Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Amplify Snack Brands, INC (1640313) 10-Q published on Nov 08, 2017 at 4:51 pm
Reporting Period: Sep 29, 2017
The Company entered into a foreign currency option contract in August 2016, to hedge its exposure to currency fluctuations in connection with the anticipated acquisition of Tyrrells, because the purchase price was denominated in pounds sterling (£). The Company subsequently terminated this foreign currency option contract and entered into a forward currency exchange contract to purchase £278 million at a US dollar to pound sterling forward rate of 1.3157. In connection with the acquisition of Tyrrells on September 2, 2016, the Company settled this forward currency exchange contract and recorded a gain of approximately $3.6 million, representing the difference between the forward rate of 1.3157 and the spot rate on the settlement date. The Company did not designate this forward currency exchange contract as a cash flow hedge for accounting purposes and the resulting gain was recognized within other income and expense, net in the accompanying condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2016.
Amplify Snack Brands, Inc., a Delaware corporation, and its wholly-owned subsidiaries (collectively, the "Company", "we", "us" and "our") is a high growth, snack food company focused on developing and marketing products that appeal to consumers’ growing preference for better-for-you ("BFY") snacks. Our anchor brand, SkinnyPop, is a highly-profitable and market-leading BFY ready-to-eat ("RTE") popcorn brand. Through its simple, major allergen-free and non-GMO ingredients, SkinnyPop embodies our BFY mission and has amassed a loyal and growing customer base across a wide range of food distribution channels in the United States. In September 2016, we acquired Crisps Topco Limited ("Tyrrells Group") and its international portfolio of premium BFY snack brands. This acquisition allows us to broaden our international customer reach, diversify our product and brand portfolio and realize the benefits of operating scale. In April 2015, we acquired Paqui, LLC ("Paqui"), an emerging BFY tortilla chip brand and in April 2016, we acquired Boundless Nutrition, LLC ("Boundless Nutrition"), which manufactures and distributes its Oatmega protein snack bars and cookies to natural, grocery, mass and food service retail partners across the United States. These acquisitions allow us to leverage our infrastructure to help us grow into adjacent snacking sub-segments with innovative BFY
brands. We believe that our focus on building a portfolio of exclusively BFY snack brands differentiates us and will allow us to leverage our platform to realize material synergies across our family of BFY brands, as well as allow our retail customers to consolidate their vendor relationships in this large and growing category.
General and administrative expenses, excluding corporate overhead, within our North America segment were approximately $2.4 million, or 3.7% of segment net sales for the 13 weeks ended September 30, 2017, compared to approximately $10.3 million or 17.3% of segment net sales for the three months ended September 30, 2016, representing a decrease of $7.9 million. For the 13 weeks ended September 30, 2017 and the three months ended September 30, 2016, we incurred $0.2 million and $8.9 million of general and administrative expenses primarily related to the acquisitions of Tyrrells Group and Boundless Nutrition that we consider non-recurring in nature. During the 13 weeks ended September 30, 2017, the reduction in acquisition related expenses of $8.7 million, was off set in part by an increase of general and administrative expenses of $0.8 million, primarily related to increased personnel costs and the expansion of office space at our corporate headquarters.
General and administrative expenses, excluding corporate overhead, within our North America segment were approximately $6.9 million or 3.6% of segment net sales for the 39 weeks ended September 30, 2017, compared to approximately $14.0 million or 8.1% of segment net sales for the nine months ended September 30, 2016, representing a decrease of approximately $7.1 million. The decrease is primarily attributable to a reduction of $8.2 million of expenses that we consider non-recurring in nature. For the 39 weeks ended September 30, 2017, we incurred approximately $1.0 million related to acquisition-related expenses associated with the Tyrrells Group acquisition and $0.7 million in executive recruitment costs and during the nine months ended September 30, 2016 we incurred $9.3 of acquisition-related expenses related to the Tyrrells Group and Boundless Nutrition acquisitions and $0.6 million of expenses associated with our secondary offering. The decrease in non-recurring expenses was offset in part by an increase of $1.1 million in general and administrative expenses that is primarily a result of our investment in personnel to effectively scale and manage our North American operations.
During the nine months ended September 30, 2016, we borrowed from Term Loans in full under our Credit Facility to finance our acquisition of Tyrrells Group and to pay off all outstanding indebtedness under our Prior Credit Facility. We received $593.4 million in proceeds from the Term Loans, net of an original issue discount ("OID") of $6.6 million, and paid lender and legal fees of approximately $15.5 million in connection with the issuance of our Credit Facility. We used $189.7 million in proceeds from Term Loans under our Credit Facility to pay off outstanding indebtedness on a term loan under the Prior Credit Facility.