|
|
|
|
|
Delaware
|
|
001-37510
|
|
46-0552933
|
(State or Other Jurisdiction
of Incorporation)
|
|
(Commission
File Number)
|
|
(IRS Employer
Identification No.)
|
¨
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
|
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
Retirement and Separation Agreement, dated November 9, 2016, between Blue Buffalo Pet Products, Inc. and Kurt Schmidt.
|
|
|
|
99.1
|
|
Press Release issued by Blue Buffalo Pet Products, Inc. dated November 10, 2016.
|
|
|
|
BLUE BUFFALO PET PRODUCTS, INC.
|
||
|
|
|
By:
|
|
/s/ Lawrence Miller
|
Name:
|
|
Lawrence Miller
|
Title:
|
|
Senior Vice President, General Counsel and Secretary
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
Retirement and Separation Agreement, dated November 9, 2016, between Blue Buffalo Pet Products, Inc. and Kurt Schmidt.
|
|
|
|
99.1
|
|
Press Release issued by Blue Buffalo Pet Products, Inc. dated November 10, 2016.
|
•
|
Am able to read the language, and understand the meaning and effect, of this Release;
|
•
|
Have no physical or mental impairment of any kind that has interfered with my ability to read and understand the meaning of this Release or its terms, and that I am not acting under the influence of any medication, drug, or chemical of any type in entering into this Release;
|
•
|
Am specifically agreeing to the terms of the release contained in this Release because the Company has agreed to pay me the payments and benefits described in the Separation Agreement, which the Company has agreed to provide because of my agreement to accept it in full settlement of all possible claims I might have or ever had, and because of my execution of this Release;
|
•
|
Acknowledge that but for my execution of this Release, I would not be entitled to the payments and benefits described in paragraphs 2(b) or 3 of the Separation Agreement;
|
•
|
Understand that, by entering into this Release, I do not waive rights or claims under ADEA that may arise after the date I execute this Release;
|
•
|
Had or could have until twenty-one (21) days following my receipt of this Release (the “
Review Period
”) in which to review and consider this Release, and that if I execute this Release prior to the expiration of the Review Period, I have voluntarily and knowingly waived the remainder of the Review Period;
|
•
|
Was advised to consult with my attorney regarding the terms and effect of this Release; and
|
•
|
Have signed this Release knowingly and voluntarily.
|
•
|
Third Quarter Highlights
|
◦
|
Net sales of
$288 million
, up
11.0%
|
◦
|
Net income of
$21 million
, down
20.6%
; Adjusted Net Income of
$45 million
, up
32.3%
|
◦
|
Adjusted EBITDA of $74 million, up
21.4%
|
◦
|
Diluted EPS of
$0.11
, down
21.1%
; Adjusted Diluted EPS of $0.22, up
31.5%
|
•
|
2016 Outlook
|
◦
|
Net sales between $1,140 million and $1,150 million
|
◦
|
Raising Adjusted Diluted EPS outlook to $0.78 to $0.79
|
•
|
CEO Succession
|
◦
|
Billy Bishop appointed CEO effective January 1, 2017
|
◦
|
Kurt Schmidt retiring with transition through 2017
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales
|
$
|
287,996
|
|
|
$
|
259,437
|
|
|
$
|
854,682
|
|
|
$
|
762,209
|
|
Cost of sales
|
154,787
|
|
|
151,152
|
|
|
470,938
|
|
|
454,595
|
|
||||
Gross profit
|
133,209
|
|
|
108,285
|
|
|
383,744
|
|
|
307,614
|
|
||||
Selling, general and administrative expenses
|
65,493
|
|
|
58,664
|
|
|
190,849
|
|
|
165,723
|
|
||||
Provision for legal settlement
|
32,000
|
|
|
—
|
|
|
32,000
|
|
|
—
|
|
||||
Operating income
|
35,716
|
|
|
49,621
|
|
|
160,895
|
|
|
141,891
|
|
||||
Interest expense, net
|
3,629
|
|
|
3,722
|
|
|
10,872
|
|
|
11,097
|
|
||||
Income before income taxes
|
32,087
|
|
|
45,899
|
|
|
150,023
|
|
|
130,794
|
|
||||
Provision for income taxes
|
10,605
|
|
|
18,833
|
|
|
54,584
|
|
|
51,044
|
|
||||
Net income
|
$
|
21,482
|
|
|
$
|
27,066
|
|
|
$
|
95,439
|
|
|
$
|
79,750
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per common share
|
$
|
0.11
|
|
|
$
|
0.14
|
|
|
$
|
0.49
|
|
|
$
|
0.41
|
|
Diluted net income per common share
|
$
|
0.11
|
|
|
$
|
0.14
|
|
|
$
|
0.48
|
|
|
$
|
0.40
|
|
Basic weighted average shares
|
196,445,684
|
|
|
196,062,348
|
|
|
196,311,529
|
|
|
195,852,404
|
|
||||
Diluted weighted average shares
|
199,452,308
|
|
|
198,254,808
|
|
|
199,290,017
|
|
|
198,028,543
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
316,362
|
|
|
$
|
224,253
|
|
Receivables, net
|
92,398
|
|
|
80,103
|
|
||
Inventories
|
75,400
|
|
|
83,482
|
|
||
Prepaid expenses and other current assets
|
6,515
|
|
|
4,492
|
|
||
Total current assets
|
490,675
|
|
|
392,330
|
|
||
|
|
|
|
||||
Restricted cash
|
781
|
|
|
473
|
|
||
Property, plant and equipment, net
|
126,282
|
|
|
115,160
|
|
||
Deferred income taxes
|
1,696
|
|
|
3,907
|
|
||
Deferred debt issuance costs, net
|
104
|
|
|
196
|
|
||
Other assets
|
517
|
|
|
480
|
|
||
Total assets
|
$
|
620,055
|
|
|
$
|
512,546
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS
’
EQUITY (DEFICIT)
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
3,960
|
|
|
$
|
3,960
|
|
Accounts payable
|
35,478
|
|
|
31,428
|
|
||
Other current liabilities
|
72,394
|
|
|
70,459
|
|
||
Total current liabilities
|
111,832
|
|
|
105,847
|
|
||
|
|
|
|
||||
Long-term debt
|
380,167
|
|
|
383,137
|
|
||
Deferred income taxes
|
4,117
|
|
|
3,268
|
|
||
Other long-term liabilities
|
14,291
|
|
|
11,013
|
|
||
Total liabilities
|
510,407
|
|
|
503,265
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
Stockholders
’
equity (deficit):
|
|
|
|
||||
Preferred stock; $0.01 par value; 150,000,000 shares authorized; none issued or outstanding at September 30, 2016 and December 31, 2015
|
—
|
|
|
—
|
|
||
Common stock, voting; $0.01 par value; 1,500,000,000 shares authorized; 196,515,280 and 196,216,596 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
|
1,965
|
|
|
1,962
|
|
||
Additional paid-in capital
|
69,752
|
|
|
64,899
|
|
||
Retained earnings (accumulated deficit)
|
37,890
|
|
|
(57,549
|
)
|
||
Accumulated other comprehensive income (loss)
|
41
|
|
|
(31
|
)
|
||
Total stockholders
’
equity
|
109,648
|
|
|
9,281
|
|
||
Total liabilities and stockholders
’
equity
|
$
|
620,055
|
|
|
$
|
512,546
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
95,439
|
|
|
$
|
79,750
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
6,766
|
|
|
5,981
|
|
||
Amortization of debt issuance costs
|
91
|
|
|
91
|
|
||
Stock-based compensation
|
3,051
|
|
|
2,935
|
|
||
Deferred compensation
|
—
|
|
|
19
|
|
||
(Gain) loss on disposal of fixed assets
|
(2
|
)
|
|
69
|
|
||
Deferred income taxes
|
3,061
|
|
|
(1,790
|
)
|
||
Tax benefit from exercise of stock options
|
—
|
|
|
(1,551
|
)
|
||
Provision for legal settlement
|
32,000
|
|
|
—
|
|
||
Payment of class action legal settlement
|
(32,000
|
)
|
|
—
|
|
||
Effect of changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(12,282
|
)
|
|
2,178
|
|
||
Inventories
|
8,257
|
|
|
(8,282
|
)
|
||
Prepaid expenses and other assets
|
(2,066
|
)
|
|
(3
|
)
|
||
Accounts payable
|
4,055
|
|
|
4,387
|
|
||
Other liabilities
|
5,158
|
|
|
10,263
|
|
||
Net cash provided by operating activities
|
111,528
|
|
|
94,047
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(17,901
|
)
|
|
(5,374
|
)
|
||
Restricted cash
|
(308
|
)
|
|
—
|
|
||
Proceeds from the sale of fixed assets
|
15
|
|
|
—
|
|
||
Net cash used in investing activities
|
(18,194
|
)
|
|
(5,374
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Principal payments on long-term debt
|
(2,970
|
)
|
|
(2,970
|
)
|
||
Proceeds from exercise of stock options
|
1,805
|
|
|
1,910
|
|
||
Tax benefit from exercise of stock options
|
—
|
|
|
1,551
|
|
||
Net cash (used in) provided by financing activities
|
(1,165
|
)
|
|
491
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(60
|
)
|
|
—
|
|
||
Net increase in cash and cash equivalents
|
92,109
|
|
|
89,164
|
|
||
Cash and cash equivalents at beginning of period
|
224,253
|
|
|
95,788
|
|
||
Cash and cash equivalents at end of period
|
$
|
316,362
|
|
|
$
|
184,952
|
|
|
|
Three Months Ended September 30, 2016
|
|||||||||||||||||||||||||||||||||||||
|
|
Gross Profit
|
|
% of Sales
|
|
SG&A
|
|
% of Sales
|
|
Operating Income
|
|
% of Sales
|
|
Income Taxes
|
|
% of Sales
|
|
Net Income
|
|
% of Sales
|
|
Diluted EPS
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
As reported (GAAP)
|
|
$
|
133.2
|
|
|
46.3
|
%
|
|
$
|
65.5
|
|
|
22.7
|
%
|
|
$
|
35.7
|
|
|
12.4
|
%
|
|
$
|
10.6
|
|
|
3.7
|
%
|
|
$
|
21.5
|
|
|
7.5
|
%
|
|
$
|
0.11
|
|
Litigation expenses (a)
|
|
—
|
|
|
|
|
2.1
|
|
|
0.7
|
%
|
|
2.1
|
|
|
0.7
|
%
|
|
0.8
|
|
|
0.3
|
%
|
|
1.3
|
|
|
0.4
|
%
|
|
0.01
|
|
|||||||
Public offering costs (b)
|
|
—
|
|
|
|
|
1.2
|
|
|
0.4
|
%
|
|
1.2
|
|
|
0.4
|
%
|
|
(0.3
|
)
|
|
(0.1
|
)%
|
|
1.5
|
|
|
0.5
|
%
|
|
0.01
|
|
|||||||
Provision for legal settlement (c)
|
|
—
|
|
|
|
|
—
|
|
|
|
|
32.0
|
|
|
11.1
|
%
|
|
11.6
|
|
|
4.0
|
%
|
|
20.4
|
|
|
7.1
|
%
|
|
0.10
|
|
||||||||
As adjusted
|
|
$
|
133.2
|
|
|
46.3
|
%
|
|
$
|
62.2
|
|
|
21.6
|
%
|
|
$
|
71.0
|
|
|
24.6
|
%
|
|
$
|
22.6
|
|
|
7.9
|
%
|
|
$
|
44.7
|
|
|
15.5
|
%
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Three Months Ended September 30, 2015
|
|||||||||||||||||||||||||||||||||||||
|
|
Gross Profit
|
|
% of Sales
|
|
SG&A
|
|
% of Sales
|
|
Operating Income
|
|
% of Sales
|
|
Income Taxes
|
|
% of Sales
|
|
Net Income
|
|
% of Sales
|
|
Diluted EPS
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
As reported (GAAP)
|
|
$
|
108.3
|
|
|
41.7
|
%
|
|
$
|
58.7
|
|
|
22.6
|
%
|
|
$
|
49.6
|
|
|
19.1
|
%
|
|
$
|
18.8
|
|
|
7.3
|
%
|
|
$
|
27.1
|
|
|
10.4
|
%
|
|
$
|
0.14
|
|
Litigation expenses (a)
|
|
—
|
|
|
|
|
1.7
|
|
|
0.7
|
%
|
|
1.7
|
|
|
0.7
|
%
|
|
0.6
|
|
|
0.2
|
%
|
|
1.1
|
|
|
0.4
|
%
|
|
0.01
|
|
|||||||
Initial public offering costs (d)
|
|
—
|
|
|
|
|
6.4
|
|
|
2.5
|
%
|
|
6.4
|
|
|
2.5
|
%
|
|
0.7
|
|
|
0.3
|
%
|
|
5.7
|
|
|
2.2
|
%
|
|
0.03
|
|
|||||||
As adjusted
|
|
$
|
108.3
|
|
|
41.7
|
%
|
|
$
|
50.6
|
|
|
19.5
|
%
|
|
$
|
57.7
|
|
|
22.2
|
%
|
|
$
|
20.2
|
|
|
7.8
|
%
|
|
$
|
33.8
|
|
|
13.0
|
%
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Nine Months Ended September 30, 2016
|
|||||||||||||||||||||||||||||||||||||
|
|
Gross Profit
|
|
% of Sales
|
|
SG&A
|
|
% of Sales
|
|
Operating Income
|
|
% of Sales
|
|
Income Taxes
|
|
% of Sales
|
|
Net Income
|
|
% of Sales
|
|
Diluted EPS
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
As reported (GAAP)
|
|
$
|
383.7
|
|
|
44.9
|
%
|
|
$
|
190.8
|
|
|
22.3
|
%
|
|
$
|
160.9
|
|
|
18.8
|
%
|
|
$
|
54.6
|
|
|
6.4
|
%
|
|
$
|
95.4
|
|
|
11.2
|
%
|
|
$
|
0.48
|
|
Litigation expenses (a)
|
|
—
|
|
|
|
|
5.4
|
|
|
0.6
|
%
|
|
5.4
|
|
|
0.6
|
%
|
|
2.0
|
|
|
0.2
|
%
|
|
3.5
|
|
|
0.4
|
%
|
|
0.02
|
|
|||||||
Public offering costs (b)
|
|
—
|
|
|
|
|
2.1
|
|
|
0.2
|
%
|
|
2.1
|
|
|
0.2
|
%
|
|
—
|
|
|
—
|
%
|
|
2.1
|
|
|
0.2
|
%
|
|
0.01
|
|
|||||||
Provision for legal settlement (c)
|
|
—
|
|
|
|
|
—
|
|
|
|
|
32.0
|
|
|
3.7
|
%
|
|
11.6
|
|
|
1.4
|
%
|
|
20.4
|
|
|
2.4
|
%
|
|
0.10
|
|
||||||||
As adjusted
|
|
$
|
383.7
|
|
|
44.9
|
%
|
|
$
|
183.3
|
|
|
21.4
|
%
|
|
$
|
200.4
|
|
|
23.5
|
%
|
|
$
|
68.2
|
|
|
8.0
|
%
|
|
$
|
121.3
|
|
|
14.2
|
%
|
|
$
|
0.61
|
|
|
|
Nine Months Ended September 30, 2015
|
|||||||||||||||||||||||||||||||||||||
|
|
Gross Profit
|
|
% of Sales
|
|
SG&A
|
|
% of Sales
|
|
Operating Income
|
|
% of Sales
|
|
Income Taxes
|
|
% of Sales
|
|
Net Income
|
|
% of Sales
|
|
Diluted EPS
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
As reported (GAAP)
|
|
$
|
307.6
|
|
|
40.4
|
%
|
|
$
|
165.7
|
|
|
21.7
|
%
|
|
$
|
141.9
|
|
|
18.6
|
%
|
|
$
|
51.0
|
|
|
6.7
|
%
|
|
$
|
79.8
|
|
|
10.5
|
%
|
|
$
|
0.40
|
|
Litigation expenses (a)
|
|
—
|
|
|
|
|
7.2
|
|
|
0.9
|
%
|
|
7.2
|
|
|
0.9
|
%
|
|
2.7
|
|
|
0.4
|
%
|
|
4.4
|
|
|
0.6
|
%
|
|
0.02
|
|
|||||||
Initial public offering costs (d)
|
|
—
|
|
|
|
|
8.5
|
|
|
1.1
|
%
|
|
8.5
|
|
|
1.1
|
%
|
|
1.5
|
|
|
0.2
|
%
|
|
7.0
|
|
|
0.9
|
%
|
|
0.04
|
|
|||||||
As adjusted
|
|
$
|
307.6
|
|
|
40.4
|
%
|
|
$
|
150.0
|
|
|
19.7
|
%
|
|
$
|
157.6
|
|
|
20.7
|
%
|
|
$
|
55.3
|
|
|
7.3
|
%
|
|
$
|
91.2
|
|
|
12.0
|
%
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
* Amounts may not be additive due to rounding.
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
(a) Represents costs primarily related to the litigation with Nestlé Purina PetCare Company.
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
(b) Represents costs incurred for our public offerings.
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
(c) Represents a provision related to the Settlement Agreement entered into in November 2016.
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
(d) Represents costs incurred for our initial public offering.
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||
Net income
|
|
$
|
21.5
|
|
|
$
|
27.1
|
|
|
$
|
95.4
|
|
|
$
|
79.8
|
|
Interest expense, net
|
|
3.6
|
|
|
3.7
|
|
|
10.9
|
|
|
11.1
|
|
||||
Provision for income taxes
|
|
10.6
|
|
|
18.8
|
|
|
54.6
|
|
|
51.0
|
|
||||
Depreciation and amortization
|
|
2.3
|
|
|
2.1
|
|
|
6.8
|
|
|
6.0
|
|
||||
EBITDA (a)
|
|
38.0
|
|
|
51.7
|
|
|
167.7
|
|
|
147.9
|
|
||||
Litigation expenses (b)
|
|
2.1
|
|
|
1.7
|
|
|
5.4
|
|
|
7.2
|
|
||||
Public offering costs (c)
|
|
1.2
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
||||
Initial public offering costs (d)
|
|
—
|
|
|
6.4
|
|
|
—
|
|
|
8.5
|
|
||||
Provision for legal settlement (e)
|
|
32.0
|
|
|
—
|
|
|
32.0
|
|
|
—
|
|
||||
Stock-based compensation (f)
|
|
1.0
|
|
|
1.4
|
|
|
3.1
|
|
|
2.3
|
|
||||
Adjusted EBITDA
|
|
$
|
74.3
|
|
|
$
|
61.2
|
|
|
$
|
210.2
|
|
|
$
|
165.9
|
|
|
|
|
|
|
|
|
|
|
||||||||
* Amounts may not be additive due to rounding.
|
|
|
|
|
||||||||||||
(a) EBITDA represents net income plus interest expense, net, provision for income taxes and depreciation and amortization.
|
||||||||||||||||
(b) Represents costs primarily related to the litigation with Nestlé Purina PetCare Company.
|
||||||||||||||||
(c) Represents costs incurred for our public offerings.
|
||||||||||||||||
(d) Represents costs incurred for our initial public offering.
|
||||||||||||||||
(e) Represents a provision related to the Settlement Agreement entered into in November 2016.
|
||||||||||||||||
(f) Represents non-cash, stock-based compensation expense.
|