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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 26, 2015
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from  __________ to __________ 

Commission File Number: 001-36051
 JASON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
46-2888322
(State or other jurisdiction of
 incorporation or organization)
 
(I.R.S. Employer
 Identification Number)
 
411 East Wisconsin Avenue
Suite 2100
Milwaukee, Wisconsin
 
53202
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code:  (414) 277-9300
 
Not Applicable
(Former name or former address, if changed since last report)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý No ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ý No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨
 
Accelerated filer ý
Non-accelerated filer ¨
 
Smaller reporting company ¨
(Do not check if a smaller reporting company) 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ¨  No ý

As of July 31, 2015, there were 22,189,336 shares of common stock of the Company issued and outstanding. 




JASON INDUSTRIES, INC.
TABLE OF CONTENTS

1




PART I – FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
Jason Industries, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
 
Successor
 
 
Predecessor
 
Three Months Ended
June 26, 2015
 
Six Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Six Months Ended
June 27, 2014
 
 
 
 
 
Net sales
$
187,578

 
$
363,414

 
 
$
190,615

 
$
377,151

Cost of goods sold
145,954

 
282,843

 
 
148,993

 
293,485

Gross profit
41,624

 
80,571

 
 
41,622

 
83,666

Selling and administrative expenses
32,521

 
64,014

 
 
27,263

 
55,175

(Gain) loss on disposals of property, plant and equipment - net
(4
)
 
22

 
 
215

 
338

Restructuring
1,010

 
2,714

 
 
1,907

 
2,554

Transaction-related expenses
710

 
886

 
 
3,233

 
4,774

Operating income
7,387

 
12,935

 
 
9,004

 
20,825

Interest expense
(7,918
)
 
(15,424
)
 
 
(3,724
)
 
(7,219
)
Equity income
260

 
542

 
 
516

 
831

Gain from sale of joint ventures

 

 
 

 
3,508

Other income - net
50

 
85

 
 
29

 
107

(Loss) income before income taxes
(221
)
 
(1,862
)
 
 
5,825

 
18,052

Tax provision (benefit)
644

 
(103
)
 
 
588

 
5,080

Net (loss) income
$
(865
)
 
$
(1,759
)
 
 
$
5,237

 
$
12,972

Less net loss attributable to noncontrolling interests
(146
)
 
(297
)
 
 

 

Net (loss) income attributable to Jason Industries
$
(719
)
 
$
(1,462
)
 
 
$
5,237

 
$
12,972

Accretion of preferred stock dividends
900

 
1,800

 
 

 

Net (loss) income available to common shareholders of Jason Industries
$
(1,619
)
 
$
(3,262
)
 
 
$
5,237

 
$
12,972


 
 
 
 
 
 
 
 
Net (loss) income per share available to common shareholders of Jason Industries:
 
 
 
 
 
 
 
 
Basic and diluted
$
(0.07
)
 
$
(0.15
)
 
 
$
5,237

 
$
12,972

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic and diluted
22,011

 
22,001

 
 
1

 
1

The accompanying notes are an integral part of these condensed consolidated financial statements.


2




Jason Industries, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands) (Unaudited)
 
Successor
 
 
Predecessor
 
Three Months Ended
June 26, 2015
 
Six Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Six Months Ended
June 27, 2014
 
 
 
 
 
Net (loss) income
$
(865
)
 
$
(1,759
)
 
 
$
5,237

 
$
12,972

Other comprehensive (loss) income:
 
 
 
 
 
 
 
 
Employee retirement plan adjustments, net of tax

 

 
 
48

 
105

Cumulative foreign currency translation adjustments associated with joint ventures sold

 

 
 

 
(591
)
Foreign currency translation adjustments
1,852

 
(8,042
)
 
 
(592
)
 
(463
)
Total other comprehensive income (loss)
1,852

 
(8,042
)
 
 
(544
)
 
(949
)
Comprehensive income (loss)
987

 
(9,801
)
 
 
4,693

 
12,023

Less: Comprehensive income (loss) attributable to noncontrolling interests
167

 
(1,656
)
 
 

 

Comprehensive income (loss) attributable to Jason Industries
$
820

 
$
(8,145
)
 
 
$
4,693

 
$
12,023

The accompanying notes are an integral part of these condensed consolidated financial statements.


3





Jason Industries, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts) (Unaudited)
 
Successor
 
June 26, 2015
 
December 31, 2014
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
32,967

 
$
62,279

Accounts receivable - net of allowances for doubtful accounts of $2,296 at June 26, 2015 and $2,415 at December 31, 2014
102,418

 
80,080

Inventories - net
82,994

 
80,546

Deferred income taxes
10,750

 
11,105

Other current assets
24,199

 
23,087

Total current assets
253,328

 
257,097

Property, plant and equipment - net of accumulated depreciation of $27,147 at June 26, 2015 and $12,920 at December 31, 2014
197,799

 
176,478

Goodwill
163,586

 
156,106

Other intangible assets - net
202,871

 
198,683

Other assets - net
20,810

 
21,040

Total assets
$
838,394

 
$
809,404

 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities
 
 
 
Current portion of long-term debt
$
6,259

 
$
5,375

Accounts payable
62,925

 
57,704

Accrued compensation and employee benefits
21,718

 
14,035

Accrued interest
6,724

 
199

Other current liabilities
24,850

 
21,759

Total current liabilities
122,476

 
99,072

Long-term debt
428,443

 
415,306

Deferred income taxes
92,223

 
91,205

Other long-term liabilities
19,474

 
21,146

Total liabilities
662,616

 
626,729

 
 
 
 
Commitments and contingencies (Note 15)

 

 
 
 
 
Equity
 
 
 
Preferred stock, $0.0001 par value (5,000,000 shares authorized,
45,000 shares issued and outstanding at June 26, 2015 and December 31, 2014)
45,000

 
45,000

Jason Industries common stock, $0.0001 par value (120,000,000 shares authorized; issued and outstanding: 22,058,399 shares at June 26, 2015 and 21,990,666 shares at December 31, 2014)
2

 
2

Additional paid-in capital
143,216

 
140,312

Retained deficit
(23,001
)
 
(21,539
)
Accumulated other comprehensive loss
(18,748
)
 
(12,065
)
Shareholders' equity attributable to Jason Industries
146,469

 
151,710

Noncontrolling interests
29,309

 
30,965

Total equity
175,778

 
182,675

Total liabilities and equity
$
838,394

 
$
809,404

The accompanying notes are an integral part of these condensed consolidated financial statements.

4




Jason Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
Successor
 
 
Predecessor
 
Six Months Ended
June 26, 2015
 
 
Six Months Ended
June 27, 2014
 
 
 
Cash flows from operating activities
 
 
 
 
Net (loss) income
$
(1,759
)
 
 
$
12,972

Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities:
 
 
 
 
Depreciation
14,659

 
 
10,125

Amortization of intangible assets
7,228

 
 
2,727

Amortization of deferred financing costs and debt discount
1,504

 
 
426

Equity income
(542
)
 
 
(831
)
Deferred income taxes
(4,692
)
 
 
(4,476
)
Loss on disposals of property, plant and equipment - net
22

 
 
338

Gain from sale of joint ventures

 
 
(3,508
)
Non-cash stock compensation
4,952

 
 
97

Net increase (decrease) in cash due to changes in:
 
 
 
 
Accounts receivable
(20,031
)
 
 
(20,632
)
Inventories
3,755

 
 
(5,602
)
Other current assets
(3,085
)
 
 
1,249

Accounts payable
4,173

 
 
6,498

Accrued compensation and employee benefits
6,638

 
 
1,141

Accrued interest
6,526

 
 
(2,716
)
Accrued income taxes
2,521

 
 
4,398

Other - net
(614
)
 
 
2,035

Total adjustments
23,014

 
 
(8,731
)
Net cash provided by operating activities
21,255

 
 
4,241

Cash flows from investing activities
 
 
 
 
Proceeds from disposals of property, plant and equipment and other assets
78

 
 
159

Proceeds from sale of joint ventures

 
 
11,500

Payments for property, plant and equipment
(15,318
)
 
 
(10,998
)
Acquisition of business, net of cash acquired
(34,763
)
 
 

Acquisitions of patents
(105
)
 
 
(33
)
Other investing activities

 
 
(490
)
Net cash (used) provided by investing activities
(50,108
)
 
 
138

Cash flows from financing activities
 
 
 
 
Payment of capitalized debt issuance costs

 
 
(444
)
Payments of 2013 U.S. term loan

 
 
(1,175
)
Payments of First Lien term loan
(775
)
 
 

Proceeds from U.S. revolving loans

 
 
64,725

Payments of U.S. revolving loans

 
 
(53,725
)
Proceeds from other long-term debt
5,031

 
 
1,383

Payments of other long-term debt
(1,378
)
 
 
(3,868
)
Payments of preferred stock dividends
(1,800
)
 
 

Net cash provided by financing activities
1,078

 
 
6,896

Effect of exchange rate changes on cash and cash equivalents
(1,537
)
 
 
(122
)
Net (decrease) increase in cash and cash equivalents
(29,312
)
 
 
11,153

Cash and cash equivalents, beginning of period
62,279

 
 
16,318

Cash and cash equivalents, end of period
$
32,967

 
 
$
27,471

Supplemental disclosure of cash flow information
 
 
 
 
Non-cash financing activities:

 
 
 
Accretion of preferred stock dividends
$
900

 
 
$

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



Jason Industries, Inc.
Condensed Consolidated Statements of Shareholders’ Equity
(In thousands) (Unaudited)
 
Preferred Stock
 
Common Stock
 
Additional
Paid-In
Capital
 
Retained
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Shareholders' Equity
Attributable to Jason
Industries, Inc.
 
Noncontrolling
Interests
 
Total Equity
Balance at December 31, 2014, Successor
$
45,000

 
$
2

 
$
140,312

 
$
(21,539
)
 
$
(12,065
)
 
$
151,710

 
$
30,965

 
$
182,675

Dividends declared

 

 
(1,800
)
 

 

 
(1,800
)
 

 
(1,800
)
Stock compensation expense

 

 
4,952

 

 

 
4,952

 

 
4,952

Tax withholding related to vesting of restricted stock units

 

 
(248
)
 

 

 
(248
)
 

 
(248
)
Net (loss)

 

 

 
(1,462
)
 

 
(1,462
)
 
(297
)
 
(1,759
)
Foreign currency translation adjustments

 

 

 

 
(6,683
)
 
(6,683
)
 
(1,359
)
 
(8,042
)
Balance at June 26, 2015, Successor
$
45,000

 
$
2

 
$
143,216

 
$
(23,001
)
 
$
(18,748
)
 
$
146,469

 
$
29,309

 
$
175,778


The accompanying notes are an integral part of these condensed consolidated financial statements.


6


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)



1.
Description of Business and Basis of Presentation
Description of Business
Jason Industries, Inc. (“Jason Industries”), including its subsidiaries (collectively, the “Company”), is a diversified industrial manufacturing company with four reportable segments: seating, finishing, acoustics, and components. The segments have separate management teams and have operations within the United States and 14 foreign countries. The Company is a producer of seating for the motorcycle and off-road vehicle sectors, and a supplier of static seats to the commercial and residential lawn/turf sector. The Company is also a producer of non-woven acoustical fiber insulation for the automotive sector and a global manufacturer of industrial consumables (brushes, buffing wheels, buffing compounds, and abrasives). The Company also manufactures precision components, expanded and perforated metal, and slip-resistant walking surfaces.
The Company was originally incorporated in Delaware on May 31, 2013 as a blank check company, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. On June 30, 2014 (the “Closing Date”), the Company consummated its business combination with Jason Partners Holdings Inc. (“Jason”) pursuant to the stock purchase agreement, dated as of March 16, 2014, which provided for the acquisition of all of the capital stock of Jason by the Company (the “Business Combination”). In connection with the closing of the Business Combination, the Company changed its name from Quinpario Acquisition Corp. to Jason Industries, Inc. and commenced trading of its common stock and warrants under the symbols, “JASN” and “JASNW”, respectively, on NASDAQ. See Note 2 for a further discussion of the Business Combination.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. For additional information, including the Company’s significant accounting policies, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
As a result of the Business Combination, the Company was identified as the acquirer for accounting purposes, and Jason is the acquiree and accounting predecessor. The Company’s financial statement presentation distinguishes a “Predecessor” for Jason for periods prior to the Closing Date.  The Company was subsequently re-established as Jason Industries, Inc. and is the “Successor” for periods after the Closing Date, which includes the consolidation of Jason subsequent to the Business Combination on June 30, 2014.  The acquisition was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of net assets acquired.  See Note 2 for further discussion of the Business Combination.  As a result of the application of the acquisition method of accounting as of the effective date of the acquisition, the financial statements for the Predecessor period and for the Successor period are presented on a different basis and, therefore, are not comparable.
The Company’s fiscal year ends on December 31. Throughout the year, the Company reports its results using a fiscal calendar whereby each three month quarterly reporting period is approximately thirteen weeks in length, ending on a Friday. The exceptions are the first quarter, which begins on January 1, and the fourth quarter, which ends on December 31. For 2015, the Company’s fiscal quarters are comprised of the three months ending March 27June 26September 25 and December 31. In 2014, the Company’s fiscal quarters were comprised of the three months ended March 28, June 27, September 26 and December 31.
In the opinion of management, all adjustments considered necessary for a fair statement of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Interim results are not necessarily indicative of the results that may be expected for the entire fiscal year.
Recently issued accounting standards
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers." Under the new standard, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received for that specific good or service. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption when implementing this standard. On July

7


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


9, 2015, the FASB voted to defer the effective date of this ASU by one year to December 15, 2017, for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. The Company is currently assessing the impact that this standard will have on its consolidated financial statements.
2.
Consummation of Business Combination
On June 30, 2014, the Company and Jason completed the Business Combination in which JPHI Holdings Inc. (“JPHI”), a majority owned subsidiary of the Company, acquired 100 percent of the capital stock of Jason. The purchase price of $536.0 million was funded by the cash proceeds from the Company’s initial public offering, new debt, the issuance of 45,000 shares of 8% Series A Convertible Perpetual Preferred Stock (the “Series A Preferred Stock”) and rollover equity invested by Jason’s former owners and management of Jason (collectively the “Rollover Participants”). During the three and six months ended June 27, 2014, the Company incurred approximately $3.2 million and $4.8 million, respectively, of transaction expenses directly related to the Business Combination.
Following the consummation of the Business Combination, Jason became an indirect majority-owned subsidiary of the Company, with the Company owning approximately 83.1 percent of JPHI and the Rollover Participants owning a noncontrolling interest of approximately 16.9 percent of JPHI. The Rollover Participants held 3,485,623 shares of JPHI exchangeable on a one-for-one basis for shares of common stock of the Company.
The following unaudited pro forma combined financial information presents the Company’s results as though Jason and the Company had combined at January 1, 2013. Pro forma net earnings attributable to common shareholders were adjusted to exclude $4.8 million and $9.8 million, respectively, of transaction-related expenses incurred in the three and six months ended June 27, 2014. The unaudited pro forma condensed consolidated financial information has been prepared using the acquisition method of accounting in accordance with GAAP.
 
(unaudited pro forma)
 
Three Months Ended
June 27, 2014
Six Months Ended
June 27, 2014
 
Net sales
$
190,615

$
377,151

Net income attributable to common shareholders of Jason Industries
$
1,650

$
3,537

The Company recorded an allocation of the purchase price to Jason’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the June 30, 2014 acquisition date. The calculation of the purchase price allocation is as follows:
 
Purchase
Price Allocation
Cash and cash equivalents
$
11,049

Accounts receivable
97,693

Inventories - net
83,538

Deferred income taxes - current (net)
8,095

Other current assets
18,973

Property, plant and equipment
179,871

Goodwill
158,263

Other intangible assets
208,450

Other assets - net
8,469

Current liabilities
(111,151
)
Deferred income taxes (net)
(97,046
)
Debt
(11,277
)
Other long-term liabilities
(18,929
)
Total purchase price
$
535,998

There were no adjustments made to the purchase price allocation during the six months ended June 26, 2015.

8


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


3.
Acquisitions
DRONCO GmbH (“DRONCO”)
On May 29, 2015, the Company acquired all of the outstanding shares of DRONCO. DRONCO is a European manufacturer of bonded abrasives. These abrasives are being manufactured and distributed by the finishing segment. The Company paid cash consideration of $34.4 million, net of cash acquired, and, pursuant to the transaction, assumed certain liabilities. The related purchase agreement includes customary representations, warranties and covenants between the named parties.
The acquisition was accounted for using the acquisition method. The operating results and cash flows of DRONCO are included in the Company’s condensed consolidated financial statements from May 29, 2015, the date the Company entered into the purchase agreement.
The Company has recorded a preliminary allocation of the purchase price for tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the May 29, 2015 acquisition date. The preliminary consideration and preliminary purchase price allocation is as follows:
 
Calculation of Purchase Price
Cash
$
34,938

Debt
11,031

Purchase consideration
$
45,969

 
Preliminary Purchase Price Allocation
Cash and cash equivalents
$
524

Accounts receivable
3,430

Inventories - net
7,156

Deferred income taxes - current (net)
89

Other current assets
1,495

Property, plant and equipment
23,931

Goodwill
8,828

Other intangible assets
11,715

Other assets - net
42

Current liabilities
(4,650
)
Deferred income taxes (net)
(6,439
)
Other long-term liabilities
(152
)
Total purchase price
$
45,969

The preliminary purchase price allocation resulted in goodwill of $8.8 million in the finishing segment, of which none is deductible for tax purposes. Goodwill generated from DRONCO is primarily attributable to expected synergies from leveraging the finishing segment’s global distribution and sales network and cross-selling of DRONCO’s product portfolio to the finish segment’s customer base.
The preliminary values allocated to other intangible assets and the weighted average useful lives are as follows:
 
Gross Carrying Amount
 
Weighted Average Useful Life (years)
Customer relationships
$
8,560

 
15
Tradenames
3,155

 
15
 
$
11,715

 
 

9


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


The preliminary allocation of the purchase price is based on the preliminary valuations performed to determine the fair value of the net assets as of the acquisition date. The amounts allocated to goodwill and intangible assets are based on preliminary valuations and are subject to final adjustments to reflect the final valuations.
The Company recognized $0.9 million of acquisition-related costs that were expensed in the six months ended June 26, 2015. These costs are included in the condensed consolidated statements of operations as “Transaction-related expenses”. During the three months ended June 26, 2015, $3.5 million of net sales from DRONCO were included in the Company’s condensed consolidated statements of operations.
Pro forma historical results of operations related to the acquisition of DRONCO have not been presented as they are not material to the Company’s condensed consolidated statements of operations.
Herold Partco    
On March 25, 2015, the Company acquired Herold Partco Manufacturing, Inc. for $0.4 million. Herold Partco Manufacturing, Inc. is a Cleveland-based manufacturer of industrial brushes. These brushes are now manufactured and distributed by the finishing segment and sold under the Osborn brand name. The purchase price allocation for this transaction resulted in goodwill of $0.1 million, other intangible assets of $0.2 million and inventory of $0.1 million.
The acquisition of Herold Partco Manufacturing, Inc. was not material to the Company’s condensed consolidated financial statements.
4.
Sale of Joint Ventures
During the first quarter of 2014, Jason completed the sale of its 50% equity interest in two of its joint ventures for a total of $11.5 million. The sale of one of the joint ventures in the amount of $7.5 million was completed in January 2014 and the sale of the second joint venture in the amount of $4.0 million was completed in March 2014. The Company recorded a $3.5 million gain on the sale of the joint ventures, which is reported separately on the condensed consolidated statements of operations. The gain includes the recognition of $0.6 million of cumulative translation adjustments which had been recorded in accumulated other comprehensive income. The $0.6 million is reported separately in the condensed consolidated statements of comprehensive income. Terms of the sale include a supply agreement which allows Jason to purchase product at established prices over the agreement’s three-year term.
5.
Restructuring Costs
The Company has continued to make changes to its worldwide manufacturing footprint. These actions resulted in charges relating to employee severance and other related charges, such as exit costs for the consolidation and closure of plant facilities, employee relocation and lease termination costs. During the three and six months ended June 26, 2015, the Company incurred $1.0 million and $2.7 million of restructuring charges, respectively. During the three and six months ended June 27, 2014, the Company incurred $1.9 million and $2.6 million of restructuring charges, respectively. These restructuring costs are presented separately on the condensed consolidated statements of operations.

10


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


The following table presents the restructuring liability:
 
Severance
costs
 
Lease
termination
costs
 
Other costs
 
Total
Balance - December 31, 2014, Successor
$
88

 
$
1,056

 
$
97

 
$
1,241

Current period restructuring charges
831

 
905

 
978

 
2,714

Cash payments
(400
)
 
(533
)
 
(882
)
 
(1,815
)
Non-cash charges and other
269

 

 
(193
)
 
76

Balance - June 26, 2015, Successor
$
788

 
$
1,428

 
$

 
$
2,216

 
 
 
 
 
 
 
 
 
Severance
costs
 
Lease
termination
costs
 
Other costs
 
Total
Balance - December 31, 2013, Predecessor
$
1,112

 
$
818

 
$
65

 
$
1,995

Current period restructuring charges
629

 
631

 
1,294

 
2,554

Cash payments
(1,088
)
 
(104
)
 
(899
)
 
(2,091
)
Balance - June 27, 2014, Predecessor
$
653

 
$
1,345

 
$
460

 
$
2,458

The accruals for severance presented above relate to costs incurred in the finishing and acoustics segments as of the period ended June 26, 2015. These accruals are expected to be utilized during the next twelve months and are recorded within other current liabilities on the condensed consolidated balance sheets. During the six months ended June 26, 2015, the accrual for lease termination costs of $0.9 million relates to restructuring costs within the acoustics segment due to the closure of the Norwalk facility. At June 26, 2015 and December 31, 2014, $0.5 million and $0.6 million, respectively, are recorded within other long-term liabilities and $0.9 million and $0.5 million, respectively, are recorded within other current liabilities on the condensed consolidated balance sheets.
6.
Inventories
Inventories consisted of the following:
 
Successor
 
June 26, 2015
 
December 31, 2014
Raw material
$
43,704

 
$
42,803

Work-in-process
4,963

 
5,572

Finished goods
34,327

 
32,171

Total Inventories
$
82,994

 
$
80,546

7.
Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill are as follows:
 
Seating
 
Finishing
 
Acoustics
 
Components
 
Total
Balance as of December 31, 2014 (Successor)
$
58,139

 
$
34,608

 
$
30,176

 
$
33,183

 
$
156,106

Acquisition of businesses

 
8,876

 

 

 
8,876

Foreign currency impact

 
(1,076
)
 
(320
)
 

 
(1,396
)
Balance as of June 26, 2015 (Successor)
$
58,139

 
$
42,408

 
$
29,856

 
$
33,183

 
$
163,586


11


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


The Company’s other intangible assets consisted of the following:
 
Successor
 
June 26, 2015
 
December 31, 2014
 
Gross
Carrying
Amount    
 
Accumulated
Amortization
 
Net        
 
Gross
Carrying    
Amount
 
Accumulated
Amortization
 
Net        
Patents
$
2,946

 
$
(403
)
 
$
2,543

 
$
2,841

 
$
(200
)
 
$
2,641

Customer relationships
146,773

 
(9,627
)
 
137,146

 
138,864

 
(4,846
)
 
134,018

Trademarks and other intangibles
67,650

 
(4,468
)
 
63,182

 
64,162

 
(2,138
)
 
62,024

Total amortized other intangible assets
$
217,369

 
$
(14,498
)
 
$
202,871

 
$
205,867

 
$
(7,184
)
 
$
198,683

8.
Debt
The Company’s debt consisted of the following:
 
Successor
 
June 26, 2015
 
December 31, 2014
First Lien Term Loans
$
308,450

 
$
309,225

Debt discount on First Lien Term Loans
(3,266
)
 
(3,538
)
Second Lien Term Loans
110,000

 
110,000

Debt discount on Second Lien Term Loans
(3,248
)
 
(3,480
)
Foreign debt
21,066

 
6,515

Capital lease obligations
1,700

 
1,959

Total debt
434,702

 
420,681

Less: Current portion
(6,259
)
 
(5,375
)
Total long-term debt
$
428,443

 
$
415,306

    Senior Secured Credit Facilities
As of June 26, 2015, the Company’s U.S. credit facility (the “Senior Secured Credit Facilities”) includes (i) term loans in an aggregate principal amount of $308.5 million (“First Lien Term Loans”) maturing in 2021, (ii) term loans in an aggregate principal amount of $110.0 million (“Second Lien Term Loans”) maturing in 2022, and (iii) a revolving loan of up to $40.0 million (“Revolving Credit Facility”) maturing in 2019.
The principal amount of the First Lien Term Loans amortizes in quarterly installments equal to $0.8 million, with the balance payable at maturity. At the Company’s election, the interest rate per annum applicable to the loans under the Senior Secured Credit Facilities is based on a fluctuating rate of interest determined by reference to either (i) a base rate determined by reference to the higher of (a) the “prime rate” of Deutsche Bank AG New York Branch, (b) the federal funds effective rate plus 0.50% and (c) the Eurocurrency rate applicable for an interest period of one month plus 1.00%, plus an applicable margin equal to (x) 3.50% in the case of the First Lien Term Loans, (y) 2.25% in the case of the Revolving Credit Facility or (z) 7.00% in the case of the Second Lien Term Loans or (ii) a Eurocurrency rate determined by reference to LIBOR, adjusted for statutory reserve requirements, plus an applicable margin equal to (x) 4.50% in the case of the First Lien Term Loans, (y) 3.25% in the case of the Revolving Credit Facility or (z) 8.00% in the case of the Second Lien Term Loans. Borrowings under the First Lien Term Facility and Second Lien Term Facility are subject to a floor of 1.00% in the case of Eurocurrency loans. The applicable margin for loans under the Revolving Credit Facility may be subject to adjustment based upon Jason Incorporated’s consolidated first lien net leverage ratio.
Under the Revolving Credit Facility, if the aggregate outstanding amount of all Revolving Loans, swingline loans and certain letter of credit obligations exceeds 25 percent of the revolving credit commitments at the end of any fiscal quarter, Jason Incorporated and its restricted subsidiaries will be required to not exceed a consolidated first lien net leverage ratio, initially specified at 5.50 to 1.00, with periodic decreases beginning on July 1, 2016 to 5.25 to 1.00, and decreasing to 4.50 to 1.00 on December 31, 2017 and remaining at that level thereafter. If such outstanding amounts do not exceed 25 percent of the revolving credit commitments at the end of any fiscal quarter, no financial covenants are applicable.

12


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


At June 26, 2015, the interest rates on the outstanding balances of the First Lien Term Loans and Second Lien Term Loans were 5.5% and 9.0%, respectively. At June 26, 2015, the Company had a total of $36.2 million of availability for additional borrowings under the Revolving Credit Facility since the Company had no outstanding borrowings and letters of credit outstanding of $3.8 million, which reduce availability under the facility.
Foreign debt
At June 26, 2015 and December 31, 2014, the Company had $21.1 million and $6.5 million, respectively, in foreign debt obligations, including various overdraft facilities and term loans. The largest foreign debt balances are held by the Company’s subsidiaries in Germany (approximately $18.6 million and $5.2 million as of June 26, 2015 and December 31, 2014, respectively), Mexico (approximately $1.8 million and $0.0 million as of June 26, 2015 and December 31, 2014, respectively), and Brazil (approximately $0.6 million and $1.1 million as of June 26, 2015 and December 31, 2014, respectively). These various foreign loans are comprised of individual outstanding obligations ranging from approximately $0.1 million to $3.3 million and $0.1 million to $2.6 million as of June 26, 2015 and December 31, 2014, respectively.
In connection with the acquisition of DRONCO, the Company assumed $11.0 million of long-term debt comprised of term loan borrowings totaling $8.5 million and revolving line of credit borrowings totaling $2.5 million. Borrowings bear interest at rates ranging from 2.3% to 4.6% and are subject to repayment in varying amounts through 2030.
9.
Share Based Compensation
Upon completion of the Business Combination, the Compensation Committee of the Company’s Board of Directors approved an initial grant under the 2014 Omnibus Incentive Plan (the “2014 Plan”) to certain executive officers, senior management employees, and members of the Board of Directors. The Company recognizes compensation expense based on estimated grant date fair values for all share-based awards issued to employees and directors, including restricted stock units and performance share units, which are restricted stock units with vesting conditions contingent upon achieving certain performance goals. Share based compensation expense is reported in selling and administrative expenses in the Company’s condensed consolidated statements of operations.
There were 3,473,435 shares of common stock reserved and authorized for issuance under the 2014 Plan. At June 26, 2015, 607,690 shares of common stock remain authorized and available for future grant under the 2014 Plan.
The Company recognized the following share-based compensation expense during the three and six months ended June 26, 2015:
 
June 26, 2015
 
Three Months Ended
 
Six Months Ended
Compensation Expense:
 
 
 
Restricted Stock Units
$
795

 
$
1,579

Adjusted EBITDA Vesting Awards
725

 
1,434

Stock Price Vesting Awards
493

 
1,063

 
2,013

 
4,076

Impact of accelerated vesting (1)
876

 
876

Total share-based compensation expense
$
2,889

 
$
4,952

 
 
 
 
Total income tax benefit recognized
$
942

 
$
1,722

(1) Represents the impact of the acceleration of certain vesting schedules for restricted stock units and stock price vesting awards related to the transition of the Company’s CFO.
As of June 26, 2015, total unrecognized compensation cost related to share-based compensation awards was approximately $10.3 million, net of estimated forfeitures, which the Company expects to recognize over a weighted average period of approximately 1.9 years.    

13


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


The following table sets forth the restricted and performance share unit activity during the six months ended June 26, 2015:
 
Restricted Stock Units
 
Adjusted EBITDA Vesting Awards
 
Stock Price Vesting Awards
 
Units
 
Weighted-Average Grant-Date Fair Value
 
Units
 
Weighted-Average Grant-Date Fair Value
 
Units
 
Weighted-Average Grant-Date Fair Value
Nonvested at December 31, 2014
762,075

 
$
10.49

 
1,215,704

 
$
10.49

 
810,469

 
$
3.54

Granted
52,102

 
7.70

 
91,178

 
7.70

 
60,785

 
1.08

Vested
(104,204
)
 
10.49

 

 

 

 

Forfeited or expired

 

 
(126,567
)
 
10.49

 

 

Nonvested at June 26, 2015
709,973

 
$
10.29

 
1,180,315

 
$
10.27

 
871,254

 
$
3.36

Restricted Stock Units    
As of June 26, 2015, there was $4.5 million of unrecognized share-based compensation expense, which is expected to be recognized over a weighted-average period of 2.0 years.
In connection with the vesting of RSUs previously issued by the Company, a number of shares sufficient to fund statutory minimum tax withholding requirements was withheld from the total shares issued or released to the award holder (under the terms of the 2014 Plan, the shares are considered to have been issued and are not added back to the pool of shares available for grant). During the three and six months ended June 26, 2015, 36,471 shares with an aggregate value of $0.2 million were withheld to satisfy the requirement. The withholding is treated as a reduction in additional paid-in capital in the accompanying condensed consolidated statements of shareholders’ equity.
Performance Share Units
Adjusted EBITDA Vesting Awards
Compensation expense for cumulative Adjusted EBITDA based performance share unit awards is currently being recognized based on an estimated payout of 100% of target or 786,876 shares. As of June 26, 2015, there was $5.2 million of unrecognized compensation expense related to cumulative Adjusted EBITDA based vesting performance share unit awards, which is expected to be recognized over a weighted average period of 2.0 years.
Stock Price Vesting Awards
As of June 26, 2015, there was $0.6 million of unrecognized compensation expense related to stock price based performance share unit awards, which is expected to be recognized over a weighted average period of 0.9 years.
The following summarizes the assumptions used in the Monte Carlo option pricing model to value stock price vesting awards granted during the six months ended June 26, 2015:
Risk-free interest rate
0.24% - 1.33%

Weighted average volatility
27.0
%
Dividend yield

10.
Earnings per Share
Basic income (loss) per share is calculated by dividing net income (loss) attributable to Jason Industries’ common shareholders by the weighted average number of common shares outstanding for the period. In computing dilutive income (loss) per share, basic income (loss) per share is adjusted for the assumed issuance of all potentially dilutive share-based awards, including warrants, restricted stock units, performance share units, convertible preferred stock, and Rollover Shares of JPHI convertible into shares of Jason Industries.

14


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


The reconciliation of the numerator and denominator of the basic and diluted income (loss) per share calculation and the anti-dilutive shares is as follows:
 
Successor
 
 
Predecessor
 
Three Months Ended
June 26, 2015
 
Six Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Six Months Ended
June 27, 2014
 
 
 
 
 
Net (loss) income per share attributable to Jason Industries common shareholders
 
 
 
 
 
 
 
 
Basic and diluted income (loss) per share
$
(0.07
)
 
$
(0.15
)
 
 
$
5,237

 
$
12,972

 
 
 
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
 
 
Net (loss) income available to common shareholders of Jason Industries
$
(1,619
)
 
$
(3,262
)
 
 
$
5,237

 
$
12,972

Denominator:
 
 
 
 
 
 
 
 
Basic and diluted weighted-average shares outstanding
22,011

 
22,001

 
 
1

 
1

 
 
 
 
 
 
 
 
 
Weighted average number of anti-dilutive shares excluded from denominator:
 
 
 
 
 
 
 
 
Warrants to purchase Jason Industries common stock
13,994

 
13,994

 
 

 

Conversion of Series A 8% Perpetual Convertible Preferred
3,653

 
3,653

 
 

 

Conversion of JPHI Rollover Shares convertible to Jason Industries common stock
3,486

 
3,486

 
 

 

Restricted stock units
710

 
710

 
 

 

Performance share units
2,052

 
2,052

 
 

 

Total
23,895

 
23,895

 
 

 

Warrants are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s common stock price during the applicable period. Performance share units are considered anti-dilutive if the performance targets upon which the issuance of the shares are contingent have not been achieved and the respective performance period has not been completed as of the end of the current period.
11.
Income Taxes
At the end of each three month period, the Company estimates a base effective tax rate expected for the full year based on the most recent forecast of its pre-tax income, permanent book and tax differences, and global tax planning strategies. The Company uses this base rate to provide for income taxes on a year-to-date basis, excluding the effect of significant, unusual, discrete or extraordinary items, and items that are reported net of their related tax effects. The Company records the tax effect of significant, unusual, discrete or extraordinary items, and items that are reported net of their tax effects in the period in which they occur.
The effective income tax rate from continuing operations was (291.4)%, and 10.1% for the three months ended June 26, 2015 and June 27, 2014, respectively. The effective income tax rate was 5.5% and 28.1% for the six months ended June 26, 2015 and June 27, 2014, respectively. The effective income tax rate for 2015 reflects the benefits of tax losses at the higher U.S. Federal statutory rate and taxable earnings derived in foreign jurisdictions with tax rates that are lower than the U.S. Federal statutory rate, and discrete items. Net discrete tax expense for the three months ended June 26, 2015 was impacted by $0.2 million and $0.3 million due to foreign losses and non-deductible transaction costs, respectively, in foreign jurisdictions for which no tax benefit was recognized, and the recognition of $0.1 million of deferred tax assets related to the vesting of restricted stock units for which no tax benefit will be realized. Net discrete tax expense for the three and six months ended June 27, 2014 was immaterial.
The amount of gross unrecognized tax benefits was $3.0 million and $2.7 million at June 26, 2015 and December 31, 2014, respectively. Of the $3.0 million of unrecognized tax benefits, $1.3 million would reduce the Company’s effective tax rate if recognized.

15


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


During the next twelve months, the Company does not expect any significant changes in its unrecognized tax benefits. The Company recognizes interest and penalties related to tax matters in tax expense. The Company did not have any interest or penalties that were recognized as a component of the income tax provision at June 26, 2015 and December 31, 2014.
12.
Equity
The changes in the components of accumulated other comprehensive income (loss), net of taxes, for the six months ended June 26, 2015 and June 27, 2014 are as follows:
 
Employee
retirement plan
adjustments
 
Foreign currency
translation
adjustments
 
Total    
Balance at December 31, 2014, Successor
$
(1,434
)
 
$
(10,631
)
 
$
(12,065
)
Other comprehensive loss before reclassifications

 
(6,683
)
 
(6,683
)
Balance at June 26, 2015, Successor
$
(1,434
)
 
$
(17,314
)
 
$
(18,748
)
 
 
 
 
 
 
 
Employee
retirement plan
adjustments
 
Foreign currency
translation
adjustments
 
Total
Balance at December 31, 2013, Predecessor
$
(156
)
 
$
630

 
$
474

Amount reclassified from accumulated other comprehensive income
105

 

 
105

Cumulative foreign currency translation adjustments associated with joint ventures sold

 
(591
)
 
(591
)
Foreign currency translation adjustments

 
(463
)
 
(463
)
Balance at June 27, 2014, Predecessor
$
(51
)
 
$
(424
)
 
$
(475
)
Series A Preferred Stock Dividends
On January 1, 2015 the Company paid a dividend on the Series A Preferred Stock of $20.00 per share to holders of record on November 15, 2014, totaling $0.9 million. On April 1, 2015, the Company paid a dividend on the Series A Preferred Stock of $20.00 per share to holders of record on February 15, 2015, totaling $0.9 million.
13.
Business Segments, Geographic and Customer Information
The Company identifies its segments using the “management approach,” which designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company’s reportable segments. The Company has four reportable segments: Seating, Finishing, Acoustics and Components.
Net sales information relating to the Company’s reportable segments is as follows:
 
Successor
 
 
Predecessor
 
Three Months Ended
June 26, 2015
 
Six Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Six Months Ended
June 27, 2014
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
Seating
$
51,909

 
$
102,869

 
 
$
52,587

 
$
104,878

Finishing
46,646

 
89,496

 
 
50,109

 
96,692

Acoustics
56,052

 
106,973

 
 
56,923

 
109,930

Components
32,971

 
64,076

 
 
30,996

 
65,651

 
$
187,578

 
$
363,414

 
 
$
190,615

 
$
377,151

The Company uses “Adjusted EBITDA” as the primary measure of profit or loss for the purposes of assessing the operating performance of its segments. The Company defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization and (gain)/loss on disposal of property, plant and equipment. The Company defines Adjusted EBITDA as EBITDA, excluding the impact of non-cash or non-operational losses or gains,

16


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


including long-lived asset impairment charges, integration and other operational restructuring charges, transactional legal fees, other professional fees and special employee bonuses, purchase accounting adjustments, sponsor fees and expenses, and non-cash share based compensation expense.
Management believes that Adjusted EBITDA provides a clear picture of the Company’s operating results by eliminating expenses and income that are not reflective of the underlying business performance. Certain corporate-level administrative expenses such as payroll and benefits, incentive compensation, travel, marketing, accounting, auditing and legal fees and certain other expenses are kept within its corporate results and not allocated to its business segments. Adjusted EBITDA is used to facilitate a comparison of the Company’s operating performance on a consistent basis from period to period and to analyze the factors and trends affecting its segments. The Company’s internal plans, budgets and forecasts use Adjusted EBITDA as a key metric. In addition, this measure is used to evaluate its operating performance and segment operating performance and to determine the level of incentive compensation paid to its employees.
As the Company uses Adjusted EBITDA as its primary measure of segment performance, generally accepted accounting principles in the United States of America (“US GAAP”) on segment reporting require the Company to include this measure in its discussion of segment operating results. The Company must also reconcile Adjusted EBITDA to operating results presented on a US GAAP basis.
Adjusted EBITDA information relating to the Company’s reportable segments is presented below followed by a reconciliation of total segment Adjusted EBITDA to consolidated income before taxes:
 
Successor
 
 
Predecessor
 
Three Months Ended
June 26, 2015
 
Six Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Six Months Ended
June 27, 2014
 
 
 
 
 
Segment Adjusted EBITDA
 
 
 
 
 
 
 
 
Seating
$
9,311

 
$
17,271

 
 
$
9,557

 
$
17,668

Finishing
6,727

 
13,038

 
 
7,529

 
13,532

Acoustics
7,338

 
12,192

 
 
5,237

 
9,676

Components
5,529

 
10,702

 
 
4,474

 
11,013

 
$
28,905

 
$
53,203

 
 
$
26,797

 
$
51,889

Interest expense, including intercompany
(379
)
 
(790
)
 
 
(678
)
 
(1,269
)
Depreciation and amortization
(11,414
)
 
(21,767
)
 
 
(6,500
)
 
(12,796
)
(Loss) gain on disposal of property, plant and equipment - net
4

 
(22
)
 
 
(214
)
 
(336
)
Restructuring
(1,010
)
 
(2,714
)
 
 
(1,907
)
 
(2,554
)
Transaction-related expenses
(789
)
 
(789
)
 
 
(242
)
 
(242
)
Integration and other restructuring costs
258

 
(204
)
 
 
(1,927
)
 
(2,575
)
Gain from sale of joint ventures

 

 
 

 
3,508

Total segment income before income taxes
15,575

 
26,917

 
 
15,329

 
35,625

Corporate general and administrative expenses
(5,384
)
 
(8,976
)
 
 
(3,438
)
 
(7,032
)
Corporate interest expense, including intercompany
(7,539
)
 
(14,634
)
 
 
(3,046
)
 
(5,950
)
Corporate depreciation
(63
)
 
(120
)
 
 
(29
)
 
(57
)
Corporate transaction-related expenses
79

 
(97
)
 
 
(2,991
)
 
(4,532
)
Corporate loss on disposal of property, plant and equipment

 

 
 

 
(2
)
Corporate share based compensation
(2,889
)
 
(4,952
)
 
 

 

Consolidated (loss) income before taxes
$
(221
)
 
$
(1,862
)
 
 
$
5,825

 
$
18,052


17


Jason Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts) (Unaudited)


Assets held by reportable segments is as follows:
 
Successor
 
June 26, 2015
 
December 31, 2014
Assets
 
 
 
Seating
$
221,248

 
$
219,215

Finishing
264,842

 
221,074

Acoustics
207,505

 
195,031

Components
133,225

 
137,354

Total segments
826,820

 
772,674

Corporate and eliminations
11,574

 
36,730

Consolidated
$
838,394

 
$
809,404

14.
Fair Value Measurements
Fair value of financial instruments
Current accounting guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. It also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with the guidance, fair value measurements are classified under the following hierarchy:
Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
Level 3 — Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.
The carrying amounts within the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. The Company assessed the amounts recorded under revolving loans, if any, and long-term debt and determined that the fair value of total debt was approximately $430.8 million as of June 26, 2015. As of December 31, 2014, the fair value of total debt approximated its recorded value. The Company considers the inputs related to these estimations to be Level 2 fair value measurements.
15.
Litigation and Contingencies
The Company is a party to various legal proceedings that have arisen in the normal course of its business. These legal proceedings typically include product liability, labor, and employment claims. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it is probable that a loss has been incurred as of the balance sheet date, can be reasonably estimated and is not covered by insurance. In the opinion of management, the resolution of these contingencies will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.
At June 26, 2015 and December 31, 2014, the Company held reserves of $1.1 million for environmental matters at two locations. The ultimate cost of any remediation required will depend on the results of future investigation. Based upon available information, the Company believes that it has obtained and is in substantial compliance with those material environmental permits and approvals necessary to conduct its business. Based on the facts presently known, the Company does not expect environmental costs to have a material adverse effect on its financial condition, results of operations or cash flows.

18



16.
Related Party Transactions
Jason was part of a Management Services Agreement with Saw Mill Capital LLC (“Saw Mill”) and Falcon Investment Advisors, LLC (“FIA”, together with Saw Mill, the “Service Providers”), affiliates of Jason’s majority shareholders, which terminated upon consummation of the Business Combination. Management fees and related expenses paid to the Service Providers under this agreement were approximately $0.6 million for the six months ended June 29, 2014. In addition, during the period January 1, 2014 through June 29, 2014 the Company incurred sale transaction fees of $5.4 million which were paid to the Service Providers on June 30, 2014 upon completion of the Business Combination.
17.
Subsequent Events
On July 1, 2015, the Company paid a dividend on the Series A Preferred Stock of $20.00 per share to holders of record on May 15, 2015, totaling $0.9 million.

19




ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
Unless otherwise indicated, references to “Jason Industries,” the “Company,” “we,” “our” and “us” in this Quarterly Report on Form 10-Q refer to Jason Industries, Inc. and its consolidated subsidiaries.
This report contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Specifically, forward-looking statements may include statements relating to:
the Company’s future financial performance;
changes in the market for the Company’s products;
the Company’s expansion plans and opportunities; and
other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.
These forward-looking statements are based on information available as of the date of this report and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:
the level of demand for the Company’s products;
competition in the Company’s markets;
the Company’s ability to grow and manage growth profitably;
the Company’s ability to access additional capital;
changes in applicable laws or regulations;
the Company’s ability to attract and retain qualified personnel;
the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and
other risks and uncertainties indicated in this report, as well as those disclosed in the Company’s other filings with the Securities and Exchange Commission, including those discussed under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Introductory Note    
On June 30, 2014, the Company (formerly known as Quinpario Acquisition Corp.) and Jason Partners Holdings Inc. (“Jason”) completed a business combination in which JPHI Holdings Inc. (“JPHI”), a majority owned subsidiary of the Company, acquired 100 percent of the capital stock of Jason from its then current owners, Saw Mill Capital, LLC, Falcon Investment Advisors, LLC and other investors (the “Business Combination”). In connection with the closing of the Business Combination, the Company changed its name to Jason Industries, Inc., and commenced trading of its common stock and warrants under the symbols, “JASN” and “JASNW”, respectively, on NASDAQ. This transaction is further described in Note 2 to the Company’s condensed consolidated financial statements included herein.
The following discussion and analysis of financial condition and results of operations of the Company should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2014, and related notes thereto, along with the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2014 Annual Report on Form 10-K.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain financial measures, in particular the presentation of EBITDA and Adjusted EBITDA, which are not presented in accordance with generally accepted accounting principles (“GAAP”). These non-GAAP financial measures are being presented because they provide readers of this MD&A with additional insight into the Company’s operational performance relative to

20




comparable prior periods presented and relative to its peer group. EBITDA and Adjusted EBITDA are key measures used by the Company to evaluate its performance. The Company does not intend for these non-GAAP financial measures to be a substitute for any GAAP financial information. Readers of this MD&A should use these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. Reconciliations of EBITDA and Adjusted EBITDA to net income, the most comparable GAAP measure, are provided in this MD&A.
Fiscal Year
The Company’s fiscal year ends on December 31. Throughout the year, the Company reports its results using a fiscal calendar whereby each three month quarterly reporting period is approximately thirteen weeks in length and ends on a Friday. The exceptions are the first quarter, which begins on January 1, and the fourth quarter, which ends on December 31. For 2015, the Company’s fiscal quarters are comprised of the three months ended March 27, June 26, September 25, and December 31. In 2014, the Company’s fiscal quarters were comprised of the three months ending March 28, June 27, September 26, and December 31. Throughout this MD&A, we refer to the period from March 28, 2015 through June 26, 2015 as the “second quarter of 2015” or the “second quarter ended June 26, 2015”. Similarly, we refer to the period from March 29, 2014 through June 27, 2014 as the “second quarter of 2014” or the “second quarter ended June 27, 2014”.
Overview
Jason Industries is a global industrial manufacturing company with leading market share positions across each of its four industry-leading segments: seating, finishing, acoustics and components. Jason, the Company’s predecessor, was founded in 1985 and today provides critical components and manufacturing solutions to customers across a wide range of end markets, industries and geographies through its global network of 35 manufacturing facilities and 19 sales offices, warehouses and joint venture facilities throughout the United States and 14 foreign countries.
The Company focuses on markets with sustainable growth characteristics and where it is, or has the opportunity to become, the industry leader. The Company’s seating segment supplies seating solutions to equipment manufacturers in the motorcycle, lawn and turf care, industrial, agricultural, construction and power sports end markets. The finishing segment focuses on the production of industrial brushes, buffing wheels, buffing compounds, and abrasives that are used in a broad range of industrial and infrastructure applications. The acoustics segment manufactures engineered non-woven, fiber-based acoustical products for the automotive industry. The components segment is a diversified manufacturer of stamped, formed, expanded and perforated metal components and subassemblies for rail and filtration applications, outdoor power equipment, small gas engines and smart utility meters.
On May 29, 2015, the Company acquired all of the outstanding shares of DRONCO. DRONCO is a leading European manufacturer of bonded abrasives. These abrasives are being manufactured and distributed by the finishing segment. The Company paid cash consideration of $34.4 million, net of cash acquired, and, pursuant to the transaction, assumed certain liabilities. The DRONCO acquisition expands the finishing segment’s product portfolio and advances its entry to adjacent abrasives markets.
During the six months ended June 26, 2015 and June 27, 2014, approximately 25% and 28%, respectively, of the Company’s sales were derived from customers outside the United States. As a diversified, global business, the Company’s operations are affected by worldwide, regional and industry-specific economic and political factors. The Company’s geographic and industry diversity, as well as the wide range of its products, help mitigate the impact of industry or economic fluctuations. Given the broad range of products manufactured and industries and geographies served, management primarily uses general economic trends to predict the overall outlook for the Company. The Company’s individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.

21




Consolidated Results of Operations
The following table sets forth our consolidated results of operations: 
 
Successor
 
 
Predecessor
 
Three Months Ended
June 26, 2015
 
Six Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Six Months Ended
June 27, 2014
 
 
 
 
 
Net sales
$
187,578

 
$
363,414

 
 
$
190,615

 
$
377,151

Cost of goods sold
145,954

 
282,843

 
 
148,993

 
293,485

Gross profit
41,624

 
80,571

 
 
41,622

 
83,666

Selling and administrative expenses
32,521

 
64,014

 
 
27,263

 
55,175

(Gain) loss on disposals of property, plant and equipment - net
(4
)
 
22

 
 
215

 
338

Restructuring
1,010

 
2,714

 
 
1,907

 
2,554

Transaction-related expenses
710

 
886

 
 
3,233

 
4,774

Operating income
7,387

 
12,935

 
 
9,004

 
20,825

Interest expense
(7,918
)
 
(15,424
)
 
 
(3,724
)
 
(7,219
)
Equity income
260

 
542

 
 
516

 
831

Gain from sale of joint ventures

 

 
 

 
3,508

Other income - net
50

 
85

 
 
29

 
107

(Loss) income before income taxes
(221
)
 
(1,862
)
 
 
5,825

 
18,052

Tax provision (benefit)
644

 
(103
)
 
 
588

 
5,080

Net (loss) income
(865
)
 
(1,759
)
 
 
5,237

 
12,972

Less net loss attributable to noncontrolling interests
(146
)
 
(297
)
 
 

 

Net (loss) income attributable to Jason Industries
(719
)
 
(1,462
)
 
 
5,237

 
12,972

Accretion of preferred stock dividends
900

 
1,800

 
 

 

Net (loss) income available to common shareholders of Jason Industries
$
(1,619
)
 
$
(3,262
)
 
 
$
5,237

 
$
12,972

Other financial data: (1)
 
Successor
 
 
Predecessor
 
Increase/(Decrease)
 
Three Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Three Months Ended
(in thousands, except percentages)
 
 
 
$
 
%
Consolidated
 
 
 
 
 
 
 
 
Net sales
$
187,578

 
 
$
190,615

 
(3,037)
 
(1.6
) %
Adjusted EBITDA
24,900

 
 
23,760

 
1,140
 
4.8

Adjusted EBITDA % of net sales
13.3
%
 
 
12.5
%
 
80 bps
 
Successor
 
 
Predecessor
 
Increase/(Decrease)
 
Six Months Ended
June 26, 2015
 
 
Six Months Ended
June 27, 2014
 
Six Months Ended
(in thousands, except percentages)
 
 
 
$
 
%
Consolidated
 
 
 
 
 
 
 
 
Net sales
$
363,414

 
 
$
377,151

 
(13,737)
 
(3.6
) %
Adjusted EBITDA
45,903

 
 
45,888

 
15
 

Adjusted EBITDA % of net sales
12.6
%
 
 
12.2
%
 
40 bps
(1)
Adjusted EBITDA and Adjusted EBITDA as a % of net sales are financial measures that are not presented in accordance with GAAP. See “Key Measures the Company Uses to Evaluate Its Performance” below for a reconciliation of Adjusted EBITDA to net (loss) income.

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The Three and Six Months Ended June 26, 2015 (Successor) Compared with the Three and Six Months Ended June 27, 2014 (Predecessor)
Net sales. Net sales were $187.6 million for the three months ended June 26, 2015, a decrease of $(3.0) million, or (1.6)%, compared with $190.6 million for the three months ended June 27, 2014, reflecting decreased net sales in the finishing segment of $(3.4) million, the acoustics segment of $(0.9) million, and the seating segment of $(0.7) million, partially offset by an increase in net sales in the components segment of $2.0 million.
Net sales were $363.4 million for the six months ended June 26, 2015, a decrease of $(13.7) million, or (3.6)%, compared with $377.2 million for the six months ended June 27, 2014, reflecting decreased net sales in the finishing segment of $(7.2) million, the acoustics segment of $(2.9) million, the seating segment of $(2.0) million, and the components segment of $(1.6) million. See further discussion of segment results below.
On May 29, 2015, the Company acquired DRONCO. DRONCO’s results of operations are included within the finishing segment and the Company’s consolidated results of operations since the date of acquisition. Net sales of DRONCO were $3.5 million during the three and six months ended June 26, 2015. See Note 3 to the condensed consolidated financial statements for further discussion of the DRONCO acquisition.
Changes in foreign currency exchange rates compared with the U.S. dollar had a net negative impact of $(7.8) million on consolidated net sales during the three months ended June 26, 2015 compared with 2014, negatively impacting the finishing, acoustics, and seating segments’ net sales by $(5.9) million, $(1.5) million, and $(0.4) million, respectively. Changes in foreign currency exchange rates compared with the U.S. dollar had a net negative impact of $(14.3) million on consolidated net sales during the six months ended June 26, 2015 compared with 2014, negatively impacting the finishing, acoustics, and seating segments’ net sales by $(10.6) million, $(3.0) million, and $(0.7) million, respectively. This was due principally to unfavorable changes in exchange rates of the U.S. dollar against the Euro; average exchange rates during the three and six months ended June 26, 2015 were 19.5% and 18.5%, respectively, lower compared with 2014.
Cost of goods sold. Cost of goods sold was $146.0 million for the three months ended June 26, 2015, compared with $149.0 million for the three months ended June 27, 2014. The decrease in cost of goods sold is due to lower net sales, improved operational efficiencies in the acoustics segment, favorable product mix and material pricing in the components segment, and a $5.4 million favorable impact related to foreign currency exchange rates, partially offset by $2.5 million of incremental depreciation expense resulting primarily from recognizing property, plant, and equipment at fair value in acquisition accounting for the Business Combination.
Cost of goods sold was $282.8 million for the six months ended June 26, 2015, compared with $293.5 million for the six months ended June 27, 2014. The decrease in cost of goods sold is due to lower net sales, improved operational efficiencies in the acoustics segment, favorable product mix and material pricing in the components segment, and a $10.0 million favorable impact related to foreign currency exchange rates, partially offset by $4.3 million of incremental depreciation expense resulting primarily from recognizing property, plant, and equipment at fair value in acquisition accounting for the Business Combination.
Gross profit. Gross profit was $41.6 million for the three months ended June 26, 2015 and for the three months ended June 27, 2014. Gross profit was favorably impacted by improved operational efficiencies in the acoustics segment, favorable product mix and material pricing in the components segment, offset by lower net sales and incremental depreciation expense.
Gross profit was $80.6 million for the six months ended June 26, 2015 compared with $83.7 million for the six months ended June 27, 2014. The decrease was primarily due to lower net sales and incremental depreciation expense, partially offset by improved operational efficiencies in the acoustics segment, and favorable product mix and material pricing in the components segment.
Selling and administrative expenses. Selling and administrative expenses were $32.5 million for the three months ended June 26, 2015, compared with $27.3 million for the three months ended June 27, 2014. For the three months ended June 26, 2015, the Company incurred $2.9 million of share based compensation expense, for which no expense was incurred in the second quarter of 2014. During the three months ended June 26, 2015, share based compensation expense included $0.9 million of expense due to accelerated vesting of restricted stock units related to the transition of the Company’s CFO. Selling and administrative expenses for the three months ended June 26, 2015 also included $2.5 million and $2.2 million of incremental depreciation and amortization expense, respectively, compared with the second quarter of 2014 resulting primarily from recognizing property, plant, and equipment and identifiable intangible assets at fair value in acquisition accounting for the Business Combination.
Selling and administrative expenses were $64.0 million for the six months ended June 26, 2015 compared with $55.2 million for the six months ended June 27, 2014. For the six months ended June 26, 2015, the Company incurred $5.0 million of share based compensation expense, for which no expense was incurred in 2014. Selling and administrative expenses for the six months ended June 26, 2015 also included $4.3 million and $4.5 million of incremental depreciation and amortization

23




expense, respectively, compared with 2014 resulting primarily from recognizing property, plant, and equipment and identifiable intangible assets at fair value in acquisition accounting for the Business Combination.
Loss (gain) on disposals of fixed assets—net. For all periods presented, the loss (gain) on disposals of fixed assets was not material. Changes in the level of fixed asset disposals are dependent upon a number of factors, including changes in the level of asset sales, operational restructuring activities, and capital expenditure levels.
Restructuring. Restructuring was $1.0 million for the three months ended June 26, 2015 compared with $1.9 million for the three months ended June 27, 2014. Restructuring was $2.7 million for the six months ended June 26, 2015 compared with $2.6 million for the six months ended June 27, 2014. During 2015, such costs related to the closure of the Norwalk, Ohio facility, closure of the finishing segment’s Brooklyn Heights, Ohio office, and closure of the components segment’s facility in China. During 2014, such costs primarily related to the closure of the acoustics segment’s Norwalk, Ohio facility.
Transaction-related expenses. Transaction-related expenses were $0.7 million for the three months ended June 26, 2015, compared with $3.2 million incurred in the three months ended June 27, 2014. Transaction-related expenses were $0.9 million for the six months ended June 26, 2015 compared with $4.8 million for the six months ended June 27, 2014. The decreases are primarily due to lower professional service fees associated with the acquisition of DRONCO in 2015, compared with professional service fees related to the Business Combination in 2014.
Interest expense. Interest expense was $7.9 million for the three months ended June 26, 2015, compared with $3.7 million for the three months ended June 27, 2014. Interest expense was $15.4 million for the six months ended June 26, 2015 compared with $7.2 million for the six months ended June 27, 2014. Interest expense in 2015 reflects the Company’s new level of debt following the consummation of the Business Combination. See “Senior Secured Credit Facilities” in the Liquidity and Capital Resources section of this MD&A for further discussion.
Equity income. Equity income was $0.3 million for the three months ended June 26, 2015, compared with $0.5 million for the three months ended June 27, 2014. Equity income was $0.5 million for the six months ended June 26, 2015 compared with $0.8 million for the six months ended June 27, 2014.
Gain from sale of joint ventures. During the first quarter of 2014, Jason completed the sale of its 50% equity interests in two Asian joint ventures for a total of $11.5 million and recorded a gain on sale of $3.5 million.
Other income (expense)—net. Other income was $0.1 million for the three months ended June 26, 2015 and was de minimis for the three months ended June 27, 2014, respectively. Other income was $0.1 million for both the six months ended June 26, 2015 and the six months ended June 27, 2014.
(Loss) income before income taxes. Loss before income taxes was $(0.2) million for the three months ended June 26, 2015, compared with income before income taxes of $5.8 million for the three months ended June 27, 2014. Loss before income taxes was $(1.9) million for the six months ended June 26, 2015, compared with income of $18.1 million for the six months ended June 27, 2014. The decrease in income before income taxes is primarily due to lower net sales and increased depreciation, amortization, and interest expense. Selling and administrative expenses also increased due to higher stock compensation expenses and higher corporate expenses related to Jason becoming a public company upon the completion of the Business Combination in 2014. Income before income taxes for the six months ended June 27, 2014 included a $3.5 million gain from the sale of joint ventures.
Tax (benefit) provision. The tax provision was $0.6 million for the three months ended June 26, 2015 and for the three months ended June 27, 2014. The tax (benefit) was $(0.1) million for the six months ended June 26, 2015, compared with a tax provision of $5.1 million for the six months ended June 27, 2014. The effective tax rate for the three months ended June 26, 2015 was (291.4)%, compared with 10.1% for the three months ended June 27, 2014. The effective tax rate for the six months ended June 26, 2015 was 5.5%, compared with 28.1% for the six months ended June 27, 2014.
The Company’s tax (benefit) provision is impacted by a number of factors, including, among others, the amount of taxable income or losses at the U.S. federal statutory rate, the amount of taxable earnings derived in foreign jurisdictions with tax rates that are lower than the U.S. federal statutory rate, permanent items, state tax rates, the ability to utilize foreign net operating loss carry forwards and adjustments to valuation allowances. The effective tax rate for the three and six months ended June 26, 2015 was impacted by pre-tax losses and non-deductible transaction costs in foreign jurisdictions for which no tax benefit was recognized, and the recognition of deferred tax assets related to vesting restricted stock units for which no tax benefit will be realized.
Net (loss) income. For the reasons described above, net loss was $(0.9) million for the three months ended June 26, 2015, compared with net income of $5.2 million for the three months ended June 27, 2014. Net loss was $(1.8) million for the six months ended June 26, 2015, compared with income of $13.0 million for the six months ended June 27, 2014.

24




Net loss attributable to noncontrolling interests. Net loss attributable to noncontrolling interests was $(0.1) million and $(0.3) million for the three and six months ended June 26, 2015, respectively. Noncontrolling interests represent the Rollover Participants interest in JPHI. See Note 2 to the condensed consolidated financial statements for further discussion.
Adjusted EBITDA. Adjusted EBITDA was $24.9 million, or 13.3% of net sales, for the three months ended June 26, 2015, an increase of $1.1 million, or 4.8%, compared with $23.8 million, or 12.5% of net sales, for the three months ended June 27, 2014, reflecting increased Adjusted EBITDA in the acoustics segment of $2.1 million and the components segment of $1.0 million, offset by decreased Adjusted EBITDA in the finishing segment of $(0.8) million, the seating segment of $(0.2) million, and corporate of $(1.0) million.
Adjusted EBITDA was $45.9 million, or 12.6% of net sales, for the six months ended June 26, 2015, compared with $45.9 million, or 12.2% of net sales, for the six months ended June 27, 2014, reflecting increased Adjusted EBITDA in the acoustics segment of $2.5 million, offset by decreased Adjusted EBITDA in the finishing segment of $(0.5) million, the components segment of $(0.3) million, the seating segment of $(0.4) million, and corporate of $(1.3) million.
Changes in foreign currency exchange rates compared with the U.S. dollar had a negative impact of $(1.0) million on consolidated Adjusted EBITDA during the three months ended June 26, 2015 compared with the first quarter of 2014, negatively impacting the finishing and acoustics segments’ Adjusted EBITDA by $(0.8) million and $(0.1) million, respectively. During the six months ended June 26, 2015, changes in foreign currency exchange rates had a negative impact of $(1.7) million on consolidated Adjusted EBITDA compared with 2014, negatively impacting the finishing and acoustics segments’ Adjusted EBITDA by $(1.4) million and $(0.2) million, respectively.
Key Measures the Company Uses to Evaluate Its Performance
EBITDA and Adjusted EBITDA. The Company defines EBITDA as net income (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization and (gain)/loss on disposal of property, plant and equipment. The Company defines Adjusted EBITDA as EBITDA, excluding the impact of operational restructuring charges and non-cash or non-operational losses or gains, including long-lived asset impairment charges, integration and other operational restructuring charges, transactional legal fees, other professional fees and special employee bonuses, purchase accounting adjustments, sponsor fees and expenses, and non-cash share based compensation expense.
Management believes that Adjusted EBITDA provides a clear picture of the Company’s operating results by eliminating expenses and income that are not reflective of the underlying business performance. The Company uses this metric to facilitate a comparison of operating performance on a consistent basis from period to period and to analyze the factors and trends affecting its segments. The Company’s internal plans, budgets and forecasts use Adjusted EBITDA as a key metric and the Company uses this measure to evaluate its operating performance and segment operating performance and to determine the level of incentive compensation paid to its employees.
The Senior Secured Credit Facilities (defined below) definition of EBITDA excludes income of partially owned affiliates, unless such earnings have been received in cash.

25




Set forth below is a reconciliation of Adjusted EBITDA to net (loss) income (in thousands) (unaudited):
 
Successor
 
 
Predecessor
 
Three Months Ended
June 26, 2015
 
Six Months Ended
June 26, 2015
 
 
Three Months Ended
June 27, 2014
 
Six Months Ended
June 27, 2014
 
 
 
 
 
Net (loss) income
$
(865
)
 
$
(1,759
)
 
 
$
5,237

 
$
12,972

Tax provision
644

 
(103
)
 
 
588

 
5,080

Interest expense
7,918

 
15,424

 
 
3,724

 
7,219

Depreciation and amortization
11,476

 
21,887

 
 
6,528

 
12,852

Loss on disposals of fixed assets—net
(4
)
 
22

 
 
215

 
338

EBITDA
19,169

 
35,471

 
 
16,292

 
38,461

Adjustments:
 
 
 
 
 
 
 
 
Restructuring(1)
1,010

 
2,714

 
 
1,907

 
2,554

Transaction-related expenses(2)
710

 
886

 
 
3,233

 
4,774

Integration and other restructuring costs(3)
1,122

 
1,880

 
 
2,047

 
3,040

Sponsor fees(4)

 

 
 
281

 
567

Gain from sale of joint ventures(5)

 

 
 


 
(3,508
)
Share based compensation(6)
2,889

 
4,952

 
 

 

Total adjustments
5,731

 
10,432