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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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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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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Large accelerated filer
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¨
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Accelerated filer
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þ
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
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Exchange Act.
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¨
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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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a robust line of roast and ground coffee, including organic, Direct Trade, Project D.I.R.E.C.T.
®
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 concentrated and ready-to-drink cold brew and 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 coffees and teas;
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•
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expand production line capacity at the New Facility to integrate acquired product volumes and to support top-line growth;
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•
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grow through acquisitions to broaden our geographic reach and to increase our presence in the premium tea industry;
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•
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implement a channel-based selling strategy to better address the unique needs of each customer channel, more quickly respond to industry trends, and improve sales growth;
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•
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rethink aspects of our Company culture to improve productivity and employee engagement and to attract and retain 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 high-quality products at a competitive cost, protection against cyber threats, 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 three quality tiers-value, premium and specialty;
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•
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consumer-branded coffee and tea products;
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•
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channel-based expertise;
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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;
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•
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product and menu insights; and
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•
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a robust approach to social, environmental and economic sustainability throughout our business.
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•
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New Facility Investment.
In fiscal 2017, we completed construction of and relocation to our state-of-the-art facility in Northlake, Texas. In fiscal 2018, we began a project to expand our production lines at the New Facility. We are focused on leveraging our investment in the New Facility to produce the highest quality coffee in response to the market shift to premium and specialty coffee, support the transition of acquired product volumes, and create opportunities for customer acquisition and sustainable long-term growth.
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•
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SQF Certification.
We are committed to the highest standards in food quality and safety. In fiscal 2018, the New Facility received SQF certification, joining our Portland and Houston SQF-certified facilities. SQF is a Global Food Safety Initiative-based system that strengthens our commitment to supply safe quality coffee products and comply with food safety legislation. Required by many of our national account customers, SQF certification at the New Facility marks an important step that will allow us the production platform to increase volume for national account customers as needed.
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•
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Acquisition Integration
. Through our recent acquisitions we have worked to reduce costs by integrating the acquired businesses into our existing corporate and operational structure. Eliminating redundant functions, merging delivery networks and combining production processing and facilities are expected to result in added synergies and efficiencies compared to their pre-acquisition cost structures.
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•
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New Facility
. 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 believe the ongoing improvements in production efficiency will allow us to operate at a lower cost, generally over the long term.
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•
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DSD Restructuring Plan.
As a result of an ongoing operational review of various initiatives within our DSD selling organization, in the third quarter of fiscal 2017, we commenced the DSD Restructuring Plan to reorganize our DSD operations in an effort to realign functions into a channel-based selling organization, streamline operations, acquire certain channel specific expertise, and improve selling effectiveness and financial results. We began recognizing cost benefits associated with the restructuring in the fourth quarter of fiscal 2017 and we anticipate annualized savings from the restructuring plan beginning in the second quarter of fiscal 2019. We expect to complete the DSD Restructuring Plan by the end of fiscal 2019. We continue to analyze our sales organization and evaluate other potential restructuring opportunities in light of our strategic priorities.
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•
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Supply Chain.
In recent years, we have undertaken efforts to streamline our supply chain, including replacing our long-haul fleet operations with third-party logistics (“3PL“), resulting in a reduction in our fuel consumption and empty trailer miles, while improving our intermodal and trailer cube utilization; using vendor managed inventory arrangements to reconfigure our packaging methodology and reduce waste; and engaging third-party warehouse management services at the New Facility 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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Telematics
. In an effort to make our DSD fleet more fuel-efficient, during fiscal 2018 we installed telematics monitoring devices in our delivery trucks, allowing us to see contributing factors to our transportation-related carbon footprint. Installation of telematics monitoring devices has resulted in reduced idling time, a cut in rapid acceleration, and a reduction in fuel expenditures.
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•
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Channel-Based Selling Organization
. Changing from a geographic to a channel-based selling strategy is expected to allow us to better serve our customers and improve sales growth. We believe this channel-based selling strategy will empower our sales organization to better address the unique needs of each customer channel thereby deepening our customer relationships, allow us to create a more comprehensive customer support structure, enhance our marketing efforts, and allow us to respond more quickly to industry trends. To this end, in the fourth quarter of fiscal 2018, we realigned our DSD and direct ship regional and national sales teams around sales channels to further our channel-based selling strategy.
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•
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Optimize Product Portfolio.
In fiscal 2018, we undertook efforts to optimize our SKU count reducing our total SKU count by 11% excluding Boyd Coffee.
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•
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Market Opportunities.
We believe we are well-positioned to continue to pursue growth through additional, opportunistic M&A activity to deliver aligned brands, customers and innovation. For example, in fiscal 2018, we completed the Boyd Coffee acquisition to add to our product portfolio, improve our growth potential, deepen our distribution footprint and increase our capacity utilization at our production facilities. Additionally, in fiscal 2017, we completed the China Mist acquisition to extend our tea product offerings and give us a greater presence in the premium tea industry, and the West Coast Coffee acquisition to broaden our reach in the Northwestern United States. See
Note 4
,
Acquisitions,
of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
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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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Investment in Technology
. We have invested in technology and process improvements to improve our efficiency and the effectiveness of our sales and distribution network. Two initiatives that were completed in fiscal 2018 were advanced routing software for our last mile delivery and the next version of our hand-held sales and inventory management device for our delivery drivers.
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•
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Branch Consolidation and Property Sales
. We evaluate our branch operation structure on an ongoing basis to identify opportunities to streamline the supply chain and reduce costs. In an effort to streamline our branch operations, in fiscal 2018, we sold a Texas branch property and in fiscal 2017 and 2016, we sold one and two Northern California branch properties, respectively.
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•
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Investment in Human Resources.
Our senior leadership team brings a proven track record of strategic and operational leadership capabilities. We have also added experienced and vibrant talent to our team and continue to benefit from our in-house expertise in sustainability, acquisition and integration, and operations.
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•
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Commitment to Employee Wellness.
We are committed to creating a healthier and happier workforce which we believe contributes to our success. We have received certifications as a Fit-Friendly Worksite and a Blue Zone Workplace based on the activities and environment created in our workplace to support healthy living and promote wellness of our associates.
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•
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Employee Development.
We have invested in a Learning Management System to enable training facilitation and tracking of training modules to support the development of employees at all levels and functions within the organization. During fiscal 2018, we deployed courses to our Quality, Manufacturing and Maintenance functions and we intend to expand our focus to include critical training modules that impact our entire workforce. We recently completed a Talent Planning Process of all exempt level employees across the organization. We calibrated the assessment of talent and created and began to execute on succession charts for all critical roles to ensure we have the right talent and capabilities to support the business today and in the future.
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•
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Performance Driven Culture.
In fiscal 2018, we continued to pursue 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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Product Development Lab.
The New Facility includes a product development lab where we are focused on developing innovative products in response to industry trends and customer needs. In fiscal 2018, we developed new products including Artisan and Metro Single Origin coffees, cold brew coffees, Artisan hot teas and on trend seasonal coffees and cappuccinos.
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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 and tea programs that can include sustainable supply chains, direct trade purchasing, training and technical assistance, recycling and composting networks, and
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•
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Science-Based Carbon Reduction Targets.
We believe combating climate change is critical to the future of our company, the coffee industry, coffee growers and the world. In fiscal 2018 we began progress to reduce greenhouse gas (GHG) emissions across our roasting and administrative operations to achieve our Science Based Targets. Setting approved targets places us among those responsible businesses that are making measurable contributions to incorporate sustainability within their business strategy.
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•
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Zero Waste to Landfill.
Achieving zero waste in our production and distribution facilities is a significant step in reaching our overall sustainability goals. In fiscal 2018 we achieved our goal of 90% waste diversion for our primary production and distribution facilities. To accomplish this goal, we implemented ambitious recycling and composting guidelines across these facilities. The enhanced efforts resulted in an approximate 80% reduction from previous years, meeting the Zero Waste International Alliance requirements for diverting waste sent to landfills in these locations.
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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 also achieved LEED
®
Silver Certification for our corporate offices at the New Facility.
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•
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Expansion of
Project D.I.R.E.C.T.
®
Program.
In fiscal 2018, we completed the baseline analysis of a third origin, Brazil, for our Project D.I.R.E.C.T.
®
program for sourcing green coffee. This information will be used to characterize farm level investments and technical assistance improvements within the communities from which we source these coffees. Project D.I.R.E.C.T
.
®
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 Project D.I.R.E.C.T
.
®
, we follow an outcome-based evaluation framework. The result of this evaluation impacts where we invest our resources within our supply chain and has led to an increased level of transparency for us. Project D.I.R.E.C.T
.
®
represents a growing part of our coffee portfolio.
|
•
|
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, we track traceability levels from all green coffee suppliers on a per-contract basis.
|
•
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Supplier Sustainability.
We are committed to working with suppliers who share our social, environmental and economic sustainability goals. Regulatory and reputational risks can increase when suppliers are not held to the same strict standards to which we hold ourselves. To address this concern, in fiscal 2017, we surveyed all green coffee suppliers to assess their social, environmental, and economic sustainability practices and alignment with the United Nations Global Compact, a United Nations initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies, documenting 99% compliance with United Nations Global Compact practices from all respondents. In fiscal 2018, we expanded this survey to include all green coffee suppliers along with our top suppliers of processed coffee and non-coffee products. We are awaiting the fiscal 2018 survey results.
|
•
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Recipient organizations include Feeding America, Ronald McDonald House, and local food banks.
|
•
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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 (“SCA”) Sustainability Council and the Coalition for Coffee Communities, which are focused on sustainability in coffee growing regions.
|
•
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Our employee-driven CAFÉ Crew organizes employee involvement at local charities and fund raisers, including support of Team Ronald McDonald House, riding in the Ride Against Hunger supported by Tarrant Area Food Bank, hosting local food drives and donation of Farmer Brothers products nearing the end of their shelf life to organizations related to Feeding America.
|
•
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All of our usable and near expiring products or products with damaged packaging that can be donated are donated to Feeding America affiliated food banks nationwide, in an effort to keep all edible food waste from going to landfills.
|
•
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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 SCA, 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 SCA certification of a state-of-the-art coffee lab and operate Public Domain
®
, a specialty coffeehouse in Portland, Oregon. We also received SCA certification for our product development lab at the New Facility.
|
•
|
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 and tea industries. We provide trend insights that help our customers create winning products and integrated marketing strategies. Within this, we are focused on understanding key demographic groups such as Millennials and Hispanics, and key channel trends.
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Item 1A.
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Risk Factors
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•
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our ability to access sufficient capital at reasonable rates to fund the Expansion Project, especially in periods of prolonged economic decline when we may be unable to access capital markets;
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•
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our ability to complete the Expansion Project within anticipated costs, including the risk that we may incur cost overruns, resulting from inflation or increased costs of equipment, materials, labor, contractor productivity, delays in construction or other factors beyond our control;
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•
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adverse weather conditions;
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•
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our ability in scaling our supply chain infrastructure as our product offerings and capacity increase;
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•
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the availability of skilled labor, equipment, and materials to complete the Expansion Project;
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•
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potential changes in federal, state and local statutes, regulations, and orders, including environmental requirements that delay or prevent the Expansion Project from proceeding or increase the anticipated cost of the Expansion Project;
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•
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inadequate customer demand for, or interest in, our products; and
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•
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failure to achieve our planned volumes and efficiencies at the New Facility.
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•
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requiring a substantial portion of our cash flow from operations to make payments on our indebtedness;
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•
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reducing the cash flow available or limiting our ability to borrow additional funds, to pay dividends, to fund capital expenditures and other corporate purposes and to pursue our business strategies;
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•
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limiting our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;
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•
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increasing our vulnerability to general adverse economic and industry conditions; and
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•
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placing us at a competitive disadvantage compared to our competitors that have less debt.
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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 assets; or
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•
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reduce or delay planned capital or operating expenditures, strategic acquisitions or investments.
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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 Area
(Square Feet)
|
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Purpose
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Status
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Northlake, TX
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535,585
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Corporate headquarters, manufacturing, distribution, warehouse, product development lab
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Owned
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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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Moonachie, NJ
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41,404
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Distribution and warehouse
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Leased
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Hillsboro, OR
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20,400
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Manufacturing, distribution and warehouse
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Leased
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Scottsdale, AZ
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17,400
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Distribution and warehouse
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Leased
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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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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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Year Ended June 30, 2018
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Year Ended June 30, 2017
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||||||||||||
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High
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Low
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High
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Low
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||||||||
1st Quarter
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$
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34.25
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$
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28.95
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$
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36.96
|
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$
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29.16
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2nd Quarter
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$
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34.70
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$
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30.90
|
|
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$
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37.55
|
|
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$
|
30.05
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3rd Quarter
|
|
$
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33.90
|
|
|
$
|
29.60
|
|
|
$
|
37.15
|
|
|
$
|
31.25
|
|
4th Quarter
|
|
$
|
30.95
|
|
|
$
|
23.95
|
|
|
$
|
37.35
|
|
|
$
|
29.30
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
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|
||||||
Farmer Bros. Co.
|
|
$
|
100.00
|
|
|
$
|
153.70
|
|
|
$
|
167.14
|
|
|
$
|
228.02
|
|
|
$
|
215.15
|
|
|
$
|
217.28
|
|
Russell 2000 Index
|
|
$
|
100.00
|
|
|
$
|
122.04
|
|
|
$
|
128.28
|
|
|
$
|
117.85
|
|
|
$
|
144.80
|
|
|
$
|
168.09
|
|
Value Line Food Processing Index
|
|
$
|
100.00
|
|
|
$
|
122.38
|
|
|
$
|
130.85
|
|
|
$
|
155.03
|
|
|
$
|
165.20
|
|
|
$
|
164.17
|
|
Peer Group Index (old)
|
|
$
|
100.00
|
|
|
$
|
111.12
|
|
|
$
|
126.35
|
|
|
$
|
154.73
|
|
|
$
|
159.25
|
|
|
$
|
160.70
|
|
Peer Group Index (new)
|
|
$
|
100.00
|
|
|
$
|
115.03
|
|
|
$
|
120.44
|
|
|
$
|
182.25
|
|
|
$
|
174.72
|
|
|
$
|
165.52
|
|
Item 6.
|
Selected Financial Data
|
|
Year Ended June 30,
|
||||||||||||||||||
(In thousands, except per share data)
|
2018(1)
|
|
2017(1)(2)
|
|
2016(2)
|
|
2015(2)
|
|
2014(2)
|
||||||||||
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
606,544
|
|
|
$
|
541,500
|
|
|
$
|
544,382
|
|
|
$
|
545,882
|
|
|
$
|
528,380
|
|
Cost of goods sold
|
$
|
399,502
|
|
|
$
|
354,622
|
|
|
$
|
373,214
|
|
|
$
|
386,253
|
|
|
$
|
351,565
|
|
Restructuring and other transition expenses(3)
|
$
|
662
|
|
|
$
|
11,016
|
|
|
$
|
16,533
|
|
|
$
|
10,432
|
|
|
$
|
—
|
|
Net gain from sale of Torrance Facility(4)
|
$
|
—
|
|
|
$
|
(37,449
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net gains from sale of Spice Assets(5)
|
$
|
(770
|
)
|
|
$
|
(919
|
)
|
|
$
|
(5,603
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Net (gains) losses from sales of other assets
|
$
|
(196
|
)
|
|
$
|
(1,210
|
)
|
|
$
|
(2,802
|
)
|
|
$
|
394
|
|
|
$
|
(3,814
|
)
|
Impairment losses on intangible assets(6)
|
$
|
3,820
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Income (loss) from operations
|
$
|
1,124
|
|
|
$
|
39,178
|
|
|
$
|
(2,190
|
)
|
|
$
|
(7,076
|
)
|
|
$
|
16,584
|
|
Income (loss) from operations per common share—diluted
|
$
|
0.07
|
|
|
$
|
2.33
|
|
|
$
|
(0.13
|
)
|
|
$
|
(0.43
|
)
|
|
$
|
1.04
|
|
Income tax expense (benefit)(7)
|
$
|
17,312
|
|
|
$
|
14,815
|
|
|
$
|
(72,239
|
)
|
|
$
|
402
|
|
|
$
|
705
|
|
Net (loss) income available to common stockholders(8)
|
$
|
(18,669
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
|
$
|
(9,708
|
)
|
|
$
|
19,800
|
|
Net (loss) income available to common stockholders per common share—basic(8)
|
$
|
(1.11
|
)
|
|
$
|
1.35
|
|
|
$
|
4.35
|
|
|
$
|
(0.60
|
)
|
|
$
|
1.24
|
|
Net (loss) income available to common stockholders per common share—diluted(8)
|
$
|
(1.11
|
)
|
|
$
|
1.34
|
|
|
$
|
4.32
|
|
|
$
|
(0.60
|
)
|
|
$
|
1.24
|
|
Cash dividends declared per common share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
June 30,
|
||||||||||||||||||
(In thousands)
|
2018
|
|
2017(2)
|
|
2016(2)
|
|
2015(2)
|
|
2014(2)
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total current assets(9)
|
$
|
173,514
|
|
|
$
|
140,703
|
|
|
$
|
177,366
|
|
|
$
|
166,140
|
|
|
$
|
209,952
|
|
Property, plant and equipment, net(10)
|
$
|
186,589
|
|
|
$
|
176,066
|
|
|
$
|
118,416
|
|
|
$
|
90,201
|
|
|
$
|
95,641
|
|
Goodwill(11)
|
$
|
36,224
|
|
|
$
|
10,996
|
|
|
$
|
272
|
|
|
$
|
272
|
|
|
$
|
—
|
|
Intangible assets, net(11)
|
$
|
31,515
|
|
|
$
|
18,618
|
|
|
$
|
6,219
|
|
|
$
|
6,419
|
|
|
$
|
5,628
|
|
Deferred income taxes
|
$
|
39,308
|
|
|
$
|
53,933
|
|
|
$
|
71,508
|
|
|
$
|
11,770
|
|
|
$
|
15,403
|
|
Total assets
|
$
|
475,531
|
|
|
$
|
407,153
|
|
|
$
|
383,714
|
|
|
$
|
282,417
|
|
|
$
|
333,658
|
|
Short-term borrowings under revolving credit facility(12)
|
$
|
89,787
|
|
|
$
|
27,621
|
|
|
$
|
109
|
|
|
$
|
78
|
|
|
$
|
78
|
|
Capital lease obligations(13)
|
$
|
248
|
|
|
$
|
1,195
|
|
|
$
|
2,359
|
|
|
$
|
5,848
|
|
|
$
|
9,703
|
|
Earnout payable(14)
|
$
|
600
|
|
|
$
|
1,100
|
|
|
$
|
100
|
|
|
$
|
200
|
|
|
$
|
—
|
|
Long-term derivative liabilities
|
$
|
386
|
|
|
$
|
380
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
—
|
|
Total liabilities
|
$
|
246,476
|
|
|
$
|
177,601
|
|
|
$
|
186,397
|
|
|
$
|
161,951
|
|
|
$
|
166,302
|
|
(6)
|
The Company performed its annual test of impairment as of January 31, 2018, to determine the recoverability of the carrying values of goodwill and indefinite-lived intangible assets. The Company also assessed the recoverability of certain finite-lived intangible assets. As a result of these impairment tests, the Company determined that the trade name/trademark and customer relationships intangible assets acquired in connection with the China Mist acquisition were impaired as the carrying value exceeded the estimated fair value. Accordingly, the Company recorded total impairment charges of $3.8 million in fiscal 2018. See
Note 14
,
Goodwill and Intangible Assets
, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Investment in State-of-the-Art Facility and Capacity Expansion.
We are focused on leveraging our investment in the New Facility to produce the highest quality coffee in response to the market shift to premium and specialty coffee, support the transition of acquired product volumes, and create opportunities for customer acquisition and sustainable long-term growth.
|
•
|
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 and different formats.
|
•
|
Fluctuations in Green Coffee Prices.
Our primary raw material is green coffee, an exchange-traded agricultural commodity that is subject to price fluctuations. Over the past five years, coffee “C” market near month price per pound ranged from approximately $1.02 to $2.22. The coffee “C” market near month price as of June 30, 2018
|
•
|
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 8
,
Derivative Instruments
, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
|
•
|
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 and tea 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 believe we are well-positioned to continue to pursue growth through additional opportunistic M&A activity to deliver aligned brands, customers and innovation. For example, in fiscal 2018, we completed the Boyd Coffee acquisition to add to our product portfolio, improve our growth potential, deepen our distribution footprint and increase our capacity utilization at our production facilities. Additionally, in fiscal 2017, we completed the China Mist acquisition to extend our tea product offerings and give us a greater presence in the premium tea industry and the West Coast Coffee acquisition to broaden our reach in the Northwestern United States. For additional information on these acquisitions, see
Note 4
,
Acquisitions
, of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
|
•
|
Change in Method of Accounting from LIFO to FIFO.
Effective June 30, 2018, we changed our method of accounting for our coffee, tea and culinary products from the last in, first out ("LIFO") basis to the first in, first out ("FIFO") basis. We believe that this change is preferable as it better matches revenues with associated expenses, aligns the accounting with the physical flow of inventory, and improves comparability with our peers.
|
•
|
Change in Accounting Principle for Freight and Warehousing Costs.
Effective June 30, 2018, we implemented a change in accounting principle for freight costs incurred to transfer goods from a distribution center to a branch warehouse and warehousing overhead costs incurred to store and ready goods prior to their sale, from expensing such costs as incurred within selling expenses to capitalizing such costs as inventory and expensing through cost of goods sold. We determined that it is preferable to capitalize such costs into inventory and expense through cost of goods sold because it better represents the costs incurred in bringing the inventory to its existing, condition and location for sale to customers and it is consistent with our accounting treatment of similar costs.
|
•
|
Reclassification and Capitalization of Allied Freight, Overhead Variances and Purchase Price Variances.
In connection with these changes in accounting principles, subsequent to the issuance of our consolidated financial statements for the year ended June 30, 2017, we made certain corrections to our consolidated financial statements to reclassify and capitalize to inventory freight associated with certain non-coffee product lines previously expensed as incurred in selling expenses, and to capitalize to inventory overhead variances and purchase price variances associated with these product lines previously expensed as incurred in cost of goods sold.
|
•
|
Volume of green coffee pounds processed and sold increased
12.5%
in fiscal 2018 as compared to fiscal 2017.
|
•
|
Gross profit increased
10.8%
to
$207.0 million
in fiscal 2018 from
$186.9 million
in fiscal 2017.
|
•
|
Gross margin decreased to
34.1%
in fiscal 2018 from
34.5%
in fiscal 2017.
|
•
|
Income from operations was
$1.1 million
in fiscal 2018 as compared to
$39.2 million
in fiscal 2017. Income from operations included
$3.8 million
in impairment losses on intangible assets in fiscal 2018 and a $37.4 million net gain from the sale of the Torrance Facility in fiscal 2017.
|
•
|
Net loss available to common stockholders was
$(18.7) million
, or
$(1.11)
per common share available to common stockholders—diluted, in fiscal 2018, compared to net income available to common stockholders of
$22.6 million
, or
$1.34
per common share available to common stockholders—diluted, in fiscal 2017.
|
•
|
EBITDA decreased
(47.7)%
to
$32.7 million
and EBITDA Margin was
5.4%
in fiscal 2018, as compared to EBITDA of
$62.5 million
and EBITDA Margin of
11.5%
in fiscal 2017.*
|
•
|
Adjusted EBITDA increased
10.6%
to $
47.6 million
and Adjusted EBITDA Margin was
7.8%
in fiscal 2018, as compared to Adjusted EBITDA of
$43.0 million
and Adjusted EBITDA Margin of
7.9%
in fiscal 2017.*
|
•
|
Acquisition of Boyd's Coffee.
In fiscal 2018, we acquired substantially all of the assets and certain specified liabilities of Boyd Coffee. The Boyd Business is expected to add to our product portfolio, improve our growth potential, deepen our distribution footprint and increase our capacity utilization at our production facilities.
|
•
|
DSD Restructuring Plan.
The DSD Restructuring Plan continued in fiscal 2018, and we expect to complete the DSD Restructuring Plan by the end of fiscal 2019. We began recognizing cost benefits associated with the DSD Restructuring Plan in the fourth quarter of fiscal 2017.
|
•
|
SQF Certification.
We are committed to the highest standards in food quality and safety. In fiscal 2018, the New Facility received SQF certification, joining our Portland and Houston SQF-certified facilities. SQF is a Global Food Safety Initiative-based system that strengthens our commitment to supply safe quality coffee products and comply with food safety legislation. Required by many of our national account customers, SQF certification at
|
•
|
Telematics
. In an effort to make our DSD fleet more fuel-efficient, during fiscal 2018 we installed telematics monitoring devices in our delivery trucks, allowing us to see contributing factors to our transportation-related carbon footprint. Installation of telematics monitoring devices has resulted in reduced idling time, a cut in rapid acceleration, and a reduction in our fuel expenditures.
|
•
|
Channel-Based Selling Organization
. Changing from a geographic to a channel-based selling strategy is expected to allow us to better serve our customers and improve sales growth. We believe this channel-based selling strategy will empower our sales organization to better address the unique needs of each customer channel thereby deepening our customer relationships, allow us to create a more comprehensive customer support structure, enhance our marketing efforts, and allow us to respond more quickly to industry trends. To this end, in the fourth quarter of fiscal 2018, we realigned our DSD and direct ship regional and national sales teams around sales channels to further our channel-based selling strategy.
|
•
|
Science-Based Carbon Reduction Targets.
We believe combating climate change is critical to the future of our company, the coffee industry, coffee growers and the world. In fiscal 2018 we began progress to reduce greenhouse gas (GHG) emissions across our roasting and administration operations to achieve our Science Based Targets. Setting approved targets places us among those responsible businesses that are making measurable contributions to incorporate sustainability within their business strategy.
|
•
|
Zero Waste to Landfill.
Achieving zero waste in our production and distribution facilities is a significant step in reaching our overall sustainability goals. In fiscal 2018 we achieved our goal of 90% waste diversion for our primary production and distribution facilities. To accomplish this goal, we implemented ambitious recycling and composting guidelines across these facilities. The enhanced efforts resulted in an approximate 80% reduction from previous years, meeting the Zero Waste International Alliance requirements for diverting waste sent to landfills in these locations.
|
(In millions)
|
Year Ended June 30,
2018 vs. 2017
|
||
Effect of change in unit sales
|
$
|
67.5
|
|
Effect of pricing and product mix changes
|
(2.5
|
)
|
|
Total increase in net sales
|
$
|
65.0
|
|
|
|
Year Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
||||||||||
(In thousands)
|
|
$
|
|
% of total
|
|
$
|
|
% of total
|
||||||
Net Sales by Product Category:
|
|
|
|
|
|
|
|
|
||||||
Coffee (Roast & Ground)
|
|
$
|
379,951
|
|
|
63
|
%
|
|
$
|
339,358
|
|
|
63
|
%
|
Coffee (Frozen Liquid)
|
|
34,794
|
|
|
6
|
%
|
|
32,827
|
|
|
6
|
%
|
||
Tea (Iced & Hot)
|
|
32,477
|
|
|
5
|
%
|
|
29,256
|
|
|
5
|
%
|
||
Culinary
|
|
64,432
|
|
|
11
|
%
|
|
55,592
|
|
|
10
|
%
|
||
Spice
|
|
25,150
|
|
|
4
|
%
|
|
24,895
|
|
|
5
|
%
|
||
Other beverages(1)
|
|
66,699
|
|
|
11
|
%
|
|
56,653
|
|
|
10
|
%
|
||
Net sales by product category
|
|
603,503
|
|
|
99
|
%
|
|
538,581
|
|
|
99
|
%
|
||
Fuel surcharge
|
|
3,041
|
|
|
1
|
%
|
|
2,919
|
|
|
1
|
%
|
||
Net sales
|
|
$
|
606,544
|
|
|
100
|
%
|
|
$
|
541,500
|
|
|
100
|
%
|
•
|
Volume of green coffee pounds processed and sold increased 5.3% in fiscal 2017 as compared to fiscal 2016.
|
•
|
Gross profit increased
9.2%
to
$186.9 million
in fiscal 2017 from
$171.2 million
in fiscal 2016.
|
•
|
Gross margin increased to
34.5%
in fiscal 2017 from
31.4%
in fiscal 2016.
|
•
|
Income from operations increased to
$39.2 million
in fiscal 2017 from a loss from operations of
$(2.2) million
in fiscal 2016. Income from operations included a $37.4 million net gain from the sale of the Torrance Facility in fiscal 2017 and net gains of $5.6 million from the sale of Spice Assets in fiscal 2016.
|
•
|
Net income available to common stockholders was
$22.6 million
, or
$1.34
per common share available to common stockholders—diluted, in fiscal 2017, primarily due to $37.4 million in net gain from the sale of the Torrance Facility and non-cash income tax expense of
$14.8 million
, compared to net income available to common stockholders of
$71.8 million
, or
$4.32
per common share available to common stockholders—diluted, in fiscal 2016, primarily due to non-cash income tax benefit of
$72.2 million
from the release of valuation allowance on deferred tax assets.
|
•
|
EBITDA increased
201.3%
to $
62.5 million
and EBITDA Margin was
11.5%
in fiscal 2017, as compared to EBITDA of $
20.8 million
and EBITDA Margin of
3.8%
in fiscal 2016.*
|
•
|
Adjusted EBITDA increased
38.6%
to $
43.0 million
and Adjusted EBITDA Margin was
7.9%
in fiscal 2017, as compared to Adjusted EBITDA of $
31.0 million
and Adjusted EBITDA Margin of
5.7%
in fiscal 2016.*
|
•
|
Corporate Relocation Plan.
We completed the Corporate Relocation Plan that was initiated in the third quarter of fiscal 2015. We commenced distribution activities at the New Facility during the second quarter of fiscal 2017 and initial production activities late in the third quarter of fiscal 2017. We began roasting coffee in the New Facility in the fourth quarter of fiscal 2017. The roasting facility in the New Facility has increased our capacity to support existing and future customers and accommodate volume growth.
|
•
|
Acquisition of China Mist and West Coast Coffee.
In fiscal 2017, we completed the China Mist acquisition to extend our tea product offerings and give us a greater presence in the premium tea industry, and the West Coast Coffee acquisition to broaden our reach in the Northwestern United States.
|
•
|
DSD Restructuring Plan.
In the third quarter of fiscal 2017, we commenced the DSD Restructuring Plan. The strategic decision to undertake the DSD Restructuring Plan resulted from an ongoing operational review of various initiatives within the DSD selling organization. We began recognizing cost benefits associated with the restructuring in the fourth quarter of fiscal 2017.
|
•
|
Third-Party Logistics.
During the second half of fiscal 2016, we replaced our long-haul fleet operations with 3PL. In fiscal 2017, we experienced a reduction in our fuel consumption and empty trailer miles, while improving our intermodal and trailer cube utilization as compared to the prior fiscal year.
Aligning with our 3PL partner has allowed us to more efficiently manage routing thereby reducing diesel pollution in support of our sustainability efforts.
|
•
|
Vendor Managed Inventory.
During the second half of fiscal 2016, we entered into a third-party vendor managed inventory arrangement. The use of vendor managed inventory arrangements has begun to yield benefits in fiscal 2017 by enabling us to reconfigure our packaging methodology, eliminating duplication but resulting in the same strength packaging with less material, thereby reducing waste and contributing to our sustainability efforts.
|
•
|
Warehouse Management
. In the first quarter of fiscal 2017, 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.
|
•
|
Product Development and Expansion.
In fiscal 2017, we opened our product development lab at the New Facility where we are focused on developing innovative products in response to industry trends and customer needs. In fiscal 2017, we introduced a new retail line of China Mist naturally flavored iced teas, a new line of Artisan hot teas, an Artisan Cold Brew Coffee and an Artisan Direct Trade Coffee.
|
(In millions)
|
Year Ended June 30,
2017 vs. 2016
|
||
Effect of change in unit sales
|
$
|
(7.4
|
)
|
Effect of pricing and product mix changes
|
4.5
|
|
|
Total decrease in net sales
|
$
|
(2.9
|
)
|
|
|
Year Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
||||||||||
(In thousands)
|
|
$
|
|
% of total
|
|
$
|
|
% of total
|
||||||
Net Sales by Product Category:
|
|
|
|
|
|
|
|
|
||||||
Coffee (Roast & Ground)
|
|
$
|
339,358
|
|
|
63
|
%
|
|
$
|
332,533
|
|
|
61
|
%
|
Coffee (Frozen Liquid)
|
|
32,827
|
|
|
6
|
%
|
|
35,933
|
|
|
7
|
%
|
||
Tea (Iced & Hot)
|
|
29,256
|
|
|
5
|
%
|
|
25,096
|
|
|
4
|
%
|
||
Culinary
|
|
55,592
|
|
|
10
|
%
|
|
54,036
|
|
|
10
|
%
|
||
Spice(1)
|
|
24,895
|
|
|
5
|
%
|
|
35,789
|
|
|
6
|
%
|
||
Other beverages(2)
|
|
56,653
|
|
|
10
|
%
|
|
57,690
|
|
|
11
|
%
|
||
Net sales by product category
|
|
538,581
|
|
|
99
|
%
|
|
541,077
|
|
|
99
|
%
|
||
Fuel surcharge
|
|
2,919
|
|
|
1
|
%
|
|
3,305
|
|
|
1
|
%
|
||
Net sales
|
|
$
|
541,500
|
|
|
100
|
%
|
|
$
|
544,382
|
|
|
100
|
%
|
•
|
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.
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net (loss) income, as reported
|
|
$
|
(18,280
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
Income tax expense (benefit)
|
|
17,312
|
|
|
14,815
|
|
|
(72,239
|
)
|
|||
Interest expense
|
|
3,177
|
|
|
2,185
|
|
|
425
|
|
|||
Depreciation and amortization expense
|
|
30,464
|
|
|
22,970
|
|
|
20,774
|
|
|||
EBITDA
|
|
$
|
32,673
|
|
|
$
|
62,521
|
|
|
$
|
20,751
|
|
EBITDA Margin
|
|
5.4
|
%
|
|
11.5
|
%
|
|
3.8
|
%
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net (loss) income, as reported
|
|
$
|
(18,280
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
Income tax expense (benefit)
|
|
17,312
|
|
|
14,815
|
|
|
(72,239
|
)
|
|||
Interest expense
|
|
3,177
|
|
|
2,185
|
|
|
425
|
|
|||
Income from short-term investments
|
|
(19
|
)
|
|
(1,853
|
)
|
|
(2,204
|
)
|
|||
Depreciation and amortization expense
|
|
30,464
|
|
|
22,970
|
|
|
20,774
|
|
|||
ESOP and share-based compensation expense
|
|
3,822
|
|
|
3,959
|
|
|
4,342
|
|
|||
Restructuring and other transition expenses
|
|
662
|
|
|
11,016
|
|
|
16,533
|
|
|||
Net gain from sale of Torrance Facility
|
|
—
|
|
|
(37,449
|
)
|
|
—
|
|
|||
Net gains from sale of Spice Assets
|
|
(770
|
)
|
|
(919
|
)
|
|
(5,603
|
)
|
|||
Net gains from sales of other assets
|
|
(196
|
)
|
|
(1,210
|
)
|
|
(2,802
|
)
|
|||
Impairment losses on intangible assets
|
|
3,820
|
|
|
—
|
|
|
—
|
|
|||
Non-recurring 2016 proxy contest-related expenses
|
|
—
|
|
|
5,186
|
|
|
—
|
|
|||
Acquisition and integration costs(1)
|
|
7,570
|
|
|
1,734
|
|
|
—
|
|
|||
Adjusted EBITDA(1)
|
|
$
|
47,562
|
|
|
$
|
42,985
|
|
|
$
|
31,017
|
|
Adjusted EBITDA Margin(1)
|
|
7.8
|
%
|
|
7.9
|
%
|
|
5.7
|
%
|
(1)
|
Includes acquisition and integration costs related to Boyd Coffee transaction only. For fiscal 2017 includes $244 and $1,490 incurred in the third and fourth quarters of fiscal 2017, respectively. While the Boyd Coffee transaction remained confidential, expenses incurred in the third quarter of fiscal 2017 were included in operating expenses and described as consulting expenses. Acquisition and integration costs incurred in prior periods were not material to the Company’s results of operations.
|
|
|
Expenditures Incurred
|
|
Budget
|
||||||||||||||||
(In thousands)
|
|
Fiscal Year Ended June 30, 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
|
|
|
|
June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Maintenance:
|
|
|
|
|
|
|
||||||
Coffee brewing equipment
|
|
$
|
12,067
|
|
|
$
|
10,758
|
|
|
$
|
8,375
|
|
Building and facilities
|
|
542
|
|
|
345
|
|
|
3,354
|
|
|||
Vehicles, machinery and equipment
|
|
5,513
|
|
|
7,445
|
|
|
10,254
|
|
|||
Software, office furniture and equipment
|
|
3,660
|
|
|
698
|
|
|
3,165
|
|
|||
Land
|
|
—
|
|
|
—
|
|
|
1,458
|
|
|||
Capital expenditures, maintenance
|
|
$
|
21,782
|
|
|
$
|
19,246
|
|
|
$
|
26,606
|
|
|
|
|
|
|
|
|
||||||
Expansion Project:
|
|
|
|
|
|
|
||||||
Machinery and equipment
|
|
$
|
10,746
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Capital expenditures, Expansion Project
|
|
$
|
10,746
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
New Facility Costs:
|
|
|
|
|
|
|
||||||
Building and facilities, including land(1)
|
|
$
|
1,577
|
|
|
$
|
39,754
|
|
|
$
|
19,426
|
|
Machinery and equipment
|
|
2,489
|
|
|
20,089
|
|
|
4,443
|
|
|||
Software, office furniture and equipment
|
|
426
|
|
|
5,860
|
|
|
—
|
|
|||
Capital expenditures, New Facility
|
|
$
|
4,492
|
|
|
$
|
65,703
|
|
|
$
|
23,869
|
|
Total capital expenditures(1)
|
|
$
|
37,020
|
|
|
$
|
84,949
|
|
|
$
|
50,475
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Current assets
|
|
$
|
173,514
|
|
|
$
|
140,703
|
|
Current liabilities(1)
|
|
178,457
|
|
|
97,267
|
|
||
Working capital
|
|
$
|
(4,943
|
)
|
|
$
|
43,436
|
|
|
|
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
|
|
$
|
17,276
|
|
|
$
|
4,803
|
|
|
$
|
4,892
|
|
|
$
|
2,334
|
|
|
$
|
5,247
|
|
Expansion Project contract(1)
|
|
8,520
|
|
|
8,520
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital lease obligations(2)
|
|
262
|
|
|
202
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|||||
Pension plan obligations(3)
|
|
92,132
|
|
|
13,652
|
|
|
16,640
|
|
|
17,430
|
|
|
44,410
|
|
|||||
Postretirement benefits other than
pension plans(4)
|
|
16,292
|
|
|
5,915
|
|
|
1,865
|
|
|
2,138
|
|
|
6,374
|
|
|||||
Revolving credit facility
|
|
89,787
|
|
|
89,787
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments(5)
|
|
78,690
|
|
|
78,690
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Derivative liabilities—noncurrent
|
|
386
|
|
|
—
|
|
|
386
|
|
|
—
|
|
|
—
|
|
|||||
Cumulative Preferred dividends, undeclared and unpaid-non-current
|
|
312
|
|
|
—
|
|
|
312
|
|
|
—
|
|
|
—
|
|
|||||
Multiemployer Plan Holdback
—
Boyd Coffee(6)
|
|
1,056
|
|
|
—
|
|
|
1,056
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
304,713
|
|
|
$
|
201,569
|
|
|
$
|
25,211
|
|
|
$
|
21,902
|
|
|
$
|
56,031
|
|
(2)
|
Includes imputed interest of
$14,000
.
|
(4)
|
Includes
$11.2 million
in estimated future benefit payments on postretirement benefit plan obligations and
$5.1 million
in estimated fiscal 2019 contributions to multiemployer plans other than pension plans. See
Note 15
,
Employee Benefit Plans,
of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
($ in thousands)
|
|
Principal
|
|
Interest Rate
|
|
Annual Interest Expense
|
|||
–150 basis points
|
|
$89,787
|
|
2.60
|
%
|
|
$
|
2,334
|
|
–100 basis points
|
|
$89,787
|
|
3.10
|
%
|
|
$
|
2,783
|
|
Unchanged
|
|
$89,787
|
|
4.10
|
%
|
|
$
|
3,681
|
|
+100 basis points
|
|
$89,787
|
|
5.10
|
%
|
|
$
|
4,579
|
|
+150 basis points
|
|
$89,787
|
|
5.60
|
%
|
|
$
|
5,028
|
|
|
|
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)
|
|
$
|
305
|
|
|
$
|
(305
|
)
|
|
$
|
5,050
|
|
|
$
|
(5,050
|
)
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
June 30,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,438
|
|
|
$
|
6,241
|
|
Short-term investments
|
—
|
|
|
368
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $495 and $721, respectively
|
58,498
|
|
|
46,446
|
|
||
Inventories
|
104,431
|
|
|
79,790
|
|
||
Income tax receivable
|
305
|
|
|
318
|
|
||
Prepaid expenses
|
7,842
|
|
|
7,540
|
|
||
Total current assets
|
173,514
|
|
|
140,703
|
|
||
Property, plant and equipment, net
|
186,589
|
|
|
176,066
|
|
||
Goodwill
|
36,224
|
|
|
10,996
|
|
||
Intangible assets, net
|
31,515
|
|
|
18,618
|
|
||
Other assets
|
8,381
|
|
|
6,837
|
|
||
Deferred income taxes
|
39,308
|
|
|
53,933
|
|
||
Total assets
|
$
|
475,531
|
|
|
$
|
407,153
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
56,603
|
|
|
39,784
|
|
||
Accrued payroll expenses
|
17,918
|
|
|
17,345
|
|
||
Short-term borrowings under revolving credit facility
|
89,787
|
|
|
27,621
|
|
||
Short-term obligations under capital leases
|
190
|
|
|
958
|
|
||
Short-term derivative liabilities
|
3,300
|
|
|
1,857
|
|
||
Other current liabilities
|
10,659
|
|
|
9,702
|
|
||
Total current liabilities
|
178,457
|
|
|
97,267
|
|
||
Accrued pension liabilities
|
40,380
|
|
|
51,281
|
|
||
Accrued postretirement benefits
|
20,473
|
|
|
19,788
|
|
||
Accrued workers’ compensation liabilities
|
5,354
|
|
|
7,548
|
|
||
Other long-term liabilities
|
1,812
|
|
|
1,717
|
|
||
Total liabilities
|
$
|
246,476
|
|
|
$
|
177,601
|
|
Commitments and contingencies (Note 24)
|
—
|
|
|
—
|
|
||
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 June 30, 2018 and 2017, respectively; liquidation preference of $15,089 and $0 as of June 30, 2018 and 2017, respectively
|
15
|
|
|
—
|
|
||
Common stock, $1.00 par value, 25,000,000 shares authorized; 16,951,659 and 16,846,002 shares issued and outstanding at June 30, 2018 and 2017, respectively
|
16,952
|
|
|
16,846
|
|
||
Additional paid-in capital
|
55,965
|
|
|
41,495
|
|
||
Retained earnings
|
220,307
|
|
|
236,993
|
|
||
Unearned ESOP shares
|
(2,145
|
)
|
|
(4,289
|
)
|
||
Accumulated other comprehensive loss
|
(62,039
|
)
|
|
(61,493
|
)
|
||
Total stockholders’ equity
|
$
|
229,055
|
|
|
$
|
229,552
|
|
Total liabilities and stockholders’ equity
|
$
|
475,531
|
|
|
$
|
407,153
|
|
|
Year Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net sales
|
$
|
606,544
|
|
|
$
|
541,500
|
|
|
$
|
544,382
|
|
Cost of goods sold
|
399,502
|
|
|
354,622
|
|
|
373,214
|
|
|||
Gross profit
|
207,042
|
|
|
186,878
|
|
|
171,168
|
|
|||
Selling expenses
|
154,539
|
|
|
133,329
|
|
|
123,260
|
|
|||
General and administrative expenses
|
47,863
|
|
|
42,933
|
|
|
41,970
|
|
|||
Restructuring and other transition expenses
|
662
|
|
|
11,016
|
|
|
16,533
|
|
|||
Net gain from sale of Torrance Facility
|
—
|
|
|
(37,449
|
)
|
|
—
|
|
|||
Net gains from sale of Spice Assets
|
(770
|
)
|
|
(919
|
)
|
|
(5,603
|
)
|
|||
Net gains from sales of other assets
|
(196
|
)
|
|
(1,210
|
)
|
|
(2,802
|
)
|
|||
Impairment losses on intangible assets
|
3,820
|
|
|
—
|
|
|
—
|
|
|||
Operating expenses
|
205,918
|
|
|
147,700
|
|
|
173,358
|
|
|||
Income (loss) from operations
|
1,124
|
|
|
39,178
|
|
|
(2,190
|
)
|
|||
Other (expense) income:
|
|
|
|
|
|
||||||
Dividend income
|
12
|
|
|
1,007
|
|
|
1,115
|
|
|||
Interest income
|
2
|
|
|
567
|
|
|
496
|
|
|||
Interest expense
|
(3,177
|
)
|
|
(2,185
|
)
|
|
(425
|
)
|
|||
Other, net
|
1,071
|
|
|
(1,201
|
)
|
|
556
|
|
|||
Total other (expense) income
|
(2,092
|
)
|
|
(1,812
|
)
|
|
1,742
|
|
|||
(Loss) income before taxes
|
(968
|
)
|
|
37,366
|
|
|
(448
|
)
|
|||
Income tax expense (benefit)
|
17,312
|
|
|
14,815
|
|
|
(72,239
|
)
|
|||
Net (loss) income
|
$
|
(18,280
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
Less: Cumulative preferred dividends, undeclared and unpaid
|
389
|
|
|
—
|
|
|
—
|
|
|||
Net (loss) income available to common stockholders
|
$
|
(18,669
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
Net (loss) income available to common stockholders per common share—basic
|
$
|
(1.11
|
)
|
|
$
|
1.35
|
|
|
$
|
4.35
|
|
Net (loss) income available to common stockholders per common share—diluted
|
$
|
(1.11
|
)
|
|
$
|
1.34
|
|
|
$
|
4.32
|
|
Weighted average common shares outstanding—basic
|
16,815,020
|
|
|
16,668,745
|
|
|
16,502,523
|
|
|||
Weighted average common shares outstanding—diluted
|
16,815,020
|
|
|
16,785,752
|
|
|
16,627,402
|
|
|
Year Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net (loss) income
|
$
|
(18,280
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Unrealized (losses) gains on derivative instruments designated as cash flow hedges, net of tax
|
(5,922
|
)
|
|
(2,900
|
)
|
|
362
|
|
|||
Losses (gains) on derivative instruments designated as cash flow hedges reclassified to cost of goods sold, net of tax
|
800
|
|
|
510
|
|
|
10,282
|
|
|||
Change in the funded status of retiree benefit obligations, net of tax
|
4,576
|
|
|
7,466
|
|
|
(11,461
|
)
|
|||
Total comprehensive (loss) income, net of tax
|
$
|
(18,826
|
)
|
|
$
|
27,627
|
|
|
$
|
70,974
|
|
FARMER BROS. CO.
|
|||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||
(In thousands)
|
|||||||||||
|
Year Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(18,280
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|||||||||||
Depreciation and amortization
|
30,464
|
|
|
22,970
|
|
|
20,774
|
|
|||
Provision for doubtful accounts
|
137
|
|
|
325
|
|
|
71
|
|
|||
Impairment losses on intangible assets
|
3,820
|
|
|
—
|
|
|
—
|
|
|||
Change in estimated fair value of contingent earnout consideration
|
(500
|
)
|
|
—
|
|
|
—
|
|
|||
Restructuring and other transition expenses, net of payments
|
(1,185
|
)
|
|
1,034
|
|
|
(2,697
|
)
|
|||
Interest on sale-leaseback financing obligation
|
—
|
|
|
681
|
|
|
—
|
|
|||
Deferred income taxes
|
17,154
|
|
|
14,343
|
|
|
(72,556
|
)
|
|||
Net gain from sale of Torrance Facility
|
—
|
|
|
(37,449
|
)
|
|
—
|
|
|||
Net gains from sales of Spice Assets and other assets
|
(995
|
)
|
|
(2,129
|
)
|
|
(8,405
|
)
|
|||
ESOP and share-based compensation expense
|
3,822
|
|
|
3,959
|
|
|
4,342
|
|
|||
Net losses (gains) on derivative instruments and investments
|
1,982
|
|
|
2,361
|
|
|
16,536
|
|
|||
Change in operating assets and liabilities:
|
|||||||||||
Restricted cash
|
—
|
|
|
—
|
|
|
1,002
|
|
|||
Purchases of trading securities
|
—
|
|
|
(5,136
|
)
|
|
(7,255
|
)
|
|||
Proceeds from sales of trading securities
|
375
|
|
|
30,645
|
|
|
5,901
|
|
|||
Accounts receivable
|
(4,628
|
)
|
|
(14
|
)
|
|
(3,476
|
)
|
|||
Inventories
|
(15,513
|
)
|
|
(8,041
|
)
|
|
10,063
|
|
|||
Income tax receivable
|
13
|
|
|
(71
|
)
|
|
288
|
|
|||
Derivative (liabilities) assets, net
|
(7,782
|
)
|
|
2,264
|
|
|
(10,295
|
)
|
|||
Prepaid expenses and other assets
|
685
|
|
|
(2,506
|
)
|
|
(111
|
)
|
|||
Accounts payable
|
3,864
|
|
|
8,885
|
|
|
(3,343
|
)
|
|||
Accrued payroll expenses and other current liabilities
|
1,766
|
|
|
(2,983
|
)
|
|
5,829
|
|
|||
Accrued postretirement benefits
|
(1,924
|
)
|
|
(1,020
|
)
|
|
(358
|
)
|
|||
Other long-term liabilities
|
(4,420
|
)
|
|
(8,557
|
)
|
|
(473
|
)
|
|||
Net cash provided by operating activities
|
$
|
8,855
|
|
|
$
|
42,112
|
|
|
$
|
27,628
|
|
Cash flows from investing activities:
|
|||||||||||
Acquisitions of businesses, net of cash acquired
|
$
|
(39,608
|
)
|
|
$
|
(25,853
|
)
|
|
$
|
—
|
|
Purchases of property, plant and equipment
|
(35,443
|
)
|
|
(45,195
|
)
|
|
(31,050
|
)
|
|||
Purchases of assets for construction of New Facility
|
(1,577
|
)
|
|
(39,754
|
)
|
|
(19,426
|
)
|
|||
Proceeds from sales of property, plant and equipment
|
1,988
|
|
|
4,078
|
|
|
10,946
|
|
|||
Net cash used in investing activities
|
$
|
(74,640
|
)
|
|
$
|
(106,724
|
)
|
|
$
|
(39,530
|
)
|
(continued on next page)
|
FARMER BROS. CO.
|
|||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||
(In thousands)
|
|||||||||||
|
Year Ended June 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from financing activities:
|
|||||||||||
Proceeds from revolving credit facility
|
$
|
85,315
|
|
|
$
|
77,985
|
|
|
$
|
405
|
|
Repayments on revolving credit facility
|
(23,149
|
)
|
|
(50,473
|
)
|
|
(374
|
)
|
|||
Proceeds from sale-leaseback financing obligation
|
—
|
|
|
42,455
|
|
|
—
|
|
|||
Proceeds from New Facility lease financing obligation
|
—
|
|
|
16,346
|
|
|
19,426
|
|
|||
Repayments of New Facility lease financing
|
—
|
|
|
(35,772
|
)
|
|
—
|
|
|||
Payments of capital lease obligations
|
(947
|
)
|
|
(1,433
|
)
|
|
(3,147
|
)
|
|||
Payment of financing costs
|
(579
|
)
|
|
—
|
|
|
(8
|
)
|
|||
Proceeds from stock option exercises
|
1,342
|
|
|
688
|
|
|
1,694
|
|
|||
Tax withholding payment - net share settlement of equity awards
|
—
|
|
|
(38
|
)
|
|
(159
|
)
|
|||
Net cash provided by financing activities
|
$
|
61,982
|
|
|
$
|
49,758
|
|
|
$
|
17,837
|
|
|
|
|
|
|
|
||||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(3,803
|
)
|
|
$
|
(14,854
|
)
|
|
$
|
5,935
|
|
Cash and cash equivalents at beginning of year
|
6,241
|
|
|
21,095
|
|
|
15,160
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,438
|
|
|
$
|
6,241
|
|
|
$
|
21,095
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
3,177
|
|
|
$
|
1,504
|
|
|
$
|
425
|
|
Cash paid for income taxes
|
$
|
144
|
|
|
$
|
567
|
|
|
$
|
324
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Equipment acquired under capital leases
|
$
|
—
|
|
|
$
|
417
|
|
|
$
|
—
|
|
Net change in derivative assets and liabilities
included in other comprehensive (loss) income, net of tax
|
$
|
(5,122
|
)
|
|
$
|
(2,390
|
)
|
|
$
|
10,644
|
|
Construction-in-progress assets under New Facility lease
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,684
|
|
New Facility lease obligation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,684
|
|
Non-cash additions to property, plant and equipment
|
$
|
2,814
|
|
|
$
|
5,517
|
|
|
$
|
441
|
|
Assets held for sale
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,179
|
|
Non-cash portion of earnout receivable recognized—Spice Assets sale
|
$
|
298
|
|
|
$
|
419
|
|
|
$
|
496
|
|
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 working capital adjustment payable recognized—China Mist acquisition
|
$
|
—
|
|
|
$
|
553
|
|
|
$
|
—
|
|
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
|
$
|
—
|
|
|
$
|
550
|
|
|
$
|
—
|
|
Cumulative preferred dividends, undeclared and unpaid
|
$
|
389
|
|
|
$
|
—
|
|
|
$
|
—
|
|
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share and per share data)
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Preferred Shares
|
|
Preferred Stock Amount
|
|
Common
Shares
|
|
Common Stock
Amount
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Unearned
ESOP
Shares
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||||||
Balance at June 30, 2015
|
—
|
|
|
—
|
|
|
16,658,148
|
|
|
$
|
16,658
|
|
|
$
|
38,143
|
|
|
$
|
142,651
|
|
|
$
|
(11,234
|
)
|
|
$
|
(65,752
|
)
|
|
$
|
120,466
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71,791
|
|
|
—
|
|
|
—
|
|
|
71,791
|
|
||||||
Unrealized gains on derivative instruments designated as cash flow hedges, net of reclassifications to cost of goods sold, net of tax expense of $5,238
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,644
|
|
|
10,644
|
|
||||||
Change in the funded status of retiree benefit obligations, net of tax expense 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
|
|
|
$
|
214,442
|
|
|
$
|
(6,434
|
)
|
|
$
|
(66,569
|
)
|
|
$
|
197,317
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,551
|
|
|
—
|
|
|
—
|
|
|
22,551
|
|
||||||
Unrealized losses on derivative instruments designated as cash flow hedges, net of reclassifications to cost of goods sold, net of tax benefit of $2,504
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,390
|
)
|
|
(2,390
|
)
|
||||||
Change in the funded status of retiree benefit obligations, net of tax expense of $4,754
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,466
|
|
|
7,466
|
|
||||||
ESOP compensation expense, including reclassifications
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|
—
|
|
|
2,145
|
|
|
—
|
|
|
2,487
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
(889
|
)
|
|
(1
|
)
|
|
1,473
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,472
|
|
||||||
Stock option exercises
|
—
|
|
|
—
|
|
|
82,803
|
|
|
83
|
|
|
604
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
687
|
|
||||||
Shares withheld to cover taxes
|
—
|
|
|
—
|
|
|
(17,473
|
)
|
|
(18
|
)
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
||||||
Balance at June 30, 2017
|
—
|
|
|
—
|
|
|
16,846,002
|
|
|
$
|
16,846
|
|
|
$
|
41,495
|
|
|
$
|
236,993
|
|
|
$
|
(4,289
|
)
|
|
$
|
(61,493
|
)
|
|
$
|
229,552
|
|
(continued on next page)
|
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share and per share data)
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Preferred Shares
|
|
Preferred Stock Amount
|
|
Common
Shares
|
|
Common Stock
Amount
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Unearned
ESOP
Shares
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,280
|
)
|
|
—
|
|
|
—
|
|
|
(18,280
|
)
|
||||||
Adjustment due to the adoption of ASU 2017-12
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|
—
|
|
|
(209
|
)
|
|
133
|
|
||||||
Adjustment due to the adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,641
|
|
|
—
|
|
|
—
|
|
|
1,641
|
|
||||||
Unrealized losses on derivative instruments designated as cash flow hedges, net of reclassifications to cost of goods sold, net of tax expense of $2,462
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,913
|
)
|
|
(4,913
|
)
|
||||||
Change in the funded status of retiree benefit obligations, net of tax expense of $1,573
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,576
|
|
|
4,576
|
|
||||||
ESOP compensation expense, including reclassifications
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|
—
|
|
|
2,144
|
|
|
—
|
|
|
2,294
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
9,155
|
|
|
9
|
|
|
1,518
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,527
|
|
||||||
Stock option exercises
|
—
|
|
|
—
|
|
|
96,502
|
|
|
97
|
|
|
1,245
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,342
|
|
||||||
Consideration for Boyd Coffee acquisition
|
14,700
|
|
|
15
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
11,557
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
11,572
|
|
|
Cumulative preferred dividends, undeclared and unpaid
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(389
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(389
|
)
|
|
Balance at June 30, 2018
|
14,700
|
|
|
15
|
|
|
16,951,659
|
|
|
$
|
16,952
|
|
|
$
|
55,965
|
|
|
$
|
220,307
|
|
|
$
|
(2,145
|
)
|
|
$
|
(62,039
|
)
|
|
$
|
229,055
|
|
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
|
Buildings and facilities
|
10 to 30 years
|
Machinery and equipment
|
3 to 10 years
|
Equipment under capital leases
|
Shorter of term of lease or estimated useful life
|
Office furniture and equipment
|
5 to 7 years
|
Capitalized software
|
3 to 5 years
|
|
|
June 30, 2017
|
||||||||||||||||||
(In thousands)
|
|
As Previously Reported
|
|
LIFO to FIFO Adjustment
|
|
Preferable Freight and Warehousing Adjustments
|
|
Corrections of Freight, Overhead Variances and PPVs
|
|
Retrospectively Adjusted
|
||||||||||
Inventories
|
|
$
|
56,251
|
|
|
$
|
19,675
|
|
|
$
|
3,821
|
|
|
$
|
43
|
|
|
$
|
79,790
|
|
Total current assets
|
|
$
|
117,164
|
|
|
$
|
19,675
|
|
|
$
|
3,821
|
|
|
$
|
43
|
|
|
$
|
140,703
|
|
Deferred income taxes
|
|
$
|
63,055
|
|
|
$
|
(7,625
|
)
|
|
$
|
(1,480
|
)
|
|
$
|
(17
|
)
|
|
$
|
53,933
|
|
Total assets
|
|
$
|
392,736
|
|
|
$
|
12,050
|
|
|
$
|
2,341
|
|
|
$
|
26
|
|
|
$
|
407,153
|
|
Retained earnings
|
|
$
|
221,182
|
|
|
$
|
13,444
|
|
|
$
|
2,341
|
|
|
$
|
26
|
|
|
$
|
236,993
|
|
Accumulated other comprehensive loss
|
|
$
|
(60,099
|
)
|
|
$
|
(1,394
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(61,493
|
)
|
Total stockholders’ equity
|
|
$
|
215,135
|
|
|
$
|
12,050
|
|
|
$
|
2,341
|
|
|
$
|
26
|
|
|
$
|
229,552
|
|
Total liabilities and stockholders’ equity
|
|
$
|
392,736
|
|
|
$
|
12,050
|
|
|
$
|
2,341
|
|
|
$
|
26
|
|
|
$
|
407,153
|
|
|
|
Year Ended June 30, 2017
|
||||||||||||||||||
(In thousands, except per share data)
|
|
As Previously Reported
|
|
LIFO to FIFO Adjustment
|
|
Preferable Freight and Warehousing Adjustments
|
|
Corrections of Freight, Overhead Variances and PPVs
|
|
Retrospectively Adjusted
|
||||||||||
Cost of goods sold
|
|
$
|
327,765
|
|
|
$
|
1,739
|
|
|
$
|
19,835
|
|
|
$
|
5,283
|
|
|
$
|
354,622
|
|
Gross profit
|
|
$
|
213,735
|
|
|
$
|
(1,739
|
)
|
|
$
|
(19,835
|
)
|
|
$
|
(5,283
|
)
|
|
$
|
186,878
|
|
Selling expenses
|
|
$
|
157,198
|
|
|
$
|
—
|
|
|
$
|
(19,241
|
)
|
|
$
|
(4,628
|
)
|
|
$
|
133,329
|
|
Operating expenses
|
|
$
|
171,569
|
|
|
$
|
—
|
|
|
$
|
(19,241
|
)
|
|
$
|
(4,628
|
)
|
|
$
|
147,700
|
|
Income from operations
|
|
$
|
42,166
|
|
|
$
|
(1,739
|
)
|
|
$
|
(594
|
)
|
|
$
|
(655
|
)
|
|
$
|
39,178
|
|
Income before taxes
|
|
$
|
40,354
|
|
|
$
|
(1,739
|
)
|
|
$
|
(594
|
)
|
|
$
|
(655
|
)
|
|
$
|
37,366
|
|
Income tax expense
|
|
$
|
15,954
|
|
|
$
|
(663
|
)
|
|
$
|
(226
|
)
|
|
$
|
(250
|
)
|
|
$
|
14,815
|
|
Net income
|
|
$
|
24,400
|
|
|
$
|
(1,076
|
)
|
|
$
|
(368
|
)
|
|
$
|
(405
|
)
|
|
$
|
22,551
|
|
Net income available to common stockholders per common share—basic
|
|
$
|
1.46
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
1.35
|
|
Net income available to common stockholders per common share—diluted
|
|
$
|
1.45
|
|
|
$
|
(0.07
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
1.34
|
|
|
|
Year Ended June 30, 2016
|
||||||||||||||||||
(In thousands, except per share data)
|
|
As Previously Reported
|
|
LIFO to FIFO Adjustment
|
|
Preferable Freight and Warehousing Adjustments
|
|
Corrections of Freight, Overhead Variances and PPVs
|
|
Retrospectively Adjusted
|
||||||||||
Cost of goods sold
|
|
$
|
335,907
|
|
|
$
|
8,593
|
|
|
$
|
21,104
|
|
|
$
|
7,610
|
|
|
$
|
373,214
|
|
Gross profit
|
|
$
|
208,475
|
|
|
$
|
(8,593
|
)
|
|
$
|
(21,104
|
)
|
|
$
|
(7,610
|
)
|
|
$
|
171,168
|
|
Selling expenses
|
|
$
|
150,198
|
|
|
$
|
—
|
|
|
$
|
(20,502
|
)
|
|
$
|
(6,436
|
)
|
|
$
|
123,260
|
|
Operating expenses
|
|
$
|
200,296
|
|
|
$
|
—
|
|
|
$
|
(20,502
|
)
|
|
$
|
(6,436
|
)
|
|
$
|
173,358
|
|
Income (loss) from operations
|
|
$
|
8,179
|
|
|
$
|
(8,593
|
)
|
|
$
|
(602
|
)
|
|
$
|
(1,174
|
)
|
|
$
|
(2,190
|
)
|
Income (loss) before taxes
|
|
$
|
9,921
|
|
|
$
|
(8,593
|
)
|
|
$
|
(602
|
)
|
|
$
|
(1,174
|
)
|
|
$
|
(448
|
)
|
Income tax benefit
|
|
$
|
(79,997
|
)
|
|
$
|
6,430
|
|
|
$
|
450
|
|
|
$
|
878
|
|
|
$
|
(72,239
|
)
|
Net income
|
|
$
|
89,918
|
|
|
$
|
(15,023
|
)
|
|
$
|
(1,052
|
)
|
|
$
|
(2,052
|
)
|
|
$
|
71,791
|
|
Net income available to common stockholders per common share—basic
|
|
$
|
5.45
|
|
|
$
|
(0.91
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
4.35
|
|
Net income available to common stockholders per common share—diluted
|
|
$
|
5.41
|
|
|
$
|
(0.90
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
4.32
|
|
(In thousands)
|
Fair Value
|
|
Estimated Useful Life (years)
|
||
|
|
|
|
||
Cash paid, net of cash acquired
|
$
|
11,183
|
|
|
|
Post-closing final working capital adjustments
|
553
|
|
|
|
|
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
|
|
|
|
|
Estimated post-closing net working capital adjustment
|
(8,059
|
)
|
|
|
|
Total consideration
|
$
|
51,599
|
|
|
|
|
|
|
|
||
Accounts receivable
|
$
|
7,503
|
|
|
|
Inventory
|
9,415
|
|
|
|
|
Prepaid expense and other assets
|
1,951
|
|
|
|
|
Property, plant and equipment
|
4,936
|
|
|
|
|
Goodwill
|
25,395
|
|
|
|
|
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)
|
|
June 30, 2018
|
||
Net sales
|
|
$
|
67,385
|
|
Income before taxes
|
|
$
|
1,572
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Net sales
|
|
$
|
628,526
|
|
|
$
|
636,969
|
|
(Loss) income before taxes
|
|
$
|
(642
|
)
|
|
$
|
36,969
|
|
(In thousands)
|
Balances,
June 30, 2014
|
|
Additions
|
|
Payments
|
|
Non-Cash Settled
|
|
Adjustments
|
|
Balances,
June 30, 2018 |
||||||||||||
Employee-related costs
|
$
|
—
|
|
|
$
|
17,352
|
|
|
$
|
17,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Facility-related costs(1)
|
—
|
|
|
10,779
|
|
|
7,048
|
|
|
3,731
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
7,424
|
|
|
7,424
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total(1)
|
$
|
—
|
|
|
$
|
35,555
|
|
|
$
|
31,824
|
|
|
$
|
3,731
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
June 30,
|
||||
(In thousands)
|
|
2018
|
|
2017
|
||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
||
Long coffee pounds
|
|
40,913
|
|
|
33,038
|
|
Derivative instruments not designated as cash flow hedges:
|
|
|
|
|
||
Long coffee pounds
|
|
2,546
|
|
|
2,121
|
|
Total
|
|
43,459
|
|
|
35,159
|
|
|
|
Derivative Instruments
Designated as Cash Flow Hedges
|
|
Derivative Instruments Not Designated as Accounting Hedges
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Financial Statement Location:
|
|
|
|
|
|
|
|
|
||||||||
Short-term derivative assets(1):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term derivative assets(2):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term derivative liabilities(1):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
3,081
|
|
|
$
|
1,733
|
|
|
$
|
219
|
|
|
$
|
190
|
|
Long-term derivative liabilities(2):
|
|
|
|
|
|
|
|
|
||||||||
Coffee-related derivative instruments
|
|
$
|
386
|
|
|
$
|
446
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year Ended June 30,
|
|
Financial Statement Classification
|
|||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
|
|
|||||||
Net (losses) gains recognized in AOCI
|
|
$
|
(8,420
|
)
|
|
$
|
(4,746
|
)
|
|
$
|
592
|
|
|
|
AOCI
|
Net losses recognized in earnings
|
|
$
|
(1,179
|
)
|
|
$
|
(835
|
)
|
|
$
|
(16,810
|
)
|
|
|
Costs of goods sold
|
Net gains (losses) recognized in earnings (ineffective portion)(1)
|
|
$
|
48
|
|
|
$
|
(456
|
)
|
|
$
|
(575
|
)
|
|
|
Other, net
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net losses on coffee-related derivative instruments
|
|
$
|
(469
|
)
|
|
$
|
(1,812
|
)
|
|
$
|
(298
|
)
|
Net gains on investments
|
|
7
|
|
|
286
|
|
|
611
|
|
|||
Net (losses) gains on derivative instruments and investments(1)
|
|
(462
|
)
|
|
(1,526
|
)
|
|
313
|
|
|||
Other gains, net(2)
|
|
1,533
|
|
|
325
|
|
|
243
|
|
|||
Other, net
|
|
$
|
1,071
|
|
|
$
|
(1,201
|
)
|
|
$
|
556
|
|
(In thousands)
|
|
|
|
Gross Amount Reported on Balance Sheet
|
|
Netting Adjustments
|
|
Cash Collateral Posted
|
|
Net Exposure
|
||||||||
June 30, 2018
|
|
Derivative Assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Derivative Liabilities
|
|
$
|
3,686
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,686
|
|
June 30, 2017
|
|
Derivative Assets
|
|
$
|
132
|
|
|
$
|
(132
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Derivative Liabilities
|
|
$
|
2,369
|
|
|
$
|
(132
|
)
|
|
$
|
—
|
|
|
$
|
2,237
|
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Total gains recognized from trading securities
|
|
$
|
7
|
|
|
$
|
286
|
|
|
$
|
611
|
|
Less: Realized gains from sales of trading securities
|
|
7
|
|
|
1,909
|
|
|
29
|
|
|||
Unrealized (losses) gains from trading securities
|
|
$
|
—
|
|
|
$
|
(1,623
|
)
|
|
$
|
582
|
|
(In thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
June 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Derivative instruments designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||
Coffee-related derivative liabilities(1)
|
|
$
|
3,467
|
|
|
$
|
—
|
|
|
$
|
3,467
|
|
|
$
|
—
|
|
Derivative instruments not designated as accounting hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||
Coffee-related derivative liabilities(1)
|
|
$
|
219
|
|
|
$
|
—
|
|
|
$
|
219
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
|
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 consolidated balance sheet at June 30, 2017.
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Trade receivables
|
|
$
|
54,547
|
|
|
$
|
44,531
|
|
Other receivables(1)
|
|
4,446
|
|
|
2,636
|
|
||
Allowance for doubtful accounts
|
|
(495
|
)
|
|
(721
|
)
|
||
Accounts receivable, net
|
|
$
|
58,498
|
|
|
$
|
46,446
|
|
(In thousands)
|
|
||
Balance at June 30, 2015
|
$
|
(643
|
)
|
Provision
|
(71
|
)
|
|
Write-off
|
—
|
|
|
Balance at June 30, 2016
|
$
|
(714
|
)
|
Provision
|
(325
|
)
|
|
Write-off
|
318
|
|
|
Balance at June 30, 2017
|
$
|
(721
|
)
|
Provision
|
(909
|
)
|
|
Write-off
|
1,530
|
|
|
Recoveries
|
(395
|
)
|
|
Balance at June 30, 2018
|
$
|
(495
|
)
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017(1)
|
||||
Coffee
|
|
|
|
|
||||
Processed
|
|
$
|
26,882
|
|
|
$
|
23,562
|
|
Unprocessed
|
|
37,097
|
|
|
25,605
|
|
||
Total
|
|
$
|
63,979
|
|
|
$
|
49,167
|
|
Tea and culinary products
|
|
|
|
|
||||
Processed
|
|
$
|
32,406
|
|
|
$
|
26,260
|
|
Unprocessed
|
|
1,161
|
|
|
94
|
|
||
Total
|
|
$
|
33,567
|
|
|
$
|
26,354
|
|
Coffee brewing equipment parts
|
|
$
|
6,885
|
|
|
$
|
4,269
|
|
Total inventories
|
|
$
|
104,431
|
|
|
$
|
79,790
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Buildings and facilities
|
|
$
|
108,590
|
|
|
$
|
108,682
|
|
Machinery and equipment
|
|
231,581
|
|
|
201,236
|
|
||
Equipment under capital leases
|
|
1,408
|
|
|
7,540
|
|
||
Capitalized software
|
|
24,569
|
|
|
21,794
|
|
||
Office furniture and equipment
|
|
13,721
|
|
|
12,758
|
|
||
|
|
$
|
379,869
|
|
|
$
|
352,010
|
|
Accumulated depreciation
|
|
(209,498
|
)
|
|
(192,280
|
)
|
||
Land
|
|
16,218
|
|
|
16,336
|
|
||
Property, plant and equipment, net
|
|
$
|
186,589
|
|
|
$
|
176,066
|
|
|
|
June 30, 2018
|
|
June 30, 2017
|
||||||||||||
(In thousands)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Customer relationships
|
|
$
|
33,003
|
|
|
$
|
(12,903
|
)
|
|
$
|
17,353
|
|
|
$
|
(10,883
|
)
|
Non-compete agreements
|
|
220
|
|
|
(81
|
)
|
|
220
|
|
|
(38
|
)
|
||||
Recipes
|
|
930
|
|
|
(221
|
)
|
|
930
|
|
|
(88
|
)
|
||||
Trade name/brand name
|
|
510
|
|
|
(271
|
)
|
|
510
|
|
|
(84
|
)
|
||||
Total amortized intangible assets
|
|
$
|
34,663
|
|
|
$
|
(13,476
|
)
|
|
$
|
19,013
|
|
|
$
|
(11,093
|
)
|
Unamortized intangible assets:
|
|
|
|
|
|
|
|
|
||||||||
Trademarks, trade names and brand name with indefinite lives
|
|
$
|
10,328
|
|
|
$
|
—
|
|
|
$
|
10,698
|
|
|
$
|
—
|
|
Total unamortized intangible assets
|
|
$
|
10,328
|
|
|
$
|
—
|
|
|
$
|
10,698
|
|
|
$
|
—
|
|
Total intangible assets
|
|
$
|
44,991
|
|
|
$
|
(13,476
|
)
|
|
$
|
29,711
|
|
|
$
|
(11,093
|
)
|
|
|
Farmer Bros. Plan
June 30,
|
|
Brewmatic Plan
June 30,
|
|
Hourly Employees’ Plan
June 30,
|
||||||||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Change in projected benefit obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Benefit obligation at the beginning of the year
|
|
$
|
146,291
|
|
|
$
|
152,325
|
|
|
$
|
4,079
|
|
|
$
|
4,574
|
|
|
$
|
4,329
|
|
|
$
|
4,329
|
|
Service cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124
|
|
||||||
Interest cost
|
|
5,417
|
|
|
5,277
|
|
|
149
|
|
|
157
|
|
|
163
|
|
|
152
|
|
||||||
Actuarial (gain) loss
|
|
(5,956
|
)
|
|
(4,556
|
)
|
|
(227
|
)
|
|
(370
|
)
|
|
(370
|
)
|
|
(233
|
)
|
||||||
Benefits paid
|
|
(8,577
|
)
|
|
(6,755
|
)
|
|
(277
|
)
|
|
(282
|
)
|
|
(82
|
)
|
|
(43
|
)
|
||||||
Projected benefit obligation at the end of the year
|
|
$
|
137,175
|
|
|
$
|
146,291
|
|
|
$
|
3,724
|
|
|
$
|
4,079
|
|
|
$
|
4,040
|
|
|
$
|
4,329
|
|
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets at the beginning of the year
|
|
$
|
97,304
|
|
|
$
|
91,201
|
|
|
$
|
3,115
|
|
|
$
|
2,989
|
|
|
$
|
2,999
|
|
|
$
|
2,447
|
|
Actual return on plan assets
|
|
5,874
|
|
|
10,874
|
|
|
201
|
|
|
337
|
|
|
198
|
|
|
256
|
|
||||||
Employer contributions
|
|
2,610
|
|
|
1,984
|
|
|
680
|
|
|
71
|
|
|
514
|
|
|
339
|
|
||||||
Benefits paid
|
|
(8,577
|
)
|
|
(6,755
|
)
|
|
(277
|
)
|
|
(282
|
)
|
|
(82
|
)
|
|
(43
|
)
|
||||||
Fair value of plan assets at the end of the year
|
|
$
|
97,211
|
|
|
$
|
97,304
|
|
|
$
|
3,719
|
|
|
$
|
3,115
|
|
|
$
|
3,629
|
|
|
$
|
2,999
|
|
Funded status at end of year (underfunded) overfunded
|
|
$
|
(39,964
|
)
|
|
$
|
(48,987
|
)
|
|
$
|
(5
|
)
|
|
$
|
(964
|
)
|
|
$
|
(411
|
)
|
|
$
|
(1,330
|
)
|
Amounts recognized in consolidated balance sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-current liabilities
|
|
(39,964
|
)
|
|
(48,987
|
)
|
|
(5
|
)
|
|
(964
|
)
|
|
(411
|
)
|
|
(1,330
|
)
|
||||||
Total
|
|
$
|
(39,964
|
)
|
|
$
|
(48,987
|
)
|
|
$
|
(5
|
)
|
|
$
|
(964
|
)
|
|
$
|
(411
|
)
|
|
$
|
(1,330
|
)
|
Amounts recognized in AOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss
|
|
51,079
|
|
|
59,007
|
|
|
1,788
|
|
|
2,135
|
|
|
218
|
|
|
618
|
|
||||||
Total AOCI (not adjusted for applicable tax)
|
|
$
|
51,079
|
|
|
$
|
59,007
|
|
|
$
|
1,788
|
|
|
$
|
2,135
|
|
|
$
|
218
|
|
|
$
|
618
|
|
Weighted average assumptions used to determine benefit obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
|
4.05
|
%
|
|
3.80
|
%
|
|
4.05
|
%
|
|
3.80
|
%
|
|
4.05
|
%
|
|
3.80
|
%
|
||||||
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)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124
|
|
Interest cost
|
|
5,417
|
|
|
5,277
|
|
|
149
|
|
|
157
|
|
|
163
|
|
|
152
|
|
||||||
Expected return on plan assets
|
|
(5,490
|
)
|
|
(6,067
|
)
|
|
(161
|
)
|
|
(188
|
)
|
|
(173
|
)
|
|
(172
|
)
|
||||||
Amortization of net loss
|
|
1,588
|
|
|
1,875
|
|
|
80
|
|
|
102
|
|
|
6
|
|
|
53
|
|
||||||
Net periodic benefit cost
|
|
$
|
1,515
|
|
|
$
|
1,085
|
|
|
$
|
68
|
|
|
$
|
71
|
|
|
$
|
(4
|
)
|
|
$
|
157
|
|
Other changes recognized in OCI
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss
|
|
$
|
(6,340
|
)
|
|
$
|
(9,363
|
)
|
|
$
|
(267
|
)
|
|
$
|
(519
|
)
|
|
$
|
(394
|
)
|
|
$
|
(317
|
)
|
Amortization of net loss
|
|
(1,588
|
)
|
|
(1,875
|
)
|
|
(80
|
)
|
|
(102
|
)
|
|
(6
|
)
|
|
(53
|
)
|
||||||
Total recognized in OCI
|
|
$
|
(7,928
|
)
|
|
$
|
(11,238
|
)
|
|
$
|
(347
|
)
|
|
$
|
(621
|
)
|
|
$
|
(400
|
)
|
|
$
|
(370
|
)
|
Total recognized in net periodic benefit cost and OCI
|
|
$
|
(6,413
|
)
|
|
$
|
(10,153
|
)
|
|
$
|
(279
|
)
|
|
$
|
(550
|
)
|
|
$
|
(404
|
)
|
|
$
|
(213
|
)
|
Weighted-average assumptions used to determine net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
|
3.80
|
%
|
|
3.55
|
%
|
|
3.80
|
%
|
|
3.55
|
%
|
|
3.80
|
%
|
|
3.55
|
%
|
||||||
Expected long-term return on plan assets
|
|
6.75
|
%
|
|
7.75
|
%
|
|
6.75
|
%
|
|
7.75
|
%
|
|
6.75
|
%
|
|
7.75
|
%
|
||||||
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)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Comparison of obligations to plan assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Projected benefit obligation
|
|
$
|
137,175
|
|
|
$
|
146,291
|
|
|
$
|
3,724
|
|
|
$
|
4,079
|
|
|
$
|
4,040
|
|
|
$
|
4,329
|
|
Accumulated benefit obligation
|
|
$
|
137,175
|
|
|
$
|
146,291
|
|
|
$
|
3,724
|
|
|
$
|
4,079
|
|
|
$
|
4,040
|
|
|
$
|
4,329
|
|
Fair value of plan assets at measurement date
|
|
$
|
97,211
|
|
|
$
|
97,304
|
|
|
$
|
3,719
|
|
|
$
|
3,115
|
|
|
$
|
3,629
|
|
|
$
|
2,999
|
|
Plan assets by category
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
$
|
63,547
|
|
|
$
|
65,270
|
|
|
$
|
2,431
|
|
|
$
|
2,133
|
|
|
$
|
2,341
|
|
|
$
|
1,973
|
|
Debt securities
|
|
27,608
|
|
|
26,241
|
|
|
1,056
|
|
|
793
|
|
|
1,065
|
|
|
851
|
|
||||||
Real estate
|
|
6,056
|
|
|
5,793
|
|
|
232
|
|
|
189
|
|
|
223
|
|
|
175
|
|
||||||
Total
|
|
$
|
97,211
|
|
|
$
|
97,304
|
|
|
$
|
3,719
|
|
|
$
|
3,115
|
|
|
$
|
3,629
|
|
|
$
|
2,999
|
|
Plan assets by category
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity securities
|
|
66
|
%
|
|
67
|
%
|
|
66
|
%
|
|
69
|
%
|
|
65
|
%
|
|
66
|
%
|
||||||
Debt securities
|
|
28
|
%
|
|
27
|
%
|
|
28
|
%
|
|
25
|
%
|
|
29
|
%
|
|
28
|
%
|
||||||
Real estate
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
||||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
June 30, 2018
|
||||||||||||||||||
(In thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Investments measured at NAV
|
||||||||||
Farmer Bros. Plan
|
|
$
|
97,211
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
97,211
|
|
Brewmatic Plan
|
|
$
|
3,719
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,719
|
|
Hourly Employees’ Plan
|
|
$
|
3,629
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,629
|
|
|
|
June 30, 2017
|
||||||||||||||||||
(In thousands)
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Investments measured at NAV
|
||||||||||
Farmer Bros. Plan
|
|
$
|
97,304
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
97,304
|
|
Brewmatic Plan
|
|
$
|
3,115
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,115
|
|
Hourly Employees’ Plan
|
|
$
|
2,999
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,999
|
|
|
Fiscal 2019
|
|
U.S. large cap equity securities
|
37.0
|
%
|
U.S. small cap equity securities
|
4.6
|
%
|
International equity securities
|
22.4
|
%
|
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, 2019
|
|
$
|
7,740
|
|
|
$
|
330
|
|
|
$
|
110
|
|
June 30, 2020
|
|
$
|
7,790
|
|
|
$
|
280
|
|
|
$
|
130
|
|
June 30, 2021
|
|
$
|
8,010
|
|
|
$
|
280
|
|
|
$
|
150
|
|
June 30, 2022
|
|
$
|
8,210
|
|
|
$
|
270
|
|
|
$
|
160
|
|
June 30, 2023
|
|
$
|
8,360
|
|
|
$
|
260
|
|
|
$
|
170
|
|
June 30, 2024 to June 30, 2028
|
|
$
|
42,210
|
|
|
$
|
1,160
|
|
|
$
|
1,040
|
|
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, 2017
|
|
July 1,
2016
|
|||||||||||||
Western Conference of Teamsters Pension Plan
|
|
91-6145047
|
|
001
|
|
Green
|
|
Green
|
|
No
|
|
No
|
|
June 30, 2022
|
(In thousands)
|
|
WCTPP(1)(2)(3)
|
|
All Other Plans(4)
|
||||
Year Ended:
|
|
|
|
|
||||
June 30, 2018
|
|
1,605
|
|
|
35
|
|
||
June 30, 2017
|
|
$
|
2,114
|
|
|
$
|
39
|
|
June 30, 2016
|
|
$
|
2,587
|
|
|
$
|
39
|
|
(1)
|
Individually significant plan.
|
(2)
|
Less than
5%
of total contribution to WCTPP based on WCTPP's FASB Disclosure Statement for the calendar year ended December 31, 2017.
|
(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)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Components of Net Periodic Postretirement Benefit Cost (Credit):
|
|
|
|
|
|
|
||||||
Service cost
|
|
$
|
609
|
|
|
$
|
760
|
|
|
$
|
1,388
|
|
Interest cost
|
|
835
|
|
|
829
|
|
|
1,194
|
|
|||
Amortization of net gain
|
|
(841
|
)
|
|
(630
|
)
|
|
(196
|
)
|
|||
Amortization of prior service credit
|
|
(1,757
|
)
|
|
(1,757
|
)
|
|
(1,757
|
)
|
|||
Net periodic postretirement benefit (credit) cost
|
|
$
|
(1,154
|
)
|
|
$
|
(798
|
)
|
|
$
|
629
|
|
Amortization Schedule
|
|
|
Transition (Asset) Obligation: The transition (asset) obligations have been fully amortized.
|
Date Established
|
|
Balance at
July 1, 2017
|
|
Annual
Amortization
|
|
Years Remaining
|
|
Curtailment
|
|
Balance at
June 30, 2018
|
|||||||
January 1, 2008
|
|
$
|
(502
|
)
|
|
$
|
231
|
|
|
1.2
|
|
—
|
|
|
$
|
(271
|
)
|
July 1, 2012
|
|
(9,949
|
)
|
|
1,527
|
|
|
5.5
|
|
—
|
|
|
(8,422
|
)
|
|||
|
|
$
|
(10,451
|
)
|
|
$
|
1,758
|
|
|
|
|
|
|
$
|
(8,693
|
)
|
|
|
Retiree Medical Plan
|
|
Death Benefit
|
||||||||||||
|
|
Year Ended June 30,
|
|
Year Ended June 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Amortization of Net (Gain) Loss:
|
|
|
|
|
|
|
|
|
||||||||
Net (gain) loss as of July 1
|
|
$
|
(9,206
|
)
|
|
$
|
(10,298
|
)
|
|
$
|
1,201
|
|
|
$
|
1,523
|
|
Net (gain) loss subject to amortization
|
|
(9,206
|
)
|
|
(10,298
|
)
|
|
1,201
|
|
|
1,523
|
|
||||
Corridor (10% of greater of APBO or assets)
|
|
1,280
|
|
|
1,214
|
|
|
(848
|
)
|
|
(854
|
)
|
||||
Net (gain) loss in excess of corridor
|
|
$
|
(7,926
|
)
|
|
$
|
(9,084
|
)
|
|
$
|
353
|
|
|
$
|
669
|
|
Amortization years
|
|
8.9
|
|
|
9.7
|
|
|
6.4
|
|
|
7.0
|
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Change in Benefit Obligation:
|
|
|
|
|
||||
Projected postretirement benefit obligation at beginning of year
|
|
$
|
20,680
|
|
|
$
|
21,867
|
|
Service cost
|
|
609
|
|
|
760
|
|
||
Interest cost
|
|
835
|
|
|
829
|
|
||
Participant contributions
|
|
699
|
|
|
741
|
|
||
Actuarial losses
|
|
(70
|
)
|
|
(2,377
|
)
|
||
Benefits paid
|
|
(1,470
|
)
|
|
(1,140
|
)
|
||
Projected postretirement benefit obligation at end of year
|
|
$
|
21,283
|
|
|
$
|
20,680
|
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Change in Plan Assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
—
|
|
|
$
|
—
|
|
Employer contributions
|
|
771
|
|
|
399
|
|
||
Participant contributions
|
|
699
|
|
|
741
|
|
||
Benefits paid
|
|
(1,470
|
)
|
|
(1,140
|
)
|
||
Fair value of plan assets at end of year
|
|
$
|
—
|
|
|
$
|
—
|
|
Projected postretirement benefit obligation at end of year
|
|
21,283
|
|
|
20,680
|
|
||
Funded status of plan
|
|
$
|
(21,283
|
)
|
|
$
|
(20,680
|
)
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Amounts Recognized in the Consolidated Balance Sheets Consist of:
|
|
|
|
|
||||
Current liabilities
|
|
$
|
(810
|
)
|
|
$
|
(893
|
)
|
Non-current liabilities
|
|
(20,473
|
)
|
|
(19,787
|
)
|
||
Total
|
|
$
|
(21,283
|
)
|
|
$
|
(20,680
|
)
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Amounts Recognized in AOCI Consist of:
|
|
|
|
|
||||
Net gain
|
|
$
|
(8,005
|
)
|
|
$
|
(8,775
|
)
|
Prior service credit
|
|
(8,693
|
)
|
|
(10,450
|
)
|
||
Total AOCI
|
|
$
|
(16,698
|
)
|
|
$
|
(19,225
|
)
|
|
|
Year Ended June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Other Changes in Plan Assets and Benefit Obligations Recognized in OCI:
|
|
|
|
|
||||
Unrecognized actuarial loss
|
|
$
|
(70
|
)
|
|
$
|
(2,377
|
)
|
Amortization of net loss
|
|
840
|
|
|
630
|
|
||
Amortization of prior service cost
|
|
1,757
|
|
|
1,757
|
|
||
Total recognized in OCI
|
|
2,527
|
|
|
10
|
|
||
Net periodic benefit cost
|
|
(1,154
|
)
|
|
(798
|
)
|
||
Total recognized in net periodic benefit credit (cost) and OCI
|
|
$
|
1,373
|
|
|
$
|
(788
|
)
|
|
|
1-Percentage Point
|
||||||
(In thousands)
|
|
Increase
|
|
Decrease
|
||||
Effect on total of service and interest cost components
|
|
$
|
65
|
|
|
$
|
(57
|
)
|
Effect on accumulated postretirement benefit obligation
|
|
$
|
761
|
|
|
$
|
(719
|
)
|
|
|
As of and for the Years Ended June 30,
|
||||
|
|
2018
|
|
2017
|
|
2016
|
Loan amount (in thousands)
|
|
$2,145
|
|
$4,289
|
|
$6,434
|
|
|
June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Allocated shares
|
|
1,502,323
|
|
|
1,717,608
|
|
||
Committed to be released shares
|
|
73,826
|
|
|
74,983
|
|
||
Unallocated shares
|
|
72,114
|
|
|
145,941
|
|
||
Total ESOP shares
|
|
1,648,263
|
|
|
1,938,532
|
|
||
|
|
|
|
|
||||
(In thousands)
|
|
|
|
|
||||
Fair value of ESOP shares
|
|
$
|
50,354
|
|
|
$
|
58,641
|
|
|
|
Year Ended June 30,
|
||||||
|
|
2018
|
|
2016
|
||||
Weighted average fair value of NQOs
|
|
$
|
10.41
|
|
|
$
|
12.63
|
|
Risk-free interest rate
|
|
2.0
|
%
|
|
1.6
|
%
|
||
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
||
Average expected term
|
|
4.6 years
|
|
|
5.1 years
|
|
||
Expected stock price volatility
|
|
35.4
|
%
|
|
47.1
|
%
|
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, 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
|
|
Granted
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Exercised(1)
|
|
(67,482
|
)
|
|
12.38
|
|
5.57
|
|
—
|
|
1,407
|
|
Cancelled/Forfeited
|
|
(18,683
|
)
|
|
25.13
|
|
10.90
|
|
—
|
|
—
|
|
Outstanding at June 30, 2017
|
|
133,464
|
|
|
13.05
|
|
5.99
|
|
2.6
|
|
2,299
|
|
Granted
|
|
124,278
|
|
|
31.70
|
|
10.41
|
|
6.1
|
|
—
|
|
Exercised
|
|
(86,160
|
)
|
|
12.32
|
|
5.71
|
|
—
|
|
1,654
|
|
Cancelled/Forfeited
|
|
(10,258
|
)
|
|
28.52
|
|
10.72
|
|
—
|
|
—
|
|
Outstanding at June 30, 2018
|
|
161,324
|
|
|
26.82
|
|
9.24
|
|
5.1
|
|
741
|
|
Vested and exercisable at June 30, 2018
|
|
41,163
|
|
|
12.59
|
|
5.79
|
|
1.5
|
|
741
|
|
Vested and expected to vest at June 30, 2018
|
|
153,562
|
|
|
26.58
|
|
9.18
|
|
5.1
|
|
741
|
|
Nonvested NQOs:
|
|
Number
of
NQOs
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life (Years)
|
|
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
|
Vested
|
|
(15,765
|
)
|
|
26.45
|
|
11.41
|
|
—
|
Forfeited
|
|
(14,878
|
)
|
|
27.44
|
|
11.96
|
|
—
|
Outstanding at June 30, 2017
|
|
8,088
|
|
|
27.33
|
|
11.47
|
|
5.3
|
Granted
|
|
124,278
|
|
|
31.70
|
|
10.41
|
|
6.1
|
Vested
|
|
(1,947
|
)
|
|
31.70
|
|
10.41
|
|
—
|
Forfeited
|
|
(10,258
|
)
|
|
30.47
|
|
12.40
|
|
—
|
Outstanding at June 30, 2018
|
|
120,161
|
|
|
31.70
|
|
10.43
|
|
6.4
|
|
|
Year Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Weighted average fair value of PNQs
|
|
$
|
11.42
|
|
|
$
|
11.38
|
|
Risk-free interest rate
|
|
1.5
|
%
|
|
1.6
|
%
|
||
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
||
Average expected term
|
|
4.9 years
|
|
|
4.9 years
|
|
||
Expected stock price volatility
|
|
37.7
|
%
|
|
42.5
|
%
|
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, 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
|
|
—
|
|
107
|
|
Cancelled/Forfeited
|
|
(64,790
|
)
|
|
23.20
|
|
10.37
|
|
—
|
|
—
|
|
Outstanding at June 30, 2016
|
|
288,599
|
|
|
25.83
|
|
10.82
|
|
5.7
|
|
1,798
|
|
Granted
|
|
149,223
|
|
|
32.85
|
|
11.42
|
|
4.6
|
|
—
|
|
Exercised(1)
|
|
(15,321
|
)
|
|
26.26
|
|
10.98
|
|
—
|
|
109
|
|
Cancelled/Forfeited
|
|
(63,715
|
)
|
|
31.39
|
|
11.39
|
|
—
|
|
—
|
|
Outstanding at June 30, 2017
|
|
358,786
|
|
|
27.75
|
|
10.96
|
|
5.2
|
|
1,181
|
|
Exercised
|
|
(10,342
|
)
|
|
27.13
|
|
11.02
|
|
—
|
|
61
|
|
Cancelled/Forfeited
|
|
(47,736
|
)
|
|
32.06
|
|
11.43
|
|
—
|
|
—
|
|
Outstanding at June 30, 2018
|
|
300,708
|
|
|
27.08
|
|
10.89
|
|
4.0
|
|
1,207
|
|
Vested and exercisable at June 30, 2018
|
|
223,318
|
|
|
25.54
|
|
10.72
|
|
3.7
|
|
1,174
|
|
Vested and expected to vest at June 30, 2018
|
|
298,120
|
|
|
27.04
|
|
10.88
|
|
4.0
|
|
1,206
|
|
Nonvested PNQs:
|
|
Number
of
PNQs
|
|
Weighted
Average
Exercise
Price ($)
|
|
Weighted
Average
Grant Date
Fair Value ($)
|
|
Weighted
Average
Remaining
Life (Years)
|
|
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
|
Granted
|
|
149,223
|
|
|
32.85
|
|
11.42
|
|
4.6
|
Vested
|
|
(119,403
|
)
|
|
24.91
|
|
10.75
|
|
—
|
Forfeited
|
|
(62,262
|
)
|
|
31.39
|
|
11.39
|
|
—
|
Outstanding at June 30, 2017
|
|
208,025
|
|
|
30.48
|
|
11.24
|
|
5.8
|
Vested
|
|
(82,899
|
)
|
|
29
|
|
10.99
|
|
—
|
Forfeited
|
|
(47,736
|
)
|
|
32
|
|
11.43
|
|
—
|
Outstanding at June 30, 2018
|
|
77,390
|
|
|
31.53
|
|
11.39
|
|
5.0
|
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, 2015
|
|
47,082
|
|
|
16.48
|
|
1.2
|
|
1,106
|
|
Granted
|
|
10,170
|
|
|
29.99
|
|
—
|
|
305
|
|
Exercised/Released(1)
|
|
(24,841
|
)
|
|
14.08
|
|
—
|
|
747
|
|
Cancelled/Forfeited
|
|
(8,619
|
)
|
|
13.06
|
|
—
|
|
—
|
|
Outstanding at June 30, 2016
|
|
23,792
|
|
|
26.00
|
|
1.8
|
|
763
|
|
Granted
|
|
5,106
|
|
|
35.25
|
|
—
|
|
180
|
|
Exercised/Released
|
|
(7,458
|
)
|
|
24.16
|
|
—
|
|
253
|
|
Cancelled/Forfeited
|
|
(5,995
|
)
|
|
26.41
|
|
—
|
|
—
|
|
Outstanding at June 30, 2017
|
|
15,445
|
|
|
29.79
|
|
0.9
|
|
467
|
|
Granted
|
|
13,110
|
|
|
33.88
|
|
—
|
|
444
|
|
Exercised/Released
|
|
(9.642
|
)
|
|
31.12
|
|
—
|
|
323
|
|
Cancelled/Forfeited
|
|
(3.955
|
)
|
|
26.13
|
|
—
|
|
—
|
|
Outstanding at June 30, 2018
|
|
14,958
|
|
|
33.48
|
|
1.7
|
|
457
|
|
Expected to vest at June 30, 2018
|
|
14,493
|
|
|
33.50
|
|
1.7
|
|
443
|
|
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
|
|
(1,682
|
)
|
|
31.70
|
|
—
|
|
—
|
|
Outstanding and nonvested at June 30, 2018
|
|
35,732
|
|
|
31.70
|
|
3.4
|
|
1,092
|
|
Expected to vest at June 30, 2018
|
|
31,800
|
|
|
31.70
|
|
3.4
|
|
971
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Accrued postretirement benefits
|
|
$
|
810
|
|
|
$
|
893
|
|
Accrued workers’ compensation liabilities
|
|
1,698
|
|
|
1,885
|
|
||
Short-term pension liabilities
|
|
3,761
|
|
|
3,956
|
|
||
Earnout payable(1)
|
|
600
|
|
|
100
|
|
||
Other (including net taxes payable)(2)
|
|
3,790
|
|
|
2,868
|
|
||
Other current liabilities
|
|
$
|
10,659
|
|
|
$
|
9,702
|
|
|
|
June 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Earnout payable(1)
|
|
$
|
—
|
|
|
$
|
1,100
|
|
Long-term obligations under capital leases
|
|
58
|
|
|
237
|
|
||
Derivative liabilities—noncurrent
|
|
386
|
|
|
380
|
|
||
Multiemployer Plan Holdback—Boyd Coffee
|
|
1,056
|
|
|
—
|
|
||
Cumulative preferred dividends, undeclared and unpaid—noncurrent
|
|
312
|
|
|
—
|
|
||
Other long-term liabilities
|
|
$
|
1,812
|
|
|
$
|
1,717
|
|
|
|
June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
101
|
|
|
$
|
132
|
|
|
$
|
214
|
|
State
|
|
56
|
|
|
340
|
|
|
103
|
|
|||
Total current income tax expense
|
|
157
|
|
|
472
|
|
|
317
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
17,090
|
|
|
12,120
|
|
|
(60,069
|
)
|
|||
State
|
|
65
|
|
|
2,223
|
|
|
(12,487
|
)
|
|||
Total deferred income tax expense (benefit)
|
|
17,155
|
|
|
14,343
|
|
|
(72,556
|
)
|
|||
Income tax expense (benefit)
|
|
$
|
17,312
|
|
|
$
|
14,815
|
|
|
$
|
(72,239
|
)
|
|
|
June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Statutory tax rate
|
|
28
|
%
|
|
35
|
%
|
|
35
|
%
|
|||
Income tax expense at statutory rate
|
|
$
|
(272
|
)
|
|
$
|
13,078
|
|
|
$
|
(157
|
)
|
State income tax expense, net of federal tax benefit
|
|
12
|
|
|
1,707
|
|
|
160
|
|
|||
Dividend income exclusion
|
|
—
|
|
|
(134
|
)
|
|
(140
|
)
|
|||
Valuation allowance
|
|
283
|
|
|
(14
|
)
|
|
(71,670
|
)
|
|||
Change in tax rate
|
|
18,022
|
|
|
(54
|
)
|
|
(836
|
)
|
|||
Retiree life insurance
|
|
19
|
|
|
1
|
|
|
135
|
|
|||
Other (net)
|
|
(752
|
)
|
|
231
|
|
|
269
|
|
|||
Income tax expense (benefit)
|
|
$
|
17,312
|
|
|
$
|
14,815
|
|
|
$
|
(72,239
|
)
|
|
|
June 30,
|
||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Deferred tax assets:
|
|
|
|
|
|
|
||||||
Postretirement benefits
|
|
$
|
18,862
|
|
|
$
|
29,813
|
|
|
$
|
33,815
|
|
Accrued liabilities
|
|
4,754
|
|
|
7,885
|
|
|
11,760
|
|
|||
Net operating loss carryforwards
|
|
32,552
|
|
|
38,981
|
|
|
38,196
|
|
|||
Other
|
|
6,728
|
|
|
6,824
|
|
|
6,952
|
|
|||
Total deferred tax assets
|
|
62,896
|
|
|
83,503
|
|
|
90,723
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|
|
||||||
Unrealized gain on investments
|
|
—
|
|
|
—
|
|
|
(609
|
)
|
|||
Fixed assets
|
|
(16,156
|
)
|
|
(17,096
|
)
|
|
(5,370
|
)
|
|||
Other
|
|
(5,536
|
)
|
|
(10,861
|
)
|
|
(11,609
|
)
|
|||
Total deferred tax liabilities
|
|
(21,692
|
)
|
|
(27,957
|
)
|
|
(17,588
|
)
|
|||
Valuation allowance
|
|
(1,896
|
)
|
|
(1,613
|
)
|
|
(1,627
|
)
|
|||
Net deferred tax assets (liabilities)
|
|
$
|
39,308
|
|
|
$
|
53,933
|
|
|
$
|
71,508
|
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands, except share and per share amounts)
|
|
2018
|
|
2017(1)
|
|
2016(1)
|
||||||
Undistributed net (loss) income available to common stockholders
|
|
$
|
(18,652
|
)
|
|
$
|
22,524
|
|
|
$
|
71,706
|
|
Undistributed net (loss) income available to nonvested restricted stockholders and holders of convertible preferred stock
|
|
(17
|
)
|
|
27
|
|
|
85
|
|
|||
Net (loss) income available to common stockholders—basic
|
|
$
|
(18,669
|
)
|
|
$
|
22,551
|
|
|
$
|
71,791
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding—basic
|
|
16,815,020
|
|
|
16,668,745
|
|
|
16,502,523
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
||||||
Shares issuable under stock options
|
|
—
|
|
|
117,007
|
|
|
124,879
|
|
|||
Shares issuable under PBRSUs
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Shares issuable under convertible preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average common shares outstanding—diluted
|
|
16,815,020
|
|
|
16,785,752
|
|
|
16,627,402
|
|
|||
Net (loss) income per common share available to common stockholders—basic
|
|
$
|
(1.11
|
)
|
|
$
|
1.35
|
|
|
$
|
4.35
|
|
Net (loss) income per common share available to common stockholders—diluted
|
|
$
|
(1.11
|
)
|
|
$
|
1.34
|
|
|
$
|
4.32
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
||||||||||||||
Shares Authorized
|
|
Shares Issued and Outstanding
|
|
Stated Value per Share
|
|
Carrying Value
|
|
Cumulative Preferred Dividends, Undeclared and Unpaid
|
|
Liquidation Preference
|
||||||||||
21,000
|
|
|
14,700
|
|
|
$
|
1,026
|
|
|
$
|
15,089
|
|
|
$
|
389
|
|
|
$
|
15,089
|
|
|
|
Contractual Obligations
|
||||||||||||||||||||||||||||||
(In thousands)
|
|
Capital
Lease
Obligations
|
|
Operating
Lease
Obligations
|
|
Expansion Project Contract(1)
|
|
Pension Plan
Obligations(2)
|
|
Postretirement
Benefits Other
Than Pension Plans(3)
|
|
Revolving Credit Facility
|
|
Purchase Commitments (4)
|
|
Other Obligations(5)
|
||||||||||||||||
Year Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
2019
|
|
$
|
202
|
|
|
$
|
4,803
|
|
|
$
|
8,520
|
|
|
$
|
13,652
|
|
|
$
|
5,915
|
|
|
$
|
89,787
|
|
|
$
|
78,690
|
|
|
$
|
—
|
|
2020
|
|
$
|
52
|
|
|
$
|
3,069
|
|
|
$
|
—
|
|
|
$
|
8,200
|
|
|
$
|
892
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,754
|
|
2021
|
|
$
|
8
|
|
|
$
|
1,823
|
|
|
$
|
—
|
|
|
$
|
8,440
|
|
|
$
|
973
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2022
|
|
$
|
—
|
|
|
$
|
1,264
|
|
|
$
|
—
|
|
|
$
|
8,640
|
|
|
$
|
1,045
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2023
|
|
$
|
—
|
|
|
$
|
1,070
|
|
|
$
|
—
|
|
|
$
|
8,790
|
|
|
$
|
1,093
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Thereafter
|
|
$
|
—
|
|
|
$
|
5,247
|
|
|
$
|
—
|
|
|
$
|
44,410
|
|
|
$
|
6,374
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
$
|
17,276
|
|
|
$
|
8,520
|
|
|
$
|
92,132
|
|
|
$
|
16,292
|
|
|
$
|
89,787
|
|
|
$
|
78,690
|
|
|
$
|
1,754
|
|
||
Total minimum lease payments
|
|
$
|
262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Less: imputed interest
(0.82% to 10.66%)
|
|
$
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Present value of future minimum lease payments
|
|
$
|
248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Less: current portion
|
|
$
|
190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term capital lease obligations
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017 |
|
December 31,
2017 |
|
March 31,
2018 |
|
|
||||||||||||||||||||
|
|
As Previously Reported
|
|
Retrospectively Adjusted
|
|
As Previously Reported
|
|
Retrospectively Adjusted
|
|
As Previously Reported
|
|
Retrospectively Adjusted
|
|
June 30,
2018 |
||||||||||||||
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net sales
|
|
$
|
131,713
|
|
|
$
|
131,713
|
|
|
$
|
167,366
|
|
|
$
|
167,366
|
|
|
$
|
157,927
|
|
|
$
|
157,927
|
|
|
$
|
149,538
|
|
Cost of goods sold
|
|
$
|
82,706
|
|
|
$
|
85,672
|
|
|
$
|
101,847
|
|
|
$
|
111,175
|
|
|
$
|
99,117
|
|
|
$
|
105,716
|
|
|
$
|
96,939
|
|
Gross profit
|
|
$
|
49,007
|
|
|
$
|
46,041
|
|
|
$
|
65,519
|
|
|
$
|
56,191
|
|
|
$
|
58,810
|
|
|
$
|
52,211
|
|
|
$
|
52,599
|
|
Selling expenses
|
|
$
|
38,915
|
|
|
$
|
32,828
|
|
|
$
|
49,328
|
|
|
$
|
42,414
|
|
|
$
|
44,736
|
|
|
$
|
38,041
|
|
|
$
|
41,256
|
|
(Loss) income from operations
|
|
$
|
(1,258
|
)
|
|
$
|
1,862
|
|
|
$
|
2,442
|
|
|
$
|
28
|
|
|
$
|
(2,864
|
)
|
|
$
|
(2,767
|
)
|
|
$
|
2,001
|
|
Net (loss) income
|
|
$
|
(978
|
)
|
|
$
|
840
|
|
|
$
|
(18,768
|
)
|
|
$
|
(17,060
|
)
|
|
$
|
(3,908
|
)
|
|
$
|
(2,193
|
)
|
|
$
|
133
|
|
Net (loss) income available to common stockholders per common share—basic
|
|
$
|
(0.06
|
)
|
|
$
|
0.05
|
|
|
$
|
(1.13
|
)
|
|
$
|
(1.03
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
—
|
|
Net (loss) income available to common stockholders per common share—diluted
|
|
$
|
(0.06
|
)
|
|
$
|
0.05
|
|
|
$
|
(1.13
|
)
|
|
$
|
(1.03
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
—
|
|
|
|
September 30,
2016 |
|
December 31,
2016 |
|
March 31,
2017 |
|
June 30,
2017 |
||||||||||||||||||||||||
|
|
As Previously Reported
|
|
Retrospectively Adjusted
|
|
As Previously Reported
|
|
Retrospectively Adjusted
|
|
As Previously Reported
|
|
Retrospectively Adjusted
|
|
As Previously Reported
|
|
Retrospectively Adjusted
|
||||||||||||||||
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net sales
|
|
$
|
130,488
|
|
|
$
|
130,488
|
|
|
$
|
139,025
|
|
|
$
|
139,025
|
|
|
$
|
138,187
|
|
|
$
|
138,187
|
|
|
$
|
133,800
|
|
|
$
|
133,800
|
|
Cost of goods sold
|
|
$
|
79,290
|
|
|
$
|
85,761
|
|
|
$
|
83,929
|
|
|
$
|
89,531
|
|
|
$
|
84,367
|
|
|
$
|
88,305
|
|
|
$
|
80,182
|
|
|
$
|
91,025
|
|
Gross profit
|
|
$
|
51,198
|
|
|
$
|
44,727
|
|
|
$
|
55,096
|
|
|
$
|
49,494
|
|
|
$
|
53,820
|
|
|
$
|
49,882
|
|
|
$
|
53,618
|
|
|
$
|
42,775
|
|
Selling expenses
|
|
$
|
38,438
|
|
|
$
|
33,303
|
|
|
$
|
39,097
|
|
|
$
|
32,408
|
|
|
$
|
40,377
|
|
|
$
|
34,388
|
|
|
$
|
39,286
|
|
|
$
|
33,230
|
|
Income from operations
|
|
$
|
2,505
|
|
|
$
|
1,168
|
|
|
$
|
35,910
|
|
|
$
|
36,997
|
|
|
$
|
2,058
|
|
|
$
|
4,109
|
|
|
$
|
1,693
|
|
|
$
|
(3,096
|
)
|
Net income (loss)
|
|
$
|
1,618
|
|
|
$
|
814
|
|
|
$
|
20,076
|
|
|
$
|
20,728
|
|
|
$
|
1,594
|
|
|
$
|
2,846
|
|
|
$
|
1,112
|
|
|
$
|
(1,837
|
)
|
Net income (loss) available to common stockholders per common share—basic
|
|
$
|
0.10
|
|
|
$
|
0.05
|
|
|
$
|
1.21
|
|
|
$
|
1.25
|
|
|
$
|
0.10
|
|
|
$
|
0.17
|
|
|
$
|
0.07
|
|
|
$
|
(0.11
|
)
|
Net income (loss) available to common stockholders per common share—diluted
|
|
$
|
0.10
|
|
|
$
|
0.05
|
|
|
$
|
1.20
|
|
|
$
|
1.24
|
|
|
$
|
0.10
|
|
|
$
|
0.17
|
|
|
$
|
0.07
|
|
|
$
|
(0.11
|
)
|
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 / Vesting of
Outstanding
Options or Rights(2)
|
|
Weighted
Average
Exercise
Price of
Outstanding
Options(3)
|
|
Number of
Shares
Remaining
Available
for Future
Issuance(4)
|
Equity compensation plans approved by stockholders(1)
|
|
462,032
|
|
$25.50
|
|
874,750
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
—
|
|
—
|
Total
|
|
462,032
|
|
$25.50
|
|
874,750
|
(4)
|
The 2017 Plan authorizes the issuance of (i) 900,000 shares of common stock plus (ii) the number of shares of common stock subject to awards under the Company’s Prior Plans that are outstanding as of the Effective Date and that expire or are forfeited, cancelled or similarly lapse following the Effective Date. Subject to certain limitations, shares of common stock covered by awards granted under the 2017 Plan that are forfeited, expire or lapse, or are repurchased for or paid in cash, may be used again for new grants under the 2017 Plan. Shares of common stock granted under the 2017 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares. In no event will more than 900,000 shares of common stock be issuable pursuant to the exercise of incentive stock options under the 2017 Plan. The 2017 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance shares and other stock- or cash-based awards to eligible participants. Non-employee directors of the Company and employees of the Company or any of its subsidiaries are eligible to receive awards under the 2017 Plan.
|
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, 2018 and 2017
|
|
Consolidated Statements of Operations for the Years Ended June 30, 2018, 2017 and 2016
|
|
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended June 30, 2018, 2017 and 2016
|
|
Consolidated Statements of Cash Flows for the Years Ended June 30, 2018, 2017 and 2016
|
|
Consolidated Statements of Stockholders’ Equity for the Years Ended June 30, 2018, 2017 and 2016
|
|
Notes to Consolidated Financial Statements
|
(b)
|
Exhibits:
|
Exhibit No.
|
|
Description
|
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17
|
|
|
|
|
|
10.18
|
|
Exhibit No.
|
|
Description
|
|
|
|
10.19
|
|
|
|
|
|
10.20
|
|
|
|
|
|
10.21
|
|
|
|
|
|
10.22
|
|
|
|
|
|
10.23
|
|
|
|
|
|
10.24
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26
|
|
|
|
|
|
10.27
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
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10.31
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Exhibit No.
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Description
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10.32
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10.33
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10.34
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10.35
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10.36
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10.37
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10.38
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10.39
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10.40
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10.41
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10.42
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10.43
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10.44
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Exhibit No.
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Description
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10.45
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10.46
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10.47
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10.48
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14.1
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18.1
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21.1
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23.1
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31.1
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31.2
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32.1
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32.2
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101
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The following financial statements from the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 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, (v) Consolidated Statements of Stockholders' Equity, and (vi) Notes to Consolidated Financial Statements (furnished herewith).
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*
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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.
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**
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Management contract or compensatory plan or arrangement.
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Item 16.
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Form 10-K Summary
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F
ARMER
B
ROS
. C
O
.
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||||
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By:
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/s/ Michael H. Keown
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Michael H. Keown
President and Chief Executive Officer (chief executive officer) |
||
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September 13, 2018
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By:
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/s/ David G. Robson
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David G. Robson
Treasurer and Chief Financial Officer (principal financial and accounting officer) |
||
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September 13, 2018
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/s/ Randy E. Clark
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Chairman of the Board and Director
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September 13, 2018
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Randy E. Clark
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/s/ Allison M. Boersma
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Director
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September 13, 2018
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Allison M. Boersma
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Jeanne Farmer Grossman
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Director
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/s/ Michael H. Keown
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Director
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September 13, 2018
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Michael H. Keown
|
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/s/ Charles F. Marcy
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Director
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September 13, 2018
|
Charles F. Marcy
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/s/ Christopher P. Mottern
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Director
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September 13, 2018
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Christopher P. Mottern
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/s/ David W. Ritterbush
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Director
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September 13, 2018
|
David W. Ritterbush
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A.
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Borrowers, the other parties signatory thereto as “Loan Parties” (each individually, a “
Loan Party
” and collectively, the “
Loan Parties
”), Administrative Agent, and the financial institutions party thereto as lenders (each individually, a “
Lender
” and collectively, the “
Lenders
”) have previously entered into that certain Credit Agreement, dated as of March 2, 2015, as amended by that certain First Amendment to Credit Agreement and First Amendment to Pledge and Security Agreement, dated as of August 25, 2017 (as so amended and as further amended, restated, supplemented or otherwise modified from time to time, the “
Credit Agreement
”), pursuant to which the Lenders have made certain loans and financial accommodations available to Borrowers. Terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement.
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B.
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Borrowers and the other Loan Parties have requested that Administrative Agent and the Lenders amend the Credit Agreement, and Administrative Agent and the Lenders are willing to amend the Credit Agreement pursuant to the terms and conditions set forth herein.
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C.
|
Each Borrower and each other Loan Party is entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Administrative Agent’s or any Lender’s rights or remedies as set forth in the Credit Agreement and the other Loan Documents are being waived or modified by the terms of this Amendment.
|
a.
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Amendment
. Administrative Agent shall have received this Amendment fully executed in a sufficient number of counterparts for distribution to all parties.
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b.
|
Representations and Warranties
. After giving effect to this Amendment, the representations and warranties of Borrowers and the other Loan Parties set forth herein and in the other Loan Documents shall be true and correct in all material respects with the same effect as though made on and as of the date hereof (other than any such representation or warranty set forth in any other Loan Document which by its terms is made as of a specified date, which representation or warranty shall be true and correct in all material respects only as of such specified date),
provided
that any such representation or warranty which is subject to any materiality qualifier shall be true and correct in all respects.
|
4.
|
Representations and Warranties
. Each Borrower and each other Loan Party represents and warrants to Administrative Agent and the Lenders as follows:
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a.
|
Authority
. Each Borrower and each other Loan Party has the requisite corporate power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Loan Documents (as amended or modified hereby) to which it is a party. The execution, delivery, and performance by each Borrower and each other Loan Party of this Amendment have been duly approved by all necessary corporate action, have received all necessary governmental approval, if any, and except to the extent such contravention or restriction would reasonably be expected to result in a Material Adverse
|
b.
|
Enforceability
. This Amendment has been duly executed and delivered by each Borrower and each other Loan Party. This Amendment and each Loan Document (as amended or modified hereby) is the legal, valid, and binding obligation of each Borrower and each other Loan Party, enforceable against each Borrower and each other Loan Party in accordance with its terms, and is in full force and effect, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
|
c.
|
Representations and Warranties
. After giving effect to this Amendment, the representations and warranties of Borrowers and the other Loan Parties set forth in the Loan Documents are true and correct in all material respects with the same effect as though made on and as of the date hereof (other than any such representation or warranty which by its terms is made as of a specified date, which representation or warranty is true and correct in all material respects only as of such specified date),
provided
that any such representation or warranty which is subject to any materiality qualifier is true and correct in all respects.
|
d.
|
No Default
. After giving effect to this Amendment, no event has occurred and is continuing that constitutes a Default.
|
7.
|
Reference to and Effect on the Loan Documents
.
|
a.
|
Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.
|
b.
|
Except as specifically set forth in this Amendment, the Credit Agreement and all other Loan Documents are and shall continue to be in full force and effect and are hereby in all
|
c.
|
The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power, or remedy of Administrative Agent or any Lender under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
|
|
/
S
/ MICHAEL H. KEOWN
|
Michael H. Keown
President and Chief Executive Officer
(principal executive officer)
|
|
/
S
/ DAVID G. ROBSON
|
David G. Robson
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
/ DAVID G. ROBSON
|
David G. Robson
Treasurer and Chief Financial Officer
(principal financial and accounting officer)
|