earnings before income taxes and equity method loss
|
$
|
41.5
|
|
|
$
|
115.7
|
|
|
$
|
221.9
|
|
|
$
|
155.1
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
Post Consumer Brands
|
$
|
29.9
|
|
|
$
|
30.9
|
|
|
$
|
59.4
|
|
|
$
|
61.8
|
|
|
|
Weetabix
|
8.8
|
|
|
12.7
|
|
|
17.5
|
|
|
19.8
|
|
|
|
Foodservice
|
27.7
|
|
|
26.0
|
|
|
54.7
|
|
|
49.9
|
|
|
|
Refrigerated Retail
|
19.7
|
|
|
15.3
|
|
|
37.7
|
|
|
22.8
|
|
|
|
Active Nutrition
|
6.3
|
|
|
6.4
|
|
|
12.7
|
|
|
12.9
|
|
|
|
Private Brands
|
—
|
|
|
11.7
|
|
|
—
|
|
|
25.1
|
|
|
|
|
Total segment depreciation and amortization
|
92.4
|
|
|
103.0
|
|
|
182.0
|
|
|
192.3
|
|
|
|
Corporate and accelerated depreciation
|
5.4
|
|
|
1.6
|
|
|
9.4
|
|
|
2.8
|
|
|
|
Total
|
$
|
97.8
|
|
|
$
|
104.6
|
|
|
$
|
191.4
|
|
|
$
|
195.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
March 31,
2019
|
|
September 30,
2018
|
|
|
Post Consumer Brands
|
|
|
|
|
$
|
3,375.0
|
|
|
$
|
3,391.7
|
|
|
|
Weetabix
|
|
|
|
|
1,856.7
|
|
|
1,853.3
|
|
|
|
Foodservice and Refrigerated Retail
|
|
|
|
|
5,105.1
|
|
|
5,132.4
|
|
|
|
Active Nutrition
|
|
|
|
|
600.8
|
|
|
559.3
|
|
|
|
Private Brands
|
|
|
|
|
—
|
|
|
1,055.3
|
|
|
|
Corporate
|
|
|
|
|
345.2
|
|
|
1,065.5
|
|
|
|
Total
|
|
|
|
|
$
|
11,282.8
|
|
|
$
|
13,057.5
|
|