2018 Q3 Form 10-Q Financial Statement

#000009141918000008 Filed on August 27, 2018

View on sec.gov

Income Statement

Concept 2018 Q3 2017 Q3
Revenue $1.903B $1.749B
YoY Change 8.78% -3.68%
Cost Of Revenue $1.224B $1.087B
YoY Change 12.65% -0.58%
Gross Profit $678.2M $662.1M
YoY Change 2.43% -8.39%
Gross Profit Margin 35.65% 37.86%
Selling, General & Admin $383.3M $348.8M
YoY Change 9.89% -2.02%
% of Gross Profit 56.52% 52.68%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $51.40M $54.50M
YoY Change -5.69% 0.93%
% of Gross Profit 7.58% 8.23%
Operating Expenses $383.3M $348.8M
YoY Change 9.89% -2.02%
Operating Profit $226.9M $235.2M
YoY Change -3.53% -19.95%
Interest Expense -$53.60M -$42.00M
YoY Change 27.62% 1.2%
% of Operating Profit -23.62% -17.86%
Other Income/Expense, Net -$200.0K -$4.200M
YoY Change -95.24% -481.82%
Pretax Income $173.1M $189.0M
YoY Change -8.41% -25.41%
Income Tax $40.10M $62.20M
% Of Pretax Income 23.17% 32.91%
Net Earnings $133.0M $126.8M
YoY Change 4.89% -25.41%
Net Earnings / Revenue 6.99% 7.25%
Basic Earnings Per Share $1.17 $1.12
Diluted Earnings Per Share $1.17 $1.12
COMMON SHARES
Basic Shares Outstanding 113.1M shares 112.9M shares
Diluted Shares Outstanding 113.1M shares 113.0M shares

Balance Sheet

Concept 2018 Q3 2017 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $192.0M $183.0M
YoY Change 4.92% 66.36%
Cash & Equivalents $192.0M $183.2M
Short-Term Investments
Other Short-Term Assets $92.20M $93.90M
YoY Change -1.81% 0.43%
Inventory $1.017B $981.3M
Prepaid Expenses
Receivables $504.2M $433.7M
Other Receivables $0.00 $0.00
Total Short-Term Assets $1.806B $1.692B
YoY Change 6.72% -2.79%
LONG-TERM ASSETS
Property, Plant & Equipment $1.828B $1.596B
YoY Change 14.55% -0.18%
Goodwill $6.622B $6.092B
YoY Change 8.7% 0.12%
Intangibles $7.095B $6.104B
YoY Change 16.23% -5.22%
Long-Term Investments
YoY Change
Other Assets $13.88B $12.35B
YoY Change 12.35% -2.9%
Total Long-Term Assets $15.71B $13.95B
YoY Change 12.6% -2.59%
TOTAL ASSETS
Total Short-Term Assets $1.806B $1.692B
Total Long-Term Assets $15.71B $13.95B
Total Assets $17.51B $15.64B
YoY Change 11.96% -2.62%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $532.1M $477.6M
YoY Change 11.41% 5.66%
Accrued Expenses $142.0M $162.0M
YoY Change -12.35% -7.95%
Deferred Revenue
YoY Change
Short-Term Debt $530.0M $283.9M
YoY Change 86.69% -7.22%
Long-Term Debt Due $499.3M
YoY Change
Total Short-Term Liabilities $1.544B $1.751B
YoY Change -11.82% 35.9%
LONG-TERM LIABILITIES
Long-Term Debt $6.185B $4.445B
YoY Change 39.15% -11.91%
Other Long-Term Liabilities $303.1M $343.9M
YoY Change -11.86% -11.07%
Total Long-Term Liabilities $8.038B $6.959B
YoY Change 15.51% -9.36%
TOTAL LIABILITIES
Total Short-Term Liabilities $1.544B $1.751B
Total Long-Term Liabilities $8.038B $6.959B
Total Liabilities $9.582B $8.710B
YoY Change 10.02% -2.86%
SHAREHOLDERS EQUITY
Retained Earnings $2.276B $1.278B
YoY Change 78.09% -4.89%
Common Stock $5.745B $5.732B
YoY Change 0.22% -2.33%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares 32.70M shares 32.90M shares
Shareholders Equity $7.931B $6.932B
YoY Change
Total Liabilities & Shareholders Equity $17.51B $15.64B
YoY Change 11.96% -2.62%

Cashflow Statement

Concept 2018 Q3 2017 Q3
OPERATING ACTIVITIES
Net Income $133.0M $126.8M
YoY Change 4.89% -25.41%
Depreciation, Depletion And Amortization $51.40M $54.50M
YoY Change -5.69% 0.93%
Cash From Operating Activities $243.0M $304.3M
YoY Change -20.14% 27.38%
INVESTING ACTIVITIES
Capital Expenditures $101.3M $69.60M
YoY Change 45.55% 38.65%
Acquisitions $1.905B $0.00
YoY Change
Other Investing Activities $25.20M -$31.50M
YoY Change -180.0% -356.1%
Cash From Investing Activities -$2.032B -$38.10M
YoY Change 5232.02% -39.04%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $4.700M $6.600M
YoY Change -28.79% -63.54%
Debt Paid & Issued, Net $0.00
YoY Change -100.0%
Cash From Financing Activities $1.791B -260.1M
YoY Change -788.39% 50.17%
NET CHANGE
Cash From Operating Activities $243.0M 304.3M
Cash From Investing Activities -$2.032B -38.10M
Cash From Financing Activities $1.791B -260.1M
Net Change In Cash $2.000M 6.100M
YoY Change -67.21% 90.63%
FREE CASH FLOW
Cash From Operating Activities $243.0M $304.3M
Capital Expenditures $101.3M $69.60M
Free Cash Flow $141.7M $234.7M
YoY Change -39.63% 24.38%

Facts In Submission

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Contingencies</font></div><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business. We are currently a defendant in a variety of such legal proceedings, including certain lawsuits related to companies that we have acquired. We cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these matters, or reasonably determine a range of potential loss. Our policy is to accrue losses for contingent liabilities when such liabilities are probable and amounts can be reasonably estimated. Based on the information known to date, with the exception of the matter discussed below, we do not believe the final outcome of these proceedings will have a material adverse effect on our financial position, results of operations, or cash flows. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On May 9, 2011, an organization named Council for Education and Research on Toxics (&#8220;Plaintiff&#8221;) filed a lawsuit in the Superior Court of the State of California, County of Los Angeles, against us and additional defendants who manufacture, package, distribute, or sell packaged coffee. The lawsuit is Council for Education and Research on Toxics v. Brad Barry LLC, et al., and was a tag along to a 2010 lawsuit against companies selling &#8220;ready-to-drink&#8221; coffee based on the same claims. Both cases have since been consolidated and now include nearly eighty defendants, which constitute the great majority of the coffee industry in California. The Plaintiff alleges that we and the other defendants failed to provide warnings for our coffee products of exposure to the chemical acrylamide as required under California Health and Safety Code Section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986, commonly referred to as &#8220;Proposition 65.&#8221; The Plaintiff seeks equitable relief, including providing warnings to consumers of coffee products, as well as civil penalties in the amount of the statutory maximum of $2,500.00 per day per violation of Proposition 65. The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Proposition 65. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">As part of a joint defense group organized to defend against the lawsuit, we dispute the claims of the Plaintiff. Acrylamide is not added to coffee, but is inherently present in all coffee in small amounts (measured in parts per billion) as a byproduct of the coffee bean roasting process. We have asserted multiple affirmative defenses. Trial of the first phase of the case commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants. On September 1, 2015, the trial court issued a final ruling adverse to the defendants on all Phase 1 defenses. Trial of the second phase of the case commenced in the fall of calendar year 2017. On March 28, 2018, the trial court issued a proposed ruling adverse to the defendants on the Phase 2 defense, our last remaining defense to liability. The trial court finalized and affirmed its Phase 2 ruling on May 7, 2018, and, therefore, the trial will proceed to the third phase regarding remedies issues.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On June 15, 2018, the state agency responsible for administering the Proposition 65 program, the California Office of Environmental Health Hazard Assessment, issued a proposed regulation clarifying that cancer warnings are not required for coffee under Proposition 65. If the proposed regulation becomes final, the lawsuit will likely be dismissed. At this stage of the proceedings, prior to a trial on remedies issues, we are unable to predict or reasonably estimate the potential loss or effect on our operations. Accordingly, no loss contingency has been recorded for this matter as of July 31, 2018, as the likelihood of loss is not considered probable or estimable. The trial court has discretion to impose zero penalties against us or to impose significant statutory penalties. Significant labeling or warning requirements that could potentially be imposed by the trial court may increase our costs and adversely affect sales of our coffee products, as well as involve substantial expense and operational disruption, which could have a material adverse impact on our financial position, results of operations, or cash flows. Furthermore, a future appellate court decision could reverse the trial court rulings. The outcome and the financial impact of settlement, or the trial or appellate court rulings of the case, if any, cannot be predicted at this time.</font></div></div>

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