Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 03, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | B&G Foods, Inc. | |
Entity Central Index Key | 1,278,027 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-29 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 65,932,291 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 62,840 | $ 206,506 |
Trade accounts receivable, net | 137,147 | 141,392 |
Inventories | 446,273 | 501,849 |
Prepaid expenses and other current assets | 24,371 | 20,054 |
Income tax receivable | 16,712 | 16,794 |
Total current assets | 687,343 | 886,595 |
Property, plant and equipment, net of accumulated depreciation of $217,518 and $200,664 | 271,955 | 272,192 |
Goodwill | 652,143 | 649,292 |
Other intangibles, net | 1,739,102 | 1,748,220 |
Other assets | 1,479 | 1,617 |
Deferred income taxes | 3,091 | 3,122 |
Total assets | 3,355,113 | 3,561,038 |
Current liabilities: | ||
Trade accounts payable | 115,595 | 122,358 |
Accrued expenses | 37,301 | 48,067 |
Income tax payable | 140 | 139 |
Dividends payable | 31,318 | 30,922 |
Total current liabilities | 184,354 | 201,486 |
Long-term debt | 2,073,874 | 2,217,574 |
Other liabilities | 25,998 | 24,881 |
Deferred income taxes | 243,873 | 236,278 |
Total liabilities | 2,528,099 | 2,680,219 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares; no shares issued or outstanding | ||
Common stock, $0.01 par value per share. Authorized 125,000,000 shares; 65,932,291 and 66,499,044 shares issued and outstanding as of June 30, 2018 and December 30, 2017 | 659 | 665 |
Additional paid-in capital | 186,745 | 266,789 |
Accumulated other comprehensive loss | (23,034) | (20,756) |
Retained earnings | 662,644 | 634,121 |
Total stockholders' equity | 827,014 | 880,819 |
Total liabilities and stockholders' equity | $ 3,355,113 | $ 3,561,038 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Consolidated Balance Sheets | ||
Property, plant and equipment, accumulated depreciation (in dollars) | $ 217,518 | $ 200,664 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, Authorized shares | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 125,000,000 | 125,000,000 |
Common stock, shares issued | 65,932,291 | 66,499,044 |
Common stock, shares outstanding | 65,932,291 | 66,499,044 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Consolidated Statements of Operations | ||||
Net sales | $ 388,378 | $ 361,676 | $ 820,107 | $ 773,983 |
Cost of goods sold | 307,205 | 257,119 | 635,578 | 548,207 |
Gross profit | 81,173 | 104,557 | 184,529 | 225,776 |
Operating expenses: | ||||
Selling, general and administrative expenses | 37,272 | 43,586 | 79,840 | 92,106 |
Amortization expense | 4,609 | 4,265 | 9,218 | 8,737 |
Operating income | 39,292 | 56,706 | 95,471 | 124,933 |
Other income and expenses: | ||||
Interest expense, net | 27,607 | 21,998 | 55,913 | 41,645 |
Loss on extinguishment of debt | 546 | 1,045 | 3,324 | 1,163 |
Other expense (income) | 388 | (1,269) | (1,666) | (3,866) |
Income before income tax expense | 10,751 | 34,932 | 37,900 | 85,991 |
Income tax expense | 2,775 | 12,871 | 9,377 | 31,166 |
Net income | $ 7,976 | $ 22,061 | $ 28,523 | $ 54,825 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 66,307,190 | 66,481,507 | 66,412,421 | 66,477,990 |
Diluted (in shares) | 66,353,639 | 66,711,319 | 66,534,542 | 66,747,804 |
Earnings per share: | ||||
Basic and diluted earnings per share (in dollars per share) | $ 0.12 | $ 0.33 | $ 0.43 | $ 0.82 |
Cash dividends declared per share (in dollars per share) | $ 0.475 | $ 0.465 | $ 0.940 | $ 0.930 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 7,976 | $ 22,061 | $ 28,523 | $ 54,825 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | (5,659) | 3,411 | (2,527) | 7,637 |
Amortization of unrecognized prior service cost and pension deferrals, net of tax | 138 | 51 | 249 | 102 |
Other comprehensive (loss) income | (5,521) | 3,462 | (2,278) | 7,739 |
Comprehensive income | $ 2,455 | $ 25,523 | $ 26,245 | $ 62,564 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 28,523 | $ 54,825 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 26,407 | 24,547 |
Amortization of deferred debt financing costs and bond discount | 2,976 | 2,795 |
Deferred income taxes | 7,511 | 19,992 |
Loss on sale of assets | 1,608 | |
Write-off of property, plant, and equipment | 29 | 105 |
Loss on extinguishment of debt | 3,324 | 1,163 |
Share-based compensation expense | 2,597 | 3,202 |
Changes in assets and liabilities, net of effects of businesses acquired: | ||
Trade accounts receivable | 2,397 | (5,750) |
Inventories | 51,744 | (60,555) |
Prepaid expenses and other current assets | (4,320) | 2,122 |
Income tax receivable/payable | 51 | (2,699) |
Other assets | 161 | 1,073 |
Trade accounts payable | (6,374) | (5,274) |
Accrued expenses | (11,647) | (18,617) |
Other liabilities | 1,425 | 1,287 |
Net cash provided by operating activities | 104,804 | 19,824 |
Cash flows from investing activities: | ||
Capital expenditures | (17,208) | (26,871) |
Proceeds from sale of assets | 2,229 | |
Payments for acquisition of businesses, net of cash acquired | (117) | |
Net cash used in investing activities | (17,208) | (24,759) |
Cash flows from financing activities: | ||
Repayments of long-term debt | (150,000) | (233,640) |
Proceeds from issuance of long-term debt | 500,000 | |
Repayments of borrowings under revolving credit facility | (221,000) | |
Borrowings under revolving credit facility | 55,000 | |
Proceeds from issuance of common stock, net | 36 | |
Dividends paid | (61,888) | (61,790) |
Payments for repurchase of common stock, net | (18,529) | |
Excess tax benefits from share-based compensation | 305 | 820 |
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation | (1,832) | (1,962) |
Debt financing costs | (8,637) | |
Net cash (used in) provided by financing activities | (232,249) | 28,007 |
Effect of exchange rate fluctuations on cash and cash equivalents | 987 | (235) |
Net (decrease) increase in cash and cash equivalents | (143,666) | 22,837 |
Cash and cash equivalents at beginning of period | 206,506 | 28,833 |
Cash and cash equivalents at end of period | 62,840 | 51,670 |
Supplemental disclosures of cash flow information: | ||
Cash interest payments | 53,025 | 34,674 |
Cash income tax payments | 1,628 | 10,232 |
Non-cash transactions: | ||
Dividends declared and not yet paid | 31,318 | $ 30,920 |
Accruals related to purchases of property, plant and equipment | $ 206 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2018 | |
Nature of Operations | |
Nature of Operations | (1) Nature of Operations B&G Foods, Inc. is a holding company whose principal assets are the shares of capital stock of its subsidiaries. Unless the context requires otherwise, references in this report to “B&G Foods,” “our company,” “we,” “us” and “our” refer to B&G Foods, Inc. and its subsidiaries. Our financial statements are presented on a consolidated basis. We operate in a single industry segment and manufacture, sell and distribute a diverse portfolio of high-quality shelf-stable and frozen foods across the United States, Canada and Puerto Rico. Our products include frozen and canned vegetables, oatmeal and other hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, pizza crusts, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, puffed corn and rice snacks, cookies and crackers, nut clusters and other specialty products. Our products are marketed under many recognized brands, including Ac’cent , B&G , B&M , Back to Nature , Baker’s Joy , Bear Creek Country Kitchens , Brer Rabbit , Canoleo , Cary’s , Cream of Rice , Cream of Wheat , Devonsheer , Don Pepino , Durkee , Emeril’s , Grandma’s Molasses , Green Giant , JJ Flats , Joan of Arc , Las Palmas , Le Sueur , MacDonald’s , Mama Mary’s , Maple Grove Farms of Vermont , Molly McButter , Mrs. Dash , New York Flatbreads , New York Style , Old London , Original Tings , Ortega , Pirate’s Booty , Polaner , Red Devil , Regina , Sa-són , Sclafani , Smart Puffs , SnackWell’s, Spice Islands , Spring Tree , Sugar Twin , Tone’s , Trappey’s , TrueNorth , Underwood , Vermont Maid , Victoria , Weber , Wright’s and, as of July 16, 2018, McCann’s , see Note 17, “Subsequent Event.” We also sell and distribute Static Guard , a household product brand . We compete in the retail grocery, foodservice, specialty, private label, club and mass merchandiser channels of distribution. We sell and distribute our products directly and via a network of independent brokers and distributors to supermarket chains, foodservice outlets, mass merchants, warehouse clubs, non-food outlets and specialty distributors. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies Fiscal Year Typically, our fiscal quarters and fiscal year consist of 13 and 52 weeks, respectively, ending on the Saturday closest to December 31 in the case of our fiscal year and fourth fiscal quarter, and on the Saturday closest to the end of the corresponding calendar quarter in the case of our fiscal quarters. As a result, a 53 rd week is added to our fiscal year every five or six years. In a 53-week fiscal year our fourth fiscal quarter contains 14 weeks. Our fiscal year ending December 29, 2018 (fiscal 2018) and our fiscal year ended December 30, 2017 (fiscal 2017) each contain 52 weeks. Each quarter of fiscal 2018 and 2017 contains 13 weeks. Basis of Presentation The accompanying unaudited consolidated interim financial statements for the thirteen and twenty-six week periods ended June 30, 2018 (second quarter and first two quarters of 2018) and July 1, 2017 (second quarter and first two quarters of 2017) have been prepared by our company in accordance with generally accepted accounting principles (GAAP) in the United States of America pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and include the accounts of B&G Foods, Inc. and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. However, our management believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated. The accompanying unaudited consolidated interim financial statements contain all adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of June 30, 2018, and the results of our operations, comprehensive income and cash flows for the second quarter and first two quarters of 2018 and 2017. Our results of operations for the second quarter and first two quarters of 2018 are not necessarily indicative of the results to be expected for the full year. We have evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2017 filed with the SEC on March 1, 2018. Certain prior year amounts have been reclassified to conform to the current year presentation. Use of Estimates The preparation of financial statements in accordance with GAAP in the United States requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management involve trade and consumer promotion expenses; allowances for excess, obsolete and unsaleable inventories; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment and deferred tax assets; and the determination of the useful life of customer relationship and amortizable trademark intangibles. Actual results could differ significantly from these estimates and assumptions. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. We adjust such estimates and assumptions when facts and circumstances dictate. Volatility in the credit and equity markets can increase the uncertainty inherent in such estimates and assumptions. Newly Adopted Accounting Standards In March 2017, the Financial Accounting Standards Board (FASB) issued a new Accounting Standards Update (ASU) that improves the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance revises how employers that sponsor defined benefit pension and other postretirement plans present the net periodic benefit cost in their income statement and requires that the service cost component of net periodic benefit cost be presented in the same income statement line items as other employee compensation costs from services rendered during the period and present the other components of net periodic pension cost below operating profit. The update was effective beginning with the first quarter of fiscal 2018. We adopted this standard as of the first quarter of fiscal 2018. The adoption of this ASU did not have any impact on our consolidated financial position, results of operations or liquidity, but did require a reclassification among selling, general and administrative expenses and other expense (income) on our consolidated statements of operations. In May 2014, the FASB issued guidance on revenue recognition, with final guidance issued in 2016. The guidance provides for a five-step model to determine the revenue to be recognized from the transfer of goods or services to customers. The guidance also requires improved disclosures to help users of the financial statements better understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. It also provides clarification for principal versus agent considerations, identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes. We adopted this guidance and related amendments as of the first quarter of fiscal 2018, applying the full retrospective transition method to all contracts. We concluded that the adoption of this standard primarily affected our policies and estimation methodologies of variable consideration associated with rebates and bill-backs, product returns and cash discounts. The provisions of the new standard did not impact the timing of revenue recognition but did impact the classification of certain payments to customers, moving an immaterial amount of such payments from expense to a deduction from net sales. Our sales predominantly contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for the goods. We report all amounts billed to a customer in a sale transaction as revenue, including those amounts related to shipping and handling. Shipping and handling costs are included in cost of goods sold. Under the new revenue guidance, we recognize our shipping and handling activities as a fulfillment of our promise to transfer products to our customers. We promote our products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the sale price based on amounts estimated as being due to customers and consumers at the end of a period. We derive these estimates principally on historical utilization and redemption rates. Payment terms in our invoices are based on the billing schedule established in our contracts or purchase orders with customers. We generally recognize the related trade receivable when the goods are shipped. In certain cases, we require a payment in advance of performance when the customer’s credit has not been established. We record these revenues as a contract liability; however, these amounts have historically been immaterial. The below tables set forth the adjustments to net sales, gross profit, selling, general and administrative expenses, operating income and other expense (income) during each quarter of 2017 as a result of the newly adopted revenue recognition standard and newly adopted presentation of net periodic pension cost and net periodic postretirement benefit cost (in thousands). Thirteen Weeks Ended April 1, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 417,874 $ (5,567) $ — $ 412,307 Cost of goods sold 291,088 — — 291,088 Gross profit 126,786 (5,567) — 121,219 Selling, general and administrative expenses 53,634 (5,567) 453 48,520 Operating income 68,680 — (453) 68,227 Other income (2,144) — (453) (2,597) Net income $ 32,764 $ — $ — $ 32,764 Basic and diluted earnings per share $ 0.49 $ — $ — $ Thirteen Weeks Ended July 1, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 368,134 $ (6,458) $ — $ 361,676 Cost of goods sold 257,119 — — 257,119 Gross profit 111,015 (6,458) — 104,557 Selling, general and administrative expenses 49,591 (6,458) 453 43,586 Operating income 57,159 — (453) 56,706 Other income (816) — (453) (1,269) Net income $ 22,061 $ — $ — $ 22,061 Basic and diluted earnings per share $ 0.33 $ — $ — $ Thirteen Weeks Ended September 30, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 408,364 $ (2,313) $ — $ 406,051 Cost of goods sold 285,109 — — 285,109 Gross profit 123,255 (2,313) — 120,942 Selling, general and administrative expenses 43,019 (2,313) 293 40,999 Operating income 75,971 — (293) 75,678 Other expense (income) 95 — (293) (198) Net income $ 32,730 $ — $ — $ 32,730 Basic and diluted earnings per share $ 0.49 $ — $ — $ Thirteen Weeks Ended December 30, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 473,684 $ (7,331) $ — $ 466,353 Cost of goods sold 372,493 — — 372,493 Gross profit 101,191 (7,331) — 93,860 Selling, general and administrative expenses 58,990 (7,331) 292 51,951 Operating income 37,592 — (292) 37,300 Other expense (income) 1,258 — (292) 966 Net income $ 129,908 $ — $ — $ 129,908 Basic and diluted earnings per share $ 1.95 $ — $ — $ In January 2017, the FASB issued a new ASU that clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business may affect many areas of accounting, including acquisitions, disposals, goodwill and consolidation. The ASU is applied on a prospective basis and is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. We adopted this standard as of the first quarter of fiscal 2018, and there was no material impact to our consolidated financial statements. In August 2016, the FASB issued a new ASU to provide guidance on eight specific cash flow classification issues and reduce diversity in practice in how some cash receipts and cash payments are presented and classified on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. We adopted this standard as of the first quarter of fiscal 2018, and there was no material impact to our consolidated financial statements. Recently Issued Accounting Standards In January 2017, the FASB issued an amendment to the standards of goodwill impairment testing. The new guidance simplifies the test for goodwill impairment, by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The update is effective for fiscal years beginning after December 15, 2019. We expect to adopt the standard when they become effective. In February 2016, the FASB issued a new ASU that requires lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current guidance. The update is effective beginning with the first quarter of fiscal 2019. We have not yet completed our assessment of the impact from adoption of this ASU on our financial statements but we expect to complete the assessment before the end of the year and we do not expect the adoption of this ASU to have a material impact to our consolidated financial statements. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Acquisitions. | |
Acquisitions | (3) Acquisitions On October 2, 2017, we completed the acquisition of Back to Nature Foods Company, LLC and related entities, including the Back to Nature and SnackWell’s brands, from Brynwood Partners VI L.P., Mondelēz International and certain other sellers for approximately $162.8 million in cash. We refer to this acquisition as the “ Back to Nature acquisition.” The following table sets forth the preliminary allocation of the Back to Nature acquisition purchase price to the estimated fair value of the net assets acquired at the date of acquisition. The preliminary purchase price allocation may be adjusted as a result of the finalization of our purchase price allocation procedures related to the assets acquired and liabilities assumed. During the first two quarters of 2018, we recorded a purchase price adjustment to increase goodwill by $2.9 million and unamortizable trademarks by $0.1 million, and decrease inventory by $0.9 million and other working capital by $2.0 million. We anticipate completing the purchase price allocation during the fourth quarter of fiscal 2018. Back to Nature Acquisition (in thousands): Purchase Price: Cash paid $ 162,848 Total $ 162,848 Preliminary Allocation: Trademarks—unamortizable intangible assets $ 109,900 Trademarks—amortizable intangible assets 12,800 Goodwill 36,383 Customer relationship intangibles—amortizable intangible assets 14,700 Inventory 5,823 Long-term deferred income tax liabilities, net (10,801) Other working capital (5,957) Total $ 162,848 The Back to Nature acquisition was not material to our consolidated results of operations or financial position and, therefore, pro forma financial information is not presented. On July 16, 2018, we acquired the McCann’s brand of premium Irish oatmeal from TreeHouse Foods, Inc. for approximately $32.0 million in cash. See Note 17, “Subsequent Event.” We refer to this acquisition as the “ McCann’s acquisition.” |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventories | |
Inventories | (4) Inventories are stated at the lower of cost or net realizable value and include direct material, direct labor, overhead, warehousing and product transfer costs. Cost is determined using the first-in, first-out and average cost methods. Inventories have been reduced by an allowance for excess, obsolete and unsaleable inventories. The allowance is an estimate based on management’s review of inventories on hand compared to estimated future usage and sales. Inventories consist of the following, as of the dates indicated (in thousands): June 30, 2018 December 30, 2017 Raw materials and packaging $ 71,438 $ 70,315 Work-in-process 92,581 140,425 Finished goods 282,254 291,109 Total $ 446,273 $ |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | (5) The carrying amounts of goodwill and other intangible assets, as of the dates indicated, consist of the following (in thousands): June 30, 2018 December 30, 2017 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount Amortizable Intangible Assets Trademarks $ 19,600 $ 2,823 $ 16,777 $ 19,600 $ 2,276 $ 17,324 Customer relationships 344,990 106,366 238,624 344,990 97,695 247,295 Total amortizable intangible assets $ 364,590 $ 109,189 $ 255,401 $ 364,590 $ 99,971 $ 264,619 Unamortizable Intangible Assets Goodwill $ 652,143 $ 649,292 Trademarks $ 1,483,701 $ 1,483,601 Amortization expense associated with amortizable intangible assets for the second quarter and first two quarters of 2018 was $4.6 million and $9.2 million, respectively, and is recorded in operating expenses. Amortization expense associated with amortizable intangible assets for the second quarter and first two quarters of 2017 was $4.3 million and $8.7 million, respectively. We expect to recognize an additional $9.2 million of amortization expense associated with our amortizable intangible assets during the remainder of fiscal 2018, and thereafter $18.4 million of amortization expense in each of the fiscal years 2019 through 2022. See Note 3, “Acquisitions.” |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2018 | |
Long-Term Debt | |
Long-Term Debt | (6) Long-term debt consists of the following, as of the dates indicated (in thousands): June 30, 2018 December 30, 2017 Revolving credit loans $ — $ — Tranche B term loans due 2022 500,110 650,110 4.625% senior notes due 2021 700,000 700,000 5.25% senior notes due 2025 900,000 900,000 Unamortized deferred financing costs (28,292) (34,167) Unamortized discount 2,056 1,631 Total long-term debt, net of unamortized deferred financing costs and discount 2,073,874 2,217,574 Current portion of long-term debt — — Long-term debt, net of unamortized deferred financing costs and discount, and excluding current portion $ 2,073,874 $ 2,217,574 As of June 30, 2018, the aggregate contractual maturities of long-term debt are as follows (in thousands): Years ending December: 2018 $ — 2019 — 2020 — 2021 700,000 2022 500,110 Thereafter 900,000 Total $ 2,100,110 Senior Secured Credit Agreement. In fiscal 2017, we refinanced our senior secured credit facility twice by amending and restating our senior secured credit agreement, first on March 30, 2017, and again on November 20, 2017. The first refinancing, on March 30, 2017, reduced by 0.75% the spread over LIBOR or the applicable base rate on the then-outstanding $640.1 million of tranche B term loans. On April 3, 2017, we repaid all of the outstanding borrowings and amounts due under our revolving credit facility and tranche A term loans using a portion of the net proceeds of our registered public offering of $500.0 million aggregate principal amount of 5.25% senior notes due 2025. On November 20, 2017, we again refinanced our senior secured credit facility. This second refinancing increased the principal amount of the tranche B term loans by $10.0 million to $650.1 million, reduced by 25 basis points the spread over LIBOR or the applicable base rate on the tranche B term loans and any revolving loans, increased the aggregate commitments under our revolving credit facility from $500.0 million to $700.0 million, and extended the maturity date applicable to our revolving credit facility from June 2019 to November 2022. We made optional prepayments of aggregate principal amount of our tranche B term loans of $125.0 million in the first quarter of 2018 and $25.0 million in the second quarter of 2018. At June 30, 2018, $500.1 million aggregate principal amount of tranche B term loans were outstanding and no amount of revolving credit loans were outstanding under our credit agreement. See Note 17, “Subsequent Event.” The entire $500.1 million principal amount of tranche B term loans outstanding are due and payable at maturity on November 2, 2022. At June 30, 2018, the available borrowing capacity under our revolving credit facility, net of outstanding letters of credit of $2.2 million, was $697.8 million. See Note 17, “Subsequent Event.” Proceeds of the revolving credit facility may be used for general corporate purposes, including acquisitions of targets in the same or a similar line of business as our company, subject to specified criteria. We are required to pay a commitment fee of 0.50% per annum on the unused portion of the revolving credit facility. The maximum letter of credit capacity under the revolving credit facility is $50.0 million, with a fronting fee of 0.25% per annum for all outstanding letters of credit and a letter of credit fee equal to the applicable margin for revolving loans that are Eurodollar (LIBOR) loans. The revolving credit facility matures on November 21, 2022. We may prepay the term loans or permanently reduce the revolving credit facility commitment under the credit agreement at any time without premium or penalty (other than customary “breakage” costs with respect to the early termination of LIBOR loans). Subject to certain exceptions, the credit agreement provides for mandatory prepayment upon certain asset dispositions or casualty events and issuances of indebtedness. Interest under the revolving credit facility, including any outstanding letters of credit, is determined based on alternative rates that we may choose in accordance with the credit agreement, including a base rate per annum plus an applicable margin ranging from 0.25% to 0.75%, and LIBOR plus an applicable margin ranging from 1.25% to 1.75%, in each case depending on our consolidated leverage ratio. Interest under the tranche B term loan facility is determined based on alternative rates that we may choose in accordance with the credit agreement, including a base rate per annum plus an applicable margin of 1.00%, and LIBOR plus an applicable margin of 2.00%. At June 30, 2018, the tranche B term loan interest rate was approximately 4.09%. Our obligations under the credit agreement are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The credit agreement is secured by substantially all of our and our domestic subsidiaries’ assets except our and our domestic subsidiaries’ real property. The credit agreement contains customary restrictive covenants, subject to certain permitted amounts and exceptions, including covenants limiting our ability to incur additional indebtedness, pay dividends and make other restricted payments, repurchase shares of our outstanding stock and create certain liens. The credit agreement also contains certain financial maintenance covenants, which, among other things, specify a maximum consolidated leverage ratio and a minimum interest coverage ratio, each ratio as defined in the credit agreement. Our consolidated leverage ratio (defined as the ratio of our consolidated net debt, as of the last day of any period of four consecutive fiscal quarters to our adjusted EBITDA for such period), may not exceed 7.00 to 1.00. We are also required to maintain a consolidated interest coverage ratio of at least 1.75 to 1.00 as of the last day of any period of four consecutive fiscal quarters. As of June 30, 2018, we were in compliance with all of the covenants, including the financial covenants, in the credit agreement. The credit agreement also provides for an incremental term loan and revolving loan facility, pursuant to which we may request that the lenders under the credit agreement, and potentially other lenders, provide unlimited additional amounts of term loans or revolving loans or both on terms substantially consistent with those provided under the credit agreement. Among other things, the utilization of the incremental facility is conditioned on our ability to meet a maximum senior secured leverage ratio of 4.00 to 1.00, and a sufficient number of lenders or new lenders agreeing to participate in the facility. 4.625% S enior Notes due 2021. On June 4, 2013, we issued $700.0 million aggregate principal amount of 4.625% senior notes due 2021 at a price to the public of 100% of their face value. Interest on the 4.625% senior notes is payable on June 1 and December 1 of each year. The 4.625% senior notes will mature on June 1, 2021, unless earlier retired or redeemed. We may redeem some or all of the 4.625% senior notes at a redemption price of 103.469% beginning June 1, 2016 and thereafter at prices declining annually to 100% on or after June 1, 2019, in each case plus accrued and unpaid interest to the date of redemption. In addition, if we undergo a change of control or upon certain asset sales, we may be required to offer to repurchase the 4.625% senior notes at the repurchase price set forth in the indenture plus accrued and unpaid interest to the date of repurchase. We may also, from time to time, seek to retire the 4.625% senior notes through cash repurchases of the 4.625% senior notes and/or exchanges of the 4.625% senior notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Our obligations under the 4.625% senior notes are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The 4.625% senior notes and the subsidiary guarantees are our and the guarantors’ general unsecured obligations and are effectively junior in right of payment to all of our and the guarantors’ secured indebtedness and to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries; are pari passu in right of payment to all of our and the guarantors’ existing and future unsecured senior debt; and are senior in right of payment to all of our and the guarantors’ future subordinated debt. Our foreign subsidiaries are not guarantors, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of the 4.625% senior notes. The indenture governing the 4.625% senior notes contains covenants with respect to us and the guarantors and restricts the incurrence of additional indebtedness and the issuance of capital stock; the payment of dividends or distributions on, and redemption of, capital stock; a number of other restricted payments, including certain investments; creation of specified liens, certain sale-leaseback transactions and sales of certain specified assets; fundamental changes, including consolidation, mergers and transfers of all or substantially all of our assets; and specified transactions with affiliates. Each of the covenants is subject to a number of important exceptions and qualifications. As of June 30, 2018, we were in compliance with all of the covenants in the indenture governing the 4.625% senior notes. 5.25% Senior Notes due 2025 . On April 3, 2017, we issued $500.0 million aggregate principal amount of 5.25% senior notes due 2025 at a price to the public of 100% of their face value. On November 20, 2017, we issued an additional $400.0 million aggregate principal amount of 5.25% senior notes due 2025 at a price to the public 101% of their face value plus accrued interest from October 1, 2017, which equates to a yield to worst of 5.03%. The notes issued in November were issued as additional notes under the same indenture as our 5.25% senior notes due 2025 that were issued in April, and, as such, form a single series and trade interchangeably with the previously issued 5.25% senior notes. We used the net proceeds of the April offering to repay all of the outstanding borrowings and amounts due under our revolving credit facility and tranche A term loans, and to pay related fees and expenses. We used the net proceeds of the November offering to repay all of the then outstanding borrowings and amounts due under our revolving credit facility and to pay related fees and expenses. We have used a portion of, and intend to use the remaining portion of, the net proceeds of the April and November offerings for general corporate purposes, which have included and could include, among other things, repayment of other long term debt or possible acquisitions. Interest on the 5.25% senior notes is payable on April 1 and October 1 of each year, commencing October 1, 2017. The 5.25% senior notes will mature on April 1, 2025, unless earlier retired or redeemed. On or after April 1, 2020, we may redeem some or all of the 5.25% senior notes at a redemption price of 103.9375% beginning April 1, 2020 and thereafter at prices declining annually to 100% on or after April 1, 2023, in each case plus accrued and unpaid interest to the date of redemption. In addition, if we undergo a change of control or upon certain asset sales, we may be required to offer to repurchase the 5.25% senior notes at the repurchase price set forth in the indenture plus accrued and unpaid interest to the date of repurchase. We may also, from time to time, seek to retire the 5.25% senior notes through cash repurchases of the 5.25% senior notes and/or exchanges of the 5.25% senior notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Our obligations under the 5.25% senior notes are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The 5.25% senior notes and the subsidiary guarantees are our and the guarantors’ general unsecured obligations and are effectively junior in right of payment to all of our and the guarantors’ secured indebtedness and to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries; are pari passu in right of payment to all of our and the guarantors’ existing and future unsecured senior debt; and are senior in right of payment to all of our and the guarantors’ future subordinated debt. Our foreign subsidiaries are not guarantors, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of the 5.25% senior notes. The indenture governing the 5.25% senior notes contains covenants with respect to us and the guarantors and restricts the incurrence of additional indebtedness and the issuance of capital stock; the payment of dividends or distributions on, and redemption of, capital stock; a number of other restricted payments, including certain investments; creation of specified liens, certain sale-leaseback transactions and sales of certain specified assets; fundamental changes, including consolidation, mergers and transfers of all or substantially all of our assets; and specified transactions with affiliates. Each of the covenants is subject to a number of important exceptions and qualifications. As of June 30, 2018, we were in compliance with all of the covenants in the indenture governing the 5.25% senior notes. Subsidiary Guarantees. We have no assets or operations independent of our direct and indirect subsidiaries. All of our present domestic subsidiaries jointly and severally and fully and unconditionally guarantee our long-term debt. There are no significant restrictions on our ability and the ability of our subsidiaries to obtain funds from our respective subsidiaries by dividend or loan. See Note 16, “Guarantor and Non-Guarantor Financial Information.” Accrued Interest . At June 30, 2018 and December 30, 2017, accrued interest of $14.6 million and $14.6 million, respectively, is included in accrued expenses in the accompanying unaudited consolidated balance sheets. Loss on Extinguishment of Debt . During the second quarter of 2018, we incurred a loss on extinguishment of debt in connection with the prepayment of our tranche B term loans, which includes the write-off of deferred debt financing costs of $0.4 million and the write-off of unamortized discount of $0.1 million. During the first two quarters of 2018, we incurred a loss on extinguishment of debt in connection with the prepayment of our tranche B term loans, which includes the write-off of deferred debt financing costs of $2.8 million and the write-off of unamortized discount of $0.5 million. During the second quarter of 2017, the repayment of all outstanding borrowings under the tranche A term loans resulted in a loss on extinguishment of debt, which includes the write-off of deferred debt financing costs of $0.9 million and the write-off of unamortized discount of $0.2 million. During the first quarter of 2017, we incurred a loss on extinguishment of debt in connection with the refinancing of our tranche B term loans, which includes the write-off of deferred debt financing costs and the write-off of unamortized discount of less than $0.1 million in each case. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | (7) The authoritative accounting literature relating to fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The accounting literature outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under generally accepted accounting principles, certain assets and liabilities must be measured at fair value, and the accounting literature details the disclosures that are required for items measured at fair value. Financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy under the accounting literature. The three levels are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable for the asset or liability, either directly or indirectly. Level 3—Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability. Cash and cash equivalents, trade accounts receivable, income tax receivable, trade accounts payable, accrued expenses, income tax payable and dividends payable are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments. The carrying values and fair values of our revolving credit loans, term loans, 4.625% senior notes and 5.25% senior notes as of June 30, 2018 and December 30, 2017 are as follows (in thousands): June 30, 2018 December 30, 2017 Carrying Value Fair Value Carrying Value Fair Value Revolving credit loans — — — — Tranche B term loans due 2022 498,526 (2) 500,395 (1) 647,831 (2) 652,689 (1) 4.625% senior notes due 2021 700,000 688,625 (4) 700,000 710,500 (4) 5.25% senior notes due 2025 903,640 (3) 851,681 (4) 903,910 (3) 919,729 (4) (1) Fair values are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. (2) The carrying values of the tranche B term loans are net of discount. At June 30, 2018 and December 30, 2017, the face amounts of the tranche B term loans were $500.1 million and $650.1 million, respectively. (3) The carrying values of the 5.25% senior notes due 2025 include a premium. At June 30, 2018 and December 30, 2017 the face amount of the 5.25% senior notes due 2025 was $900.0 million. (4) Fair values are estimated based on quoted market prices. There was no Level 3 activity during the second quarter or first two quarters of 2018 or 2017. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jun. 30, 2018 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | (8) The reclassifications from accumulated other comprehensive loss (AOCL) for the second quarter and first two quarters of 2018 and 2017 are as follows (in thousands): Amounts Reclassified from AOCL Thirteen Weeks Ended Twenty-six Weeks Ended Affected Line Item in June 30, July 1, June 30, July 1, the Statement Where Details about AOCL Components 2018 2017 2018 2017 Net Income is Presented Defined benefit pension plan items Amortization of unrecognized prior service cost $ 1 $ 9 $ 1 $ 18 See (1) below Amortization of unrecognized loss 183 73 331 146 See (1) below Accumulated other comprehensive loss before tax 184 82 332 164 Total before tax Tax expense (46) (31) (83) (62) Income tax expense Total reclassification $ 138 $ 51 $ 249 $ 102 Net of tax (1) These items are included in the computation of net periodic pension cost. See Note 10, “Pension Benefits,” for additional information. Changes in AOCL for the first two quarters of 2018 are as follows (in thousands): Foreign Currency Defined Benefit Translation Pension Plan Items Adjustments Total Beginning balance $ (12,985) $ (7,771) $ (20,756) Other comprehensive income before reclassifications — (2,527) (2,527) Amounts reclassified from AOCL 249 — 249 Net current period other comprehensive income 249 (2,527) (2,278) Ending balance $ (12,736) $ (10,298) $ (23,034) |
Stock Repurchase Program
Stock Repurchase Program | 6 Months Ended |
Jun. 30, 2018 | |
Stock Repurchase Program | |
Stock Repurchase Program | (9) On March 13, 2018, our board of directors authorized a stock repurchase program for the repurchase of up to $50.0 million of the company’s common stock through March 15, 2019. Under the authorization, the company may purchase shares of common stock from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the Securities and Exchange Commission (SEC). The timing and amount of stock repurchases under the program will be at the discretion of management, and will depend on available cash, market conditions and other considerations. Therefore, we cannot assure you as to the number or aggregate dollar amount of shares that will be repurchased under the repurchase program. We may discontinue the program at any time. Any shares repurchased pursuant to the repurchase program will be cancelled. During the second quarter of 2018, we repurchased and retired 694,749 shares of common stock at an average price per share (excluding fees and commissions) of $26.65, or $18.5 million in the aggregate. As of June 30, 2018, we had $31.5 million available for future repurchases of common stock under the stock repurchase program. We did not repurchase any shares of common stock during the first quarter of 2018 or the first two quarters of 2017. See Note 10, “Pension Benefits,” for disclosure relating to shares of the company’s common stock purchased by our defined benefit pension plans. |
Pension Benefits
Pension Benefits | 6 Months Ended |
Jun. 30, 2018 | |
Pension Benefits | |
Pension Benefits | (10) Company Sponsored Defined Benefit Pension Plans . Net periodic pension cost for company sponsored defined benefit pension plans for the second quarter and first two quarters of 2018 and 2017 includes the following components (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Service cost—benefits earned during the period $ 1,909 $ $ 3,894 $ Interest cost on projected benefit obligation 1,267 2,529 Expected return on plan assets (2,008) (4,009) Amortization of unrecognized prior service cost 1 1 Amortization of unrecognized loss 183 73 331 146 Net periodic pension cost $ 1,352 $ 917 $ 2,746 $ 1,834 As a result of adopting the ASU issued by the FASB in March 2017, which improves the presentation of net periodic pension cost and net periodic postretirement benefit cost, we have reclassified net periodic pension cost, excluding service cost, out of selling, general and administrative expenses and into other expense (income) on our consolidated statements of operations. During the first two quarters of 2018, we made $1.1 million of defined benefit pension plan contributions. We do not plan to make additional contributions during the remainder of fiscal 2018. During the second quarter of 2018, our defined benefit pension plans purchased 227,667 shares of the company’s common stock at an average price per share (excluding fees and commissions) of $28.27, or $6.4 million in the aggregate. Multi-Employer Defined Benefit Pension Plan . We also contribute to the Bakery and Confectionery Union and Industry International Pension Fund (EIN 52-6118572, Plan No. 001), a multi-employer defined benefit pension plan, sponsored by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM). The plan provides multiple plan benefits with corresponding contribution rates that are collectively bargained between participating employers and their affiliated BCTGM local unions. We were notified that for the plan year beginning January 1, 2012, the plan was in critical status and classified in the Red Zone. As of the date of the accompanying unaudited consolidated interim financial statements, the plan remains in critical status. The law requires that all contributing employers pay to the plan a surcharge to help correct the plan’s financial situation. The amount of the surcharge is equal to a percentage of the amount an employer is otherwise required to contribute to the plan under the applicable collective bargaining agreement. During the second quarter of 2015, we agreed to a collective bargaining agreement that, among other things, implements a rehabilitation plan. As a result, our contributions to the plan are expected to increase by at least 5.0% per year. B&G Foods made contributions to the plan of $0.5 million in the first two quarters of 2018 and expects to pay surcharges of less than $0.1 million in fiscal 2018 assuming consistent hours are worked. B&G Foods contributed $0.2 million in fiscal 2017 and paid less than $0.1 million in surcharges. These contributions represented less than five percent of total contributions made to the plan. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | (11) Operating Leases . As of June 30, 2018, future minimum lease payments under non-cancelable operating leases in effect at quarter-end (with initial or remaining lease terms in excess of one year) for the periods set forth below were as follows (in thousands): Fiscal year ending: 2018 $ 7,325 2019 13,353 2020 11,215 2021 8,059 2022 3,833 Thereafter 12,140 Total $ 55,925 Legal Proceedings. We are from time to time involved in various claims and legal actions arising in the ordinary course of business, including proceedings involving product liability claims, product labeling claims, worker’s compensation and other employee claims, and tort and other general liability claims, as well as trademark, copyright, patent infringement and related claims and legal actions. While we cannot predict with certainty the results of these claims and legal actions in which we are currently, or in the future may be, involved, we do not expect that the ultimate disposition of any currently pending claims or actions will have a material adverse effect on our consolidated financial position, results of operations or liquidity. Environmental. We are subject to environmental laws and regulations in the normal course of business. We did not make any material expenditures during the first two quarters of 2018 or 2017 in order to comply with environmental laws and regulations. Based on our experience to date, management believes that the future cost of compliance with existing environmental laws and regulations (and liability for any known environmental conditions) will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. However, we cannot predict what environmental or health and safety legislation or regulations will be enacted in the future or how existing or future laws or regulations will be enforced, administered or interpreted, nor can we predict the amount of future expenditures that may be required in order to comply with such environmental or health and safety laws or regulations or to respond to such environmental claims. Collective Bargaining Agreements. As of June 30, 2018, approximately 1,606 of our 2,621 employees, or 61.3%, were covered by collective bargaining agreements. None of our collective bargaining agreements are scheduled to expire within one year. Severance and Change of Control Agreements. We have employment agreements with each of our executive officers. The agreements generally continue until terminated by the executive or by us, and provide for severance payments under certain circumstances, including termination by us without cause (as defined in the agreements) or as a result of the employee’s death or disability, or termination by us or a deemed termination upon a change of control (as defined in the agreements). Severance benefits generally include payments for salary continuation, continuation of health care and insurance benefits, present value of additional pension credits and, in the case of a change of control, accelerated vesting under compensation plans and, in certain cases, potential gross up payments for excise tax liability. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per Share | |
Earnings per Share | (12) Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding plus all additional shares of common stock that would have been outstanding if potentially dilutive shares of common stock had been issued upon the exercise of stock options or in connection with performance shares that may be earned under long-term incentive awards as of the grant date, in the case of the stock options, and as of the beginning of the period, in the case of the performance shares, using the treasury stock method. For the second quarter of 2018 and 2017, there were 1,225,416 and 173,357, respectively, shares of common stock issuable upon the exercise of stock options excluded from the calculation of diluted weighted average shares outstanding because the effect would have been anti-dilutive on diluted earnings per share. Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Weighted average shares outstanding: Basic 66,307,190 66,481,507 66,412,421 66,477,990 Net effect of potentially dilutive share-based compensation awards 46,449 229,812 122,121 269,814 Diluted 66,353,639 66,711,319 66,534,542 66,747,804 |
Business and Credit Concentrati
Business and Credit Concentrations and Geographic Information | 6 Months Ended |
Jun. 30, 2018 | |
Business and Credit Concentrations and Geographic Information | |
Business and Credit Concentrations and Geographic Information | (13) Business and Credit Concentrations and Geographic Information Our exposure to credit loss in the event of non-payment of accounts receivable by customers is estimated in the amount of the allowance for doubtful accounts. We perform ongoing credit evaluations of the financial condition of our customers. Our top ten customers accounted for approximately 56.0% and 54.9% of consolidated net sales for the first two quarters of 2018 and 2017, respectively. Our top ten customers accounted for approximately 56.6% and 49.4% of our consolidated trade accounts receivables as of June 30, 2018 and December 30, 2017, respectively. Other than Walmart, which accounted for 24.8% and 22.7% of our consolidated net sales for the second quarter of 2018 and 2017, respectively, no single customer accounted for more than 10.0% of our consolidated net sales for the first two quarters of 2018 or 2017. Other than Walmart, which accounted for 25.7% and 21.5% of our consolidated trade accounts receivables as of June 30, 2018 and December 30, 2017, respectively, no single customer accounted for more than 10.0% of our consolidated trade accounts receivables. As of June 30, 2018, we do not believe we have any significant concentration of credit risk with respect to our consolidated trade accounts receivable with any single customer whose failure or nonperformance would materially affect our results other than as described above with respect to Walmart. During the first two quarters of 2018 and 2017, our sales to customers in foreign countries represented approximately 6.9% and 7.1%, respectively, of net sales. Our foreign sales are primarily to customers in Canada. |
Share-Based Payments
Share-Based Payments | 6 Months Ended |
Jun. 30, 2018 | |
Share-Based Payments | |
Share-Based Payments | (14) Our company makes annual grants of stock options and performance share long-term incentive awards (LTIAs) to our executive officers and certain other members of senior management. The performance share LTIAs entitle the participants to earn shares of common stock upon the attainment of certain performance goals. In addition, our non-employee directors receive annual equity grants as part of their non-employee director compensation and may elect to receive a portion of their annual cash retainer in stock options. The following table details our stock option activity for the first two quarters of fiscal 2018 (dollars in thousands, except per share data): Weighted Weighted Average Average Contractual Life Aggregate Options Exercise Price Remaining (Years) Intrinsic Value Outstanding at beginning of fiscal 2018 832,569 $ 33.45 Granted 397,864 $ 27.00 Exercised — $ — Forfeited (3,160) $ 38.45 Cancelled (1,026) $ 27.77 Outstanding at end of second quarter of 2018 1,226,247 $ 31.35 7.99 $ 1,723 Exercisable at end of second quarter of 2018 533,103 $ 31.34 6.65 $ 293 The fair value of the options was estimated on the date of grant using the Black-Scholes option-pricing model utilizing the following assumptions. Expected volatility was based on both historical and implied volatilities of our common stock over the estimated expected term of the award. The expected term of the options granted represents the period of time that options were expected to be outstanding and is based on the “simplified method” in accordance with accounting guidance. We utilized the simplified method to determine the expected term of the options as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury implied yield at the date of grant. 2018 2017 Weighted average grant date fair value $ 3.74 $ 7.35 Expected volatility 30.6% - 31.7% 27.5% - 29.2% Expected term 5.5 - 6.5 years 5.5 - 6.5 years Risk-free interest rate 2.6% - 2.8% 1.8% - 2.4% Dividend yield 6.7% - 8.1% 4.5% - 4.6% The following table sets forth the compensation expense recognized for share-based payments (performance share LTIAs, stock options, non-employee director stock grants and other share based payments) during the second quarter and first two quarters of 2018 and 2017 and where that expense is reflected in our consolidated statements of operations (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, Consolidated Statements of Operations Location 2018 2017 2018 2017 Compensation expense included in cost of goods sold $ 495 $ $ 764 $ Compensation expense included in selling, general and administrative expenses 1,264 1,833 Total compensation expense for share-based payments $ 1,759 $ 2,059 $ 2,597 $ 3,202 As of June 30, 2018, there was $2.0 million of unrecognized compensation expense related to performance share LTIAs, which is expected to be recognized over the next 2.5 years, and $1.9 million of unrecognized compensation expense related to stock options, which is expected to be recognized over the next 2.75 years. The following table details the activity in our non-vested performance share LTIAs for the first two quarters of 2018: Weighted Average Number of Grant Date Fair Value Performance Shares (1) (per share) (2) Beginning of fiscal 2018 437,218 $ 29.36 Granted 242,436 $ 21.39 Vested (150,255) $ 23.84 Forfeited (3,056) $ 33.45 End of second quarter of 2018 526,343 $ 27.24 (1) Solely for purposes of this table, the number of performance shares is based on the participants earning the maximum number of performance shares (i.e., 200% of the target number of performance shares). (2) The fair value of the awards was determined based upon the closing price of our common stock on the applicable measurement dates (i.e., the deemed grant dates for accounting purposes), reduced by the present value of expected dividends using the risk-free interest-rate, as the award holders are not entitled to dividends or dividend equivalents during the vesting period. The following table details the number of shares of common stock issued by our company during the second quarter and first two quarters of 2018 and 2017 upon the vesting of performance share LTIAs, the exercise of stock options and other share-based payments (dollars in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Number of performance shares vested — — 150,255 110,528 Shares withheld to fund statutory minimum tax withholding — — 57,298 42,368 Shares of common stock issued for performance share LTIAs — — 92,957 68,160 Shares of common stock issued upon the exercise of stock options — 1,300 — 1,300 Shares of common stock issued to non-employee directors for annual equity grants — 20,559 1,119 20,559 Total shares of common stock issued — 21,859 94,076 90,019 Excess tax benefit (1) $ — $ (6) $ 305 $ 820 (1) As a result of the adoption of ASU 2016-09, we recognized discrete tax benefits of $0.3 million and $0.8 million in the income taxes line item of our consolidated statement of operations for the first two quarters 2018 and 2017, respectively, related to excess tax benefits upon vesting or settlement. |
Net Sales by Brand
Net Sales by Brand | 6 Months Ended |
Jun. 30, 2018 | |
Net Sales by Brand | |
Net Sales by Brand | (15) The following table sets forth net sales by brand (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 (2) 2018 2017 (2) Brand: (1) Green Giant - frozen $ 84,182 $ 70,327 $ 179,071 $ 154,461 Spices & Seasonings (3) 63,670 67,205 126,430 130,375 Ortega 34,068 34,669 71,922 71,015 Pirate Brands 25,206 16,308 46,202 41,882 Green Giant - shelf stable 13,446 21,165 39,129 48,765 Back to Nature (4) 17,622 — 37,662 — Maple Grove Farms of Vermont 17,078 16,298 34,043 34,968 Mrs. Dash 14,513 14,634 31,249 31,347 Cream of Wheat 11,777 12,210 30,201 28,783 Bear Creek Country Kitchens 3,313 4,418 14,934 16,257 All other brands 103,503 104,442 209,264 216,130 Total $ 388,378 $ 361,676 $ 820,107 $ 773,983 (1) Table includes net sales for each of our brands whose net sales for the first two quarters of 2018 or fiscal 2017 represent 3% or more of our total net sales for the first two quarters of 2018, and for “all other brands” in the aggregate. Net sales for each brand includes branded net sales and, if applicable, any private label and foodservice net sales attributable to the brand. (2) Net sales for the second quarter and first two quarters of 2017 have been adjusted to reflect our retrospective adoption of the new revenue recognition standard. See Note 2, “Summary of Significant Accounting Policies — Newly Adopted Accounting Standards .” (3) Includes net sales for multiple brands acquired as part of the spices & seasonings acquisition that we completed on November 21, 2016. Does not include net sales for Mrs. Dash and our other legacy spices & seasonings brands. (4) We completed the Back to Nature acquisition on October 2, 2017. |
Guarantor and Non-Guarantor Fin
Guarantor and Non-Guarantor Financial Information | 6 Months Ended |
Jun. 30, 2018 | |
Guarantor and Non-Guarantor Financial Information | |
Guarantor and Non-Guarantor Financial Information | (16) As further discussed in Note 6, “Long-Term Debt,” our obligations under the 4.625% senior notes and the 5.25% senior notes are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries, which we refer to in this note as the guarantor subsidiaries. Our foreign subsidiaries, which we refer to in this note as the non-guarantor subsidiaries, do not guarantee the 4.625% senior notes or the 5.25% senior notes. The following condensed consolidating financial information presents the condensed consolidating balance sheet as of June 30, 2018 and December 30, 2017, the related condensed consolidating statement of operations for the thirteen and twenty-six weeks ended June 30, 2018 and July 1, 2017 and the related condensed consolidating statement of cash flows for the twenty-six weeks ended June 30, 2018 and July 1, 2017 for: 1. 2. 3. 4. The information includes elimination entries necessary to consolidate the Parent with the guarantor subsidiaries and non-guarantor subsidiaries. The guarantor subsidiaries and non-guarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. Separate financial information for each of the guarantor subsidiaries and non-guarantor subsidiaries are not presented because management believes such financial statements would not be meaningful to investors. Condensed Consolidating Balance Sheet As of June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ — $ 58,827 $ 4,013 $ — $ 62,840 Trade accounts receivable, net — 130,003 7,144 — 137,147 Inventories, net — 381,567 64,706 — 446,273 Prepaid expenses and other current assets — 20,825 3,546 — 24,371 Income tax receivable — 14,884 1,828 — 16,712 Total current assets — 606,106 81,237 — 687,343 Property, plant and equipment, net — 230,214 41,741 — 271,955 Goodwill — 652,143 — — 652,143 Other intangibles, net — 1,739,102 — — 1,739,102 Other assets — 1,466 13 — 1,479 Deferred income taxes — — 3,091 — 3,091 Investments in subsidiaries 2,960,498 94,051 — (3,054,549) — Total assets $ 2,960,498 $ 3,323,082 $ 126,082 $ (3,054,549) $ 3,355,113 Liabilities and Stockholders' Equity Current Liabilities: Trade accounts payable $ — $ 97,683 $ 17,912 $ — $ 115,595 Accrued expenses — 34,721 2,580 — 37,301 Income tax payable — — 140 — 140 Dividends payable 31,318 — — — 31,318 Intercompany payables — (11,383) 11,383 — — Total current liabilities 31,318 121,021 32,015 — 184,354 Long-term debt 2,102,166 (28,292) — — 2,073,874 Other liabilities — 25,982 16 — 25,998 Deferred income taxes — 243,873 — — 243,873 Total liabilities 2,133,484 362,584 32,031 — 2,528,099 Stockholders' Equity: Preferred stock — — — — — Common stock 659 — — — 659 Additional paid-in capital 186,745 2,323,113 68,253 (2,391,366) 186,745 Accumulated other comprehensive loss (23,034) (23,034) (10,298) 33,332 (23,034) Retained earnings 662,644 660,419 36,096 (696,515) 662,644 Total stockholders’ equity 827,014 2,960,498 94,051 (3,054,549) 827,014 Total liabilities and stockholders’ equity $ 2,960,498 $ 3,323,082 $ 126,082 $ (3,054,549) $ 3,355,113 Condensed Consolidating Balance Sheet As of December 30, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ — $ 204,815 $ 1,691 $ — $ 206,506 Trade accounts receivable, net — 129,769 11,623 — 141,392 Inventories, net — 428,613 73,236 — 501,849 Prepaid expenses and other current assets — 15,932 4,122 — 20,054 Income tax receivable — 16,259 535 — 16,794 Total current assets — 795,388 91,207 — 886,595 Property, plant and equipment, net — 229,219 42,973 — 272,192 Goodwill — 649,292 — — 649,292 Other intangibles, net — 1,748,220 — — 1,748,220 Other assets — 1,603 14 — 1,617 Deferred income taxes — (1) 3,123 — 3,122 Investments in subsidiaries 3,163,482 91,766 — (3,255,248) — Total assets $ 3,163,482 $ 3,515,487 $ 137,317 $ (3,255,248) $ 3,561,038 Liabilities and Stockholders' Equity Current Liabilities: Trade accounts payable $ — $ 102,594 $ 19,764 $ — $ 122,358 Accrued expenses — 45,586 2,481 — 48,067 Income tax payable — — 139 — 139 Dividends payable 30,922 — — — 30,922 Intercompany payables — (23,167) 23,167 — — Total current liabilities 30,922 125,013 45,551 — 201,486 Long-term debt 2,251,741 (34,167) — — 2,217,574 Other liabilities — 24,881 — — 24,881 Deferred income taxes — 236,278 — — 236,278 Total liabilities 2,282,663 352,005 45,551 — 2,680,219 Stockholders' Equity: Preferred stock — — — — — Common stock 665 — — — 665 Additional paid-in capital 266,789 2,552,342 68,253 (2,620,595) 266,789 Accumulated other comprehensive loss (20,756) (20,756) (7,771) 28,527 (20,756) Retained earnings 634,121 631,896 31,284 (663,180) 634,121 Total stockholders’ equity 880,819 3,163,482 91,766 (3,255,248) 880,819 Total liabilities and stockholders’ equity $ 3,163,482 $ 3,515,487 $ 137,317 $ (3,255,248) $ 3,561,038 Condensed Consolidating Statement of Operations and Comprehensive Income Thirteen Weeks Ended June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 372,442 $ 40,911 $ (24,975) $ 388,378 Cost of goods sold — 294,431 37,749 (24,975) 307,205 Gross profit — 78,011 3,162 — 81,173 Operating expenses: Selling, general and administrative expenses — 35,902 1,370 — 37,272 Amortization expense — 4,609 — — 4,609 Operating income — 37,500 1,792 — 39,292 Other expenses: Interest expense, net — 27,607 — — 27,607 Loss on extinguishment of debt — 546 — — 546 Other expense — 388 — — 388 Income before income tax expense — 8,959 1,792 — 10,751 Income tax expense — 3,595 (820) — 2,775 Equity in earnings of subsidiaries 7,976 2,612 — (10,588) — Net income $ 7,976 $ 7,976 $ 2,612 $ (10,588) $ 7,976 Comprehensive income (loss) $ 2,455 $ 7,838 $ (3,047) $ (4,791) $ 2,455 Condensed Consolidating Statement of Operations and Comprehensive Income Twenty-six Weeks Ended June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 780,290 $ 93,226 $ (53,409) $ 820,107 Cost of goods sold — 605,656 83,331 (53,409) 635,578 Gross profit — 174,634 9,895 — 184,529 Operating expenses: Selling, general and administrative expenses — 75,041 4,799 — 79,840 Amortization expense — 9,218 — — 9,218 Operating income — 90,375 5,096 — 95,471 Other income and expenses: Interest expense, net — 55,913 — — 55,913 Loss on extinguishment of debt — 3,324 — — 3,324 Other income — (1,666) — — (1,666) Income before income tax expense — 32,804 5,096 — 37,900 Income tax expense — 9,093 284 — 9,377 Equity in earnings of subsidiaries 28,523 4,812 — (33,335) — Net income $ 28,523 $ 28,523 $ 4,812 $ (33,335) $ 28,523 Comprehensive income (loss) $ 26,245 $ 28,274 $ 2,285 $ (30,559) $ 26,245 Condensed Consolidating Statement of Operations and Comprehensive Income Thirteen Weeks Ended July 1, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 346,716 $ 31,685 $ (16,725) $ 361,676 Cost of goods sold — 243,907 29,937 (16,725) 257,119 Gross profit — 102,809 1,748 — 104,557 Operating expenses: Selling, general and administrative expenses — 40,187 3,399 — 43,586 Amortization expense — 4,265 — — 4,265 Operating income — 58,357 (1,651) — 56,706 Other income and expenses: Interest expense, net — 21,998 — — 21,998 Loss on extinguishment of debt — 1,045 — — 1,045 Other income — (1,269) — — (1,269) Income before income tax expense — 36,583 (1,651) — 34,932 Income tax expense — 12,632 239 — 12,871 Equity in earnings of subsidiaries 22,061 (1,890) — (20,171) — Net income $ 22,061 $ 22,061 $ (1,890) $ (20,171) $ 22,061 Comprehensive income (loss) $ 25,523 $ 22,011 $ 1,523 $ (23,534) $ 25,523 Condensed Consolidating Statement of Operations and Comprehensive Income Twenty-six Weeks Ended July 1, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 735,728 $ 78,828 $ (40,573) $ 773,983 Cost of goods sold — 516,235 72,545 (40,573) 548,207 Gross profit — 219,493 6,283 — 225,776 Operating expenses: Selling, general and administrative expenses — 86,295 5,811 — 92,106 Amortization expense — 8,737 — — 8,737 Operating income — 124,461 472 — 124,933 Other income and expenses: Interest expense, net — 41,645 — — 41,645 Loss on extinguishment of debt — 1,163 — — 1,163 Other income — (3,866) — — (3,866) Income before income tax expense — 85,519 472 — 85,991 Income tax expense — 30,264 902 — 31,166 Equity in earnings of subsidiaries 54,825 (430) — (54,395) — Net income $ 54,825 $ 54,825 $ (430) $ (54,395) $ 54,825 Comprehensive income (loss) $ 62,564 $ 54,724 $ 7,208 $ (61,932) $ 62,564 Condensed Consolidating Statement of Cash Flows Twenty-six Weeks Ended June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash provided by operating activities $ — $ 89,706 $ 15,098 $ — $ 104,804 Cash flows from investing activities: Capital expenditures — (15,229) (1,979) — (17,208) Proceeds from sale of assets — — — — — Payments for acquisition of businesses, net of cash acquired — — — — — Net cash used in investing activities — (15,229) (1,979) — (17,208) Cash flows from financing activities: Repayments of long-term debt (150,000) — — — (150,000) Proceeds from issuance of long-term debt — — — — — Borrowings under revolving credit facility — — — — — Dividends paid (61,888) — — — (61,888) Payments for the repurchase of common stock, net (18,529) — — — (18,529) Payments of tax withholding on behalf of employees for net share settlement of share-based compensation — (1,832) — — (1,832) Debt financing costs — — — — — Intercompany transactions 230,417 (218,633) (11,784) — — Net cash (used in) provided by financing activities — (220,465) (11,784) — (232,249) Effect of exchange rate fluctuations on cash and cash equivalents — — 987 — 987 Net (decrease) increase in cash and cash equivalents — (145,988) 2,322 — (143,666) Cash and cash equivalents at beginning of period — 204,815 1,691 — 206,506 Cash and cash equivalents at end of period $ — $ 58,827 $ 4,013 $ — $ 62,840 Condensed Consolidating Statement of Cash Flows Twenty-six Weeks Ended July 1, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash provided by operating activities $ — $ 10,665 $ 9,159 $ — $ 19,824 Cash flows from investing activities: Capital expenditures — (19,516) (7,355) — (26,871) Proceeds from sale of assets — 2,229 — — 2,229 Payments for acquisition of businesses, net of cash acquired — (117) — — (117) Net cash used in investing activities — (17,404) (7,355) — (24,759) Cash flows from financing activities: Repayments of long-term debt (233,640) — — — (233,640) Proceeds from issuance of long-term debt 500,000 — — — 500,000 Repayments of borrowings under revolving credit facility (221,000) — — — (221,000) Borrowings under revolving credit facility 55,000 — — — 55,000 Proceeds from issuance of common stock, net 36 — — — 36 Dividends paid (61,790) — — — (61,790) Payments of tax withholding on behalf of employees for net share settlement of share-based compensation — (1,962) — — (1,962) Debt financing costs — (8,637) — — (8,637) Intercompany transactions (38,606) 42,427 (3,821) — — Net cash provided by financing activities — 31,828 (3,821) — 28,007 Effect of exchange rate fluctuations on cash and cash equivalents — — (235) — (235) Net (decreased) increase in cash and cash equivalents — 25,089 (2,252) — 22,837 Cash and cash equivalents at beginning of period — 25,119 3,714 — 28,833 Cash and cash equivalents at end of period $ — $ 50,208 $ 1,462 $ — $ 51,670 |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Event. | |
Subsequent Event | (17) On July 16, 2018, we acquired the McCann’s brand of premium Irish oatmeal from TreeHouse Foods, Inc. for approximately $32.0 million in cash, subject to customary closing and post-closing adjustments. We funded the acquisition and related fees and expenses with cash on hand and revolving loans under our existing credit facility. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Fiscal Year | Fiscal Year Typically, our fiscal quarters and fiscal year consist of 13 and 52 weeks, respectively, ending on the Saturday closest to December 31 in the case of our fiscal year and fourth fiscal quarter, and on the Saturday closest to the end of the corresponding calendar quarter in the case of our fiscal quarters. As a result, a 53 rd week is added to our fiscal year every five or six years. In a 53-week fiscal year our fourth fiscal quarter contains 14 weeks. Our fiscal year ending December 29, 2018 (fiscal 2018) and our fiscal year ended December 30, 2017 (fiscal 2017) each contain 52 weeks. Each quarter of fiscal 2018 and 2017 contains 13 weeks. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated interim financial statements for the thirteen and twenty-six week periods ended June 30, 2018 (second quarter and first two quarters of 2018) and July 1, 2017 (second quarter and first two quarters of 2017) have been prepared by our company in accordance with generally accepted accounting principles (GAAP) in the United States of America pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and include the accounts of B&G Foods, Inc. and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. However, our management believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated. The accompanying unaudited consolidated interim financial statements contain all adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of June 30, 2018, and the results of our operations, comprehensive income and cash flows for the second quarter and first two quarters of 2018 and 2017. Our results of operations for the second quarter and first two quarters of 2018 are not necessarily indicative of the results to be expected for the full year. We have evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2017 filed with the SEC on March 1, 2018. Certain prior year amounts have been reclassified to conform to the current year presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP in the United States requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management involve trade and consumer promotion expenses; allowances for excess, obsolete and unsaleable inventories; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment and deferred tax assets; and the determination of the useful life of customer relationship and amortizable trademark intangibles. Actual results could differ significantly from these estimates and assumptions. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. We adjust such estimates and assumptions when facts and circumstances dictate. Volatility in the credit and equity markets can increase the uncertainty inherent in such estimates and assumptions. |
Newly Adopted and Recently Issued Accounting Standards | Newly Adopted Accounting Standards In March 2017, the Financial Accounting Standards Board (FASB) issued a new Accounting Standards Update (ASU) that improves the presentation of net periodic pension cost and net periodic postretirement benefit cost. The new guidance revises how employers that sponsor defined benefit pension and other postretirement plans present the net periodic benefit cost in their income statement and requires that the service cost component of net periodic benefit cost be presented in the same income statement line items as other employee compensation costs from services rendered during the period and present the other components of net periodic pension cost below operating profit. The update was effective beginning with the first quarter of fiscal 2018. We adopted this standard as of the first quarter of fiscal 2018. The adoption of this ASU did not have any impact on our consolidated financial position, results of operations or liquidity, but did require a reclassification among selling, general and administrative expenses and other expense (income) on our consolidated statements of operations. In May 2014, the FASB issued guidance on revenue recognition, with final guidance issued in 2016. The guidance provides for a five-step model to determine the revenue to be recognized from the transfer of goods or services to customers. The guidance also requires improved disclosures to help users of the financial statements better understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. It also provides clarification for principal versus agent considerations, identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes. We adopted this guidance and related amendments as of the first quarter of fiscal 2018, applying the full retrospective transition method to all contracts. We concluded that the adoption of this standard primarily affected our policies and estimation methodologies of variable consideration associated with rebates and bill-backs, product returns and cash discounts. The provisions of the new standard did not impact the timing of revenue recognition but did impact the classification of certain payments to customers, moving an immaterial amount of such payments from expense to a deduction from net sales. Our sales predominantly contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for the goods. We report all amounts billed to a customer in a sale transaction as revenue, including those amounts related to shipping and handling. Shipping and handling costs are included in cost of goods sold. Under the new revenue guidance, we recognize our shipping and handling activities as a fulfillment of our promise to transfer products to our customers. We promote our products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the sale price based on amounts estimated as being due to customers and consumers at the end of a period. We derive these estimates principally on historical utilization and redemption rates. Payment terms in our invoices are based on the billing schedule established in our contracts or purchase orders with customers. We generally recognize the related trade receivable when the goods are shipped. In certain cases, we require a payment in advance of performance when the customer’s credit has not been established. We record these revenues as a contract liability; however, these amounts have historically been immaterial. The below tables set forth the adjustments to net sales, gross profit, selling, general and administrative expenses, operating income and other expense (income) during each quarter of 2017 as a result of the newly adopted revenue recognition standard and newly adopted presentation of net periodic pension cost and net periodic postretirement benefit cost (in thousands). Thirteen Weeks Ended April 1, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 417,874 $ (5,567) $ — $ 412,307 Cost of goods sold 291,088 — — 291,088 Gross profit 126,786 (5,567) — 121,219 Selling, general and administrative expenses 53,634 (5,567) 453 48,520 Operating income 68,680 — (453) 68,227 Other income (2,144) — (453) (2,597) Net income $ 32,764 $ — $ — $ 32,764 Basic and diluted earnings per share $ 0.49 $ — $ — $ Thirteen Weeks Ended July 1, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 368,134 $ (6,458) $ — $ 361,676 Cost of goods sold 257,119 — — 257,119 Gross profit 111,015 (6,458) — 104,557 Selling, general and administrative expenses 49,591 (6,458) 453 43,586 Operating income 57,159 — (453) 56,706 Other income (816) — (453) (1,269) Net income $ 22,061 $ — $ — $ 22,061 Basic and diluted earnings per share $ 0.33 $ — $ — $ Thirteen Weeks Ended September 30, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 408,364 $ (2,313) $ — $ 406,051 Cost of goods sold 285,109 — — 285,109 Gross profit 123,255 (2,313) — 120,942 Selling, general and administrative expenses 43,019 (2,313) 293 40,999 Operating income 75,971 — (293) 75,678 Other expense (income) 95 — (293) (198) Net income $ 32,730 $ — $ — $ 32,730 Basic and diluted earnings per share $ 0.49 $ — $ — $ Thirteen Weeks Ended December 30, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 473,684 $ (7,331) $ — $ 466,353 Cost of goods sold 372,493 — — 372,493 Gross profit 101,191 (7,331) — 93,860 Selling, general and administrative expenses 58,990 (7,331) 292 51,951 Operating income 37,592 — (292) 37,300 Other expense (income) 1,258 — (292) 966 Net income $ 129,908 $ — $ — $ 129,908 Basic and diluted earnings per share $ 1.95 $ — $ — $ In January 2017, the FASB issued a new ASU that clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business may affect many areas of accounting, including acquisitions, disposals, goodwill and consolidation. The ASU is applied on a prospective basis and is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. We adopted this standard as of the first quarter of fiscal 2018, and there was no material impact to our consolidated financial statements. In August 2016, the FASB issued a new ASU to provide guidance on eight specific cash flow classification issues and reduce diversity in practice in how some cash receipts and cash payments are presented and classified on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. We adopted this standard as of the first quarter of fiscal 2018, and there was no material impact to our consolidated financial statements. Recently Issued Accounting Standards In January 2017, the FASB issued an amendment to the standards of goodwill impairment testing. The new guidance simplifies the test for goodwill impairment, by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The update is effective for fiscal years beginning after December 15, 2019. We expect to adopt the standard when they become effective. In February 2016, the FASB issued a new ASU that requires lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under current guidance. The update is effective beginning with the first quarter of fiscal 2019. We have not yet completed our assessment of the impact from adoption of this ASU on our financial statements but we expect to complete the assessment before the end of the year and we do not expect the adoption of this ASU to have a material impact to our consolidated financial statements. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of newly adopted revenue recognition and net periodic pension cost and net periodic postretirement benefit cost standards | The below tables set forth the adjustments to net sales, gross profit, selling, general and administrative expenses, operating income and other expense (income) during each quarter of 2017 as a result of the newly adopted revenue recognition standard and newly adopted presentation of net periodic pension cost and net periodic postretirement benefit cost (in thousands). Thirteen Weeks Ended April 1, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 417,874 $ (5,567) $ — $ 412,307 Cost of goods sold 291,088 — — 291,088 Gross profit 126,786 (5,567) — 121,219 Selling, general and administrative expenses 53,634 (5,567) 453 48,520 Operating income 68,680 — (453) 68,227 Other income (2,144) — (453) (2,597) Net income $ 32,764 $ — $ — $ 32,764 Basic and diluted earnings per share $ 0.49 $ — $ — $ Thirteen Weeks Ended July 1, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 368,134 $ (6,458) $ — $ 361,676 Cost of goods sold 257,119 — — 257,119 Gross profit 111,015 (6,458) — 104,557 Selling, general and administrative expenses 49,591 (6,458) 453 43,586 Operating income 57,159 — (453) 56,706 Other income (816) — (453) (1,269) Net income $ 22,061 $ — $ — $ 22,061 Basic and diluted earnings per share $ 0.33 $ — $ — $ Thirteen Weeks Ended September 30, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 408,364 $ (2,313) $ — $ 406,051 Cost of goods sold 285,109 — — 285,109 Gross profit 123,255 (2,313) — 120,942 Selling, general and administrative expenses 43,019 (2,313) 293 40,999 Operating income 75,971 — (293) 75,678 Other expense (income) 95 — (293) (198) Net income $ 32,730 $ — $ — $ 32,730 Basic and diluted earnings per share $ 0.49 $ — $ — $ Thirteen Weeks Ended December 30, 2017 As Reported Impact of Revenue Adoption Impact of Pension Adoption As Adjusted Net sales $ 473,684 $ (7,331) $ — $ 466,353 Cost of goods sold 372,493 — — 372,493 Gross profit 101,191 (7,331) — 93,860 Selling, general and administrative expenses 58,990 (7,331) 292 51,951 Operating income 37,592 — (292) 37,300 Other expense (income) 1,258 — (292) 966 Net income $ 129,908 $ — $ — $ 129,908 Basic and diluted earnings per share $ 1.95 $ — $ — $ |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Back To Nature Foods Company, LLC | |
Business Acquisition | |
Schedule of preliminary allocation of purchase price to the estimated fair value of the net assets acquired | Back to Nature Acquisition (in thousands): Purchase Price: Cash paid $ 162,848 Total $ 162,848 Preliminary Allocation: Trademarks—unamortizable intangible assets $ 109,900 Trademarks—amortizable intangible assets 12,800 Goodwill 36,383 Customer relationship intangibles—amortizable intangible assets 14,700 Inventory 5,823 Long-term deferred income tax liabilities, net (10,801) Other working capital (5,957) Total $ 162,848 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventories | |
Summary of Inventories | Inventories consist of the following, as of the dates indicated (in thousands): June 30, 2018 December 30, 2017 Raw materials and packaging $ 71,438 $ 70,315 Work-in-process 92,581 140,425 Finished goods 282,254 291,109 Total $ 446,273 $ |
Goodwill and Other Intangible28
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill and other intangible assets | The carrying amounts of goodwill and other intangible assets, as of the dates indicated, consist of the following (in thousands): June 30, 2018 December 30, 2017 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount Amortizable Intangible Assets Trademarks $ 19,600 $ 2,823 $ 16,777 $ 19,600 $ 2,276 $ 17,324 Customer relationships 344,990 106,366 238,624 344,990 97,695 247,295 Total amortizable intangible assets $ 364,590 $ 109,189 $ 255,401 $ 364,590 $ 99,971 $ 264,619 Unamortizable Intangible Assets Goodwill $ 652,143 $ 649,292 Trademarks $ 1,483,701 $ 1,483,601 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Long-Term Debt | |
Schedule of long-term debt | Long-term debt consists of the following, as of the dates indicated (in thousands): June 30, 2018 December 30, 2017 Revolving credit loans $ — $ — Tranche B term loans due 2022 500,110 650,110 4.625% senior notes due 2021 700,000 700,000 5.25% senior notes due 2025 900,000 900,000 Unamortized deferred financing costs (28,292) (34,167) Unamortized discount 2,056 1,631 Total long-term debt, net of unamortized deferred financing costs and discount 2,073,874 2,217,574 Current portion of long-term debt — — Long-term debt, net of unamortized deferred financing costs and discount, and excluding current portion $ 2,073,874 $ 2,217,574 |
Schedule of aggregate contractual maturities of long-term debt | As of June 30, 2018, the aggregate contractual maturities of long-term debt are as follows (in thousands): Years ending December: 2018 $ — 2019 — 2020 — 2021 700,000 2022 500,110 Thereafter 900,000 Total $ 2,100,110 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements | |
Summary of carrying values and fair values of our revolving credit loans, term loans and senior notes | The carrying values and fair values of our revolving credit loans, term loans, 4.625% senior notes and 5.25% senior notes as of June 30, 2018 and December 30, 2017 are as follows (in thousands): June 30, 2018 December 30, 2017 Carrying Value Fair Value Carrying Value Fair Value Revolving credit loans — — — — Tranche B term loans due 2022 498,526 (2) 500,395 (1) 647,831 (2) 652,689 (1) 4.625% senior notes due 2021 700,000 688,625 (4) 700,000 710,500 (4) 5.25% senior notes due 2025 903,640 (3) 851,681 (4) 903,910 (3) 919,729 (4) (1) Fair values are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active. (2) The carrying values of the tranche B term loans are net of discount. At June 30, 2018 and December 30, 2017, the face amounts of the tranche B term loans were $500.1 million and $650.1 million, respectively. (3) The carrying values of the 5.25% senior notes due 2025 include a premium. At June 30, 2018 and December 30, 2017 the face amount of the 5.25% senior notes due 2025 was $900.0 million. (4) Fair values are estimated based on quoted market prices. |
Accumulated Other Comprehensi31
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accumulated Other Comprehensive Loss. | |
Schedule of reclassification from accumulated other comprehensive loss | The reclassifications from accumulated other comprehensive loss (AOCL) for the second quarter and first two quarters of 2018 and 2017 are as follows (in thousands): Amounts Reclassified from AOCL Thirteen Weeks Ended Twenty-six Weeks Ended Affected Line Item in June 30, July 1, June 30, July 1, the Statement Where Details about AOCL Components 2018 2017 2018 2017 Net Income is Presented Defined benefit pension plan items Amortization of unrecognized prior service cost $ 1 $ 9 $ 1 $ 18 See (1) below Amortization of unrecognized loss 183 73 331 146 See (1) below Accumulated other comprehensive loss before tax 184 82 332 164 Total before tax Tax expense (46) (31) (83) (62) Income tax expense Total reclassification $ 138 $ 51 $ 249 $ 102 Net of tax (1) These items are included in the computation of net periodic pension cost. See Note 10, “Pension Benefits,” for additional information. |
Schedule of changes in accumulated other comprehensive loss | Changes in AOCL for the first two quarters of 2018 are as follows (in thousands): Foreign Currency Defined Benefit Translation Pension Plan Items Adjustments Total Beginning balance $ (12,985) $ (7,771) $ (20,756) Other comprehensive income before reclassifications — (2,527) (2,527) Amounts reclassified from AOCL 249 — 249 Net current period other comprehensive income 249 (2,527) (2,278) Ending balance $ (12,736) $ (10,298) $ (23,034) |
Pension Benefits (Tables)
Pension Benefits (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Pension Benefits | |
Schedule of components of net periodic pension costs | Net periodic pension cost for company sponsored defined benefit pension plans for the second quarter and first two quarters of 2018 and 2017 includes the following components (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Service cost—benefits earned during the period $ 1,909 $ $ 3,894 $ Interest cost on projected benefit obligation 1,267 2,529 Expected return on plan assets (2,008) (4,009) Amortization of unrecognized prior service cost 1 1 Amortization of unrecognized loss 183 73 331 146 Net periodic pension cost $ 1,352 $ 917 $ 2,746 $ 1,834 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies | |
Summary of future minimum lease payments under non-cancelable operating leases | As of June 30, 2018, future minimum lease payments under non-cancelable operating leases in effect at quarter-end (with initial or remaining lease terms in excess of one year) for the periods set forth below were as follows (in thousands): Fiscal year ending: 2018 $ 7,325 2019 13,353 2020 11,215 2021 8,059 2022 3,833 Thereafter 12,140 Total $ 55,925 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings per Share | |
Schedule of calculations related to basic and diluted earning per share | Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Weighted average shares outstanding: Basic 66,307,190 66,481,507 66,412,421 66,477,990 Net effect of potentially dilutive share-based compensation awards 46,449 229,812 122,121 269,814 Diluted 66,353,639 66,711,319 66,534,542 66,747,804 |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Share-Based Payments | |
Schedule of stock option activity | The following table details our stock option activity for the first two quarters of fiscal 2018 (dollars in thousands, except per share data): Weighted Weighted Average Average Contractual Life Aggregate Options Exercise Price Remaining (Years) Intrinsic Value Outstanding at beginning of fiscal 2018 832,569 $ 33.45 Granted 397,864 $ 27.00 Exercised — $ — Forfeited (3,160) $ 38.45 Cancelled (1,026) $ 27.77 Outstanding at end of second quarter of 2018 1,226,247 $ 31.35 7.99 $ 1,723 Exercisable at end of second quarter of 2018 533,103 $ 31.34 6.65 $ 293 |
Schedule of stock options, valuation assumption | 2018 2017 Weighted average grant date fair value $ 3.74 $ 7.35 Expected volatility 30.6% - 31.7% 27.5% - 29.2% Expected term 5.5 - 6.5 years 5.5 - 6.5 years Risk-free interest rate 2.6% - 2.8% 1.8% - 2.4% Dividend yield 6.7% - 8.1% 4.5% - 4.6% |
Schedule of compensation expense recognized for share-based payments | The following table sets forth the compensation expense recognized for share-based payments (performance share LTIAs, stock options, non-employee director stock grants and other share based payments) during the second quarter and first two quarters of 2018 and 2017 and where that expense is reflected in our consolidated statements of operations (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, Consolidated Statements of Operations Location 2018 2017 2018 2017 Compensation expense included in cost of goods sold $ 495 $ $ 764 $ Compensation expense included in selling, general and administrative expenses 1,264 1,833 Total compensation expense for share-based payments $ 1,759 $ 2,059 $ 2,597 $ 3,202 |
Schedule of non-vested performance share LTIAs | Weighted Average Number of Grant Date Fair Value Performance Shares (1) (per share) (2) Beginning of fiscal 2018 437,218 $ 29.36 Granted 242,436 $ 21.39 Vested (150,255) $ 23.84 Forfeited (3,056) $ 33.45 End of second quarter of 2018 526,343 $ 27.24 (1) Solely for purposes of this table, the number of performance shares is based on the participants earning the maximum number of performance shares (i.e., 200% of the target number of performance shares). (2) The fair value of the awards was determined based upon the closing price of our common stock on the applicable measurement dates (i.e., the deemed grant dates for accounting purposes), reduced by the present value of expected dividends using the risk-free interest-rate, as the award holders are not entitled to dividends or dividend equivalents during the vesting period. |
Schedule of number of shares of common stock issued by entity upon the vesting of performance share long-term incentive awards other share based compensation | The following table details the number of shares of common stock issued by our company during the second quarter and first two quarters of 2018 and 2017 upon the vesting of performance share LTIAs, the exercise of stock options and other share-based payments (dollars in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 2018 2017 Number of performance shares vested — — 150,255 110,528 Shares withheld to fund statutory minimum tax withholding — — 57,298 42,368 Shares of common stock issued for performance share LTIAs — — 92,957 68,160 Shares of common stock issued upon the exercise of stock options — 1,300 — 1,300 Shares of common stock issued to non-employee directors for annual equity grants — 20,559 1,119 20,559 Total shares of common stock issued — 21,859 94,076 90,019 Excess tax benefit (1) $ — $ (6) $ 305 $ 820 (1) As a result of the adoption of ASU 2016-09, we recognized discrete tax benefits of $0.3 million and $0.8 million in the income taxes line item of our consolidated statement of operations for the first two quarters 2018 and 2017, respectively, related to excess tax benefits upon vesting or settlement. |
Net Sales by Brand (Tables)
Net Sales by Brand (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Net Sales by Brand | |
Schedule of net sales by brand | The following table sets forth net sales by brand (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended June 30, July 1, June 30, July 1, 2018 2017 (2) 2018 2017 (2) Brand: (1) Green Giant - frozen $ 84,182 $ 70,327 $ 179,071 $ 154,461 Spices & Seasonings (3) 63,670 67,205 126,430 130,375 Ortega 34,068 34,669 71,922 71,015 Pirate Brands 25,206 16,308 46,202 41,882 Green Giant - shelf stable 13,446 21,165 39,129 48,765 Back to Nature (4) 17,622 — 37,662 — Maple Grove Farms of Vermont 17,078 16,298 34,043 34,968 Mrs. Dash 14,513 14,634 31,249 31,347 Cream of Wheat 11,777 12,210 30,201 28,783 Bear Creek Country Kitchens 3,313 4,418 14,934 16,257 All other brands 103,503 104,442 209,264 216,130 Total $ 388,378 $ 361,676 $ 820,107 $ 773,983 (1) Table includes net sales for each of our brands whose net sales for the first two quarters of 2018 or fiscal 2017 represent 3% or more of our total net sales for the first two quarters of 2018, and for “all other brands” in the aggregate. Net sales for each brand includes branded net sales and, if applicable, any private label and foodservice net sales attributable to the brand. (2) Net sales for the second quarter and first two quarters of 2017 have been adjusted to reflect our retrospective adoption of the new revenue recognition standard. See Note 2, “Summary of Significant Accounting Policies — Newly Adopted Accounting Standards .” (3) Includes net sales for multiple brands acquired as part of the spices & seasonings acquisition that we completed on November 21, 2016. Does not include net sales for Mrs. Dash and our other legacy spices & seasonings brands. (4) We completed the Back to Nature acquisition on October 2, 2017. |
Guarantor and Non-Guarantor F37
Guarantor and Non-Guarantor Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Guarantor and Non-Guarantor Financial Information | |
Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet As of June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ — $ 58,827 $ 4,013 $ — $ 62,840 Trade accounts receivable, net — 130,003 7,144 — 137,147 Inventories, net — 381,567 64,706 — 446,273 Prepaid expenses and other current assets — 20,825 3,546 — 24,371 Income tax receivable — 14,884 1,828 — 16,712 Total current assets — 606,106 81,237 — 687,343 Property, plant and equipment, net — 230,214 41,741 — 271,955 Goodwill — 652,143 — — 652,143 Other intangibles, net — 1,739,102 — — 1,739,102 Other assets — 1,466 13 — 1,479 Deferred income taxes — — 3,091 — 3,091 Investments in subsidiaries 2,960,498 94,051 — (3,054,549) — Total assets $ 2,960,498 $ 3,323,082 $ 126,082 $ (3,054,549) $ 3,355,113 Liabilities and Stockholders' Equity Current Liabilities: Trade accounts payable $ — $ 97,683 $ 17,912 $ — $ 115,595 Accrued expenses — 34,721 2,580 — 37,301 Income tax payable — — 140 — 140 Dividends payable 31,318 — — — 31,318 Intercompany payables — (11,383) 11,383 — — Total current liabilities 31,318 121,021 32,015 — 184,354 Long-term debt 2,102,166 (28,292) — — 2,073,874 Other liabilities — 25,982 16 — 25,998 Deferred income taxes — 243,873 — — 243,873 Total liabilities 2,133,484 362,584 32,031 — 2,528,099 Stockholders' Equity: Preferred stock — — — — — Common stock 659 — — — 659 Additional paid-in capital 186,745 2,323,113 68,253 (2,391,366) 186,745 Accumulated other comprehensive loss (23,034) (23,034) (10,298) 33,332 (23,034) Retained earnings 662,644 660,419 36,096 (696,515) 662,644 Total stockholders’ equity 827,014 2,960,498 94,051 (3,054,549) 827,014 Total liabilities and stockholders’ equity $ 2,960,498 $ 3,323,082 $ 126,082 $ (3,054,549) $ 3,355,113 Condensed Consolidating Balance Sheet As of December 30, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ — $ 204,815 $ 1,691 $ — $ 206,506 Trade accounts receivable, net — 129,769 11,623 — 141,392 Inventories, net — 428,613 73,236 — 501,849 Prepaid expenses and other current assets — 15,932 4,122 — 20,054 Income tax receivable — 16,259 535 — 16,794 Total current assets — 795,388 91,207 — 886,595 Property, plant and equipment, net — 229,219 42,973 — 272,192 Goodwill — 649,292 — — 649,292 Other intangibles, net — 1,748,220 — — 1,748,220 Other assets — 1,603 14 — 1,617 Deferred income taxes — (1) 3,123 — 3,122 Investments in subsidiaries 3,163,482 91,766 — (3,255,248) — Total assets $ 3,163,482 $ 3,515,487 $ 137,317 $ (3,255,248) $ 3,561,038 Liabilities and Stockholders' Equity Current Liabilities: Trade accounts payable $ — $ 102,594 $ 19,764 $ — $ 122,358 Accrued expenses — 45,586 2,481 — 48,067 Income tax payable — — 139 — 139 Dividends payable 30,922 — — — 30,922 Intercompany payables — (23,167) 23,167 — — Total current liabilities 30,922 125,013 45,551 — 201,486 Long-term debt 2,251,741 (34,167) — — 2,217,574 Other liabilities — 24,881 — — 24,881 Deferred income taxes — 236,278 — — 236,278 Total liabilities 2,282,663 352,005 45,551 — 2,680,219 Stockholders' Equity: Preferred stock — — — — — Common stock 665 — — — 665 Additional paid-in capital 266,789 2,552,342 68,253 (2,620,595) 266,789 Accumulated other comprehensive loss (20,756) (20,756) (7,771) 28,527 (20,756) Retained earnings 634,121 631,896 31,284 (663,180) 634,121 Total stockholders’ equity 880,819 3,163,482 91,766 (3,255,248) 880,819 Total liabilities and stockholders’ equity $ 3,163,482 $ 3,515,487 $ 137,317 $ (3,255,248) $ 3,561,038 |
Condensed Consolidating Statement of Operations and Comprehensive Income | Condensed Consolidating Statement of Operations and Comprehensive Income Thirteen Weeks Ended June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 372,442 $ 40,911 $ (24,975) $ 388,378 Cost of goods sold — 294,431 37,749 (24,975) 307,205 Gross profit — 78,011 3,162 — 81,173 Operating expenses: Selling, general and administrative expenses — 35,902 1,370 — 37,272 Amortization expense — 4,609 — — 4,609 Operating income — 37,500 1,792 — 39,292 Other expenses: Interest expense, net — 27,607 — — 27,607 Loss on extinguishment of debt — 546 — — 546 Other expense — 388 — — 388 Income before income tax expense — 8,959 1,792 — 10,751 Income tax expense — 3,595 (820) — 2,775 Equity in earnings of subsidiaries 7,976 2,612 — (10,588) — Net income $ 7,976 $ 7,976 $ 2,612 $ (10,588) $ 7,976 Comprehensive income (loss) $ 2,455 $ 7,838 $ (3,047) $ (4,791) $ 2,455 Condensed Consolidating Statement of Operations and Comprehensive Income Twenty-six Weeks Ended June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 780,290 $ 93,226 $ (53,409) $ 820,107 Cost of goods sold — 605,656 83,331 (53,409) 635,578 Gross profit — 174,634 9,895 — 184,529 Operating expenses: Selling, general and administrative expenses — 75,041 4,799 — 79,840 Amortization expense — 9,218 — — 9,218 Operating income — 90,375 5,096 — 95,471 Other income and expenses: Interest expense, net — 55,913 — — 55,913 Loss on extinguishment of debt — 3,324 — — 3,324 Other income — (1,666) — — (1,666) Income before income tax expense — 32,804 5,096 — 37,900 Income tax expense — 9,093 284 — 9,377 Equity in earnings of subsidiaries 28,523 4,812 — (33,335) — Net income $ 28,523 $ 28,523 $ 4,812 $ (33,335) $ 28,523 Comprehensive income (loss) $ 26,245 $ 28,274 $ 2,285 $ (30,559) $ 26,245 Condensed Consolidating Statement of Operations and Comprehensive Income Thirteen Weeks Ended July 1, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 346,716 $ 31,685 $ (16,725) $ 361,676 Cost of goods sold — 243,907 29,937 (16,725) 257,119 Gross profit — 102,809 1,748 — 104,557 Operating expenses: Selling, general and administrative expenses — 40,187 3,399 — 43,586 Amortization expense — 4,265 — — 4,265 Operating income — 58,357 (1,651) — 56,706 Other income and expenses: Interest expense, net — 21,998 — — 21,998 Loss on extinguishment of debt — 1,045 — — 1,045 Other income — (1,269) — — (1,269) Income before income tax expense — 36,583 (1,651) — 34,932 Income tax expense — 12,632 239 — 12,871 Equity in earnings of subsidiaries 22,061 (1,890) — (20,171) — Net income $ 22,061 $ 22,061 $ (1,890) $ (20,171) $ 22,061 Comprehensive income (loss) $ 25,523 $ 22,011 $ 1,523 $ (23,534) $ 25,523 Condensed Consolidating Statement of Operations and Comprehensive Income Twenty-six Weeks Ended July 1, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net sales $ — $ 735,728 $ 78,828 $ (40,573) $ 773,983 Cost of goods sold — 516,235 72,545 (40,573) 548,207 Gross profit — 219,493 6,283 — 225,776 Operating expenses: Selling, general and administrative expenses — 86,295 5,811 — 92,106 Amortization expense — 8,737 — — 8,737 Operating income — 124,461 472 — 124,933 Other income and expenses: Interest expense, net — 41,645 — — 41,645 Loss on extinguishment of debt — 1,163 — — 1,163 Other income — (3,866) — — (3,866) Income before income tax expense — 85,519 472 — 85,991 Income tax expense — 30,264 902 — 31,166 Equity in earnings of subsidiaries 54,825 (430) — (54,395) — Net income $ 54,825 $ 54,825 $ (430) $ (54,395) $ 54,825 Comprehensive income (loss) $ 62,564 $ 54,724 $ 7,208 $ (61,932) $ 62,564 |
Condensed Consolidating Statement of Cash Flows | Condensed Consolidating Statement of Cash Flows Twenty-six Weeks Ended June 30, 2018 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash provided by operating activities $ — $ 89,706 $ 15,098 $ — $ 104,804 Cash flows from investing activities: Capital expenditures — (15,229) (1,979) — (17,208) Proceeds from sale of assets — — — — — Payments for acquisition of businesses, net of cash acquired — — — — — Net cash used in investing activities — (15,229) (1,979) — (17,208) Cash flows from financing activities: Repayments of long-term debt (150,000) — — — (150,000) Proceeds from issuance of long-term debt — — — — — Borrowings under revolving credit facility — — — — — Dividends paid (61,888) — — — (61,888) Payments for the repurchase of common stock, net (18,529) — — — (18,529) Payments of tax withholding on behalf of employees for net share settlement of share-based compensation — (1,832) — — (1,832) Debt financing costs — — — — — Intercompany transactions 230,417 (218,633) (11,784) — — Net cash (used in) provided by financing activities — (220,465) (11,784) — (232,249) Effect of exchange rate fluctuations on cash and cash equivalents — — 987 — 987 Net (decrease) increase in cash and cash equivalents — (145,988) 2,322 — (143,666) Cash and cash equivalents at beginning of period — 204,815 1,691 — 206,506 Cash and cash equivalents at end of period $ — $ 58,827 $ 4,013 $ — $ 62,840 Condensed Consolidating Statement of Cash Flows Twenty-six Weeks Ended July 1, 2017 (In thousands) Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net cash provided by operating activities $ — $ 10,665 $ 9,159 $ — $ 19,824 Cash flows from investing activities: Capital expenditures — (19,516) (7,355) — (26,871) Proceeds from sale of assets — 2,229 — — 2,229 Payments for acquisition of businesses, net of cash acquired — (117) — — (117) Net cash used in investing activities — (17,404) (7,355) — (24,759) Cash flows from financing activities: Repayments of long-term debt (233,640) — — — (233,640) Proceeds from issuance of long-term debt 500,000 — — — 500,000 Repayments of borrowings under revolving credit facility (221,000) — — — (221,000) Borrowings under revolving credit facility 55,000 — — — 55,000 Proceeds from issuance of common stock, net 36 — — — 36 Dividends paid (61,790) — — — (61,790) Payments of tax withholding on behalf of employees for net share settlement of share-based compensation — (1,962) — — (1,962) Debt financing costs — (8,637) — — (8,637) Intercompany transactions (38,606) 42,427 (3,821) — — Net cash provided by financing activities — 31,828 (3,821) — 28,007 Effect of exchange rate fluctuations on cash and cash equivalents — — (235) — (235) Net (decreased) increase in cash and cash equivalents — 25,089 (2,252) — 22,837 Cash and cash equivalents at beginning of period — 25,119 3,714 — 28,833 Cash and cash equivalents at end of period $ — $ 50,208 $ 1,462 $ — $ 51,670 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 29, 2018 | Dec. 30, 2017 | |
Fiscal Year | |||
Number of weeks in each fiscal quarter | 91 days | 91 days | |
Number of weeks in fiscal period | 364 days | 364 days | |
Minimum | |||
Fiscal Year | |||
Number of years between 53 week fiscal years | 5 years | ||
Maximum | |||
Fiscal Year | |||
Number of weeks in fiscal period | 371 days | ||
Number of weeks in fourth fiscal quarter | 98 days | ||
Number of years between 53 week fiscal years | 6 years |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Impact of Adoption (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Net sales | $ 388,378 | $ 466,353 | $ 406,051 | $ 361,676 | $ 412,307 | $ 820,107 | $ 773,983 |
Cost of goods sold | 307,205 | 372,493 | 285,109 | 257,119 | 291,088 | 635,578 | 548,207 |
Gross profit | 81,173 | 93,860 | 120,942 | 104,557 | 121,219 | 184,529 | 225,776 |
Selling, general and administrative expenses | 37,272 | 51,951 | 40,999 | 43,586 | 48,520 | 79,840 | 92,106 |
Operating income | 39,292 | 37,300 | 75,678 | 56,706 | 68,227 | 95,471 | 124,933 |
Other expense (income) | 388 | 966 | (198) | (1,269) | (2,597) | (1,666) | (3,866) |
Net income | $ 7,976 | $ 129,908 | $ 32,730 | $ 22,061 | $ 32,764 | $ 28,523 | $ 54,825 |
Earnings per share: | |||||||
Basic and diluted earnings per share (in dollars per share) | $ 0.12 | $ 1.95 | $ 0.49 | $ 0.33 | $ 0.49 | $ 0.43 | $ 0.82 |
As Reported | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Net sales | $ 473,684 | $ 408,364 | $ 368,134 | $ 417,874 | |||
Cost of goods sold | 372,493 | 285,109 | 257,119 | 291,088 | |||
Gross profit | 101,191 | 123,255 | 111,015 | 126,786 | |||
Selling, general and administrative expenses | 58,990 | 43,019 | 49,591 | 53,634 | |||
Operating income | 37,592 | 75,971 | 57,159 | 68,680 | |||
Other expense (income) | 1,258 | 95 | (816) | (2,144) | |||
Net income | $ 129,908 | $ 32,730 | $ 22,061 | $ 32,764 | |||
Earnings per share: | |||||||
Basic and diluted earnings per share (in dollars per share) | $ 1.95 | $ 0.49 | $ 0.33 | $ 0.49 | |||
ASU 2014-09 | Impact of Adoption | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Net sales | $ (7,331) | $ (2,313) | $ (6,458) | $ (5,567) | |||
Gross profit | (7,331) | (2,313) | (6,458) | (5,567) | |||
Selling, general and administrative expenses | (7,331) | (2,313) | (6,458) | (5,567) | |||
ASU 2017-07 | Impact of Adoption | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Selling, general and administrative expenses | 292 | 293 | 453 | 453 | |||
Operating income | (292) | (293) | (453) | (453) | |||
Other expense (income) | $ (292) | $ (293) | $ (453) | $ (453) |
Acquisitions - Back to Nature (
Acquisitions - Back to Nature (Details) - USD ($) $ in Thousands | Oct. 02, 2017 | Jun. 30, 2018 | Dec. 30, 2017 |
Preliminary Allocation: | |||
Goodwill | $ 652,143 | $ 649,292 | |
Back To Nature Foods Company, LLC | |||
Business Acquisition | |||
Purchase price adjustment | 2,900 | ||
Inventory adjustment | 900 | ||
Purchase price allocation adjustments, other working capital | 2,000 | ||
Purchase Price: | |||
Cash paid | $ 162,848 | ||
Total | 162,848 | ||
Preliminary Allocation: | |||
Goodwill | 36,383 | ||
Inventory | 5,823 | ||
Long-term deferred income tax liabilities, net | (10,801) | ||
Other working capital | (5,957) | ||
Total | 162,848 | ||
Back To Nature Foods Company, LLC | Trademarks | |||
Preliminary Allocation: | |||
Trademarks - unamortizable intangible assets | 109,900 | ||
Amortizable intangible assets | 12,800 | ||
Back To Nature Foods Company, LLC | Customer relationship | |||
Preliminary Allocation: | |||
Amortizable intangible assets | $ 14,700 | ||
Trademarks | Back To Nature Foods Company, LLC | Trademarks | |||
Business Acquisition | |||
Intangible asset adjustment | $ 100 |
Acquisitions - McCann's (Detail
Acquisitions - McCann's (Details) $ in Millions | Jul. 16, 2018USD ($) |
McCann's brand of premium Irish oatmeal | |
Purchase Price: | |
Cash paid | $ 32 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 |
Inventories | ||
Raw materials and packaging | $ 71,438 | $ 70,315 |
Work-in-process | 92,581 | 140,425 |
Finished goods | 282,254 | 291,109 |
Total | $ 446,273 | $ 501,849 |
Goodwill and Other Intangible43
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 30, 2017 | |
Goodwill and Other Intangible Assets | |||||
Amortization expense | $ 4,609 | $ 4,265 | $ 9,218 | $ 8,737 | |
Amortizable Intangible Assets | |||||
Gross Carrying Amount | 364,590 | 364,590 | $ 364,590 | ||
Accumulated Amortization | 109,189 | 109,189 | 99,971 | ||
Net Carrying Amount | 255,401 | 255,401 | 264,619 | ||
Unamortizable Intangible Assets | |||||
Goodwill | 652,143 | 652,143 | 649,292 | ||
Future amortization expense | |||||
Remainder of fiscal 2018 | 9,200 | 9,200 | |||
2,019 | 18,400 | 18,400 | |||
2,020 | 18,400 | 18,400 | |||
2,021 | 18,400 | 18,400 | |||
2,022 | 18,400 | 18,400 | |||
Trademarks | |||||
Unamortizable Intangible Assets | |||||
Unamortizable intangible assets excluding goodwill | 1,483,701 | 1,483,701 | 1,483,601 | ||
Trademarks | |||||
Amortizable Intangible Assets | |||||
Gross Carrying Amount | 19,600 | 19,600 | 19,600 | ||
Accumulated Amortization | 2,823 | 2,823 | 2,276 | ||
Net Carrying Amount | 16,777 | 16,777 | 17,324 | ||
Customer relationship | |||||
Amortizable Intangible Assets | |||||
Gross Carrying Amount | 344,990 | 344,990 | 344,990 | ||
Accumulated Amortization | 106,366 | 106,366 | 97,695 | ||
Net Carrying Amount | $ 238,624 | $ 238,624 | $ 247,295 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 | Nov. 20, 2017 | Apr. 03, 2017 | Mar. 30, 2017 | Jun. 04, 2013 |
Information related to long-term debt | ||||||
Outstanding principal | $ 2,100,110 | |||||
Unamortized deferred financing costs | (28,292) | $ (34,167) | ||||
Unamortized discount (premium) | 2,056 | 1,631 | ||||
Total long-term debt, net of unamortized deferred financing costs and discount | 2,073,874 | 2,217,574 | ||||
Long-term debt, net of unamortized deferred financing costs and discount, and excluding current portion | 2,073,874 | 2,217,574 | ||||
Tranche B Term Loans due 2022 | ||||||
Information related to long-term debt | ||||||
Outstanding principal | 500,110 | 650,110 | $ 650,100 | $ 640,100 | ||
4.625% Senior notes due 2021 | ||||||
Information related to long-term debt | ||||||
Outstanding principal | $ 700,000 | $ 700,000 | ||||
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | |||
5.25% Senior Notes due 2025 | ||||||
Information related to long-term debt | ||||||
Outstanding principal | $ 900,000 | $ 900,000 | $ 500,000 | |||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% |
Long-Term Debt - Contractual Ma
Long-Term Debt - Contractual Maturities (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Aggregate contractual maturities of long-term debt | |
2,021 | $ 700,000 |
2,022 | 500,110 |
Thereafter | 900,000 |
Outstanding principal | $ 2,100,110 |
Long-Term Debt, Activity (Detai
Long-Term Debt, Activity (Details) $ in Thousands | Nov. 20, 2017USD ($) | Mar. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jul. 01, 2017USD ($) | Apr. 01, 2017USD ($) | Jun. 30, 2018USD ($)item | Jul. 01, 2017USD ($) | Dec. 30, 2017USD ($) | Nov. 19, 2017USD ($) | Apr. 03, 2017USD ($) | Jun. 04, 2013USD ($) |
Information related to senior notes | ||||||||||||
Outstanding principal | $ 2,100,110 | $ 2,100,110 | ||||||||||
Repayments of long-term debt | 150,000 | $ 233,640 | ||||||||||
Accrued Interest | ||||||||||||
Accrued interest | 14,600 | 14,600 | $ 14,600 | |||||||||
Tranche B Term Loans due 2022 | ||||||||||||
Information related to senior notes | ||||||||||||
Outstanding principal | $ 650,100 | $ 640,100 | 500,110 | $ 500,110 | 650,110 | |||||||
Increase in principal of debt | $ 10,000 | |||||||||||
Repayments of long-term debt | $ 25,000 | $ 125,000 | ||||||||||
Interest rate at period end (as a percent) | 4.09% | 4.09% | ||||||||||
Extinguishment of Debt | ||||||||||||
Write-off of deferred debt financing costs | $ 400 | $ 100 | $ 2,800 | |||||||||
Write-off of unamortized discount | 100 | $ 100 | $ 500 | |||||||||
Tranche B Term Loans due 2022 | LIBOR | ||||||||||||
Information related to senior notes | ||||||||||||
Percentage reduction in spread from refinancing | 0.25% | 0.75% | ||||||||||
Interest rate added to variable base rate (as a percent) | 2.00% | |||||||||||
Tranche B Term Loans due 2022 | Base rate | ||||||||||||
Information related to senior notes | ||||||||||||
Interest rate added to variable base rate (as a percent) | 1.00% | |||||||||||
Tranche A Term Loans | ||||||||||||
Extinguishment of Debt | ||||||||||||
Write-off of deferred debt financing costs | $ 900 | |||||||||||
Write-off of unamortized discount | $ 200 | |||||||||||
Revolving credit loans | ||||||||||||
Information related to senior notes | ||||||||||||
Maximum capacity available | $ 700,000 | $ 500,000 | ||||||||||
Outstanding amount of debt | 0 | $ 0 | ||||||||||
Outstanding letters of credit | 2,200 | 2,200 | ||||||||||
Available borrowing capacity | 697,800 | $ 697,800 | ||||||||||
Commitment fees (as a percent) | 0.50% | |||||||||||
Number of quarters consolidated leverage ratio to be maintained | item | 4 | |||||||||||
Number of quarters consolidated interest coverage ratio to be maintained | item | 4 | |||||||||||
Revolving credit loans | Minimum | ||||||||||||
Information related to senior notes | ||||||||||||
Consolidated interest leverage ratio | 1.75 | |||||||||||
Revolving credit loans | Maximum | ||||||||||||
Information related to senior notes | ||||||||||||
Consolidated leverage ratio | 7 | |||||||||||
Revolving credit loans | LIBOR | Minimum | ||||||||||||
Information related to senior notes | ||||||||||||
Interest rate added to variable base rate (as a percent) | 1.25% | |||||||||||
Revolving credit loans | LIBOR | Maximum | ||||||||||||
Information related to senior notes | ||||||||||||
Interest rate added to variable base rate (as a percent) | 1.75% | |||||||||||
Revolving credit loans | Base rate | Minimum | ||||||||||||
Information related to senior notes | ||||||||||||
Interest rate added to variable base rate (as a percent) | 0.25% | |||||||||||
Revolving credit loans | Base rate | Maximum | ||||||||||||
Information related to senior notes | ||||||||||||
Interest rate added to variable base rate (as a percent) | 0.75% | |||||||||||
Letters of credit facility | ||||||||||||
Information related to senior notes | ||||||||||||
Maximum capacity available | $ 50,000 | $ 50,000 | ||||||||||
Fronting fee (as a percent) | 0.25% | |||||||||||
Incremental term loan | Maximum | ||||||||||||
Information related to senior notes | ||||||||||||
Senior secured leverage ratio | 4 | 4 | ||||||||||
4.625% Senior notes due 2021 | ||||||||||||
Information related to senior notes | ||||||||||||
Outstanding principal | $ 700,000 | $ 700,000 | $ 700,000 | |||||||||
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | 4.625% | ||||||||
Principal amount of notes | $ 700,000 | |||||||||||
Debt issuance price (as a percent) | 100.00% | |||||||||||
4.625% Senior notes due 2021 | Redemption period beginning June 1, 2016 | ||||||||||||
Information related to senior notes | ||||||||||||
Redemption price (as a percent) | 103.469% | |||||||||||
4.625% Senior notes due 2021 | Redemption period on or after June 1, 2019 | ||||||||||||
Information related to senior notes | ||||||||||||
Redemption price (as a percent) | 100.00% | |||||||||||
5.25% Senior Notes due 2025 | ||||||||||||
Information related to senior notes | ||||||||||||
Outstanding principal | $ 900,000 | $ 900,000 | $ 900,000 | $ 500,000 | ||||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | 5.25% | |||||||
Interest rate at period end (as a percent) | 5.03% | |||||||||||
Principal amount of notes | $ 400,000 | $ 900,000 | $ 900,000 | $ 900,000 | $ 500,000 | |||||||
Debt issuance price (as a percent) | 101.00% | 100.00% | ||||||||||
5.25% Senior Notes due 2025 | Redemption period beginning April 1, 2020 | ||||||||||||
Information related to senior notes | ||||||||||||
Redemption price (as a percent) | 103.9375% | |||||||||||
5.25% Senior Notes due 2025 | Redemption period on or after April 1, 2023 | ||||||||||||
Information related to senior notes | ||||||||||||
Redemption price (as a percent) | 100.00% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||||
Jun. 30, 2018 | Mar. 31, 2018 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 30, 2017 | Nov. 20, 2017 | Apr. 03, 2017 | Jun. 04, 2013 | |
Changes in level 3 | ||||||||
Level 3 activity | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Tranche B term loan due 2022 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Face amount of senior notes | $ 500,100 | $ 650,100 | ||||||
4.625% Senior notes due 2021 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Face amount of senior notes | $ 700,000 | |||||||
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | |||||
5.25% Senior Notes due 2025 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Face amount of senior notes | $ 900,000 | $ 900,000 | $ 400,000 | $ 500,000 | ||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | ||||
Carrying Value | Tranche B term loan due 2022 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Fair values and carrying amount of revolving credit loans, term loan and senior notes | $ 498,526 | $ 647,831 | ||||||
Carrying Value | 4.625% Senior notes due 2021 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Fair values and carrying amount of revolving credit loans, term loan and senior notes | 700,000 | 700,000 | ||||||
Carrying Value | 5.25% Senior Notes due 2025 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Fair values and carrying amount of revolving credit loans, term loan and senior notes | 903,640 | 903,910 | ||||||
Fair value measured on recurring basis | Fair Value | Tranche B term loan due 2022 | Level 2 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Fair values and carrying amount of revolving credit loans, term loan and senior notes | 500,395 | 652,689 | ||||||
Fair value measured on recurring basis | Fair Value | 4.625% Senior notes due 2021 | Level 2 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Fair values and carrying amount of revolving credit loans, term loan and senior notes | 688,625 | 710,500 | ||||||
Fair value measured on recurring basis | Fair Value | 5.25% Senior Notes due 2025 | Level 2 | ||||||||
Financial assets and liabilities at fair value | ||||||||
Fair values and carrying amount of revolving credit loans, term loan and senior notes | $ 851,681 | $ 919,729 |
Accumulated Other Comprehensi48
Accumulated Other Comprehensive Loss - Reclassifications (Details) - Amount Reclassified from AOCL - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Reclassification from AOCL | ||||
Accumulated other comprehensive loss before tax | $ 184 | $ 82 | $ 332 | $ 164 |
Tax expense | (46) | (31) | (83) | (62) |
Total reclassification | 138 | 51 | 249 | 102 |
Amortization of unrecognized prior service cost | ||||
Reclassification from AOCL | ||||
Accumulated other comprehensive loss before tax | 1 | 9 | 1 | 18 |
Amortization of unrecognized loss | ||||
Reclassification from AOCL | ||||
Accumulated other comprehensive loss before tax | $ 183 | $ 73 | $ 331 | $ 146 |
Accumulated Other Comprehensi49
Accumulated Other Comprehensive Loss - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Changes in accumulated other comprehensive income (loss) | ||||
Beginning balance | $ 880,819 | |||
Net current period other comprehensive income (loss) | $ (5,521) | $ 3,462 | (2,278) | $ 7,739 |
Ending balance | 827,014 | 827,014 | ||
Defined Benefit Pension Plan Items | ||||
Changes in accumulated other comprehensive income (loss) | ||||
Beginning balance | (12,985) | |||
Amounts reclassified from AOCL | 249 | |||
Net current period other comprehensive income (loss) | 249 | |||
Ending balance | (12,736) | (12,736) | ||
Foreign Currency Translation Adjustments | ||||
Changes in accumulated other comprehensive income (loss) | ||||
Beginning balance | (7,771) | |||
Other comprehensive income (loss) before reclassifications | (2,527) | |||
Net current period other comprehensive income (loss) | (2,527) | |||
Ending balance | (10,298) | (10,298) | ||
Accumulated Other Comprehensive Loss | ||||
Changes in accumulated other comprehensive income (loss) | ||||
Beginning balance | (20,756) | |||
Other comprehensive income (loss) before reclassifications | (2,527) | |||
Amounts reclassified from AOCL | 249 | |||
Net current period other comprehensive income (loss) | (2,278) | |||
Ending balance | $ (23,034) | $ (23,034) |
Stock Repurchase Program (Detai
Stock Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Jun. 30, 2018 | Mar. 13, 2018 | |
Stock repurchase program | ||
Stock repurchased and retired (in shares) | 694,749 | |
Average price per share (in dollars per share) | $ 26.65 | |
Stock repurchased and retired (in dollars) | $ 18.5 | |
Available for future repurchases (in dollars) | $ 31.5 | |
Maximum | ||
Stock repurchase program | ||
Value of stock authorized for repurchase | $ 50 |
Pension Benefits - Net Periodic
Pension Benefits - Net Periodic Pension Cost, AOCI (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Components of net periodic pension cost | ||||
Service cost-benefits earned during the period | $ 1,909 | $ 1,370 | $ 3,894 | $ 2,740 |
Interest cost on projected benefit obligation | 1,267 | 1,215 | 2,529 | 2,430 |
Expected return on plan assets | (2,008) | (1,750) | (4,009) | (3,500) |
Amortization of unrecognized prior service cost | 1 | 9 | 1 | 18 |
Amortization of unrecognized loss | 183 | 73 | 331 | 146 |
Net periodic pension cost | $ 1,352 | $ 917 | 2,746 | $ 1,834 |
Employer contributions | $ 1,100 | |||
Defined benefit pension plans | ||||
Components of net periodic pension cost | ||||
Number of shares of company's common stock (in shares) | 227,667 | |||
Share price (in dollars per share) | $ 28.27 | $ 28.27 | ||
Value of company's common stock | $ 6,400 |
Pension Benefits - Multi-Employ
Pension Benefits - Multi-Employer Defined Benefit Pension Plan (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | 39 Months Ended |
Jun. 30, 2018 | Dec. 30, 2017 | Jun. 30, 2018 | |
Multi-Employer Defined Benefit Pension Plan | |||
Contribution to the multi-employer plan | $ 0.5 | $ 0.2 | |
Maximum contribution to multi-employer plan (as a percent) | 5.00% | 5.00% | |
Maximum | |||
Multi-Employer Defined Benefit Pension Plan | |||
Surcharges expected to be paid | $ 0.1 | ||
Surcharges paid | $ 0.1 | ||
Plan | Minimum | |||
Multi-Employer Defined Benefit Pension Plan | |||
Plan expected to increase (as a percent) | 5.00% |
Commitments and Contingencies53
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Future minimum lease payments under non-cancelable operating leases | |
2,018 | $ 7,325 |
2,019 | 13,353 |
2,020 | 11,215 |
2,021 | 8,059 |
2,022 | 3,833 |
Thereafter | 12,140 |
Total | $ 55,925 |
Commitments and Contingencies -
Commitments and Contingencies - Collective Bargaining (Details) | 6 Months Ended |
Jun. 30, 2018employeeagreement | |
Information related to Collective Bargaining Agreements | |
Number of employees | 2,621 |
Collective bargaining agreements expiration period | 1 year |
Covered under collective bargaining agreements | Unionized Employees | |
Information related to Collective Bargaining Agreements | |
Number of employees | 1,606 |
Percentage of total employees covered under collective bargaining agreements | 61.30% |
Collective bargaining agreements expiring with next 12 months | |
Information related to Collective Bargaining Agreements | |
Number of collective bargaining agreements expiring within one year | agreement | 0 |
Earnings per Share (Details)
Earnings per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Earnings per Share | ||||
Antidilutive securities excluded from computation of loss per share | 1,225,416 | 173,357 | ||
Weighted average shares outstanding: | ||||
Basic (in shares) | 66,307,190 | 66,481,507 | 66,412,421 | 66,477,990 |
Net effect of potentially dilutive share-based compensation awards (in shares) | 46,449 | 229,812 | 122,121 | 269,814 |
Diluted (in shares) | 66,353,639 | 66,711,319 | 66,534,542 | 66,747,804 |
Business and Credit Concentra56
Business and Credit Concentrations and Geographic Information (Details) - customer | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | Dec. 30, 2017 | |
Net sales | Consolidated net sales | Top ten customers | |||||
Business and Credit Concentrations | |||||
Number of top customers | 10 | 10 | |||
Percentage of concentration risk | 56.00% | 54.90% | |||
Net sales | Consolidated net sales | Other than Walmart | |||||
Business and Credit Concentrations | |||||
Percentage of concentration risk | 24.80% | 22.70% | |||
Accounts receivable | Trade accounts receivables | Top ten customers | |||||
Business and Credit Concentrations | |||||
Number of top customers | 10 | 10 | |||
Percentage of concentration risk | 56.60% | 49.40% | |||
Accounts receivable | Trade accounts receivables | Other than Walmart | |||||
Business and Credit Concentrations | |||||
Percentage of concentration risk | 25.70% | 21.50% | |||
Foreign | Net sales | Consolidated net sales | |||||
Business and Credit Concentrations | |||||
Percentage of concentration risk | 6.90% | 7.10% |
Share-Based Payments - Stock Op
Share-Based Payments - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Options | |||
Exercised (in shares) | (1,300) | (1,300) | |
Stock Option | |||
Options | |||
Outstanding at beginning of fiscal period (in shares) | 832,569 | ||
Granted (in shares) | 397,864 | ||
Forfeited (in shares) | (3,160) | ||
Cancelled (in shares) | (1,026) | ||
Outstanding at end of quarter (in shares) | 1,226,247 | ||
Exercisable at end of quarter (in shares) | 533,103 | ||
Weighted Average Exercise Price | |||
Outstanding at beginning of fiscal period (in dollar per share) | $ 33.45 | ||
Granted (in dollars per share) | 27 | ||
Forfeited (in dollars per share) | 38.45 | ||
Cancelled (in dollars per share) | 27.77 | ||
Outstanding at end of quarter (in dollar per share) | 31.35 | ||
Exercisable at end of quarter ( in dollars per share) | $ 31.34 | ||
Weighted Average Contractual Life Remaining (Years) | |||
Weighted Average Contractual Life Remaining (Years) | 7 years 11 months 27 days | ||
Exercisable, Weighted Average Contractual Life Remaining (Years) | 6 years 7 months 24 days | ||
Aggregate Intrinsic Value | |||
Outstanding at end of quarter, Aggregate Intrinsic Value | $ 1,723 | ||
Exercisable, Aggregate Intrinsic Value | $ 293 | ||
Assumptions: | |||
Weighted average grant date fair value (in dollars per share) | $ 3.74 | $ 7.35 | |
Stock Option | Minimum | |||
Assumptions: | |||
Expected volatility (as a percent) | 30.60% | 27.50% | |
Expected term | 5 years 6 months | 5 years 6 months | |
Risk-free interest rate (as a percent) | 2.60% | 1.80% | |
Dividend yield (as a percent) | 6.70% | 4.50% | |
Stock Option | Maximum | |||
Assumptions: | |||
Expected volatility (as a percent) | 31.70% | 29.20% | |
Expected term | 6 years 6 months | 6 years 6 months | |
Risk-free interest rate (as a percent) | 2.80% | 2.40% | |
Dividend yield (as a percent) | 8.10% | 4.60% |
Share-Based Payments - Share-ba
Share-Based Payments - Share-based payments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Compensation expense | ||||
Total compensation expense for share-based payments | $ 1,759 | $ 2,059 | $ 2,597 | $ 3,202 |
Performance shares | ||||
Compensation expense | ||||
Unrecognized compensation expense | 2,000 | $ 2,000 | ||
Period over which unrecognized compensation expense is expected to be recognized | 2 years 6 months | |||
Stock Option | ||||
Compensation expense | ||||
Unrecognized compensation expense | 1,900 | $ 1,900 | ||
Period over which unrecognized compensation expense is expected to be recognized | 2 years 9 months | |||
Cost of Goods Sold | ||||
Compensation expense | ||||
Total compensation expense for share-based payments | 495 | 250 | $ 764 | 472 |
Selling, General and Administrative Expenses | ||||
Compensation expense | ||||
Total compensation expense for share-based payments | $ 1,264 | $ 1,809 | $ 1,833 | $ 2,730 |
Share-Based Payments - Performa
Share-Based Payments - Performance (Details) - Performance shares - $ / shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||
Percentage of target number of shares that may be earned | 200.00% | |
Number of Shares | ||
Balance at the beginning of the period (in shares) | 437,218 | |
Granted (in shares) | 242,436 | |
Vested (in shares) | (150,255) | (110,528) |
Forfeited (in shares) | (3,056) | |
Balance at the end of the period (in shares) | 526,343 | |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period (in dollars per share) | $ 29.36 | |
Granted (in dollars per share) | 21.39 | |
Vested (in dollars per share) | 23.84 | |
Forfeited (in dollars per share) | 33.45 | |
Balance at the end of the period (in dollars per share) | $ 27.24 |
Share-Based Payments - Other Ve
Share-Based Payments - Other Vested (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Share based compensation expense related to long-term incentive plans | |||
Shares of common stock issued upon the exercise of stock options | 1,300 | 1,300 | |
Total shares of common stock issued | 21,859 | 94,076 | 90,019 |
Excess tax benefit | $ (6) | $ 305 | $ 820 |
Non-Employee Directors | |||
Share based compensation expense related to long-term incentive plans | |||
Total shares of common stock issued | 20,559 | 1,119 | 20,559 |
Performance shares | |||
Share based compensation expense related to long-term incentive plans | |||
Number of performance shares vested | 150,255 | 110,528 | |
Shares withheld to fund statutory minimum tax withholding | 57,298 | 42,368 | |
Total shares of common stock issued | 92,957 | 68,160 |
Share-Based Payments, ASU 2016-
Share-Based Payments, ASU 2016-09 (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Income tax expense (benefit) | $ 2,775 | $ 12,871 | $ 9,377 | $ 31,166 |
ASU 2016-09 | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Income tax expense (benefit) | $ (300) | $ (800) |
Net Sales by Brand (Details)
Net Sales by Brand (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Brand | |||||||
Net sales | $ 388,378 | $ 466,353 | $ 406,051 | $ 361,676 | $ 412,307 | $ 820,107 | $ 773,983 |
Specific brand sale to total sale (as a percent) | 3.00% | ||||||
Green Giant - frozen | |||||||
Brand | |||||||
Net sales | 84,182 | 70,327 | $ 179,071 | 154,461 | |||
Spices and Seasonings | |||||||
Brand | |||||||
Net sales | 63,670 | 67,205 | 126,430 | 130,375 | |||
Ortega | |||||||
Brand | |||||||
Net sales | 34,068 | 34,669 | 71,922 | 71,015 | |||
Pirate Brands | |||||||
Brand | |||||||
Net sales | 25,206 | 16,308 | 46,202 | 41,882 | |||
Green Giant - shelf stable | |||||||
Brand | |||||||
Net sales | 13,446 | 21,165 | 39,129 | 48,765 | |||
Back To Nature | |||||||
Brand | |||||||
Net sales | 17,622 | 37,662 | |||||
Maple Grove Farms of Vermont | |||||||
Brand | |||||||
Net sales | 17,078 | 16,298 | 34,043 | 34,968 | |||
Mrs. Dash | |||||||
Brand | |||||||
Net sales | 14,513 | 14,634 | 31,249 | 31,347 | |||
Cream of Wheat | |||||||
Brand | |||||||
Net sales | 11,777 | 12,210 | 30,201 | 28,783 | |||
Bear Creek Country Kitchens | |||||||
Brand | |||||||
Net sales | 3,313 | 4,418 | 14,934 | 16,257 | |||
All other brands | |||||||
Brand | |||||||
Net sales | $ 103,503 | $ 104,442 | $ 209,264 | $ 216,130 |
Guarantor and Non-Guarantor F63
Guarantor and Non-Guarantor Financial Information (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 30, 2017 | Nov. 20, 2017 | Jul. 01, 2017 | Apr. 03, 2017 | Dec. 31, 2016 | Jun. 04, 2013 |
Current assets: | |||||||
Cash and cash equivalents | $ 62,840 | $ 206,506 | $ 51,670 | $ 28,833 | |||
Trade accounts receivable, net | 137,147 | 141,392 | |||||
Inventories, net | 446,273 | 501,849 | |||||
Prepaid expenses and other current assets | 24,371 | 20,054 | |||||
Income tax receivable | 16,712 | 16,794 | |||||
Total current assets | 687,343 | 886,595 | |||||
Property, plant and equipment, net | 271,955 | 272,192 | |||||
Goodwill | 652,143 | 649,292 | |||||
Other intangibles, net | 1,739,102 | 1,748,220 | |||||
Other assets | 1,479 | 1,617 | |||||
Deferred income taxes | 3,091 | 3,122 | |||||
Total assets | 3,355,113 | 3,561,038 | |||||
Current liabilities: | |||||||
Trade accounts payable | 115,595 | 122,358 | |||||
Accrued expenses | 37,301 | 48,067 | |||||
Income tax payable | 140 | 139 | |||||
Dividends payable | 31,318 | 30,922 | |||||
Total current liabilities | 184,354 | 201,486 | |||||
Long-term debt | 2,073,874 | 2,217,574 | |||||
Other liabilities | 25,998 | 24,881 | |||||
Deferred income taxes | 243,873 | 236,278 | |||||
Total liabilities | 2,528,099 | 2,680,219 | |||||
Stockholders' equity: | |||||||
Preferred stock | |||||||
Common Stock | 659 | 665 | |||||
Additional paid-in capital | 186,745 | 266,789 | |||||
Accumulated other comprehensive loss | (23,034) | (20,756) | |||||
Retained earnings | 662,644 | 634,121 | |||||
Total stockholders' equity | 827,014 | 880,819 | |||||
Total liabilities and stockholders' equity | $ 3,355,113 | $ 3,561,038 | |||||
4.625% Senior notes due 2021 | |||||||
Interest rate (as a percent) | 4.625% | 4.625% | 4.625% | ||||
5.25% Senior Notes due 2025 | |||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | |||
Reportable Legal Entities | Parent | |||||||
Current assets: | |||||||
Investments in subsidiaries | $ 2,960,498 | $ 3,163,482 | |||||
Total assets | 2,960,498 | 3,163,482 | |||||
Current liabilities: | |||||||
Dividends payable | 31,318 | 30,922 | |||||
Total current liabilities | 31,318 | 30,922 | |||||
Long-term debt | 2,102,166 | 2,251,741 | |||||
Total liabilities | 2,133,484 | 2,282,663 | |||||
Stockholders' equity: | |||||||
Preferred stock | |||||||
Common Stock | 659 | 665 | |||||
Additional paid-in capital | 186,745 | 266,789 | |||||
Accumulated other comprehensive loss | (23,034) | (20,756) | |||||
Retained earnings | 662,644 | 634,121 | |||||
Total stockholders' equity | 827,014 | 880,819 | |||||
Total liabilities and stockholders' equity | 2,960,498 | 3,163,482 | |||||
Reportable Legal Entities | Guarantor Subsidiaries | |||||||
Current assets: | |||||||
Cash and cash equivalents | 58,827 | 204,815 | 50,208 | 25,119 | |||
Trade accounts receivable, net | 130,003 | 129,769 | |||||
Inventories, net | 381,567 | 428,613 | |||||
Prepaid expenses and other current assets | 20,825 | 15,932 | |||||
Income tax receivable | 14,884 | 16,259 | |||||
Total current assets | 606,106 | 795,388 | |||||
Property, plant and equipment, net | 230,214 | 229,219 | |||||
Goodwill | 652,143 | 649,292 | |||||
Other intangibles, net | 1,739,102 | 1,748,220 | |||||
Other assets | 1,466 | 1,603 | |||||
Deferred income taxes | (1) | ||||||
Investments in subsidiaries | 94,051 | 91,766 | |||||
Total assets | 3,323,082 | 3,515,487 | |||||
Current liabilities: | |||||||
Trade accounts payable | 97,683 | 102,594 | |||||
Accrued expenses | 34,721 | 45,586 | |||||
Intercompany payables | (11,383) | (23,167) | |||||
Total current liabilities | 121,021 | 125,013 | |||||
Long-term debt | (28,292) | (34,167) | |||||
Other liabilities | 25,982 | 24,881 | |||||
Deferred income taxes | 243,873 | 236,278 | |||||
Total liabilities | 362,584 | 352,005 | |||||
Stockholders' equity: | |||||||
Preferred stock | |||||||
Additional paid-in capital | 2,323,113 | 2,552,342 | |||||
Accumulated other comprehensive loss | (23,034) | (20,756) | |||||
Retained earnings | 660,419 | 631,896 | |||||
Total stockholders' equity | 2,960,498 | 3,163,482 | |||||
Total liabilities and stockholders' equity | 3,323,082 | 3,515,487 | |||||
Reportable Legal Entities | Non-Guarantor Subsidiaries | |||||||
Current assets: | |||||||
Cash and cash equivalents | 4,013 | 1,691 | $ 1,462 | $ 3,714 | |||
Trade accounts receivable, net | 7,144 | 11,623 | |||||
Inventories, net | 64,706 | 73,236 | |||||
Prepaid expenses and other current assets | 3,546 | 4,122 | |||||
Income tax receivable | 1,828 | 535 | |||||
Total current assets | 81,237 | 91,207 | |||||
Property, plant and equipment, net | 41,741 | 42,973 | |||||
Other assets | 13 | 14 | |||||
Deferred income taxes | 3,091 | 3,123 | |||||
Total assets | 126,082 | 137,317 | |||||
Current liabilities: | |||||||
Trade accounts payable | 17,912 | 19,764 | |||||
Accrued expenses | 2,580 | 2,481 | |||||
Income tax payable | 140 | 139 | |||||
Intercompany payables | 11,383 | 23,167 | |||||
Total current liabilities | 32,015 | 45,551 | |||||
Other liabilities | 16 | ||||||
Total liabilities | 32,031 | 45,551 | |||||
Stockholders' equity: | |||||||
Preferred stock | |||||||
Additional paid-in capital | 68,253 | 68,253 | |||||
Accumulated other comprehensive loss | (10,298) | (7,771) | |||||
Retained earnings | 36,096 | 31,284 | |||||
Total stockholders' equity | 94,051 | 91,766 | |||||
Total liabilities and stockholders' equity | 126,082 | 137,317 | |||||
Eliminations | |||||||
Current assets: | |||||||
Investments in subsidiaries | (3,054,549) | (3,255,248) | |||||
Total assets | (3,054,549) | (3,255,248) | |||||
Stockholders' equity: | |||||||
Preferred stock | |||||||
Additional paid-in capital | (2,391,366) | (2,620,595) | |||||
Accumulated other comprehensive loss | 33,332 | 28,527 | |||||
Retained earnings | (696,515) | (663,180) | |||||
Total stockholders' equity | (3,054,549) | (3,255,248) | |||||
Total liabilities and stockholders' equity | $ (3,054,549) | $ (3,255,248) |
Guarantor and Non-Guarantor F64
Guarantor and Non-Guarantor Financial Information - Operating Income and Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Net sales | $ 388,378 | $ 466,353 | $ 406,051 | $ 361,676 | $ 412,307 | $ 820,107 | $ 773,983 |
Cost of goods sold | 307,205 | 372,493 | 285,109 | 257,119 | 291,088 | 635,578 | 548,207 |
Gross profit | 81,173 | 93,860 | 120,942 | 104,557 | 121,219 | 184,529 | 225,776 |
Operating expenses: | |||||||
Selling, general and administrative expenses | 37,272 | 51,951 | 40,999 | 43,586 | 48,520 | 79,840 | 92,106 |
Amortization expense | 4,609 | 4,265 | 9,218 | 8,737 | |||
Operating income | 39,292 | 37,300 | 75,678 | 56,706 | 68,227 | 95,471 | 124,933 |
Other income and expenses: | |||||||
Interest expense, net | 27,607 | 21,998 | 55,913 | 41,645 | |||
Loss on extinguishment of debt | 546 | 1,045 | 3,324 | 1,163 | |||
Other income | 388 | 966 | (198) | (1,269) | (2,597) | (1,666) | (3,866) |
Income before income tax expense | 10,751 | 34,932 | 37,900 | 85,991 | |||
Income tax expense | 2,775 | 12,871 | 9,377 | 31,166 | |||
Net income | 7,976 | $ 129,908 | $ 32,730 | 22,061 | $ 32,764 | 28,523 | 54,825 |
Comprehensive income (loss) | 2,455 | 25,523 | 26,245 | 62,564 | |||
Eliminations | |||||||
Net sales | (24,975) | (16,725) | (53,409) | (40,573) | |||
Cost of goods sold | (24,975) | (16,725) | (53,409) | (40,573) | |||
Other income and expenses: | |||||||
Equity in earnings of subsidiaries | (10,588) | (20,171) | (33,335) | (54,395) | |||
Net income | (10,588) | (20,171) | (33,335) | (54,395) | |||
Comprehensive income (loss) | (4,791) | (23,534) | (30,559) | (61,932) | |||
Parent | Reportable Legal Entities | |||||||
Other income and expenses: | |||||||
Equity in earnings of subsidiaries | 7,976 | 22,061 | 28,523 | 54,825 | |||
Net income | 7,976 | 22,061 | 28,523 | 54,825 | |||
Comprehensive income (loss) | 2,455 | 25,523 | 26,245 | 62,564 | |||
Guarantor Subsidiaries | Reportable Legal Entities | |||||||
Net sales | 372,442 | 346,716 | 780,290 | 735,728 | |||
Cost of goods sold | 294,431 | 243,907 | 605,656 | 516,235 | |||
Gross profit | 78,011 | 102,809 | 174,634 | 219,493 | |||
Operating expenses: | |||||||
Selling, general and administrative expenses | 35,902 | 40,187 | 75,041 | 86,295 | |||
Amortization expense | 4,609 | 4,265 | 9,218 | 8,737 | |||
Operating income | 37,500 | 58,357 | 90,375 | 124,461 | |||
Other income and expenses: | |||||||
Interest expense, net | 27,607 | 21,998 | 55,913 | 41,645 | |||
Loss on extinguishment of debt | 546 | 1,045 | 3,324 | 1,163 | |||
Other income | 388 | (1,269) | (1,666) | (3,866) | |||
Income before income tax expense | 8,959 | 36,583 | 32,804 | 85,519 | |||
Income tax expense | 3,595 | 12,632 | 9,093 | 30,264 | |||
Equity in earnings of subsidiaries | 2,612 | (1,890) | 4,812 | (430) | |||
Net income | 7,976 | 22,061 | 28,523 | 54,825 | |||
Comprehensive income (loss) | 7,838 | 22,011 | 28,274 | 54,724 | |||
Non-Guarantor Subsidiaries | Reportable Legal Entities | |||||||
Net sales | 40,911 | 31,685 | 93,226 | 78,828 | |||
Cost of goods sold | 37,749 | 29,937 | 83,331 | 72,545 | |||
Gross profit | 3,162 | 1,748 | 9,895 | 6,283 | |||
Operating expenses: | |||||||
Selling, general and administrative expenses | 1,370 | 3,399 | 4,799 | 5,811 | |||
Operating income | 1,792 | (1,651) | 5,096 | 472 | |||
Other income and expenses: | |||||||
Income before income tax expense | 1,792 | (1,651) | 5,096 | 472 | |||
Income tax expense | (820) | 239 | 284 | 902 | |||
Net income | 2,612 | (1,890) | 4,812 | (430) | |||
Comprehensive income (loss) | $ (3,047) | $ 1,523 | $ 2,285 | $ 7,208 |
Guarantor and Non-Guarantor F65
Guarantor and Non-Guarantor Financial Information - Cash Flows (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Cash flows from operating activities: | ||
Net cash provided by (used in) operating activities | $ 104,804 | $ 19,824 |
Cash flows from investing activities: | ||
Capital expenditures | (17,208) | (26,871) |
Proceeds from sale of assets | 2,229 | |
Payments for acquisition of businesses, net of cash acquired | (117) | |
Net cash used in investing activities | (17,208) | (24,759) |
Cash flows from financing activities: | ||
Repayments of long-term debt | (150,000) | (233,640) |
Proceeds from issuance of long-term debt | 500,000 | |
Repayments of borrowings under revolving credit facility | (221,000) | |
Borrowings under revolving credit facility | 55,000 | |
Proceeds from issuance of common stock, net | 36 | |
Dividends paid | (61,888) | (61,790) |
Payments for repurchase of common stock, net | (18,529) | |
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation | (1,832) | (1,962) |
Debt financing costs | (8,637) | |
Net cash (used in) provided by financing activities | (232,249) | 28,007 |
Effect of exchange rate fluctuations on cash and cash equivalents | 987 | (235) |
Net (decrease) increase in cash and cash equivalents | (143,666) | 22,837 |
Cash and cash equivalents at beginning of period | 206,506 | 28,833 |
Cash and cash equivalents at end of period | 62,840 | 51,670 |
Parent | Reportable Legal Entities | ||
Cash flows from financing activities: | ||
Repayments of long-term debt | (150,000) | (233,640) |
Proceeds from issuance of long-term debt | 500,000 | |
Repayments of borrowings under revolving credit facility | (221,000) | |
Borrowings under revolving credit facility | 55,000 | |
Proceeds from issuance of common stock, net | 36 | |
Dividends paid | (61,888) | (61,790) |
Payments for repurchase of common stock, net | (18,529) | |
Intercompany transactions | 230,417 | (38,606) |
Guarantor Subsidiaries | Reportable Legal Entities | ||
Cash flows from operating activities: | ||
Net cash provided by (used in) operating activities | 89,706 | 10,665 |
Cash flows from investing activities: | ||
Capital expenditures | (15,229) | (19,516) |
Proceeds from sale of assets | 2,229 | |
Payments for acquisition of businesses, net of cash acquired | (117) | |
Net cash used in investing activities | (15,229) | (17,404) |
Cash flows from financing activities: | ||
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation | (1,832) | (1,962) |
Debt financing costs | (8,637) | |
Intercompany transactions | (218,633) | 42,427 |
Net cash (used in) provided by financing activities | (220,465) | 31,828 |
Net (decrease) increase in cash and cash equivalents | (145,988) | 25,089 |
Cash and cash equivalents at beginning of period | 204,815 | 25,119 |
Cash and cash equivalents at end of period | 58,827 | 50,208 |
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||
Cash flows from operating activities: | ||
Net cash provided by (used in) operating activities | 15,098 | 9,159 |
Cash flows from investing activities: | ||
Capital expenditures | (1,979) | (7,355) |
Net cash used in investing activities | (1,979) | (7,355) |
Cash flows from financing activities: | ||
Intercompany transactions | (11,784) | (3,821) |
Net cash (used in) provided by financing activities | (11,784) | (3,821) |
Effect of exchange rate fluctuations on cash and cash equivalents | 987 | (235) |
Net (decrease) increase in cash and cash equivalents | 2,322 | (2,252) |
Cash and cash equivalents at beginning of period | 1,691 | 3,714 |
Cash and cash equivalents at end of period | $ 4,013 | $ 1,462 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Jul. 16, 2018USD ($) |
McCann's brand of premium Irish oatmeal | |
Subsequent events | |
Cash paid | $ 32 |