EFTA01381286.pdf

Form S-I Table of Contrail 9 percentage points of the increase in net sales and favorable product mix contributed 2 percentage points, partially offset by a 1 percentage point impact from net pricing. In preparation for the systems cutover from our previous ERP system to SAP, we stopped shipping to customers in December 2013 for a partial week. These sales were =ovend in the first quarter of 2014 when we resumed shipping to customers. As a result, we estimate that $13.1 million of sales were shifted from the fourth quarter of 2013 to the first quarter of 2014. Excluding this shift in shipments, our net sales growth for the three months ended March 31, 2015 would have been 6.8 percentage points higher, or 16.8%. Net sales of Dry Foods increased $17.0 million, or 9.1%. to $204.2 million for the three months ended March 31, 2015, compared to $187.2 million for the three months ended March 31, 2014. Volume growth accounted for 9 percentage points of the increase in net sales of Dry Foods and favorable product mix contributed 1 percentage point, partially offset by a 1 percentage point impact from net pricing. The introduction of new products under each of our major product lines drove our growth in net sales of Dry Foods. The decrease in net pricing was primarily driven by higher levels of promotional activity. Net sales of Wet Foods, Treats and Other Products increased $5.5 million, or 14.0%. to $44.6 million for the three months ended March 31. 2015. compared to $39.1 million for the three months ended March 31, 2014. Volume growth accounted for 8 percentage points of the increase in net sales of our Wet Foods, Treats and Other Products and favorable product mix contributed 7 percentage points, partially offset by a 1 percentage point impact from net pricing. The introduction of new wet foods across each of our major product lines was the primary' driver of the growth of our net sales of Wet Foods, Treats and Other Products. The decrease in net pricing was primarily driven by higher levels of promotional activity. Gross Profit Gross profit increased $3.2 million, or 3.3%. to $99.5 million for the three months ended March 31, 2015, compared to $96.3 million for the three months ended March 31. 2014. driven primarily by increased volume. Gross margin decreased to 40.0% for the three months ended March 31, 2015, from 42.6% for the three months ended March 31. 2014 and was primarily impacted by incremental supply chain costs (1.1 percentage points gross margin decrease), Heartland start-up costs (0.7 percentage point grow margin decrease) and lower net price realization (0.7 percentage point gross margin decrease). Selling. General. and Administrative Expenses Selling, general. and administrative expenses were $47.4 million for the three months ended March 31, 2015, up $4.7 million, or 10.9%. from $42.7 million for the three months ended March 31, 2014. The increase reflects incremental salaries and payroll-related expenses to support the growth of ow business. Interest lispense, Net Interest expense. net increased $0.5 million, or 15.2%, to $3.7 million for the three months ended March 31, 2015, compared to $3.2 million for the that months ended March 31, 2014. The increase was driven by capitalized interest of $0.8 million which reduced interest expense recorded during the three months ended March 31, 2014. Excluding capitalized interest, our effective interest rate quarter-over-quarter was 3.82% for the three months ended March 31, 2015 as compared to 4.07% for the three months ended March 31, 2014. Provisionfor Income Taves Provision for income taxes decreased $0.9 million, or 4.5%, to $18.4 million for the three months ended March 31, 2015, compared to $19.3 million for the three months ended March 31. 2014. Our effective tar rate was 38.0% for the three months ended March 31.2015 as compared to 38.2% for the thrw months ended March 31, 2014. This decrease in our effective tax rate primarily reflects the benefit of domestic manufacturing deductions for the that months ended March 31, 2015. 51 httplAvww.sec.gov/Arehi vestedgar/datat I 609989/000119312515218883/d734898dsl.htm17/20/2015 10:30:13 AM) CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0080138 CONFIDENTIAL SDNY GM_00228322 EFTA01381286