TREEHOUSE FOODS, INC., 10-Q filed on 5/6/2011
Quarterly Report
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)
In Thousands
3 Months Ended
Mar. 31, 2011
Year Ended
Dec. 31, 2010
Current assets:
 
 
Cash and cash equivalents
$ 2,375 
$ 6,323 
Receivables, net
129,472 
126,644 
Inventories, net
299,153 
287,395 
Deferred income taxes
3,627 
3,499 
Prepaid expenses and other current assets
12,071 
12,861 
Assets held for sale
4,081 
4,081 
Total current assets
450,779 
440,803 
Property, plant and equipment, net
381,219 
386,191 
Goodwill
1,079,671 
1,076,321 
Intangible assets, net
461,764 
463,617 
Other assets, net
23,753 
24,316 
Total assets
2,397,186 
2,391,248 
Current liabilities:
 
 
Accounts payable and accrued expenses
195,899 
202,384 
Current portion of long-term debt
974 
976 
Total current liabilities
196,873 
203,360 
Long-term debt
951,865 
976,452 
Deferred income taxes
195,526 
194,917 
Other long-term liabilities
40,927 
38,553 
Total liabilities
1,385,191 
1,413,282 
Commitments and contingencies (Note 17)
 
 
Stockholders' equity:
 
 
Preferred stock, par value $0.01 per share, 10,000 shares authorized, none issued
0 
0 
Common stock, par value $0.01 per share, 90,000 shares authorized, 35,502 and 35,440 shares issued and outstanding, respectively
355 
354 
Additional paid-in capital
708,674 
703,465 
Retained earnings
305,988 
286,181 
Accumulated other comprehensive loss
(3,022)
(12,034)
Total stockholders' equity
1,011,995 
977,966 
Total liabilities and stockholders' equity
$ 2,397,186 
$ 2,391,248 
PARENTHETICAL DATA TO THE CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)
In Thousands, except Per Share data
Mar. 31, 2011
Dec. 31, 2010
Stockholders' equity:
 
 
Preferred stock, par value per share (in dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, shares authorized (in shares)
10,000 
10,000 
Preferred stock, shares issued (in shares)
0 
0 
Common stock, par value per share (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized (in shares)
90,000 
90,000 
Common stock, shares issued (in shares)
35,502 
35,440 
Common stock, shares outstanding (in shares)
35,502 
35,440 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (USD $)
In Thousands, except Per Share data
3 Months Ended
Mar. 31,
2011
2010
Income Statement
 
 
Net sales
$ 493,513 
$ 397,124 
Cost of sales
372,587 
308,346 
Gross profit
120,926 
88,778 
Operating expenses:
 
 
Selling and distribution
36,260 
26,796 
General and administrative
29,243 
28,478 
Other operating expense (income) net
2,650 
(2,261)
Amortization expense
8,049 
4,447 
Total operating expenses
76,202 
57,460 
Operating income
44,724 
31,318 
Other expense (income):
 
 
Interest expense, net
13,851 
6,827 
Loss on foreign currency exchange
1,430 
100 
Other income, net
(492)
(213)
Total other expense
14,789 
6,714 
Income before income taxes
29,935 
24,604 
Income taxes
10,127 
8,285 
Net income
19,808 
16,319 
Weighted average common shares:
 
 
Basic
35,534 
33,553 
Diluted
36,785 
34,614 
Net earnings per common share:
 
 
Basic
0.56 
0.49 
Diluted
$ 0.54 
$ 0.47 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
In Thousands
3 Months Ended
Mar. 31,
2011
2010
Cash flows from operating activities:
 
 
Net income
$ 19,808 
$ 16,319 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
11,787 
9,670 
Amortization
8,049 
4,447 
Loss on foreign currency exchange
800 
1,281 
Mark to market adjustment on derivative contracts
(575)
(691)
Excess tax benefits from stock-based compensation
(422)
(276)
Stock-based compensation
4,774 
3,354 
Write-down of tangible assets
2,352 
0 
Deferred income taxes
463 
2,254 
Curtailment of postretirement benefit obligation
0 
(2,357)
Other
31 
90 
Changes in operating assets and liabilities, net of acquisitions:
 
 
Receivables
(3,782)
20,548 
Inventories
(10,693)
14,182 
Prepaid expenses and other assets
1,748 
(1,703)
Accounts payable, accrued expenses and other liabilities
(1,592)
(13,006)
Net cash provided by operating activities
32,748 
54,112 
Cash flows from investing activities:
 
 
Additions to property, plant and equipment
(10,578)
(6,546)
Additions to other intangible assets
(4,150)
(4,396)
Acquisition of business, net of cash acquired
1,401 
(664,655)
Proceeds from sale of fixed assets
33 
0 
Net cash used in investing activities
(13,294)
(675,597)
Cash flows from financing activities:
 
 
Proceeds from issuance of debt
0 
400,000 
Borrowings under revolving credit facility
80,600 
237,700 
Payments under revolving credit facility
(105,000)
(119,300)
Payments on capitalized lease obligations
(196)
(169)
Proceeds from issuance of common stock, net of expenses
0 
110,688 
Payment of deferred financing costs
0 
(9,296)
Net (payments) proceeds related to stock-based award activities
(18)
1,167 
Excess tax benefits from stock-based compensation
422 
276 
Net cash (used in) provided by financing activities
(24,192)
621,066 
Effect of exchange rate changes on cash and cash equivalents
790 
101 
Net decrease in cash and cash equivalents
(3,948)
(318)
Cash and cash equivalents, beginning of period
6,323 
4,415 
Cash and cash equivalents, end of period
$ 2,375 
$ 4,097 
Basis of Presentation
Basis of Presentation
1. Basis of Presentation

The unaudited Condensed Consolidated Financial Statements included herein have been prepared by TreeHouse Foods, Inc. (the “Company,” “we,” “us,” or “our”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to quarterly reporting on Form 10-Q.  In our opinion, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as permitted by such rules and regulations.  Certain product sales, as disclosed in Note 20, from prior year, have been reclassified and certain line items on the Condensed Consolidated Statements of Cash Flows for the prior year have been combined to conform to the current period presentation.  These reclassifications had no effect on reported net income, total assets, or cash flows.  The Condensed Consolidated Financial Statements and related notes should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.  Results of operations for interim periods are not necessarily indicative of annual results.

The preparation of our Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to use our judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of net sales and expenses during the reporting period.  Actual results could differ from these estimates.

A detailed description of the Company’s significant accounting policies can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
2. Recent Accounting Pronouncements

In December 2010, the FASB issued ASU No. 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations to specify that if a company presents comparative financial statements, it should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current period, occurred at the beginning of the comparable prior annual reporting period only.  This guidance is effective prospectively for business combinations for which the acquisition date is, on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.  We will apply this guidance to business combinations for which the acquisition date is on or after January 1, 2011.  It will not have a significant impact on the Company.
Facility Closings
Facility Closings
3. Facility Closings

On February 28, 2011, the Company announced plans to close its pickle plant in Springfield, Missouri.  Production will cease in August 2011 and will be transferred to other pickle facilities.  Full plant closure is expected to occur by December 2011.  For the three months ended March 31, 2011, the Company recorded costs of $2.4 million relating to this closure, which consisted of a fixed asset impairment charge of $2.3 million to reduce the carrying value of the facility to net realizable value and $0.1 million for severance.  These costs are included in Other operating expense (income) line in our Condensed Consolidated Statements of Income.  Total costs are expected to be approximately $4.8 million. Components of the charges include $3.5 million for asset write-offs and removal of certain manufacturing equipment, $0.9 million in severance and other charges, and $0.4 million in costs to transfer inventory to other manufacturing facilities.  The Company estimates that approximately $2.4 million of the charges will be in cash and incurred in 2011.  The Company has accrued severance costs of approximately $0.1 million at March 31, 2011.
Acquisition
Acquisition
4. Acquisitions

On October 28, 2010, the Company acquired all of the outstanding securities of STSF Holdings, Inc. (“Holdings”) for approximately $180 million in cash (subject to adjustment) plus up to an additional $15 million in cash (“earn out”) if S.T. Specialty Foods, Inc. (“S.T. Foods”) achieved certain earnings targets for the twelve month period ending December 31, 2010.  The earnings targets were not met; therefore, no additional payment was required.  The acquisition was funded by the Company’s revolving credit facility.  S.T. Foods, a wholly owned subsidiary of Holdings, has annual net sales of approximately $100 million and is a manufacturer of private label macaroni and cheese, skillet dinners and other value-added side dishes.  The acquisition added additional categories to our product portfolio for the retail grocery channel.

The Company’s purchase price allocation as set forth in the Company’s Annual Report of Form 10-K for the fiscal year ended December 31, 2010 is preliminary and subject to tax adjustments that are expected to be completed during the third quarter of 2011.  There were no adjustments to the purchase price allocation during the first quarter 2011.

On March 2, 2010, the Company acquired Sturm Foods, Inc. (“Sturm”), a private label manufacturer of hot cereals and powdered soft drink mixes that serves retail and foodservice customers in the United States with annual sales of approximately $340 million.  The acquisition of Sturm has strengthened the Company’s presence in private label dry grocery categories.
Inventories
Inventories
5. Inventories

   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(In thousands)
 
Raw materials and supplies
 
$
111,099
   
$
111,376
 
Finished goods
   
206,593
     
194,558
 
LIFO reserve
   
(18,539
)
   
(18,539
)
Total
 
$
299,153
   
$
287,395
 
                 
Approximately $65.1 million and $84.8 million of our inventory was accounted for under the LIFO method of accounting at March 31, 2011 and December 31, 2010, respectively.
 
Property, Plant and Equipment
Property, Plant and Equipment
6. Property, Plant and Equipment
           
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(In thousands)
 
Land
 
$
15,847
   
$
15,851
 
Buildings and improvements
   
147,864
     
148,616
 
Machinery and equipment
   
396,867
     
390,907
 
Construction in progress
   
25,449
     
21,067
 
Total
   
586,027
     
576,441
 
Less accumulated depreciation
   
(204,808
)
   
(190,250
)
Property, plant and equipment, net
 
$
381,219
   
$
386,191
 
                 
Goodwill and Intangible Assets
Goodwill and Intangible Assets
7. Goodwill and Intangible Assets

Changes in the carrying amount of goodwill for the three months ended March 31, 2011 are as follows:

   
North American
 
Food Away
 
Industrial
   
   
Retail Grocery
 
From Home
 
and Export
 
Total
 
   
(In thousands)
 
Balance at December 31, 2010
 $850,593  $92,146  $133,582  $1,076,321 
Currency exchange adjustment
  2,601   625   —   3,226 
Purchase price adjustment
  133   (9 )  —   124 
Balance at March 31, 2011
 $853,327  $92,762  $133,582  $1,079,671 
                  

Purchase price adjustments are primarily related to working capital and tax adjustments for the Sturm acquisition.  The Company has not incurred any goodwill impairments since its inception.

The gross carrying amount and accumulated amortization of intangible assets other than goodwill as of March 31, 2011 and December 31, 2010 are as follows:

   
March 31, 2011
   
December 31, 2010
 
   
Gross
         
Net
   
Gross
         
Net
 
   
Carrying
   
Accumulated
   
Carrying
   
Carrying
   
Accumulated
   
Carrying
 
   
Amount
   
Amortization
   
Amount
   
Amount
   
Amortization
   
Amount
 
   
(In thousands)
 
Intangible assets with indefinite lives:
                                               
Trademarks
 
$
33,433
   
$
—
   
$
33,433
   
$
32,673
   
$
—
   
$
32,673
 
Intangible assets with finite lives:
                                               
Customer-related
   
447,547
     
(64,296
)
   
383,251
     
445,578
     
(57,480
)
   
388,098
 
Non-compete agreement
   
1,000
     
(1,000
)
   
—
     
1,000
     
(967
)
   
33
 
Trademarks
   
20,010
     
(3,690
)
   
16,320
     
20,010
     
(3,393
)
   
16,617
 
Formulas/recipes
   
6,862
     
(2,337
)
   
4,525
     
6,825
     
(1,972
)
   
4,853
 
Computer software
   
29,944
     
(5,709
)
   
24,235
     
26,007
     
(4,664
)
   
21,343
 
Total
 
$
538,796
   
$
(77,032
)
 
$
461,764
   
$
532,093
   
$
(68,476
)
 
$
463,617
 
                                                 
Amortization expense on intangible assets for the three months ended March 31, 2011 and 2010 was $8.0 million and $4.4 million, respectively.  Estimated amortization expense on intangible assets for 2011 and the next four years is as follows:
 
(In thousands)
 
2011
32,663
 
2012
32,746
 
2013
30,624
 
2014
30,269
 
2015
29,375
 
Accounts Payable and Accrued Expenses
Accounts Payable and Accrued Expenses
8. Accounts Payable and Accrued Expenses
       
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(In thousands)
 
Accounts payable
 
$
127,235
   
$
112,638
 
Payroll and benefits
   
28,091
     
33,730
 
Interest and taxes
   
20,622
     
21,019
 
Health insurance, workers’ compensation and other insurance costs
   
5,772
     
4,855
 
Marketing expenses
   
4,501
     
10,165
 
Other accrued liabilities
   
9,678
     
19,977
 
Total
 
$
195,899
   
$
202,384
 
                 
Income Taxes
Income Taxes
9. Income Taxes

Income tax expense was recorded at an effective rate of 33.8% and 33.7% for the three months ended March 31, 2011 and 2010, respectively.  The Company’s effective tax rate is favorably impacted by an intercompany financing structure entered into in conjunction with the E.D. Smith Canadian acquisition.

As of March 31, 2011, the Company does not believe that its gross recorded unrecognized tax benefits will materially change within the next 12 months.

The Company or one of its subsidiaries files income tax returns in the U.S., Canada and various state jurisdictions.  During the quarter ended March 31, 2010, the Company settled with the Internal Revenue Service an audit related to its 2007 federal income tax return.  The audit resulted in a small refund to the Company.  During the second quarter of 2010, the Canada Revenue Agency (CRA) completed an income tax audit for E.D. Smith’s 2006 and 2007 income tax years.  The Company did not incur any material adjustments as a result of the tax audit.  The Company has various state tax examinations in process, which are expected to be completed in 2011 or 2012.  The outcome of the various state tax examinations is unknown at this time.
Long-Term Debt
Long-Term Debt
10. Long-Term Debt
                 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(In thousands)
 
Revolving credit facility
 
$
448,200
   
$
472,600
 
High yield notes
   
400,000
     
400,000
 
Senior notes
   
100,000
     
100,000
 
Tax increment financing and other
   
4,639
     
4,828
 
Total debt outstanding
   
952,839
     
977,428
 
Less current portion
   
(974
)
   
(976
)
Total long-term debt
 
$
951,865
   
$
976,452
 
                 
 
Revolving Credit Facility — The Company is party to an unsecured revolving credit facility with an aggregate commitment of $750 million, of which $292.6 million was available as of March 31, 2011.  The revolving credit facility matures October 27, 2015.  In addition, as of March 31, 2011, there were $9.2 million in letters of credit under the revolving credit facility that were issued but undrawn.  Our revolving credit facility contains various financial and other restrictive covenants and requires that the Company maintains certain financial ratios, including a leverage and interest coverage ratio.  The Company is in compliance with all applicable covenants as of March 31, 2011.  The Company’s average interest rate on debt outstanding under our revolving credit facility at March 31, 2011 was 2.30%.

High Yield Notes — On March 2, 2010, the Company completed its offering of $400 million in aggregate principal amount of 7.75% high yield notes due 2018 (the “Notes”).  The net proceeds of $391.0 million ($400.0 million notes less underwriting discount of $9.0 million providing an effective interest rate of 8.03%) were used as partial payment in the acquisition of all of the issued and outstanding stock of Sturm.  The Notes are guaranteed by the Company’s wholly owned subsidiaries Bay Valley Foods, LLC; EDS Holdings, LLC; Sturm Foods, Inc.; STSF Holdings, Inc. and S.T. Specialty Foods, Inc. and certain other of our subsidiaries that may become guarantors from time to time in accordance with the applicable indenture and may fully, jointly, severally and unconditionally guarantee our payment obligations under any series of debt securities offered.  The Indenture provides, among other things, that the Notes will be senior unsecured obligations of the Company.  Interest is payable on the Notes on March 1 and September 1 of each year.

Senior Notes — The Company maintains a private placement of $100 million in aggregate principal of 6.03% senior notes due September 30, 2013, pursuant to a Note Purchase Agreement among the Company and a group of purchasers.  The Note Purchase Agreement contains covenants that will limit the ability of the Company and its subsidiaries to, among other things, merge with other entities, change the nature of the business, create liens, incur additional indebtedness or sell assets.  The Note Purchase Agreement also requires the Company to maintain certain financial ratios.  The Company is in compliance with the applicable covenants as of March 31, 2011.

Swap Agreement — The Company has a $50 million interest rate swap agreement with a termination date of August 19, 2011 with a fixed 2.9% interest rate.  Under the terms of the Company’s revolving credit agreement and in conjunction with our credit spread, this will result in an all-in borrowing cost on the swapped principal of $50 million being no more than 4.95% until August 19, 2011.  The Company did not apply hedge accounting to this swap.

Tax Increment Financing — As part of the acquisition of the soup and infant feeding business in 2006, the Company assumed the payments related to redevelopment bonds pursuant to a Tax Increment Financing Plan.  The Company has agreed to make certain payments with respect to the principal amount of the redevelopment bonds through May 2019.  As of March 31, 2011, $2.5 million remains outstanding.
Earnings Per Share
Earnings Per Share
11. Earnings Per Share

Basic earnings per share is computed by dividing net income by the number of weighted average common shares outstanding during the reporting period.  The weighted average number of common shares used in the diluted earnings per share calculation is determined using the treasury stock method and includes the incremental effect related to outstanding options, restricted stock, restricted stock units and performance units.

In March 2010, the Company issued 2,702,500 shares of common stock in connection with the acquisition of Sturm.  For the three months ended March 31, 2010, these shares have been included on a weighted average basis in basic shares outstanding.

The following table summarizes the effect of the share-based compensation awards on the weighted average number of shares outstanding used in calculating diluted earnings per share:
                       
       
Three Months Ended
       
March 31,
           
2011
 
2010
Weighted average common shares outstanding
             
35,534,492
   
33,552,646
Assumed exercise of stock options (1)
             
793,423
   
675,841
Assumed vesting of restricted stock, restricted stock units
and performance units (1)
             
456,599
   
385,336
Weighted average diluted common shares outstanding
             
36,784,514
   
34,613,823
                       

     
(1)
 
Incremental shares from stock options, restricted stock, restricted stock units, and performance units are computed by the treasury stock method.  Stock options, restricted stock, restricted stock units, and performance units excluded from our computation of diluted earnings per share because they were anti-dilutive, were 131,090 for the three months ended March 31, 2011 and 94,539 for the three months ended March 31, 2010.
Stock-Based Compensation
Stock-Based Compensation
12. Stock-Based Compensation

Income before income taxes for the three month periods ended March 31, 2011 and 2010 includes share-based compensation expense of $4.8 million and $3.4 million, respectively.  The tax benefit recognized related to the compensation cost of these share-based awards was approximately $1.8 million and $1.3 million for the three month periods ended March 31, 2011 and 2010, respectively.

The following table summarizes stock option activity during the three months ended March 31, 2011.  Stock options are granted under our long-term incentive plan, and have a three year vesting schedule, which vest one-third on each of the first three anniversaries of the grant date.  Stock options expire ten years from the grant date.

            
Weighted
    
         
Weighted
 
Average
    
         
Average
 
Remaining
 
Aggregate
 
 
Employee
 
Director
 
Exercise
 
Contractual
 
Intrinsic
 
 
Options
 
Options
 
Price
 
Term (yrs)
 
Value
 
Outstanding, December 31, 2010
2,256,735
 
94,796
 
$
28.38
 
5.6
 
$
53,400,867
 
Granted
—
 
—
 
$
—
 
—
   
—
 
Forfeited
—
 
—
 
$
—
 
—
   
—
 
Exercised
(31,798
)
—
 
$
25.17
 
—
   
—
 
Outstanding, March 31, 2011
2,224,937
 
94,796
 
$
28.43
 
5.4
 
$
65,984,632
 
Vested/expected to vest, at March 31, 2011
2,220,757
 
94,796
 
$
28.39
 
5.4
 
$
65,941,160
 
Exercisable, March 31, 2011
1,951,464
 
94,363
 
$
27.58
 
5.0
 
$
59,924,629
 
                         
Compensation costs related to unvested options totaled $2.1 million at March 31, 2011 and will be recognized over the remaining vesting period of the grants, which averages 2.0 years.  The Company uses the Black-Scholes option pricing model to value its stock option awards.  No stock options were issued during the three months ended March 31, 2011.  The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2011was approximately $0.9 million.

In addition to stock options, the Company also grants restricted stock, restricted stock units and performance unit awards.  These awards are granted under our long-term incentive plan.  Employee restricted stock and restricted stock unit awards generally vest based on the passage of time.  These awards generally vest one-third on each anniversary of the grant date.  Director restricted stock units vest over thirteen months.  Certain directors have deferred receipt of their awards until their departure from the Board.  A complete description of restricted stock and restricted stock unit awards is presented in the Company’s annual report on Form 10-K for the year ended December 31, 2010.  The following table summarizes the restricted stock and restricted stock unit activity during the three months ended March 31, 2011:

        
Weighted
      
Weighted
      
Weighted
 
   
Employee
   
Average
 
Employee
   
Average
   
Director
 
Average
 
   
Restricted
   
Grant Date
 
Restricted
   
Grant Date
   
Restricted
 
Grant Date
 
   
Stock
   
Fair Value
 
Stock Units
   
Fair Value
   
Stock Units
 
Fair Value
 
Outstanding, at December 31, 2010
   
291,628
   
$
24.32
     
419,876
   
$
39.22
     
62,270
   
$
32.24
 
Granted
   
—
     
—
     
1,380
   
$
52.43
     
—
   
$
—
 
Vested
   
(16,440
)
 
$
26.35
     
(29,248
)
 
$
44.50
     
—
     
—
 
Forfeited
   
(430
)
 
$
25.13
     
(7,315
)
 
$
47.19
     
—
     
—
 
Outstanding, at March 31, 2011
   
274,758
   
$
24.20
     
384,693
   
$
38.79
     
62,270
   
$
32.24
 
                                                 
Future compensation costs related to restricted stock and restricted stock units is approximately $12.0 million as of March 31, 2011, and will be recognized on a weighted average basis, over the next 1.7 years.  The grant date fair value of the awards granted in 2011 is equal to the Company’s closing stock price on the grant date.

Performance unit awards are granted to certain members of management.  These awards contain service and performance conditions.  For each of the three performance periods, one third of the units will accrue, multiplied by a predefined percentage between 0% and 200%, depending on the achievement of certain operating performance measures.  Additionally, for the cumulative performance period, a number of units will accrue, equal to the number of units granted multiplied by a predefined percentage between 0% and 200%, depending on the achievement of certain operating performance measures, less any units previously accrued.  Accrued units will be converted to stock or cash, at the discretion of the compensation committee, generally, on the third anniversary of the grant date.  The Company intends to settle these awards in stock and has the shares available to do so.  The following table summarizes the performance unit activity during the three months ended March 31, 2011:

     
Weighted
 
     
Average
 
 
Performance
 
Grant Date
 
 
Units
 
Fair Value
 
Unvested, at December 31, 2010
165,060
 
$
30.87
 
Granted
—
 
$
—
 
Vested
—
   
—
 
Forfeited
—
   
—
 
Unvested, at March 31, 2011
165,060
 
$
30.87
 
           
Future compensation cost related to the performance units is estimated to be approximately $3.4 million as of March 31, 2011, and is expected to be recognized over the next 1.7 years.
Comprehensive Income
Comprehensive Income
13. Comprehensive Income

The following table sets forth the components of comprehensive income:

   
Three Months Ended 
 
   
March 31, 
 
   
2011
   
2010
 
   
(In thousands)
 
Net income
 
$
19,808
   
$
16,319
 
Foreign currency translation adjustment
   
8,803
     
8,522
 
Amortization of pension and postretirement
               
prior service costs and net loss, net of tax
   
169
     
178
 
Curtailment of postretirement plan
   
—
     
862
 
Amortization of swap loss, net of tax
   
40
     
40
 
Comprehensive income
 
$
28,820
   
$
25,921
 
                 
The Company expects to amortize $0.7 million of prior service costs and net loss, net of tax and $0.2 million of swap loss, net of tax from other comprehensive income into earnings during 2011.
Employee Retirement and Postretirement Benefits
Employee Retirement and Postretirement Benefits
14. Employee Retirement and Postretirement Benefits

Pension, Profit Sharing and Postretirement Benefits — Certain employees and retirees participate in pension and other postretirement benefit plans.  Employee benefit plan obligations and expenses included in the Condensed Consolidated Financial Statements are determined based on plan assumptions, employee demographic data, including years of service and compensation, benefits and claims paid, and employer contributions.

Effective March 31, 2010, the Company negotiated the transfer of the postretirement union retiree medical plan at the Dixon production facility to the Central States multiemployer plan.  The Company transferred its liability to the multiemployer plan and no longer carries a liability for the accumulated benefit obligation of the employees covered under that plan, resulting in a plan curtailment.  The curtailment resulted in a gain of $2.4 million, $1.4 million net of tax, which is included in Other operating expense (income), net on the Condensed Consolidated Statements of Income for the three months ended March 31, 2010.

Components of net periodic pension expense are as follows:
   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
   
(In thousands)
 
Service cost
 
$
560
   
$
515
 
Interest cost
   
560
     
551
 
Expected return on plan assets
   
(592
)
   
(549
)
Amortization of unrecognized net loss
   
144
     
124
 
Amortization of prior service costs
   
151
     
151
 
Net periodic pension cost
 
$
823
   
$
792
 
                 
The Company contributed $0.4 million to the pension plans in the first three months of 2011 and expects to contribute approximately $3.6 million in 2011.

Components of net periodic postretirement expenses are as follows:

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
   
(In thousands)
 
Service cost
 
$
9
   
$
54
 
Interest cost
   
31
     
49
 
Amortization of prior service credit
   
(18
)
   
(18
)
Amortization of unrecognized net loss
   
(2
)
   
(1
)
Net periodic postretirement cost
 
$
20
   
$
84
 
                 
The Company expects to contribute approximately $0.2 million to the postretirement health plans during 2011.
Other Operating Expense
Other Operating Expense
15. Other Operating Expense (Income), Net

The Company incurred Other operating expense (income), net of $2.7 million and $(2.3) million, for the three months ended March 31, 2011 and 2010, respectively, and consisted of the following:

   
Three Months Ended
 
   
March 31,
 
   
2011
 
2010
 
   
(In thousands)
 
Facility closing costs
 
$
2,697
   
$
—
 
Gain on postretirement plan curtailment
   
—
     
(2,357
)
Other
   
(47
)
   
96
 
Total other operating expense (income), net
 
$
2,650
   
$
(2,261
)
                 
Supplemental Cash Flow Information
Supplemental Cash Flow Information
16. Supplemental Cash Flow Information

     
Three Months Ended,
     
March 31,
       
2011
 
2010
     
(In thousands)
Interest paid
   
$
22,151
   
$
5,202
Income taxes paid
   
$
6,010
   
$
7,523
Accrued purchase of property and equipment
   
$
2,194
   
$
2,358
Accrued other intangible assets
   
$
1,400
   
$
1,022

Non cash financing activities for the three months ended March 31, 2011 and 2010 include the settlement of 44,949 and 19,120 shares, respectively, of restricted stock and restricted stock units, where shares were withheld to satisfy the minimum statuary tax withholding requirements.
Commitments and Contingencies
Commitments and Contingencies
17. Commitments and Contingencies

Litigation, Investigations and Audits — The Company is party in the ordinary course of business to certain claims, litigation, audits and investigations.  The Company believes that it has established adequate reserves to satisfy any liability that may be incurred in connection with any such currently pending or threatened matters.  The settlement of any such currently pending or threatened matters is not expected to have a material adverse impact on our financial position, annual results of operations or cash flows.
Derivative instruments
Derivative instruments
18. Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations.  The primary risks managed by derivative instruments include interest rate risk, foreign currency risk and commodity price risk.

Interest rate swaps are entered into to manage interest rate risk associated with the Company’s $750 million revolving credit facility.  Interest on our credit facility is variable and use of interest rate swaps establishes a fixed rate over the term of a portion of the facility.  The Company’s objective in using an interest rate swap is to establish a fixed interest rate, thereby enabling the Company to predict and manage interest expense and cash flows in a more efficient and effective manner.

During 2008, the Company entered into a $200 million long-term interest rate swap agreement with an effective date of November 19, 2008 to lock into a fixed LIBOR interest rate base.  Under the terms of the agreement, $200 million in floating rate debt was swapped for a fixed rate of 2.9% interest rate base for a period of 24 months, amortizing to $50 million for an additional nine months at the same 2.9% interest rate.  As of March 31, 2011 the swap amount was $50 million.  The Company did not apply hedge accounting and recorded the fair value of this instrument on its Condensed Consolidated Balance Sheets.  The fair value of the swap at March 31, 2011 and December 31, 2010 was a liability of approximately $0.6 million and $0.9 million, respectively.  The Company recorded income of $0.3 million and $0.7 million related to the mark to market adjustment in the three months ended March 31, 2011 and 2010, respectively, within the Other expense (income) line of the Condensed Consolidated Statements of Income.

Due to the Company’s operations in Canada, we are exposed to foreign currency risks.  The Company enters into foreign currency contracts to manage the risk associated with foreign currency cash flows.  The Company’s objective in using foreign currency contracts is to establish a fixed foreign currency exchange rate for certain Canadian raw material purchases that are denominated in U.S. dollars, thereby enabling the Company to manage its foreign currency exchange rate risk.  These contracts do not qualify for hedge accounting and changes in their fair value are recorded through the Condensed Consolidated Statements of Income, within the loss on foreign currency exchange line. As of March 31, 2011 and December 31, 2010, we had a liability of approximately $0.6 million and $0.2 million, respectively, for foreign exchange contracts.  There were no foreign exchange contracts issued or outstanding as of and for the three months ended March 31, 2010.  The Company realized a loss of approximately $0.4 million in the three months ended March 31, 2011.

 
In the second quarter of 2010, the Company entered into a commodity swap contract for 5.4 million pounds of High Density Polyethylene (“HDPE”) to manage the Company’s risk associated with the underlying commodity cost of a significant component used in packaging materials.  The objective in using this swap is to establish a fixed commodity cost over the term of the contract.
The trade date was June 3, 2010, with an effective date of July 1, 2010 and an expiration date of December 31, 2011.  The Company settles 0.3 million pounds on a monthly basis over the term of the contract.  The Company did not apply hedge accounting to the commodity swap, and it is recorded at fair value on the Company’s Condensed Consolidated Balance Sheets.  As of March 31, 2011 and December 31, 2010, the Company had an asset of approximately $0.6 million and $0.4 million, respectively, associated with the commodity swap contract.  For the three months ended March 31, 2011, the Company realized a gain of $0.3 million on this contract which is recorded in the Condensed Consolidated Statement of Income, within the Other expense (income) line.

The following table identifies the derivative, its fair value, and location on the Condensed Consolidated Balance Sheet:

     
Fair Value
 
 
Balance Sheet Location
 
March 31, 2011
  
December 31, 2010
 
Liability Derivatives:
   
(In thousands)
 
Interest rate swap
Accounts payable and accrued expenses
 $560  $874 
Foreign exchange contract
Accounts payable and accrued expenses
  574   184 
     $1,134  $1,058 
            
Asset Derivative:
          
Commodity contract
Prepaid expenses and other current assets
 $621  $360 
     $621  $360 
Fair Value of Financial Instruments
Fair Value of Financial Instruments
19. Fair Value of Financial Instruments

Cash and cash equivalents and accounts receivable are financial assets with carrying values that approximate fair value.  Accounts payable are financial liabilities with carrying values that approximate fair value.  As of March 31, 2011, the outstanding balance of the Company’s variable rate debt (revolving credit facility) was $448.2 million, the fair value of which is estimated to be $449.8 million, using a present value technique and market based interest rates and credit spreads.  As of March 31, 2011, the carrying value of the Company’s fixed rate senior notes was $100.0 million and fair value was estimated to be $99.4 million based on a present value technique using market based interest rates and credit spreads.  The fair value of the Company’s 7.75% high yield notes due 2018, with an outstanding balance of $400.0 million as of March 31, 2011, was estimated at $429.0 million, based on quoted market prices.

The fair value of the Company’s interest rate swap agreement, as described in Notes 10 and 18, was a liability of approximately $0.6 million as of March 31, 2011.  The fair value of the swap was determined using Level 2 inputs, which are inputs other than quoted prices that are observable for an asset or liability, either directly or indirectly.  The fair value is based on a market approach, comparing the fixed rate of 2.9% to the current and forward one month LIBOR rates throughout the term of the swap agreement.

The fair value of the Company’s commodity contract as described in Note 18 was an asset of approximately $0.6 million as of March 31, 2011.  The fair value of the commodity contract was determined using Level 1 inputs.  Level 1 inputs are those inputs where quoted prices in active markets for identical assets or liabilities are available.

The fair value of the Company’s foreign exchange contract as described in Note 18 was a liability of $0.6 million as of March 31, 2011, using level 2 inputs, comparing the foreign exchange rate of our contract to the spot rate as of March 31, 2011.
Business and Geographic Information and Major Customers
Business and Geographic Information and Major Customers
20. Business and Geographic Information and Major Customers

The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources in total rather than on a segment-level basis.  The Company has designated reportable segments based on how management views its business.  The Company does not segregate assets between segments for internal reporting.  Therefore, asset-related information has not been presented.  The reportable segments, as presented below, are consistent with the manner in which the Company reports its results to the Chief Operating Decision maker.

The Company evaluates the performance of its segments based on net sales dollars, gross profit and direct operating income (gross profit less freight out, sales commissions and direct selling and marketing expenses).  The amounts in the following tables are obtained from reports used by senior management and do not include allocated income taxes.  Other expenses not allocated include warehouse start-up costs, unallocated selling and distribution expenses and corporate expenses which consist of general and administrative expenses, amortization expense, other operating (income) expense, interest expense, interest income, foreign currency exchange and other (income) expense.  The accounting policies of the Company’s segments are the same as those described in the summary of significant accounting policies set forth in Note 1 to our 2010 Consolidated Financial Statements contained in our Annual Report on Form 10-K.

   
Three Months Ended
 
   
March 31,
 
   
2011
 
2010
 
   
(In thousands)
 
Net sales to external customers:
             
North American Retail Grocery
 
$
353,463
 
$
261,800
 
Food Away From Home
   
74,227
   
73,427
 
Industrial and Export
   
65,823
   
61,897
 
Total
 
$
493,513
 
$
397,124
 
Direct operating income:
             
North American Retail Grocery
 
$
65,521
 
$
42,122
 
Food Away From Home
   
10,762
   
9,461
 
Industrial and Export
   
12,830
   
11,662
 
Total
   
89,113
   
63,245
 
Unallocated selling and distribution expenses
   
(4,447
)
 
(1,263
)
Unallocated corporate expense
   
(39,942
)
 
(30,664
)
Operating income
   
44,724
   
31,318
 
Other expense
   
14,789
   
6,714
 
Income before income taxes
 
$
29,935
 
$
24,604
 
               
Geographic Information — The Company had revenues to customers outside of the United States of approximately 12.2% and 13.4% of total consolidated net sales in the three months ended March 31, 2011 and 2010, respectively, with 11.3% and 12.6% going to Canada, respectively.

Major Customers — Wal-Mart Stores, Inc. and affiliates accounted for approximately 20.5% and 16.5% of consolidated net sales in the three months ended March 31, 2011 and 2010, respectively.  No other customer accounted for more than 10% of our consolidated net sales.

Product Information — The following table presents the Company’s net sales by major products for the three months ended March 31, 2011 and 2010.  Certain product sales for 2010 have been reclassified to conform to the current period presentation due to enhanced information reporting available with the new SAP software system.

   
Three Months Ended
 
   
March 31,
 
   
2011
   
2010
 
   
(In thousands)
 
Products:
               
Non-dairy creamer
 
$
82,030
   
$
84,292
 
Soup and infant feeding
   
73,399
     
77,760
 
Pickles
   
70,454
     
74,389
 
Powdered drinks
   
55,888
     
14,390
 
Salad dressing
   
51,353
     
50,186
 
Mexican and other sauces
   
47,190
     
45,761
 
Hot cereals
   
40,754
     
9,405
 
Dry dinners
   
28,770
     
—
 
Aseptic products
   
21,936
     
21,853
 
Jams
   
16,104
     
14,944
 
Other products
   
5,635
     
4,144
 
Total net sales
 
$
493,513
   
$
397,124
 
                 
Guarantor and Non-Guarantor Financial Information
Guarantor and Non-Guarantor Financial Information
21.
Guarantor and Non-Guarantor Financial Information

On March 2, 2010, the Company issued $400 million 7.75% high yield notes due 2018, which are guaranteed by its wholly owned subsidiaries Bay Valley Foods, LLC; EDS Holdings, LLC; Sturm Foods, Inc.; STSF Holdings, Inc. and S.T. Specialty Foods, Inc. and certain other of our subsidiaries that may become guarantors from time to time in accordance with the applicable indenture and may fully, jointly, severally and unconditionally guarantee our payment obligations under any series of debt securities offered.  There are no significant restrictions on the ability of the parent company or any guarantor to obtain funds from its subsidiaries by dividend or loan.  The following condensed consolidating financial information presents the results of operations, financial position and cash flows of TreeHouse Foods, Inc., its Guarantor subsidiaries, its non-Guarantor subsidiaries and the eliminations necessary to arrive at the information for the Company on a consolidated basis as of March 31, 2011 and 2010 and for the three months ended March 31, 2011 and 2010.  The equity method has been used with respect to investments in subsidiaries.  The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.
 


 
Condensed Supplemental Consolidating Balance Sheet
March 31, 2011
(In thousands)
 
   
Parent
  
Guarantor
  
Non-Guarantor
       
   
Company
  
Subsidiaries
  
Subsidiaries
  
Eliminations
  
Consolidated
 
Assets
Current assets:
               
Cash and cash equivalents
 $—  $11  $2,364  $—  $2,375 
Receivables, net
  1,410   110,239   17,823   —   129,472 
Inventories, net
  —   258,721   40,432   —   299,153 
Deferred income taxes
  339   3,112   176   —   3,627 
Assets held for sale
  —   4,081   —   —   4,081 
Prepaid expenses and other current assets
  932   10,691   448   —   12,071 
Total current assets
  2,681   386,855   61,243   —   450,779 
Property, plant and equipment, net
  11,445   333,840   35,934   —   381,219 
Goodwill
  —   963,260   116,411   —   1,079,671 
Investment in subsidiaries
  1,262,089   162,605   —   (1,424,694 )  — 
Intercompany accounts receivable, net
  654,136   (551,851 )  (102,285 )  —   — 
Deferred income taxes
  13,889   —   —   (13,889 )  — 
Identifiable intangible and other assets, net
  47,726   352,510   85,281   —   485,517 
Total assets
 $1,991,966  $1,647,219  $196,584  $(1,438,583 ) $2,397,186 
                      
Liabilities and Stockholders’ Equity
Current liabilities:
                    
Accounts payable and accrued expenses
 $18,655  $159,788  $17,456  $—  $195,899 
Current portion of long-term debt
  —   967   7   —   974 
Total current liabilities
  18,655   160,755   17,463   —   196,873 
Long-term debt
  938,212   13,653   —   —   951,865 
Deferred income taxes
  6,286   186,613   16,516   (13,889 )  195,526 
Other long-term liabilities
  16,818   24,109   —   —   40,927 
Stockholders’ equity
  1,011,995   1,262,089   162,605   (1,424,694 )  1,011,995 
Total liabilities and stockholders’ equity
 $1,991,966  $1,647,219  $196,584  $(1,438,583 ) $2,397,186 
                      
 

 
Condensed Supplemental Consolidating Balance Sheet
 
December 31, 2010
 
(In thousands)
 
                 
   
Parent
  
Subsidiary
  
Non-Guarantor
       
   
Company
  
Guarantors
  
Subsidiaries
  
Eliminations
  
Consolidated
 
Assets
               
Current assets:
               
Cash and cash equivalents
 $—  $6  $6,317  $—  $6,323 
Accounts receivable, net
  3,381   104,227   19,036   —   126,644 
Inventories, net
  —   251,993   35,402   —   287,395 
Deferred income taxes
  339   2,916   244   —   3,499 
Assets held for sale
  —   4,081   —   —   4,081 
Prepaid expenses and other current assets
  1,299   10,997   565   —   12,861 
Total current assets
  5,019   374,220   61,564   —   440,803 
Property, plant and equipment, net
  12,722   337,634   35,835   —   386,191 
Goodwill
  —   963,031   113,290   —   1,076,321 
Investment in subsidiaries
  1,216,618   140,727   —   (1,357,345 )  — 
Intercompany accounts receivable, net
  703,283   (586,789 )  (116,494 )  —   — 
Deferred income taxes
  13,179   —   —   (13,179 )  — 
Identifiable intangible and other assets, net
  45,005   358,805   84,123   —   487,933 
Total assets
 $1,995,826  $1,587,628  $178,318  $(1,370,524) $2,391,248 
                      
Liabilities and Shareholders’ Equity
 
Current liabilities:
                    
Accounts payable and accrued expenses
 $33,363  $147,889  $21,132  $—  $202,384 
Current portion of long-term debt
  —   976   —   —   976 
Total current liabilities
  33,363   148,865   21,132   —   203,360 
Long-term debt
  963,014   13,438   —   —   976,452 
Deferred income taxes
  6,210   185,427   16,459   (13,179 )  194,917 
Other long-term liabilities
  15,273   23,280   —   —   38,553 
Shareholders’ equity
  977,966   1,216,618   140,727   (1,357,345 )  977,966 
Total liabilities and shareholders’ equity
 $1,995,826  $1,587,628  $178,318  $(1,370,524) $2,391,248 



   
Condensed Supplemental Consolidating Statement of Income
 
Three Months Ended March 31, 2011
 
(In thousands)
 
   
     
Parent
     
Guarantor
     
Non-Guarantor
                 
     
Company
     
Subsidiaries
     
Subsidiaries
     
Eliminations
     
Consolidated
 
                                         
Net sales
 
$
—
   
$
437,336
   
$
64,130
   
$
(7,953
)
 
$
493,513
 
Cost of sales
   
—
     
330,552
     
49,988
     
(7,953
)
   
372,587
 
Gross profit
   
—
     
106,784
     
14,142
     
—
     
120,926
 
Selling, general and administrative expense
   
14,505
     
46,251
     
4,747
     
—
     
65,503
 
Amortization
   
564
     
6,224
     
1,261
     
—
     
8,049
 
Other operating expense, net
   
—
     
2,650
     
—
     
—
     
2,650
 
Operating (loss) income
   
(15,069
)
   
51,659
     
8,134
     
—
     
44,724
 
Interest expense (income), net
   
13,657
     
(3,320
)
   
3,514
     
—
     
13,851
 
Other income, net
   
(314
)
   
622
     
630
     
—
     
938
 
(Loss) income from continuing operations, before income taxes
   
(28,412
)
   
54,357
     
3,990
     
—
     
29,935
 
Income taxes (benefit)
   
(11,720
)
   
20,781
     
1,066
     
—
     
10,127
 
Equity in net income of subsidiaries
   
36,500
     
2,924
     
—
     
(39,424
)
   
—
 
Net income
 
$
19,808
   
$
36,500
   
$
2,924
   
$
(39,424
)
 
$
19,808
 
                                         


     
Condensed Supplemental Consolidating Statement of Income
   
Three Months Ended March 31, 2010
   
(In thousands)
   
     
     
Parent
     
Guarantor
     
Non-Guarantor
                 
     
Company
     
Subsidiaries
     
Subsidiaries
     
Eliminations
     
Consolidated
 
                                         
Net sales
 
$
—
   
$
345,951
   
$
58,157
   
$
(6,984
)
 
$
397,124
 
Cost of sales
   
—
     
266,642
     
48,688
     
(6,984
)
   
308,346
 
Gross profit
   
—
     
79,309
     
9,469
     
—
     
88,778
 
Selling, general and administrative expense
   
15,869
     
33,840
     
5,565
     
—
     
55,274
 
Amortization
   
131
     
3,168
     
1,148
     
—
     
4,447
 
Other operating expense (income), net
   
—
     
(2,261
)
   
—
     
—
     
(2,261
)
Operating (loss) income
   
(16,000
)
   
44,562
     
2,756
     
—
     
31,318
 
Interest expense (income), net
   
6,628
     
(3,161
)
   
3,360
     
—
     
6,827
 
Other (income) expense, net
   
(691
)
   
1,759
     
(1,181
)
   
—
     
(113
)
(Loss) income from continuing operations, before income taxes
   
(21,937
)
   
45,964
     
577
     
—
     
24,604
 
Income taxes (benefit)
   
(7,812
)
   
15,900
     
197
     
—
     
8,285
 
Equity in net income of subsidiaries
   
30,444
     
380
     
—
     
(30,824
)
   
—
 
Net income
 
$
16,319
   
$
30,444
   
$
380
   
$
(30,824
)
 
$
16,319
 
                                         


Condensed Supplemental Consolidating Statement of Cash Flows
Three Months Ended March 31, 2011
(In thousands)
 
   
Parent
  
Guarantor
  
Non-Guarantor
        
   
Company
  
Subsidiaries
  
Subsidiaries
  
Eliminations
  
Consolidated
  
                  
Net cash provided by operating activities
 $(26,843) $63,451  $(3,860) $—  $32,748  
Cash flows from investing activities:
                     
Additions to property, plant and equipment
  1,073   (10,768 )  (883 )  —   (10,578 ) 
Additions to other intangible assets
  (2,628 )  (1,522 )  —   —   (4,150 ) 
Acquisition of business, net of cash acquired
  1,401   —   —   —   1,401  
Proceeds from sale of fixed assets
  —   33   —   —   33  
Net cash used in investing activities
  (154 )  (12,257 )  (883 )  —   (13,294 ) 
Cash flows from financing activities:
                     
Borrowings under revolving credit facility
  80,600   —   —   —   80,600  
Payments under revolving credit facility
  (105,000 )  —   —   —   (105,000 ) 
Payments on capitalized lease obligations
  —   (196 )  —   —   (196 ) 
Intercompany transfer
  50,993   (50,993 )  —   —   —  
Excess tax benefits from stock-based compensation
  422   —   —   —   422  
Net payments related to stock-based award activities
  (18 )  —   —   —   (18 ) 
Net cash provided by financing activities
  26,997   (51,189 )  —   —   (24,192 ) 
Effect of exchange rate changes on cash and cash equivalents
  —   —   790   —   790  
Net (decrease) increase in cash and cash equivalents
  —   5   (3,953 )  —   (3,948 ) 
Cash and cash equivalents, beginning of period
  —   6   6,317   —   6,323  
Cash and cash equivalents, end of period
 $—  $11  $2,364  $—  $2,375  
                       


Condensed Supplemental Consolidating Statement of Cash Flows
 
Three Months Ended March 31, 2010
 
(In thousands)
 
   
     
Parent
     
Guarantor
     
Non-Guarantor
                 
     
Company
     
Subsidiaries
     
Subsidiaries
     
Eliminations
     
Consolidated
 
                                         
Net cash provided by operating activities
 
$
(35,429
)
 
$
88,650
   
$
891
   
$
—
   
$
54,112
 
Cash flows from investing activities:
                                       
Additions to property, plant and equipment
   
(15
)
   
(5,397
)
   
(1,134
)
   
—
     
(6,546
)
Additions to other intangible assets
   
(2,932
)
   
—
     
(1,464
)
   
—
     
(4,396
)
Acquisition of business, net of cash acquired
   
(664,655
)
   
—
     
—
     
—
     
(664,655
)
Net cash used in investing activities
   
(667,602
)
   
(5,397
)
   
(2,598
)
   
—
     
(675,597
)
Cash flows from financing activities:
                                       
Proceeds from issuance of debt
   
400,000
     
—
     
—
     
—
     
400,000
 
Borrowings under revolving credit facility
   
237,700
     
—
     
—
     
—
     
237,700
 
Payments under revolving credit facility
   
(119,300
)
   
—
     
—
     
—
     
(119,300
)
Payments on capitalized lease obligations
   
—
     
(120
)
   
(49
)
   
—
     
(169
)
Intercompany transfer
   
81,795
     
(82,295
)
   
500
     
—
     
—
 
Proceeds from issuance of common stock, net of expenses
   
110,688
     
—
     
—
     
—
     
110,688
 
Payment of deferred financing costs
   
(9,296
)
   
—
     
—
     
—
     
(9,296
)
Excess tax benefits from stock-based compensation
   
276
     
—
     
—
     
—
     
276
 
Net proceeds related to stock-based award activities
   
1,167
     
—
     
—
     
—
     
1,167
 
Net cash provided by financing activities
   
703,030
     
(82,415
)
   
451
     
—
     
621,066
 
Effect of exchange rate changes on cash and cash equivalents
   
—
     
—
     
101
     
—
     
101
 
Net (decrease) increase in cash and cash equivalents
   
(1
)
   
838
     
(1,155
)
   
—
     
(318
)
Cash and cash equivalents, beginning of period
   
1
     
8
     
4,406
     
—
     
4,415
 
Cash and cash equivalents, end of period
 
$
—
   
$
846
   
$
3,251
   
$
—
   
$
4,097
 
                                         
Document Information
3 Months Ended
Mar. 31, 2011
Document Type
10-Q 
Amendment Flag
FALSE 
Document Period End Date
2011-03-31 
Entity Information
3 Months Ended
Mar. 31, 2011
Apr. 29, 2011
Jun. 30, 2010
Entity Registrant Name
TreeHouse Foods, Inc. 
 
 
Entity Central Index Key
0001320695 
 
 
Current Fiscal Year End Date
12/31 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Public Float
 
 
1,570,232,971 
Entity Common Stock, Shares Outstanding
 
35,502,778 
 
Document Fiscal Year Focus
2011 
 
 
Document Fiscal Period Focus
Q1