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ý
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ANNUAL REPORT PURSUANT TO 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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(IRS Employer Identification Number)
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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
Class A Common Stock
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Nasdaq
Nasdaq
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Large Accelerated Filer
¨
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Accelerated Filer
ý
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Non-Accelerated Filer
¨
(Do not check if a smaller reporting company)
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Smaller Reporting Company
¨
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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the recent transition to a new CEO, and our dependence upon him and our other key executives;
|
•
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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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•
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|
•
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Net sales for fiscal
2016
increased
$178.3 million
, or
10.8%
, to
$1,829.0 million
. Our Pet segment sales increased
20.9%
, and our Garden segment sales declined 1.2%.
|
•
|
Gross profit for fiscal
2016
increased
$65.0 million
, or 13.3%, to
$553.1 million
from
$488.1 million
in fiscal
2015
. Gross margin increased
60
basis points in fiscal
2016
to
30.2%
, from
29.6%
in
2015
.
|
•
|
Our operating income increased
$37.9 million
, or
41.5%
, to
$129.4 million
in fiscal
2016
, and increased as a percentage of net sales to
7.1%
from
5.5%
. Non-GAAP operating income increased $30.1 million, or 30.5%.
|
•
|
Net income was
$44.5 million
, or
$0.87
per share on a fully diluted basis, compared to net income in fiscal
2015
of
$32.0 million
, or
$0.64
per share on a fully diluted basis. Non-GAAP net income increased to
$64.4 million
, or
$1.26
per share, in fiscal
2016
from
$36.6 million
, or
$0.74
per share, in fiscal
2015
.
|
•
|
Our net cash provided by operating activities was
$151.4 million
in fiscal
2016
, compared to
$87.4 million
in fiscal
2015
.
|
•
|
Market Leadership Positions Built on a Strong Brand Portfolio
. We are one of the leaders in the U.S. pet supplies market and in the U.S. consumer lawn and garden supplies market. We have a diversified portfolio of brands, many of which we believe are among the leading brands in their respective U.S. market categories. The majority of our brands have been marketed and sold for more than 25 years.
|
•
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History of Innovative New Products and Customer Service
. We continuously seek to introduce new products, both as complementary extensions of existing product lines and as new product categories. Over the last three years, we have received a number of awards for innovation, customer service and marketing. For innovation in 2016, the Pet segment received awards at both Global Pet Expo and Super Zoo in the reptile category for Zilla Turtle Trunk and in the aquatics category for Aqueon NeoGlow aquariums. Aqueon's OptiBright won Pet Product News Editor's Choice award and both Aqueon Jukebox 5 aquarium kit and Herptile Habitat Accessories for Zilla Turtle Trunk won the Pet Business Industry Recognition Award. Also in 2016, we won Best in Show at Global Pet for the the small animal category for Kaytee Critter Trail LED. In 2015, we received best new aquatic product at Global Pet Expo 2015 for the Aqueon Jukebox and a Product of the Year award
s
in 2014 for the Adams Flea and Tick Home Spray. For customer service in 2016, we received Lowe's Lawn & Garden Supplier of the Year award. Also in 2016, at the Wal*Mart Lawn & Garden Supplier Summit, Central was recognized for both e-commerce and collaboration.
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•
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Strong Relationships with Retailers
. We have developed strong relationships with major and independent retailers, as well as e-commerce retailers, through product innovation, premium brands, broad product offerings, private label programs, proprietary sales and logistics capabilities and a high level of customer service. Major retailers value the efficiency of dealing with suppliers with national scope and strong brands. Our ability to meet their unique needs for packaging and point of sale displays provides us with a competitive advantage. Independent retailers value our high level of customer service and broad array of premium branded products. We believe these strengths have made us one of the largest pet supplies vendors to PetSmart, PETCO and Wal*Mart and among the largest lawn and garden supplies vendors to Wal*Mart, Home Depot and Lowe’s, as well as a leading supplier to independent pet and garden supplies retailers in the United States.
|
•
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Favorable Long-Term Industry Characteristics
. We believe the U.S. pet supplies market is expected to grow over the long-term due to favorable demographic and leisure trends. The key demographics bolstering our markets are the growth rates in the number of children under 18 and the number of adults over age 55. Households with children tend to own more pets, and adults over 55 are more likely to be “empty nesters” that keep pets as companions and have more disposable income and leisure time. According to the 2015-2016 APPA National Pet Owners Survey, the number of U.S. pet owners in recent years has reached record highs, with 79.7 million households, or 65%, owning a pet.
|
•
|
Sales and Logistics Networks
. We are a leading supplier to independent specialty retailers for the pet and lawn and garden supplies markets through our sales and logistics networks. We believe our sales and logistics networks give us a significant competitive advantage over other suppliers. These networks provide us with key access to independent pet specialty retail stores and retail lawn and garden customers that require two-step distribution for our branded products facilitating:
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◦
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acquisition and maintenance of premium shelf placement;
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◦
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prompt product replenishment;
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◦
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customization of retailer programs;
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◦
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quick responses to changing customer and retailer preferences;
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◦
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rapid deployment and feedback for new products; and
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◦
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immediate exposure for new internally developed and acquired brands.
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•
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Balanced Organizational Change
. We have adopted a balanced approach to improving profitability through a focus on increasing sales and improving margins, providing superior customer service and innovative new products while improving our operations and reducing costs. We expect to continue this balanced approach in the future and to continue to focus on profit, our customers, and eliminating inefficiencies.
|
•
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Build Existing Brands
. With our broad product assortment, strong brand names, strong sell-through and innovative products and packaging, we believe we can further strengthen our relationships with existing and new retailers, as well as e-commerce retailers, to increase shelf space and sales. Under our master branding strategy, we have consolidated certain brands and expanded others. At the same time, we are developing private label programs for key retailers to complement our proprietary brands, strengthen our relationships with key retailers and increase sales and profits. We believe that the strength of our major customers provides us with a solid foundation for future growth. We intend to gain market share in the home centers, mass market, grocery, specialty pet store and independent channels. We intend to add new retailers through marketing and sales personnel dedicated to these channels, as well as our innovative product introductions and packaging. We will continue to focus on using our sales and logistics network to emphasize sales of our higher margin, proprietary brands and to use efficient supply chain capabilities that enable us to provide retailers with high service levels and consistent in-stock positions.
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•
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Continue New Product and Packaging Innovation
. We will continue to build and leverage the strength of our leading brand names by introducing innovative new products and packaging, extending existing product lines and entering new product categories. Our product strategy seeks to capitalize on fulfilling consumer needs, leveraging our strong brand names, utilizing our established customer relationships and continuing our history of product innovation.
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•
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Improve Profitability
. We believe there are opportunities to improve our gross and operating profits through increasing sales of our innovative branded products, acquiring new private label business and reducing and leveraging our existing infrastructure. Although we focused more on achieving gross margin gains in the past several years, we have shifted our focus to concentrate more on overall profitability than on any specific gross margin targets. We have undertaken a number of initiatives to lower the cost of production, and believe success in doing so will allow us to gain additional sales and increase our profitability.
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•
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Pursue Strategic Acquisitions
. We plan to continue to make selected strategic acquisitions of companies that complement our existing brands and product offerings. By leveraging our marketing, manufacturing and sales and logistics capabilities, we believe we can increase the sales and improve the operating efficiencies of the companies we acquire. We generally seek target companies with high quality and innovative product offerings, an experienced management team and historical and projected organic earnings growth.
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•
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Reduce Our Investment In Working Capital
. We believe there are opportunities to reduce our investment in working capital over the long term by focusing on specific balance sheet metrics. In particular, we believe that the improvement in our fill rates as a result of tighter linkage between our businesses and supply chain will enable us to reduce our investment in inventory without compromising the level of the service we provide to our customers. During fiscal
2014
, we reduced our inventory level from
$391.9 million
to
$326.4 million
while maintaining high fill rates. Our inventory level at the end of fiscal
2015
and fiscal
2016
increased to
$335.9 million
and
$362.0 million
, respectively, as a result of acquisitions. Our inventory turns have continued to improve as a result of our focus on our working capital.
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Category
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2016
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2015
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2014
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||||||
Other pet products
|
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$
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689.3
|
|
|
$
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594.7
|
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$
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774.2
|
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Garden controls and fertilizer products
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298.8
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286.3
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262.5
|
|
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|||
Wild bird feed
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183.6
|
|
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193.2
|
|
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202.1
|
|
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|||
Grass seed
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(1)
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(1)
|
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183.1
|
|
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|||
Other garden supplies
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331.3
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343.5
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182.5
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|||
Dog and cat products
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326.0
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|
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233.0
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(1)
|
|
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|||
Total
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$
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1,829.0
|
|
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$
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1,650.7
|
|
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$
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1,604.4
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•
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Nylabone is made in the United States and has a strong history of developing innovative products such as NutriDent
®
Edible Dental Brush Chews, as well as numerous other award-winning dog toys and healthy chews.
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•
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IMS is a manufacturer and supplier of a full-line of quality rawhide and other natural dog chews, and treats.
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•
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Four Paws Products include industry leaders in grooming and waste management products under the Wee Wee and Magic Coat Brands.
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•
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DMC, the industry-leading dog & cat bed company and supplier to many of the largest retailers for private label and branded bedding.
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•
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TFH Publications is a globally recognized publisher of both pet books and an aquatics magazine.
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•
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Breeder’s Choice, featuring the Pinnacle
®
and AvoDerm
®
brands, is a manufacturer of natural pet food and treats.
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•
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a sales organization operating by category and channel;
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•
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dedicated account teams servicing our largest customers;
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•
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a group of account managers focused on regional chains;
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•
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a geographic based group of territory managers dedicated to the independent retailer; and
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•
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a specialized group of account managers dedicated to the professional and equine markets.
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•
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dedicated sales forces represent our combined brand groups;
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•
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retail sales and logistics network, which provides in-store training and merchandising for our customers, especially during the prime spring and summer seasons;
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•
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dedicated account-managers and sales teams located near and dedicated to serve several of our largest customers; and
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•
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selected independent distributors who sell our brands.
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Name
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Age
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Position
|
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George C. Roeth
|
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55
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President & Chief Executive Officer
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William E. Brown
|
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75
|
|
|
Chairman of the Board
|
Howard Machek
|
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53
|
|
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Principal Financial Officer
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Michael A. Reed
|
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68
|
|
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Executive Vice President
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George Yuhas
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64
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General Counsel and Secretary
|
•
|
seasonality and adverse weather conditions;
|
•
|
fluctuations in prices of commodity grains and other input costs;
|
•
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operational problems;
|
•
|
shifts in demand for lawn and garden and pet products;
|
•
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changes in product mix, service levels, marketing and pricing by us and our competitors;
|
•
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the effect of acquisitions; and
|
•
|
economic stability and strength of our relationships with retailers.
|
•
|
develop and grow brands with leading market positions;
|
•
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grow market share;
|
•
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maintain and expand our relationships with key retailers;
|
•
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continually develop innovative new products that appeal to consumers;
|
•
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implement effective marketing and sales promotion programs;
|
•
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maintain strict quality standards;
|
•
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deliver products on a reliable basis at competitive prices; and
|
•
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effectively integrate acquired companies.
|
•
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failure of the acquired business to achieve expected results, as well as the potential impairment of the acquired assets if operating results decline after an acquisition;
|
•
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diversion of management’s attention;
|
•
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failure to retain key personnel of the acquired business;
|
•
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additional financing, if necessary and available, which could increase leverage and costs, dilute equity, or both;
|
•
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the potential negative effect on our financial statements from the increase in goodwill and other intangibles;
|
•
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the high cost and expenses of identifying, negotiating and completing acquisitions; and
|
•
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risks associated with unanticipated events or liabilities.
|
•
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make it more difficult for us to satisfy our obligations with respect to the terms of our indebtedness;
|
•
|
require us to dedicate a large portion of our cash flow to pay principal and interest on our indebtedness, which would reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other business activities;
|
•
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increase our vulnerability to adverse industry conditions, including unfavorable weather conditions or commodity price increases;
|
•
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limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
|
•
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restrict us from making strategic acquisitions or exploiting business opportunities;
|
•
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place us at a competitive disadvantage compared to competitors that have less debt; and
|
•
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limit our ability to borrow additional funds at reasonable rates, if at all.
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Location
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Type of Facility
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Owned or Leased
|
Phoenix, AZ (2)
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Sales and Logistics
|
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Owned
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Irwindale, CA
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Manufacturing
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Leased
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Sacramento, CA
|
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Sales and Logistics
|
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Leased
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Santa Fe Springs, CA
|
|
Sales and Logistics
|
|
Leased
|
Aurora, CO
|
|
Sales and Logistics
|
|
Leased
|
Tampa, FL
|
|
Sales and Logistics
|
|
Leased
|
Council Bluffs, IA
|
|
Manufacturing
|
|
Owned
|
Jamesburg, NJ
|
|
Sales and Logistics
|
|
Leased
|
Neptune City, NJ
|
|
Manufacturing
|
|
Owned
|
Neptune City, NJ
|
|
Manufacturing
|
|
Leased
|
South Brunswick, NJ (2)
|
|
Sales and Logistics
|
|
Leased
|
Wood-Ridge, NJ
|
|
Manufacturing
|
|
Leased
|
Fairfield, OH
|
|
Sales and Logistics
|
|
Leased
|
Cressona, PA
|
|
Manufacturing
|
|
Owned
|
Pottsville, PA
|
|
Sales and Logistics
|
|
Leased
|
Athens, TX
|
|
Manufacturing
|
|
Leased
|
Athens, TX
|
|
Sales and Logistics
|
|
Leased
|
Dallas, TX
|
|
Manufacturing
|
|
Owned
|
Dallas, TX
|
|
Sales and Logistics
|
|
Leased
|
Algona, WA
|
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Sales and Logistics
|
|
Leased
|
Chilton, WI
|
|
Manufacturing
|
|
Owned
|
Franklin, WI
|
|
Manufacturing
|
|
Leased
|
Franklin, WI
|
|
Manufacturing
|
|
Owned
|
Guelph, Ontario, Canada
|
|
Manufacturing
|
|
Leased
|
Guangzhou, China
|
|
Manufacturing
|
|
Leased
|
Shanghai, China
|
|
Sales and Logistics
|
|
Leased
|
Atlixco, Puebla, Mexico
|
|
Manufacturing
|
|
Owned
|
Dorking, Surrey, UK
|
|
Manufacturing
|
|
Leased
|
Taunton, Somerset, UK
|
|
Sales and Logistics
|
|
Leased
|
Location
|
|
Type of Facility
|
|
Owned or Leased
|
Cullman, AL
|
|
Sales and Logistics
|
|
Owned
|
Cullman, AL
|
|
Sales and Logistics
|
|
Leased
|
Roll, AZ
|
|
Manufacturing
|
|
Owned
|
Yuma, AZ
|
|
Manufacturing
|
|
Leased
|
Chico, CA
|
|
Manufacturing
|
|
Leased
|
El Centro, CA
|
|
Manufacturing
|
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Owned
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Ontario, CA
|
|
Sales and Logistics
|
|
Leased
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Longmont, CO
|
|
Manufacturing
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|
Owned
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Covington, GA
|
|
Sales and Logistics
|
|
Leased
|
Eatonton, GA
|
|
Manufacturing
|
|
Owned
|
Eatonton, GA
|
|
Sales and Logistics
|
|
Leased
|
Madison, GA
|
|
Manufacturing
|
|
Leased
|
Madison, GA (2)
|
|
Manufacturing
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Owned
|
Madison, GA
|
|
Sales and Logistics
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Owned
|
Madison, GA
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|
Sales and Logistics
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Leased
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Laurel, MD
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|
Sales and Logistics
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Leased
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Greenfield, MO (2)
|
|
Manufacturing
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Owned
|
Greenfield, MO
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|
Sales and Logistics
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Owned
|
Neosho, MO
|
|
Manufacturing
|
|
Owned
|
Charlotte, NC
|
|
Sales and Logistics
|
|
Leased
|
Sidney, NE
|
|
Manufacturing
|
|
Owned
|
Fairfield, OH
|
|
Sales and Logistics
|
|
Leased
|
Peebles, OH
|
|
Manufacturing
|
|
Owned
|
Peebles, OH
|
|
Manufacturing
|
|
Leased
|
Albany, OR
|
|
Manufacturing
|
|
Owned
|
Lebanon, OR
|
|
Manufacturing
|
|
Owned
|
Portland, OR
|
|
Sales and Logistics
|
|
Leased
|
Easton, PA
|
|
Sales and Logistics
|
|
Leased
|
Grand Prairie, TX
|
|
Sales and Logistics
|
|
Leased
|
Kenbridge, VA
|
|
Sales and Logistics
|
|
Leased
|
Northbend, WA
|
|
Manufacturing
|
|
Leased
|
|
|
Common Stock
|
|
Class A
Common Stock
|
||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
Fiscal 2015
|
|
|
|
|
||||||||||||
First Quarter
|
|
$
|
8.85
|
|
|
$
|
6.61
|
|
|
$
|
9.47
|
|
|
$
|
7.04
|
|
Second Quarter
|
|
10.41
|
|
|
8.45
|
|
|
11.24
|
|
|
9.10
|
|
||||
Third Quarter
|
|
10.61
|
|
|
9.26
|
|
|
11.51
|
|
|
9.67
|
|
||||
Fourth Quarter
|
|
16.43
|
|
|
9.19
|
|
|
17.00
|
|
|
10.08
|
|
||||
Fiscal 2016
|
|
|
|
|
||||||||||||
First Quarter
|
|
$
|
17.93
|
|
|
$
|
13.35
|
|
|
$
|
18.54
|
|
|
$
|
13.65
|
|
Second Quarter
|
|
16.21
|
|
|
12.05
|
|
|
16.14
|
|
|
12.02
|
|
||||
Third Quarter
|
|
22.54
|
|
|
14.82
|
|
|
21.29
|
|
|
14.80
|
|
||||
Fourth Quarter
|
|
27.62
|
|
|
21.21
|
|
|
25.51
|
|
|
20.12
|
|
|
|
9/24/2011
|
|
9/29/2012
|
|
9/28/2013
|
|
9/27/2014
|
|
9/26/2015
|
|
9/24/2016
|
||||||
Central Garden & Pet Company
|
|
100.00
|
|
|
177.73
|
|
|
105.08
|
|
|
114.95
|
|
|
244.99
|
|
|
379.22
|
|
NASDAQ Composite
|
|
100.00
|
|
|
126.98
|
|
|
156.30
|
|
|
188.77
|
|
|
198.31
|
|
|
227.35
|
|
Dow Jones US Nondurable Household Products
|
|
100.00
|
|
|
116.75
|
|
|
134.57
|
|
|
153.44
|
|
|
141.64
|
|
|
175.13
|
|
Period
|
|
Total Number
of Shares
(or Units)
Purchased
|
|
|
Average
Price Paid
per Share
(or Unit)
|
|
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)
|
||||||
June 26, 2016 - July 30, 2016
|
|
940
|
|
|
(2)
|
$
|
22.85
|
|
|
—
|
|
|
$
|
34,968,000
|
|
July 31, 2016 - August 27, 2016
|
|
2,634
|
|
|
(2)
|
24.01
|
|
|
—
|
|
|
34,968,000
|
|
||
August 28, 2016 - September 24, 2016
|
|
1,128
|
|
|
(2)
|
22.98
|
|
|
—
|
|
|
34,968,000
|
|
||
Total
|
|
4,702
|
|
|
|
$
|
23.53
|
|
|
—
|
|
|
$
|
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 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.
|
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
|
September 24, 2016
|
|
September 26, 2015
|
|
September 27, 2014
|
|
September 28, 2013
|
|
September 29, 2012
|
||||||||||
|
|
(in thousands, except per share amounts)
|
||||||||||||||||||
Statement of Operations Data (1):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
1,829,017
|
|
|
$
|
1,650,737
|
|
|
$
|
1,604,357
|
|
|
$
|
1,653,633
|
|
|
$
|
1,700,013
|
|
Cost of goods sold and occupancy
|
|
1,275,967
|
|
|
1,162,685
|
|
|
1,150,333
|
|
|
1,189,731
|
|
|
1,185,855
|
|
|||||
Gross profit
|
|
553,050
|
|
|
488,052
|
|
|
454,024
|
|
|
463,902
|
|
|
514,158
|
|
|||||
Selling, general and administrative expenses
|
|
421,864
|
|
|
389,345
|
|
|
397,811
|
|
|
416,038
|
|
|
439,737
|
|
|||||
Intangible asset and goodwill impairments (2)
|
|
1,828
|
|
|
7,272
|
|
|
—
|
|
|
7,709
|
|
|
—
|
|
|||||
Operating income (3)
|
|
129,358
|
|
|
91,435
|
|
|
56,213
|
|
|
40,155
|
|
|
74,421
|
|
|||||
Interest expense, net (4)
|
|
(42,707
|
)
|
|
(39,898
|
)
|
|
(42,750
|
)
|
|
(42,970
|
)
|
|
(40,170
|
)
|
|||||
Other income (expense) (5)
|
|
(17,013
|
)
|
|
13
|
|
|
403
|
|
|
(677
|
)
|
|
678
|
|
|||||
Income (loss) before income taxes and noncontrolling interest
|
|
69,638
|
|
|
51,550
|
|
|
13,866
|
|
|
(3,492
|
)
|
|
34,929
|
|
|||||
Income tax expense (benefit)
|
|
24,053
|
|
|
18,535
|
|
|
4,045
|
|
|
(2,592
|
)
|
|
12,816
|
|
|||||
Income (loss) including noncontrolling interest
|
|
45,585
|
|
|
33,015
|
|
|
9,821
|
|
|
(900
|
)
|
|
22,113
|
|
|||||
Net income attributable to noncontrolling interest
|
|
1,071
|
|
|
1,044
|
|
|
1,017
|
|
|
1,029
|
|
|
940
|
|
|||||
Net income (loss) attributable to Central Garden & Pet
|
|
$
|
44,514
|
|
|
$
|
31,971
|
|
|
$
|
8,804
|
|
|
$
|
(1,929
|
)
|
|
$
|
21,173
|
|
Net income (loss) per share attributable to Central Garden & Pet:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.91
|
|
|
$
|
0.66
|
|
|
$
|
0.18
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.44
|
|
Diluted
|
|
$
|
0.87
|
|
|
$
|
0.64
|
|
|
$
|
0.18
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.44
|
|
Weighted average shares used in the computation of income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
48,964
|
|
|
48,562
|
|
|
48,880
|
|
|
48,094
|
|
|
47,622
|
|
|||||
Diluted
|
|
51,075
|
|
|
49,638
|
|
|
49,397
|
|
|
48,094
|
|
|
48,374
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
|
$
|
40,001
|
|
|
$
|
33,703
|
|
|
$
|
35,781
|
|
|
$
|
32,968
|
|
|
$
|
30,425
|
|
Capital expenditures
|
|
$
|
27,622
|
|
|
$
|
22,030
|
|
|
$
|
17,173
|
|
|
$
|
25,172
|
|
|
$
|
39,592
|
|
Cash provided (used) by operating activities
|
|
$
|
151,426
|
|
|
$
|
87,449
|
|
|
$
|
126,467
|
|
|
$
|
(28,282
|
)
|
|
$
|
89,169
|
|
Cash used in investing activities
|
|
$
|
(91,195
|
)
|
|
$
|
(49,854
|
)
|
|
$
|
(35,181
|
)
|
|
$
|
(25,122
|
)
|
|
$
|
(44,477
|
)
|
Cash provided (used) by financing activities
|
|
$
|
(14,165
|
)
|
|
$
|
(68,370
|
)
|
|
$
|
(27,759
|
)
|
|
$
|
20,309
|
|
|
$
|
(8,575
|
)
|
Ratio of earnings to fixed charges (6)
|
|
2.6x
|
|
|
2.3x
|
|
|
1.3x
|
|
|
—
|
|
|
1.8x
|
|
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
|
September 24, 2016
|
|
September 26, 2015
|
|
September 27, 2014
|
|
September 28, 2013
|
|
September 29, 2012
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and short term investments
|
|
$
|
92,982
|
|
|
$
|
47,584
|
|
|
$
|
88,666
|
|
|
$
|
32,976
|
|
|
$
|
71,180
|
|
Working capital
|
|
512,587
|
|
|
476,916
|
|
|
498,454
|
|
|
490,325
|
|
|
445,299
|
|
|||||
Total assets (7)
|
|
1,212,193
|
|
|
1,131,597
|
|
|
1,143,702
|
|
|
1,155,906
|
|
|
1,143,103
|
|
|||||
Total debt (7)
|
|
395,269
|
|
|
396,982
|
|
|
445,214
|
|
|
467,333
|
|
|
443,370
|
|
|||||
Equity
|
|
554,587
|
|
|
506,380
|
|
|
486,453
|
|
|
470,024
|
|
|
464,883
|
|
(1)
|
Fiscal years 2013, 2014, 2015 and 2016 included 52 weeks. Fiscal year 2012 included 53 weeks.
|
(2)
|
During fiscal 2016, we recognized a non-cash charge of $1.8 million related to the impairment of a certain indefinite-lived intangible asset in our Pet segment. During fiscal 2015, we recognized a non-cash charge of $7.3 million related to the impairment of certain indefinite-lived intangible assets in our Pet segment. During fiscal 2013, we recognized a non-cash charge of $7.7 million related to impairment of goodwill in our Garden segment.
|
(3)
|
During fiscal 2013, we recognized an $11.2 million charge related to certain products introduced in fiscal 2013 in our Garden segment. During fiscal 2014, we recognized a $16.9 million charge related to these products. We recognized a $4.9 million gain in fiscal 2014 from the sale of manufacturing plant assets. During fiscal 2016 we recognized a $2.4 million gain in our Pet segment from the sale of a manufacturing plant.
|
(4)
|
During fiscal 2016 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 on our 2018 Notes, as a result of the redemption of our 2018 Notes and issuance of our 2023 Notes.
|
(5)
|
During fiscal 2016, we recognized a non-cash impairment charge of $16.6 million related to our investment in two joint ventures as a result of changes in marketplace conditions, which impacted expected cash flows and the recoverability of the investment.
|
(6)
|
For the purposes of determining the ratio of earnings to fixed charges, earnings consist of income (loss) before income taxes and noncontrolling interest and after eliminating undistributed earnings of equity method investees and before fixed charges. Fixed charges consist of interest expense incurred, the portion of rental expense under operating leases deemed by management to be representative of the interest factor and amortization of deferred financing costs. For the fiscal year ended September 28, 2013, earnings were insufficient to cover fixed charges by approximately $3.2 million, and the ratio is not meaningful.
|
(7)
|
In fiscal 2016, we retrospectively adopted new accounting guidance, which requires classification of debt issuance costs as a reduction of the carrying value of the debt. In doing so, $3.2 million, $5.0 million, $5.3 million and $6.4 million of deferred issuance costs have been reclassified from Other assets to Long-term debt in our Consolidated Balance Sheets for fiscal 2015, 2014, 2013 and 2012, respectively.
|
•
|
Net sales for fiscal
2016
increased
$178.3 million
, or
10.8%
, to
$1,829.0 million
. Our Pet segment sales increased
20.9%
, and our Garden segment sales declined 1.2%.
|
•
|
Gross profit for fiscal
2016
increased
$65.0 million
, or 13.3%, to
$553.1 million
from
$488.1 million
in fiscal
2015
. Gross margin increased
60
basis points in fiscal
2016
to
30.2%
, from
29.6%
in
2015
.
|
•
|
Our operating income increased
$37.9 million
, or
41.5%
, to
$129.4 million
in fiscal
2016
, and increased as a percentage of net sales to
7.1%
from
5.5%
. Non-GAAP operating income increased $30.1 million, or 30.5%.
|
•
|
Net income was
$44.5 million
, or
$0.87
per share on a fully diluted basis, compared to net income in fiscal
2015
of
$32.0 million
, or
$0.64
per share on a fully diluted basis. Non-GAAP net income increased to
$64.4 million
, or
$1.26
per share, in fiscal
2016
from
$36.6 million
, or
$0.74
per share, in fiscal
2015
.
|
•
|
Our net cash provided by operating activities was
$151.4 million
in fiscal
2016
, compared to
$87.4 million
in fiscal
2015
.
|
•
|
Asset impairment charges: we have excluded the impact of asset impairments on intangible assets and equity method investments as such non-cash amounts are inconsistent in amount and frequency and are impacted by the timing and/or size of acquisitions. We believe that the adjustment of these charges supplements the GAAP information with a measure that can be used to assess the sustainability of our operating performance.
|
•
|
Gains or losses on disposals of significant plant assets: we have excluded the impact of gains or losses on the disposal of significant plant assets as these represent infrequent transactions that impact the 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 assess the sustainability of our operating performance.
|
•
|
Other adjustments: we have excluded costs associated with the discontinuation of two new products in our Garden segment, including the write off of associated inventory, product return costs, promotional allowances and other costs related to the cessation of the products.
|
•
|
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 is not consistent and is significantly impacted by the timing and size of debt financing transactions.
|
•
|
Tax impact: 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.
|
•
|
Additionally, we have provided a comparison of our free cash flow, a non-GAAP measure which may be used as an assessment of liquidity and which we use internally to evaluate our operating performance. We define free cash flow as net cash provided by operations less capital expenditures. Free cash flow does not represent cash available only for discretionary expenditures, since we have mandatory debt service requirements and other contractual and non-discretionary expenditures.
|
(1)
|
During the fourth quarter of fiscal 2016 and fiscal 2015, we recognized non-cash impairment charges in our Pet segment of $1.8 million and $7.3 million, respectively, related to the impairment of intangible assets caused by increased competition and declining volume of sales. These impairments are included within Intangible asset impairment.
|
(2)
|
During 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. This adjustment was recorded as part of Selling, general and administrative costs.
|
(3)
|
During the first quarter of fiscal 2016, we redeemed our 2018 Notes and issued senior notes due November 2023. As a result of the bond 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 consolidated statements of operations.
|
(4)
|
During the fourth quarter of fiscal 2016, we recognized a non-cash impairment charge of $16.6 million related to our investment in two joint ventures as a result of changes in marketplace conditions, which impacted the expected cash flows and recoverability of the investment. The impairment is included within Other income (expense).
|
(5)
|
During fiscal 2014, we recorded a $16.9 million charge in our Garden segment (“garden charge”). During fiscal 2013, we introduced two new Garden products. Despite support from our retailers and substantial marketing spend, the new products did not sell through as expected, and we recorded an $11.2 million charge to operating income relating to the new products. Despite a concerted effort to improve consumer takeaway of the products through product, packaging and placement changes, as well as aggressive promotions, we continued to experience weak consumer sales of the products in their second season. Late in the third quarter of fiscal 2014, major retailers indicated that they would not support the products going forward. Consequently, we made the decision to discontinue the two products at the end of the 2014 garden season. As a result, we recorded a $16.9 million charge to operating income in the quarter ended June 28, 2014 to write off the remaining inventory of these products and to account for product returns, promotional allowances and other costs related to the discontinuance of the products. The $16.9 million charge to Operating income is composed of a $7.0 million reduction of revenue included within net sales and $9.9 million included within Cost of goods sold.
|
|
|
GAAP to Non-GAAP Reconciliation
(in thousands) For the Year Ended September |
||||||||||
Non-GAAP Adjustments
|
|
2016
|
|
2015
|
|
2014
|
||||||
Impairments of intangible assets
|
(1)
|
$
|
1,828
|
|
|
$
|
7,272
|
|
|
|
||
(Gain)/loss on disposal of plant assets
|
(2)
|
(2,363
|
)
|
|
|
|
(4,875
|
)
|
||||
Incremental expenses from note redemption and issuance
|
(3)
|
14,339
|
|
|
|
|
|
|||||
Impairment of equity method investments
|
(4)
|
16,572
|
|
|
|
|
|
|||||
Garden inventory innovation charge
|
(5)
|
|
|
|
|
16,908
|
|
|||||
Total non-GAAP adjustments
|
|
30,376
|
|
|
7,272
|
|
|
12,033
|
|
|||
Tax effects of non-GAAP adjustments
|
|
(10,492
|
)
|
|
(2,618
|
)
|
|
(4,352
|
)
|
|||
Total net income impact from non-GAAP adjustments
|
|
$
|
19,884
|
|
|
$
|
4,654
|
|
|
$
|
7,681
|
|
|
|
|
|
|
|
|
||||||
Net Sales Reconciliation
|
|
|
||||||||||
GAAP net sales
|
|
N/A
|
|
N/A
|
|
$
|
1,604,357
|
|
||||
Net sales impact from non-GAAP adjustments
|
(5)
|
|
|
|
|
7,035
|
|
|||||
Non-GAAP net sales
|
|
|
|
|
|
$
|
1,611,392
|
|
||||
|
|
|
|
|
|
|
||||||
Garden Segment Net Sales Reconciliation
|
|
|
||||||||||
GAAP Garden segment net sales
|
|
N/A
|
|
N/A
|
|
$
|
758,852
|
|
||||
Net sales impact from non-GAAP adjustments
|
(5)
|
|
|
|
|
7,035
|
|
|||||
Non-GAAP Garden segment net sales
|
|
|
|
|
|
$
|
765,887
|
|
Gross Profit Reconciliation
|
|
GAAP to Non-GAAP Reconciliation
(in thousands) For the Year Ended September |
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
GAAP gross profit
|
|
N/A
|
|
N/A
|
|
$
|
454,024
|
|
||||
Gross profit impact from non-GAAP adjustments
|
(5)
|
|
|
|
|
16,908
|
|
|||||
Non-GAAP gross profit
|
|
|
|
|
|
$
|
470,932
|
|
||||
|
|
|
|
|
|
|
||||||
SG&A Expense Reconciliation
|
|
|
||||||||||
GAAP SG&A expense
|
|
$
|
423,692
|
|
|
$
|
396,617
|
|
|
$
|
397,811
|
|
SG&A expense impact from non-GAAP adjustments
|
(1) (2)
|
535
|
|
|
(7,272
|
)
|
|
4,875
|
|
|||
Non-GAAP SG&A expense
|
|
$
|
424,227
|
|
|
$
|
389,345
|
|
|
$
|
402,686
|
|
GAAP SG&A expense as a percentage of net sales
|
|
23.1
|
%
|
|
24.0
|
%
|
|
24.8
|
%
|
|||
Non-GAAP SG&A expense as a percentage of net sales
|
|
23.2
|
%
|
|
23.6
|
%
|
|
25.0
|
%
|
|||
|
|
|
|
|
|
|
||||||
Operating Income Reconciliation
|
|
|
||||||||||
GAAP operating income
|
|
$
|
129,358
|
|
|
$
|
91,435
|
|
|
$
|
56,213
|
|
Total operating income impact from non-GAAP adjustments
|
(1)(2)(5)
|
(535
|
)
|
|
7,272
|
|
|
12,033
|
|
|||
Non-GAAP operating income
|
|
$
|
128,823
|
|
|
$
|
98,707
|
|
|
$
|
68,246
|
|
GAAP operating margin
|
|
7.1
|
%
|
|
5.5
|
%
|
|
3.5
|
%
|
|||
Non-GAAP operating margin
|
|
7.0
|
%
|
|
6.0
|
%
|
|
4.2
|
%
|
|||
|
|
|
|
|
|
|
||||||
Pet Segment Operating Income Reconciliation
|
|
|
||||||||||
GAAP Pet segment operating income
|
|
$
|
119,930
|
|
|
$
|
98,798
|
|
|
N/A
|
||
Total operating income impact from non-GAAP adjustments
|
(1)(2)
|
(535
|
)
|
|
7,272
|
|
|
|
||||
Non-GAAP Pet segment operating income
|
|
$
|
119,395
|
|
|
$
|
106,070
|
|
|
|
||
GAAP Pet segment operating margin
|
|
11.1
|
%
|
|
11.0
|
%
|
|
|
||||
Non-GAAP Pet operating margin
|
|
11.0
|
%
|
|
11.9
|
%
|
|
|
||||
|
|
|
|
|
|
|
||||||
Garden Segment Operating Income Reconciliation
|
|
|
||||||||||
GAAP Garden segment operating income
|
|
N/A
|
|
N/A
|
|
$
|
41,020
|
|
||||
Total operating income impact from non-GAAP adjustments
|
(5)
|
|
|
|
|
12,033
|
|
|||||
Non-GAAP Garden segment operating income
|
|
|
|
|
|
$
|
53,053
|
|
||||
GAAP Garden segment operating margin
|
|
|
|
|
|
5.4
|
%
|
|||||
Non-GAAP Garden segment operating margin
|
|
|
|
|
|
6.9
|
%
|
|||||
|
|
|
|
|
|
|
||||||
Interest Expense Reconciliation
|
|
|
||||||||||
GAAP interest expense
|
|
$
|
(42,847
|
)
|
|
N/A
|
|
N/A
|
||||
Impact from non-GAAP adjustment
|
(3)
|
14,339
|
|
|
|
|
|
|||||
Non-GAAP interest expense
|
|
$
|
(28,508
|
)
|
|
|
|
|
|
|
GAAP to Non-GAAP Reconciliation
(in thousands, except per share amounts) For the Year Ended September |
||||||||||
Other Income (Expense) Reconciliation
|
|
2016
|
|
2015
|
|
2014
|
||||||
GAAP other income (expense)
|
|
$
|
(17,013
|
)
|
|
N/A
|
|
N/A
|
||||
Impact from non-GAAP adjustment
|
(4)
|
16,572
|
|
|
|
|
|
|||||
Non-GAAP other income (expense)
|
|
$
|
(441
|
)
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||||
Net Income and Diluted Net Income Per Share Reconciliation
|
|
|
||||||||||
GAAP net income attributable to Central Garden & Pet
|
|
$
|
44,514
|
|
|
$
|
31,971
|
|
|
$
|
8,084
|
|
Total non-GAAP adjustments
|
(1)(2) (3)(4)
|
30,376
|
|
|
7,272
|
|
|
12,033
|
|
|||
Tax effects of non-GAAP adjustments
|
|
(10,492
|
)
|
|
(2,618
|
)
|
|
(4,352
|
)
|
|||
Total net income impact from non-GAAP adjustments
|
|
19,884
|
|
|
4,654
|
|
|
7,681
|
|
|||
Non-GAAP net income attributable to Central Garden & Pet
|
|
$
|
64,398
|
|
|
$
|
36,625
|
|
|
$
|
16,485
|
|
GAAP diluted net income per share
|
|
$
|
0.87
|
|
|
$
|
0.64
|
|
|
$
|
0.18
|
|
Non-GAAP diluted net income per share
|
|
$
|
1.26
|
|
|
$
|
0.74
|
|
|
$
|
0.33
|
|
Shares used in GAAP and non-GAAP diluted net earnings per share calculation
|
|
51,075
|
|
|
49,638
|
|
|
49,397
|
|
|
|
GAAP to Non-GAAP Reconciliation
(in millions) For the Year Ended |
|||||||||
Pet Segment
|
|
September 24, 2016
|
|
September 26, 2015
|
|
Percentage change
|
|||||
Reported net sales - GAAP
|
|
$
|
1,081.8
|
|
|
$
|
894.5
|
|
|
20.9
|
%
|
Effect of acquisitions
|
|
(133.3
|
)
|
|
—
|
|
|
—
|
|
||
Organic net sales
|
|
$
|
948.5
|
|
|
$
|
894.5
|
|
|
6
|
%
|
|
|
Fiscal Year Ended
|
|||||||
|
|
September 24, 2016
|
|
September 26, 2015
|
|
September 27, 2014
|
|||
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold and occupancy
|
|
69.8
|
|
|
70.4
|
|
|
71.7
|
|
Gross profit
|
|
30.2
|
|
|
29.6
|
|
|
28.3
|
|
Selling, general and administrative
|
|
23.1
|
|
|
23.6
|
|
|
24.8
|
|
Intangible asset impairment
|
|
—
|
%
|
|
0.5
|
%
|
|
—
|
|
Operating income
|
|
7.1
|
|
|
5.5
|
|
|
3.5
|
|
Interest expense, net
|
|
(2.3
|
)%
|
|
(2.4
|
)%
|
|
(2.7
|
)%
|
Other income (expense)
|
|
(0.9
|
)%
|
|
—
|
|
|
—
|
|
Income taxes
|
|
1.3
|
%
|
|
1.1
|
%
|
|
0.3
|
%
|
Noncontrolling interest
|
|
0.2
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Net income (loss)
|
|
2.4
|
%
|
|
1.9
|
%
|
|
0.5
|
%
|
Category
|
|
2016
|
|
2015
|
|
2014
|
|
||||||
Other pet products
|
|
$
|
689.3
|
|
|
$
|
594.7
|
|
|
$
|
774.2
|
|
|
Garden controls and fertilizer products
|
|
298.8
|
|
|
286.3
|
|
|
262.5
|
|
|
|||
Wild bird feed
|
|
183.6
|
|
|
193.2
|
|
|
202.1
|
|
|
|||
Grass seed
|
|
(1)
|
|
|
(1)
|
|
|
183.1
|
|
|
|||
Other garden supplies
|
|
331.3
|
|
|
343.5
|
|
|
182.5
|
|
|
|||
Dog and cat products
|
|
326.0
|
|
|
233.0
|
|
|
(1)
|
|
|
|||
Total
|
|
$
|
1,829.0
|
|
|
$
|
1,650.7
|
|
|
$
|
1,604.4
|
|
|
Category
|
|
2015
|
|
2014
|
|
2013
|
||||||
Other pet products
|
|
$
|
594.7
|
|
|
$
|
774.2
|
|
|
$
|
807.4
|
|
Garden controls and fertilizer products
|
|
286.3
|
|
|
262.5
|
|
|
274.9
|
|
|||
Wild bird feed
|
|
193.2
|
|
|
202.1
|
|
|
210.8
|
|
|||
Other garden supplies
|
|
343.5
|
|
|
182.5
|
|
|
183.5
|
|
|||
Grass seed
|
|
(1)
|
|
|
183.1
|
|
|
177.0
|
|
|||
Dog and cat products
|
|
233.0
|
|
|
(1)
|
|
|
(1)
|
|
|||
Total
|
|
$
|
1,650.7
|
|
|
$
|
1,604.4
|
|
|
$
|
1,653.6
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by operations
|
|
$
|
151,426
|
|
|
$
|
87,449
|
|
|
$
|
126,467
|
|
Less: capital expenditures
|
|
(27,622
|
)
|
|
(22,030
|
)
|
|
(17,173
|
)
|
|||
Free cash flow
|
|
$
|
123,804
|
|
|
$
|
65,419
|
|
|
$
|
109,294
|
|
Free cash flow as a percentage of net sales
|
|
6.8
|
%
|
|
4.0
|
%
|
|
6.8
|
%
|
Contractual Obligations
|
|
Fiscal
2017
|
|
Fiscal
2018
|
|
Fiscal
2019
|
|
Fiscal
2020
|
|
Fiscal
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||
Long-term debt, including current maturities (1)
|
|
$
|
0.5
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
400.0
|
|
|
$
|
400.9
|
|
Interest payment obligations (2)
|
|
24.5
|
|
|
24.5
|
|
|
24.5
|
|
|
24.5
|
|
|
24.5
|
|
|
52.1
|
|
|
174.6
|
|
|||||||
Operating leases
|
|
23.8
|
|
|
17.3
|
|
|
14.8
|
|
|
12.7
|
|
|
8.4
|
|
|
29.3
|
|
|
106.3
|
|
|||||||
Purchase commitments (3)
|
|
104.6
|
|
|
37.3
|
|
|
20.5
|
|
|
14.1
|
|
|
6.7
|
|
|
0.6
|
|
|
183.8
|
|
|||||||
Performance-based payments (4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
|
$
|
153.4
|
|
|
$
|
79.4
|
|
|
$
|
59.8
|
|
|
$
|
51.4
|
|
|
$
|
39.6
|
|
|
$
|
482.0
|
|
|
$
|
865.6
|
|
(1)
|
Excludes $2.5 million of outstanding letters of credit related to normal business transactions. Excludes the unamortized portion of deferred financing costs associated with the 2023 Notes of $5.6 million as of September 24, 2016, which is amortizable until November 2023 and is included in the carrying value of long-term debt. See
Note 10
to the consolidated financial statements for further discussion of long-term debt.
|
(2)
|
Estimated interest payments to be made on our 2023 Notes. See
Note 10
to the consolidated financial statements for description of interest rate terms.
|
(3)
|
Contracts for purchases of grains, grass seed and pet food ingredients, used primarily to mitigate risk associated with increases in market prices and commodity availability.
|
(4)
|
Possible performance-based payments associated with prior acquisitions of businesses are not included in the above table, because they are based on future performance of the businesses acquired, which is not yet known. Performance-based payments of approximately $2.0 million were made in 2016 related to B2E, acquired in fiscal 2013 and Hydro-Organics Wholesale, Inc., acquired in fiscal 2016. Potential performance-based periods extend through 2020 for B2E and 2025 for Hydro-Organics Wholesale, Inc. Payments are capped at $1.0 million per year related to Hydro-Organics Wholesale, Inc.
|
(a)
|
The following documents are filed as part of this report:
|
(i)
|
Consolidated Financial Statements of Central Garden & Pet Company are attached to this Form 10-K beginning on page F-1:
|
(2)
|
Exhibits:
|
CENTRAL GARDEN & PET COMPANY
|
||
|
|
|
|
By
|
/s/ George C. Roeth
|
|
|
George C. Roeth
|
|
|
Chief Executive Officer and President
|
|
|
|
|
|
Signature
|
|
Capacity
|
|
Date
|
/s/ George C. Roeth
|
|
Director, Chief Executive Officer and President (Principal Executive Officer)
|
|
December 1, 2016
|
George C. Roeth
|
|
|
||
|
|
|
||
/s/ Howard A. Machek
|
|
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
|
|
December 1, 2016
|
Howard A. Machek
|
|
|
||
|
|
|
|
|
/s/ William E. Brown
|
|
Chairman
|
|
December 1, 2016
|
William E. Brown
|
|
|
||
|
|
|
||
/s/ John B. Balousek
|
|
Director
|
|
December 1, 2016
|
John B. Balousek
|
|
|
||
|
|
|
||
/s/ David N. Chichester
|
|
Director
|
|
December 1, 2016
|
David N. Chichester
|
|
|
||
|
|
|
|
|
/s/ Thomas J. Colligan
|
|
Director
|
|
December 1, 2016
|
Thomas J. Colligan
|
|
|
||
|
|
|
||
/s/ Brooks M. Pennington, III
|
|
Director
|
|
December 1, 2016
|
Brooks M. Pennington, III
|
|
|
||
|
|
|
||
/s/ Alfred A. Piergallini
|
|
Director
|
|
December 1, 2016
|
Alfred A. Piergallini
|
|
|
||
|
|
|
||
/s/ John R. Ranelli
|
|
Director
|
|
December 1, 2016
|
John R. Ranelli
|
|
|
||
|
|
|
||
/s/ Mary Beth Springer
|
|
Director
|
|
December 1, 2016
|
Mary Beth Springer
|
|
|
Central Garden & Pet Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 24,
2016 |
|
September 26,
2015 |
||||
|
|
(in thousands)
|
||||||
ASSETS
|
|
|
||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
92,982
|
|
|
$
|
47,584
|
|
Restricted cash
|
|
10,910
|
|
|
13,157
|
|
||
Accounts receivable, net
|
|
201,151
|
|
|
207,402
|
|
||
Inventories
|
|
362,004
|
|
|
335,946
|
|
||
Prepaid expenses, deferred income taxes and other
|
|
47,759
|
|
|
49,731
|
|
||
Total current assets
|
|
714,806
|
|
|
653,820
|
|
||
Plant, property and equipment, net
|
|
158,224
|
|
|
162,809
|
|
||
Goodwill
|
|
231,385
|
|
|
209,089
|
|
||
Other intangible assets, net
|
|
95,865
|
|
|
75,460
|
|
||
Other assets
|
|
11,913
|
|
|
30,419
|
|
||
Total
|
|
$
|
1,212,193
|
|
|
$
|
1,131,597
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
102,413
|
|
|
$
|
88,889
|
|
Accrued expenses
|
|
99,343
|
|
|
87,724
|
|
||
Current portion of long-term debt
|
|
463
|
|
|
291
|
|
||
Total current liabilities
|
|
202,219
|
|
|
176,904
|
|
||
Long-term debt
|
|
394,806
|
|
|
396,691
|
|
||
Deferred income taxes and other long-term obligations
|
|
60,581
|
|
|
51,622
|
|
||
Commitments and contingencies
(Note 11)
|
|
|
|
|
||||
Equity:
|
|
|
|
|
||||
Common stock
|
|
120
|
|
|
119
|
|
||
Class A common stock
|
|
374
|
|
|
364
|
|
||
Class B stock
|
|
16
|
|
|
16
|
|
||
Additional paid-in capital
|
|
393,297
|
|
|
388,636
|
|
||
Retained earnings
|
|
160,501
|
|
|
115,987
|
|
||
Accumulated other comprehensive income (loss)
|
|
(1,294
|
)
|
|
164
|
|
||
Total Central Garden & Pet shareholders’ equity
|
|
553,014
|
|
|
505,286
|
|
||
Noncontrolling interest
|
|
1,573
|
|
|
1,094
|
|
||
Total equity
|
|
554,587
|
|
|
506,380
|
|
||
Total
|
|
$
|
1,212,193
|
|
|
$
|
1,131,597
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
September 24,
2016 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||
|
|
(in thousands, except per share amounts)
|
||||||||||
Net sales
|
|
$
|
1,829,017
|
|
|
$
|
1,650,737
|
|
|
$
|
1,604,357
|
|
Cost of goods sold and occupancy
|
|
1,275,967
|
|
|
1,162,685
|
|
|
1,150,333
|
|
|||
Gross profit
|
|
553,050
|
|
|
488,052
|
|
|
454,024
|
|
|||
Selling, general and administrative expenses
|
|
421,864
|
|
|
389,345
|
|
|
397,811
|
|
|||
Intangible asset impairment
|
|
1,828
|
|
|
7,272
|
|
|
—
|
|
|||
Operating income
|
|
129,358
|
|
|
91,435
|
|
|
56,213
|
|
|||
Interest expense
|
|
(42,847
|
)
|
|
(40,027
|
)
|
|
(42,844
|
)
|
|||
Interest income
|
|
140
|
|
|
129
|
|
|
94
|
|
|||
Other income (expense)
|
|
(17,013
|
)
|
|
13
|
|
|
403
|
|
|||
Income before income taxes and noncontrolling interest
|
|
69,638
|
|
|
51,550
|
|
|
13,866
|
|
|||
Income tax expense
|
|
24,053
|
|
|
18,535
|
|
|
4,045
|
|
|||
Net income including noncontrolling interest
|
|
45,585
|
|
|
33,015
|
|
|
9,821
|
|
|||
Net income attributable to noncontrolling interest
|
|
1,071
|
|
|
1,044
|
|
|
1,017
|
|
|||
Net income attributable to Central Garden & Pet Company
|
|
$
|
44,514
|
|
|
$
|
31,971
|
|
|
$
|
8,804
|
|
Net income per share attributable to Central Garden & Pet Company:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.91
|
|
|
$
|
0.66
|
|
|
$
|
0.18
|
|
Diluted
|
|
$
|
0.87
|
|
|
$
|
0.64
|
|
|
$
|
0.18
|
|
Weighted average shares used in the computation of net income per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
48,964
|
|
|
48,562
|
|
|
48,880
|
|
|||
Diluted
|
|
51,075
|
|
|
49,638
|
|
|
49,397
|
|
|
|
Fiscal Year Ended
|
||||||||||
|
|
September 24,
2016 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||
Net income
|
|
$
|
45,585
|
|
|
$
|
33,015
|
|
|
$
|
9,821
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Foreign currency translation
|
|
(1,458
|
)
|
|
(1,078
|
)
|
|
(200
|
)
|
|||
Unrealized loss on securities
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|||
Reclassification of loss on available for sale securities to net income
|
|
—
|
|
|
20
|
|
|
—
|
|
|||
Total comprehensive income
|
|
44,127
|
|
|
31,947
|
|
|
9,611
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
|
1,071
|
|
|
1,044
|
|
|
1,017
|
|
|||
Comprehensive income attributable to Central Garden & Pet Company
|
|
$
|
43,056
|
|
|
$
|
30,903
|
|
|
$
|
8,594
|
|
|
Central Garden & Pet Company
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Class A Common
Stock |
|
Class B Stock
|
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
|
|
Noncontrolling
Interest |
|
Total
|
|||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||||
Balance,
September 28, 2013 |
12,246,751
|
|
|
$
|
122
|
|
|
35,291,001
|
|
|
$
|
353
|
|
|
1,652,262
|
|
|
$
|
16
|
|
|
$
|
389,153
|
|
|
$
|
77,592
|
|
|
$
|
1,442
|
|
|
$
|
468,678
|
|
|
$
|
1,346
|
|
|
$
|
470,024
|
|
Amortization of share-based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,572
|
|
|
—
|
|
|
—
|
|
|
4,572
|
|
|
—
|
|
|
4,572
|
|
|||||||||
Tax deficiency on exercise of stock options, net of tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,973
|
)
|
|
—
|
|
|
—
|
|
|
(1,973
|
)
|
|
—
|
|
|
(1,973
|
)
|
|||||||||
Restricted share activity
|
190,556
|
|
|
2
|
|
|
1,232,105
|
|
|
12
|
|
|
|
|
|
|
3,446
|
|
|
|
|
|
|
3,460
|
|
|
|
|
3,460
|
|
||||||||||||||
Issuance of common stock
|
—
|
|
|
—
|
|
|
364,505
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1,390
|
|
|
—
|
|
|
—
|
|
|
1,394
|
|
|
—
|
|
|
1,394
|
|
|||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(300
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||||||
Distribution to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(633
|
)
|
|
(633
|
)
|
|||||||||||||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(210
|
)
|
|
(210
|
)
|
|
—
|
|
|
(210
|
)
|
|||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,804
|
|
|
—
|
|
|
8,804
|
|
|
1,017
|
|
|
9,821
|
|
|||||||||
Balance,
September 27, 2014 |
12,437,307
|
|
|
124
|
|
|
36,887,311
|
|
|
369
|
|
|
1,652,262
|
|
|
16
|
|
|
396,586
|
|
|
86,396
|
|
|
1,232
|
|
|
484,723
|
|
|
1,730
|
|
|
486,453
|
|
|||||||||
Amortization of share-based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,378
|
|
|
—
|
|
|
—
|
|
|
6,378
|
|
|
—
|
|
|
6,378
|
|
|||||||||
Tax deficiency on exercise of stock options, net of tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(358
|
)
|
|
—
|
|
|
—
|
|
|
(358
|
)
|
|
—
|
|
|
(358
|
)
|
|||||||||
Restricted share activity
|
(12,073
|
)
|
|
—
|
|
|
156,477
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(1,233
|
)
|
|
|
|
|
|
(1,231
|
)
|
|
|
|
(1,231
|
)
|
||||||||||||
Issuance of common stock
|
641
|
|
|
—
|
|
|
536,827
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||||
Repurchase of common stock
|
(517,558
|
)
|
|
(5
|
)
|
|
(1,118,316
|
)
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12,727
|
)
|
|
(2,380
|
)
|
|
—
|
|
|
(15,124
|
)
|
|
—
|
|
|
(15,124
|
)
|
|||||||||
Distribution to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,680
|
)
|
|
(1,680
|
)
|
|||||||||||||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,068
|
)
|
|
(1,068
|
)
|
|
—
|
|
|
(1,068
|
)
|
|||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,971
|
|
|
—
|
|
|
31,971
|
|
|
1,044
|
|
|
33,015
|
|
|||||||||
Balance,
September 26, 2015 |
11,908,317
|
|
|
119
|
|
|
36,462,299
|
|
|
364
|
|
|
1,652,262
|
|
|
16
|
|
|
388,636
|
|
|
115,987
|
|
|
164
|
|
|
505,286
|
|
|
1,094
|
|
|
506,380
|
|
|||||||||
Amortization of share-based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,552
|
|
|
—
|
|
|
—
|
|
|
6,552
|
|
|
—
|
|
|
6,552
|
|
|||||||||
Tax benefit on exercise of stock options, net of tax deficiency
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,865
|
|
|
—
|
|
|
—
|
|
|
6,865
|
|
|
—
|
|
|
6,865
|
|
|||||||||
Restricted share activity
|
|
|
|
—
|
|
|
202,916
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(1,341
|
)
|
|
—
|
|
|
—
|
|
|
(1,339
|
)
|
|
—
|
|
|
(1,339
|
)
|
|||||||||
Issuance of common stock
|
90,155
|
|
|
1
|
|
|
753,357
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(7,415
|
)
|
|
—
|
|
|
—
|
|
|
(7,406
|
)
|
|
—
|
|
|
(7,406
|
)
|
|||||||||
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(592
|
)
|
|
(592
|
)
|
|||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,458
|
)
|
|
(1,458
|
)
|
|
—
|
|
|
(1,458
|
)
|
|||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,514
|
|
|
—
|
|
|
44,514
|
|
|
1,071
|
|
|
45,585
|
|
|||||||||
Balance,
September 24, 2016 |
11,998,472
|
|
|
$
|
120
|
|
|
37,418,572
|
|
|
$
|
374
|
|
|
1,652,262
|
|
|
$
|
16
|
|
|
$
|
393,297
|
|
|
$
|
160,501
|
|
|
$
|
(1,294
|
)
|
|
$
|
553,014
|
|
|
$
|
1,573
|
|
|
$
|
554,587
|
|
|
Fiscal Year Ended
|
||||||||||
|
September 24,
2016 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||
|
(in thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
45,585
|
|
|
$
|
33,015
|
|
|
$
|
9,821
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
40,001
|
|
|
33,703
|
|
|
35,781
|
|
|||
Amortization of deferred financing costs
|
1,504
|
|
|
1,996
|
|
|
2,107
|
|
|||
Stock-based compensation
|
8,356
|
|
|
8,315
|
|
|
7,678
|
|
|||
Excess tax benefits from stock-based awards
|
(6,869
|
)
|
|
(2,154
|
)
|
|
(498
|
)
|
|||
Deferred income taxes
|
3,189
|
|
|
15,566
|
|
|
5,548
|
|
|||
Gain on sale of property and equipment
|
(2,544
|
)
|
|
—
|
|
|
(4,875
|
)
|
|||
Loss on disposal of property, plant and equipment
|
1,163
|
|
|
702
|
|
|
1,063
|
|
|||
Write-off of deferred financing costs
|
3,337
|
|
|
537
|
|
|
1,731
|
|
|||
Asset impairments
|
19,367
|
|
|
7,272
|
|
|
5,870
|
|
|||
Other
|
987
|
|
|
(69
|
)
|
|
249
|
|
|||
Changes in assets and liabilities (excluding businesses acquired):
|
|
|
|
|
|
||||||
Receivables
|
27,444
|
|
|
(9,093
|
)
|
|
2,655
|
|
|||
Inventories
|
(6,519
|
)
|
|
4,403
|
|
|
69,698
|
|
|||
Prepaid expenses and other assets
|
6,901
|
|
|
(4,325
|
)
|
|
(176
|
)
|
|||
Accounts payable
|
(2,793
|
)
|
|
(4,757
|
)
|
|
(16,321
|
)
|
|||
Accrued expenses
|
11,234
|
|
|
1,485
|
|
|
8,442
|
|
|||
Other long-term obligations
|
1,083
|
|
|
853
|
|
|
(2,306
|
)
|
|||
Net cash provided by operating activities
|
151,426
|
|
|
87,449
|
|
|
126,467
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Additions to property, plant and equipment
|
(27,622
|
)
|
|
(22,030
|
)
|
|
(17,173
|
)
|
|||
Businesses acquired, net of cash acquired, and investments in joint ventures
|
(69,001
|
)
|
|
(38,384
|
)
|
|
(20,282
|
)
|
|||
Proceeds from disposals of real property
|
3,911
|
|
|
—
|
|
|
8,737
|
|
|||
Change in restricted cash and cash equivalents.
|
2,247
|
|
|
1,126
|
|
|
(14,283
|
)
|
|||
Proceeds from short-term investments.
|
—
|
|
|
9,997
|
|
|
17,820
|
|
|||
Investment in short-term investments
|
—
|
|
|
(17
|
)
|
|
(10,000
|
)
|
|||
Other investing activities
|
(730
|
)
|
|
(546
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(91,195
|
)
|
|
(49,854
|
)
|
|
(35,181
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Repayments on revolving line of credit
|
(419,000
|
)
|
|
(312,000
|
)
|
|
(301,000
|
)
|
|||
Borrowings on revolving line of credit
|
419,000
|
|
|
312,000
|
|
|
278,000
|
|
|||
Repayments of long-term debt
|
(400,307
|
)
|
|
(50,289
|
)
|
|
(367
|
)
|
|||
Issuance of long-term debt
|
400,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of common stock
|
324
|
|
|
200
|
|
|
1,165
|
|
|||
Excess tax benefits from stock-based awards
|
6,869
|
|
|
2,154
|
|
|
498
|
|
|||
Repurchase of common stock, including shares surrendered for tax withholding
|
(10,873
|
)
|
|
(18,497
|
)
|
|
(2,332
|
)
|
|||
Payments of contingent consideration
|
(2,026
|
)
|
|
—
|
|
|
—
|
|
|||
Distribution to noncontrolling interest
|
(592
|
)
|
|
(1,680
|
)
|
|
(633
|
)
|
|||
Payment of financing costs
|
(7,560
|
)
|
|
(258
|
)
|
|
(3,090
|
)
|
|||
Net cash used by financing activities
|
(14,165
|
)
|
|
(68,370
|
)
|
|
(27,759
|
)
|
|||
Effect of exchange rate changes on cash and equivalents
|
(668
|
)
|
|
(317
|
)
|
|
(7
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
45,398
|
|
|
(31,092
|
)
|
|
63,520
|
|
|||
Cash and cash equivalents at beginning of year
|
47,584
|
|
|
78,676
|
|
|
15,156
|
|
|||
Cash and cash equivalents at end of year
|
$
|
92,982
|
|
|
$
|
47,584
|
|
|
$
|
78,676
|
|
Supplemental information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
32,995
|
|
|
$
|
39,855
|
|
|
$
|
41,549
|
|
Cash paid for income taxes – net of refunds
|
10,399
|
|
|
3,192
|
|
|
826
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Capital expenditures incurred but not paid
|
2,743
|
|
|
2,087
|
|
|
238
|
|
|||
Liability for contingent performance based payments
|
2,590
|
|
|
(101
|
)
|
|
249
|
|
|||
Restricted share stock bonus
|
—
|
|
|
—
|
|
|
4,086
|
|
Financial Statement Line Item
|
|
Previously Reported September 26, 2015
|
|
Reclassifications
|
|
As Adjusted September 26, 2015
|
||||||
Other assets
|
|
$
|
33,576
|
|
|
$
|
(3,157
|
)
|
|
$
|
30,419
|
|
Total assets
|
|
1,134,754
|
|
|
(3,157
|
)
|
|
1,131,597
|
|
|||
Long term debt
|
|
399,848
|
|
|
(3,157
|
)
|
|
396,691
|
|
|||
Total liabilities and equity
|
|
1,134,754
|
|
|
(3,157
|
)
|
|
1,131,597
|
|
|||
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liability for contingent consideration (a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,113
|
|
|
$
|
5,113
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,113
|
|
|
$
|
5,113
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liability for contingent consideration (a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,625
|
|
|
$
|
3,625
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,625
|
|
|
$
|
3,625
|
|
(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 consolidated balance sheets.
|
|
|
||
|
Amount
|
||
Balance as of 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
|
924
|
|
|
Performance-based payments made
|
(2,026
|
)
|
|
Balance as of September 24, 2016
|
$
|
5,113
|
|
In thousands
|
Amounts Previously Recognized as of Acquisition Date (1)
|
|
Measurement Period Adjustments
|
|
Amounts Recognized as of Acquisition Date (as Adjusted)
|
||||||
Current assets, net of cash and cash equivalents acquired
|
$
|
41,170
|
|
|
$
|
156
|
|
|
$
|
41,326
|
|
Fixed assets
|
521
|
|
|
17
|
|
|
538
|
|
|||
Goodwill
|
—
|
|
|
15,058
|
|
|
15,058
|
|
|||
Other assets
|
33,810
|
|
|
(33,790
|
)
|
|
20
|
|
|||
Other intangible assets, net
|
—
|
|
|
18,700
|
|
|
18,700
|
|
|||
Current liabilities
|
(14,586
|
)
|
|
(40
|
)
|
|
(14,626
|
)
|
|||
Net assets acquired, less cash and cash equivalents
|
$
|
60,915
|
|
|
$
|
101
|
|
|
$
|
61,016
|
|
|
|
|
In thousands (unaudited)
|
||||||
|
|
|
Fiscal Year Ended
|
||||||
|
|
|
September 24, 2016
|
|
September 26, 2015
|
||||
Pro forma net sales
|
|
|
$
|
1,856,691
|
|
|
$
|
1,815,997
|
|
In thousands
|
Amounts Previously Recognized as of Acquisition Date (1)
|
|
Measurement Period Adjustments
|
|
Amounts Recognized as of Acquisition Date (as Adjusted)
|
||||||
Current assets, net of cash and cash equivalents acquired
|
$
|
20,458
|
|
|
$
|
315
|
|
|
$
|
20,773
|
|
Fixed assets
|
1,670
|
|
|
—
|
|
|
1,670
|
|
|||
Goodwill
|
—
|
|
|
1,365
|
|
|
1,365
|
|
|||
Other assets
|
5,356
|
|
|
(5,356
|
)
|
|
—
|
|
|||
Other intangible assets, net
|
—
|
|
|
4,510
|
|
|
4,510
|
|
|||
Current liabilities
|
(5,100
|
)
|
|
—
|
|
|
(5,100
|
)
|
|||
Net assets acquired, less cash and cash equivalents
|
$
|
22,384
|
|
|
$
|
834
|
|
|
$
|
23,218
|
|
(In thousands)
|
|
Amounts
Recognized as of Acquisition Date (as Adjusted) |
||
Current assets, net of cash and cash equivalents acquired
|
|
$
|
6,650
|
|
Fixed assets
|
|
20
|
|
|
Goodwill
|
|
3,333
|
|
|
Intangible assets
|
|
11,450
|
|
|
Current liabilities
|
|
(1,170
|
)
|
|
Net assets acquired, less cash and cash equivalents
|
|
$
|
20,283
|
|
Description
|
Balances at
Beginning
of Period
|
|
Charged/
(Credited) to
Costs and
Expenses
|
|
Asset
Write-Offs,
Less
Recoveries
|
|
Balances at
End of
Period
|
||||
Fiscal Year Ended September 27, 2014
|
21,158
|
|
|
8,988
|
|
|
(4,934
|
)
|
|
25,212
|
|
Fiscal Year Ended September 26, 2015
|
25,212
|
|
|
741
|
|
|
(6,657
|
)
|
|
19,296
|
|
Fiscal Year Ended September 24, 2016
|
19,296
|
|
|
6,041
|
|
|
(4,268
|
)
|
|
21,069
|
|
|
September 24,
2016 |
|
September 26,
2015 |
||||
Raw materials
|
$
|
120,786
|
|
|
$
|
94,969
|
|
Work in progress
|
17,378
|
|
|
15,268
|
|
||
Finished goods
|
217,788
|
|
|
215,673
|
|
||
Supplies
|
6,052
|
|
|
10,036
|
|
||
Total inventories, net
|
$
|
362,004
|
|
|
$
|
335,946
|
|
|
|
September 24,
2016 |
|
September 26,
2015 |
||||
Land
|
|
$
|
8,825
|
|
|
$
|
9,306
|
|
Buildings and improvements
|
|
115,965
|
|
|
111,605
|
|
||
Transportation equipment
|
|
5,574
|
|
|
5,130
|
|
||
Machine and warehouse equipment
|
|
193,525
|
|
|
184,556
|
|
||
Capitalized software
|
|
109,641
|
|
|
107,965
|
|
||
Office furniture and equipment
|
|
25,282
|
|
|
26,556
|
|
||
|
|
458,812
|
|
|
445,118
|
|
||
Accumulated depreciation and amortization
|
|
(300,588
|
)
|
|
(282,309
|
)
|
||
|
|
$
|
158,224
|
|
|
$
|
162,809
|
|
|
Garden Products
Segment
|
|
Pet Products
Segment
|
|
Total
|
||||||
Balance as of September 28, 2013
|
|
|
|
|
|
||||||
Goodwill
|
$
|
213,583
|
|
|
$
|
401,734
|
|
|
$
|
615,317
|
|
Accumulated impairment losses
|
(213,583
|
)
|
|
(195,978
|
)
|
|
(409,561
|
)
|
|||
|
—
|
|
|
205,756
|
|
|
205,756
|
|
|||
Additions in fiscal 2014
|
—
|
|
|
2,477
|
|
|
2,477
|
|
|||
Balance as of September 27, 2014
|
|
|
|
|
|
||||||
Goodwill
|
213,583
|
|
|
404,211
|
|
|
617,794
|
|
|||
Accumulated impairment losses
|
(213,583
|
)
|
|
(195,978
|
)
|
|
(409,561
|
)
|
|||
|
—
|
|
|
208,233
|
|
|
208,233
|
|
|||
Additions in fiscal 2015
|
—
|
|
|
856
|
|
|
856
|
|
|||
Balance as of September 26, 2015
|
|
|
|
|
|
||||||
Goodwill
|
213,583
|
|
|
405,067
|
|
|
618,650
|
|
|||
Accumulated impairment losses
|
(213,583
|
)
|
|
(195,978
|
)
|
|
(409,561
|
)
|
|||
|
—
|
|
|
209,089
|
|
|
209,089
|
|
|||
Additions in fiscal 2016
|
5,473
|
|
|
16,823
|
|
|
22,296
|
|
|||
Balance as of September 24, 2016
|
|
|
|
|
|
||||||
Goodwill
|
219,056
|
|
|
421,890
|
|
|
640,946
|
|
|||
Accumulated impairment losses
|
(213,583
|
)
|
|
(195,978
|
)
|
|
(409,561
|
)
|
|||
|
$
|
5,473
|
|
|
$
|
225,912
|
|
|
$
|
231,385
|
|
|
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
|
|
September 26, 2015
|
|
|
|
|
|
|
|
||||||||
Marketing-related intangible assets – amortizable
|
$
|
14.1
|
|
|
$
|
(10.4
|
)
|
|
$
|
—
|
|
|
$
|
3.7
|
|
Marketing-related intangible assets – nonamortizable
|
59.6
|
|
|
—
|
|
|
(24.2
|
)
|
|
35.4
|
|
||||
Total
|
73.7
|
|
|
(10.4
|
)
|
|
(24.2
|
)
|
|
39.1
|
|
||||
Customer-related intangible assets – amortizable
|
43.3
|
|
|
(22.3
|
)
|
|
—
|
|
|
21.0
|
|
||||
Other acquired intangible assets – amortizable
|
19.3
|
|
|
(10.5
|
)
|
|
—
|
|
|
8.8
|
|
||||
Other acquired intangible assets – nonamortizable
|
7.8
|
|
|
—
|
|
|
(1.2
|
)
|
|
6.6
|
|
||||
Total
|
27.1
|
|
|
(10.5
|
)
|
|
(1.2
|
)
|
|
15.4
|
|
||||
Total other intangible assets
|
$
|
144.1
|
|
|
$
|
(43.2
|
)
|
|
$
|
(25.4
|
)
|
|
$
|
75.5
|
|
|
|
|
September 24,
2016 |
|
September 26,
2015 |
||||
|
|
(in thousands)
|
|||||||
Senior notes, interest at 6.125%, payable semi-annually, principal due November 2023
|
|
|
$
|
400,000
|
|
|
$
|
—
|
|
Senior subordinated notes, interest at 8.25%, payable semi-annually, repaid in December 2015
|
|
|
—
|
|
|
400,000
|
|
||
Unamortized discount
|
|
|
—
|
|
|
(309
|
)
|
||
Unamortized debt issuance costs
|
|
|
(5,635
|
)
|
|
(3,157
|
)
|
||
Net carrying value
|
|
|
394,365
|
|
|
396,534
|
|
||
Asset-based revolving credit facility, interest at LIBOR plus a margin of 1.25% to 1.75% or Base Rate plus a margin of 0.25% to 0.75%, amended in April 2016
|
|
|
—
|
|
|
—
|
|
||
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
|
|
|
—
|
|
|
—
|
|
||
Other notes payable
|
|
|
904
|
|
|
448
|
|
||
Total
|
|
|
395,269
|
|
|
396,982
|
|
||
Less current portion
|
|
|
(463
|
)
|
|
(291
|
)
|
||
Long-term portion
|
|
|
$
|
394,806
|
|
|
$
|
396,691
|
|
|
(in thousands)
|
|
||
Fiscal year:
|
|
|
||
2017
|
$
|
463
|
|
|
2018
|
374
|
|
|
|
2019
|
5
|
|
|
|
2020
|
62
|
|
|
|
2021
|
—
|
|
|
|
Thereafter
|
400,000
|
|
|
|
Total
|
$
|
400,904
|
|
(1)
|
(1)
|
Debt repayments do not reflect the unamortized portion of deferred financing costs associated with the 2023 Notes of
$5.6 million
as of
September 24, 2016
, which is amortizable until November 2023 and is included in the carrying value.
|
|
|
||
|
(in thousands)
|
||
Fiscal year:
|
|
||
2017
|
$
|
23,811
|
|
2018
|
17,278
|
|
|
2019
|
14,771
|
|
|
2020
|
12,721
|
|
|
2021
|
8,445
|
|
|
Thereafter
|
29,274
|
|
|
Total
|
$
|
106,300
|
|
|
Fiscal Year Ended
|
||||||||||
|
September 24,
2016 |
|
September 26,
2015 |
|
September 27,
2014 |
||||||
|
(in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
18,592
|
|
|
$
|
2,301
|
|
|
$
|
(329
|
)
|
State
|
2,140
|
|
|
643
|
|
|
873
|
|
|||
Foreign
|
110
|
|
|
25
|
|
|
—
|
|
|||
Total
|
20,842
|
|
|
2,969
|
|
|
544
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
2,796
|
|
|
14,843
|
|
|
4,171
|
|
|||
State
|
463
|
|
|
625
|
|
|
177
|
|
|||
Foreign
|
(48
|
)
|
|
98
|
|
|
(847
|
)
|
|||
Total
|
3,211
|
|
|
15,566
|
|
|
3,501
|
|
|||
Total
|
$
|
24,053
|
|
|
$
|
18,535
|
|
|
$
|
4,045
|
|
|
Fiscal Year Ended
|
|||||||
|
September 24,
2016 |
|
September 26,
2015 |
|
September 27,
2014 |
|||
Statutory federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
2.1
|
|
|
2.4
|
|
|
2.1
|
|
Other permanent differences
|
(1.6
|
)
|
|
(0.5
|
)
|
|
0.2
|
|
Adjustment of prior year accruals
|
(0.6
|
)
|
|
(0.5
|
)
|
|
(0.2
|
)
|
Uncertain tax positions
|
—
|
|
|
—
|
|
|
0.4
|
|
Credits
|
(1.0
|
)
|
|
(0.3
|
)
|
|
(1.6
|
)
|
Change in valuation allowances
|
0.5
|
|
|
—
|
|
|
(5.4
|
)
|
Foreign rate differential
|
0.1
|
|
|
(0.1
|
)
|
|
(1.3
|
)
|
Effective income tax rate (benefit)
|
34.5
|
%
|
|
36.0
|
%
|
|
29.2
|
%
|
|
September 24, 2016
|
|
September 26, 2015
|
||||||||||||
|
Deferred
Tax
Assets
|
|
Deferred
Tax
Liabilities
|
|
Deferred
Tax
Assets
|
|
Deferred
Tax
Liabilities
|
||||||||
Current:
|
(in thousands)
|
||||||||||||||
Allowance for doubtful accounts
|
$
|
7,634
|
|
|
$
|
—
|
|
|
$
|
7,054
|
|
|
$
|
—
|
|
Inventory write-downs
|
9,869
|
|
|
—
|
|
|
11,366
|
|
|
—
|
|
||||
Prepaid expenses
|
—
|
|
|
1,188
|
|
|
—
|
|
|
651
|
|
||||
Nondeductible reserves
|
1,632
|
|
|
—
|
|
|
936
|
|
|
—
|
|
||||
State taxes
|
19
|
|
|
—
|
|
|
—
|
|
|
385
|
|
||||
Employee benefits
|
10,544
|
|
|
—
|
|
|
9,411
|
|
|
—
|
|
||||
Other
|
3,000
|
|
|
—
|
|
|
2,754
|
|
|
—
|
|
||||
Total
|
32,698
|
|
|
1,188
|
|
|
31,521
|
|
|
1,036
|
|
||||
Noncurrent:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
—
|
|
|
62,778
|
|
|
—
|
|
|
52,415
|
|
||||
Equity loss
|
5,070
|
|
|
—
|
|
|
—
|
|
|
305
|
|
||||
State net operating loss carryforward
|
4,939
|
|
|
—
|
|
|
5,032
|
|
|
—
|
|
||||
Stock based compensation
|
2,642
|
|
|
—
|
|
|
3,422
|
|
|
—
|
|
||||
State credits
|
2,317
|
|
|
—
|
|
|
2,348
|
|
|
—
|
|
||||
Other
|
2,303
|
|
|
—
|
|
|
2,463
|
|
|
—
|
|
||||
Valuation allowance
|
(6,583
|
)
|
|
—
|
|
|
(6,205
|
)
|
|
—
|
|
||||
Total
|
10,688
|
|
|
62,778
|
|
|
7,060
|
|
|
52,720
|
|
||||
Total
|
$
|
43,386
|
|
|
$
|
63,966
|
|
|
$
|
38,581
|
|
|
$
|
53,756
|
|
|
|
||
Balance as of September 27, 2014
|
$
|
87
|
|
Increases related to prior year tax positions
|
55
|
|
|
Increases related to current year tax positions
|
20
|
|
|
Decreases related to prior year tax positions
|
—
|
|
|
Settlements
|
(9
|
)
|
|
Decreases related to lapse of statute of limitations
|
(15
|
)
|
|
Balance as of September 26, 2015
|
$
|
138
|
|
Increases related to prior year tax positions
|
51
|
|
|
Increases related to current year tax positions
|
66
|
|
|
Decreases related to prior year tax positions
|
—
|
|
|
Settlements
|
(1
|
)
|
|
Decreases related to lapse of statute of limitations
|
—
|
|
|
Balance as of September 24, 2016
|
$
|
254
|
|
|
Number of
Shares
(in thousands)
|
|
Weighted
Average Exercise
Price per Share
|
|
Weighted Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding at September 26, 2015
|
6,257
|
|
|
$
|
10.51
|
|
|
3 years
|
|
$
|
38,663
|
|
Granted
|
1,166
|
|
|
$
|
13.83
|
|
|
|
|
|
||
Exercised
|
(2,646
|
)
|
|
$
|
10.02
|
|
|
|
|
|
||
Canceled or expired
|
(608
|
)
|
|
$
|
11.31
|
|
|
|
|
|
||
Outstanding at September 24, 2016
|
4,169
|
|
|
$
|
11.64
|
|
|
3 years
|
|
$
|
53,705
|
|
Exercisable at September 27, 2014
|
5,205
|
|
|
$
|
10.81
|
|
|
2 years
|
|
390
|
|
|
Exercisable at September 26, 2015
|
2,910
|
|
|
$
|
10.74
|
|
|
2 years
|
|
17,226
|
|
|
Exercisable at September 24, 2016
|
1,732
|
|
|
$
|
11.46
|
|
|
2 years
|
|
22,954
|
|
|
Expected to vest after September 24, 2016
|
2,057
|
|
|
$
|
11.77
|
|
|
4 years
|
|
$
|
25,948
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Date
Fair Value per
Share
|
|||
|
(in thousands)
|
|
|
|||
Nonvested at September 28, 2013
|
894
|
|
|
$
|
9.35
|
|
Granted
|
1,021
|
|
|
$
|
7.98
|
|
Vested
|
(226
|
)
|
|
$
|
9.92
|
|
Forfeited
|
(80
|
)
|
|
$
|
8.93
|
|
Nonvested at September 27, 2014
|
1,609
|
|
|
$
|
8.43
|
|
Granted
|
493
|
|
|
$
|
10.55
|
|
Vested
|
(331
|
)
|
|
$
|
8.63
|
|
Forfeited
|
(221
|
)
|
|
$
|
8.84
|
|
Nonvested at September 26, 2015
|
1,550
|
|
|
$
|
9.00
|
|
Granted
|
373
|
|
|
$
|
16.32
|
|
Vested
|
(295
|
)
|
|
$
|
9.32
|
|
Forfeited
|
(88
|
)
|
|
$
|
9.53
|
|
Nonvested at September 24, 2016
|
1,540
|
|
|
$
|
10.68
|
|
|
Fiscal Year Ended
September 24, 2016 |
|
Fiscal Year Ended
September 26, 2015 |
|
Fiscal Year Ended
September 27, 2014 |
|||||||||||||||||||||||||||
|
Net
Income
|
|
Shares
|
|
Per
Share
|
|
Net
Income
|
|
Shares
|
|
Per
Share
|
|
Net
Income
(Loss)
|
|
Shares
|
|
Per
Share
|
|||||||||||||||
|
(in thousands, except per share amounts)
|
|||||||||||||||||||||||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income (loss) available to common shareholders
|
$
|
44,514
|
|
|
48,964
|
|
|
$
|
0.91
|
|
|
$
|
31,971
|
|
|
48,562
|
|
|
$
|
0.66
|
|
|
$
|
8,804
|
|
|
48,880
|
|
|
$
|
0.18
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Options to purchase common stock
|
|
|
1,335
|
|
|
(0.02
|
)
|
|
|
|
520
|
|
|
(0.01
|
)
|
|
|
|
69
|
|
|
0
|
|
|||||||||
Restricted shares
|
|
|
776
|
|
|
(0.02
|
)
|
|
|
|
556
|
|
|
(0.01
|
)
|
|
|
|
448
|
|
|
0
|
|
|||||||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income (loss) available to common shareholders
|
$
|
44,514
|
|
|
51,075
|
|
|
$
|
0.87
|
|
|
$
|
31,971
|
|
|
49,638
|
|
|
$
|
0.64
|
|
|
$
|
8,804
|
|
|
49,397
|
|
|
$
|
0.18
|
|
|
Fiscal 2016
|
|
|
||||||||||||||||
|
1
st
Quarter
|
|
2
nd
Quarter
|
|
3
rd
Quarter
|
|
4
th
Quarter
|
|
|
||||||||||
|
(in thousands, except per share amounts)
|
|
|
||||||||||||||||
Net sales
|
$
|
359,812
|
|
|
$
|
541,249
|
|
|
$
|
514,544
|
|
|
$
|
413,412
|
|
|
|
||
Gross profit
|
99,786
|
|
|
169,339
|
|
|
163,745
|
|
|
120,180
|
|
|
|
||||||
Net income (loss) attributable to Central Garden & Pet Company
|
(8,602
|
)
|
(1
|
)
|
32,697
|
|
|
26,030
|
|
(2
|
)
|
(5,611
|
)
|
|
(3)
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.18
|
)
|
|
$
|
0.67
|
|
|
$
|
0.53
|
|
|
$
|
(0.11
|
)
|
|
|
||
Diluted
|
$
|
(0.18
|
)
|
|
$
|
0.65
|
|
|
$
|
0.51
|
|
|
$
|
(0.11
|
)
|
|
|
||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
48,566
|
|
|
48,717
|
|
|
49,120
|
|
|
49,453
|
|
|
|
||||||
Diluted
|
48,566
|
|
|
50,445
|
|
|
51,063
|
|
|
49,453
|
|
|
|
|
Fiscal 2015
|
|
|
||||||||||||||
|
1
st
Quarter
|
|
2
nd
Quarter
|
|
3
rd
Quarter
|
|
4
th
Quarter
|
|
|
||||||||
|
(in thousands, except per share amounts)
|
|
|
||||||||||||||
Net sales
|
$
|
307,320
|
|
|
$
|
497,602
|
|
|
$
|
459,446
|
|
|
$
|
386,369
|
|
|
|
Gross profit
|
87,981
|
|
|
150,062
|
|
|
142,037
|
|
|
107,972
|
|
|
|
||||
Net income (loss) attributable to Central Garden & Pet Company
|
(5,697
|
)
|
|
23,237
|
|
|
18,800
|
|
|
(4,369
|
)
|
|
(4)
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.12
|
)
|
|
$
|
0.48
|
|
|
$
|
0.39
|
|
|
$
|
(0.09
|
)
|
|
|
Diluted
|
$
|
(0.12
|
)
|
|
$
|
0.47
|
|
|
$
|
0.38
|
|
|
$
|
(0.09
|
)
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
49,379
|
|
|
48,384
|
|
|
48,167
|
|
|
48,322
|
|
|
|
||||
Diluted
|
49,379
|
|
|
49,439
|
|
|
49,290
|
|
|
48,322
|
|
|
|
(1)
|
During the first quarter of fiscal 2016, the Company redeemed its 2018 Notes and issued senior notes due November 2023. As a result of the bond redemption, the Company 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.
|
(2)
|
The Company recognized 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 during the third quarter of fiscal 2016.
|
(3)
|
The Company recognized a non-cash impairment charge of
$16.6 million
related to our investment in
two
joint ventures as a result of changes in marketplace conditions, and a non-cash impairment charge in our Pet segment of
$1.8 million
related to the impairment of certain indefinite-lived intangible assets due to declining sales volume during the fourth quarter of fiscal 2016.
|
(4)
|
The Company recognized a
$7.3 million
non-cash impairment charge to its indefinite-lived intangible assets as a result of increased competition and declining sales volume in its Pet segment during the fourth quarter of fiscal 2015.
|
Category
|
2016
|
|
2015
|
|
2014
|
|
||||||
Other pet products
|
$
|
689.3
|
|
|
$
|
594.7
|
|
|
$
|
774.2
|
|
|
Garden controls and fertilizer products
|
298.8
|
|
|
286.3
|
|
|
262.5
|
|
|
|||
Wild bird feed
|
183.6
|
|
|
193.2
|
|
|
202.1
|
|
|
|||
Grass seed
|
(1)
|
|
|
(1)
|
|
|
183.1
|
|
|
|||
Other garden supplies
|
331.3
|
|
|
343.5
|
|
|
182.5
|
|
|
|||
Dog and cat products
|
326.0
|
|
|
233.0
|
|
|
(1)
|
|
|
|||
Total
|
$
|
1,829.0
|
|
|
$
|
1,650.7
|
|
|
$
|
1,604.4
|
|
|
|
Fiscal Year Ended
|
|
||||||||||
|
September 24, 2016
|
|
September 26, 2015
|
|
September 27, 2014
|
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Pet segment
|
$
|
1,081,853
|
|
|
$
|
894,549
|
|
|
$
|
845,505
|
|
|
Garden segment
|
747,164
|
|
|
756,188
|
|
|
758,852
|
|
|
|||
Total
|
$
|
1,829,017
|
|
|
$
|
1,650,737
|
|
|
$
|
1,604,357
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
||||||
Pet segment
|
$
|
119,930
|
|
(1)
|
$
|
98,798
|
|
(1)
|
$
|
88,077
|
|
|
Garden segment
|
70,317
|
|
|
60,145
|
|
|
41,020
|
|
(2)
|
|||
Corporate
|
(60,889
|
)
|
|
(67,508
|
)
|
|
(72,884
|
)
|
|
|||
Total
|
129,358
|
|
|
91,435
|
|
|
56,213
|
|
|
|||
Interest expense
|
(42,847
|
)
|
|
(40,027
|
)
|
|
(42,844
|
)
|
|
|||
Interest income
|
140
|
|
|
129
|
|
|
94
|
|
|
|||
Other income (expense)
|
(17,013
|
)
|
(3)
|
13
|
|
|
403
|
|
|
|||
Income (loss) before income taxes and noncontrolling interest
|
69,638
|
|
|
51,550
|
|
|
13,866
|
|
|
|||
Income tax expense (benefit)
|
24,053
|
|
|
18,535
|
|
|
4,045
|
|
|
|||
Net income (loss) including noncontrolling interest
|
45,585
|
|
|
33,015
|
|
|
9,821
|
|
|
|||
Net income attributable to noncontrolling interest
|
1,071
|
|
|
1,044
|
|
|
1,017
|
|
|
|||
Net income (loss) attributable to Central Garden & Pet Company
|
$
|
44,514
|
|
|
$
|
31,971
|
|
|
$
|
8,804
|
|
|
Assets:
|
|
|
|
|
|
|
||||||
Pet segment
|
$
|
508,879
|
|
|
$
|
465,171
|
|
|
$
|
414,279
|
|
|
Garden segment
|
304,901
|
|
|
310,981
|
|
|
337,461
|
|
|
|||
Corporate and eliminations
|
398,413
|
|
|
355,445
|
|
|
396,987
|
|
|
|||
Total
|
$
|
1,212,193
|
|
|
$
|
1,131,597
|
|
|
$
|
1,148,727
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
||||||
Pet segment
|
$
|
22,556
|
|
|
$
|
15,885
|
|
|
$
|
17,256
|
|
|
Garden segment
|
6,098
|
|
|
5,988
|
|
|
6,793
|
|
|
|||
Corporate
|
11,347
|
|
|
11,830
|
|
|
11,732
|
|
|
|||
Total
|
$
|
40,001
|
|
|
$
|
33,703
|
|
|
$
|
35,781
|
|
|
Expenditures for long-lived assets:
|
|
|
|
|
|
|
||||||
Pet segment
|
$
|
18,939
|
|
|
$
|
17,060
|
|
|
$
|
8,561
|
|
|
Garden segment
|
4,750
|
|
|
2,432
|
|
|
5,541
|
|
|
|||
Corporate
|
3,933
|
|
|
2,538
|
|
|
3,071
|
|
|
|||
Total
|
$
|
27,622
|
|
|
$
|
22,030
|
|
|
$
|
17,173
|
|
|
(1)
|
Includes a
$1.8 million
impairment charge in fiscal 2016 and a
$7.3 million
impairment charge in fiscal 2015 to indefinite-lived intangible assets as a result of increased competition and declining sales volume.
|
(2)
|
Includes a
$16.9 million
charge related to certain products introduced in fiscal 2013 and a
$4.9 million
gain from the sale of manufacturing plant assets.
|
(3)
|
Includes a
$16.6 million
impairment charge related to
two
equity method investments.
|
|
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
|
||||||||||||||||||
|
Fiscal Year Ended September 24, 2016
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
587,579
|
|
|
$
|
82,567
|
|
|
$
|
1,238,339
|
|
|
$
|
(79,468
|
)
|
|
$
|
1,829,017
|
|
Cost of goods sold and occupancy
|
466,543
|
|
|
62,727
|
|
|
820,573
|
|
|
(73,876
|
)
|
|
1,275,967
|
|
|||||
Gross profit
|
121,036
|
|
|
19,840
|
|
|
417,766
|
|
|
(5,592
|
)
|
|
553,050
|
|
|||||
Selling, general and administrative expenses
|
138,556
|
|
|
18,077
|
|
|
272,651
|
|
|
(5,592
|
)
|
|
423,692
|
|
|||||
Operating income (loss)
|
(17,520
|
)
|
|
1,763
|
|
|
145,115
|
|
|
—
|
|
|
129,358
|
|
|||||
Interest expense
|
(42,700
|
)
|
|
(266
|
)
|
|
119
|
|
|
—
|
|
|
(42,847
|
)
|
|||||
Interest income
|
136
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
140
|
|
|||||
Other income (expense)
|
(16,925
|
)
|
|
(113
|
)
|
|
25
|
|
|
—
|
|
|
(17,013
|
)
|
|||||
Income (loss) before taxes and equity in earnings of affiliates
|
(77,009
|
)
|
|
1,388
|
|
|
145,259
|
|
|
—
|
|
|
69,638
|
|
|||||
Income tax expense (benefit)
|
(26,422
|
)
|
|
923
|
|
|
49,552
|
|
|
—
|
|
|
24,053
|
|
|||||
Equity in earnings of affiliates
|
95,101
|
|
|
—
|
|
|
624
|
|
|
(95,725
|
)
|
|
—
|
|
|||||
Net income including noncontrolling interest
|
44,514
|
|
|
465
|
|
|
96,331
|
|
|
(95,725
|
)
|
|
45,585
|
|
|||||
Noncontrolling interest
|
—
|
|
|
1,071
|
|
|
—
|
|
|
—
|
|
|
1,071
|
|
|||||
Net income (loss) attributable to Central Garden & Pet Company
|
$
|
44,514
|
|
|
$
|
(606
|
)
|
|
$
|
96,331
|
|
|
$
|
(95,725
|
)
|
|
$
|
44,514
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
|
||||||||||||||||||
|
Fiscal Year Ended September 26, 2015
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
484,310
|
|
|
$
|
100,127
|
|
|
$
|
1,146,821
|
|
|
$
|
(80,521
|
)
|
|
$
|
1,650,737
|
|
Cost of goods sold and occupancy
|
379,235
|
|
|
76,597
|
|
|
781,797
|
|
|
(74,944
|
)
|
|
1,162,685
|
|
|||||
Gross profit
|
105,075
|
|
|
23,530
|
|
|
365,024
|
|
|
(5,577
|
)
|
|
488,052
|
|
|||||
Selling, general and administrative expenses
|
124,613
|
|
|
18,329
|
|
|
259,252
|
|
|
(5,577
|
)
|
|
396,617
|
|
|||||
Operating income (loss)
|
(19,538
|
)
|
|
5,201
|
|
|
105,772
|
|
|
—
|
|
|
91,435
|
|
|||||
Interest expense
|
(39,893
|
)
|
|
(268
|
)
|
|
134
|
|
|
—
|
|
|
(40,027
|
)
|
|||||
Interest income
|
126
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
129
|
|
|||||
Other income (expense)
|
(372
|
)
|
|
407
|
|
|
(22
|
)
|
|
—
|
|
|
13
|
|
|||||
Income (loss) before taxes and equity in earnings of affiliates
|
(59,677
|
)
|
|
5,343
|
|
|
105,884
|
|
|
—
|
|
|
51,550
|
|
|||||
Income tax expense (benefit)
|
(21,500
|
)
|
|
2,089
|
|
|
37,946
|
|
|
—
|
|
|
18,535
|
|
|||||
Equity in earnings of affiliates
|
70,148
|
|
|
—
|
|
|
2,445
|
|
|
(72,593
|
)
|
|
—
|
|
|||||
Net income including noncontrolling interest
|
31,971
|
|
|
3,254
|
|
|
70,383
|
|
|
(72,593
|
)
|
|
33,015
|
|
|||||
Noncontrolling interest
|
—
|
|
|
1,044
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
|||||
Net income attributable to Central Garden & Pet Company
|
$
|
31,971
|
|
|
$
|
2,210
|
|
|
$
|
70,383
|
|
|
$
|
(72,593
|
)
|
|
$
|
31,971
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
|
||||||||||||||||||
|
Fiscal Year Ended September 27, 2014
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
460,781
|
|
|
$
|
109,453
|
|
|
$
|
1,103,926
|
|
|
$
|
(69,803
|
)
|
|
$
|
1,604,357
|
|
Cost of goods sold and occupancy
|
370,492
|
|
|
87,028
|
|
|
757,217
|
|
|
(64,404
|
)
|
|
1,150,333
|
|
|||||
Gross profit
|
90,289
|
|
|
22,425
|
|
|
346,709
|
|
|
(5,399
|
)
|
|
454,024
|
|
|||||
Selling, general and administrative expenses
|
117,240
|
|
|
18,230
|
|
|
267,740
|
|
|
(5,399
|
)
|
|
397,811
|
|
|||||
Operating income (loss)
|
(26,951
|
)
|
|
4,195
|
|
|
78,969
|
|
|
—
|
|
|
56,213
|
|
|||||
Interest expense
|
(42,742
|
)
|
|
(218
|
)
|
|
116
|
|
|
—
|
|
|
(42,844
|
)
|
|||||
Interest income
|
92
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|||||
Other income (expense)
|
186
|
|
|
583
|
|
|
(366
|
)
|
|
—
|
|
|
403
|
|
|||||
Income (loss) before taxes and equity in earnings of affiliates
|
(69,415
|
)
|
|
4,562
|
|
|
78,719
|
|
|
—
|
|
|
13,866
|
|
|||||
Income tax expense (benefit)
|
(26,962
|
)
|
|
756
|
|
|
30,251
|
|
|
—
|
|
|
4,045
|
|
|||||
Equity in earnings of affiliates
|
51,257
|
|
|
—
|
|
|
1,506
|
|
|
(52,763
|
)
|
|
—
|
|
|||||
Net income (loss) including noncontrolling interest
|
8,804
|
|
|
3,806
|
|
|
49,974
|
|
|
(52,763
|
)
|
|
9,821
|
|
|||||
Noncontrolling interest
|
—
|
|
|
1,017
|
|
|
—
|
|
|
—
|
|
|
1,017
|
|
|||||
Net income (loss) attributable to Central Garden & Pet Company
|
$
|
8,804
|
|
|
$
|
2,789
|
|
|
$
|
49,974
|
|
|
$
|
(52,763
|
)
|
|
$
|
8,804
|
|
|
CONSOLIDATING CONDENSED STATEMENTS OF
COMPREHENSIVE INCOME
|
||||||||||||||||||
|
Fiscal Year Ended September 24, 2016
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
44,514
|
|
|
$
|
465
|
|
|
$
|
96,331
|
|
|
$
|
(95,725
|
)
|
|
$
|
45,585
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
(1,458
|
)
|
|
(1,132
|
)
|
|
8
|
|
|
1,124
|
|
|
(1,458
|
)
|
|||||
Total comprehensive income (loss)
|
43,056
|
|
|
(667
|
)
|
|
96,339
|
|
|
(94,601
|
)
|
|
44,127
|
|
|||||
Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
1,071
|
|
|
—
|
|
|
—
|
|
|
1,071
|
|
|||||
Comprehensive income attributable to Central Garden & Pet Company
|
$
|
43,056
|
|
|
$
|
(1,738
|
)
|
|
$
|
96,339
|
|
|
$
|
(94,601
|
)
|
|
$
|
43,056
|
|
|
CONSOLIDATING CONDENSED STATEMENTS OF
COMPREHENSIVE INCOME
|
||||||||||||||||||
|
Fiscal Year Ended September 26, 2015
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
31,971
|
|
|
$
|
3,254
|
|
|
$
|
70,383
|
|
|
$
|
(72,593
|
)
|
|
$
|
33,015
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized loss on securities
|
(10
|
)
|
|
—
|
|
|
|
|
|
|
|
|
(10
|
)
|
|||||
Reclassification of realized loss on securities included in net income
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||
Foreign currency translation
|
(1,078
|
)
|
|
(537
|
)
|
|
(380
|
)
|
|
917
|
|
|
(1,078
|
)
|
|||||
Total comprehensive income
|
30,903
|
|
|
2,717
|
|
|
70,003
|
|
|
(71,676
|
)
|
|
31,947
|
|
|||||
Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
1,044
|
|
|
—
|
|
|
—
|
|
|
1,044
|
|
|||||
Comprehensive income attributable to Central Garden & Pet Company
|
$
|
30,903
|
|
|
$
|
1,673
|
|
|
$
|
70,003
|
|
|
$
|
(71,676
|
)
|
|
$
|
30,903
|
|
|
CONSOLIDATING CONDENSED STATEMENTS OF
COMPREHENSIVE INCOME
|
||||||||||||||||||
|
Fiscal Year Ended September 27, 2014
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
8,804
|
|
|
$
|
3,806
|
|
|
$
|
49,974
|
|
|
$
|
(52,763
|
)
|
|
$
|
9,821
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized loss on securities
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
(200
|
)
|
|
—
|
|
|
—
|
|
|
(200
|
)
|
|||||
Total comprehensive income (loss)
|
8,794
|
|
|
3,606
|
|
|
49,974
|
|
|
(52,763
|
)
|
|
9,611
|
|
|||||
Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
1,017
|
|
|
—
|
|
|
—
|
|
|
1,017
|
|
|||||
Comprehensive loss attributable to Central Garden & Pet Company
|
$
|
8,794
|
|
|
$
|
2,589
|
|
|
$
|
49,974
|
|
|
$
|
(52,763
|
)
|
|
$
|
8,594
|
|
|
|
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
|
|
|||||
Shareholders’ equity attributable to Central Garden & Pet
|
|
553,014
|
|
|
(18,827
|
)
|
|
1,179,691
|
|
|
(1,160,864
|
)
|
|
553,014
|
|
|||||
Noncontrolling interest
|
|
—
|
|
|
1,573
|
|
|
—
|
|
|
—
|
|
|
1,573
|
|
|||||
Total equity
|
|
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 BALANCE SHEET
|
||||||||||||||||||
|
September 26, 2015
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
$
|
36,280
|
|
|
$
|
10,022
|
|
|
$
|
1,282
|
|
|
$
|
—
|
|
|
$
|
47,584
|
|
Restricted cash
|
13,157
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,157
|
|
|||||
Accounts receivable, net
|
46,326
|
|
|
6,775
|
|
|
154,301
|
|
|
—
|
|
|
207,402
|
|
|||||
Inventories
|
86,109
|
|
|
11,690
|
|
|
238,147
|
|
|
—
|
|
|
335,946
|
|
|||||
Prepaid expenses and other assets
|
22,926
|
|
|
848
|
|
|
25,957
|
|
|
—
|
|
|
49,731
|
|
|||||
Total current assets
|
204,798
|
|
|
29,335
|
|
|
419,687
|
|
|
—
|
|
|
653,820
|
|
|||||
Land, buildings, improvements and equipment, net
|
51,409
|
|
|
3,663
|
|
|
107,737
|
|
|
—
|
|
|
162,809
|
|
|||||
Goodwill
|
—
|
|
|
—
|
|
|
209,089
|
|
|
—
|
|
|
209,089
|
|
|||||
Other long term assets
|
25,881
|
|
|
3,662
|
|
|
82,436
|
|
|
(6,100
|
)
|
|
105,879
|
|
|||||
Intercompany receivable
|
32,695
|
|
|
—
|
|
|
437,385
|
|
|
(470,080
|
)
|
|
—
|
|
|||||
Investment in subsidiaries
|
1,075,028
|
|
|
—
|
|
|
—
|
|
|
(1,075,028
|
)
|
|
—
|
|
|||||
Total
|
$
|
1,389,811
|
|
|
$
|
36,660
|
|
|
$
|
1,256,334
|
|
|
$
|
(1,551,208
|
)
|
|
$
|
1,131,597
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable
|
$
|
20,506
|
|
|
$
|
2,543
|
|
|
$
|
65,840
|
|
|
$
|
—
|
|
|
$
|
88,889
|
|
Accrued expenses and other liabilities
|
38,723
|
|
|
1,789
|
|
|
47,212
|
|
|
—
|
|
|
87,724
|
|
|||||
Current portion of long term debt
|
261
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
291
|
|
|||||
Total current liabilities
|
59,490
|
|
|
4,332
|
|
|
113,082
|
|
|
—
|
|
|
176,904
|
|
|||||
Long-term debt
|
396,626
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
396,691
|
|
|||||
Intercompany payable
|
426,639
|
|
|
43,441
|
|
|
—
|
|
|
(470,080
|
)
|
|
—
|
|
|||||
Losses in excess of investment in subsidiaries
|
—
|
|
|
—
|
|
|
11,867
|
|
|
(11,867
|
)
|
|
—
|
|
|||||
Other long-term obligations
|
1,770
|
|
|
—
|
|
|
55,952
|
|
|
(6,100
|
)
|
|
51,622
|
|
|||||
Shareholders’ equity attributable to Central Garden & Pet
|
505,286
|
|
|
(12,207
|
)
|
|
1,075,368
|
|
|
(1,063,161
|
)
|
|
505,286
|
|
|||||
Noncontrolling interest
|
—
|
|
|
1,094
|
|
|
—
|
|
|
—
|
|
|
1,094
|
|
|||||
Total equity
|
505,286
|
|
|
(11,113
|
)
|
|
1,075,368
|
|
|
(1,063,161
|
)
|
|
506,380
|
|
|||||
Total
|
$
|
1,389,811
|
|
|
$
|
36,660
|
|
|
$
|
1,256,334
|
|
|
$
|
(1,551,208
|
)
|
|
$
|
1,131,597
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
|
||||||||||||||||||
|
Fiscal Year Ended September 24, 2016
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by operating activities
|
$
|
3,514
|
|
|
$
|
2,654
|
|
|
$
|
150,141
|
|
|
$
|
(4,883
|
)
|
|
$
|
151,426
|
|
Additions to property, plant and equipment
|
(4,513
|
)
|
|
(717
|
)
|
|
(22,392
|
)
|
|
—
|
|
|
(27,622
|
)
|
|||||
Payments to acquire companies, net of expenses
|
(69,001
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,001
|
)
|
|||||
Proceeds from disposal of land, buildings, etc.
|
—
|
|
|
—
|
|
|
3,911
|
|
|
—
|
|
|
3,911
|
|
|||||
Change in restricted cash and cash equivalents
|
2,247
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,247
|
|
|||||
Maturities of short term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Investment in short term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other investing activities
|
(730
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(730
|
)
|
|||||
Intercompany investing activities
|
(83
|
)
|
|
—
|
|
|
(130,100
|
)
|
|
130,183
|
|
|
—
|
|
|||||
Net cash used by investing activities
|
(72,080
|
)
|
|
(717
|
)
|
|
(148,581
|
)
|
|
130,183
|
|
|
(91,195
|
)
|
|||||
Repayments on revolving line of credit
|
(419,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(419,000
|
)
|
|||||
Borrowings on revolving line of credit
|
419,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
419,000
|
|
|||||
Repayments of long-term debt
|
(400,286
|
)
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
(400,307
|
)
|
|||||
Issuance of long-term debt
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|||||
Proceeds from issuance of common stock
|
324
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324
|
|
|||||
Excess tax benefits from stock-based awards
|
6,869
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,869
|
|
|||||
Repurchase of common stock
|
(10,873
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,873
|
)
|
|||||
Payments of contingent consideration
|
|
|
|
|
|
|
(2,026
|
)
|
|
|
|
|
(2,026
|
)
|
|||||
Payment of deferred financing costs
|
(7,560
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,560
|
)
|
|||||
Distribution to parent
|
—
|
|
|
(4,883
|
)
|
|
—
|
|
|
4,883
|
|
|
—
|
|
|||||
Distribution to noncontrolling interest
|
—
|
|
|
(592
|
)
|
|
—
|
|
|
—
|
|
|
(592
|
)
|
|||||
Intercompany financing activities
|
127,436
|
|
|
2,747
|
|
|
—
|
|
|
(130,183
|
)
|
|
—
|
|
|||||
Net cash provided (used) by financing activities
|
115,910
|
|
|
(2,728
|
)
|
|
(2,047
|
)
|
|
(125,300
|
)
|
|
(14,165
|
)
|
|||||
Effect of exchange rates on cash
|
(1,466
|
)
|
|
464
|
|
|
334
|
|
|
—
|
|
|
(668
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
45,878
|
|
|
(327
|
)
|
|
(153
|
)
|
|
—
|
|
|
45,398
|
|
|||||
Cash and cash equivalents at beginning of year
|
36,280
|
|
|
10,022
|
|
|
1,282
|
|
|
—
|
|
|
47,584
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
82,158
|
|
|
$
|
9,695
|
|
|
$
|
1,129
|
|
|
$
|
—
|
|
|
$
|
92,982
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
|
||||||||||||||||||
|
Fiscal Year Ended September 26, 2015
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash (used) provided by operating activities
|
$
|
(16,823
|
)
|
|
$
|
7,372
|
|
|
$
|
103,619
|
|
|
$
|
(6,719
|
)
|
|
$
|
87,449
|
|
Additions to property, plant and equipment
|
(2,721
|
)
|
|
(405
|
)
|
|
(18,904
|
)
|
|
—
|
|
|
(22,030
|
)
|
|||||
Payments to acquire companies, net of expenses
|
(38,384
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,384
|
)
|
|||||
Change in restricted cash and cash equivalents
|
1,126
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,126
|
|
|||||
Maturities of short term investments
|
9,997
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,997
|
|
|||||
Investment in short term investments
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|||||
Other investing activities
|
(546
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(546
|
)
|
|||||
Intercompany investing activities
|
(15,789
|
)
|
|
—
|
|
|
(85,963
|
)
|
|
101,752
|
|
|
—
|
|
|||||
Net cash (used) provided by investing activities
|
(46,334
|
)
|
|
(405
|
)
|
|
(104,867
|
)
|
|
101,752
|
|
|
(49,854
|
)
|
|||||
Repayments on revolving line of credit
|
(312,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(312,000
|
)
|
|||||
Borrowings on revolving line of credit
|
312,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
312,000
|
|
|||||
Repayments of long-term debt
|
(50,262
|
)
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(50,289
|
)
|
|||||
Proceeds from issuance of common stock
|
200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|||||
Excess tax benefits from stock-based awards
|
2,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,154
|
|
|||||
Repurchase of common stock
|
(18,497
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,497
|
)
|
|||||
Payment of deferred financing costs
|
(258
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(258
|
)
|
|||||
Distribution to parent
|
—
|
|
|
(6,719
|
)
|
|
—
|
|
|
6,719
|
|
|
—
|
|
|||||
Distribution to noncontrolling interest
|
—
|
|
|
(1,680
|
)
|
|
—
|
|
|
—
|
|
|
(1,680
|
)
|
|||||
Intercompany financing activities
|
103,326
|
|
|
(1,574
|
)
|
|
—
|
|
|
(101,752
|
)
|
|
—
|
|
|||||
Net cash provided (used) by financing activities
|
36,663
|
|
|
(9,973
|
)
|
|
(27
|
)
|
|
(95,033
|
)
|
|
(68,370
|
)
|
|||||
Effect of exchange rates on cash
|
(697
|
)
|
|
222
|
|
|
158
|
|
|
—
|
|
|
(317
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(27,191
|
)
|
|
(2,784
|
)
|
|
(1,117
|
)
|
|
—
|
|
|
(31,092
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
63,471
|
|
|
12,806
|
|
|
2,399
|
|
|
—
|
|
|
78,676
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
36,280
|
|
|
$
|
10,022
|
|
|
$
|
1,282
|
|
|
$
|
—
|
|
|
$
|
47,584
|
|
|
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
|
||||||||||||||||||
|
Fiscal Year Ended September 27, 2014
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||
|
Parent
|
|
Non-Guarantor
Subsidiaries
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash (used) provided by operating activities
|
$
|
(4,139
|
)
|
|
$
|
7,420
|
|
|
$
|
125,720
|
|
|
$
|
(2,534
|
)
|
|
$
|
126,467
|
|
Additions to property, plant and equipment
|
(6,721
|
)
|
|
(1,027
|
)
|
|
(9,425
|
)
|
|
—
|
|
|
(17,173
|
)
|
|||||
Businesses acquired, net of cash acquired
|
—
|
|
|
—
|
|
|
(20,282
|
)
|
|
—
|
|
|
(20,282
|
)
|
|||||
Proceeds from disposal of plant and equipment
|
—
|
|
|
—
|
|
|
8,737
|
|
|
—
|
|
|
8,737
|
|
|||||
Change in restricted cash and cash equivalents
|
(14,283
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,283
|
)
|
|||||
Maturities of short term investments
|
17,820
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,820
|
|
|||||
Investment in short term investments
|
(10,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,000
|
)
|
|||||
Intercompany investing activities
|
(6,726
|
)
|
|
—
|
|
|
(104,926
|
)
|
|
111,652
|
|
|
—
|
|
|||||
Net cash (used) provided by investing activities
|
(19,910
|
)
|
|
(1,027
|
)
|
|
(125,896
|
)
|
|
111,652
|
|
|
(35,181
|
)
|
|||||
Repayments on revolving line of credit
|
(301,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(301,000
|
)
|
|||||
Borrowings on revolving line of credit
|
278,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
278,000
|
|
|||||
Repayments of long-term debt
|
(243
|
)
|
|
—
|
|
|
(124
|
)
|
|
—
|
|
|
(367
|
)
|
|||||
Proceeds from issuance of common stock
|
1,165
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,165
|
|
|||||
Excess tax benefits from stock-based awards
|
498
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
498
|
|
|||||
Repurchase of common stock
|
(2,332
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,332
|
)
|
|||||
Payment of deferred financing costs
|
(3,090
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,090
|
)
|
|||||
Distribution to parent
|
—
|
|
|
(2,534
|
)
|
|
—
|
|
|
2,534
|
|
|
—
|
|
|||||
Distribution to noncontrolling interest
|
—
|
|
|
(633
|
)
|
|
—
|
|
|
—
|
|
|
(633
|
)
|
|||||
Intercompany financing activities
|
109,057
|
|
|
2,595
|
|
|
—
|
|
|
(111,652
|
)
|
|
—
|
|
|||||
Net cash provided (used) by financing activities
|
82,055
|
|
|
(572
|
)
|
|
(124
|
)
|
|
(109,118
|
)
|
|
(27,759
|
)
|
|||||
Effect of exchange rates on cash
|
27
|
|
|
(18
|
)
|
|
(16
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
58,033
|
|
|
5,803
|
|
|
(316
|
)
|
|
—
|
|
|
63,520
|
|
|||||
Cash and cash equivalents at beginning of year
|
5,438
|
|
|
7,003
|
|
|
2,715
|
|
|
—
|
|
|
15,156
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
63,471
|
|
|
$
|
12,806
|
|
|
$
|
2,399
|
|
|
$
|
—
|
|
|
$
|
78,676
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number
|
|
Exhibit
|
|
Form
|
|
File
No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
3.1
|
|
Fourth Amended and Restated Certificate of Incorporation, including the Certificate of Designation – Series A Convertible Preferred Stock and Certificate of Designation – Series B Convertible Preferred Stock.
|
|
10-K
|
|
001-33268
|
|
3.1
|
|
12/14/2006
|
|
|
3.2
|
|
Amended and Restated By-laws of Central Garden & Pet Company, effective August 18, 2015.
|
|
10-K
|
|
001-33268
|
|
3.2
|
|
12/10/2015
|
|
|
4.1
|
|
Specimen Common Stock Certificate.
|
|
S-1
|
|
33-48070
|
|
4.1
|
|
5/21/1992
|
|
|
4.2
|
|
Specimen Class A Common Stock Certificate.
|
|
8-A
|
|
001-33268
|
|
1
|
|
1/24/2007
|
|
|
4.3
|
|
Indenture, dated as of March 8, 2010, by and between the Company and Wells Fargo Bank, National Association, as trustee.
|
|
8-K
|
|
001-33268
|
|
4.2
|
|
3/8/2010
|
|
|
4.4
|
|
Third Supplemental Indenture, dated as of November 9, 2015, by and among the Company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee, relating to 6.125% Senior Notes due 2023.
|
|
10-K
|
|
001-33268
|
|
4.6
|
|
12/10/2015
|
|
|
4.5
|
|
Fourth Supplemental Indenture, dated as of March 25, 2016, by and among the Company, certain guarantors named therein and Wells Fargo Bank, National Association, as trustee, relating to 6.125% Senior Notes due 2023.
|
|
|
|
|
|
|
|
|
|
X
|
10.1*
|
|
Form of Indemnification Agreement between the Company and Executive Officers and Directors.
|
|
S-1
|
|
33-48070
|
|
10.18
|
|
5/21/1992
|
|
|
10.2
|
|
Amended and Restated Credit Agreement dated April 22, 2016 among the Company, certain of the Company's domestic subsidiaries as borrowers and guarantors, a syndicate of financial institutions party thereto, SunTrust Bank, as issuing bank and administrative agent, and SunTrust Robinson Humphrey, Inc., as left lead arranger and joint bookrunner, Bank of America, N.A., U.S. Bank National Association and Wells Fargo Bank, National Association , as co-syndication agents, Bank of the West, BMO Harris Bank N.A., JP Morgan Chase Bank, N.A. and KeyBank National Association as co-documentation agents.
|
|
10-Q
|
|
001-33268
|
|
10.1
|
|
5/5/2016
|
|
|
10.3*
|
|
2003 Omnibus Equity Incentive Plan, as amended and restated effective February 13, 2012.
|
|
8-K
|
|
001-33268
|
|
10.2
|
|
2/15/2012
|
|
|
10.4*
|
|
Form of Nonstatutory Stock Option Agreement for 2003 Omnibus Equity Incentive Plan.
|
|
10-K
|
|
000-20242
|
|
10/5/2001
|
|
12/9/2004
|
|
|
10.5*
|
|
Form of Restricted Stock Agreement for 2003 Omnibus Equity Incentive Plan.
|
|
10-K
|
|
000-20242
|
|
10/5/2002
|
|
12/9/2004
|
|
|
10.6*
|
|
Form of Performance-Based Non-Statutory Stock Option Agreement for 2003 Omnibus Equity Incentive Plan
|
|
10-K
|
|
001-33268
|
|
10/4/2003
|
|
11/19/2010
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number
|
|
Exhibit
|
|
Form
|
|
File
No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
10.7*
|
|
Nonemployee Director Equity Incentive Plan, as amended and restated effective December 10, 2008 (Incorporated by reference from Exhibit 10.5 to the Company’s Form 10-Q for the fiscal quarter ended March 28, 2009).
|
|
10-Q
|
|
001-33268
|
|
10.5
|
|
5/7/2009
|
|
|
10.8*
|
|
Form of Nonstatutory Stock Option Agreement for Nonemployee Director Equity Incentive Plan.
|
|
10-Q
|
|
000-20242
|
|
10/6/2001
|
|
2/3/2005
|
|
|
10.9*
|
|
Form of Restricted Stock Agreement for Nonemployee Director Equity Incentive Plan.
|
|
10-Q
|
|
000-20242
|
|
10/6/2002
|
|
2/3/2005
|
|
|
10.10*
|
|
Employment Agreement dated as of February 27, 1998 between Pennington Seed, Inc. of Delaware and Brooks Pennington III.
|
|
10-K/A
|
|
000-20242
|
|
10.20
|
|
1/20/1999
|
|
|
10.11*
|
|
Modification and Extension of Employment Agreement dated as of February 27, 1998 between Pennington Seed, Inc. of Delaware and Brooks Pennington III, dated as of May 6, 2003.
|
|
10-Q
|
|
000-20242
|
|
10/7/2001
|
|
8/8/2003
|
|
|
10.12*
|
|
Modification and Extension of Employment Agreement and Noncompetition Agreement, dated as of April 10, 2006, between the Company and Brooks M. Pennington III.
|
|
8-K
|
|
000-20242
|
|
10.1
|
|
4/14/2006
|
|
|
10.13*
|
|
Modification and Extension of Employment Agreement and Noncompetition Agreement, dated as of July 1, 2008, between the Company and Brooks M. Pennington III.
|
|
10-K
|
|
001-33268
|
|
10/7/2002
|
|
11/26/2008
|
|
|
10.14*
|
|
Amendment of Employment Agreement and Non-Competition Agreement between the Company and Brooks M. Pennington III, dated March 20, 2012.
|
|
10-Q
|
|
001-33268
|
|
10.1
|
|
2/7/2013
|
|
|
10.15*
|
|
Modification and Extension of Employment Agreement and Noncompetition Agreement, dated as of March 1, 2014, between the Company and Brooks M. Pennington III.
|
|
10-Q
|
|
001-33268
|
|
10.1
|
|
2/5/2015
|
|
|
10.16*
|
|
Form of Agreement to Protect Confidential Information, Intellectual Property and Business Relationships.
|
|
8-K
|
|
000-20242
|
|
10.1
|
|
10/14/2005
|
|
|
10.17*
|
|
Form of Post-Termination Consulting Agreement.
|
|
8-K
|
|
000-20242
|
|
10.2
|
|
10/14/2005
|
|
|
10.18*
|
|
Employment Agreement between the Company and John Ranelli, dated January 9, 2013.
|
|
10-Q
|
|
001-33268
|
|
10.3
|
|
2/7/2013
|
|
|
10.19*
|
|
Amendment to Employment Agreement dated July 22, 2015 between the Company and John R. Ranelli.
|
|
8-K
|
|
001-33268
|
|
10.1
|
|
7/27/2015
|
|
|
10.20*
|
|
Employment Agreement between the Company and David Chichester, effective September 2, 2015.
|
|
10-K
|
|
001-33268
|
|
10.23
|
|
12/10/2015
|
|
|
10.21*
|
|
Employment Agreement between the Company and George A. Yuhas, effective March 1, 2011.
|
|
10-K
|
|
001-33268
|
|
10.24
|
|
12/10/2015
|
|
|
10.22*
|
|
Employment Agreement between the Company and George Roeth, effective June 1, 2016.
|
|
8-K
|
|
011-33268
|
|
10.25
|
|
5/6/2016
|
|
|
12
|
|
Statement re Computation of Ratios of Earnings to Fixed Charges.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number
|
|
Exhibit
|
|
Form
|
|
File
No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
21
|
|
List of Subsidiaries.
|
|
|
|
|
|
|
|
|
|
X
|
23
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
|
|
X
|
32.2
|
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
*
|
|
Management contract or compensatory plan or arrangement.
|
|
|
Fiscal Year Ended
|
||||||||||||||||||
|
|
September 24,
2016 |
|
September 26,
2015 |
|
September 27,
2014 |
|
September 28,
2013 |
|
September 29,
2012 |
||||||||||
Income (loss) before income taxes, and income (loss) of equity method investees
|
|
$
|
70,375
|
|
|
$
|
51,675
|
|
|
$
|
14,019
|
|
|
$
|
(3,185
|
)
|
|
$
|
34,764
|
|
Fixed charges (1)
|
|
43,807
|
|
|
40,847
|
|
|
43,608
|
|
|
44,038
|
|
|
41,162
|
|
|||||
Earnings
|
|
114,182
|
|
|
92,522
|
|
|
57,627
|
|
|
40,853
|
|
|
75,926
|
|
|||||
Fixed charges (1)
|
|
$
|
43,807
|
|
|
$
|
40,847
|
|
|
$
|
43,608
|
|
|
$
|
44,038
|
|
|
$
|
41,162
|
|
Earnings to fixed charges excess (deficiency)
|
|
$
|
70,375
|
|
|
$
|
51,675
|
|
|
$
|
14,019
|
|
|
$
|
(3,185
|
)
|
|
$
|
34,764
|
|
Ratio of earnings to fixed charges (2)
|
|
2.6
|
|
|
2.3
|
|
|
1.3
|
|
|
N/M
|
|
|
1.8
|
|
(1)
|
Fixed charges consist of interest expense, the portion of rental expense under operating leases deemed by management to be representative of the interest factor and amortization of deferred financing costs.
|
(2)
|
For the fiscal year ended September 28, 2013, earnings were insufficient to cover fixed charges by approximately $3.2 million, and the ratio is not meaningful.
|
Name
|
State or Other
Jurisdiction of Incorporation
|
All-Glass Aquarium Co., Inc.
|
Wisconsin
|
B2E Corporation
|
New York
|
B2E Biotech, LLC
|
Delaware
|
B2E Microbials, LLC
|
Delaware
|
B2E Manufacturing, LLC
|
Delaware
|
Farnam Companies, Inc.
|
Arizona
|
Four Paws Products, Ltd.
|
New York
|
Four Star Microbial Products, LLC
|
Delaware
|
Gulfstream Home & Garden, Inc.
|
Florida
|
Howard Johnson's Enterprises, Inc
|
Delaware
|
Hydro-Organics Wholesale
|
California
|
IMS Comercializadora Y Fabricacion DE Calidad SA DE CV
|
Mexico
|
IMS Southern, LLC
|
Utah
|
IMS Trading, LLC
|
Utah
|
IMS Trading Mexico
|
Mexico
|
Interpet Limited
|
Foreign
|
Kaytee Products, Inc.
|
Wisconsin
|
Matson, LLC
|
Washington
|
New England Pottery, LLC
|
Delaware
|
Nexgen Turf Research, LLC
|
Oregon
|
Pennington Seed, Inc.
|
Delaware
|
Pets International, Ltd.
|
Illinois
|
TFH Publications, Inc.
|
Delaware
|
Wellmark International
|
California
|
Gro Tec, Inc.
|
Georgia
|
1.
|
I have reviewed this report on Form 10-K 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;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures 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
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d)
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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
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5.
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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 registrant’s Board of Directors (or persons performing the equivalent functions):
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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
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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.
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Date: December 1, 2016
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/s/ George C. Roeth
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George C. Roeth
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President and Chief Executive Officer
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|
(Principal Executive Officer)
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1.
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I have reviewed this report on Form 10-K of Central Garden & Pet Company;
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2.
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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;
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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;
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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 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 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.
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Date: December 1, 2016
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/s/ Howard A. Machek
|
|
Howard A. Machek
|
|
Senior Vice President and Chief Accounting Officer
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|
(Principal Financial Officer)
|
(1)
|
such Report complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
the information contained in such Report presents, in all material respects, the financial condition and results of operations of Central Garden & Pet Company.
|
December 1, 2016
|
/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 fairly presents, in all material respects, the financial condition and results of operations of Central Garden & Pet Company.
|
December 1, 2016
|
/s/ Howard A. Machek
|
|
Howard A. Machek
|
|
Senior Vice President and Chief Accounting Officer
|
|
(Principal Financial Officer)
|