þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-0725980
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $1.00 par value
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The NASDAQ Global Select Market
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PART I
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ITEM 1.
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Business
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ITEM 1A.
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Risk Factors
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ITEM 1B.
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Unresolved Staff Comments
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ITEM 2.
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Properties
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ITEM 3.
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Legal Proceedings
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ITEM 4.
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Mine Safety Disclosures
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PART II
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ITEM 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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ITEM 6.
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Selected Financial Data
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ITEM 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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ITEM 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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ITEM 8.
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Financial Statements and Supplementary Data
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ITEM 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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ITEM 9A.
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Controls and Procedures
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ITEM 9B.
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Other Information
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PART III
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ITEM 10.
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Directors, Executive Officers and Corporate Governance
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ITEM 11.
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Executive Compensation
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ITEM 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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ITEM 13.
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Certain Relationships and Related Transactions, and Director Independence
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ITEM 14.
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Principal Accountant Fees and Services
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PART IV
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ITEM 15.
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Exhibits and Financial Statement Schedules
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ITEM 16.
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Form 10-K Summary
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SIGNATURES
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Item 1.
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Business
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•
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Manufacturing and Distribution.
In the fourth quarter of fiscal 2015, we transitioned our coffee roasting, grinding and packaging functions from our Torrance, California production facility and consolidated them with our Houston, Texas and Portland, Oregon production facilities, and moved our Houston distribution operations to our Oklahoma City, Oklahoma distribution center.
|
•
|
Corporate Headquarters
. During the first half of fiscal 2016, we transferred our primary administrative offices from Torrance to temporary leased offices in Fort Worth, Texas near the New Facility, including the transfer or new hire of approximately 140 employees.
|
•
|
Sale of Spice Assets
. In order to focus on our core product offerings, in the second quarter of fiscal 2016, we completed the sale of certain assets associated with our manufacture, processing and distribution of raw, processed and blended spices and certain other culinary products (collectively, the “Spice Assets”) to Harris Spice Company Inc. (“Harris”). We provided certain post-closing transition services to Harris which concluded during the fourth quarter of fiscal 2016. The sale of the Spice Assets does not represent a strategic shift for us and is not expected to have a material impact on our results of operations because we will continue to sell a complete portfolio of spice and other culinary products purchased from Harris under a supply agreement to our direct-store-delivery, or DSD, customers.
|
•
|
Sale of the Torrance Facility.
In the fourth quarter of fiscal 2016, we entered into a purchase and sale agreement to sell the Torrance facility. Subsequent to the fiscal year end, the sale of the Torrance facility closed on July 15, 2016. We have agreed to lease back the Torrance facility on a triple net basis through October 31, 2016, subject to two one-month extensions, at our option. As of June 30, 2016, the Torrance facility continued to house certain administrative functions and serve as a distribution facility and branch warehouse pending transition of the remaining Torrance operations to our other facilities.
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•
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a robust line of roast and ground coffee, including organic, Direct Trade, DTVS and other sustainably-produced offerings;
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•
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frozen liquid coffee;
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•
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flavored and unflavored iced and hot teas;
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•
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culinary products including gelatins and puddings, soup bases, dressings, gravy and sauce mixes, pancake and biscuit mixes, jellies and preserves, and coffee-related products such as coffee filters, sugar and creamers;
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•
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spices; and
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•
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other beverages including cappuccino, cocoa, granitas, and ready-to-drink iced coffee.
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•
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develop new products in response to demographic and other trends to better compete in areas such as premium coffee and tea;
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•
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rethink aspects of our Company culture to improve productivity and employee engagement and to attract talent;
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•
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embrace sustainability across our operations, in the quality of our products, as well as, how we treat our coffee growers; and
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•
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ensure our systems and processes provide the highest quality products at a competitive cost, protection from cyber-risk, and a safe environment for our employees and partners.
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•
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a wide variety of coffee product offerings and packaging options across numerous brands and quality tiers;
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•
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beverage equipment placement and service;
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•
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hassle-free inventory and product procurement management;
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•
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DSD service;
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•
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merchandising support; and
|
•
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product and menu insights.
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•
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New Facility
. In fiscal 2015, we commenced work on a corporate relocation plan to replace our aging production facility in Torrance, California with a more efficient, state-of-the-art facility to be located in Northlake, Texas. We undertook this endeavor, in part, to pursue improved production efficiency to allow us to provide a more cost-competitive offering of high-quality products. We believe the expected improvements in production efficiency, combined with the wind-down and sale of our Torrance facility, should allow us to operate at a lower cost, generally.
|
•
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Third-Party Logistics
. During the second half of fiscal 2016, we replaced our long-haul fleet operations with third-party logistics ("3PL"). We expect that this transportation arrangement will reduce our fuel consumption and empty trailer miles, while improving our intermodal and trailer cube utilization.
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•
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Vendor Managed Inventory.
During the second half of fiscal 2016, we entered into a vendor managed inventory arrangement with a third party. We anticipate that the use of vendor managed inventory arrangements will result in a reduction in raw material, finished goods and logistics costs, while improving packaging innovation and fulfillment.
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•
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Warehouse Management
. Subsequent to the fiscal year end, we entered into an agreement with a third party to provide warehouse management services for our New Facility. We expect the warehouse management services to facilitate cost savings by leveraging the third party's expertise in opening new facilities, implementing lean management practices, improving performance on certain key performance metrics, and standardizing best practices.
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•
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Pricing and Products.
In fiscal 2016, we built capability to more strategically optimize our pricing strategy across product, channel, customer and geographic segments. This process is designed to improve our average margins as well as retention rates. In addition, we continued our prior work optimizing SKU count and identifying opportunities to consolidate suppliers to improve costs and supply chain efficiency.
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•
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DSD Reorganization.
During the second half of fiscal 2016, we began to realign our DSD organization by undertaking initiatives intended to streamline communication and decision making, enhance branch organizational structure, and improve customer focus, including initiatives toward a comprehensive training program for all DSD team members to strengthen customer engagement.
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•
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Accelerate Customer Acquisition Efforts.
In fiscal 2016, we executed a regional test of our first advertising and lead generation campaign designed to improve our new customer acquisition rate within our DSD network.
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•
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Asset Utilization.
We continue to look for ways to deploy our personnel, systems, assets and infrastructure to create or enhance stockholder value. Areas of focus have included corporate staffing and structure, methods of procurement, logistics, inventory management, supporting technology, and real estate assets.
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•
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Branch Consolidation and Property Sales
. In an effort to streamline our branch operations, in the fourth quarter of fiscal 2016, we sold two Northern California branch properties, with a third Northern California property under contract for sale, and we acquired a new branch facility in Hayward, California.
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•
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Acquisitions.
One of our investment priorities is exploring acquisitions that we believe will enhance long-term stockholder value and complement or enhance our product, equipment, service and/or distribution offerings to existing and new customer bases. For example, on September 9, 2016, through a newly-formed, wholly-owned subsidiary, we entered into an asset purchase agreement to acquire substantially all of the assets of China Mist Brands, Inc., dba China Mist Tea Company ("China Mist") for an aggregate purchase price of $11.3 million, with $10.8 million to be paid in cash at closing and $0.5 million to be paid as earnout if certain sales levels are achieved in the calendar years of 2017 and 2018. The transaction is expected to close during the second quarter of fiscal 2017. We anticipate that the acquisition of China Mist will give us a greater presence in the high-growth premium tea industry. See
Note 24
,
Subsequent Events
, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
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•
|
Investment in Human Resources.
In fiscal 2016, we hired Isaac N. Johnston, Jr. as our Treasurer and Chief Financial Officer and Carolyn Suzanne Gargis as our VP of Human Relations. Each of these individuals brings a proven track record at both large consumer packaged goods operations as well as experience in dealing with smaller and more entrepreneurial companies. In addition, in fiscal 2016, we continued to emphasize greater alignment of employee individual goals with Company goals under our compensation plans in order to focus the entire organization on the effort to create value for our stockholders.
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•
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Introduction of Collaborative Coffee™ and Redesign of Un Momento
®
Branded Retail Products.
In an effort to address what we believe to be unmet consumer needs and improve margin within the retail grocery environment, in fiscal 2016 we launched the Collaborative Coffee
™
brand into the retail grocery channel and completed a packaging redesign and product portfolio optimization of our Un Momento
®
retail branded product line. Collaborative Coffee™ offers coffee enthusiasts a super-premium, verified direct trade coffee at an approachable price. Un Momento
®
delivers Millennial Hispanic consumers appealing flavor variety and premium coffee at an exceptional value.
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•
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Sustainability.
We believe that our collective efforts in measuring our social and environmental impact, creating programs for waste, water and energy reduction, promoting partnerships in our supply chain that aim at supply chain stability and food security, and focusing on employee engagement place us in a unique position to help retailers and foodservice operators create differentiated coffee programs that can include sustainable supply chains, direct trade purchasing, training and technical assistance, recycling and composting networks, and packaging material reductions. During fiscal 2016, we submitted our second third-party verified Carbon Disclosure Project survey for Scope 1, 2 and 3 emissions (direct emissions, indirect emissions from consumption of purchased electricity, heat or steam and other indirect emissions). Further, we published a sustainability report based on the Global Reporting Initiative’s compliance standard.
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•
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LEED
®
Certified Facilities.
Our Portland production and distribution facility was one of the first in the Northwest to achieve LEED
®
Silver Certification. We anticipate that our corporate offices at the New Facility will also be LEED
®
certified.
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•
|
Expansion of Direct Trade Verified Sustainable Program.
In fiscal 2016, we completed our first third-party audit and verification of our DTVS program for sourcing green coffee. DTVS is an impact-based product or raw material sourcing framework that utilizes data-based sustainability metrics to influence an inclusive, collaborative approach to sustainability along the supply chain. To evaluate whether coffee is DTVS, we follow an outcome-based evaluation framework. The outcome of this evaluation weighs on where we invest our resources within our supply chain and has led to an increased level of transparency for us. DTVS represents a growing percentage of our coffee portfolio.
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•
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Green Coffee Traceability.
We are committed to the inclusion of more sustainably-sourced coffees in our supply chain. Regulatory and reputational risks can increase when customers, roasters and suppliers cannot see back into their supply chain. To address these concerns, as well as to deepen our commitment to the longevity of the coffee industry, in fiscal 2016 we began requiring our immediate suppliers of green coffee to enhance their reporting of traceability information on each lot of coffee sold to us.
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•
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Recipient organizations include Feeding America, Mercy Corps, Ronald McDonald House, and local food banks.
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•
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We support industry organizations such as World Coffee Research, which commits to grow, protect, and enhance supplies of quality coffee while improving the livelihoods of the families who produce it, and the Specialty Coffee Association of America ("SCAA") Sustainability Council and the Coalition for Coffee Communities, which are focused on sustainability in coffee growing regions.
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•
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Our employee-driven CAFÉ Crew organizes employee involvement at local charities and fund raisers, including running in the Chicago Marathon in support of Team Ronald McDonald House, riding in the Ride Against Hunger supported by Tarrant Area Food Bank, supporting delivery for Meals on Wheels, and hosting local food drives.
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•
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All of our usable and near expiring products or products with damaged packaging are donated to Feeding America affiliated food banks nationwide, in an effort to fully eliminate edible food waste from the landfill.
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•
|
Coffee Industry Leadership.
Through our dedication to the craft of sourcing, blending and roasting coffee, and our participation and/or leadership positions with the SCAA, National Coffee Association, Coalition for Coffee Communities, International Women's Coffee Alliance, International Foodservice Manufacturers Association, Pacific Coast Coffee Association, Roasters Guild and World Coffee Research, we work to help shape the future of the coffee industry. We believe that due to our commitment to the industry, large retail and foodservice operators are drawn to working with us. We were among the first coffee roasters in the nation to receive SCAA certification of a state-of-the-art coffee lab and operate Public Domain
®
, a specialty coffeehouse in Portland, Oregon. Upon completion, we plan to submit our product development lab at the New Facility for SCAA certification.
|
•
|
Market Insight and Consumer Research.
We have developed a market insight capability internally that reinforces our business-to-business positioning as a thought leader in the coffee industry. We provide trend insights that help our customers create winning products and integrated marketing strategies for their own coffee brands.
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Item 1A.
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Risk Factors
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•
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seek additional financing in the debt or equity markets;
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•
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refinance or restructure all or a portion of our indebtedness;
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•
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sell selected assets; or
|
•
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reduce or delay planned capital or operating expenditures.
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Item 1.B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Location
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Approximate Square Feet
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|
Purpose
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Status
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Northlake, TX(1)
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538,000
|
|
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Under construction
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Leased
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Houston, TX
|
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330,877
|
|
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Manufacturing and warehouse
|
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Owned
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Portland, OR
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114,000
|
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Manufacturing and distribution
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Leased
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Northlake, IL
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89,837
|
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Distribution and warehouse
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Leased
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Oklahoma City, OK
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142,115
|
|
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Distribution and warehouse
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Owned
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Moonachie, NY
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41,404
|
|
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Distribution and warehouse
|
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Leased
|
Torrance, CA(2)
|
|
665,000
|
|
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Distribution and warehouse
|
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Leased
|
(2)
|
We sold the Torrance facility on July 15, 2016, subject to a lease back as described in
Note 24
,
Subsequent Events,
of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report. As of June 30, 2016, the Torrance facility continued to house certain administrative functions and serve as a distribution facility and a branch warehouse pending transition of the remaining Torrance operations to our other facilities.
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Item 3.
|
Legal Proceedings
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Item 4.
|
Mine Safety Disclosures
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Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
Year Ended June 30, 2016
|
|
Year Ended June 30, 2015
|
||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
1st Quarter
|
|
$
|
28.16
|
|
|
$
|
20.90
|
|
|
$
|
29.10
|
|
|
$
|
20.29
|
|
2nd Quarter
|
|
$
|
32.94
|
|
|
$
|
26.99
|
|
|
$
|
31.86
|
|
|
$
|
26.01
|
|
3rd Quarter
|
|
$
|
31.63
|
|
|
$
|
24.04
|
|
|
$
|
32.50
|
|
|
$
|
22.72
|
|
4th Quarter
|
|
$
|
32.50
|
|
|
$
|
26.69
|
|
|
$
|
25.96
|
|
|
$
|
23.39
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
||||||
Farmer Bros. Co.
|
|
$
|
100.00
|
|
|
$
|
78.50
|
|
|
$
|
138.66
|
|
|
$
|
213.12
|
|
|
$
|
231.76
|
|
|
$
|
316.17
|
|
Russell 2000 Index
|
|
$
|
100.00
|
|
|
$
|
97.92
|
|
|
$
|
121.63
|
|
|
$
|
150.38
|
|
|
$
|
160.61
|
|
|
$
|
150.70
|
|
Value Line Food Processing Index
|
|
$
|
100.00
|
|
|
$
|
108.65
|
|
|
$
|
130.34
|
|
|
$
|
159.51
|
|
|
$
|
170.55
|
|
|
$
|
202.07
|
|
Peer Group Index
|
|
$
|
100.00
|
|
|
$
|
119.31
|
|
|
$
|
144.21
|
|
|
$
|
160.87
|
|
|
$
|
175.66
|
|
|
$
|
215.12
|
|
Item 6.
|
Selected Financial Data
|
|
Year Ended June 30,
|
||||||||||||||||||
(In thousands, except per share data)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
544,382
|
|
|
$
|
545,882
|
|
|
$
|
528,380
|
|
|
$
|
513,869
|
|
|
$
|
498,701
|
|
Cost of goods sold
|
$
|
335,907
|
|
|
$
|
348,846
|
|
|
$
|
332,466
|
|
|
$
|
328,693
|
|
|
$
|
332,309
|
|
Restructuring and other transition expenses(1)
|
$
|
16,533
|
|
|
$
|
10,432
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net gains from sale of Spice Assets(2)
|
$
|
(5,603
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net (gains) losses from sales of assets
|
$
|
(2,802
|
)
|
|
$
|
394
|
|
|
$
|
(3,814
|
)
|
|
$
|
(4,467
|
)
|
|
$
|
(268
|
)
|
Income (loss) from operations
|
$
|
8,179
|
|
|
$
|
3,284
|
|
|
$
|
8,916
|
|
|
$
|
372
|
|
|
$
|
(21,846
|
)
|
Income (loss) from operations per common share—diluted
|
$
|
0.49
|
|
|
$
|
0.20
|
|
|
$
|
0.56
|
|
|
$
|
0.02
|
|
|
$
|
(1.41
|
)
|
Income tax (benefit) expense(3)
|
$
|
(79,997
|
)
|
|
$
|
402
|
|
|
$
|
705
|
|
|
$
|
(825
|
)
|
|
$
|
(347
|
)
|
Net income (loss)(4)
|
$
|
89,918
|
|
|
$
|
652
|
|
|
$
|
12,132
|
|
|
$
|
(8,462
|
)
|
|
$
|
(26,576
|
)
|
Net income (loss) per common share—basic
|
$
|
5.45
|
|
|
$
|
0.04
|
|
|
$
|
0.76
|
|
|
$
|
(0.54
|
)
|
|
$
|
(1.72
|
)
|
Net income (loss) per common share—diluted
|
$
|
5.41
|
|
|
$
|
0.04
|
|
|
$
|
0.76
|
|
|
$
|
(0.54
|
)
|
|
$
|
(1.72
|
)
|
Cash dividends declared per common share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
June 30,
|
||||||||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets(5)
|
$
|
368,991
|
|
|
$
|
240,943
|
|
|
$
|
266,177
|
|
|
$
|
244,136
|
|
|
$
|
257,916
|
|
Deferred income taxes
|
$
|
80,786
|
|
|
$
|
751
|
|
|
$
|
414
|
|
|
$
|
467
|
|
|
$
|
861
|
|
Capital lease obligations(6)
|
$
|
2,359
|
|
|
$
|
5,848
|
|
|
$
|
9,703
|
|
|
$
|
12,168
|
|
|
$
|
15,867
|
|
Long-term borrowings under revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,000
|
|
|
$
|
—
|
|
Earn-out payable-RLC acquisition(7)
|
$
|
100
|
|
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term derivative liabilities
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
1,129
|
|
|
$
|
—
|
|
Total liabilities(8)
|
$
|
186,397
|
|
|
$
|
150,932
|
|
|
$
|
151,313
|
|
|
$
|
162,298
|
|
|
$
|
174,364
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Event
|
|
Date
|
Announced Corporate Relocation Plan
|
|
Q3 fiscal 2015
|
Transitioned coffee processing and packaging from Torrance production facility
and consolidated them with Houston and Portland production facilities
|
|
Q4 fiscal 2015
|
Moved Houston distribution operations to Oklahoma City distribution center
|
|
Q4 fiscal 2015
|
Entered into the lease agreement and development management agreement for New Facility
|
|
Q1 fiscal 2016
|
Commenced construction of New Facility
|
|
Q1 fiscal 2016
|
Transitioned primary administrative offices from Torrance to temporary leased offices in Fort Worth, Texas
|
|
Q1-Q2 fiscal 2016
|
Sold Spice Assets to Harris
|
|
Q2 fiscal 2016
|
Principal design work completed on New Facility
|
|
Q3 fiscal 2016
|
Completed transition services to Harris and ceased spice processing and packaging at Torrance facility
|
|
Q4 fiscal 2016
|
Entered into purchase and sale agreement to sell Torrance facility
|
|
Q4 fiscal 2016
|
Exercised purchase option on New Facility
|
|
Q4 fiscal 2016
|
Closed sale of Torrance facility
|
|
Q1 fiscal 2017
|
Close on purchase option for New Facility
|
|
Estimated Q1 fiscal 2017
|
Exit from Torrance facility
|
|
Estimated Q2 fiscal 2017
|
Completion of construction and relocation to New Facility
|
|
Estimated Q3 fiscal 2017
|
•
|
Demographic and Channel Trends.
Our success is dependent upon our ability to develop new products in response to demographic and other trends to better compete in areas such as premium coffee and tea, including expansion of our product portfolio by investing resources in what we believe to be key growth categories, including the launch of our Metropolitan™ single cup coffee, expanded seasonal coffee and specialty beverages, new shelf-stable coffee products, new hot teas, the introduction of Collaborative Coffee™ branded products into the retail grocery channel, and the packaging redesign and product portfolio optimization of our Un Momento
®
retail branded product line.
|
•
|
Fluctuations in Green Coffee Prices.
Our primary raw material is green coffee, an agricultural commodity traded on the Commodities and Futures Exchange that is subject to price fluctuations. Over the past five years, coffee “C” market price per pound ranged from approximately $1.02 to $2.90. The coffee “C” market price as of June 30, 2016 and 2015 was
$1.46
and
$1.32
per pound, respectively. The price and availability of green coffee directly impacts our results of operations. For additional details, see
Risk Factors
in Part I, Item 1A of this report.
|
•
|
Hedging Strategy.
We are exposed to market risk of losses due to changes in coffee commodity prices. Our business model strives to reduce the impact of green coffee price fluctuations on our financial results and to protect and stabilize our margins, principally through customer arrangements and derivative instruments, as further explained in
Note 7
,
Derivative Instruments
, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report. In each of fiscal 2016 and fiscal 2015, a lower percentage of our roast and ground coffee volume was based on a price schedule and a higher percentage was sold to customers under commodity-based pricing arrangements as compared to fiscal 2014.
|
•
|
Sustainability
.
With an increasing focus on sustainability across the coffee and foodservice industry, and particularly from the customers we serve, it is important for us to embrace sustainability across our operations, in the quality of our products, as well as, how we treat our coffee growers. We believe that our collective efforts in measuring our social and environmental impact, creating programs for waste, water and energy reduction, promoting partnerships in our supply chain that aim at supply chain stability and food security, and focusing on employee engagement place us in a unique position to help retailers and foodservice operators create differentiated coffee programs that can include sustainable supply chains, direct trade purchasing, training and technical assistance, recycling and composting networks, and packaging material reductions.
|
•
|
Supply Chain Efficiencies and Competition
.
In order to compete effectively and capitalize on growth opportunities, we must continue to evaluate and undertake initiatives to reduce costs and streamline our supply chain. We undertook the Corporate Relocation Plan, in part, to pursue improved production efficiency to allow us to provide a more cost-competitive offering of high-quality products. We continue to look for ways to deploy our personnel, systems, assets and infrastructure to create or enhance stockholder value. Areas of focus have included corporate staffing and structure, methods of procurement, logistics, inventory management, supporting technology, and real estate assets.
|
•
|
Market Opportunities.
We have invested and in the future may invest in acquisitions that we believe will enhance long-term stockholder value and complement or enhance our product, equipment, service and/or distribution offerings to existing and new customer bases. For example, subsequent to the fiscal year end, on September 9, 2016, we entered into an asset purchase agreement to acquire substantially all of the assets of China Mist as described in
Note 24
,
Subsequent Events
, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report. We anticipate that the acquisition of China Mist will give us a greater presence in the high-growth premium tea industry. Additionally, in the first quarter of fiscal 2015 we acquired substantially all of the assets of Rae' Launo Corporation (“RLC”) as described in
Note 2
,
Acquisition
, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
|
•
|
Capacity Utilization
.
We calculate our utilization for all of our production facilities on an aggregate basis based on the number of product pounds manufactured during the actual number of production shifts worked during an average week, compared to the number of product pounds that could be manufactured based on the maximum number of production shifts that could be operated during the week (assuming three shifts per day, seven days per week), in each case, based on our current product mix. Utilization rates for our production facilities were approximately 90%, 66% and 65% during the fiscal years ended June 30, 2016, 2015 and 2014, respectively. The higher utilization rate in fiscal 2016 was due to the wind-down of production at our Torrance facility and the addition of those production volumes to our Portland and Houston production facilities. Since most of our customers do not commit to long-term firm production schedules, we are unable to forecast the level of customer orders with certainty to maximize utilization of manufacturing capacity. As a result, our production facility capacity utilization generally remains less than 100%.
|
•
|
Gross profit increased
5.8%
to
$208.5 million
in fiscal 2016 from
$197.0 million
in fiscal 2015.
|
•
|
Gross margin increased to
38.3%
in fiscal 2016 from
36.1%
in fiscal 2015.
|
•
|
Income from operations increased
149.1%
to
$8.2 million
in fiscal 2016 from
$3.3 million
in fiscal 2015.
|
•
|
Net income was
$89.9 million
, or
$5.41
per diluted common share, in fiscal 2016, primarily due to non-cash income tax benefit of
$80.3 million
from the release of valuation allowance on deferred tax assets, compared to
$0.7 million
, or
$0.04
per diluted common share, in fiscal 2015.
|
•
|
Corporate Relocation Plan.
We continued to execute on the Corporate Relocation Plan that we initiated in the third quarter of fiscal 2015 by executing on the milestones described above under
Corporate Relocation
.
|
•
|
Third-Party Logistics.
During the second half of fiscal 2016, we replaced our long-haul fleet operations with 3PL. We expect that this transportation arrangement will reduce our fuel consumption and empty trailer miles, while improving our intermodal and trailer cube utilization.
|
•
|
Vendor Managed Inventory.
During the second half of fiscal 2016, we entered into a vendor managed inventory arrangement with a third party. We anticipate that the use of vendor managed inventory arrangements will result in a reduction in raw material, finished goods and logistics costs, while improving packaging innovation and fulfillment.
|
•
|
DSD Reorganization.
In fiscal 2016, we continued our efforts to improve efficiencies in our sales and product offerings. During the second half of fiscal 2016, we began to realign our DSD organization by undertaking initiatives intended to streamline communication and decision making, enhance branch organizational structure, and improve customer focus, including toward a comprehensive training program for all DSD team members to strengthen customer engagement. In fiscal 2016, we executed a regional test of our first advertising and lead generation campaign designed to improve our new customer acquisition rate within our DSD network.
|
•
|
Branch Consolidation and Property Sales.
In an effort to streamline our branch operations, in the fourth quarter of fiscal 2016 we sold two Northern California branch properties, with a third Northern California property under contract for sale, and we acquired a new branch facility in Hayward, California.
|
•
|
Introduction of Collaborative Coffee™ and Redesign of Un Momento
®
Branded Retail Products.
In an effort to address what we believe to be unmet consumer needs and improve margin within the retail grocery environment, in fiscal 2016, we launched Collaborative Coffee™, a new brand of ethically sourced, whole bean direct trade coffees into the retail grocery channel. In addition, we completed a packaging redesign and product portfolio optimization of our Un Momento® retail branded product line.
|
(In millions)
|
Year Ended June 30,
2016 vs. 2015
|
||
Effect of change in unit sales
|
$
|
14.4
|
|
Effect of pricing and product mix changes
|
(15.9
|
)
|
|
Total decrease in net sales
|
$
|
(1.5
|
)
|
|
|
Year Ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
||||||||||
(In thousands)
|
|
$
|
|
% of total
|
|
$
|
|
% of total
|
||||||
Net Sales by Product Category:
|
|
|
|
|
|
|
|
|
||||||
Coffee (Roast & Ground)
|
|
$
|
332,533
|
|
|
61
|
%
|
|
$
|
336,129
|
|
|
60
|
%
|
Coffee (Frozen Liquid)
|
|
35,933
|
|
|
7
|
%
|
|
37,428
|
|
|
7
|
%
|
||
Tea (Iced & Hot)
|
|
25,096
|
|
|
4
|
%
|
|
27,172
|
|
|
5
|
%
|
||
Culinary
|
|
54,036
|
|
|
10
|
%
|
|
54,208
|
|
|
11
|
%
|
||
Spice(1)
|
|
35,789
|
|
|
6
|
%
|
|
32,336
|
|
|
6
|
%
|
||
Other beverages(2)
|
|
57,690
|
|
|
11
|
%
|
|
54,933
|
|
|
10
|
%
|
||
Net sales by product category
|
|
541,077
|
|
|
99
|
%
|
|
542,206
|
|
|
99
|
%
|
||
Fuel surcharge
|
|
3,305
|
|
|
1
|
%
|
|
3,676
|
|
|
1
|
%
|
||
Net sales
|
|
$
|
544,382
|
|
|
100
|
%
|
|
$
|
545,882
|
|
|
100
|
%
|
(In millions)
|
Year Ended June 30,
2015 vs. 2014
|
||
Effect of change in unit sales
|
$
|
(2.0
|
)
|
Effect of pricing and product mix changes
|
19.5
|
|
|
Total increase in net sales
|
$
|
17.5
|
|
|
|
Year Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
||||||||||
(In thousands)
|
|
$
|
|
% of total
|
|
$
|
|
% of total
|
||||||
Net Sales by Product Category:
|
|
|
|
|
|
|
|
|
||||||
Coffee (Roast & Ground)
|
|
$
|
336,129
|
|
|
61
|
%
|
|
$
|
319,251
|
|
|
60
|
%
|
Coffee (Frozen Liquid)
|
|
37,428
|
|
|
7
|
%
|
|
37,840
|
|
|
7
|
%
|
||
Tea (Iced & Hot)
|
|
27,172
|
|
|
5
|
%
|
|
28,452
|
|
|
5
|
%
|
||
Culinary
|
|
54,208
|
|
|
10
|
%
|
|
56,567
|
|
|
11
|
%
|
||
Spice
|
|
32,336
|
|
|
6
|
%
|
|
31,876
|
|
|
6
|
%
|
||
Other beverages(1)
|
|
54,933
|
|
|
10
|
%
|
|
50,572
|
|
|
10
|
%
|
||
Net sales by product category
|
|
542,206
|
|
|
99
|
%
|
|
524,558
|
|
|
99
|
%
|
||
Fuel surcharge
|
|
3,676
|
|
|
1
|
%
|
|
3,822
|
|
|
1
|
%
|
||
Net sales
|
|
$
|
545,882
|
|
|
100
|
%
|
|
$
|
528,380
|
|
|
100
|
%
|
•
|
restructuring and other transition expenses;
|
•
|
net gains and losses from sales of assets; and
|
•
|
income tax benefit, including the release of valuation allowance on deferred tax assets.
|
•
|
income taxes;
|
•
|
interest expense;
|
•
|
depreciation and amortization expense;
|
•
|
ESOP and share-based compensation expense;
|
•
|
non-cash impairment losses;
|
•
|
non-cash pension withdrawal expense;
|
•
|
other similar non-cash expenses;
|
•
|
restructuring and other transition expenses; and
|
•
|
net gains and losses from sales of assets.
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income, as reported
|
|
$
|
89,918
|
|
|
$
|
652
|
|
|
$
|
12,132
|
|
Restructuring and other transition expenses
|
|
16,533
|
|
|
10,432
|
|
|
—
|
|
|||
Net gains from sale of Spice Assets
|
|
(5,603
|
)
|
|
—
|
|
|
—
|
|
|||
Net (gains) losses from sales of assets
|
|
(2,802
|
)
|
|
394
|
|
|
(3,814
|
)
|
|||
Non-cash income tax benefit, including release of valuation allowance on deferred tax assets
|
|
(80,439
|
)
|
|
—
|
|
|
—
|
|
|||
Non-GAAP net income
|
|
$
|
17,607
|
|
|
$
|
11,478
|
|
|
$
|
8,318
|
|
|
|
|
|
|
|
|
||||||
Net income per common share—diluted, as reported
|
|
$
|
5.41
|
|
|
$
|
0.04
|
|
|
$
|
0.76
|
|
Impact of restructuring and other transition expenses
|
|
$
|
1.00
|
|
|
$
|
0.64
|
|
|
$
|
—
|
|
Impact of net gains from sale of Spice Assets
|
|
$
|
(0.34
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Impact of net (gains) losses from sales of assets
|
|
$
|
(0.17
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.24
|
)
|
Impact of release of valuation allowance on deferred tax assets
|
|
$
|
(4.84
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-GAAP net income per diluted common share
|
|
$
|
1.06
|
|
|
$
|
0.71
|
|
|
$
|
0.52
|
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income, as reported
|
|
$
|
89,918
|
|
|
$
|
652
|
|
|
$
|
12,132
|
|
Income tax (benefit) expense
|
|
(79,997
|
)
|
|
402
|
|
|
705
|
|
|||
Interest expense
|
|
425
|
|
|
769
|
|
|
1,258
|
|
|||
Depreciation and amortization expense
|
|
20,774
|
|
|
24,179
|
|
|
27,334
|
|
|||
ESOP and share-based compensation expense
|
|
4,342
|
|
|
5,691
|
|
|
4,692
|
|
|||
Restructuring and other transition expenses
|
|
16,533
|
|
|
10,432
|
|
|
—
|
|
|||
Net gains from sale of Spice Assets
|
|
(5,603
|
)
|
|
—
|
|
|
—
|
|
|||
Net (gains) losses from sales of assets
|
|
(2,802
|
)
|
|
394
|
|
|
(3,814
|
)
|
|||
Adjusted EBITDA
|
|
$
|
43,590
|
|
|
$
|
42,519
|
|
|
$
|
42,307
|
|
Adjusted EBITDA Margin
|
|
8.0
|
%
|
|
7.8
|
%
|
|
8.0
|
%
|
|
|
|
|
June 30,
|
|
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Coffee brewing equipment
|
|
$
|
8,375
|
|
|
$
|
10,709
|
|
|
$
|
13,550
|
|
Vehicles, machinery and equipment
|
|
10,254
|
|
|
6,079
|
|
|
9,270
|
|
|||
Building and facilities
|
|
3,354
|
|
|
1,460
|
|
|
758
|
|
|||
Software, office furniture and equipment
|
|
3,165
|
|
|
946
|
|
|
1,689
|
|
|||
Land
|
|
1,458
|
|
|
—
|
|
|
—
|
|
|||
Capital expenditures, excluding New Facility
|
|
$
|
26,606
|
|
|
$
|
19,194
|
|
|
$
|
25,267
|
|
New Facility:
|
|
|
|
|
|
|
||||||
Machinery and equipment
|
|
$
|
4,443
|
|
|
$
|
22
|
|
|
$
|
—
|
|
Total capital expenditures
|
|
$
|
31,049
|
|
|
$
|
19,216
|
|
|
$
|
25,267
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Current assets(1)
|
|
$
|
153,365
|
|
|
$
|
135,685
|
|
Current liabilities(2)
|
|
56,837
|
|
|
64,874
|
|
||
Working capital
|
|
$
|
96,528
|
|
|
$
|
70,811
|
|
|
|
Payment due by period
|
||||||||||||||||||
(In thousands)
|
|
Total
|
|
Less Than
One Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More Than
5 Years
|
||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating lease obligations
|
|
$
|
11,801
|
|
|
$
|
4,093
|
|
|
$
|
5,927
|
|
|
$
|
1,720
|
|
|
$
|
61
|
|
New Facility purchase option exercise price(1)
|
|
58,779
|
|
|
58,779
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital lease obligations(2)
|
|
2,504
|
|
|
1,443
|
|
|
1,005
|
|
|
56
|
|
|
—
|
|
|||||
Pension plan obligations
|
|
89,950
|
|
|
8,075
|
|
|
16,858
|
|
|
17,918
|
|
|
47,099
|
|
|||||
Postretirement benefits other than
pension plans
|
|
11,957
|
|
|
1,080
|
|
|
2,245
|
|
|
2,386
|
|
|
6,246
|
|
|||||
Revolving credit facility
|
|
109
|
|
|
109
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments(3)
|
|
72,217
|
|
|
72,217
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
247,317
|
|
|
$
|
145,796
|
|
|
$
|
26,035
|
|
|
$
|
22,080
|
|
|
$
|
53,406
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
($ in thousands)
|
|
Market Value of
Preferred
Securities at
June 30, 2016
|
|
Change in Market
Value
|
||||
Interest Rate Changes
|
|
|
||||||
–150 basis points
|
|
$
|
26,495
|
|
|
$
|
904
|
|
–100 basis points
|
|
$
|
26,310
|
|
|
$
|
719
|
|
Unchanged
|
|
$
|
25,591
|
|
|
$
|
—
|
|
+100 basis points
|
|
$
|
24,644
|
|
|
$
|
(947
|
)
|
+150 basis points
|
|
$
|
24,184
|
|
|
$
|
(1,407
|
)
|
|
|
Increase (Decrease) to Net Income
|
|
Increase (Decrease) to AOCI
|
||||||||||||
|
|
10% Increase in Underlying Rate
|
|
10% Decrease in Underlying Rate
|
|
10% Increase in Underlying Rate
|
|
10% Decrease in Underlying Rate
|
||||||||
(In thousands)
|
|
|||||||||||||||
Coffee-related derivative instruments(1)
|
|
$
|
118
|
|
|
$
|
(118
|
)
|
|
$
|
4,941
|
|
|
$
|
(4,941
|
)
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
June 30, 2016
|
|
June 30, 2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
21,095
|
|
|
$
|
15,160
|
|
Restricted cash
|
—
|
|
|
1,002
|
|
||
Short-term investments
|
25,591
|
|
|
23,665
|
|
||
Accounts and notes receivable, net of allowance for doubtful accounts of $714 and $643, respectively
|
44,364
|
|
|
40,161
|
|
||
Inventories
|
46,378
|
|
|
50,522
|
|
||
Income tax receivable
|
247
|
|
|
535
|
|
||
Short-term derivative assets
|
3,954
|
|
|
—
|
|
||
Prepaid expenses
|
4,557
|
|
|
4,640
|
|
||
Assets held for sale
|
7,179
|
|
|
—
|
|
||
Total current assets
|
153,365
|
|
|
135,685
|
|
||
Property, plant and equipment, net
|
118,416
|
|
|
90,201
|
|
||
Goodwill and intangible assets, net
|
6,491
|
|
|
6,691
|
|
||
Other assets
|
9,933
|
|
|
7,615
|
|
||
Deferred income taxes
|
80,786
|
|
|
751
|
|
||
Total assets
|
$
|
368,991
|
|
|
$
|
240,943
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
23,919
|
|
|
27,023
|
|
||
Accrued payroll expenses
|
24,540
|
|
|
23,005
|
|
||
Short-term borrowings under revolving credit facility
|
109
|
|
|
78
|
|
||
Short-term obligations under capital leases
|
1,323
|
|
|
3,249
|
|
||
Short-term derivative liabilities
|
—
|
|
|
3,977
|
|
||
Deferred income taxes
|
—
|
|
|
1,390
|
|
||
Other current liabilities
|
6,946
|
|
|
6,152
|
|
||
Total current liabilities
|
56,837
|
|
|
64,874
|
|
||
Accrued pension liabilities
|
68,047
|
|
|
47,871
|
|
||
Accrued postretirement benefits
|
20,808
|
|
|
23,471
|
|
||
Accrued workers’ compensation liabilities
|
11,459
|
|
|
10,964
|
|
||
Other long-term liabilities-capital leases
|
1,036
|
|
|
2,599
|
|
||
Other long-term liabilities
|
28,210
|
|
|
225
|
|
||
Deferred income taxes
|
—
|
|
|
928
|
|
||
Total liabilities
|
$
|
186,397
|
|
|
$
|
150,932
|
|
Commitments and contingencies (Note 22)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $1.00 par value, 500,000 shares authorized and none issued
|
—
|
|
|
—
|
|
||
Common stock, $1.00 par value, 25,000,000 shares authorized; 16,781,561 and 16,658,148 shares issued and outstanding at June 30, 2016 and 2015, respectively
|
16,782
|
|
|
16,658
|
|
||
Additional paid-in capital
|
39,096
|
|
|
38,143
|
|
||
Retained earnings
|
196,782
|
|
|
106,864
|
|
||
Unearned ESOP shares
|
(6,434
|
)
|
|
(11,234
|
)
|
||
Accumulated other comprehensive loss
|
(63,632
|
)
|
|
(60,420
|
)
|
||
Total stockholders’ equity
|
$
|
182,594
|
|
|
$
|
90,011
|
|
Total liabilities and stockholders’ equity
|
$
|
368,991
|
|
|
$
|
240,943
|
|
|
Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
$
|
544,382
|
|
|
$
|
545,882
|
|
|
$
|
528,380
|
|
Cost of goods sold
|
335,907
|
|
|
348,846
|
|
|
332,466
|
|
|||
Gross profit
|
208,475
|
|
|
197,036
|
|
|
195,914
|
|
|||
Selling expenses
|
150,198
|
|
|
151,753
|
|
|
155,088
|
|
|||
General and administrative expenses
|
41,970
|
|
|
31,173
|
|
|
35,724
|
|
|||
Restructuring and other transition expenses
|
16,533
|
|
|
10,432
|
|
|
—
|
|
|||
Net gains from sale of Spice Assets
|
(5,603
|
)
|
|
—
|
|
|
—
|
|
|||
Net (gains) losses from sales of assets
|
(2,802
|
)
|
|
394
|
|
|
(3,814
|
)
|
|||
Operating expenses
|
200,296
|
|
|
193,752
|
|
|
186,998
|
|
|||
Income from operations
|
8,179
|
|
|
3,284
|
|
|
8,916
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Dividend income
|
1,115
|
|
|
1,172
|
|
|
1,073
|
|
|||
Interest income
|
496
|
|
|
381
|
|
|
429
|
|
|||
Interest expense
|
(425
|
)
|
|
(769
|
)
|
|
(1,258
|
)
|
|||
Other, net
|
556
|
|
|
(3,014
|
)
|
|
3,677
|
|
|||
Total other income (expense)
|
1,742
|
|
|
(2,230
|
)
|
|
3,921
|
|
|||
Income before taxes
|
9,921
|
|
|
1,054
|
|
|
12,837
|
|
|||
Income tax (benefit) expense
|
(79,997
|
)
|
|
402
|
|
|
705
|
|
|||
Net income
|
$
|
89,918
|
|
|
$
|
652
|
|
|
$
|
12,132
|
|
Net income per common share—basic
|
$
|
5.45
|
|
|
$
|
0.04
|
|
|
$
|
0.76
|
|
Net income per common share—diluted
|
$
|
5.41
|
|
|
$
|
0.04
|
|
|
$
|
0.76
|
|
Weighted average common shares outstanding—basic
|
16,502,523
|
|
|
16,127,610
|
|
|
15,909,631
|
|
|||
Weighted average common shares outstanding—diluted
|
16,627,402
|
|
|
16,267,134
|
|
|
16,014,587
|
|
|
Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
89,918
|
|
|
$
|
652
|
|
|
$
|
12,132
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Unrealized gains (losses) on derivative instruments designated as cash flow hedges, net of taxes
|
185
|
|
|
(14,295
|
)
|
|
18,685
|
|
|||
Losses (Gains) on derivative instruments designated as cash flow hedges reclassified to cost of goods sold, net of taxes
|
8,064
|
|
|
(4,211
|
)
|
|
(1,161
|
)
|
|||
Change in the funded status of retiree benefit obligations, net of taxes
|
(11,461
|
)
|
|
(14,122
|
)
|
|
(2,802
|
)
|
|||
Total comprehensive income (loss), net of tax
|
$
|
86,706
|
|
|
$
|
(31,976
|
)
|
|
$
|
26,854
|
|
FARMER BROS. CO.
|
|||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||
(In thousands)
|
|||||||||||
|
Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
89,918
|
|
|
$
|
652
|
|
|
$
|
12,132
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||||||
Depreciation and amortization
|
20,774
|
|
|
24,179
|
|
|
27,334
|
|
|||
Provision for (recovery of) doubtful accounts
|
71
|
|
|
(8
|
)
|
|
80
|
|
|||
Restructuring and other transition expenses, net of payments
|
(2,697
|
)
|
|
6,608
|
|
|
—
|
|
|||
Deferred income taxes
|
(80,314
|
)
|
|
123
|
|
|
137
|
|
|||
Net (gains) losses from sales of assets
|
(8,405
|
)
|
|
394
|
|
|
(3,814
|
)
|
|||
ESOP and share-based compensation expense
|
4,342
|
|
|
5,691
|
|
|
4,692
|
|
|||
Net losses (gains) on derivative instruments and investments
|
12,910
|
|
|
(950
|
)
|
|
(4,276
|
)
|
|||
Change in operating assets and liabilities:
|
|
|
|
|
|
||||||
Restricted cash
|
1,002
|
|
|
(1,002
|
)
|
|
8,084
|
|
|||
Purchases of trading securities held for investment
|
(7,255
|
)
|
|
(3,661
|
)
|
|
(5,915
|
)
|
|||
Proceeds from sales of trading securities held for investment
|
5,901
|
|
|
2,358
|
|
|
4,290
|
|
|||
Accounts and notes receivable
|
(3,476
|
)
|
|
2,078
|
|
|
2,248
|
|
|||
Inventories
|
3,608
|
|
|
20,470
|
|
|
(14,439
|
)
|
|||
Income tax receivable
|
288
|
|
|
(307
|
)
|
|
181
|
|
|||
Derivative (liabilities) assets, net
|
(10,583
|
)
|
|
(7,269
|
)
|
|
3,932
|
|
|||
Prepaid expenses and other assets
|
(111
|
)
|
|
(1,332
|
)
|
|
(661
|
)
|
|||
Accounts payable
|
(3,343
|
)
|
|
(16,841
|
)
|
|
17,526
|
|
|||
Accrued payroll expenses and other current liabilities
|
5,829
|
|
|
(4,606
|
)
|
|
2,574
|
|
|||
Accrued postretirement benefits
|
(358
|
)
|
|
(1,507
|
)
|
|
(1,905
|
)
|
|||
Other long-term liabilities
|
(473
|
)
|
|
1,860
|
|
|
695
|
|
|||
Net cash provided by operating activities
|
$
|
27,628
|
|
|
$
|
26,930
|
|
|
$
|
52,895
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of business, net of cash acquired
|
$
|
—
|
|
|
$
|
(1,200
|
)
|
|
$
|
—
|
|
Purchases of property, plant and equipment
|
(31,050
|
)
|
|
(19,216
|
)
|
|
(25,267
|
)
|
|||
Purchases of construction-in-progress assets under New Facility lease
|
(19,426
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of property, plant and equipment
|
10,946
|
|
|
273
|
|
|
4,536
|
|
|||
Net cash used in investing activities
|
$
|
(39,530
|
)
|
|
$
|
(20,143
|
)
|
|
$
|
(20,731
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from revolving credit facility
|
$
|
405
|
|
|
$
|
63,376
|
|
|
$
|
44,806
|
|
Repayments on revolving credit facility
|
(374
|
)
|
|
(63,947
|
)
|
|
(65,454
|
)
|
|||
Proceeds from New Facility lease financing
|
19,426
|
|
|
—
|
|
|
—
|
|
|||
Payments of capital lease obligations
|
(3,147
|
)
|
|
(3,910
|
)
|
|
(3,681
|
)
|
|||
Payment of financing costs
|
(8
|
)
|
|
(571
|
)
|
|
—
|
|
|||
Proceeds from stock option exercises
|
1,694
|
|
|
1,548
|
|
|
1,480
|
|
|||
Tax withholding payment - net share settlement of equity awards
|
(159
|
)
|
|
(116
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
17,837
|
|
|
$
|
(3,620
|
)
|
|
$
|
(22,849
|
)
|
(continued on next page)
|
FARMER BROS. CO.
|
|||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||
(In thousands)
|
|||||||||||
|
Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net increase in cash and cash equivalents
|
$
|
5,935
|
|
|
$
|
3,167
|
|
|
$
|
9,315
|
|
Cash and cash equivalents at beginning of year
|
15,160
|
|
|
11,993
|
|
|
2,678
|
|
|||
Cash and cash equivalents at end of year
|
$
|
21,095
|
|
|
$
|
15,160
|
|
|
$
|
11,993
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
425
|
|
|
$
|
769
|
|
|
$
|
1,258
|
|
Cash paid for income taxes
|
324
|
|
|
$
|
858
|
|
|
$
|
361
|
|
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
|
|
||||||
Equipment acquired under capital leases
|
$
|
—
|
|
|
$
|
55
|
|
|
$
|
1,217
|
|
Net change in derivative assets and liabilities
included in other comprehensive income (loss), net of tax
|
$
|
8,249
|
|
|
$
|
(18,506
|
)
|
|
$
|
17,524
|
|
Construction-in-progress assets under New Facility lease
|
$
|
8,684
|
|
|
$
|
—
|
|
|
$
|
—
|
|
New Facility lease obligation
|
$
|
8,684
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-cash additions to equipment
|
$
|
441
|
|
|
$
|
51
|
|
|
$
|
142
|
|
Asset held for sale
|
$
|
7,179
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-cash portion of earnout recognized
|
$
|
496
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Common
Shares
|
|
Stock
Amount
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Unearned
ESOP
Shares
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||||
Balance at June 30, 2013
|
16,454,422
|
|
|
$
|
16,454
|
|
|
$
|
34,654
|
|
|
$
|
94,080
|
|
|
$
|
(20,836
|
)
|
|
$
|
(42,514
|
)
|
|
$
|
81,838
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
12,132
|
|
|
—
|
|
|
—
|
|
|
12,132
|
|
||||||
Unrealized gains on derivative instruments designated as cash flow hedges, net of reclassifications to cost of goods sold
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,524
|
|
|
17,524
|
|
||||||
Change in the funded status of retiree benefit obligations, net of tax of zero
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,802
|
)
|
|
(2,802
|
)
|
||||||
ESOP compensation expense, including reclassifications
|
—
|
|
|
—
|
|
|
(1,475
|
)
|
|
—
|
|
|
4,801
|
|
|
—
|
|
|
3,326
|
|
||||||
Share-based compensation
|
(4,936
|
)
|
|
(5
|
)
|
|
1,371
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,366
|
|
||||||
Stock option exercises
|
112,964
|
|
|
113
|
|
|
1,367
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,480
|
|
||||||
Balance at June 30, 2014
|
16,562,450
|
|
|
$
|
16,562
|
|
|
$
|
35,917
|
|
|
$
|
106,212
|
|
|
$
|
(16,035
|
)
|
|
$
|
(27,792
|
)
|
|
$
|
114,864
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
652
|
|
|
—
|
|
|
—
|
|
|
652
|
|
||||||
Unrealized losses on derivative instruments designated as cash flow hedges, net of reclassifications to cost of goods sold
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,506
|
)
|
|
(18,506
|
)
|
||||||
Change in the funded status of retiree benefit obligations, net of tax of zero
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,122
|
)
|
|
(14,122
|
)
|
||||||
ESOP compensation expense, including reclassifications
|
—
|
|
|
—
|
|
|
(377
|
)
|
|
—
|
|
|
4,801
|
|
|
—
|
|
|
4,424
|
|
||||||
Share-based compensation
|
4,272
|
|
|
4
|
|
|
1,263
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,267
|
|
||||||
Stock option exercises
|
95,723
|
|
|
96
|
|
|
1,452
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,548
|
|
||||||
Shares withheld to cover taxes
|
(4,297
|
)
|
|
(4
|
)
|
|
(112
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
||||||
Balance at June 30, 2015
|
16,658,148
|
|
|
$
|
16,658
|
|
|
$
|
38,143
|
|
|
$
|
106,864
|
|
|
$
|
(11,234
|
)
|
|
$
|
(60,420
|
)
|
|
$
|
90,011
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
89,918
|
|
|
—
|
|
|
—
|
|
|
89,918
|
|
||||||
Unrealized gains on derivative instruments designated as cash flow hedges, net of reclassifications to cost of goods sold, net of tax of $5,238
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,249
|
|
|
8,249
|
|
||||||
Change in the funded status of retiree benefit obligations, net of tax benefit of $7,277
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,461
|
)
|
|
(11,461
|
)
|
||||||
ESOP compensation expense, including reclassifications
|
—
|
|
|
—
|
|
|
(1,413
|
)
|
|
—
|
|
|
4,800
|
|
|
—
|
|
|
3,387
|
|
||||||
Share-based compensation
|
1,551
|
|
|
2
|
|
|
954
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
956
|
|
||||||
Stock option exercises
|
127,039
|
|
|
127
|
|
|
1,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,693
|
|
||||||
Shares withheld to cover taxes
|
(5,177
|
)
|
|
(5
|
)
|
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(159
|
)
|
||||||
Balance at June 30, 2016
|
16,781,561
|
|
|
$
|
16,782
|
|
|
$
|
39,096
|
|
|
$
|
196,782
|
|
|
$
|
(6,434
|
)
|
|
$
|
(63,632
|
)
|
|
$
|
182,594
|
|
Derivative Treatment
|
|
Accounting Method
|
Normal purchases and normal sales exception
|
|
Accrual accounting
|
Designated in a qualifying hedging relationship
|
|
Hedge accounting
|
All other derivative instruments
|
|
Mark-to-market accounting
|
•
|
Gains and losses on all derivative instruments that are not designated as cash flow hedges and for which the normal purchases and normal sales exception has not been elected; and
|
•
|
The ineffective portion of unrealized gains and losses on derivative instruments that are designated as cash flow hedges.
|
Buildings and facilities
|
10 to 30 years
|
Machinery and equipment
|
3 to 5 years
|
Equipment under capital leases
|
Term of lease
|
Office furniture and equipment
|
5 years
|
Capitalized software
|
3 years
|
Fair Values of Assets Acquired
|
|
Estimated Useful Life (years)
|
|||
(In thousands)
|
|
|
|
||
Property, plant and equipment
|
$
|
338
|
|
|
|
Intangible assets:
|
|
|
|
||
Non-compete agreement
|
20
|
|
|
3.0
|
|
Customer relationships
|
870
|
|
|
4.5
|
|
Goodwill
|
272
|
|
|
|
|
Total assets acquired
|
$
|
1,500
|
|
|
|
(In thousands)
|
Balances,
June 30, 2015
|
|
Additions
|
|
Payments
|
|
Non-Cash Settled
|
|
Adjustments
|
|
Balances,
June 30, 2016
|
||||||||||||
Employee-related costs(1)
|
$
|
6,156
|
|
|
$
|
9,730
|
|
|
$
|
13,544
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,342
|
|
Facility-related costs(2)
|
—
|
|
|
3,716
|
|
|
2,712
|
|
|
1,004
|
|
|
—
|
|
|
—
|
|
||||||
Other(3)
|
200
|
|
|
3,087
|
|
|
3,087
|
|
|
—
|
|
|
—
|
|
|
200
|
|
||||||
Total(2)
|
$
|
6,356
|
|
|
$
|
16,533
|
|
|
$
|
19,343
|
|
|
$
|
1,004
|
|
|
$
|
—
|
|
|
$
|
2,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current portion
|
$
|
6,356
|
|
|
|
|
|
|
|
|
|
|
$
|
2,542
|
|
||||||||
Non-current portion
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
||||||||
Total
|
$
|
6,356
|
|
|
|
|
|
|
|
|
|
|
$
|
2,542
|
|
|
|
June 30,
|
||||
(In thousands)
|
|
2016
|
|
2015
|
||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
||
Long coffee pounds
|
|
32,550
|
|
|
32,288
|
|
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
||
Long coffee pounds
|
|
1,618
|
|
|
1,954
|
|
Less: Short coffee pounds
|
|
(188
|
)
|
|
—
|
|
Total
|
|
33,980
|
|
|
34,242
|
|
|
|
Derivative Instruments
Designated as Cash Flow Hedges
|
|
Derivative Instruments Not Designated as Accounting Hedges
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(In thousands)
|
|
2016(1)
|
|
2015(2)
|
|
2016(1)
|
|
2015(2)
|
||||||||
Financial Statement Location:
|
|
|
|
|
|
|
|
|
||||||||
Short-term derivative assets:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
3,771
|
|
|
$
|
128
|
|
|
$
|
183
|
|
|
$
|
25
|
|
Long-term derivative assets:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
2,575
|
|
|
$
|
136
|
|
|
$
|
57
|
|
|
$
|
2
|
|
Short-term derivative liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
—
|
|
|
$
|
4,128
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Long-term derivative liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
—
|
|
|
$
|
163
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year Ended June 30,
|
Financial Statement Classification
|
|||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
|
|||||||
Net gains (losses) recognized in accumulated other comprehensive income (loss) (effective portion)
|
|
$
|
303
|
|
|
$
|
(14,295
|
)
|
|
$
|
17,524
|
|
|
AOCI
|
Net (losses) gains recognized in earnings (effective portion)
|
|
$
|
(13,184
|
)
|
|
$
|
4,211
|
|
|
$
|
1,161
|
|
|
Costs of goods sold
|
Net losses recognized in earnings (ineffective portion)
|
|
$
|
(575
|
)
|
|
$
|
(325
|
)
|
|
$
|
(259
|
)
|
|
Other, net
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net (losses) gains on coffee-related derivative instruments
|
|
$
|
(298
|
)
|
|
$
|
(2,992
|
)
|
|
$
|
2,655
|
|
Net gains (losses) on investments
|
|
611
|
|
|
(270
|
)
|
|
464
|
|
|||
Net losses on interest rate swap
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
Net gains (losses) on derivative instruments and investments(1)
|
|
313
|
|
|
(3,262
|
)
|
|
3,114
|
|
|||
Other gains, net
|
|
243
|
|
|
248
|
|
|
563
|
|
|||
Other, net
|
|
$
|
556
|
|
|
$
|
(3,014
|
)
|
|
$
|
3,677
|
|
(In thousands)
|
|
|
|
Gross Amount Reported on Balance Sheet
|
|
Netting Adjustments
|
|
Cash Collateral Posted
|
|
Net Exposure
|
||||||||
June 30, 2016
|
|
Derivative Assets
|
|
$
|
6,586
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,586
|
|
June 30, 2015
|
|
Derivative Assets
|
|
$
|
291
|
|
|
$
|
(291
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Derivative Liabilities
|
|
$
|
4,292
|
|
|
$
|
(291
|
)
|
|
$
|
1,001
|
|
|
$
|
3,000
|
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Total gains (losses) recognized from trading securities held for investment
|
|
$
|
611
|
|
|
$
|
(270
|
)
|
|
$
|
464
|
|
Less: Realized gains from sales of trading securities held for investment
|
|
29
|
|
|
89
|
|
|
116
|
|
|||
Unrealized gains (losses) from trading securities held for investment
|
|
$
|
582
|
|
|
$
|
(359
|
)
|
|
$
|
348
|
|
(In thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
June 30, 2016
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock(1)
|
|
$
|
25,591
|
|
|
$
|
21,976
|
|
|
$
|
3,615
|
|
|
$
|
—
|
|
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative assets(2)
|
|
$
|
6,346
|
|
|
$
|
—
|
|
|
$
|
6,346
|
|
|
$
|
—
|
|
Coffee-related derivative liabilities(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative instruments not designated as accounting hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative assets(2)
|
|
$
|
240
|
|
|
$
|
—
|
|
|
$
|
240
|
|
|
$
|
—
|
|
Coffee-related derivative liabilities(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
June 30, 2015
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock(1)
|
|
$
|
23,665
|
|
|
$
|
19,132
|
|
|
$
|
4,533
|
|
|
$
|
—
|
|
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative assets(2)
|
|
$
|
264
|
|
|
$
|
—
|
|
|
$
|
264
|
|
|
$
|
—
|
|
Coffee-related derivative liabilities(2)
|
|
$
|
4,290
|
|
|
$
|
—
|
|
|
$
|
4,290
|
|
|
$
|
—
|
|
Derivative instruments not designated as accounting hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative assets(2)
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
Coffee-related derivative liabilities(2)
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Included in “Short-term investments” on the Company's consolidated balance sheets.
|
(2)
|
The Company's coffee derivative instruments are traded over-the-counter and, therefore, classified as Level 2.
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Trade receivables
|
|
$
|
43,113
|
|
|
$
|
38,783
|
|
Other receivables(1)
|
|
1,965
|
|
|
2,021
|
|
||
Allowance for doubtful accounts
|
|
(714
|
)
|
|
(643
|
)
|
||
Accounts and notes receivable, net
|
|
$
|
44,364
|
|
|
$
|
40,161
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Coffee
|
|
|
|
|
||||
Processed
|
|
$
|
12,362
|
|
|
$
|
13,837
|
|
Unprocessed
|
|
13,534
|
|
|
11,968
|
|
||
Total
|
|
$
|
25,896
|
|
|
$
|
25,805
|
|
Tea and culinary products
|
|
|
|
|
||||
Processed
|
|
$
|
15,384
|
|
|
$
|
17,022
|
|
Unprocessed
|
|
377
|
|
|
2,764
|
|
||
Total
|
|
$
|
15,761
|
|
|
$
|
19,786
|
|
Coffee brewing equipment parts
|
|
$
|
4,721
|
|
|
$
|
4,931
|
|
Total inventories
|
|
$
|
46,378
|
|
|
$
|
50,522
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Coffee
|
|
$
|
14,462
|
|
|
$
|
25,541
|
|
Tea and culinary products
|
|
7,139
|
|
|
8,200
|
|
||
Total
|
|
$
|
21,601
|
|
|
$
|
33,741
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Buildings and facilities
|
|
$
|
54,768
|
|
|
$
|
79,040
|
|
Machinery and equipment
|
|
182,227
|
|
|
172,432
|
|
||
Buildings and facilities—New Facility(1)
|
|
28,110
|
|
|
—
|
|
||
Equipment under capital leases
|
|
11,982
|
|
|
18,562
|
|
||
Capitalized software
|
|
21,545
|
|
|
19,703
|
|
||
Office furniture and equipment
|
|
16,077
|
|
|
15,005
|
|
||
|
|
$
|
314,709
|
|
|
$
|
304,742
|
|
Accumulated depreciation
|
|
(206,162
|
)
|
|
(223,660
|
)
|
||
Land
|
|
9,869
|
|
|
9,119
|
|
||
Property, plant and equipment, net(2)
|
|
$
|
118,416
|
|
|
$
|
90,201
|
|
(In thousands)
|
||||
Balance at June 30, 2014
|
|
$
|
—
|
|
Additions—RLC acquisition
|
|
272
|
|
|
Balance at June 30, 2015
|
|
$
|
272
|
|
Additions
|
|
—
|
|
|
Balance at June 30, 2016
|
|
$
|
272
|
|
|
|
June 30, 2016
|
|
June 30, 2015
|
||||||||||||
(In thousands)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
|
$
|
10,953
|
|
|
$
|
(10,373
|
)
|
|
$
|
10,953
|
|
|
$
|
(10,179
|
)
|
Covenant not to compete
|
|
20
|
|
|
(10
|
)
|
|
20
|
|
|
(3
|
)
|
||||
Total amortized intangible assets
|
|
$
|
10,973
|
|
|
$
|
(10,383
|
)
|
|
$
|
10,973
|
|
|
$
|
(10,182
|
)
|
Unamortized intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Tradenames with indefinite lives
|
|
$
|
3,640
|
|
|
$
|
—
|
|
|
$
|
3,640
|
|
|
$
|
—
|
|
Trademarks with indefinite lives
|
|
1,988
|
|
|
—
|
|
|
1,988
|
|
|
—
|
|
||||
Total unamortized intangible assets
|
|
$
|
5,628
|
|
|
$
|
—
|
|
|
$
|
5,628
|
|
|
$
|
—
|
|
Total intangible assets
|
|
$
|
16,601
|
|
|
$
|
(10,383
|
)
|
|
$
|
16,601
|
|
|
$
|
(10,182
|
)
|
Customer relationships (years)
|
|
3.0
|
||||||
Covenant not to compete (years)
|
|
1.5
|
|
|
Farmer Bros. Plan
June 30,
|
|
Brewmatic Plan
June 30,
|
|
Hourly Employees’ Plan
June 30,
|
||||||||||||||||||
($ in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Change in projected benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefit obligation at the beginning of the year
|
|
$
|
136,962
|
|
|
$
|
133,136
|
|
|
$
|
4,064
|
|
|
$
|
3,991
|
|
|
$
|
3,145
|
|
|
$
|
2,619
|
|
Service cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
389
|
|
|
386
|
|
||||||
Interest cost
|
|
5,875
|
|
|
5,393
|
|
|
172
|
|
|
160
|
|
|
137
|
|
|
108
|
|
||||||
Actuarial loss
|
|
15,999
|
|
|
4,596
|
|
|
682
|
|
|
188
|
|
|
687
|
|
|
56
|
|
||||||
Benefits paid
|
|
(6,511
|
)
|
|
(6,163
|
)
|
|
(344
|
)
|
|
(275
|
)
|
|
(29
|
)
|
|
(24
|
)
|
||||||
Projected benefit obligation at the end of the year
|
|
$
|
152,325
|
|
|
$
|
136,962
|
|
|
$
|
4,574
|
|
|
$
|
4,064
|
|
|
$
|
4,329
|
|
|
$
|
3,145
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets at the beginning of the year
|
|
94,815
|
|
|
$
|
98,426
|
|
|
$
|
3,291
|
|
|
$
|
3,435
|
|
|
$
|
2,104
|
|
|
$
|
1,629
|
|
|
Actual return on plan assets
|
|
1,556
|
|
|
1,731
|
|
|
42
|
|
|
66
|
|
|
85
|
|
|
10
|
|
||||||
Employer contributions
|
|
1,341
|
|
|
821
|
|
|
—
|
|
|
65
|
|
|
287
|
|
|
489
|
|
||||||
Benefits paid
|
|
(6,511
|
)
|
|
(6,163
|
)
|
|
(344
|
)
|
|
(275
|
)
|
|
(29
|
)
|
|
(24
|
)
|
||||||
Fair value of plan assets at the end of the year
|
|
$
|
91,201
|
|
|
$
|
94,815
|
|
|
$
|
2,989
|
|
|
$
|
3,291
|
|
|
$
|
2,447
|
|
|
$
|
2,104
|
|
Funded status at end of year (underfunded) overfunded
|
|
(61,124
|
)
|
|
$
|
(42,147
|
)
|
|
(1,585
|
)
|
|
$
|
(773
|
)
|
|
$
|
(1,882
|
)
|
|
$
|
(1,041
|
)
|
||
Amounts recognized in consolidated balance sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-current liabilities
|
|
(61,124
|
)
|
|
(42,147
|
)
|
|
(1,585
|
)
|
|
(773
|
)
|
|
(1,882
|
)
|
|
(1,041
|
)
|
||||||
Total
|
|
$
|
(61,124
|
)
|
|
$
|
(42,147
|
)
|
|
$
|
(1,585
|
)
|
|
$
|
(773
|
)
|
|
$
|
(1,882
|
)
|
|
$
|
(1,041
|
)
|
Amounts recognized in consolidated statements of operations
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss
|
|
70,246
|
|
|
$
|
50,743
|
|
|
2,756
|
|
|
$
|
1,965
|
|
|
988
|
|
|
$
|
237
|
|
|||
Total accumulated OCI (not adjusted for applicable tax)
|
|
$
|
70,246
|
|
|
$
|
50,743
|
|
|
$
|
2,756
|
|
|
$
|
1,965
|
|
|
$
|
988
|
|
|
$
|
237
|
|
Weighted average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
|
3.55
|
%
|
|
4.40
|
%
|
|
3.55
|
%
|
|
4.40
|
%
|
|
3.55
|
%
|
|
4.40
|
%
|
||||||
Rate of compensation increase
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Farmer Bros. Plan
June 30,
|
|
Brewmatic Plan
June 30,
|
|
Hourly Employees’ Plan
June 30,
|
||||||||||||||||||
($ in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
389
|
|
|
$
|
386
|
|
Interest cost
|
|
5,875
|
|
|
5,393
|
|
|
172
|
|
|
160
|
|
|
137
|
|
|
108
|
|
||||||
Expected return on plan assets
|
|
(6,470
|
)
|
|
(6,938
|
)
|
|
(219
|
)
|
|
(234
|
)
|
|
(149
|
)
|
|
(119
|
)
|
||||||
Amortization of net loss
|
|
1,411
|
|
|
1,153
|
|
|
68
|
|
|
57
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost (credit)
|
|
$
|
816
|
|
|
$
|
(392
|
)
|
|
$
|
21
|
|
|
$
|
(17
|
)
|
|
$
|
377
|
|
|
$
|
375
|
|
Other changes recognized in OCI
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss
|
|
$
|
20,913
|
|
|
$
|
9,803
|
|
|
$
|
859
|
|
|
$
|
356
|
|
|
$
|
750
|
|
|
$
|
165
|
|
Amortization of net loss
|
|
(1,411
|
)
|
|
(1,153
|
)
|
|
(68
|
)
|
|
(57
|
)
|
|
—
|
|
|
—
|
|
||||||
Total recognized in OCI
|
|
$
|
19,502
|
|
|
$
|
8,650
|
|
|
$
|
791
|
|
|
$
|
299
|
|
|
$
|
750
|
|
|
$
|
165
|
|
Total recognized in net periodic benefit cost and OCI
|
|
$
|
20,318
|
|
|
$
|
8,258
|
|
|
$
|
812
|
|
|
$
|
282
|
|
|
$
|
1,127
|
|
|
$
|
540
|
|
Weighted-average assumptions used to determine net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
|
4.40
|
%
|
|
4.15
|
%
|
|
4.40
|
%
|
|
4.15
|
%
|
|
4.40
|
%
|
|
4.15
|
%
|
||||||
Expected long-term return on plan assets
|
|
7.50
|
%
|
|
7.50
|
%
|
|
7.50
|
%
|
|
7.50
|
%
|
|
7.50
|
%
|
|
7.50
|
%
|
||||||
Rate of compensation increase
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Farmer Bros. Plan
June 30,
|
|
Brewmatic Plan
June 30,
|
|
Hourly Employees’ Plan
June 30,
|
||||||||||||||||||
($ in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Comparison of obligations to plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Projected benefit obligation
|
|
$
|
152,325
|
|
|
$
|
136,962
|
|
|
$
|
4,574
|
|
|
$
|
4,064
|
|
|
$
|
4,329
|
|
|
$
|
3,145
|
|
Accumulated benefit obligation
|
|
$
|
152,325
|
|
|
$
|
136,962
|
|
|
$
|
4,574
|
|
|
$
|
4,064
|
|
|
$
|
4,329
|
|
|
$
|
3,145
|
|
Fair value of plan assets at measurement date
|
|
$
|
91,201
|
|
|
$
|
94,815
|
|
|
$
|
2,989
|
|
|
$
|
3,291
|
|
|
$
|
2,447
|
|
|
$
|
2,104
|
|
Plan assets by category
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
$
|
58,094
|
|
|
$
|
47,340
|
|
|
$
|
1,909
|
|
|
$
|
1,638
|
|
|
$
|
1,542
|
|
|
$
|
1,050
|
|
Debt securities
|
|
27,586
|
|
|
37,789
|
|
|
899
|
|
|
1,322
|
|
|
758
|
|
|
839
|
|
||||||
Real estate
|
|
5,521
|
|
|
9,686
|
|
|
181
|
|
|
331
|
|
|
147
|
|
|
215
|
|
||||||
Total
|
|
$
|
91,201
|
|
|
$
|
94,815
|
|
|
$
|
2,989
|
|
|
$
|
3,291
|
|
|
$
|
2,447
|
|
|
$
|
2,104
|
|
Plan assets by category
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
64
|
%
|
|
50
|
%
|
|
64
|
%
|
|
50
|
%
|
|
63
|
%
|
|
50
|
%
|
||||||
Debt securities
|
|
30
|
%
|
|
40
|
%
|
|
30
|
%
|
|
40
|
%
|
|
31
|
%
|
|
40
|
%
|
||||||
Real estate
|
|
6
|
%
|
|
10
|
%
|
|
6
|
%
|
|
10
|
%
|
|
6
|
%
|
|
10
|
%
|
||||||
Total
|
|
100.0
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
June 30, 2016
|
||||||||||||||
(In thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Farmer Bros. Plan
|
|
$
|
91,201
|
|
|
$
|
—
|
|
|
$
|
91,201
|
|
|
$
|
—
|
|
Brewmatic Plan
|
|
$
|
2,989
|
|
|
$
|
—
|
|
|
$
|
2,989
|
|
|
$
|
—
|
|
Hourly Employees’ Plan
|
|
$
|
2,447
|
|
|
$
|
—
|
|
|
$
|
2,447
|
|
|
$
|
—
|
|
|
|
June 30, 2015
|
||||||||||||||
(In thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Farmer Bros. Plan
|
|
$
|
94,815
|
|
|
$
|
—
|
|
|
$
|
94,815
|
|
|
$
|
—
|
|
Brewmatic Plan
|
|
$
|
3,291
|
|
|
$
|
—
|
|
|
$
|
3,291
|
|
|
$
|
—
|
|
Hourly Employees’ Plan
|
|
$
|
2,104
|
|
|
$
|
—
|
|
|
$
|
2,104
|
|
|
$
|
—
|
|
|
Fiscal 2017
|
|
U.S. large cap equity securities
|
42.8
|
%
|
U.S. small cap equity securities
|
5.2
|
%
|
International equity securities
|
16.0
|
%
|
Debt securities
|
30.0
|
%
|
Real estate
|
6.0
|
%
|
Total
|
100.0
|
%
|
(In thousands)
|
|
Farmer Bros. Plan
|
|
Brewmatic Plan
|
|
Hourly Employees’
Plan
|
||||||
Year Ending:
|
|
|
||||||||||
June 30, 2017
|
|
$
|
7,310
|
|
|
$
|
320
|
|
|
$
|
81
|
|
June 30, 2018
|
|
$
|
7,520
|
|
|
$
|
310
|
|
|
$
|
110
|
|
June 30, 2019
|
|
$
|
7,760
|
|
|
$
|
310
|
|
|
$
|
120
|
|
June 30, 2020
|
|
$
|
8,040
|
|
|
$
|
300
|
|
|
$
|
140
|
|
June 30, 2021
|
|
$
|
8,250
|
|
|
$
|
290
|
|
|
$
|
170
|
|
June 30, 2022 to June 30, 2026
|
|
$
|
42,770
|
|
|
$
|
1,340
|
|
|
$
|
1,170
|
|
Pension Plan
|
|
Employer
Identification
Number
|
|
Pension
Plan
Number
|
|
PPA Zone Status
|
|
FIP/RP
Status
Pending/
Implemented
|
|
Surcharge
Imposed
|
|
Expiration Date
of Collective
Bargaining
Agreements
|
|||
|
|||||||||||||||
July 1, 2015
|
|
July 1,
2014
|
|
||||||||||||
Western Conference of Teamsters Pension Plan
|
|
91-6145047
|
|
001
|
|
Green
|
|
Green
|
|
No
|
|
No
|
|
January 31, 2020
|
(1)
|
Individually significant plan.
|
(2)
|
Less than
5%
of total contribution to WCTPP based on WCTPP's most recent annual report on Form 5500 for the calendar year ended December 31, 2015.
|
(3)
|
The Company guarantees that one hundred seventy-three (
173
) hours will be contributed upon for all employees who are compensated for all available straight time hours for each calendar month. An additional
6.5%
of the basic contribution must be paid for PEER or the Program for Enhanced Early Retirement.
|
(4)
|
Includes one plan that is not individually significant.
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Components of Net Periodic Postretirement Benefit Cost (credit):
|
|
|
|
|
|
|
||||||
Service cost
|
|
$
|
1,388
|
|
|
$
|
1,195
|
|
|
$
|
936
|
|
Interest cost
|
|
1,194
|
|
|
943
|
|
|
810
|
|
|||
Amortization of net gains
|
|
(196
|
)
|
|
(500
|
)
|
|
(880
|
)
|
|||
Amortization of prior service credit
|
|
(1,757
|
)
|
|
(1,757
|
)
|
|
(1,757
|
)
|
|||
Net periodic postretirement benefit cost (credit)
|
|
$
|
629
|
|
|
$
|
(119
|
)
|
|
$
|
(891
|
)
|
Amortization Schedule
|
|
|
Transition (Asset) Obligation: The transition (asset) obligations have been fully amortized.
|
Date Established
|
|
Balance at
July 1, 2015
|
|
Annual
Amortization
|
|
|
Years Remaining
|
|
Curtailment
|
|
Balance at
June 30, 2016
|
|||||||
January 1, 2008
|
|
$
|
(962
|
)
|
|
$
|
230
|
|
|
|
3.2
|
|
—
|
|
|
$
|
(732
|
)
|
July 1, 2012
|
|
(13,001
|
)
|
|
1,526
|
|
|
|
7.5
|
|
—
|
|
|
(11,475
|
)
|
|||
|
|
$
|
(13,963
|
)
|
|
$
|
1,756
|
|
|
|
|
|
|
|
$
|
(12,207
|
)
|
|
|
Year Ended June 30,
|
|
Year Ended June 30,
|
||||||||||||
|
|
Retiree Medical Plan
|
|
Death Benefit
|
||||||||||||
($ in thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Amortization of Net (Gain) Loss:
|
|
|
|
|
||||||||||||
Net (gain) loss as of July 1
|
|
$
|
(8,710
|
)
|
|
$
|
(3,655
|
)
|
|
$
|
690
|
|
|
$
|
690
|
|
Net (gain) loss subject to amortization
|
|
(8,710
|
)
|
|
(3,655
|
)
|
|
690
|
|
|
690
|
|
||||
Corridor (10% of greater of APBO or assets)
|
|
1,724
|
|
|
1,723
|
|
|
(729
|
)
|
|
(729
|
)
|
||||
Net (gain) loss in excess of corridor
|
|
$
|
(6,986
|
)
|
|
$
|
(1,932
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Amortization years
|
|
10.0
|
|
|
10.8
|
|
|
7.7
|
|
|
8.7
|
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Change in Benefit Obligation:
|
|
|
|
|
||||
Projected postretirement benefit obligation at beginning of year
|
|
$
|
24,522
|
|
|
$
|
20,889
|
|
Service cost
|
|
1,388
|
|
|
1,195
|
|
||
Interest cost
|
|
1,194
|
|
|
943
|
|
||
Participant contributions
|
|
795
|
|
|
711
|
|
||
Actuarial losses
|
|
(4,259
|
)
|
|
2,751
|
|
||
Benefits paid
|
|
(1,773
|
)
|
|
(1,967
|
)
|
||
Projected postretirement benefit obligation at end of year
|
|
$
|
21,867
|
|
|
$
|
24,522
|
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Change in Plan Assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
—
|
|
|
$
|
—
|
|
Employer contributions
|
|
978
|
|
|
1,256
|
|
||
Participant contributions
|
|
795
|
|
|
711
|
|
||
Benefits paid
|
|
(1,773
|
)
|
|
(1,967
|
)
|
||
Fair value of plan assets at end of year
|
|
—
|
|
|
—
|
|
||
Projected postretirement benefit obligation at end of year
|
|
$
|
21,867
|
|
|
$
|
24,522
|
|
Funded status of plan
|
|
$
|
(21,867
|
)
|
|
$
|
(24,522
|
)
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Amounts Recognized in the Consolidated Balance Sheets Consist of:
|
|
|
|
|
||||
Non-current assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities
|
|
(1,060
|
)
|
|
(1,051
|
)
|
||
Non-current liabilities
|
|
(20,807
|
)
|
|
(23,471
|
)
|
||
Total
|
|
$
|
(21,867
|
)
|
|
$
|
(24,522
|
)
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Amounts Recognized in Accumulated OCI Consist of:
|
|
|
|
|
||||
Net gain
|
|
$
|
(7,027
|
)
|
|
$
|
(2,965
|
)
|
Transition obligation
|
|
(12,207
|
)
|
|
(13,963
|
)
|
||
Total accumulated OCI
|
|
$
|
(19,234
|
)
|
|
$
|
(16,928
|
)
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Other Changes in Plan Assets and Benefit Obligations Recognized in OCI:
|
|
|
|
|
||||
Unrecognized actuarial loss
|
|
$
|
(4,259
|
)
|
|
$
|
2,751
|
|
Amortization of net loss
|
|
196
|
|
|
500
|
|
||
Amortization of prior service cost
|
|
1,757
|
|
|
1,757
|
|
||
Total recognized in OCI
|
|
(2,306
|
)
|
|
5,008
|
|
||
Net periodic benefit credit
|
|
629
|
|
|
(119
|
)
|
||
Total recognized in net periodic benefit cost and OCI
|
|
$
|
(1,677
|
)
|
|
$
|
4,889
|
|
(In thousands)
|
|
||
Estimated Future Benefit Payments:
|
|
||
Year Ending:
|
|
||
June 30, 2017
|
$
|
1,080
|
|
June 30, 2018
|
$
|
1,102
|
|
June 30, 2019
|
$
|
1,143
|
|
June 30, 2020
|
$
|
1,176
|
|
June 30, 2021
|
$
|
1,210
|
|
June 30, 2022 to June 30, 2026
|
$
|
6,246
|
|
|
|
||
Expected Contributions:
|
|
||
June 30, 2017
|
$
|
1,080
|
|
|
|
1-Percentage Point
|
||||||
(In thousands)
|
|
Increase
|
|
Decrease
|
||||
Effect on total of service and interest cost components
|
|
$
|
181
|
|
|
$
|
(154
|
)
|
Effect on accumulated postretirement benefit obligation
|
|
$
|
1,664
|
|
|
$
|
(1,423
|
)
|
|
|
As of and for the years ended June 30,
|
||||
|
|
2016
|
|
2015
|
|
2014
|
Loan amount (in thousands)
|
|
$6,434
|
|
$11,234
|
|
$16,035
|
|
|
June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Allocated shares
|
|
1,941,934
|
|
|
1,970,117
|
|
||
Committed to be released shares
|
|
169,603
|
|
|
172,398
|
|
||
Unallocated shares
|
|
220,925
|
|
|
390,528
|
|
||
Total ESOP shares
|
|
2,332,462
|
|
|
2,533,043
|
|
||
|
|
|
|
|
||||
(In thousands)
|
|
|
|
|
||||
Fair value of ESOP shares
|
|
$
|
74,779
|
|
|
$
|
59,527
|
|
|
|
Year Ended June 30,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Weighted average fair value of NQOs
|
|
$
|
12.63
|
|
|
$
|
10.38
|
|
|
$
|
9.17
|
|
Risk-free interest rate
|
|
1.6
|
%
|
|
1.5
|
%
|
|
1.7
|
%
|
|||
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Average expected term
|
|
5.1 years
|
|
|
5.1 years
|
|
|
6 years
|
|
|||
Expected stock price volatility
|
|
47.1
|
%
|
|
47.9
|
%
|
|
50.4
|
%
|
Outstanding NQOs:
|
|
Number
of NQOs
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life
(Years)
|
|
Aggregate
Intrinsic
Value
($ in thousands)
|
||
Outstanding at June 30, 2013
|
|
557,427
|
|
|
12.81
|
|
5.44
|
|
5.1
|
|
1,620
|
|
Granted
|
|
1,927
|
|
|
18.68
|
|
9.17
|
|
6.4
|
|
—
|
|
Exercised
|
|
(112,964
|
)
|
|
13.10
|
|
5.81
|
|
—
|
|
895
|
|
Cancelled/Forfeited
|
|
(33,936
|
)
|
|
16.63
|
|
6.13
|
|
—
|
|
—
|
|
Outstanding at June 30, 2014
|
|
412,454
|
|
|
12.44
|
|
5.30
|
|
4.4
|
|
3,782
|
|
Granted
|
|
25,703
|
|
|
23.91
|
|
10.38
|
|
6.8
|
|
—
|
|
Exercised
|
|
(95,723
|
)
|
|
16.17
|
|
5.86
|
|
—
|
|
747
|
|
Cancelled/Forfeited
|
|
(13,134
|
)
|
|
11.26
|
|
5.00
|
|
—
|
|
—
|
|
Outstanding at June 30, 2015
|
|
329,300
|
|
|
12.30
|
|
5.54
|
|
3.9
|
|
3,700
|
|
Granted
|
|
21,595
|
|
|
29.48
|
|
12.63
|
|
6.4
|
|
—
|
|
Exercised
|
|
(112,895
|
)
|
|
12.35
|
|
5.37
|
|
—
|
|
1,853
|
|
Cancelled/Forfeited
|
|
(18,371
|
)
|
|
13.45
|
|
6.17
|
|
—
|
|
—
|
|
Outstanding at June 30, 2016
|
|
219,629
|
|
|
13.87
|
|
6.28
|
|
3.7
|
|
3,995
|
|
Vested and exercisable, June 30, 2016
|
|
180,298
|
|
|
11.06
|
|
5.13
|
|
3.1
|
|
3,800
|
|
Vested and expected to vest, June 30, 2016
|
|
217,160
|
|
|
13.72
|
|
6.22
|
|
3.6
|
|
3,983
|
|
Nonvested NQOs:
|
|
Number
of
NQOs
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life (Years)
|
|
Outstanding at June 30, 2013
|
|
315,661
|
|
|
10.80
|
|
5.12
|
|
6.1
|
Granted
|
|
1,927
|
|
|
18.68
|
|
9.17
|
|
6.4
|
Vested
|
|
(133,957
|
)
|
|
11.02
|
|
5.21
|
|
—
|
Forfeited
|
|
(15,833
|
)
|
|
11.48
|
|
5.49
|
|
—
|
Outstanding at June 30, 2014
|
|
167,798
|
|
|
10.65
|
|
5.06
|
|
5.3
|
Granted
|
|
25,703
|
|
|
23.91
|
|
10.38
|
|
6.8
|
Vested
|
|
(101,172
|
)
|
|
9.87
|
|
4.72
|
|
—
|
Forfeited
|
|
(12,134
|
)
|
|
10.31
|
|
4.91
|
|
—
|
Outstanding at June 30, 2015
|
|
80,195
|
|
|
15.94
|
|
7.21
|
|
5.2
|
Granted
|
|
21,595
|
|
|
29.48
|
|
12.63
|
|
6.4
|
Vested
|
|
(47,418
|
)
|
|
14.05
|
|
6.44
|
|
—
|
Forfeited
|
|
(15,641
|
)
|
|
12.95
|
|
6.09
|
|
—
|
Outstanding at June 30, 2016
|
|
38,731
|
|
|
27.02
|
|
11.63
|
|
6.1
|
|
|
Year Ended June 30,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Weighted average fair value of PNQs
|
|
$
|
11.38
|
|
|
$
|
10.16
|
|
|
$
|
10.49
|
|
Risk-free interest rate
|
|
1.6
|
%
|
|
1.5
|
%
|
|
1.8
|
%
|
|||
Dividend yield
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Average expected term (years)
|
|
4.9
|
|
|
5.0
|
|
|
6.0
|
|
|||
Expected stock price volatility
|
|
42.5
|
%
|
|
47.9
|
%
|
|
50.5
|
%
|
Outstanding PNQs:
|
|
Number
of
PNQs
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life
(Years)
|
|
Aggregate
Intrinsic
Value
($ in
thousands)
|
||
Outstanding at June 30, 2013
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Granted
|
|
112,442
|
|
|
21.27
|
|
10.49
|
|
6.5
|
|
—
|
|
Cancelled/Forfeited
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Outstanding at June 30, 2014
|
|
112,442
|
|
|
21.27
|
|
10.49
|
|
6.5
|
|
38
|
|
Granted
|
|
121,024
|
|
|
23.44
|
|
10.16
|
|
6.6
|
|
—
|
|
Cancelled/Forfeited
|
|
(9,399
|
)
|
|
21.33
|
|
10.52
|
|
—
|
|
—
|
|
Outstanding at June 30, 2015
|
|
224,067
|
|
|
22.44
|
|
10.31
|
|
6.0
|
|
237
|
|
Granted
|
|
143,466
|
|
|
29.48
|
|
11.38
|
|
6.2
|
|
—
|
|
Exercised
|
|
(14,144
|
)
|
|
21.20
|
|
10.45
|
|
0
|
|
107
|
|
Cancelled/Forfeited
|
|
(64,790
|
)
|
|
23.20
|
|
10.37
|
|
0
|
|
—
|
|
Outstanding at June 30, 2016
|
|
288,599
|
|
|
25.83
|
|
10.82
|
|
5.7
|
|
1,798
|
|
Vested and exercisable, June 30, 2016
|
|
48,132
|
|
|
22.52
|
|
10.31
|
|
5.1
|
|
459
|
|
Vested and expected to vest, June 30, 2016
|
|
274,919
|
|
|
25.75
|
|
10.81
|
|
5.7
|
|
1,736
|
|
Nonvested PNQs:
|
|
Number
of
PNQs
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life (Years)
|
||||
Outstanding at June 30, 2014
|
|
112,442
|
|
|
21.27
|
|
|
10.49
|
|
|
6.5
|
|
Granted
|
|
121,024
|
|
|
23.44
|
|
|
10.16
|
|
|
6.6
|
|
Vested
|
|
(34,959
|
)
|
|
21.27
|
|
|
10.49
|
|
|
—
|
|
Forfeited
|
|
(9,399
|
)
|
|
21.33
|
|
|
10.52
|
|
|
—
|
|
Outstanding at June 30, 2015
|
|
189,108
|
|
|
22.66
|
|
|
10.28
|
|
|
6.2
|
|
Granted
|
|
143,466
|
|
|
29.48
|
|
|
11.38
|
|
|
6.2
|
|
Vested
|
|
(27,317
|
)
|
|
10.16
|
|
|
23.44
|
|
|
—
|
|
Forfeited
|
|
(64,790
|
)
|
|
23.20
|
|
|
10.37
|
|
|
—
|
|
Outstanding at June 30, 2016
|
|
240,467
|
|
|
26.49
|
|
|
10.92
|
|
|
5.9
|
|
Outstanding and Nonvested Restricted Stock Awards:
|
|
Shares
Awarded
|
|
Weighted
Average
Grant Date
Fair Value
($)
|
|
Weighted
Average
Remaining
Life
(Years)
|
|
Aggregate
Intrinsic
Value
($ in thousands)
|
|||
Outstanding at June 30, 2013
|
|
139,360
|
|
|
9.87
|
|
|
1.9
|
|
1,959
|
|
Granted
|
|
9,200
|
|
|
20.48
|
|
|
—
|
|
188
|
|
Exercised/Released
|
|
(38,212
|
)
|
|
11.59
|
|
|
—
|
|
820
|
|
Cancelled/Forfeited
|
|
(14,136
|
)
|
|
9.38
|
|
|
—
|
|
—
|
|
Outstanding at June 30, 2014
|
|
96,212
|
|
|
10.27
|
|
|
1.5
|
|
2,079
|
|
Granted
|
|
13,256
|
|
|
23.64
|
|
|
—
|
|
313
|
|
Exercised/Released(1)
|
|
(53,402
|
)
|
|
8.43
|
|
|
—
|
|
1,377
|
|
Cancelled/Forfeited
|
|
(8,984
|
)
|
|
8.36
|
|
|
—
|
|
—
|
|
Outstanding at June 30, 2015
|
|
47,082
|
|
|
16.48
|
|
|
1.2
|
|
1,106
|
|
Granted
|
|
10,170
|
|
|
29.99
|
|
|
—
|
|
305
|
|
Exercised/Released(2)
|
|
(24,841
|
)
|
|
14.08
|
|
|
—
|
|
747
|
|
Cancelled/Forfeited
|
|
(8,619
|
)
|
|
13.06
|
|
|
—
|
|
—
|
|
Outstanding at June 30, 2016
|
|
23,792
|
|
|
26.00
|
|
|
1.8
|
|
763
|
|
Expected to vest, June 30, 2016
|
|
22,253
|
|
|
25.91
|
|
|
1.8
|
|
713
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Accrued postretirement benefits
|
|
$
|
1,060
|
|
|
$
|
1,051
|
|
Accrued workers’ compensation liabilities
|
|
3,225
|
|
|
2,382
|
|
||
Short-term pension liabilities
|
|
347
|
|
|
347
|
|
||
Earnout payable—RLC acquisition
|
|
100
|
|
|
100
|
|
||
Other (including net taxes payable)
|
|
2,214
|
|
|
2,272
|
|
||
Other current liabilities
|
|
$
|
6,946
|
|
|
$
|
6,152
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
New Facility lease obligation(1)
|
|
$
|
28,110
|
|
|
$
|
—
|
|
Earnout payable—RLC acquisition(2)
|
|
100
|
|
|
200
|
|
||
Derivative liabilities, non-current
|
|
—
|
|
|
25
|
|
||
Other long-term liabilities
|
|
$
|
28,210
|
|
|
$
|
225
|
|
|
|
June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
214
|
|
|
$
|
(30
|
)
|
|
$
|
293
|
|
State
|
|
103
|
|
|
309
|
|
|
275
|
|
|||
Total current income tax expense
|
|
317
|
|
|
279
|
|
|
568
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
(66,648
|
)
|
|
106
|
|
|
99
|
|
|||
State
|
|
(13,666
|
)
|
|
17
|
|
|
38
|
|
|||
Total deferred income tax (benefit) expense
|
|
(80,314
|
)
|
|
123
|
|
|
137
|
|
|||
Income tax (benefit) expense
|
|
$
|
(79,997
|
)
|
|
$
|
402
|
|
|
$
|
705
|
|
|
|
June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Statutory tax rate
|
|
35
|
%
|
|
34
|
%
|
|
34
|
%
|
|||
Income tax expense at statutory rate
|
|
$
|
3,472
|
|
|
$
|
358
|
|
|
$
|
4,365
|
|
State income tax expense, net of federal tax benefit
|
|
557
|
|
|
260
|
|
|
749
|
|
|||
Dividend income exclusion
|
|
(140
|
)
|
|
(54
|
)
|
|
—
|
|
|||
Valuation allowance
|
|
(83,230
|
)
|
|
(185
|
)
|
|
(4,292
|
)
|
|||
Change in tax rate
|
|
(1,061
|
)
|
|
—
|
|
|
—
|
|
|||
Retiree life insurance
|
|
135
|
|
|
—
|
|
|
—
|
|
|||
Change in contingency reserve (net)
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|||
Other (net)
|
|
270
|
|
|
23
|
|
|
(78
|
)
|
|||
Income tax (benefit) expense
|
|
$
|
(79,997
|
)
|
|
$
|
402
|
|
|
$
|
705
|
|
|
|
June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Deferred tax assets:
|
|
|
|
|
|
|
||||||
Postretirement benefits
|
|
$
|
33,273
|
|
|
$
|
31,100
|
|
|
$
|
19,800
|
|
Accrued liabilities
|
|
11,760
|
|
|
10,091
|
|
|
6,156
|
|
|||
Net operating loss carryforwards
|
|
38,196
|
|
|
41,544
|
|
|
40,275
|
|
|||
Intangible assets
|
|
71
|
|
|
594
|
|
|
1,126
|
|
|||
Other
|
|
6,881
|
|
|
6,794
|
|
|
7,253
|
|
|||
Total deferred tax assets
|
|
90,181
|
|
|
90,123
|
|
|
74,610
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|
|
||||||
Unrealized gain on investments
|
|
(609
|
)
|
|
(2,242
|
)
|
|
—
|
|
|||
Fixed assets
|
|
(5,370
|
)
|
|
(2,647
|
)
|
|
(1,902
|
)
|
|||
Other
|
|
(1,789
|
)
|
|
(1,943
|
)
|
|
(1,538
|
)
|
|||
Total deferred tax liabilities
|
|
(7,768
|
)
|
|
(6,832
|
)
|
|
(3,440
|
)
|
|||
Valuation allowance
|
|
(1,627
|
)
|
|
(84,857
|
)
|
|
(72,613
|
)
|
|||
Net deferred tax assets (liabilities)
|
|
$
|
80,786
|
|
|
$
|
(1,566
|
)
|
|
$
|
(1,443
|
)
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Unrecognized tax benefits at beginning of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,211
|
|
Decreases in tax positions for prior years
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||
Settlements
|
|
—
|
|
|
—
|
|
|
(3,181
|
)
|
|||
Unrecognized tax benefits at end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year ended June 30,
|
||||||||||
(In thousands, except share and per share amounts)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income attributable to common stockholders—basic
|
|
$
|
89,812
|
|
|
$
|
651
|
|
|
$
|
12,063
|
|
Net income attributable to nonvested restricted stockholders
|
|
106
|
|
|
1
|
|
|
69
|
|
|||
Net income
|
|
$
|
89,918
|
|
|
$
|
652
|
|
|
$
|
12,132
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding—basic
|
|
16,502,523
|
|
|
16,127,610
|
|
|
15,909,631
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
||||||
Shares issuable under stock options
|
|
124,879
|
|
|
139,524
|
|
|
104,956
|
|
|||
Weighted average common shares outstanding—diluted
|
|
16,627,402
|
|
|
16,267,134
|
|
|
16,014,587
|
|
|||
Net income per common share—basic
|
|
$
|
5.45
|
|
|
$
|
0.04
|
|
|
$
|
0.76
|
|
Net income per common share—diluted
|
|
$
|
5.41
|
|
|
$
|
0.04
|
|
|
$
|
0.76
|
|
|
|
Contractual Obligations
|
||||||||||||||||||||||||||
(In thousands)
|
|
Capital Lease
Obligations
|
|
Operating
Lease
Obligations
|
|
New Facility Purchase Option Exercise Price(1)
|
|
Pension Plan
Obligations
|
|
Postretirement
Benefits Other
Than Pension Plans
|
|
Revolving Credit Facility
|
|
Purchase Commitments (2)
|
||||||||||||||
Year Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2017
|
|
$
|
1,443
|
|
|
$
|
4,093
|
|
|
$
|
58,779
|
|
|
$
|
8,075
|
|
|
$
|
1,080
|
|
|
$
|
109
|
|
|
$
|
72,217
|
|
2018
|
|
$
|
880
|
|
|
$
|
3,366
|
|
|
$
|
—
|
|
|
$
|
8,304
|
|
|
$
|
1,102
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2019
|
|
$
|
125
|
|
|
$
|
2,561
|
|
|
$
|
—
|
|
|
$
|
8,554
|
|
|
$
|
1,143
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2020
|
|
$
|
52
|
|
|
$
|
1,279
|
|
|
$
|
—
|
|
|
$
|
8,844
|
|
|
$
|
1,176
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2021
|
|
$
|
4
|
|
|
$
|
441
|
|
|
$
|
—
|
|
|
$
|
9,074
|
|
|
$
|
1,210
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Thereafter
|
|
$
|
—
|
|
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
47,099
|
|
|
$
|
6,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
$
|
11,801
|
|
|
$
|
58,779
|
|
|
$
|
89,950
|
|
|
$
|
11,957
|
|
|
$
|
109
|
|
|
$
|
72,217
|
|
||
Total minimum lease payments
|
|
$
|
2,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Less: imputed interest
(0.82% to 10.7%)
|
|
$
|
(145
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Present value of future minimum lease payments
|
|
$
|
2,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Less: current portion
|
|
$
|
1,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term capital lease obligations
|
|
$
|
1,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2015 |
|
December 31,
2015 |
|
March 31,
2016 |
|
June 30,
2016 |
||||||||
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
||||||||
Net sales
|
|
$
|
133,445
|
|
|
$
|
142,307
|
|
|
$
|
134,468
|
|
|
$
|
134,162
|
|
Gross profit
|
|
$
|
50,579
|
|
|
$
|
52,908
|
|
|
$
|
52,560
|
|
|
$
|
52,428
|
|
(Loss) income from operations
|
|
$
|
(563
|
)
|
|
$
|
5,361
|
|
|
$
|
306
|
|
|
$
|
3,075
|
|
Net (loss) income
|
|
$
|
(1,074
|
)
|
|
$
|
5,561
|
|
|
$
|
1,192
|
|
|
$
|
84,239
|
|
Net (loss) income) per common share—basic
|
|
$
|
(0.07
|
)
|
|
$
|
0.34
|
|
|
$
|
0.07
|
|
|
$
|
5.09
|
|
Net (loss) income per common share—diluted
|
|
$
|
(0.07
|
)
|
|
$
|
0.34
|
|
|
$
|
0.07
|
|
|
$
|
5.05
|
|
|
|
September 30,
2014 |
|
December 31,
2014 |
|
March 31,
2015 |
|
June 30,
2015 |
||||||||
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
||||||||
Net sales
|
|
$
|
135,984
|
|
|
$
|
144,809
|
|
|
$
|
132,507
|
|
|
$
|
132,582
|
|
Gross profit
|
|
$
|
48,121
|
|
|
$
|
53,142
|
|
|
$
|
46,569
|
|
|
$
|
49,204
|
|
Income (loss) from operations
|
|
$
|
2,601
|
|
|
$
|
3,505
|
|
|
$
|
(1,405
|
)
|
|
$
|
(1,417
|
)
|
Net income (loss)
|
|
$
|
2,515
|
|
|
$
|
2,896
|
|
|
$
|
(2,572
|
)
|
|
$
|
(2,187
|
)
|
Net income (loss) per common share—basic
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
(0.16
|
)
|
|
$
|
(0.13
|
)
|
Net income (loss) per common share—diluted
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
$
|
(0.16
|
)
|
|
$
|
(0.13
|
)
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Plan Category
|
|
Number of
Shares to be
Issued Upon
Exercise of
Outstanding
Options
|
|
Weighted
Average
Exercise
Price of
Outstanding
Options
|
|
Number of
Shares
Remaining
Available
for Future
Issuance(2)
|
Equity compensation plans approved by stockholders(1)
|
|
508,228
|
|
$20.66
|
|
151,857
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
—
|
|
—
|
Total
|
|
508,228
|
|
$20.66
|
|
151,857
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
(a)
|
List of Financial Statements and Financial Statement Schedules:
|
|
Consolidated Balance Sheets as of June 30, 2016 and 2015
|
|
Consolidated Statements of Operations for the Years Ended June 30, 2016, 2015 and 2014
|
|
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended June 30, 2016, 2015 and 2014
|
|
Consolidated Statements of Cash Flows for the Years Ended June 30, 2016, 2015 and 2014
|
|
Consolidated Statements of Stockholders’ Equity for the Years Ended June 30, 2016, 2015 and 2014
|
|
Notes to Consolidated Financial Statements
|
(b)
|
Exhibits: See Exhibit Index.
|
Item 16.
|
Form 10-K Summary
|
|
|
|
|
|
|
|
F
ARMER
B
ROS
. C
O
.
|
||||
|
|
|
|||
|
By:
|
|
/s/Michael H. Keown
|
||
|
|
|
Michael H. Keown
President and Chief Executive Officer (chief executive officer) |
||
|
|
|
September 13, 2016
|
||
|
By:
|
|
/s/Isaac N. Johnston, Jr.
|
||
|
|
|
Isaac N. Johnston, Jr.
Treasurer and Chief Financial Officer (principal financial and accounting officer) |
||
|
|
|
September 13, 2016
|
|
|
|
|
|
|
|
|
|
|
/s/ Randy E. Clark
|
|
Chairman of the Board and Director
|
|
September 13, 2016
|
Randy E. Clark
|
|
|
|
|
|
|
|
|
|
/s/ Guenter W. Berger
|
|
Chairman Emeritus and Director
|
|
September 13, 2016
|
Guenter W. Berger
|
|
|
|
|
|
|
|
|
|
/s/ Hamideh Assadi
|
|
Director
|
|
September 13, 2016
|
Hamideh Assadi
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
Jeanne Farmer Grossman
|
|
|
|
|
|
|
|
|
|
/s/ Michael H. Keown
|
|
Director
|
|
September 13, 2016
|
Michael H. Keown
|
|
|
|
|
|
|
|
|
|
/s/ Charles F. Marcy
|
|
Director
|
|
September 13, 2016
|
Charles F. Marcy
|
|
|
|
|
|
|
|
|
|
/s/ Christopher P. Mottern
|
|
Director
|
|
September 13, 2016
|
Christopher P. Mottern
|
|
|
|
|
2.1
|
|
Asset Purchase Agreement, dated as of November 16, 2015, by and between Farmer Bros. Co. and Harris Spice Company Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2015 and incorporated herein by reference).*
|
|
|
|
3.1
|
|
Certificate of Incorporation (filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K filed with the SEC on September 16, 2014 and incorporated herein by reference).
|
|
|
|
3.2
|
|
Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company’s Quarterly on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
3.3
|
|
Certificate of Elimination (filed as Exhibit 3.3 to the Company's Registration Statement on Form 8-A/A filed with the SEC on September 24, 2015 and incorporated herein by reference).
|
|
|
|
4.1
|
|
Specimen Stock Certificate (filed as Exhibit 4.1 to the Company's Registration Statement on Form 8-A/A filed with the SEC on September 24, 2015 and incorporated herein by reference)
|
|
|
|
4.2
|
|
Registration Rights Agreement, dated as of June 16, 2016, among Farmer Bros. Co. and the Investors identified on the signature pages thereto (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 21, 2016 and incorporated herein by reference).
|
|
|
|
10.1
|
|
Credit Agreement, dated as of March 2, 2015, by and among Farmer Bros. Co., Coffee Bean International, Inc., FBC Finance Company, Coffee Bean Holding Co., Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K for the period ended March 6, 2015 and incorporated herein by reference).
|
|
|
|
10.2
|
|
Pledge and Security Agreement, dated as of March 2, 2015, by and among Farmer Bros. Co., Coffee Bean International, Inc., FBC Finance Company, Coffee Bean Holding Co., Inc. and JPMorgan Chase Bank, N.A., as Administrative Agent (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K for the period ended March 6, 2015 and incorporated herein by reference).
|
|
|
|
10.3
|
|
Farmer Bros. Co. Pension Plan for Salaried Employees (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed with the SEC on November 5, 2012 and incorporated herein by reference).**
|
|
|
|
10.4
|
|
Amendment No. 1 to Farmer Bros. Co. Retirement Plan effective June 30, 2011 (filed herewith).**
|
|
|
|
10.5
|
|
Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Retirement Plan, effective as of December 6, 2012 (filed as Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed with the SEC on May 6, 2013 and incorporated herein by reference).**
|
|
|
|
10.6
|
|
Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2013 filed with the SEC on February 10, 2014 and incorporated herein by reference).**
|
|
|
|
10.7
|
|
Amendment to Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 10, 2014 and incorporated herein by reference).**
|
|
|
|
10.8
|
|
Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, as adopted by the Board of Directors on December 9, 2010 and effective as of January 1, 2010 (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).**
|
|
|
|
10.9
|
|
Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, effective as of January 1, 2012 (filed as Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012 filed with the SEC on September 7, 2012 and incorporated herein by reference).*
|
|
|
|
10.10
|
|
Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, effective as of January 1, 2015 (filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 9, 2015 and incorporated herein by reference).**
|
|
|
|
10.11
|
|
Action of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans amending the Farmer Bros. Co. Amended and Restated Employee Stock Ownership Plan, effective as of January 1, 2015 ((filed as Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 9, 2015 and incorporated herein by reference).**
|
|
|
|
10.12
|
|
ESOP Loan Agreement including ESOP Pledge Agreement and Promissory Note, dated March 28, 2000, between Farmer Bros. Co. and Wells Fargo Bank, N.A., Trustee for the Farmer Bros Co. Employee Stock Ownership Plan (filed as Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.13
|
|
Amendment No. 1 to ESOP Loan Agreement, dated June 30, 2003, between Farmer Bros. Co. and Wells Fargo Bank, N.A., Trustee for the Farmer Bros Co. Employee Stock Ownership Plan (filed as Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.14
|
|
ESOP Loan Agreement No. 2 including ESOP Pledge Agreement and Promissory Note, dated July 21, 2003 between Farmer Bros. Co. and Wells Fargo Bank, N.A., Trustee for the Farmer Bros Co. Employee Stock Ownership Plan (filed as Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.15
|
|
Employment Agreement, dated March 9, 2012, by and between Farmer Bros. Co. and Michael H. Keown (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 13, 2012 and incorporated herein by reference).**
|
|
|
|
10.16
|
|
Employment Agreement, dated as of April 1, 2013, by and between Farmer Bros. Co. and Mark J. Nelson (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).**
|
|
|
|
10.17
|
|
Amendment No. 1 to Employment Agreement, dated as of January 1, 2014, by and between Farmer Bros. Co. and Mark J. Nelson (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on March 5, 2014 and incorporated herein by reference).**
|
|
|
|
10.18
|
|
Amendment No. 2 to Employment Agreement, dated as of November 23, 2015, between Farmer Bros. Co. and Mark J. Nelson (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 30, 2015 and incorporated herein by reference).**
|
|
|
|
10.19
|
|
Employment Agreement, dated as of December 2, 2014, by and between Farmer Bros. Co. and Barry C. Fischetto (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on December 5, 2014 and incorporated herein by reference).**
|
|
|
|
10.20
|
|
Employment Agreement, effective as of May 27, 2015, by and between Farmer Bros. Co. and Scott W. Bixby (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 20, 2015 and incorporated herein by reference).**
|
|
|
|
10.21
|
|
Employment Agreement, effective as of August 6, 2015, by and between Farmer Bros. Co. and Thomas J. Mattei, Jr. (filed as Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed with the SEC on September 14, 2015 and incorporated herein by reference).**
|
|
|
|
10.22
|
|
Separation Agreement, dated as of July 16, 2014, by and between Farmer Bros. Co. and Mark A. Harding (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 17, 2014 and incorporated herein by reference).**
|
|
|
|
10.23
|
|
Farmer Bros. Co. 2007 Omnibus Plan, as amended (as approved by the stockholders at the 2012 Annual Meeting of Stockholders on December 6, 2012) (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on December 12, 2012 and incorporated herein by reference).**
|
|
|
|
10.24
|
|
Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan (as approved by the stockholders at the 2013 Annual Meeting of Stockholders on December 5, 2013) (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on December 11, 2013 and incorporated herein by reference).**
|
|
|
|
10.25
|
|
Addendum to Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan (filed as Exhibit 10.30 to the Company's Quarterly Report on Form 10-Q filed with the SEC on February 9, 2015 and incorporated herein by reference).**
|
|
|
|
10.26
|
|
Form of Farmer Bros. Co. 2007 Omnibus Plan Stock Option Grant Notice and Stock Option Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 4, 2013 and incorporated herein by reference).**
|
|
|
|
10.27
|
|
Stock Ownership Guidelines for Directors and Executive Officers (filed herewith).**
|
|
|
|
10.28
|
|
Form of Award Letter (Fiscal 2014) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on September 17, 2014 and incorporated herein by reference).**
|
|
|
|
10.29
|
|
Form of Target Award Notification Letter (Fiscal 2015) under Farmer Bros. Co. 2005 Incentive Compensation Plan (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on September 17, 2014 and incorporated herein by reference).**
|
|
|
|
10.30
|
|
Form of Change in Control Severance Agreement for Executive Officers of the Company (with schedule of executive officers attached) (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the SEC on September 29, 2015 and incorporated herein by reference).**
|
|
|
|
10.31
|
|
Form of Indemnification Agreement for Directors and Officers of the Company, as adopted on December 5, 2013 (with schedule of indemnitees attached) (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on September 29, 2015 and incorporated herein by reference).**
|
|
|
|
10.32
|
|
Lease Agreement, dated as of July 17, 2015, by and between Farmer Bros. Co. as Tenant, and WF-FB NLTX, LLC as Landlord (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on July 23, 2015 and incorporated herein by reference).
|
|
|
|
10.33
|
|
First Amendment to Lease Agreement dated as of December 29, 2015, by and between Farmer Bros. Co. as Tenant, and WF-FB NLTX, LLC as Landlord (filed as Exhibit 10.36 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.34
|
|
Amendment No. 2 to Lease Agreement dated as of March 10, 2016, by and between Farmer Bros. Co. as Tenant, and WF-FB NLTX, LLC as Landlord (filed as Exhibit 10.37 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.35
|
|
Development Management Agreement dated as of July 17, 2015, by and between Farmer Bros. Co., as Tenant and Stream Realty Partners-DFW, L.P., as Developer (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on July 23, 2015 and incorporated herein by reference).
|
|
|
|
10.36
|
|
First Amendment to Development Management Agreement dated as of January 1, 2016, by and between Farmer Bros. Co., as Tenant and Stream Realty Partners-DFW, L.P., as Developer (filed as Exhibit 10.39 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.37
|
|
Second Amendment to Development Management Agreement dated as of March 25, 2016, by and between Farmer Bros. Co., as Tenant and Stream Realty Partners-DFW, L.P., as Developer (filed as Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.38
|
|
Agreement of Purchase and Sale and Joint Escrow Instructions, dated as of April 11, 2016, by and between Farmer Bros. Co. as Seller, and Bridge Acquisition, LLC as Buyer (filed as Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2016 and incorporated herein by reference).
|
|
|
|
10.39
|
|
First Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions, dated as of June 1, 2016, by and between Farmer Bros. Co. and Bridge Acquisition, LLC (filed herewith).
|
|
|
|
14.1
|
|
Farmer Bros. Co. Code of Conduct and Ethics adopted on August 26, 2010 and updated February 2013 and September 7, 2016 (filed herewith).
|
|
|
|
21.1
|
|
List of all Subsidiaries of Farmer Bros. Co. (filed herewith)
|
|
|
|
23.1
|
|
Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (filed herewith)
|
|
|
|
31.1
|
|
Principal Executive Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
31.2
|
|
Principal Financial and Accounting Officer Certification Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
|
32.1
|
|
Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
|
|
32.2
|
|
Principal Financial and Accounting Officer Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
|
|
101
|
|
The following financial statements from the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2016, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Stockholders' Equity, and (vi) Notes to Consolidated Financial Statements (furnished herewith).
|
*
|
Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and/or exhibits to this agreement have been omitted. The Registrant undertakes to supplementally furnish copies of the omitted schedules and/or exhibits to the Securities and Exchange Commission upon request.
|
**
|
Management contract or compensatory plan or arrangement.
|
|
|
|
FARMERS BROS. CO
|
||
|
|
|
By
|
|
/s/ Jeffrey Wahba
|
|
|
CFO
|
|
|
Title
|
Officer
|
Value of Shares Owned
|
Chief Executive Officer
|
at least three (3) times base salary
|
Other Executive Officers
|
at least one (1) times base salary
|
757161.01/WLA
374981-00001/5-27-16/ejw/ejw
|
|
|
757161.01/WLA
374981-00001/5-27-16/ejw/ejw
|
2
|
|
SELLER:
|
FARMER BROS. CO.
a Delaware corporation |
By:
|
/a/ Isaac N. Johnston, Jr.
Name: Isaac N. Johnston, Jr. Title: Treasurer and Chief Financial Officer |
BUYER:
|
BRIDGE ACQUISITION, LLC,
a Delaware limited liability company |
By:
|
/s/ Brian Wilson
Name: Brian Wilson Title: Manager |
757161.01/WLA
374981-00001/5-27-16/ejw/ejw
|
3
|
|
|
/s/ DELOITTE & TOUCHE LLP
|
|
Dallas, Texas
|
September 13, 2016
|
|
/
S
/ MICHAEL H. KEOWN
|
Michael H. Keown
President and Chief Executive Officer
(principal executive officer)
|
|
/
S
/ ISAAC N. JOHNSTON
, JR.
|
Isaac N. Johnston, Jr.
Treasurer and Chief Financial Officer
(principal financial and accounting officer)
|
|
/
S
/ MICHAEL H. KEOWN
|
Michael H. Keown
President and Chief Executive Officer
(principal executive officer)
|
|
/
S
/ ISAAC N. JOHNSTON, JR.
|
Isaac N. Johnston, Jr.
Treasurer and Chief Financial Officer
(principal accounting and financial officer)
|