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Table of Contents
Income from operations was $508.6 million in 2013, a decrease of $2.0 million, or 0.4% , compared to $510.6 million in 2012. The
decrease in income from operations was driven by higher selling and administrative expenses primarily resulting from $75.0 million of IPO- and
secondary-offering related expenses recorded during 2013, mostly offset by higher net sales and gross profit. Total operating margin percentage
decreased 30 basis points to 4.7% in 2013, from 5.0% in 2012. Operating margin percentage was negatively impacted by the increase in selling
and administrative expenses as a percentage of net sales and gross profit margin compression, partially offset by a decrease in advertising
expense as a percentage of net sales.
Corporate segment income from operations was $363.3 million in 2013, an increase of $14.3 million, or 4.1% , compared to $349.0
million in 2012. Corporate segment operating margin percentage decreased 20 basis points to 6.1% in 2013, from 6.3%
in 2012. Results for 2013
included $26.4 million of IPO- and secondary-offering related expenses, which reduced Corporate segment operating margin by 40 basis points.
Higher sales and gross profit dollars offset the effect of IPO- and secondary-offering related expenses on income from operations for 2013.
Public segment income from operations was $246.5 million in 2013, a decrease of $0.2 million, or 0.1%, compared to $246.7 million in
2012. Public segment operating margin percentage decreased 20 basis points to 5.9% in 2013, from 6.1% in 2012. Results for 2013 included
$14.4 million of IPO- and secondary-offering related expenses, which reduced Public segment operating margin by 30 basis points. Higher sales
and gross profit dollars nearly offset the effect of IPO- and secondary-offering related expenses on income from operations for 2013.
Interest expense, net
At December 31, 2013 , our outstanding long-term debt totaled $3,251.2 million, compared to $3,771.0 million at December 31, 2012.
We reduced long-term debt throughout the year primarily through the use of a portion of the net proceeds from the IPO and cash flows provided
by operating activities. Net interest expense in 2013 was $250.1 million , a decrease of $57.3 million compared to $307.4 million in 2012. This
decrease was primarily due to lower debt balances and effective interest rates for 2013 compared to 2012 as a result of debt repayments and
refinancing activities completed during 2012 and 2013.
Net loss on extinguishments of long
-term debt
During 2013 , we recorded a net loss on extinguishments of long-term debt of $64.0 million compared to $17.2 million in 2012 .
In October 2013, we redeemed $155.0 million aggregate principal amount of the Senior Subordinated Notes. In connection with this
redemption, we recorded a loss on extinguishment of long-term debt of $8.5 million, representing the difference between the redemption price
and the net carrying amount of the purchased debt, adjusted for a portion of the unamortized deferred financing costs.
In August 2013, we redeemed $324.0 million aggregate principal amount of the Senior Subordinated Notes. In connection with this
redemption, we recorded a loss on extinguishment of long-term debt of $24.6 million, representing the difference between the redemption price
and the net carrying amount of the purchased debt, adjusted for a portion of the unamortized deferred financing costs.
In July 2013, we redeemed $175.0 million aggregate principal amount of the Senior Secured Notes. In connection with this redemption,
we recorded a loss on extinguishment of long-term debt of $16.7 million, representing the difference between the redemption price and the net
carrying amount of the purchased debt, adjusted for a portion of the unamortized deferred financing costs.
In April 2013, we entered into a new seven-year, $1,350.0 million aggregate principal amount Term Loan. Substantially all of the
proceeds were used to repay the $1,299.5 million outstanding aggregate principal amount of the prior senior secured term loan facility. In
connection with this refinancing, we recorded a loss on extinguishment of long-term debt of $10.3 million, representing a write-off of the
remaining unamortized deferred financing costs related to the prior senior secured term loan facility.
In March 2013, we redeemed $50.0 million aggregate principal amount of the Senior Subordinated Notes. We recorded a loss on
extinguishment of long-term debt of $3.9 million, representing the difference between the redemption price and the net carrying amount of the
purchased debt, adjusted for a portion of the unamortized deferred financing costs.
In December 2012, we redeemed $100.0 million aggregate principal amount of the Senior Subordinated Notes. We recorded a loss on
extinguishment of long-term debt of $7.8 million representing the difference between the redemption price and the net carrying amount of the
purchased debt, adjusted for a portion of the unamortized deferred financing costs.
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