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Treehouse Foods 10-Q 2011
e10vq
Table of Contents

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
     
þ    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
For the Quarterly Period Ended June 30, 2011.
or
     
o   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 001-32504
TreeHouse Foods, Inc.
(Exact name of the registrant as specified in its charter)
(TREE HOUSE LOGO)
     
Delaware
(State or other jurisdiction of incorporation or organization)
  20-2311383
(I.R.S. employer identification no.)
     
2021 Spring Road, Suite 600
Oak Brook, IL
(
Address of principal executive offices)
  60523
(
Zip Code)
(Registrant’s telephone number, including area code) (708) 483-1300
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       þ       No       o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data 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       þ       No       o
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
                 
 
  Large accelerated filer   þ   Accelerated filer   o
 
               
 
  Non-accelerated filer   o   Smaller reporting Company   o
 
  (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       o       No       þ
Number of shares of Common Stock, $0.01 par value, outstanding as of July 22, 2011: 35,873,741
 
 

 


 

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 EX-12.1
 EX-15.1
 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2
 EX-101 INSTANCE DOCUMENT
 EX-101 SCHEMA DOCUMENT
 EX-101 CALCULATION LINKBASE DOCUMENT
 EX-101 LABELS LINKBASE DOCUMENT
 EX-101 PRESENTATION LINKBASE DOCUMENT
 EX-101 DEFINITION LINKBASE DOCUMENT

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Part I — Financial Information
Item 1.   Financial Statements
TREEHOUSE FOODS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)
                 
    June 30,     December 31,  
    2011     2010  
    (Unaudited)  
Assets
               
Current assets:
               
Cash and cash equivalents
  $   2,347     $   6,323  
Receivables, net
    117,005       126,644  
Inventories, net
    320,672       287,395  
Deferred income taxes
    3,360       3,499  
Prepaid expenses and other current assets
    10,685       12,861  
Assets held for sale
    4,081       4,081  
 
           
Total current assets
    458,150       440,803  
Property, plant and equipment, net
    392,255       386,191  
Goodwill, net
    1,079,301       1,076,321  
Intangible assets, net
    454,908       463,617  
Other assets, net
    23,105       24,316  
 
           
Total assets
  $   2,407,719     $   2,391,248  
 
           
               
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable and accrued expenses
  $   205,500     $   202,384  
Current portion of long-term debt
    1,232       976  
 
           
Total current liabilities
    206,732       203,360  
Long-term debt
    940,324       976,452  
Deferred income taxes
    195,451       194,917  
Other long-term liabilities
    41,512       38,553  
 
           
Total liabilities
    1,384,019       1,413,282  
Commitments and contingencies (Note 17)
               
Stockholders’ equity:
               
Preferred stock, par value $0.01 per share, 10,000 shares authorized, none issued
           
Common stock, par value $0.01 per share, 90,000 shares authorized, 35,868 and 35,440 shares issued and outstanding, respectively
    359       354  
Additional paid-in capital
    707,249       703,465  
Retained earnings
    320,333       286,181  
Accumulated other comprehensive loss
    (4,241 )     (12,034 )
 
           
Total stockholders’ equity
    1,023,700       977,966  
 
           
Total liabilities and stockholders’ equity
  $   2,407,719     $   2,391,248  
 
           
See Notes to Condensed Consolidated Financial Statements.

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TREEHOUSE FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (Unaudited)     (Unaudited)  
Net sales
  $   492,620     $   446,195     $   986,133     $   843,319  
Cost of sales
    383,180       340,045       755,767       648,391  
 
                       
Gross profit
    109,440       106,150       230,366       194,928  
Operating expenses:
                               
Selling and distribution
    35,558       30,887       71,818       57,683  
General and administrative
    30,602       25,084       59,845       53,562  
Other operating expense (income), net
    1,348       2,019       3,998       (242 )
Amortization expense
    8,319       7,287       16,368       11,734  
 
                       
Total operating expenses
    75,827       65,277       152,029       122,737  
 
                       
Operating income
    33,613       40,873       78,337       72,191  
Other expense (income):
                               
Interest expense, net
    13,470       11,779       27,321       18,606  
(Gain) loss on foreign currency exchange
    (875 )     (2,170 )     555       (2,070 )
Other income, net
    (225 )     (993 )     (717 )     (1,206 )
 
                       
Total other expense
    12,370       8,616       27,159       15,330  
 
                       
Income before income taxes
    21,243       32,257       51,178       56,861  
Income taxes
    6,898       10,605       17,025       18,890  
 
                       
Net income
  $   14,345     $   21,652     $   34,153     $   37,971  
 
                       
                               
Weighted average common shares:
                               
Basic
    35,600       34,814       35,566       34,465  
Diluted
    36,950       35,994       36,871       35,588  
Net earnings per common share:
                               
Basic
  $   .40     $   .62     $   .96     $   1.10  
Diluted
  $   .39     $   .60     $   .93     $   1.07  
See Notes to Condensed Consolidated Financial Statements.

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TREEHOUSE FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
                 
    Six Months Ended  
    June 30,  
    2011     2010  
    (Unaudited)  
Cash flows from operating activities:
               
Net income
  $   34,153     $   37,971  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
    23,979       20,763  
Amortization
    16,368       11,734  
Loss on foreign currency exchange
    720       668  
Mark to market adjustment on derivative contracts
    (753 )     (1,710 )
Excess tax (benefits) deficiency from stock-based compensation
    (3,671 )     440  
Stock-based compensation
    9,449       7,798  
Loss on disposition of assets, net
    237       1,720  
Write-down of tangible assets
    2,330        
Deferred income taxes
    907       7,199  
Curtailment of postretirement benefit obligation
          (2,357 )
Other
    27       81  
Changes in operating assets and liabilities, net of acquisitions:
               
Receivables
    6,763       20,556  
Inventories
    (32,427 )     16,875  
Prepaid expenses and other assets
    3,610       (11,898 )
Accounts payable, accrued expenses and other liabilities
    9,344       6,922  
 
           
Net cash provided by operating activities
    71,036       116,762  
Cash flows from investing activities:
               
Additions to property, plant and equipment
    (29,839 )     (16,625 )
Additions to other intangible assets
    (6,183 )     (6,614 )
Acquisition of business, net of cash acquired
    3,243       (664,655 )
Proceeds from sale of fixed assets
    56        
 
           
Net cash used in investing activities
    (32,723 )     (687,894 )
Cash flows from financing activities:
               
Proceeds from issuance of debt
          400,000  
Borrowings under revolving credit facility
    125,600       270,900  
Payments under revolving credit facility
    (162,200 )     (187,100 )
Payments on capitalized lease obligations
    (599 )     (587 )
Proceeds from issuance of common stock, net of expenses
          110,688  
Payment of deferred financing costs
          (10,783 )
Net (payments) proceeds related to stock-based award activities
    (9,394 )     (12,256 )
Excess tax benefits (deficiency) from stock-based compensation
    3,671       (440 )
 
           
Net cash (used in) provided by financing activities
    (42,922 )     570,422  
 
           
Effect of exchange rate changes on cash and cash equivalents
    633       (258 )
 
           
Net decrease in cash and cash equivalents
    (3,976 )     (968 )
Cash and cash equivalents, beginning of period
    6,323       4,415  
 
           
Cash and cash equivalents, end of period
  $   2,347     $   3,447  
 
           
See Notes to Condensed Consolidated Financial Statements.

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TREEHOUSE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of and for the six months ended June 30, 2011
(Unaudited)
1. Basis of Presentation
The unaudited Condensed Consolidated Financial Statements included herein have been prepared by TreeHouse Foods, Inc. (the “Company,” “we,” “us,” or “our”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to quarterly reporting on Form 10-Q. In our opinion, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as permitted by such rules and regulations. Certain product sales, as disclosed in Note 20, from prior year have been reclassified and certain line items on the Condensed Consolidated Statements of Cash Flows for the prior year have been combined to conform to the current period presentation. These reclassifications had no effect on reported net income, total assets, or cash flows. The Condensed Consolidated Financial Statements and related notes should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Results of operations for interim periods are not necessarily indicative of annual results.
The preparation of our Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to use our judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from these estimates.
A detailed description of the Company’s significant accounting policies can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
2. Recent Accounting Pronouncements
On June 16, 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, Presentation of Comprehensive Income which revises the manner in which entities present comprehensive income in their financial statements. This ASU removes the current presentation guidance and requires comprehensive income to be presented either in a single continuous statement of comprehensive income or two separate but consecutive statements. This guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. ASU 2011-05 does not change current accounting and therefore is not expected to have a significant impact on the Company.
On May 12, 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU provides converged guidance on how (not when) to measure fair value. The ASU provides expanded disclosure requirements and other amendments, including those that eliminate unnecessary wording differences between U.S. GAAP and IFRSs. This ASU is effective for interim and annual periods beginning after December 15, 2011 and is not expected to have a significant impact on the Company’s disclosures or fair value measurements.
3. Facility Closings
On February 28, 2011, the Company announced plans to close its pickle plant in Springfield, Missouri. Production will cease in August 2011 and will be transferred to other pickle facilities. Full plant closure is expected to occur by December 2011. For the three and six months ended June 30, 2011, the Company recorded costs of $0.8 million and $3.2 million, respectively. For the three months ended June 30, 2011, costs consisted of $0.2 million for severance and $0.6 million for disposal costs. For the six months ended June 30, 2011, costs relating to this closure consisted of a fixed asset impairment charge of $2.3 million to reduce the carrying value of the facility to net realizable value, $0.3 million for severance and $0.6 million for disposal costs. These costs are included in Other operating expense (income), net line in our Condensed Consolidated Statements of Income. Total costs are expected to be approximately $4.7 million. Components of the charges include $3.6 million for asset write-offs and removal of certain manufacturing equipment, $0.8 million in severance and other charges, and $0.3 million in costs to transfer inventory to other manufacturing facilities. The Company estimates that approximately $2.4 million of the charges will be in cash and incurred in 2011. The Company has accrued severance costs of approximately $0.2 million at June 30, 2011.

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4. Acquisitions
On October 28, 2010, the Company acquired S.T. Specialty Foods, Inc (S.T. Foods), a wholly owned subsidiary of STSF Holdings, Inc. (“Holdings”) by acquiring all of the outstanding securities of Holdings for approximately $180 million in cash. The acquisition was funded by the Company’s revolving credit facility. S.T. Foods, has annual net sales of approximately $100 million and is a manufacturer of private label macaroni and cheese, skillet dinners and other value-added side dishes. The acquisition added additional categories to our product portfolio for the retail grocery channel.
On March 2, 2010, the Company acquired Sturm Foods, Inc. (“Sturm”), a private label manufacturer of hot cereals and powdered soft drink mixes that services retail and foodservice customers in the United States. The acquisition of Sturm has strengthened the Company’s presence in private label dry grocery categories.
The Company’s purchase price allocation as set forth in the Company’s Annual Report of Form 10-K for the fiscal year ended December 31, 2010 is preliminary and subject to tax adjustments that are expected to be completed during the third quarter of 2011.
5. Inventories
                 
    June 30,     December 31,  
    2011     2010  
    (In thousands)  
Raw materials and supplies
  $   113,204     $   111,376  
Finished goods
    226,807       194,558  
LIFO reserve
    (19,339 )     (18,539 )
 
           
Total
  $   320,672     $   287,395  
 
           
Approximately $59.9 million and $84.8 million of our inventory was accounted for under the LIFO method of accounting at June 30, 2011 and December 31, 2010, respectively.
6. Property, Plant and Equipment
                 
    June 30,     December 31,  
    2011     2010  
    (In thousands)  
Land
  $   15,840     $   15,851  
Buildings and improvements
    148,304       148,616  
Machinery and equipment
    400,212       390,907  
Construction in progress
    44,226       21,067  
 
           
Total
    608,582       576,441  
Less accumulated depreciation
    (216,327 )     (190,250 )
 
           
Property, plant and equipment, net
  $   392,255     $   386,191  
 
           
7. Goodwill and Intangible Assets
Changes in the carrying amount of goodwill for the six months ended June 30, 2011 are as follows:
                                 
    North American     Food Away     Industrial        
    Retail Grocery     From Home     and Export     Total  
    (In thousands)  
Balance at December 31, 2010
  $   850,593     $   92,146     $   133,582     $   1,076,321  
Currency exchange adjustment
    2,155       561             2,716  
Purchase price adjustment
    273       (9 )           264  
 
                       
Balance at June 30, 2011
  $   853,021     $   92,698     $   133,582     $   1,079,301  
 
                       
Purchase price adjustments are related to working capital, tax and other adjustments for the Sturm and S.T. Foods acquisitions. The Company has not incurred any goodwill impairments since its inception.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The gross carrying amount and accumulated amortization of intangible assets other than goodwill as of June 30, 2011 and December 31, 2010 are as follows:
                                                 
    June 30, 2011     December 31, 2010  
    Gross             Net     Gross             Net  
    Carrying     Accumulated     Carrying     Carrying     Accumulated     Carrying  
    Amount     Amortization     Amount     Amount     Amortization     Amount  
                    (In thousands)                  
Intangible assets with indefinite lives:
                                               
Trademarks
  $   33,313     $       $   33,313     $   32,673     $       $   32,673  
Intangible assets with finite lives:
                                               
Customer-related
    447,538       (70,499 )     377,039       445,578       (57,480 )     388,098  
Non-compete agreement
    1,000       (1,000 )           1,000       (967 )     33  
Trademarks
    20,010       (3,989 )     16,021       20,010       (3,393 )     16,617  
Formulas/recipes
    6,856       (2,672 )     4,184       6,825       (1,972 )     4,853  
Computer software
    31,447       (7,096 )     24,351       26,007       (4,664 )     21,343  
 
                                   
Total
  $   540,164     $ (85,256 )   $   454,908     $   532,093     $ (68,476 )   $   463,617  
 
                                   
Amortization expense on intangible assets for the three months ended June 30, 2011 and 2010 was $8.3 million and $7.3 million, respectively, and $16.4 million and $11.7 million for the six months ended June 30, 2011 and 2010, respectively. Estimated amortization expense on intangible assets for 2011 and the next four years is as follows:
         
    (In thousands)  
2011
    33,827  
2012
    32,029  
2013
    30,679  
2014
    30,450  
2015
    29,518  
8. Accounts Payable and Accrued Expenses
                 
    June 30,     December 31,  
    2011     2010  
    (In thousands)  
Accounts payable
  $   135,515     $   112,638  
Payroll and benefits
    32,444       33,730  
Interest and taxes
    19,198       21,019  
Health insurance, workers’ compensation and other insurance costs
    5,757       4,855  
Marketing expenses
    5,247       10,165  
Other accrued liabilities
    7,339       19,977  
 
           
Total
  $   205,500     $   202,384  
 
           
9. Income Taxes
Income tax expense was recorded at an effective rate of 32.5% and 33.3% for the three and six months ended June 30, 2011, respectively, compared to 32.9% and 33.2% for the three and six months ended June 30, 2010, respectively. The Company’s effective tax rate is favorably impacted by an intercompany financing structure entered into in conjunction with the E.D. Smith Canadian acquisition.
As of June 30, 2011, the Company does not believe that its gross recorded unrecognized tax benefits will materially change within the next 12 months.
The Company or one of its subsidiaries files income tax returns in the U.S., Canada and various state jurisdictions. The Company has various state tax examinations in process, which are expected to be completed in 2011 or 2012. The outcome of the various state tax examinations is unknown at this time.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
10. Long-Term Debt
                 
    June 30,     December 31,  
    2011     2010  
    (In thousands)  
Revolving credit facility
  $   436,000     $   472,600  
High yield notes
    400,000       400,000  
Senior notes
    100,000       100,000  
Tax increment financing and other debt
    5,556       4,828  
 
           
Total debt outstanding
    941,556       977,428  
Less current portion
    (1,232 )     (976 )
 
           
Total long-term debt
  $   940,324     $   976,452  
 
           
Revolving Credit Facility — The Company is party to an unsecured revolving credit facility with an aggregate commitment of $750 million, of which $304.8 million was available as of June 30, 2011. The revolving credit facility matures October 27, 2015. In addition, as of June 30, 2011, there were $9.2 million in letters of credit under the revolving credit facility that were issued but undrawn. Our revolving credit facility contains various financial and other restrictive covenants and requires that the Company maintains certain financial ratios, including a leverage and interest coverage ratio. The Company is in compliance with all applicable covenants as of June 30, 2011. The Company’s average interest rate on debt outstanding under our revolving credit facility for the three and six months ended June 30, 2011 was 2.13% and 2.16%, respectively.
High Yield Notes — On March 2, 2010, the Company completed its offering of $400 million in aggregate principal amount of 7.75% high yield notes due March 1, 2018 (the “Notes”). The net proceeds of $391.0 million ($400.0 million notes less underwriting discount of $9.0 million providing an effective interest rate of 8.03%) were used as partial payment in the acquisition of all of the issued and outstanding stock of Sturm. The Notes are guaranteed by the Company’s wholly owned subsidiaries Bay Valley Foods, LLC; EDS Holdings, LLC; Sturm Foods, Inc.; STSF Holdings, Inc. and S.T. Specialty Foods, Inc. and certain other of our subsidiaries that may become guarantors from time to time in accordance with the applicable indenture and may fully, jointly, severally and unconditionally guarantee our payment obligations under any series of debt securities offered. The Indenture provides, among other things, that the Notes will be senior unsecured obligations of the Company. Interest is payable on the Notes on March 1 and September 1 of each year.
Senior Notes — The Company maintains a private placement of $100 million in aggregate principal of 6.03% senior notes due September 30, 2013, pursuant to a Note Purchase Agreement among the Company and a group of purchasers. The Note Purchase Agreement contains covenants that will limit the ability of the Company and its subsidiaries to, among other things, merge with other entities, change the nature of the business, create liens, incur additional indebtedness or sell assets. The Note Purchase Agreement also requires the Company to maintain certain financial ratios. The Company is in compliance with the applicable covenants as of June 30, 2011.
Swap Agreement — The Company has a $50 million interest rate swap agreement with a termination date of August 19, 2011 and a fixed 2.9% interest rate. Under the terms of the Company’s revolving credit agreement, and in conjunction with our credit spread, this will result in an all-in borrowing cost on the swapped principal of $50 million being no more than 4.95% until August 19, 2011. The Company did not apply hedge accounting to this swap.
Tax Increment Financing — As part of the acquisition of the soup and infant feeding business in 2006, the Company assumed the payments related to redevelopment bonds pursuant to a Tax Increment Financing Plan. The Company has agreed to make certain payments with respect to the principal amount of the redevelopment bonds through May 2019. As of June 30, 2011, $2.3 million remains outstanding.
11. Earnings Per Share
Basic earnings per share is computed by dividing net income by the number of weighted average common shares outstanding during the reporting period. The weighted average number of common shares used in the diluted earnings per share calculation is determined using the treasury stock method and includes the incremental effect related to outstanding stock options, restricted stock, restricted stock units and performance units.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes the effect of the share-based compensation awards on the weighted average number of shares outstanding used in calculating diluted earnings per share:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
Weighted average common shares outstanding
    35,599,737       34,814,309       35,566,370       34,464,990  
Assumed exercise/vesting of equity awards (1)
    1,350,258       1,179,282       1,304,240       1,123,481  
 
                       
Weighted average diluted common shares outstanding
    36,949,995       35,993,591       36,870,610       35,588,471  
 
                       
     
(1)   Incremental shares from stock options, restricted stock, restricted stock units, and performance units are computed by the treasury stock method. Stock options, restricted stock, restricted stock units, and performance units excluded from our computation of diluted earnings per share because they were anti-dilutive, were 110,000 and 365,720 for the three and six months ended June 30, 2011, respectively, and 276,620 for the three and six months ended June 30, 2010.
12. Stock-Based Compensation
Income before income taxes for the three and six month periods ended June 30, 2011 and 2010 includes share-based compensation expense of $4.7 million, $9.4 million, $4.4 million and $7.8 million, respectively. The tax benefit recognized related to the compensation cost of these share-based awards was approximately $1.8 million, $3.7 million, $1.7 million and $3.0 million for the three and six month periods ended June 30, 2011 and 2010, respectively.
The following table summarizes stock option activity during the six months ended June 30, 2011. Stock options are granted under our long-term incentive plan, and have a three year vesting schedule, which vest one-third on each of the first three anniversaries of the grant date. Stock options expire ten years from the grant date.
                                         
                            Weighted        
                    Weighted     Average        
                    Average     Remaining     Aggregate  
    Employee     Director     Exercise     Contractual     Intrinsic  
    Options     Options     Price     Term (yrs)     Value  
Outstanding, December 31, 2010
    2,256,735       94,796     $   28.38       5.6     $   53,400,867  
Granted
    110,000           $   54.90              
Forfeited
              $                
Exercised
    (78,933 )         $   25.48              
 
                                   
Outstanding, June 30, 2011
    2,287,802       94,796     $   29.70       5.3     $   59,378,742  
 
                                   
Vested/expected to vest, at June 30, 2011
    2,281,668       94,796     $   29.65       5.3     $   59,358,924  
 
                                   
Exercisable, June 30, 2011
    2,090,770       94,796     $   27.77       5.0     $   58,670,301  
 
                                   
Compensation costs related to unvested options totaled $3.8 million at June 30, 2011 and will be recognized over the remaining vesting period of the grants, which averages 2.6 years. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used to calculate the fair value of stock options issued in 2011 include the following: expected volatility of 33.35%, expected term of six years, risk free rate of 2.57% and no dividends. The average grant date fair value of stock options granted in the six months ended June 30, 2011 was $20.36. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2011 was approximately $2.3 million.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In addition to stock options, the Company also grants restricted stock, restricted stock units and performance unit awards. These awards are granted under our long-term incentive plan. Employee restricted stock and restricted stock unit awards generally vest based on the passage of time. These awards generally vest one-third on each anniversary of the grant date. Director restricted stock units vest over thirteen months. Certain directors have deferred receipt of their awards until their departure from the Board. A complete description of restricted stock and restricted stock unit awards is presented in the Company’s annual report on Form 10-K for the year ended December 31, 2010. The following table summarizes the restricted stock and restricted stock unit activity during the six months ended June 30, 2011:
                                                 
            Weighted             Weighted             Weighted  
    Employee     Average     Employee     Average     Director     Average  
    Restricted     Grant Date     Restricted     Grant Date     Restricted     Grant Date  
    Stock     Fair Value     Stock Units     Fair Value     Stock Units     Fair Value  
Outstanding, at December 31, 2010
    291,628     $   24.32       419,876     $   39.22       62,270     $   32.24  
Granted
                126,760     $   54.88       13,230     $   54.90  
Vested
    (274,292 )   $   24.20       (137,729 )   $   38.08              
Forfeited
    (590 )   $   25.46       (8,608 )   $   43.01              
 
                                         
Outstanding, at June 30, 2011
    16,746     $   26.34       400,299     $   44.49       75,500     $   36.21  
 
                                         
Future compensation costs related to restricted stock and restricted stock units is approximately $15.7 million as of June 30, 2011, and will be recognized on a weighted average basis, over the next 2.1 years. The grant date fair value of the awards granted in 2011 is equal to the Company’s closing stock price on the grant date.
Performance unit awards are granted to certain members of management. These awards contain service and performance conditions. For each of the three performance periods, one third of the units will accrue, multiplied by a predefined percentage between 0% and 200%, depending on the achievement of certain operating performance measures. Additionally, for the cumulative performance period, a number of units will accrue, equal to the number of units granted multiplied by a predefined percentage between 0% and 200%, depending on the achievement of certain operating performance measures, less any units previously accrued. Accrued units will be converted to stock or cash, at the discretion of the compensation committee, generally, on the third anniversary of the grant date. The Company intends to settle these awards in stock and has the shares available to do so. As of June 30, 2011, based on achievement of operating performance measures, 72,900 performance units were converted into 145,800 shares of stock. Conversion of these shares was based on attainment of at least 120% of the target performance goals, and resulted in the vesting awards being converted into two shares of stock for each performance unit. The following table summarizes the performance unit activity during the six months ended June 30, 2011:
                 
            Weighted  
            Average  
    Performance     Grant Date  
    Units     Fair Value  
Unvested, at December 31, 2010
    165,060     $   30.87  
Granted
    43,050     $   54.90  
Vested
    (72,900 )     24.06  
Forfeited
    (1,512 )     28.47  
 
             
Unvested, at June 30, 2011
    133,698     $   42.35  
 
             
Future compensation cost related to the performance units is estimated to be approximately $5.1 million as of June 30, 2011, and is expected to be recognized over the next 2.3 years.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Comprehensive Income
The following table sets forth the components of comprehensive income:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (In thousands)     (In thousands)  
Net income
  $   14,345     $   21,652     $   34,153     $   37,971  
Foreign currency translation adjustment
    (1,428 )     (7,773 )     7,375       749  
Amortization of pension and postretirement prior service costs and net loss, net of tax
    169       137       338       315  
Curtailment of postretirement plan, net of tax
                      862  
Amortization of swap loss, net of tax
    40       40       80       80  
 
                       
Comprehensive income
  $   13,126     $   14,056     $   41,946     $   39,977  
 
                       
The Company expects to amortize $0.7 million of prior service costs and net loss, net of tax and $0.2 million of swap loss, net of tax from other comprehensive income into earnings during 2011.
14. Employee Retirement and Postretirement Benefits
Pension, Profit Sharing and Postretirement Benefits — Certain employees and retirees participate in pension and other postretirement benefit plans. Employee benefit plan obligations and expenses included in the Condensed Consolidated Financial Statements are determined based on plan assumptions, employee demographic data, including years of service and compensation, benefits and claims paid, and employer contributions.
Effective March 31, 2010, the Company negotiated the transfer of the postretirement union retiree medical plan at the Dixon production facility to the Central States multiemployer plan. The Company transferred its liability to the multiemployer plan and no longer carries a liability for the accumulated benefit obligation of the employees covered under that plan, resulting in a plan curtailment. The curtailment resulted in a gain of $2.4 million, $1.4 million net of tax, which is included in Other operating expense (income), net on the Condensed Consolidated Statements of Income for the six months ended June 30, 2010.
Components of net periodic pension expense are as follows:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (In thousands)     (In thousands)  
Service cost
  $   560     $   515     $   1,120     $   1,030  
Interest cost
    560       551       1,120       1,102  
Expected return on plan assets
    (592 )     (549 )     (1,184 )     (1,098 )
Amortization of unrecognized net loss
    144       124       288       248  
Amortization of prior service costs
    151       151       302       302  
 
                       
Net periodic pension cost
  $   823     $   792     $   1,646     $   1,584  
 
                       
The Company contributed $1.2 million to the pension plans in the first six months of 2011 and expects to contribute approximately $3.6 million in 2011.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Components of net periodic postretirement expenses are as follows:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (In thousands)     (In thousands)  
Service cost
  $   9     $   12     $   18     $   66  
Interest cost
    31       35       62       84  
Amortization of prior service credit
    (17 )     (18 )     (35 )     (36 )
Amortization of unrecognized net loss
    (3 )     (10 )     (5 )     (11 )
 
                       
Net periodic postretirement cost
  $   20     $   19     $   40     $   103  
 
                       
The Company expects to contribute approximately $0.2 million to the postretirement health plans during 2011.
15. Other Operating Expense (Income), Net
The Company incurred Other operating expense (income), for the three and six months ended June 30, 2011 and 2010, respectively, which consisted of the following:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (In thousands)     (In thousands)  
Facility closing costs
  $   1,368     $       $   4,065     $    
Gain on postretirement plan curtailment
                      (2,357 )
Realignment of infant feeding business
          1,915             1,915  
Other
    (20 )     104       (67 )     200  
 
                       
Total other operating expense (income), net
  $   1,348     $   2,019     $   3,998     $ (242 )
 
                       
16. Supplemental Cash Flow Information
                 
    Six Months Ended,  
    June 30,  
    2011     2010  
    (In thousands)  
Interest paid
  $   26,005     $   7,790  
Income taxes paid
  $   19,582     $   23,012  
Accrued purchase of property and equipment
  $   5,083     $   3,626  
Accrued other intangible assets
  $   1,101     $   2,158  
Non cash financing activities for the six months ended June 30, 2011 and 2010 include the settlement of 555,322 shares and 890,488, shares, respectively, of restricted stock, restricted stock units and performance units, where shares were withheld to satisfy the minimum statuary tax withholding requirements.
17. Commitments and Contingencies
Litigation, Investigations and Audits — The Company is party in the ordinary course of business to certain claims, litigation, audits and investigations. The Company believes that it has established adequate reserves to satisfy any liability that may be incurred in connection with any such currently pending or threatened matters. The settlement of any such currently pending or threatened matters is not expected to have a material adverse impact on our financial position, annual results of operations or cash flows.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
18. Derivative Instruments
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by derivative instruments include interest rate risk, foreign currency risk and commodity price risk.
Interest rate swaps are entered into to manage interest rate risk associated with the Company’s $750 million revolving credit facility. Interest on our credit facility is variable and use of interest rate swaps establishes a fixed rate over the term of a portion of the facility. The Company’s objective in using an interest rate swap is to establish a fixed interest rate, thereby enabling the Company to predict and manage interest expense and cash flows in a more efficient and effective manner.
The Company’s $50 million interest rate swap agreement swaps floating rate debt for a fixed rate of 2.9% and expires August 19, 2011. The Company did not apply hedge accounting and recorded the fair value of this instrument on its Condensed Consolidated Balance Sheets. The Company recorded income of $0.3 million, $0.6 million, $1.2 million and $1.9 million related to the mark to market adjustment in the three and six months ended June 30, 2011 and 2010, respectively, within the Other expense (income) line of the Condensed Consolidated Statements of Income.
Due to the Company’s operations in Canada, we are exposed to foreign currency risks. The Company enters into foreign currency contracts to manage the risk associated with foreign currency cash flows. The Company’s objective in using foreign currency contracts is to establish a fixed foreign currency exchange rate for the net cash flow requirements for purchases that are denominated in U.S. dollars. These contracts do not qualify for hedge accounting and changes in their fair value are recorded in the Condensed Consolidated Statements of Income, within the loss on foreign currency exchange line. The Company realized a gain of approximately $0.5 million and $0.1 million in the three and six months ended June 30, 2011. As of June 30, 2011, the Company had three foreign currency contracts for the purchase of U.S. dollars, all expiring by the end of the third quarter in 2011. The total contracted U.S. dollar amount as of June 30, 2011 is $15.0 million.
Commodity price risk is managed, in part, by using derivatives such as commodity swaps, the objective of which is to establish a fixed commodity cost over the term of the contracts.
As of June 30, 2011, the Company had two types of commodity swap contracts outstanding, one for diesel fuel and one for high density polyethylene (“HDPE”). The Company entered into diesel fuel swap contracts on June 30, 2011 to manage the Company’s risk associated with the underlying cost of diesel fuel used to deliver products. These contracts expire in the third and fourth quarters of 2011. The contract for HDPE is used to manage the Company’s risk associated with the underlying commodity cost of a significant component used in packaging materials.
As of June 30, 2011, the Company had 1.8 million gallons outstanding under diesel contracts, with 0.9 million gallons settling in the third and fourth quarters of 2011. As of June 30, 2011, the company had 1.8 million pounds outstanding under the HDPE swap with 0.3 million pounds settling on a monthly basis. The contract expires on December 31, 2011.
The Company did not apply hedge accounting to the commodity swaps, and they are recorded at fair value on the Company’s Condensed Consolidated Balance Sheets. For the three months ended June 30, 2011 and 2010, the Company realized a loss of $0.2 million, and for the six months ended June 30, 2011 and 2010 a gain of $0.1 million, and a loss of $0.2 million, respectively, related to mark to market adjustments, which are recorded in the Condensed Consolidated Statement of Income, within the Other expense (income) line.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table identifies the derivative, its fair value, and location on the Condensed Consolidated Balance Sheet:
                         
            Fair Value  
    Balance Sheet Location   June 30, 2011     December 31, 2010  
          (In thousands)  
Liability Derivatives:
                       
Interest rate swap
  Accounts payable and accrued expenses   $   229     $   874  
Foreign exchange contract
  Accounts payable and accrued expenses     93       184  
 
                   
 
          $   322     $   1,058  
 
                   
 
                       
Asset Derivative:
                       
Commodity contracts
  Prepaid expenses and other current assets   $   468     $   360  
 
                   
 
          $   468     $   360  
 
                   
19. Fair Value of Financial Instruments
Cash and cash equivalents and accounts receivable are financial assets with carrying values that approximate fair value. Accounts payable are financial liabilities with carrying values that approximate fair value. As of June 30, 2011, the outstanding balance of the Company’s variable rate debt (revolving credit facility) was $436.0 million, the fair value of which is estimated to be $448.3 million, using a present value technique and market based interest rates and credit spreads. As of June 30, 2011, the carrying value of the Company’s fixed rate senior notes was $100.0 million and fair value was estimated to be $98.6 million based on a present value technique using market based interest rates and credit spreads. The fair value of the Company’s 7.75% high yield notes due March 1, 2018, with an outstanding balance of $400.0 million as of June 30, 2011, was estimated at $427.0 million, based on quoted market prices.
The fair value of the Company’s interest rate swap agreement, as described in Notes 10 and 18, was a liability of approximately $0.2 million as of June 30, 2011. The fair value of the swap was determined using Level 2 inputs, which are inputs other than quoted prices that are observable for an asset or liability, either directly or indirectly. The fair value is based on a market approach, comparing the fixed rate of 2.9% to the current and forward one month LIBOR rates throughout the term of the swap agreement.
The fair value of the Company’s commodity contracts as described in Note 18 was an asset of approximately $0.5 million as of June 30, 2011. The fair value of the commodity contracts were determined using Level 1 inputs. Level 1 inputs are those inputs where quoted prices in active markets for identical assets or liabilities are available.
The fair value of the Company’s foreign exchange contract as described in Note 18 was a liability of $0.1 million as of June 30, 2011, using level 2 inputs, comparing the foreign exchange rate of our contract to the spot rate as of June 30, 2011.
20. Segment Information
The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources in total rather than on a segment-level basis. The Company has designated reportable segments based on how management views its business. The Company does not segregate assets between segments for internal reporting. Therefore, asset-related information has not been presented. The reportable segments, as presented below, are consistent with the manner in which the Company reports its results to the Chief Operating Decision maker.
The Company evaluates the performance of its segments based on net sales dollars, gross profit and direct operating income (gross profit less freight out, sales commissions and direct selling and marketing expenses). The amounts in the following tables are obtained from reports used by senior management and do not include allocated income taxes. Other expenses not allocated include unallocated selling and distribution expenses and corporate expenses which consist of general and administrative expenses, amortization expense, other operating (income) expense, and other expense (income). The accounting policies of the Company’s segments are the same as those described in the summary of significant accounting policies set forth in Note 1 to our 2010 Consolidated Financial Statements contained in our Annual Report on Form 10-K.

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (In thousands)     (In thousands)  
Net sales to external customers:
                               
North American Retail Grocery
  $   350,861     $   307,526     $   704,324     $   569,105  
Food Away From Home
    79,179       80,269       153,406       153,747  
Industrial and Export
    62,580       58,400       128,403       120,467  
 
                       
Total
  $   492,620     $   446,195     $   986,133     $   843,319  
 
                       
Direct operating income:
                               
North American Retail Grocery
  $   54,102     $   52,218     $   117,046     $   94,119  
Food Away From Home
    10,089       12,608       20,141       22,120  
Industrial and Export
    10,592       11,158       23,414       22,990  
 
                       
Total
    74,783       75,984       160,601       139,229  
Unallocated selling and distribution expenses
    (901 )     (721 )     (2,053 )     (1,984 )
Unallocated corporate expense
    (40,269 )     (34,390 )     (80,211 )     (65,054 )
 
                       
Operating income
    33,613       40,873       78,337       72,191  
Other expense
    (12,370 )     (8,616 )     (27,159 )     (15,330 )
 
                       
Income before income taxes
  $   21,243     $   32,257     $   51,178     $   56,861  
 
                       
Geographic Information — The Company had revenues to customers outside of the United States of approximately 12.9% and 13.9% of total consolidated net sales in the six months ended June 30, 2011 and 2010, respectively, with 12.1% and 13.1% going to Canada, respectively.
Major Customers — Wal-Mart Stores, Inc. and affiliates accounted for approximately 20.0% and 17.8% of consolidated net sales in the six months ended June 30, 2011 and 2010, respectively. No other customer accounted for more than 10% of our consolidated net sales.
Product Information — The following table presents the Company’s net sales by major products for the three and six months ended June 30, 2011 and 2010. Certain product sales for 2010 have been reclassified to conform to the current period presentation due to enhanced information reporting available with the new enterprise resource planning (“ERP”) software system.
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2011     2010     2011     2010  
    (In thousands)     (In thousands)  
Products:
                               
Pickles
  $   87,682     $   91,367     $   158,136     $   165,756  
Non-dairy creamer
    74,372       68,321       156,402       152,613  
Soup and infant feeding
    59,094       59,369       132,493       137,129  
Powdered drinks
    57,918       51,990       113,806       66,380  
Salad dressing
    61,297       57,296       112,650       107,482  
Mexican and other sauces
    52,489       51,655       99,679       97,416  
Hot cereals
    30,971       25,516       71,725       34,921  
Dry dinners
    24,032             52,802        
Aseptic products
    23,083       21,764       45,019       43,617  
Jams
    19,200       15,116       35,304       30,060  
Other products
    2,482       3,801       8,117       7,945  
 
                       
Total net sales
  $   492,620     $   446,195     $   986,133     $   843,319  
 
                       

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TREEHOUSE FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
21. Guarantor and Non-Guarantor Financial Information
On March 2, 2010, the Company issued $400 million 7.75% high yield notes due March 1, 2018, which are guaranteed by its wholly owned subsidiaries Bay Valley Foods, LLC; EDS Holdings, LLC; Sturm Foods, Inc.; STSF Holdings, Inc. and S.T. Specialty Foods, Inc. and certain other of our subsidiaries that may become guarantors from time to time in accordance with the applicable indenture and may fully, jointly, severally and unconditionally guarantee our payment obligations under any series of debt securities offered. There are no significant restrictions on the ability of the parent company or any guarantor to obtain funds from its subsidiaries by dividend or loan. The following condensed consolidating financial information presents the results of operations, financial position and cash flows of TreeHouse Foods, Inc., its Guarantor subsidiaries, its non-Guarantor subsidiaries and the eliminations necessary to arrive at the information for the Company on a consolidated basis as of June 30, 2011 and 2010 and for the three and six months ended June 30, 2011 and 2010. The equity method has been used with respect to investments in subsidiaries. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

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Condensed Supplemental Consolidating Balance Sheet
June 30, 2011

(In thousands)
                                         
    Parent     Guarantor     Non-Guarantor              
    Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Assets
                                       
Current assets:
                                       
Cash and cash equivalents
  $       $   11     $   2,336     $       $   2,347  
Receivables, net
    50       93,635       23,320             117,005  
Inventories, net
          280,851       39,821             320,672  
Deferred income taxes
    339       2,846       175             3,360  
Assets held for sale
          4,081                   4,081  
Prepaid expenses and other current assets
    1,240       8,912       533             10,685  
 
                             
Total current assets
    1,629       390,336       66,185             458,150  
Property, plant and equipment, net
    13,793       343,421       35,041             392,255  
Goodwill
          963,400       115,901             1,079,301  
Investment in subsidiaries
    1,293,373       165,674             (1,459,047 )      
Intercompany accounts receivable, net
    625,248       (523,780 )     (101,468 )            
Deferred income taxes
    13,106                   (13,106 )      
Identifiable intangible and other assets, net
    47,460       346,919       83,634             478,013  
 
                             
Total assets
  $   1,994,609     $   1,685,970     $   199,293     $ (1,472,153 )   $   2,407,719  
 
                             
 
                                       
Liabilities and Stockholders’ Equity
                                       
Current liabilities:
                                       
Accounts payable and accrued expenses
  $   20,689     $   167,642     $   17,169     $       $   205,500  
Current portion of long-term debt
          1,226       6             1,232  
 
                             
Total current liabilities
    20,689       168,868       17,175             206,732  
Long-term debt
    925,633       14,691                   940,324  
Deferred income taxes
    6,438       185,675       16,444       (13,106 )     195,451  
Other long-term liabilities
    18,149       23,363                   41,512  
Stockholders’ equity
    1,023,700       1,293,373       165,674       (1,459,047 )     1,023,700  
 
                             
Total liabilities and stockholders’ equity
  $   1,994,609     $   1,685,970     $   199,293     $ (1,472,153 )   $   2,407,719  
 
                             

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Condensed Supplemental Consolidating Balance Sheet
December 31, 2010

(In thousands)
                                         
    Parent     Subsidiary     Non-Guarantor              
    Company     Guarantors     Subsidiaries     Eliminations     Consolidated  
Assets
                                       
Current assets:
                                       
Cash and cash equivalents
  $       $   6     $   6,317     $       $   6,323  
Accounts receivable, net
    3,381       104,227       19,036             126,644  
Inventories, net
          251,993       35,402             287,395  
Deferred income taxes
    339       2,916       244             3,499  
Assets held for sale
          4,081                   4,081  
Prepaid expenses and other current assets
    1,299       10,997       565             12,861  
 
                             
Total current assets
    5,019       374,220       61,564             440,803  
Property, plant and equipment, net
    12,722       337,634       35,835             386,191  
Goodwill
          963,031       113,290             1,076,321  
Investment in subsidiaries
    1,216,618       140,727             (1,357,345 )      
Intercompany accounts receivable, net
    703,283       (586,789 )     (116,494 )            
Deferred income taxes
    13,179                   (13,179 )      
Identifiable intangible and other assets, net
    45,005       358,805       84,123             487,933  
 
                             
Total assets
  $   1,995,826     $   1,587,628     $   178,318     $ (1,370,524 )   $   2,391,248  
 
                             
 
                                       
Liabilities and Shareholders’ Equity
                                       
Current liabilities:
                                       
Accounts payable and accrued expenses
  $   33,363     $   147,889     $   21,132     $       $   202,384  
Current portion of long-term debt
          976                   976  
 
                             
Total current liabilities
    33,363       148,865       21,132             203,360  
Long-term debt
    963,014       13,438                   976,452  
Deferred income taxes
    6,210       185,427       16,459       (13,179 )     194,917  
Other long-term liabilities
    15,273       23,280                   38,553  
Shareholders’ equity
    977,966       1,216,618       140,727       (1,357,345 )     977,966  
 
                             
Total liabilities and shareholders’ equity
  $   1,995,826     $   1,587,628     $   178,318     $ (1,370,524 )   $   2,391,248  
 
                             

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Condensed Supplemental Consolidating Statement of Income
Three Months Ended June 30, 2011

(In thousands)
                                         
    Parent     Guarantor     Non-Guarantor              
    Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Net sales
  $       $   424,684     $   75,141     $ (7,205 )   $   492,620  
Cost of sales
          332,516       57,869       (7,205 )     383,180  
 
                             
Gross profit
          92,168       17,272             109,440  
Selling, general and administrative expense
    14,587       43,646       7,927             66,160  
Amortization
    741       6,292       1,286             8,319  
Other operating expense, net
          1,348                   1,348  
 
                             
Operating (loss) income
    (15,328 )     40,882       8,059             33,613  
Interest expense (income), net
    12,571       (2,724 )     3,623             13,470  
Other income, net
    (331 )     26       (795 )           (1,100 )
 
                             
(Loss) income before income taxes
    (27,568 )     43,580       5,231             21,243  
Income taxes (benefit)
    (9,369 )     14,858       1,409             6,898  
Equity in net income of subsidiaries
    32,544       3,822             (36,366 )      
 
                             
Net income
  $   14,345     $   32,544     $   3,822     $ (36,366 )   $   14,345  
 
                             
Condensed Supplemental Consolidating Statement of Income
Three Months Ended June 30, 2010

(In thousands)
                                         
    Parent     Guarantor     Non-Guarantor              
    Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Net sales
  $       $   388,850     $   64,812     $ (7,467 )   $   446,195  
Cost of sales
          297,191       50,321       (7,467 )     340,045  
 
                             
Gross profit
          91,659       14,491             106,150  
Selling, general and administrative expense
    9,911       39,813       6,247             55,971  
Amortization
    132       5,976       1,179             7,287  
Other operating expense, net
          2,019                   2,019  
 
                             
Operating (loss) income
    (10,043 )     43,851       7,065             40,873  
Interest expense (income), net
    11,710       (3,366 )     3,435             11,779  
Other income, net
    (1,235 )     (371 )     (1,557 )           (3,163 )
 
                             
(Loss) income before income taxes
    (20,518 )     47,588       5,187             32,257  
Income taxes (benefit)
    (7,420 )     16,455       1,570             10,605  
Equity in net income of subsidiaries
    34,750       3,617             (38,367 )      
 
                             
Net income
  $   21,652     $   34,750     $   3,617     $ (38,367 )   $   21,652  
 
                             

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Condensed Supplemental Consolidating Statement of Income
Six Months Ended June 30, 2011

(In thousands)
                                         
    Parent     Guarantor     Non-Guarantor              
    Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Net sales
  $       $   862,020     $   139,271     $   (15,158 )   $   986,133  
Cost of sales
          663,068       107,857       (15,158 )     755,767  
 
                             
Gross profit
          198,952       31,414             230,366  
Selling, general and administrative expense
    29,092       89,897       12,674             131,663  
Amortization
    1,305       12,516       2,547             16,368  
Other operating expense, net
          3,998                   3,998  
 
                             
Operating (loss) income
    (30,397 )     92,541       16,193             78,337  
Interest expense (income), net
    26,228       (6,044 )     7,137             27,321  
Other (income) expense, net
    (645 )     648       (165 )           (162 )
 
                             
(Loss) income before income taxes
    (55,980 )     97,937       9,221             51,178  
Income taxes (benefit)
    (21,089 )     35,639       2,475             17,025  
Equity in net income of subsidiaries
    69,044       6,746             (75,790 )      
 
                             
Net income
  $   34,153     $   69,044     $   6,746     $ (75,790 )   $   34,153  
 
                             
Condensed Supplemental Consolidating Statement of Income
Six Months Ended June 30, 2010

(In thousands)
                                         
    Parent     Guarantor     Non-Guarantor              
    Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Net sales
  $       $   734,801     $   122,969     $   (14,451 )   $   843,319  
Cost of sales
          563,833       99,009       (14,451 )     648,391  
 
                             
Gross profit
          170,968       23,960             194,928  
Selling, general and administrative expense
    25,780       73,653       11,812             111,245  
Amortization
    263       9,144       2,327             11,734  
Other operating income, net
          (242 )                 (242 )
Operating (loss) income
    (26,043 )     88,413       9,821             72,191  
Interest expense (income), net
    18,338       (6,527 )     6,795             18,606  
Other (income) expense, net
    (1,926 )     1,388       (2,738 )           (3,276 )
 
                             
(Loss) income before income taxes
    (42,455 )     93,552       5,764             56,861  
Income taxes (benefit)
    (15,232 )     32,355       1,767             18,890  
Equity in net income of subsidiaries
    65,194       3,997             (69,191 )      
 
                             
Net income
  $   37,971     $   65,194     $   3,997     $   (69,191 )   $   37,971  
 
                             

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Condensed Supplemental Consolidating Statement of Cash Flows
Six Months Ended June 30, 2011

(In thousands)
                                         
    Parent     Guarantor     Non-Guarantor              
    Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Net cash provided by operating activities
  $   (34,017 )   $   108,219     $   (3,166 )   $       $   71,036  
Cash flows from investing activities:
                                       
Additions to property, plant and equipment
    (1,518 )     (26,873 )     (1,448 )           (29,839 )
Additions to other intangible assets
    (4,035 )     (2,148 )                 (6,183 )
Acquisition of business, net of cash acquired
          3,243                   3,243  
Proceeds from sale of fixed assets
          56                   56  
 
                             
Net cash used in investing activities
    (5,553 )     (25,722 )     (1,448 )           (32,723 )
Cash flows from financing activities:
                                       
Borrowings under revolving credit facility
    125,600                         125,600  
Payments under revolving credit facility
    (162,200 )                       (162,200 )
Payments on capitalized lease obligations
          (599 )                 (599 )
Intercompany transfer
    81,893       (81,893 )                  
Excess tax benefits from stock-based compensation
    3,671                         3,671  
Net payments related to stock-based award activities
    (9,394 )                       (9,394 )
 
                             
Net cash provided by financing activities
    39,570       (82,492 )                 (42,922 )
 
                             
Effect of exchange rate changes on cash and cash equivalents
                633             633  
Net (decrease) increase in cash and cash equivalents
          5       (3,981 )           (3,976 )
Cash and cash equivalents, beginning of period
          6       6,317             6,323  
 
                             
Cash and cash equivalents, end of period
  $       $   11     $   2,336     $       $   2,347  
 
                             
Condensed Supplemental Consolidating Statement of Cash Flows
Six Months Ended June 30, 2010

(In thousands)
                                         
    Parent     Guarantor     Non-Guarantor              
    Company     Subsidiaries     Subsidiaries     Eliminations     Consolidated  
Net cash provided by operating activities
  $   (16,357 )   $   129,783     $   3,336     $       $   116,762  
Cash flows from investing activities:
                                       
Additions to property, plant and equipment
    (17 )     (13,192 )     (3,416 )           (16,625 )
Additions to other intangible assets
    (5,135 )     (15 )     (1,464 )           (6,614 )
Acquisition of business, net of cash acquired
          (664,655 )                 (664,655 )
 
                             
Net cash used in investing activities
    (5,152 )     (677,862 )     (4,880 )           (687,894 )
Cash flows from financing activities:
                                       
Proceeds from sale of fixed assets
    400,000                         400,000  
Borrowings under revolving credit facility
    270,900                         270,900  
Payments under revolving credit facility
    (187,100 )                       (187,100 )
Payments on capitalized lease obligations
          (488 )     (99 )           (587 )
Intercompany transfer
    (549,501 )     549,501                    
Proceeds from issuance of common stock, net of expenses
    110,688                         110,688  
Payment of deferred financing costs
    (10,783 )                       (10,783 )
Excess tax (deficiency) benefits from stock-based payment arrangements
    (440 )                       (440 )
Net payments related to stock-based award activities
    (12,256 )                       (12,256 )
 
                             
Net cash provided by financing activities
    21,508       549,013       (99 )           570,422  
 
                             
Effect of exchange rate changes on cash and cash equivalents
                (258 )           (258 )
Net decrease in cash and cash equivalents
    (1 )     934       (1,901 )           (968 )
Cash and cash equivalents, beginning of period
    1       8       4,406             4,415  
 
                             
Cash and cash equivalents, end of period
  $       $   942     $   2,505     $       $   3,447  
 
                             

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
TreeHouse is a food manufacturer servicing primarily the retail grocery and foodservice distribution channels. Its products include non-dairy powdered coffee creamers; canned soups; salad dressings and sauces; sugar free drink mixes and sticks; instant oatmeal and hot cereals; macaroni and cheese; skillet dinners; Mexican sauces; jams and pie fillings; pickles and related products; infant feeding products; aseptic sauces; refrigerated salad dressings; and liquid non-dairy creamer. TreeHouse believes it is the largest manufacturer of pickles and non-dairy powdered creamer in the United States and the largest manufacturer of private label salad dressings, drink mixes and instant hot cereals in the United States and Canada based on sales volume.
The following discussion and analysis presents the factors that had a material effect on our results of operations for the three and six months ended June 30, 2011 and 2010. Also discussed is our financial position as of the end of those periods. This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the Notes to those Condensed Consolidated Financial Statements included elsewhere in this report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.
We discuss the following segments in this Management’s Discussion and Analysis of Financial Condition and Results of Operations: North American Retail Grocery, Food Away From Home, and Industrial and Export. The key performance indicators of our segments are net sales dollars, gross profit and direct operating income, which is gross profit less the cost of transporting products to customer locations (referred to in the tables below as “freight out”), commissions paid to independent sales brokers, and direct selling and marketing expenses.
Our current operations consist of the following:
Our North American Retail Grocery segment sells branded and private label products to customers within the United States and Canada. These products include non-dairy powdered creamers; condensed and ready to serve soups, broths and gravies; salad dressings and sauces; pickles and related products; Mexican sauces; jams and pie fillings; aseptic products; liquid non-dairy creamer; powdered drinks; hot cereals; macaroni and cheese and skillet dinners.
Our Food Away From Home segment sells non-dairy powdered creamers, pickle products, Mexican sauces, refrigerated dressings, aseptic products and hot cereals to foodservice customers, including restaurant chains and food distribution companies, within the United States and Canada.
Our Industrial and Export segment includes the Company’s co-pack business and non-dairy powdered creamer sales to industrial customers for use in industrial applications, including products for repackaging in portion control packages and for use as ingredients by other food manufacturers; pickles; Mexican sauces; infant feeding products and refrigerated dressings. Export sales are primarily to industrial customers outside of North America.
The Company continues its effort to focus on volume, cost containment and margin improvement. This strategy combined with the acquisitions of Sturm and S.T. Foods, has increased our net sales for the three and six months ended June 30, 2011 by approximately 10.4% and 16.9%, respectively, versus the same periods last year. However, the Company has been challenged by rising input and distribution costs that have caused in our direct operating income margins to decrease from 17.0% in the second quarter of 2010 to 15.2% in the second quarter of 2011. Direct operating income margins for the six months ended June 30, 2011 and 2010 were 16.3% and 16.5%, respectively. To offset rising costs, the Company increased prices and expects to realize them in the second half of the year.

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Recent Developments
With the success to date of the Company’s ongoing ERP systems implementation, a decision was made to accelerate the conversion of the Sturm and S.T. Foods acquisitions to SAP, while maintaining an aggressive rollout to our distribution centers. This acceleration will require an additional investment of approximately $5.0 million.
On February 28, 2011, the Company announced plans to close its pickle plant in Springfield, Missouri. Production at the facility will cease in August 2011 and will be consolidated at other pickle facilities. Full plant closure is expected to occur by December 2011. Total costs are expected to be approximately $4.7 million. Components of the charges include $3.6 million for asset write-offs and removal of certain manufacturing equipment, approximately $0.8 million in severance and other charges, and $0.3 million in costs to transfer inventory to other manufacturing facilities.
Results of Operations
The following table presents certain information concerning our financial results, including information presented as a percentage of net sales:
                                                                 
    Three Months Ended June 30,     Six Months Ended June 30,  
    2011     2010     2011     2010  
    Dollars     Percent     Dollars     Percent     Dollars     Percent     Dollars     Percent  
            (Dollars in thousands)                     (Dollars in thousands)          
Net sales
  $   492,620       100.0 %   $   446,195       100.0 %   $   986,133       100.0 %   $   843,319       100.0 %
Cost of sales
    383,180       77.8       340,045       76.2       755,767       76.6       648,391       76.9  
 
                                               
Gross profit
    109,440       22.2       106,150       23.8       230,366       23.4       194,928       23.1  
Operating expenses:
                                                               
Selling and distribution
    35,558       7.2       30,887       6.9       71,818       7.3       57,683       6.8  
General and administrative
    30,602       6.2       25,084       5.6       59,845       6.1       53,562       6.3  
Other operating expense (income), net
    1,348       0.3       2,019       0.5       3,998       0.4       (242 )      
Amortization expense
    8,319       1.7       7,287       1.7       16,368       1.7       11,734       1.4  
 
                                               
Total operating expenses
    75,827       15.4       65,277       14.7       152,029       15.5       122,737       14.5  
 
                                               
Operating income
    33,613       6.8       40,873       9.1       78,337       7.9       72,191       8.6  
Other expenses (income):
                                                               
Interest expense, net
    13,470       2.7       11,779       2.6       27,321       2.7       18,606       2.2  
(Gain) loss on foreign currency exchange
    (875 )     (0.2 )     (2,170 )     (0.5 )     555       0.1       (2,070 )     (0.2 )
Other income, net
    (225 )           (993 )     (0.2 )     (717 )     (0.1 )     (1,206 )     (0.1 )
 
                                               
Total other expense
    12,370       2.5       8,616       1.9       27,159       2.7       15,330       1.9  
 
                                               
Income before income taxes
    21,243       4.3       32,257       7.2       51,178       5.2       56,861       6.7  
Income taxes
    6,898       1.4       10,605       2.4       17,025       1.7       18,890       2.2  
 
                                               
Net income
  $   14,345       2.9 %   $   21,652       4.8 %   $   34,153       3.5 %   $   37,971       4.5 %
 
                                               
Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010
Net Sales — Second quarter net sales increased 10.4% to $492.6 million in 2011 compared to $446.2 million in the second quarter of 2010. The increase is partially driven by the acquisition of S.T. Foods in 2010 and price increases to offset increasing input costs. Net sales by segment are shown in the following table:
                                 
    Three Months Ended June 30,  
                    $ Increase/     % Increase/  
    2011     2010     (Decrease)     (Decrease)  
            (Dollars in thousands)          
North American Retail Grocery
  $   350,861     $   307,526     $   43,335       14.1 %
Food Away From Home
    79,179       80,269       (1,090 )     (1.4 )%
Industrial and Export
    62,580       58,400       4,180       7.2 %
 
                         
Total
  $   492,620     $   446,195     $   46,425       10.4 %
 
                         

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Cost of Sales — All expenses incurred to bring a product to completion are included in cost of sales. These costs include raw materials, ingredient and packaging costs, labor costs, facility and equipment costs, costs to operate and maintain our warehouses, and costs associated with transporting our finished products from our manufacturing facilities to distribution centers. Cost of sales as a percentage of net sales was 77.8% in the second quarter of 2011 compared to 76.2% in 2010. Contributing to the increase in cost of sales, as a percent of net sales, is the increase in the cost of ingredients, packaging supplies and warehouse start-up costs associated with the consolidation of the Company’s distribution network.
Operating Expenses — Total operating expenses were $75.8 million during the second quarter of 2011 compared to $65.3 million in 2010. The increase in 2011 resulted from the following:
Selling and distribution expenses increased $4.7 million or 15.1% in the second quarter of 2011 compared to 2010 primarily due to the addition of S.T. Foods. Selling and distribution expenses as a percentage of total revenues increased to 7.2% in 2011 from 6.9% in 2010, mainly due to increases in distribution costs.
General and administrative expenses increased $5.5 million in the second quarter of 2011 compared to 2010. The increase is primarily related to incremental general and administrative costs of the S.T. Foods acquisition and costs related to the ERP systems implementation.
Other operating expenses were $1.3 million in the second quarter of 2011 consisting primarily of facility closing costs of the Springfield, Missouri pickle plant, compared to $2.0 million in 2010 due to the realignment of the infant feeding business.
Amortization expense increased $1.0 million in the second quarter of 2011 compared to 2010, due primarily to the additional intangible assets acquired in the S.T. Foods acquisition and amortization of capitalized ERP system costs.
Interest Expense, net — Interest expense increased to $13.5 million in the second quarter of 2011, compared to $11.8 million in 2010 primarily due to an increase in debt resulting from the S.T. Foods acquisition and higher borrowing costs.
Foreign Currency — The Company’s foreign currency gain was $0.5 million for the three months ended June 30, 2011 compared to a gain of $2.2 million in 2010, due to fluctuations in currency exchange rates between the U.S. and Canadian dollar.
Income Taxes — Income tax expense was recorded at an effective rate of 32.5% in the second quarter of 2011 compared to 32.9% in the prior year’s quarter.
Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010 — Results by Segment
North American Retail Grocery
                                 
    Three Months Ended June 30,  
    2011     2010  
    Dollars     Percent     Dollars     Percent  
            (Dollars in thousands)          
Net sales
  $   350,861       100.0 %   $   307,526       100.0 %
Cost of sales
    268,627       76.6       231,763       75.4  
 
                       
Gross profit
    82,234       23.4       75,763       24.6  
Freight out and commissions
    19,235       5.5       14,189       4.6  
Direct selling and marketing
    8,897       2.5       9,356       3.0  
 
                       
Direct operating income
  $   54,102       15.4 %   $   52,218       17.0 %
 
                       
Net sales in the North American Retail Grocery segment increased by $43.3 million, or 14.1% in the second quarter of 2011 compared to 2010. The change in net sales from 2010 to 2011 was due to the following:
                 
    Dollars     Percent  
    (Dollars in thousands)  
2010 Net sales
  $   307,526          
Volume
    11,191       3.6 %
Pricing
    2,707       0.9  
Acquisition
    27,592       9.0  
Foreign currency
    3,406       1.1  
Mix/other
    (1,561 )     (0.5 )
 
           
2011 Net sales
  $   350,861       14.1 %
 
           

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The increase in net sales from 2010 to 2011 resulted primarily from the acquisition of S.T. Foods in 2010, higher volume, price increases and foreign currency fluctuations partially offset by an unfavorable product mix. Overall volume is higher in the second quarter of 2011 compared to that of 2010, primarily due to increases in the soup category.
Cost of sales as a percentage of net sales increased from 75.4% in the second quarter of 2010 to 76.6% in 2011 primarily due to higher ingredient and packaging costs and warehouse start-up costs partially offset by price increases.
Freight out and commissions paid to independent sales brokers were $19.2 million in the second quarter of 2011 compared to $14.2 million in 2010, an increase of 35.6%, primarily due to the addition of S.T. Foods and increases in distribution costs.
Direct selling and marketing expenses were approximately $8.9 million in the second quarter of 2011 and $9.4 million in 2010.
Food Away From Home
                                 
    Three Months Ended June 30,  
    2011     2010  
    Dollars     Percent     Dollars     Percent  
            (Dollars in thousands)          
Net sales
  $   79,179       100.0 %   $   80,269       100.0 %
Cost of sales
    64,156       81.0       62,865       78.3  
 
                       
Gross profit
    15,023       19.0       17,404       21.7  
Freight out and commissions
    3,103       4.0       2,732       3.4  
Direct selling and marketing
    1,831       2.3       2,064       2.6  
 
                       
Direct operating income
  $   10,089       12.7 %   $   12,608       15.7 %
 
                       
Net sales in the Food Away From Home segment decreased by $1.1 million, or 1.4%, in the second quarter of 2011 compared to the prior year. The change in net sales from 2010 to 2011 was due to the following:
                 
    Dollars     Percent  
    (Dollars in thousands)  
2010 Net sales
  $   80,269          
Volume
    (5,878 )     (7.3 )%
Pricing
    325       0.4  
Acquisition
    278       0.3  
Foreign currency
    525       0.7  
Mix/other
    3,660       4.5  
 
           
2011 Net sales
  $   79,179       (1.4 )%
 
           
Net sales decreased during the second quarter of 2011 compared to 2010 primarily due to decreases in volume in our pickle category partially offset by a positive product mix.
Cost of sales as a percentage of net sales increased from 78.3% in the second quarter of 2010 to 81.0% in 2011 due to higher ingredient and packaging costs.
Freight out and commissions paid to independent sales brokers were $3.1 million in the second quarter of 2011 compared to $2.7 million in 2010, an increase of 13.6%, primarily due to increased distribution costs.
Direct selling and marketing was $1.8 million in the second quarter of 2011 and $2.1 million in 2010.

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Industrial and Export
                                 
    Three Months Ended June 30,  
    2011     2010  
    Dollars     Percent     Dollars     Percent  
            (Dollars in thousands)          
Net sales
  $   62,580       100.0 %   $   58,400       100.0 %
Cost of sales
    50,397       80.5       45,417       77.8  
 
                       
Gross profit
    12,183       19.5       12,983       22.2  
Freight out and commissions
    1,048       1.7       1,363       2.3  
Direct selling and marketing
    543       0.9       462       0.8  
 
                       
Direct operating income
  $   10,592       16.9 %   $   11,158       19.1 %
 
                       
Net sales in the Industrial and Export segment increased $4.2 million or 7.2% in the second quarter of 2011 compared to the prior year. The change in net sales from 2010 to 2011 was due to the following:
                 
    Dollars     Percent  
    (Dollars in thousands)  
2010 Net sales
  $   58,400          
Volume
    (3,338 )     (5.7 )%
Pricing
    3,499       6.0  
Acquisition
           
Foreign currency
    107       0.2  
Mix/other
    3,912       6.7  
 
           
2011 Net sales
  $   62,580       7.2 %
 
           
The increase in net sales is due to price increases and a favorable product mix, partially offset by lower volume in our co-pack soup business.
Cost of sales as a percentage of net sales increased from 77.8% in the second quarter of 2010 to 80.5% in 2011 primarily due to higher ingredient and packaging costs.
Freight out and commissions paid to independent sales brokers were $1.0 million in the second quarter of 2011 and $1.4 million 2010, a decrease of 23.1% due to the decrease in volume partially offset by increases in distribution costs.
Direct selling and marketing was $0.5 million in the second quarter of 2011 and 2010.
Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010
Net Sales — Net sales increased 16.9% to $986.1 million in the first six months of 2011 compared to $843.3 million in the first six months of 2010. The increase is driven by the acquisitions of Sturm and S.T. Foods in 2010, increases in pricing needed to offset higher input costs, favorable foreign currency exchange rates between the U.S. and Canadian dollar and a favorable product mix. Net sales by segment are shown in the following table:
                                 
    Six Months Ended June 30,  
                    $ Increase/     % Increase/  
    2011     2010     (Decrease)     (Decrease)  
            (Dollars in thousands)          
North American Retail Grocery
  $   704,324     $   569,105     $   135,219       23.8 %
Food Away From Home
    153,406       153,747       (341 )     (0.2 )%
Industrial and Export
    128,403       120,467       7,936       6.6 %
 
                         
Total
  $   986,133     $   843,319     $   142,814       16.9 %
 
                         

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Table of Contents

Cost of Sales — All expenses incurred to bring a product to completion are included in cost of sales. These costs include raw materials, ingredient and packaging costs, labor costs, facility and equipment costs, costs to operate and maintain our warehouses, and costs associated with transporting our finished products from our manufacturing facilities to distribution centers. Cost of sales as a percentage of net sales was 76.6% in the first six months of 2011 compared to 76.9% in 2010. Contributing to the reduction in cost of sales, as a percent of net sales, is a favorable mix of sales from Sturm and S.T. Foods, partially offset by lower margins in legacy product categories resulting from an increase in ingredient and packaging costs and warehouse start-up costs associated with the consolidation of the Company’s distribution network. The underlying commodity cost of most raw materials and packaging supplies has increased in the six months ended June 30, 2011.
Operating Expenses — Total operating expenses were $152.0 million during the first six months of 2011 compared to $122.7 million in 2010. The increase in 2011 resulted from the following:
Selling and distribution expenses increased $14.1 million or 24.5% in the first six months of 2011 compared to 2010 primarily due to the addition of Sturm and S.T. Foods. Selling and distribution expenses as a percentage of total revenues increased to 7.3% in 2011 from 6.8% in 2010, mainly due to increases in distribution costs.
General and administrative expenses increased $6.3 million in the first six months of 2011 compared to 2010. The increase is primarily related to incremental general and administrative costs of Sturm and S.T. Foods and costs related to the ERP systems implementation.
Amortization expense increased $4.6 million in the first six months of 2011 compared to the first six months of 2010, due primarily to the additional intangible assets acquired in the Sturm and S.T. Foods acquisitions and amortization of capitalized SAP systems cost.
Other operating expense was $4.0 million in the first six months of 2011 compared to operating income of $0.2 million in the first six months of 2010. Expense in 2011 relates to facility closings, primarily the closing of the Springfield, Missouri pickle plant. Income in 2010 was primarily related to the postretirement benefit plan curtailment at our Dixon facility, offset by costs associated with the realignment of the infant feeding business.
Interest Expense, net — Interest expense increased to $27.3 million in the first six months of 2011, compared to $18.6 million in 2010, primarily due to an increase in debt resulting from the Sturm and S.T. Foods acquisitions and higher borrowing costs.
Foreign Currency — The Company’s foreign currency loss was $0.9 million for the six months ended June 30, 2011 compared to a gain of $2.1 million in 2010, due to fluctuations in currency exchange rates between the U.S. and Canadian dollar.
Income Taxes — Income tax expense was recorded at an effective rate of 33.3% in the first six months of 2011 compared to 33.2% in 2010. The Company’s effective tax rate is favorably impacted by an intercompany financing structure with E.D. Smith.
Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010 — Results by Segment
North American Retail Grocery
                                 
    Six Months Ended June 30,  
    2011     2010  
    Dollars     Percent     Dollars     Percent  
            (Dollars in thousands)          
Net sales
  $   704,324       100.0 %   $   569,105       100.0 %
Cost of sales
    530,670       75.4       431,932       75.9  
 
                       
Gross profit
    173,654       24.6       137,173       24.1  
Freight out and commissions
    38,766       5.5       27,366       4.8  
Direct selling and marketing
    17,842       2.5       15,688       2.8  
 
                       
Direct operating income
  $   117,046       16.6 %   $   94,119       16.5 %
 
                       
Net sales in the North American Retail Grocery segment increased by $135.2 million, or 23.8% in the first six months of 2011 compared to the first quarter of 2010. The change in net sales from 2010 to 2011 was due to the following:

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    Dollars     Percent  
    (Dollars in thousands)  
2010 Net sales
  $   569,105          
Volume
    16,965       3.0 %
Pricing
    1,392       0.2  
Acquisition
    116,346       20.5  
Foreign currency
    5,951       1.1  
Mix/other
    (5,435 )     (1.0 )
 
           
2011 Net sales
  $   704,324       23.8 %
 
           
The increase in net sales from 2010 to 2011 resulted from the acquisition of Sturm and S.T. Foods, foreign currency fluctuations, and higher unit sales offset by an unfavorable product mix. Overall volume is higher in the first six months of 2011 compared to that of 2010, primarily due to increases in the soup category.
Cost of sales as a percentage of net sales decreased from 75.9% in the first six months of 2010 to 75.4% in 2011 primarily due to a favorable mix of sales from Sturm and S.T. Foods partially offset by higher ingredient and packaging costs and warehouse start-up costs.
Freight out and commissions paid to independent sales brokers were $38.8 million in the first six months of 2011 compared to $27.4 million in 2010, an increase of 41.7%, primarily due to the addition of Sturm and S.T. Foods and increases in distribution costs.
Direct selling and marketing expenses increased $2.2 million, or 13.7% in the first six months of 2011 compared to 2010 primarily due to the Sturm and S.T. Foods acquisitions.
Food Away From Home
                                 
    Six Months Ended June 30,  
    2011     2010  
    Dollars     Percent     Dollars     Percent  
            (Dollars in thousands)          
Net sales
  $   153,406       100.0 %   $   153,747       100.0 %
Cost of sales
    123,582       80.6       122,597       79.7  
 
                       
Gross profit
    29,824       19.4       31,150       20.3  
Freight out and commissions
    5,670       3.7       5,162       3.4  
Direct selling and marketing
    4,013       2.6       3,868       2.5  
 
                       
Direct operating income
  $   20,141       13.1 %   $   22,120       14.4 %
 
                       
Net sales in the Food Away From Home segment decreased by $0.3 million, or 0.2%, in the first six months of 2011 compared to the prior year. The change in net sales from 2010 to 2011 was due to the following:
                 
    Dollars     Percent  
    (Dollars in thousands)  
2010 Net sales
  $   153,747          
Volume
    (10,866 )     (7.1 )%
Pricing
    (65 )      
Acquisition
    3,170       2.1  
Foreign currency
    916       0.6  
Mix/other
    6,504       4.2  
 
           
2011 Net sales
  $   153,406       (0.2 )%
 
           

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Net sales decreased during the first six months of 2011 compared to 2010 primarily due to decreases in volume in our pickle category partially offset by the acquisition of Sturm, foreign currency fluctuations and a positive product mix.
Cost of sales as a percentage of net sales increased from 79.7% in the first six months of 2010 to 80.6% in 2011, due to increases in raw material, ingredient and packaging costs.
Freight out and commissions paid to independent sales brokers were $5.7 million in the first six months of 2011 compared to $5.2 million in 2010 due to the addition of Sturm and increased distribution costs.
Direct selling and marketing was $4.0 million in the first six months of 2011 compared to $3.9 million in 2010.
Industrial and Export
                                 
    Six Months Ended June 30,  
    2011     2010  
    Dollars     Percent     Dollars     Percent  
            (Dollars in thousands)          
Net sales
  $   128,403       100.0 %   $   120,467       100.0 %
Cost of sales
    101,515       79.1       93,862       77.9  
 
                       
Gross profit
    26,888       20.9       26,605       22.1  
Freight out and commissions
    2,399       1.9       2,724       2.3  
Direct selling and marketing
    1,075       0.8       891       0.7  
 
                       
Direct operating income
  $   23,414       18.2 %   $   22,990       19.1 %
 
                       
Net sales in the Industrial and Export segment increased $7.9 million or 6.6% in the first six months of 2011 compared to the prior year. The change in net sales from 2010 to 2011 was due to the following:
                 
    Dollars     Percent  
    (Dollars in thousands)  
2010 Net sales
  $   120,467          
Volume
    (7,976 )     (6.6 )%
Pricing
    7,029       5.8  
Acquisition
    1,963       1.6  
Foreign currency
    192       0.2  
Mix/other
    6,728       5.6  
 
           
2011 Net sales
  $   128,403       6.6 %
 
           
The increase in net sales is primarily due to price increases, a favorable product mix and the addition of the Sturm co-pack business. The lower volume is mainly due to a decrease in the co-pack soup business.
Cost of sales, as a percentage of net sales, increased from 77.9% in the first six months of 2010 to 79.1% in 2011 primarily due to cost increases in raw material, ingredient and packaging costs.
Freight out and commissions paid to independent sales brokers were $2.4 million in the first six months of 2011 compared to $2.7 million in 2010, a decrease of 11.9%, due to the decrease in sales volume partially offset by increases in distribution costs.
Direct selling and marketing was $1.1 million in the first six months of 2011 compared to $0.9 million in 2010.

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Liquidity and Capital Resources
Cash Flow
Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate substantial cash flow from operating activities and remains in a strong financial position, with resources available for reinvestment in existing businesses, acquisitions and managing its capital structure on a short and long-term basis. If additional borrowings are needed, approximately $304.8 million was available under the revolving credit facility as of June 30, 2011. See Note 10 to our Condensed Consolidated Financial Statements for additional information regarding our revolving credit facility. We believe that, given our cash flow from operating activities and our available credit capacity, we can comply with the current terms of the revolving credit facility and meet foreseeable financial requirements.
The Company’s cash flows from operating, investing and financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows are summarized in the following tables:
                 
    Six Months Ended  
    June 30,  
    2011     2010  
    (In thousands)  
Cash flows from operating activities:
               
 
Net income
  $   34,153     $   37,971  
Depreciation and amortization
    40,347       32,497  
Stock-based compensation
    9,449       7,798  
Loss on foreign currency exchange
    720       668  
Write-down of tangible assets
    2,330        
Curtailment of postretirement benefit obligation
          (2,357 )
Deferred income taxes
    907       7,199  
Changes in operating assets and liabilities, net of acquisitions
    (12,710 )     32,455  
Other
    (4,160 )     531  
 
           
Net cash provided by operating activities
  $   71,036     $   116,762  
 
           
Our cash from operations was $71.0 million in the first six months of 2011 compared to $116.8 million 2010, a decrease of $45.8 million. The decrease in cash from operating activities is due to an increase in working capital, primarily resulting from higher input costs of our inventories.
                 
    Six Months Ended  
    June 30,  
    2011     2010  
    (In thousands)  
Cash flows from investing activities:
               
 
Additions to property, plant and equipment
  $   (29,839 )   $   (16,625 )
Additions to other intangible assets
    (6,183 )     (6,614 )
Acquisition of business, net of cash acquired
    3,243       (664,655 )
Other
    56        
 
           
Net cash used in investing activities
  $   (32,723 )   $   (687,894 )
 
           
In the first six months of 2011, cash used in investing activities decreased by $655.2 million compared to 2010 primarily due to the acquisition of Sturm in 2010 for $664.7 million.
We expect capital spending programs to be approximately $85 million in 2011. Capital spending in 2011 will focus on food safety, quality, productivity improvements, improvements to our San Antonio facility, installation of an Enterprise Resource Planning system (ERP) and routine equipment upgrades or replacements at our plants, and will be funded with cash from operations.

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    Six Months Ended  
    June 30,  
    2011     2010  
    (In thousands)  
Cash flows from financing activities:
               
 
Proceeds from issuance of debt for acquisitions
  $       $   400,000  
Borrowings under revolving credit facility
    125,600       270,900  
Payments under revolving credit facility
    (162,200 )     (187,100 )
Proceeds from issuance of common stock, net of expenses
          110,688  
Payment of deferred financing costs
          (10,783 )
Net payments related to stock-based award activities
    (9,394 )     (12,256 )
Other
    3,072       (1,027 )
 
           
Net cash (used in) provided by financing activities
  $   (42,922 )   $   570,422  
 
           
Net cash used in financing activities in 2011 was $43.0 million compared to $570.4 million provided by financing activities in 2010. In the first six months of 2010, we issued $400.0 million of new debt, common stock in the net amount of $110.7 million and borrowings under our revolving credit facility to finance the Sturm acquisition. The first six months of 2011 consisted of only normal borrowings and repayments under our line of credit.
Cash provided by operating activities is used to pay down debt and fund additions to property, plant and equipment and intangible assets.
Our short-term financing needs are primarily for financing working capital during the year. Due to the seasonality of pickle and fruit production, driven by harvest cycles which occur primarily during late spring and summer, inventories generally are at a low point in late spring and at a high point during the fall, increasing our working capital requirements. In addition, we build inventories of salad dressings in the spring and soup in the late summer months in anticipation of large seasonal shipments that begin late in the second and third quarters, respectively. Our long-term financing needs will depend largely on potential acquisition activity. We expect our revolving credit facility, plus cash flow from operations, to be adequate to provide liquidity for current operations.
Debt Obligations
At June 30, 2011, we had $436.0 million in borrowings outstanding under our revolving credit facility, 7.75% High Yield Notes due 2018 of $400 million outstanding, Senior Notes of $100 million outstanding and $5.6 million of tax increment financing and other obligations. In addition, at June 30, 2011, there were $9.2 million in letters of credit under the revolving credit facility that were issued but undrawn.
Our revolving credit facility provides for an aggregate commitment of $750 million, of which $304.8 million was available at June 30, 2011. Interest rates on debt outstanding under our revolving credit facility as of June 30, 2011 averaged 2.18%.
We are in compliance with applicable debt covenants as of June 30, 2011.
See Note 10 to our Condensed Consolidated Financial Statements for additional information regarding our indebtedness and related agreements.
Other Commitments and Contingencies
We also have the following commitments and contingent liabilities, in addition to contingent liabilities related to the ordinary course of litigation, investigations and tax audits:
    certain lease obligations, and
 
    selected levels of property and casualty risks, primarily related to employee health care, workers’ compensation claims and other casualty losses.
See Note 17 to our Condensed Consolidated Financial Statements and Note 19 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 for more information about our commitments and contingent obligations.

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Recent Accounting Pronouncements
Information regarding recent accounting pronouncements is provided in Note 2 to the Company’s Condensed Consolidated Financial Statements.
Critical Accounting Policies
A description of the Company’s critical accounting policies is contained in our Annual Report on Form 10-K for the year ended December 31, 2010. There were no material changes to our critical accounting policies in the six months ended June 30, 2011.
Off-Balance Sheet Arrangements
We do not have any obligations that meet the definition of an off-balance sheet arrangement, other than operating leases and letters of credit, which have or are reasonably likely to have a material effect on our Condensed Consolidated Financial Statements.
Forward Looking Statements
From time to time, we and our representatives may provide information, whether orally or in writing, including certain statements in this Quarterly Report on Form 10-Q, which are deemed to be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.
The words “anticipate,” “believe,” “estimate,” “project,” “expect,” “intend,” “plan,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. We do not intend to update these forward-looking statements.
In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q and other public statements we make. Such factors include, but are not limited to: the outcome of litigation and regulatory proceedings to which we may be a party; the impact of product recalls; actions of competitors; changes and developments affecting our industry; quarterly or cyclical variations in financial results; our ability to obtain suitable pricing for our products; development of new products and services; our level of indebtedness; the availability of financing on commercially reasonable terms; cost of borrowing; our ability to maintain and improve cost efficiency of operations; changes in foreign currency exchange rates; interest rates; raw material and commodity costs; changes in economic conditions; political conditions; reliance on third parties for manufacturing of products and provision of services; general U.S. and global economic conditions; the financial condition of our customers and suppliers; consolidations in the retail grocery and foodservice industries; our ability to continue to make acquisitions in accordance with our business strategy or effectively manage the growth from acquisitions; and other risks that are set forth in the Risk Factors section, the Legal Proceedings section, the Management’s Discussion and Analysis of Financial Condition and Results of Operations section and other sections of this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2010 and from time to time in our filings with the Securities and Exchange Commission.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Fluctuations
The Company is party to an unsecured revolving credit facility with an aggregate commitment of $750 million. The interest rate under the revolving credit facility is based on the Company’s consolidated leverage ratio, and will be determined by either LIBOR plus a margin ranging from 1.25% to 2.05% or a base rate (as defined in the revolving credit facility) plus a margin ranging from 0.25% to 1.05%.
The Company has a $50 million interest rate swap agreement with a termination date of August 19, 2011 with a fixed 2.9% interest rate. Under the terms of the Company’s revolving credit agreement and in conjunction with our credit spread, this will result in an all-in borrowing cost on the swapped principal of $50 million being no more than 4.95% until August 19, 2011. The Company did not apply hedge accounting to this swap.

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In July 2006, we entered into a forward interest rate swap transaction for a notional amount of $100 million as a hedge of the forecasted private placement of $100 million senior notes. The interest rate swap transaction was terminated on August 31, 2006, which resulted in a pre-tax loss of $1.8 million. The unamortized loss is reflected, net of tax, in Accumulated other comprehensive loss in our Condensed Consolidated Balance Sheets. The loss is reclassified ratably to our Condensed Consolidated Statements of Income as an increase to interest expense over the term of the senior notes, providing an effective interest rate of 6.29% over the term of our senior notes.
We do not utilize financial instruments for trading purposes or hold any derivative financial instruments, which could expose us to significant interest rate market risk, other than our interest rate swap agreement, as of June 30, 2011. Our exposure to market risk for changes in interest rates relates primarily to the increase in the amount of interest expense we expect to pay with respect to our revolving credit facility, which is tied to variable market rates. Based on our outstanding debt balance of $436.0 million under our revolving credit facility at June 30, 2011, and adjusting for the $50 million fixed rate swap amount, as of June 30, 2011, each 1% rise in our interest rate would increase our interest expense by approximately $3.9 million annually.
Input Costs
The costs of raw materials, packaging materials and fuel, have varied widely in recent years and future changes in such costs may cause our results of operations and our operating margins to fluctuate significantly. We experienced increases in costs of most raw materials, ingredients, and packaging materials in the first six months of 2011 compared to 2010. In addition, fuel costs, which represent the most important factor affecting utility costs at our production facilities, as well as our transportation costs rose significantly in the first six months of 2011. We expect the volatile nature of these costs to continue with an overall upward trend.
We manage the cost of certain raw materials by entering into forward purchase contracts. Forward purchase contracts help us manage our business and reduce cost volatility.
The most important raw material used in our pickle operations is cucumbers. We purchase cucumbers under seasonal grower contracts with a variety of growers strategically located to supply our production facilities. Bad weather or disease in a particular growing area can damage or destroy the crop in that area, which would impair crop yields. If we are not able to buy cucumbers from local suppliers, we would likely either purchase cucumbers from foreign sources, such as Mexico or India, or ship cucumbers from other growing areas in the United States, thereby increasing our production costs.
Changes in the prices of our products may lag behind changes in the costs of our products. We experienced a lag in our pricing in the second quarter relative to increased input costs. Although we expect the trend of increased input costs to continue, we anticipate that we will realize the impact of our pricing efforts in the second half of the year, which will partially offset such increased costs. Competitive pressures also may limit our ability to quickly raise prices in response to increased raw materials, packaging and fuel costs. Accordingly, if we are unable to increase our prices to offset increasing raw material, packaging and fuel costs, our operating profits and margins could be materially adversely affected. In addition, in instances of declining input costs, customers may be looking for price reductions in situations where we have locked into pricing at higher costs.
Fluctuations in Foreign Currencies
The Company is exposed to fluctuations in the value of our foreign currency investment in E.D. Smith, located in Canada. Input costs for certain Canadian sales are denominated in U.S. dollars, further impacting the effect foreign currency fluctuations may have on the Company.
The Company’s financial statements are presented in U.S. dollars, which require the Canadian assets, liabilities, revenues, and expenses to be translated into U.S. dollars at the applicable exchange rates. Accordingly, we are exposed to volatility in the translation of foreign currency earnings due to fluctuations in the value of the Canadian dollar, which may negatively impact the Company’s results of operations and financial position. For the six months ended June 30, 2011 the Company recognized a net gain of $6.8 million, of which a gain of $7.4 million was recorded as a component of Accumulated other comprehensive loss and a loss of $0.6 million was recorded on the Company’s Condensed Consolidated Statements of Income within the Loss on foreign currency exchange. For the six months ended June 30, 2010, the Company recognized a net foreign currency exchange gain of $2.8 million, of which a gain of $0.7 million was recorded as a component of Accumulated other comprehensive loss and a gain of $2.1 million was recorded on the Company’s Condensed Consolidated Statements of Income within the Loss on foreign currency exchange.
The Company has entered into foreign currency contracts due to the exposure to Canadian/U.S. dollar currency fluctuations on cross border transactions. The Company does not apply hedge accounting to these contracts and records them at fair value on the Condensed Consolidated Balance Sheets. The contracts were entered into for the purchase of U.S. dollar denominated raw materials by our Canadian subsidiary. As of June 30, 2011, the Company had a liability of $0.1 million and realized a gain of approximately $0.1 million in the six months ended June 30, 2011.

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Item 4. Controls and Procedures
Evaluations were carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon those evaluations, the Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2011, these disclosure controls and procedures were effective. We have excluded S.T. Foods from our evaluation of disclosure controls and procedures, as of June 30, 2011, because S.T. Foods was acquired by the Company in October of 2010. The net sales and total assets of S.T. Foods represented approximately 4.9%, and, 9.0%, respectively, of the related Condensed Consolidated Financial Statement amounts as of and for the quarter ended June 30, 2011.
During the second quarter of 2011, we continued migrating certain financial processing systems to an enterprise resource planning system. This software implementation is part of our ongoing business transformation initiative, and we plan to continue implementing such software and related process throughout our businesses over the course of the next few years. In connection with this implementation and resulting business process changes, we continue to enhance the design and documentation of our internal control processes to ensure suitable controls over our financial reporting.
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2011 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
TreeHouse Foods, Inc.
Oak Brook, IL
We have reviewed the accompanying condensed consolidated balance sheet of TreeHouse Foods, Inc. and subsidiaries (the “Company”) as of June 30, 2011, and the related condensed consolidated statements of income for the three and six month periods ended June 30, 2011 and 2010 and of cash flows for the six month periods ended June 30, 2011 and 2010. These interim financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of TreeHouse Foods, Inc. and subsidiaries as of December 31, 2010, and the related consolidated statements of income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 14, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2010 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
August 5, 2011

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Part II — Other Information
Item 1. Legal Proceedings
We are party to a variety of legal proceedings arising out of the conduct of our business. While the results of proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our consolidated financial statements, annual results of operations or cash flows.
Item 1A. Risk Factors
Information regarding risk factors appears in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Information Related to Forward-Looking Statements, in Part I — Item 2 of this Form 10-Q and in Part I — Item 1A of the TreeHouse Foods, Inc. Annual Report on Form 10-K for the year ended December 31, 2010. There have been no material changes from the risk factors previously disclosed in the TreeHouse Foods, Inc. Annual Report on Form 10-K for the year ended December 31, 2010.
Item 6. Exhibits
     
12.1
  Computation of Ratio of Earnings to Fixed Changes.
 
   
15.1
  Awareness Letter from Deloitte & Touche LLP regarding unaudited financial information.
 
   
31.1
  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.2
  Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
32.1
  Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   
32.2
  Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
   
101.INS*
  XBRL Instance Document.
 
   
101.SCH*
  XBRL Taxonomy Extension Schema Document.
 
   
101.CAL*
  XBRL Taxonomy Extension Calculation Linkbase Document.
 
   
101.LAB*
  XBRL Taxonomy Extension Label Linkbase Document.
 
   
101.PRE*
  XBRL Taxonomy Extension Presentation Linkbase Document.
 
   
101.DEF*
  XBRL Taxonomy Extension Definition Linkbase Document.
*Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Income for the three and six months ended June 30, 2011 and 2010, (ii) the Condensed Consolidated Balance Sheet at June 30, 2011 and December 31, 2010, (iii) the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2011 and 2010, and (iv) Notes to Condensed Consolidated Financial Statements for the six months ended June 30, 2011. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  TREEHOUSE FOODS, INC.

 
 
  /s/ Dennis F. Riordan    
  Dennis F. Riordan   
  Executive Vice President and Chief Financial Officer   
 
August 5, 2011

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