Management's Discussion and Analysis (MD\&A) section of the annual report is found on pages 19-33. In this section, the management of Smucker's provides their explanation of the company's financial results. On page 21 under the section on Operating Income, management explains why Operating Income decreased in 2019 even though sales increased. According to management, what is the primary reason(s) for the decrease in Operating Income in 2019? Lower prices and higher costs Increase in selling, distribution \& administrative expenses and amortization expense as the result of acquiring another company (Ainsworth). Non-GAAP adjustments. Gain on the sale of their US Baking Business. (A) We use non-GAAP financial measures to evaluate our performance. Refer to "Non-GAAP Financial Measures" in this discussion and analysis for a reconciliation to the comparable GAAP financial measure. Operating Income The following table presents the components of operating income as a percentage of net sales. The following table presents selected cash flow information. Capital Resources The following table presents our capital structure. \begin{tabular}{|c|c|c|} \hline \multirow[b]{2}{*}{ Principal payments - excludes the impact of potential debt refinancing } & \multicolumn{2}{|c|}{\begin{tabular}{c} Projection \\ Year Ending \\ April 30,2020 \end{tabular}} \\ \hline & $ & 800.0 \\ \hline Dividend payments - based on current rates and common shares outstanding & & 390.0 \\ \hline Capital expenditures & & 310.0 \\ \hline Interest payments - excludes the impact of potential debt refinancing & & 205.0 \\ \hline \end{tabular} Year Ended April 30, \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline \multirow{2}{*}{ Gross profit reconciliation: } & \multicolumn{2}{|r|}{2019} & \multicolumn{2}{|r|}{2018} & \multicolumn{2}{|r|}{2017} & \multicolumn{2}{|r|}{2016} & \multicolumn{2}{|r|}{2015} \\ \hline & & & & & & & & & & \\ \hline Gross profit & $ & 2,915.7 & $ & 2,836.1 & $ & 2,835.3 & $ & 2,967.8 & $ & 1,968.7 \\ \hline Unallocated derivative losses (gains) & & 54.2 & & (37.3) & & 27.2 & & (12.0) & & 24.5 \\ \hline Cost of products sold - special project costs & & - & & 3.9 & & 5.7 & & 12.2 & & 6.2 \\ \hline Adjusted gross profit & $ & 2,969.9 & $ & 2,802.7 & $ & 2,868.2 & $ & 2,968.0 & $ & 1,999.4 \\ \hline \multicolumn{11}{|l|}{ Operating income reconciliation: } \\ \hline Operating income & $ & 928.6 & $ & 1,044.0 & $ & 1,042.6 & $ & 1,146.3 & $ & 785.3 \\ \hline Amortization & & 240.3 & & 206.8 & & 207.3 & & 208.4 & & 109.7 \\ \hline Goodwill impairment charges & & 97.9 & & 145.0 & & - & & - & & - \\ \hline Other intangible assets impairment charges & & 107.2 & & 31.9 & & 133.2 & & - & & 1.2 \\ \hline Unallocated derivative losses (gains) & & 54.2 & & (37.3) & & 27.2 & & (12.0) & & 24.5 \\ \hline Cost of products sold - special project costs & & - & & 3.9 & & 5.7 & & 12.2 & & 6.2 \\ \hline Other special project costs & & 64.1 & & 45.4 & & 76.9 & & 135.9 & & 56.6 \\ \hline Adjusted operating income & $ & 1,492.3 & $ & 1,439.7 & $ & 1,492.9 & $ & 1,490.8 & $ & 983.5 \\ \hline \multicolumn{11}{|l|}{ Net income reconciliation: } \\ \hline Net income & $ & 514.4 & $ & 1,338.6 & $ & 592.3 & $ & 688.7 & $ & 344.9 \\ \hline Income tax expense (benefit) & & 187.2 & & (477.6) & & 286.1 & & 289.2 & & 178.1 \\ \hline Amortization & & 240.3 & & 206.8 & & 207.3 & & 208.4 & & 109.7 \\ \hline Goodwill impairment charges & & 97.9 & & 145.0 & & - & & - & & - \\ \hline Other intangible assets impairment charges & & 107.2 & & 31.9 & & 133.2 & & - & & 1.2 \\ \hline Unallocated derivative losses (gains) & & 54.2 & & (37.3) & & 27.2 & & (12.0) & & 24.5 \\ \hline Cost of products sold - special project costs & & - & & 3.9 & & 5.7 & & 12.2 & & 6.2 \\ \hline Other special project costs & & 64.1 & & 45.4 & & 76.9 & & 135.9 & & 56.6 \\ \hline Adjusted income before income taxes & $ & 1,265.3 & $ & 1,256.7 & $ & 1,328.7 & $ & 1,322.4 & $ & 721.2 \\ \hline Income taxes, as adjusted (A) & & 322.6 & & 352.1 & & 432.8 & & 391.1 & & 245.6 \\ \hline Adjusted income & $ & 942.7 & $ & 904.6 & $ & 895.9 & $ & 931.3 & $ & 475.6 \\ \hline Weighted-average shares - assuming dilution & & 113.7 & & 113.6 & & 116.1 & & 119.5 & & 103.7 \\ \hline Adjusted earnings per share - assuming dilution & $ & 8.29 & $ & 7.96 & $ & 7.72 & $ & 7.79 & $ & 4.59 \\ \hline \multicolumn{11}{|l|}{ EBITDA (as adjusted) reconciliation: } \\ \hline Net income & $ & 514.4 & $ & 1,338.6 & $ & 592.3 & $ & 688.7 & $ & 344.9 \\ \hline Income tax expense (benefit) & & 187.2 & & (477.6) & & 286.1 & & 289.2 & & 178.1 \\ \hline Interest expense - net & & 207.9 & & 174.1 & & 163.1 & & 171.1 & & 79.9 \\ \hline Depreciation & & 206.0 & & 206.3 & & 211.7 & & 221.7 & & 157.5 \\ \hline Amortization & & 240.3 & & 206.8 & & 207.3 & & 208.4 & & 109.7 \\ \hline Goodwill impairment charges & & 97.9 & & 145.0 & & - & & - & & - \\ \hline Other intangible assets impairment charges & & 107.2 & & 31.9 & & 133.2 & & - & & 1.2 \\ \hline EBITDA (as adjusted) & $ & 1,560.9 & $ & 1,625.1 & $ & 1,593.7 & $ & 1,579.1 & $ & 871.3 \\ \hline \multicolumn{11}{|l|}{ Free cash flow reconciliation: } \\ \hline Net cash provided by (used for) operating activities & $ & 1,141.2 & $ & 1,218.0 & $ & 1,059.0 & $ & 1,461.0 & $ & 739.1 \\ \hline Additions to property, plant, and equipment & & (359.8) & & (321.9) & & (192.4) & & (201.4) & & (247.7) \\ \hline Free cash flow & $ & 781.4 & $ & 896.1 & $ & 866.6 & $ & 1,259.6 & $ & 491.4 \\ \hline \end{tabular} CONTRACTUAL OBLIGATIONS The following table summarizes our contractual obligations by fiscal year at April 30, 2019