þ
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QUARTERLY 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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1912 Farmer Brothers Drive, Northlake, Texas 76262
|
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(Address of Principal Executive Offices; Zip Code)
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888-998-2468
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(Registrant’s Telephone Number, Including Area Code)
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None
|
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(Former Address, if Changed Since Last Report)
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Page
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March 31, 2018
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|
June 30, 2017
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||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,974
|
|
|
$
|
6,241
|
|
Short-term investments
|
—
|
|
|
368
|
|
||
Accounts receivable, net
|
61,988
|
|
|
46,446
|
|
||
Inventories
|
75,080
|
|
|
56,251
|
|
||
Income tax receivable
|
156
|
|
|
318
|
|
||
Prepaid expenses
|
8,841
|
|
|
7,540
|
|
||
Total current assets
|
153,039
|
|
|
117,164
|
|
||
Property, plant and equipment, net
|
183,501
|
|
|
176,066
|
|
||
Goodwill
|
36,561
|
|
|
10,996
|
|
||
Intangible assets, net
|
32,207
|
|
|
18,618
|
|
||
Other assets
|
7,127
|
|
|
6,837
|
|
||
Deferred income taxes
|
45,779
|
|
|
63,055
|
|
||
Total assets
|
$
|
458,214
|
|
|
$
|
392,736
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
59,059
|
|
|
39,784
|
|
||
Accrued payroll expenses
|
16,369
|
|
|
17,345
|
|
||
Short-term borrowings under revolving credit facility
|
85,885
|
|
|
27,621
|
|
||
Short-term obligations under capital leases
|
239
|
|
|
958
|
|
||
Short-term derivative liabilities
|
2,604
|
|
|
1,857
|
|
||
Other current liabilities
|
10,878
|
|
|
9,702
|
|
||
Total current liabilities
|
175,034
|
|
|
97,267
|
|
||
Accrued pension liabilities
|
49,988
|
|
|
51,281
|
|
||
Accrued postretirement benefits
|
18,435
|
|
|
19,788
|
|
||
Accrued workers’ compensation liabilities
|
6,365
|
|
|
7,548
|
|
||
Other long-term liabilities-capital leases
|
77
|
|
|
237
|
|
||
Other long-term liabilities
|
2,008
|
|
|
1,480
|
|
||
Total liabilities
|
$
|
251,907
|
|
|
$
|
177,601
|
|
Commitments and contingencies (Note 21)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; 14,700 and zero shares issued and outstanding as of March 31, 2018 and June 30, 2017, respectively; liquidation preference of $821 and $0 as of March 31, 2018 and June 30, 2017, respectively
|
15
|
|
|
—
|
|
||
Common stock, $1.00 par value, 25,000,000 shares authorized; 16,927,988 and 16,846,002 shares issued and outstanding as of March 31, 2018 and June 30, 2017, respectively
|
16,928
|
|
|
16,846
|
|
||
Additional paid-in capital
|
54,780
|
|
|
41,495
|
|
||
Retained earnings
|
199,252
|
|
|
221,182
|
|
||
Unearned ESOP shares
|
(2,145
|
)
|
|
(4,289
|
)
|
||
Accumulated other comprehensive loss
|
(62,523
|
)
|
|
(60,099
|
)
|
||
Total stockholders’ equity
|
$
|
206,307
|
|
|
$
|
215,135
|
|
Total liabilities and stockholders’ equity
|
$
|
458,214
|
|
|
$
|
392,736
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net sales
|
$
|
157,927
|
|
|
$
|
138,187
|
|
|
$
|
457,006
|
|
|
$
|
407,700
|
|
Cost of goods sold
|
99,117
|
|
|
84,367
|
|
|
283,670
|
|
|
247,586
|
|
||||
Gross profit
|
58,810
|
|
|
53,820
|
|
|
173,336
|
|
|
160,114
|
|
||||
Selling expenses
|
44,736
|
|
|
40,377
|
|
|
132,979
|
|
|
117,912
|
|
||||
General and administrative expenses
|
13,766
|
|
|
9,196
|
|
|
39,007
|
|
|
31,925
|
|
||||
Restructuring and other transition expenses
|
52
|
|
|
2,547
|
|
|
311
|
|
|
9,542
|
|
||||
Net gain from sale of Torrance Facility
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,449
|
)
|
||||
Net gains from sale of spice assets
|
(110
|
)
|
|
(272
|
)
|
|
(655
|
)
|
|
(764
|
)
|
||||
Net gains from sales of other assets
|
(590
|
)
|
|
(86
|
)
|
|
(446
|
)
|
|
(1,525
|
)
|
||||
Impairment losses on intangible assets
|
3,820
|
|
|
—
|
|
|
3,820
|
|
|
—
|
|
||||
Operating expenses
|
61,674
|
|
|
51,762
|
|
|
175,016
|
|
|
119,641
|
|
||||
(Loss) income from operations
|
(2,864
|
)
|
|
2,058
|
|
|
(1,680
|
)
|
|
40,473
|
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
1
|
|
|
273
|
|
|
12
|
|
|
808
|
|
||||
Interest income
|
—
|
|
|
147
|
|
|
2
|
|
|
435
|
|
||||
Interest expense
|
(902
|
)
|
|
(517
|
)
|
|
(2,286
|
)
|
|
(1,430
|
)
|
||||
Other, net
|
154
|
|
|
1,044
|
|
|
794
|
|
|
(1,088
|
)
|
||||
Total other (expense) income
|
(747
|
)
|
|
947
|
|
|
(1,478
|
)
|
|
(1,275
|
)
|
||||
(Loss) income before taxes
|
(3,611
|
)
|
|
3,005
|
|
|
(3,158
|
)
|
|
39,198
|
|
||||
Income tax expense
|
297
|
|
|
1,411
|
|
|
20,497
|
|
|
15,910
|
|
||||
Net (loss) income
|
$
|
(3,908
|
)
|
|
$
|
1,594
|
|
|
$
|
(23,655
|
)
|
|
$
|
23,288
|
|
Less: Cumulative preferred dividends, undeclared and unpaid
|
128
|
|
|
—
|
|
|
257
|
|
|
—
|
|
||||
Net (loss) income available to common stockholders
|
$
|
(4,036
|
)
|
|
$
|
1,594
|
|
|
$
|
(23,912
|
)
|
|
$
|
23,288
|
|
Net (loss) income per common share available to common stockholders—basic
|
$
|
(0.24
|
)
|
|
$
|
0.10
|
|
|
$
|
(1.43
|
)
|
|
$
|
1.40
|
|
Net (loss) income per common share available to common stockholders—diluted
|
$
|
(0.24
|
)
|
|
$
|
0.10
|
|
|
$
|
(1.43
|
)
|
|
$
|
1.39
|
|
Weighted average common shares outstanding—basic
|
16,760,145
|
|
|
16,605,754
|
|
|
16,727,624
|
|
|
16,584,125
|
|
||||
Weighted average common shares outstanding—diluted
|
16,760,145
|
|
|
16,721,774
|
|
|
16,727,624
|
|
|
16,704,200
|
|
|
Three Months Ended
March 31,
|
|
Nine Months Ended
March 31,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income
|
$
|
(3,908
|
)
|
|
$
|
1,594
|
|
|
$
|
(23,655
|
)
|
|
$
|
23,288
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized (losses) gains on derivative instruments designated as cash flow hedges, net of tax
|
(2,437
|
)
|
|
104
|
|
|
(4,148
|
)
|
|
(1,249
|
)
|
||||
Losses (gains) on derivative instruments designated as cash flow hedges reclassified to cost of goods sold, net of tax
|
1,355
|
|
|
(516
|
)
|
|
1,724
|
|
|
(366
|
)
|
||||
Total comprehensive (loss) income, net of tax
|
$
|
(4,990
|
)
|
|
$
|
1,182
|
|
|
$
|
(26,079
|
)
|
|
$
|
21,673
|
|
FARMER BROS. CO.
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|||||||
(In thousands)
|
|||||||
|
Nine Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(23,655
|
)
|
|
$
|
23,288
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|||||
Depreciation and amortization
|
22,727
|
|
|
16,613
|
|
||
Provision for (recovery of) doubtful accounts
|
369
|
|
|
(44
|
)
|
||
Impairment losses on intangible assets
|
3,820
|
|
|
—
|
|
||
Change in estimated fair value of contingent earnout consideration
|
(500
|
)
|
|
—
|
|
||
Interest on sale-leaseback financing obligation
|
—
|
|
|
681
|
|
||
Restructuring and other transition expenses, net of payments
|
(1,084
|
)
|
|
2,191
|
|
||
Deferred income taxes
|
20,138
|
|
|
15,766
|
|
||
Net gain from sale of Torrance Facility
|
—
|
|
|
(37,449
|
)
|
||
Net gains from sales of spice assets and other assets
|
(1,101
|
)
|
|
(2,289
|
)
|
||
ESOP and share-based compensation expense
|
2,892
|
|
|
2,996
|
|
||
Net losses on derivative instruments and investments
|
3,292
|
|
|
793
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Purchases of trading securities
|
—
|
|
|
(4,216
|
)
|
||
Proceeds from sales of trading securities
|
375
|
|
|
2,911
|
|
||
Accounts receivable
|
(8,417
|
)
|
|
(3,994
|
)
|
||
Inventories
|
(9,533
|
)
|
|
(13,242
|
)
|
||
Income tax receivable
|
162
|
|
|
(46
|
)
|
||
Derivative (liabilities) assets, net
|
(6,091
|
)
|
|
3,845
|
|
||
Prepaid expenses and other assets
|
920
|
|
|
(203
|
)
|
||
Accounts payable
|
7,516
|
|
|
11,293
|
|
||
Accrued payroll expenses and other current liabilities
|
353
|
|
|
(5,712
|
)
|
||
Accrued postretirement benefits
|
(1,353
|
)
|
|
(624
|
)
|
||
Other long-term liabilities
|
(2,476
|
)
|
|
(2,028
|
)
|
||
Net cash provided by operating activities
|
$
|
8,354
|
|
|
$
|
10,530
|
|
Cash flows from investing activities:
|
|
|
|
||||
Acquisition of businesses, net of cash acquired
|
$
|
(39,608
|
)
|
|
$
|
(25,853
|
)
|
Purchases of property, plant and equipment
|
(25,889
|
)
|
|
(35,497
|
)
|
||
Purchases of assets for construction of New Facility
|
(1,577
|
)
|
|
(26,653
|
)
|
||
Proceeds from sales of property, plant and equipment
|
1,565
|
|
|
3,984
|
|
||
Net cash used in investing activities
|
$
|
(65,509
|
)
|
|
$
|
(84,019
|
)
|
(continued on next page)
|
FARMER BROS. CO.
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|||||||
(In thousands)
|
|||||||
|
Nine Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from revolving credit facility
|
$
|
76,513
|
|
|
$
|
67,583
|
|
Repayments on revolving credit facility
|
(18,249
|
)
|
|
(23,517
|
)
|
||
Proceeds from sale-leaseback financing obligation
|
—
|
|
|
42,455
|
|
||
Proceeds from New Facility lease financing obligation
|
—
|
|
|
7,662
|
|
||
Repayments of New Facility lease financing obligation
|
—
|
|
|
(35,772
|
)
|
||
Payments of capital lease obligations
|
(878
|
)
|
|
(1,107
|
)
|
||
Payment of financing costs
|
(560
|
)
|
|
—
|
|
||
Proceeds from stock option exercises
|
1,062
|
|
|
823
|
|
||
Tax withholding payment - net share settlement of equity awards
|
—
|
|
|
(6
|
)
|
||
Net cash provided by financing activities
|
$
|
57,888
|
|
|
$
|
58,121
|
|
Net increase (decrease) in cash and cash equivalents
|
$
|
733
|
|
|
$
|
(15,368
|
)
|
Cash and cash equivalents at beginning of period
|
6,241
|
|
|
21,095
|
|
||
Cash and cash equivalents at end of period
|
$
|
6,974
|
|
|
$
|
5,727
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
Equipment acquired under capital leases
|
$
|
—
|
|
|
$
|
353
|
|
Net change in derivative assets and liabilities
included in other comprehensive (loss) income, net of tax
|
$
|
(2,424
|
)
|
|
$
|
(1,615
|
)
|
Non-cash additions to property, plant and equipment
|
$
|
2,146
|
|
|
$
|
8,515
|
|
Non-cash portion of earnout receivable recognized—spice assets sale
|
$
|
183
|
|
|
$
|
229
|
|
Non-cash portion of earnout payable recognized—China Mist acquisition
|
$
|
—
|
|
|
$
|
500
|
|
Non-cash portion of earnout payable recognized—West Coast Coffee acquisition
|
$
|
—
|
|
|
$
|
600
|
|
Non-cash receivable from West Coast Coffee—post-closing final working capital adjustment
|
$
|
218
|
|
|
$
|
—
|
|
Non-cash consideration given—Issuance of Series A Preferred Stock
|
$
|
11,756
|
|
|
$
|
—
|
|
Non-cash Multiemployer Plan Holdback payable recognized—Boyd Coffee acquisition
|
$
|
1,056
|
|
|
$
|
—
|
|
Option costs paid with exercised shares
|
$
|
—
|
|
|
$
|
174
|
|
Cumulative preferred dividends, undeclared and unpaid
|
$
|
257
|
|
|
$
|
—
|
|
(In thousands)
|
Fair Value
|
|
Estimated
Useful Life
(years)
|
||
|
|
|
|
||
Cash paid, net of cash acquired
|
$
|
11,183
|
|
|
|
Post-closing final working capital adjustments
|
553
|
|
|
|
|
Fair value of contingent consideration
|
500
|
|
|
|
|
Total consideration
|
$
|
12,236
|
|
|
|
|
|
|
|
||
Accounts receivable
|
$
|
811
|
|
|
|
Inventory
|
544
|
|
|
|
|
Prepaid assets
|
48
|
|
|
|
|
Property, plant and equipment
|
189
|
|
|
|
|
Goodwill
|
2,927
|
|
|
|
|
Intangible assets:
|
|
|
|
||
Recipes
|
930
|
|
|
7
|
|
Non-compete agreement
|
100
|
|
|
5
|
|
Customer relationships
|
2,000
|
|
|
10
|
|
Trade name/trademark—indefinite-lived
|
5,070
|
|
|
|
|
Accounts payable
|
(383
|
)
|
|
|
|
Total consideration, net of cash acquired
|
$
|
12,236
|
|
|
|
(In thousands)
|
Fair Value
|
|
Estimated Useful Life (years)
|
||
|
|
|
|
||
Cash paid, net of cash acquired
|
$
|
14,671
|
|
|
|
Post-closing final working capital adjustments
|
(218
|
)
|
|
|
|
Fair value of contingent consideration
|
600
|
|
|
|
|
Total consideration
|
$
|
15,053
|
|
|
|
|
|
|
|
||
Accounts receivable
|
$
|
956
|
|
|
|
Inventory
|
910
|
|
|
|
|
Prepaid assets
|
16
|
|
|
|
|
Property, plant and equipment
|
1,546
|
|
|
|
|
Goodwill
|
7,630
|
|
|
|
|
Intangible assets:
|
|
|
|
||
Non-compete agreements
|
100
|
|
|
5
|
|
Customer relationships
|
4,400
|
|
|
10
|
|
Trade name—finite-lived
|
260
|
|
|
7
|
|
Brand name—finite-lived
|
250
|
|
|
1.7
|
|
Accounts payable
|
(833
|
)
|
|
|
|
Other liabilities
|
(182
|
)
|
|
|
|
Total consideration, net of cash acquired
|
$
|
15,053
|
|
|
|
(In thousands)
|
Fair Value
|
|
Estimated
Useful Life
(years)
|
||
|
|
|
|
||
Cash paid
|
$
|
38,871
|
|
|
|
Holdback Cash Amount
|
3,150
|
|
|
|
|
Multiemployer Plan Holdback
|
1,056
|
|
|
|
|
Fair value of Series A Preferred Stock (14,700 shares)(1)
|
11,756
|
|
|
|
|
Fair value of Holdback Stock (6,300 shares)(1)
|
4,825
|
|
|
|
|
Preliminary estimated post-closing working capital adjustment
|
(8,059
|
)
|
|
|
|
Total consideration
|
$
|
51,599
|
|
|
|
|
|
|
|
||
Accounts receivable
|
$
|
7,166
|
|
|
|
Inventory
|
9,415
|
|
|
|
|
Prepaid expense and other assets
|
1,951
|
|
|
|
|
Property, plant and equipment
|
4,936
|
|
|
|
|
Goodwill
|
25,732
|
|
|
|
|
Intangible assets:
|
|
|
|
||
Customer relationships
|
16,000
|
|
|
10
|
|
Trade name/trademark—indefinite-lived
|
3,100
|
|
|
|
|
Accounts payable
|
(15,080
|
)
|
|
|
|
Other liabilities
|
(1,621
|
)
|
|
|
|
Total consideration
|
$
|
51,599
|
|
|
|
(In thousands)
|
|
March 31, 2018
|
||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
Net sales
|
|
$
|
22,848
|
|
|
$
|
49,138
|
|
Income before taxes
|
|
$
|
81
|
|
|
$
|
592
|
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
||||||||
Net sales
|
|
$
|
157,927
|
|
|
$
|
161,339
|
|
|
$
|
478,988
|
|
|
$
|
480,749
|
|
(Loss) income before taxes
|
|
$
|
(3,611
|
)
|
|
$
|
2,838
|
|
|
$
|
(2,832
|
)
|
|
$
|
39,252
|
|
(In thousands)
|
|
March 31, 2018
|
|
June 30, 2017
|
||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
||
Long coffee pounds
|
|
32,625
|
|
|
33,038
|
|
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
||
Long coffee pounds
|
|
2,129
|
|
|
2,121
|
|
Less: Short coffee pounds
|
|
(38
|
)
|
|
—
|
|
Total
|
|
34,716
|
|
|
35,159
|
|
|
|
Derivative Instruments
Designated as Cash Flow Hedges
|
|
Derivative Instruments Not Designated as Accounting Hedges
|
||||||||||||
|
|
March 31, 2018
|
|
June 30, 2017
|
|
March 31, 2018
|
|
June 30, 2017
|
||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
||||||||
Financial Statement Location:
|
|
|
|
|
|
|
|
|
||||||||
Short-term derivative assets(1):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
16
|
|
|
$
|
66
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Long-term derivative assets(2):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term derivative liabilities(1):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
2,068
|
|
|
$
|
1,733
|
|
|
$
|
553
|
|
|
$
|
190
|
|
Long-term derivative liabilities(2):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
146
|
|
|
$
|
446
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Three Months Ended
March 31,
|
|
Nine Months Ended
March 31,
|
|
Financial Statement Classification
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|||||||||
Net (losses) gains recognized in AOCI
|
|
$
|
(3,265
|
)
|
|
$
|
188
|
|
|
$
|
(5,724
|
)
|
|
$
|
(2,029
|
)
|
|
AOCI
|
Net (losses) gains recognized in earnings
|
|
$
|
(1,815
|
)
|
|
$
|
865
|
|
|
$
|
(2,419
|
)
|
|
$
|
614
|
|
|
Costs of goods sold
|
Net gains recognized in earnings (ineffective portion)(1)
|
|
$
|
—
|
|
|
$
|
90
|
|
|
$
|
48
|
|
|
$
|
63
|
|
|
Other, net
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (losses) gains on coffee-related derivative instruments
|
|
$
|
(444
|
)
|
|
$
|
188
|
|
|
$
|
(537
|
)
|
|
$
|
(1,052
|
)
|
Net gains (losses) on investments
|
|
—
|
|
|
738
|
|
|
7
|
|
|
(354
|
)
|
||||
Net (losses) gains on derivative instruments and investments(1)
|
|
(444
|
)
|
|
926
|
|
|
(530
|
)
|
|
(1,406
|
)
|
||||
Other gains, net(2)
|
|
598
|
|
|
118
|
|
|
1,324
|
|
|
318
|
|
||||
Other, net
|
|
$
|
154
|
|
|
$
|
1,044
|
|
|
$
|
794
|
|
|
$
|
(1,088
|
)
|
(In thousands)
|
|
|
|
Gross Amount Reported on Balance Sheet
|
|
Netting Adjustments
|
|
Cash Collateral Posted
|
|
Net Exposure
|
||||||||
March 31, 2018
|
|
Derivative Assets
|
|
$
|
17
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Derivative Liabilities
|
|
$
|
2,767
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
2,750
|
|
June 30, 2017
|
|
Derivative Assets
|
|
$
|
132
|
|
|
$
|
(132
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Derivative Liabilities
|
|
$
|
2,369
|
|
|
$
|
(132
|
)
|
|
$
|
—
|
|
|
$
|
2,237
|
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total gains (losses) recognized from trading securities
|
|
$
|
—
|
|
|
$
|
738
|
|
|
$
|
7
|
|
|
$
|
(354
|
)
|
Less: Realized gains from sales of trading securities
|
|
—
|
|
|
7
|
|
|
7
|
|
|
5
|
|
||||
Unrealized gains (losses) from trading securities
|
|
$
|
—
|
|
|
$
|
731
|
|
|
$
|
—
|
|
|
$
|
(359
|
)
|
(In thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative assets(1)
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
—
|
|
Coffee-related derivative liabilities(1)
|
|
$
|
2,214
|
|
|
$
|
—
|
|
|
$
|
2,214
|
|
|
$
|
—
|
|
Derivative instruments not designated as accounting hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative assets(1)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Coffee-related derivative liabilities(1)
|
|
$
|
553
|
|
|
$
|
—
|
|
|
$
|
553
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
June 30, 2017
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock(2)
|
|
$
|
368
|
|
|
$
|
—
|
|
|
$
|
368
|
|
|
$
|
—
|
|
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative assets(1)
|
|
$
|
132
|
|
|
$
|
—
|
|
|
$
|
132
|
|
|
$
|
—
|
|
Coffee-related derivative liabilities(1)
|
|
$
|
2,179
|
|
|
$
|
—
|
|
|
$
|
2,179
|
|
|
$
|
—
|
|
Derivative instruments not designated as accounting hedges:
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative liabilities(1)
|
|
$
|
190
|
|
|
$
|
—
|
|
|
$
|
190
|
|
|
$
|
—
|
|
(1)
|
The Company’s coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2.
|
(2)
|
Included in “Short-term investments” on the Company’s Condensed Consolidated Balance Sheet at June 30, 2017.
|
(In thousands)
|
|
March 31, 2018
|
|
June 30, 2017
|
||||
Trade receivables
|
|
$
|
59,804
|
|
|
$
|
44,531
|
|
Other receivables(1)
|
|
3,102
|
|
|
2,636
|
|
||
Allowance for doubtful accounts
|
|
(918
|
)
|
|
(721
|
)
|
||
Accounts receivable, net
|
|
$
|
61,988
|
|
|
$
|
46,446
|
|
(In thousands)
|
|
March 31, 2018
|
|
June 30, 2017
|
||||
Coffee
|
|
|
|
|
||||
Processed
|
|
$
|
16,755
|
|
|
$
|
14,085
|
|
Unprocessed
|
|
26,485
|
|
|
17,083
|
|
||
Total
|
|
$
|
43,240
|
|
|
$
|
31,168
|
|
Tea and culinary products
|
|
|
|
|
||||
Processed
|
|
$
|
24,981
|
|
|
$
|
20,741
|
|
Unprocessed
|
|
922
|
|
|
74
|
|
||
Total
|
|
$
|
25,903
|
|
|
$
|
20,815
|
|
Coffee brewing equipment parts
|
|
$
|
5,937
|
|
|
$
|
4,268
|
|
Total inventories
|
|
$
|
75,080
|
|
|
$
|
56,251
|
|
(In thousands)
|
|
March 31, 2018
|
|
June 30, 2017
|
||||
Buildings and facilities
|
|
$
|
108,515
|
|
|
$
|
108,682
|
|
Machinery and equipment
|
|
224,993
|
|
|
201,236
|
|
||
Equipment under capital leases
|
|
2,486
|
|
|
7,540
|
|
||
Capitalized software
|
|
23,611
|
|
|
21,794
|
|
||
Office furniture and equipment
|
|
13,350
|
|
|
12,758
|
|
||
|
|
372,955
|
|
|
352,010
|
|
||
Accumulated depreciation
|
|
(205,672
|
)
|
|
(192,280
|
)
|
||
Land
|
|
16,218
|
|
|
16,336
|
|
||
Property, plant and equipment, net
|
|
$
|
183,501
|
|
|
$
|
176,066
|
|
|
|
March 31, 2018
|
|
June 30, 2017
|
||||||||||||
(In thousands)
|
|
Gross Carrying
Amount(1)
|
|
Accumulated
Amortization(1)
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships(2)
|
|
$
|
33,003
|
|
|
$
|
(12,300
|
)
|
|
$
|
17,353
|
|
|
$
|
(10,883
|
)
|
Non-compete agreements
|
|
220
|
|
|
(71
|
)
|
|
220
|
|
|
(38
|
)
|
||||
Recipes
|
|
930
|
|
|
(188
|
)
|
|
930
|
|
|
(88
|
)
|
||||
Trade name/brand name
|
|
510
|
|
|
(225
|
)
|
|
510
|
|
|
(84
|
)
|
||||
Total amortized intangible assets
|
|
$
|
34,663
|
|
|
$
|
(12,784
|
)
|
|
$
|
19,013
|
|
|
$
|
(11,093
|
)
|
Unamortized intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks, trade names and brand name with indefinite lives(3)
|
|
$
|
10,328
|
|
|
$
|
—
|
|
|
$
|
10,698
|
|
|
$
|
—
|
|
Total unamortized intangible assets
|
|
$
|
10,328
|
|
|
$
|
—
|
|
|
$
|
10,698
|
|
|
$
|
—
|
|
Total intangible assets
|
|
$
|
44,991
|
|
|
$
|
(12,784
|
)
|
|
$
|
29,711
|
|
|
$
|
(11,093
|
)
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
(In thousands)
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
372
|
|
Interest cost
|
|
1,432
|
|
|
1,397
|
|
|
4,296
|
|
|
4,191
|
|
||||
Expected return on plan assets
|
|
(1,456
|
)
|
|
(1,607
|
)
|
|
(4,368
|
)
|
|
(4,821
|
)
|
||||
Amortization of net loss(1)
|
|
418
|
|
|
508
|
|
|
1,254
|
|
|
1,524
|
|
||||
Net periodic benefit cost
|
|
$
|
394
|
|
|
$
|
422
|
|
|
$
|
1,182
|
|
|
$
|
1,266
|
|
|
Fiscal
|
||
|
2018
|
|
2017
|
Discount rate
|
3.80%
|
|
3.55%
|
Expected long-term return on plan assets
|
6.75%
|
|
7.75%
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
152
|
|
|
$
|
190
|
|
|
$
|
456
|
|
|
$
|
570
|
|
Interest cost
|
|
209
|
|
|
207
|
|
|
627
|
|
|
621
|
|
||||
Amortization of net gain
|
|
(210
|
)
|
|
(157
|
)
|
|
(630
|
)
|
|
(471
|
)
|
||||
Amortization of prior service credit
|
|
(439
|
)
|
|
(439
|
)
|
|
(1,317
|
)
|
|
(1,317
|
)
|
||||
Net periodic postretirement benefit credit
|
|
$
|
(288
|
)
|
|
$
|
(199
|
)
|
|
$
|
(864
|
)
|
|
$
|
(597
|
)
|
|
Fiscal
|
||
|
2018
|
|
2017
|
Retiree Medical Plan discount rate
|
4.13%
|
|
3.73%
|
Death Benefit discount rate
|
4.12%
|
|
3.79%
|
|
Nine Months Ended
March 31, 2018
|
Weighted average fair value of NQOs
|
$31.70
|
Risk-free interest rate
|
2.0%
|
Dividend yield
|
—%
|
Average expected term
|
4.6 years
|
Expected stock price volatility
|
35.4%
|
Outstanding NQOs:
|
|
Number
of NQOs
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life
(Years)
|
|
Aggregate
Intrinsic
Value
($ in thousands)
|
||
Outstanding at June 30, 2017
|
|
133,464
|
|
|
13.05
|
|
5.99
|
|
2.6
|
|
2,299
|
|
Granted
|
|
124,278
|
|
|
31.70
|
|
10.41
|
|
6.4
|
|
—
|
|
Exercised
|
|
(62,489
|
)
|
|
12.51
|
|
5.78
|
|
—
|
|
1,233
|
|
Cancelled/Forfeited
|
|
(9,114
|
)
|
|
28.12
|
|
10.76
|
|
—
|
|
—
|
|
Outstanding at March 31, 2018
|
|
186,139
|
|
|
24.94
|
|
8.78
|
|
4.9
|
|
1,162
|
|
Vested and exercisable at March 31, 2018
|
|
63,832
|
|
|
12.01
|
|
5.60
|
|
1.7
|
|
1,162
|
|
Vested and expected to vest at March 31, 2018
|
|
176,915
|
|
|
24.59
|
|
8.69
|
|
4.8
|
|
1,162
|
|
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, 2017
|
|
358,786
|
|
|
27.75
|
|
10.96
|
|
5.2
|
|
1,181
|
|
Granted
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Exercised
|
|
(10,342
|
)
|
|
27.13
|
|
11.02
|
|
—
|
|
61
|
|
Cancelled/Forfeited
|
|
(46,352
|
)
|
|
32.08
|
|
11.43
|
|
—
|
|
—
|
|
Outstanding at March 31, 2018
|
|
302,092
|
|
|
27.10
|
|
10.89
|
|
4.3
|
|
1,127
|
|
Vested and exercisable at March 31, 2018
|
|
223,318
|
|
|
25.54
|
|
10.72
|
|
4.0
|
|
1,104
|
|
Vested and expected to vest at March 31, 2018
|
|
298,531
|
|
|
27.04
|
|
10.88
|
|
4.3
|
|
1,126
|
|
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 and nonvested at June 30, 2017
|
|
15,445
|
|
|
29.79
|
|
|
0.9
|
|
467
|
|
Granted
|
|
13,110
|
|
|
33.88
|
|
|
1.7
|
|
444
|
|
Vested/Released
|
|
(9,642
|
)
|
|
31.12
|
|
|
—
|
|
323
|
|
Cancelled/Forfeited
|
|
(3,955
|
)
|
|
26.13
|
|
|
—
|
|
—
|
|
Outstanding and nonvested at March 31, 2018
|
|
14,958
|
|
|
33.48
|
|
|
1.7
|
|
452
|
|
Expected to vest at March 31, 2018
|
|
14,327
|
|
|
33.49
|
|
|
1.7
|
|
433
|
|
Outstanding and Nonvested PBRSUs:
|
|
PBRSUs
Awarded
|
|
Weighted
Average
Grant Date
Fair Value
($)
|
|
Weighted
Average
Remaining
Life
(Years)
|
|
Aggregate
Intrinsic
Value
($ in thousands)
|
||||
Outstanding and nonvested at June 30, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Granted(1)
|
|
37,414
|
|
|
31.70
|
|
|
—
|
|
|
1,186
|
|
Vested/Released
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Cancelled/Forfeited
|
|
(1,306
|
)
|
|
31.70
|
|
|
—
|
|
|
—
|
|
Outstanding and nonvested at March 31, 2018
|
|
36,108
|
|
|
31.70
|
|
|
2.6
|
|
|
1,090
|
|
Expected to vest at March 31, 2018
|
|
31,743
|
|
|
31.70
|
|
|
2.6
|
|
|
959
|
|
(In thousands)
|
|
March 31, 2018
|
|
June 30, 2017
|
||||
Earnout payable(1)
|
|
$
|
600
|
|
|
$
|
1,100
|
|
Derivative liabilities—noncurrent
|
|
146
|
|
|
380
|
|
||
Multiemployer Plan Holdback—Boyd Coffee
|
|
1,056
|
|
|
—
|
|
||
Accrued cumulative preferred dividends—noncurrent
|
|
206
|
|
|
—
|
|
||
Other long-term liabilities
|
|
$
|
2,008
|
|
|
$
|
1,480
|
|
|
|
Three Months Ended
March 31,
|
|
Nine Months Ended
March 31, |
||||||||||||
(In thousands, except share and per share amounts)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Undistributed net (loss) income available to common stockholders
|
|
$
|
(4,033
|
)
|
|
$
|
1,592
|
|
|
$
|
(23,899
|
)
|
|
$
|
23,253
|
|
Undistributed net (loss) income available to nonvested restricted stockholders and holders of convertible preferred stock
|
|
(3
|
)
|
|
2
|
|
|
(13
|
)
|
|
35
|
|
||||
Net (loss) income available to common stockholders—basic
|
|
$
|
(4,036
|
)
|
|
$
|
1,594
|
|
|
$
|
(23,912
|
)
|
|
$
|
23,288
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding—basic
|
|
16,760,145
|
|
|
16,605,754
|
|
|
16,727,624
|
|
|
16,584,125
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Shares issuable under stock options
|
|
—
|
|
|
116,020
|
|
|
—
|
|
|
120,075
|
|
||||
Shares issuable PBRSUs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Shares issuable under convertible preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average common shares outstanding—diluted
|
|
16,760,145
|
|
|
16,721,774
|
|
|
16,727,624
|
|
|
16,704,200
|
|
||||
Net (loss) income per common share available to common stockholders—basic
|
|
$
|
(0.24
|
)
|
|
$
|
0.10
|
|
|
$
|
(1.43
|
)
|
|
$
|
1.40
|
|
Net (loss) income per common share available to common stockholders—diluted
|
|
$
|
(0.24
|
)
|
|
$
|
0.10
|
|
|
$
|
(1.43
|
)
|
|
$
|
1.39
|
|
Shares Authorized
|
|
Shares Issued and Outstanding
|
|
Par Value per Share
|
|
Carrying Value
|
|
Cumulative Preferred Dividends
|
|
Liquidation Preference
|
||||||||||
21,000
|
|
|
14,700
|
|
|
$
|
1.00
|
|
|
$
|
14,700
|
|
|
$
|
257,250
|
|
|
$
|
820,554
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Volume of green coffee pounds processed and sold increased
13.7%
and
10.8%
, respectively, in the three and nine months ended
March 31, 2018
as compared to the three and nine months ended
March 31, 2017
.
|
•
|
Gross profit increased
$5.0 million
to
$58.8 million
in the three months ended
March 31, 2018
from
$53.8 million
in the three months ended
March 31, 2017
. Gross profit increased
$13.2 million
to
$173.3 million
in the nine months ended
March 31, 2018
, from
$160.1 million
in the nine months ended
March 31, 2017
.
|
•
|
Gross margin decreased to
37.2%
and
37.9%
, respectively, in the three and nine months ended
March 31, 2018
, from
38.9%
and
39.3%
, respectively, in the three and nine months ended
March 31, 2017
.
|
•
|
Loss from operations was
$(2.9) million
and
$(1.7) million
, respectively, in the three and nine months ended
March 31, 2018
as compared to income from operations of
$2.1 million
and
$40.5 million
, respectively, in the three and nine months ended
March 31, 2017
. Income from operations in the nine months ended
March 31, 2017
included a
$37.4 million
net gain from the sale of the Torrance Facility. Loss from operations in the three and nine months ended March 31, 2018 included $(3.8) million in losses on intangible assets.
|
•
|
Net loss was
$(3.9) million
, or
$(0.24)
per common share available to common stockholders, in the three months ended
March 31, 2018
, compared to net income of
$1.6 million
, or
$0.10
per common share available to common stockholders—diluted, in the three months ended
March 31, 2017
. Net loss was
$(23.7) million
, or
$(1.43)
per common share available to common stockholders, in the nine months ended
March 31, 2018
, compared to net income of
$23.3 million
, or
$1.39
per common share available to common stockholders—diluted, in the nine months ended
March 31, 2017
. Net loss in the nine months ended
March 31, 2018
included income tax expense of
$20.5 million
, as compared to income tax expense of
$15.9 million
, in the nine months ended
March 31, 2017
.
|
•
|
EBITDA decreased
(53.3)%
to
$4.7 million
and EBITDA Margin was
3.0%
in the three months ended
March 31, 2018
, as compared to EBITDA of
$10.0 million
and EBITDA Margin of
7.3%
in the three months ended
March 31, 2017
. EBITDA decreased
(61.8)%
to
$21.9 million
and EBITDA Margin was
4.8%
in the nine months ended March 31, 2018, as compared to EBITDA of
$57.2 million
and EBITDA Margin of
14.0%
in the nine months ended
March 31, 2017
.*
|
•
|
Adjusted EBITDA decreased
(13.4)%
to
$10.5 million
and Adjusted EBITDA Margin was
6.7%
in the three months ended
March 31, 2018
, as compared to Adjusted EBITDA of
$12.2 million
and Adjusted EBITDA Margin of
8.8%
in the three months ended
March 31, 2017
. Adjusted EBITDA decreased
(4.6)%
to
$32.8 million
and Adjusted EBITDA Margin was
7.2%
in the nine months ended March 31, 2018, as compared to Adjusted EBITDA of
$34.3 million
and Adjusted EBITDA Margin of
8.4%
in the nine months ended
March 31, 2017
.*
|
•
|
(* EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. See
Non-GAAP Financial Measures
in Part I, Item 2 of this report for a reconciliation of these non-GAAP measures to their corresponding GAAP measures.)
|
(In millions)
|
Three Months Ended
March 31, 2018 vs. 2017 |
|
Nine Months Ended
March 31, 2018 vs. 2017 |
||||
Effect of change in unit sales
|
$
|
21.6
|
|
|
$
|
40.6
|
|
Effect of pricing and product mix changes
|
(1.9
|
)
|
|
8.7
|
|
||
Total increase in net sales
|
$
|
19.7
|
|
|
$
|
49.3
|
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2018
|
|
2017
|
||||||||||
(In thousands)
|
|
$
|
|
% of total
|
|
$
|
|
% of total
|
||||||
Net Sales by Product Category:
|
|
|
|
|
|
|
|
|
||||||
Coffee (Roast & Ground)
|
|
$
|
99,315
|
|
|
63
|
%
|
|
$
|
87,833
|
|
|
64
|
%
|
Coffee (Frozen Liquid)
|
|
8,675
|
|
|
5
|
%
|
|
8,228
|
|
|
6
|
%
|
||
Tea (Iced & Hot)
|
|
7,889
|
|
|
5
|
%
|
|
7,662
|
|
|
6
|
%
|
||
Culinary
|
|
16,872
|
|
|
11
|
%
|
|
13,855
|
|
|
10
|
%
|
||
Spice
|
|
6,115
|
|
|
4
|
%
|
|
5,948
|
|
|
4
|
%
|
||
Other beverages(1)
|
|
18,319
|
|
|
12
|
%
|
|
13,947
|
|
|
10
|
%
|
||
Net sales by product category
|
|
157,185
|
|
|
100
|
%
|
|
137,473
|
|
|
100
|
%
|
||
Fuel surcharge
|
|
742
|
|
|
—
|
%
|
|
714
|
|
|
—
|
%
|
||
Net sales
|
|
$
|
157,927
|
|
|
100
|
%
|
|
$
|
138,187
|
|
|
100
|
%
|
|
|
Nine Months Ended March 31,
|
||||||||||||
|
|
2018
|
|
2017
|
||||||||||
(In thousands)
|
|
$
|
|
% of total
|
|
$
|
|
% of total
|
||||||
Net Sales by Product Category:
|
|
|
|
|
|
|
|
|
||||||
Coffee (Roast & Ground)
|
|
$
|
286,655
|
|
|
63
|
%
|
|
$
|
256,013
|
|
|
63
|
%
|
Coffee (Frozen Liquid)
|
|
25,825
|
|
|
6
|
%
|
|
24,623
|
|
|
6
|
%
|
||
Tea (Iced & Hot)
|
|
23,312
|
|
|
5
|
%
|
|
21,371
|
|
|
5
|
%
|
||
Culinary
|
|
48,011
|
|
|
10
|
%
|
|
41,354
|
|
|
10
|
%
|
||
Spice
|
|
18,722
|
|
|
4
|
%
|
|
18,303
|
|
|
4
|
%
|
||
Other beverages(1)
|
|
52,354
|
|
|
11
|
%
|
|
43,831
|
|
|
11
|
%
|
||
Net sales by product category
|
|
454,879
|
|
|
99
|
%
|
|
405,495
|
|
|
99
|
%
|
||
Fuel surcharge
|
|
2,127
|
|
|
1
|
%
|
|
2,205
|
|
|
1
|
%
|
||
Net sales
|
|
$
|
457,006
|
|
|
100
|
%
|
|
$
|
407,700
|
|
|
100
|
%
|
•
|
restructuring and other transition expenses;
|
•
|
net gains and losses from sales of assets;
|
•
|
non-cash income tax expense (benefit), including the release of valuation allowance on deferred tax assets;
|
•
|
non-recurring 2016 proxy contest-related expenses;
|
•
|
non-cash interest expense accrued on the Torrance Facility sale-leaseback financing obligation;
|
•
|
acquisition and integration costs;
|
•
|
income taxes on non-GAAP adjustments.
|
•
|
income taxes;
|
•
|
interest expense; and
|
•
|
depreciation and amortization expense.
|
•
|
income taxes;
|
•
|
interest expense;
|
•
|
(loss) income from short-term investments;
|
•
|
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;
|
•
|
net gains and losses from sales of assets;
|
•
|
non-recurring 2016 proxy contest-related expenses; and
|
•
|
acquisition and integration costs.
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
(In thousands, except per share data)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income available to common stockholders, as reported
|
|
$
|
(4,036
|
)
|
|
$
|
1,594
|
|
|
$
|
(23,912
|
)
|
|
$
|
23,288
|
|
Restructuring and other transition expenses
|
|
52
|
|
|
2,547
|
|
|
311
|
|
|
9,542
|
|
||||
Net gain from sale of Torrance Facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,449
|
)
|
||||
Net gains from sale of spice assets
|
|
(110
|
)
|
|
(272
|
)
|
|
(655
|
)
|
|
(764
|
)
|
||||
Net gains from sales of other assets
|
|
(590
|
)
|
|
(86
|
)
|
|
(446
|
)
|
|
(1,525
|
)
|
||||
Non-recurring 2016 proxy contest-related expenses
|
|
—
|
|
|
196
|
|
|
—
|
|
|
5,186
|
|
||||
Interest expense on sale-leaseback financing obligation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
681
|
|
||||
Acquisition and integration costs
|
|
1,639
|
|
|
—
|
|
|
5,021
|
|
|
—
|
|
||||
Income tax (benefit) expense on non-GAAP adjustments
|
|
(317
|
)
|
|
(930
|
)
|
|
(1,354
|
)
|
|
9,488
|
|
||||
Non-GAAP net (loss) income
|
|
$
|
(3,362
|
)
|
|
$
|
3,049
|
|
|
$
|
(21,035
|
)
|
|
$
|
8,447
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per common share available to common stockholders—diluted, as reported
|
|
$
|
(0.24
|
)
|
|
$
|
0.10
|
|
|
$
|
(1.43
|
)
|
|
$
|
1.39
|
|
Impact of restructuring and other transition expenses
|
|
$
|
—
|
|
|
$
|
0.15
|
|
|
$
|
0.02
|
|
|
$
|
0.57
|
|
Impact of net gain from sale of Torrance Facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2.24
|
)
|
Impact of net gains from sale of spice assets
|
|
$
|
—
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
Impact of net gains from sales of other assets
|
|
$
|
(0.04
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.09
|
)
|
Impact of non-recurring 2016 proxy contest-related expenses
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.31
|
|
Impact of interest expense on sale-leaseback financing obligation
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.04
|
|
Impact of acquisition and integration costs
|
|
$
|
0.10
|
|
|
$
|
—
|
|
|
$
|
0.30
|
|
|
$
|
—
|
|
Impact of income tax (benefit) expense on non-GAAP adjustments
|
|
$
|
(0.02
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.57
|
|
Non-GAAP net (loss) income per diluted common share
|
|
$
|
(0.20
|
)
|
|
$
|
0.17
|
|
|
$
|
(1.26
|
)
|
|
$
|
0.50
|
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income, as reported
|
|
$
|
(3,908
|
)
|
|
$
|
1,594
|
|
|
$
|
(23,655
|
)
|
|
$
|
23,288
|
|
Income tax expense
|
|
297
|
|
|
1,411
|
|
|
20,497
|
|
|
15,910
|
|
||||
Interest expense
|
|
902
|
|
|
517
|
|
|
2,286
|
|
|
1,430
|
|
||||
Depreciation and amortization expense
|
|
7,397
|
|
|
6,527
|
|
|
22,727
|
|
|
16,613
|
|
||||
EBITDA
|
|
$
|
4,688
|
|
|
$
|
10,049
|
|
|
$
|
21,855
|
|
|
$
|
57,241
|
|
EBITDA Margin
|
|
3.0
|
%
|
|
7.3
|
%
|
|
4.8
|
%
|
|
14.0
|
%
|
|
|
Three Months Ended March 31,
|
|
Nine Months Ended March 31,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net (loss) income, as reported
|
|
$
|
(3,908
|
)
|
|
$
|
1,594
|
|
|
$
|
(23,655
|
)
|
|
$
|
23,288
|
|
Income tax (benefit) expense
|
|
297
|
|
|
1,411
|
|
|
20,497
|
|
|
15,910
|
|
||||
Interest expense
|
|
902
|
|
|
517
|
|
|
2,286
|
|
|
1,430
|
|
||||
Income from short-term investments
|
|
—
|
|
|
(1,156
|
)
|
|
(19
|
)
|
|
(882
|
)
|
||||
Depreciation and amortization expense
|
|
7,397
|
|
|
6,527
|
|
|
22,727
|
|
|
16,613
|
|
||||
ESOP and share-based compensation expense
|
|
1,048
|
|
|
902
|
|
|
2,892
|
|
|
2,996
|
|
||||
Restructuring and other transition expenses
|
|
52
|
|
|
2,547
|
|
|
311
|
|
|
9,542
|
|
||||
Net gain from sale of Torrance Facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,449
|
)
|
||||
Net gains from sale of spice assets
|
|
(110
|
)
|
|
(272
|
)
|
|
(655
|
)
|
|
(764
|
)
|
||||
Net gains from sales of other assets
|
|
(590
|
)
|
|
(86
|
)
|
|
(446
|
)
|
|
(1,525
|
)
|
||||
Impairment losses on intangible assets
|
|
3,820
|
|
|
—
|
|
|
3,820
|
|
|
—
|
|
||||
Non-recurring 2016 proxy contest-related expenses
|
|
—
|
|
|
196
|
|
|
—
|
|
|
5,186
|
|
||||
Acquisition and integration costs
|
|
1,639
|
|
|
—
|
|
|
5,021
|
|
|
—
|
|
||||
Adjusted EBITDA
|
|
$
|
10,547
|
|
|
$
|
12,180
|
|
|
$
|
32,779
|
|
|
$
|
34,345
|
|
Adjusted EBITDA Margin
|
|
6.7
|
%
|
|
8.8
|
%
|
|
7.2
|
%
|
|
8.4
|
%
|
|
|
Expenditures Incurred
|
|
Budget
|
||||||||||||||||
(In thousands)
|
|
Nine Months Ended March 31, 2018
|
|
Through Fiscal Year Ended June 30, 2017
|
|
Total
|
|
Lower bound
|
|
Upper bound
|
||||||||||
Building and facilities, including land
|
|
$
|
—
|
|
|
$
|
60,770
|
|
|
$
|
60,770
|
|
|
$
|
55,000
|
|
|
$
|
60,000
|
|
Machinery and equipment; furniture and fixtures
|
|
—
|
|
|
33,241
|
|
|
$
|
33,241
|
|
|
35,000
|
|
|
39,000
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
94,011
|
|
|
$
|
94,011
|
|
|
$
|
90,000
|
|
|
$
|
99,000
|
|
|
|
Nine Months Ended December 31,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Maintenance:
|
|
|
|
|
||||
Coffee brewing equipment
|
|
$
|
8,118
|
|
|
$
|
8,280
|
|
Building and facilities
|
|
324
|
|
|
230
|
|
||
Vehicles, machinery and equipment
|
|
5,804
|
|
|
9,439
|
|
||
Software, office furniture and equipment
|
|
3,127
|
|
|
1,831
|
|
||
Capital expenditures, maintenance
|
|
$
|
17,373
|
|
|
$
|
19,780
|
|
|
|
|
|
|
||||
Expansion Project:
|
|
|
|
|
||||
Machinery and equipment
|
|
$
|
5,601
|
|
|
$
|
—
|
|
Capital expenditures, Expansion Project
|
|
$
|
5,601
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
New Facility:
|
|
|
|
|
||||
Building and facilities, including land(1)
|
|
$
|
1,577
|
|
|
$
|
26,606
|
|
Machinery and equipment
|
|
2,489
|
|
|
11,774
|
|
||
Software, office furniture and equipment
|
|
426
|
|
|
3,990
|
|
||
Capital expenditures, New Facility
|
|
$
|
4,492
|
|
|
$
|
42,370
|
|
Total capital expenditures
|
|
$
|
27,466
|
|
|
$
|
62,150
|
|
|
|
March 31, 2018
|
|
June 30, 2017
|
||||
(In thousands)
|
|
|
|
|
||||
Current assets
|
|
$
|
153,039
|
|
|
$
|
117,164
|
|
Current liabilities
|
|
175,034
|
|
|
97,267
|
|
||
Working capital
|
|
$
|
(21,995
|
)
|
|
$
|
19,897
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
($ in thousands)
|
|
Principal
|
|
Interest Rate
|
|
Annual Interest Expense
|
|||
–150 basis points
|
|
$85,885
|
|
2.38
|
%
|
|
$
|
2,044
|
|
–100 basis points
|
|
$85,885
|
|
2.88
|
%
|
|
$
|
2,473
|
|
Unchanged
|
|
$85,885
|
|
3.88
|
%
|
|
$
|
3,332
|
|
+100 basis points
|
|
$85,885
|
|
4.88
|
%
|
|
$
|
4,191
|
|
+150 basis points
|
|
$85,885
|
|
5.38
|
%
|
|
$
|
4,621
|
|
|
|
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)
|
|
$
|
260
|
|
|
$
|
(260
|
)
|
|
$
|
4,415
|
|
|
$
|
(4,415
|
)
|
Item 4.
|
Controls and Procedures
|
PART II - OTHER INFORMATION
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 6.
|
Exhibits
|
Exhibit No.
|
|
Description
|
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
10.27
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
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).**
|
|
|
|
10.33
|
|
|
|
|
|
10.34
|
|
|
|
|
|
10.35
|
|
|
|
|
|
10.36
|
|
|
|
|
|
10.37
|
|
|
|
|
|
10.38
|
|
|
|
|
|
10.39
|
|
|
|
|
|
10.40
|
|
|
|
|
|
10.41
|
|
|
|
|
|
10.42
|
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
10.43
|
|
|
|
|
|
10.44
|
|
|
|
|
|
10.45
|
|
|
|
|
|
10.46
|
|
|
|
|
|
10.47
|
|
|
|
|
|
10.48
|
|
|
|
|
|
10.49
|
|
|
|
|
|
10.50
|
|
|
|
|
|
10.51
|
|
|
|
|
|
10.52
|
|
|
|
|
|
10.53
|
|
|
|
|
|
10.54
|
|
|
|
|
|
10.55
|
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
10.56
|
|
|
|
|
|
10.57
|
|
|
|
|
|
10.58
|
|
|
|
|
|
10.59
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101
|
|
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2018, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed 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.
|
|
|
|
|
|
|
|
F
ARMER
B
ROS
. C
O
.
|
||||
|
|
|
|||
|
By:
|
|
/s/ Michael H. Keown
|
||
|
|
|
Michael H. Keown
President and Chief Executive Officer (chief executive officer) |
||
|
|
|
May 9, 2018
|
||
|
|
|
|
||
|
By:
|
|
/s/ David G. Robson
|
||
|
|
|
David G. Robson
Treasurer and Chief Financial Officer
(principal financial and accounting officer)
|
||
|
|
|
May 9, 2018
|
/s/ H. Gomez
Title:
VP & Controller
|
/s/ Tom Mattei, Jr
Title:
VP & Corporate Counsel
|
/
s/ L.P. Quiggle
Title: VP Human Resources
|
/s/ Mike H. Keown
Title: President & CEO
|
|
|
|
|
|
|
|
Participant:
|
|
|
|
|
|
|
|
|
|
Grant Date:
|
|
|
|
|
|
|
|
|
|
Exercise Price per Share:
|
|
$
|
|
|
|
|
|
|
|
Total Exercise Price:
|
|
$
|
|
|
|
|
|
|
|
Total Number of Shares Subject to the Option:
|
|
|
|
|
|
|
|
|
|
Expiration Date:
|
|
|
|
|
|
|
|
|
Type of Option:
|
|
Incentive Stock Option Non-Qualified Stock Option
|
|
|
|
Vesting Schedule:
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One-third (1/3) of the Total Number of Shares Subject to the Option, rounded down to the nearest whole number of shares, vest on each of the first two anniversaries of the Grant Date, and the remainder vest on the third anniversary of the Grant Date, subject to the acceleration provision of the Stock Option Agreement.
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FARMER BROS. CO.
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PARTICIPANT
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By:
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By:
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Print Name:
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Print Name:
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Title:
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Address:
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20333 South Normandie Avenue
Torrance, California 90502
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Address:
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Grant Date:
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__________________
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Number of Shares as to which Option is Exercised:
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__________________
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Exercise Price per Share:
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$_________________
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Total Exercise Price:
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$_________________
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Certificate to be issued in name of:
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__________________
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Payment delivered herewith:
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$_________________
(Representing the full Exercise Price for the Shares, as well as any applicable withholding tax)
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Form of Payment: _______________
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(Please specify)
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Type of Option:
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Incentive Stock Option Non-Qualified Stock Option
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Participant:
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Grant Date:
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Vesting Commencement Date:
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Total Number of Shares of Restricted Stock:
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Vesting Schedule:
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[To be specified in individual agreements], subject to the acceleration provisions set forth in the Restricted Stock Agreement.
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FARMER BROS. CO.
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PARTICIPANT
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By:
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By:
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Print Name:
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Print Name:
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Title:
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Address:
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20333 South Normandie Avenue
Torrance, California 90502
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Address:
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/S/ MICHAEL H. KEOWN
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Michael H. Keown
President and Chief Executive Officer
(principal executive officer)
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/
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/ DAVID G. ROBSON
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David G. Robson
Treasurer and Chief Financial Officer
(principal financial and accounting officer)
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/
S
/ MICHAEL H. KEOWN
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Michael H. Keown
President and Chief Executive Officer
(principal executive officer)
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/
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/ DAVID G. ROBSON
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David G. Robson
Treasurer and Chief Financial Officer
(principal financial and accounting officer)
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