MICHAEL FOODS GROUP, INC.

CIK:0001517224|SEC Filings

Comprehensive Income

3 Months Ended

Mar. 29, 2014

NOTE F—COMPREHENSIVE INCOME

Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss) is comprised of unrealized gains (losses) on cash flow hedges and foreign currency translation adjustments.

The components of accumulated other comprehensive income (loss), net of taxes, were as follows (in thousands):

	March 29,			December 28,
	2014			2013
Fair value of derivatives, net of tax	$	1,776		$	(124	)
Foreign currency translation		(653	)		(525	)
Accumulated other comprehensive income (loss)	$	1,123		$	(649	)

Changes in Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated balances of the components of other comprehensive income and the related tax effects for the three-month periods ended March 29, 2014 and March 30, 2013 (in thousands):

	Three Months Ended
	March 29,			March 30,
	2014			2013
Unrealized gain (loss) on cash flow hedges, before tax	$	3,001		$	451
Tax expense (benefit)		1,101			167
Unrealized gain (loss) on cash flow hedges, net of tax		1,900			284
Foreign currency translation		(128	)		(40	)
Other comprehensive income (loss)	$	1,772		$	244

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

The following table summarizes the reclassification adjustments, net of tax, out of accumulated other comprehensive income (loss), by component, that were included in net earnings for the three-month periods ended March 29, 2014 and March 30, 2013 (in thousands):

	Three Months Ended					Location on
	March 29,		March 30,			Condensed Consolidated
	2014		2013			Statements of Earnings
Cash flow hedges, net of tax	$	59	$	(971	)	Cost of sales

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Cash flows from operating activities:
Net earnings	$ 1,694	$ 14,243
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	14,943	15,040
Amortization of intangibles	7,700	7,700
Amortization of deferred financing costs	1,922	2,045
Amortization of original issue discount on long-term debt	489	538
Deferred income taxes	(883)	(5,421)
Non-cash stock option compensation	533	535
Changes in operating assets and liabilities:
Accounts receivable	1,387	(6,407)
Inventories	(2,818)	(11,669)
Prepaid expenses, income taxes and other	(2,205)	(554)
Accounts payable	(10,013)	(11,009)
Accrued liabilities	(7,280)	(992)
Net cash provided by operating activities	5,469	4,049
Cash flows from investing activities:
Capital expenditures	(8,779)	(5,071)
Other assets	(2,000)
Net cash used in investing activities	(10,779)	(5,071)
Cash flows from financing activities:
Payments on long-term debt	(1,349)	(12,346)
Dividend to parent	(11,688)
Deferred financing costs	(43)	(49)
Net cash used in financing activities	(13,080)	(12,395)
Effect of exchange rate changes on cash	2	7
Net decrease in cash and equivalents	(18,388)	(13,410)
Cash and equivalents at beginning of period	60,677	43,274
Cash and equivalents at end of period	42,289	29,864
Supplemental disclosures of cash flow information:
Non-cash capital investment by parent (see Note D)	$ 2,094	$ 2,617

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 29, 2014	Dec. 28, 2013
Current Assets
Cash and equivalents	$ 42,289	$ 60,677
Accounts receivable, less allowances	169,419	170,935
Inventories	161,065	158,495
Prepaid expenses and other	14,928	13,948
Total Current Assets	387,701	404,055
Property, Plant and Equipment
Land	10,410	10,410
Buildings and improvements	137,782	138,010
Machinery and equipment	343,352	335,723
Total Property, Plant and Equipment	491,544	484,143
Less accumulated depreciation	229,803	215,941
Property, Plant and Equipment, net	261,741	268,202
Goodwill	830,947	831,171
Intangible assets, net	515,908	523,608
Deferred financing costs	29,612	31,487
Other assets	9,993	8,786
Total Assets	2,035,902	2,067,309
Current Liabilities
Current maturities of long-term debt	4,436	4,758
Accounts payable	93,112	103,365
Accrued liabilities
Compensation	14,244	15,899
Customer programs	37,891	38,388
Interest	12,007	22,534
Other	30,081	28,999
Total Current Liabilities	191,771	213,943
Long-term debt, less current maturities	1,165,613	1,166,304
Deferred income taxes	232,630	234,847
Other long-term liabilities	2,896	3,628
Commitments and contingencies
Shareholder’s Equity
Common stock, $0.01 par value, 5,000 shares authorized and 100 shares issued and outstanding as of March 29, 2014 and December 28, 2013
Additional paid-in capital	407,903	405,276
Retained earnings	33,966	43,960
Accumulated other comprehensive income (loss)	1,123	(649)
Total Shareholder's Equity	442,992	448,587
Total Liabilities and Shareholder's Equity	$ 2,035,902	$ 2,067,309