2019 Q2 Form 10-K Financial Statement

#000009141919000005 Filed on June 17, 2019

View on sec.gov

Income Statement

Concept 2019 Q2 2018 Q2 2018 Q1
Revenue $1.902B $1.781B $1.903B
YoY Change 6.78% -0.14% 1.3%
Cost Of Revenue $1.210B $1.087B $1.175B
YoY Change 11.3% -3.92% 1.64%
Gross Profit $692.4M $690.5M $728.5M
YoY Change 0.28% 5.82% 0.77%
Gross Profit Margin 36.4% 38.76% 38.28%
Selling, General & Admin $369.8M $319.9M $330.6M
YoY Change 15.6% -4.34% -1.96%
% of Gross Profit 53.41% 46.33% 45.38%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $112.3M $101.2M $103.7M
YoY Change 10.97% -2.88% -0.58%
% of Gross Profit 16.22% 14.66% 14.23%
Operating Expenses $428.8M $225.7M $330.6M
YoY Change 89.99% -40.99% -1.96%
Operating Profit $263.6M $464.8M $164.0M
YoY Change -43.29% 72.15% -31.01%
Interest Expense -$49.10M -$47.40M -$43.10M
YoY Change 3.59% 17.62% 6.95%
% of Operating Profit -18.63% -10.2% -26.28%
Other Income/Expense, Net -$2.600M -$5.200M -$4.900M
YoY Change -50.0% -194.55% -2550.0%
Pretax Income $101.9M $264.2M $116.0M
YoY Change -61.43% 63.19% -41.3%
Income Tax $30.40M $78.30M -$715.3M
% Of Pretax Income 29.83% 29.64% -616.64%
Net Earnings $71.50M $185.9M $831.3M
YoY Change -61.54% 68.39% 517.61%
Net Earnings / Revenue 3.76% 10.44% 43.68%
Basic Earnings Per Share $0.63 $1.64 $7.32
Diluted Earnings Per Share $0.63 $1.64 $7.32
COMMON SHARES
Basic Shares Outstanding 113.7M shares 113.5M shares 113.0M shares
Diluted Shares Outstanding 113.0M shares

Balance Sheet

Concept 2019 Q2 2018 Q2 2018 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $101.0M $193.0M $186.0M
YoY Change -47.67% 15.57% 32.86%
Cash & Equivalents $101.3M $192.6M $186.2M
Short-Term Investments
Other Short-Term Assets $109.8M $122.4M $91.90M
YoY Change -10.29% -6.28% -31.57%
Inventory $910.3M $854.4M $909.1M
Prepaid Expenses
Receivables $503.8M $385.6M $422.7M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $1.625B $1.555B $1.610B
YoY Change 4.51% -5.29% -4.79%
LONG-TERM ASSETS
Property, Plant & Equipment $1.912B $1.729B $1.634B
YoY Change 10.6% 6.9% 3.77%
Goodwill $6.311B $5.942B $5.949B
YoY Change 6.2% -2.22% -2.22%
Intangibles $6.719B $5.917B $5.971B
YoY Change 13.56% -3.8% -4.65%
Long-Term Investments $41.00M
YoY Change
Other Assets $13.17B $12.02B $12.09B
YoY Change 9.62% -2.93% -3.67%
Total Long-Term Assets $15.09B $13.75B $13.72B
YoY Change 9.75% -1.8% -2.84%
TOTAL ASSETS
Total Short-Term Assets $1.625B $1.555B $1.610B
Total Long-Term Assets $15.09B $13.75B $13.72B
Total Assets $16.71B $15.30B $15.33B
YoY Change 9.22% -2.16% -3.05%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $591.0M $512.1M $471.2M
YoY Change 15.41% 7.31% 9.96%
Accrued Expenses $228.0M $181.0M $117.0M
YoY Change 25.97% -6.7% -20.95%
Deferred Revenue
YoY Change
Short-Term Debt $426.0M $144.0M $254.0M
YoY Change 195.83% -68.28% 78.87%
Long-Term Debt Due $798.5M $0.00 $0.00
YoY Change -100.0%
Total Short-Term Liabilities $2.342B $1.034B $1.090B
YoY Change 126.49% -43.59% 9.3%
LONG-TERM LIABILITIES
Long-Term Debt $4.686B $4.688B $4.689B
YoY Change -0.04% 5.45% -5.19%
Other Long-Term Liabilities $110.3M $105.1M $366.0M
YoY Change 4.95% 19.43% -4.01%
Total Long-Term Liabilities $6.399B $6.376B $6.435B
YoY Change 0.36% -8.35% -15.02%
TOTAL LIABILITIES
Total Short-Term Liabilities $2.342B $1.034B $1.090B
Total Long-Term Liabilities $6.399B $6.376B $6.435B
Total Liabilities $8.741B $7.410B $7.525B
YoY Change 17.96% -15.69% -12.19%
SHAREHOLDERS EQUITY
Retained Earnings $2.368B $2.239B $2.127B
YoY Change 5.73% 80.51% 43.63%
Common Stock $5.756B $5.740B $5.740B
YoY Change 0.28% 0.26% -2.36%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares 32.76M shares 32.92M shares 32.90M shares
Shareholders Equity $7.971B $7.891B $7.804B
YoY Change
Total Liabilities & Shareholders Equity $16.71B $15.30B $15.33B
YoY Change 9.22% -2.16% -3.05%

Cashflow Statement

Concept 2019 Q2 2018 Q2 2018 Q1
OPERATING ACTIVITIES
Net Income $71.50M $185.9M $831.3M
YoY Change -61.54% 68.39% 517.61%
Depreciation, Depletion And Amortization $112.3M $101.2M $103.7M
YoY Change 10.97% -2.88% -0.58%
Cash From Operating Activities $274.2M $314.4M $469.0M
YoY Change -12.79% 19.0% 11.8%
INVESTING ACTIVITIES
Capital Expenditures -$92.60M -$111.6M -$80.30M
YoY Change -17.03% 100.0% 52.66%
Acquisitions
YoY Change
Other Investing Activities -$8.800M $5.800M $14.80M
YoY Change -251.72% -59.15% 1750.0%
Cash From Investing Activities -$101.4M -$105.8M -$65.50M
YoY Change -4.16% 154.33% 26.45%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -274.6M -196.8M -404.0M
YoY Change 39.53% 1.6% 15.0%
NET CHANGE
Cash From Operating Activities 274.2M 314.4M 469.0M
Cash From Investing Activities -101.4M -105.8M -65.50M
Cash From Financing Activities -274.6M -196.8M -404.0M
Net Change In Cash -101.8M 11.80M -500.0K
YoY Change -962.71% -59.17% -103.05%
FREE CASH FLOW
Cash From Operating Activities $274.2M $314.4M $469.0M
Capital Expenditures -$92.60M -$111.6M -$80.30M
Free Cash Flow $366.8M $426.0M $549.3M
YoY Change -13.9% 33.12% 16.35%

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when they reach age 55 and have attained 10 years of credited service
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P3Y3M18D
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861000000 USD
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701600000 USD
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3100000 USD
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21500000 USD
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3600000 shares
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CY2019Q2 us-gaap Stockholders Equity
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CY2019 us-gaap Unrecognized Tax Benefits Decreases Resulting From Prior Period Tax Positions
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1100000 USD
CY2018 us-gaap Unrecognized Tax Benefits Decreases Resulting From Settlements With Taxing Authorities
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3000000 USD
CY2019 us-gaap Unrecognized Tax Benefits Decreases Resulting From Settlements With Taxing Authorities
UnrecognizedTaxBenefitsDecreasesResultingFromSettlementsWithTaxingAuthorities
9000000 USD
CY2017Q2 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued
UnrecognizedTaxBenefitsIncomeTaxPenaltiesAndInterestAccrued
4100000 USD
CY2018Q2 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued
UnrecognizedTaxBenefitsIncomeTaxPenaltiesAndInterestAccrued
4000000 USD
CY2019Q2 us-gaap Unrecognized Tax Benefits Income Tax Penalties And Interest Accrued
UnrecognizedTaxBenefitsIncomeTaxPenaltiesAndInterestAccrued
3300000 USD
CY2017 us-gaap Unrecognized Tax Benefits Increases Resulting From Acquisition
UnrecognizedTaxBenefitsIncreasesResultingFromAcquisition
0 USD
CY2018 us-gaap Unrecognized Tax Benefits Increases Resulting From Acquisition
UnrecognizedTaxBenefitsIncreasesResultingFromAcquisition
0 USD
CY2019 us-gaap Unrecognized Tax Benefits Increases Resulting From Acquisition
UnrecognizedTaxBenefitsIncreasesResultingFromAcquisition
0 USD
CY2017 us-gaap Unrecognized Tax Benefits Increases Resulting From Current Period Tax Positions
UnrecognizedTaxBenefitsIncreasesResultingFromCurrentPeriodTaxPositions
700000 USD
CY2018 us-gaap Unrecognized Tax Benefits Increases Resulting From Current Period Tax Positions
UnrecognizedTaxBenefitsIncreasesResultingFromCurrentPeriodTaxPositions
1100000 USD
CY2019 us-gaap Unrecognized Tax Benefits Increases Resulting From Current Period Tax Positions
UnrecognizedTaxBenefitsIncreasesResultingFromCurrentPeriodTaxPositions
900000 USD
CY2017 us-gaap Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions
UnrecognizedTaxBenefitsIncreasesResultingFromPriorPeriodTaxPositions
1200000 USD
CY2018 us-gaap Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions
UnrecognizedTaxBenefitsIncreasesResultingFromPriorPeriodTaxPositions
500000 USD
CY2019 us-gaap Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions
UnrecognizedTaxBenefitsIncreasesResultingFromPriorPeriodTaxPositions
300000 USD
CY2017 us-gaap Unrecognized Tax Benefits Reductions Resulting From Lapse Of Applicable Statute Of Limitations
UnrecognizedTaxBenefitsReductionsResultingFromLapseOfApplicableStatuteOfLimitations
5800000 USD
CY2018 us-gaap Unrecognized Tax Benefits Reductions Resulting From Lapse Of Applicable Statute Of Limitations
UnrecognizedTaxBenefitsReductionsResultingFromLapseOfApplicableStatuteOfLimitations
6700000 USD
CY2019 us-gaap Unrecognized Tax Benefits Reductions Resulting From Lapse Of Applicable Statute Of Limitations
UnrecognizedTaxBenefitsReductionsResultingFromLapseOfApplicableStatuteOfLimitations
9500000 USD
CY2017Q2 us-gaap Unrecognized Tax Benefits That Would Impact Effective Tax Rate
UnrecognizedTaxBenefitsThatWouldImpactEffectiveTaxRate
23100000 USD
CY2018Q2 us-gaap Unrecognized Tax Benefits That Would Impact Effective Tax Rate
UnrecognizedTaxBenefitsThatWouldImpactEffectiveTaxRate
21500000 USD
CY2019Q2 us-gaap Unrecognized Tax Benefits That Would Impact Effective Tax Rate
UnrecognizedTaxBenefitsThatWouldImpactEffectiveTaxRate
12000000 USD
CY2019 us-gaap Valuation Allowance Deferred Tax Asset Change In Amount
ValuationAllowanceDeferredTaxAssetChangeInAmount
600000 USD
CY2017 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
100000 shares
CY2018 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
0 shares
CY2019 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
0 shares
CY2017 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
115600000 shares
CY2018 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
113000000 shares
CY2019 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
113100000 shares
CY2017 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
115500000 shares
CY2018 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
113000000 shares
CY2019 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
113100000 shares
CY2019 us-gaap Loss Contingency Disclosures
LossContingencyDisclosures
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Note 15: Contingencies</font></div><div style="line-height:120%;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;">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 the alleged price-fixing of shelf stable tuna products prior to 2011 by a business previously owned by, but divested prior to our acquisition of, Big Heart, the significant majority of which we settled during the second half of 2019 and the remainder of which we anticipate resolving in the near future. While we cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these matters, we have accrued losses for certain contingent liabilities that we have determined are probable and reasonably estimable at </font><font style="font-family:inherit;font-size:10pt;">April&#160;30, 2019</font><font style="font-family:inherit;font-size:10pt;">. 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 could 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%;padding-bottom:16px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On May 9, 2011, CERT 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 CERT 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 Proposition 65. 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;">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 </font></div><div style="line-height:120%;padding-bottom:16px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">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 on the third phase regarding remedies issues was scheduled to commence on October 15, 2018. The trial did not proceed on the scheduled date as further described below.</font></div><div style="line-height:120%;padding-bottom:16px;text-align:left;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 (&#8220;OEHHA&#8221;), issued a proposed regulation clarifying that cancer warnings are not required for coffee under Proposition 65. The California Court of Appeals granted defendants&#8217; requests to stay the trial on remedies until a final determination was made on OEHHA&#8217;s proposed regulation. The California Office of Administrative Law approved the proposed regulation on June 3, 2019, and the regulation will go into effect on October 1, 2019, which should result in the dismissal of this case. However, prior to the approval of the proposed regulation, CERT challenged the authority of OEHHA to propose the regulation. Considering the regulation is final, we expect this challenge to continue. At this stage of the proceedings, prior to and without knowing whether the trial on remedies issues will move forward in light of the challenge, 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 April 30, 2019, 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 if the case proceeds. 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, the trial, or the appellate court rulings of the case, if any, cannot be predicted at this time.</font></div></div>
CY2019 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates:</font><font style="font-family:inherit;font-size:10pt;"> The preparation of consolidated financial statements in conformity with U.S. GAAP requires that we make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates in these consolidated financial statements include, among others: estimates of future cash flows associated with assets, potential asset impairments, useful lives and residual values of long-lived assets used in determining depreciation and amortization, net realizable value of inventories, accruals for trade marketing and merchandising programs, income taxes, and the determination of discount and other assumptions for defined benefit pension and other postretirement benefit expenses. Actual results could differ from these estimates.</font></div></div>

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