|
ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT OF SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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68-0275553
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(State or other jurisdiction
of incorporation or organization)
|
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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¨
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Accelerated filer
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ý
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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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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Common Stock Outstanding as of July 25, 2017
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12,160,023
|
|
|
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Class A Common Stock Outstanding as of July 25, 2017
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37,962,372
|
|
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Class B Stock Outstanding as of July 25, 2017
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1,652,262
|
|
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•
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seasonality and fluctuations in our operating results and cash flow;
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•
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our dependence upon key executives;
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•
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risks associated with new product introductions, including the risk that our new products will not produce sufficient sales to recoup our investment;
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•
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fluctuations in energy prices, fuel and related petrochemical costs;
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Item 1.
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Financial Statements
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June 24,
2017 |
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June 25,
2016 |
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September 24,
2016 |
||||||
ASSETS
|
|
|
|
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|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
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$
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14,473
|
|
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$
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40,000
|
|
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$
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92,982
|
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Restricted cash
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10,999
|
|
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12,029
|
|
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10,910
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|
|||
Accounts receivable (less allowance for doubtful accounts of $21,277, $25,429 and $21,069)
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279,504
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|
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241,954
|
|
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201,151
|
|
|||
Inventories
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383,449
|
|
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361,813
|
|
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362,004
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|
|||
Deferred taxes, prepaid expenses and other
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51,964
|
|
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45,075
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|
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47,759
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|
|||
Total current assets
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740,389
|
|
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700,871
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|
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714,806
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|
|||
Land, buildings, improvements and equipment—net
|
177,784
|
|
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159,430
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|
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158,224
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|
|||
Goodwill
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230,385
|
|
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233,011
|
|
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231,385
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|
|||
Other intangible assets—net
|
90,004
|
|
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95,070
|
|
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95,865
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|
|||
Other assets
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113,185
|
|
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28,525
|
|
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11,913
|
|
|||
Total
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$
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1,351,747
|
|
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$
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1,216,907
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|
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$
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1,212,193
|
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LIABILITIES AND EQUITY
|
|
|
|
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|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable
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$
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106,408
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|
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$
|
96,906
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|
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$
|
102,413
|
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Accrued expenses
|
112,091
|
|
|
102,953
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|
|
99,343
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|
|||
Current portion of long-term debt
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375
|
|
|
530
|
|
|
463
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|
|||
Total current liabilities
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218,874
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|
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200,389
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|
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202,219
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|
|||
Long-term debt
|
435,074
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|
|
394,603
|
|
|
394,806
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|
|||
Deferred taxes and other long-term obligations
|
68,792
|
|
|
63,975
|
|
|
60,581
|
|
|||
Equity:
|
|
|
|
|
|
||||||
Common stock, 12,160,023, 11,998,472, and 11,998,472 shares outstanding at June 24, 2017, June 25, 2016 and September 24, 2016
|
122
|
|
|
120
|
|
|
120
|
|
|||
Class A common stock, $0.01 par value: 37,933,970, 37,197,569 and 37,418,572 shares outstanding at June 24, 2017, June 25, 2016 and September 24, 2016
|
379
|
|
|
371
|
|
|
374
|
|
|||
Class B stock, $0.01 par value: 1,652,262 shares outstanding
|
16
|
|
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16
|
|
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16
|
|
|||
Additional paid-in capital
|
392,995
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|
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390,270
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|
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393,297
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|
|||
Accumulated earnings
|
235,070
|
|
|
166,112
|
|
|
160,501
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|
|||
Accumulated other comprehensive income (loss)
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(1,487
|
)
|
|
(805
|
)
|
|
(1,294
|
)
|
|||
Total Central Garden & Pet Company shareholders’ equity
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627,095
|
|
|
556,084
|
|
|
553,014
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|
|||
Noncontrolling interest
|
1,912
|
|
|
1,856
|
|
|
1,573
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|
|||
Total equity
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629,007
|
|
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557,940
|
|
|
554,587
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|
|||
Total
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$
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1,351,747
|
|
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$
|
1,216,907
|
|
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$
|
1,212,193
|
|
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Three Months Ended
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Nine Months Ended
|
||||||||||||
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June 24,
2017 |
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June 25,
2016 |
|
June 24,
2017 |
|
June 25,
2016 |
||||||||
Net sales
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$
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574,592
|
|
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$
|
514,544
|
|
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$
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1,564,014
|
|
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$
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1,415,605
|
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Cost of goods sold and occupancy
|
391,319
|
|
|
350,799
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|
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1,076,534
|
|
|
982,735
|
|
||||
Gross profit
|
183,273
|
|
|
163,745
|
|
|
487,480
|
|
|
432,870
|
|
||||
Selling, general and administrative expenses
|
125,340
|
|
|
115,560
|
|
|
345,749
|
|
|
316,509
|
|
||||
Operating income
|
57,933
|
|
|
48,185
|
|
|
141,731
|
|
|
116,361
|
|
||||
Interest expense
|
(7,273
|
)
|
|
(6,964
|
)
|
|
(20,976
|
)
|
|
(36,205
|
)
|
||||
Interest income
|
53
|
|
|
43
|
|
|
99
|
|
|
74
|
|
||||
Other income (expense)
|
1,626
|
|
|
318
|
|
|
(306
|
)
|
|
(243
|
)
|
||||
Income before income taxes and noncontrolling interest
|
52,339
|
|
|
41,582
|
|
|
120,548
|
|
|
79,987
|
|
||||
Income tax expense
|
19,450
|
|
|
14,916
|
|
|
44,621
|
|
|
28,509
|
|
||||
Income including noncontrolling interest
|
32,889
|
|
|
26,666
|
|
|
75,927
|
|
|
51,478
|
|
||||
Net income attributable to noncontrolling interest
|
641
|
|
|
636
|
|
|
1,358
|
|
|
1,353
|
|
||||
Net income attributable to Central Garden & Pet Company
|
$
|
32,248
|
|
|
$
|
26,030
|
|
|
$
|
74,569
|
|
|
$
|
50,125
|
|
Net income per share attributable to Central Garden & Pet Company:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.64
|
|
|
$
|
0.53
|
|
|
$
|
1.49
|
|
|
$
|
1.03
|
|
Diluted
|
$
|
0.62
|
|
|
$
|
0.51
|
|
|
$
|
1.44
|
|
|
$
|
0.99
|
|
Weighted average shares used in the computation of net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
50,507
|
|
|
49,120
|
|
|
50,084
|
|
|
48,801
|
|
||||
Diluted
|
51,825
|
|
|
51,063
|
|
|
51,769
|
|
|
50,743
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
June 24,
2017 |
|
June 25,
2016 |
|
June 24,
2017 |
|
June 25,
2016 |
||||||||
Income including noncontrolling interest
|
$
|
32,889
|
|
|
$
|
26,666
|
|
|
$
|
75,927
|
|
|
$
|
51,478
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
172
|
|
|
(277
|
)
|
|
(193
|
)
|
|
(969
|
)
|
||||
Total comprehensive income
|
33,061
|
|
|
26,389
|
|
|
75,734
|
|
|
50,509
|
|
||||
Comprehensive income attributable to noncontrolling interest
|
641
|
|
|
636
|
|
|
1,358
|
|
|
1,353
|
|
||||
Comprehensive income attributable to Central Garden & Pet Company
|
$
|
32,420
|
|
|
$
|
25,753
|
|
|
$
|
74,376
|
|
|
$
|
49,156
|
|
|
Nine Months Ended
|
||||||
|
June 24,
2017 |
|
June 25,
2016 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
75,927
|
|
|
$
|
51,478
|
|
Adjustments to reconcile net income to net cash used by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
31,374
|
|
|
29,286
|
|
||
Amortization of deferred financing costs
|
1,021
|
|
|
1,164
|
|
||
Stock-based compensation
|
8,189
|
|
|
6,069
|
|
||
Excess tax benefits from stock-based awards
|
(17,205
|
)
|
|
(4,726
|
)
|
||
Deferred income taxes
|
10,420
|
|
|
12,305
|
|
||
Write-off of deferred financing costs
|
—
|
|
|
3,337
|
|
||
Loss on sale of property and equipment
|
96
|
|
|
788
|
|
||
Gain on sale of facility
|
(2,050
|
)
|
|
(2,544
|
)
|
||
Other
|
1,241
|
|
|
190
|
|
||
Change in assets and liabilities (excluding businesses acquired):
|
|
|
|
||||
Accounts receivable
|
(74,234
|
)
|
|
(13,236
|
)
|
||
Inventories
|
(17,347
|
)
|
|
(5,928
|
)
|
||
Prepaid expenses and other assets
|
11,774
|
|
|
6,493
|
|
||
Accounts payable
|
2,901
|
|
|
(8,027
|
)
|
||
Accrued expenses
|
10,629
|
|
|
14,812
|
|
||
Other long-term obligations
|
(88
|
)
|
|
(1,878
|
)
|
||
Net cash provided by operating activities
|
42,648
|
|
|
89,583
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to property and equipment
|
(37,087
|
)
|
|
(19,486
|
)
|
||
Payments to acquire companies, net of cash acquired
|
(106,821
|
)
|
|
(68,901
|
)
|
||
Proceeds from the sale of business, facility and other assets
|
8,301
|
|
|
3,899
|
|
||
Change in restricted cash
|
(89
|
)
|
|
1,129
|
|
||
Investment in equity method investee
|
(11,495
|
)
|
|
—
|
|
||
Other investing activities
|
(2,735
|
)
|
|
(550
|
)
|
||
Net cash used in investing activities
|
(149,926
|
)
|
|
(83,909
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayments of long-term debt
|
(456
|
)
|
|
(400,230
|
)
|
||
Proceeds from issuance of long-term debt
|
—
|
|
|
400,000
|
|
||
Borrowings under revolving line of credit
|
456,000
|
|
|
419,000
|
|
||
Repayments under revolving line of credit
|
(416,000
|
)
|
|
(419,000
|
)
|
||
Proceeds from issuance of common stock
|
—
|
|
|
280
|
|
||
Repurchase of common stock, including shares surrendered for tax withholding
|
(25,654
|
)
|
|
(9,429
|
)
|
||
Payment of contingent consideration liability
|
(1,222
|
)
|
|
—
|
|
||
Distribution to noncontrolling interest
|
(1,019
|
)
|
|
(592
|
)
|
||
Payment of financing costs
|
—
|
|
|
(7,560
|
)
|
||
Excess tax benefits from stock-based awards
|
17,205
|
|
|
4,726
|
|
||
Net cash provided (used) by financing activities
|
28,854
|
|
|
(12,805
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(85
|
)
|
|
(453
|
)
|
||
Net decrease in cash and cash equivalents
|
(78,509
|
)
|
|
(7,584
|
)
|
||
Cash and equivalents at beginning of period
|
92,982
|
|
|
47,584
|
|
||
Cash and equivalents at end of period
|
$
|
14,473
|
|
|
$
|
40,000
|
|
Supplemental information:
|
|
|
|
||||
Cash paid for interest
|
$
|
27,075
|
|
|
$
|
32,440
|
|
1.
|
Basis of Presentation
|
2.
|
Fair Value Measurements
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Liability for contingent consideration (a)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,095
|
|
|
$
|
4,095
|
|
Total liabilities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,095
|
|
|
$
|
4,095
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Liability for contingent consideration (a)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
6,355
|
|
|
$
|
6,355
|
|
Total liabilities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
6,355
|
|
|
$
|
6,355
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Liability for contingent consideration (a)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,113
|
|
|
$
|
5,113
|
|
Total liabilities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,113
|
|
|
$
|
5,113
|
|
(a)
|
The liability for contingent consideration relates to an earn-out for B2E, acquired in December 2012, and future performance-based contingent payments for Hydro-Organics Wholesale, Inc., acquired in October 2015. The fair value of the estimated contingent consideration arrangement is determined based on the Company’s evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by the acquired entity. This is presented as part of long-term liabilities in the Company's condensed consolidated balance sheets.
|
|
Amount
|
||
Balance September 24, 2016
|
$
|
5,113
|
|
Estimated contingent performance-based consideration established at the time of acquisition
|
—
|
|
|
Changes in the fair value of contingent performance-based payments established at the time of acquisition
|
204
|
|
|
Performance-based payments
|
(1,222
|
)
|
|
Balance June 24, 2017
|
$
|
4,095
|
|
|
|
||
|
Amount
|
||
Balance September 26, 2015
|
$
|
3,625
|
|
Estimated contingent performance-based consideration established at the time of acquisition
|
2,590
|
|
|
Changes in the fair value of contingent performance-based payments established at the time of acquisition
|
140
|
|
|
Balance June 25, 2016
|
$
|
6,355
|
|
3.
|
Acquisitions
|
4.
|
Inventories, net
|
|
|
June 24, 2017
|
|
June 25, 2016
|
|
September 24, 2016
|
||||||
Raw materials
|
|
$
|
118,097
|
|
|
$
|
110,095
|
|
|
$
|
120,786
|
|
Work in progress
|
|
16,573
|
|
|
16,604
|
|
|
17,378
|
|
|||
Finished goods
|
|
243,053
|
|
|
225,814
|
|
|
217,788
|
|
|||
Supplies
|
|
5,726
|
|
|
9,300
|
|
|
6,052
|
|
|||
Total inventories, net
|
|
$
|
383,449
|
|
|
$
|
361,813
|
|
|
$
|
362,004
|
|
5.
|
Goodwill
|
6.
|
Other Intangible Assets
|
|
|
Gross
|
|
Accumulated
Amortization
|
|
Accumulated
Impairment
|
|
Net
Carrying
Value
|
||||||||
|
|
|
|
|
|
(in millions)
|
|
|
||||||||
June 24, 2017
|
|
|
|
|
|
|
|
|
||||||||
Marketing-related intangible assets – amortizable
|
|
$
|
14.9
|
|
|
$
|
(11.9
|
)
|
|
$
|
—
|
|
|
$
|
3.0
|
|
Marketing-related intangible assets – nonamortizable
|
|
62.7
|
|
|
—
|
|
|
(26.0
|
)
|
|
36.7
|
|
||||
Total
|
|
77.6
|
|
|
(11.9
|
)
|
|
(26.0
|
)
|
|
39.7
|
|
||||
Customer-related intangible assets – amortizable
|
|
64.3
|
|
|
(29.0
|
)
|
|
—
|
|
|
35.3
|
|
||||
Other acquired intangible assets – amortizable
|
|
20.8
|
|
|
(12.4
|
)
|
|
—
|
|
|
8.4
|
|
||||
Other acquired intangible assets – nonamortizable
|
|
7.8
|
|
|
—
|
|
|
(1.2
|
)
|
|
6.6
|
|
||||
Total
|
|
28.6
|
|
|
(12.4
|
)
|
|
(1.2
|
)
|
|
15.0
|
|
||||
Total other intangible assets
|
|
$
|
170.5
|
|
|
$
|
(53.3
|
)
|
|
$
|
(27.2
|
)
|
|
$
|
90.0
|
|
|
|
Gross
|
|
Accumulated
Amortization
|
|
Accumulated
Impairment
|
|
Net
Carrying
Value
|
||||||||
|
|
|
|
|
|
(in millions)
|
|
|
||||||||
June 25, 2016
|
|
|
|
|
|
|
|
|
||||||||
Marketing-related intangible assets – amortizable
|
|
$
|
14.9
|
|
|
$
|
(11.1
|
)
|
|
$
|
—
|
|
|
$
|
3.8
|
|
Marketing-related intangible assets – nonamortizable
|
|
63.0
|
|
|
—
|
|
|
(24.2
|
)
|
|
38.8
|
|
||||
Total
|
|
77.9
|
|
|
(11.1
|
)
|
|
(24.2
|
)
|
|
42.6
|
|
||||
Customer-related intangible assets – amortizable
|
|
62.1
|
|
|
(25.8
|
)
|
|
—
|
|
|
36.3
|
|
||||
Other acquired intangible assets – amortizable
|
|
20.8
|
|
|
(11.2
|
)
|
|
—
|
|
|
9.6
|
|
||||
Other acquired intangible assets – nonamortizable
|
|
7.8
|
|
|
—
|
|
|
(1.2
|
)
|
|
6.6
|
|
||||
Total
|
|
28.6
|
|
|
(11.2
|
)
|
|
(1.2
|
)
|
|
16.2
|
|
||||
Total other intangible assets
|
|
$
|
168.6
|
|
|
$
|
(48.1
|
)
|
|
$
|
(25.4
|
)
|
|
$
|
95.1
|
|
|
|
Gross
|
|
Accumulated
Amortization
|
|
Accumulated
Impairment
|
|
Net
Carrying
Value
|
||||||||
|
|
|
|
|
|
(in millions)
|
|
|
||||||||
September 24, 2016
|
|
|
|
|
|
|
|
|
||||||||
Marketing-related intangible assets – amortizable
|
|
$
|
14.9
|
|
|
$
|
(11.3
|
)
|
|
$
|
—
|
|
|
$
|
3.6
|
|
Marketing-related intangible assets – nonamortizable
|
|
63.0
|
|
|
—
|
|
|
(26.0
|
)
|
|
37.0
|
|
||||
Total
|
|
77.9
|
|
|
(11.3
|
)
|
|
(26.0
|
)
|
|
40.6
|
|
||||
Customer-related intangible assets – amortizable
|
|
65.6
|
|
|
(26.1
|
)
|
|
—
|
|
|
39.5
|
|
||||
Other acquired intangible assets – amortizable
|
|
20.8
|
|
|
(11.6
|
)
|
|
—
|
|
|
9.2
|
|
||||
Other acquired intangible assets – nonamortizable
|
|
7.8
|
|
|
—
|
|
|
(1.2
|
)
|
|
6.6
|
|
||||
Total
|
|
28.6
|
|
|
(11.6
|
)
|
|
(1.2
|
)
|
|
15.8
|
|
||||
Total other intangible assets
|
|
$
|
172.1
|
|
|
$
|
(49.0
|
)
|
|
$
|
(27.2
|
)
|
|
$
|
95.9
|
|
7.
|
Long-Term Debt
|
|
|
June 24, 2017
|
|
June 25, 2016
|
|
September 24, 2016
|
||||||
|
|
(in thousands)
|
||||||||||
Senior notes, interest at 6.125%, payable semi-annually, principal due November 2023
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Unamortized debt issuance costs
|
|
(5,039
|
)
|
|
(5,834
|
)
|
|
(5,635
|
)
|
|||
Net carrying value
|
|
394,961
|
|
|
394,166
|
|
|
394,365
|
|
|||
Asset-based revolving credit facility, interest at LIBOR plus a margin of 1.25% to 1.50% or Base Rate plus a margin of 0.25% to 0.50%, final maturity April 2021
|
|
40,000
|
|
|
—
|
|
|
—
|
|
|||
Other notes payable
|
|
488
|
|
|
967
|
|
|
904
|
|
|||
Total
|
|
435,449
|
|
|
395,133
|
|
|
395,269
|
|
|||
Less current portion
|
|
(375
|
)
|
|
(530
|
)
|
|
(463
|
)
|
|||
Long-term portion
|
|
$
|
435,074
|
|
|
$
|
394,603
|
|
|
$
|
394,806
|
|
8.
|
Supplemental Equity Information
|
|
|
Controlling Interest
|
|
|
|
|
||||||||||||||||||||||||||||||
(in thousands)
|
|
Common
Stock
|
|
Class A
Common
Stock
|
|
Class
B
Stock
|
|
Additional
Paid In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|
Noncontrolling
Interest
|
|
Total
|
||||||||||||||||||
Balance September 24, 2016
|
|
$
|
120
|
|
|
$
|
374
|
|
|
$
|
16
|
|
|
$
|
393,297
|
|
|
$
|
160,501
|
|
|
$
|
(1,294
|
)
|
|
$
|
553,014
|
|
|
$
|
1,573
|
|
|
$
|
554,587
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
74,569
|
|
|
(193
|
)
|
|
74,376
|
|
|
1,358
|
|
|
75,734
|
|
|||||||||||||
Amortization of share-based awards
|
|
|
|
|
|
|
|
6,377
|
|
|
|
|
|
|
6,377
|
|
|
|
|
6,377
|
|
|||||||||||||||
Restricted share activity, including net share settlement
|
|
|
|
(1
|
)
|
|
|
|
(7,491
|
)
|
|
|
|
|
|
(7,492
|
)
|
|
|
|
(7,492
|
)
|
||||||||||||||
Issuance of common stock, including net share settlement of stock options
|
|
2
|
|
|
6
|
|
|
|
|
(16,358
|
)
|
|
|
|
|
|
(16,350
|
)
|
|
|
|
(16,350
|
)
|
|||||||||||||
Tax benefit on stock option exercise, net of tax deficiency
|
|
|
|
|
|
|
|
17,170
|
|
|
|
|
|
|
17,170
|
|
|
|
|
17,170
|
|
|||||||||||||||
Distribution to Noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,019
|
)
|
|
(1,019
|
)
|
||||||||||||||||
Balance June 24, 2017
|
|
$
|
122
|
|
|
$
|
379
|
|
|
$
|
16
|
|
|
$
|
392,995
|
|
|
$
|
235,070
|
|
|
$
|
(1,487
|
)
|
|
$
|
627,095
|
|
|
$
|
1,912
|
|
|
$
|
629,007
|
|
|
|
Controlling Interest
|
|
|
|
|
||||||||||||||||||||||||||||||
(in thousands)
|
|
Common
Stock
|
|
Class A
Common
Stock
|
|
Class
B
Stock
|
|
Additional
Paid In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|
Noncontrolling
Interest
|
|
Total
|
||||||||||||||||||
Balance September 26, 2015
|
|
$
|
119
|
|
|
$
|
364
|
|
|
$
|
16
|
|
|
$
|
388,636
|
|
|
$
|
115,987
|
|
|
$
|
164
|
|
|
$
|
505,286
|
|
|
$
|
1,094
|
|
|
$
|
506,380
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
50,125
|
|
|
(969
|
)
|
|
49,156
|
|
|
1,353
|
|
|
50,509
|
|
|||||||||||||
Amortization of share-based awards
|
|
|
|
|
|
|
|
4,796
|
|
|
|
|
|
|
4,796
|
|
|
|
|
4,796
|
|
|||||||||||||||
Restricted share activity, including net share settlement
|
|
|
|
1
|
|
|
|
|
(1,230
|
)
|
|
|
|
|
|
(1,229
|
)
|
|
|
|
(1,229
|
)
|
||||||||||||||
Issuance of common stock, including net share settlement of stock options
|
|
1
|
|
|
6
|
|
|
|
|
(6,654
|
)
|
|
|
|
|
|
(6,647
|
)
|
|
|
|
(6,647
|
)
|
|||||||||||||
Tax benefit on stock option exercise, net of tax deficiency
|
|
|
|
|
|
|
|
4,722
|
|
|
|
|
|
|
4,722
|
|
|
|
|
4,722
|
|
|||||||||||||||
Distribution to Noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(592
|
)
|
|
(592
|
)
|
||||||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
1
|
|
||||||||||||||||
Balance June 25, 2016
|
|
$
|
120
|
|
|
$
|
371
|
|
|
$
|
16
|
|
|
$
|
390,270
|
|
|
$
|
166,112
|
|
|
$
|
(805
|
)
|
|
$
|
556,084
|
|
|
$
|
1,856
|
|
|
$
|
557,940
|
|
9.
|
Stock-Based Compensation
|
10.
|
Earnings Per Share
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
|
June 24, 2017
|
|
June 24, 2017
|
||||||||||||||||||
|
|
Income
|
|
Shares
|
|
Per Share
|
|
Income
|
|
Shares
|
|
Per Share
|
||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income available to common shareholders
|
|
$
|
32,248
|
|
|
50,507
|
|
|
$
|
0.64
|
|
|
$
|
74,569
|
|
|
50,084
|
|
|
$
|
1.49
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Options to purchase common stock
|
|
|
|
810
|
|
|
(0.01
|
)
|
|
—
|
|
|
1,080
|
|
|
(0.03
|
)
|
|||||
Restricted shares
|
|
|
|
508
|
|
|
(0.01
|
)
|
|
—
|
|
|
605
|
|
|
(0.02
|
)
|
|||||
Diluted EPS:
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|||||||||
Net income available to common shareholders
|
|
$
|
32,248
|
|
|
51,825
|
|
|
$
|
0.62
|
|
|
$
|
74,569
|
|
|
51,769
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
|
June 25, 2016
|
|
June 25, 2016
|
||||||||||||||||||
|
|
Income
|
|
Shares
|
|
Per Share
|
|
Income
|
|
Shares
|
|
Per Share
|
||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income available to common shareholders
|
|
$
|
26,030
|
|
|
49,120
|
|
|
$
|
0.53
|
|
|
$
|
50,125
|
|
|
48,801
|
|
|
$
|
1.03
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Options to purchase common stock
|
|
|
|
1,211
|
|
|
(0.01
|
)
|
|
|
|
1,201
|
|
|
(0.03
|
)
|
||||||
Restricted shares
|
|
|
|
732
|
|
|
(0.01
|
)
|
|
|
|
741
|
|
|
(0.01
|
)
|
||||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income available to common shareholders
|
|
$
|
26,030
|
|
|
51,063
|
|
|
$
|
0.51
|
|
|
$
|
50,125
|
|
|
50,743
|
|
|
$
|
0.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
Segment Information
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
June 24,
2017 |
|
June 25,
2016 |
|
June 24,
2017 |
|
June 25,
2016 |
||||||||
Net sales:
|
|
|
|
|
|
|
|
|
||||||||
Pet segment
|
|
$
|
313,437
|
|
|
$
|
287,213
|
|
|
$
|
915,876
|
|
|
$
|
811,203
|
|
Garden segment
|
|
261,155
|
|
|
227,331
|
|
|
648,138
|
|
|
604,402
|
|
||||
Total net sales
|
|
$
|
574,592
|
|
|
$
|
514,544
|
|
|
$
|
1,564,014
|
|
|
$
|
1,415,605
|
|
Operating income:
|
|
|
|
|
|
|
|
|
||||||||
Pet segment
|
|
36,092
|
|
|
38,759
|
|
|
104,143
|
|
|
97,363
|
|
||||
Garden segment
|
|
38,369
|
|
|
26,452
|
|
|
87,050
|
|
|
67,605
|
|
||||
Corporate
|
|
(16,528
|
)
|
|
(17,026
|
)
|
|
(49,462
|
)
|
|
(48,607
|
)
|
||||
Total income from operations
|
|
57,933
|
|
|
48,185
|
|
|
141,731
|
|
|
116,361
|
|
||||
Interest expense - net
|
|
(7,220
|
)
|
|
(6,921
|
)
|
|
(20,877
|
)
|
|
(36,131
|
)
|
||||
Other income (expense)
|
|
1,626
|
|
|
318
|
|
|
(306
|
)
|
|
(243
|
)
|
||||
Income tax expense
|
|
19,450
|
|
|
14,916
|
|
|
44,621
|
|
|
28,509
|
|
||||
Income including noncontrolling interest
|
|
32,889
|
|
|
26,666
|
|
|
75,927
|
|
|
51,478
|
|
||||
Net income attributable to noncontrolling interest
|
|
641
|
|
|
636
|
|
|
1,358
|
|
|
1,353
|
|
||||
Net income attributable to Central Garden & Pet Company
|
|
$
|
32,248
|
|
|
$
|
26,030
|
|
|
$
|
74,569
|
|
|
$
|
50,125
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
||||||||
Pet segment
|
|
$
|
6,794
|
|
|
6,700
|
|
|
$
|
18,798
|
|
|
$
|
16,120
|
|
|
Garden segment
|
|
1,651
|
|
|
1,542
|
|
|
4,686
|
|
|
4,586
|
|
||||
Corporate
|
|
2,585
|
|
|
2,842
|
|
|
7,890
|
|
|
8,580
|
|
||||
Total depreciation and amortization
|
|
$
|
11,030
|
|
|
$
|
11,084
|
|
|
$
|
31,374
|
|
|
$
|
29,286
|
|
|
|
June 24,
2017 |
|
June 25,
2016 |
|
September 24,
2016 |
||||||
Assets:
|
|
|
|
|
|
|
||||||
Pet segment
|
|
$
|
622,567
|
|
|
$
|
523,281
|
|
|
$
|
508,879
|
|
Garden segment
|
|
368,365
|
|
|
327,768
|
|
|
304,901
|
|
|||
Corporate
|
|
360,815
|
|
|
365,858
|
|
|
398,413
|
|
|||
Total assets
|
|
$
|
1,351,747
|
|
|
$
|
1,216,907
|
|
|
$
|
1,212,193
|
|
Goodwill (included in corporate assets above):
|
|
|
|
|
|
|
||||||
Pet segment
|
|
$
|
224,912
|
|
|
$
|
229,713
|
|
|
$
|
225,912
|
|
Garden segment
|
|
5,473
|
|
|
3,298
|
|
|
5,473
|
|
|||
Total goodwill
|
|
$
|
230,385
|
|
|
$
|
233,011
|
|
|
$
|
231,385
|
|
12.
|
Consolidating Condensed Financial Information of Guarantor Subsidiaries
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
|
||||||||||||||||||
|
|
Three Months Ended June 24, 2017
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
|
$
|
184,719
|
|
|
$
|
29,067
|
|
|
$
|
387,333
|
|
|
$
|
(26,527
|
)
|
|
$
|
574,592
|
|
Cost of goods sold and occupancy
|
|
142,533
|
|
|
20,636
|
|
|
252,678
|
|
|
(24,528
|
)
|
|
391,319
|
|
|||||
Gross profit
|
|
42,186
|
|
|
8,431
|
|
|
134,655
|
|
|
(1,999
|
)
|
|
183,273
|
|
|||||
Selling, general and administrative expenses
|
|
39,234
|
|
|
5,476
|
|
|
82,629
|
|
|
(1,999
|
)
|
|
125,340
|
|
|||||
Operating income
|
|
2,952
|
|
|
2,955
|
|
|
52,026
|
|
|
—
|
|
|
57,933
|
|
|||||
Interest expense
|
|
(7,213
|
)
|
|
(54
|
)
|
|
(6
|
)
|
|
—
|
|
|
(7,273
|
)
|
|||||
Interest income
|
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|||||
Other income
|
|
1,064
|
|
|
86
|
|
|
476
|
|
|
—
|
|
|
1,626
|
|
|||||
Income (loss) before taxes and equity in earnings of affiliates
|
|
(3,144
|
)
|
|
2,987
|
|
|
52,496
|
|
|
—
|
|
|
52,339
|
|
|||||
Income tax expense (benefit)
|
|
(1,178
|
)
|
|
1,096
|
|
|
19,532
|
|
|
—
|
|
|
19,450
|
|
|||||
Equity in earnings of affiliates
|
|
34,214
|
|
|
—
|
|
|
1,302
|
|
|
(35,516
|
)
|
|
—
|
|
|||||
Net income including noncontrolling interest
|
|
32,248
|
|
|
1,891
|
|
|
34,266
|
|
|
(35,516
|
)
|
|
32,889
|
|
|||||
Net income attributable to noncontrolling interest
|
|
—
|
|
|
641
|
|
|
—
|
|
|
—
|
|
|
641
|
|
|||||
Net income attributable to Central Garden & Pet Company
|
|
$
|
32,248
|
|
|
$
|
1,250
|
|
|
$
|
34,266
|
|
|
$
|
(35,516
|
)
|
|
$
|
32,248
|
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
|
||||||||||||||||||
|
|
Three Months Ended June 25, 2016
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
|
$
|
162,751
|
|
|
$
|
28,052
|
|
|
$
|
350,013
|
|
|
$
|
(26,272
|
)
|
|
$
|
514,544
|
|
Cost of goods sold and occupancy
|
|
128,517
|
|
|
18,274
|
|
|
228,343
|
|
|
(24,335
|
)
|
|
350,799
|
|
|||||
Gross profit
|
|
34,234
|
|
|
9,778
|
|
|
121,670
|
|
|
(1,937
|
)
|
|
163,745
|
|
|||||
Selling, general and administrative expenses
|
|
36,826
|
|
|
5,380
|
|
|
75,291
|
|
|
(1,937
|
)
|
|
115,560
|
|
|||||
Operating income (loss)
|
|
(2,592
|
)
|
|
4,398
|
|
|
46,379
|
|
|
—
|
|
|
48,185
|
|
|||||
Interest expense
|
|
(6,904
|
)
|
|
(53
|
)
|
|
(7
|
)
|
|
—
|
|
|
(6,964
|
)
|
|||||
Interest income
|
|
42
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|||||
Other income (expense)
|
|
(108
|
)
|
|
(146
|
)
|
|
572
|
|
|
—
|
|
|
318
|
|
|||||
Income (loss) before taxes and equity in earnings of affiliates
|
|
(9,562
|
)
|
|
4,200
|
|
|
46,944
|
|
|
—
|
|
|
41,582
|
|
|||||
Income tax expense (benefit)
|
|
(3,517
|
)
|
|
1,552
|
|
|
16,881
|
|
|
—
|
|
|
14,916
|
|
|||||
Equity in earnings of affiliates
|
|
32,075
|
|
|
—
|
|
|
2,148
|
|
|
(34,223
|
)
|
|
—
|
|
|||||
Net income including noncontrolling interest
|
|
26,030
|
|
|
2,648
|
|
|
32,211
|
|
|
(34,223
|
)
|
|
26,666
|
|
|||||
Net income attributable to noncontrolling interest
|
|
—
|
|
|
636
|
|
|
—
|
|
|
—
|
|
|
636
|
|
|||||
Net income attributable to Central Garden & Pet Company
|
|
$
|
26,030
|
|
|
$
|
2,012
|
|
|
$
|
32,211
|
|
|
$
|
(34,223
|
)
|
|
$
|
26,030
|
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
|
|
|
||||||||||||||||
|
|
Nine Months Ended June 24, 2017
|
|
|
||||||||||||||||
|
|
(in thousands)
|
|
|
||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
|
$
|
531,028
|
|
|
$
|
69,183
|
|
|
$
|
1,032,444
|
|
|
$
|
(68,641
|
)
|
|
$
|
1,564,014
|
|
Cost of goods sold and occupancy
|
|
409,262
|
|
|
52,442
|
|
|
678,798
|
|
|
(63,968
|
)
|
|
1,076,534
|
|
|||||
Gross profit
|
|
121,766
|
|
|
16,741
|
|
|
353,646
|
|
|
(4,673
|
)
|
|
487,480
|
|
|||||
Selling, general and administrative expenses
|
|
114,546
|
|
|
14,014
|
|
|
221,862
|
|
|
(4,673
|
)
|
|
345,749
|
|
|||||
Operating income
|
|
7,220
|
|
|
2,727
|
|
|
131,784
|
|
|
—
|
|
|
141,731
|
|
|||||
Interest expense
|
|
(20,823
|
)
|
|
(136
|
)
|
|
(17
|
)
|
|
—
|
|
|
(20,976
|
)
|
|||||
Interest income
|
|
98
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|||||
Other income (expense)
|
|
(276
|
)
|
|
(301
|
)
|
|
271
|
|
|
—
|
|
|
(306
|
)
|
|||||
Income (loss) before taxes and equity in earnings of affiliates
|
|
(13,781
|
)
|
|
2,291
|
|
|
132,038
|
|
|
—
|
|
|
120,548
|
|
|||||
Income tax expense (benefit)
|
|
(5,088
|
)
|
|
1,133
|
|
|
48,576
|
|
|
—
|
|
|
44,621
|
|
|||||
Equity in earnings of affiliates
|
|
83,262
|
|
|
—
|
|
|
875
|
|
|
(84,137
|
)
|
|
—
|
|
|||||
Net income including noncontrolling interest
|
|
74,569
|
|
|
1,158
|
|
|
84,337
|
|
|
(84,137
|
)
|
|
75,927
|
|
|||||
Net income attributable to noncontrolling interest
|
|
—
|
|
|
1,358
|
|
|
—
|
|
|
—
|
|
|
1,358
|
|
|||||
Net income (loss) attributable to Central Garden & Pet Company
|
|
$
|
74,569
|
|
|
$
|
(200
|
)
|
|
$
|
84,337
|
|
|
$
|
(84,137
|
)
|
|
$
|
74,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
|
|
|
||||||||||||||||
|
|
Nine Months Ended June 25, 2016
|
|
|
||||||||||||||||
|
|
(in thousands)
|
|
|
||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
|
$
|
456,568
|
|
|
$
|
73,324
|
|
|
$
|
953,925
|
|
|
$
|
(68,212
|
)
|
|
$
|
1,415,605
|
|
Cost of goods sold and occupancy
|
|
360,745
|
|
|
54,319
|
|
|
631,251
|
|
|
(63,580
|
)
|
|
982,735
|
|
|||||
Gross profit
|
|
95,823
|
|
|
19,005
|
|
|
322,674
|
|
|
(4,632
|
)
|
|
432,870
|
|
|||||
Selling, general and administrative expenses
|
|
102,990
|
|
|
14,283
|
|
|
203,868
|
|
|
(4,632
|
)
|
|
316,509
|
|
|||||
Operating income (loss)
|
|
(7,167
|
)
|
|
4,722
|
|
|
118,806
|
|
|
—
|
|
|
116,361
|
|
|||||
Interest expense
|
|
(36,065
|
)
|
|
(133
|
)
|
|
(7
|
)
|
|
—
|
|
|
(36,205
|
)
|
|||||
Interest income
|
|
71
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
74
|
|
|||||
Other income (expense)
|
|
(286
|
)
|
|
(409
|
)
|
|
452
|
|
|
—
|
|
|
(243
|
)
|
|||||
Income (loss) before taxes and equity in earnings of affiliates
|
|
(43,447
|
)
|
|
4,183
|
|
|
119,251
|
|
|
—
|
|
|
79,987
|
|
|||||
Income tax expense (benefit)
|
|
(15,437
|
)
|
|
1,749
|
|
|
42,197
|
|
|
—
|
|
|
28,509
|
|
|||||
Equity in earnings of affiliates
|
|
78,135
|
|
|
—
|
|
|
1,971
|
|
|
(80,106
|
)
|
|
—
|
|
|||||
Net income including noncontrolling interest
|
|
50,125
|
|
|
2,434
|
|
|
79,025
|
|
|
(80,106
|
)
|
|
51,478
|
|
|||||
Net income attributable to noncontrolling interest
|
|
—
|
|
|
1,353
|
|
|
—
|
|
|
—
|
|
|
1,353
|
|
|||||
Net income attributable to Central Garden & Pet Company
|
|
$
|
50,125
|
|
|
$
|
1,081
|
|
|
$
|
79,025
|
|
|
$
|
(80,106
|
)
|
|
$
|
50,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||
|
|
Three Months Ended June 24, 2017
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
|
$
|
32,248
|
|
|
$
|
1,891
|
|
|
$
|
34,266
|
|
|
$
|
(35,516
|
)
|
|
$
|
32,889
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
|
172
|
|
|
116
|
|
|
19
|
|
|
(135
|
)
|
|
172
|
|
|||||
Total comprehensive income
|
|
32,420
|
|
|
2,007
|
|
|
34,285
|
|
|
(35,651
|
)
|
|
33,061
|
|
|||||
Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
641
|
|
|
—
|
|
|
—
|
|
|
641
|
|
|||||
Comprehensive income (loss) attributable to Central Garden & Pet Company
|
|
$
|
32,420
|
|
|
$
|
1,366
|
|
|
$
|
34,285
|
|
|
$
|
(35,651
|
)
|
|
$
|
32,420
|
|
|
|
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||||
|
|
Three Months Ended June 25, 2016
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
26,030
|
|
|
$
|
2,648
|
|
|
$
|
32,211
|
|
|
$
|
(34,223
|
)
|
|
$
|
26,666
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
|
(277
|
)
|
|
(233
|
)
|
|
25
|
|
|
208
|
|
|
(277
|
)
|
|||||
Total comprehensive income
|
|
25,753
|
|
|
2,415
|
|
|
32,236
|
|
|
(34,015
|
)
|
|
26,389
|
|
|||||
Comprehensive loss attributable to noncontrolling interests
|
|
—
|
|
|
636
|
|
|
—
|
|
|
—
|
|
|
636
|
|
|||||
Comprehensive income (loss) attributable to Central Garden & Pet Company
|
|
$
|
25,753
|
|
|
$
|
1,779
|
|
|
$
|
32,236
|
|
|
$
|
(34,015
|
)
|
|
$
|
25,753
|
|
|
|
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||||||||
|
|
Nine Months Ended June 24, 2017
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
74,569
|
|
|
$
|
1,158
|
|
|
$
|
84,337
|
|
|
$
|
(84,137
|
)
|
|
$
|
75,927
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
|
(193
|
)
|
|
(144
|
)
|
|
(11
|
)
|
|
155
|
|
|
(193
|
)
|
|||||
Total comprehensive income (loss)
|
|
74,376
|
|
|
1,014
|
|
|
84,326
|
|
|
(83,982
|
)
|
|
75,734
|
|
|||||
Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
1,358
|
|
|
—
|
|
|
—
|
|
|
1,358
|
|
|||||
Comprehensive income (loss) attributable to Central Garden & Pet Company
|
|
$
|
74,376
|
|
|
$
|
(344
|
)
|
|
$
|
84,326
|
|
|
$
|
(83,982
|
)
|
|
$
|
74,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||||||||
|
|
Nine Months Ended June 25, 2016
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
50,125
|
|
|
$
|
2,434
|
|
|
$
|
79,025
|
|
|
$
|
(80,106
|
)
|
|
$
|
51,478
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
|
(969
|
)
|
|
(773
|
)
|
|
32
|
|
|
741
|
|
|
(969
|
)
|
|||||
Total comprehensive income (loss)
|
|
49,156
|
|
|
1,661
|
|
|
79,057
|
|
|
(79,365
|
)
|
|
50,509
|
|
|||||
Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
1,353
|
|
|
—
|
|
|
—
|
|
|
1,353
|
|
|||||
Comprehensive income (loss) attributable to Central Garden & Pet Company
|
|
$
|
49,156
|
|
|
$
|
308
|
|
|
$
|
79,057
|
|
|
$
|
(79,365
|
)
|
|
$
|
49,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATING CONDENSED BALANCE SHEET
|
||||||||||||||||||
|
|
June 24, 2017
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
929
|
|
|
$
|
10,118
|
|
|
$
|
3,426
|
|
|
$
|
—
|
|
|
$
|
14,473
|
|
Restricted cash
|
|
10,999
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,999
|
|
|||||
Accounts receivable, net
|
|
92,703
|
|
|
9,842
|
|
|
176,959
|
|
|
—
|
|
|
279,504
|
|
|||||
Inventories
|
|
127,307
|
|
|
10,567
|
|
|
245,575
|
|
|
—
|
|
|
383,449
|
|
|||||
Prepaid expenses and other
|
|
19,670
|
|
|
1,059
|
|
|
31,235
|
|
|
—
|
|
|
51,964
|
|
|||||
Total current assets
|
|
251,608
|
|
|
31,586
|
|
|
457,195
|
|
|
—
|
|
|
740,389
|
|
|||||
Land, buildings, improvements and equipment, net
|
|
37,823
|
|
|
4,065
|
|
|
135,896
|
|
|
—
|
|
|
177,784
|
|
|||||
Goodwill
|
|
15,058
|
|
|
—
|
|
|
215,327
|
|
|
—
|
|
|
230,385
|
|
|||||
Other long-term assets
|
|
34,273
|
|
|
3,200
|
|
|
167,858
|
|
|
(2,142
|
)
|
|
203,189
|
|
|||||
Intercompany receivable
|
|
36,783
|
|
|
—
|
|
|
601,317
|
|
|
(638,100
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
1,369,307
|
|
|
—
|
|
|
—
|
|
|
(1,369,307
|
)
|
|
—
|
|
|||||
Total
|
|
$
|
1,744,852
|
|
|
$
|
38,851
|
|
|
$
|
1,577,593
|
|
|
$
|
(2,009,549
|
)
|
|
$
|
1,351,747
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
34,562
|
|
|
$
|
7,832
|
|
|
$
|
64,014
|
|
|
$
|
—
|
|
|
$
|
106,408
|
|
Accrued expenses
|
|
57,235
|
|
|
2,632
|
|
|
52,224
|
|
|
—
|
|
|
112,091
|
|
|||||
Current portion of long-term debt
|
|
—
|
|
|
—
|
|
|
375
|
|
|
—
|
|
|
375
|
|
|||||
Total current liabilities
|
|
91,797
|
|
|
10,464
|
|
|
116,613
|
|
|
—
|
|
|
218,874
|
|
|||||
Long-term debt
|
|
434,962
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
435,074
|
|
|||||
Intercompany payable
|
|
588,378
|
|
|
49,722
|
|
|
|
|
|
(638,100
|
)
|
|
—
|
|
|||||
Losses in excess of investment in subsidiaries
|
|
—
|
|
|
—
|
|
|
19,327
|
|
|
(19,327
|
)
|
|
—
|
|
|||||
Other long-term obligations
|
|
2,620
|
|
|
—
|
|
|
68,314
|
|
|
(2,142
|
)
|
|
68,792
|
|
|||||
Total Central Garden & Pet shareholders’ equity (deficit)
|
|
627,095
|
|
|
(23,247
|
)
|
|
1,373,227
|
|
|
(1,349,980
|
)
|
|
627,095
|
|
|||||
Noncontrolling interest
|
|
—
|
|
|
1,912
|
|
|
—
|
|
|
—
|
|
|
1,912
|
|
|||||
Total equity (deficit)
|
|
627,095
|
|
|
(21,335
|
)
|
|
1,373,227
|
|
|
(1,349,980
|
)
|
|
629,007
|
|
|||||
Total
|
|
$
|
1,744,852
|
|
|
$
|
38,851
|
|
|
$
|
1,577,593
|
|
|
$
|
(2,009,549
|
)
|
|
$
|
1,351,747
|
|
|
|
CONSOLIDATING CONDENSED BALANCE SHEET
|
||||||||||||||||||
|
|
June 25, 2016
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
30,477
|
|
|
$
|
8,675
|
|
|
$
|
848
|
|
|
$
|
—
|
|
|
$
|
40,000
|
|
Restricted cash
|
|
12,029
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,029
|
|
|||||
Accounts receivable, net
|
|
74,162
|
|
|
9,395
|
|
|
158,397
|
|
|
—
|
|
|
241,954
|
|
|||||
Inventories
|
|
105,440
|
|
|
9,037
|
|
|
247,336
|
|
|
—
|
|
|
361,813
|
|
|||||
Prepaid expenses and other
|
|
20,543
|
|
|
1,039
|
|
|
23,493
|
|
|
—
|
|
|
45,075
|
|
|||||
Total current assets
|
|
242,651
|
|
|
28,146
|
|
|
430,074
|
|
|
—
|
|
|
700,871
|
|
|||||
Land, buildings, improvements and equipment, net
|
|
43,475
|
|
|
3,877
|
|
|
112,078
|
|
|
—
|
|
|
159,430
|
|
|||||
Goodwill
|
|
18,858
|
|
|
—
|
|
|
214,153
|
|
|
—
|
|
|
233,011
|
|
|||||
Other long-term assets
|
|
37,139
|
|
|
3,294
|
|
|
84,702
|
|
|
(1,540
|
)
|
|
123,595
|
|
|||||
Intercompany receivable
|
|
31,005
|
|
|
—
|
|
|
478,780
|
|
|
(509,785
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
1,130,148
|
|
|
—
|
|
|
—
|
|
|
(1,130,148
|
)
|
|
—
|
|
|||||
Total
|
|
$
|
1,503,276
|
|
|
$
|
35,317
|
|
|
$
|
1,319,787
|
|
|
$
|
(1,641,473
|
)
|
|
$
|
1,216,907
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
26,818
|
|
|
$
|
6,210
|
|
|
$
|
63,878
|
|
|
$
|
—
|
|
|
$
|
96,906
|
|
Accrued expenses
|
|
48,981
|
|
|
2,290
|
|
|
51,682
|
|
|
—
|
|
|
102,953
|
|
|||||
Current portion of long-term debt
|
|
154
|
|
|
—
|
|
|
376
|
|
|
—
|
|
|
530
|
|
|||||
Total current liabilities
|
|
75,953
|
|
|
8,500
|
|
|
115,936
|
|
|
—
|
|
|
200,389
|
|
|||||
Long-term debt
|
|
394,164
|
|
|
—
|
|
|
439
|
|
|
—
|
|
|
394,603
|
|
|||||
Intercompany payable
|
|
468,039
|
|
|
41,746
|
|
|
—
|
|
|
(509,785
|
)
|
|
—
|
|
|||||
Losses in excess of investment in subsidiaries
|
|
—
|
|
|
—
|
|
|
14,780
|
|
|
(14,780
|
)
|
|
—
|
|
|||||
Other long-term obligations
|
|
9,036
|
|
|
—
|
|
|
56,479
|
|
|
(1,540
|
)
|
|
63,975
|
|
|||||
Total Central Garden & Pet shareholders’ equity (deficit)
|
|
556,084
|
|
|
(16,785
|
)
|
|
1,132,153
|
|
|
(1,115,368
|
)
|
|
556,084
|
|
|||||
Noncontrolling interest
|
|
—
|
|
|
1,856
|
|
|
—
|
|
|
—
|
|
|
1,856
|
|
|||||
Total equity (deficit)
|
|
556,084
|
|
|
(14,929
|
)
|
|
1,132,153
|
|
|
(1,115,368
|
)
|
|
557,940
|
|
|||||
Total
|
|
$
|
1,503,276
|
|
|
$
|
35,317
|
|
|
$
|
1,319,787
|
|
|
$
|
(1,641,473
|
)
|
|
$
|
1,216,907
|
|
|
|
CONSOLIDATING CONDENSED BALANCE SHEET
|
||||||||||||||||||
|
|
September 24, 2016
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
82,158
|
|
|
$
|
9,695
|
|
|
$
|
1,129
|
|
|
$
|
—
|
|
|
$
|
92,982
|
|
Restricted cash
|
|
10,910
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,910
|
|
|||||
Accounts receivable, net
|
|
59,617
|
|
|
5,156
|
|
|
136,378
|
|
|
—
|
|
|
201,151
|
|
|||||
Inventories
|
|
113,317
|
|
|
11,752
|
|
|
236,935
|
|
|
—
|
|
|
362,004
|
|
|||||
Prepaid expenses and other assets
|
|
20,978
|
|
|
817
|
|
|
25,964
|
|
|
—
|
|
|
47,759
|
|
|||||
Total current assets
|
|
286,980
|
|
|
27,420
|
|
|
400,406
|
|
|
—
|
|
|
714,806
|
|
|||||
Land, buildings, improvements and equipment, net
|
|
41,083
|
|
|
3,897
|
|
|
113,244
|
|
|
—
|
|
|
158,224
|
|
|||||
Goodwill
|
|
15,058
|
|
|
—
|
|
|
216,327
|
|
|
—
|
|
|
231,385
|
|
|||||
Other long-term assets
|
|
30,555
|
|
|
2,980
|
|
|
85,701
|
|
|
(11,458
|
)
|
|
107,778
|
|
|||||
Intercompany receivable
|
|
32,778
|
|
|
—
|
|
|
567,374
|
|
|
(600,152
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
|
1,176,990
|
|
|
—
|
|
|
—
|
|
|
(1,176,990
|
)
|
|
—
|
|
|||||
Total
|
|
$
|
1,583,444
|
|
|
$
|
34,297
|
|
|
$
|
1,383,052
|
|
|
$
|
(1,788,600
|
)
|
|
$
|
1,212,193
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
|
$
|
34,096
|
|
|
$
|
3,953
|
|
|
$
|
64,364
|
|
|
$
|
—
|
|
|
$
|
102,413
|
|
Accrued expenses and other liabilities
|
|
47,862
|
|
|
1,410
|
|
|
50,071
|
|
|
—
|
|
|
99,343
|
|
|||||
Current portion of long term debt
|
|
88
|
|
|
—
|
|
|
375
|
|
|
—
|
|
|
463
|
|
|||||
Total current liabilities
|
|
82,046
|
|
|
5,363
|
|
|
114,810
|
|
|
—
|
|
|
202,219
|
|
|||||
Long-term debt
|
|
394,364
|
|
|
—
|
|
|
442
|
|
|
—
|
|
|
394,806
|
|
|||||
Intercompany payable
|
|
553,964
|
|
|
46,188
|
|
|
—
|
|
|
(600,152
|
)
|
|
—
|
|
|||||
Losses in excess of investment in subsidiaries
|
|
—
|
|
|
—
|
|
|
16,126
|
|
|
(16,126
|
)
|
|
—
|
|
|||||
Other long-term obligations
|
|
56
|
|
|
—
|
|
|
71,983
|
|
|
(11,458
|
)
|
|
60,581
|
|
|||||
Total Central Garden & Pet shareholders’ equity (deficit)
|
|
553,014
|
|
|
(18,827
|
)
|
|
1,179,691
|
|
|
(1,160,864
|
)
|
|
553,014
|
|
|||||
Noncontrolling interest
|
|
—
|
|
|
1,573
|
|
|
—
|
|
|
—
|
|
|
1,573
|
|
|||||
Total equity (deficit)
|
|
553,014
|
|
|
(17,254
|
)
|
|
1,179,691
|
|
|
(1,160,864
|
)
|
|
554,587
|
|
|||||
Total
|
|
$
|
1,583,444
|
|
|
$
|
34,297
|
|
|
$
|
1,383,052
|
|
|
$
|
(1,788,600
|
)
|
|
$
|
1,212,193
|
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
|
||||||||||||||||||
|
|
Nine Months Ended June 24, 2017
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-
Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided (used) by operating activities
|
|
$
|
(14,968
|
)
|
|
$
|
2,482
|
|
|
$
|
59,210
|
|
|
$
|
(4,076
|
)
|
|
$
|
42,648
|
|
Additions to property and equipment
|
|
(6,811
|
)
|
|
(557
|
)
|
|
(29,719
|
)
|
|
|
|
|
(37,087
|
)
|
|||||
Payments to acquire companies, net of cash acquired
|
|
(106,821
|
)
|
|
—
|
|
|
|
|
|
—
|
|
|
(106,821
|
)
|
|||||
Proceeds from sale of business, facility and other assets
|
|
—
|
|
|
—
|
|
|
8,301
|
|
|
—
|
|
|
8,301
|
|
|||||
Change in restricted cash and cash equivalents
|
|
(89
|
)
|
|
—
|
|
|
|
|
|
—
|
|
|
(89
|
)
|
|||||
Investment in equity method investee
|
|
(11,495
|
)
|
|
—
|
|
|
|
|
—
|
|
|
(11,495
|
)
|
||||||
Other investing activities
|
|
(2,735
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,735
|
)
|
|||||
Intercompany investing activities
|
|
(4,005
|
)
|
|
—
|
|
|
(33,943
|
)
|
|
37,948
|
|
|
—
|
|
|||||
Net cash used by investing activities
|
|
(131,956
|
)
|
|
(557
|
)
|
|
(55,361
|
)
|
|
37,948
|
|
|
(149,926
|
)
|
|||||
Repayments on revolving line of credit
|
|
(416,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(416,000
|
)
|
|||||
Borrowings under revolving line of credit
|
|
456,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
456,000
|
|
|||||
Repayments under long-term debt
|
|
(88
|
)
|
|
—
|
|
|
(368
|
)
|
|
—
|
|
|
(456
|
)
|
|||||
Excess tax benefits from stock-based awards
|
|
17,205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,205
|
|
|||||
Repurchase of common stock
|
|
(25,654
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,654
|
)
|
|||||
Distribution to parent
|
|
|
|
|
(4,076
|
)
|
|
—
|
|
|
4,076
|
|
|
—
|
|
|||||
Distribution to noncontrolling interest
|
|
|
|
|
(1,019
|
)
|
|
—
|
|
|
—
|
|
|
(1,019
|
)
|
|||||
Payment of contingent consideration liability
|
|
|
|
|
—
|
|
|
(1,222
|
)
|
|
—
|
|
|
(1,222
|
)
|
|||||
Intercompany financing activities
|
|
34,414
|
|
|
3,534
|
|
|
|
|
|
(37,948
|
)
|
|
—
|
|
|||||
Net cash provided (used) by financing activities
|
|
65,877
|
|
|
(1,561
|
)
|
|
(1,590
|
)
|
|
(33,872
|
)
|
|
28,854
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
|
(182
|
)
|
|
59
|
|
|
38
|
|
|
—
|
|
|
(85
|
)
|
|||||
Net decrease in cash and cash equivalents
|
|
(81,229
|
)
|
|
423
|
|
|
2,297
|
|
|
—
|
|
|
(78,509
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
|
82,158
|
|
|
9,695
|
|
|
1,129
|
|
|
—
|
|
|
92,982
|
|
|||||
Cash and cash equivalents at end of period
|
|
$
|
929
|
|
|
$
|
10,118
|
|
|
$
|
3,426
|
|
|
$
|
—
|
|
|
$
|
14,473
|
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
|
||||||||||||||||||
|
|
Nine Months Ended June 25, 2016
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash used by operating activities
|
|
$
|
4,127
|
|
|
$
|
6,082
|
|
|
$
|
84,258
|
|
|
$
|
(4,884
|
)
|
|
$
|
89,583
|
|
Additions to property, plant and equipment
|
|
(1,876
|
)
|
|
(577
|
)
|
|
(17,033
|
)
|
|
—
|
|
|
(19,486
|
)
|
|||||
Payments to acquire companies, net of cash acquired
|
|
(60,916
|
)
|
|
—
|
|
|
(7,985
|
)
|
|
—
|
|
|
(68,901
|
)
|
|||||
Change in restricted cash and cash equivalents
|
|
1,129
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,129
|
|
|||||
Proceeds from sale of plant assets
|
|
|
|
|
|
3,899
|
|
|
|
|
3,899
|
|
||||||||
Other investing activities
|
|
(550
|
)
|
|
|
|
|
|
|
|
|
|
|
(550
|
)
|
|||||
Intercompany investing activities
|
|
1,689
|
|
|
—
|
|
|
(63,778
|
)
|
|
62,089
|
|
|
—
|
|
|||||
Net cash provided (used) by investing activities
|
|
(60,524
|
)
|
|
(577
|
)
|
|
(84,897
|
)
|
|
62,089
|
|
|
(83,909
|
)
|
|||||
Repayments of long-term debt
|
|
(400,208
|
)
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(400,230
|
)
|
|||||
Borrowings under revolving line of credit
|
|
419,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
419,000
|
|
|||||
Repayments under revolving line of credit
|
|
(419,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(419,000
|
)
|
|||||
Issuance of long-term debt
|
|
400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|||||
Excess tax benefits from stock-based awards
|
|
4,726
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,726
|
|
|||||
Repurchase of common stock
|
|
(9,429
|
)
|
|
|
|
|
—
|
|
|
|
|
|
(9,429
|
)
|
|||||
Proceeds from issuance of common stock
|
|
280
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
280
|
|
|||||
Distribution to parent
|
|
—
|
|
|
(4,884
|
)
|
|
—
|
|
|
4,884
|
|
|
—
|
|
|||||
Distribution to noncontrolling interest
|
|
|
|
|
(592
|
)
|
|
|
|
|
|
|
|
(592
|
)
|
|||||
Payment of financing costs
|
|
(7,560
|
)
|
|
—
|
|
|
|
|
|
|
|
|
(7,560
|
)
|
|||||
Intercompany financing activities
|
|
63,786
|
|
|
(1,697
|
)
|
|
—
|
|
|
(62,089
|
)
|
|
—
|
|
|||||
Net cash provided (used) by financing activities
|
|
51,595
|
|
|
(7,173
|
)
|
|
(22
|
)
|
|
(57,205
|
)
|
|
(12,805
|
)
|
|||||
Effect of exchange rates on cash
|
|
(1,001
|
)
|
|
321
|
|
|
227
|
|
|
—
|
|
|
(453
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
|
(5,803
|
)
|
|
(1,347
|
)
|
|
(434
|
)
|
|
—
|
|
|
(7,584
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
|
36,280
|
|
|
10,022
|
|
|
1,282
|
|
|
—
|
|
|
47,584
|
|
|||||
Cash and cash equivalents at end of year
|
|
$
|
30,477
|
|
|
$
|
8,675
|
|
|
$
|
848
|
|
|
$
|
—
|
|
|
$
|
40,000
|
|
13.
|
Contingencies
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Net sales increased
$60.1 million
, or
11.7%
, to
$574.6 million
from the prior year quarter. Pet segment sales increased
$26.2 million
, and Garden segment sales increased
$33.9 million
.
|
•
|
Organic sales improved
8%
;
15%
in Garden and
2%
in Pet.
|
•
|
Gross margin increased
10
basis points to
31.9%
and gross profit increased
$19.5 million
.
|
•
|
Selling, general & administrative expense increased
$9.8 million
to
$125.3 million
, but decreased as a percentage of net sales as compared to the prior year quarter.
|
•
|
Operating income improved
$9.7 million
from the prior year quarter, to
$57.9 million
in the
third
quarter of fiscal
2017
.
|
•
|
Our net income in the
third
quarter of fiscal
2017
was
$32.2 million
, or
$0.62
per diluted share, compared to
$26.0 million
, or
$0.51
per diluted share, in the
third
quarter of fiscal
2016
.
|
•
|
Gains or losses on disposals of significant plant assets: we have excluded the impact of gains or losses on the disposal of facilities as these represent infrequent transactions that impact comparability between operating periods. We believe the adjustment of these gains or losses supplements the GAAP information with a measure that may be used to help assess the sustainability of our continuing operating performance.
|
•
|
Loss on early extinguishment of debt: we have excluded the charges associated with the refinancing of our 2018 Notes as the amount and frequency of such charges are not consistent and are significantly impacted by the timing and size of debt financing transactions.
|
•
|
Tax impact: the adjustment represents the impact of the tax effect of the pre-tax non-GAAP adjustments excluded from non-GAAP net income. The tax impact of the non-GAAP adjustments is calculated based on the consolidated effective tax rate on a GAAP basis, applied to the non-GAAP adjustments, unless the underlying item has a materially different tax treatment.
|
•
|
We have also provided organic net sales, a non-GAAP measure that excludes the impact of businesses purchased or exited in the prior 12 months, because we believe it permits investors to better understand the performance of our historical business without the impact of recent acquisitions or dispositions.
|
(1)
|
During the first quarter of fiscal 2017, we recorded a $2.0 million gain in our Garden segment from the sale of a distribution facility resulting from rationalizing our facilities to reduce excess capacity. This adjustment was recorded as part of selling, general and administrative costs in the condensed consolidated statements of operations.
|
(2)
|
During the first quarter of fiscal 2016, we redeemed our 2018 Notes and issued senior notes due November 2023. As a result of the redemption, we incurred incremental expenses of $14.3 million, comprised of a call premium payment of $8.3 million, a $2.7 million payment of overlapping interest expense for 30 days and a $3.3 million non-cash charge for the write off of unamortized deferred financing costs and discount related to the 2018 Notes. These amounts are included in interest expense in the condensed consolidated statements of operations for fiscal 2016.
|
(3)
|
During the third quarter of fiscal 2016, we recorded a $2.4 million gain in our Pet segment from the sale of a manufacturing plant resulting from rationalizing our facilities to reduce excess capacity.
|
Operating Income Reconciliation
|
|
GAAP to Non-GAAP Reconciliation
(in thousands) For the Nine Months Ended |
||||||
|
|
June 24, 2017
|
|
June 25, 2016
|
||||
GAAP operating income
|
|
$
|
141,731
|
|
|
$
|
116,361
|
|
Sale of distribution facility
|
(1) (3)
|
(2,050
|
)
|
|
$
|
(2,363
|
)
|
|
Non-GAAP operating income
|
|
$
|
139,681
|
|
|
$
|
113,998
|
|
GAAP operating margin
|
|
9.1
|
%
|
|
8.2
|
%
|
||
Non-GAAP operating margin
|
|
8.9
|
%
|
|
8.1
|
%
|
||
|
|
|
|
|
|
|
GAAP to Non-GAAP Reconciliation
(in thousands, except per share amounts) For the Nine Months Ended |
||||||
Net Income and Diluted Net Income Per Share Reconciliation
|
|
June 24, 2017
|
|
June 25, 2016
|
||||
GAAP net income (loss) attributable to Central Garden & Pet
|
|
$
|
74,569
|
|
|
$
|
50,125
|
|
Sale of distribution facility
|
(1) (3)
|
(2,050
|
)
|
|
(2,363
|
)
|
||
2018 notes redemption
|
(2)
|
—
|
|
|
14,339
|
|
||
Tax effects of non-GAAP adjustments
|
|
759
|
|
|
(4,268
|
)
|
||
Total net income (loss) impact from non-GAAP adjustments
|
|
(1,291
|
)
|
|
7,708
|
|
||
Non-GAAP net income attributable to Central Garden & Pet
|
|
$
|
73,278
|
|
|
$
|
57,833
|
|
GAAP diluted net income per share
|
|
$
|
1.44
|
|
|
$
|
0.99
|
|
Non-GAAP diluted net income per share
|
|
$
|
1.42
|
|
|
$
|
1.14
|
|
Shares used in GAAP diluted net earnings per share calculation
|
|
51,769
|
|
|
50,743
|
|
||
Shares used in non-GAAP diluted net earnings per share calculation
|
|
51,769
|
|
|
50,743
|
|
|
|
GAAP to Non-GAAP Reconciliation
(in millions) For the Three Months Ended June 24, 2017 |
||||||||||||
|
|
Consolidated
|
|
Pet Segment
|
||||||||||
|
|
|
|
Percentage change
|
|
|
|
Percentage change
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Reported net sales - Q3 FY17 (GAAP)
|
|
$
|
574.6
|
|
|
|
|
$
|
313.4
|
|
|
|
||
Reported net sales - Q3 FY16 (GAAP)
|
|
514.5
|
|
|
|
|
287.2
|
|
|
|
||||
Increase in net sales
|
|
60.1
|
|
|
11.7
|
%
|
|
26.2
|
|
|
9.1
|
%
|
||
Effect of acquisition and divestitures on increase in net sales
|
|
21.0
|
|
|
4.0
|
%
|
|
21.3
|
|
|
7.4
|
%
|
||
Increase in organic net sales - Q3 2017
|
|
$
|
39.1
|
|
|
7.6
|
%
|
|
$
|
4.9
|
|
|
1.7
|
%
|
|
|
GAAP to Non-GAAP Reconciliation
(in millions) For the Nine Months Ended June 24, 2017 |
||||||||||||||||||
|
|
Consolidated
|
|
Pet Segment
|
|
Garden Segment
|
||||||||||||||
|
|
|
|
Percent change
|
|
|
|
Percent change
|
|
|
|
Percent change
|
||||||||
Reported net sales - Q3 FY17 (GAAP)
|
|
$
|
1,564.0
|
|
|
|
|
$
|
915.9
|
|
|
|
|
648.1
|
|
|
|
|||
Reported net sales - Q3 FY16 (GAAP)
|
|
1,415.6
|
|
|
|
|
811.2
|
|
|
|
|
604.4
|
|
|
|
|||||
Increase in net sales
|
|
148.4
|
|
|
10.5
|
%
|
|
104.7
|
|
|
12.9
|
%
|
|
43.7
|
|
|
7.2
|
%
|
||
Effect of acquisition and divestitures on increase in net sales
|
|
75.5
|
|
|
5.3
|
%
|
|
81.0
|
|
|
10.0
|
%
|
|
(5.5
|
)
|
|
(1.0
|
)%
|
||
Increase in organic net sales
|
|
$
|
73.0
|
|
|
5.2
|
%
|
|
$
|
23.7
|
|
|
2.9
|
%
|
|
49.2
|
|
|
8.2
|
%
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number
of Shares
(or Units)
Purchased
|
|
|
|
Average
Price Paid
per Share
(or Units)
|
|
Total Number
of Shares
(or Units)
Purchased as
Part of Publicly
Announced Plans
or Programs
|
|
Maximum Number (or
Approximate Dollar Value)
of Shares
(or Units)
that May Yet Be Purchased
Under the Plans or
Programs (1)
|
||||||
March 26, 2017 - April 29, 2017
|
|
51,171
|
|
|
(2)
|
|
$
|
35.36
|
|
|
—
|
|
|
$
|
34,968,000
|
|
April 30, 2017 - May 27, 2017
|
|
1,700
|
|
|
(2)
|
|
$
|
33.07
|
|
|
—
|
|
|
$
|
34,968,000
|
|
May 28, 2017 - June 24, 2017
|
|
4,184
|
|
|
(2)
|
|
$
|
29.66
|
|
|
—
|
|
|
$
|
34,968,000
|
|
Total
|
|
57,055
|
|
|
|
|
$
|
34.87
|
|
|
—
|
|
|
$
|
34,968,000
|
|
(1)
|
During the third quarter of fiscal 2011, our Board of Directors authorized a $100 million share repurchase program. The program has no expiration date and expires when the amount authorized has been used or the Board withdraws its authorization. The repurchase of shares may be limited by certain financial covenants in our credit facility and indenture that restrict our ability to repurchase our stock.
|
(2)
|
Shares purchased during the period indicated represent withholding of a portion of shares to cover taxes in connection with the vesting of restricted stock.
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
|
CENTRAL GARDEN & PET COMPANY
|
|
Registrant
|
|
|
|
Dated: August 3, 2017
|
|
|
|
/s/ GEORGE C. ROETH
|
|
George C. Roeth
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
|
/s/ NICHOLAS LAHANAS
|
|
Nicholas Lahanas
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
1.
|
I have reviewed this report on Form 10-Q for the quarter ended
June 24, 2017
of Central Garden & Pet Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ GEORGE C. ROETH
|
|
George C. Roeth
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this report on Form 10-Q for the quarter ended
June 24, 2017
of Central Garden & Pet Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Nicholas Lahanas
|
|
Nicholas Lahanas
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
(1)
|
such Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in such Report presents, in all material respects, the financial condition and results of operations of Central Garden & Pet Company.
|
|
/s/ GEORGE C. ROETH
|
|
George C. Roeth
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
(1)
|
such Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in such Report presents, in all material respects, the financial condition and results of operations of Central Garden & Pet Company.
|
|
/s/ NICHOLAS LAHANAS
|
|
Nicholas Lahanas
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|